Ladies and gentlemen, good day and welcome to Rubicon Research Q1 FY 2027 earnings conference call hosted by Motilal Oswal Financial Services Limited. 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 and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Tushar Manudhane from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir. Thanks, Sagar. On behalf of Motilal Oswal Financial Services, I welcome you all for Q1 FY 2027 results earnings call of Rubicon Research Limited. From the management side, we have Mr. Parag Sancheti, Chief Executive Officer, Mr. Nitin Jajodia, Chief Financial Officer, and Mr. Sagar Oak, Senior VP, Corporate Development & Strategy. Over to you, sir, for opening comments. Hey, thanks, Tushar, for hosting us for this earnings call. Also thank you, everyone, for joining the quarter one FY 2027 earnings call. I will take you through the highlights of the financials. We have again had a very strong quarter. This is the first quarter we are reporting since Arinna acquisition. The Arinna acquisition got closed in the month of April, and the revenue impact is roughly around INR 12 crore. There is no material impact on EBITDA. If you look at our Q1 numbers, our revenue for operations came out to INR 534 crore. EBITDA came out at INR 131 crore. PAT came out at around INR 86 crore. From a percentage growth, year-on-year revenue has grown by 51%, EBITDA has grown by 65%, and PAT has grown by more than 100%. I will request Nitin to take us through the detailed income statement and balance sheet. Thanks, Parag, and good evening, everyone, for joining this call. On the slide number six. All the numbers are in INR. Our revenue from operation for the quarter was INR 5,343 million, a growth of 52% versus the same quarter last year. Gross profit was INR 3,543 million versus INR 2,430 million in the quarter one previous year. Again, a strong growth of 46%. Our pre-R&D EBITDA was at INR 1,871 million, translating into 35% pre-R&D EBITDA margin versus 32.5% for the quarter one previous year. Our R&D expense for the quarter was INR 580 million, translating into a 10.9% R&D as a percentage of revenue, versus INR 355 million in the quarter one previous year. Our operating EBITDA for the quarter was INR 1,291 million versus INR 791 million in the quarter one previous year. Again, a strong growth of 63.2%. Operating EBITDA margin was at 24.2% for the quarter one this year versus 22.4% previous year. During the quarter, we had a one-off item in other income that was in the form of insurance claim against our goods lost in transit. After that one-time other income, the PAT was at INR 848 million, versus INR 433 million in the previous year, a strong growth of 96%. Overall, a strong performance, and EPS was at INR 5.08. Moving on to the next slide number seven on balance sheet. As Parag mentioned, this balance sheet reflects Arinna's consolidation effect as on June 30th, 2026. As on that day, our capital employed was INR 14,778 million. It was after excluding cash and cash equivalent of INR 2,408 million. The net working capital for the quarter or as on June 30th, 2026 was 114 days versus 126 days as on March 31st, 2026. While there is an improvement in net working capital days, I think we should not read too much into it because it's also a function of quarterly fluctuation. We see working capital in the range of 125-130 days as we have guided earlier as well. Our ROCE for the quarter was strong 36%, and I would like to highlight one point that this ROCE of 36% was despite close to 1/4 of our capital employed being there in investment, which are either pre-revenue or which are yet to materially contribute to the revenue. Again, the point is a strong ROCE. Now moving on to the next slide on cash flow statement. Our operating cash flow before working capital change for the quarter was INR 1,390 million. Our net cash flow from operating activity was INR 285 million. In this quarter, the cash flow was impacted because of some delay in GST refunds. These refunds are getting normalized, and we should see the impact of this in quarter two in terms of healthy cash flow for the quarter. In this quarter, the cash flow investing activities was primarily driven by our acquisition of Arinna Lifesciences and some CapEx. That's broadly on the cash flow statement. With this, I'll hand over to Parag, and he'll take us through the business performance for the quarter. Thanks, Nitin. Just touching on some of the key highlights for the quarterly performance. We'll start with the revenue growth. As I mentioned, we had a strong, again, revenue growth. As we go ahead, also we do see a strong traction for revenue. If you look at the growth has been broad-based again as our portfolio design is. Top five products contributed 39% of the revenue in the quarter one, and top 10 products contributed 55% of our revenue in quarter one. Again, this is broadly in line with our last four quarters in terms of concentration. For us, the pricing continues to remain stable because of our portfolio, which is focused on specialty and differentiated products. As mentioned again, we continue to see very strong visibility for revenue in coming quarters. Our USD revenue for Q1 was $55 million, which was up 32% year-on-year from $42 million. There is a slight sequential drop owing to the tactical measures we have taken, which we have spoken in the earlier quarters with respect to gross margins. I will explain that in detail when we go to gross margins. Q2 FY 2027 is tracking strong for sequential USD revenue growth. Coming to cash flow. The cash flow from operations was INR 285 million. Along with that, if you would just go through a footnote, this was impacted by certain GST refunds, which were stuck. In this