Ladies and gentlemen, good day, and welcome to Syngene International's second quarter FY 2024 financial results conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Suruchi Daga from Syngene International. Thank you, and over to you. Thank you, Yashaswi. Good afternoon, everyone. Thank you for joining us on this call to discuss Syngene's Q2 FY 2024 and H1 FY 2024 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, and 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 may contain certain forward-looking statements and must be viewed in relation to the risks 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, and 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. Thanks, Suruchi, and good afternoon to everybody. Thank you for joining us on today's call to review our second quarter and first half performance of the financial year. I'll start my remarks with a quick overview of the key financials for the quarter before getting into some of the operational and strategic highlights. Then, of course, we'll be happy to open up for questions as usual. Overall, the shape of the quarter is pretty much in line with expectations, positive and strong performances across the divisions led by development and manufacturing services. Revenue from operations came in at INR 910 crore, that's up 18.5% reported, but 15% on constant currency basis. Operating EBITDA was up 17.4% to INR 254 crore. Profit after tax before exceptional items was up 20% over the corresponding quarter last year to INR 122 crore. So So you can see some operating leverage through the P&L there. In line with our strategy and the focus on building up the development and manufacturing parts of the business, we continue to add capabilities. In our development services division, we commissioned a non-GMP facility, which added the capability to do early-phase development projects in what I think is an agile and cost-effective manner. In manufacturing services, we made good progress in the quarter with our biologics manufacturing partnership with Zoetis. And we also commissioned a state-of-the-art digitally-enabled quality control lab that will support our growing biologics operations. Looking at the research divisions, which covers discovery services and dedicated centers, they showed together sustained growth. In discovery services, while the global demand, as remained generally healthy, we did experience some softening in demand in the U.S.-based biotech segment as it adjusts to a new funding environment. However, if you look at new capital raising in the sector over the last two or three months, it's really started to come back to pre-pandemic levels, and we expect that to normalize in due course. Overall, sector fundamentals remain strong, and we expect continued demand growth, but at a slightly reduced level in the second half of the year. Most of this will come in the next quarter, so as our guidance for thinking about your modeling, with a strong return to growth in the fourth quarter. Again, that's teed up, as we've seen in previous years, for a very strong fourth quarter for us and quite a strong exit to the year. This short-term slowing in demand is reflected in the updated guidance that we gave for the full year on revenue. We've adjusted our annual revenue guidance to mid-teens year-on-year growth in constant currency from high teens that was previously announced. I'll leave Sibaji to give you a bit more color on that if needed. It's important to note that these nuances really are limited to the smaller biotech companies in the U.S. The major pharma companies in Europe and the U.K. and the large pharma companies in the U.S. are well insulated from this funding dynamic, and we continue to see positive demand from these clients. As you know, pharmaceutical research is a long-term business, so our planning is based on market growth that we see 3, 4, 5 years down the line. In that context, none of our plans or our expectations have changed. Hence, the purchase of the 17-acre land parcel in Genome Valley in Hyderabad, that we announced last quarter. That's really about giving us headroom and space, literally space to grow for the next decade or so in Hyderabad. Although our roots lie in research services, in the last few years, we've also focused on building up our development and manufacturing division, the CDMO part of the business, and the long-term manufacturing contract with Zoetis provided the platform to expand our biologics capacity, and the proposed acquisition of a multimodal facility from Stelis Biopharma would be part of that strategy. Looking at the first half of the year as a whole, our financial results have been robust. Revenue growth of 22% reported, that's about 17% on a constant currency basis, and we've achieved some important milestones that I think are a key part of accelerating and delivering our strategy. As I explained, we're expecting to see a little bit of a slower growth in research in the short term, but notwithstanding that, the order book looks in pretty good shape, and we remain cautiously positive as we head into the second half of the year. With that, let me hand over to Sibaji. Thank you, Jonathan, and a good afternoon to everyone. I'm pleased to share with you the strong financial performance of our company for the second quarter and the first half of the year. Let me begin by discussing the second quarter performance, and I will cover the first half and updated guidance before I close my commentary. In the second quarter, we witnessed close to 18.5% growth in reported revenues from operation, which translates to around 