Ladies and gentlemen, good day, and welcome to Piramal Pharma Limited Q3 FY 2024 earnings conference call. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gagan Borana from Piramal Pharma Limited. Thank you, and over to you, sir. Thank you, Seema. Good evening, everyone. I welcome you all to our post-results earnings conference call to discuss our Q3 and 9-month FY 2024 results. Our results material have been uploaded on our website, and you may like to download them and refer them during our discussion. The discussion today may include some forward-looking statements, and these must be viewed in conjunction with the risks that our business faces. 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. 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 earning call. We had started FY 2024 on a positive note with healthy order inflows, specifically in commercial manufacturing of on-patent molecules in our CDMO vertical and steady growth in our complex hospital generics and India consumer healthcare business. We are pleased to share that we have continued the momentum in quarter three as well, with 14% year-on-year revenue growth, EBITDA growth of 94%, and about 700 basis point year-on-year improvement in EBITDA margin. Further, adjusting for an exceptional item of INR 32 crore related to a product recall initiated by our third-party supplier, we have delivered a PAT of INR 35 crore during the quarter, compared to a net loss of INR 90 crore in quarter three FY 2023. It is also satisfying to note this performance has been broad-based, with our CDMO business growing at about mid-teen rate during the year, and the CHG business and India consumer business delivering steady double-digit growth. All the businesses have seen year-on-year improvement in their profitability, driven by operating leverage, normalization of raw material and energy costs, better product and market mix, and efforts of our cost optimization and operational excellence teams. Given that a large part of our CDMO expenses in the CDMO business are fixed, the reduction of a mid-teen growth in this business has helped us deliver an improvement in EBITDA margin during the year. In terms of our debt position, we have seen an improvement in our net debt-to-EBITDA ratio. Currently, it stands at about 3.4x, compared to 5.6x at the start of the financial year. We have used the major part of our proceeds from the rights issue to pay down our debt and are looking forward to further improve our leverage position. On the sustainability front, we have taken a target to reduce our scope one and scope two greenhouse gas emissions by 42% by FY 2030, compared to FY 2022, which is in accordance with the 1.5-degree trajectory suggested by SBTi. Further, we've also taken the target to reduce our scope three emissions by 25% by FY 2030. We're working diligently to minimize our resource consumption, conserve biodiversity, provide a safe workplace for all our employees, to deliver quality products and services, promote diversity and inclusion in our workforce, and enhance the quality of life of the communities around us. Moving on to business-specific highlights, starting with the CDMO business. In our CDMO business, we continue to see good momentum and order inflows during quarter three of FY 2024. The new developments in commercial orders, excluding the existing multi-year manufacturing relationships, grew by 60% in the nine months FY 2024 compared to the nine months FY 2023. These recent order inflows have a high quotient of innovation related work, especially for commercial orders for on-patent molecules. During the quarter, we received a multi-source antibody drug conjugate order involving monoclonal antibodies. This order involves three sites, Yapan for mAb, Grangemouth for conjugation, and Lexington for fill finish. Given the pickup in the CDMO business, we are seeing an improvement in profitability driven by operating leverage, favorable revenue mix, normalization of raw material cost, and cost optimization initiatives. In terms of regulatory compliance, all our recently audited facilities by the U.S. FDA have an EIR. We have also successfully closed over 140 customer audits in the nine months of FY 2024. We are also scheduled to have a MHRA inspection at our newly commissioned multipurpose state-of-the-art ADC manufacturing facility at Grangemouth in February 2024. In terms of key challenges for our CDMO business, incomplete recovery in the biotech funding environment impacting the pace of order inflows, especially in the early stages of discovery and development, is a key thing to watch out for. Also, clinical and regulatory attrition of our customers' products is a material challenge in the CDMO business. Moving on to the complex hospital business. We continue to deliver steady double-digit growth during the quarter and nine months of FY 2024, mainly driven by our inhalation anesthesia portfolio. We are seeing good volume growth in our Inhalation Anesthesia portfolio in the U.S. market, which is partially being offset by lower market prices due to increased competition. We continue to maintain our leading position in the U.S. Sevoflurane market, with significant market share gains in the last three years. In the non-U.S. markets, such as the U.K., France, Vietnam, Thailand, et cetera, we are seeing increased traction for our Inhalation Anesthesia products. Given the healthy demand for our Inhalation Anesthesia products, our three Inhalation Anesthesia facilities in India and the U.S. are operating at capacity, with a focus on operational efficiency and timely execution of the planned capacity expansion. In the intrathecal segment, we continue to command leading market share in the U.S. Our brand Gablofen continues to be the number one ranking baclofen prefilled syringe and brand in the U.S. In the other injectable segment, we launched three new products in the U.S. and European markets during the quarter. We're also building a pipeline of 25 injectable products, which are in different stages of development. The current addressable market size of these products is about $2 billion. In terms of key challenges for this business, geopolitical risk and associated supply chain challenges is a key issue to watch out for, apart from adverse cross-currency movements as we sell products in over 100 countries. Moving to our India consumer healthcare business. During the quarter, nine months, our ICH business delivered a steady