quarter, that should normalize. Coming to the approvals for the products. We received two approvals in this quarter. The commercialization rate remains strong at 88%. Some of these products need to be commercialized in the coming two quarters. I also would like to highlight specialty portfolio contribution to gross profit for the quarter is 36%. Specialty focus underpinned by a very robust pipeline is expected to keep on growing as we have mentioned in our earlier analyst calls. Thank you. We can move to the next slide. Coming to the next slide, on gross margins and EBITDA. I wanted to highlight a few things. Again, this is in line with our commentary, what we have given earlier. Our gross margin increased sequentially by around 140 basis points to 67.7%. This is despite we have had sequential increase in key input cost, freight cost due to the geopolitical conditions. In Q3 FY 2026 update, we had flagged off that stronger than anticipated revenue traction, coupled with our own constraint in manufacturing, was leading to a larger reliance on contract manufacturing, which was pressurizing our GM and company was looking to do certain tactical measures to ensure that we are able to meet the demand. At the same time, we are also focused on the gross margin piece of it. Post that, I think the company over the last few quarters has taken those tactical measures. What we have done is we have given up relatively lower margin businesses, which has led to a marginal sequential drop in rigorous revenues, but it has led to increase in the gross margin. These tactical measures allows us to prepare better with mix of our own versus outsourced manufacturing reliance. In light of the strong demand generation or revenue traction expected over the next coming quarters. Coming to EBITDA. The operating EBITDA rose to 24.2% compared to 23.1% in the sequential quarter, which is again, despite sharp increase in our input and freight cost due to the prevailing geopolitical conditions, plus employee appraisals, which have been concluded in quarter one. For the remaining three quarters, I also want to point out in FY 2027, some specific costs which could impact EBITDA margins such as ESOP cost which is arising from the new ESOP scheme. Arinna costs which are related to kickstarting the growth for Arinna and the pre-revenue cost for the new facility which we have acquired in New Jersey and Pithampur. But despite all these cost impact, we are slightly up guiding for around 20%. Earlier, our guidance was 22%-23% on EBITDA, but now we are comfortable to revise this upwards for the whole of FY 2027 to 23%. We can move to the next slide. Sagar, if you want to just take over or take through the acquisitions we have done. Thank you, Parag. Good evening, everyone. I am on slide 11 of our presentation, and I will take you through the updates with respect to our manufacturing facilities. Starting off with Pithampur. In early July, we had informed that the FDA conducted an unannounced inspection. A Form 483 was issued with two observations, which we had said we were confident of concluding the evaluation in a timely way. The observations were procedural. We are happy to report that we filed the appropriate response and also received FDA approval on a regulatory filing after the inspection was concluded. We have pretty much delivered in line with what we had said in early July. We are on track to ramp up commercial operations at this facility from first quarter of calendar year 2027, as we had previously guided. The second update is relating to our recent announcement of the acquisition of a manufacturing site in New Jersey, U.S. We acquired this facility, which is in East Brunswick, via court-supervised bankruptcy process. The total purchase price was $2.9 million. The site has, in terms of size and in terms of footprint, it is similar to our manufacturing site at Satara in Maharashtra. But we believe it adds a completely different dimension to our supply chain with on-site or on-shore manufacturing presence in the U.S. This facility has over a decade-long track record with US FDA. In a way, I think the timing was quite good that FDA carried out an inspection in May of 2026, roughly a month before we closed our acquisition. It gives us a good and I guess an authentic and official assessment or evaluation or a due diligence almost, if you will. I can also tell you that as of today, the updated status on the FDA's website for the May 2026 inspection is a VAI or voluntary action classification. This is again, in line with our commentary when we announced the acquisition. You may recall that at that point in time, the FDA had issued form 483 with six observations, which we believe were largely procedural. We also announced that they had been responded to within the prescribed time, and I think now the current outcome sort of bears testimony to the fact that the inspection has been successfully concluded. This facility offers us a number of benefits. It is located adjacent to our distribution operations that sit within our subsidiary, AIM Rx 3PL. If you actually see at a slide later on in the deck, shows that they actually share a wall. It's also not very far away from our U.S. headquarters, which is also in New Jersey. We believe the facility from an operational efficiency standpoint brings in a fair amount of synergy for us. Our intent is to focus on specialty and high-value products from this site, as well as demand from certain customers, such as U.S. government departments, where having an on-site or on-shore manufacturing presence is an enabler. We expect commercialization to start in calendar year 2027 once we are done with implementing our quality management systems at this site. Sagar, I would just like to