Shaily Engineering Plastics Ltd — Q3 FY26

Shaily Engineering Plastics Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=5kh8yHvPYps Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Q3 and 9 months FY26 earnings conference call of Shily Engineering Plastics Limited. As a 0:10 10 seconds reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation 0:18 18 seconds concludes. Should you need assistance during the conference call, please signal an operator by pressing star 10 0:25 25 seconds on your touchstone phone. Please note that this conference has been recorded. Before we begin, a brief disclaimer. 0:33 33 seconds This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company 0:42 42 seconds as on date of this call. These statements are not the guarantees of future performance and it may involve risks and uncertaintities that are 0:50 50 seconds difficult to predict. I now hand the conference over to Mr. Amit Sangri, managing director of Shili Engineering 0:57 57 seconds Plastics Limited. Thank you and over to you sir. Thank you very much. 1:04 1 minute, 4 seconds Good afternoon and a very warm welcome to all of you to our quarter 3 earnings call. 1:11 1 minute, 11 seconds I have with me Mr. Sanjay Sha, chief strategy officer and SGA, our investor relations advisors. I hope you've had a look at our financial results and the 1:20 1 minute, 20 seconds investor presentation that is uploaded on our website as well as the stock exchange. 1:26 1 minute, 26 seconds Let me begin by giving you highlights of our key business development over the quarter. 1:32 1 minute, 32 seconds In Q3 FY26, we delivered strong revenue growth along with meaningful margin expansion. Revenue stood at 251 crores 1:42 1 minute, 42 seconds up 27% yearonear and IDA came in at 66 crores up 43% yearonear with a margin of 1:50 1 minute, 50 seconds 26.5% representing an expansion of 310 basis points year on year. 1:58 1 minute, 58 seconds The growth was driven by the continued momentum across our business verticals. 2:02 2 minutes, 2 seconds Importantly, the healthcare segment's contribution to our overall revenue mix, which has now doubled to 42% compared to last year, reflecting the increasing scale of this business. 2:14 2 minutes, 14 seconds Um, during the quarter, there have been two important updates in healthcare that strengthen our future outlook. 2:22 2 minutes, 22 seconds First and the most important, I'm very happy to announce that we're establishing a new scalable facility in 2:30 2 minutes, 30 seconds Abu Dhabi for manufacturing of pen and auto injectors. This is a strategic move to build capacity in the fast growing 2:37 2 minutes, 37 seconds drug delivery segment and places us in close close proximity to our international clientele. The planned 2:43 2 minutes, 43 seconds investment is in the range of 130 to 150 million AD translating to about 300 to 2:50 2 minutes, 50 seconds 350 coursees to build a capacity of approximately 75 million pen injectors pen/auto injectors per year. 3:00 3 minutes We expect this facility to be operational by Q4 FY28 significantly scaling our global 3:07 3 minutes, 7 seconds manufacturing footprint in GLP1 and other advanced therapies. With this addition, our total pen injector 3:14 3 minutes, 14 seconds capacity will increase substantially to 150 million units from the current 80 million units uh per year. 3:22 3 minutes, 22 seconds We are also in discussions with the government in Abu Dhabi for potential financial support and we will provide an update as those discussions progress. 3:33 3 minutes, 33 seconds Second, we are very pleased to announce the appointment of Mr. Joe Cam as chief operating officer of healthcare division in Chile effective 1st March 2026. 3:47 3 minutes, 47 seconds Joe has Joe brings over 20 years of international experience in manufacturing and operations across highly regulated regulated 3:54 3 minutes, 54 seconds process-driven industries. Prior to Jo joining Chevy, he held senior leadership roles at SHL in Taiwan, managing their 4:02 4 minutes, 2 seconds entire device manufacturing operations across seven sites. 4:07 4 minutes, 7 seconds And he's also had previous to SHL he's worked at Flexronics in in manufacturing of medical devices of high-end medical 4:15 4 minutes, 15 seconds devices including electronics. He holds an executive MBA from the Chinese University of Hong Kong in advanced qualifications in automation systems and engineering management. 4:25 4 minutes, 25 seconds At Shelly, Joe will lead our global healthcare operations with a clear mandate to drive operational excellence, further strengthening quality and 4:32 4 minutes, 32 seconds compliance, accelerating automation, scale up, and building high performance teams to support our next phase of growth 4:41 4 minutes, 41 seconds in the healthcare segment. Beyond the upcoming facility, we have onboarded two new customers for GLP1s and have also 4:49 4 minutes, 49 seconds additionally signed two new contracts with global pharma for the manufacturer and supply of pen injectors. 4:58 4 minutes, 58 seconds In the consumer segment, we received a new product mandate from an existing home furnishings customer. And within industrial segment, we commence supplies 5:06 5 minutes, 6 seconds of power tool components for a new client and added applications in LED lighting as well. With that, I will now 5:15 5 minutes, 15 seconds hand over the call to Mr. Sanjay Sha to take you through the operating and the financial highlights of the quarter. 5:20 5 minutes, 20 seconds Thank you very much. Over to you, Sanjivan. 5:23 5 minutes, 23 seconds Thanks, Amit. Uh good afternoon, everyone. I will start with the operating metrics uh for the quarter and the 9month period and then move to the 5:31 5 minutes, 31 seconds financial performance. During Q3 FI26, we processed 5541 tons of polymers as 5:38 5 minutes, 38 seconds compared to 638 tons in Q3 FI25, a decline of 12%. Uh for 9 months, FI26 5:46 5 minutes, 46 seconds polymer process stood at 19,209 tons versus 18,396 tons last year, a growth of 4.4%. 5:55 5 minutes, 55 seconds machine utilization was flat at about 47.1 in Q3 as compared to and 47.818 6:03 6 minutes, 3 seconds for 9 months FI26. Uh with the ramp up of new programs, we expect utilization to improve going forward. Exports 6:11 6 minutes, 11 seconds continued to remain strong and contributed approximately 71% of total revenue in both Q3 and 9 months FI26. 6:20 6 minutes, 20 seconds Let me now summarize the consolidated financial highlights for Q3 FI26. 6:25 6 minutes, 25 seconds Revenues to bet 251 crores as compared to rupees 198 crores during Q3 FI25. A growth of 27% yearonear. 6:35 6 minutes, 35 seconds IITA has doubled to rupees 66 crores as compared to rupees 46 crores during Q3 FI25. IITA margins stood at 26.5% an increase of 310 bips over Q3 FI25. 6:49 6 minutes, 49 seconds PAT stood at 37 crores as compared to rupees 25 crores during Q3 FI25 a growth of 48% year-onear pat margins stood at 6:59 6 minutes, 59 seconds 14.9% an increase of 220 basis points over Q3 FI25 coming to segmental revenue breakup for 7:07 7 minutes, 7 seconds Q3 FI26 in the consumer segment revenue stood at 123 crores as compared to 141 crores during Q3 FI25 7:16 7 minutes, 16 seconds a decrease of 13% uh in Healthcare segment revenue stood at 104 crores as 7:22 7 minutes, 22 seconds compared to 44 crores during Q3 FI25 a growth of 139%. In the industrial segment revenue stood at 23 crores as 7:31 7 minutes, 31 seconds compared to 13 crores during Q3 FI25 a growth of 87%. 7:35 7 minutes, 35 seconds Now coming to 9 month FI26 consolidated highlights revenue stood at 754 crores as compared to 569 crores during 9 month FI25 a growth of 32%. 7:47 7 minutes, 47 seconds The business understood that 218 crores is compared to 124 crores during 9 months FI25. A growth of 76% on a YI 7:57 7 minutes, 57 seconds basis. Emita margins stood at 29% an increase of 720 basis points over 9 month FI25. 8:05 8 minutes, 5 seconds PAT stood at rupees 130 crores as compared to rupees 65 crores during 9 month FI25. A growth of 101% on YI 8:14 8 minutes, 14 seconds basis. Pat margins stood at 17.2% an increase of 590 basis points over 9 month FI25. 8:23 8 minutes, 23 seconds Cash back for 9 month FI26 was reported at rupees 166 crores as compared to 96 crores during 9 month FI25. A growth of 73% yearonear. 8:34 8 minutes, 34 seconds Our ROC and roe stood at 38.4% and 29.1% respectively as on 31st December 2025. 8:42 8 minutes, 42 seconds The growth in business has been achieved with different use of capital. Our debt to equity stands at 3x and fixes asset 8:49 8 minutes, 49 seconds turnover ratio at 2.0x as on 31st December 2025. 8:55 8 minutes, 55 seconds Now coming to segmental revenue break up for 9 month FI26. In the consumer segment revenue stood at 409 crores as compared to 413 9:04 9 minutes, 4 seconds crores during 9 month FI25 a decrease of 1%. In the healthcare segment, revenue stood at 280 crores as 9:12 9 minutes, 12 seconds compared to 109 crores during 9 month FI25, a growth of 158%. 9:17 9 minutes, 17 seconds In the industrial segment, revenue stood at 65 crores as compared to rupees 48 crores during 9 month FI25, a growth of 36%. 9:26 9 minutes, 26 seconds That concludes the update from my side. We can now open the floor for questions. 9:33 9 minutes, 33 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 9:40 9 minutes, 40 seconds star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are 9:49 9 minutes, 49 seconds requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. 