Sai Life Sciences Limited — Q4 FY26

Sai Life Sciences Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=Y-O8y7Acf6o Published: 1d ago

0:00 Ladies and gentlemen, good day and welcome to SAI Life Sciences Limited Q4 FY26 earnings conference call. As a 0:10 10 seconds reminder, all participants will be in the listener only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should 0:18 18 seconds you need assistance during the conference call, please signal an operator by pressing star then zero on a touchstone phone. Please note that this 0:25 25 seconds conference is being recorded. I now hand the conference over to Mr. Diwakar Ping from ENY. Thank you and over to you sir. 0:35 35 seconds Uh thank you. Uh good evening to all the participant in this call and good morning if you're logging into uh before we proceed to the call let me 0:43 43 seconds remind you that the discussion may contain forwardlooking statements uh may invol may not mean risk uncertainty and 0:50 50 seconds other factors. It must exude in conjunction with our businesses that could cause future result performance or achievement to defer significantly from 0:58 58 seconds what is expressed or employed by the power system. 1:02 1 minute, 2 seconds Please note we named the results and the presentation and the same is available in the company's website. In case you not receive the same you can write to us 1:10 1 minute, 10 seconds and be happy to send the same to you take us through the results and answer your questions. Today we have the top management of licenses represented by 1:19 1 minute, 19 seconds Krishna Kimi managing director and chief executive officer and Shiva full-time financial officer. 1:27 1 minute, 27 seconds We will start the call with a brief overview of the quarter missia then past um which will be followed by Shiva focusing on the financials and then 1:36 1 minute, 36 seconds we'll uh go over the Q&A session. With that said, I'll now hand over the call to Krishna Ki over Krishna. 1:44 1 minute, 44 seconds Thank you. Um uh good evening and thank you all for joining us today. We are pleased to report that life sciences has 1:52 1 minute, 52 seconds delivered a strong performance in FY26 with overall revenue growth of 29% growth of 56% and pack growth of 109%. 2:02 2 minutes, 2 seconds Both our CRO and CDMO segments registered healthy growth despite operating in an environment characterized by geopolitain 2:11 2 minutes, 11 seconds disruptions evolving regulatory expectations. This performance underscores the strength of our integrated CMO platform and our increase in relevance to global innovator companies. 2:22 2 minutes, 22 seconds A key highlight of our growth continues to be increasing contribution from large pharma in FY26. The revenue contribution 2:29 2 minutes, 29 seconds from our 19 farmer clients went up from 28% FY22 to 49% this FY26 2:38 2 minutes, 38 seconds building a full we are increasingly seeing a trend of large farmer moving to consolidate the full life cycle from 2:46 2 minutes, 46 seconds early development to commercial manufacturing similar to trends witnessed in China. Our CDMO strategy remains firmly anchored on deepening 2:54 2 minutes, 54 seconds engagement with large farmer clients. As you're aware, s life science today works with 19 of the top 25 global pharma companies. We believe that this 3:03 3 minutes, 3 seconds foundation gives us a strong platform to build our growth on. We continue to build a strong pipeline of commercial molecules with the tally standing at 34 3:11 3 minutes, 11 seconds commercial molecules in phase three pre-estration about 155 in earlier stages of development. Importantly, 3:19 3 minutes, 19 seconds we're also seeing strong traction in our dedicated development R&D team model with large and initiative we started scaling last year. We believe this model 3:28 3 minutes, 28 seconds will fundamentally reshape how we partner with large farmer towards larger, more customized and longer duration programs. On CRO side, our 3:36 3 minutes, 36 seconds integrated discovery continues to grow momentum partly with biotech customers. 3:41 3 minutes, 41 seconds Our CRO revenue mix between pharma and biotech stands at 48 to 52% versus 52%. 3:47 3 minutes, 47 seconds We're also seeing increased cross-selling opportunities with our CDMO large former customers reinforcing the strength of our integrated model. A 3:55 3 minutes, 55 seconds key differentiator for us is our focus on automation and scale in DMPK and biology enabling us to handle large integrated programs for our clients. At 4:04 4 minutes, 4 seconds the same time, we are investing in next generation technologies particular interest and program input from large pharma. 4:14 4 minutes, 14 seconds Let me touch upon a few broader industry trends shaping our strategy. First, evolving radiative landscape, particularly the FDA's push towards new 4:22 4 minutes, 22 seconds approach methodologies is expected to reshape discovery workflows over the next several years. While animal testing will continue to remain relevant for 4:30 4 minutes, 30 seconds complex toxicology and global regulatory environments, we expect increasing demand for biology heavy discovery services including invitro biology, 4:39 4 minutes, 39 seconds human cellbased assays and organides. We s is well positioned to capitalize on this shift and we continue to invest in 4:46 4 minutes, 46 seconds these areas. Second, biotech funding has shown encouraging signs of recovery with 4:53 4 minutes, 53 seconds uh key year-to- date funding up 52% year-over-year and April 2020 starting 5:00 5 minutes reaching 10.6 billion up over 4% year-over-year. IPO activity has also strengthened significantly. While 5:07 5 minutes, 7 seconds funding remains somewhat constant at larger late stage biotech companies, this trend still supports overall CRDM demand partly through increase outsourcing and program progression. 5:18 5 minutes, 18 seconds Third, we are closely monitoring evolving global trade environment including potential character developments. Increasingly, we are seeing large increasingly structured 5:27 5 minutes, 27 seconds deals in a way that mitigate tariff exposure. 5:31 5 minutes, 31 seconds We also remain mindful of near-term challenges. Ongoing gable tensions including medley situation are impacting input costs and dis disrupting logistics 5:40 5 minutes, 40 seconds and supply chains. Despite this, our customer conversation on visibility give us confidence as we enter FY27. 5:47 5 minutes, 47 seconds We continue to believe that our growth will be led by pharma driven by increasing outsourcing intensity, movement of biotech assets into pharma 5:55 5 minutes, 55 seconds pipelines and strategic long-term partnerships. 5:58 5 minutes, 58 seconds As we scale, a few priorities remain central to our approach. Science-led capacity expansion rather than POV 6:05 6 minutes, 5 seconds reactor lift growth. Continue product and pipeline diversification especially in CDMO given the inherent variability in product life cycles. Careful 6:14 6 minutes, 14 seconds management of customer concentration in FY26 top 10 customers contributed 54% top five 37% and top 12% of revenues. 6:24 6 minutes, 24 seconds Our top customer engagement spans multiple services reducing concentration risk at any service level. Given the momentum we have seen through FY26 and 6:33 6 minutes, 33 seconds the nature of customer discussions underway, we're entering an increasing investment cycle to support future growth opportunities. Our current 6:41 6 minutes, 41 seconds estimate for investment in FY27 is in the range of 1100 to,300 crores. 6:46 6 minutes, 46 seconds Importantly, these investments are being undertaken either with clear demand visibility or through active strategic conversation with the large customers. 6:55 6 minutes, 55 seconds Finally, on the digital AI transformation, we're investing cap capabilities that improve productivity, speed, and growth across organization. 7:03 7 minutes, 3 seconds We believe this will be an important lever in enhancing competitiveness and narrowing productive gaps across industry. At the same time, adoption of 7:11 7 minutes, 11 seconds AI within the CMO sector as we carefully balance customer confidentiality and data security considerations. Over the 7:17 7 minutes, 17 seconds next 18 24 months, we expect AI and datab will become increasingly embedded in not only enabling function but also across the core scientific and development workflows. 