add also, since we're talking about facilities, quality culture, inspections, I just want to emphasize the way we have built business over the last few years with inorganic acquisitions of capabilities, let it be the facility of Satara from Cipla or this facility which we bought from Alkem in Pithampur. I think I'm very happy the way team has executed to build the right culture before these sites have been offered to FDA in record time. And within the first inspection, we've been able to resolve the issues or the points which the auditors have highlighted. We continue as we build even the facility in the U.S. I think the important part we really focus on is building the right culture and the right systems which allow us to, once we commercialize these sites. We know that we are going in the right direction from a quality and compliance perspective. Absolutely, Parag. Fully agree. I'll move now to the next slide, which is slide number 12 relating to R&D spends and their impact on revenue growth. For the quarter, our expenses were 10.9% of our consolidated operating revenue. As we have said in our previous calls, R&D spend is sort of the lifeline or the lifeblood of our business. It's a lead indicator of future revenue. And we measure R&D productivity by comparing the incremental revenue to lagging total R&D spend, which you can see on that slide. Just to quickly recap what is there on the slide. If you consider a typical development timeline, an FDA approval timeline, a product that you begin working on today will come to market about two years hence. When you consider that along with our measured approach of building market share, a product that we began development in fiscal year 2020 would typically register meaningfully in revenue by fiscal year 2024. We look at incremental revenue over a three-year time frame, and we compare it to the nine quarters total R&D spend on a lag basis. In this case, comparing 2021 with 2024, we are taking two full years of R&D spend, which is fiscal 2020 and 2021, and adding in Q1 of fiscal 2022 to account for cases where development may have been largely completed, but filing would have been done in the first quarter of the next year. By comparing that INR 165 crore of R&D spend with roughly INR 539 crore, INR 540 crore of incremental revenue is the 3.3x multiple or R&D productivity that we've pointed out. We've shown this analysis on a rolling three-years basis, 2025 versus 2022, 2026 versus 2023, and 2027 versus 2024. Just want to call out here that the 2024 and 2027 analysis is based on an arithmetic annualization of the quarter one revenue. Simplistically, for the purposes of this analysis, we've multiplied Q1 revenue by 4x. As you can see, our current R&D productivity based on this Q1 FY 2027 is about 5.5x. This is on revenue that does not include Arinna Lifesciences. We expect that the multiple will expand during the course of the year as the revenue ramps up. We already spoke about how Q1 revenue compares year on year with Q1 of last year. Coming then to our guidance. We had guided for INR 5 billion or INR 500 crore of R&D spend over nine quarters of fiscal 2026, 2027, and Q1 of fiscal year 2028. We have completed spend of about INR 251 crore out of INR 500 crore in five quarters. The current rate of spending is about INR 60 crore, INR 600 million per quarter. We believe we are on track to comfortably meet the INR 500 crore spend guidance by Q1 of next year. Also just want to call out, in our unlisted phase, we invested significantly in R&D. FY 2022 relative to revenue was just under 40%, was 39.5% R&D spend. Since that has normalized to what is still an industry-leading 10%-11%, which as we have previously stated, we will continue to hold. FY 2027 is the last year of what you see on screen as on a cumulative three-year, nine-quarter basis, reducing R&D spend. From FY 2028, you should see the impact of the increasing absolute spend as well, and I'll just clarify what I mean by that. If you look at nine quarters R&D spend, fiscal year 2024 plus 2025 and quarter one of 2026, these are all, of course, actual numbers. That is a total of INR 278 crore. Moving forward one year, 2025 plus 2026 and Q1 of 2027, again, actuals, INR 380 crore. Then there is the period for which we have guided INR 500 crore, which is fiscal year 2026, 2027, and Q1 of fiscal year 2028, which is our current guidance. I think at this point it's also useful to highlight our track record of market execution because along with R&D, the second part to this slide is revenue. If you look at how we have executed in the past on revenue generation, I'll ask you to see slide number 22 later on in this deck. This actually shows for the six products that we had showcased as part of the IPO process. We have updated data and added on FY 2026. I think what you can see here is the rank number one in all of these products, despite the competitive scenario not having changed much. In fact, there is one product where market share is a tad down, but the ranking has gone up. Another where market share is marginally down, but the ranking has been maintained. The remaining four products where ranking as well as market share have both gone up. Market execution for us is a moat, and I think should be seen hand-in-hand along with product selection as well as R&D execution. With that, I will hand it back to Parag. We would go to slide number 13. Parag? Parag, sir, this is the operator. Can you hear me? Just a minute. Parag is joining this call from U.S., so there may be some- Yeah, I think- some lag or issue. Just a minute. Ladies and gentlemen, please stay connected while we reconnect the line for Parag, sir. Ladies and gentlemen, thank you for patiently holding. We have the line for Parag