Ladies and gentlemen, good day and welcome to the Caplin Point Laboratories Limited Q1 FY 2026 earnings conference call hosted by Dolat Capital Market Private Limited. As a 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 concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Zain Gulam Hussain from Dolat Capital Market Private Limited. Thank you and over to you, sir.
Thank you and good evening everyone. I, Zain Gulam Hussain, on behalf of Dolat Capital Market Private Limited, welcome you to the Q1 FY 2026 earnings call of Caplin Point Laboratories Limited. We thank Caplin Point Management for giving us this opportunity to hold the call. Today we have with us senior management of the company represented by Mr. C.C. Paarthipan, Chairman, Mr. Vivek Partheeban, Chief Operating Officer, Dr. Sridhar Ganesan, Managing Director, Mr. D. Muralidharan, Chief Financial Officer, and Mr. M. Sathya Narayanan, Deputy CFO . I will now hand over the call to the management for the opening remarks. Over to you, sir.
Thank you Zain. Thank you to Dolat Capital. Welcome everyone to our earnings call to discuss the results of Q1 FY 2026. Please note that a copy of all our disclosures is available on the investors section of our website as well as on the stock exchanges. Please also note that anything said on this call which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. The conference call is being recorded and the transcript along with the audio will be made available on the company's website as well as the exchanges. Please note that the audio is copyright material of Caplin Point and cannot be copied, rebroadcast, or attributed in press or media without specific written consent of the company.
I would like to now hand over the floor to our Chairman for his opening remarks.
Thank you. Good evening and welcome to our investors call. You are aware that the geopolitics seems to be overwhelming economics. In future, many countries may focus on their individual interest. It is time for companies to look at things in different ways to generate a new perspective on the perspective matters. Our perspective, as you all know well, is a concept of mastery in the mundane. We are consistently performing with focus and dedication in Latin America, which will be explained by colleagues in detail. The second one is stick to the basics. Our basics is always the concept of catering to the bottom of the pit. He also went for a mix of investments in products in Latin America with the acquisition of channel partners that really help the company to reach the eternal cash flow with profits.
Now you are aware of our liquidity and the liquid asset. The recurring successful pattern of our business encourages us to move from smaller geographies to the bigger geographies such as Chile, Colombia, and Mexico. Shortly, we will open up our office in Brazil too. We are not interested in vanity metrics. We always look for a metric that actually maps to our desired outcome. Coming to the U.S. business, the tariff is currently not applicable to generic medicines. We sincerely hope that this is not going to happen and there is no such thing as American quality but African price. The world is moving towards protectionism, which we also understand. Hence, our investments will first go to countries where we are doing exceptionally well now, such as Guatemala. We are doubly sure that we will also do well in countries such as Mexico.
We will start our factories in the next two to three years. The volume and value will be high because of the population in Mexico and also the health care budget, which is big. The private market is at least three to four times bigger than the Central American market where we are doing business currently. Why we may not invest in the U.S. in the near future? Our volumes are too low compared to the $18 billion of the generics that are being exported from India to the U.S. Number two, starting a factory in the U.S. will take three to four years for completion and the operating cost will be five to ten times higher than India. We'll invest in the U.S. the day we understand that our 20% of price gives us the 80% of the business. Then it becomes easy to manufacture the only 20%.
Only the 20% rather than manufacturing the entire hundred. It may not be easy to replace India and China in the generic business, especially India when it comes to formulation. It will definitely lead to scarcity. Innovation is true, is needed, but invariably to help the rich and famous. The 3V layers are just for profits, not for the interests of the people, especially the dop. Now let me highlight my recent Chinese visit, which took three weeks for me actually to stay in various cities of China. I have been to 2- 3 trade fairs for new knowledge. China has moved from imitation to innovation. Probably they understood imitation has no limitation, then moved to innovation. Another thing that I found in China is that even the startup and mid-sized companies manufacture Biosimilars and Peptides.
