Alivus Life Sciences Limited — Q2 FY26

Alivus Life Sciences Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=Q-15Uws01OE Published: 6 months ago

0:00 Ladies and gentlemen, good morning and welcome to the Aliveist Life Sciences Limited Q2 FY26 earnings call. As a 0:10 10 seconds reminder, all participant clients will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:20 20 seconds Should you need assistance during the conference call, please signal an operator by pressing star then zero on 0:28 28 seconds your Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Miss Swami Roy from Alivas Life Sciences Limited. 0:39 39 seconds Thank you and over to you ma'am. 0:43 43 seconds Uh good morning everyone. I welcome you all to the earnings call of Alivas Life Sciences Limited for the quarter ended 0:49 49 seconds September 30th 2025. From Alivas Life Sciences we have with us Dr. Yasiri Raji our MD and CEO and Mr. Tushar Mistri our 0:58 58 seconds CFO. Our board has approved the results for the quarter ended September 30th, 2025. We've released the same to the stock exchanges and uploaded it on our 1:06 1 minute, 6 seconds website. Please note that the recording in the transcript of this call will be available on the website of the company. 1:12 1 minute, 12 seconds Now, I'd like to draw your attention to the fact that some of the information shared as part of this call, especially information with respect to our plans and strategies, may contain certain 1:20 1 minute, 20 seconds forward-looking statements that involve risks and uncertainties. statements are based on current expectations, forecasts and assumptions that are subject to risk 1:28 1 minute, 28 seconds which could act cause uh actual results to differ materially from these statements depending upon the economic conditions, government policies and 1:36 1 minute, 36 seconds other incidental factors. Such statements should not be regarded by recipients as substitute of their own judgment. The company undertakes no obligation to update or revise any 1:44 1 minute, 44 seconds forward-looking statement. Our actual results may differ materially from those expressed in or implied by these forward-looking statements. With that, I invite Dr. Yasi Raji to say a few words. 1:54 1 minute, 54 seconds Thank you and over to you doctor. 1:57 1 minute, 57 seconds Uh Shami, thank you. Uh good morning everyone and welcome to our um quarter 2 earnings call. Before we get into the 2:05 2 minutes, 5 seconds company's quarterly performance, uh just a few words on the broader industry landscape uh that is influencing our 2:12 2 minutes, 12 seconds business environment. The global pharmaceutical industry is growing uh but also evolving rapidly driven by 2:20 2 minutes, 20 seconds advances in AI and digital technology and a growing demand from emerging markets. Companies are strengthening 2:28 2 minutes, 28 seconds supply chain resilience, local formulation manufacturing and focusing on patiententric models and 2:37 2 minutes, 37 seconds sustainability. While rising costs and regulatory pressures pose challenges, innovation, technology adoption and government support continue to fuel 2:46 2 minutes, 46 seconds growth and reshape the competitive landscape. With this, let me draw your attention to our performance for the quarter. We reported revenue of 588 2:56 2 minutes, 56 seconds crores uh rupees 588 crores registering a healthy 16% growth yi. This was driven 3:04 3 minutes, 4 seconds by a very strong performance of by of our nonGPL business which grew at by 39.7%. 3:13 3 minutes, 13 seconds Backed by mainly successful new product launches, the performance reflects the inherent 3:21 3 minutes, 21 seconds strength of our core operations. Though overall growth was partly moderated by a decline in the GPL segment due to customer uh inventory rationalization. 3:32 3 minutes, 32 seconds As indicated earlier, we anticipate the GPL business to regain momentum in the second half of FY26. 3:41 3 minutes, 41 seconds During the quarter, we saw broad-based growth with regions like emerging markets, Latum, Japan, Europe, and 3:49 3 minutes, 49 seconds India, XGPL, delivering strong performances and emerging as key contributors to our overall growth. Moving on to our profits 3:58 3 minutes, 58 seconds for the quarter, our gross margin for the quarter was 57.7%. 4:04 4 minutes, 4 seconds up 210 bips y driven by rationalized input cost and product new product launches and favorable product picks. 4:14 4 minutes, 14 seconds Our EITA margin for the quarter was 33% up 480 bips YI. 4:21 4 minutes, 21 seconds The CDMO business has been a mix um but overall when you look at it it looks 4:27 4 minutes, 27 seconds soft. Um we expected to rebound um in the second half led by the addition of new projects uh and ramp up across existing projects. 4:39 4 minutes, 39 seconds With a healthy pipeline and new projects being added, we anticipate a meaningful turnaround in CDMO performance in the 4:46 4 minutes, 46 seconds second half. Our pipeline rem remains robust with 586 DMF and CB filings globally as on September 30th, 2025. 