double-digit YoY revenue growth, driven by new product launches and growth in our power brands. We have also seen an improvement in our profitability as planned on account of operating leverage as we get closer to INR 1,000 crore of annualized revenue. We continue to invest in media and trade spends to drive growth in our Power Brands. Promotional spends during 9 months at FY 2024 was 13% of our ICH revenues. Our Power Brands grew at 12% during the nine months and contributed 41% to our total consumer healthcare sales. Our key brands, such as Little's and Lacto Calamine, grew at about 18% in the nine months. However, growth in Tetmosol was impacted due to unseasonal rains and erratic weather patterns in the summer. Over the last three years, we have launched 100 new products in the market with a reasonable success rate. During quarter three, FY 2024, we've launched 6 new products and 3 new SKUs. New products launched in the last 24 months contribute to 13% of our consumer business sales. Our sales on e-commerce platforms are growing well and complement our presence in general trade. E-commerce sales are about 16% of our ICH revenue, and we have a presence across more than 20 e-commerce platforms and also have our own direct-to-consumer website, wellofy.in. To summarize, I'd like to say we've so far delivered a healthy performance in the first nine months of the financial year. Our CDMO business is growing at about a mid-teen rate, while our CHG business and our India Consumer Healthcare business are delivering steady double-digit growth. All of our businesses are showing year-on-year improvement in their profitability. We continue to maintain our best-in-class quality record, and are taking multiple initiatives to integrate sustainability into our operations. Q4 is historically the strongest quarter for us in the financial year, and we expect to continue this momentum, subject to a stable macro environment and access to logistics and distributions given the current geopolitical situation. We'd also like to reiterate our earlier guidance of high-teens year-over-year revenue growth in H2 FY 2024, accompanied with a meaningful margin expansion. With this, I would like to open the floor to a Q&A. Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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. We take the first question from the line of Niharika Agarwal from InCred Research. Please go ahead. Hello. So my question is that, could you provide some revenue guidance for the ADC unit? ADC. ADC. I don't think we provide at that level of guidance at such a level. ... 'cause I think it's only one of our sites. However, qualitatively, we would like to state that we see that the overall market demand for ADCs as an offering remains strong. If you look at the current deal activity going on on the innovator side, it suggests that a lot of innovation money is going into this segment. That's part of what led us to go forward with the expansion at the Grangemouth facility, which we believe should be able to demonstrate increased order flow, win rates and subsequently, revenue growth in the coming quarters and years. What capacity utilization are you expecting for the new Grangemouth facility? We've just done the expansion, Niharika, and what we've added is two new suites to the facility. We had three initially. So it's a meaningful expansion in capacity, and we'll see how the capacity expansion picks up. Okay. Thank you. And, could you share what market share do you have for this area right now? And, are you expecting the market share to pick up as well? I don't think we disclose technology-level market shares. However, I would like to note that we were one of the earlier entrants into the conjugation space through the Grangemouth facility, and therefore, we have a long track record, and we think that we are, well positioned versus our competition to continue to win our fair share, but we don't publish specific, individual technology market shares. Okay, thank you. Thank you, ma'am. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead, sir. Thank you for the opportunity. Hi, this is Akash here. My first question is, any timeline for commencement of ADC contract? Can you please share that? I think we have multiple ADC contracts. The work with the one that we've mentioned, I think, has already started. Correct. The work has already begun for the one that we mentioned. It's already started. Okay. How many molecules are under phase III clinical trials, which can support the growth prospects for the company? So there are about 35 as we updated, as on FY 2023. We update this number annually, so in the next quarterly call, we'll be updating the, you know, pipeline. So the last updated one is 35 molecules in phase III. Okay. So, next question would be, how much cost optimization can be expected over the next 12-24 months? It's possible to quantify the reduction in OpEx from current rate? So, we're not specifically calling out a number of absolute value of cost optimization, Tushar. But, what we can assure you is that the cost optimization programs, which we began at the beginning of the financial year, are all holding in good stead, as you can see from the margin expansion that has happened, and it will continue through the next year as well. Okay. Any impact on logistics costs due to Red Sea issue? Currently, there are constraints. At the same time, our supply chain and logistics teams are working to ensure that we are carrying adequate inventory or shipping in advance to ensure that the shipments reach the customers on time. The situation is a little fluid right now, and we are evaluating it. Of course, our attempt will be to try and push out the consignment. Okay. And the last question is, how much tax rate do you expect in FY 2025? While we are not making a forward guidance right now for FY 2025, the tax rates for the peak are 25%, effective tax rates for India and U.S., which are the largest in terms of our profit share. Okay. Thank you for the opportunity. Thank you, sir. We take the next question from the line of Bharat Gupta from India Insight. Please go ahead. Yeah. Hi, thanks for the opportunity. I have a couple of questions. The first is in regard- Yeah, Bharat, go ahead. Hello? Sir, the line for Mr. Bharat is disconnected. Can we take the next question, please? Sure, sir. The next question is from the line of Praveen Rathi, from Praveen Rathi and Associates. Please go