It is not the case with other countries, and China has also gone into actually nutraceuticals and adaptogens, which is nothing but functional food from PCM, and it is similar to our Ayurveda. The estimated business of nutraceuticals in India will be in the region of $30 billion. However, there is no big brand except one player called Himalaya, which you are also aware. Many of us will buy the dietary supplement via Amazon. It is made in China, packaged in the U.S., sold in India and also other countries. House is one of the few countries where the social media can influence Main Street to Gala Street. It also helps actually business. It also at times helps the business focus in China is to go for another asset like Norway and its value-added products. You have planned to go for Biosimilars in bulk and Peptides.
We already started manufacturing one of the Peptides for formulations. When we bought this peptide, 1 gram was costing $500. Very recently I found the same quality, the price has come down to $100, and we went for some associates. In fact, we shortlisted some associates, and these resources will do the manufacturing, and we will control the regulatory and marketing. We also found that the availability of containers and lead time from China to Latin America is much easier compared to other countries in Asia. We are currently expanding our presence in two major cities in addition to the office which we have in Shijiazhuang. The increase of Chinese stock also will help us to do the follow-up work.
Our Latin American regulatory team will inspect the facilities and decide whether the facilities are suitable for in-demand unresolved inspections, which alone can take us to the countries like Mexico and Brazil. Current 30% of our outsourcing is coming actually from China, and we would like to increase the complex products and biosimilar Peptides for our ROW market. Further, we will continue to prioritize our own primitive products as these primitive products actually cannot be replaced by Biosimilars and Peptides. It will continue to cater to the bottom of the pyramid altogether. It's totally a different segment, and let us focus on the value-added products such as monoclonal antibodies, which will be brought in as a finished product actually for the ROW market. As I told you later, we will bring it actually and do the fill finish for the bigger geographies. This for memory.
Finally, dietary supplement is also known as nutraceuticals. This I've seen actually in a very big way in China. The future is for dietary supplements. You know how important is diet? Probably after the diet, dietary supplement is equally important. Now that China is moving towards dietary supplements in the form of PCM infused with tea, calcium infused waters, L-carnitine with black coffee, and many other products which may not be able to disclose due to business reasons. We already started actually shortlisting the products earlier in the process of completing the entire thing in the next six months after that. You love to decide where exactly? We love to do the packaging and get into the market business. In addition to actually what we are doing in the form of manufacturing and then expanding to various factories, you'll also get the factories as I told you in Mexico.
The reason being that it will help us actually in the form of 15% price advantage in the tender business and GT business. GT factory will help us to increase the liquid orders, which of course is cost effective when we manufacture in the local areas. Otherwise, we have to transport water from one continent to the third continent. The news is to stop the real war, even in production of tariff war. So how they generate exempted, we don't know whether it is ill concealed or well concealed. Thank you. Thank you very much.
Thank you, Chairman.
I would like their goal. You want to give a speech?
Thank you, Chairman. I'll give a quick update on the Caplin Steriles business. Specifically, we are seeing good progress with both top and bottom line in Caplin Steriles. Some of our recent launches, such as injectable emulsion products and emulsion bag products, etc., are really helping boost our bottom line. We are glad to see good growth in both our B2B and B2C businesses. It's important for us to focus on both because we have expanded capacity so that we can adequately focus on both channels. Our reduction in milestone income has been adequately compensated by an increase in the profit share, especially from our optimal range. We're also pleased to inform you that our Caplin Steriles USA label has reached profitability within the first couple of quarters of launch.
In fact, I don't think we'll need to infuse any more funds from the parent company into Caplin Steriles or Caplin Steriles USA Under our label, we have so far launched around 21 products with another 15 launches planned in the coming quarters. It's a healthy mix of bags, emulsions, vials, so that should keep it very relevant to all the large and small buyers of the U.S. We have around 38 ANDAs approved with another 13 under review. We are actively working on a large pipeline of products, which includes prefilled syringes, bags, complex generic vials, etc., where competition is few and far between. We're not going to be focusing only on complex products because typically what does happen is we focus on products that move on a day-to-day basis.
