Ladies and gentlemen, good day and welcome to Laurus Labs Q4 FY25 earnings call, hosted by Dam Capital Advisors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from Dam Capital Advisors. Thank you, and over to you, sir. Thank you. Hi, everyone. A very warm welcome to Laurus Labs Q4 FY2025 earnings call, hosted by Dam Capital Advisors Limited. On the call today, we are representing Laurus Labs management, Dr. Satyanarayana Chava, Founder and CEO, Mr. V V Ravi Kumar, Executive Director and CFO, and Mr. Vivek Kumar, AVP Investor Relations. I'll hand over the call to the Laurus Labs management team to make their opening comments, and we will open the floor for questions. Please go ahead, sir. Thank you, Nitin, for the introduction. Good afternoon to all our stakeholders. Financially, 2025 has been a year of significant acceleration and diversification across our company, and I'm proud of continued transformative progress we are making in enhancing capabilities, enhancing capacities, meeting complex needs of our customers, thereby creating value for all stakeholders. We continue to execute our strategic priorities with a strong focus on commercial execution. By leveraging our leading technology platforms, we advanced multiple clinical stage projects and commercial stage phase programs for big pharma that have significant patient benefits and also strong commercial potential for the company. I would say the majority of these projects are utilizing cutting-edge technologies like biocatalysis, flow chemistry, continuous manufacturing, high-energy chemistry, cryogenic reaction sectors, which have been growing interest from our partners and also companies' focus currently. While we continue to work towards realizing the potential of the late-stage pipeline, we're also strengthening our focus to broaden the project funnel and servicing early-stage clinical programs, especially after commissioning our new small molecule R&D facility recently, which leverages advanced process development capabilities. These efforts are helping us deepen our cooperation with major clients and thus securing long-term growth for the organization. Our initiatives in cell and gene therapies have also reported significant updates for the year. Our associate company, ImmunoAct, has supported about 300 patients with very good survival rate using NexCar 19. ImmunoAct is also carrying phase one trial for pediatric purposes using NexCar 19, and also another product got permission for phase one clinical trials for BCMA. This additional manufacturing capacity for NexCar 19 is progressing as per schedule and will be ready for operations by September 2025. We have got a new leadership recruited to lead our initiatives on gene therapy and also antibody-drug conjugates. We plan to invest over $15 million to build a GMP facility, which will have capabilities to do classmates vectors, both adenovirus and lentiviral, and also the ability to do antibody-drug conjugation. Moving to our financial results, FY2025 demonstrated strong resilience in our core business, and we reported healthy operating results. The growth reflects continued robust demand for our CDMO offerings and higher sales in the FDF business. The company achieved a revenue of INR 5,554 crores. Gross margins were healthy and maintained around the 55% range, and EBITDA margins expanded by 4 percentage points to 20% following better operating leverage. When we look back at our last five years, Laurus Labs has done successful expansion of the business and product portfolio. Today, our share of ARV revenues has come down from 67% to 45% in the last five years, whereas our CDMO share has moved from 13% to 28%, and we are expanding into multiple therapeutic areas within our generic portfolio. These results demonstrate the strength of our business and give us confidence in our outlook. Before we move to the business performance, we have adopted and updated our division reporting structure to make it simplified and focused along two distinct business models: CDMO and generics. In the CDMO, we are reporting results in small molecules and large molecules. In CDMO, our small molecule division has continued to build on the high market momentum and saw robust demand for our integrated commercial offerings, recording Q4 sales of INR 461 crore. For FY2025, the division recorded about 49% growth. The growth was mainly driven by several mid to late-stage MC deliveries and a steady increase in sales from new manufacturing assets, which was brought online during the second half of this year. CDMO pipeline momentum has remained healthy across clinical and commercial phase, and our full year, we have seen the mix shifting towards increased high-value projects from big pharma, which is providing good support for long-term growth. As I did, we have a pipeline of over 110 active projects, 19 in human health and over 20 in animal health and crop sciences, over 15 commercial projects, including APIs and intermediates. We are also nurturing additional relationships in animal health and crop science ingredients. Key CDMO focus growth projects are progressing in line with our plan. In 2025, small molecule API reactor volume enhanced by 15%, and we are further expanding our multi-site capacity for various modalities. In the large molecule CDMO, our Laurus Bio division reported Q4 sales of INR 29 crores. Sales are transitionally lower due to timing of shipments in certain international markets. If you look at FY2025, performance is muted due to timing and discontinued lower profitability business. However, we see strong demand continued in ARV portfolio. We are looking to break ground for the commercial-scale fermentation facility in Visakhapatnam by June 2025. We believe the new site will further accelerate on high-quality CDMO service capability and grow our industry position to offer CDMO projects utilizing our enzyme engineering platform. We propose to invest close to INR 250 crores in the projects, which will more than double our fermentation capacity by the end of 2026. In the generics, our revenue from generic division has continued with strong quarter-on-quarter progress led by both ARV and developed market portfolio, reporting a sales of INR 1,230 crores. Performance of the FDF division is in