ahead, sir. Hi, good evening. I have two questions. Are we actively participating in the bidding process of HLL Lifecare? If yes, then how the debt will be managed? And the second one: Are we commercially manufacturing SGLT-2 Dapagliflozin? Yes, sir. So one is, I think our focus right now, we have said, is on organic revenue growth, operational excellence and cost management, and reduction of debt. So I think that's the focus of the company right now. In terms of, Dapagliflozin, yes, we are, manufacturing it. We are not bidding for the HLL Lifecare. Is it being discontinued by the government? I think right now our focus is on, as I said, organic growth. Okay, thank you. Thank you, sir. The next question is from the line of Abdulkader Puranwala from ICICI Securities. Please go ahead. Yeah, hi. Thank you for the opportunity. So just couple of questions from my end. To start with, on the gross margin front, so for this quarter, if you see, your gross margins were slightly lower as compared to what you had done in Q2. So though, you know, the top line was largely identical, what explains this dip in gross margins on a sequential basis? So, Mr. Abdul, this basically, we had called this out last time that, we had a significant increase in inventory, and that led to an overhead credit in the COGS, which we had said would, unwind, in H2. So this is basically the timing thing. Our standard gross margins are between 64%-65%, and that's what we remain at. Okay, so this number should largely sustain in Q4 and for next year, FY 2025? We're not making a guidance for FY 2025, but for FY 2024, that's right. Sure. Understood. Understood. And, so secondly, on, you know, the breakup what you provide on, the revenue side, so possible to provide a split of your CDMO business between, you know, what is, led by innovation for the quarter and what is for the generics, including the API business? I think our plan is to give that in an annual basis, 'cause we see that there can be within quarter, abnormalities, and we find it probably more salient to give once a year, along with our pipeline update that I think Gagan mentioned earlier in the call. Okay. Okay. So, I mean, so just to, you know, then better understand your CDMO growth of just 11% or the 13.5% to what you have recorded in the first half, when so some ballpark color as to, you know, where the growth is coming from. Is it coming from the new molecules which are getting added in the clinical trials, or it's more led by the 18 commercial molecules, on the innovation side, or, you know, is it the generic piece which is pulling it? Yeah. So it's a fair question, and we, we're actually quite excited that a lot of the growth is happening in the recently launched commercial innovative molecules that we're supporting. And I think this is consistent with the messages we shared with our year-end numbers, where we saw an increased order flow in that category, and we're seeing that now flowing through into the revenues. So we would expect that to be a relevant contributor to our growth. All right. And so lastly, you know, in the previous concalls, we have highlighted the business for the potential of achieving EBITDA margins, at least by, in a range of, say, 16%-18%. So how soon you think, you know, this kind of an EBITDA margin is achievable? Is it a long-term aspiration or something which you can achieve in the next 2-3- years? So, as we mentioned, we are not making a forward guidance at this point, and we don't really give a segment-level margin split, and we'll cover that later when we make a specific guidance for the future. No. So I was not looking for any specific, segment link, but, on an overall basis, your consolidated EBITDA margins, I mean, you know, how should we peg in, in terms of, you know, the way to look at it? Is it, you know, this 13%-14% to what you have reported in the last two quarters, quite sustainable, or you see a meaningful increase, you know, to happen in the next coming years? As we have guided that we will see a meaningful increase in the EBITDA margins over the previous year, and we stand by that guidance, and you will see an improvement overall at the end of the financial year as well. I think also going forward, we should see improvements in EBITDA margins as we get more operating leverage through revenue growth. So I think in the future, we should see higher EBITDA margins. All right. Just final one, if I may. On the leverage part, I mean, so in terms of our aspiration, where do we see that, you know, leverage landing up in, say, another 2-3 years? Would it be close to, say, like, 2x or 3x the EBITDA, what you do in the next couple of years or any ballpark, you know, color on that would be again, very helpful. As you would have seen, we've consistently improved the overall leverage. We were at 5.6 when we began the year. We are now down to 3.4. As a first step, we are targeting to bring it down to less than 3 in the immediate term. Let's start from there, and that's the target that we have, to bring it down to less than three. All right, sir. Thank you, and wish you all the best. Yeah, just for the benefit of all, last quarter, we gave a guidance for H2. For the guidance on FY 2025, we'll have to wait till the next quarter till we get some clarity on the order inflows. So we are not making any forward-looking guidance for FY 2025 this call, but maybe in Q4, we will be giving more clarity on FY 2025 outlook for the guidance. Thank you. We'll take the next question from the line of Ankit Shah from Canara Robeco AMC. Please go ahead, sir. ... Hi, thanks for the opportunity. To start with, I wanted a bit more granularity on the demand front. I understand that right now, biotech funding environment is weak, but are you seeing any kind of traction in the, you know, RFQs or inquiries? And secondly, so you said, you said you are seeing good traction on the commercial molecules. So does that give a more longer-term visibility now with more commercial molecules under execution? So there's some color on that. I'll answer the second part first, which is that a large part of our strategy is pivoting to innovative work on the development side, integrated projects on the development side, and differentiated offerings in those integrated projects on the development side, is all a mixed shift towards what we believe to be more attractive, stickier business. And as these clinical programs mature and become commercial, the predictability