Cohance Lifesciences Limited — Q3 FY26

Cohance Lifesciences Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=MdgwDcAnFfo Published: 3 months ago

0:00 Ladies and gentlemen, good day and welcome to Q3 and 911's FI26 earnings conference call of Cohance Life Hands 0:08 8 seconds Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you 0:15 15 seconds to ask questions after the presentation concludes. 0:19 19 seconds Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. 0:28 28 seconds Please note that this conference is being recorded. 0:32 32 seconds I now have the conference ODM and Carvalo. Thank you and over to you ma'am. 0:40 40 seconds Thanks NRA. 0:42 42 seconds Good evening, good morning everyone and thank you for joining Gohan's life sciences earnings call for the third quarter and 9 months of FI26. 0:51 51 seconds Joining me today we have our executive chairman Mr. Vive Sharma Mr. Yan Dihar 1:00 1 minute CEO Pharma CDMMO Mr. Gungjan Singh business head API plus Mr. Amrit Singh 1:07 1 minute, 7 seconds business head specialtity chemical and our whole time director and chief financial officer Mr. the Himmana. 1:14 1 minute, 14 seconds Before we begin, I would like to remind you that today's discussion may include forward-looking statements which are subject to risk and uncertainty. Actual 1:23 1 minute, 23 seconds results may differ materially. We encourage you to review the disclosures filed by the company. With that, I'll 1:30 1 minute, 30 seconds hand the call over to Mr. Res Sharma for his opening remarks. 1:36 1 minute, 36 seconds Thank you, Cinderella. Good evening and good morning to everyone joining us today. I would like to begin today's call by acknowledging that our recent 1:44 1 minute, 44 seconds performance has come in below our expectations. During this call, the team and I will walk you through where each 1:51 1 minute, 51 seconds business stands today, what is now embedded in our revenue base and how we see the business progressing from here. 1:58 1 minute, 58 seconds As you look at FY26, it has been a transition year for the company driven largely by portfolio mix and customer 2:06 2 minutes, 6 seconds lack timing factors. With that context, let me walk you through the key highlights across each business segment. 2:14 2 minutes, 14 seconds Starting with pharma CDMO. In our pharma CDMO business, we continue to see a combination of near-term challenges 2:22 2 minutes, 22 seconds alongside encouraging progress. On the near-term side, the stocking in two large commercial products is expected to 2:29 2 minutes, 29 seconds continue. In addition, one large commercial molecule is approaching patent expiry which has resulted in 2:37 2 minutes, 37 seconds lower reload volumes. Further, certain customer reloads and scaleups have been deferred due to delays in launch 2:43 2 minutes, 43 seconds sequencing and program timelines. At the same time, there are several positive developments. Customer engagement has 2:51 2 minutes, 51 seconds deepened meaningfully with two large global innovators progressing multiple ongoing programs as well as new IFPS. 2:59 2 minutes, 59 seconds Importantly, one late stage commercial RFP has converted into a confirmed program while the balance of the RFP 3:08 3 minutes, 8 seconds funnel remains actively engaged with several programs now progressing in late development stages. We currently support 3:16 3 minutes, 16 seconds a robust late stage pipeline with nine phase three programs across our portfolio. While the pace of 3:23 3 minutes, 23 seconds commercialization is customer-led and timing dependent, the step of phase three engagement provides serious 3:30 3 minutes, 30 seconds medium-term visibility as these assets progress towards launch and scaleup. In parallel, we are expanding relationship 3:39 3 minutes, 39 seconds with Western CDMO that are seeking to leverage our technology platforms. In this context, we have secured a 3:47 3 minutes, 47 seconds commercial KSM opportunity with the Western CDMO with commercial supplies expected to commence from the second half of FI27. 3:57 3 minutes, 57 seconds Turning to our advanced niche technology platform including ADC and Ouclei, the near-term environment remains mixed. On 4:05 4 minutes, 5 seconds the near-term side, decision making across biotech customers has slowed due to funding constraints impacting the 4:12 4 minutes, 12 seconds pace of new signings and variables. That said, we are encouraged by the large pharma customer momentum. Our adjacent 4:21 4 minutes, 21 seconds payload platform has been further expanded and we have already onboarded two new large global innovator and 4:29 4 minutes, 29 seconds continues to receive a strong inquiry for this platform. I'm excited to share that on the existing payload platform, 4:37 4 minutes, 37 seconds we have filed one new payload with work ongoing on three additional filings in FY27. 4:44 4 minutes, 44 seconds Operationally, we've successfully completed a business continuity audit at our Wise facility by a large Japanese innovator customer. 4:53 4 minutes, 53 seconds In oligoucleotides, we have seen increasing engagement for higher complexity oligoucleucleotides and ematite programs reflecting customer 5:03 5 minutes, 3 seconds confidence in our chemistry capabilities, quality systems and regulatory readiness. To support this momentum, we have onboarded two highly 5:12 5 minutes, 12 seconds seasoned dedicated business development professionals with over two decades of experience in olgonucleotides. One based 5:20 5 minutes, 20 seconds out of UK and one in Boston. Moving on to the API plus business performance during the period has been shaped by a 5:29 5 minutes, 29 seconds combination of regulatory and demand related factors. On the challenge side, as previously communicated, the Nacharam 5:36 5 minutes, 36 seconds formulation site received the warning letter following the OA status. 5:41 5 minutes, 41 seconds Production for non US markets has resumed and remediation actions are underway alongside risk mitigation 5:49 5 minutes, 49 seconds through filing transfer to alternate facilities. 5:53 5 minutes, 53 seconds In addition, a small number of API products were impacted by customer related approval delays and demand 6:00 6 minutes softness. Despite this, we have continued to rebuild the API and formulation pipeline. During the year, 6:08 6 minutes, 8 seconds we completed eight DNF C filings and file five partner A&Ds. These filings 6:15 6 minutes, 15 seconds provide a foundation for recovery in this segment of customer approvals and demand normalizers. 6:22 6 minutes, 22 seconds In specialty chemicals, we continue to make progress on customer diversification and pipeline development. On the positive side, a 6:30 6 minutes, 30 seconds Japanese customer has been onboarded with validation completed and commercial qualification planned for the second half of FY27. 6:39 6 minutes, 39 seconds Engagement with two large European agrochemical innovators also continues supporting medium-term pipeline development. 6:47 6 minutes, 47 seconds At the same time, the agrochemical business has been impacted in the near term by Chinese generic pressure regulatory phases. 