Cohance Lifesciences Ltd — Q4 FY26

Cohance Lifesciences Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=AgK2hp7W_0o Published: 1 day ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to the Q4 and FY26 earnings conference call of Cohance Life Sciences 0:09 9 seconds Limited. As a reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to ask questions after the presentation 0:18 18 seconds concludes. Should you need assistance during this conference, please signal an operator by pressing star then zero on your Touchstone phone. Please note that this conference is being recorded. 0:29 29 seconds I now hand the conference over to Miss Cinderella Carvalo. Thank you and over to you ma'am. 0:36 36 seconds Thanks Darin. Good evening and good morning everyone. And thank you for joining Kohans Life Sciences quarter 4 0:43 43 seconds and FI26 earnings call. Today we welcome our executive chairman and group CEO Mr. 0:49 49 seconds Omar Gora on his first earnings call with Kohans. Joining me today are Mr. 0:55 55 seconds Yan our CEO Pharma CDMO, Mr. Gungjin, our CEO API plus, Mr. Amrit, our uh head 1:04 1 minute, 4 seconds specialty chemical and Mr. Himman Shuagarwaltime director and chief financial officer. Before we begin, I 1:12 1 minute, 12 seconds would like to remind you that today discussion may include forward-looking statements. With that, I will hand it over to Omar for his opening remarks. 1:26 1 minute, 26 seconds Thank you, Cinderella, and good evening to everyone on the call. Uh, I am very happy to be here. Having spent over 1:33 1 minute, 33 seconds three decades in this industry, I'm excited to be part of a platform that is anchored in science with capabilities 1:39 1 minute, 39 seconds such as ABCs and olonucleotides which are well differentiated and hard to replicate in terms of a value offering. 1:48 1 minute, 48 seconds Cohance is well positioned to be such a platform. 1:53 1 minute, 53 seconds It is also important to acknowledge the team behind the platform. The colleagues on this call along with the broad broader leadership group and our 640 2:02 2 minutes, 2 seconds scientists who bring this science to life every day represent a strong foundation. 2:09 2 minutes, 9 seconds My immediate priority over the next few months will be to spend time with our teams, customers and sites. By the end of this fiscal year, the intent is to 2:18 2 minutes, 18 seconds create a strategic blueprint for growth and sustainable value creation. 2:24 2 minutes, 24 seconds Over the next few years, we in intend to focus Cohans's capabilities and science on the predictability of 2:32 2 minutes, 32 seconds delivery backed by our strong quality and systems, a deep talent pool, and a pipeline that matters to our partners and our patients. 2:42 2 minutes, 42 seconds With that, I will hand it over to Yan. 2:46 2 minutes, 46 seconds Thank you uh Yanks and uh good evening everyone. 2:51 2 minutes, 51 seconds The pharmacy business reported revenue of 8.9 or 8.89 2:58 2 minutes, 58 seconds billion CR billion rupees for FY26 adjusting for the dtoing impact in the 3:06 3 minutes, 6 seconds two large commercial molecules. The business delivered an underlying growth of early single digit. Commercial 3:14 3 minutes, 14 seconds products contributed more than 70% of standalone pharma CDMO revenues in FY26. 3:22 3 minutes, 22 seconds Overall, we have more than 140 active projects across the pharmacy standalone 3:29 3 minutes, 29 seconds portfolio covering both development and commercial programs on small molecules. 3:38 3 minutes, 38 seconds While FY26 was impacted by customer inventory adjustments, order phasing and 3:46 3 minutes, 46 seconds slower reloads, engagement with customers for both the large commercial products currently under desktocking 3:54 3 minutes, 54 seconds continues to remain steady. We added one new phase three lateral program in small molecules with a large innovator along 4:04 4 minutes, 4 seconds with one program each in ADC and oligoucleotide advancing into phase three. With two programs progressing 4:12 4 minutes, 12 seconds towards commercialization, the total phase three pipeline now stands at 10 programs. Within the phase three 4:19 4 minutes, 19 seconds pipeline, one program is under priority review and another is awaiting clinical data readout expected in calendar year 26. 4:30 4 minutes, 30 seconds Of the two programs that recently entered commercialization, we have reset recently received orders for one 4:38 4 minutes, 38 seconds involving four intermediates with the other that is also expected to contribute during FY27. 4:48 4 minutes, 48 seconds Reload conversion remains uh quite high above 90% and new business conversion with innovator pharma and biotech 4:56 4 minutes, 56 seconds customers continue to be heavy on ADCs customer interest continues in payload 5:04 5 minutes, 4 seconds linker programs in FY26 we have filed three payload DMS and many 5:12 5 minutes, 12 seconds additional payload linker filings are on the way we are also seeing traction in newer payload platforms including exatican linked opportunities. 5:24 5 minutes, 24 seconds During the year, we initiated work on adjacent payload platforms based on customer inquiries. 5:30 5 minutes, 30 seconds At NJ bio, we continue to expand our integrated ADC capabilities. The 5:37 5 minutes, 37 seconds platform has successfully completed the first bio conjugation campaign during Q426 CGMP. 5:46 5 minutes, 46 seconds Expansion work of $10 million capex at the NG bio US facility is progressing to 5:53 5 minutes, 53 seconds support future scale phase 2 requirements and readiness in 5:59 5 minutes, 59 seconds olgonucleotide segment through the Sapala platform. We have received a follow on purchase order. The CGMP or 6:08 6 minutes, 8 seconds nicolonucleotide building block facilities under validation. Several customer qualifications and higher 6:14 6 minutes, 14 seconds complexity RFPs are progressing. During the last few months, we completed more than 20 plus audits and customer visits 6:24 6 minutes, 24 seconds from large and midsized innovator farmer and biotech customers. Several of these included senior customer teams visiting 6:32 6 minutes, 32 seconds our facilities. To summarize, FY26 revenues were impacted by restocking, 6:41 6 minutes, 41 seconds customer inventory adjustment, and delayed reloads. However, RFQ activity, customer audits, late stage programs, and pipeline building work continued. 