of the once launched commercial programs is higher than the development programs, which are subject to binary risk. So overall, this is, we think, seeing some of the lagging indicators of our strategy, and so we think it's a good thing. If you look at our order intake and the RFP inflow that we're seeing, we've seen through this difficult period, strong continued inflows from the large pharma client base, which have more stable balance sheets. For the emerging biopharma, which would be in the area that would have to tap the funding markets, it has been a difficult period for them over the last, let's say, 24 months. While some with good data and more advanced programs have been able to get funding over the period and funding has occurred, it has not rebounded to date to a higher level than what it has been, let's say, over the last 2 years. And so we look forward to it improving in the future, but we can't predict exactly when that would be. And so for the near term, we're expecting more of the same in terms of the funding environment, and any improvement over that in our mind would be a an improvement in our outlook. Got it. Got it. So related to that, I understand it's early days yet, but recently there was a proposed BIOSECURE Act, you know, which looks to delink with China. So, what are your thoughts on that? You know, would it stand to benefit Piramal's business? Any initial thoughts would be helpful. We see the geopolitical and geographic preferences of our customers being complex and varied. We see some clients who would like more onshore production, and for them, their shores may vary, but it would largely be in the U.S. or Europe. We see other clients for whom they have larger volumes and cost of goods is important, and they want to de-risk from China, and then we see increased inflows for customers with that profile. And we see other customers who continue to be comfortable with China as a place to source from. And so we see the entire mix, and our go-to-market strategy is not to try and convince the clients to go to a particular place, because what we found is they typically know where they want to go, and then we provide an offer from the location that they want at a price that is competitive and a technology level that's competitive, and a service level that's competitive for that geography. And so we see demand in actually both our overseas and our Indian offerings at the moment. Fine. That's helpful. Secondly, can you tell me what was the net working capital, where it stands at the end of December, and has there been any inventory build-up ahead of Q4 dispatches? So yes, as we mentioned, that there is a significant increase in inventories because we have a high quarter four. Net working capital is roughly about INR 2,400 crore at the end of December. It is almost similar to what it was in the earlier quarter, in September. Got it. Lastly, on the cost side, so, I see that your costs have come down significantly, the other expenses. You mentioned some of the reason, but, should we expect this run rate to continue going forward or any, any, cost that can increase due to, new, facilities, ramping up or anything? Should... Can, can the current run rate, in other expenses continue going forward? To the extent of costs which are variable and linked to production, they will obviously vary depending upon the quantum of production and operations that happens during the quarter. Otherwise, we are trying to do our best to keep costs at the optimum levels, and therefore, all the operational excellence initiatives and cost optimization initiatives are running in parallel, and we will continue. If you are referring to a decrease in the other expenses for the quarter, I would just want to highlight that last year in quarter three, we did have a provision for a receivable, which was one-off, so that may not be a correct comparison. But otherwise, the current expense that you see is more or less, you know, in line with what we want to operate at. Got it. Those were the questions. Thank you so much. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to two per participant. Should you have a follow-up question, we request you to rejoin the question queue. We take our next question from the line of Ranveer Singh from Nuvama Wealth. Please go ahead, sir. Um, hello? Hello, Mr. Singh, we are unable to hear you, sir. Hello, Mr. Singh, can you hear me? Sorry. No, so sir, if you are in a headset, I would request you to switch to your handset, please. Sir, Mr. Singh? Yes, madam. Yeah, sir, please go ahead with your question. Yeah. So my, my question was that, in segment 2017, last year, last corresponding, these numbers seems to have been restated. So, when we see the CDMO business was, 1,021 crore last corresponding quarter, but this time, it is 1,010 crores. Similarly, I see the difference in other segment revenue also. So is, there has been some restatement there? Sorry, repeat your question. I was not very clear on your question. If you could please repeat or if you are not in a place where you can speak, maybe you can email and we'll separately respond to you. I was not very clear on your question. Okay, okay. I'll, I'll come back into work. I think I think there's some problem. Thank you. The next question is from the line of Vinod Jain from WF Advisors. Please go ahead. Good evening. Even in a benign environment, and even with all the operational excellence achieved overall, the profitability of the company is constrained. I mean, if you take the one-time charge into account, the profitability is almost nil. That leaves nothing for the shareholders. So my indication is whether it is the cost reduction which is the answer to the question, wherein IT could be a key driver, and the administrative costs and the overhead in the other expenses could be curtailed further. I would like to have some thoughts of the management on this. So, firstly, in terms of the subdued profitability, as you would see that, we are making good progress quarter on quarter in terms of improving the revenues, improving the capacity utilization and optimizing the cost, which is leading to that improvement in margin. Obviously, this can't happen overnight and has to go through the process. As the revenues increase hereafter, we will see further improvement in margin and therefore, improvement in overall profitability. The points that you referred to with respect to admin and other expenses, all of