6:56 6 minutes, 56 seconds Stepping back, we remain excited about our organization capability reflecting in our strong technology-led CRDMO 7:03 7 minutes, 3 seconds platform. Accordingly, we have continued to invest in quality systems, regulatory capabilities and complex chemistry 7:11 7 minutes, 11 seconds platforms. Over the past few quarters, we have also strengthened leadership depth across business with experienced 7:20 7 minutes, 20 seconds leaders now fully embedded and operating with clearer accountability and execution discipline. These investments 7:28 7 minutes, 28 seconds position us well to scale as customer programs progresses. 7:33 7 minutes, 33 seconds Overall, what we are seeing in FY26 is largely a timing and products mix imping. I would like to reassure you 7:42 7 minutes, 42 seconds that during this challenging period, we have not lost any customers or cancel any orders. Customer rotip metrics 7:50 7 minutes, 50 seconds remain healthy and we are able to service customer demands effectively. We continue to be an essential part of the 7:57 7 minutes, 57 seconds innovative drug manufacturing supply chain and we continue to win new customers and new business including 8:04 8 minutes, 4 seconds recent notable wins the two large innovator customers. Importantly, our technology platform continues to attract 8:12 8 minutes, 12 seconds a strong interest from large global innovators and biotech companies with RSQ engagement levels remaining healthy 8:21 8 minutes, 21 seconds and increasingly focused on higher complexity programs. Based on current visibility and execution phasing, we 8:29 8 minutes, 29 seconds have revised our FY26 revenue outlooks to reflect an early to mid doubledigit decline. Looking ahead, we believe FI27 8:38 8 minutes, 38 seconds will be a year of growth driven by the successful pipeline built across businesses and recovery in the API plus 8:45 8 minutes, 45 seconds segment led by product filing and partner products. 8:50 8 minutes, 50 seconds With that, I will now hand the call over to Yan to walk you through the pharma CTM business. Yan, 9:00 9 minutes thank you uh VC. Good evening everyone. 9:05 9 minutes, 5 seconds From a farmer CGMO perspective, Q3 fiscal year 26 in particular has been 9:12 9 minutes, 12 seconds characterized by strong new customer engagement which has translated into a 9:18 9 minutes, 18 seconds meaningful increase in late stage RFP activity both from new customers and for new programs with existing customers. 9:31 9 minutes, 31 seconds strengthening our prospect as we look ahead to fiscal year 27. 9:39 9 minutes, 39 seconds With the completeness of our business development team in December, our strategy has yielded a doubledigit 9:47 9 minutes, 47 seconds number of commercial and late stage RSPs including engagement originating from western TDMOS. 9:56 9 minutes, 56 seconds We are also deepening relationships with two top 10 global pharmaceutical companies, both of whom have visited our 10:05 10 minutes, 5 seconds site with senior level representation and indicated intent to commit additional new business in FY27. 10:16 10 minutes, 16 seconds As it is typical for the CDMO business which is inherently lumpy, these new 10:23 10 minutes, 23 seconds relationships are expected to start yielding business in FY27 and grow progressively as we complete customer qualifications. 10:37 10 minutes, 37 seconds Near-term revenues were impacted by customer-led delays in reloads and 10:44 10 minutes, 44 seconds payload intermediate offse driven by higher inventory levels at customer supply chain endpoints, changes in 10:53 10 minutes, 53 seconds launch timing and rep prioritization of programs. 10:57 10 minutes, 57 seconds These resulted in a sharper than expected near-term impact. 11:03 11 minutes, 3 seconds I want to clarify here that no business was lost as far as we know. 11:09 11 minutes, 9 seconds Beyond near-term inventory normalization, there is some moderation in demand for certain mature commercial products as 11:18 11 minutes, 18 seconds they approach late life cycle or patent expiry phases. In these cases, innovators are recalibrating volumes 11:27 11 minutes, 27 seconds earlier than we had previously anticipated as part of life cycle and inventory management strategies. As a 11:35 11 minutes, 35 seconds result, we now expect the steadystate contribution from some of these large commercial products to be lower than 11:43 11 minutes, 43 seconds earlier trajectory assumptions. This earlier than expected volume recalibration has contributed to the current timing gap outside of this. 11:55 11 minutes, 55 seconds Pharma CGMO revenue in Q3 was impacted by these factors driving pharma CGMO 12:01 12 minutes, 1 second decline of 27 yearon year. Meanwhile, adjusting for the Dtocking, it was 7% 12:10 12 minutes, 10 seconds growth. When adjusted for inventory restocking in select molecules and NG bio considation effect, underlying 12:19 12 minutes, 19 seconds demand trends remain stable. We have also meaningfully strengthened our business development organization adding 12:27 12 minutes, 27 seconds senior high capability professionals with deep experience across innovator and biotech customers. The farmer TGMO 12:37 12 minutes, 37 seconds business is now supported by a dedicated global business development team of nine professionals actively engaged across 12:45 12 minutes, 45 seconds North America, Europe and Japan and strategically position in critical hub Boston, San Francisco, Northeast US, UK, 12:55 12 minutes, 55 seconds Switzerland and Asia. Our approach remains executionled with emphasis on 13:02 13 minutes, 2 seconds lateral RFQ conversions, capacity commissioning and customerled ramp up. 13:10 13 minutes, 10 seconds Customer engagement remains strong with RSQ intensify increasing at least two 13:17 13 minutes, 17 seconds times year to date, including a higher proportion of phase three and commercial opportunities. 13:25 13 minutes, 25 seconds Over the last three to four months, the company has undergone more than 16 large 13:32 13 minutes, 32 seconds and midfarma innovator and biotech audits and visits. 13:37 13 minutes, 37 seconds Many of which have also led to senior level customer delegation visits and indication of intent to deepen ongoing engagement. 13:49 13 minutes, 49 seconds To specifically address our commercialization pipeline, we currently support nine phase three molecules 13:56 13 minutes, 56 seconds across our pharma GDMO portfolio. Of these, four molecules are expected to move into commercial supply over the 14:04 14 minutes, 4 seconds coming fiscal year across therapy areas including preliminary, ADHD, antibiotic, and 14:11 14 minutes, 11 seconds oncology. Two of these molecules have already received USMG approval and entered the initial launch phase. The 14:20 14 minutes, 20 seconds third has received priority review status and the fourth is awaiting clinical data readout expected in calendar year uh 2026. 