15% at constant currency. This growth was predominantly driven by the development and manufacturing parts of our business, with commercial manufacturing of biologics being the key contributor. The contract has now reached a run rate of around $50 million per annum, as previously guided. Small molecule development services delivered steady growth, driven by repeat orders from clients and strong growth in our clinical formulation business. Our research businesses continue to perform well with the dedicated centers that we operate for BMS, Amgen, and Baxter maintaining steady growth. However, as Jonathan mentioned, discovery services experienced temporary softening of demand as companies adjust to the new biotech funding environment. I'm sure that you will have seen this reported by others already. The industry fundamentals for the research business remain strong, and there are already signs that the U.S. biotech funding is getting back to more stable pre-pandemic levels, which should then bring back growth momentum in the research business over the next few quarters. The demand signals from the large and the medium biopharma companies are encouraging, so we remain optimistic, although these arrangements generally take a longer period to materialize. In the second half, we'll continue to invest in scientific capabilities and other enterprise projects, and we expect our CapEx investments to run to plan. As usual, we'll phase this over the coming quarters with the pace of execution being determined by the demand environment. Internal cash growth remains strong, and all investments are expected to be funded from internal equity, so we'll have limited need to resort to external credit. Now, moving to profitability metrics. EBITDA from operations grew at 17.4%, surpassing the constant currency revenue growth rate. Operating profit, which is EBIT, also showed strong growth at 18.4%, reflecting the impact of operating leverage on the back of improved capacity utilization in our development and manufacturing businesses. Let me now turn to some of the cost lines, and I'll explain the key changes and trends we saw in the quarter. The cost of raw materials increased by 34% year-on-year, primarily reflecting the shift of business mix towards development and manufacturing services, which, by nature, have a higher material cost component. While the cost of raw materials was at 29% of revenues for the second quarter, we expect this to stabilize around 27%-28% of revenues for the full year. Staff costs rose by 10.4%, tracking the increased headcounts as well as the impact of annual increment cycle. Although it is worth noting that it is a lower percentage of revenue at 26.5%, compared to 28.4% in the previous year. This is driven by the shift towards manufacturing, which is a less people-intensive business. Direct costs, primarily power and utility expenses, showed a decline of 4% year-on-year. This favorable trend reflects reduced utility input costs and an increase in captive green energy consumption compared to the previous year. At present, 81% of our total energy consumption is from renewable sources, an increase from the 77% last year. Other operating costs grew by 18% year-on-year, which is similar to the trend that we saw in the last quarter. As before, this increase primarily stemmed from increasing spend on the upkeep of our facilities, which have expanded with new laboratory spaces and installation of new equipment and infrastructure. Furthermore, other operating investments, especially the recruitment of commercial and scientific teams located outside India closer to our clients, have contributed to higher costs compared to the previous year. The hedge loss for the quarter came in at INR 18 crore, compared to INR 19 crore in the same period last year. Spot rate averaged around 82.7 rupee per U.S. dollar during the quarter, against our hedge rate of 81.3 for the quarter. Overall, operating EBITDA margins remained at similar levels in the second quarter, at 27.9% of revenue, compared to 28.2% in the previous year. Depreciation charges increased by 16% year-on-year, driven primarily by asset additions across business divisions and rent from new leases entered during the period. The new leases include a non-GMP facility, which adds the capability to deliver early-phase development projects in an agile and cost-effective environment. Operating EBIT margins for the quarter remained flat at 16.4% compared to the previous year. Finance costs increased from INR 11.74 to INR 13.4, mainly due to the increase in interest component on lease rentals. Other income increased by 40% year-on-year due to higher cash balances and improved interest yields. Turning now to tax. Our effective tax rate remained stable at approximately 23%. Our profit after tax growth before exceptional items was around 20%. However, during the quarter, we had an exceptional item of INR 5.34 net of tax, and this is attributable to the transactions relating to the acquisition of the biopharma manufacturing facility from Stelis. PAT after exceptional items grew at 14.4%. Turning now to the performance in the first half, reported revenue from operations grew at 22%, 17% at constant currency, primarily driven by development and manufacturing services. Operating EBITDA grew at 20%, while operating profit, in other words, EBIT, grew at 22%. The trend in expenses in the first half broadly mirrors that of the second quarter. The cost of raw materials increased 36% due to shifting mix towards development and manufacturing services. As mentioned earlier, the raw material costs will