Granules India Limited — Q3 FY26

Granules India Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=AGN3TgoLeOw Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to Granules India Limited Q3 and 9month FI26 earning conference call 0:10 10 seconds hosted by MUFG Investor relation. As a reminder, all participant line will be the listenon mode and there will be an 0:17 17 seconds opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an 0:24 24 seconds operator by pressing star then zero on your touchstone phone. I now hand the conference over to Miss Prai Amre from 0:31 31 seconds MUFG Investor relation. Thank you and over to you ma'am. 0:36 36 seconds Thank you Danish. On behalf of Granules India Limited, I extend a warm welcome to all the participants on the Q3 and 9 0:43 43 seconds months FY26 financial results discussion call. Today on the call we have Dr. 0:48 48 seconds Krishna Prasad Chigurupati chairman and managing director, Miss Priyanka Chigurupati, executive director, Mr. MK 0:56 56 seconds Surana, Chief Financial Officer, Dr. Pi Shinas, Chief Technology Officer and Mr. Sanjay Kumar, Chief Strategy Officer. 1:04 1 minute, 4 seconds Before we begin the call, I would like to give a short disclaimer. This call contains some of the forward-looking statements which are completely based on 1:12 1 minute, 12 seconds our expectations, beliefs, and opinions as of today. The statements are not a guarantee of our future performance and involve unforeseen risks and 1:21 1 minute, 21 seconds uncertainties. With this, I would like to hand over the call to Dr. Krishna Prasad sir for his opening remarks. Over to you sir. Thank you. 1:30 1 minute, 30 seconds Thank you Prachi. Uh good evening ladies and gentlemen. 1:36 1 minute, 36 seconds Thank you for joining us today and for your continued interest in granules India. 1:42 1 minute, 42 seconds We trust you have had a chance to review the detailed presentation available on our website. 1:50 1 minute, 50 seconds Let me begin with our consolidated performance. 1:54 1 minute, 54 seconds Q3 FY26 has been one of our strongest quarters despite a temporary loss at our peptide CDMO business. 2:05 2 minutes, 5 seconds We reported revenues of 1,388 cr a 22% increase yearonearita 2:15 2 minutes, 15 seconds was 308 crores growing 34% over the same period last year. 2:21 2 minutes, 21 seconds Margins improved meaningfully driven by disciplined execution and better operating leverage. 2:29 2 minutes, 29 seconds This momentum reflects the strength of our diversified business model and the progress we are making on multiple fronts. 2:39 2 minutes, 39 seconds Regulatory and quality upgrade regulatory excellence continues to be a critical priority for us. We made steady 2:48 2 minutes, 48 seconds progress across all our facilities for this quarter. 2:52 2 minutes, 52 seconds Gagilapur facility our remediation plan remains on track. 2:58 2 minutes, 58 seconds We held a post warning letter meeting with the FBA in early January. 3:03 3 minutes, 3 seconds We will be submitting the requested documentation shortly. 3:07 3 minutes, 7 seconds Importantly, to date, the agency has not raised any concerns regarding the adequacy or pace of our corrective actions. 3:18 3 minutes, 18 seconds We expect a formal feedback after our submission and remain confident about the pathway to resolution. 3:26 3 minutes, 26 seconds As a prudent de-risking measure, we have filed select products from our US and GLS facilities. 3:35 3 minutes, 35 seconds The site also received NVA Brazil GMP certification reinforcing the improvement in our quality system. 3:45 3 minutes, 45 seconds GLS at Janome Valley. 3:48 3 minutes, 48 seconds The US FDA conducted an unannounced PAS and GMP inspection from 15th to the 19th 3:55 3 minutes, 55 seconds of December. We received five observations, none related to data integrity. Our responses were submitted within the stipulated timeline. 4:06 4 minutes, 6 seconds Earlier in the quarter, GLS received a PAS approval on 10th November and an EIR 4:13 4 minutes, 13 seconds on 11th December for the inspection held in August. 4:18 4 minutes, 18 seconds We have also received a CB30 approval following the recent inspection. 4:24 4 minutes, 24 seconds TPI in the US, our GPI facility received the I on 5th November, closing the PA inspection from June. 4:35 4 minutes, 35 seconds GCH, our US packaging site. The US FDA completed a GMP inspection on 4th 4:42 4 minutes, 42 seconds December with zero form 483s across the network. We continue to 4:49 4 minutes, 49 seconds advance digitalization of manual oper operations. 4:55 4 minutes, 55 seconds Several initiatives are already live at DPI. We expect to complete implementation at Gagilapur by midcal year followed by rollout to other sites. 5:07 5 minutes, 7 seconds While a lot of our consultancy costs have come down, we expect to invest into system enhancements which will involve 5:15 5 minutes, 15 seconds some capex and opex over the coming quarters. 5:19 5 minutes, 19 seconds These steps will strengthen both the reliability and resilience of our operation. 5:26 5 minutes, 26 seconds R&D filings. Our R&D and regulatory pipeline progressed well this quarter. 5:33 5 minutes, 33 seconds We filed one EU dosier which is DCP, eight new product registrations in rest 5:40 5 minutes, 40 seconds of the world markets through partners, four DMFs in rest of the world countries. 