6:52 6 minutes, 52 seconds The focus for FY27 is execution, order conversion and delivery visibility. With that, I will hand over to Gunja. 7:04 7 minutes, 4 seconds Thank you, Yan and good evening everyone. 7:07 7 minutes, 7 seconds The API plus business reported revenues of 10.88 billion rupees in FY26 reflecting a decline of 8% yearon year. 7:17 7 minutes, 17 seconds The softer performance was due to product specific factors, shipment delays and temporary disruptions at the 7:23 7 minutes, 23 seconds Nacharam formulation site. However, performance through the second half improved sequentially as the supply execution stabilized, the customer 7:32 7 minutes, 32 seconds engagement strengthened and the order conversion improved across key markets. 7:37 7 minutes, 37 seconds In APIs, the portfolio continues to remain broad and differentiated. Our top 15 leadership products contribute around 7:45 7 minutes, 45 seconds half of the API revenues and eight of our top 10 molecules continue to hold leadership positions. 7:52 7 minutes, 52 seconds The business remains supported by niche small to mid-volume products, diversified customer relationships, cost 7:59 7 minutes, 59 seconds competitiveness and backward integration capabilities. 8:03 8 minutes, 3 seconds During the year, the demand across therapies remained largely stable with growth primarily volume dead. While 8:11 8 minutes, 11 seconds select mature molecules experienced pricing pressure, this was substantially mitigated through higher volumes, operating efficiencies, portfolio expansion, and focused cost actions. 8:22 8 minutes, 22 seconds Importantly, the challenges during FY26 were concentrated around a limited set of products and customer specific 8:30 8 minutes, 30 seconds situations rather than deflecting any structural weakness in the portfolio. As highlighted over the course of the year, 8:38 8 minutes, 38 seconds we've continued to strengthen our development pipeline and diversify the revenue base. During FI26, we completed 8:45 8 minutes, 45 seconds 10 new findings and validated six more new products. We also advanced multiple new customer engagements including life 8:53 8 minutes, 53 seconds cycle management opportunities with European customers which are expected to scale progressively over the medium term. The breadth of the pipeline today 9:02 9 minutes, 2 seconds is materially stronger than it was a year ago and provides a broader platform for future growth. On the formulation 9:09 9 minutes, 9 seconds sides, revenues were impacted by approximately 610 million rupees during FY26 due to the temporary disruptions at 9:17 9 minutes, 17 seconds our Nacharam site and the associated shipment difference. 9:22 9 minutes, 22 seconds Production and US supplies have since resumed and remediation actions implemented over the past several months 9:29 9 minutes, 29 seconds are strengthening quality and operating systems at the site. 9:33 9 minutes, 33 seconds While utilization levels are still normalizing, customer engagement and order visibility have steadily improved. 9:40 9 minutes, 40 seconds In parallel, we have continued to actively manage supply chain continuity through alternate site strategies and closer customer coordination. 9:49 9 minutes, 49 seconds We expect further normalization over the coming quarters as execution stabilizes and the order book progressively converts into shipment. On the business 9:58 9 minutes, 58 seconds front, we we shifted five launches. We we supported five launches during the year while 10:05 10 minutes, 5 seconds additional two launches moved into the next quarter based on customer timelines. Further, there are a few very interesting and differentiated 10:12 10 minutes, 12 seconds opportunities in our formulation business that are shaping up. Most of these are leveraging our integrated API 10:19 10 minutes, 19 seconds and FDL frame. Overall, API plus enters FY27 from a significantly more stable operating base. The focus now is on 10:28 10 minutes, 28 seconds accelerating volume growth, improving asset utilization, expanding customer engagement across both APIs and formulations, and converting the 10:36 10 minutes, 36 seconds strengthened pipeline into commercial scaleup opportunity over the medium term. 10:42 10 minutes, 42 seconds With that, I hand over over to Am 3 billion in FY26, a marginal decline. 10:55 10 minutes, 55 seconds Uh Amritsa, sorry to interrupt. We missed some of your audio. I request you to please uh restart. Okay. Thank you, sir. 11:02 11 minutes, 2 seconds So, I'm starting from Specialty Chemical uh this thing. So, Specialty Chemicals reported revenue of 2.913 billion in FI26. 11:10 11 minutes, 10 seconds A marginal decline of 2.1% yearonear. 11:14 11 minutes, 14 seconds The business was impacted by customer program phasing, regulatory timing, and generics pressure. In agrochemical, we 11:21 11 minutes, 21 seconds continue to work on active ingredient and advanced intermediates. During the year, we saw progress in qualification campaigns, registration sample work and 11:30 11 minutes, 30 seconds new lab scale programs. Engagement continues with large global agrochemical innovators across qualification work, 11:38 11 minutes, 38 seconds registration sample and advanced intermediate programs. In the performance chemical business, photochrome coating application remains 11:45 11 minutes, 45 seconds relatively stable. The OLED business is going through a product cycle transition. We are also seeing early stage engagement in electronic materials and semiconductor link chemistries. 