14:32 14 minutes, 32 seconds While pipeline maturity continues to improve, the pace of commercial ramp up has been slower than originally 14:39 14 minutes, 39 seconds anticipated driven by customer launch sequencing, inventory management and cautious initial scale. As a result, 14:48 14 minutes, 48 seconds this commercialization pipeline is taking longer to reach steady state contribution, which has added to the current timing gap. In advanced 14:56 14 minutes, 56 seconds platforms including ADC payload intermediate. We continue to be the exclusive payload intermediate supplier 15:03 15 minutes, 3 seconds to major innovator. During the year, one new ADC payload DMF was filed with three 15:10 15 minutes, 10 seconds additional payload filings progressing on track. Near-term demand remains influenced by biotech forming cycle, but 15:18 15 minutes, 18 seconds customer programs remain active. A $10 million CGMT US-based expansion is on the way, 15:28 15 minutes, 28 seconds enabling full ADC supply capability up to phase 2B by fiscal year 27. 15:36 15 minutes, 36 seconds Customer engagement is further supported by the successful completion of the business continuity audit at our live 15:44 15 minutes, 44 seconds life site in olgonot. 15:48 15 minutes, 48 seconds Beyond capacity buildout, we are seeing increasing customer engagement through higher value and higher complexity RFPs 15:57 15 minutes, 57 seconds reflecting growing confidence in our chemistry quality system and ability to support differentiated programs. The 16:06 16 minutes, 6 seconds CGMP oligon nucleotide building block facility at Naturam is nearing operationalization, positioning the platform to scale as 16:15 16 minutes, 15 seconds customer programs and launch phase assets progress. Customer qualifications and early commercial engagements are advancing as planned. 16:25 16 minutes, 25 seconds At our subsidiary, customers continue to recognize the quality of execution and technical capabilities of the team, including through public complimentary. 16:36 16 minutes, 36 seconds However, given delays in certain customer clinical programs and the slower pace of contract renewals in the 16:43 16 minutes, 43 seconds current biotech funding environment, the recent trajectory has been used including into fiscal year 27. To 16:52 16 minutes, 52 seconds reiterate, this reflects timing and funding dynamics at the customer level and does not change the long-term relevance of the integrated ADC platform 17:01 17 minutes, 1 second which we continue to be very excited about. 17:05 17 minutes, 5 seconds Now I hand over to Gungjan to talk about API plus segment. 17:12 17 minutes, 12 seconds Thank you and good evening everyone. 17:15 17 minutes, 15 seconds Let me begin with an update on the API plus business which includes our generate API and the formulation segment 17:23 17 minutes, 23 seconds in the API business. Our performance during FY26 has been driven largely by product specific dynamics rather than broadbased demand softness. 17:35 17 minutes, 35 seconds Three products in particular accounted for most of the impacts. two were delayed due to extended timelines for 17:42 17 minutes, 42 seconds change approvals and a third was affected by a facility related issue at a key European customer. These were 17:51 17 minutes, 51 seconds discrete identifiable issues and do not reflect any deterioration in the underlying competitiveness of the API portfolio. 18:00 18 minutes At the same time, we've been actively repositioning the portfolio and strengthening business development efforts to reduce dependence on small 18:09 18 minutes, 9 seconds set of products and expand engagement across a product opportunity set. 18:15 18 minutes, 15 seconds Business development teams are increasingly focused on newer molecules, alternate hosting opportunities and incremental wallet share with the 18:24 18 minutes, 24 seconds existing customers particularly in regulated and semi-regulated markets. 18:29 18 minutes, 29 seconds While near-term revenues have been impacted, inquiry flow and pipeline depth have significantly improved, 18:36 18 minutes, 36 seconds providing a more balance as we look ahead. 18:40 18 minutes, 40 seconds On the development front, there has been some interesting progress. We remain strongly on track to meet our filing and 18:48 18 minutes, 48 seconds pipeline objectives. Over the last nine months, we have completed eight DMF and 18:53 18 minutes, 53 seconds C filings against our target of 10. In addition, eight new products have completed lab development with two more 19:02 19 minutes, 2 seconds expected to be completed in the coming quarter. These developments materially expand our offering set to our business 19:10 19 minutes, 10 seconds development team and support deeper multi-product customer engagement. 19:15 19 minutes, 15 seconds Before I move to our foundation business, I'm really excited to share uh a couple of interesting developments. As 19:23 19 minutes, 23 seconds you may have heard earlier, we are working with a large European big farmer on life cycle management opportunities. 19:31 19 minutes, 31 seconds Happy to share that we ship the first validation quantity in the last quarter to the customer and the commercial for 19:38 19 minutes, 38 seconds this product will get materialized in FY28. 19:43 19 minutes, 43 seconds Another interesting development was with another big farmer company again based out of Europe with whom we have already been in relationship 19:51 19 minutes, 51 seconds here. After a long time we received approval to add a dedicated block for the product. This will enable us to have 19:59 19 minutes, 59 seconds the largest capacity globally for the customer who again has the largest market share globally. 20:07 20 minutes, 7 seconds Turning to formulation, a demand effort by one customer had a modest impact on the QC performance. That said, the focus 20:15 20 minutes, 15 seconds over the last year have been on diversification and pipeline liquidity rather than chasing immediate volume recovery. 20:24 20 minutes, 24 seconds BD efforts are increasingly centered on partner and niche formulation opportunities including products with 20:32 20 minutes, 32 seconds limited competition complex supply chain for long-term profit share potential. 20:38 20 minutes, 38 seconds We are also seeing a growing interest from our existing API customers to extend relationships into growth format. 20:47 20 minutes, 47 seconds During the year we completed five formulation pilings on behalf of our customers which has further strengthened 20:54 20 minutes, 54 seconds platform credibility annual earlier engagement during the product selection and qualification stages. Several of 21:02 21 minutes, 2 seconds these programs are progressing through customer qualification and regulatory review with commercial timeline typically linked to commercial launch 21:10 21 minutes, 10 seconds sequencing rather than internal constraints. 