Ladies and gentlemen, good day, and welcome to Piramal Pharma Limited's Q1 FY 2024 earnings conference call. As a reminder, all participant lines will be in 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 0 on your touchtone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Gagan Borana from Piramal Pharma Limited. Thank you, and over to you, sir. Thank you, Carol. Good morning, everyone. I welcome you all to our fourth results earnings conference call to discuss our Q1 FY 2024 results. Our results material has been uploaded on stock exchanges. We would like to download and refer to them during our discussion. On the call today, we have with us Ms. Nandini Piramal, Chairperson, Piramal Pharma Limited, Mr. Peter DeYoung, CEO, Global Pharma, and Mr. Vivek Valsaraj, CFO of our company. Before I proceed with the call, I would like to update everyone that currently we are in the middle of our rights issue for raising capital not exceeding INR 1,060 crore. Given this event, we will have to abide by the statutory guidelines as issued by the regulator in regards to our disclosure and external communications. Accordingly, we will not be able to share any forward-looking statements, nor disclose any further details on the proposed fundraise, other than what is shared in the LOF during the deal window period. I would request everyone on this call to restrict our today's discussion to Q1 FY 2024 performance. Since last week post declaring our quarterly results, we have received several investor queries. In alignment with the related restrictions, we have drafted our responses to this query, and we share these responses first, and later open up the floor for any other questions that you may have. With that, I would like to hand over to Ms. Nandini Piramal to share her thoughts. Good day, everyone, and thank you for joining us on our post-results quarter one FY 2024 earnings call. Starting with the update on the rights issue, we have filed a Letter of Offer with SEBI and have also finalized the issue details. The rights issue price has been fixed at INR 81, with an entitlement ratio of 5 shares to every 46 held. The record date was 2nd August. On the quarter's performance, during the quarter, we registered a year-on-year revenue growth of 18%, delivering revenues of INR 1,749 crore. Our CDMO business, aided by continued order flow momentum and strong execution, grew by 17% during the first quarter of the financial year. We're also seeing healthy demand for our recently expanded facilities, offering differentiated capabilities. Further, we witnessed year-on-year improvement in demand in our generic API business. Our complex hospital generics grew by 22% year-on-year during the quarter, primarily driven by robust demand in civil flooring and contributions from new product launches in the injectable segment. Our India consumer healthcare businesses registered a year-on-year growth of 13%, driven by our brand and new product launches. Our EBITDA during the first quarter stood at INR 171 crore, with an EBITDA margin of 10%, compared to 6% in the same quarter last year. The healthy improvement in our EBITDA margin was on account of strong revenue growth, along with cost optimization measures. Also, please note, our first quarter FY 2023 EBITDA had a one-time inventory margin impact of INR 68 crore. On the debt, our net debt at the end of Q1 FY 2024 is about INR 4,700 crore compared to INR 4,800 crore in the last quarter. We repaid some net debt, some debt in the last quarter. Historically, our H2 has been better than H1, both in terms of revenue and profitability. We are working to leverage our good start to the financial year and continuing this momentum to deliver a healthy performance for the rest of the year. We continue to maintain a high-quality track record of zero OAIs, as we successfully closed the US FDA inspection at the Pick and Pull facility with zero observations. During the quarter, we also received an EIR for our Telerik facility, thereby successfully closing the inspection. In the last nine months, five of our facilities have undergone a US FDA inspection, and we have successfully closed all of them. Apart from the US FDA inspection, our facilities also underwent regulatory inspections from other global agencies, along with audits from our customers, which we cleared successfully. On the ESG front as well, we made key progress with the development of our decarbonization plan in accordance with the 1.5 degree trajectory, as suggested by SBTi Science Based Targets. We are now committed to SBTi and the UN Global Compact. We also adopted a Global Human Development Policy, Code of Conduct and Ethics to strengthen our governance. During FY 2023, we had 0 fatalities and also improved our gender diversity. We will soon be releasing our sustainability report, in which we will be sharing further details about ESG initiatives undertaken in FY 2023. Moving to business-specific highlights. The CDMO. In our CDMO business, we witnessed good momentum in order inflows in quarter one FY 2024. These incremental orders are a healthy mix of development work, involving differentiated capabilities and commercial manufacturing of on-patent molecules. We have seen encouraging demand for expanded capabilities that went live towards the end of FY 2023. We are expanding our capacity expansion for antibody drug candidates at the Greensboro facility, which should open in the H2 of this year. That will help strengthen our position in the ADC market. Our generic API business, which has a soft demand in FY 2023, is also seeing a pickup of year-on-year in demand. We continue to work towards cost optimization, strategizing procurement, and implementing operational excellence initiatives to mitigate inflationary pressures and to improve our profitability. Moving to the Complex Hospital business. Our inhaled anesthesia portfolio continues delivering a healthy performance, mainly led by strong demand for sevoflurane. Our capacity expansion for inhalation anesthesia is on track. Our intraocular portfolio in the US continues to command a leading market share. Our