sir reconnected. Yes, sir, please go ahead. Hey. Hi. So sorry for this. I think there was some technical glitch. Coming to the slide number 13, and I think this is a very important slide and a very important organizational update. As Rubicon began to grow and become a global pharmaceutical company, as you've seen that we've been working in various areas and with that also, with the growing organization, it was important also to create management bandwidth, succession planning and everything what is required to ensure that for the next phase of growth, we are completely ready in terms of people. I am very happy to state that Nitin, who is currently the CFO, is moving on to a Chief Commercial Officer role. Rohit, who will be right now as a CFO designate, but as Nitin transitions his CFO responsibilities to Rohit would move into the CFO role. Why I wanted to highlight this as an important update is because as the company is getting into newer areas, it is important the management bandwidth also keeps it in the same. We are focusing on building that management bandwidth within our company, also growing our own folks via leadership, also looking at the right talent from outside to ensure that we have the right people as we look at expanding our business. Nitin joined us in 2021. Beyond the CFO role, he has immensely contributed in building the business, let it be supply chain, IT, business transformation, organizational development. Nitin has played extremely critical role in building all these functions. From the scale we have grown, at least when Nitin joined, we were roughly around at INR 400 crore revenue. Today, last year, we closed at INR 1,700 crore revenue. He has been an integral part of the journey and a pillar of the management team. This is after five years. I think it was opportune time that we use Nitin's focus on business functions where we are seeing tremendous amount of opportunities to grow our business. I completely appreciate Nitin's efforts as a CFO, but also welcome Rohit to the Rubicon family. Thank you. We can open the floor for questions. Yes. 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 then one on their touchtone phone. If you wish to remove yourself from the question queue, you may please 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. Participants, you may press star and then one to ask a question. Your first question comes from the line of Akshay with AK Investment. Please go ahead. Hello. Hi, sir. Am I audible? I think your voice is not very clear to me at least. Yeah. Can you hear me clearly now? Yes. Okay. Thank you for the opportunity, and congratulations on the great set of numbers. My first question is about the product contribution. Currently, top 10 products contribute around 55% of the revenue. If you can give some color in terms of therapeutics area, from which therapies these products contribute and also in which stage are these products. Are they maturing or still growing? Also going ahead, how many products we can expect such products to commercialize with relatively large total addressable market? Thank you. Nitin, you want to take that? Yeah. I think if I were to talk about the growth maturity, just to tell you, we continue to see growth across. There are products which we launched a couple of years back, continues to grow. If you look at the slide 22, which Sagar talked about, the other product which we had launched eight, 10 years back, even in those products, we continue to see strong growth, strong demand. As we mentioned earlier, that our portfolio is pretty broad-based. If you look at the concentration of top five, top 10 products over the year have continued to come down. Even if you look at last few quarter, it is range bound. Okay. That is the point. It is a fairly broad-based portfolio, continues to grow. Okay, sir. My second question is about the artificial intelligence use. Due to artificial intelligence, does our efficiency increase in terms of product development cycle and R&D? In Rubicon's perspective, are we currently leveraging AI and how AI does improve our efficiency and all business processes, especially in terms of CMO on pharmaceutical companies? Yeah. Sorry, go ahead, Nitin. Yeah, Parag carry on. I would put AI automation, other processes, technology, I would say, and we adopt technology wherever. And we are very actively adopting technology wherever we see that technology can value add in the work we are doing in terms of increasing efficiency, increasing compliance, reducing errors. That's one of our guiding principles which are there, and we continue to invest and find use cases of doing it in the appropriate way. I do not want to specifically just comment on AI because AI is a very evolving area. We are definitely looking at it. But in pharmaceutical setting, regulatory is a very important aspect. Whenever we adopt technology, the important aspect we also need to think through is, we have to give regulator the confidence that whatever we are using has enough checks and balances which allow that technology is giving consistent, predictable, and robust results. We are definitely adopting it in the right processes. But again, it's a very large field, and we don't want to specifically comment on just AI part of it. Okay, sir. And lastly, on the product pipeline, how many are in the phase I, phase II, and phase III in the development cycle, and how many molecules are commercial as of now? I think we do not comment specifically on phase I, phase II, phase III. But in terms of, I think there is a slide which is there. I think, Sagar, you can point it with number of products which are approved. And then we have also mentioned our commercialization rate is strong at around 88%. And if you looked at