Ladies and gentlemen, good day, and welcome to the Q3 FY23 earnings conference call of Strides Pharma Science Limited. As a reminder, all participants lines will be in a listen-only mode, and there'll 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. Abhishek Singhal. Thank you. Over to you. A very good evening. Thank you for joining us today for Strides earnings call for the third quarter and nine months ended financial year 2023. Today we have with us Arun, Founder, Executive Chairperson, and Manager here, and Sundri, Executive Director, Finance and Group CFO, to share the highlights of the business and finances of the quarter. I hope you've gone through our results release and the quarterly investor presentation that have been uploaded on our website as well as stock exchange website. The transcript of this call will be available in a week's time on the company's website. Please note that today's discussion will be forward-looking in nature and must be viewed in relation to the risks pertaining to our business. After the end of this call, in case you have any further questions, please feel free to reach out to the investor relations team. I now hand over the call to Arun to make the opening comments. Thank you, Abhishek, good evening, everybody joining us today on our call. Let me first start with general overview of Strides. I know there will be specific questions around Stelis Biopharma, which I'll lead to in a bit. As to that Strides is concerned, we are extremely pleased with the progress that we are making Q on Q, in bringing back the company to its normalized EBITDAs in the next couple of quarters. As you'll recall, we started off the year with an EBITDA of less than INR 4 crores. We are now at INR 120 crores in less than three quarters. A lot of that is driven by our focus across the group post-COVID in terms of how we reset the company in terms of our focus on portfolio, price discipline, margins, and also our keen eye on our cost structures. All of this is playing to. If you see the Q3 numbers, revenue numbers, slightly depressed in comparison to Q2, it was predominantly because we had 0 revenues on our institutional business. This is quite normal as the institutional business is awarded every three years. Like we alluded in the last quarter, we have already completed our last allocation in H1, which led to a very hefty H1 numbers on our institutional business. I'm also now pleased to let you know that we have been awarded similar volumes in terms of our institutional business. We've received our awards. We will commence supplies to the institutional business starting from Q1 for a three-year contract. Adjusted for that, it's been a great quarter. Typically we have 15-20 crores of flow through gross margins on a quarterly basis on that business, which should have lifted our EBITDAs significantly higher than the 120 crores that we reported. Generally, significant milestones this quarter. First time we have crossed $100 million of revenues in our regulated markets. We continue to grow well in our U.S. portfolio, reporting yet another highest quarter. We have obviously done better than our Q2 numbers. I must say, however, we benefited from a significant seasonal opportunity, which was quite unusual. Strides does benefit from these opportunities, but that also gives us the ability to further fine-tune our portfolio and exiting lines that don't make profits. In the U.S., we still have over 100 approved ANDAs, that go through rigorous processes of cost improvements and robustness before we relaunch. Therefore, we have very strong pipeline for the next two-three years, to continue the momentum of growth, that we are showing in the U.S. Teasing, of course, with the improved gross margin. Historically, our regulated market delivers 60% gross margin. We are very close to those numbers. Over the last few quarters, we have improved gross margins by 700 basis points. As we hoped and committed, we did receive the debt payments from Australia. We received it just a few days before Christmas. In the next update you will see a significant drop in the gross debt to net debt. We continue to focus on improving our balance sheet quality, reduction of our debts, which is going well. One must also appreciate the fact that we have added $60 million of revenues in the U.S. in the last nine months with no incremental cost, no incremental increase in our working capital lines. Our U.S. revolver for close to about $80 million has now been renewed for another 5 years, showing the strength of our U.S. business, as that revolver is based on our U.S. operations. Chestnut Ridge, which is a facility we acquired from Endo, it's now very close to breaking even. It still does have an underrecovery that we believe we will solve for by the end of this financial year, and that should then add further momentum to the U.S.. Business. We guided in Q2 after a depressed other regulated markets business that will come back to the historical numbers, and that was just a timing issue. We are also pleased to today announce that our other regulated market businesses, especially led by strong rebound in our B2B strategy and our U.K. businesses, are now back to traditional quarterly throughputs, and in rupee terms, this is now again our highest quarter that we reported. Overall, the regulated market delivered a very strong $100 million plus revenue. We strongly believe that the fundamentals of the business have