10:02 10 minutes, 2 seconds We take the first question from the line of Shalin Kumar from UBS India. Please proceed. 10:09 10 minutes, 9 seconds Yeah. Hi, thank you so much. Uh congratulations to the management for a a fairly good set of numbers. So Amit U 10:16 10 minutes, 16 seconds and Sanjay two questions first on the capacity side. So can we get an update if I missed the missed the initial part? 10:23 10 minutes, 23 seconds So we are having a two lines coming up right of 25 million each. So uh is the first line uh is operational? 10:32 10 minutes, 32 seconds The first line is going through operational qualification should be completed next week and then we'll go 10:40 10 minutes, 40 seconds into supply immediately after the second line is scheduled to arrive in um May end of April beginning of May 26. So 10:48 10 minutes, 48 seconds it'll get commercialized by end of July 26. 10:53 10 minutes, 53 seconds So fair to resume Amit that uh our commercial production from that the new lines will start in like we do doing commercial production in March onwards. 11:03 11 minutes, 3 seconds Yeah, we will have some commercial production in March. Uh but uh we'll do the proper scale up uh from April. 11:11 11 minutes, 11 seconds Got it. And for that that one maybe August, September, right? 11:17 11 minutes, 17 seconds No, that one we're end of July we should be in production. So Okay. Yeah, I guess consider a month 11:24 11 minutes, 24 seconds for, you know, getting the line up to speed that it's intended. We typically start at, you know, 50 60 parts per minute on an 80 part per minute line and then scale it up to 80. 11:35 11 minutes, 35 seconds Got it. Sorry. So, a um you know, we setting up two lines with 50 million and 11:42 11 minutes, 42 seconds now we have also uh setting up you know 75 million uh line which will coming up by end of FI28. And you have also 11:51 11 minutes, 51 seconds highlighted that you have signed up two more customers etc. So is it is it again fair to assume that these you have 11:58 11 minutes, 58 seconds pretty confident on the these at least these existing lines 15 million to be able to fully utilize in next 12 to 24 12:06 12 minutes, 6 seconds months and that's the reason you're looking for 75 million line. 12:10 12 minutes, 10 seconds So all the capacity expansion we're doing I mean let's look at the capacity expansion in India are more or less 12:17 12 minutes, 17 seconds fully backed by um uh what do you call it commercial contracts. Mhm. 12:23 12 minutes, 23 seconds The the Abu Dhabi expansion uh I would say is somewhere around 50 to 60% uh secure in terms of capacity commitments. 12:35 12 minutes, 35 seconds Not fully but you know it's anticipated to be 18 months out from now. So yeah we anticipate that we will be fully 12:44 12 minutes, 44 seconds uh backed by contracts even on the Abu Dhabi setup. 12:48 12 minutes, 48 seconds So yeah fair yeah so basically you're saying that 50 million is fully backed but so the point is like uh so we should 12:55 12 minutes, 55 seconds be fully utilized in 12 to 24 months right? Um 24 months. Yes. 13:02 13 minutes, 2 seconds Yes. Right. and uh 75 million you're saying that you already have a commitment uh for more than 50%. 13:10 13 minutes, 10 seconds Yeah, around 50 to 60 somewhere in between that. Now you know sometimes you will see a you will sometimes see 10 13:17 13 minutes, 17 seconds cannibalizing auto injectors or vice versa but that's a risk we have to live with. Got it. Got it. 13:25 13 minutes, 25 seconds uh and uh you know on on the GLP1 side uh now how should we think about the your 13:34 13 minutes, 34 seconds supply given you know there's a likelihood of launches coming in one queue should we expect that you will be 13:41 13 minutes, 41 seconds started supplying GLP1 um injectors in this quarter fourth quarter 13:49 13 minutes, 49 seconds we've already started supplying in the last quarter itself for commercial launches which are planned in Canada, Brazil, India, uh Middle East, um 13:58 13 minutes, 58 seconds Turkey. So supplies have already started. You know, we're just we're struggling right now because our our highspeed line is still uh not up and 14:07 14 minutes, 7 seconds running. It's still in qualification. So as soon as that happens, you know, we'll be in a better position to um supply the volume that is needed. 14:16 14 minutes, 16 seconds Right. So basically, you're saying it will only ramp up from here. You already have a demand coming from customers. 14:22 14 minutes, 22 seconds Yeah, absolutely. I mean, we got customers breathing down our necks for supply. Well, that's that's a good news. 14:32 14 minutes, 32 seconds So, Canada like uh we have a line share, right? Can we say that like are you possible to for you to quantify like 14:41 14 minutes, 41 seconds what kind of a share you have amongst the customers you have signed up or the number of customers who have filed 14:49 14 minutes, 49 seconds um without um you know without breaching any confidentiality I believe Canada we would if I look at 14:58 14 minutes, 58 seconds the potentially the first uh six seven eight filers Mhm. I would say we have uh 15:07 15 minutes, 7 seconds upwards of 65 75% of that share. 15:14 15 minutes, 14 seconds Okay. So you think 75% of the customers that file are with are with you. 15:19 15 minutes, 19 seconds Yeah. If I look at the first again first seven yeah filers. 15:25 15 minutes, 25 seconds Yeah. So effectively basically uh there's a likelihood that anyone who gets an approval will be using a shell plan in Canada. Most likely there's a good good likelihood. 15:36 15 minutes, 36 seconds Very good likelihood. 15:38 15 minutes, 38 seconds Good good to hear sir. Good to hear that. Uh um now u moving on to the 15:45 15 minutes, 45 seconds consumer electronic bid. uh if we can get to know like what's the status on that front like uh when are we probably 15:55 15 minutes, 55 seconds are we done with the qualification when can we expect commercial deliveries to go on a for the consumer electronics 16:03 16 minutes, 3 seconds client I think we're coming to the coming closer to the end of the qualification 16:09 16 minutes, 9 seconds cycle um but you know I don't have anything uh that I will be able to share 16:17 16 minutes, 17 seconds beyond that. So I we should come to an end of qualification u either end of this month or early March and hopefully from there the there 16:26 16 minutes, 26 seconds on we will have a little bit more visibility on supplies. 16:31 16 minutes, 31 seconds So most likely you're saying the supply will probably begin fourth quarter end of or the one one Q. Can we assume that? 16:40 16 minutes, 40 seconds That's also my assumption at the moment but like I said I don't have any Yeah. Yeah. Yeah. But you the product is mostly qualified, right? That 16:48 16 minutes, 48 seconds that most of the qualifications are done if if our understanding is correct. 16:53 16 minutes, 53 seconds I mean there's a there's a long qualification cycle. You have to always consider um you know that one one is to 17:01 17 minutes, 1 second qualify a component then is to qualify the component at uh site at the uh 17:08 17 minutes, 8 seconds assembly site. Then beyond that there's a testing period for verification that everything works. So it's not a very 17:16 17 minutes, 16 seconds short process especially for uh for a new uh supplier to enter. We assume that we're at the end of that cycle at the 17:25 17 minutes, 25 seconds moment. Uh hopefully we will start supplies soon. 17:30 17 minutes, 30 seconds Got it. Got it. Last question from my side and then I'll go back in the queue or last uh last two question actually uh 17:38 17 minutes, 38 seconds on the semiconductor casings. That's another excitement area uh you highlighted if we can get some status 17:45 17 minutes, 45 seconds update on that as well right uh where we are um like what kind of customers are we looking at and when can we start 17:54 17 minutes, 54 seconds seeing the commercial supplies happening on that front 18:02 18 minutes, 2 seconds look um plants in India are still you know are are not up right so so the chip manufacturing train companies are not 18:11 18 minutes, 11 seconds fully up and operational. I think it's going to be um likely the be 12 months before they come up. We should see some 18:19 18 minutes, 19 seconds we should see some uh small quantities in in the current uh in the new FY for sure. But I think any scale up will 18:28 18 minutes, 28 seconds largely depend on how quickly these capacities come up and how quickly they then scale from uh after setup. there 18:36 18 minutes, 36 seconds it's a direct link you know there's can't can't do anything else with the product except supply the ship manufacturers but can can there be an export 18:44 18 minutes, 44 seconds opportunity in that beyond the uh not at the moment not at the moment it's it's not it's not friendly to uh 18:53 18 minutes, 53 seconds international shipping it's quite quite can be quite expensive so in most regions these are 19:00 19 minutes manufactured uh close to the end end um customer. 19:06 19 minutes, 6 seconds All right. All right. Last bit on on the financials. Uh while while I can observe that your gross margin has been stable 19:14 19 minutes, 14 seconds but I could see there are some cost increases to a little bit on the employee side and the other expenses. 19:21 19 minutes, 21 seconds Just just want to understand like what were they pertaining to? 19:26 19 minutes, 26 seconds I think largely admin admin and selling expenses have gone up. Um uh so if you want to take it that's that's fine. 19:35 19 minutes, 35 seconds Okay. You go ahead. Yeah. Yeah. Good. No problem. 