We want to have a good enough portfolio that caters to all unfamiliar products that get used in the hospital. When it comes to GLP-1 products, I'm sure people are present on that. We aim to launch this in our current Latin American markets during the first half of next year with some amount of differentiation, considering we're going to be catering to the bottom of the pyramid. In addition to the U.S., we have also filed many good products in Canada, Australia, Saudi, UAE, South Africa, etc., and we can start to see some good progress coming from that next year. Finally, as Chairman also discussed, we are strategically looking at some locations where potentially some onshore manufacturing can happen. This is a moving piece as we speak. As and when we have some information, we'll keep everyone updated.
We understand that these are turbulent or sometimes even confusing times, but we are confident that as a company we are well diversified and well prepared, that we will be one of the last ones or we will be one of the least ones to get affected with any kind of eventuality. We will be a company that has been catering to the bottom of the pyramid with affordable products with very high quality products. We simply don't foresee a world where that will be threatened. Thank you, and I will pass it on to our CFO to give a little color on the numbers before we can open up for questions.
Yeah, thanks Mr. Vivek. Good evening once again too. Am I audible?
Yes, yes.
Good evening. You all took time off to join our Investors call for FY 2025-2026 Q1 results. These are with you for some time now. I'd like to give you some key points before that. We are very glad to inform that we have begun the year well and very happy to inform that we have performed well, better than many of the peers whose results have been announced thus far. For the current quarter, overall revenue growth is 11.7%. Latin American business is giving about 1% and U.S. national business has given 31%, which is remarkable growth albeit on a low base. The INR 533 crores we achieved in the current quarter is the equivalent of 2018 full year revenue, which was at INR 540 crores. Contribution margin stands at 61.1%.
This is thus far due to an adapted product mix, though we have been saying that it's sustainable at about 50%, which we will hold on to. That increase in gross margin of 2.1% is flowing up to the PAT level, that is, 26.2% to 28.1% PAT that has grown. Thanks to judicial monitoring of expenses, sustainable at 26%. Again, PAT of INR 151 crores surpassed 2018 full year, which was just at INR 143 crores, a growth of 20.7%. In fact, when the revenues have grown 11.7%, this gives us the color of the.
Business which Chairman explained.
Our CFO was at INR 118 crore. As Chairman put it, we have some things, a few of them I would like to mention for the benefit of the investors. Our liquid assets are at INR 2,207 crore with cash and cash equivalent of INR 1,231 crore. Year on year we have a target of accruing INR 300 crore which will enable us to meet CapEx requirements and build reserves for the future. Second one is inventory closer to the customer. As Chairman put it, we have acquired our channel partner four years back and 56% of our warehouse inventory is positioned in our warehouse very close to the customer. This has enabled us to cash on certain demands which are sporadic in nature, especially in the generics market, and maximize our gains. The realizable revenues of this inventory in warehouse and transit would be around approximately INR 800 crore.
This gives us an opportunity to tide over any temporary issues in terms of transit or any other issues that we may face. Combination of assets and assets, heavy manufacturing facilities and asset-light outsourcing model is one of our great strengths. We have invested about INR 700 crore in the last five years to create state-of-the-art facilities for future readiness and exploring regulated markets. Asset-light model, which is mainly outsourcing out of China and Indian manufacturers, enabling sustained growth and enable cash generation. Cash that generated has helped us invest without borrowing. We have zero borrowing and no finance cost. The parent company has handheld new ventures and investors find it out of the INR 500 crore in subsidies. The project sort of internal accrual also gives us the flexibility to dynamically rearrange and prioritize projects.
The current scenario, because we have been having certain projects depending on the priorities and then the geopolitical level and whatnot, we are able to quickly realign. Had we borrowed, this flexibility would not have been available to us. We are answerable to somebody. These are some of the points from me. We are welcome to answer any question. Welcome to over to Mr. Vivek Partheeban.
Thank you, sir. We can open up the floor for questions now, please.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of CA Garvit Goyal from Nvest Analytics Advisory LLP. Please go ahead.