them, of course, are being looked at, and those are continuous programs that we are running to optimize costs across the organization, and those will continue. Yeah, whether IT could be a key driver? Of course. We, I, we are working on digitization wherever possible, and, that's a continuously running program, across all our businesses. Very well. That answers my question. Thank you, sir. The next question is from the line of Gaurav Arora from Equirus. Please go ahead, sir. Hi, a couple of questions. The first is related to the CDMO business. So how much of your CDMO business would be from the small biotech firms? And how much would it have shifted from small biotech to, let's say, larger firms or generic pharma over the last few quarters? So roughly about 33% of our business comes from biotech. It's almost like an equal split. Large pharma is 33, biotech is 33, and the other balance is the mid-sized pharma. I think we give those demographics annually. That's right. Within the year, I think we probably had a bit higher growth in the large pharma this year than the emerging biopharma, for the reasons we mentioned in the demand discussion earlier. That will probably reflect when we give the updated annual numbers, for the categories. In the next quarter, we'll be putting out all the pipeline details and the FY 2024, you know, customer breakups, so you'll get the answer there. But yes, directionally, it's one third, one third, one third. Sure. The next question is related to the CapEx. So, we've just completed a large CapEx of $157 odd million over the last couple of years. So how much would you need to invest further for growing the business? And have the CapEx plans for FY 2025 been fixed? So, we're not making a forward guidance on FY 2025 CapEx yet. For the current year, we have spent about INR 16 million, and we expect, maybe another INR 20-25 million to happen in quarter four. So that's, that's what we see as the current set of investment. Should we expect the CapEx intensity to reduce a bit in FY 2025, or should it, I mean, be at- The last part of the growth CapEx which we wanted to do, we have done, so there'll be some reduction, but we'll give you a more specific guidance, on that later. Thanks. Last question on the ICH. And so with the annualized run rate now surpassing the INR 1,000 crore, would it be fair to assume that ICH business would have low- to mid-single-digit margins now, now? Or would it be fair to assume that it will keep improving herein, or would you keep investing in ad spends or new product launches and prioritize growth over margins there? It has single-digit margins right now, and as we gain scale, I think we'll like to focus on improving profitability as well as growth. But profitability first. ... Sure, thanks. Those were the questions. Thank you. Thank you, sir. Next question is from the line of Bharat Gupta from India Inside. Please go ahead, sir. Yeah. Hi, I think I'm audible now. So a couple of questions. One, on the order book space, so can you quantify, like, what kind of order book we are maintaining in the CDMO space? And if possible, can you bifurcate it across the API and the innovation space? So we don't give a quantitative number. In terms of, API and formulation split, it is more in favor of API, maybe 60/40, 60% API, 40% formulation. And in terms of split between innovation and generic, the, as the last reported one, 45% of our CDMO revenue comes from innovation-related services, and 55% is from generic. So when I say 45%, it includes discovery, development, and commercial manufacturing of all patent molecules. Our overall multi-year trend, as I think we've communicated in our prior materials, has been that the innovation mix has been increasing. We would anticipate with the current performance, that when we next update, that should show movement in that direction again. We would see that we're growing faster in that category. Right. I believe there has been some sort of a supply constraint with one of our peers closing down two of their sites. So do you believe that the supply constraints are benefiting us in terms of gaining market share? I think, overall in CDMO, there is actually quite a lot of capacity, so... and market share doesn't move that easily. I think customers obviously have choices, and we, we need to win our business, and we feel that we do win more than our fair share of business that comes up. But they do have choices, and on any given project, there'll be a long list, a short list, and then finally, they'll choose between three to five players, and everything goes out to bid, and we win more than our fair share, we think. But I don't think that there's a shortage of capacity and choices. Like, my question was particularly with respect to the capability which we have, particularly if we try to compare it with our peers. So are we at par, or we might have to incur and bring on new platforms so as to be at par with them in order to take the market share from them? We continue to look at where we need to make investments in our CapEx. I think the first priority remains on maintenance and compliance CapEx, and then the next thing would be on capacity and capabilities. As mentioned earlier on the CapEx discussion, we just completed some major expansions across our network, and at this stage, we're looking to try and maximize the benefit and utilization of those, and that's why you see a more muted CapEx number for the year overall. We obviously look site to site and look for gaps to address, but we do feel, and I'll reiterate, that our win rates, as we see them when we're on the shortlist, are reasonably good versus our competition. We think that we're winning more than our fair share, which is showing up in our order book and in our revenue growth. Right. My last question pertains to the Indian healthcare space. So, I can see in the presentation that there has been a reduction in respect to the advertising spend, and that, particularly with respect to last nine months, it has been close to 13%. So are we expecting an increase over Q4, FY 2024, or this is a sustainable level, and we can focus more on the profitability side? I think Q4 will see a little more higher advertisement spend, especially it's a seasonal time for some of our products, so yes, it will be a little higher. Right. That's it from me, sir. Thank you. Next question is from the line of Chintan Sheth from JM Financial. Please go ahead. Hi. Thank you so much