19:38 19 minutes, 38 seconds Yeah. But as you can imagine quarter three uh this particular year ended up with with three very large obviously 19:46 19 minutes, 46 seconds exhibitions uh which is a very significant cost for us. Plus we're you know we're doing these setups in uh um 19:56 19 minutes, 56 seconds in in Abu Dhabi and elsewhere in the world. So there's you you've seen a temporarily cost increase on that but 20:04 20 minutes, 4 seconds the reason it's reflecting on the margins is because we've had some income the the onetime income which has which has been delayed from quarter 3 to quarter 4. 20:16 20 minutes, 16 seconds Okay. So can we get like what kind the nature of that income like what was it like? So you say the cost is already booked for that. 20:27 20 minutes, 27 seconds So uh what happens is yeah so shin what happens is that um 20:33 20 minutes, 33 seconds basically um from UK and Abu Dhabi we basically license or give access to people uh to 20:42 20 minutes, 42 seconds our platforms uh where the fees are recovered over 12 to 18 months or 21 months in terms of agreed 20:50 20 minutes, 50 seconds milestones with the customer. Now we would have submitted papers to the customer uh customer would validate that 20:58 20 minutes, 58 seconds and then confirm it and then invoices would be raised. In this case uh there have been some 21:04 21 minutes, 4 seconds uh income which has not been booked in the quarter 3 uh because we have not got confirmations from the customer. So we 21:12 21 minutes, 12 seconds expect we should basically be able to do that in quarter 4. So you think that the cost has been incurred but the income has yet to receive for that? 21:22 21 minutes, 22 seconds Yes, actually you're right. So what happens is is as as I mentioned earlier um you basically 21:31 21 minutes, 31 seconds we raise income once the customer confirmations come in. Now these are long-term contracts with different agreed milestones at the start of the 21:40 21 minutes, 40 seconds contract. Now if a customer basically we were expecting the customer approvals to come in for that milestone in say quarter 3 some of them would have been 21:49 21 minutes, 49 seconds deferred to quarter 4 or something like that. So that's that's the reason that income has not come in. Uh you would see that when you look at the difference between the consolidated numbers and the 21:57 21 minutes, 57 seconds standalone numbers. uh you would see that the revenue compared in quarter 1 and quarter two and quarter three the revenue in quarter 22:04 22 minutes, 4 seconds three from uh UK and Dubai operations is lower as compared to quarter 1 and quarter 2 and that's the reason for that while 22:12 22 minutes, 12 seconds expenses have been there uh you don't have corresponding revenue which is coming 22:19 22 minutes, 19 seconds so so basically uh in as we move into forq we will not have a these exhibition cost and also we will have a revenue 22:27 22 minutes, 27 seconds coming from the work we have done at Q3 uh milestone. 22:31 22 minutes, 31 seconds And just to add to what Amit said uh with exhibition cost we also have had uh expenses on labor code implementation in 22:40 22 minutes, 40 seconds terms of uh graduity and uh leave and attachment. Uh so that expense was about 90 lakhs to a cr 22:49 22 minutes, 49 seconds and and any thoughts on the exhibition cost sir if that can also you can figure out quite quite a figure like that was substantial uh because there 22:57 22 minutes, 57 seconds were three large exhibitions which we took part in uh one was CPHI in Europe uh then pod and PD 23:05 23 minutes, 5 seconds okay all right sir all thank you so much sir um that's it from my side I'll join back thanks Thanks. Thank you. 23:18 23 minutes, 18 seconds Thank you. Before we proceed with the next question, participants, please limit your questions to two per participant as there are several participants waiting for their turn. 23:33 23 minutes, 33 seconds We take the next question from the line of Vishal Manchanda from systematics. Please proceed. 23:40 23 minutes, 40 seconds Uh good evening and thanks for the opportunity. Uh sir regarding the consumer business that's that continues to decline. Uh so if you could share 23:49 23 minutes, 49 seconds whether we can expect a rebound there sometime soon. 23:54 23 minutes, 54 seconds Super sure. Um when you look at the consumer business uh the consumer business we've seen some decline because of overall demand slowdown which is 24:04 24 minutes, 4 seconds happening in Europe and US. Uh as and when economy improves there I think you should see a rebound. Um the other thing 24:12 24 minutes, 12 seconds is with the US FDA or US agreement happening and the EU FDA happening um once this gets signed and 24:21 24 minutes, 21 seconds implemented you should basically see some advantage coming to India as compared to uh its peers in terms of 24:27 24 minutes, 27 seconds exports. So you would see probably couple of quarters but post that you should see uh improvement happening on that part of the business. 24:36 24 minutes, 36 seconds Would this stabilize at current level or there can be further uh downside from current numbers? 24:42 24 minutes, 42 seconds Uh which is very difficult to say um because again it this will depend on how things pan out globally uh in these 24:51 24 minutes, 51 seconds economies which would be difficult for us to predict sitting here. 24:55 24 minutes, 55 seconds So do your question what you see? 24:58 24 minutes, 58 seconds Yeah. So if you see uh if you see if you look at quarter 1, quarter two, quarter three while we have taken on additional 25:06 25 minutes, 6 seconds new business from on home furnishings space from our customers on existing businesses we seeing a drop in volumes. 25:15 25 minutes, 15 seconds So that's something which will again depend on how does the revival happen in Europe and US. 25:24 25 minutes, 24 seconds Right. So is is there not a annual commitment that these customers give you or these are more uh uh need- based orders that you get from your customers? 25:35 25 minutes, 35 seconds There would be in some cases there would be commitments in a lot of these cases this would be regular orders which would be based on uh the demand. 25:45 25 minutes, 45 seconds So we do have a 52 week rolling forecast. So we'd have some sense of it but then that forecast also will change with time 25:54 25 minutes, 54 seconds right and uh IKEA kind of there are press uh there are press articles saying IK is looking to source more uh more 26:03 26 minutes, 3 seconds from us for the US market uh any any signals that you're getting on this 26:10 26 minutes, 10 seconds we have not seen that uh so okay 26:18 26 minutes, 18 seconds see what happens when you look at it um with tariff coming down from 50 to 18%. 26:23 26 minutes, 23 seconds Uh India will have a significant advantage against his peers uh for exports to the US. 26:31 26 minutes, 31 seconds Okay. 26:33 26 minutes, 33 seconds Got it. And so just one final one on the commitments that you uh say you have commitments for 50% of the capacity at 26:42 26 minutes, 42 seconds Abu Dhabi. Are these commitments in form of capital advances? So like they do they fund 50% of your capeex. Is that the way these commitments work? 26:54 26 minutes, 54 seconds No, that's a I think I mentioned this in two of my previous calls but um with every customer it's different in some 27:01 27 minutes, 1 second customers pay uh we do want a structure where an advance is given. Advance can range from anything from 20 20% to 40%. 27:11 27 minutes, 11 seconds And in most cases it will always be a take or pay contract. So every year there's a certain volume guaranteed a minimum volume guaranteed by the 27:20 27 minutes, 20 seconds customers um which they have to purchase and this volume guarantee is for multiple years that they provide let's 27:27 27 minutes, 27 seconds say for the next uh since in for the next five years since inception. Okay. 27:34 27 minutes, 34 seconds Yeah. I mean look, it's in the customer's you know um it's to the customer's 27:40 27 minutes, 40 seconds benefit to do that because if we if someone's taking a pen from us for semaglutide and they only have a 27:49 27 minutes, 49 seconds contract for one year next year I may not have supply for them because you know this market is like that there's more demand than supply. 27:58 27 minutes, 58 seconds Right. Right. 28:01 28 minutes, 1 second And I just uh and I I'll come back in the queue. Uh yeah, thank you. Thanks. 28:08 28 minutes, 8 seconds Thank you. We take the next question from the line of H Sha from GM Financial PMS. Please proceed. 28:16 28 minutes, 16 seconds Yeah. Uh thank you for the opportunity. 28:18 28 minutes, 18 seconds Uh a few questions from my side. Um so firstly once again on the uh consumer business. Uh so I understand uh uh as 28:27 28 minutes, 27 seconds you mentioned that you know uh demand is kind of uh uh uh changing both in US and Europe. But uh from a modeling from a 28:36 28 minutes, 36 seconds modeling perspective uh would it be right or assumption to kind of take as mids singledigit kind of 28:44 28 minutes, 44 seconds growth uh annually in this business or you probably feel that post this treaties uh things could materially uh change in our favor. 