5:47 5 minutes, 47 seconds Approvals included a tentative USFDA approval for generic aenes from GPI, one 5:54 5 minutes, 54 seconds approval in Europe, two approvals in RW markets, one DMF approval in China. 6:02 6 minutes, 2 seconds Our increasing focus on RW markets supports our strategy to diversify beyond the US and Europe. 6:11 6 minutes, 11 seconds ESG progress sustainability continues to be a core part of who we are. This quarter, our 6:21 6 minutes, 21 seconds CDP climate change rating improved to A, up from B. 6:26 6 minutes, 26 seconds Our S&P CSS score increased to 62, placing us among the top 10% of our global peers. 6:36 6 minutes, 36 seconds We reinforce our commitments as a signary to the UN women's empowerment principles, UN global compact and PSVIR. 6:47 6 minutes, 47 seconds Our Gilapool facility achieves zero waste to landfill which is platinum plus with over 99% waste diversion. 6:58 6 minutes, 58 seconds We continue to make measurable progress across scope one, two, and three emissions. 7:04 7 minutes, 4 seconds Renewable energy, sustainable procurement and water neutrality initiative. 7:12 7 minutes, 12 seconds Preferential issue during the quarter. 7:15 7 minutes, 15 seconds We also took a strategic step to strengthen our balance sheet through the preferential issue which saw strong 7:22 7 minutes, 22 seconds support from shareholders in yesterday's EGM. 7:28 7 minutes, 28 seconds The proceeds from this issue enhance our financial flexibility and will be deployed prudently to support capacity 7:36 7 minutes, 36 seconds expansion, drive efficiency and pursue value accreative opportunities while maintaining a focus on governance and capital discipline. 7:47 7 minutes, 47 seconds We believe this capital raise positions the company well to accelerate growth and create sustainable long-term value for all shareholders. 8:00 8 minutes Strategic direction as we noted last quarter granules has entered a phase of renewed momentum. 8:10 8 minutes, 10 seconds Our strategic priorities remain clear. 8:14 8 minutes, 14 seconds Transitioning to higher complexity generics normalization at Gagilapur following 8:21 8 minutes, 21 seconds remediation and strengthening the quality systems holistically across all the facilities. 8:28 8 minutes, 28 seconds Strengthening our market presence across key geographies. 8:33 8 minutes, 33 seconds Scaling operations at GLS as regulatory milestones translate into commercial execution. 8:42 8 minutes, 42 seconds Building a differentiated peptide CDMO platform through SLS with rising innovator engagement. 8:51 8 minutes, 51 seconds These pillars position us well for sustainable quality growth. 8:57 8 minutes, 57 seconds For ease of understanding, we have broken down our portfolio strategy into integrated RX, complex RX and CDMO. 9:06 9 minutes, 6 seconds The definition and directions of which have been presented in our IR presentation. 9:13 9 minutes, 13 seconds To conclude, this has been a strong quarter operationally, financially, and strategically. 9:20 9 minutes, 20 seconds We remain committed to building a highquality, innovationdriven global pharmaceutical enterprise 9:27 9 minutes, 27 seconds supported by robust governance and a resilient multi-sight supply chain. 9:35 9 minutes, 35 seconds With this I now hand over the call over to Sanjay Kumar who will speak about our peptides and CDMO growth platform. Over to you Sanjay. 9:46 9 minutes, 46 seconds Thank you chairman sir. Uh good evening everyone. Uh let me briefly update you on the progress of our peptide CDMO platform aselis peptides and sen 9:55 9 minutes, 55 seconds chemicals. As anticipated, performance in the Q3 was modest but consistent with the transition phase we have discussed 10:03 10 minutes, 3 seconds earlier. Having said that, Q3 was an execution and activity intensive quarter focused on executing key projects, 10:11 10 minutes, 11 seconds increasing utilization and strengthening delivery readiness for the Q4. Also during the quarter Q3, we incurred high 10:19 10 minutes, 19 seconds operating costs on account of planned maintenance activities and additional shifts. additional shifts towards the 10:27 10 minutes, 27 seconds key customer project. The benefit of this increased activity are expected to translate as delivery conversion in the 10:33 10 minutes, 33 seconds next quarter that is the Q4. Uh from an execution standpoint, Q4 is anchored on delivering key projects where work 10:41 10 minutes, 41 seconds carried out over the last quarter is now moving into delivery stage. Accordingly, Q4 is tracking towards a meaningful improvement in performance supported by 10:50 10 minutes, 50 seconds ongoing project deliveries. Our focus remains on discipline execution, predictable delivery and strengthening customer confidence. 10:59 10 minutes, 59 seconds On the R&D front, we are seeing active collaboration between our Switzerland and India teams working together on live customer projects after 11:08 11 minutes, 8 seconds operationalization of our peptide center of excellence at IIT Hiserb. The India R&D setup has begun contributing 11:16 11 minutes, 16 seconds directly to the customer projects including development and execution responsibility. The R&D team is also 11:24 11 minutes, 24 seconds making progress on TSA peptide chemistries reinforcing our technology differentiation particularly in the 11:30 11 minutes, 30 seconds cosmetic segment. On the commercial F front front, our focus over the next couple of quarter is on progressing 11:38 11 minutes, 38 seconds feasibility discussions with our customers, seeding samples with those select customers, particularly in a minus derivatives and complex peptide 11:46 11 minutes, 46 seconds fragments and responding to the RFQS and the RFPs across the active pipelines. Uh these activities are focused on building 11:54 11 minutes, 54 seconds a conversion pipeline for the coming financial year and beyond the current financial uh the next financial year. 12:02 12 minutes, 2 seconds Uh with that I will hand over to MKkesh Surana uh chief financial officer who will take us through the financial performance. 