stabilize around 27%-28% for the full year. Operating EBIT margins were maintained at 15%, almost in line with the first half of the previous year. Other income increased by 46%, attributable to higher cash balance and improved interest yields. On the other side of the equation, increased finance costs also reflect higher interest rates. Overall, we had a very good first half of the year, with profit after tax before exceptional items growing at 23% year-on-year, and profit after tax after exceptional items growing at 19% year-on-year. We have invested around $30 million in CapEx in the first half of the year, with around 60% of that directed towards adding new capabilities and capacities in the research business. CapEx in Discovery Services was mainly in Hyderabad, where we opened an automated compound management facility and a DMPK biology lab for integrated small molecule studies. Hyderabad now houses close to 40% of the scientists in Discovery Services, making it a sizable operating footprint with further plans for capacity expansion. The rest of the CapEx was largely invested in development and manufacturing services, which includes infrastructure such as quality control and testing laboratory for the biologics manufacturing business and additional freeze capabilities for the small molecule business. Now moving on to the revised guidance for the year. As you have seen, the first half revenue performance was in line with the guidance. The sector fundamentals remain strong. We expect continued demand growth, but at a reduced level in the second half of the year, and most of this will be reflected in the next quarter, with a relatively strong recovery expected in the fourth quarter. The biologics manufacturing for Zoetis is on track and will continue to deliver strong revenues. However, please note that we started to build up revenue from the contract from the second half of the last year, so the year-on-year growth will be modest compared to what we had experienced in the first half of the year. This is built into the revised guidance. In the small molecules business, several ongoing projects are scheduled to complete in the fourth quarter, so we expect lower growth in the third quarter and a strong fourth quarter, which typically is our highest in the year. Putting these factors together will result in mid-teen revenue growth for the full year at constant currency, which equates to high-teens growth for the full year on a reported basis. Overall, we see the current demand growth situation from U.S. biotech as short term and expect it to stabilize as the biotech funding environment normalizes, signs of which are already visible. The demand situation from other client segments continue to be normal, so we remain cautiously positive in the second half of the year. Moving on to the CapEx guidance. Against the revised CapEx guidance of $85 million that we indicated in the first quarter call, we now believe we will execute close to $80 million of CapEx this year, and the balance will be carried over to the next year. $30 million has been executed in the first half. Another $20 million has already been committed for execution. Of the total $80 million, more than 50% will be invested in the first business, around $5 million towards upgrading the multimodal facility being acquired from Stelis, and the remaining CapEx will go for small molecule development and manufacturing service businesses and other enterprise initiatives. The acquisition of the Stelis' facility is in progress, and both parties are working towards fulfilling all closing conditions. We will update you on this once we close the deal. To summarize, we had a productive half year, making progress in implementing strategic initiatives while delivering operating efficiency. We believe we are well positioned to navigate through the temporary U.S. biotech funding challenges, and we will continue to invest in building capabilities and capacity for growth in the future. With this, I conclude my remarks and will now take your 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 their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Tarang Agrawal from Old Bridge Asset Management. Please go ahead. Hi, good afternoon. Three questions from my side. One, you know, because of the IRA, right, there is an implication that perhaps it would result in the transitioning of investments from out of small molecule developments towards large molecule developments because of the stipulations laid out in the IRA. Are you seeing any signs of that happening in your interaction with the customers? So that's one. Second, in terms of your large molecule outsourcing business, are there any developments that you're seeing other than the Zoetis contract? And third, given that we've already received the approval for the Mangalore API facility, if you could comment on the ramp-up of that business, say in FY 2025 and 2026. And last, fourth, a small bookkeeping one. You said $80 million of CapEx guidance for FY 2024. I would believe this is organic CapEx. Stelis acquisition will be over and above, if you could clarify on that. Thanks. Yeah, the last one's a yes. No supposition is correct on the last one. I'll talk around to some of the others. The IRA, to the Inflation Reduction Act, that's quite an interesting question. The really easy answer to your question is no, we've seen no impact whatsoever, but I'm not sure that's particularly informative. I would expect this to play out over the next five, 10, 20 years, to go to the other end of it. If it has implications for the research strategy of major