28:54 28 minutes, 54 seconds So hers uh it'll depend uh so I I think it's a little too early to talk about it. Uh 29:03 29 minutes, 3 seconds the EU needs to be ratified. Uh India we are still the India US is still 29:10 29 minutes, 10 seconds there a lot of discussions going on while there's some some sort of framework agreement agreed upon but there's still some discussions which are going on so it's a little too early to talk about it. 29:20 29 minutes, 20 seconds Got it. Okay no worries. uh on the uh Pence's guidance uh in terms of volumes which you had given probably at the 29:28 29 minutes, 28 seconds start of this financial year of almost around 30 million odd uh would you retain that guidance for FI96? 29:37 29 minutes, 37 seconds Yes. 29:39 29 minutes, 39 seconds Okay. It'll be a little lower given our qualification activities are delayed by 3 months. So it'll be a slightly lower but generally it's the same broadly the same right? 29:50 29 minutes, 50 seconds Yeah. Okay. Yeah. 29:52 29 minutes, 52 seconds Got it. And uh on the uh new capacity expansion uh in the UAE, right? Uh if you could, you know, kind of walk us 30:00 30 minutes through in terms of the rashad why uh UAE was uh chosen as the location. So 30:07 30 minutes, 7 seconds correct me if I'm wrong. So it it is it that you know your focus would be more on the regulated markets where the IT 30:16 30 minutes, 16 seconds protection on the pens would be much stronger. uh visav markets like India you know wherein there's lot of Chinese 30:23 30 minutes, 23 seconds competition as well uh coming in and also something some color on the revenue and the payback period you would have 30:31 30 minutes, 31 seconds assumed at the current juncture uh for the UAE plant um we'll not talk about revenue and 30:39 30 minutes, 39 seconds payback in this call I think when we get closer to taking a call on um finalizing this maybe we can announce it then on 30:47 30 minutes, 47 seconds the on the rational for the UAE plant it's you know if you look at the business for healthcare particularly 30:56 30 minutes, 56 seconds we we import resin we import equipment uh we import and and in in Shai's case 31:05 31 minutes, 5 seconds we're also importing people right so key senior engineering talent within shi running the healthcare business are 31:12 31 minutes, 12 seconds expats now maybe you know there's a certainly savings when you do all of these imports 31:21 31 minutes, 21 seconds within the country. But more than anything else, the expats we hire come from regions in Asia where personal 31:31 31 minutes, 31 seconds income tax is a lot lower. It's less than 50% of what it is in India. So we actually end up paying someone 2x what 31:38 31 minutes, 38 seconds they should be getting paid just to bring them to to India. So our cost is not you know we're not able to at the 31:46 31 minutes, 46 seconds end of it justify the cost of you know uh gaining this uh capability you know given the scale that we want to 31:54 31 minutes, 54 seconds grow at. So there's a lot of benefit of being here. There's also 32:01 32 minutes, 1 second I never wanted to mention this but you know we we lost out on a particular um 32:09 32 minutes, 9 seconds you know on a particular very large contract a year ago when um when operation Hindu happened just because the customer saw risk in their clinical 32:18 32 minutes, 18 seconds program. So we have a very nice base in India. We'll continue to operate and grow that but we 32:26 32 minutes, 26 seconds need to have a business continuity plan in place and and there are large customers who will look at that very 32:34 32 minutes, 34 seconds very um you know very closely and not put not want to have all their uh eggs in one basket. So that's the that's the last one. 32:44 32 minutes, 44 seconds Got it. And one last question before I get back in the queue. Uh so the thing that you all mentioned in the PPT with 32:51 32 minutes, 51 seconds respect to the two new contracts with uh global companies uh for pen injectors uh so would these be uh completely newer 33:00 33 minutes customers or um how should one uh read this one's an existing customer new project 33:09 33 minutes, 9 seconds one's a completely new customer got it sure sure uh that's it from my back in thank Thank you. 33:19 33 minutes, 19 seconds Thanks. 33:21 33 minutes, 21 seconds Thank you. We take the next question from the line of from invest. Please proceed. 33:28 33 minutes, 28 seconds Yeah. Hi, thanks for the opportunity to take quick questions. Uh uh Sanjay, you indicated around 30 million P this year. 33:34 33 minutes, 34 seconds Uh can you give uh guidance for 2728 if it's possible? 33:43 33 minutes, 43 seconds There's probably I would say it'll wait till the end of the year and then we can probably give an idea on that. 33:49 33 minutes, 49 seconds Uh okay. Uh second question is uh uh the consumer business has actually uh it has reported a decline on a year-on-year 33:58 33 minutes, 58 seconds basis. Now in a way this should be a good thing uh for a gross margin if we look at it on a sequential basis. So uh 34:07 34 minutes, 7 seconds despite uh stellar growth what we have seen in healthcare uh how should we comprehend the gross margin profile on a sequential basis. 34:18 34 minutes, 18 seconds So if you look at on a standalone basis the gross margins have improved on a sequential basis. 34:28 34 minutes, 28 seconds So the Q2 margins are at about 55% the Q3 margins are at about 56%. So you have 34:35 34 minutes, 35 seconds seen a 1% increase uh in terms of gross margins. So it's been marginal but yeah it has been there. 34:41 34 minutes, 41 seconds Correct. And on consult basis basically you did indicate about uh the revenue which has not been booked. The cost was there. If it's what possible for you to 34:49 34 minutes, 49 seconds quantify that number basically uh probably at a consult level it will help us uh better appreciate the number. 34:55 34 minutes, 55 seconds uh so I already indicated the number on uh the labor cost which is about 90 lakhs to a crude and then there will be u cost related to exhibitions and other 35:04 35 minutes, 4 seconds costs which is there which uh I think when you look at the numbers you should be able to um arrive at the number I'm I'm referring to uh at at the gross 35:12 35 minutes, 12 seconds margin level uh you indicated there was a revenue uh which was there between console and standalone you were explaining which was not booked in Q3 35:20 35 minutes, 20 seconds and that some income will be actually booked in Q4 uh would be possible possible for you to qualify that income number. 35:28 35 minutes, 28 seconds Uh again um I would basically refrain from giving a number here because a lot of this is milestone based but you will 35:36 35 minutes, 36 seconds see some of this revenue getting booked in quarter 4. 35:40 35 minutes, 40 seconds Sure. Uh okay. Uh few questions for Ahmed. Uh uh Amit you indicated highspeed line under qualification. Uh 35:49 35 minutes, 49 seconds this was respect to the first question that you answered uh about the next line by next week and the other one by July end. Uh can can you detail like uh what are we referring to over here? 36:03 36 minutes, 3 seconds Sorry, I didn't understand the question. 36:05 36 minutes, 5 seconds What what are we referring to in terms of the line or? 36:08 36 minutes, 8 seconds Yeah, you said highspeed line under qualification. So which qualification are pen assembly? 36:16 36 minutes, 16 seconds Just just the pen assembly. Pen assembly. Okay. Okay. Okay. Uh okay. 36:20 36 minutes, 20 seconds So it's it's more procedural. Uh okay that that that's fine. And uh with respect to the UA capacity what we have 36:27 36 minutes, 27 seconds announced uh how should we read into this capacity? Is this like on a four capacity uh cavity mold or a 8 cavity 36:35 36 minutes, 35 seconds mold and how does it stack up versus the facility that we have in Boda uh from a technological standpoint. 36:43 36 minutes, 43 seconds So Boda we currently run a combination on again different on different products but it's a combination of four uh eight 36:52 36 minutes, 52 seconds cavity four cavity 8 cavity and uh 16 cavity right so 36:58 36 minutes, 58 seconds any so 16 cavity is only there for the lines which are supplying for GLP1s and there's only two lines doing that 37:07 37 minutes, 7 seconds right uh all the rest of our products would be four and eight cavities in in Abu Abu Dhabi we're looking at only 16 37:15 37 minutes, 15 seconds cavities there will be no eight cavity production lines it will be so it's basically all highspeed lines in Abu Dhabi 37:23 37 minutes, 23 seconds so lines will each line is capable of producing each set of capacity capable of producing somewhere around 25 to 28 37:29 37 minutes, 29 seconds million pens pen or devices per year largely automated even our India 37:37 37 minutes, 37 seconds facilities fairly automated but this would be uh much higher level of automation than that 37:43 37 minutes, 43 seconds sure uh and uh in the presentation we have indicated Q4 FI28 as the commissioning uh if we had to read on 37:51 37 minutes, 51 seconds the dispatches for FI 29 FY30 uh I I I understand you won't probably give the number but hypothetically if we 37:59 37 minutes, 59 seconds are 100% booked uh what is what is the dispatch quantum it can happen uh I'm not looking at it from a commercial standpoint I'm just looking at it from a 38:07 38 minutes, 7 seconds manufacturing standpoint uh can there be any startup issues or is it something which is very very smooth. Uh uh that's what we're having right now. 38:16 38 minutes, 16 seconds We're having startup issues, right? 