for the opportunity. I just had one question. So if I look at the interest cost in the financials, so QOQ, that is still around at similar levels of, say, INR 105-odd crores, but the net debt at the end of previous quarter got reduced to INR 3,800 crores. So can you just explain what has happened there? Chintan, it's largely rate driven. As you're aware, almost 78% of our debt resides outside of India, and our debt is actually benchmarked against all the benchmark reference rates, so whether it's the LIBOR, the SOFR, the Fed rate. And all of these, if you look at between March and December, have increased in the range of anywhere between 9%-17%. Also, in India, if you see, whether it's the treasury bill or the bank reference rates, MCLR have also increased between 3%-7%. So, for the interest cost to go down, these benchmark reference rates need to come down first, and that will help reduce the overall interest cost. Got it. Understood. So if you can just also highlight what's the gross debt number as of December, what proportion would be overseas, and how are we planning to... are we, like, targeting that the better cash flows will be reducing that first? What's the strategy? So, as I mentioned, nearly 78% of our debt resides outside. The rest are dollar-denominated debt, which is serviced locally. The gross debt is roughly about INR 4,500 crores. The idea, as I mentioned, is through internal accruals, given the fact that the EBITDA is improving, the overall CapEx spend is also now reducing. We will see internal accruals for being able to retire debt. Our target would be to bring down the debt-to-EBITDA ratio from the current levels of 3.4 to about 3 to begin with, and then reduce thereafter. Okay, fine. Understood. Got it. That's it from my side. Thank you. Thank you. Thank you. The next question is from the line of Shubham Shukla from Voyager Capital. Please go ahead, sir. Hi, good evening, everyone. I hope I'm audible? Yes, Shubham. Okay, so most of my questions have been answered already. Just to like this on, funding scenario in U.S. biotech firms, is it like, bottoming out? Is it better than last quarter, or can we expect a bounce in next one to two quarters? So we tracked it- Overall scenario. There are different reports you could look at from other from analysts that track this category. But I would say that the funding has continued at a subdued rate over much of last year, and while there's always discussion about whether next month will be the month that it ticks up, I wouldn't say that there's been any material improvement in the overall funding. And when we look at funding, we look at across the private funding, the IPOs, the follow-ons, and the pipes. And I'd say across that aggregate funding for our customer base, it has continued at a meaningful level, but significantly below the peak, and it hasn't really rebounded. Obviously, everyone's checking January, and there's been some notable IPOs in the U.S., but two good IPOs do not a trend make, and at this stage, we're assuming more of the same until we get enough data points to say there's a signal. Okay, fair enough. Just one small another question. This exceptional items we adjusted for, like, INR 32 crore this quarter. If, like, there's some more colors, like, in detail, what was exactly this about? Yeah, Shubham. So, during the quarter, one of our suppliers for our complex hospital generics business had reported that there was a certain quality and sterility issues with respect to their product, and the supplier had triggered a recall of those products. As per our agreement, we were entitled to indemnity for the cost with respect to the recall and the unsold products and other associated costs. Our subsidiary had given ample opportunities to the supplier to pay for those, and since the supplier was not able to pay for those, we instituted a formal insolvency proceeding against them. And, accordingly, the claim which we had made against them, we have made a provision for that in the books, which has been classified as an exceptional item. Okay. Okay, thank you. Thank you so much. Thank you. Next question is from the line of Alok Dalal from Jefferies India Private Limited. Please go ahead. Hi, good evening, everyone. Peter, on this new integrated order for ADC, so can you tell us which stage is this order? Is it stage three, or NDA filing, or commercial? Oh, so this, this is an early stage filing. What we've seen generally is that as the ADC sector has become much more attractive as a destination for innovation work, we've seen meaningful uptick in emerging biopharma or smaller companies targeting these assets. And for those companies, the integrated offering and the speed and the simplicity we can offer them is very important. But these would be on the earlier stage in terms of the development cycle. They would not be late stage. This would be on the early side. And we expect as a market, when a particular technology area becomes hot, you get a little bit more private funding into that category, more single asset startups or, you know, single digit number asset startups targeting these. That category, we think we're well suited to meet those needs, because they want the virtual, simplistic, simpler, faster offering, which we can provide. Okay. And Peter, you know, the company has, over the years, built multiple capabilities. ADC is one. There is High-Po APIs, peptides, controlled substances. So which are the areas that excite you? Where is Piramal differentiated, has an edge over others, and that can be a significant growth driver for CDMO, say, over the next 3-5- years? So I'd say there's several that we're excited about. I think the onshore High-Po API offering remains a strong offering for us, and we think it'll be a meaningful growth driver in the, in the medium term, as you said. I'd say that our, if you look at our containment-oriented fill finish offering in the U.S., that's also an area where we think we have some distinctive capabilities, and we continue to get strong order inflow. You mentioned ADCs, both on a standalone conjugation basis, where we have a long history, and then for a more medium period of time, where we're doing that combined with fill finish, and as I mentioned earlier, more recently with, the, the mAb. So now we can offer all three, and even in other cases, we're offering linker payloads. So we can now offer the fully integrated offering there in the ADC category. As we