biopharma companies, the decisions they make today would be about where they invest their front edge of their science. That's three, four years in discovery, four, five years in development before you even get a product. So you're effectively asking questions that are predicated, if there was a decision that you would make differently today at the very front end of the R&D process, when would we see that play out? And it would. It's a 10-year discovery development cycle. So no, there's nothing immediate happened in the last two, three quarters since the legislation became visible. The other bit is just around scientific technological risk. The challenge of finding a molecule and a target that works, that produces a drug, I think dwarfs the selection of either the small molecule or a large molecule. If you look at the success rates that we all understand in drug discovery, the choice is not always there between, well, let's have a large molecule version of that same thing. So I think it's almost a false narrative to think that will be the choice between them. That said, what it will do that will make people think around speed to market, how many things that traditionally that they will have done in the discovery development phase sequentially, and will they want to do them in parallel? So it might increase the amount of investment in any given decision space, stage for our clients. And then I'm gonna pull it back into a net implication for us. We offer world-class science to FDA, EMA global standards. We do it with speed that's equivalent to our clients, and then sometimes quicker. And we do that with an operating cost arbitrage that lowers the expense. So if they were going to try and do more things in parallel, and they wanted to do it quickly, I can see it being advantageous, that scientific footprint, continuing the trend we already see of moving to places like India and companies like Syngene. But on the immediate premise of your question, have I seen anything in the last 12 weeks? No, I think it's way, way too early, and it'll play out over years. But let me just pause there and see if that answer helped. Yes, it did. Thank you. So on the other two, good. Having been helpful on the first question, I'm gonna duck giving you specific product level guidance on either of the other two questions, which are really the same one, which is what is the outlook for our manufacturing businesses? It continues. Same thing as I would have said last quarter and the quarter before that. We're out there, we're connecting with clients. We continue to see a step up actually, in the number of meetings that we have with clients. We're seeing a healthy environment around, you know, incoming client inquiries. But I actually don't have anything to tell you, because if I did, I would have put it in the press release earlier today. Our enthusiasm for being a CDMO business as well as a CRO business hasn't changed at all. I still think the capital we're deploying for shareholders is the right thing to do to create long-term value. Okay. Jonathan, can I squeeze in one more? Go on then. Okay. So, you know, I was just thinking, given the interest rate environment in the West, and while I understand that it emerges as a, you know, short-term risk in terms of the funding drying up, but purely from a medium to long-term perspective, given that, you know, capital is going to be more expensive, does it therefore not, you know, increase the requirement of businesses like ours? Because creating an infrastructure, or for that matter of fact, getting the drug faster to market, will be even more important than what it was before. And in that sense, from a medium to long-term perspective, it works for us. Yeah. I mean, if you just reverse the economics in your question. If capital is harder to get and more expensive, you may well only get a smaller amount of investment, in which case you have to work hard to make it go further. And one of the ways you can make any given dollar go further is to spend it wisely. And if you can get equivalent science, equivalent service, world-class regulatory, you know, compliance for a lower dollar amount, which is essentially what companies like Syngene offer their clients in comparison to doing the work themselves in the West or using Western service providers, then yeah, it sharpens the value proposition we have. And that wouldn't be lost on our customers, nor would it be lost on our salespeople. Those are the sort of conversations we're having every day. Thank you. All the best. Thank you. We have our next question from the line of Harith Ahamed from Avendus Spark. Please go ahead. Hi, thanks for the opportunity. Is there a date on your margin guidance for FY 2024? I think earlier you guided for 30% EBITDA margin for the year. Could you also share the hedge rate for the second half of FY 2024? I'm sorry. Could you. You're very muffled. Could you just restate the question, because I couldn't capture that? So I was checking if there is an update on your margin guidance for the year. You had previously guided for 30% EBITDA margin for FY 2024. Yeah, I still. And then also. I still think it'll be around 30%. Yeah. So there's no change in the guidance. The only thing we commented on earlier today in sort of the press release and various media interactions and in Sibaji's remarks is high teens constant currency revenue growth becoming mid-teens. By the way, I still think that that's a gain share outgrowing our market sector, outgrowing most of our competitors type performance. So it looks pretty good. On the EBITDA margin, I think