38:17 38 minutes, 17 seconds That's why qualification which should have happened in possibly in uh October last year, we're still in we're in FE 38:25 38 minutes, 25 seconds this year. It's still ongoing because the line is a very very very complicated line and um it's taking 38:34 38 minutes, 34 seconds a yeah it's taking a a lot more than we anticipated. Sure. 38:43 38 minutes, 43 seconds Uh and would it be possible for us to give some more flavor on the consumer electronics supplies that we have already started? Uh basically how we 38:52 38 minutes, 52 seconds entered in this business because historically we have looked at high margin, high ROC uh SKUs. Uh this could 38:59 38 minutes, 59 seconds be high volume probably low margin. uh what is what is the thought process and uh what what is the scope of uh uh 39:07 39 minutes, 7 seconds revenue margin profile uh opportunity that we have over here 39:16 39 minutes, 16 seconds look it's a very very big opportunity and very scalable opportunity right so look at maybe if you if you look at 39:23 39 minutes, 23 seconds supply chain in China each of these each of these plastic guys that participate in consumer electronics opportunities 39:31 39 minutes, 31 seconds Especially the high-end more high precision small parts comp high complexity each of them you know do 39:39 39 minutes, 39 seconds revenues of between 300 million to half a billion600 million US right 39:48 39 minutes, 48 seconds annually and they've all kind of grown to that level maybe within a span of 10 39:55 39 minutes, 55 seconds 10 years really so um we what we see is that this particular opportunity is highly 40:03 40 minutes, 3 seconds highly scalable in terms you know so it's long-term scalable it's not there's a very high amount of revenue that you 40:10 40 minutes, 10 seconds can generate and because of the complexity which takes out you know a lot of your competition right not 40:18 40 minutes, 18 seconds everybody can do it first of all very very difficult you'll find a handful who will be actually be able to do this so 40:25 40 minutes, 25 seconds which means that there is also margin to be earned the margin is not going to be healthcare margin But I'd say certainly higher than our um 40:33 40 minutes, 33 seconds you know home furnishings much I would say higher than our home furnishings business. So you got better margin high complexity which means there's the 40:41 40 minutes, 41 seconds return for someone else to enter um and better margin profile. I think it's a good mix. 40:48 40 minutes, 48 seconds Sure. And what sort of capex will we look uh for this particular business? Uh I would presume like we'll be uh we'll running we'll be running out of capacity 40:56 40 minutes, 56 seconds very quickly over here. So how should we look at the incremental capital allocation for this part of the business? 41:03 41 minutes, 3 seconds We're working on the capex plan. I think we don't have a a very concrete answer yet but uh it will be you know it will be available shortly. 41:13 41 minutes, 13 seconds Sure. I'll turn back to you. Thank you so much for the answer. Thanks. Thank you. 41:21 41 minutes, 21 seconds Before we proceed with the next question, a reminder to the participants. Please limit your questions to two per participant. 41:29 41 minutes, 29 seconds We take the next question from the line of Mirali Gopani from Unique PMS. Please proceed. 41:36 41 minutes, 36 seconds Uh yeah, hi Amit and Saba and thank you for the opportunity. Congratulations on good set of result. Um Amit, my first 41:44 41 minutes, 44 seconds question is on the capacity timeline. uh now when we expect uh to sell around 30 million pence few year and there in the 41:52 41 minutes, 52 seconds very near future and uh the capacity to come up in towards the end of FI28 uh do you see any capacity constraint 42:01 42 minutes, 1 second that we might see in the next two years and do we have any uh um is there an option to add further capacity in India 42:08 42 minutes, 8 seconds as no no you know when we did not intend to 42:15 42 minutes, 15 seconds had um the 25 million line which I uh the 25 million pen line which is being delivered in in uh end April beginning 42:24 42 minutes, 24 seconds of May. We never intended that uh in India but we had to do it because 42:32 42 minutes, 32 seconds um I mean essentially because you know you can't execute a full project in a foreign country in 10 months. I mean we can do it in India in 10 months but 42:40 42 minutes, 40 seconds outside of India it's not possible to do it in such a short time. So we decided to max out uh the capacity in India. We 42:48 42 minutes, 48 seconds don't have any more building space uh left. We don't have any more factory space left uh in India. So we'd have to build new anyways. Um 42:57 42 minutes, 57 seconds I'm you know when we talk about capacity rupal you have to understand that almost any most 43:04 43 minutes, 4 seconds of our contracts will stipulate a upside um upside of 20 to 25% depending on um what a customer is potentially signing. 43:16 43 minutes, 16 seconds So for example if we have a capacity of 80 million pens in India the guaranteed volume that we have is 80% of that 43:24 43 minutes, 24 seconds right. So, so we always have we have to have spare capacity available for um 43:31 43 minutes, 31 seconds managing launches, managing you know uh seasonality, managing a sudden spike in demand from on an expert and on an X 43:40 43 minutes, 40 seconds product versus a Y product. Um so it it capacity essentially never gets 100% utilized and you expect that it will be around 80% utilized. 43:51 43 minutes, 51 seconds Perfect. Perfect. Very clear. And uh secondly uh Amit on exam I understand that the launch will be three years out 43:59 43 minutes, 59 seconds and it's still far but any any directional update that you would like to share on uh you know onboarding of customer or signing any contract uh any 44:08 44 minutes, 8 seconds timeline that you know when can it happen? 44:16 44 minutes, 16 seconds We have quite a few advanced stage discussions ongoing uh two in particular 44:23 44 minutes, 23 seconds to be uh to be honest. Um regarding uh GLP1s for novel molecules 44:30 44 minutes, 30 seconds um hey all of you keep your fingers crossed and pray for us. It could be this year. 44:37 44 minutes, 37 seconds Um, so you know, we we could we could look at potentially signing on a on a partner, a customer for one of our innov more innovative products this year. 44:49 44 minutes, 49 seconds Okay, perfect. 44:51 44 minutes, 51 seconds Uh, sorry, this year, this calendar year, not financial year, right? Very interesting. uh and Amit not 44:59 44 minutes, 59 seconds not looking at the quarterly numbers but UK uh we have a pipeline for to grow substantially over the next 2 three four 45:08 45 minutes, 8 seconds years right uh the pipeline in your view looks strong for the UK subsidy to deliver numbers 45:17 45 minutes, 17 seconds absolutely we're we've got uh one two three 45:25 45 minutes, 25 seconds four five six we've got seven seven new projects in the pipeline. Um and each of them could have multiple customers. So, 45:32 45 minutes, 32 seconds so we've got seven new projects in the pipeline. In fact, you know, we are discussing how quickly we can implement this. We don't we don't have the 45:40 45 minutes, 40 seconds resourcing available. 45:45 45 minutes, 45 seconds So, UK pipeline is very strong. I don't see any challenges for the next uh three three to four years. 45:53 45 minutes, 53 seconds Okay. Okay. And and the last question on the numbers I may miss 46:01 46 minutes, 1 second I would request you to join back the queue as there are several participants waiting for their turn. 46:06 46 minutes, 6 seconds Absolutely fine. Thank you so much for answering. All right. Thanks. 46:12 46 minutes, 12 seconds Thank you. We take the next question from the line of Kunal Bhartya from Dalal and Brocha Stock Broking Limited. 46:19 46 minutes, 19 seconds Please proceed. 46:22 46 minutes, 22 seconds Yeah sir. Thank you for the opportunity sir. I I just had uh two questions. One was in regarding the uh Abu Dhabi facility which we have which we we would 46:31 46 minutes, 31 seconds be starting. A uh um you've mentioned some bit about the funding on that but if you could uh be more elaborative on 46:38 46 minutes, 38 seconds how are we going to fund that? Uh secondly also uh will this facility be used uh uh only for the uh GLP1 46:48 46 minutes, 48 seconds opportunity or even for u other uh u therapies? Um and uh the final question 46:55 46 minutes, 55 seconds is also if you could give some sense now since that global capacity has also uh 47:02 47 minutes, 2 seconds increased uh how are you facing uh the pricing end for uh the uh pens. 47:09 47 minutes, 9 seconds Yeah. 47:12 47 minutes, 12 seconds So I I'll probably answer the first part of the question in terms of funding. Uh we basically look at funding it by a mix of internal approvals and debt. Um the 47:21 47 minutes, 21 seconds implementation time as Amit indicated in his opening remarks is 18 months. So we will have enough of approvals which we would be able to generate and we will be 47:30 47 minutes, 30 seconds approaching our bankers as well as bankers in uh Abu Dhabi for funding the same. 47:37 47 minutes, 37 seconds Thank you S. Um on the other two pricing yeah there is pressure on pricing but uh 47:45 47 minutes, 45 seconds you know it's not it's not crashing down or anything. Um anyways large volume pricing was you know if we look at our 47:53 47 minutes, 53 seconds uh if I of course you guys don't have this information and we cannot provide it but from what we had quoted uh when we first submitted proposals on high 48:02 48 minutes, 2 seconds volume um you know uptake it's not a whole lot different. We've seen essentially a 15% 10 to 15% price 48:12 48 minutes, 12 seconds erosion on those numbers. But that's that's a given. When you sit down to negotiate large volume contracts, you will see that happen anyways. Um pricing 48:21 48 minutes, 21 seconds will be under pressure for sure. But you know, I think most most uh companies now have their cogs for semiglutide 48:30 48 minutes, 30 seconds somewhere in the range of 5 to 7 or 6 to 76$6 to $8. So let's take a low point of six, high point of eight. 