11:56 11 minutes, 56 seconds These are still at an evaluation stage and will take time to scale. For FY27, the focus is on converting customer 12:03 12 minutes, 3 seconds qualifications, RFQS and confirm orders into revenue. FYI 27 will be a qualification and readiness year for 12:12 12 minutes, 12 seconds parts of the portfolio with supplies expected to build as customer programs progress growth to return in FI28. 12:19 12 minutes, 19 seconds With that I will hand it over to Himmanu. Thank you. 12:24 12 minutes, 24 seconds Thank you Amit and good evening everyone. Let me take you through the financial performance for FI26. 12:31 12 minutes, 31 seconds Revenue stood at 22.68 68 billion, a decline of approximately 13% yearonear. 12:40 12 minutes, 40 seconds The adjusted AIDA stood at 4.77 billion. 12:46 12 minutes, 46 seconds Aida margin stood at 21% while our standalone adjusted aida margin were at 24.6%. 12:54 12 minutes, 54 seconds Q4 and FI26 performance were in line with the guidance we had shared last quarter. 13:01 13 minutes, 1 second Gross margin was at 70.8%. 8%. This was supported by product mix, backward integration, cost actions and benefit of 13:10 13 minutes, 10 seconds INR depreciation. Operating margins were impacted by low volumes, continued investment in business and weak performance by subsidies. 13:21 13 minutes, 21 seconds Towards the end of Q4, uncertaintities in the Middle East region led to escalation in logistics and freight cost 13:28 13 minutes, 28 seconds along with selective inflation in certain raw materials and key starting materials. While Q4 did not witness any 13:36 13 minutes, 36 seconds material impact from the situation, Q1 will experience impact of nearly 100 to 13:42 13 minutes, 42 seconds 150 pips on our FI26 gross margin levels largely on account of API plus business. 13:48 13 minutes, 48 seconds We are under discussion with some of our customers to share part of this cost inflation. 13:55 13 minutes, 55 seconds Capex during the year was rupees 2.515 billion. This was focus on ADC 14:03 14 minutes, 3 seconds olonucides manufacturing infrastructure and our quality systems. We expect capex spend of nearly 3 billion in FI27. 14:13 14 minutes, 13 seconds Free cash generated in FI26 stood at 1.73 billion. 14:21 14 minutes, 21 seconds In FI27, growth will return from second half of FI27 onwards. 14:29 14 minutes, 29 seconds Quarter 1 FI27 is to be low on both revenue and AITA largely on account of revenue schedules 14:38 14 minutes, 38 seconds skewed towards second half escalation in logistics and input cost arising from the Middle East geopolitical situation as well as higher operating cost. 14:49 14 minutes, 49 seconds Improvement in AIDA should become visible in the second half as the volumes recover, order conversion improves and product mix normalize. 14:58 14 minutes, 58 seconds We believe the business is moving towards a bottoming out phase with quarter 1 FI27 to be the low point. 15:07 15 minutes, 7 seconds We expect recovery becoming more visible from second half of FI27 supported by execution on existing programs, customer 15:17 15 minutes, 17 seconds conversions, reloads and improving utilization across the platform. With that, I'll hand it back to Cinderella. 15:25 15 minutes, 25 seconds Thank you, Himanchu. We will now open the floor for question and answers. 15:31 15 minutes, 31 seconds Thank you very much ladies and gentlemen. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 15:39 15 minutes, 39 seconds and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to 15:47 15 minutes, 47 seconds please use handsets while asking a question. We will now wait for a moment while the question queue assembles. 15:54 15 minutes, 54 seconds Our first question is from the line of Karthi from Suesh 16:01 16 minutes, 1 second Advisers. Please go ahead. Yeah. Uh good evening gentlemen. Uh Mr. Wong welcome to Cohand. Uh if this stock price is any 16:10 16 minutes, 10 seconds indication you are uh you know your presence is greatly appreciated. Uh so I had just a couple of clarifications. One 16:18 16 minutes, 18 seconds is if you could for FI26 that is split the CDMO revenues into ADCs small molecules Sapala and NJ and give an 16:27 16 minutes, 27 seconds outlook for 27 and beyond and a detail to that would be what is the contribution expected from the two 16:34 16 minutes, 34 seconds products uh which saw a big draw down last year uh and and what would be the likely contribution from the two new products which have been commercialized. 16:49 16 minutes, 49 seconds So s I'll answer part of this karthi uh sorry about that I'll answer 16:58 16 minutes, 58 seconds part of the question and then I'll hand it over to Mark. So from the contribution of the two large molecules commercial molecules that we've seen 17:07 17 minutes, 7 seconds dalking as communicated earlier the impact is around 260 crores. 17:15 17 minutes, 15 seconds Yeah. Yes. I said how much of that is likely to return in FI27 and the two new products what could be the likely contribution that was my question. 17:24 17 minutes, 24 seconds Yeah. So from a return uh we are in active discussion with both the customers and we expect there would be a return in 17:33 17 minutes, 33 seconds both these molecules. However, you will have to allow us to have meaningful conversations crystallize into orders 17:41 17 minutes, 41 seconds before which before uh we communicate to you on the actual amount uh on the new products. 17:48 17 minutes, 48 seconds Sorry Greece. 17:50 17 minutes, 50 seconds Yeah. Yeah. Uh you're saying there is no visibility as it is. That's what I'm to take away, right? 17:55 17 minutes, 55 seconds No. What I'm saying right now to you is there is a visibility because we are in conversations with the customers. What I 18:02 18 minutes, 2 seconds cannot confirm to you is the value at this stage but I can confirm to you that 18:09 18 minutes, 9 seconds we are expecting these material both these molecules to return back to us in FI27. 18:17 18 minutes, 17 seconds Fair and you were talking about the other two new products added to the commercial portfolio. 