line, growing 25% for the quarter and 12% for the full year. We have executed on multiple integrated CMO contracts in the year and for some new contracts. We expect these increased sales to continue in future quarters, driving continued improvements in our utilization page. Karka JV collaboration is progressing well, and land acquisition completed. We expect to break ground for GMP manufacturing facility by June 2025. Moving forward, 2026 will be a year of rebalancing the generic R&D and manufacturing resources, mainly to enhance product pipeline and meet delivery commitment to our customers. On our R&D front, we have spent about 4.5% of our sales, which is higher by 7% year-on-year. Let me share a brief on our quality and ESG side. In 2025, the company underwent close to 160 quality audits by multiple regulatory agencies and several customers, which was over 20% more than the previous year. The company has successfully completed audits without any critical findings. The company received EIR for Unit 4, with this no pending regulatory inspection outcomes for the company. We remain committed to advancing quality systems, meeting highest compliance standards from clients and global regulators. We're also making good progress on ESG and HS agenda for long-term success. Now, turning into our broad FY26 outlook, our business is well-positioned, and we are readily evolving towards our goal to become a more diversified CDMO CMO company with a promising pipeline, enabling technology platforms and coupled with commercial excellence. We'll continue to increase and deepen our collaboration with major clients and execute on CDMO potential while improving resourcing in generic business. Operating margins are expected to improve from better asset utilization and also product mix. I acknowledge the efforts of our dedicated team, which remain committed to the unified vision of providing high-quality integrated solutions to global customers and creating value to all stakeholders. With that, I would like to hand it over to Ravi to share some financial highlights. Thank you, Dr. Satya, and a very warm welcome to everyone on our Q4 and full year FY2025 earnings call. Total income from operations is around INR 5,554 crore, registering a growth of 10%. For the quarter, we have completed INR 1,720 crore, with a growth of 19% year-on-year. Despite the ongoing macroeconomic challenges, we have continued to see a high level of demand for our offerings. Gross margin maintained at a healthy level of Q4 at 54.5%, and for 12 months, it is at 55.4%, mainly due to better product mix as well as the process improvements carried in some of our key large volume APIs. Our EBITDA for Q4 stands at INR 477 crore and margins at 27.7%, whereas for the full year, it is around 20.1%, which is in line with our outlook provided a couple of quarters back. On a full-year basis, we expect these margins to be higher as we continue on path to operational deliveries, especially execution of long-term long lead programs, new asset ramp-up, driving better asset utilization. Our profit after tax for Q4 is INR 234 crores, and for 12 months, it increased to INR 358 crores. This is with a growth of 122%. Our ROSI improved from 6.4% to 9.7%, but of course, still it is at a lower close to double digit, but it will improve further based on the asset utilization. On the CapEx front, we invested close to INR 211 crores in the quarter and INR 659 crores for the full year. The majority of the expansion, the CapEx is being invested into the CDMO or CMO projects. Our net debt stood at INR 2,594 crores, and net debt by EBITDA is 2.3, versus 3.1 in the last year. On the capital allocation front, our strategy remains unchanged, and we will continue to prioritize investment into high-value business segments to drive near and long-term growth. You can refer to our IR presentation for more details. With this, I request the moderator to open the lines for the Q&A. Thank you. Thank you, sir. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead. Yeah, hi. Thanks for giving me this opportunity. Before I ask my question, I would like to acknowledge a trivia fact. During difficult times, you assumed responsibility, Dr. Satya and Ravi, both of you. Now that you have made significant turnaround, you are fully acknowledging the team's contribution in your press release. I mean, this signals everything about the culture at Laurus Labs, and I'm sure Somya and Krishna will take this strong fabric of culture to the next level internally. Coming to my questions, slide 14 says 30% increase in continuous flow and 40% increase in biocatalysis. On slide 26 and 25, you're saying 1.5x expansion in client-based BioY, and we can see that 20 new projects are being added to the human CDMO. Can you add some color and help us link these very strong indicators together? We know that outside China Laurus holds a leading position in the design and manufacturing of our enzymes as well as large-scale continuous flow manufacturing. How can we leverage this unique advantage to secure partnerships for those projects where innovators are actively seeking for a credible option outside China? Thank you. Thanks, Sajal, for your comment. The leveraging of our enzyme engineering and manufacturing capabilities in our integrated offering is quite visible now. We have many projects at different phases where we are doing multiple biocatalytic steps, and some of the enzymes are manufactured in our bio facilities in Bangalore. The trend is increasing. We also started developing our own enzymes for our big pharma partners. I think the overlap between chemistry and biology is a clear winner, and we have seen in some projects, and the trend is increasing. Okay. That's helpful. Dr. Satya, as many innovators are looking for a China-free supply chain all the way to KSMs and intermediates there, what's our preparation at the moment, and what are we doing to de-risk our indirect dependency on China? By indirect, I mean our intermediate supplier may be dependent on China for KSMs today, but innovators are actively seeking for a 100% indigenous India supply chain. Is the recent INR 5,000 crore CapEx announcement a step in that direction, if at all? We have a team that focuses on backward integration. There are some projects