been solved for. We have now sorted for network optimization, cost improvements. We have brought our cost levels to the levels that we were in FY21. This is in line with what I mentioned in Q1 of this year. We have now moved from almost negligibly EBITDA to closer to 14%. We are chugging along, and I'm sure that we will add more to these numbers in the coming quarters, and we get back to our historical numbers in not in the distant, but in the future. Key of course here is the continued momentum of our relaunches of our approved AI portfolio. We have several new programs and B2B partnerships that we're building out in Europe. You will see a significant drop in the emerging markets because as you would note from our notes in our Q2 results that we have deconsolidated Universal, our Kenyan operations, which deliver approximately INR 200 crores of revenues per year. This is more to do with local strategies in terms of securing more business. We still have beneficial interests have not changed. However, from an accounting standpoint, we stopped consolidating UCL as we communicated earlier. With the pickup of the institutional business from Q1, we think we should be back on track to what we felt would have been the end of or more or less the end of the reset strategy for Strides. Overall, it's been a productive three quarters. We have grown steadily Q on Q with renewed focus on our governance and how we run this business on our capital allocation and also our focus on product portfolio and profit maximization. You'll see more of this playing through because you'll also appreciate that several of our cost improvements included significant cost reductions of our overseas operations, which leads to several actions leaving the costs that we carry through the financial year. All of that will be behind us as of the end of Q4, and that adjustment itself should add another 2%-3% to our EBITDA. I'm confident that, not only will we have a very strong comeback in FY24 as previously guided, but we will also be in line with our historically which is approximately in that 18%-21% range for the next financial year. I'm excited with the opportunities that Strides has set for itself. We have a very motivated and dedicated team delivering outcomes as chartered, and I'm very happy with our progress. Our progress at Strides may be marred or overshadowed by the results related to Stelis. This is something that we've been guiding the street for several quarters. As we have taken several prudent positioning in Stelis as we move from a product company to a pure-play CDMO. I'll discuss more details in a little while as we get into Stelis. Overall, strict reduction, we have now reduced debt by close to about INR 600 crores, and we'll continue to focus on reducing debt as we complete certain actions that we are focused on, which will not have any impact on our revenues or our growth strategies. We hope to give you more updates in the next quarter and the full year update. Separately, in terms of our cash flow generation, Patrik and Alok will add in his comments, but we have now become a cash flow positive company, which is great considering that we had several quarters of challenges. That's. So we are focused on capital allocation and our tight governance on our cash flows as we start to bring improved inflows. That momentum should continue given that we are not refilling a lot of our inventory given that we had a large inventory position when we started off this year. Having said that, we think that we will continue our focus. We will improve our margin expansion, and you'll see more important growth coming from other regulated markets as we stabilize the U.S. business, mainly focused on profit maximization and launching the right products that add to those. The philosophy of our previous philosophy of niche product selection and margin expansion. I know that there will be several questions on Stelis Biopharma, we have endeavored to put in a very detailed note. Let me give you more color around this. As you probably are aware that Stelis Biopharma is an investment in our biopharmaceutical division that we have invested for several years. During COVID-19, we expanded our biopharmaceutical business to setting up a new multimodal facility which could make, amongst other things, vaccines, got into this contract with the Russian Direct Investment Fund, which is the sovereign fund of Russia. We received all permissions to export the product. Given the challenges, geopolitical situation, our take-or-pay contract has not been executed. Although we have now received extension of inventory timing until end of June, we have made prudent provisions in terms of all COVID-19 related inventories as we now become a pure play company. Consequently, we have also written down approximately some IP value of close to about INR 100 crore on products that we do not intend to continue developing, which we have been developing for the last seven to eight years as we believe that the value in Sterilics comes from its pure play CDMO strategy, and that is what is playing out well. I'm also very pleased to let you know that we've had three very important inspections by the USFDA. Two from the USFDA and one from the EMA. The only one product that we have developed got EU approval, and we are now in the process of licensing that product to a very large European company. We will make an announcement in time for our results in the next