shift to India, I think we're quite excited with our peptide capability. This used to have more of a generic orientation, but we've been repositioning that, and we expect in the future to have a services innovation angle, and we think the peptide, not a lot of CDMOs would be offering. Obviously, there's some incredible, much larger competitors, but we think that we have some capabilities that put us at the table. And I wouldn't also underplay that there are not a lot of innovative-oriented CDMOs in the Indian delivery market, with a combination of science, track record, and efficiency profile that we can offer, and that's actually driving a lot of our growth this year. And so the innovation offering in the India market with the science and quality and track record also. So I gave you a bit of a long answer, but we're actually, part of what excites us is it's not just one thing. It's, we have several engines to grow with, and we think that they collectively will allow us to serve more innovators, more integrated projects and with these differentiated offerings. Yeah, sure. No, thanks, Peter. Also, I think so if we take 3-5 years, then the current mix of CDMO is 55, generic, 45 innovation driven. Is there a target in mind that the company has about a change in CDMO mix, which can then provide investors with more sustainable revenue and a much better margin profile? So, I mean, the obvious next milestone that we would like to achieve would be being more than 50%. We can't give you a specific time frame as to when that would happen, but that would be one meaningful, it's just a mathematical number, but it's a meaningful tipping point we'd like to be able to demonstrate to the market. We're not at the point where we can say that we've achieved it, but obviously, we'd want to do that. But I'd say that overall, we'd expect our mix shift to continue to move upwards on the innovation side. As you mentioned, we think that while we obviously still benefit from selling in the off-patent area, and that will always be a meaningful part of our offering because of certain other benefits, which we've discussed before, we would anticipate continuing to aim to have a sequential improvement in the innovative mix with all the benefits you described. Okay, great. Okay, thank you for taking my question. Thank you. The next question is from the line of Agam, from Plutus. Please go ahead. Hello. Thank you for taking my question. My question is regarding the seasonality bias in our business. We're expecting, better numbers on the absolute numbers on the top line and the EBITDA this quarter. Just wondering if, if there's some spillover residual billing that's going to happen in quarter four, given the numbers are quite flat, in quarter two and quarter three. Could you throw some light on that, please? So historically, for us, quarter four is the biggest quarter. And even when we gave out a guidance in quarter two, we had specifically called out that it is within H2, it is Q4, which is specifically the biggest quarter. So for us, the seasonality for within H2 is also more skewed towards quarter four. So yes, you will see a bigger number in quarter four in terms of revenue. Okay, thank you. Thank you. The next question is from the line of Pawan Bhatia from Nova. Please go ahead. Hi, am I audible? Yes. I have two questions, actually. One is, is there, has there been any restatement in the segmental breakup? Because if I see the CDMO revenues right now show about INR 1,010 crore, versus in the Q3 result, it was, of FY 2023, it shows INR 1,021 crore. So has there been any restatement? No specific restatement. At the most, there might be an FX-related movement. We will separately provide you the detail of this, if you can send us a query, Pawan. Okay. Okay, thank you. And our second question is, is there going to be any price trend in inhalers? Are they going to change in the subsequent quarters? You mean to say inhalation anesthesia? Yes. I mean, it is a generic market where there is price pressure, so there is competition in the market. So yes, I mean, pricing is- Generally, if you look over a multi-year trend, pricing in this particular market has a modest annual degrowth or reduction. One of the benefits we have in this business segment that you just asked about is that we're vertically integrated, and we have a multi-year cost program that has allowed us to maintain, over a long time horizon, despite price decreases, a reasonably attractive gross margin or contribution margin. And so that counterbalancing component allows us to maintain the necessary profitability, and we anticipate working with these levers to continue that in the future. Okay, got it. Thank you. Thank you. The next question is from the line of Omkar Kamtekar from Bonanza Portfolio. Please go ahead. Hello, thank you for taking my question. So firstly, what I wanted to ask was with respect to your consumer business, the consumer business, so power brands approximately contribute 41% of our revenues for the nine months of our 2024, and it's been steady. How do you see this number moving, and is this number going to move meaningfully ahead, and higher? What are the outputs there? I think overall, yes, I think that is the idea. I think just, this year for one of our brands, we had some unseasonal rains which kind of impacted it during the season. But I think in general, the trend is for us to put media and advertising and, investment behind the power brands, and we should see higher growth. So any of the non-other brands that could migrate into the power brands and that might... Is there something like that could happen over the medium term, near term? Could that be also a case? Right now, the focus is on our five current power brands. I think we want to get them to significant sizes, and so there's some way to go yet. Okay. And the consumer business itself is also now closing in on INR 1,000 crore of revenues. Yeah. Would that be something sustainable over a period of time, say, ahead? Yes. Or could that, would this also maybe be volatile? Because the competition in the OTC market with other peers, how are we faring? And do we see any challenges in that segment, in this segment as such? I agree there is competition in the market, but it is a sustainable business. We've been, you know, investing with kind of our distribution and feet on street. ... in, you know, chemists and, you know, stores and modern trade in across India. And so