4:57 4 minutes, 57 seconds The development grid remains steady and future ready with a mix of near-term launches, NC minus1 opportunities 5:05 5 minutes, 5 seconds u and for the target markets. The high potent API portfolio remains on the development path with 26 products in the 5:14 5 minutes, 14 seconds active grid representing a total addressable market of 666 billion. 5:21 5 minutes, 21 seconds Excuse me. Of these 10 products are validated, seven products are in advanced stages of development and the remaining nine products are progressing through lab development stages. 5:32 5 minutes, 32 seconds Our capacity expansion initiatives at Shapur, Ankleshwar and Deh are progressing well and as planned. Looking 5:40 5 minutes, 40 seconds forward, we reaffirm our guidance of high singledigit revenue growth for FI26 driven by a stronger performance in the 5:49 5 minutes, 49 seconds second half of the year led by strong profitable growth in broad-based external sales recovery in GPL business 5:58 5 minutes, 58 seconds and ramp up of CDMO projects. We remain confident of sustaining margins at around 30% despite the absence of PLI 6:07 6 minutes, 7 seconds benefits. The margins are reinforced by a robust pipeline of new launches and operational efficiency. With this, I 6:16 6 minutes, 16 seconds hand over to our CFO, Tashar Mistri. Uh, Tash, please take over. Thank you very much. 6:24 6 minutes, 24 seconds Thank you Dr. Yas. Uh, good morning everyone. Welcome to our Q2 FY26 earnings call. Before we take questions 6:32 6 minutes, 32 seconds from you all, I would like to take a moment to highlight the key performance updates for the quarter and half year ended 30th September 2025. 6:41 6 minutes, 41 seconds For second quarter FI26, revenue from operations stood at rupes 588 crores, a growth of 16% yearonear. 6:49 6 minutes, 49 seconds Gross profit for the quarter was 339 crores, up 20.4% yearon year. Gross margins for the quarter stood at 57.7%. 6:59 6 minutes, 59 seconds This is towards the higher side of our given guidance. IITA for the quarter was at rupees 194 crores up 35.7% yearonear 7:07 7 minutes, 7 seconds and IATA margin for the quarter was 33% up 480 basis points year on year driven by better product mix and new launches. 7:15 7 minutes, 15 seconds P for the quarter stood at 130 crores with P margins at 22.1%. 7:20 7 minutes, 20 seconds For first half FI26 revenue from operations stood at 1190 crores, a growth of 8.6% yearonear. Gross profit 7:28 7 minutes, 28 seconds for H1 was at 2671 crores up 15.1% yearon year. Gross margins for H1 stood at 56.4%. 7:35 7 minutes, 35 seconds AITA for H1 was at 375 crores up 21.9% yearon year. A bitter margin for H1 was 31.5% up 340 basis points yearon year. 7:47 7 minutes, 47 seconds PAT for H1 stood at rupees 252 crores with PAT margins at 21%. 7:53 7 minutes, 53 seconds Looking at the therapeutic mix, CVS and CNS continue to lead the growth during the quarter with both therapies contributing 55% to the top line. 8:01 8 minutes, 1 second Chronic therapies contributed 69% to the top line. In Q2 FI26, R&D expenditure for Q2 FI26 was rupes 22 8:10 8 minutes, 10 seconds crores which was 3.7% of our sales. For H1 FI26, it was 43 crores uh at 3.6% of 8:17 8 minutes, 17 seconds our sales on the balance sheet and cash flow moment. Speaking of capital expenditure, capex for the quarter was rupes 61 crores and for first half it 8:25 8 minutes, 25 seconds was rupes 113 crores. I would like to reiterate that our capex guidance we have a capex approval from the board of rupes 600 crores including carryover of 190 crores for fi25. 8:36 8 minutes, 36 seconds We continue to remain a net debtree company and we have generated strong cash flow from operations of rups 148 crores in Q2 FI26 8:44 8 minutes, 44 seconds uh with cash and cash equivalents including short-term investments of 653 crores on the books as of 30th September 2025. 8:51 8 minutes, 51 seconds In closing, we remain confident that the strong demand momentum coupled with improved visibility for the second half of FI26 will position us well to deliver 8:59 8 minutes, 59 seconds a steady growth performance for the year. With that, let us open the floor for Q&A. 9:06 9 minutes, 6 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 9:15 9 minutes, 15 seconds star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you 9:22 9 minutes, 22 seconds may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will 9:30 9 minutes, 30 seconds wait for a moment while the question cue assembles. 9:45 9 minutes, 45 seconds The first question is from the line of Ahmed Madha from Unifi Capital. Please go ahead. 