12:11 12 minutes, 11 seconds Thank you CMD and Sanjay. 12:14 12 minutes, 14 seconds Let me take you all through key financial highlights for 23 FI26 revenue. The third quarter revenue were 12:22 12 minutes, 22 seconds rupes 13,879 million as compared to rups 11,377 12:29 12 minutes, 29 seconds million in Q3 FI25 a growth of 22% and revenue sequentially grew by 7% as compared to Q2 FI26. 12:38 12 minutes, 38 seconds Revenue growth was broad-based with strong contribution of formulation business in North America and Europe. 12:45 12 minutes, 45 seconds The sales breakup as per business division and geographic region are presented in our investor presentation which is available on the website. Gross 12:54 12 minutes, 54 seconds margin we delivered a gross margin of 63.9% in Q3 FI26 representing an 13:00 13 minutes improvement of 216 basis points year on year and decrease of 183 basis points sequentially. Year oneononear gross 13:08 13 minutes, 8 seconds margin improved with a better product mix with a finished dosage segment. EITA and EITA margin EIA for the quarter was 13:16 13 minutes, 16 seconds rupes 3,81 million that is 22.2% of sales as compared to rups 233 million that is 20.2% 2% of sales in Q3 FI25. 13:27 13 minutes, 27 seconds Meaningful improvement of 196 basis point from Q3 FI25 despite EITA loss of acelis peptides of rupees 2 248 million. 13:38 13 minutes, 38 seconds Quarteronquarter increase in ebitita loss of acelis peptides used due to regular and preventive maintenance taken up in December 25 at sen chemicals 13:47 13 minutes, 47 seconds facility. EITA as a percentage of sales for Q3 FI26 is improved by 75 basis 13:54 13 minutes, 54 seconds points from Q2 FI26. The improvement in EITA was primary due to sales growth and 14:00 14 minutes margin expansion. R&D R&D expenses for the quarter were rupes 689 million that 14:09 14 minutes, 9 seconds is 5% of sales as compared to rupees 568 million that is 5% to sales in Q3 FI25 14:16 14 minutes, 16 seconds and rupes 705 million that was 5.4% 4% to sales in Q2 FI26. We will continue to 14:23 14 minutes, 23 seconds spend similar amounts to support long-term strategic growth. Net debt, our net debt stood at Rs 10,151 million 14:31 14 minutes, 31 seconds as compared to Rs 10,241 million in Q2 FI26. 14:36 14 minutes, 36 seconds Cash to cash cycle, our cash to cash cycle has slightly improved to 202 days in the current quarter as compared to 204 days in Q2 FI26. 14:46 14 minutes, 46 seconds Net working capital as a percentage to sales was at 27% improved from 33% in the year beginning of cash flow from 14:54 14 minutes, 54 seconds operations. Cash flow from operations for the quarter was rupes 2,87 million as compared to rups 1,937 million in Q2 FI26. 15:05 15 minutes, 5 seconds Capex spent during the quarter was rups,298 million as compared to rups 2,12 million in Q2 FI26. 15:14 15 minutes, 14 seconds ROC ROC for Q3 FI26 is 16.8% as compared to 16.2% in Q2 FI26. ROC has 15:24 15 minutes, 24 seconds improved with the improvement in operating profit quarteron quarter. With this I open the floor for question. 15:34 15 minutes, 34 seconds Thank you sir. Ladies and gentlemen, we'll begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the 15:43 15 minutes, 43 seconds touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. 15:51 15 minutes, 51 seconds Ladies and gentlemen, I request you to please use handsets while asking a question. We'll wait for a moment while the question symbols. 16:03 16 minutes, 3 seconds Our first question come from the line of Krisha Kansara from Molecu Venture. Please go ahead. 16:11 16 minutes, 11 seconds Yeah. Hi, am I audible? Yes, ma'am, you are. 16:15 16 minutes, 15 seconds Yeah. Um, so, uh, thank you for this opportunity and, um, I joined the call a bit late. So, pardon me if the answer to 16:24 16 minutes, 24 seconds my question has already been answered in your opening remarks. But my question is on our Gagilapur facility. So, in the 16:31 16 minutes, 31 seconds last quarter, you informed that we were going to meet the FDA in January month. 16:36 16 minutes, 36 seconds So could you please update your investors regarding the same? Have we met them already? And if yes, could you please outline the next steps that we as 16:45 16 minutes, 45 seconds a company are required to follow before we clear this warning letter? Um, thank you. This is my question. 