overall, I think we see it as a sustainable business. Okay. And, could you, could you just share the market share number for the, sterile generics business? How much of is the, is that some, is that a disclosable number that we have? I think we disclosed it last quarter. In Sevoflurane, we have got 44% market share in the U.S., and in intrathecal baclofen, we have 78% market share in the U.S. These are two, you know, significant products we have, and we have disclosed this. Okay, okay. How is the pricing environment in the U.S. with respect to our products? Are we seeing any headwinds there or maybe resolution of the headwinds that we can be out of so that the outlook becomes better over a period of time? Is there any color on that? Can you please share? I think overall, as we said, in a generic market, there is year-on-year price declines, and we're trying to manage overall margin improvement by through vertical integration for it. Okay, okay. And lastly, so our gross block as of the last reported number as the financial, FY 2023 number is, INR 3,500 crore odd. And, this facility that will actually be coming on, how much of that would be capitalized, in the books? So the gross block, what will be the number now? So, while we have not published a balance sheet for December, and the next one you will see in March, a significant part of the increase in the gross block has come in on account of the CapEx that we have incurred at Grangemouth, CapEx which we closed at Riverview, the CapEx which we did at Turbhe, and in vitro capability that we did at Discovery Services. Those are the four big ones which we have done over the last year, which has led to an increase in the gross block. So- As I mentioned, the total- CapEx number. CapEx we expect is anywhere between $80 million-$85 million for the year. 80-85. So what would be the asset turns that we can see for current, for FY 2024 year? But on a continued basis, what will be the fixed gross asset turns that we can expect one... So it's currently in the range of 1-1.1, but will it be sustained at these levels ahead also, or would it improve? No, it obviously has to improve, and the target will be to take it to 2%-2.5%. Of course, that will vary by size, but the asset terms will improve. We are targeting 2-2.5, but that would be. We are not putting any timeline towards, but 2-2.5 is our target. Yes. Over the next couple of years, the target will be to move in that direction. Over the next couple of years. Thank you. Could you just finally I'm sorry to interrupt you, sir. May we request you to join the question queue? We have multiple participants waiting for their turn. Thank you. The next question is from the line of Kunal Tokial from Fair Value. Please go ahead. Hello, can you hear me? Yes, please go ahead. Yeah, most of my questions have been answered. I just had one left. You mentioned that in the ICH vertical, the contribution of the products launched in the last two years is 13% to the top line. So do you expect this ratio to improve or stay the same going forward? I think we expect it to be around the same, because as we, as the products, scale and, and grow older, in a sense, they move into our, existing products basket. All right. That was all from my side. Thank you. Thank you, sir. We take the next question from the line of Ruchita from iWealth. Please go ahead. Hello. Very good evening. Congratulations on a great set of numbers. So my question was mainly on the side of margins. So, when we are saying that, you know, obviously there is a part of operating leverage that would play out if my sales, you know, increase. But is there a chance that my gross profit margins would improve further from here because of a better product mix? Or do we stay that this 64%-65% of margin, you know, should only be sustainable? So, while there are different factors that impact the gross margin, as you rightly mentioned, product mix can play an impact. At the same time, yield improvement, backward integration, cost optimization initiatives can also help improve the overall gross margin. And sometimes just the depreciation of the rupee can also play an impact on the gross margin. So there are multiple factors that can play out, and obviously, our attempt will be to move in the direction of improving gross margins. We'll work towards it, but as we mentioned, there are certain businesses where there could be pricing challenges, there could be impact, it might even balance out. So that's possible, Ruchita. Okay, sir. Okay. But is there any target like, you know, that you would like to reach to, like, in terms of your EBITDA margins or gross margins, if you could, you know, just give a little sense on that? No specific target. I mean, obviously, we will try to improve it as much as we can, but we can't put a number to it, because it completely depends upon the kind of product mix, the kind of orders we get. It depends upon the customer mix. So all of that, there are variables that will be beyond our control as well. Okay. And sir, when we talk about this high teen sales growth, do we also include the other income in it, when we speak of that, or is it just- It's just the revenue number, including the other, other income. Right. Because right now we've been growing at around, you know, at the lower end of it, like, low teens, basically. So how do we see this, you know, improving? Because, there's just one quarter left. So, you know, where do you see the growth coming from? Ruchita, as we said, quarter four for us is the biggest quarter. A large part of sales does happen in quarter four, and there, the growth rate will be higher, which should take us to closer to where we have said we will be. High teens? Yes. This high teens growth, do we see this in the next 3, 4 years as well? Like, not the next year immediately I'm talking about, but, you know, on a longer term trajectory, if I want to see the company? We're not making a forward guidance, at this point in time, Ruchita. We'll come back on that. Okay, sir. Okay. Okay. Sure. Thank you, sir. Thanks. Thank you. Ladies and gentlemen, we take that as the last question for the day. I would now like to hand the conference over to Mr. Gagan for 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 clarifications, please feel free to reach out to me, and I'll be happy to respond. Thank you, and have a good day. Thank you. On behalf of Piramal Pharma Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.