48:40 48 minutes, 40 seconds I'm not sure if if a 30 40 cent difference really makes that much of an impact uh of and is it worthwhile taking 48:48 48 minutes, 48 seconds the risk. So you know to be honest yeah we we anticipate some further price erosion but but it'll probably stabilize 48:56 48 minutes, 56 seconds after um you know after the first 24 months of supply. 49:03 49 minutes, 3 seconds So sir this was much uh lesser than what was anticipated earlier if I'm not wrong it's a lot sorry did you can you repeat 49:11 49 minutes, 11 seconds that? So I'm saying uh the erosion is uh lesser than what we were anticipating earlier, right? 49:18 49 minutes, 18 seconds Yeah, the erosion is lesser. You see pen capacities are limited. If you look at API, API prices eroded very significantly. 49:26 49 minutes, 26 seconds But it's it's difficult on the the most complex part of the entire uh combination product is the device. 49:39 49 minutes, 39 seconds Right sir, thank you so much. too many players also who who are there on the device front. Right. Yeah. 49:48 49 minutes, 48 seconds Thank you. Thanks. Thanks. Thank you. A request to all the participants. 49:56 49 minutes, 56 seconds Please limit your questions to per two per participant as there are several participants waiting for their turn. We 50:04 50 minutes, 4 seconds take the next question from the line of Pritesh from Lucky Investments. Please proceed. Yeah. Hi. Uh so I have two questions. 50:12 50 minutes, 12 seconds One on the bridge of the capacity uh addition in India. So you were supposed to add 25 million two lines and take it 50:21 50 minutes, 21 seconds to 80. Did I hear correctly that one of the line is slated to come in one of 27. 50:27 50 minutes, 27 seconds Is that correct? Right. 50:31 50 minutes, 31 seconds One line is already at Shai Pradesh and it's under qualification. It arrived in Shili in December. It's currently under 50:40 50 minutes, 40 seconds qualification. The second line will arrive end of April, beginning of May and should be qualified by end of July. 50:47 50 minutes, 47 seconds So the line which was supposed to be qualified in quarter three, current quarter is yet to be qualified and then 50:54 50 minutes, 54 seconds there another line will come in quarter two next year. So so that will take you to the intermediate. Correct. Correct. Okay. Correct. Correct. That's right. 51:02 51 minutes, 2 seconds Second question is uh we are seeing some movements on the oral oral GLPS. So uh 51:10 51 minutes, 10 seconds you know uh Nova did that. No launched the Vego V1 and then there was a ripoff 51:16 51 minutes, 16 seconds in the form of him and hers. There was a launch there. So you know you had some assessment of the overall GLP 51:24 51 minutes, 24 seconds or a market of the sema or of the G of the GLP. 51:30 51 minutes, 30 seconds uh any any comment there any observation any changes on the oral uh as a percentage of the total GFP? 51:40 51 minutes, 40 seconds So look uh as far as him and hers is concerned there's ongoing litigation. Um my information is that it will be very 51:48 51 minutes, 48 seconds difficult for them to come out with that product. Um again you know I don't want to speculate but we'll see what happens. 51:57 51 minutes, 57 seconds basic the fundamental is that the oral GLP1 is not as um effective and has more side 52:04 52 minutes, 4 seconds effects because of bioavailability and the API content that goes in a product right so it's it's a daily daily API 52:12 52 minutes, 12 seconds content of 14 mg versus once a week of 2.4 4 MG right so you can imagine um you do 14 * 7 and you have your math 52:22 52 minutes, 22 seconds of API comparison between oral and uh injectable um oral will have a market share they 52:30 52 minutes, 30 seconds even currently do but it's not going to impact our business 52:38 52 minutes, 38 seconds and uh so this qualification is what you're mentioning about these lines so what are you referring from the qualif ification basically what what has to happen? 52:49 52 minutes, 49 seconds Oh so much um first you have to assemble the whole line then you have to qualify each and every station. So an 80 parts 52:58 52 minutes, 58 seconds per minute line conducting you know uh 25 to 30 operations on the line has a 53:06 53 minutes, 6 seconds lot of equipment. Um and you have to qualify each of those equipment. 53:16 53 minutes, 16 seconds We lost you. Hello. 53:17 53 minutes, 17 seconds It seems like the line falls or has been disconnected. Yeah. Can you just please connect it? Yeah. 53:25 53 minutes, 25 seconds Yes. 53:30 53 minutes, 30 seconds [music] 53:43 53 minutes, 43 seconds [music] 53:49 53 minutes, 49 seconds [music] 53:55 53 minutes, 55 seconds [music] 53:59 53 minutes, 59 seconds The line for the management has been connected. Thank you for waiting patiently. So you can go ahead. Thank you. Uh I don't know if is still uh on. Yeah. 54:09 54 minutes, 9 seconds So um the it's a it's a very complex uh piece of equipment. So you have to qualify each and every operation uh 54:17 54 minutes, 17 seconds separately and then you have to qualify the whole thing uh together right so we're at a stage right now where the 54:24 54 minutes, 24 seconds line runs we've been running the line at 60 parts per minute 70 parts per minute we're not getting we're getting high 54:32 54 minutes, 32 seconds levels of rejection 30 30% rejection and that's doesn't have to do with the quality of the product but has to do with the settings of why the machine is 54:41 54 minutes, 41 seconds rejecting it. So we're we're probably in the last stage of that uh process right now. We should be able to get that up 54:48 54 minutes, 48 seconds and running uh over the next few is from a customer or from the USF. 54:54 54 minutes, 54 seconds No, of the line a qualification of the line. So pra this is an internal qualification which sh does u and 55:04 55 minutes, 4 seconds certifies that the product is meeting our specification. So this is a qualification which we end up doing it internally. 55:11 55 minutes, 11 seconds Okay. And my last question is on the margins let's say. 55:14 55 minutes, 14 seconds Sorry to interrupt Mr. Prates I would request you to join back the queue. 55:19 55 minutes, 19 seconds Ma'am is just I initiated or maybe you want to allow me. So sort of question there are several participants waiting for their turn. 55:25 55 minutes, 25 seconds That's okay. Uh let him let him continue. It's okay. Yeah. 55:28 55 minutes, 28 seconds Okay sir. So just on the on the margin side uh and I did some assessment of the margin you know based on the 30 million 55:37 55 minutes, 37 seconds devices that you're selling you know when you move towards a larger scale you know and this this line is obviously fully utilized and also when 55:46 55 minutes, 46 seconds you move towards a larger scale of volume uh between what is today and then will there be a margin differential 55:59 55 minutes, 59 seconds Sorry Brites. Uh are you talking about between India and Abu Dhabi or No, just healthare. I'm talking about health care in general, the healthare business in general. 56:08 56 minutes, 8 seconds Mhm. 56:09 56 minutes, 9 seconds When you move from the current scale to the higher scale and then uh uh will there be a margin differential between 56:17 56 minutes, 17 seconds what you're doing a margin difference between what you're doing today and what you do then considering the scale and on the other hand considering pricing of the product. 56:26 56 minutes, 26 seconds Yeah. 56:27 56 minutes, 27 seconds Yeah. So if you look at just manufacturing mar if you look at just manufacturing margin what will happen is we know that you know manufacturing 56:36 56 minutes, 36 seconds higher volume product is at a lower price right but the because of the scale once we stabilize the operations it's 56:45 56 minutes, 45 seconds fully automated not a lot of manual intervention so far we've been doing a lot manually right so the overhead cost is high we should essentially be at a 56:53 56 minutes, 53 seconds point where we're able to maintain the same margins or um you know there could be there could be a time uh that we increase them 57:03 57 minutes, 3 seconds but but generally speaking these are the margins that we will maintain on the farmer business. 57:08 57 minutes, 8 seconds Perfect. This was very helpful. Thank you guys. Thank you. Thank you ma'am. All right. Thank you. Thank you. Thank you. 57:15 57 minutes, 15 seconds Thank you. 57:17 57 minutes, 17 seconds We take the next question from the line of Lucky Agarwal from Equid Securities. Please proceed. 57:28 57 minutes, 28 seconds Hello. I would. Yes, sir. Go ahead. We can hear you. 57:40 57 minutes, 40 seconds Hello, Mr. Lucky. Are you on the line? I would. 57:48 57 minutes, 48 seconds Yeah, let's go to the next one. 57:49 57 minutes, 49 seconds Yes. I would request Mr. Lucky to join back the queue again. Till then the next question is from the line of Ammon from 57:57 57 minutes, 57 seconds Astute Investment Management. Please proceed. Yeah. Uh good evening sir. 58:08 58 minutes, 8 seconds Yeah. Good evening. Yeah. Good evening. 