7:28 7 minutes, 28 seconds As we enter FY27, long-term operated model with strong farmer relationships, 7:36 7 minutes, 36 seconds technology investment position as well for sustained growth. We would like to reiterate aspects of maintaining revenue 7:43 7 minutes, 43 seconds growth to 15 20% while maintaining a margin in the 28 to 30% range over a three-year period. Just a pointer given 7:50 7 minutes, 50 seconds some new capacities and investment progressively coming on stream during the year. We expect second half of FY27 to be stronger than first half. With 7:58 7 minutes, 58 seconds that I will now hand over Shiva to talk through the financial performance. 8:05 8 minutes, 5 seconds Thank you Krishna. Uh let me begin by reiterating that system 26 has been a year of strong financial performance and discipline execution. We delivered a 8:14 8 minutes, 14 seconds revenue growth of 29% in a dicta growth of Pacific specific and the past growth of over 100%. This growth was supported 8:22 8 minutes, 22 seconds by balanced contribution from both the CRO and the CDMO businesses alongside continued operational efficiencies. 8:29 8 minutes, 29 seconds The CRO of the CDMO business for the year demonstrated a healthy growth rate. 8:34 8 minutes, 34 seconds 24% for CRO and 20 33% for the CDMO business. Our revenue contribution from the top 19 out of the 25 global large 8:42 8 minutes, 42 seconds farmer companies increased to 49% in FI26 as compared to 28% in FI22 demonstrating the steady deepening of 8:50 8 minutes, 50 seconds our strategic relationships. Our revenue mix continues to evolve in line with strategy with increasing contributions from PAMA clients across both sectors. 9:00 9 minutes While the overall revenue growth in fiscal 26 was 29% as compared to 16% in FY25, 9:07 9 minutes, 7 seconds the year fiscal 26 witnessed a relatively even distribution of revenues with the split between H1 and H2 being 9:14 9 minutes, 14 seconds 48 and 52% respectively as compared to 40 and 60% in fiscal 25. In addition, Q4 9:22 9 minutes, 22 seconds and Fiscal 25 was skewed at 34% of the total revenues as compared to 27% in 9:29 9 minutes, 29 seconds fiscal 26. As we've often stated, the CRDMO sector is inherently characterized by a degree of quarterly lumpiness, 9:38 9 minutes, 38 seconds particularly as projects transition across between stages. While this will lead to periodic fluctuations in revenue and margin, as Krishna mentioned, the 9:47 9 minutes, 47 seconds long-term opportunity for the CMO sector remains robust and our integrated model with strong PAL relationships and technology investments position as well 9:56 9 minutes, 56 seconds for sustained growth. We remain confident in our ability to sustain our long-term revenue growth guidance of 15 to 20% and that range of 28 to 30%. 10:05 10 minutes, 5 seconds As we enter fiscal 27, a key focus area for us is to invest in proactive capacity creation aligned with customer 10:13 10 minutes, 13 seconds demand. In fiscal 26, we incurred a capex of 633 crores and made a budgeted spend of 700 crores. For fiscal 27, we 10:22 10 minutes, 22 seconds expect capex in the range of 1100 to,300 crores split between CDMO at 65% and CRO at 35%. 10:31 10 minutes, 31 seconds We expect to fund the capex to a mix of internal approvals and debt. Our capex allocation will be split across capacity expansion, capability and technology. 10:42 10 minutes, 42 seconds 75% of the capex will go towards capacity expansion and the balance towards capability and AI and technology. 10:48 10 minutes, 48 seconds At the same time while we put these numbers of 1100 to 1300 crores we will continue to calibrate the pace and the 10:56 10 minutes, 56 seconds facing of these investments in line with the evolving business environment and closely align the trend with our customers strategic priorities and 11:04 11 minutes, 4 seconds demand visibility. Importantly our approach to capex remains science thread as Srishna mentioned rather than capacity heavy ensuring flexibility and higher long-term returns. 11:16 11 minutes, 16 seconds During the year, we navigated external headwinds including increases in input cost and higher logistics cost and shipping delays arising from evolving 11:24 11 minutes, 24 seconds geopolitical environment potentially continuing. At this point, we do expect some short-term impact on our cost structure. We have approached our 11:32 11 minutes, 32 seconds customers for appropriate cost provisions in certain areas. However, we believe that the recovery of these increases may not always be contemptuous 11:40 11 minutes, 40 seconds with the increments of cost. We continue to manage these challenges through operational efficiency, strategic sourcing initiatives, discipline 11:48 11 minutes, 48 seconds execution, and ongoing engagement with our customers. In closing, I want to reiterate that we remain committed to discipline growth, student capital 11:56 11 minutes, 56 seconds allocation, and margin resilience. Our balance sheet remains well positioned to support the next paper expansion, both in terms of debt and in terms of internal approvals that we projecting. 12:08 12 minutes, 8 seconds Near-term volatility can persist. Our medium to long-term outlook remains strong. 12:14 12 minutes, 14 seconds With this, uh, we'll be happy to take your questions. 12:18 12 minutes, 18 seconds Thank you very much, sir. We will now begin the question and answer session. 12:23 12 minutes, 23 seconds Anyone who wishes to ask a question may press star and one on their touchstone telephone. 12:29 12 minutes, 29 seconds If you wish to withdraw yourself from the question, you may press star and two. 12:34 12 minutes, 34 seconds Participants are requested to use handset while asking a question. 12:39 12 minutes, 39 seconds Ladies and gentlemen, we'll wait for a moment while the question queue assembles. 12:48 12 minutes, 48 seconds First question is from the line of bin Singh from Morgan Stanley. Please go ahead. 12:55 12 minutes, 55 seconds Uh hi team. Uh thanks for the opportunity. My first question will be on the Apex announcement uh that you shared. And now we've seen a very sharp 13:03 13 minutes, 3 seconds increase in capeex you know from 200 crores or so that we did two weeks back to now taking it up to 1,300 crores. 13:09 13 minutes, 9 seconds Could you talk a little bit about what is giving us the confidence for this level of uh jump in cex and uh is there any oneoff project that you're doing 13:18 13 minutes, 18 seconds next year which is leading to this or this sort of becomes our new level of cex could you share thoughts on these points? 13:27 13 minutes, 27 seconds So Ben, if you look at what we had indicated uh at Capex couple years back, it was based on what we thought the 13:35 13 minutes, 35 seconds demand was. But if you look at the last 18 months or so, we've been getting more involved with customers across the value 13:42 13 minutes, 42 seconds chain. And as we work with them closely, they're giving a better sense of what they would like us to look like and what 13:50 13 minutes, 50 seconds volume they can potentially come in our direction on the discovery side and CDMO side. as we are getting into more integrated collaborations uh 13:59 13 minutes, 59 seconds really being development partners we're having greater visibility in terms of pipelines rather than waiting for RFPs to come through. So I think given what 14:09 14 minutes, 9 seconds customers are telling us where we have to go in terms of technology in terms of better visibility of what they have in 14:16 14 minutes, 16 seconds the pipeline and what potentially can come our way and what they want us to see in terms of other technologies 14:24 14 minutes, 24 seconds coming in is building next generation technologies development for changes in peptide development uh in terms of uh 14:32 14 minutes, 32 seconds high throughput uh screening and biology to do more integrated programing s and in terms of the level of u data exchange 14:40 14 minutes, 40 seconds they need between us and them and also just the visibility in terms of not only what they are giving us for development 14:48 14 minutes, 48 seconds and pipeline we're seeing a lot more of the program than we had in the past and that'll give us better sense of what likely will translate probably 12 15 14:56 14 minutes, 56 seconds months down the road to commercial manufacturing so it's just better visibility a better engagement with our customers uh across both diversity of 15:06 15 minutes, 6 seconds areas to invest in like a new area was we were not very uh sure about what formulation would look like but we're 15:13 15 minutes, 13 seconds seeing a greater need for formulation developments as early on and so there's a lot more new things we getting from customers as we engage more and more 15:21 15 minutes, 21 seconds with them what is extremely clear is companies want to develop strategic 15:28 15 minutes, 28 seconds partners in India at this point and they want to see who will be relevant in next five years and they want the partners 15:36 15 minutes, 36 seconds who can understand work with them and build along with them and that's how we are playing this game at this point. So we have a lot of conviction behind these investments. 