9:52 9 minutes, 52 seconds Uh good morning doctor and thanks for the opportunity. I have uh three questions. Uh first on KEX part uh we 10:00 10 minutes have done 110 cooking through KEX in the first half. So how do you see the uh 10:06 10 minutes, 6 seconds overall research capex uh in realistic terms? Is it fair to assume the uh the budgeted amount we'll be able to uh 10:16 10 minutes, 16 seconds utilize uh for the capex and is there any change in the timelines for the solar plant? That was the first 10:25 10 minutes, 25 seconds question. Uh second question was regarding the CDMO business. Can you give some granular sense uh how do you see all the new as well as existing 10:33 10 minutes, 33 seconds projects uh I believe with the new one we have five overall five. So how how does the second half looks like and how 10:41 10 minutes, 41 seconds do we end the FI26 here and lastly uh when we say in press release we have 10:48 10 minutes, 48 seconds better visibility in terms of the GPL business. Can you give some granular sense? Yeah thank you so much. 10:55 10 minutes, 55 seconds Okay, thank you. Um, so capex uh has been slow in H1. Um, I would say that uh 11:05 11 minutes, 5 seconds I mean R&D we expected to close um R&D this uh first half but it has moved out 11:13 11 minutes, 13 seconds slightly. uh we had planned around um 90 to 100 cr on R&D spend 11:21 11 minutes, 21 seconds uh for the R&D center but this year we probably will end up spending half of that. So that takes away half of what we 11:31 11 minutes, 31 seconds had planned to spend on R&D. Shapur is on track. Uh but from the spend perspective we probably will spend a little less in shapur. 11:42 11 minutes, 42 seconds So we uh while the second half will pick up, we will not spend the remainder of that 600 uh you know uh cr uh this year. 11:53 11 minutes, 53 seconds Okay. So more likely we'll end up uh you know spending around 250 cr in second 12:00 12 minutes half. Uh of course projects are on track. Ankleshwar and the hij are very much on track. Okay. Uh we should have 12:09 12 minutes, 9 seconds Ankleshwar coming up. uh the new projects getting completed by June of next year. So it'll be operational from 12:18 12 minutes, 18 seconds Q2 uh of next year and the hage should be operational from Q1 itself of next year. 12:28 12 minutes, 28 seconds Uh and Shapur also we are targeting a start of Shapur from April. So uh we are 12:37 12 minutes, 37 seconds on track but on the spend side uh you know we we will not uh spend the entire 12:44 12 minutes, 44 seconds 600 this year. Um as far as CDMO goes uh you know CDMMO has been doing well. I 12:53 12 minutes, 53 seconds mean the new projects are picking up really nicely. Okay. our project 4 uh the commercial we've already achieved 13:00 13 minutes close to 50% of the commercial potential and it's going very nicely. Now the reason why the numbers are still a 13:09 13 minutes, 9 seconds little muted okay is because um on the existing projects there is a bit of 13:16 13 minutes, 16 seconds slowdown which is not uh which is not which is only temporary right and it will pick up uh so in the 13:25 13 minutes, 25 seconds second half we are pretty confident that uh you know our existing our earlier three projects will come back uh 13:34 13 minutes, 34 seconds commercially and we'll be well on track on the fifth project. We also expect most regulatory 13:41 13 minutes, 41 seconds approvals to come uh in the second half and so hopefully we'll be kicking all 13:48 13 minutes, 48 seconds five projects uh in the second half and that would contribute to a much higher CDMO um contribution. 13:58 13 minutes, 58 seconds Uh now with respect to GPL uh yeah I mean you know we expect the second half to be better. 14:09 14 minutes, 9 seconds Okay. Uh I can't say how much better but it'll definitely be better because um 14:17 14 minutes, 17 seconds the the outlook is good right? Uh but it remains to be seen. I expect we expect 14:25 14 minutes, 25 seconds GPL to to do much better than what we've done in H1 given the fact that uh CDMO and GPL will both pick up right I I'm 14:34 14 minutes, 34 seconds expecting second half to be uh much better than uh the first half. 14:40 14 minutes, 40 seconds Just one followup in terms of uh you said you said second half uh so are we considering anything else in terms of 14:48 14 minutes, 48 seconds inopenic or any other capital deployment opportunity in near term or we are happy to wait and uh wait for the opportunity 14:56 14 minutes, 56 seconds in medium to long. See we are evaluating various things. Okay. Uh in terms of 15:04 15 minutes, 4 seconds capital like Tushar just said we are sitting on more than 650 crores of cash. 15:08 15 minutes, 8 seconds Okay. Um and obviously sitting in the bank it's not going to give us uh you know that kind of return. The business 15:16 15 minutes, 16 seconds is doing well. It makes sense to reinvest back in the business. But we've got to be smart about it and uh we would 15:23 15 minutes, 23 seconds much rather take our time and evaluate opportunities across the board to uh try 15:30 15 minutes, 30 seconds and figure out you know what is the best fit for u our business. I mean mind you I mean the one thing that I have always 15:38 15 minutes, 38 seconds said and uh I'll continue to say it is that one of the strongest uh elements of our business is our portfolio. 15:47 15 minutes, 47 seconds Okay. And with 160 plus molecules, very good molecules, right? Uh you know, not 15:54 15 minutes, 54 seconds vanilla molecules, right? We we are well positioned not only in the API business, 16:00 16 minutes but if we go API plus, okay, uh we could end up doing uh a lot more with this 16:07 16 minutes, 7 seconds portfolio. So whatever we do will be aligned uh very closely uh with this 16:14 16 minutes, 14 seconds portfolio that we have built up over the last 6 7 years. Okay. So uh yeah we are actively 16:23 16 minutes, 23 seconds uh you know evaluating opportunities and uh this uh this is something that uh makes a lot of sense right in the current situation. 