21:14 21 minutes, 14 seconds As shared earlier, the OI status of our NASA formulation site received in 21:21 21 minutes, 21 seconds September has since been progress to a warning letter. We have already implemented multiple remediation measures and are now executing an 21:29 21 minutes, 29 seconds enhanced supplementary program to comprehensively address the FDA's observations working closely with 21:36 21 minutes, 36 seconds existing with external experts. My production at the site has resumed. It will take some more time for the plant to return to earlier operating levels. 21:46 21 minutes, 46 seconds In parallel, we are also transferring static filing to alternate facilities to manage risk and ensure supply continuity. 21:56 21 minutes, 56 seconds As again mentioned earlier, we have also in on on the ADA plus side strengthened our talent base uh adding six resources 22:06 22 minutes, 6 seconds across level with strong industry credentials and operational rep. This enhances our ability to support a 22:13 22 minutes, 13 seconds broader and more complex pipeline as it matures. 22:17 22 minutes, 17 seconds the 9 months period uh EPA plus segment overall reported a revenue decline of 8% 22:24 22 minutes, 24 seconds year on year to 8.15 billion IR overall while FY26 reflects known 22:33 22 minutes, 33 seconds pricing resets approval timelines and shipment adjustments the Q4 order book remains healthy consistent with seasonal 22:41 22 minutes, 41 seconds seasonally stronger demand profile more importantly the pipeline across APIs and formulations is broader. 22:50 22 minutes, 50 seconds Ladies and gentlemen, please stay connected. The line for the management dropped. 22:59 22 minutes, 59 seconds Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Sir, please go ahead. 23:06 23 minutes, 6 seconds Thank you. Good evening everyone. Uh, so let me now cover the specialty chemicals business. To set the background as you are aware in specialty chemicals, we 23:14 23 minutes, 14 seconds operate across agrochemical, CDMO and performance chemical including OLED materials and photochromatic coatings 23:21 23 minutes, 21 seconds with global innovators. FY26 performance in specialty chemicals has been impacted by regulatory timing and program phasing 23:30 23 minutes, 30 seconds consistent with the longer gestation nature of this business. Engagement with a large Euro based agrochemical customer 23:37 23 minutes, 37 seconds continues supporting future pipeline development and medium-term monetization. 23:42 23 minutes, 42 seconds Also, I'm very happy to share that we have been shortlisted in the RFP stage for the patent regime AI which is active 23:49 23 minutes, 49 seconds ingredient by a US-based agrochemical innovator and more so we are fully back integrated for this AI which could help 23:57 23 minutes, 57 seconds us to position as a strategic partner for this active initiative. While near-term revenues are affected by 24:04 24 minutes, 4 seconds global macro conditions and qualification timeline, these engagements materially strengthen the resilience and visibility of the 24:11 24 minutes, 11 seconds business. We have made good progress in onboarding a Japanese customer with laboratory and pilot validation 24:19 24 minutes, 19 seconds successfully completed for the first project. We expect to submit the commercial qualification campaign for this project by the end end of FY27. 24:30 24 minutes, 30 seconds Now coming to performance chemical, we are cementing our relationships with key innovators in the OLED and photochromatic coding space. On the new 24:38 24 minutes, 38 seconds development front, we are working on applications of our existing technology platforms in chemicals used for 24:45 24 minutes, 45 seconds semiconductor chip processing. In 9 months, the specialty chemical segment reported a revenue growth of 32% Yon to 24:54 24 minutes, 54 seconds rupees 1.9 billion. Overall FY27 is expected to remain a transition year for 25:01 25 minutes, 1 second specialty chemicals with earnings improving as qualification programs convert across both agrochemical CDMO and performance chemical. Thank you so 25:10 25 minutes, 10 seconds much. With that I hand over to Himmanshu for the further updates. 25:16 25 minutes, 16 seconds Thanks Amit. Good evening everyone. Let me walk you through the financial impact of the specific drivers we outlined and 25:24 25 minutes, 24 seconds quantify how these timing and mix effect translated into our reported performance 25:32 25 minutes, 32 seconds at a high level. FI26 performance and be has been influenced by clearly 25:38 25 minutes, 38 seconds identifiable factors such as restocking in two large commercial products which together impacted revenue 25:48 25 minutes, 48 seconds by nearly 260 crores as customers normalized inventories earlier than anticipated. 25:55 25 minutes, 55 seconds Second, the temporary disruption of our natural formulation facility following the OI classification and subsequent 26:04 26 minutes, 4 seconds warning letter has led to a shipment deferral of approximately 55 crores. 26:11 26 minutes, 11 seconds Third, product specific customer related approval delays and demand softness in select API products. And finally, 26:20 26 minutes, 20 seconds subsidy performance has remained muted due to lower project renewals in the current biotech funding environment. 26:30 26 minutes, 30 seconds As FI26 is the first full year of NJ bio consolidation, the cost base is fully 26:38 26 minutes, 38 seconds reflected in our P&L while the revenue has lacked. 26:43 26 minutes, 43 seconds Importantly, these drivers are timing, product mix and consolidation related, not structural in nature. From a 26:52 26 minutes, 52 seconds profitability perspective, AIDA for the year has been impacted by three primary components. A shift in business mix with 27:01 27 minutes, 1 second lower contribution from higher margin commercial products and advanced CDMO programs. 27:10 27 minutes, 10 seconds operating deliberate resulting from lower revenue absorption while we have continued to invest in leadership 27:18 27 minutes, 18 seconds business development quality and our technology platforms. 27:23 27 minutes, 23 seconds Finally, the first year consolidation effect from subsidies where margins have remained subdued given the current biotech funding. 27:33 27 minutes, 33 seconds As you would observe, all these factors are timing and not structural issues. 27:40 27 minutes, 40 seconds Turning now to the reported numbers. 27:43 27 minutes, 43 seconds Given the inherently lumpy nature of the CDMO industry, we believe a 9-month view provides a more representative performance versus the quarterly trend. 27:54 27 minutes, 54 seconds On a 9th month FI26 basis, our revenue has declined by 6.7% 28:01 28 minutes, 1 second to 1650 crores. Gross margin has improved to 72.8% 8% up 204 basis points 28:10 28 minutes, 10 seconds year on year supported by product mix and the consolidation of recent acquisitions adjusted AIDA for 9 month 26 has 28:20 28 minutes, 20 seconds declined by 43% to 348 crores with adjusted AIDA margins at 21%. 28:28 28 minutes, 28 seconds For context, standalone adjusted AITA margins stood at 24%, highlighting impact of subsidy consolidation and neutered operating leverage. 28:40 28 minutes, 40 seconds In quart 356, the revenues declined by 19.5% to 545 28:46 28 minutes, 46 seconds crores, reflecting the lumpy nature of commercial draw down and shipment. 