16:52 16 minutes, 52 seconds Uh, Krisha, we had a meeting with the virtual meeting with FDA early January and they have requested us for some more 17:00 17 minutes documentation which we'll be submitting shortly. The most important part is the agency has not raised any concerns 17:07 17 minutes, 7 seconds regarding the adequacy or pace of a corrector action. So once we submit our uh response and further information 17:16 17 minutes, 16 seconds um we will see what the FDA comes back with but we are uh that's it. Yeah. 17:23 17 minutes, 23 seconds Right. So uh would you be able to put a timeline to it like when are we expecting the final reinspection from their end? 17:32 17 minutes, 32 seconds We cannot put a timeline to that but we will be submitting a response uh quite early in the very near future but we'll 17:40 17 minutes, 40 seconds have to see how their agency I mean what timelines they're going to come out to but again like I mentioned 17:48 17 minutes, 48 seconds we have also been drisking we some of the filings have been happening in our US facility and also at our GLS 17:57 17 minutes, 57 seconds facility and some products are being site transferred to or GLS facility here too. Right amount of disasking is 18:05 18 minutes, 5 seconds happening even if it takes a little longer. Uh I mean it should not be a major problem. 18:14 18 minutes, 14 seconds Right. Right. Okay. Sure. Thank you. Thank you. 18:20 18 minutes, 20 seconds Our next question come from the line of Binoir Patramapil from Ara Capital. Please go ahead. 18:28 18 minutes, 28 seconds Hi um good evening. Um couple of questions from my side. Um one there is this 25 cr of loss from the peptide uh 18:39 18 minutes, 39 seconds franchise uh which you have given in the investor resolution. How has this moved uh across quarters from 1q to 3q and 18:48 18 minutes, 48 seconds what is the outlook for the next few quarters? 18:51 18 minutes, 51 seconds I think it's a good idea Sanjay takes this call. Sanjay. 18:56 18 minutes, 56 seconds Yes. So responsible for the peptide business and anything regarding peptide. 19:03 19 minutes, 3 seconds Yeah. So when so the numbers are comparable to uh the financial performance of the previous 19:11 19 minutes, 11 seconds quarter. uh in terms of outlook uh it this is uh a typical of a CDMO uh 19:19 19 minutes, 19 seconds business where the quartertoquarter valuation happens and as I covered as a part of my uh early commentary while uh 19:27 19 minutes, 27 seconds the financial performance was lower and as anticipated the quarter itself was 19:34 19 minutes, 34 seconds activity intense and our projects progressed u uh through the execution which typically take couple of quarters 19:43 19 minutes, 43 seconds and the outcome of the last quarter will be reflected uh in the Q4 and we're expecting a very meaningful improvement 19:51 19 minutes, 51 seconds in the Q4 performance and uh we do have a visibility over the next set of quarters and the numbers are uh 19:58 19 minutes, 58 seconds significantly improve over the past two quarters on the revenue basis. 20:07 20 minutes, 7 seconds Understood. Just to follow up on that uh when you say improvement in performance are you uh referring to a break even and a positive emitter sometime soon? 20:18 20 minutes, 18 seconds Yes. Uh I I exactly mean that and that is something that we covered in the last corn call as well that we expected 4 to 20:26 20 minutes, 26 seconds uh go above the the neutrality uh on the data that you asked. Uh so so we remain confident and we are on track to to to get to that position. 20:37 20 minutes, 37 seconds Q4 I think next quarter right this coming quarter. Yes the current uh ongoing quarter. 20:44 20 minutes, 44 seconds Okay. And what will drive that? Is it transfer of manufacturing to India or additional projects the that you have 20:52 20 minutes, 52 seconds taken off? What is leading to this sharp turnaround? 20:56 20 minutes, 56 seconds So I I won't uh put it as actively that like I you would assume the the lead 21:03 21 minutes, 3 seconds time to execute these projects go beyond a quarter. So we did have the visibility on the execution timeline for this and 21:13 21 minutes, 13 seconds we understood that those deliveries will happen in Q4. Uh again uh the quartertoquarter variation is very 21:21 21 minutes, 21 seconds unique to the CDMO business. uh so we did have the visibility we were executing during the Q2 Q3 and we 21:28 21 minutes, 28 seconds continue to execute through the Q4 and some of the key customer deliveries are happening in the Q4. 21:35 21 minutes, 35 seconds Understood. And can we also assume that it will remain uh in depositive drug territory through the quarters in FI27 as well? 21:46 21 minutes, 46 seconds So uh our our target uh is always to turn positive from next financial years but uh again I keep on saying the 21:54 21 minutes, 54 seconds quarter to quarters variation will remain a characteristic of this business but uh uh on a year basis we're turning 22:03 22 minutes, 3 seconds towards uh uh neutrality and profitability for sure. 22:07 22 minutes, 7 seconds Got it. Um thanks on that. And um second is there any cost related to uh 22:15 22 minutes, 15 seconds Gagalapur facility uh remediation still sitting in the P&L in Q3? 22:22 22 minutes, 22 seconds Yeah mir this side we know the remediation cost has substantially come down so it'll be in this normal levels 22:29 22 minutes, 29 seconds for few quarters and then will be negligible. It has come down substantially. 22:34 22 minutes, 34 seconds Got it. And one last question on US. If I look at your US revenues in dollar terms, um the last couple of years we 22:42 22 minutes, 42 seconds have added like 40 to 50 somewhere between 40 and $50 million every year to the US revenue. Um is that something um 22:53 22 minutes, 53 seconds which we can kind of uh look forward to in the coming couple of years as well? 22:59 22 minutes, 59 seconds That's what we aspire for and we are confident of that. 23:04 23 minutes, 4 seconds Got it. Thank you. I'll turn back to you. Thank you. 23:13 23 minutes, 13 seconds Our next question come from the line of Tushar Manuhani from Utila Los Financial Service. Please go ahead. 