58:11 58 minutes, 11 seconds Yeah. Yeah. Uh so my question is on the India launch. So how many cu uh customers of ours do you expect uh do we 58:19 58 minutes, 19 seconds have today in India and how many do you think will be able to launch in uh March itself and are they using mostly harmony or are some of them also using Neo? 58:31 58 minutes, 31 seconds No, they're using both. We have customers that use Harmony, customers that use Neo. We have um I think if I 58:39 58 minutes, 39 seconds look at this the guys who been who received approval from CVSO 58:45 58 minutes, 45 seconds um I think there's both Harmony and Neil 58:55 58 minutes, 55 seconds so I mean whether it's March I I harmony will go live at March for sure in India 59:02 59 minutes, 2 seconds um Neo might be might be April, could be March, could be May I I don't I really don't know but 59:09 59 minutes, 9 seconds but sometimes in the in the first three months of launch and continuing with this um we had uh 59:18 59 minutes, 18 seconds read about that after India launch it it's like automatic approval in almost 5200 countries except the big ones. So 59:26 59 minutes, 26 seconds do you expect that uh after India launch in March most of uh our customer is also launching in whatever 5000 geography 59:34 59 minutes, 34 seconds which is opening up directly after that using the same COP. 59:41 59 minutes, 41 seconds I would assume wherever these guys have reach and partnerships uh already in place they will launch. 59:49 59 minutes, 49 seconds Um everybody will prioritize volume for Canada but uh beyond that I think they will launch in all countries. 1:00:00 1 hour Sure sir. And uh any update on uh Teddy launch in EU or US? 1:00:08 1 hour, 8 seconds I think we have approval is there but um but uh focus is on SEMA right now. The 1:00:15 1 hour, 15 seconds Terry launch will happen at some point some some point once this uh semi launch is 1:00:22 1 hour, 22 seconds completed and that is my assumption or possibly the latest information I have. 1:00:28 1 hour, 28 seconds So sure and uh among the other geographies like Turkey and Brazil do you expect it 1:00:35 1 hour, 35 seconds to be launched in quarter two or do you see there can be further delays in that? 1:00:42 1 hour, 42 seconds Um I'd say there's very high probability of quarter one launches but uh I don't 1:00:51 1 hour, 51 seconds think it will get delayed beyond quarter 2. Sure sir. Uh final question. 1:00:58 1 hour, 58 seconds No you have to understand my information is probably just as accurate as yours. 1:01:02 1 hour, 1 minute, 2 seconds Same similar sources. So I I I'm I'm assuming that everybody will be able to launch will get approvals. 1:01:13 1 hour, 1 minute, 13 seconds Uh sure sir that that makes sense. Uh on the semiconductor side you you talked about that uh the product has to be near 1:01:20 1 hour, 1 minute, 20 seconds the fabs and in my understanding there are like four fabs in Gujarat. Uh so are we in talks with uh at least two to 1:01:28 1 hour, 1 minute, 28 seconds three of them because some are uh maybe expected to commercialize their fabs in CY27 itself. So I've been in 1:01:37 1 hour, 1 minute, 37 seconds conversation with all and do you think that uh do we require all three or four for this product to scale uh or even one 1:01:46 1 hour, 1 minute, 46 seconds is good enough for it to scale massively? Anybody you want to take this? 1:01:54 1 hour, 1 minute, 54 seconds Yeah. Uh so so basically we would be looking at working with all the four. 1:02:02 1 hour, 2 minutes, 2 seconds Um is where we would talk about it. Um most of these guys basically as you rightly said will look at uh starting 1:02:11 1 hour, 2 minutes, 11 seconds commercial operations uh by next year. So that's when we would basically be 1:02:19 1 hour, 2 minutes, 19 seconds looking at supplies. uh there'll be some supplies which can probably happen towards the end of the year. 1:02:26 1 hour, 2 minutes, 26 seconds Okay. But we are in talks with all fours. Yeah. 1:02:32 1 hour, 2 minutes, 32 seconds Uh sure. Fi final question is on the uh margin side uh for this quarter in healthcare. uh I understand that one off 1:02:40 1 hour, 2 minutes, 40 seconds uh because of delay but was there any mix change also and maybe more contract manufacturing and more uh uh insulin 1:02:48 1 hour, 2 minutes, 48 seconds versus GLP1's and do you expect say quarter 4 with the GLP1 scaling and maybe quarter 1 back um 1:02:57 1 hour, 2 minutes, 57 seconds maybe even more so do you expect it to go back like quarter 2 margins of overall business 1:03:05 1 hour, 3 minutes, 5 seconds I'd expect quarter one to go back for sure uh quarter quarter four. We're still, like I said, you know, we're still qualifying the line. You're not 1:03:12 1 hour, 3 minutes, 12 seconds going to have a lot of lot coming from the highspeed line in quarter 4. Um, so 1:03:20 1 hour, 3 minutes, 20 seconds margins will certainly go up in quarter 4, but you will see full normalization only in quarter one. 1:03:30 1 hour, 3 minutes, 30 seconds Uh, sure sir. These were my questions. Thank you. Thank you. Thanks. Thank you. 1:03:38 1 hour, 3 minutes, 38 seconds We take the next question from the line of Akil Parik from BNK securities. Please proceed. 1:03:44 1 hour, 3 minutes, 44 seconds I thanks for the opportunity. Uh I have two questions. Amit you a couple of time mentioned that there's a difference between the supply and demand. Right. 1:03:52 1 hour, 3 minutes, 52 seconds The demand continues to be way higher uh for the GP1 devices. Any ballpark difference between the supply and demand 1:04:01 1 hour, 4 minutes, 1 second you would like to highlight specifically from a near term next 12 to 18 months. uh what that percentage would be. 1:04:12 1 hour, 4 minutes, 12 seconds So demand is higher. I mean look when we you know when we when we look at capacity build and demand we 1:04:21 1 hour, 4 minutes, 21 seconds always look at um sort of a minimum offtake plus an upside right given that 1:04:30 1 hour, 4 minutes, 30 seconds you look at players uh in in globally for pens you you really have uh barring 1:04:38 1 hour, 4 minutes, 38 seconds maybe some new Chinese entrance which will supply into limited markets on account of IP infringement, you know, 1:04:45 1 hour, 4 minutes, 45 seconds you really have only four four uh four players globally. So I would assume that 1:04:51 1 hour, 4 minutes, 51 seconds uh uh supply is limited and supply will only happen with firm commitments. 1:05:02 1 hour, 5 minutes, 2 seconds So is it fair to assume like So is it fair to know big capacities will be coming at least in near term? 1:05:09 1 hour, 5 minutes, 9 seconds Basically we know the capacities which are already 1:05:15 1 hour, 5 minutes, 15 seconds set up or in progress of being set up but even with those capacities you're not necessarily 1:05:24 1 hour, 5 minutes, 24 seconds looking at a scenario where there's an over capacity. 1:05:28 1 hour, 5 minutes, 28 seconds Okay. Okay. So that's helpful. And second and last question uh you mentioned that capacity expansion is backed by uh orders uh from our clients. 1:05:37 1 hour, 5 minutes, 37 seconds Uh uh so what are the terms like if a client don't oblige uh you know and they don't buy the required order uh any 1:05:46 1 hour, 5 minutes, 46 seconds penalties which are there as a part of the contract and that's my second and last question. 1:05:52 1 hour, 5 minutes, 52 seconds They're full takeaway contracts. Now that doesn't mean that uh we're not going to help our customers out in periods when they need you know they 1:06:00 1 hour, 6 minutes need it but essentially you have to if you don't buy you still have to pay the same value. 1:06:08 1 hour, 6 minutes, 8 seconds Got it. Got it. Yeah. That's all from my side. Uh best wishes for caucus. Yeah. Thanks. Thank you. 1:06:16 1 hour, 6 minutes, 16 seconds Thank you. We take the next question from the line of Pankit Gupta from Bamboo Capital. Please proceed. 1:06:24 1 hour, 6 minutes, 24 seconds Yeah, thanks for the opportunity on uh the Turkey and Brazil market. You know, when do we expect to see Shi devices 1:06:32 1 hour, 6 minutes, 32 seconds being launched there? Any you know update that we have from our clients? 1:06:38 1 hour, 6 minutes, 38 seconds Um not really. We assume quarter 1, quarter two, next year. Don't don't know. I don't don't quote me on that. 1:06:47 1 hour, 6 minutes, 47 seconds But are these like do you think we'll have a significant market share? uh our partners will have significant market 1:06:54 1 hour, 6 minutes, 54 seconds share in these markets or and how many uh you know players uh are you planning to supply there? 1:07:04 1 hour, 7 minutes, 4 seconds Uh I think look uh you know certainly uh you know three four of our large 1:07:12 1 hour, 7 minutes, 12 seconds customers have have partnerships. Um so we we we would assume that they would be 1:07:19 1 hour, 7 minutes, 19 seconds able to they would be successful in those regions. 1:07:25 1 hour, 7 minutes, 25 seconds Sure. Sure. Sure. And uh Amit with you know both the lines commencing operations by Q1 of next year u should 1:07:32 1 hour, 7 minutes, 32 seconds we expect that you know uh for uh the expansion capacity in India we should be looking at at least 70 to 80% capacity 1:07:40 1 hour, 7 minutes, 40 seconds utilization for FI27 no 28 1:07:47 1 hour, 7 minutes, 47 seconds these it takes time to scale up it's not it's not easy technically also not easy sure and by that time we'll also have uh 1:07:56 1 hour, 7 minutes, 56 seconds the UAE uh expansion coming up by uh at least by the end of F20. 