15:47 15 minutes, 47 seconds Uh uh thanks for that you know 15:56 15 minutes, 56 seconds sorry to interrupt Mr. B you are not audible. Hi sorry for that. You know one thing I noticed in your presentation you've added one more large farmer 16:04 16 minutes, 4 seconds customer right earlier you were working with 18 of 25 now it is 19 and if I hear you correctly in the opening remarks you said that you are now have a dedicated 16:13 16 minutes, 13 seconds research uh sort of a tie up for large farmer because earlier we had that's not what no no that's not what we're talking 16:22 16 minutes, 22 seconds that's not what we're talking about what we're talking about what pharma has done so if you look at in the past uh pharma never gave us late phase opportunities 16:30 16 minutes, 30 seconds ities for outsourcing and process development. They generally used to give us uh lateral tech transfers. So over the last couple years, several large 16:38 16 minutes, 38 seconds pharma have started getting into FD agreements for late stage and mid-stage development. Uh it's not a dedicated sit 16:46 16 minutes, 46 seconds or anything of that kind. It's just that these are dedicated FTEEs. We are running for large farmer between our global site both in India and uh 16:54 16 minutes, 54 seconds Manchester which has greater visibility into uh doing development. So they're mid and late stage assets and that's 17:02 17 minutes, 2 seconds what we mean by that as opposed to a dedicated centers the dedicated FDA teams working on development. I hope that clarifies that. 17:10 17 minutes, 10 seconds Yeah know that that's very clear and lastly could you comment a little bit about where the capacity will go with the scape and that's it from my side. 17:17 17 minutes, 17 seconds Thanks I'll let Shiva talk about the capacity where it's going. So as I connect the the capacities that we are adding today 17:26 17 minutes, 26 seconds I think our uh uh current capacities will take us to around the 1160k capacity that we had mentioned as far as 17:35 17 minutes, 35 seconds the capacity expansion is concerned. What we are doing a lot of this is actually going towards one investments in 17:44 17 minutes, 44 seconds discovery. Second there is investments in development phase that is kind of adding to our cost numbers. 17:51 17 minutes, 51 seconds uh you know if you if you if you remember last year we had mentioned to you that we had started the plan for 17:58 17 minutes, 58 seconds going from 700 KL to 1150K and we said that the FY26 capex will only take into 18:05 18 minutes, 5 seconds account capex that will be incurred in that fiscal year while both the plants will not get completed a majority of the 18:12 18 minutes, 12 seconds capex will also fall in this year so as I mentioned earlier uh out of the 18:19 18 minutes, 19 seconds 1100 to 1500 core capex direction that we have provided 75% of that will actually go and uh satisfy capacity 18:27 18 minutes, 27 seconds requirements 25% will be for capabilities. Thanks. Thanks. 18:37 18 minutes, 37 seconds Thank you. 18:39 18 minutes, 39 seconds Next question is from the line of Amed Chalk from GM Financial. Please go ahead. 18:45 18 minutes, 45 seconds Yeah. Thank you for giving the opportunity and congrats to the mans. 18:49 18 minutes, 49 seconds So the first question I have uh like uh the CDMO uh uh segment uh have delivered more than 30% growth uh during F26. Uh 18:59 18 minutes, 59 seconds so uh what will be the outlook for 2728 uh while answering that uh there are two data points from the PPD. Uh one is we 19:08 19 minutes, 8 seconds have added to large farmer customers on the commercial supply side. uh as well as uh our commercial uh products have 19:16 19 minutes, 16 seconds gone up from 30 to 34 from the last quarter. So uh how these uh uh two three opportunities on the commercial side uh 19:25 19 minutes, 25 seconds in terms of the uh uh the scale as well as in what areas these commercial opportunities are. Thank you so much. 19:32 19 minutes, 32 seconds Thanks. Um so am I uh so I think on the on the CDMO side I think what we have stated is that we we've stated that 19:40 19 minutes, 40 seconds there are uh I think even in the last conference call we had mentioned there were three new products that are actually gone commercial and we've added 19:49 19 minutes, 49 seconds one more product since then uh which makes it 54. So uh some of them you know at least a couple of them will see 19:58 19 minutes, 58 seconds production and uh commercial revenue starting this year. Uh other question you asked about is how is 20:06 20 minutes, 6 seconds the growth prospect? I think you know we believe that the CDM you know as as we start the fiscal year we believe based 20:14 20 minutes, 14 seconds on the visibility we believe the growth will be will be strong and we confident about a good financial year at this point in time. 20:24 20 minutes, 24 seconds Sure. And the second question I have on the margin front uh uh we have given the guidance that we will uh aim to maintain 20:31 20 minutes, 31 seconds margins in 28 to 30% range. Uh but there are two headwinds uh for the margins. 20:37 20 minutes, 37 seconds One is the uh RM cost inflation which could be there next year as well as the capex which is getting commercialized uh 20:44 20 minutes, 44 seconds at the end of the year or the second half of the year. So how should we look at the particularly in terms of the margins? Thank you. 20:54 20 minutes, 54 seconds So our our stated uh uh aspirational margin is to remain around the 28th 21:01 21 minutes, 1 second education. I'll tell you two reasons for it. one with Palmer generally there's an open book pricing and from what we've 21:09 21 minutes, 9 seconds seen and we've seen this across the Chinese companies at much operating at much larger scale the margins tend to 21:17 21 minutes, 17 seconds remain between the 25 30% which is what we've seen and our pricing with pharma 21:24 21 minutes, 24 seconds indicates that 28 to 30% is what is much more comfortable from a pharma pricing 21:30 21 minutes, 30 seconds perspective the second thing I think Will there be an operating leverage as we scale up? Yes. But there's also 21:38 21 minutes, 38 seconds capacity coming in and there's going to be some amount of inefficiency as we scale up new capacity which would then 21:46 21 minutes, 46 seconds add cost into the equation. So that is also mean something that we need to take care of and that's why we're giving you an operational guidance of 28 to 30%. I 21:55 21 minutes, 55 seconds know we've hit 30% this year but we still want to leave you with this guidance and this is consistent with what you stated all including last quarter. 22:05 22 minutes, 5 seconds Sure the last question if I can squeeze in on the CR side this is the second year I believe where we have delivered 22:12 22 minutes, 12 seconds 20% plus growth and over these years the large farmer contribution or the big farmer contribution have consistently 22:18 22 minutes, 18 seconds gone up. Uh so is this contribution going up? Is it incidental because the biotech funding has slowed down or is it 22:25 22 minutes, 25 seconds also strategic in nature and uh should we expect this uh large pharma contracts to keep driving our CR business going ahead? Thank you so much. 22:36 22 minutes, 36 seconds Um on that I'll take this question. So I think uh there are actually both at play right? One is strategic. I think large 22:44 22 minutes, 44 seconds farmer is very clear that they want to build India footprint. I think this far large farmer business did not exist in India a couple of years ago. There only 22:52 22 minutes, 52 seconds two three large farmer who were actively doing metam in India. I would say as close as three years back. But now every 22:59 22 minutes, 59 seconds large pharma is looking at uh coming to India to do discovery. So this will be a structural trend for the next uh few 23:08 23 minutes, 8 seconds years in terms of their big partners. uh but also I think biotech is just uh going through a little bit of slowdown 23:16 23 minutes, 16 seconds as well on the new company formation and we expect that to pick up in the next couple of years. So I think secular 23:23 23 minutes, 23 seconds trend you will probably see larger uh pharma coming in and filling the gap for the next couple years but biotech will 23:30 23 minutes, 30 seconds come back uh in the next 24 months and give us secure growth. So I think from that way the industry is well positioned 23:37 23 minutes, 37 seconds to kind of uh for the short and long term as where we are where we are right now and we're also at the early part of 23:44 23 minutes, 44 seconds this big right people are just coming chemistry but eventually the whole goal right now is to be fully integrated so I 23:51 23 minutes, 51 seconds think the opportunity is significant for us because our integrated story is something we've invested in on a biology and DMPK front which should probably 24:00 24 minutes give us an advantage uh in terms of being a preferred choice going forward right now. 24:07 24 minutes, 7 seconds Sure. Thank you so much. I will join the Thank you. 24:13 24 minutes, 13 seconds Next question is from the line of Sajjal Kapoor from anti-fragile thinking. Please go ahead. 