where partners are very particular about avoiding certain sources. Some partners are okay. We have to balance it. Using all starting materials from one country or avoiding one country is not a scenario we can do currently. I think we have to balance it depending on what the customer is looking at. Finally, outlook on the animal and crop science CDMO now that we are commercial across both capabilities and crop included this quarter. How can these two segments drive our CDMO segment in the near term? We have more clarity on our animal health business. By the end of next year, we'll complete all our validations and go into commercial, which is a significant jump in our animal health revenues in FY 2026. Coming back to our crop sciences, we commercialized the facility last quarter, and then we delivered material to a partner, and this year also we'll deliver some quantity. There are a few projects which are at the negotiation stage. One project where feasibility is being done, another is at the negotiation stage. We have encouraging discussions, but maybe we need another year to give more confident results about the partner programs and then the future of our crop science business. We need one more year to nurture that division. Sure, sure. I have got many more questions, Dr. Satya, but I am cognizant of the fact that there are many waiting in the queue. I will rejoin. Thank you. Thank you for all your responses. Thank you. Thank you. The next question comes from the line of Deepak Kumar from Veda Growth Partners, LLP. Please go ahead. Hello. Yes, Deepak, please go ahead. Yeah, hi. Congratulations first of all on the fantastic results. In your slide, you have mentioned that tariff versatility is creating very short-term noise for your business. Deepak, can you please speak a little louder? Deepak? Hello. We can't hear. Am I audible now? Not really. Audible now? Yeah, now better. Yeah. In the presentation, you have mentioned that tariff uncertainty, all this noise around U.S. tariffs and all, this won't create much impact on your business. Just can you highlight a bit more on that, how you are seeing that play out in your case? We haven't commented any on tariffs, and it is too early to take any call on the tariffs. Okay. What exactly? I mean, there would be some impact which you must be seeing on your business on all the things which are going on in the global order right now. I think, Deepak, we are not clear on your question. Can you please repeat? No, no. See, as of now, I think there is no clarity on the tariffs. People are monitoring the U.S. tariff situation. That's what we mentioned. We haven't commented anything on the tariffs as such. Okay. Thank you. Thank you. The next question comes from the line of Ravi Agarwal from Agarwal Investments. Please go ahead. Hello. Please go ahead, Ravi. Please go ahead, Ravi. Yes. Namaste, sir. Thanks for having me. Sir, congratulations first of all for a wonderful result. My first question is on your CAR-T technology. What can be our exact source of revenue in CAR-T business, sir? Hello? ImmunoAct is our associate company. We only reported the full revenue results from that. One proportional profit. No, profit being proportional, but results, we mentioned that overall results. They are also scaling up manufacturing capacity to 2,500 treatments, which will be ready by September this year. Okay, okay, sir. Whether it will be any royalty from hospital or in what way we can be and what kind of opportunity or market we can have in future? If it is sales by our associate company, ImmunoAct, to the hospitals, the product sale will be the revenue source. Okay, sir. Sir, one more thing I have to ask that last financial year, I have seen that many Chinese companies are forming joint ventures for biotech supplies in China. Means US company and European company form JV with a Chinese company. Whether it affects Indian biotech and Laurus? Last year, actually. Yeah. Hello? Are we there? Yes, yes. My question is that last financial year, many Chinese companies have formed joint ventures with US and European companies for biotech supplies. Does it affect Indian biotech company and our Laurus also? No. We are not planning any. Yeah. Okay. Okay. Thank you. Thank you for your answer. Thank you. The next question comes from the line of Bharat from Quest for Value. Please go ahead. Hello. Hi. Dr. Satya, can you please throw some light on CAR-T and with this new Navi Mumbai facility coming up with 2,500 patient capacity getting commercialized this year, may I know how many patients you are expecting to be treated per year? See, when we mentioned 2,500 treatments, that facility can produce enough CAR-T to treat 2,500 patients. Yeah. I think till now, I think 300 patients were treated, I guess, right? Current facility can treat 300 patients per year. With the new facility, once it is ready, it can treat up to 2,500 patients per year. Okay. Due to this recent trade war between the U.S. and China, did you notice any pattern like increasing demand from innovators for the current commercial molecules? For example, if China is first source and Laurus is second source, then are innovators thinking to reduce quantities from China and increase from Laurus? Did you see this trend? Adding a vendor, validating a product, getting approval is a three- to four-year process. I think two to three years or six months' time may not change the prospects significantly. We haven't seen much change in our customer behavior in the last three months. Okay. Thanks. My last question is regarding this ARV, FDF sales. I guess that for the current quarter, it is around INR 450 crore. This is what my guess is because we did not report in the PPT. I think it should be around INR 450 crore, which is quite high compared to the normal trend. Did you prepone the deliveries to global funds due to uncertainty in the US funding? No. Prepone was done. No sales were advanced because of this. Yeah. May I know what is the ARV, FDF sales? We have done about INR 2,550 crore ARV sales. For the complete year, for this quarter? Similar revenues to last year. Yeah. Okay. Yeah. Thank you. That's it from my side. Thank you. The next question comes from the line of Jeevan Patwa from Sahasrar Capital. Please go ahead. Yeah. Congratulations, sir. The