Hi, am I audible?
Yes, yes please.
Good evening sir and congratulations. My first question is on the geopolitical event. Considering these kind of events are happening and our growing exposure in the U.S. where there is a rising risk of carry on pharma, how Caplin is going to mitigate the same and do you think like is it going to result in any slowdown in our growth in the near term at least?
Yeah, in general I know it's better to actually, you know, cross the bridge when we reach there because it is not a townhomes fit and it's not going to be bad cases for him to announce this one. If you wanted to do it, you could have done it also, isn't it?
The second issue is if you look at our business especially the bottom line is not very high. It is easy for us to actually handle that kind of actually profitability with one more country or two more countries actually in Latin America or even actually in West Africa. It's not going to affect us, affect our growth. You know, there are three stages for any company: growth, status quo and decline. That decline and status quo will not happen. Definitely there will be growth. In a worst case scenario there will be a slowdown on the top line, not on the bottom line of cash flow.
Yeah. In addition to Chairman's quote, please note that our business in the U.S. today, over 90% of all business in the U.S. is B2B where we supply to the larger companies and distributors that buy our products and then sell to other buyers in the U.S., right to wholesalers and hospital networks and things like that. Technically, the tariffs don't fall on to us. It is actually paid by the person that is going to be importing the products into the U.S., number one. Number two, remember that whatever tariffs, that happens to everybody, not just one company. While there may be some amount of realignment that we need to do when it comes to Caplin Steriles USA, that is still about 5% of the business only right now. Like Chairman said, I think we need to cross the bridge when we get there.
There is also, I think, a lot of information available online. There is something called the Section 232 Investigation that is going on, which will probably be concluded sometime in the future, after which, you know, the Trump administration will take a call, we suppose. Again, it's anybody's call and nobody really has a nice answer to any of this at this moment.
One more thing I would like to add. I think I've seen the news in the media that, you know, 30 companies are the ones, you know, control, I think 80%- 90% of the business, which is happening actually in the U.S., and we are not part of those 30 companies. The impact will not be that severe to us. When a company goes to the extent of now selling 50%- 60% of their business in the U.S., then it's not going to be that easy actually to wriggle out and create another market. I hope you would agree with me.
Understood, sir.
That means for now, whatever the rate that we have growing, we will continue that, right?
Yes, please. Yes, definitely.
Yeah. One other information also that just top of my head, in fact, when the tariffs were first moved out, we started doing a little bit of a study as to what our portfolio looks like and how this can be replaced by onshore manufacturing. We are in a position where less than 10% of the products in our portfolio currently has U.S. manufacturing. That gives us a little bit more comfort level that even if tariffs were to apply, most likely it's going to be applied to everybody that's on the market because like I said, 90% of all the products in our portfolio are not remanufactured by others in the U.S. at this point. How that will change in the future is anybody's guess.
Once again, it goes back to our original statement that we will be one of the last ones to get affected or the least one.
Yeah, I also would like to actually mention that in course of my speech, I only said you're not going to focus on the vanity metrics. Top line is vanity, bottom line is sanity, and cash is king. Yeah, please go ahead. Thank you.
Thank you. Thank you very much, sir. Secondly, on our CapEx side, our OSD facility last quarter we mentioned the timeline as Q4 FY 2026, and now it's Q3 FY 2027.
It's a big change.
Can you please explain some reason for it?
Are you talking of our Anko facility?
This is the knowledge facility.
Yes, yes.
Okay. Did you mention to start? Yeah, please go.
Yeah. Basically, let me just explain. Over the last three, four months, you can all imagine that we needed a very careful wait and watch approach. We need to understand what would be the right strategy for us and where we would be utilizing our next round of CapEx, where we'll be utilizing our cash in the next level of projects that we need to be putting together. Should it be in India, should it be closer to the market, should it be actually at the markets, all of these things. I think it's a very dynamic environment that we are living in and we need to make sure that we take the right decision because typically what happens is these CapEx take about three to four years to complete all of the validations and then churn out products from there.
