Ladies and gentlemen, good day. Welcome to Syngene International Third Quarter Ended December 2023 Financial Results Conference Call. As a reminder, all participant lines will be in the listen-only mode. 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 Ms. Avantika Mishra from EY. Thank you. Over to you, ma'am. Thank you, Rujuta, good afternoon, everyone. Thank you for joining us on this call to discuss Syngene's Q3 FY23 financial and business performance. From the management side, we have Mr. Jonathan Hunt, MD and Chief Executive Officer, Mr. Sibaji Biswas, Chief Financial Officer, and Dr. Mahesh Bhalgat, Chief Operating Officer. Post opening remarks from the management, we will open the line for Q&A. We'll be happy to answer any questions you may have. Before we begin, I would like to caution that comments made during this conference call today will contain certain forward-looking statements and must be viewed in relation to the risk pertaining to the business. The safe harbor clause indicated in the investor presentation also applies to this conference call. The replay of this call will be available for the next few days. The transcript will be subsequently made available. With this, I now hand over the call to Mr. Jonathan Hunt. Thank you, and over to you, sir. Well, thank you. Good afternoon to everybody. Thank you for joining us on the call today to discuss Syngene's performance in the third quarter. I'll start by commenting on the headline numbers, and then move on to some key operational and strategic highlights for the quarter. Sibaji will provide a more detailed insight into the financials in his remarks. I'm pleased to report that we continue to see good demand in our main client markets of the U.S. and Europe, which combined with strong execution and good forward planning, helped us deliver solid revenue growth in the third quarter. In addition, I think we had a busy quarter working with regulators. During the quarter, we received regulatory approval for our commercial biologics operations from the U.S. FDA, from the European Union's EMA and the U.K.'s MHRA. Pleased to have these audits behind us, but more importantly, we're delighted to see that our commitment to higher operating standards was endorsed. All four divisions performed well during the quarter. Revenue from operations grew by 23% to INR 786 crore over the corresponding quarter last year. Operating EBITDA was up around 14% to INR 231 crore. Profit after tax was up 5% over the corresponding quarter last year to INR 110 crore. On the back of a robust first half, I believe that the performance during the third quarter was steady, and we continued to make progress on our strategic priorities. I think overall we're well-positioned to deliver our guidance for the full year. Turning now to interview operating divisions. I'll start with Discovery Services, which grew steadily through the quarter. Our second campus in Hyderabad continued to expand and now plays an increasingly important role in our discovery chemistry operations. In the last nine months, the number of scientists has increased to around 800, and we expect the completion of an additional 24,000 sq ft of lab space and a new compound management facility in the current quarter. This gives us further space to grow as well as enhancing our capabilities. Growth in Development Services was driven predominantly by repeat orders from existing clients, as well as an increase in the number of collaborations with emerging biopharma companies. During the quarter, we continued to invest in new infrastructure and capability development. For example, we completed the construction of a state-of-the-art sterile fill-finish facility for small-scale clinical manufacturing. The facility successfully completed the CDMO joint inspection, and we expect to start GMP production this quarter. This facility offers us the ability to offer end-to-end solutions in product development and manufacturing for clinical supplies of both small and large molecules. Turning now to Manufacturing Services. Overall, we made good progress on our strategic milestones for the quarter. As I mentioned, we successfully completed the U.S. FDA, EMA and MHRA regulatory audits for our commercial-scale biologics manufacturing facility. With cGMP certifications from the regulatory agencies in place, we're on track to manufacture drug substance at commercial scale and make progress on the biologics growth strategy. To summarize before I hand over to Sibaji, overall the demand environment remains broadly positive. To capture these opportunities, we continue to invest in digitization, capability building, and additional infrastructure development. All divisions have shown steady growth over the past nine months, and we expect a good fourth quarter. The positive outcomes during the quarter of the three major regulatory audits is a very positive step forward in enabling our commercial-scale biologics strategy. Overall, I think we're confident we're on track to deliver our annual revenue growthOf high gains applied to. With that, I hand over to Suraj to provide more details on the financials. Thank you, Jonathan, and a very good afternoon to you all. Let me start with the revenue performance, then take you through margins, profitability and CapEx investments for the company and end with thoughts on the outlook for the full year in 2023, which is in line with our earlier guidance given at the end of the first