brand, Gablofen, continues to be the number 1 ranking baclofen prefill syringe and vial brand in the US, with a market share of 77%. In the injectable pain segment, our brand, Sentinel, is the number 1 ranking brand in its representative markets of Japan, South Africa, and Indonesia. While we focus to further strengthen our positioning in existing portfolio, we're also building a pipeline of over 27 injectable products who are in different stages of development. We launched 1 new product during the quarter. We strengthened our CHG management team by appointing Jeffrey Hampton as President and Chief Operating Officer for the CHG business. Jeff has previously worked with Accord Healthcare Inc. and Apotex Inc. Moving to our India Consumer Healthcare business. Our business delivered a Y-o-Y growth of 13% in quarter one, driven by growth in our power brands and new product launches. Our power brands grew 15% during the quarter and contributed 43% to total health sales. We launched 11 new products and 3 new SKUs during the quarter. We continued to invest in marketing and promotional activities to build strong brands in the market, with a good reach in general trade and are strengthening our presence in alternate channels of distribution, including e-commerce, modern trade, and having our own B2C platform, Wellify.in. To summarize, I'd like to say we had a positive start in the new financial year, with healthy revenue growth and improvement in EBITDA margins. Our CDMO business is witnessing continued order inflows, especially for differentiated offerings and innovation-related work. Our inhalation anesthesia portfolio is also seeing a healthy demand. Further, our India Consumer Healthcare business is delivering good growth driven by the power brands. We continue to maintain our best-in-class quality track record and are taking multiple initiatives in the area of ESG. We believe in the growth potential of all our businesses and are accordingly executing on our strategic priorities. Further, we're raising capital through rights issue, for which the letter of offer has been filed. Our promoters have agreed to subscribe to the extent of 100% of the equity shares offered in the issue, reaffirming their confidence in the underlying strength of our business. With this, I'd like to hand over the call to Vivek Valsaraj, who will respond to queries we've received since last evening. Post that, we'll open the floor for any additional questions that you might have. Thank you, Nandini. Good day, everyone, and thank you to those who shared questions. We'll take those first before opening up the floor for the other questions. A few questions on the CDMO business. Reasons for growth in the CDMO business. The company witnessed significant pickup in order bookings in Q4 FY 2023, which continued in Q1 FY 2024 as well. Healthy demand for innovation-related work and differentiated offerings, and we have been seeing a year-on-year pickup in demand for the generic API business and an encouraging response for the expanded capacity that went live last fiscal. A related question was: Is the order book back to normalcy? We have seen a good pickup in order book in the month of March, which has continued in Q1 as well. Our recently opened expansions have witnessed a good customer demand. How is the phase 3 pipeline looking? We have about 25 plus products in our development pipeline, which are in phase 3. The commercialization by our customers would lead to some important commercial manufacturing contracts for us in the future. We continue to support our customers to advance their development work and are also looking to add more customers. Some of our recent commercial manufacturing opportunities for on-patent molecules is already in public domain. Moving on to CHG, there was a question on what are the reasons, primary reasons for growth in this business. The growth was primarily driven by healthy demand for our inhalation anesthesia portfolio and improvement in supplies from our CMO for our injectable pain management products. There was a question on the quantum of CapEx spend in FY 2024 quarter one. The CapEx was INR 147 crore. There was questions on why there is a lower other income in quarter one versus quarter one of FY 2023. The previous year, quarter one, had higher effect gains consequent to major currency movements. The US dollar did strengthen, and that led to a significant Forex gain. Compared to that, in the current quarter, we had relatively stable currency, leading to a lower Forex gain. Excluding this, the EBITDA on a comparable basis, the June quarter has grown by 55%. There's a question on reasons for increase in interest cost and what will be the scenario post the rights issue. The increase in interest cost versus the June quarter is due to a combination of both increase in average borrowings to support planned CapEx and operations, and general increase in interest rates. Versus the March quarter, it is primarily the effect of interest rates. We will be using a large part of our proceeds for our INR 1,050 crore rights issue to reduce the existing levels of debt. This will reduce interest cost going forward. We also expect to complete our rights issue this month, which will help lower our interest cost thereafter. There was also a question on, please explain the movement in debt level. Our net debt is actually reduced by about INR 100 crore versus the March quarter, and currently our net debt stands at about INR 4,700 crore. As mentioned earlier, a major portion of the rights issue will be utilized for reduction of debt, and further, we will continue to make judicious choice in our CapEx spends to control debt, also aided by an improved financial performance. Rationale for the rights pricing. It has been our endeavor to keep the pricing fair to enable participation by all shareholders. The pricing has also been decided keeping in mind the regulatory requirements and the general procedures based on guidance by our lead managers to the issue. A detailed FAQ that clarifies several questions on the rights issue proceedings and the modalities will be uploaded on our website this weekend. Please do refer to the same. There was a question: Is the company looking to do any acquisitions after the rights issue? Currently, our focus would be more to execute planned CapEx and ongoing capacities and capabilities at various sites which are reflecting high demand. Our focus will be to execute and commercialize these investments. Those were some of the questions that we received upfront, and we can now open the floor for any other questions. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star 2. 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 is from the line of Ranveer Singh from Nuvama. Please go ahead. Well, ladies and gentlemen, we've lost the line for the current participant. We move on to the next question from the line of Pramod Tangi from Unifi Capital. Please go ahead. Hi, thanks. I have 2 questions. One is, while your margins have expanded, especially if I remove the other income, last year's first quarter, the margin, EBITDA margin have expanded, very good, the other expenses also went up by 15%. Is there any particular reason about the other expenses? Pramod, if you look at the total increase in other expenses versus the June quarter, the increase is 13%, which includes impact of Forex movement as well, that's about 4%. Excluding that, the increase is 11%, which is commensurate with an 18% increase in the total top line between the two periods. Okay, got it. Last year, we had the Forex gain, this time we have a Forex loss. We don't have a loss. We just have a small Forex gain compared to last year. Okay. Okay, okay. You know, just if you can, you know, guide on the, you know, profitability, you know, as we are highlighting that, we are on the path of profitability. With a 10% EBITDA margin, our depreciation is, is equivalent to that, that amount, and then we have the finance cost. Where we are looking to gain that profitability, is it from the revenue side or is it some cost control? What is that, you can give some, you know, highlight on that. Pramod, because historically, track on financials, our H2 tends to be higher than H1, and therefore, you will see a significant jump in H2 versus H1, both in terms of revenue and profitability. The primary driver for improvement in margins is the scale at which the business operates thereafter in H2. You will see higher revenues, and therefore, the benefit of better fixed cost leverage leading to improvement in margins. Okay. Okay, great. What is, what is your capacity utilization as of today, if I look at the CDMO and the anesthesia business? Pramod, you know, giving one capacity utilization figure across 17 different sites is, is, is complex and probably not practical. What we have done is we have invested in capacities where we have very high demand. Our API facilities in overseas, whether it's the high-potent API or whether it's the antibody drug conjugates, where we are currently investing, are the ones where we were short on capacity. Formulations in general, we tend to have reasonably good capacity. Okay, great. Great. Thanks. That's, that's all from my side. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Thanks for your question. Sorry to interrupt. You're also not audible. May I please request you to speak through the handset mode? Is this better? Yes, sir, you may please proceed. Yeah, just on the, within CDMO segment, just would like to understand how much is the API sales or API contribution? Typically, the CDMO business, I'm referring to a full year sale, our combinations and API is like 55, 45%. 55% being API, 45% being combination. Does that change meaningfully on a quarterly basis? Quarterly, it would vary depending upon the lumpiness and queues, but not very, not very materially. Understood. Given that the, on the CapEx side, largely more or less capacity expansion is done, and we need, as you highlighted in the opening remarks, that the commercial benefit is to accrue. The overall CapEx, how much it would be for FY 2024? Are you referring to an annual CapEx? See, currently, we can't make a forward-looking statement on the total CapEx, Tushar. Please bear with us because we are in the deal window period. As we have said that we are making a judicious CapEx spend, investing on those which we have kind of planned, in those areas where demand is high. Generally speaking, depreciation, at least maintenance CapEx, which is equivalent to depreciation, can that be taken as a broad indication? No, maintenance CapEx is normally lower than depreciation. Okay. Yeah, thanks. That's it from my side. Thank you. The next question is from the line of Randhir Singh from Nuvama. Please go ahead. Yeah, thanks for taking my question. Sir, 2, 3 things. We have been seeing that first half is normally lower, so that I wanted to understand the rationale why first half is normally lower than the second half, which means, you know. Secondly, not forward-looking, but earlier announced CapEx of that previous number, $157 million. That, that CapEx has already been spent or part of it remains? Last 2 things, if you could clarify. Sure, Randhir. Firstly, if you look at, and your question is on why the skew is more towards H2, there are actually a variety of factors for that, which includes the overall cycle time from the receipt of the order till the time it is delivered. It also depends upon the customer's own preference of, you know, starting the year. For them, the year typically start in January, where they have more orders placed out in January on the new budget, versus reducing the inventories that they carry when, when they are in the December quarter. It's a mix of various things, but typically what happens is the longer cycle time, that kind of by the time you get orders and by the time you execute and by the time you invoice, it gets pushed over towards the second quarter, the second half of the year. The second question was on the $157 million of CapEx that we announced. While a part of that has already been done and some of them have gone live, some part of that is still under execution right now. Okay. That part would be spent in, 2024 or that