24:20 24 minutes, 20 seconds Yeah. Hi, thank you for giving me this opportunity. 24:24 24 minutes, 24 seconds Hi team. uh in emerging modalities uh many outsourcing relationships uh begin in discovery but don't necessarily 24:34 24 minutes, 34 seconds translate into late stage clinical or commercial manufacturing so I'm alluding to one of your other CRDMO competitors 24:41 24 minutes, 41 seconds in India Bangalore based company what precisely increases the probability that Sai retains a molecule across the life 24:49 24 minutes, 49 seconds cycle and where do you still see the highest leakage age points today. That's my first question. 24:57 24 minutes, 57 seconds Um so I think I think there's a difference in how we have been built versus other companies. So if you look at way we have been built uh from day 25:05 25 minutes, 5 seconds one uh we've done this. So we actually were discovery company first but then we took a gap in terms discovery investment 25:14 25 minutes, 14 seconds and went very clearly in terms of becoming a preferred commercial partner and uh so as we become a preferred 25:22 25 minutes, 22 seconds commercial partner uh we also now in the last few years have become a preferred development partner. So we right now are working with companies in all three 25:29 25 minutes, 29 seconds areas right discovery development and commercial. And what is happening because we're integrated 25:36 25 minutes, 36 seconds uh there's a technology thing right so essentially what happens is when you're doing discovery people are looking at newer technologies like ADCs first 25:45 25 minutes, 45 seconds generation ADCs will be very different from next generation ADCs and so whatever we're doing in discovery the development teams also are doing 25:53 25 minutes, 53 seconds development to kind of reflect what their new generation ADCs look like and what the technologies are so because we 26:00 26 minutes are partners there as well and we're partners, it's much easier for them because we're qualified by all three 26:07 26 minutes, 7 seconds departments to work with them. Whereas other companies have not made that transition. Either they're very manufacturing heavy or discovery heavy 26:15 26 minutes, 15 seconds and they overlap a little bit on the discovery side, a little bit on the development side, but we're the only one only company really stitch all these 26:23 26 minutes, 23 seconds together and we're approved by all three of these areas. And that's the strength why we believe that we can retain uh 26:31 26 minutes, 31 seconds majority of the molecules. But that said, some molecules definitely leak out of us because either we don't have specific capacity, people want diversity 26:38 26 minutes, 38 seconds or they want to take the molecules inhouse. Uh but the chances of us retaining it are higher than most other 26:46 26 minutes, 46 seconds players at this point. That's how I would frame it. 26:50 26 minutes, 50 seconds No, thank you. Thank you Krishna. My second question is um and that explains um the whole scenario very well. So thank you for that. My second question 26:59 26 minutes, 59 seconds is historically many CRDMOS scale revenue faster than organizational 27:05 27 minutes, 5 seconds capability which eventually creates um execution fragility. So in that context 27:12 27 minutes, 12 seconds as Thai increases integration across discovery, development and manufacturing where do you believe complexity is kind 27:20 27 minutes, 20 seconds of um compounding um faster um internally or fastest internally that is complexity is compounding fastest 27:28 27 minutes, 28 seconds internally and what are the leading indicators you monitor before those kind of stresses show up uh in numbers or financially? Thank you. 27:39 27 minutes, 39 seconds Um that's a very broad question but again u unfortunately when right now 27:46 27 minutes, 46 seconds we're at a point right now that we are uh getting into a very interesting part 27:53 27 minutes, 53 seconds right uh we're scaling capacity uh we're scaling technology and we're getting deep in relationships so I think what 28:01 28 minutes, 1 second gives us the advantage to understand where the gaps are because we're very deep in relationships and not doing one-offs we get to have a much uh more 28:10 28 minutes, 10 seconds visibility in terms of what we are doing from a performance standpoint. I think the key I think if you ask me where the 28:18 28 minutes, 18 seconds key gap will be down the road is really figuring out how AI plays a big role in terms of bridging the productivity gap 28:26 28 minutes, 26 seconds visa v India and other uh geographies so to speak and getting the right talent pool who's next generation ready in 28:34 28 minutes, 34 seconds terms of working in the digital space because we believe AI is a great equalizer in terms of one uh is 28:41 28 minutes, 41 seconds intellectual horsepower uh in terms of uh basically knowing what's going on 28:48 28 minutes, 48 seconds everywhere more rapid problem shooting so I think we are putting all the tools in place so we have a much better view 28:55 28 minutes, 55 seconds of how to scale up where the gaps are and be proactive in terms of scaling up at this point and so the idea is there's 29:04 29 minutes, 4 seconds no magic bullet here rather than having your ears to the ground talking to customers regularly and this is a 247 business it's about every customer every 29:12 29 minutes, 12 seconds bird one day at a And that's how we are able to scale up. 29:16 29 minutes, 16 seconds It's that's really how it works. You want to add something to this? 29:21 29 minutes, 21 seconds Yeah, I think I think uh so I think to add to what Krishna said, right? I think the one advantage that is that we've seen right working with these large 29:29 29 minutes, 29 seconds pharma companies gives you and you know because you work with them closely they actually train you they work with you they kind of teach you their thought 29:37 29 minutes, 37 seconds processes everything from setting up of a lab setting up of experiments how do you kind of train what kind of things to look at how do you kind of look at a 29:45 29 minutes, 45 seconds problem right so I think that kind of gives us that ability to understand things and what we are doing to reinforce and kind of strengthen 29:54 29 minutes, 54 seconds We are just taking this as part of our learning. We've created our own what we call an internal SI academy that can 30:02 30 minutes, 2 seconds reinforces this teaching not just to that team that is kind of involved with this particular with any particular program to broad cases across the 30:09 30 minutes, 9 seconds organization. This is now headed by a senior head of uh research from a large farmer uh who has now taken this 30:17 30 minutes, 17 seconds full-time as an activity so that this can be a separate area for us and that's how we kind of make sure uh you know we 30:25 30 minutes, 25 seconds we we we keep at uh technology and science keeps changing every day and uh just kind of adding to that right 30:33 30 minutes, 33 seconds one thing we keep talking about is that we are building a technology leg growth so we really are focused on building the foundation 30:40 30 minutes, 40 seconds just not trying to overindex in one area because we realize that if you overindex one area then you're really not building the foundation. So we are very very 30:48 30 minutes, 48 seconds clear that we want to get the foundation right here and that's where we're spending most of the effort. Sorry go ahead another question. No that's sensible Krishna thank you for that. 30:56 30 minutes, 56 seconds Just on that AI thing I mean is it homegrown capability or is it something off the shelf that you know even the 31:03 31 minutes, 3 seconds competitor can buy off the shelf? I mean how do we plan to differentiate AI so that it adds to the real advantage? 