23:20 23 minutes, 20 seconds Uh thanks for the opportunity. So just on this assess peptide how much of the revenue would have been in this quarter or let's say 9 months. 23:30 23 minutes, 30 seconds So this quarter is 33 crores. Tusha. Okay. 23:37 23 minutes, 37 seconds And uh you know quarteron quarter last quarter it was uh 28 and the previous quarter also around 28 29. This quarter 23:44 23 minutes, 44 seconds 3 course higher uh and the loss has gone up which uh Sanjay also has clarified. I also clarified primly we have taken 23:53 23 minutes, 53 seconds higher execution activities both on the some of the active projects where the revenue will further come in Q4 and also 24:00 24 minutes we have taken up regular and preventive maintenance costs you know in December 24:09 24 minutes, 9 seconds so effectively that re maintenance cost will reduce and then there will be scale up in the revenue which is why the AIA break even for 24:18 24 minutes, 18 seconds you you're right Dan Even if I leave SI or even if I ex so if 24:26 24 minutes, 26 seconds I exclude let's say SLS revenue and the AIDA loss with respect to uh the SLS the X of that business is 24:35 24 minutes, 35 seconds also scaled up uh both in terms of the revenue as well as uh profitability. So 24:43 24 minutes, 43 seconds how that piece of the business will imp you know subsequently you know maybe like fourth quarter onwards or in FY27 given that the regulatory issue related 24:51 24 minutes, 51 seconds expenses are actually at least largely behind we might wait for inspection reinspection for uh developing site but 24:58 24 minutes, 58 seconds except that how to think about the growth in the business in FIRD you can 25:06 25 minutes, 6 seconds share some light on that. Yeah, Tusha, we are looking at uh sequential improvement both on the sales and uh 25:14 25 minutes, 14 seconds margin side and that will be driven by 25:21 25 minutes, 21 seconds that will be driven by ex you know one expenses operational leverage for sure uh and more than that in fact revenue as well. 25:34 25 minutes, 34 seconds that this is to do with our let's say core products or the new approvals uh and which geographies if you can give 25:43 25 minutes, 43 seconds more colors to um if you've seen Oh Priyanka go ahead you can answer that. 25:49 25 minutes, 49 seconds Yeah Tisha I'll answer that. Um a few things is the the last couple of quarters that you mentioned in our past 25:57 25 minutes, 57 seconds concourse also we while we were producing we weren't producing to the full of our capability. So right now we are going to be increasing capacities 26:05 26 minutes, 5 seconds and catering to all the avoids that we have in the US and to the other markets. 26:10 26 minutes, 10 seconds So just the operational efficiencies will increase productivity will increase and that will certainly increase uh the numbers going forward. In addition if um 26:19 26 minutes, 19 seconds all goes well with Gaza Lapur we'll have our launches in place that will also facilitate the growth. We have a few 26:27 26 minutes, 27 seconds CD30 approvals and some PAS approvals from the GLS site uh which we plan on launching that will also facilitate growth. 26:37 26 minutes, 37 seconds Got it. That's it. Thank you. Thank you. 26:43 26 minutes, 43 seconds Thank you. Our next question come from the line of Yesh. Please go ahead. 26:51 26 minutes, 51 seconds Hello. Can I order this? Yes ma'am. 26:55 26 minutes, 55 seconds Yeah, good evening everyone. So I just have one question. I wanted to gain some clarification on listing. 27:02 27 minutes, 2 seconds What's the product status? As we heard previously that GPI repeated FD approval for the same uh chewable tablets in 27:11 27 minutes, 11 seconds December 24 and then in January 25 capsules. Is there any revenue recognition also? I just wanted to gain some insight for Mr. 27:20 27 minutes, 20 seconds Yes, it's been uh four Yeah, sure. It's been four quarters um uh since we've launched uh listex caps and taps and it 27:29 27 minutes, 29 seconds provides a meaningful revenue addition to our US business. 27:34 27 minutes, 34 seconds All right. So, uh could you clarify some numbers of the revenue for the same? You know we don't get into product specifics 27:42 27 minutes, 42 seconds unfortunately but I will tell you that we have u we were a late entrance to the market but because of our kota history and our 27:50 27 minutes, 50 seconds compliance history with the DEA we were able to uh get meaningful share and we plan on increasing it as we keep going further. 