28:53 28 minutes, 53 seconds Gross margins have declined by nearly 126 basis points largely due to product mix tilted towards lower margin 29:02 29 minutes, 2 seconds business. Adjusted AIDA for quarter 3 stood at 85 crores with margins at 15 29:09 29 minutes, 9 seconds 12%. Standalone AIDA margins remain close to 19% again illustrating the effect consolidation and operating delage. 29:20 29 minutes, 20 seconds While near-term margin pressure is evident, this reflects business mix volume and consolidation dynamics rather 29:28 29 minutes, 28 seconds than a reset of platform structural profitability potential. 29:34 29 minutes, 34 seconds Turning to cash flows, despite earning volatility, the business continues to demonstrate resilence. During the first 29:42 29 minutes, 42 seconds nine months of FI26, we've generated free cash flow of 175 crores reflecting continued cash generation from the core 29:50 29 minutes, 50 seconds platform. Capital expenditure during the first nine months amounts to 161 crores 29:57 29 minutes, 57 seconds primal directed towards advancing our differentiated platforms such as ADC and oligoucleotides 30:05 30 minutes, 5 seconds strengthening our quality and compliance systems and selective capacity and capability upgrades aligned with our customer programs. Our balance sheet 30:13 30 minutes, 13 seconds remains sound and our capital allocation priorities remain unchanged. To conclude, while FI26 has reflected 30:22 30 minutes, 22 seconds timing related pressure and margin production mixed shifts, the underlying platform technology capabilities and our 30:30 30 minutes, 30 seconds customer engagements remain intact. With the action taken and the assumptions now embedded, we believe the business is 30:37 30 minutes, 37 seconds positioned for recovery as customer drawdown normalizes and our commercial assets scale progressively through FI27. 30:46 30 minutes, 46 seconds Thanks. And with that I'll hand it over to Sria. 30:50 30 minutes, 50 seconds Thank you Rahman Shu. I request the operator to open the Q&A. NRA. 30:56 30 minutes, 56 seconds Thank you very much. We'll now begin with the question and answer session. 31:00 31 minutes Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you 31:08 31 minutes, 8 seconds may press star and two. Participants are requested to use handsets while asking a question. 31:15 31 minutes, 15 seconds Ladies and gentlemen, we will wait for a moment while the question Q assembles. 31:25 31 minutes, 25 seconds The first question is from L of Forum Parik from BB Capital Markets. Please go ahead. Yeah. Uh thank you for the opportunity. 31:34 31 minutes, 34 seconds Um my first question is uh since we have lowered the uh revenue guidance for FY26 31:41 31 minutes, 41 seconds to mid to early to mid double digit. So my first question is um how are we uh 31:49 31 minutes, 49 seconds are we retaining our $1 billion USD uh sales target for FY30 and um u what 31:58 31 minutes, 58 seconds would be the drivers since you know uh FY26 has seen such decline. 32:09 32 minutes, 9 seconds Hi Puram thanks for the question. So yes, we are committed to our billion dollar guidelines. Timing might shift slightly because of the challenges we 32:18 32 minutes, 18 seconds have seen this year, but overall management is fully committed to the long-term guidelines that we have. 32:25 32 minutes, 25 seconds Okay. And uh my uh sub question would be since FI26 is going to see a decline so 32:34 32 minutes, 34 seconds um do we can we anticipate growth in FI27 or um it's still far away? 32:44 32 minutes, 44 seconds No. Yes, we are fully working uh for growth in FI27. 32:49 32 minutes, 49 seconds Um okay. And my second question, yeah, sorry. Yeah. No, go ahead. Yeah. 32:58 32 minutes, 58 seconds Okay. Uh my second question is on the API side. I see in the presentation that uh we have written uh order book 33:06 33 minutes, 6 seconds visibility is uh I mean uh recovery looks gradual uh in the order book for FY27 and since API contributes almost 33:14 33 minutes, 14 seconds 50% of our total sales. So how should we look at it? Can we anticipate growth uh 33:20 33 minutes, 20 seconds in FI27 and therefore um it can be uh it can be looked at a bandit level. 33:35 33 minutes, 35 seconds uh PM I think uh if you uh look at uh the commentary uh that was shared by 33:43 33 minutes, 43 seconds as well as subsequently by the business heads I think we are seeing lot of traction in our business. I think all 33:51 33 minutes, 51 seconds the business partners have talked about how they are seeing the business growth right. Uh and therefore uh API as well is looking at growth uh in the business. 34:05 34 minutes, 5 seconds The growth that we are reflecting in FI27 or indicating in FI27 is a function 34:11 34 minutes, 11 seconds of what offshoots we are seeing as of now which is what we have transparently shared uh with the larger community. 34:20 34 minutes, 20 seconds So yes uh to answer your question both FI27 as well as API uh we would be looking at both. 34:30 34 minutes, 30 seconds Okay. And um would would you like to quantify what's the growth we are looking at uh for FY27 uh on a blended level. 34:42 34 minutes, 42 seconds So forum I uh perfectly understand the question and the need uh of the question at this junction but uh given that we 34:52 34 minutes, 52 seconds are in February we are still in the midst of iron tightening our budget assumptions 34:59 34 minutes, 59 seconds and very carefully looking at the risk profile. We do understand the and you do understand as well that uh we have not 35:08 35 minutes, 8 seconds reached to our expectations in FI26 and therefore we are very very careful with the guidance that we give out hereafter. 35:17 35 minutes, 17 seconds I would request you and the community to be patient with us and give us some more time for us to validate test and give 35:26 35 minutes, 26 seconds you more color to FI27 in one or two quarters. Sure. 35:33 35 minutes, 33 seconds And third question if I may. Um are we calling out on the niche technology contribution for the quarter like 35:40 35 minutes, 40 seconds contribution from ADC and oligo uh for this quarter? 35:49 35 minutes, 49 seconds Yes. Uh I think I think two important aspects. 35:54 35 minutes, 54 seconds one we started calling out the niche technology percentage and the contribution which we have indeed called 36:02 36 minutes, 2 seconds up for this quarter but as I mentioned at the start of my communication on financials 36:10 36 minutes, 10 seconds we are a lumpy business and we are determined by the customer inventory 36:17 36 minutes, 17 seconds management and the forecasting so therefore quarter on quarter it is it is little difficult for any analyst to 36:26 36 minutes, 26 seconds attribute the percentages though uh we have called out the third quarter for 9 36:34 36 minutes, 34 seconds months it has been around 15% and that's what I would urge the community to look at 36:42 36 minutes, 42 seconds sure um that's helpful thank you and all the best thank you next question is from the line 36:51 36 minutes, 51 seconds of Alman Das from JP Morgan Please go ahead. 