will be just for the- In 2024, yeah. Okay. Can you refer me a number also then? FY 2023. In FY 2023, we had a CapEx of about $118 million versus the total market then. Yes, yes, yes, yes, that is it. Secondly, on Hemmo Pharmaceuticals, whether this entity has or this is yet to come. Randhir, sorry, can you please repeat your question? That Hemmo Pharmaceuticals, which we acquired last year. Yes. Whether, that our revenue is currently a portion of revenue coming from Hemmo Pharmaceuticals? Hemmo Pharmaceuticals is a smaller part of the total business, and the integration has been done, and that's, yes, the current revenues do include a part of Hemmo Pharmaceuticals. Remember, it was also there part of the previous year as well. The numbers are comparable to the extent of this acquisition, and it is contributing. In fact, you may have also heard in the prior call that we did complete a major expansion to expand our capacity by about 40%-50%, and that has also gone live currently. Okay, currently, at what capacity utilization it would be? Just I wanted to understand that what max potential we can expect from this entity. As we said, we've just expanded the capacity by about 40%-50%, so that's the capacity available currently. Okay, fine. Fine. In CDMO, the order book in last quarter itself, we said that we see uptick in order book, but can you give some indication what size of order book, what kind of order book we have in hand to be executable this year or next year? You know, Randhir, currently, we are in the deal window period, and we can't make specific disclosures on numbers which are not part of the Letter of Offer. Please bear with us. Okay, okay. No issue. Thanks. Thanks a lot. That's it from my side. Thank you. The next question is from the line of Vinod Jain from WF Advisors. Please go ahead. Good morning. My question relates to interest cost. While there is sales growth and even some margin expansion, there has been this has been almost entirely mitigated by increase in interest cost. There is no slide to explain this phenomena, but apparently this must be resultant of high inventory and debtors level. Please convey what is the basis, what is being done to arrest this phenomena and reverse it? Vinod, I think your question was on the increase in interest cost. Am I correct? Right. Yeah. As we explained earlier, the primary reason for increase in interest cost was an increase in our average borrowings. If you're comparing versus the June quarter, the average borrowings did increase, and this was primarily to fund some of our CapEx requirements and some of the working capital requirements during the last fiscal year. There was also an increase in the average rate of interest. As you've been seeing, the Fed, the RBI did increase rates over a period of time, the effect of that also came into the P&L, leading to an overall increase in interest cost. Having said that, as you're aware, the primary purpose of a rights issue is to pare down the debt, once the rights issue process is completed at the end of this month, these proceeds will be utilized towards reducing the debt. That will be one of the factors which will help reduce the overall interest cost. We also clarified that our overall investments in CapEx and OpEx is being aligned with the overall fiscal performance, thereby helping to maintain a certain level of debt, which will help reduce the overall cost of interest. Yeah. The only thing is, the interest costs have almost doubled. I mean, would the explanation given, would, would it justify the increase by almost doubling, or is there also an element of increasing debtors and inventory? While, you know, there is some increase in working capital, that is primarily because of an increased inventory, which we are carrying for strategic reasons. The explanation given with respect to the overall movement in debt and interest rates does explain it, post rights issue, you will start seeing, you know, from quarter three onwards, reduction, a meaningful reduction in the overall interest cost. Very good. Thank you. Yeah, overall debtors have not increased. They're actually reduced or in, in terms of days are in line with what is our historical leading. Very good. Very good. Thank you. Thank you. The next question is from the line of Shubham Shukla from Voyager Capital. Please go ahead. Hi, good morning, everyone. I just wanted... Like, I had two questions, one around the inventory provision we had created in quarter 3. Any update on those $4 million inventory from the biotech company, like, which we have created? Shubham, the provision was not with respect to inventory, but it was with respect to a receivable from a biotech company. The process is ongoing to try and recover the money as of, as of date. Do we still hold those inventory with us? Yes. Okay, thank you. On second question on, like, mostly on the debt side, which is currently INR 4,007 as, like, you said, from a, like, I can recall from our previous controls, we wanted to bring it down to, like, the level to, like, 2x to our debt to EBITDA. I understand that we are under the process of INR 1,000 crore, INR 1,050 crore rights issue. Any, like, guidance or, like, anything around this, like, when do we- when, when can we expect this 2x to EBITDA, debt to EBITDA levels? Shubham, I don't recall us giving a specific guidance of our debt levels being at 2 times the EBITDA. Having said that, once the rights issue process is done, you will see that the overall debt to EBITDA ratio will meaningfully improve. As our overall fiscal performance improves over a period of the next 2 quarters and thereafter, this ratio will also start showing an improvement. I can't give a specific guidance. Please bear with us. As I said, we are in a window period right now. Okay. Okay. just to like, on the percentage increase in, additional average borrowing this quarter you have done, like, previous, compared to previous quarter and year-over-year? No, our borrowing has actually reduced. It is actually reduced by about INR 195 crore during the quarter. No, like you said, like, the interest costs have gone