27:59 27 minutes, 59 seconds All right. So will it be feasible for you to tell how much incremental demand this will signal since you mentioned 28:05 28 minutes, 5 seconds that the kota for us um the kota for lizeka has been introduced and in 24 it 28:11 28 minutes, 11 seconds was around 26k per kg whereas in 25 it was increased to 32k per kg and in 28:18 28 minutes, 18 seconds September 19 also it was raised so uh can we see any numbers from R and what benefit we can see 28:27 28 minutes, 27 seconds I'm sorry can you please repeat your Uh I mean to say that since Kota was 28:34 28 minutes, 34 seconds increased uh around September it was announced by USD that the kota has been 28:40 28 minutes, 40 seconds increased from 24 to um 25 and here approximately 40k per kg. So what 28:48 28 minutes, 48 seconds incremental demand does this signal and does the industry have sufficient end market demand to absorb it? 28:55 28 minutes, 55 seconds First of all, I'd like to clarify that without end market demand, the DEA will not increase the Kota overall for any 29:01 29 minutes, 1 second product. So yes, there is market and based on compliance history of each company and the continuous outflow of 29:09 29 minutes, 9 seconds products quarteron quarter based on legitimate demand. Um and again I want to say based on the compliance aspects 29:17 29 minutes, 17 seconds of that the DEA awards quotas to um the um suppliers that was my question. Thank you so much. 29:28 29 minutes, 28 seconds Yeah. Thank you. 29:34 29 minutes, 34 seconds Our next question come from the line of Ritwick Sit from OneUp Finn. Please go ahead. 29:39 29 minutes, 39 seconds Hi uh good evening uh sir. Uh sir couple of questions uh firstly sir the we've got an approval in principle approval 29:47 29 minutes, 47 seconds for amphetamine product uh in December across uh two dosage form uh and you've 29:54 29 minutes, 54 seconds mentioned the market size is 220 to $230 million perom and we are one of the few uh you know players to get approval for 30:03 30 minutes, 3 seconds this. So uh when can we expect the launch of this product in uh US and you know over a period of time what kind of market share uh can we uh garner? 30:16 30 minutes, 16 seconds I'll take that question. Um if you're referring to the approval of u generic ads it was a tentative approval. It's 30:24 30 minutes, 24 seconds not an approval yet because it is an IP based product. The overall uh value of the product right now including the 30:31 30 minutes, 31 seconds brand is about 170 million units. But there's only one other generic player in the market. Um, so but the timing of 30:38 30 minutes, 38 seconds launch I cannot uh confirm right now because it is a tentative approval which is in liquidation stage right now. 30:45 30 minutes, 45 seconds Okay. And and when do we get the final approval if at all we get it? It will take a year. 30:53 30 minutes, 53 seconds Okay. It will take a year. Okay. Got it. Yeah. 30:56 30 minutes, 56 seconds And uh second question is on uh control substance. uh what kind of growth did we clock in uh Q3 and 9 months FI26 in this segment? 31:08 31 minutes, 8 seconds I think we should start referring to this entire uh basket. Um instead of just looking at control substances, I 31:15 31 minutes, 15 seconds would urge you to just look at our investor presentation where we're segregating our divisions into um integrated pharma, complex, generics and 31:23 31 minutes, 23 seconds others. Um and within that um the definitions etc have been mentioned in the presentation but within the complex 31:32 31 minutes, 32 seconds generics range itself just uh from Y or Y growth Q3 to Q3 FI 25 to 26 we grew um 31:40 31 minutes, 40 seconds from 27% as a total contribution to 49% and Q1 Q we grew from 40% to 49% within the 31:49 31 minutes, 49 seconds complex generics range right so so control options would be a significant part of the complex generics. 31:57 31 minutes, 57 seconds Yes. 31:58 31 minutes, 58 seconds Right. Right. Okay. Got it. Uh this is helpful. And uh just one last question uh on bookkeeping. Uh so what was the remediation expense in uh Q3 FI26? 32:11 32 minutes, 11 seconds So uh it has been substantially lower almost half of what we incurred in Q2. 32:17 32 minutes, 17 seconds Okay. Got it. Uh thank you and all the best. Thank you. 32:25 32 minutes, 25 seconds Our next question come from the line of Sukrit Patri from Eyesight Fred Private Limited. Please go ahead. 32:31 32 minutes, 31 seconds Good evening to your team. Uh I have two uh powerlifting questions. My first question is uh as granules continues to 32:38 32 minutes, 38 seconds grow it sorry as granule continues to grow its formulations and uh CRMS business how do 32:47 32 minutes, 47 seconds you see capacity use and overall production level changing over the next uh one to two years in particularly how 32:54 32 minutes, 54 seconds will steps like uh making more of your own a uh APIs using automation in 33:01 33 minutes, 1 second manufacturing and strengthening regulatory compliance and be put into practice to improve efficiency, reduce 33:08 33 minutes, 8 seconds production time and keep uh the company competitive in the global markets. 33:13 33 minutes, 13 seconds That's my first question. I'll ask my second question after this. Thank you. By go ahead. 33:20 33 minutes, 20 seconds Um in terms of capacity utilization if I understood your question um right um we 33:27 33 minutes, 27 seconds will be at at Gazilapur we will have um some capacities over the next couple of quarters but GLS we will have 33:35 33 minutes, 35 seconds significant capacities and more importantly both the sites will have a lot of products in common so if there is uh a lot of demand that we see going 33:43 33 minutes, 43 seconds forward we can cater to it from both the sides and on the operational efficiencies could you please um repeat your question. 33:53 33 minutes, 53 seconds So we just want to understand uh who like uh what steps uh we taking you know 34:01 34 minutes, 1 second making more of your own APIs using automation in manufacturing and strengthening the regulatory compliance uh to reduce production time and keep 34:10 34 minutes, 10 seconds the company competitive in the global market. 