quarter. Promoters have brought in along with investors of Stelis Biopharma close to INR 650 crores, have made commitments of INR 650 crores of capital to ensure that we meet all our operational and debt obligations and COVID-related provisions and also to meet all our obligations. We have reduced debt quite significantly in Stelis Biopharma. Debt at Stelis Biopharma will now drop down to INR 700 crores by the end of March. we now have a CDMO order book for the next year in excess of INR 300 crore, now giving us the confidence to guide the market that Stelis Biopharma will be EBITDA positive from next year. As you know, this is a high 90% gross margin business that we operate in. Post our USFDA approvals, our requests for quotes have been very significant. Our RFPs issued now runs into several million dollars in terms of both contracts and also our engagement with Big Pharma and large biopharmaceutical companies have been very significant ever since we got our FDA approval. These have been challenging times for biopharmaceutical companies globally in terms of compliance, and we are standing to gain from these opportunities. We know we owe an answer to the Strides shareholders on what we intend to do with Stelis. I'm now pleased to let you know that after much deliberation, we have appointed a global banker to evaluate the strategic options, including a listing option for Stelis in the near term. We will have more concrete and final updates for our stakeholders with our FY23 results or earlier. We strongly believe that while Stelis has significant headwinds, not waves making and waves lighting, the shift to the CDMO business is playing out extremely well. We have added several new customers, and we are benefiting very significantly from the shortages of certain types of capacities that are still challenging the industry. We are very happy with the new customer list that we are onboarding. With this rather longish opening commentary, I will suggest and request the operators again let the questions so that we can address as many as we can. I have with me, Parag and my colleague who will address questions on finance. Parag, do you want to say anything? Okay. We've covered a little bit of the debt book, but if there are subsequent questions on finance, we'd be more than happy to discuss that. Thank you. Mike, can you take it from here? Sure. Thank you. We will now begin the question and answer session. Participants who wish to ask a question may press star and one on your 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'll wait for a moment while the question queue assembles. We have the first question on the line of Rishabh Jain, an investor. Please go ahead. Hi. Thank you for the opportunity. I have two set of questions. Firstly, on the U.S. business. The U.S. business seems to have hit its revenue outlook now with the current quarterly run rate. How should we think about this business over the next two to three years in terms of approval and new launches? Secondly, on the other regulated markets It has bounced back strongly during the quarter. Are there any one-offs or we can assume the growth trajectory to continue? What will be the key drivers for this business going forward? Are there any specific geographies we should watch out for? Thank you. Thank you. The U.S. business at 63, as you rightly said, is in line with our excess run rate range, $200 million-$250 million of revenue. We have two now considerable quarters, so that is the base number that you can bake in, which is what I mentioned in the last quarter call. From here we already have over 100 ANDAs approved, through our acquisition through Endo, which we are in the process of relaunching from several of our sites. We are not dependent on any new product approvals because as in April, you would recall that I had mentioned that we are not investing in R&D in the U.S. because we have a very strong portfolio. That answers your second question that we have diverted a lot of the R&D capital to the other regulated markets, which is where the build-up is coming with several filings and approvals that are expected and we are getting on a regular basis. Our other regulated market business of $39 million has got no one-offs, and that is a number that we have hit at least three or four quarters, consequently, I mean previously. That is a good base number to keep and there are no one-offs in that number. Okay. Got it. Thank you. Thank you. We have the next question from the line of Aman Shah, an advisor. Please go ahead. Hi, sir. Thank you for the approach, opportunity. Am I audible? Yes. Hi, sir. I have a few sets of questions. First is, the emerging market business has seen a significant decline during the quarter. Can you help us understand the reason for the same and what's the outlook for this business in the coming quarters? The second question is, also, how does this place fit into the overall strategy, you know, the overall strategy, given that it's now approximately at 6% of the overall revenue? Yeah. The emerging market, I explained in my opening statement that the emerging market is typically a market that we call for our Trinity South Africa business and UCL, which is our Kenyan operations, which we deconsolidated starting beginning last quarter. Adjusted for that, our emerging market is typically about, it's not more than about INR 400 crores a year in the institutional business. Aman Shah, could you kindly mute your