18:24 18 minutes, 24 seconds I'll ask Yan to contribute uh and answer that. 18:27 18 minutes, 27 seconds Yeah. So um with regard to the two new products that have been approved as indicated 18:37 18 minutes, 37 seconds in my speech, we have received four commercial orders for four key starting 18:46 18 minutes, 46 seconds materials with regard to one of the commercial uh drug. Right? So that's uh 18:54 18 minutes, 54 seconds revenue that will appear mostly in Q2 FY27 and in Q3 FY27. 19:04 19 minutes, 4 seconds With regard to the uh second product that has been approved, we are in active discussion in order to determine when those will be delivered. 19:16 19 minutes, 16 seconds Sure. Sure. And would you be able to call out the contribution of ADC to your CDMO revenue this year FI26 that is? And what is the likely growth in FI27? 19:26 19 minutes, 26 seconds I think we we are not providing that color right now but as we reassess the strategy maybe a few months later we 19:33 19 minutes, 33 seconds could consider that. Um but at this point uh we are not providing that car. 19:40 19 minutes, 40 seconds Sure. And one last thing before I get back in the queue sir uh would you be able to provide the breakup of the onetime expenses over the last two years roughly about 109 cr rupes. Can you 19:49 19 minutes, 49 seconds break that down so we have we have a clear understanding of the nature of these one-offs? 19:55 19 minutes, 55 seconds Your line is slightly he wants to know the breakdown. I will give maybe you can just tell him this year's. Yeah. So I'll tell you about this year. 20:03 20 minutes, 3 seconds I think this year uh this year on one time expenses there are two large elements. One is that we have taken a 20:12 20 minutes, 12 seconds one-off inventory provision which is around 195 million and we've also 20:19 20 minutes, 19 seconds provided for certain customer adjustments that's in the range of around 126 million. Onto 20:28 20 minutes, 28 seconds the point of ADC and oligo we've called out in the presentation that our nist as a percentage of revenue is 16.2%. 20:38 20 minutes, 38 seconds for the full year. Sure. Uh thanks and best wishes. 20:45 20 minutes, 45 seconds Thank you. Ladies and gentlemen, to ask a question, you may please press star then one. 20:54 20 minutes, 54 seconds Our next question is from the line of Sham Shinasan from Goldman Sachs. Please go ahead. 21:00 21 minutes Yeah. Uh thank you for taking my question and good evening team. Uh and welcome Oman. Um so I think first question is just on you know uh from a 21:09 21 minutes, 9 seconds forward-looking perspective uh I think I've seen the guidance that has been mentioned on the opening remarks and we missed the presentation uh Q1 supposed 21:17 21 minutes, 17 seconds to be weak and second half recovery so just uh if you could share u other than the base effect is there uh anything 21:25 21 minutes, 25 seconds tangible or qualitative that you could add um and if you could also give color across the three segments as well 21:32 21 minutes, 32 seconds spectrum API plus and 3DM So uh Sham this is Himmanshu 21:43 21 minutes, 43 seconds uh see at this stage as we've said that uh the second half would be when we would 21:50 21 minutes, 50 seconds uh see the growth returning right and uh the first half is weak with quarter one 21:58 21 minutes, 58 seconds in particular weak with both revenue and AIDA uh we do expect that there would be I 22:07 22 minutes, 7 seconds mean in the order of uh revenue it would be API followed by CDMMO and followed by 22:14 22 minutes, 14 seconds spec that would be the order but uh I would not be able to give you more dimension on it but that's essentially 22:23 22 minutes, 23 seconds what we are looking at uh so quarter one would be low the quarter two is our understanding where we expect the 22:32 22 minutes, 32 seconds quarter two to be stable and then H2 is where we calling out growth moving forward. 22:41 22 minutes, 41 seconds Uh thank you. Just second question to from your own vantage point. You have spent so much time in the pharma industry. Uh sir, what are some of the 22:50 22 minutes, 50 seconds uh things that you I know it's been a short time since you've been at Cohance, but just want to understand, you know, just to double click on your role and 22:58 22 minutes, 58 seconds what are some of the best practices you think you would like to bring or is it just enhancing already existing systems? 23:05 23 minutes, 5 seconds Just some philosophical thoughts around the path forward for comics. 23:10 23 minutes, 10 seconds Yeah, I think the I mean if I was to broadly and again look I'm sorry please don't hold me to it. It's been 9 days or 23:17 23 minutes, 17 seconds 10 days, but it seems to me that Cohans has attentioned significant places or 23:26 23 minutes, 26 seconds significant portions of the value chain in the ADC oligoucleotide chemistry and I think there are some that we will 23:34 23 minutes, 34 seconds continue to augment and build so as to offer a value offering that is probably unique and maybe more integrated. 23:43 23 minutes, 43 seconds Uh that's one of the things that we will do. Uh I think there are some chemistries on the small molecule on the on the API and the API plus side which 23:52 23 minutes, 52 seconds are pretty unique to what you know to what Cohance does which are around the areas of colored compounds around 23:59 23 minutes, 59 seconds certain types of chemistries which are which are which are important for Cohance and I think the intention is to build these further while improving the 24:08 24 minutes, 8 seconds product offering here. I think basically the capabilities of science, the capabilities of the ability to offer 24:15 24 minutes, 15 seconds differentiation is what I think uh Cohance would position itself to do and linked to that would be you know 24:22 24 minutes, 22 seconds operating leverage that hopefully will come out from the business as we begin to pull um you know as we begin to get 24:30 24 minutes, 30 seconds more revenue and we begin to optimize the type of expenditures that the business has invested in over the past couple of quarters. 