34:13 34 minutes, 13 seconds I think uh to answer your question if if it's specifically about APIs almost all the APIs that we make we're already very 34:19 34 minutes, 19 seconds cost competitive. So when we talk about automation and digitization digitalization it's more to increase quality compliance to make sure that uh 34:28 34 minutes, 28 seconds we are one of the strongest companies um in quality going forward and quality has always been a strong pillar for us. 34:36 34 minutes, 36 seconds So that's where we'll be spending a lot of our resources with automation and digitalization. Thank you. 34:43 34 minutes, 43 seconds Let me let me clarify suggest uh okay the existing plans there is a level of automation already but any new plans 34:52 34 minutes, 52 seconds that are coming up including one API plan with a different type of differentiated technology in visak this 34:59 34 minutes, 59 seconds is going to be totally DCS driven and very few people on the site so even that will happen in addition to uh paperless documentation. 35:10 35 minutes, 10 seconds Good to hear. My second question uh is specifically to Mr. uh Mkesh. Uh you know with strong uh c cash flows and 35:18 35 minutes, 18 seconds ongoing expansion into CRMS and speciality formulations. How do you plan 35:24 35 minutes, 24 seconds to keep uh AITA margin steady while also funding new investments from a financial 35:32 35 minutes, 32 seconds process uh point of view? How will you handle the working capital more efficiently? uh manage currency risk on 35:41 35 minutes, 41 seconds export revenues uh and use digital tools to control costs so that roe and balance 35:48 35 minutes, 48 seconds sheets uh remain strong in the near medium term. Thank you. Thank you. It's a multi-loaded question. 35:57 35 minutes, 57 seconds AITA improvement of course you know with a uh good mix of formulation and getting into a larger complex generics the EIA 36:07 36 minutes, 7 seconds margin of course gross margin to EITA margin will continue to improve and uh thereby of course cash flow from 36:14 36 minutes, 14 seconds operation will be uh positive quarteron quarter at the same time with the increased sales there will be uh 36:21 36 minutes, 21 seconds investment in working capital at the same time we are seeing that you know how we uh steady state at the CCC days 36:30 36 minutes, 30 seconds uh even with the new launches and increase in inventory uh requirement how we efficiently manage the CCC days so 36:37 36 minutes, 37 seconds that working capital blockage is lesser with the growth as well that is a continuous process which we do and we do have on the forex side which you have 36:46 36 minutes, 46 seconds asked we have a good risk management governance and uh we balance hedging also accordingly 36:54 36 minutes, 54 seconds and uh if you see all of these processes are effective effectively manage that's how you see ROC is improving and return on equity is also improving you know 37:01 37 minutes, 1 second quarteron quarter with a business improvement thank you for the guidance and I wish the entire team best of luck for the 37:09 37 minutes, 9 seconds next quarter we don't give guidance uh to 37:16 37 minutes, 16 seconds it's all going to be positive that's all we can say no guidance thank you I I thank you and best of luck for the next quarter 37:24 37 minutes, 24 seconds thank you thank Thank you. Our next question come from the line of Abu Rafi from Weld Catalyst. 37:32 37 minutes, 32 seconds Please go ahead. 37:35 37 minutes, 35 seconds Thank you sir. Thank you for giving me the opportunity. So my question is earlier management had indicated that paracetamol demand was weak due to 37:42 37 minutes, 42 seconds elevated inventory. Uh could you update on the current inventory situation? Has the excess inventory largely been cleared sir? And how does the management 37:50 37 minutes, 50 seconds view the demand outlook for paracetamol over the next few quarters? You want to take that? 37:56 37 minutes, 56 seconds Sure, I can take that. Um, paracetamol as an absolute the if you talk about the inventory situation they in in certain 38:04 38 minutes, 4 seconds markets they have eased down. Um, and we are seeing an increase in demand from our key customers in both APIs, PFIs and 38:14 38 minutes, 14 seconds finished dosages. Um, while we are seeing good growth and that's what facilitated the growth in some of our 38:20 38 minutes, 20 seconds regions this quarter. uh we do see some amount of uh price erosion also in paracetamol but in terms of inventory uh the volumes are building back up. 38:33 38 minutes, 33 seconds Yeah, thank you ma'am. Thank you. That's what uh that was my question and thank you very much. Thank you. 38:41 38 minutes, 41 seconds Our next question come from the line of Vive Gupta from Star Investment. Please go ahead. 38:52 38 minutes, 52 seconds Mr. Gupta, you may please proceed ahead with the question. Yeah. Hi. Uh am I audible? Yes, you are. 39:00 39 minutes Yes. So, sir, uh could you outline the expected timeline for meaningful product launches from the uh Gome Valley 39:08 39 minutes, 8 seconds facility and uh like share your estimates on the incremental revenue contribution that is anticipated in uh FY27? 