wonderful set of numbers, especially the CDMO, has shown a very good, impressive growth. Just wanted to understand next year, FY2026. We have given a qualitative comment, but just wanted to understand how do you see the growth coming on the formulation side specifically? One, I understand with the new CMO contract starting in December, that will add to the growth in the formulation. Apart from that, how do you see the growth coming in the formulation side, especially non-ARV formulation side? Non-ARV formulation sales increase. We are getting few approvals in the US and Canada. Also, our expansion to our existing CMO partner will be commissioned by the last quarter of this calendar year. Non-ARV formulation revenue will go up from Q3 onwards. Yeah. For the first two quarters, there may not be significant growth in the formulation. That's what you're saying? Yes. Yeah. Okay, okay. On the CDMO side, this first second half of the FY25 has been really impressive. Do you think the similar pattern will be for FY26, that H1 will be a little weak and H2 will be strong? Maybe. I think less so. We should not look at quarter-on-quarter basis. As we are indicating, you have to compare on a yearly basis, one. Yeah. I know. Typically, what happens in CDMO is I have seen this pattern since many last two, three years. The first half is typically a little weaker, and the second half is stronger with more deliveries. Is it going to be similar for FY2026? Maybe we'll give more information during the next quarter conference call. Right now, we can say the FY2026 growth looks good, and then we will achieve significant growth in revenues and profits. That much we can tell you. Yeah. Perfect, perfect. No, that's sufficient, sir. Thanks a lot. Thank you. The next question comes from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Thanks for the opportunity. Firstly, if you could just call out a bookkeeping question in terms of ARV, API, and formulation sales for the quarter. ARV, API sales for the quarter were INR 800 crores. Yeah, INR 800 crores. API and formulation separately, if you can share? INR 803 crores, Tushar. You can take the numbers from Vivek after the call. I think it's more or less 50/50, INR 400 crores from API and INR 400 crores from formulations. Sure. While there has been quarter-on-quarter significant increase in the ARV sales, as I could see, at the same time, the gross margin reduction is relatively lesser. Is it to do that the gross margin for the ARV as well as non-ARV generics businesses is similar to that of CDMO business? Is that the same as in? No, no, no. As we mentioned, our ARV sales, you look at in year on year, we increased only by one from INR 2,500 crores to INR 2,550 crores. Yeah. Not much significant growth in ARV sales. We expect FY2026 also will be in the similar range. When it comes to our gross margins, it's always we maintained at around 55% level. Yeah. That means our operations were running very efficiently. The processes were running efficiently, and our product gross margins are also very healthy. Maybe if our CDMO revenues grow significantly higher than current quarter, then our margins may improve further. I'll put it that way. Just extending that, the CDMO is now like INR 400 crore. Would that be a sustainable base to look for, given the kind of contracts we have at hand? Is that a sustainable base to look for, or does it have any sort of launch quantities which might have some repercussion in the near to medium term? I think I can say that we have good projects on hand, and the opportunities look interesting. We expect growth of CDMO revenues from year FY 2025 to FY 2026. We are not going to quantify how much we are going to grow. Just more on the overall CapEx for FY26, and if you could also further break down that into different areas. FY2026 CapEx will happen on multiple fronts. The CapEx what we are doing to increase our formulation CMO, that will be capitalized in FY2026. We are also planning to do some specific CapEx for another partner in our formulation. Our fermentation capacity, we are investing close to INR 250 crore in Vizag. We are adding more production blocks at Vizag for our API and CDMO business. By your INR 250 crores? Yeah. That's what. Fermentation is INR 250 crores we're investing. This year also maybe closer to around INR 1,000 crores will be the CapEx. Will there be any increase in debt to support the CapEx? No. Debt? No. Debt we may not increase significantly. Debt increase. Just lastly, with this sort of new facilities coming on board in FY2026, the absolute increase in the operational cost, if you could, in terms of employee and other expenses, which currently maybe at a quarterly revenue is about INR 500 crore per quarter, with the new facilities coming up, because this is something very certain, right? Irrespective of what kind of revenue, if you could help us understand what kind of quarterly OpEx will be there. Hopefully, at FY2026. In FY 2026, we are not expecting any new greenfield facilities come to operations. There will be more production blocks in our existing facilities only. The manpower reduction may not be very significant. We do not expect significant operation deleverage in the financial year 2026 because we are not adding more new sites. Got it. Thank you. Thank you, Dr. Panaskar. Thank you. The next question comes from the line of Balaji from Kotak Mahindra Bank. Please go ahead. Hello. Please go ahead, Balaji. Balaji. Sir, may I add any? Yeah, yeah, yeah. Congratulations, sir, for healthy results. Almost, I think, last three years, these are the best results as of now. Sir, what was your projection on PE, which is uncomfortable as of now at 175 at this level? After these results, what is your stand? The PE might be around 100 or something like that, sir. How can we comment on PE? Sorry, we can't comment. We can only comment on business prospects and products, facilities, regulatory inspections. We have no control on how much multiples and all. We are not the right people to comment. We don't have experience in that. Okay, sir. Okay. Thank you, sir. Actually, your business and everything is going on very right way. We are commenting on business, only the fundamental side only, the number side only. I have