24:38 24 minutes, 38 seconds So I think I I see those as u as important areas to go. It's really about embedding cohance into the value chain 24:46 24 minutes, 46 seconds of new drugs as well as you know of patent and unique drugs that uh that exist in our marketplace. 24:56 24 minutes, 56 seconds Uh thank you sir and all the best. Thank you very much. 25:01 25 minutes, 1 second Thank you. Our next question is from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead. 25:09 25 minutes, 9 seconds Yeah. Hi, thank you for taking my questions. Um, hi team. Now with Omang on board uh and some reshuffling and 25:17 25 minutes, 17 seconds some rethinking will invariably happen, we just as shareholders we look uh forward to some uh growth. Can I can I 25:26 25 minutes, 26 seconds just clarify that when we say H2 from current fiscal of H2 we will uh revert 25:32 25 minutes, 32 seconds back to growth. Will we be measuring ourselves against the previous YI basis 25:39 25 minutes, 39 seconds or the FI25 which was the last growth um Q3 and Q4 of fiscal 25? Are we benchmarking our 25:49 25 minutes, 49 seconds growth um or expecting that growth to come on the on that base the higher base? 26:01 26 minutes, 1 second Yeah. Uh so sajib this is Himmanu. 26:04 26 minutes, 4 seconds Uh so first of all I think the growth would be on a year-on-year basis. Okay. 26:11 26 minutes, 11 seconds I think that's important uh for us to relate to. Right? Having said that I'm not saying that there may or may not be 26:18 26 minutes, 18 seconds a growth versus the previous to previous year. I think what we must understand and I think I mentioned that to Karthi 26:26 26 minutes, 26 seconds that there is a large commercial which got dropped in the uh FI26 and as you know that we are ramping up 26:34 26 minutes, 34 seconds our commercial our phase 3 pipeline as we've called out has moved up to 10 and 26:42 26 minutes, 42 seconds from the nine it moved to 10 with two molecules moving out into commercial. So we have actually added three molecules 26:50 26 minutes, 50 seconds into the pipeline. So the commercial gets strengthened. 26:55 26 minutes, 55 seconds However, it does take time for the commercial to improve or for the innovators to make these products 27:03 27 minutes, 3 seconds commercial and therefore we would see a lag effect on the revenue and that's essentially what we are looking at from a business perspective. 27:15 27 minutes, 15 seconds Sure. 27:18 27 minutes, 18 seconds Sure. No, that's helpful. And if I could just conclude with my second question, I mean, what is likely to be the hardest 27:27 27 minutes, 27 seconds decision for you as a team you will need to make at Cohens in the next 18 to 12 months? Because see, ours is a regulated 27:35 27 minutes, 35 seconds business. It's a relationship based business where trust um compounds over many years with our customers. So in 27:43 27 minutes, 43 seconds that context what you think is the biggest priority for the team to sort of rebuild that confidence um both with 27:50 27 minutes, 50 seconds regulators and the customers so that when we get back to growth we we stay in growth mode for a very long period. 27:58 27 minutes, 58 seconds Thank you. 28:01 28 minutes, 1 second I think our the I can think of two things uh or or maybe three let me put out three things here. 28:10 28 minutes, 10 seconds uh one is the operational rigor. Uh when we have the green light to go, we can't be short of capacities, we can't be 28:18 28 minutes, 18 seconds short of product robustness and the quality systems have to be strong. 28:23 28 minutes, 23 seconds Uh the second point is customer relationships have to deepen and like Himanchchu was mentioning there are some 28:30 28 minutes, 30 seconds places where we beginning to see diversified customer base and diversified customer orders coming in uh 28:38 28 minutes, 38 seconds versus our historical reliance on one or two customers. 28:43 28 minutes, 43 seconds Uh and I think the third is just the science engine. uh we need to keep progressing our science engine whether 28:50 28 minutes, 50 seconds it's in the area of ADCs and oligouonucleotides and other emidite chemistries to even beyond into regular 28:58 28 minutes, 58 seconds solid dose chemistry and solid dose capabilities. So I think pushing the science envelope which means talent 29:06 29 minutes, 6 seconds pushing our quality envelope and the robustness of our offering right as well as pushing the ability to create and 29:13 29 minutes, 13 seconds sustain long-term relationships. I think those are the three things around which I think we will be making decisions 29:20 29 minutes, 20 seconds going forward. Uh I don't know if we're at a point where we will make tough decisions at this stage, but wherever a 29:29 29 minutes, 29 seconds tough decision is needed on where we allocate capital, it's likely to be in these three areas. 29:38 29 minutes, 38 seconds Thank you. Thank you. I wish you a very long and productive um career here at Gohan. Thank you so much. 29:45 29 minutes, 45 seconds Thank Thank you so much. 29:48 29 minutes, 48 seconds Thank you. Our next question is from the line of Sedhhat Nandhi with CWC. Please go ahead. 29:56 29 minutes, 56 seconds Hi, thanks for the opportunity. Uh um you just mentioned about uh a certain program concentration if you could share 30:04 30 minutes, 4 seconds the program and customer concentration in revenue for each of the three segments. Uh the second would be any any 30:13 30 minutes, 13 seconds specific examples of uh AI implementation that you are seeing which is enabling you either to get uh you 30:23 30 minutes, 23 seconds know uh better quality output or get output faster uh especially in the uh 30:31 30 minutes, 31 seconds the later stages of your programs. And lastly, if you could share any color on 30:37 30 minutes, 37 seconds the FI27 guidance in terms of um what growth can one expect and and I hear you on the the H1 H2 base. 30:53 30 minutes, 53 seconds Yeah, you'll take the first. 