36:56 36 minutes, 56 seconds Yeah. Hi sir. Uh so my first question is regarding the Nacharam facility. Uh since it has been under uh OI since uh 37:04 37 minutes, 4 seconds the past few months and uh recently it also a warning letter and as you had pointed out that it had an impact of around 55 crores. So is this a peak of 37:14 37 minutes, 14 seconds uh the negative impact that we see from this facility or or should we bake in some uh more impact due to due to this 37:22 37 minutes, 22 seconds ongoing warning letter? That's my first question. 37:31 37 minutes, 31 seconds Uh Gunj uh can I request you to uh address this? 37:37 37 minutes, 37 seconds So uh sure thanks. So as you rightly said uh you know uh we received the uh first the 48 and then the OI which 37:46 37 minutes, 46 seconds subsequently got converted to a WL uh we are we are putting in all the efforts uh from our side we have recruit we've got 37:54 37 minutes, 54 seconds some really exceptional talent uh uh recruited in the team recently at the same time uh we are taking external 38:02 38 minutes, 2 seconds consultants help into it who are experts and have done the similar imitation exercises in the past and and we are not shying away from anything which is 38:11 38 minutes, 11 seconds required to to re to regain the confidence of the authorities and our customers there. There will be some uh 38:18 38 minutes, 18 seconds slowdowns for sure because there will be some delays uh while we implement the remediation uh activities. our revenues 38:26 38 minutes, 26 seconds or our production or dispatches and production for the non- US market would continue while the US will take uh 38:34 38 minutes, 34 seconds gradual uh you know uh resumption. 38:41 38 minutes, 41 seconds Additionally, I would also add our overall exposure to the site was uh quite uh uh limited. Only 2% of the 38:48 38 minutes, 48 seconds total uh revenues were to the uh US market from this site. 38:55 38 minutes, 55 seconds Okay. 2% of the US revenue as you said. 38:58 38 minutes, 58 seconds Uh so so following on that uh since uh it's a 39:05 39 minutes, 5 seconds 2% of US revenues you said right if I did I get it correctly 39:12 39 minutes, 12 seconds hello this is himu. No. So uh so what we have 39:20 39 minutes, 20 seconds uh mentioned is that it is 2% of our total revenue. So the plant contributes 39:27 39 minutes, 27 seconds 2% of uh the US sales. Yeah. But it is on the total revenue for the business. 39:37 39 minutes, 37 seconds Sorry it's still not clear. So is it 2% of the console sales or 2% of the US revenues per se? 39:46 39 minutes, 46 seconds it is less than 2% of the consolidated sales. 39:53 39 minutes, 53 seconds Okay, understood. Thanks. Uh, next uh my next question is regarding uh the RFQS since you have been saying that u you 40:01 40 minutes, 1 second have been gaining uh good traction on RFQS since the past few quarters. So I just wanted to understand what's the conversion rate on this RFQS as suppose 40:10 40 minutes, 10 seconds you have 100 RFQS from different customers. How many how how much of those actually converts to a commercial molecule and what's the typical timeline for that? 40:24 40 minutes, 24 seconds Uh Yan uh can we request you to take this piece? 40:29 40 minutes, 29 seconds Yeah, I I can take this the this part right. Um so first of all the the good 40:36 40 minutes, 36 seconds news um is that uh we are receiving much more RFQS that are phase three and commercial. 40:46 40 minutes, 46 seconds The nature of commercial RFQS is that it takes much longer for conversion right 40:53 40 minutes, 53 seconds because very often clients here have already one supplier and they are looking at the second supplier most likely to derisk their their supply 41:02 41 minutes, 2 seconds chain. So that's a good news and it takes more time to get conversion. So since the effort right has yielded at 41:10 41 minutes, 10 seconds least double the the value even more right in our funnel in the last quarter 41:17 41 minutes, 17 seconds which is good news. This funnel will uh will essentially release essentially 41:24 41 minutes, 24 seconds orders right in the next two to three quarters. That's what it takes. Okay. in term of percentage right of win on RFQ 41:35 41 minutes, 35 seconds um normally the percentage win is around 20%. That's what you can expect and it 41:41 41 minutes, 41 seconds depends on the uh on the face right very often. So what I can tell is that the 41:50 41 minutes, 50 seconds funnel that we have today is significantly better than what we had uh one quarter ago and that will continue 41:59 41 minutes, 59 seconds to increase with our business development team uh strategically located. Right. 42:06 42 minutes, 6 seconds Thanks. So and and if I could squeeze one more uh of these four molecules which are going commercial uh next year 42:14 42 minutes, 14 seconds uh what what could be the end market size that we could guess from that we could understand for these molecules 42:23 42 minutes, 23 seconds very good question it really depends on the application right um so I can give you an example one uh 42:31 42 minutes, 31 seconds uh one application is ADHD I mean the volume could be uh could almost triple digit metric tons right 42:40 42 minutes, 40 seconds for this particular application for oncology it's a different uh it's normally the the demand is much lower so 42:48 42 minutes, 48 seconds those molecules differ per nature given the uh the application so could you please quantify it in a 42:58 42 minutes, 58 seconds value terms in in dollar terms per se if if it's possible So 43:06 43 minutes, 6 seconds our clients might not know themselves, right? Uh so very difficult to quantify. 43:14 43 minutes, 14 seconds All right sir. Those are my questions. Thank you. Thanks a lot. Thank you. 43:22 43 minutes, 22 seconds Next question is from the man of Kunal Damisha from McQuary. Please go ahead. 43:27 43 minutes, 27 seconds Hi. Uh thank you for the opportunity. Uh the first one on the Nasaram plant. Uh we are seeing that the impact is around 43:35 43 minutes, 35 seconds 55 cr right now that represents around can you speak a little louder please 43:43 43 minutes, 43 seconds can you hear me now is it better yes hello yeah so naram impact of 55 cr 43:51 43 minutes, 51 seconds which represents around 2.1% of the full year 25 sales which means that if that's the impact 43:59 43 minutes, 59 seconds the sale of from that plant has gone to zero now in the 9 month FYI 26. 44:10 44 minutes, 10 seconds So Kunal uh I think the plant produces material that we supply to US and it 44:18 44 minutes, 18 seconds also produces material that we supply to non- US market. Yeah. I mean uh if you 44:26 44 minutes, 26 seconds would uh if you would recolct we had taken a voluntary shutdown 44:33 44 minutes, 33 seconds of the plant so that we could proactively remediate 44:40 44 minutes, 40 seconds and ensure that all kapas are adher to yeah we have 44:47 44 minutes, 47 seconds open the plant for non US markets and we continue to service the non- US market. 