a doubt. That's the reason I attended the question. Thank you, sir. Thank you very much. Thank you. The next question comes from the line of Keshav Mundra from Guardian Capital Investment Advisors. Please go ahead. Yes, sir. Am I audible? Yeah, you're audible. Yeah. Hi, sir. Congratulations on the amazing set of numbers, right? Two questions. Can you speak louder, boy? Hi, is it audible now? Slightly better, but I think we want you to use handset. Okay. Not speaker. Yeah. I'm using the handset right now. Okay. Okay. Can you just speak louder, please? Yeah. So basically, my question is on the share of API and CDMO segment, right? We see that the share of CDMO is gradually picking up, and API segment is slowly not reducing, but it's slowing down, right? Could you give us an idea about how you see the margins and the revenue growth rates for these two segments over next year in FY 2026? On the same front, can you give us an idea of where you will be focusing upcoming CapEx more towards? These are my two questions, sir. As our share of CDMO increases, we also expect the margin improvement should happen. The second, the majority of CapEx is happening to service CMO or CDMO products. Would it be possible to give an idea of what revenue growth you're seeing in the CDMO segment over FY 2026? We're not giving any forecast or guidance in terms of how much growth we are going to expect. Maybe, as we mentioned, we expect growth in revenues and also profitability in FY 2026 when compared to FY 2025. I think we would like to stick to that statement rather than elaborating further. Understood, sir. Thank you for your time. Thank you. The next question comes from the line of Kunal Dhamesha from Macquarie. Please go ahead. Hi. Thank you for the opportunity. I wanted to understand on the ARV business. I know that USAID is not a big part of our ARV business. After the announcement, what are you seeing on the ground? What are some of the latest developments on that front? Recently, what we came to know, the USAID is supporting treatment but not willing to support PrEP, that is, prevention. We haven't seen any significant decrease in orders. Our inquiries are coming for treatment. We don't see a significant impact to our revenues going forward in FY2026. We will maintain revenues closer to INR 2,400 crore-INR 2,500 crore-INR 2,600 crore, around that level. Sir, let's say as a risk mitigation plan, because we would be deploying meaningful capacity towards this business, right? I want to understand, is it possible to pause CapEx for us for now and utilize these capacities for the CDMO business rather than doing incremental CapEx? Because anyway, there are a lot of uncertainties. The margins are not that great. Is it a possibility that you would put when you look at all business segments? ARV, we are a strong leader catering to close to 40% of the emerging world HIV patients. We expect we'll maintain that leadership position. We don't see any impact coming from either product replacement or lack of funding will be a problem for us to lower or allocate our ARV capacity to something else. We don't expect so. Yeah. We're running our ARV API capacities fully. Going back to your question, we're using maybe 10-12% of our formulation capacity for HIV manufacturing, not more. API would be higher, right? API is higher, and we are running at full capacity. We do not see that going down in not just FY 2026, even next two-three years, we do not see any challenge there. Okay. Sure, sir. Thank you. All the best. Thank you. Thank you. Participants, please restrict yourself to two questions. If you have any more questions, kindly rejoin the queue. The next question comes from the line of Rajat from Tata Mutual Funds. Please go ahead. Yeah. Hi, sir. Kunal just asked my question. One more bit on it. Can you just quantify how much is the business dependent on all these agencies like Global Fund, PEPFAR, Bill, Melinda Gates? If you could just quantify, that would be really helpful. Based on reports, about 20% of HIV treatment is dependent on USAID, US government funding. Sure. For us also, that number would be similar? If you divide our HIV sales, two-thirds is not two-thirds. Maybe 55% is API and 45% is formulations. For our formulation business, maybe you can take, I think, that 20% exposure for formulation business. That is maybe INR 1,000 crore in 2025, INR 250 crore coming from US-supported programs globally. Sure. Sir, in case there is this risk which comes in on the treatment as well, in that case, how do you think about the business? Do you renegotiate with countries for tenders? How does it happen? Are you thinking anything around this? We're not renegotiating. I think we will service what orders are placed. See, most of these orders are placed by global agencies except South Africa. I think we will get allocations and we will service those orders. Sure. Lastly, sir, last quarter, one of the. Those were your two questions. I would request you to rejoin the queue. Sure. Okay. Thank you. The next question comes from the line of Manoj Bahety from Carnelian Asset Management. Please go ahead. Hello. First of all, congratulations, Dr. Chava, and Ravi for a good set of numbers. My first question is, if I look at the operating cash flow and particularly working capital, can you help us understand the reason for slight deterioration there? I believe that that is the reason for a slight increase in our debt also. Is it temporary? Is it because of higher sales during the quarter? If you can help us understand on that side. Partly because we are handling very long, complex projects in CDMO, our order-to-delivery is much longer when compared to genuine programs. Some of the working capital is stuck in our CDMO programs. That is one reason. The second reason is, as our sales, our formulations increase in the U.S. and Canada, our working capital is also going up because of longer lead times in logistics right now. These are the two reasons for our increased working capital. Particularly, receivables have gone up from, so receivables, I wanted to understand particularly why there is such a big increase on the receivables side. If you look at the fourth quarter revenue, it's in higher revenue, right? That is one of the things. When you take a number of days as for the full year, it looks like a higher. If you look at INR 1,750 crores is a sale in the fourth quarter, the receivables are INR 2,000 crores. That's how you have to look at it. Got it. Got it. Sir, my second question is, on slide number 25, you have highlighted that there has been a significant increase in RFPs and active pipeline projects, which is 110 now, 90 is on the human health side, and 20 is on the animal health. Can you help us understand what this number was like two years back? How do you see, as an investor, how do we see the revenue potential of this? At what stage are these pipeline projects? This number used to be about 60, around that number. Yeah. Okay. It was almost doubled, sir, right? 