30:56 30 minutes, 56 seconds So let me clarify. Could you repeat the question on the uh customer concentration? 31:03 31 minutes, 3 seconds So could you could you share your customer concentration for uh the CDMO 31:09 31 minutes, 9 seconds segment uh by program or molecule and by customer? So what's the revenue salience 31:17 31 minutes, 17 seconds of the top one, top three and top five customers? Top one, top three and top five molecules. 31:24 31 minutes, 24 seconds So I mean we we don't give these uh level of details. Nevertheless, I mean I can answer some of the question on 31:32 31 minutes, 32 seconds customer concentration, right? Um and you can see that in our results, 31:39 31 minutes, 39 seconds right? So we have had by the past uh reliance on a few molecules right 31:46 31 minutes, 46 seconds historically and that's the reason why we are in the situation we are in today especially on the small molecule side of the business of the CDMO business. 31:56 31 minutes, 56 seconds the uh this concentration is changing positively year on year 32:03 32 minutes, 3 seconds meaning that there is less concentration in FY26 than there was in FY25 and there 32:11 32 minutes, 11 seconds will be less concentration in FY27 versus FY26 as we continue to develop our customer 32:19 32 minutes, 19 seconds project pipeline and that's essentially the message that's one way to derisk long term 32:27 32 minutes, 27 seconds I hand over to uh Shunan for the same question. Right. And and and and the API plus case which is you know a products 32:35 32 minutes, 35 seconds business um our uh top 15 products contribute nearly half of the API 32:41 32 minutes, 41 seconds revenues there and uh if I give you a favor around the kind of customers so nearly twothird of the revenues come 32:49 32 minutes, 49 seconds from customers who are uh innovators or large global generic or regional leaders 32:57 32 minutes, 57 seconds in generic space and only uh you Nearly one/ird is with smaller customers there. 33:07 33 minutes, 7 seconds Got it. 33:11 33 minutes, 11 seconds And uh and any FI27 guidance and any specific AI implementation that is 33:18 33 minutes, 18 seconds helping you either get uh through programs faster or get better quality output for for any of your programs. 33:30 33 minutes, 30 seconds I mean maybe maybe I I can answer this is Jan here on the AI related topic right so um what's important for us is 33:40 33 minutes, 40 seconds customer centricity and how we support our clients in their projects that's how we are successful as an organization as 33:48 33 minutes, 48 seconds such we've uh implemented some AI tools in order to improve our analysis on uh 33:56 33 minutes, 56 seconds on essentially our results right in order to be able to have proper communication with clients and offer as 34:04 34 minutes, 4 seconds well opportunities for improvement. So that's one example of use of AI tools that we currently have uh in our platform to support the client. Okay. 34:15 34 minutes, 15 seconds And I'll just add to couple of points there u on the AI use. We are uh we are in active discussions and evaluating 34:23 34 minutes, 23 seconds some some tools around uh which can help improve operational efficiencies and can also support us on the regulatory 34:31 34 minutes, 31 seconds aspects in terms of reducing our uh time to file and and improve the quality of filings there. Yeah, that's the limited use that that we are uh doing so far. 34:42 34 minutes, 42 seconds Additionally, we are also exploring you know the creation of data lakes and the databases that can help uh you know take 34:50 34 minutes, 50 seconds better and faster decisions uh going forward both on operational as well as customer side 34:57 34 minutes, 57 seconds any FI27 guidance across the Sat this is himu and uh yes we really 35:05 35 minutes, 5 seconds appreciate uh the lead to give a guidance but I think you would have to allow us some time to come back and give 35:13 35 minutes, 13 seconds guidance. At this stage, I think we are comfortable to share that uh the growth 35:19 35 minutes, 19 seconds will return from second half and quarter two would be stable while quarter 1 is a weak quarter both on revenue and aida. 35:30 35 minutes, 30 seconds Sure. Thanks. 35:33 35 minutes, 33 seconds Thank you. Our next question is from the line of Ashish from UTI. Please go ahead. 35:41 35 minutes, 41 seconds Yeah, thanks for the opportunity. Um, so given that you know between uh the standalone and the console uh there's a 35:48 35 minutes, 48 seconds difference in the margins. Uh so I wanted to have some details on safala and ng bio. Uh what is the projected 35:56 35 minutes, 56 seconds timeline for consolidated margins to return to the historical benchmark of 30%. So if you could give some color around this would be helpful. 36:08 36 minutes, 8 seconds So Ashish this is Hmanu. 36:10 36 minutes, 10 seconds So I mean uh at this stage uh one the results will enable you to get a sense 36:18 36 minutes, 18 seconds and appreciation of how the standalone and uh subsidy results uh are right. So 36:26 36 minutes, 26 seconds that would give you a good indication of uh uh the four to 5% plague that we're 36:32 36 minutes, 32 seconds looking at it and uh I think there is there is a recognition that is there. 36:39 36 minutes, 39 seconds you've called out that Sapala has a uh a reload on phase 2 phase three and that 36:48 36 minutes, 48 seconds could kind of uh help the Sapala business uh accelerate from here onwards 36:55 36 minutes, 55 seconds on NJO there is uh work being progressed with uh NJBio team in terms of bringing the business back to profitability. 37:08 37 minutes, 8 seconds uh but as I said uh we do need some time to kind of come back to all of you on 37:16 37 minutes, 16 seconds how this would shape up in the coming year and maybe I'll ask Yan to further contribute uh on the subject. 