the DRHP at that point of time, when we had filed a DRHP and we had mentioned 60+ products were at the advanced stages of development, which were qualified by the appropriate consultants after looking at the data. Okay, sir. Thank you so much. Parag, that number was 63 at the time of filing RHP. Yeah. Just to add to that, Akshay, we usually do not comment on product-level developments. Pipeline is something that we prefer not to go into too much detail on because it is commercially sensitive. But if you look at slide 28 of the current quarter's earnings presentation, it provides an overview of how the portfolio has evolved with time. In terms of how we expect portfolio to impact business, that is what we are talking about as we went through slide number 12 on R&D productivity. But at this point, we would not be commenting further on that. Okay, sir. Fair enough. Thank you so much, and all the best. Thank you. Thank you. Thank you. Your next question comes from the line of [Siddharth Mehandru] with CWC. Please go ahead. Hi, Parag, Sagar, Nitin, and the team. Congratulations again on a great set of numbers, and on the consistency of delivering. Few questions from my end. One, the rate of approval seems to be marginally slowing down while revenue growth obviously continues at a very healthy pace. Is this a fewer, bigger strategy now, or how should one think of your pipeline in terms of the molecules you will pursue and the molecules that you get approved. That was question one. Question two is, in light of the acquisition in New Jersey, how should one look at the manufacturing footprint playing out between U.S. and India? In that context, how should one think of gross margins? The third one was on the churn in your specialty portfolio, where you classify products only being specialty if they have zero or one competitor. So what's the churn there? And if you could give us some idea on how many products do you have currently in this that you would classify as specialty products. Just one other clarification. On the capacity slide, you mentioned that there is headroom for expansion. If you could clarify on what the capacity utilization is and what do you mean by headroom for expansion, is there more land available? How should one think of your expansion on the existing facilities? Yeah, those were my questions. So I think the first question, let me take that, Sagar, on the portfolio approvals or approvals slowing down. So that it's more. Again, this is as per the plan we have or what we were expecting in our, as we were expecting approval. More importantly, we are very conservative so that when we look at building revenue forecast from that further. So I think right now, I wouldn't comment the approvals have slowed down. Also, I think you alluded that we are going to take fewer approvals, but I think you were referring to that less approvals and bigger numbers. I don't think that's the right way of putting it. I think we still follow a very clear portfolio strategy. So I think numbers of how many are coming, what are coming, I think is just indicative. But I think I can assure you that we are on track to the approvals which we have, on which our forecast and the plan is built on. Nitin, you want to take the question on gross margin and- So Siddharth, if I understood correct, your question around gross margin, can you please repeat once? Sure. In context of the U.S. acquisition of the manufacturing facility, how do you see the manufacturing footprint playing out between U.S. and India? How should one think of gross margins in context of the manufacturing split between India and U.S.? Okay. If you look at the acquisition of U.S. facility, okay, that is a fairly strategic move for us because it gives us lots of avenues. It gives us ability to enter into government VA business. It gives us ability to be closer to our customer. It gives us flexibility to manufacture the certain strategic product in United States. Also we mentioned that it also gives us advantage in terms of being a next door facility to our warehouse in United States. From that perspective, this is a valued addition, and we don't see margin, I would say, getting diluted because of this. Okay? We definitely see that it will be in the overall scheme of thing, should be margin accretive only. Just to add, Nitin, I would just say, Siddharth, I think what Nitin was just summarizing in a simple way is, it's a very strategic move then, I think. When we look at financials, obviously, from a strategic perspective, an extremely important move we have done. We obviously don't see impact on gross margins or, again, our forecasting, we build some of these things into it. What we have focused at also, that we are going to focus on value-added differentiated products which will create a business for the government. Also, this will create risk diversification for us in terms of our customers getting some of these very important products from two sites, one in India, one from the U.S., and mitigating any risks in terms of supply chain. I think, though no financial impact, it has very high strategic impact, which customers can view very positively and could give us some, I would say, some premium in the market when you do something like that. Siddharth, I think the other question you had was around composition of specialty pipeline. I think it is obviously sensitive from a competitive standpoint. We have tried to strike a balance of providing thoughtful disclosures to help investors track in the long run without jeopardizing sort of the business itself. We share on an ongoing basis what is the share of gross profit of the specialty portfolio? Once a year, we also talk about number of specialty products that we have. I think we want