We don't want to hurry and then make a mess of it or we don't want to hurry and then get to a situation where we leave it half done and then we need to move from there, you know. I would say that we adequately covered in fact one other big effective.
What we have is we've been able.
To connect with a lot of Chinese and also a couple of Indian companies that have the necessary approval and scale that is available for us to do contract manufacturing for OSD products. I would say that even if it gets delayed by a further one year also we're not going to be affected by that delay.
Correct?
Yes.
I would like to mention here that my recent, I in fact told you about the recent trip to China. There are plenty of companies who have completed actually seeing entire facility. They also know register some of the product, but they have not been in a position to do business. China is very good in terms of actually, you know, hardware. When it comes to regulation and marketing, they are very keen to associate with actually some Indian company, and we have been having an office for the last 18 years. Hence, we are in a position to reach to many companies. I have found as actually the CEO has put in, told actually is better to delay rather than actually, you know, hurry up and invest your money, which is not a real asset-light model.
You have to go for asset-heavy when it is needed and when there are opportunities to go for asset-light model. If you look at all the big companies like multinational, they prefer to go for generic outsourcing. If it comes to innovation or incremental innovation, they think of their own. It's not the facility which is going to give us actually the returns, it's the business model and the number of registration. Today we're getting lot of doses from the Chinese company and some other, even one or two actually other companies from Turkey also. They showed their interest to associate with us. Hence, we are focusing more on North and South America. After the announcements of Trump, announcement of Trump, of course, we are shown that it's not going to affect us. We don't want to be judgmental.
Our focus will be much more on Latin America because as we know is the market, especially the bigger geographies like Mexico, Brazil, Chile, Colombia, then smaller geographies where we are expanding into in the form of Paraguay, Uruguay. We are capable of giving the best of the best business for our company.
Understood. And lastly on GLP-1 side. Can you spend two , three minutes on explaining the opportunity for Caplin in this particular area and how exactly are we going to capitalize that?
In Latin America, if you see, we already have a wide portfolio of anti diabetic products. This will be an add-on to our portfolio. The truth is this is a product that has had a lot more visibility in the larger market such as the U.S. and Europe, etc. For us, it's important that we launch this because of the fact that it's a good portfolio product. Also, the trust that Caplin has built up over there puts us in a very good position to make this successful. The differentiation in how we formulate the product in terms of usage, is it going to be a pen device, is it going to be something else that we are going to be launching in the market, is where we need to be a little bit creative around.
If you ask us what will be the market size and all of that, it's a difficult question to answer because there's been a lot of shortages. There's been a lot of new products that are entering the market even now. I think a very small percentage of the population that's supposed to be using it is still using it. We would probably know a lot more after we have launched the product next year.
Got it sir.
That's it from my side. All the best for the future.
Thank you.
Thank you. Thank you.
Thank you. The next question is from the line of Aryamaan Agarwal from Money Stories Asset Management. Please go ahead.
In the previous presentations, you were mentioning about M&A opportunities. I want to know if you're still looking out for those opportunities or anything in the pipeline.
Yes.
Yeah. The question was about any potential M&A opportunities. Are we working on anything right now?
Right, yeah,
actually, yes, definitely will be interested if it is meaningful when there are opportunities in the form acquiring the product. That will be our first, actually, you know, choice. The reason is currently we are not in a position to understand the geopolitics and geo economics. If we acquire a product, then, you know, what will happen will be in a patient to understand whether we can market these products in the U.S. or in Latin America or in other markets. If you acquire a facility, unless you have the right people to manage, and also without even understanding what will happen in a de-globalized world. If I told you in course of my talking, many more countries will also follow the path of protectionism. At that point of time, one has to look for actually a proposition.
Now, as I told you, we will go for facilities in two countries. The base countries are Mexico and Guatemala, and that itself actually will make us invest money in such a way that, you know, it will help our business in the long run.
Got it. What sort of growth rate can we expect going forward from here on in terms of your bottom line?