1:08:01 1 hour, 8 minutes, 1 second Yeah. Yeah. You know with expansion expansion lead times are just equipment lead times have now become 15 months. Uh 1:08:10 1 hour, 8 minutes, 10 seconds and if you have to build the facility it goes to 18 18 20 months. It's hard to predict you. You could always have a 1:08:19 1 hour, 8 minutes, 19 seconds scenario where you have very low utilization in the first year. But I think generally the business plan is solid. We need the capacity. So you know that's what we're doing. 1:08:31 1 hour, 8 minutes, 31 seconds Just one last question on the innovator side. You did uh talk about you know keeping finger crossed on getting some contracts with at least one of them for 1:08:40 1 hour, 8 minutes, 40 seconds in this uh uh you know in this current year. But uh uh in terms of you know scalability and the timelines if you can 1:08:48 1 hour, 8 minutes, 48 seconds give an indication you know how big can this uh be for Shi and uh you know when 1:08:54 1 hour, 8 minutes, 54 seconds can we expect some supplies to TWA tax uh in with innovator from the time you 1:09:03 1 hour, 9 minutes, 3 seconds engage with them on with an official agreement in place uh minimum timeline for launch will be three years you know 1:09:11 1 hour, 9 minutes, 11 seconds two to somewhere between two and three years and and then it really depends on their success and and how well the 1:09:18 1 hour, 9 minutes, 18 seconds molecule does. But we're bullish, you know, um we think uh we think at a 1:09:26 1 hour, 9 minutes, 26 seconds minimum 50 million pens to 100 million pens is the potential for innovators uh to come in. 1:09:35 1 hour, 9 minutes, 35 seconds Now we don't know whether it happens in 30 29 31 I really don't know but uh you know that's part of the journey 1:09:44 1 hour, 9 minutes, 44 seconds okay okay just just one follow up on this so uh you know uh with this UI expansion coming in so let's say uh for 1:09:52 1 hour, 9 minutes, 52 seconds the innovator also we might have to if and hopefully we get that contract for innovator supplies also are we looking for further expansion apart from the Abu 1:10:02 1 hour, 10 minutes, 2 seconds Dhabi or uh this expansion might also be to do with that since uh um 1:10:10 1 hour, 10 minutes, 10 seconds if a very large volume commitment comes in where we have to do 50 million additional pens then we will need to expand that also. 1:10:22 1 hour, 10 minutes, 22 seconds Okay. Thank you. 1:10:30 1 hour, 10 minutes, 30 seconds We take the next question from the line of Bhavika Jane from Nashai. Please proceed. 1:10:37 1 hour, 10 minutes, 37 seconds Um thank you for taking my question. Uh so basically I want understanding on the consumer electronic side. Uh want to understand management view what exactly 1:10:46 1 hour, 10 minutes, 46 seconds we are going we are planning to do in the consumer electronic and from which region um this is expected to come the business. 1:10:55 1 hour, 10 minutes, 55 seconds We are planning to participate in anything in consumer electronics where 1:11:02 1 hour, 11 minutes, 2 seconds there is high complexity, high precision and small parts uh including combination combination parts where you have metal and plastic. 1:11:12 1 hour, 11 minutes, 12 seconds Um and the business is obviously going to come primarily from uh you know 1:11:19 1 hour, 11 minutes, 19 seconds customers setting up uh setting up their final assembly in in India. 1:11:26 1 hour, 11 minutes, 26 seconds Um just a follow up that because of my understanding uh like there are lot of value chain shifting happening uh like 1:11:34 1 hour, 11 minutes, 34 seconds uh because of China plus one and a lot of things are coming to India. Um so basically understand uh that uh are we 1:11:42 1 hour, 11 minutes, 42 seconds participating in that uh thing or we are doing something uh totally different like uh are we uh trying to cater this 1:11:49 1 hour, 11 minutes, 49 seconds shift happening in the value chain or we are um going to do something other than this 1:11:59 1 hour, 11 minutes, 59 seconds we are I'd say a combination we certainly are a part of the shift part wanting to participate because of the 1:12:06 1 hour, 12 minutes, 6 seconds shift Um and I think what's what's different is only the you know the the parts or the type of products in which 1:12:15 1 hour, 12 minutes, 15 seconds we participate. So we likely will not do simple stuff because simple stuff 1:12:23 1 hour, 12 minutes, 23 seconds yeah you know so we usually look at we look relatively speaking yes you know high is 1:12:32 1 hour, 12 minutes, 32 seconds a very um you know statement alluded statement. Yeah, it's low at lower business margins. 1:12:43 1 hour, 12 minutes, 43 seconds It'll be higher than our current consumer business and that's where I will end up. Yeah. 1:12:49 1 hour, 12 minutes, 49 seconds Okay. And when we are expecting this consumer electronic segment coming live 1:12:56 1 hour, 12 minutes, 56 seconds hopefully hopefully over the next uh 12 to 18 months. 1:13:03 1 hour, 13 minutes, 3 seconds Okay. Okay. Thank you so much. 1:13:07 1 hour, 13 minutes, 7 seconds Thank you. We take the next question from the line of Shabbama from Burman Capital. Please proceed. 1:13:13 1 hour, 13 minutes, 13 seconds Uh hi sir. Thank you for the opportunity sir. I just want to you know understand the supply and the competition side globally uh like you know who are uh the 1:13:22 1 hour, 13 minutes, 22 seconds large players if you comment on that and since you mentioned you know that uh the demand will outstrip you know supply in 1:13:30 1 hour, 13 minutes, 30 seconds the next 12 to 18 months. uh then I just I just you know want to understand why didn't we you know talking about price erosion in the large volume contract and 1:13:39 1 hour, 13 minutes, 39 seconds uh from that I'm could you help sorry Sham you were very choppy I 1:13:47 1 hour, 13 minutes, 47 seconds actually didn't get all of it I you you asked something about price erosion uh yes sir just you know want to understand the competition and supply 1:13:54 1 hour, 13 minutes, 54 seconds globally uh specifically for the you know JP1 does and uh you know why are we looking at price erosion if you are uh you kind of mentioned that the demand 1:14:03 1 hour, 14 minutes, 3 seconds for these GP1 drugs will you know uh outstrip uh the supply part. So just you know want to understand both of these aspects together. 1:14:12 1 hour, 14 minutes, 12 seconds Price erosion will not happen because of uh uh demand constraint. The reason for price erosion will be end market 1:14:20 1 hour, 14 minutes, 20 seconds competition. Right? So you need to support your customer to so that they get they get more market share. If they get more market share, you get more market share. It's as simple as that. 1:14:30 1 hour, 14 minutes, 30 seconds And if you look at the number of filers and GLP1s in general for semaglutide the number is exceptionally high. So everybody the end customers are going to fight for volume for market dominance. 1:14:43 1 hour, 14 minutes, 43 seconds And that's why you will see all of this play out in the first 24 months. After 24 months it likely will consolidate and stabilize. 1:14:53 1 hour, 14 minutes, 53 seconds Um understood sir. Uh got it. Uh secondly sir on the uh if you can comment on uh you know what's the capacity utilization that is you 1:15:02 1 hour, 15 minutes, 2 seconds currently have of the 30 million uh you know capacity currently for the healthcare space. 1:15:09 1 hour, 15 minutes, 9 seconds some we don't report. 1:15:13 1 hour, 15 minutes, 13 seconds Yeah. But you can assume that we're adding 25 plus 25 50 million which takes us to a total of 80 80 million capacity 1:15:22 1 hour, 15 minutes, 22 seconds and if we're planning to supply 30 million then we're nearly capped out. 1:15:27 1 hour, 15 minutes, 27 seconds Understood. Understood. Got it. Uh so lastly uh you I think you mentioned that the simite prices for most of your 1:15:35 1 hour, 15 minutes, 35 seconds customers will be at $68. Uh uh this is like the price per pen. 1:15:39 1 hour, 15 minutes, 39 seconds No, I didn't say prices. I said cogs. I did not say prices cost of goods. 1:15:44 1 hour, 15 minutes, 44 seconds Understood. So $6 to $8 including all the fill finish uh you know uh cords as well as the pin device and any other cost, right? 1:15:53 1 hour, 15 minutes, 53 seconds That's the current CG cost. Yeah. 1:15:55 1 hour, 15 minutes, 55 seconds Understood. Understood. Uh thank you sir. Um and all the best for the future. Thank you. Thank you. 1:16:03 1 hour, 16 minutes, 3 seconds Thank you ladies and gentlemen. Due to time constraints, we take that as the last question and would now like to hand the 1:16:11 1 hour, 16 minutes, 11 seconds conscience over to the management for closing comments. Over to you, sir. 1:16:17 1 hour, 16 minutes, 17 seconds Thank you. Um, thank you everyone for joining the call. 1:16:21 1 hour, 16 minutes, 21 seconds We hope that we've been able to answer your questions adequately. For any further information, I request you to get in touch with SGAA, our investor 1:16:29 1 hour, 16 minutes, 29 seconds relations advisors. Thank you and have a great evening. Thank you. Thank you everybody. 1:16:36 1 hour, 16 minutes, 36 seconds Thank you on behalf of Shil Engineering Plastics Limited. That concludes this conference. Thank you for joining us and you may now disconnect