31:11 31 minutes, 11 seconds Look I think it's a question of uh getting the framework ready for using AI and there a lot of tools coming in. One is obviously you want to use the tools 31:19 31 minutes, 19 seconds available and you have to understand we're going to be restricted in terms of uh what we can use of customer data. So 31:27 31 minutes, 27 seconds how much internal data we can use is going to evolve. Right now we have to depend on external sources. But it's not a question of just uh integrating AI. 31:36 31 minutes, 36 seconds It's a question of what is the long-term strategy of how you integrate across the board. It has to be a fundamental shift. 31:42 31 minutes, 42 seconds Cannot be I'm buying a single tool and this is what's going to work. It's not a single tool. It's a complete uh way of operation has to change. Um and right 31:51 31 minutes, 51 seconds now we don't know how it's going to evolve in terms of internal tools what customers want from IP standpoint. It's early days but the idea is to make 32:00 32 minutes ourselves digital ready to be able to plug and play different tools as they come in. But our our core process themselves should be datari to give us 32:08 32 minutes, 8 seconds the opportunity to uh evolve with as the tools evolve. 32:17 32 minutes, 17 seconds Thank you. 32:20 32 minutes, 20 seconds Next question is from the line of Girish Bakru from RBM. Please go ahead. 32:26 32 minutes, 26 seconds Yeah, thanks for bringing my question just on the suggest question only actually on the new modalities um Krishna possible to give a ballpark 32:36 32 minutes, 36 seconds figure you're targeting for revenue contribution from new modalities by say 30 given they sub 10%. 32:45 32 minutes, 45 seconds Um right now we're not in the position to give that information yet at this point. Uh we uh so we're not that far 32:52 32 minutes, 52 seconds along to be able to give full prediction of what that will be. uh but generally what happens if you really look at the trend of CIO just to be put in 33:01 33 minutes, 1 second perspective right we tend to basically follow whichever way the pharma companies are going if you look at where 33:07 33 minutes, 7 seconds pharma is going today uh it's 50% pure small molecule then the next 30% will be 33:15 33 minutes, 15 seconds uh peptides uh holucleides and ATC's so that's what they consider biologic so 33:22 33 minutes, 22 seconds 80% is going to be covered there so over probably a five to seven year from now, you see a similar mix. Uh 33:31 33 minutes, 31 seconds purely from a not a SI perspective, but anybody who plays in those areas, you tend to follow the customers from that 33:38 33 minutes, 38 seconds standpoint. If you look at the way the market is that might flip, right? In in two years, people might say, you know, peptides are useless. We go someplace 33:45 33 minutes, 45 seconds else. But it's very hard for us to forecast what it looks like because we are almost like the uh we're almost like 33:53 33 minutes, 53 seconds we are following the customer and that can switch any time. But the important part of being a CR and RP is to be a 34:00 34 minutes fast follower, be close enough uh to be able to change the trend but not be on the bleeding edge where you left uh left 34:08 34 minutes, 8 seconds with the dead investment. So that's how kind of how we look at it. 34:12 34 minutes, 12 seconds Understood. And of course you highlighted four of these key ones. Uh just one key question there. I mean 34:20 34 minutes, 20 seconds there are a lot of lowhanging foods but where do you think you will potentially take a high market share? Is it uh more 34:28 34 minutes, 28 seconds peptides or I mean you you're doing right now fragments you're limiting yourself to anides and oligos. Um ADP 34:36 34 minutes, 36 seconds side also you said that you're evaluating clinical conjugation. So which which area do you think will be a 34:44 34 minutes, 44 seconds possibly a big focus area uh of these four and probably you need to do also 34:54 34 minutes, 54 seconds um what do you have to say at this point I love to come and give you that grant I can't really uh give you the exact sequence how that's going to go right 35:02 35 minutes, 2 seconds like it's uh it's it's how right now I honestly we can't predict that uh at this 35:12 35 minutes, 12 seconds customer molecule. So you never really know which 35:24 35 minutes, 24 seconds will will go ahead which will will come on. So there's going to be other things that will kind of influence the number and the revenue and that's why it's a 35:31 35 minutes, 31 seconds little difficult uh to kind of uh give you a specific growth rate or a number at the end of a particular period. 35:39 35 minutes, 39 seconds Understood. Understood. And this last one u I mean I this is probably more like a industrywide question. Uh we've 35:47 35 minutes, 47 seconds seen so many companies uh talking about uh these new areas but very few investments going into biologic 35:54 35 minutes, 54 seconds manufacturing. Uh do you have any plans for that in future? 35:59 35 minutes, 59 seconds Look, we evaluate all options and when we're ready to uh take a position, we'll kind of communicate, but obviously we're evaluating every market at this point. 36:09 36 minutes, 9 seconds Um and uh there's obviously we're looking at all options and uh even if you look at 36:16 36 minutes, 16 seconds biologics, you decide where to play. Um again we are constantly talking to customers see where the demand is where 36:24 36 minutes, 24 seconds the gap is and uh as our strategy evolves we'll definitely inform you guys how we look at it. 36:32 36 minutes, 32 seconds Thank you so much. Thank you. 36:38 36 minutes, 38 seconds Next question is from the line of Sadhar Nandi from CWC. Please go ahead. 36:45 36 minutes, 45 seconds Hi thanks for the opportunity. Uh just wanted a couple of quick clarification. 36:51 36 minutes, 51 seconds One uh you know the new technology uh revenue salience went down from 7% to 36:58 36 minutes, 58 seconds 4%. Uh which means that in absolute terms also there is likely to have been sort of a decline on a year-on-year 37:05 37 minutes, 5 seconds basis. Uh was that you know if you could explain you know what caused that uh what caused that? Was there a one-off 37:12 37 minutes, 12 seconds earlier or was there any particular project uh that did not go through uh from one stage to to the other? If you 37:19 37 minutes, 19 seconds could give us some color on that. The second one will you mentioned about some of the capeex being on AI. If you could 37:28 37 minutes, 28 seconds tell us what's the nature of that AI capeex uh that you are putting up um that will be helpful. 37:36 37 minutes, 36 seconds Sure. So I think on the first question I think we we mentioned this even last time when we put up this number the a 37:43 37 minutes, 43 seconds lot of the work on the new modalities are not commercial from market they are in clinical pipeline. when you when you 37:50 37 minutes, 50 seconds work on clinical pipeline, you're going to have a campaign and then you're waiting for another campaign and so there will always be that shrink and 37:58 37 minutes, 58 seconds this is the the primary reason why CDMO businesses have revenue stream and so it is primarily that and it's not about oneoff this time or one off last year. 38:08 38 minutes, 8 seconds The second question on AI, I think Krishna addressed this but I'll kind of give you a thought the thought process that we have with respect to AI right so 38:16 38 minutes, 16 seconds the way we are thinking about AI right we need to look at our productivity efficiency and kind of you know scientific output that can be improved 38:25 38 minutes, 25 seconds by using AI as technology that can aid and enable a scientist to do things faster that's the whole purpose of this 38:32 38 minutes, 32 seconds AI definition there are a few tools that are available from the market but we're also building things within our overall 38:39 38 minutes, 39 seconds system. We are defining an AI canvas as we speak. This is kind of to make sure that the teams can get as much assistance automation 38:48 38 minutes, 48 seconds analytics all pulled in one direction in one set of information that the chemist leader the leadership team can actually 38:56 38 minutes, 56 seconds use at any point in time to kind of look analyze and kind of present data. We're also with respect to the partnerships 39:04 39 minutes, 4 seconds that we have with the large farmer, we're also trying to integrate with their systems and their needs in terms of what data that we will transmit and 39:12 39 minutes, 12 seconds send out. So that's the broad concept of the AI. 39:18 39 minutes, 18 seconds Sure. Uh uh sir, you also mentioned about some AI capeex. Is there any particular capeex there or or did I miss that? 39:28 39 minutes, 28 seconds Yeah. So anything that you're building or your tools that you're buying will be paper and that's AI software and stuff. Got it. 39:36 39 minutes, 36 seconds Yes. Right. Thank you. Thanks. 