16:32 16 minutes, 32 seconds Uh thanks for today's questions. All the best. Thank you. 16:39 16 minutes, 39 seconds Thank you. A reminder to all the participants. You may press star and one to ask a question. 16:47 16 minutes, 47 seconds The next question is from the line of Tarang Agarwal from Oldbridge. Please go ahead. 16:54 16 minutes, 54 seconds Hi sir, good morning. Uh couple of questions. One, uh how are you looking at the API business environment? I think 17:03 17 minutes, 3 seconds now it's been what 12 quarters probably where we feel that uh the pricing on the 17:10 17 minutes, 10 seconds raw materials as well as uh end market continues to remain benign. So is that something that you're also facing? And 17:18 17 minutes, 18 seconds number two u you're currently now at a consistent clip of about 600 crores per quarter. Uh when do you think you'll be 17:27 17 minutes, 27 seconds able to get to about 700 crores per quarter on a consistent basis? 17:35 17 minutes, 35 seconds Okay. Hi sir. Um see the API business environment I would say is a bit mixed. 17:43 17 minutes, 43 seconds Okay. If you look at the commodity side right then yes um prices 17:51 17 minutes, 51 seconds uh are under pressure. Okay. But at the same time raw materials are also you know uh not going up uh like crazy. 18:02 18 minutes, 2 seconds Okay. So that's helpful. Uh but then there's the other side where you we have the newer products getting introduced in 18:11 18 minutes, 11 seconds various markets and there uh it's much more advantageous the pricing scenario. 18:18 18 minutes, 18 seconds Okay. Obviously, you know, we uh we mentioned in the commentary as well that 18:25 18 minutes, 25 seconds uh we had launches um and good launches and so uh you know, we've been able to 18:32 18 minutes, 32 seconds secure on the newer uh projects that have launched uh you know uh good prices and uh we've been able to control costs 18:40 18 minutes, 40 seconds at the level that we had planned. uh again u both the R&D effort on that as 18:48 18 minutes, 48 seconds well as the uh you know manufacturing efficiency has helped us to keep costs 18:54 18 minutes, 54 seconds under control. So um for the newer portfolio that certainly applies right 19:02 19 minutes, 2 seconds and uh I I believe that that will continue. Now with respect to 600 to 700 19:10 19 minutes, 10 seconds uh I mean you know in this quarter it's our only our nonGPL business the API 19:17 19 minutes, 17 seconds business that has fired well and uh it's most of the regions except the US that has been uh has done very well. Japan 19:26 19 minutes, 26 seconds we've had a fantastic turnaround okay which will continue. uh Japan as you recall I had said about a year back has 19:34 19 minutes, 34 seconds only four commercial products. Okay. And uh we are building the pipeline. So that pipeline now is uh you know beginning to 19:43 19 minutes, 43 seconds work for us in Japan where we have close to now we have eight to nine commercial products right that that are kicking in. 19:52 19 minutes, 52 seconds Okay. and it'll continue that trajectory will continue to move north. Uh for Japan, LATAM uh you know has also turned 20:02 20 minutes, 2 seconds around very nicely. You remember the uh Argentina currency situation which had slowed down our Latam business uh you 20:10 20 minutes, 10 seconds know and that has turned around completely. Okay. So uh in LATAM we have 20:16 20 minutes, 16 seconds Brazil, Argentina, Mexico firing pretty well for us and uh again it's a nice 20:23 20 minutes, 23 seconds broad-based turnaround. Uh India has been consistently doing well but Europe and RO also have 20:32 20 minutes, 32 seconds turned around I mean have done much better uh than uh you know in the recent 20:38 20 minutes, 38 seconds past. So uh overall the only you I mean the big lever here for you know this 20:45 20 minutes, 45 seconds performance has been our nonGPL API business when we look at and I answered this earlier uh that the CDMO is going 20:54 20 minutes, 54 seconds to turn around well uh in the second half and even GPL business has I would 21:00 21 minutes say we are at the lowest point really it can't get worse than this right but it'll turn around uh in second half So I 21:10 21 minutes, 10 seconds don't know whether we will hit 700 uh this year but given the fact that we have a very strong pipeline with new 21:18 21 minutes, 18 seconds launches coming up uh and uh you know CDMO is also doing 21:25 21 minutes, 25 seconds well I would say right even though the number like I said in the commentary doesn't really reflect that but the 21:32 21 minutes, 32 seconds outlook for CDMO being very good I would say that if even if we don't get to 700 100 in this year we'll be very close to 21:41 21 minutes, 41 seconds it. Okay. So um you know I mean overall the outlook is very strong. 