line? There's some disturbance coming from your line. The emerging market business should be estimated at INR 400 crores. In that INR 400 crores, almost INR 250 to INR 200 or INR 250 crores is institutional business. This business is awarded to us once in three years. The contract was completed in H1 of this financial year. We have just won our awards a couple of weeks ago, and we have retained our volume share. We still believe this business. You should, in your evaluation... I mean, in your calculations, you should consider the emerging markets to peak at INR 400 crores, and you'll see that run rate from Q1 of FY24. Okay. Thank you for your answer. Thank you. Next question. We have the next question from the line of Vishwas Nandani, an individual investor. Please go ahead. My first question is regarding gross margins for the company. We have seen a sharp bounce back in our gross margin in our Viwa business and I think same has expanded by 800 basis. What is driving this margin expansion? Is it sustainable? How is the overall pricing environment across the key markets? My second question pertains to our operating leverage. We have seen an operating leverage playing out for the business over last three quarters. What is driving this improvement in operating cost margin expansion? From a long-term perspective, where are we in our journey on the margin expansion path? These are my two questions. Thank you. Right. Our gross margin is sustainable at 57%-58%. This is the second quarter running that we are delivering these numbers. I don't see any reason why this will be any lower than this. It could be one or two percentage points lower once in a while, especially when the emerging markets come up, the margins are not so much. Having said that, our journey is to get back to our 2019-2020 numbers, which is approximately 61%-62%. We have moved from 50- 57, but 57- 61-62 will be a slow climb, but we'll get there in a couple of quarters. Our OpEx leverage is coming directly from our oversight of OpEx. We have reduced significantly our network costs across the globe. We are being supported, to be honest, also by a reduced freight cost because of the significant drop in freight costs. That's playing out to our budgetary numbers. This is what is playing through. We are able to reduce every line item of cost, be it HR cost, be it warehousing cost, logistics, network. We have been very successful in getting back the cost structure to where we should be. It's a frugal business, so we've brought frugality back to the business, and that's what we are focusing on. Okay. Thank you. Thank you. Thank you. We have the next question on the line of Rohan from ICICI Securities. Please go ahead. Hello. Good evening. Are you audible? Not so much, Rohan. You may want to try again. If you could go I mean, off the speaker phone, it'll be much more clearer. Yeah. Please go ahead, Rohan. Better? No, it's still not clear. Can you come closer to the microphone, please? Yeah. Just one second. Hello. Is it better now? Yeah. Go ahead. Go ahead. Yeah. Okay. I have a few set of questions. Firstly, does the current write-off in the GES account for all the inventories? Go ahead with your questions. Rohan, your question is not very clear. Do you need to come off the microphone or if you could join back again? Yeah, I'll come back in. Thank you. Take the next question, Michael. We have the next question on the line of Nitin Agarwal from DAM Capital Advisors. Please go ahead. Hi. Thank you. Nitin again. Arun, on the U.S. business, you know, now given where we are, and with whatever changes that you see in the landscape, I mean, how do you see, and the 15 new launches that you're planning out from an exit perspective, how should we look at maybe probably next year or if you could give us some sense on that? Nitin, one thing that we are doing is while we are introducing, you know, the 15-20 products, we are also churning out our existing products that don't add any sense to us given the competitive landscape of certain products or. That is effectively getting the company back to the traditional Strides model. It's not that I'm suggesting that, you know, 250 with 15 other products will get to $300 million next year. That's not what I'm suggesting. What I'm trying to tell you is that, 55, the $250 million being the base, we want to calibrate growth from there. We are still very focused on our $400 million play in the next two-three years. We are in no hurry to get there, but we are in a hurry to move our margins up from 57 to that 61%. That has been the focus, and we don't want. That is relentless, and we don't want to change that focus. I'll be very happy if we get to $300 million in the next 12 months, but move up our gross margins by four points. That will then give us very strong balance sheet, strong leverage, and we will achieve our target to be significantly lower than two times on our debt-to-EBITDA. That is our primary focus, Nitin. Okay. In the the slide mention about corporate action, the network optimization effort which have probably shifted to Q1. Any sort of broad color on what you have in mind on that account? See, a couple of things is very clear in this business. You know, you either position yourself as being a very significant top tier player in the U.S. market, or you position yourself as a company that is very focused on customer advocacy, having products on time, delivered on time, and then become a reliable