39:42 39 minutes, 42 seconds Thank you. Before we move to the next question, ladies and gentlemen, in order to ensure that the management is able to 39:50 39 minutes, 50 seconds address questions from all the participant in the question queue, please restrict yourself to two questions only. Should you have a 39:57 39 minutes, 57 seconds follow-up question, please rejoin the queue. 40:01 40 minutes, 1 second Next question is from the line of Sanjay Kumar Eiguan from I thought PMS. Please go ahead. 40:10 40 minutes, 10 seconds Uh hi. Uh so first question on the uh capex. Uh so I think 1,300 is your mark 40:19 40 minutes, 19 seconds but uh next year's cash flows could be anywhere around 600 700 crores. uh so what what will be the depth that we are 40:27 40 minutes, 27 seconds planning and uh is it only for the does this capex only include the 1150k capacity or we'll also start work on the 40:35 40 minutes, 35 seconds green field I think we have mentioned that we have acquired a land uh for a new green field site 40:43 40 minutes, 43 seconds sorry your line is not very clear can you repeat your question please so the 1,300 crores that we have 40:50 40 minutes, 50 seconds earmarked for uh capex uh but our our cash flows will be somewhere around 600 700 crores. So 40:58 40 minutes, 58 seconds we'll have to take debt right. So how much debt are we planning to take to fund the capex and that's this 1,300 cr 41:06 41 minutes, 6 seconds uh capex is it only for the 1150k brownfield expansion or is it also for the green field uh that we'll be 41:13 41 minutes, 13 seconds starting in the new land that we have acquired. 41:17 41 minutes, 17 seconds So the 1100k uh crores to 1300 crores cash static. 41:21 41 minutes, 21 seconds I'm not going to give you the debt versus the cash flow number because that means you know I'm trying to give you a projection. So without going you know 41:30 41 minutes, 30 seconds based on where we see this number ending for fiscal 27 our debt to ratio will be fairly healthy. That's really what I 41:37 41 minutes, 37 seconds believe and uh if I look at the the the capex trend itself uh it will be for 41:44 41 minutes, 44 seconds capacity also including the 1150k that we've talked about as we mentioned uh uh 41:51 41 minutes, 51 seconds 225 kale of 450k capex will only get done at the second half of this year. 41:57 41 minutes, 57 seconds The other capex is going to be much longer duration. So most of the capex for the plant would actually happen in this year as opposed to last year. Plus 42:05 42 minutes, 5 seconds we're also adding capacity on the product development side adding capacity in terms of fume cupboards uh and analytical and chemistry equipment. 42:14 42 minutes, 14 seconds We're also increasing our discovery capability and biology capability both in terms of fume cupboards and equipment. So this will all be there. Uh 42:23 42 minutes, 23 seconds there will be slightly smaller capex on on the new site. That new site will 42:29 42 minutes, 29 seconds probably start towards late this fiscal year and early next year. 42:35 42 minutes, 35 seconds is how I see that capex starting to grow. 42:39 42 minutes, 39 seconds Okay. Okay. And uh second question, uh we've added uh four commercial molecules compared to the last quarter and five in 42:48 42 minutes, 48 seconds the phase three phase. Uh can you highlight some of the high potential ones and uh the corresponding therapy 42:56 42 minutes, 56 seconds areas? Do any of them involve uh new modalities? 43:02 43 minutes, 2 seconds So not going to you know I think there are a few areas are broad. So there are uh multiple multiple things there are 43:10 43 minutes, 10 seconds there are there's uh uh when I say high potential at least in my belief there are at least three molecules that would 43:19 43 minutes, 19 seconds show a good progress in this current financial year. We have started manufacturing and delivering or starting 43:27 43 minutes, 27 seconds to deliver revenue in fiscal 270 on at least three of the of the molecules that we have currently added into that pipeline. Uh of the four molecules I 43:36 43 minutes, 36 seconds would say three will have a pretty decent uh revenue growth and trajectory. 43:42 43 minutes, 42 seconds The fourth one in our opinion will be much will be a smaller one but it was a fairly important capability acquired and hence we've done this. 43:52 43 minutes, 52 seconds Okay. Just to follow up then uh I think Krishna had indicated indicated in a media interview that you might even look 43:59 43 minutes, 59 seconds at acquiring new modalities or acquiring small pharma companies for the tech and for the new modalities. Anything uh that we looking at? 44:10 44 minutes, 10 seconds So we we are open to offerings all the time. We evaluate deals as and when they get presented uh from you know from the 44:17 44 minutes, 17 seconds bankers. Uh at this time we don't have an announcement to make but I as I said earlier we continue to evaluate multiple deals all the time. 44:27 44 minutes, 27 seconds Got it. Thank you. Thank you. 44:33 44 minutes, 33 seconds Next question is from the line of Verai from Kamayaka wealth management. Please go ahead. 44:40 44 minutes, 40 seconds Congratulations sir on great set of numbers. So just one clarity on the capex you said 25% of capex is in 44:47 44 minutes, 47 seconds capability. So is it predominantly for our new modalities and which is the key area that we are going to focus on. 44:56 44 minutes, 56 seconds Uh it's not necessarily new modalities. 44:58 44 minutes, 58 seconds This could be newer techniques even for small molecule. For example, high throughput experimentation is fairly new in terms of how things work or a 45:07 45 minutes, 7 seconds complete automation on a DNP techology which kind of end to end kind of gives you a different ability to kind of do 45:15 45 minutes, 15 seconds precision biology and handling molecules at scale or volumes at scale. That's those are the things. So it is it is it 45:23 45 minutes, 23 seconds is uh capabilities in both types both small molecule and uh you know uh some large you know some you know new modalities. 45:34 45 minutes, 34 seconds So but this could also include the capex for ADCs and peptides. 45:40 45 minutes, 40 seconds So our there is if if you if you if you go back to our uh conference calls in the last year I think we had stated that 45:49 45 minutes, 49 seconds the we are adding development capability on the peptide side. We probably will also add pilot scale u uh you know this 45:59 45 minutes, 59 seconds is coming up this year. So we started the capex last year. So peptides will definitely included in the capex that we 46:06 46 minutes, 6 seconds talking about this year. We are adding some capability on the ADC side but that's more on the discovery side. Uh you know we have some costs and we are 46:15 46 minutes, 15 seconds working on the ADC on the development side. We will come back to you you know uh as soon as we are able to make a public announcement on that. 46:23 46 minutes, 23 seconds Okay. And just last question even in the CRO business we are seeing that pharma is constantly at higher share of revenue 46:30 46 minutes, 30 seconds compared to biotech companies. So do you see this increasing uh in the coming years and how has been the pipeline has been the development from the biotech companies? 