we said around 30% was the phrase we used at the beginning of the year. I continue to think that everything indicates around 30% is the right guidance for the full year. Okay. And, the. On the hedge rate, our hedge is around 81-81.5, in that range. I would like to remind everybody that 30% or around 30% guidance was given for the revenue translated at the hedge rate, so you can work out your arithmetic. So the guidance for margin is full, and the hedge rate, as I said, is between 81-81.5. Yeah, and it actually, if you triangulate into it, I'm sure for the analysts on the call, that their calculators will be running through this already. If we expect around 30% for the full year, and our average EBITDA margin rate for the first half, Sibaji, I'm looking at you, was how many? The first half was around 28%. Okay. So if the first half is 28%, and we're going to do around 30% for the full year, one of the implications you can triangulate into is that second half EBITDA margins will be higher than first half. Okay. Understood. Sibaji, I also noticed that there's a sharp reduction in working capital over 30 days versus March, and then especially the debtor days have come down. So trying to understand what has led to this? Actually, we are running a very focused program on working capital improvement, and that's on receivables, inventory, payables. So all are improving. Of course, you must have also noticed a marked improvement in the receivables as well, and typically that's arithmetic, because quarter four is the highest quarter for us, so, and, the receivables is, it's number of days, right? Of billing. So compared to that, there is also some benefit which is coming, on, on the receivable line. But if you take that out, overall, you will see improvement in all the lines of working capital. And it's coming out of a structured program that we are in. If you recall, during the pandemic, we built up a lot of inventory to kind of de-risk our business, and as we have settled that down, post-pandemic, we are optimizing inventory across the business. Although, you know, in absolute terms, inventory will still go up as our business move towards development and manufacturing. But in terms of proportion of the billing, I think we are continuously optimizing that and into that going forward as well. Last one, with your permission, on. Stelis facility acquisition. Can you share the timelines for closing the transaction and the additional CapEx that you've guided for, which is around INR 100 crore, the timelines for spending that? And once you close the acquisition, will there be expenses sitting or payment from the facility, or will you be capitalizing the pre-op expenses that you're incurring there? Thank you for taking my call. Timeline, I'd expect with the rate we're progressing, I'd expect it to close in this quarter. But, it's not running to a timetable, it's running to a checklist, if that makes sense. So there are, there are a number of things that need to be completed, closing items that need to be done, and, that will, is what will govern the closing of that deal. So it's not to a clock, it's to a checklist. But I'd expect us to get through that in the quarter. On the accounting and the financials, Sibaji. Yeah. So, as you might remember, the cost of the acquisition was around INR 700 crore, a little bit more than INR 700 crore, and we said we'd spend close to INR 100 crore modifying that facility. 50% of that is actually built into the CapEx guidance we gave, because we consider it as organic CapEx. So you can take anywhere between $5 million-$7 million is built into the $80 million CapEx guidance that we have given. The rest is for our own facilities that we'll be incurring. Okay. And on the costs, or the costs that are coming through, or you're incurring it, will it come through the PNL, or will you be capitalizing it once you close the transaction? Are you talking about the cost of transaction, like, you know? No, no, the operational expenses at the facility. Okay. The operational expenses from the date of acquisition till the date of commissioning and starting operation will be capitalized. Okay. That's very helpful. Thank you for taking my questions. Thank you. Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. We have our next question from the line of Sudarshan Padmanabhan from JM Financial Services. Please go ahead. Yeah, thank you for taking my question. So my question is to understand, you know, what is really driving the near-term slowdown in the biotech spending, as you said. As you know, I understand that there is, you know, cost of capital that has increased very sharply, and current outlook remains that interest rates would remain high for long. In this scenario, smaller biotech companies, I would assume, will largely be affected more as compared to, you know, well-capitalized large, larger names. In this context, do we have the, you know, versatility to shift the business from, say, smaller companies, in case the slowdown, you know, prolong, to larger names, and also look at ramping up the manufacturing a little bit faster in case, you know, this, you know, related issues continue? Super! Your question's better than my answer. I think you described all of the elements of it. That's sort of what we were trying to get to in some of the comments earlier and some of the media interviews. We're a broad-based business. We've got 450+ active clients. They cover from, I think, the very largest pharmaceutical company in the world to the smallest, newest biotech startup. I've actually met one client where it was a single