player as what we used to be. From 2016 to 2019, we had, for example, zero failure to supplies in three years in $500 million of sales. We wanna get to those kind of recalls rather than saying, you know, we are the 30th biggest company in the U.S. or the 31st biggest or the 15th biggest. That's no longer the focus. I mean... The network optimization, we have achieved a growth of, you know, almost $70 million of incremental revenue with no incremental unit sales. The question we're asking ourselves from a network is that, do we really need so much of infrastructure to run a business of our size and, or do we use the infrastructure that we want to have and deliver products which are more profitable? The Endo acquisition allows us that luxury to pick and choose products that we want to launch. If I tell you that I want to build this business to $600 million in the next two years, then I'll have to be on the treadmill, and I don't want to be on the treadmill when it comes, given the, you know, the significant challenges in the industry facing. I want to be a very measured player in the U.S. with the right product selection and launching it at the right price, basically. Key for me is to get the manufacturing operations in New York to a profitable level, which it hasn't in this year. I'm actually carrying a fair amount of underrecovery still from our Chestnut Ridge that's within New York. I think that we can fix that in the next financial year. Those will be a bigger focus. You will see margin uptick. I'm not so sure about revenue uptick, and that's not my focus in the next 12 months. Right. On the debt part, we've guided to a three times debt to EBITDA by the end of the year. Now, over a slightly longer period, aspirationally, I mean, where would you want, I mean, how would you want an ideal debt to EBITDA picture or debt profile to be look like for Strides as a business? Yeah. I'm very comfortable with a debt to EBITDA of under three. There is absolutely no problem. The company has got no very little long-term loans. One of the other reasons why I'm not so excited about growing rapidly the U.S. business is that any incremental dollar revenue takes close to about 200 days of new working capital under sales. I would want the U.S. business, today it's already making profits for us, but it is also solving for the Chestnut Ridge facility in New York. Once that is fully sorted out in the next couple of quarters, I don't think it'll take us more than two quarters to sort that out. We will then be able to use the free cash that we generate in U.S. to solve for growth. I don't want to... If I'm going to activate growth, I will have to increase my working capital deployment for the U.S. It's a, you know, chicken or egg situation, unfortunately. We are very happy with the trajectory because our other regulated markets will more than make up for any adventures that we may be missing out in the U.S. in the near term. Last one, if I heard you correctly, the emerging market business, you know, given the restructuring, we should now look at as including the branded business about INR 100 crore per quarter. I mean, the INR 400 crore analyzed business, roughly speaking from a modeling perspective. Yeah. That's because we won the contract couple of weeks ago. We have the allocation, so I can give you comfort around the numbers. This will be starting from Q1. We'll start very little supplies from this quarter. This is very typical that the global clients have a 6-month lag between two contracts. You mentioned the restructuring bit where the business is not really consolidated. Despite that, you will end up recording, this INR 400 crores is after adjusting for the restructuring which is there. Yeah. If I had not deconsolidated 400, it would have been 600. Okay. I got it. Okay. Okay. Thank you. Thanks. Thank you. We have the next question from the line of Devanshi Mehta, an investor. Please go ahead. Thanks for the opportunity. I just wanted to understand from a portfolio, build-out perspective, how should we look at the overall R&D investment for the business going forward? Also, you know, given the regulated market business is witnessing a strong growth, how are the utilizations at the plants and how do we, you know, look at the CapEx requirements for the business to support the growth plan? That's it. Yeah. The R&D spend inside is lower since the last one year. We brought it down from $25 million to just about $10 million. This is because we don't need to spend new R&D money for the U.S. as we have over 100 approved ANDAs that have not been launched. Every year we are launching 12 to 15 new products from this approved list, which does not require any R&D activities because these are already approved products. We are just moving these products from Chestnut Ridge in New York to other sites within the group. That leads to your next question, that currently we have approximately capacity utilization of only 60%, which means we have significant capacity unutilized, which is why we talk about underrecoveries very often in our conversations. There will be no new CapEx required for several years, even if we double our business from where we are. That's on the business. On the regulated business, your question specifically was on capacity, right? Mm-hmm. The utilization. I think the request is clear. Thanks so much. Thank you. Thank you. We have the next question from the line of Amar Maurya from AlfAccurate