to be consistent with our disclosures in that sense. I think at this time we wouldn't be sort of expanding set of disclosures around specialty. Sure. The last one was on the clarification on the headroom for expansion on the slide for the manufacturing facilities, if you could share that. Yeah, so- Sagar, go ahead. Headroom for expansion, you are referring to at Pithampur, Siddharth? Give me a second. I will tell you the slide number I am referring to. This is the slide that- No, number- ...all your manufacturing facilities, all the four manufacturing facilities. Yes. This is slide number 30. Yeah, absolutely. If you look at the site in Pithampur, which is a pretty large, nearly 30 acre area site, of which today we are using barely 5 acres, 6 acres. We have significant room that we can expand at that site. Just for sort of order of magnitude, I mean that amount of space is, Nitin, correct me if I'm wrong, greater than the footprint of all of our- Yeah. ...sites put together. In addition, I think Nitin in the slide has mentioned, we have a facility in CSN, which is for niche dosage forms, which is kind of modularly ready, which is there. Again, there is headwind to grow this business, from a manufacturing standpoint. We have different areas we are having ability to grow the facilities. Very clear and very helpful. Thank you so much. I will join the line queue again for more questions. Nitin, congratulations on your new role. Thanks. Done. Thank you. Your next question comes from the line of Nishant Maheshwari with Grow Wealth. Please go ahead. Thank you for the opportunity and congratulations to the management for the fantastic set of numbers. My question to the management is related with the year-on-year additional cost of material consumed. As I see that it is roughly INR 19.83 crore and additional purchases is roughly INR 19 crore. While our additional sale is INR 181.9 crore, does it reflect the substantial value addition on account of transfer pricing mechanism that is transferred to the U.S. entity and from there we are selling? Because what I can see is that on standalone basis, there is a decrease in the closing stock of roughly INR 10 crore, while on a consolidated basis, we have an incremental closing stock of INR 7 crore. And further, how we will manage if in the worst case scenario U.S. tariff gets imposed and how we will Because we are certainly 97% exporting to U.S. Okay. I think the math which you explained, I've not been able to follow that number. Your underlying question seems So two things. One is, you mentioned that how are we prepared to take care of our sales if there's any tariff in future. Okay. And the other point you alluded on with respect to the transfer price. Is that correct? Yeah. Because what I can see is that with the additional expenditure of INR 38 crore in terms of purchasing and cost of material consumed on standalone basis, our incremental sale is roughly INR 181 crore. And that seems to be very, in terms of volume number, I don't see that there is a substantial growth unless and until we have increased the prices of the product substantially. So that's what I was feeling, but clarity from the part of management, which I feel that you must address. I think if I look at So from a gross margin perspective, I think as we have mentioned earlier, if you are comparing, let's say- YoY. ...on a YoY basis, we explained in the last few quarters that how our reliance on the outsourced manufacturing has gone up in the last three, four quarters. That has had some impact on the gross margin of the business if you compare versus the last year's quarter one. The other thing, as far as gross margin is concerned, I will tell you, as an organization, we are very conscious of our margin profile of the business. As Parag alluded that we have sort of taken practical measures to let go of relatively lower margin business. So that is what I can say in terms of our focus on gross margin. In terms of your math, I think maybe we can connect offline and understand what you are trying to convey. No, I am just trying to convey that with an additional increase of INR 38 crore, our revenue has jumped up by INR 181 crore YoY. Sales, I mean. So if I see as a layman, there must be a substantial increase in the price of the product through transfer pricing and the stock has decreased. On standalone basis, it has decreased by INR 10 crore, while on consolidated basis, I am seeing that there is an increase in the stock by INR 6 crore, if you see the changes in the inventory. So I am unable to understand how this has been in terms of volume jump or a price jump. I do not know that. Again, it is a combination of various things. But let me first tell you that as far as the transfer pricing is concerned, in line with a very high standard of governance with respect to the transfer pricing, et c, we are fully compliant and no sharp movement in transfer pricing mechanism. The other thing is all of these numbers also a function of various things in terms of our own manufacturing, outsourced manufacturing, sale of traded goods, own manufactured. Again, as I suggest, I think we can take this offline to understand your math and then clarify. Sure, sir. Sir, further, one more question, last question. That if we start the facility, that is which we have acquired from Alkem in calendar year, I mean January to March. So what can be the incremental margin as against the outsourcing? I mean, how much we will save more in terms of percentage? So we will refrain from quoting any specific margin percentage. But what I can assure you that our own manufacturing is both from a gross margin as well as overall margin profile perspective, is far more efficient. Okay. Thank you, sir. Thank you. Your