person entity. They were the chief executive and receptionist all-in-one. So we span that whole range. It's not a case really of moving from one to another, 'cause we've always engaged with both, whether it's big pharma, big biotech, medium-sized or startups. That's one of the advantages, I think, of the breadth of capability in our strategy is we've got the ability to go with all sides of clients, from discovery through to development, through to manufacturing. But I think your implications are right. If I take bits out of your question, large pharma, large biotech, those companies are not dependent on the VC environment for funding. They're super well-capitalized, massively cash generative, some of the biggest corporate entities in the world. So for them, it's not an issue in their decision making. They're more likely to be looking at their long-term distribution of where they do the research, where can they tap into talent, where- Ladies and gentlemen, we've lost the management connection. Please stay on the line while we reconnect them. Thank you. Ladies and gentlemen, thank you for patiently holding. We have the management line back on the call. Hello. Could we just go back to the last questioner? And you're gonna have to tell me where I got cut off in my prime, 'cause I was trying my best to answer your question, but I don't know which bit where we got cut off. Mr. Padmanabhan? Yes, please go ahead. So you were saying that, you know, smaller companies depend more on VC. The larger companies are well capitalized, but, you know, the versatility of the business would play in your favor. Yeah. Super good. So that was, that was one of my key points. The other bit I was just gonna say is, if you go back pre-pandemic, I think that the U.S. biotech sub-segment was seen to be healthy, dynamic, well-funded and a good thing for investors, biotech companies and services businesses. We then, as we went into the pandemic, had a couple of factors. One was financial macroeconomics, which with interest rates, were super low, almost to the point of being negative, so capital was in search of places to be deployed, and we had a global existential threat to the whole world in the pandemic. We saw a lot of money, possibly for me, if I look at it, certainly a generational high, maybe a lifetime high of capital going into new funding of biotech, around the world, and particularly in the U.S. As we've come out of the pandemic, we had a very busy year in the first 12 months after the pandemic, as the world tried to catch up. Some of the growth rates you saw in our business and in other businesses last year would indicate that. But simultaneously, we also saw the capital starting to move back into all of the other sectors of the economy. Think about it, during the pandemic, there were a whole industry groups that were not getting funded because they were on furlough or people were closed up. So as the world, as, as the capital was redeployed, it of course meant relative to an all-time peak, a much lower base. Now, there are a number of investment banks track this and report. I would point you to any number of them, report on this, but the data which I've seen over the years, certainly over the last three months, suggests that U.S. biotech funding is now stabilizing. It's starting to settle back, and the level it's settled back, it's settling back at, looks very similar to the levels it was pre-pandemic. So a new normal, but the normal looks very much like the pre-pandemic normal. So what I now think we have is a timing issue between raising new capital, hiring people, restarting new programs and spending it in the market with people like us. And it's gonna take us, you know, one or two quarters to work through that. But we'll have to watch it. We'll have to watch it through the quarter. But we're not the first company to comment on this. I would say we're amongst the last actually, to have had any impact on their business. If I read CROs around the world, particularly those that are publicly listed, because they're more likely to make a quarterly comment, we're a couple of quarters into people making exactly the comments I've made today. Does that help? So it gives you a beginning, a middle and an end and a sense of the temporal nature of this. Yes, yes. Definitely. So it looks like it's probably to, you know, one to two quarter phenomena, and probably all your investments will, you know, pay dividends, probably say once this, you know, issues are reallocated and you are able to reallocate. Yeah, I mean, put it another way. When we deploy shareholders' capital into things like buying land in Hyderabad, we're taking a 20-30-year return in value creation view, and a belief that we will create value beyond our cost of capital over decades. We're not looking at it over weeks and months. Sure. And so the next question from my side, before I join the queue, is: if I take the last five years and even post, you know, you coming into Syngene, there has been a lot of investments, not only in the capacity, on the capability side. Now, typically, when you work with your clients on the research, I mean, it, one, is you get the quantity of orders. I mean, there'll be a lot of low-hanging fruits, you know, which a MNC company or an innovator would like to give. The second is the quality of projects where, you know, there are certain complexity involved, you know, probably projects with higher success rate, which unless you demonstrate your capabilities, you know, your clients would be hesitant to give. In your experience over, say, over the last five years, have