Yeah, see the growth rate at this juncture, we don't want to tell you know what could be the growth rate. Because if you ask me after two, three years we'll be doing very well. We very sure that we'll do very well. Because the markets which we are into is actually we know the theta. Anything which is predictable is repeatable. In those markets, in every market, as you know, when you get into smaller to larger geography, the registration time actually is the most important factor. Once it's registered, we assured that in another one year we love 200, 250 products in Mexico itself. When that happens, you will keep the goods in the warehouse. In Mexico, the local companies, what they do is they will extract, actually they somehow influence and tell the influence the government and make foreign companies to supply the product in 30 days.
That's the reason most foreign companies may not be in a position to supply. Whereas when we complete the registration, we actually decided that we will keep the goods actually in our warehouse in one person. If you don't get the tender, then we can supply the products in the direct market. This is the strategy. We are very sure that you know, will not only sell in the private market, but also in tenders that will increase the business manifold.
All right. Thank you.
Thank you, sir. Thank you. Thank you.
Thank you. I request each participant to ask two questions. The next question is from the line of Tushar from Motilal Oswal Financial Services. Please go ahead.
Yeah, thanks for the opportunity, sir. Just with respect to this, PFS lines which more or less are complete at Caplin Steriles phase II. While we, you know, sort of register it for regulated market, in that time is there scope for utilizing this facility either as a CDMO and for the other markets where this GLP-1 opportunity is opening up, maybe before the opportunity in the regulated market?
Yeah. So a couple of points here. Number one, Tushar, is we are actually looking at launching many of our vial products into PFS products, converting them from vial into a PFS product where they will go by what we call as a post approval supplement in the U.S. Typically, when new products take about 10- 15 months to get approved, a post approval supplement takes only six months. For XYZ product, if we have a vial already or a bag already approved, our idea is to convert several of these, if the case may be feasible, into a pre-filled range. Number one.
Number two, we're also going to be doing our GLP-1 product for our current markets from this facility and also our CP153 because some of the new countries that we're entering into, like Mexico and Chile, will require the regulatory approval which we already have from this site. Number three, I would say that when it comes to CDMO, we are always open, we are not against it. The only thing is we feel that there is adequate capacity. In fact, if you read some reports, it says that there's probably overcapacity when it comes to this GLP-1 CDMO space. I don't know how much of that is accurate, but we are open to it. We are not against utilizing our capacity for CDMO for GLP.
Understood, that's helpful. Secondly, now this API facilities sort of upgrade and completed. Will that start reflecting in margin given that you know, this is more like backend integration for us over a.
Period of time, not immediately. What we are going to do is we are going to secure our supply chain as much as possible by finding second sources for many of our key products in the U.S. and Latin America. For it to reflect in the bottom line and stuff, I think we are still talking about some time away. I would say that at least two years away, not now.
This is like alternate source filing, typically takes six to nine months. We will need to.
We will need to do some amount of development, not full scale. It'll probably be a couple of months of development. We will need to do batches and then put them in stability for six months, and PAs would take another six months. Typically, it's 12 to 15 months for the approval to come through, but there are also products where it's going to be a primary source as well. Again, we need to complete U.S. approval, EU approval, whatever it is, and then only go for all this. This is, I would say, a midterm kind of a target, not.
Sir, lastly if you could maybe I missed in the opening remarks which I already highlighted, Caplin Point.
I request Sathya or CFO to take this.
Yeah, thanks. For the quarter, Caplin Point Consolidated.
Turnover is INR 108.48 crore with EBITDA of INR 27.99 crore.
PAT, sir,
PAT is INR 7.95 crores.
Thank you. That's it for me. Thanks.
Thank you. The next question is from the line of Vedant from ICICI Securities. Please go ahead.
Hello. Am I audible?
Yeah.
Yes, you're audible.
Thank you so much for the opportunity. My first question is in the Latin America market. I think this quarter we have imported a 6% in the Latin America market. Keeps present like. How is it going to shape in the coming two years?
Mr. Vedant, there is a lot of disturbance. Can you please talk louder or shift to another room?
Is it better now?