21:48 21 minutes, 48 seconds Got it. Doc just uh two followups. One uh you know you spoke about Japan uh I 21:55 21 minutes, 55 seconds mean four is moved to eight. Where do you see the potential given that uh you know you've got about 160 165 22:04 22 minutes, 4 seconds uh so to say uh unique molecules um and uh um the 22:12 22 minutes, 12 seconds sorry yeah that's that's about it yes thanks so we are actively filing in Japan 22:19 22 minutes, 19 seconds tarang okay I mean we uh and uh there will be more commercial uh launches happening 22:28 22 minutes, 28 seconds in this next year, okay, and uh in the following year. So for the next two to even maybe 3 years, we have a reasonable 22:37 22 minutes, 37 seconds uptick on the Japan business mainly on account of new launches and new customers. 22:46 22 minutes, 46 seconds Yeah, go ahead. Please start. So could we fathom a situation where u you know more customers obviously getting added 22:54 22 minutes, 54 seconds in Japan but probably uh four new molecules getting commercialized each year from here on is that something that we it's prudent for us to bake in? 23:06 23 minutes, 6 seconds Yeah. Yeah. We are good for four every year. 23:12 23 minutes, 12 seconds Okay. And second uh in your initial address you qualified that uh perhaps the benign environment is uh I think you 23:21 23 minutes, 21 seconds specifically called out for commoditized APIs. Uh was there a reason why you did it or it's actually only for commoditized APIs and not the case uh everywhere. 23:33 23 minutes, 33 seconds Okay let's let's understand what's your definition of benign. Are you talking only on the cost side or even on the sales on the pricing side? I'm saying 23:42 23 minutes, 42 seconds margins overall in all of these businesses. Clearly, we've seen a situation where finished good prices have come down and so have raw prices, 23:50 23 minutes, 50 seconds but uh same percentage margin on lower realization effectively results in a lower absolute profitability per ton or 24:00 24 minutes per kg. Correct. Um so that's what I think that's something that we've seen uh play out in most of the players if 24:08 24 minutes, 8 seconds not all. Uh that's what I mean by a benign environment. So you essentially for you to continue chugging in the same 24:15 24 minutes, 15 seconds absolute profitability, you have to increase your volumes materially, right? Uh that's where I'm coming from. 24:25 24 minutes, 25 seconds Yeah. Okay. So let me address only the the more mature APIs because we have them as well. I mean it's not as if everything is new, 24:33 24 minutes, 33 seconds right? Uh so on the more mature APIs our volumes have been growing. Okay. And what you said is true right that yeah 24:42 24 minutes, 42 seconds prices are not going up you know I mean prices are stable or even declining slightly but then the cost environment is also reasonable. Okay. 24:52 24 minutes, 52 seconds So it's not like you know we are getting pressured uh you know that uh downward pressure you know that uh on the cost 24:59 24 minutes, 59 seconds side. So that is also being managed and then whatever whatever sort of delta is coming negative delta is coming is being 25:09 25 minutes, 9 seconds uh you know offset by uh slightly better volumes. So that part of the business is 25:14 25 minutes, 14 seconds stable. Okay. And the margins uh not the percentage margin but the absolute margin on the overall business is is 25:24 25 minutes, 24 seconds growing slightly as a result of the volume uh increase. Got it. 25:32 25 minutes, 32 seconds Sure. 25:38 25 minutes, 38 seconds Thank you. A reminder to all the participants you may press star and one to ask a question. 25:46 25 minutes, 46 seconds The next question is from the line of Ketan Archer and retail investor. Please go ahead. 25:53 25 minutes, 53 seconds Yeah. Hi. Uh good morning. Thank you for the opportunity. Uh Dr. You uh in one of the previous responses you just mentioned about uh API plus uh could you 26:02 26 minutes, 2 seconds uh please u expand uh uh what do you mean by API plus and uh how much is that contributing to our uh revenues in the current scenario? 26:12 26 minutes, 12 seconds Okay. So Keton see this whole concept is something that basically comes from our 26:19 26 minutes, 19 seconds CDMO platform but also basically extends to our generic uh 26:25 26 minutes, 25 seconds business. Okay. Uh right now we don't only give API to our CDMO customers. 26:33 26 minutes, 33 seconds Okay. We are giving a whole range of solutions around the API uh that basically helps our CDMO 26:42 26 minutes, 42 seconds business uh by you know offering customers more of a one-stop shop. Okay. 26:48 26 minutes, 48 seconds And this support that we give uh you know on the documentation side, the regulatory filing side, you know, the 26:56 26 minutes, 56 seconds analytical support and so on is something that really goes well with customers. Okay. uh and in CDMO it has 27:04 27 minutes, 4 seconds been a big hit for us. Okay, I mean a real it's working very nicely. So what we've done is that we've started 27:12 27 minutes, 12 seconds extending this model to you know some of our key generic API customers as well. 27:20 27 minutes, 20 seconds Okay. Where you know they they see they they have a we we give them a lot of value in terms of uh you know the other 27:28 27 minutes, 28 seconds elements um around the API mainly on the regulatory support you know the 27:35 27 minutes, 35 seconds analytical uh you know support and so on. So what that does basically where 27:42 27 minutes, 42 seconds that is value creative is that