up, like, year-on-year, like, it's doubled. The reason is, additional borrowings on your average borrowing needed for, like, working capital and other costs. Shubham, are you comparing versus the June quarter? Yeah, like, on quarter-on-quarter and, like, year-on-year basis. Yeah. It's gone up about 200 basis points versus the June quarter and about 90 basis points versus the March quarter. This is at a time when the interest rates have started peaking, but as you're aware, in, in many of the geographies, there has been some stability, but of course, we have to wait and see how this pans out. No, no, my question is with the average, like, you said that you have taken newly average borrowing, like, this quarter. Like, the, the reason for interest cost up is, like, you have taken more additional, like, average borrowings, and there's an increase in interest costs. Right. Like, interest rate. Like, I'm trying to understand the% increase in the average borrowing this quarter. The average increase in our borrowings versus the June quarter is about INR 1,300 crore higher. Versus March quarter, there is no increase in borrowing. Okay. Okay. Thank you so much. That's it. Thank you. Thank you. The next question is from the line of Kunal Kundania from TSP Asset Managers. Please go ahead. Hi, good morning. This is Vivek Ramakrishnan. Just 1 clarification on the interest cost. Is there a component of foreign currency debt, which is, where the rates have gone up even more steeply that is hurting you? If you could give us a breakup of foreign currency versus INR debt, that would be useful. That's it from our side. Vivek, about 60% of our debt actually resides outside of India, and that's foreign currency, but managed locally, paid locally. Yes, we have seen a, a increase. The increase that I referred to also pertains to increase in the overall rates in the foreign currency debt as well. Okay, thank you very much, and wish you good luck. Thank you, Vivek. Thank you. The next question is from the line of Harsha from Dimensional Securities. Please go ahead. Hi, good morning, sir. My question pertains to our gross block. In FY 2023, we have gross block of nearly INR 9,500 crore, against which we did revenue of around INR 7,000 crore. Just want to understand, excluding the additional capacity expansion, which we are taking, which we are going to do going forward. Excluding that, what is the revenue potential from the existing gross block? Because at 0.8, 0.85x, I believe our asset turnover are extremely low. Just wanted to understand from existing capacity, what is the kind of revenue which we can do? Just to clarify, firstly, Sumam, I think the overall gross block, as you're aware, comprises of both the tangible assets as well as intangible assets. The intangible assets includes two components. One is the component of the total brands that we acquired, and of course, these get amortized over a predefined life, and it also includes the component of goodwill. If you were to break up our total gross block, half of it comes from tangible and half of it comes from intangible assets. That's the total breakup. You need to kind of look at the total fixed assets when you actually look at the intangible assets primarily are brands pertaining to the complex portfolio generics and the consumer products business. On the overall, in terms of what the future revenue from these assets will be, again, would become a forward-looking statement. I would avoid going in that direction, but I think this should help probably respond to your question. Okay. What is the policy regarding amortization of the intangible assets currently? It depends upon the brand. Each of the brands assess for its useful life, and it could vary from maybe 10 years, 20 years, five years, depending upon what the total estimated useful life of a particular brand. Okay. One thing I, I'm worry about is while, as you mentioned, that some of the half of the assets on our book are intangible assets, but at the end of the day, it is economically we fail out of our bank, whether we acquired a business or a brand. With all these assets sitting in our sitting on our balance sheet, and given that we are operating at 0.7, 0.8 turnover, what will be the journey towards higher ROE? Because these numbers, at the end of the day, will continue to pull your ROE downwards. Just wanted to get an idea on that. Right. Let me just first explain this principally to you, and then thereafter, of course, clarify the question. Essentially, if you look at it, and, and look at what we have done in the last couple of years, one, we acquired a lot of brands, and second, we did a lot of CapEx. Brands primarily in the product business and CapEx in the CDMO space. Post which there was, you know, this impact of COVID, because of which our overall business did take an impact, and, we were not able to realize revenue to the full potential. As we move ahead, we will be sweating these assets and brands more, which will help improve the overall ratio. The denominator as it stands today, is on a higher side, which is not necessarily seeing the full potential of revenues that come from these assets, which is why, you have to kind of look at this over a period of time to see the overall improvement in the asset turnover ratio. Okay. Without delving into numbers, I would believe that on the existing base of revenue, we can still do higher revenues compared to what we have done up till now. Correct. All right. Thank you so much. Thank you. Before we take the next question, I'd like to remind all participants, if you wish to ask a question, please press star then one on your touchtone telephone. The next question is from the line of Aditya Grover, an individual investor. Please go ahead. Hello, good morning. Am I audible? Yes, Aditya. Yeah, my question is regarding the CHG business. In this, from the sevoflurane, last year, we did around INR 1,000 crore. That means basically we are doing 50% of CHG business from this one particular product. I want to understand what is the market size here, and can we grow rapidly here? That is my first question. Sevoflurane, if