next question comes from the line of Harsh Kundnani with Aionios Alpha. Please go ahead. Yeah. Hi, Parag and team. Congrats on good set of numbers. A couple of very small questions from my end. One is that I think in the opening remarks, you mentioned that Arinna's contribution to top line and EBITDA for the quarter. So the top-line contribution was INR 12 crore and I think EBITDA you said was flattish. Just wanted to clarify, did I hear that correctly? Yeah, so you are right. The revenue contribution was close to INR 12 crore and the EBITDA contribution on that INR 12 crore revenue was not material. Understood. Does that mean that our base business margins were in fact higher than the reported margins because of, if I just adjust it for this acquisition? Yeah, if you do that math, you are right. Slightly on that INR 12 crore, there will be some slight impact on the overall margin provide. But I think overall, considering order of magnitude, Harsh, it is probably not going to have too much of an impact. Understood. How do you look at Arinna's margins going forward in the next few quarters? Yeah, as we had mentioned earlier on, I just reiterate that we are looking at this Arinna business in various phases. As we had mentioned that in the first phase, our focus is to put the growth, identify and fix the growth levers. That will be the focus for this financial year. In the next phase, we will be focusing on beating IPM growth, how do we drive growth in that business. After that, we will look at profitability. That's how we look at various phases in Arinna journey. Harsh, if you look at the EBITDA guidance that we have given, that is obviously at a consolidated level, taking into account what Nitin just mentioned in terms of growth investments in Arinna. I think what we are guiding towards is after taking into account sort of the growth and the build-out that we've mentioned previously. Understood, Sagar. Thanks, Parag, Sagar, and Nitin. That's it from my end. Thank you. Congrats and all the best. Thanks, Harsh. Thank you. The next question comes from the line of Tushar Manudhane. Please go ahead. Yeah. First of all, congratulations on multiple fronts, may it be financial performance, may it be getting successful compliance at Pithampur site, and starting or establishing the U.S. manufacturing footprint. In fact, connecting to U.S. manufacturing footprint, we would like to sort of understand how you got this facility in a way at just a couple of million dollars. If you can just sort of explain that part. Sure, Tushar. Thank you. If you look at our approach to M&A and M&A strategy, I think we have focused on sort of looking at deals where we can create long-term value. We are prepared to be patient because we believe M&A by design is not relating to next few quarters, but more sort of long term in nature. Whether you look at our past acquisitions, whether it was the center in Canada, which was in Impopharma, whether it was the manufacturing site in Satara, which was five years ago and by all accounts has been reasonably successful. In this case, I think, this acquisition process ran fairly long, I think well over a year and a half. It was a court-supervised bankruptcy. I think we were able to stay the distance. The fact that we already have an adjacent site over there, I would say, gave us a little bit of an advantage in the process because we are well connected in that ecosystem. But, yeah, I think it also boils down to, I guess, culture, right? I think our approach in terms of how we scout deals, how we pursue deals, and get them over the finish line. Got it. Tushar, just to add to it, I would say it is also the ability to assess, right? How we can build on these acquisitions, right? So deals come at a certain value, but I think more important work we do is how do we see that value and build on that to create significant revenue and profit multipliers on all our acquisitions we have done till now. From the start to now, if you take any acquisition, we have been able to build multiple revenues and profitability on those capabilities. Got it. Secondly, while the quantum of R&D sort of increases, and as guided, like INR 500 crore and subsequently, it remains as 10%-11% of sales. Just would like to understand if this is going to be, while not sort of getting into product specifics, and rightly so, but is this going to be certain product-specific R&D or is this going to be spread across the portfolio? Tushar, I think it will be again a portfolio approach. When I say portfolio, we look at various parameters, including risk, probability, execution ease, maturity of the organization in doing those products. All put together, I think we will always have a portfolio approach. It is never going to be that we are going to concentrate only on few big bets which are there, but it is going to be a combination of various threshold where we are looking at long-term high innovation products, then we are looking at some other products which could be in the range where we are able to execute and have a competitive advantage. So it will always be a portfolio-based approach. Got it. Lastly, while there was a discussion as far as manufacturing facility is concerned, just if you can sort of elaborate why so many facilities across so many sites again. Yeah. Tushar, if you've seen, we've grown facilities over a period of time, and always when you've grown the facility, the underlying theory has been or underlying basis has been our portfolio. We have not done acquisition because this site was available or that site was available or it was available at a certain cost. We've always had an underlying thesis of our pipeline, and that has guided us towards the next acquisition or what we have been looking