Advisors. Please go ahead. Sir, thanks a lot for the opportunity. Am I audible? Yes. Yeah. A couple of questions from my side, sir. Firstly, in U.S. business, as you indicated that, you know, the winter portfolio had also done well in this quarter. What kind of like, you know, the uptick we would have got from that winter portfolio? We don't give specifics. you know, we have a lot of products which, and as you probably would appreciate, we don't have anything called summer and winter anymore. Most often some of our seasonal products will sell throughout the year or at least nine months a quarter. We don't call out a specific number. We're just saying that we benefited from that. I'm not suggesting therefore our business will drop from the next quarter. Just gives us flexibility on what products we introduce quickly into the market for, without contracts and with contracts. Basically my point was like, you know, probably this particular product is largely having a better margin than the overall portfolio. Not necessarily. Okay, sir. Our margin profile, if you look at, has only improved from 57%- 58%. If this were actually very big, then our margin expansion would have been far greater from the last quarter. Okay. Okay. Secondly, sir, you know, like, you know, you indicated that largely you are targeting operational profitability and less focusing on the revenue growth at this point of time. No, that's not true. I'm saying only with regard to U.S., because in the U.S., when we hit $250 million, we have added over $100 million of sales from last year. We have grown 40%. I think going forward, you will see growth coming from non-U.S. markets. Our focus this year has been to increase the U.S. growth quite significantly. You already reached to If I do the annualized version of this particular quarter number, I think you already hit to the $250 million number, right? Correct. That's what is your aspiration for the US, as you said. Correct. We have already hit it. What we are saying is now that we are done with that, we'll steady the business with a large portfolio of approved products to improve our margin profile to what we have a target margin profile of 62, 61%-62%. Okay. Okay. This you expect to happen, let's say, in 2024? As in the margin expansion? That is our hope. I mean, but we do not know how markets play out. Yeah, we think With all, everything that we're doing, we think that we'll get closer to the 60% in FY24. That is why I suggested that our EBITDA's where are at 14% will get back to the 18%-20% range. That's the reason. We need to take the gross margin up by about 300 basis points. Thank you. We have the next question on the line of Sarvesh Gupta from Maximal Capital. Please go ahead. Good evening, sir. first question. Mr. Gupta, your line is not clear. If you could kindly, go off the speaker phone. Is it better now? Yes, it's much better now. First question is pertaining to the gross margin. This quarter, we saw that our institutional business actually fell off the cliff. In spite of that, on a quarter-to-quarter basis, there is no increase on the overall gross margin, which should have ideally increased a lot because of much higher mix from the regulated markets. That is number one. Second is that, you know, there were some news reports on the reintroduction of ranitidine in the U.S. If you can throw some color and if there are any comments on that front. Thirdly, on the Stelis, this is the first time I think there is no slide or no presentation on Stelis business as- There is, Sarvesh. There is a big, very significant detailed presentation on Stelis. You must have a look again. Okay. Maybe I missed it. Now, you know, I think last quarter also, you had sort of alluded that, you know, on account of this global banker which has been appointed, and we were planning a big fundraise to lower down the debt at the Stelis level significantly by. If you look at the debt, We have appointed a banker to give you specific options, not to fundraise. The fundraise has already been done. INR 650 crores of fundraise has been committed in Stelis, of which INR 475 crores has already been invested. Understood. It, it's all there in the Stelis deck. To answer your question on Strides, the other regulated market does not have the same gross margin profile as the U.S. market, but at the same time, it does not have the same cost structure as the U.S. market. If you see the growth of the incremental $9 million has come from other regulated markets. The U.S. obviously operates at a much higher gross margin. Understood. Any comments on the Ranitidine thing? Ranitidine is there and gone. Currently, we don't think the product is going to be relaunched by anybody in a long while. The current regulatory framework that we have here has asked companies to do on Ranitidine is almost impossible. Having said that, Ranitidine is coming back in certain countries in Europe, Canada, Australia. We are watching. These markets, we hope to relaunch the product in the near term. Understood. finally, on the rightsizing of our infrastructure, so if you can throw some color, as in what exactly are we planning to do? Are we planning to sell some of these facilities, or are we planning to? No, rightsizing can mean a lot of things. It could be operating facilities in two shifts, in similar shifts, moving plants from less efficient plants to more efficient plants, bringing products from near or to the U.S. to India, or