you look at the overall market size of inhalation anesthesia, as per IQVIA data, the global size is about $1 billion, of which sevoflurane is about 80%. If you ask us, $18 billion is the global market size for sevoflurane. In terms of trend, sevoflurane is growing faster than the other inhalation anesthesia product. This is all what we can say on the market side of sevoflurane. Currently, in terms of, you know, demand, which we are seeing for sevoflurane, I, I can say at least we are seeing demand, you know, much higher than what we can supply. As I said in our call and our presentation as well, our focus is to expand the capacity so that we can meet the growing demand. Okay. Okay. Coming to our CDMO innovator business, when we say we have the order book of $62 million, so that is executable for 1 year and, or, to how is this order book structured? Order book typically can be some of it is executed within the year. Some of them could also spill over to the years ahead, Ajay? The $62 million is our integrated orders, so these are orders that will cover more than one site. Our total order book is much larger, but given we're in the deal window, we can't actually disclose the size. Okay. Okay, makes sense. Is our CHG consumer product business, it is EBITDA positive or, still we are running net-to-net there? No, EBITDA positive. Okay, it's EBITDA positive. Okay. The last question on the scientist part I have, like, when we are running a discovery or development business, what is the number of scientists we have there? I think we have about 650 scientists across. My question is, if we want to scale this business, so if you see the large players, right, in the CRO or discovery business, they have large like, like thousands or 3,000 plus scientists, right? When we want to scale this business, employees are strength here. How, how are we planning to build here? Because if you want to enter the value chain, like grow more share of innovator business, then, how are we looking there? Because with 600 scientists, I think it is a quite less number when we compare with the bigger CDMOs. I would answer this question in that the largest part of our growth in the innovator business will be in the clinical development and on-patent commercial segment, which would be slightly later than you would say in the CRO FTE model, which is in the discovery segment. In that model, it's much more about being able to help our clients with the tech transfer, scale up and eventual registration, validation and commercialization of their molecules. In that business, it's a little bit of a different business model than the CRO business model that you described, which we also participate in. From a materiality standpoint, most of our revenue, profitability and growth is coming from the on-patent development and commercial support, and less from the CRO discovery, which is FTE based, as you described. We see more barriers to entry and more defendable elements in this business, because switching costs, we think, are higher. Okay. Okay. Coming to the generic pharma, we, we do a CDMO generic pharma. What are things? Because generally there is always a pricing pressure is here, right? You said in the commentary that you are seeing good traction and good pickup in the CDMO space, and we have larger strength in the generic side. What is... Can you give some light, what is happening here, like, in the demand side, how it is picking up and how do you see that this year going by? First, as an overall trend, I think we've shared in our investor materials that we've been doing a long-term pivot and increase in mixed innovator business, which I just described in the answer to your earlier question. We do see and that becoming an increasing share of our business going forward. That being said, we do still see meaningful potential out of our API generic business. Over the last year, we did a lot of work to build additional customers into our portfolio. Knowing how that works, if you want to onboard a new customer with an existing API, they do have to take registry validation batches. They have to update their filings. The uptick we're seeing this year is largely due to work done in the prior year in terms of onboarding new customers. It's now materializing into some amount of incremental volumes. We think that that is the primary driver behind the increases, the efforts of done new customer acquisition from the existing portfolio in the past, let's say, 12 to 18 months. Sure. Sure. Thanks. Thank you so much, sir. All the best. Thank you. The next question is from the line of Nirali Shah from Ashika Group. Please go ahead. Hi, so my one question is that in terms of our CDMO business, can you please shed some light on the late stage molecules in the clinic and their potential timeline on commercialization? If I can recall, you had 34 molecules in phase 3 earlier. Can you give some update on that? I think we have 35 plus molecules now, in phase III. I think those will commercialize over the next 2-3 years. Okay. Okay. Is there any commercialization that we see in this year? Hard to make forward-looking comments. I think to whatever extent our clients have put information into the public domain, you can locate that to what they've communicated. It's difficult in the deal period and also with our confidentiality agreements, too, to speak with ourselves. You can find a couple in the net, but we're not really in the position to share. Got it. Thanks. Thank you. The next question is from the line of Bharat Gupta from Fair Value Capital. Please go ahead. Hi, thanks for giving up the question. I have just one question with respect to the CDMO business. Like in the last few years calls, we have seen that there has been some sort of a delay with respect to the funding, which was there from the institutions out there. Has there been any structural change? Because frankly speaking, the interest rates are on higher side, and there are liquidity issues out there. Despite that, we have seen a good amount of order inflows which are coming in place. Has there been any kind of a turnaround which we