quarter. I'll cover the third quarter performance at the beginning, and then we'll briefly touch on the nine months performance. Like the previous two quarters, we'll be referring to underlying performance in parts of my comments. Just to be clear, this is performance excluding the impact of Renesculpt manufacturing. We recorded high sales of Renesculpt during the last financial year, most of it in the first quarter. However, we did continue Renesculpt sales last year till the end of the third quarter. No Renesculpt sales have been recorded in the first nine months of this financial year, we think it is helpful to exclude Renesculpt from both periods to illustrate the underlying performance of the business. You heard from Jonathan, the reported revenue from operations from the third quarter grew by 23% versus the same quarter last year. Underlying revenue growth, that is, excluding Renesculpt, was stronger at around 28%. This performance come on back of a very strong first half, where we had an underlying growth of around 13%. Growth was primarily driven by continued good performance from the recovery services division and strong performance from manufacturing division driven by biologics. Development Services also grew well, the growth was relatively modest due to spillover of execution to quarter four. Overall, reported EBITDA for the quarter was up 15% year-on-year to INR 248 crores compared to INR 216 crores for the same period last year. The reported EBITDA margin for the quarter was at 30.9% versus 33.1% last year. EBITDA from operations, that is excluding other income, came in at INR 231 crores compared to INR 203 crores in the same quarter last year, up by around 14%. Operating EBITDA margin, that is without other income, was 29.4% for the quarter compared to 31.7% last year. To understand the operating leverage equation, it is important to look at the business restated at the hedge rate, which forms the basis of our guidance at the beginning of the year. Our reported hedge rate is based on average values of the forward and option contracts for the period and builds in the structural long-term rupee depreciation versus the US dollar. The forward rate, which is generally higher than the spot rate, provides partial cover for the Indian inflation, which shows up in the expense lines. The hedge rate revenue growth was at high 80 this quarter, but the EBITDA growth for the quarter was 15%. The EBITDA growth was a bit lower than the revenue growth, primarily due to achieving mix towards manufacturing, which currently has lower margins because of lower scale and capacity utilization. In addition, there are inflationary pressures on other operating expenses, which I'll explain further. During the quarter, staff costs increased by 12% year-on-year. The increase is in line with the increase in headcount and reflects salary increases and change in mix of the employee base. Other OpEx has seen a 33% increase versus the third quarter last year. This is primarily due to cost inflation as well as a step up in business travel, sales promotion and other overheads. It is important to note that as we came out of the pandemic at the beginning of this year, we deliberately chose to invest in business and sales promotion activities, including travel, which also drove up costs. Maintenance expenses increased as a re-reflection of the new capacities built over the last few years. Other operating investments, including the expansion of the commercial team and acceleration of digitization and automation projects across the business, also led to higher costs on a year-on-year basis. These are sound investments for the future. We should see benefits from these investments over the long run. Other direct costs, which primarily include power and utility costs, increased 7% year-on-year. These now constitute 3.4% of the revenue from operations for the quarter, compared to 3.8% for the corresponding period in the prior year. In the current environment, we are seeing benefit of our investments in renewable energy, which is not only reducing the cost of energy supply, but also helping us make good progress on our environmental commitments by reducing carbon emissions. Despite an increase in total energy consumption due to the expansion of our facilities and increasing power and fuel tariffs, these investments provide us a mechanism to mitigate cost increases. Revenue for the quarter was hedged at INR 79 to the US dollar. Our margin guidance for the top line was given at the hedge exchange rate, while the average realized rate was upward of INR 81 per US dollar. The depreciation of the rupee versus the US dollar strengthened our top line without commensurate benefit on the bottom line because we booked hedge losses as a part of our operating expenses. In summary, the operating margin adjusted for the revenue at the hedge rate was 30% compared to 30.8% last year. Hedge losses during the quarter were INR 16 crores, reflecting the difference between average spot rate during the quarter to the hedge rate. This is compared to hedge gain of INR 20 crores in the same quarter last year. Other income for the period increased from INR 13 crores to INR 17 crores, an increase of 34% on back of increasing yields on investment and fixed deposits. Depreciation and amortization for the period was at INR 95 crores compared to INR 79 crores in the same period last year. This increase of 21% on a year-on-year basis is mainly owing