37:24 37 minutes, 24 seconds So on on the NG bio situation right we have a very important investment that is 37:33 37 minutes, 33 seconds currently uh being implemented to be able to support the bio conjugation program to phase one phase two. So this 37:41 37 minutes, 41 seconds is uh where a lot of the value moving forward is. As such I mean it takes 37:49 37 minutes, 49 seconds always some time here because it takes about one year to implement plus uh some time for validation and then uh being 37:57 37 minutes, 57 seconds able to ex execute all the different programs here. So give us here uh a little bit more than two years to get back to uh to this loop. 38:10 38 minutes, 10 seconds Okay, this is helpful. Uh lastly uh since you said recovery, the order of recovery would be API first. uh just 38:17 38 minutes, 17 seconds wanted to understand uh the second half recovery that you mentioned uh is that 38:24 38 minutes, 24 seconds dependent a lot on uh the API segment recovering and to that extent uh what I was trying to understand is the 38:31 38 minutes, 31 seconds naturaram uh formulation facility so what's the kind of dependency that we have uh when we say uh it would be a 38:39 38 minutes, 39 seconds second half recovery uh I think what I'd mentioned to sham was how we were looking at the H1. 38:51 38 minutes, 51 seconds When you're looking at recovery from an H2 perspective, we expect uh the CDMO 38:58 38 minutes, 58 seconds business to have an accelerated recovery and in fact all the three businesses we expect the recovery to be strong in the 39:07 39 minutes, 7 seconds second half. So it's just that the order book is skewed towards the second half which is why we are looking at a weak 39:16 39 minutes, 16 seconds quarter one and a stable quarter two. Yeah this helps. Thanks a lot. 39:26 39 minutes, 26 seconds Thank you. Our next question is from the line of Shria Chhattaji with ageless capital. Please go ahead. 39:34 39 minutes, 34 seconds Thank you for taking my question. My first question is uh just confirming the fact that you had mentioned that there would be four commercial molecule launch in FI27. 39:44 39 minutes, 44 seconds So I guess two molecules have already launched. So is that in uh progress like four total molecules to be launched in FI 26 and 27. 39:59 39 minutes, 59 seconds Hello. 40:01 40 minutes, 1 second Yep. So I confirm right two have launches and we expect of launch right when we expect two others to to launch 40:09 40 minutes, 9 seconds of course depending on the uh uh clinical performance and uh we expect this to be known within the next 12 18 40:17 40 minutes, 17 seconds months and would it be possible to give any color like in H2 how much are you expecting from this new commercial molecule launch? 40:28 40 minutes, 28 seconds I mean I think Imanu had uh provided the already the response. I mean we are not 40:35 40 minutes, 35 seconds yet ready to answer that question that will come later. 40:40 40 minutes, 40 seconds Got it. And also on the new uh phase three molecule that you have added on the small molecule side and the ADC 40:48 40 minutes, 48 seconds molecule that uh you had commercialized it will be possible to give some color to these two molecules 41:00 41 minutes of phase I mean this is the end again phase three we we normally don't provide too much color right this is early phase 41:08 41 minutes, 8 seconds three so we need a little bit more time even the the the client might not know 41:14 41 minutes, 14 seconds himself right the kind of volume that is expected here. 41:20 41 minutes, 20 seconds Got it. And also if it's possible like this question is to Himangu uh to provide the breakdown of other expenses for the full year which is like a big 41:29 41 minutes, 29 seconds amount 671 crores. Uh if if that's possible like where the major expenses uh heads going a rough breakdown of that amount it would be helpful. 41:42 41 minutes, 42 seconds So sh uh I mean so the financials have been declared and they have the 41:49 41 minutes, 49 seconds necessary split from that perspective. I mean I'm not sure what additional flavor you're seeking. If you can help me out 41:58 41 minutes, 58 seconds uh then what is possible we will certainly want to share uh like what are the major heads of the 42:05 42 minutes, 5 seconds expenses under the expenses which is like a big amount 671 cr because our gross margin seems to be quite high but when we convert it to adjust debita 42:13 42 minutes, 13 seconds margin we're losing out a lot one part is employee benefit expenses but then other expenses is also a big net so just u trying to understand what are the 42:21 42 minutes, 21 seconds major expense heads uh currently in FI26 so there is under the expenses. 42:28 42 minutes, 28 seconds Yeah. So of the so large portion of that is the conversion expenditure that's almost in the range of 400 plus 42:36 42 minutes, 36 seconds crows and then the balance uh 260 is a function of the marketing expenditure as 42:44 42 minutes, 44 seconds you know that we had a merger and therefore we were building the brand. So the brand building expenditure as well 42:52 42 minutes, 52 seconds as the entire SGNA actually the entire SGNA if you look at it whether it's a uh the office expenditure travel expenditure so these are all granular 43:00 43 minutes expenditure which is typically there uh in the business. 43:06 43 minutes, 6 seconds Got it. Got it. Thank you. Thank you ladies and gentlemen to ask a 43:13 43 minutes, 13 seconds question you may please press star and one. 43:17 43 minutes, 17 seconds Our next question is from the line of Chiag Sha from White Pine Investment Management Private Limited. Please go ahead. 