at. When you look at right now when we have facilities, Ambernath has been the core where we started with, where we are doing oral solids and nasal sprays. When we acquired Satara, we had a liquid portfolio which we were doing with CMO. Then we got those products in-house, and then we are building nasal capabilities there. Which could be a backup to our Ambernath facility. Again, risk diversification also is extremely important for protecting revenues and also creating capacity. Then we had Indore. Indore, as we have said, we've been seeing strong traction from a revenue perspective for our existing products. Also we wanted to add additional capabilities like hormones, steroids, high-potent products. Plus one single site which gave us room to build. So that it's very important that we build a big capacity from a perspective of at one facility we can have very, very large batch sizes or we can build in some modern technology to deal with continuous process manufacturing. That's where came Alkem. The CSN piece or what Nitin mentioned in his balance sheet is looking at or we are looking at some niche dosage forms in our pipeline, and hence that facility has been prepared modularly to ensure that when we are looking at these niche dosage forms, we have a separate facility from a compliance and management perspective. That's, I think, the way we have looked at building a footprint. Also the U.S. one we already discussed, so I'm not again going back to the U.S. one, but this is the way we've looked at each of these facilities. Also, we have to look at that manufacturing outsourcing came into the whole play along with that was because our manufacturing is again driven by portfolio and CapEx will always lag sales. We are doing CapEx based on this revenue capability and visibility we have, and we will keep that mix of where we are doing. We have risk diversification also is important, and also for every important product, having a couple of sites which ensure that we are offering our customers a business continuity. Yes. Thanks a lot for that elaborate explanation. That's it from my side. Thank you. The next question comes from the line of Prateek Shrivastava with Nivesh Wisdom. Please go ahead. Thank you, sir, for giving me this opportunity. First of all, congratulations on great set of numbers and the progress you are making on all the multiple sites. Sir, my first question is on the U.S. revenue. We thought that the Indian revenue grew 9.7%, but U.S. grew only 4%, and you mentioned there because of we walked away from some lower margin U.S. businesses, and that was in Q1. Now, what is the latest status here, sir? Have you got some new higher margin business now for our U.S. subsidiary? Nitin, you want to take that? Yeah. If I understood your question correct, you said that when we have given away technically some lower margin business, then have we got the higher margin business in place of that? Correct. What is the latest status? Because given we walked away If you look at couple of things, if you look at our share of specialty in the overall gross profit, okay, that has gone up with increase in revenue. And we have technically given away a relatively lower margin business. So in a way, yeah, that's correct. Again, also look at that if we are letting go of a relatively lower margin business, okay, in that choice making, we will do that only if we are securing a higher margin business. So you're right. Fair enough, sir. My second question is now on the Pithampur site. So I see there is around close to INR 1,500 million capital sitting there to give revenue. And the EIR still awaited. Now, what is our capacity utilization curve in near term, like around six, nine months to a year versus, let's say, a long term, two, three year out? Yeah. I think first, we don't want to jump the gun. We have mentioned that we are looking at quarter one for commercialization or ramp-up from there. For that, we have enough capacity which is there. Plus, as we mentioned, the site is roughly around 30 acres. We have only utilized 6 acres. Even with the current building incrementally, if we build the site, I think there is enough headroom for capacity expansion fairly quickly. I think there, the next two, three years, I think the capacity, the facility is extremely There's a lot of land or footprint available to grow that business from Pithampur. I think just in one line, I think there is enough capacity available at Pithampur in the long run and in the short run. There is again, we'll be scaling up the facility gradually in the next 9- 12 months. For that also, we have enough capacity. Got it. And sir, my final question again is on in Q4 con call you gave the number that there were 24 products under FDA review. But this time around, the number is not there in terms of ANDAs, NDAs. Any specific- Yeah. ...reason what the change has been gathered? Yeah. Yeah. Last time, if you recollect, we had specifically mentioned that these numbers we will give once in a year. We shared that in the last quarter, and then we will be sharing that number once in a year. Okay. Got it, sir. Thank you very much, and all the very best. Thank you, Prateek. Thank you. Ladies and gentlemen, we take that as our last question for today. I now hand the conference back to the management for closing comments. Thanks. Thank you Motilal Oswal, Tushar, and Sagar for hosting this call. We thank all the participants who joined us in this call, and we look forward to speaking to you in the next earnings call for quarter two. Thank you. Thank you, members of the management. On behalf of- Thank you. Thank you. On behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you everyone for joining us, and you may now disconnect your lines.