you seen the quality of the projects moving up? And with the current environment, do you see the quality of the projects moving up further and also help the return ratios and the profit margin profitability? Yes, to the first one, definitely. I mean, that's essentially our long-term strategy, is to move from efficiently doing simple things really well to where we are today, where I think we are, in many ways, at an equivalent level of sophistication, scientific innovation, and complexity to any of our clients. We no longer sit around the sort of boardroom table or in the labs with our clients and as anything other than scientific partners and equals, and that's the intention. You know, many of them, and if you look at some of the smaller companies, would look to Syngene and say, 8,500 people, 6,500 scientists, coming on for 30 years of experience. They're actually looking to us for insight and advice based on our experience, rather than to instruct us and hope that we can follow instructions. So it's changed dramatically. In parentheses, that's not unusual in services business, and then India's world leader in IT services, and there's a 30-year journey that looks very, very similar there, of starting out doing simple work and following Western clients' instructions, to now maybe setting the technological boundaries of what's possible. Hopefully, that makes sense. Sure, sir. Some, you know, more qualitative commentary on the kind of capabilities that you are building, I mean, through the CapEx. In which aspect of the business? I mean, there's so many. If you take, for example, this SynVent model that we've got, it's a particular type of service offering where we will fully integrate all aspects of drug discovery. And effectively, that's us becoming our, our client, as it were, indistinguishable from them in process, approach, the ability to do not only the chemistry and the biology, but then to synthesize and integrate them, and get that through to a decision-making point. There's a simple way of looking at it. The difference between being on the bus and driving the bus, and in something like the SynVent model, we're actually driving the projects for the client. Yeah. To do that, we work across therapies and so in a very versatile manner. But may I request questions to be limited to one or two, because you know, I'm sure there's a queue. So I'll join back. Thank you. you. Thanks a lot. Thank you very much. Thank you. We have our next question from the line of Dheeresh from White Oak. Please go ahead. Yeah, thank you for the opportunity. I have two questions. First question is, if you can share what percentage of our, let's say, last year's full year revenue we got from small biotech firms? That will be question number one, please. Okay, so that's your first question. What's your second one? It seems in the gross margin, there seems to be some one-off this quarter. So is there a one-off this quarter? Because, even assuming a certain mix of manufacturing versus discovery, the margins seem to be subdued. Okay. So, Sibaji, I'll give that one to you. Yep. The question is, are we subdued in our gross margins? While you're thinking about that, I'll do the first one on small biotech. We don't normally disclose it, but to give you a sense of it, I would guess about 15% or so of our revenue would come from, at a, at a total firm level, would come from that U.S. biotech segment. Okay, thank you. One second, please, okay. The on the gross margin? On the gross margin, first, let me clarify, there is no one-off. It's a function of the mix. Even within, you know, CDMO part of our business, raw material as a percentage of revenue in small molecules and large molecules, which in biologics are different. In a quarter where you have high biologics revenue in the overall revenue, you see a move towards higher raw material costs. In a quarter where you have more, you know, small molecule CDMO, you'll have slightly lower raw material costs. So it's all in the mix. There is no one-off I can communicate that. In fact, I guess you are also taking utility and power in the direct costs. That has gone down, and that has gone down quite sharply because of the multiple agreements that we have entered for green power, which also comes at a better rate for us. So it's a mixture of all those things, but no one-off as such. Thank you. Thank you. One last question. In Mangalore API, have you given any utilization guidelines for FY 2025 or 2026, like, how At least the guide path in terms of when do you plan to fully utilize it? No, we haven't, but it's a gift so that I can preempt the other questions that will be the same line of that. We roll up all of our guidance into the annual revenue and margin guidance. We don't give breakups in plant level and machine level and line level operating and utilizing, utilization guidance. It's progressing in line with our broad strategic direction. I'm quite happy actually with the progress we're making in development and manufacturing. We said we would start to rebalance the shape of the business so that it was more evenly balanced between the CRO side and the development manufacturing, and that's exactly what's happening. Thank you very much for taking my questions. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Ms. Suruchi Daga from Syngene International for closing comments. Over to you. Thank you everyone for joining today's call. If you have any further queries, please do get in touch with our team, and we'll be happy to get back to you. Have a good day, and 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.