60 to 110. Yeah. Around 60. Yeah. Right. Right. Sir, the second part is that some color on the quality of this pipeline project. How do we see revenue potential out of this pipeline project? Particularly, I'm asking whether a good amount of that are near to phase three. We have a mix of projects. I would say the projects, majority in phase two and three, not in phase one. I would say that. Great, sir. Thank you for taking my question. I wish you good luck. Thank you. Thank you. The next question comes from the line of Harshit Dhoot from Dymon Asia. Please go ahead. Hello. Am I audible to you? Yes. Yeah. Thank you. Thanks a lot for taking my question, sir. Sir, one question related to ARV. Mr. President of the USAID said multiple times that they have stopped the USAID funding. As you have highlighted that, it is impacting around 20% of our ARV sales. Is it right to understand that, sir? We haven't said it is affecting the formulation business, which we are catering, which is funded by US funds. It is maybe around INR 250 crore. That's what we said. It's not that we are going to lose INR 250 crore sales. Okay. Okay. Got it, sir. The second thing, we have been a tested partner of the VDRA when going to a COVID time also. We have given them the timely supply and all. The partner has recently called up a molecule. Will it have an impact on us or not? Actually, we didn't get your question very clear. Can you repeat? Sir, we are a tested partner of the VDRA, and we have given them timely supply to them during the COVID and helped the world a lot. Now that the VDRA has called up a big molecule which we were developing, and the lot is known to be a very tested supply to them. So a lot of. We were unable to understand your question. Can you hear me properly now, sir? No. Harshit, can you get onto the handset mode in case if you're on speaker? Yeah. I'm on handset only, sir. That's all. Because your voice is quite muffled. Is it better now? Just a little bit. Slightly. Okay. Sir, let me speak again. Laurus has been known as one of the tested suppliers of the VDRA of the world. Laurus has supplied them at the Madison at the time and then as a tested supplier with the smooth supply chain. The VDRA has called up a big molecule in the development. Will it have an impact on Laurus? Just give me that Laurus is closely working with them. Will it impact on Laurus or not? Maybe you have to write to Vivek. We can answer. We have a lot of difficulties in understanding your question. I'm sorry for that. Okay, sir. No problem. Thanks. Thank you. The next question comes from the line of Chandramouli, an individual investor. Please go ahead. Yeah. Thank you for giving me this opportunity. I'm happy with the quarterly result that Laurus has posted. I wanted to know when will we reach a return of capital employed to the earlier 2021, 2022-year levels? Also on the return on equity going back to those levels. If I compare with BVs or other competitors, they are already there. Would I be as an investor right in expecting that Laurus is on the growth path today for the next two, three, four years, we will be reaching those higher levels? I think your point and observation is very, very valid. If you look at the ROSI numbers, we were there earlier. It's not that we never had that number. It will take a few years for us to get there again. I think we have a desire and putting our best efforts to get there. I think we will get there. I don't want to attach any year when we'll get there, but we are putting efforts to go there. Thank you, sir. The second question is now that you are getting into multiple optionalities: cell therapy, hospital-related formulations, crop sciences. Now, would you be rewarding the long-term shareholders with optionalities or creating value by divesting such businesses as and when they reach scale? When do you think you expect them to reach such scale? If you look at we have created well-diversified CDMO offerings: human health, animal health, crop sciences, dietary and cosmetic ingredients, small molecules in these, and large molecules like enzymes and cosmetic proteins. Out of these, I would say we need some time to get to a scale. Our majority of CDMO revenues are coming from human health right now. That will continue to grow. Our animal health will peak in FA27 maybe. We are also nurturing a new partnership in animal health. That partnership will give some additional revenues. In crop sciences, as I mentioned to one of the questions, we need one more year to give more granularity in the division, how growth looks like. Thank you, sir. I'll come back and get you for more questions. Thank you. The next question comes from the line of Amalan from Nomura. Please go ahead. Yeah. Hi, sir. Can you hear me? We can hear you. Yeah. Yeah. Sir, in the press release, they mentioned that the generics performance was softer with a lower optical in the oncology API sites. When do you see this oncology API performance picking up? Could you just quantify what is the oncology API sales this quarter? As we mentioned, we modified our reporting system to a simplified version of giving generic APIs formulations. We are also giving overall API ARVs revenues combining APIs and formulations. I think if you look at oncology APIs, they are not going to define the growth path of Laurus Labs previously, currently, and in the future also. If we grow by INR 100 crores or sell less by INR 100 crores, it's not going to impact significantly. That is the reason we modified our reporting pattern to make it