taking products from our group to external manufacturers. That is what is network rightsizing means. It could also include does it make sense to have so many plants. All of that is a function of long-range planning strategy. What our focus is to if you have to build margins, you really don't need to sell billions of units to improve the quality of your business. You can say, sell few, less units for more outcomes. Thank you. We have the next question on the line of Rikham Damani from Damani Securities. Please go ahead. Hi, good evening. Can you hear me? Hi. Go ahead. Right. One question with respect to Stelis. Can we anticipate any further write-off going forward in terms of the... Everything is taken into account. Everything is taken into account? Okay, great. Another question with respect to our shareholding in Stelis. In your document where you are refinancing the loans, you all state that Strides holds 31.5% in Stelis, and the investor presentation says 33. What's our current shareholding or are there some outstanding warrants that are being factored in here? Sorry. It's fully diluted because as you see on the deck of Stelis, there is outstanding capital that needs to come through. Like we said, out of the 650, 475 is coming. When all the 650 comes through, Strides will go down from 36 to 31.5. Okay, got it. Thank you. Thirty-three to thirty-one point five. Okay, thank you. One question with regards to the NC segment. This gap that we are seeing after two quarters, I know you've elaborated a little bit. I just wanted a clarification. Which segment? The NC segment, the two quarters. Okay, fine. Is that of a PQ inspection or compliance with? No, no, no. The, the global funds award contracts once in three years. Typically, they complete the off takes in about, instead of the 36 months, they complete the off takes in about 13 months so that they keep enough inventory for... The bidding starts in the process, and they're in no hurry to stock, stockpile because they already have stockpile. That is why if you look at our H1 numbers, our institutional business in H1 was almost $40 million, $35 million-$40 million. We did the entire annual year's production in H1. Okay. Good to know. Thanks. Going forward, can we expect to maintain the same volume as you actually said before? We have already received the same allocation. Oh, thank you. All the very best. If we got a slightly better allocation. Thank you. Thank you. All the best. Thank you. We have the next question from the line of Ankit Jain, an investor. Please go ahead. Hi. Are we expecting any more write-offs, in terms of Strides for the company Strides? How we think the margin will play out? Can I just recap please, Ankit? Yeah. What I was saying. First question we understood. Yeah. The second is how the margin will play out, in the future for the acquisition that you did there. Okay. Like I said, first one is on write-off side, there is none. We, we don't, we don't anticipate anything. We, we have a very good system there. When it comes to... The second question was on acquisition of the Endo. I did mention in my longish introduction that we will break even the plant in FY24. We did a lot of actions. We have reduced our cost from $47 million to now $31 million. That cost reduction have to go through what is called a regular WARN notice program in the U.S., and we will get the full benefit of that starting from Q1. We are carrying an acquired cost, and there were certain challenges in us to make those decisions with regarding right sizing based on the contracts we signed up. All that is now done and dusted. It's in the public domain that we have issued a WARN notice, and we will have a headcount reduction starting from 28th of this month. We'll still carry certain costs till end of April. After that, We would have reduced our cost at New York facility by about $15 million. That is when, that is what will drive the U.S. operations to profitability. Thank you. We have the next question from the line of Pushkar Bagre, an individual investor. Please go ahead. Yeah. yeah, very good evening. can you hear me? Yes, Pushkar. Go ahead. Okay. Yeah. The question is that since June 2021, Strides took almost five quarters to come back to the historical level of U.S. revenue business. In quarter two of this FY, U.K. business went down from INR 40 million to INR 31 million. In quarter three, U.S. and U.K. came back to its historical level. This time Africa and institutional business came down. As an investor, I have, you know, some, you know, there is no consistency in overall business. Are we getting the value to our investment? Even since 2017, we are not getting any value to our investments. That is my first question. Second is that you have launched 10 products in U.S. this financial year. You have said that 20 products would be launched in this financial year. That is one. Second, you said that $240 million will be done in U.S., in the entire FY. Are you confident about, you know, the, you know, regarding the reaching this level? If you look at our exit run rate, yes, the answer is we will reach to $40 million- $250 million. That was what we guided as our exit run rate. We are on track to get there. I do appreciate your angst in not having created value since the last several years, and that is nothing to do with one quarter dip in our business. In Q2, we had guided that as the other regulated market had a one-off quarter spill, which we will