46:42 46 minutes, 42 seconds Let me repeat your question. Sorry you're not able to understand I'll take I'll take the question. I'll take the question. Uh I think we already answered 46:49 46 minutes, 49 seconds the early part of the call right. It's it's uh it's just where the market dynamics are right now. I think biotech will always be a significant part of 46:57 46 minutes, 57 seconds discovery. I think long-term I think the 50/50 ratio will hold. uh shortterm there might be a imbalance in terms of 47:04 47 minutes, 4 seconds pharma uh you know maybe in the next couple years but long-term biotech still is the development engine for large 47:11 47 minutes, 11 seconds farmer so we do expect that balance to maintain 50/50 on the 50/50ish longterm 47:18 47 minutes, 18 seconds on the farmer versus biotech it's just for the short term you will see uh pharma probably drive the growth longer term biotech will come back but overall 47:26 47 minutes, 26 seconds the pie should get larger in the next couple years hope that answers your Thank you. 47:36 47 minutes, 36 seconds Next question is from the line of Virat Sha from PGIM. Please go ahead. 47:41 47 minutes, 41 seconds Uh hi, thank you for the opportunity. I just have one question. Uh in your presentation uh you have mentioned 15 to 47:47 47 minutes, 47 seconds 20% uh revenue ker uh on a you know current revenue run rate of 2,2200 crores with expected capex of 1100 47:57 47 minutes, 57 seconds crores. So fair to assume the asset turn would remain in the similar historical range as it was. 48:05 48 minutes, 5 seconds So I would see a little bit of a depth before it kind of comes back because we into uh we're doubling down on our capex. That's really what we have 48:13 48 minutes, 13 seconds stated. So our what we had committed and we continue to commit this is our asset 48:19 48 minutes, 19 seconds turn on net basis u um you know installed capacity will be 1.0 to 1.4 4 but that's medium-term commitment. We 48:28 48 minutes, 28 seconds would see some fluctuations but we continue to remain committed to our uh you know the the steady state 1.2 to 1.4 48:36 48 minutes, 36 seconds Look, I think the important aspect to understand is that no matter what capital you put in, it's going to take a two three year cycle to get back to that scale. It's not like you put it, it's 48:44 48 minutes, 44 seconds going to be day one that revenue. So, I think as much as uh it it'll we expect that as a long-term trend to maintain whatever we forecasting, but obviously 48:53 48 minutes, 53 seconds there'll be a a two three year ramp up period to get there for any capex you put in. 49:00 49 minutes Understood. Okay, that's it for my Thank you. 49:04 49 minutes, 4 seconds Thank you. Next question is from the line of Akshi from AK Investments. Please go ahead. 49:11 49 minutes, 11 seconds Uh hi sir. Uh thanks for the opportunity. 49:14 49 minutes, 14 seconds Uh sir my first question is generally the quarter four should be the strongest for our kind of business right. So uh in 49:22 49 minutes, 22 seconds this quarter we have seen here on grow of only uh let's say about 4%. So can you put some light on that and uh um uh okay then I will ask my follow question. 49:35 49 minutes, 35 seconds So I think uh a uh I actually answered that question in my opening remarks. 49:40 49 minutes, 40 seconds What I was mentioning to you was if you look at our typical 25 and this has been the general training window five we had 49:48 49 minutes, 48 seconds a 40% in the first uh 6 months and a 60% revenue split in the second 6 months in 49:54 49 minutes, 54 seconds fiscal 25 while in fiscal 26 even though we delivered close to a 30% growth our revenues actually fell almost even so we 50:03 50 minutes, 3 seconds were like 4852 so it's not about and as we've always told you you know this business cannot be you ascertain on a quarterto quarter basis. 50:13 50 minutes, 13 seconds So uh you know kind of difficult to say when a PO comes becomes due and when the PO gets delivered because this is not a 50:20 50 minutes, 20 seconds business that you produce in anticipation. You produce only based on what the customer wants. So it just depends on how the PO is. 50:28 50 minutes, 28 seconds Okay sir. And my second question is despite the heavy capex of anticipation of around 1100 to,300 cr so are we 50:37 50 minutes, 37 seconds confident of maintaining 28 to 30% margin uh in the this year this financial year and going forward. 50:46 50 minutes, 46 seconds So our so would be again we set this last year continuing this year. So 28 to 30% is our steady state aspiration. 50:56 50 minutes, 56 seconds That's really what we committed and we actually committed we'll get there in two to three years time frame and we've gotten to 30% last year uh based on how 51:05 51 minutes, 5 seconds we look at the best and I believe that uh we we will continue aim for that same number. 51:15 51 minutes, 15 seconds Thank you. 51:17 51 minutes, 17 seconds Next question is from the line of Aikshit Vijay from Global Consult Research. Please go ahead. 51:24 51 minutes, 24 seconds Um yeah, hi thank you for the opportunity. I had a couple of questions. So first one is uh we had uh set aside a uh amount of 1100 to,300 cr. 51:36 51 minutes, 36 seconds So when do we expect it to come live? 51:41 51 minutes, 41 seconds So a typical plant takes somewhere around 18 months or so to kind of complete construction. So depending on 51:48 51 minutes, 48 seconds what project. So for example, we started the 700 to 1150K scale capacity expansion sometimes during the middle of 51:56 51 minutes, 56 seconds last year. We expecting 225K to come this year and 225K next year. So 52:04 52 minutes, 4 seconds similarly we had put up a capacity to to double our software R&D capacity uh last year. So it will take anything will take 52:12 52 minutes, 12 seconds around 12 to 15 months time frame in terms of capacity. So and capex will be incurred in a in part in one year and 52:20 52 minutes, 20 seconds maybe the remainder will come in the second year. Now these are all uh brownfield expansions within sites that 52:27 52 minutes, 27 seconds are already developed. If it's green field sites it's probably going to take you 24 to 30 months. Okay. Yeah. Uh that answers my question. 52:36 52 minutes, 36 seconds And the second one is uh is there a possibility that we could name some of our molecules on the end client? 52:44 52 minutes, 44 seconds Uh we will not be able to do that due to confidentiality. Uh not even the client is possible. 52:53 52 minutes, 53 seconds Uh it is definitely not possible. Okay. Yeah. Thank you so much. Okay. Thank you. 53:02 53 minutes, 2 seconds Thank you. Next question is from the line of Alankar Garud from Kotak Institutional Equities. Please go ahead. 53:10 53 minutes, 10 seconds Hi, thank you for the opportunity. Uh so first question, apart from the four commercial molecules that you added in FI26, 53:19 53 minutes, 19 seconds you also now have 11 phase three or pre-registration molecules. Now this number as of third quarter FI26 was 53:28 53 minutes, 28 seconds around six. Assuming there have not been any drop offs or further additions, seems that you have added about five 53:35 53 minutes, 35 seconds incremental opportunities in phase three or pre-registration. Can you elaborate on which modalities would these be in 53:42 53 minutes, 42 seconds any any technologies that you would like to call out? 53:47 53 minutes, 47 seconds U most of these Alantar uh you've identified one that is already there on the new modality which you said is 53:55 53 minutes, 55 seconds currently undergoing validation. Uh there is probably one more on new modality but the rest of them are all 54:03 54 minutes, 3 seconds small molecule and some of it is coming from I think what Krishna was talking about right this whole integrated CDMO 54:11 54 minutes, 11 seconds uh play that pharma wants to consolidate as they kind of look at long-term outsourcing partners in India. So customers who are probably not doing a 54:20 54 minutes, 20 seconds lot of make phase in India are looking to do some of those which is also a result of some of these addition. 54:30 54 minutes, 30 seconds Got it. And out of these 11 molecules sir do you expect any to commercialize in FI28? 54:39 54 minutes, 39 seconds Uh are not too difficult. Some of them have kept moved. Uh very very difficult for 54:46 54 minutes, 46 seconds us to predict but as soon as we hear something we'll definitely come back and provide that information. 54:52 54 minutes, 52 seconds Fair enough sir. Uh the second question is what is your view on the impact of AI on drug discovery. Uh you spoke about 55:01 55 minutes, 1 second the investment, you spoke about the opportunities but specifically on drug discovery. Do you see that as a threat or an opportunity? 