Yeah,
yeah, it's much better. Thank you.
Thank you for the opportunity. I just wanted to know the management comments on the Latin America market performance for the quarter and how could we see this market shaping up in the coming year or two.
Okay. See, coming to the performance of Latin America, I would actually request the CFO to give you the numbers so that you can understand that we have continued to do well in the Latin America market, and the best is yet to come because, you know, we are just answering. The bigger job is, as I told you before last year, to give you the numbers. Hello.
Thanks, Darwin.
As it's only. I mean we have got the full number and also the U.S. number. Reminder is all coming from the Latin America. Of course, Africa has a very nominal contribution to that. We have grown 12% in the Latin America market for the quarter over the last year corresponding period. In terms of profitability, out of INR 151 crores, barring the INR 8 crores from U.S.A., the rest all will come from there.
Is it okay?
Right. My second question is on the GLP-1 products. The launches of our GLP-1 products will take place in Latin America markets, correct?
Yes.
In which quarter could we see the ramp up or their effect on the revenues?
Yeah. As I explained to a previous person on the call, this is a new product. Right. The area itself is quite new. The segment itself is quite new, especially for Latin America, which did not really have consistent supply of the brand because they had multiple shortages and issues in the U.S. and Europe market also. This is an evolving space.
We will definitely have this as one of the products in our portfolio, especially because we have quite a good presence in Latin America and the anti diabetes range, including insulin in one of the countries, and we're also, you know, getting insulin approved in some of the other countries where we're operating in, but we don't have any sort of numbers when the ramp up will happen, etc. It will be certainly within the first wave of products going in. Different countries have different approval times. Right? Some countries it's about six to eight months, some countries can take up to a year. I think we will probably need to evaluate it as and when the launch happens. There is no specific numbers or anything that we're targeting with it at this point.
Any timeline could be helpful if at all there is.
In terms of launch, you're probably looking at Q4 of next year. Q4 next year, next September to October is when the launch is going to happen. Remember, there's a lot of competition here. I think even within India, even exporters from here, there'll be a lot of competition. We're not worried about the competition because like I said earlier, Caplin as a brand is very well established there. There's a lot of trust with the product that we bring to the market. The market in itself, is it large enough, is it growing? All of that we would only know after we launch.
Thank you so much. That is my question. I'll get back into the queue.
Thank you.
Thank you. The next question is on the line of Deekshant from DB Wealth. Please go ahead.
Hi Marisan, congratulations on recent quarter. The first question.
Can you be a little louder?
Yeah, just one second. Is this better?
Yeah,
continue.
Yeah.
In the last three quarters we have been talking about our growth.
Mr. Chairman had mentioned that the growth.
Will not be marginal going forward.
I think Q3 call, and we have also talked about that in the next 18- 24 months it's going.
To be somewhat of a similar trajectory of growth.
We have never talked about what kind of growth can we see post this 2.5, 3 years timeline. Let's say that 24 months from now, what kind of growth can we see and what is the opportunity type for us? Can you paint us some sort of opportunity picture here.
What would really be helpful for us is some metrics here.
Yeah. Let's convey this actually some way this way. See, currently our strength is actually the cash flow. You must have seen the liquidity and the liquid assets. Wherever we are building actually, our business is going to be in the form of actually keeping the goods next to the customer. That happens actually in bigger geographies like Mexico and other countries in South America where it's Latin America. In fact, now we just started our warehouse in Chile. In the next two years, maybe after two years, we will definitely do a business of, yeah, and because I'm sure of doing the business of, say, $50 million in that country alone. Chile, Mexico is such, is still bigger job, bigger country, and we are only waiting for the registrations to be completed.
It's too early for us to understand how long it would take to complete the registration in Mexico. This is one country where some of the big companies can even influence and delay the registration. Not that they can deny, actually they can delay the registration. We're waiting and we are also networking with some other important people to help us to complete the rest. After we start doing this in this type of countries like Mexico, Colombia, Chile, and later in Brazil, I'm sure maybe after three years, we will have double digit growth and it should be in the form of 20, 25% also after three years, that's for sure. How it is possible means when you surplus cash. When we focus more on actually Latin America, definitely will for some acquisitions that will also multiply our actually revenue and profits. Is it okay?