completely recoup in Q3, we did exactly that. We guided you as an investor in Q2 that it was more an invoicing, accounting, logistics issue, which we solved for, we are back on track. We are in if you have six continuous quarters where we have performed in the $37 million-$40 million range, and if you have guided the market that we had a one-off issue for various reasons, I think it's an unfair position for you to take in terms of our consistency. Second, talking about Africa, I just mentioned that the Africa business for us is a branded business, and we are doing extremely well with that. There is no lack of consistency. Probably, you have not paid attention to the fact that we said in Q2 that we deconsolidated our Kenyan operations, so you're not doing a like-to-like comparison. Separately, we told you that we have already won our emerging market contracts from the institutional business, which will get back our revenues back to INR 400 crores from Q1. That is very standard in our business, that there are contracts that you win, there are contracts that you lose, but overall you should do well. Our focus has been on getting the company from negative EBITDA to a positive EBITDA traction to set the goals for the next year, where we are very confident that we'll get back to historical highs. First of all, thank you for your persistent reinvesting in Strides. I'm sure that these actions will give you the results that you're looking for. Thank you. Thank you. We have the last question from the line of Aditi Kasbekar, an individual investor. Please go ahead. Hi, Arun. Hope you're doing well. Am I audible? Yes, you are, Aditi. Okay. Basically, I have one clarification. I think, like, you know, few conf calls back, it was mentioned that we've got a total basket of about 260 approved molecules, out of which about 60 is commercialized, and the rest is sort of approved and yet to be commercialized. Out of which, I think it was said that 80- 100 molecules meet 60% gross margin criteria. Firstly, how has that mix of, you know, sort of commercialized molecules changed to support the $63 million U.S. run rate? That's the first question. The second question is on the other regulated markets. I think our peak, I mean, if I see the quarterly run rate, the peak was in fourth quarter of FY22 when we did about $42 million. Do we see us getting sort of to that level or sort of getting to that $42 million-$45 million level? Like you're mentioning on the US market where you said that, you know, $240 million-$250 million annual sales is what you're targeting. Similarly, are we thinking on ORM also a similar kind of a overall size for the annual revenue in terms of the exit run rate? Those are the two questions. Thank you. On the U.S., you're right with the number of molecules that will meet our threshold margins that we are used to as a company. What really happens, Aditi, is that a lot of the heavy lifting that we have done on product launches goes to support the Chestnut Ridge facility which is under recovery. I did tell you a little back, by the end of this quarter, all of the actions to get the costs to size right has been taken, and therefore you will see an incremental flow through. Almost $60 million-$70 million of my revenues in the US goes only to support the Chestnut Ridge facility without adding any EBITDA to the group. That's going to change because all the actions to cost, to right size the cost are being taken and vested. You would see the flow through of those margins actually coming through starting from May, when our cost structure is reduced with all the actions we have taken. Considering these are major corporate actions, U.S. regulations require us to follow certain processes, and these are not employment at will opportunities that we can normally use. Therefore, there's a WARN notice. There is a time you have to give people. There's a severance pay. You have to put forth various investments to ensure that they can be reemployed in other places and stuff like that. All that has been done, and as of 28th of January, that will fall in effect. We'll still carry costs for three months. By 28th of April, we will get to a cost level that is comfortable, where we know that the US operation with this portfolio will start delivering margins. On the ORM, $39 million-$42 million is a good base level from where we would grow. I would like to believe that this business will mirror the US business in about two-three years. There's a lot of focus that we're attaching here, and I would estimate the business to exit at least at $50 million in the next financial year. This is a slow growth business because, you know, it's a diverse continent with several customers and countries and languages and packaging. It's slow and steady. It's very sticky. It's, it may not deliver the same gross margin as the U.S. business, but it doesn't also incur the costs that we are used to running the U.S. business. I think next year exit run rate this time, at $50 million would be a reasonable level of guidance from us at this stage. Thank you. That was the last question. I now hand it over to the management for closing comments. Thank you all. Really appreciate your time today. As always, if you have questions, you may please reach out to me or Abhishek or to our investor relations side. Thank you very much. Good evening. Thank you. On behalf of Strides Pharma Science Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.