39:18 39 minutes, 18 seconds I'll take that question. Yes. Um we are going to be launching at least one product if not two products um which are 39:26 39 minutes, 26 seconds existing product u from the GDP site to cater to additional demand um that we have. So these two products uh will be 39:35 39 minutes, 35 seconds launched over the next couple of uh next two quarters, one to two quarters, but we'll start this quarter and we'll see an incremental uh revenue coming up and 39:43 39 minutes, 43 seconds we're also expecting once we have a European approval uh for that site, then we expect even more numbers to come in. 39:53 39 minutes, 53 seconds Okay. Okay. So uh with uh oncology and high value segments uh positioned as key uh long-term growth levelers uh how do 40:01 40 minutes, 1 second you plan to scale capacity uh build partnerships uh and you know uh progress uh regulatory fillings to unlock their potential. 40:11 40 minutes, 11 seconds Um so if you look at the uh three baskets that we have uh mentioned in our investor presentation um sequentially 40:19 40 minutes, 19 seconds even if you look at the R&D filings um in order of in in order of how they have changed over time you you'll see that 40:28 40 minutes, 28 seconds the the percentage of complex generics which is where oncology uh CNS and other products come into play they have 40:35 40 minutes, 35 seconds sequentially grown. So we plan on filing a certain number of products more inclined towards complex generics in the 40:43 40 minutes, 43 seconds future while integrated generics remain a core um area of focus as well. 40:51 40 minutes, 51 seconds Okay. Okay. Thank you. Thank you so much. Thank you. 40:57 40 minutes, 57 seconds Our next question come from the line of uh SA from SS Capital. Please go ahead. Hello. 41:06 41 minutes, 6 seconds Am I audible? Yes. Yes, you are. Yes, you are. 41:09 41 minutes, 9 seconds Hi. Uh, good evening. Actually, I joined a little late that uh I had a question regarding that the control substances that are emerging 41:18 41 minutes, 18 seconds as a key go driver key growth driver in the US market. Could you provide a greater visibility on the pipeline like 41:26 41 minutes, 26 seconds uh the outline the expected launch timeline and can you share how the management anticipates this products will contribute to your earnings for the next two three years? 41:38 41 minutes, 38 seconds I'll take that question also. Um in when somebody I sorry I forget the name but um somebody spoke to me about it in the 41:45 41 minutes, 45 seconds in the past couple of minutes. I mentioned that we should look at it as integrated generics, complex generics and others. So CNS, ADHD and control 41:54 41 minutes, 54 seconds substances are a part of the complex generics range. We have about eight to nine products um in the market. Five to 42:01 42 minutes, 1 second six out of which are um uh we have amongst the top three if not number one in the market today. Um so going forward 42:10 42 minutes, 10 seconds as immediat launches well immediat launches um meaning within the next year year and a half we have about three launches and they will three to four 42:18 42 minutes, 18 seconds launches and they will contribute to a very meaningful um percentage of our overall growth story. 42:26 42 minutes, 26 seconds Okay, got it. And also regarding the sensitive approval for amphetamine could you just elaborate on the 42:33 42 minutes, 33 seconds strategic importance of this molecule particularly in the terms of potential revenu contribution and I don't want to yeah 42:43 42 minutes, 43 seconds I can't sorry please finish your question no thank you um it is a very important very very 42:51 42 minutes, 51 seconds important uh product for us from a strategic perspective because it reinforces our strategy of filing limited competition products to be able 42:59 42 minutes, 59 seconds to get um to to be able to give um patients with with um uh ADHD immediate 43:07 43 minutes, 7 seconds access to products by launching genetics that are early to the market. And from a manufacturing and development perspective, these are difficult 43:14 43 minutes, 14 seconds products. These are products um that some of the products have been in the market with this particular product. 43:19 43 minutes, 19 seconds Well, there has been one generic for a long time but others have not been able to develop file and get approval um for 43:27 43 minutes, 27 seconds this product because of the complexity involved. So overall it is a very good product that fits exactly within the 43:34 43 minutes, 34 seconds pipeline that we have ambit for ourselves and it will contribute to a very meaningful amount going forward. 43:42 43 minutes, 42 seconds Okay. Got it. Thank you and best of luck. Thank you. 43:48 43 minutes, 48 seconds Thank you ladies and gentlemen. Anyone who wishes to ask a question may press star and one on their touchstone telephone. 44:03 44 minutes, 3 seconds As there are no further question from the participant, I would like to hand the conference over to management for the closing comments. Thank you and over to you management. 44:15 44 minutes, 15 seconds On behalf of the entire leadership team, I would like to thank all our shareholders, analysts, and participants 44:22 44 minutes, 22 seconds for taking the time to join us today. We value your insights and your continued trust. This brings our call to a close. 44:30 44 minutes, 30 seconds Thank you and have a wonderful evening. Thank you. 44:34 44 minutes, 34 seconds Thank you, sir. Ladies and gentlemen, on behalf of MUFG Investor Relation Limited, I conclude this conference. 44:41 44 minutes, 41 seconds Thank you for joining. If anyone disconnect your lines,