44:55 44 minutes, 55 seconds What you have seen 55 is an effect of both the loss of supplies to US market 45:04 45 minutes, 4 seconds as well as to non- US market during the period of the shutdown. So it's a mix of both. 45:13 45 minutes, 13 seconds Again to repeat we have opened the plant for non- US market 45:21 45 minutes, 21 seconds but then we are seeing that the plant contributes less than 2% of total sales right so then last year full full year 45:29 45 minutes, 29 seconds revenue was 2600 cr so then 2% is like 52 cr 45:37 45 minutes, 37 seconds let me let me clarify the plant total plant does not contribute to 2% revenue. 45:45 45 minutes, 45 seconds The total plant US revenues is less than 2% of our consolidated revenue which you 45:54 45 minutes, 54 seconds said in FI25 was 2500 crores. That is correct. But the qualification is that it is US revenue. 46:05 46 minutes, 5 seconds US revenue from the plant is less than 2% of total revenue. 46:10 46 minutes, 10 seconds That is correct. Thank you for that explanation. 46:14 46 minutes, 14 seconds Okay. Perfect. Uh secondly, uh the way uh you are talking about the detocking impact of do 60 cr from the two 46:22 46 minutes, 22 seconds commercial products. The correct way to understand this is uh 46:28 46 minutes, 28 seconds the 9 month FI26 or 9 month FI25 number for those two products minus 9 month FI26 number for those two products is 260 K. 46:38 46 minutes, 38 seconds That's the impact. That's the decline. Yes, that is broadly correct. 46:49 46 minutes, 49 seconds Okay. And let's say when you would have uh have you you know analyzed these two product as to how the innovator says 46:58 46 minutes, 58 seconds mood uh you know versus how the our supply how our supply move historically 47:05 47 minutes, 5 seconds and was there a way uh or a pattern for you to figure out uh you know that your supplies are running higher than the innovator says growth. 47:16 47 minutes, 16 seconds Uh have you done such exercise and if yes have you done extended such exercise for the remaining seven molecules which 47:24 47 minutes, 24 seconds we supply currently on a commercial basis. 47:30 47 minutes, 30 seconds Uh I would lean on to Yan to reply to you. I believe he has done lot of work on this. Yan please. 47:39 47 minutes, 39 seconds Yeah. So I mean good question and uh the answer is yes. Right. And so we we of 47:46 47 minutes, 46 seconds course uh um based on uh client interaction as well as market intelligence we develop our model uh for 47:56 47 minutes, 56 seconds our forecast right that's clear one one thing to keep in mind um uh as 48:03 48 minutes, 3 seconds information right normally between the the production of the key starting material where we are active right and 48:10 48 minutes, 10 seconds the consumption of the drug in the market you have about two years like two plus years. 48:17 48 minutes, 17 seconds As such, when uh uh when drugs are getting closer to uh uh patent expiry, 48:24 48 minutes, 24 seconds which is a case for of one year, what what's happening is that the originator will reset their their supply chain and 48:33 48 minutes, 33 seconds we have a new base right happening for the uh for the need of the key starting material based on the market that they 48:40 48 minutes, 40 seconds expect to to retain, right? So that's essentially what we have and of course we are trying to forecast properly with 48:48 48 minutes, 48 seconds marketing intelligence and customer interaction. 48:53 48 minutes, 53 seconds So Yan for the remaining seven molecules that we supplying these two uh you know 49:00 49 minutes would we be kind of you know comfortable uh with our forecast plan for the next couple of years that we won't see uh 49:08 49 minutes, 8 seconds such a hiccup in in uh majority of those molecules. 49:15 49 minutes, 15 seconds Yeah. Yes that that that is correct. In fact, what I mean um what what we have 49:22 49 minutes, 22 seconds right, we have a bodal distribution of our uh commercial pipeline, right? And what you 49:31 49 minutes, 31 seconds see is essentially a reduction [clears throat] in the the more mature part of the uh customer pipeline 49:40 49 minutes, 40 seconds where we can influence and where we are influencing right is the acquisition of new project that are freshly commercial 49:48 49 minutes, 48 seconds right or phase three and also what we have is uh when commercial drugs have been approved which is the case for many 49:57 49 minutes, 57 seconds of those that have been approved last year right have been approved in 20 in calendar year 2025, right? You can 50:04 50 minutes, 4 seconds project that for the next 10 years, you will have a constant growth for this uh 50:11 50 minutes, 11 seconds uh early st I mean for this first node right of the bodal distribution. 50:17 50 minutes, 17 seconds So that's why I mean what we are seeing today is a reduction in a more mature part of the portfolio right and what we 50:26 50 minutes, 26 seconds have is a actually pretty good uh pipeline on the early stage that will essentially render value for the next 10 years. 50:37 50 minutes, 37 seconds Sure. and and uh uh let's say uh for for a product where the patent expiry is not 50:44 50 minutes, 44 seconds a near-term concern of the two product uh is it just a inventory draw down or innovator would have added some new 50:52 50 minutes, 52 seconds source beyond us is there a clarity that you have so 51:00 51 minutes I mean in fact in the market right you have two phase where you have less predictability like one phase is when 51:09 51 minutes, 9 seconds it's getting closer to patent hiring, right? And the other phase is when the drugs have been freshly approved because 51:17 51 minutes, 17 seconds then the the the the marketer doesn't even have I mean very often doesn't know 51:24 51 minutes, 24 seconds I mean who doesn't know projects but the projections uh are never correct right nobody can project properly on how a 51:33 51 minutes, 33 seconds drug will uh will deliver. uh so so well right so what's happening is that you have a little bit more unpredictability 51:42 51 minutes, 42 seconds right when the drug is freshly approved and a little bit more predictability when the drug is mature our pipeline 51:50 51 minutes, 50 seconds essentially is very much heavy on those two end of the spectrum right so that explained a little bit the the less 51:59 51 minutes, 59 seconds predictability that we have right now in our in in our portfolio Sure. 52:05 52 minutes, 5 seconds And and lastly on the four uh molecules that we expect to commercialize uh right 52:13 52 minutes, 13 seconds and where to are already approved. So would we have uh like the master services agreement in the place and 52:20 52 minutes, 20 seconds waiting for purchase orders or uh we are get to sign MSAS for those products? 