to the new investments that we made in the last 12 months. Finance cost increased from INR 9.4 crores to INR 13.7 crores as we recognize the interest component on newly leased assets following lease accounting as per accounting standard Ind AS 116. This is in addition to rising interest rate on borrowings. Even though a large part of our loan is covered through interest rate swaps, the steep increase in the interest rate on the unhedged portion of the loan led to higher interest costs. Profit before tax increased by 9% year-on-year. Here, lower growth of PBT compared to EBITDA is on account of higher interest rate and increased depreciation. The effective tax rate for the quarter was around 21.5% compared to 19% during the same period last year. You will remember that we expect that there will be a gradual increase in the tax rate as some of our units move out of the SEZ tax benefit period and an increasing share of business is coming from locations not enjoying SEZ benefits. With the effective tax, while the effective tax rate is going up, we have a MAT credit of INR 160 crore, which will be utilized over the next few years, and this will enable us to maintain the cash outflow for income tax at the minimum pertinent tax settled. Profit after tax stood at INR 110 crores as compared to INR 104 crores last year, a growth of around 5%. nine months 8.23 performance. Moving to that, revenue from operations grew by 19%, including the impact of revenue in the business. Underlying revenue growth for nine months was at 30%. Material costs increased by 6% year-on-year. However, adjusted for the revenue impact in the last year, material cost growth was around 26% year-on-year, reflecting the change in mix of revenues towards development and manufacturing businesses. Staff costs increased by 13%, YTD in line with the headcount growth. Other direct costs increased by 32%, mainly driven by inflationary pressures on utility and other costs while other expenses grew by 37%, primarily due to resumption of activities post-pandemic and other operating investments explained earlier. The reported EBITDA margin for nine months was at 29.7% against 31% last year. EBITDA margin from operations were around 28.2% against 29.6% last year for the same period. CapEx for the nine months of the year was around $50 million, and an almost equal amount has been committed and projects under execution. Moving to the guidance for the year. Based on the nine months results and the overall trajectory of the business, I'm happy to reconfirm the guidance for the full year of high teens revenue growth and an EBITDA margin of around 30%. The next point I will make is very important. Please note that this guidance was made and continues to be at the exchange rate of INR 79 per US dollar. Given the rupee versus US dollar depreciation we have seen, we need to adjust the top-line growth and the margins accordingly. Cash growth for the full year continues to be expected in the single digits. Looking forward, we expect operating leverage within the business to improve from next year onwards, and that should improve the overall PAT outlook in the coming years. I'll say more about that once we have completed the year at the full year results. With this, I complete my commentary and will hand back to the moderator for questions. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the 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. The first question is from the line of Tarang Agrawal from Old Bridge Capital Management. Please go ahead. Hi. Hi, everyone. Good afternoon, and thank you for your time. Three questions from my side. One, Jonathan, are you witnessing any slowdown in preclinical or phase one clinical projects, especially from your emerging biopharma customers? That's one. The two, if you could just give us some sense on, you know, what percentage of your molecules currently under phase II and phase III would be with the emerging bio customers and what percentage would be perhaps with the big pharma. The third question is, in the quarter gone by, did any of your customers receive any NCE approvals, which is likely to be commercialized in the near future? Thanks. Thank you for the questions. We sound a bit anxious by the nature of the question. The first question, the answer is no. This is probably about the most direct sort of insight I can give you. I'm not really seeing a slowdown or a mix. I'm assuming that the question, do feel free to come back and comment, is born out of trying to interpret U.S. fundraising and the environment for U.S. biotech in terms of, you know, IPOs and fundraising. To some extent, and I think I commented this on previous quarters. Those that have already well-funded are very keen to try and stretch that money. If they've got a year's funding, they'd love to turn it into a two years funding pathway. One of the ways they can do that is making sure that they're spending it smartly and wisely. Companies like Syngene offer them very good value for money. I think that sort of offsets it. No, I'm not seeing a discernible mix. Of course, it all depends on your reference point. If you go back to, I don't know, 18 months, two years ago, we were at an all-time peak for fundraising in the US startup biotech environment. Driven to some extent by two factors that are unusual in tandem. One is 10 years of quantitative easing and incredibly low cost of capital, cost of fundraising. The other one was an awful