it basically speeds the the development for the at the customer end as well. Okay. 27:54 27 minutes, 54 seconds And uh this is a model uh obviously you know we would have to sort of build some capability 28:02 28 minutes, 2 seconds uh in terms of R&D around uh you know this in order to sort of push uh you 28:11 28 minutes, 11 seconds know the API plus uh business okay which is something that we are doing we're not 28:17 28 minutes, 17 seconds greatly accelerating it but as how you know customers get interested to you 28:25 28 minutes, 25 seconds know not only get API but even get API plus data and more data okay that helps 28:31 28 minutes, 31 seconds because the other thing is the other place where it has really proven to be beneficial is on the complex API 28:39 28 minutes, 39 seconds development. So in complex APIs what happens is that a lot of the work is 28:45 28 minutes, 45 seconds done um you know at the API level instead of the formulation uh at the formulation level. So here uh again 28:55 28 minutes, 55 seconds right this kind of support on the API uh you know is a big help uh to uh you know 29:03 29 minutes, 3 seconds generate uh interest with the customers who are buying uh complex APIs. 29:13 29 minutes, 13 seconds Uh thanks thanks for that explanation doctor. So Bernov just a small follow up on that. So when we talk about this additional uh uh value that we provide 29:21 29 minutes, 21 seconds to the customers um while it will be incremental um does this also help us um improve the margins u uh upwards uh or 29:30 29 minutes, 30 seconds in other words would this be a higher margin as compared to the uh a pure API? Yes. 29:51 29 minutes, 51 seconds Yes, sir. 29:53 29 minutes, 53 seconds Yeah, Dr. Uh I'm not sure if you heard my question. Shall I repeat? No, I did and I said yes. I don't know if you heard it. 30:01 30 minutes, 1 second No. Okay. No, I I'll address that. Okay. 30:03 30 minutes, 3 seconds Okay. Yeah. Thank you. Thank you so much. Yeah. Thanks. That that's for my question. Thank you. Wish you all the best. Thank you. 30:11 30 minutes, 11 seconds Thank you. A reminder to all the participants. You may press star and one to ask a question. The next follow-up 30:19 30 minutes, 19 seconds question is from the line of Tarang Agarwal from Oldbridge. Please go ahead. 30:25 30 minutes, 25 seconds Yeah. Hi sir. Uh just a couple of things. One on KEX, right? 30:29 30 minutes, 29 seconds I'm sorry to interrupt Mr. Tarang. Your voice is not audible. Am I audible now? 30:38 30 minutes, 38 seconds Yes sir. Please better. Thanks. 30:42 30 minutes, 42 seconds Yes. Uh just a couple of them sir. one on capeex I understand that uh you know getting the right uh uh uh you know land 30:51 30 minutes, 51 seconds parcel approval so on and so forth can take its own time and there are things and exigencies which are out of our hands. Um what I wanted to probably get 31:00 31 minutes a better handle on is is it in any case does it uh in some sense be an impedance for you to grow next year or in the next 31:09 31 minutes, 9 seconds one and a half years because of the mismatch in uh the timing of cash flow deployment that we've seen in um FI26 and to some extent which we saw in FI25. 31:20 31 minutes, 20 seconds So that was one. Um so we're okay I mean we're okay if uh uh the deployment moves 31:27 31 minutes, 27 seconds around by a quarter or two as long as uh it's not really impeding the broader growth trajectory of the business. So 31:34 31 minutes, 34 seconds that's where I'm coming from. And the second question is um you know about 2 years back u um specifically in FI24 31:44 31 minutes, 44 seconds um we had seen this uh reasonable bout of uh uh cost increase uh when it came to the employee base and what we 31:52 31 minutes, 52 seconds understand is that the operating environment generally in the industry uh uh was quite aggressive uh which led to 32:00 32 minutes that cost increase. Um how have things changed now two years later? Um because we've also seen some element of capital 32:08 32 minutes, 8 seconds withdrawal um in the industry. Um 2 years 3 years is generally a long time even for the new capital that came into 32:16 32 minutes, 16 seconds the industry to realize how important it is to have prudent operating metrics. So just wanted to get a broad sense in 32:23 32 minutes, 23 seconds terms of uh how are you seeing uh uh broad inflation or competitive dynamics when it comes to employees and workforce in the API industry. 