52:31 52 minutes, 31 seconds So for for those products we we always have contracts right I mean those contracts may or may not include uh 52:38 52 minutes, 38 seconds minimum uh orders right especially at the beginning that's where uh you have 52:45 52 minutes, 45 seconds because of the predictability I mean our our customers are also very cautious right how they approach the situation 52:54 52 minutes, 54 seconds my understanding is u you know during at the time of commercialization typically innovators uh are okay to 53:02 53 minutes, 2 seconds enter into a long-term contract. Uh right uh uh is that understanding 53:09 53 minutes, 9 seconds correct or uh there are all sorts of contracts that kind of go on? 53:18 53 minutes, 18 seconds I mean we I mean by nature right we have long-term contracts with uh with 53:25 53 minutes, 25 seconds customers. Those long-term contract might or might not include minimum orders, right? But by nature of the 53:33 53 minutes, 33 seconds business, there are long-term contracts with obligations. Okay. 53:38 53 minutes, 38 seconds Sure. Thank you. And lastly, uh for Himu, uh this 106 million reversal, uh what does it pertain to? 53:50 53 minutes, 50 seconds So, uh, that's essentially, uh, the ESOP. Uh, that's kind of you're looking at the employee, uh, line, right? 53:59 53 minutes, 59 seconds Yeah. Yeah. Yeah. 54:01 54 minutes, 1 second Yeah. Yeah. So, that's essentially on the ESOP. Uh, that's an ESOP address. 54:08 54 minutes, 8 seconds Okay. Uh, okay. Yeah. Thank you. Uh, I'll I'll move back in the queue. 54:18 54 minutes, 18 seconds Thank you. Next question is from the line of Shamsini Vasan from Goldman Facts. Please go ahead. 54:25 54 minutes, 25 seconds I thank you for taking my question. Good evening. Just two quick questions. One on this qualitative comment around the earlier than expected life cycle for 54:33 54 minutes, 33 seconds some mature commercial products. Just trying to double click here. Is that something that is industry specific? Do you think uh something that you're 54:40 54 minutes, 40 seconds seeing more uh because products do see end of life cycle all the time. So, has something changed uh now versus earlier? 54:56 54 minutes, 56 seconds Uh Yan, can I request you to please take this? 55:01 55 minutes, 1 second I mean the uh okay so the the question right what you're asking I mean is it a 55:08 55 minutes, 8 seconds standard in the industry to have this uh less predictability when uh when products get to uh the end of the life 55:16 55 minutes, 16 seconds the patent life right the answer is yes there's less predictability that's that's for sure especially when 55:26 55 minutes, 26 seconds you a key starting material supplier and the product that you make right essentially 55:34 55 minutes, 34 seconds made two years before uh the products are consumed in the market. 55:44 55 minutes, 44 seconds Yeah. And what has changed now that the predictability has become increased? I think I'm just trying to look for more qualitative evidence. And should we 55:52 55 minutes, 52 seconds expect this in the next what about 3 5 years that this unpredictable nature this two plus years you're seeing will probably continue. 56:02 56 minutes, 2 seconds Yeah. So uh that's what I was trying to explain. You have more unpredictability 56:08 56 minutes, 8 seconds when your um customer products right are in close to 56:15 56 minutes, 15 seconds patent expiry or have just been approved right and that's where the predictability is the highest when the 56:23 56 minutes, 23 seconds products have been in the market for four five years the predictability is much better in our case we have a a heavy load of uh 56:32 56 minutes, 32 seconds uh products in uh um in those two buckets I mean that's that's where our 56:40 56 minutes, 40 seconds our sales were right but as such that increase the predictability unpredictability for cohance versus 56:48 56 minutes, 48 seconds maybe other players may have a more balanced uh portfolio that with uh with products that have been for example 56:56 56 minutes, 56 seconds commercial since about five years we have less of those in our portfolio so it's a good news long term because we 57:04 57 minutes, 4 seconds have a strong uh uh early I mean early commercialized pipeline 57:12 57 minutes, 12 seconds that's helpful just second question on him the what we should think about margins I'm not asking for a quantitative number but 9 month I'm 57:20 57 minutes, 20 seconds again not using third quarter 9 month 24% for console 21% for standalone last year was like you know performer is 30% 57:30 57 minutes, 30 seconds so are we now moving to a slightly lower trajectory of margins again not looking at the quantity level but from the mix 57:38 57 minutes, 38 seconds of how we are 50% API right 40% um CDMO the rest is um uh spec so just want to 57:45 57 minutes, 45 seconds understand are we is there a downgrade maybe we come down and then start stabilizing there but just want to understand just the margin um walk there 57:54 57 minutes, 54 seconds thank you yeah uh so sham uh I think uh 58:03 58 minutes, 3 seconds the important aspects to understand is uh there is multiple factors that is in 58:09 58 minutes, 9 seconds that are in play here. Okay. And I had alluded to some of them. Uh let me try explaining them. 58:18 58 minutes, 18 seconds See typically uh the commercial products come uh at higher margins. Okay. And I 58:26 58 minutes, 26 seconds think Yan has alluded to the interplay that we have experienced as a business where uh we have have a lower mix of a 58:36 58 minutes, 36 seconds lower contribution of commercial products that's kind of had an impact on the margins. Okay. Right. The API 58:46 58 minutes, 46 seconds business comes with a relatively lower margin than the uh CDMO and the NIST 58:54 58 minutes, 54 seconds business. the hashtag business continues to do well and I think if you uh look at 59:01 59 minutes, 1 second the the trajectory that is coming in right so we've got we've talked about two commercial uh products which will 59:10 59 minutes, 10 seconds mature and two new commercial also I think which you've talked about okay and then there is new payloads kind of 59:18 59 minutes, 18 seconds coming in I would say that I would say that these are timing issues for us we 59:25 59 minutes, 25 seconds are not sensing that there is a change in the margin profile from a mid-term perspective but yes short-term is 59:34 59 minutes, 34 seconds impacted I wouldn't disagree and that's what is reflected in the current performance but we remain close to the 59:42 59 minutes, 42 seconds guidance that we have said that uh we will reach to the margin of 30 plus 59:50 59 minutes, 50 seconds which we had set but in short term we will you will have to allow us to get back to the right mix of the business. 1:00:00 1 hour Thank you and all the best. 1:00:03 1 hour, 3 seconds Thank you very much ladies and gentlemen. We'll take that as the last question. I'll now hand the conference to Miss Andrea Carvalo for closing comments. 1:00:13 1 hour, 13 seconds Thank you everyone for joining. We'll see you again in after the quarter four numbers. Thank you. 1:00:20 1 hour, 20 seconds Thanks everyone. Thanks. Thank you. Thank you. 1:00:26 1 hour, 26 seconds Thank you very much. On behalf of Cohance License Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.