have observed out there in the developed markets, which are leading out to good amount of order inflows? Well, I would say that the order inflow increase that we saw from our clients in the fourth quarter that ended last year, and the first quarter that just ended now, a large amount of that has been with customers that had already committed to work with us at our sites. While they had delayed certain instances of ordering due to financial limitations, ultimately their products were proceeding, and they did have the money, and they did then place the orders. So that lag effect affected us unfortunately through much of last year. At some point, when these products are succeeding in the clinic and in the marketplace, they do have to make the reorders, and they reach those points, and a lot of that growth was in that area. I'd say that the second point, we are seeing continuation of new customer additions, but at a modest pace, not at a dramatic pace. That is continuing to happen, and we're seeing that. I think all customers are being careful in prioritization of what they spend and where. I think we are seeing the benefits of a lot of our work to stay close to our key customers and make sure we're focusing on key customers that have good data and good financing. That started to play out in Q4 and Q1. Right. Just have questions a bit on the Indian consumer business. Like previously, we have been able to maintain like advertisement, promotional spending in ratio of near about 18%-20% of sales. Are we keeping on track like we are maintaining it, or we are focusing more on the profitability side? I think we're doing both. As the scale grows, the percentage of advertising in a way almost falls, right? That kind of goes into a bit of that's how it. When we are managing to do, to have a better positives, I think that's what we want to continue doing. Thanks. That's it from my side. Thank you. The next question is from the line of Dhara Patwa from Smith Limited. Please go ahead. Thanks for the opportunity. I just had one question. Like, Pfizer's plant in U.S. is hit by tornado, and there was a lot of restocking for the hospital's injectables. Are we gaining anything on that front, since we also have a lot of hospital injectable basket in our portfolio? We did. Obviously, it's a tragedy that affected that plant and that location, and we're very heartened to hear that no one was hurt. We have actually been in touch with the different market participants, and it is our understanding that while the warehouse was hit, there's not viewed to be a major shortage in the market in general, and the number of products that would be solely sourced there was considered few. We have a limited portfolio that would overlap with that, and to the extent that would have neutralized, we are poised to take advantage. Based on whatever we can tell from the FDA shortage interactions or the marketplace, we're not seeing, for the products, that we can provide a dramatic change there. Okay, that's it from my side. Thank you. The next question is from the line of Harsh Bhatia from Bandhan Mutual Fund. Please go ahead. Yeah, thank you. Morning. Hope I'm audible. Yes, Harsh. Go ahead. Yeah, thanks. Just two or three quick clarifications. In terms of the foreign debt aspect, you're saying 60%-70% of that is outside of India but gets serviced within India. That's what I caught in the earlier comments. Is that the case that you are servicing the debt in INR? Basically, the INR depreciation for the rate hike is sort of a double-edged sword for the company as a whole. I'm just trying to, like, ask your thoughts on it. Harsh, the debt is based outside India and is serviced from outside India. It is not serviced from India. It It is serviced locally from the geographies where the debt was taken. Okay. Sure, that makes sense. As a broader thought process, if we were to think about the antibody drug conjugate market as a whole. Whatever our internal thinking is, thought process is, and whatever we are getting the feedback, is that the number of players or the supply capacities are very limited in the Western markets as of now. I think so Piramal, WuXi, Lonza, these are the very handful of players in the ADC market as of today, but the demand sort of continues to outgrow the supply. What is the thought process in that market? How are we seeing the overall environment for the ADC market? We see- Yeah, I think, I think our understanding also reflects this, as you said. That's why we're actually putting in a big expansion into our Grangemouth facility, which will open in second half. Sure. Can you throw some light on this new CHG product that we had launched during the quarter? I mean, I'm not asking on the pipeline per se, but the new product that you have just launched in the first quarter in the CHG business. It's a modest contributor to revenue. We mention it because we want to indicate when our pipeline moves, and it is a modest contributor to revenue in the region, and it's progressing. I would say the majority of the revenue growth is coming from the inhalation in the period that we just reported. We continue to have other elements in our pipeline which are progressing, and we expect them to contribute in the future quarters. We can't give forward-looking comments for the reasons we mentioned earlier, but on the period that just ended, while the launch was nice, it was near the end of the quarter, and the market size is smaller compared to inhalation. It tends to be under the inhalation portfolio as a whole. This was mentioned. Injectable, pharmaceutical, injectable. Okay. All right. Thank you. Thank you. Thank you. The next question is from the line of Vivek Gupta, an individual investor. Please go ahead. Yes, thanks for the opportunity. There are a couple of questions from my side. I've seen that management is bit aggressive to grow the top line, but there is no focus on growing the bottom line. That's the first question. I also see that management is saying that they pay down debt to this right issue subscribed, but this is just near 25%, less than 25% of the outstanding debt. What