simple. Okay, sir. Thank you. Sir, my next question is on the CDMO market that you have presented in slide seven. You said that the market is impacted by the pricing pressure from the IRA. Have you seen these pressures in your CDMO customers too? What has been the impact of the IRA on your pricing or on your revenues for the last two or three years? I think that is a general commentary we made. It is not that broader commentary. A lot of assumptions. We gave a market scenario in a concise way. It has nothing to do significantly with Laurus Labs' offering in CDMO. Yeah. Okay, sir. Okay. That helps. Thank you, sir. Thank you for answering my questions. Thank you. The next question comes from the line of Chirag from Wine Pine Investment Management. Please go ahead. Yeah. Thanks for the opportunity. Congratulations on a good set of numbers, sir. Sir, my first question is with respect to the CDMO revenue that we have reported this quarter and in Q3. First question, sir, can you just comment a bit on contribution coming from big pharma and late stage? Because you have been mentioning that. Can this sustain for a reasonable period of time, at least for three, four quarters? Or is there an element of lumpiness which is there? One good thing in our CDMO revenue is it is coming from majority big pharma partnerships. What we can expect, we have a partnership with big pharma. There is a continuum of projects. We are not working on a success of one project forever. Our partners have a very strong pipeline. We keep on getting more and more projects. That is the reason our project pipeline is increasing. Okay. This was not the case earlier, right? Two years back, this was not the case. The volatility that we have been seeing in the past on CDMO will subsidize significantly. That is the right way to look at it? Can you repeat your question? I would say in the past, this was not the case, right? The volatility that we used to see in CDMO revenue should subsidize significantly going ahead, given more number of projects with the same customer and more number of big pharmas in our CDMO revenue. Given that they are into late stage also. Yeah. Earlier, we have a lot of revenue volatility because we are handling several early stage clinical programs, whether they go to late stage or not, there is a lot of volatility. Now, some volatility will be there. I'm not saying there will be no volatility. That is reduced significantly because our number of active projects has gone up. Yeah. The late stage would include phase one, right, sir? Yeah. You're right. Late stage will include phase one. The second, sir, you made a comment that you want to invest in ADC. I think if I heard correct, $15 million, right? Can you talk a little bit about it? What exactly you are intending to do in ADC? What part you are trying to cover in ADC? What is the thought process? Because your plate is already full in that sense, given our balance sheet and the debt level. If you can just talk more about it. We already make payloads and linkers in antibody-drug conjugates. We have a request from our partners to get into conjugation. We are not going to make mAbs. We made very clear earlier also. We only do conjugation because we have good experience in making payloads and linkers. Sir, what would be the revenue of the ADC currently for us? Sorry, Chirag, those were your two questions. I would request you to. Yeah. Just a clarification. What is the revenue of ADC currently for us? Because we are doing payload and link-up. Currently, it's a few million dollars. Nothing more. Yeah. Okay. Okay. Thank you. Thank you. The next question comes from the line of Utsav Jaipuria from DAM Capital. Please go ahead. Hi, sir. Thanks for the opportunity and congrats on the strong performance. Sir, if I look at your revenue mix today, CDMO is close to 30% of revenues. How do you see this mix evolving over the next two, three years? Is there a number that you're targeting internally? We expect the revenues coming from CDMO segment will grow. We are not giving a number for you to guess. It will grow. As you have seen, our ARV revenues, we believe it is going to stay closer to INR 2,500 crore in the medium term as well. Our efforts in increasing our product portfolio and adding more products in generics is also happening. Our CDMO in generics is also growing. As we mentioned earlier, we expect significant growth will come from our CDMO division. It will grow. We are not adding any% to that. Okay, sir. Thanks. Sir, what could this mean for margins over the next two, three years? EBITDA margins, perhaps? As the CDMO revenues contribution goes up, we expect margins should also improve. Yeah. Okay, sir. Just lastly, on the Kartha JV, what are your plans for this business in terms of the targeted products and therapies that you are planning to introduce? I think it is at the early stage right now. Maybe our partner is more keen to divulge those details than us. Okay, sir. Thank you. Thank you. The next question comes from the line of Rupesh Tatiya from Intels ense Capital. Please go ahead. Yeah. Thank you, sir, for the opportunity. My first question, sir, is with 15 commercial projects, how many are human health and how many are animal health? Then whatever projects are there in human health, are you a single source supplier or a dominant or primary supplier in those? That is question number one. Thanks for raising that comment. In the 15, I think those are human health only. We are not adding any animal health into that. Maybe next time, we'll add those, club everything into one and then show. That's harmonizing. We'll also link those two together and then give one number. Fifteen, what we mentioned is human health. Yes, sir. Are you a single source supplier or a primary supplier in those 15? No, no. We don't want to reveal that information. I mean, that gives some indication on quality of business, sir, right? I mean, you have always talked about quality of business. About INR 1,000 crore revenue is coming from commercial supplies. I'll put it that way. Okay. Okay. Sir, I mean, next year, animal health, there is a very clear trajectory. I think we have some INR 100 crore, INR 600 crore of asset, very clear trajectory. INR 150 crore, INR 200 crore of agrochemical asset, I think very