lot of work that was driven and related to the pandemic. It depends what you're comparing to. If you compare it to a sort of once in a decade high, then I think funding levels have come down. I'm not seeing anything discernible. Onto the other two questions. Don't really have a comment. I mean, we actually don't track our projects by phase one, phase two, phase three or as presented, so it's not a number I can really report. I think you get an essence from our commentary and from my answering of the question. The demand in the market, I think it's reasonably healthy between, I suppose, discovery, service and development and manufacturing. A reasonable demand environment for us in the U.S. and Europe to our main markets. It's much more around execution and being commercially competitive, I think, are the drivers of our growth. Does that help? It does. It does. To my last question, I mean, on any of your clients getting an NCE approval in the quarter gone by? Well, I'm not sure what can you do with that information? I'm not sure how to answer it if it's on our manufacturing business. Okay. Sure. If I can squeeze in one more. Sibaji, typically, I mean, if I look at FY 2022 over 2021, the rupee-dollar exchange rate was rather flat, and we saw that you're, you know, reaping in Forex gains. In 2023 over 2022, we're witnessing extreme depreciation of rupee against dollars, where we are essentially seeing some kind of Forex losses. What it says is effectively, I mean, at an average rupee depreciates by about 5%, so that's typically what your forward hedge rate would be. If in any given year the depreciation is more acute, then we'll probably see a Forex loss. If the depreciation is perhaps a little lower, then that'll translate into a Forex gain. Would that be the right way to look at it? Yeah. You are right, Varun. That's how it is. The point to note over here is that either way, the EBITDA or the P&L does not get impacted. If we actually have a rupee depreciation and the rupee is, and the spot rate is above the hedge rate, you do get a bit of a buoyancy on the top line, but we have hedge losses at the profit level, EBITDA level, they cancel. It only optically impacts the margin because it's a very inflated top line. The same absolutely with other margins will come in lower. That's why the guidance was given of high teens, 30% margin at the hedge rate. We're getting at 81 at this point. You may have a slightly better top line, but the margins will be lower. Those adjustments have to be made in the model. We continue to look at our business for the exact realization we get and hedge rate built in the structure completely, which is as part and parcel of our operating model. Okay. Thank you. That's it from me. Thank you. Thank you. Participants who wishes to ask a question may press star and one. The next question is from the line of Surya Patra from PhillipCapital. Please go ahead. Yeah. Hello. Please go ahead, sir. Your line is open. Go ahead, Surya. Yeah. Hi. Just first question on the fill finish unit that you have indicated about. What is the scale size of the fill finish facility? If you can also share the size of investment in that. That is the first question. Maybe if you can clarify whether this is part of the Bangalore site or it is part of the Bangalore site. It's in the Bangalore site. I don't think we're gonna dimension it. I think the advice I'd give you is it's in a clinical scale. It's small enough that it's not a line item in the in an analyst model. Does that sort of capture the essence of the question? Yeah, a bit. I'm just here trying to understand the scale size because, is it just a kind of a, this facility is capable of doing some kind of development or support service or it is also capable of offering commercialized manufacturing service as well? It's clinical scale. It's That was the reason for describing it as clinical scale. It's to support phase one, phase two type clinical trials. Therefore the volumes are relatively small. I think that answers the essence of the question. It's not a commercial scale fill finish facility. Yeah, yeah. Got it. No, got it. Second question is, Sibaji, Sir, if you can just update about the cumulative CapEx for the Bangalore site as of now, and what is the cumulative CapEx in Biologic investment, biologic assets, so far. That would be it, Sir. The CapEx in Bangalore site hasn't made any increase much from the last quarter. If you recall, I mentioned around $85 million that we have invested over there. We clear that depending on what exchange rate it takes, so that remains more or less at the same level. In case of biologics, cumulatively since the beginning of the year, we've invested $55 million in here that are unexceeded. We have started a program of another $30 million of execution. That's still not in books because the program is underway, and you can expect to see that facility and the CapEx coming into the books for the next few quarters. The capital execution. Sure. Yeah. Yeah. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Miss Avantika Mishra from EY for closing comments. Thank you everyone for joining today's call. I hope we have answered your questions. If you have any further queries, please do get in touch with our team. We will be happy to get back to you. Have a good day. Thank you once again. Thank you. On behalf of Syngene International Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. You may disconnect them.