are the plans to be debt-free, and what are the plans to pay down debt for the remaining amount? To see the bottom line, I think, well, being an investor, I'm not at all happy with the kind of performance company been posting, so that is another question I want an answer to. Please go ahead. Vivek, firstly, on your point with respect to the growth focus on top line and versus bottom line, I think our intent is very clear that we want to grow top line as well as grow bottom line, as we have always maintained. If you look at the performance of this quarter, and if you look at the real intrinsic performance on a comparable basis, our bottom line has improved and our operating margins have also improved. The overall debt position, as we stated, will reduce in the first instance by rights issue, but thereafter, our focus will be to kind of reduce the debt as we keep improving our overall financial performance. It's also important to acknowledge that the overall debt did go up during the period when we were doing certain investments for meeting our objectives of expanding capacities and capabilities in those areas where there was demand. Unfortunately, at that point in time, the business did also see an operating performance impact due to the pandemic and the overall geopolitical conflict that arose thereafter. Having said that, we continued our investments because we believed that there was an opportunity, and we did not want to miss the bus when the opportunity came in, and that's the reason the overall debt was at a higher level. Now we are paying down the debt in the first instance, and as performance improves, you will see that our overall debt-to-EBITDA ratio will be within permissible or acceptable levels. What is the target, what is the target management have set for themselves to be debt-free? There should be some target, right? As Vivek, as we said, we bear with us. Currently, we can't make that disclosure, which is forward-looking and not part of the Letter of Offer. Okay. The next question is: I see that it's just less than one year with the demerger from Piramal Enterprises. I see management has come up with the rights issue in the first year of the listing itself. Why didn't the management opt a route of preferential issue, and we are just keep on diluting the equity? The overall decision with respect to the entire method or the tool to be adopted for raising was discussed and deliberated at the board, and we felt that the most judicious way to do this, considering the overall time, the turnaround, and the fact that we could allow for fair participation to all shareholders, we thought rights issue was the best way to go forward. Why not the preferential route? Sorry, I didn't get that part. From an overall timeline standpoint, it wouldn't have matched with what our overall requirements were. This, this was the best suited in terms of timelines. Okay, politely disagree with that. Anyhow, the next question is: I see that there are a lot of other expenses which have been rising on quarter-to-quarter basis. I see there are marketing costs which have been mentioned, and there's a big umbrella which you have quoted down in the balance sheet and the results stating that these are other expenses. Why can't I, being an investor, when I read the results, why can't I get a segregation of the extra expenses which you are saying? Why we are being so frugal in the marketing, that we are not growing the bottom line at all? Why can't we reduce our ex-expenses there? So if you are referring to the overall promotion and marketing expenses, then, as we have stated, that we have been doing a significant spend, in the media for our consumer products business. We've in fact been doing, aggressive spend there so that we could boost top line, the results of which has been seen over the last couple of years. With respect to your details and, request for breakup of information, if you are referring to the March 2023 annual report, then all the details with respect to other expenses and breakup is available in the schedule there. If you have any specific questions, please feel free to reach out to Gagan Borana, and we'll be happy to respond to that. Actually, I've tried reaching out to Piramal a lot of times, but eventually there is no communication which has been done. Let me try it again. Being an investor, I think, there is nothing which the management is doing as of now for the investors. The rights issue, ratio, as well as the pricing, is something which are not in favor. I would request management to seriously think about doing the bottom line instead of top line, and we set aside some such aim that when we are planning to be debt-free. I think from quarter-to-quarter basis, we'll be getting onto con calls, and we will be stating that H1 is bad and H2 is good, but eventually the same story will unfold for coming quarters as well. That's it from my side. Thank you. Thank you. Thank you. We take the next question from the line of Anil Kumar, an individual investor. Please go ahead. Hi, ma'am. Can you hear me? Yes. Ma'am, I just wanted to say thank you, and we are going... We are seeing improvement quarter on quarter basis, and this will prevail going ahead. Most of my questions are answered. Maybe, my questions are same as just immediate previous investor I think you have asked. I think you have answered that in detail about the debt part, and hopefully we will become, we will reach the comfortable level from the debt level going forward. Apart from that, I just wanted to say all the best. Thank you. That is from my side. Thank you very much. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for their closing comments. Thank you, everyone. We hope that we were able to answer most of your questions. In case you have any follow-up questions or any clarification that you would need, please feel free to reach out to me, and I will be happy to respond. Thank you once again, and have a good day and weekend ahead. Thank you. On behalf of Piramal Pharma Limited, that concludes this conference. Thank you all for joining. You may now disconnect your lines.