32:37 32 minutes, 37 seconds Okay. Uh let me take the f second question uh first. Okay. 32:44 32 minutes, 44 seconds So there was a a increase 2 years ago 32:50 32 minutes, 50 seconds but that was largely because of some um uh performance related you know long-term performance incentives that 32:58 32 minutes, 58 seconds were basically uh you know planned for uh key employees. Okay. So that uh has 33:06 33 minutes, 6 seconds sort of leveled off obviously right. uh with respect to the environment 33:14 33 minutes, 14 seconds right. Uh see we remain we remain uh a a high talent uh you know intensive 33:23 33 minutes, 23 seconds industry right and uh this is uh so you know of the 2200 people that we employ 33:32 33 minutes, 32 seconds right um a good 25 30% of that workforce is a high talent workforce uh in fact even a 33:41 33 minutes, 41 seconds little more I would say even close to 40%. Okay. Uh so we need to be we need 33:47 33 minutes, 47 seconds to be competitive. Okay. Which we uh continue to be uh when we evaluate our 33:54 33 minutes, 54 seconds uh you know our pay scales we are close to the 75th percentile uh because we want to continue to retain 34:02 34 minutes, 2 seconds good people and attract uh good people to come and work for the company. Okay. 34:09 34 minutes, 9 seconds Uh but having said that we also are balancing it out with a flat a flatter 34:16 34 minutes, 16 seconds structure than we see in most other companies. Okay. Now this not only helps 34:22 34 minutes, 22 seconds us uh you know maintain better cost but it also has a shorter chain of command 34:30 34 minutes, 30 seconds uh okay and a and a tighter chain of command when it comes to solving problems and you know dealing with issues. Okay. So it has served us well 34:39 34 minutes, 39 seconds and uh I think we will continue to operate along those lines. Um you know 34:45 34 minutes, 45 seconds so u there we'll try to maintain our employee cost at around you know 10 and a half 11%. 34:56 34 minutes, 56 seconds But yes, we we will have to attract good people and uh if it does inch up a 35:02 35 minutes, 2 seconds little bit uh on account of that uh you know that uh talent uh we would continue to do that. Okay. Because we are still 35:10 35 minutes, 10 seconds well below the industry uh you know um average in terms of our uh employee 35:18 35 minutes, 18 seconds cost. Now coming to uh capex right see 35:24 35 minutes, 24 seconds the the basically R&D continues to work in our current facility. The idea of 35:31 35 minutes, 31 seconds having our own R&D center owned by us, right, is simply that we know we are on 35:39 35 minutes, 39 seconds a growth path. Okay, and we'll continue to be on a growth path u for the next at 35:45 35 minutes, 45 seconds least for the next 5 years. Okay. Now given that uh situation right we we we 35:53 35 minutes, 53 seconds continue to add new levers in R&D to u you know uh for that growth okay and so 36:01 36 minutes, 1 second we need the space we need to add more infrastructure from time to time so having our own place you know with 36:08 36 minutes, 8 seconds enough u expandability is something that will serve us well so yeah we've been we've been I would say very picky in 36:18 36 minutes, 18 seconds terms of where we select our R&D new center uh and how much space we need for that and that's taken a bit of time but 36:26 36 minutes, 26 seconds we are hopefully we will close in this quarter itself right and uh then you know we've got our design for the first phase of R&D ready and that will 36:35 36 minutes, 35 seconds continue so it's not impacting business but uh we would like to we would like to move ahead as soon as possible with respect to other u projects Okay. 36:48 36 minutes, 48 seconds Shapur is where uh there has been a slowdown, not by a lot, but uh 36:57 36 minutes, 57 seconds we uh again uh you know we are building this facility. It will be a state-of-the-art facility right where we 37:06 37 minutes, 6 seconds have built in a lot of continuous manufacturing infrastructure plus 37:12 37 minutes, 12 seconds you know and you know some you know high uh capacity infrastructure for backward integration. 37:21 37 minutes, 21 seconds So given the fact that you know we have uh a different kind of site that we are building but at the same time it should 37:29 37 minutes, 29 seconds be you know we we want to be it uh it to be an FDA approvable site. Okay. So 37:37 37 minutes, 37 seconds given these uh dynamics the planning uh you know continues and we want to be sure that we have the right kind of fit 37:45 37 minutes, 45 seconds but again is it impacting business? No because you've seen our market is more than 80% regulated market. It's 37:53 37 minutes, 53 seconds happening out of mahal out of aneshwar out of the h okay because these are uh 37:59 37 minutes, 59 seconds USFDA inspected sites and that would uh that would u you know be our way of 38:07 38 minutes, 7 seconds looking at it. Sholur even if it takes a bit of time is not going to impact business. Okay. But we want to again just like I said for R&D we want to get 38:15 38 minutes, 15 seconds it right. Okay. And that's what we are working towards. Perfect sir. Thank you. All the best. 38:23 38 minutes, 23 seconds Thank you. 38:26 38 minutes, 26 seconds Thank you. A reminder to all the participants. You may press star and one to ask a question. The next question is 38:34 38 minutes, 34 seconds from the line of Vijay Carp and individual investor. Please go ahead. 38:41 38 minutes, 41 seconds Yeah. Uh thank you for the opportunity. 