clear trajectory in two, three years. The rest of the business, I mean, there is no kind of way for an investor to guess. Either you give a financial guidance or you give capacity utilization guidance, or in some way, either you give a financial outlook or you give some hints about operational outlook. Because otherwise, it becomes very difficult. That is my question. Non-animal, non-agrochemical CDMO business, how will the trajectory look in two, three years? One thing I wanted to give information. When we have clubbed animal health, crop sciences, dietary supplements into our CDMO, because all those what we are doing have similar gross margins. We do not want to club low gross margin business with high gross margin business. We club that into one because all that revenue coming from one product to one customer. Mostly, it is for branded companies. We do not need to segregate revenues coming from animal health, crop sciences, dietary supplements, and then give you five headings. All those business lines have similar gross margins because of that we club together. Sir, maybe what is the total gross block in the CDMO business as of today? How much are we utilizing? Gross block for this division? We don't have a specific. Some ballpark number, Ravi sir. Some ballpark number will be fine. No. Because it can utilize for both generics as well as CDMO, how can we give a separate asset? It is very difficult. Animal health and crop science, we put INR 700 crore. INR 700 crore. That number we can give you. Yeah. Rest of the business, sir, maybe INR 1,500 crores? Okay. Sir, you're done with your two questions. I would request you to fall back into the queue. Thank you. The next question comes from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead. Yeah. Hi. Thanks for the follow-up. Dr. Satya, with close to 40% employee base in R&D and quality, assuming more industry-level 15% attrition rate, how do you see the demand-supply dynamics given the fresh CapEx that we need to undertake, the recent agreement that we had with the Andhra government? I mean, do you see us getting into a challenging situation where we are not getting the right kind of talent for our requirement? Because our requirement for R&D and quality will be in a few thousands, right? I think attrition is in the early teens, mid-teens. Even our quality and R&D, as you rightly mentioned, about 40% of our employees in that division, in both divisions put together. We have to recruit 400-500 people every year to maintain at the same level. We have a well-established mechanism internally, interns, fresh graduates from universities, people with one or two experience. I think we're managing. We believe we will continue to do that. Okay. You do not see that to be a challenge, including the fresh greenfield, brownfield CapEx that we have just announced? It should not be a problem. We believe it shouldn't be a problem. Oh, okay. Okay. Fair enough. Thank you. Thank you. Thank you. The next question comes from the line of Manoj Bahety from Carnelian Asset Management. Please go ahead. Hello. Thank you for taking follow-up again. I was just looking at from FY 2022 to FY 2025, total capex which we have done is around INR 3,200 crores. In one of the slides, you mentioned that the slide just before that, that our current asset turnover is around 0.83 with an average of 1.1x. Considering a large portion of this capex must be towards CDMO, I was just trying to understand that with this kind of capex, which is already done in two-three years' time, if INR 3,000 crores kind of top line from CDMO have possibility on the capex which we have already done and looking at the pipeline of phase two and phase three which we are having? It's a mix of CapEx in the greenfield sites and brownfield investments were done. Our investment in animal health and crop sciences will take a lot of time to go beyond one asset turn ratio because those are the new investments. Our formulation investments are yielding good results. The idea we put that slide is to give there is a possibility to go back to those levels. That's the confidence we want to give it to our investors. We had 1.1 asset turn earlier. Currently, it is underutilized. Once utilization goes up, we can get back to that number. Yeah. Sir, the reason for asking this question is because your ARV is not going to grow, and growth will come from CDMO only. If this 0.83 to 1.1 happens, then CDMO has to contribute to that. If INR 3,000 crore is a possibility because if we have to read historically, we have done even 1.5x because of the one-time order. If I take only 1.1x also, is that a possibility? See, observation is very right. The asset turnover ratio for CDMO is higher. It all depends on the project scale and the complexity of the projects. I think we have to watch. No, I think. We have to watch. We can't give you a number right now where we'll go there. No, I think the CapEx, what it went or what it's going to be in a CDMO. Apart from that, even a formulation we are investing in. I think you will see the growth because we can't spare the numbers. We are looking at it as an asset turn. We can't give more details, but yes, it is a potential to grow more in a CDMO and a formulation. These are the two other growth drivers. Got it. Ravish, just one last. You mentioned that next year your capex will be INR 1,000 crore. With this INR 1,000 crore capex and the way the working capital has moved, how do you see that debt level, whether debt level will go up or you will be able to manage with the current debt level and INR 1,000 crore capex will happen out of the internal cash flow? Debt level will not significantly grow. We were indicating before also maybe 10% minus or plus. In that range, actually, we will move. Okay. 10% has happened this year only. Next year, whether it's 10% or. If it is a 10% of the current level, it is maybe INR 250 crore less or minus. Okay. Okay. Okay. Got it. Thanks for taking my question. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for the closing comments. Thanks, Nitin and all the investors for their very insightful questions. Thank you. Yeah. Thank you. Thank you, sir. Ladies and gentlemen, on behalf of Dam Capital Advisors, that concludes this conference. You may now disconnect your lines.