55:11 55 minutes, 11 seconds Yeah. So we see as opportunity I don't see it that should I go ahead if you no one definitely 55:19 55 minutes, 19 seconds look I think it's a opportunity I think end of the day the synthesis part does not change and AI modes are much more complex to make than reg regular 55:28 55 minutes, 28 seconds synthesis yes you might make fewer molecules but the resources need to make the molecule more than the past and plus 55:35 55 minutes, 35 seconds AI itself helps us be more efficient in terms of uh root design and better options I net net I think my view of AI 55:43 55 minutes, 43 seconds is going to be that you probably won't drop the R&D dollars you probably will be do more with less more targets and I 55:51 55 minutes, 51 seconds think everybody we've talked to so far has indicated that uh the design part is what is going to be affected the most 56:00 56 minutes not the synthesis part synthesis part is going to be an important aspect of it u and I think AI for us is a net positive 56:07 56 minutes, 7 seconds because uh the complexity of the molecules are higher And we don't see R&D dollars dropping in terms of what they wanted along the iPhone. 56:18 56 minutes, 18 seconds Krishna, thank you and all the best. Thank you. Thank you. 56:25 56 minutes, 25 seconds Next question is from the line of Bat Sa from BCS Capital Ideas Limited. Please go ahead. 56:33 56 minutes, 33 seconds Yeah, I I this has come right at the very end. I had another call to catch up in two 56:39 56 minutes, 39 seconds minutes. So I'll be just brief but u I was intrigued by Krishna's statement 56:46 56 minutes, 46 seconds about AI in terms of aiding the digital capability. I thought uh in specifically 56:53 56 minutes, 53 seconds for pharma AI probably uh would be a very potent uh research 57:00 57 minutes resource. uh and I'm from a non-science background but whatever I understand 57:07 57 minutes, 7 seconds uh pharma drug discovery is much more of DPT some hard work and some amount of 57:14 57 minutes, 14 seconds luck trying out zillions of molecules and AI along with quantum computing can 57:22 57 minutes, 22 seconds uh tremendously accelerate that process and make the drug discovery process smoother and much much faster and far 57:31 57 minutes, 31 seconds more efficient. So uh I was bit intrigued by AI merely is a digital uh capability rather than the fundamental 57:40 57 minutes, 40 seconds core capability of the uh CDM or CIS uh in our organization. 57:49 57 minutes, 49 seconds So I think maybe make sure this uh no I think I think see I think the way 57:56 57 minutes, 56 seconds we look at a few things right from our perspective what we presented to you is what we can do uh without impacting 58:06 58 minutes, 6 seconds confidentiality and IP of our customers right that is what we can do within AI but if you look at AI on the drug 58:13 58 minutes, 13 seconds discovery side right I think if you really look at AI today is being great at generating molecules, right? It gives you novel binding targets and things 58:21 58 minutes, 21 seconds like that. But that's the probably the least expensive part of drug discovery, right? There is uh you know, if you 58:28 58 minutes, 28 seconds really look at programs actually succeed or fail and the bottleneck is actually when they move from preclinical to clinical, there are many things that 58:37 58 minutes, 37 seconds today today these programs success of a program actually hinge on judgment calls, right? AI will get you 58:45 58 minutes, 45 seconds efficiency, gains in enrollment and all that stuff. But there is so many things that the model today is not yet trained. 58:52 58 minutes, 52 seconds I'm not saying 5 years, 10 years down the road how they will behave. But today it is attacking the probably the lower 58:59 58 minutes, 59 seconds cost piece of the AI and the lower complexity part of AI right there is definitely software is giving you know great output workflow optimization etc. 59:11 59 minutes, 11 seconds But I think the whole uh development side of synthesizing a molecule that is kind of super complex because AI is 59:18 59 minutes, 18 seconds created things without a constraint is creating more work on that side. That's really what we're talking about. 59:25 59 minutes, 25 seconds And I just want to add a little bit to that, right? I think we're not saying digitalization, but okay, AI, you're talking about quantum computing just in 59:32 59 minutes, 32 seconds terms of uh discovering what molecule develop, right? But now you're synthesizing a molecule, scaling up the molecule. AI will help you design the 59:41 59 minutes, 41 seconds molecule. Synthesis code itself is better. It'll give you a better translation from lab to plant. Uh so there's a lot more AI which go beyond 59:49 59 minutes, 49 seconds digital. It's AI is inbuilt into everything. you have become an AI native com uh company but what I say digital is 59:59 59 minutes, 59 seconds getting to be enabled to handle AI is as in unless you get to the platform right you won't able to apply tools across the 1:00:07 1 hour, 7 seconds board and AI is just not related to just discovery of new molecules it's a question of increasing efficiency and scaling up every molecule as they go 1:00:16 1 hour, 16 seconds commercial and reducing that timeline so I hope that is clear we're not digitalization here we already are complete digital were ahead of the curve. We're talking 1:00:24 1 hour, 24 seconds about how to take that data and increase your accuracy and speed in terms of scaling it up and what's the correlation 1:00:32 1 hour, 32 seconds uh between lab data to plan data and so forth. I hope that gives you a little more clarity as we're talking about this. 1:00:41 1 hour, 41 seconds Thank you. 1:00:44 1 hour, 44 seconds Next question is from the line of Gorbama from GM Financial. Please go ahead. Uh hello. Am I audible? 1:00:53 1 hour, 53 seconds Your voice is very low. Please use your handset. 1:00:57 1 hour, 57 seconds Yeah, this is uh is it better now? 1:01:04 1 hour, 1 minute, 4 seconds Yes, please proceed. Hello. Is it better now? Yes, please go ahead with the question. 1:01:12 1 hour, 1 minute, 12 seconds Yeah. So, thank you for the opportunity first. Uh I would like to begin with congratulating the company on the good set of end numbers. Uh I had a question 1:01:19 1 hour, 1 minute, 19 seconds regarding the CRO business. Uh it's a more of a bookkeeping kind of question. 1:01:24 1 hour, 1 minute, 24 seconds So I just wanted to understand how many scientists do we have in the discovery of the CRO business and what was the similar number in FI25? 1:01:33 1 hour, 1 minute, 33 seconds We don't provide discovery CNC sciences we had scientists across discovery and CNC. I think uh you know we we provided 1:01:42 1 hour, 1 minute, 42 seconds this number as part of our annual disclosure and you will see that number Understood. And uh on the second 1:01:50 1 hour, 1 minute, 50 seconds question, I think you did answer uh it a bit earlier but nonetheless I'll uh confirm again. So the 1 uh the 1100 1:01:58 1 hour, 1 minute, 58 seconds to300 cr uh cex outlay uh large part of it is going towards the 1150 kl 1:02:05 1 hour, 2 minutes, 5 seconds expansion plan right the 75% of the this7 guidel 1:02:19 1 hour, 2 minutes, 19 seconds for discovery for R&D capability covers all of that stuff included understood Yeah, that's it for myself. Thank you. 1:02:30 1 hour, 2 minutes, 30 seconds Thank you. 1:02:31 1 hour, 2 minutes, 31 seconds Thank you ladies and gentlemen. We will take this as the last question for the day. I now hand the conference over to the management for the closing comments. 1:02:43 1 hour, 2 minutes, 43 seconds So I thank you for uh uh you know for the call. As we mentioned uh we believe 1:02:50 1 hour, 2 minutes, 50 seconds as we enter 5027 we believe that the trend in terms of also seeing with respect to the PRM remains very robust 1:02:57 1 hour, 2 minutes, 57 seconds and we believe we are positioned well to kind of capitalize on this growth. 1:03:01 1 hour, 3 minutes, 1 second Krishna I want to add something for closing comments. you know I think uh it's uh it's very exciting time then I 1:03:08 1 hour, 3 minutes, 8 seconds think uh for I think India in general and side as well I think uh this multi-year trend nothing has changed 1:03:17 1 hour, 3 minutes, 17 seconds dramatically I think uh uh if you I think India is going to be definitely become a very strategic player in terms 1:03:25 1 hour, 3 minutes, 25 seconds of global supply chain over the next five years um so I think the trend is uh trend is good and 1:03:33 1 hour, 3 minutes, 33 seconds We're well said to uh benefit from this opportunity at this point. 1:03:41 1 hour, 3 minutes, 41 seconds Thank you sir. On behalf of Sai Life Sciences Limited, that concludes this conference. Thank you all for joining us and you may now disconnect your