38:43 38 minutes, 43 seconds Uh uh good morning. Uh my question is uh the spend on kex has been reduced for uh 38:51 38 minutes, 51 seconds the second half. In spite of that we are seeing that the plants are on track. Um how are we making that possible? That is 38:58 38 minutes, 58 seconds the uh first question. Uh the second question is uh on the Gujarat state pollution board. I think so we are uh we 39:06 39 minutes, 6 seconds have gotten to a small issue for the second time again. So uh in spite of having good compliance with the other 39:14 39 minutes, 14 seconds agencies, why do we keep on getting in trouble with the Gujar state pollution board? Okay. 39:23 39 minutes, 23 seconds Uh on the pollution board, uh this was not a sort of a regular issue. Uh we did 39:30 39 minutes, 30 seconds have an incident okay where we had a flash fire in the factory okay and so 39:38 39 minutes, 38 seconds they penalized us for that uh you know it hasn't caused any major damage but then that's the view of the board the 39:46 39 minutes, 46 seconds pollution control board and they find us. So it's not like we are in trouble with them. I mean end of the day we work 39:54 39 minutes, 54 seconds with authorities closely and we we try our best to comply but then it is a manufacturing environment and things do 40:00 40 minutes happen. So I would say it's a one-off uh it's nothing to really worry about. 40:06 40 minutes, 6 seconds Okay. I mean our factories are working at the highest level. I mean you you would have tracked that we had US FDA 40:14 40 minutes, 14 seconds come into two of our facilities this year. Okay. In January they USFDA visited uh Ankleshwar. Okay. And we had 40:22 40 minutes, 22 seconds only one 483 observation. We answered that. We got our EIR with a VI status. And in the F FDA was there in May. Okay. 40:32 40 minutes, 32 seconds And there was no observation. So it was an NI status. We have our EI for uh both these facilities. I mean the compliance 40:40 40 minutes, 40 seconds level at Alivis in all facilities is very high. I can assure you that you know yeah I mean sometimes authorities 40:48 40 minutes, 48 seconds take a view they take a view right so but we continue to work with them coming 40:53 40 minutes, 53 seconds to um capex right capex uh reduction and and projects still happening on time is 41:01 41 minutes, 1 second as a result of getting better credit as well okay I explained on the R&D part right that yes there is a slowdown and 41:08 41 minutes, 8 seconds why but uh we also are getting better credit from our suppliers has. So while work is progressing, the cash outflow 41:17 41 minutes, 17 seconds has not been that big in H1, but obviously we'll have to, you know, after the credit period goes away, we'll have 41:25 41 minutes, 25 seconds to pay our vendors. So we're going to do that and uh you know uh that'll happen 41:32 41 minutes, 32 seconds in H2 and then there will be a spill in the in the next financial year as well. 41:40 41 minutes, 40 seconds Great. And thank you for answering my questions. Last question is on the working capital. So what was the working 41:46 41 minutes, 46 seconds capital uh for the uh quarter and uh what best can we do with the working capital? How low can it go? How low can we manage? 41:57 41 minutes, 57 seconds Yeah, I'll request to take that question please. 42:05 42 minutes, 5 seconds Yeah. So uh on the working capital we remain uh uh stable as far as uh the 42:14 42 minutes, 14 seconds working capital is concerned we were uh at about,000 42:23 42 minutes, 23 seconds crores we remain at that same range as of now also uh you would recollect we had uh reiterated uh that the 42:33 42 minutes, 33 seconds receivables had gone up because of the new arrangement that we had with uh GP while uh that continues 42:42 42 minutes, 42 seconds uh but uh that is now stabilized as far as the number of days is concerned for receivables we are roughly at around 148 42:48 42 minutes, 48 seconds days of receivables uh uh compared to March the current quarter also or the current September number of numbers are 42:56 42 minutes, 56 seconds also at 148 days there's a slight increase on the inventory number of days uh again that is because of uh the 43:04 43 minutes, 4 seconds buildup of inventory that we need to do to service our customers. Uh there is nothing uh oneoff there. It is in the 43:12 43 minutes, 12 seconds normal course of business and the payables uh also remain uh stable. So 43:18 43 minutes, 18 seconds overall the working capital that was around,250 crores is about 1,322 crores in the current uh uh as of 30th September. 43:32 43 minutes, 32 seconds Okay. Can you talk about the overall number in in terms of days and uh what number can we bring it down to? 43:42 43 minutes, 42 seconds Uh bringing it down considerably as I mentioned earlier also is not uh we are not seeing that there might be some ease 43:48 43 minutes, 48 seconds off that may happen. I again uh if you refer to our earlier uh transcripts we 43:56 43 minutes, 56 seconds have maintained that the receivable days are going to remain where they are. they may not significantly come down and on the other inventory as well as payables 44:04 44 minutes, 4 seconds we are on the at par with the industry levels. So there is a limited uh scope there for uh breaking it down. 44:16 44 minutes, 16 seconds Okay. Okay. Great. Thank you so much and best of luck. Thank you. 44:23 44 minutes, 23 seconds Thank you very much ladies and gentlemen. That was the last question for today. On behalf of Aliveist Life 44:30 44 minutes, 30 seconds Sciences Limited, that concludes this conference. Thank you for joining us today and you may not disconnect your lines.