43:27 43 minutes, 27 seconds Uh thanks a lot for the opportunity. Uh I have two questions. Question one on 43:34 43 minutes, 34 seconds some uh indication on the vacuum that has got created because of loss of two molecules. So yan and specifically for 43:43 43 minutes, 43 seconds you what is being done right now to ensure this kind of vacuum doesn't get created in future. So that's question 43:51 43 minutes, 51 seconds one I have and second question I'll ask once you respond to it it's for the second question is for 44:01 44 minutes, 1 second so thank you for for for the question right and uh and that's true uh we we mentioned it several time I mean we we 44:09 44 minutes, 9 seconds have a dip because of the high concentration in few molecules and the fact that some are getting close to 44:17 44 minutes, 17 seconds becoming generics right So what do we do about it right? Uh in order to bring growth is essentially expansion in term 44:26 44 minutes, 26 seconds of number of customers and uh uh being able to get um uh projects that are later phase in 44:36 44 minutes, 36 seconds the customer project pipeline to accelerate recovery. So that's what we are doing at the moment. We see uh good 44:43 44 minutes, 43 seconds traction with strong funnel uh that has been multiplied by two essentially in the last six months with regards to 44:51 44 minutes, 51 seconds small molecule that uh give us strong hope that we are going in the right direction. Yeah. 44:58 44 minutes, 58 seconds Okay. Uh and second question for um actually a slightly different question. 45:03 45 minutes, 3 seconds So since you have joined the organization uh have you been able to focus on corporate governance and uh 45:11 45 minutes, 11 seconds strengthening the processes uh or it has not been on your agenda as of now why I'm asking that in your 45:19 45 minutes, 19 seconds absence when you are not there it's coincidental that certain information and certain investor category 45:27 45 minutes, 27 seconds uh have coal aligned in that sense at the peak some information has got out and some investors have exited they have 45:35 45 minutes, 35 seconds reentered at the bottom of the stock price and since then the again positive announcements have started so it's a request if you look at the centering of 45:43 45 minutes, 43 seconds corporate governance/ information flow which have which I believe are happening selectively uh I could be I could be absolutely 45:52 45 minutes, 52 seconds wrong uh and I hope I am wrong so if you have not been able to spend time I would request you to focus on that uh that 46:01 46 minutes, 1 second that's that's my second No certainly I think as part of this role the governance uh requirement is uh 46:10 46 minutes, 10 seconds is paramount and uh I will be spending time on that as well uh in uh in the next few months. So but thank you for 46:18 46 minutes, 18 seconds raising this and I I hope you would be able to update us uh whenever you can maybe two quarters down the line on what changes have you made on this site. 46:29 46 minutes, 29 seconds Yes absolutely. Yeah. Yeah. Thank you very much. Thank you. 46:35 46 minutes, 35 seconds Thank you. Our next question is from the line of Siddhhat Nandhi with CWC. Please go ahead. 46:47 46 minutes, 47 seconds Uh just just a followup on the claim that you put in respect of the one-time settlement with the customer. A if you 46:55 46 minutes, 55 seconds could give some color on what that what that was towards and does that have any impact or bearing on that customer relationship and therefore the revenue 47:04 47 minutes, 4 seconds likely revenue impact going forward. Uh that was that was one question and uh on 47:12 47 minutes, 12 seconds the brand building expenses that were there. Therefore, do we expect those also to be more one-time in nature and 47:19 47 minutes, 19 seconds therefore uh some some cost savings on that in FI27 and going forward? That's 47:26 47 minutes, 26 seconds question two. Question three is if you could give us a uh a little bit of a break up on you know the number of 47:34 47 minutes, 34 seconds programs that you have underway and breakdown by phase into how many of those are phase one phase two phase three and commercial 47:46 47 minutes, 46 seconds so that on your first point I think the customer settlement is purely commercial and therefore given the nature of the 47:55 47 minutes, 55 seconds settlement we don't see any impact act on the revenue or on the relationship with the customers. 48:03 48 minutes, 3 seconds On the second question, uh uh yes, we would see a reduction in the marketing expenses given that a part of the brand 48:12 48 minutes, 12 seconds building has already been done. So, uh to the extent your observation is right. 48:18 48 minutes, 18 seconds And on the third, could you quantify that? Sorry, sorry, I'm interjecting. Could you quantify that? 48:25 48 minutes, 25 seconds No, I would not prefer to quantify that uh at this stage. I mean we do not give 48:32 48 minutes, 32 seconds specific categories of expenditure but yes there would be a reduction uh that would happen uh on that. Yeah. And on 48:41 48 minutes, 41 seconds your third question I'm going to uh request Yan to address that. So I think we thank you uhu 48:49 48 minutes, 49 seconds on the uh on the programs. I think we communicate on the phase three and commercial programs quite extensively. 48:57 48 minutes, 57 seconds It's part of the portal report as well. 49:00 49 minutes Right. So I think this information is uh is available. 49:04 49 minutes, 4 seconds What I can tell you as well uh is the quality of the programs that we are on boarding right now in phase one phase 49:13 49 minutes, 13 seconds two is also pretty strong with some clients also asking us to produce the uh 49:20 49 minutes, 20 seconds API or the complex molecule for them. So that's good news. I mean of course it's phase one phase two takes some time to 49:27 49 minutes, 27 seconds develop but that shows as well the uh the strength of the uh of the platform. 49:35 49 minutes, 35 seconds Thank you. 49:39 49 minutes, 39 seconds Thank you ladies and gentlemen. We will take that as the last question for today. I would now like to hand the conference over to the management for closing comments. 49:49 49 minutes, 49 seconds Thank you everyone for your time and joining us today. See you next time on the 41 calls. 49:56 49 minutes, 56 seconds Thank you on behalf of Cohance Life Sciences Limited. That concludes this conference. Thank you all for joining us. You may now disconnect your lines.