Would like to ask any other questions, please. Question, please.
Sir, last female growth has been.
Let's say around 14%- 16%. From what I can infer, you have mentioned that this year and next year would be somewhere in the similar line. Is it fair to say that FY 2028 onwards our growth is going to be around
20% to 25%? Yes, after 2028, 2029, yes.
Secondly, there has been some change in the management in the last six months, which is the Senior Management, a couple of them have resigned and there has been one new appointment.
Of Mr. Vinayakar Dinkar and three designations.
I have been there in April, May, and July. What's happening in our senior management team?
Is there a reshuffle happening? Could you just give us some light here?
Coming to R&D, we in fact have good people actually who are capable of going for complex products, and some of the products are very unique also for our future business. One person, of course, is it something unexpected? He expected something extraordinary from him, and later we have found him very ordinary, so we asked him to leave. Other than that, actually, the other person is actually used to take care of some of the external work in the form of meeting the officer and getting the licenses. It was only two people, out of which one, of course, we expected him to do many things. He's even gone to the extent of telling us when he joined, "I can even integrate AI into your shop floor management and all." When he went to the shop floor, he came back and told me that, "I feel like actually fainting.
I am 72." He was 52. I've been going to the shop floor every day at least four or five times. Our Managing Director, he goes there. He also goes there four or five times inside, and he is 70. A person who is 52, if he says that, why do I have to keep him in the company? If he has to integrate with pharmaceutical AI, it cannot be done actually alone. It has to be integrated with other areas, right?
Yeah.
Nobody wants to send people out. These are people who have not gone on their own. Sometimes what happens, after having stayed in the company, there are people who are assets for the company. They love the company. We also know we love the people. We understand we have to actually have a very good relationship with our employees and customers. Retaining them is the most important thing. At the end of the day, if it is not going to help the company, do you think that we'll be able to keep them?
We are now looking to bolster up our senior management even better.
Thank you. Okay, last two questions, quick ones here.
One is that
Mr. Deekshant, I request you to rejoin the queue for the follow up question as there are many participants left in the queue. Thank you. The next question is from the line of Ketan. Please go ahead.
Yeah, hi, thank you for the opportunity and many congratulations for a good set of numbers. Sir, I've got two questions.
Yeah, welcome.
Sir, I've got two questions.
One is, you know, for a.
We are a largely generics company, and for a generics products company, I feel the margins are very high.
Are these sustainable for the mid to long term?
Is my first question, sir.
Okay. As I told you in course of my conversation with our investors, it is not the generic that really gives you the money. It is the business model that actually makes you this kind of use cash flow and proper. As I told you, in fact I had to tell this to one of our investors. We keep our goods next to the customer. Initially, when we went to the smaller geographies it was more of a physical. Now, of course, we are used to the pattern that the site as we understand and we continue to do the same business. We are doing it now that we started in Chile, like one month ago we started our warehouse, which is nothing but no stock and sale next to the customer.
Same we will do maybe in one year's time in Mexico, and then the front end which was started in the U.S. I think the few will tell you when exactly it was started. Business change is really sensitive to increase your cash GR profits. It's all about the business models.
When it comes to our U.S. business as well, I know that we can't paint anybody with the, with the same, you know, we can't paint multiple people with the same trust. What we've been pleasantly surprised is.
The injectables continue to give decent margins.
As long as we keep compliance levels very high, as long as we are able to maneuver all of the issues that we face at the facility, etc., with a high degree of compliance and keeping the patient at the top of our heads, I think there is definitely margins that's left to be achieved. In the past we've had to share 50% of our profits with front end partners, and then typically what happens is some of these very large companies, when the gross profit goes below a certain level, it's us that need to shell out something from our pockets to make sure their margins remain whole. Rather than that, some of these slightly more commoditized products, we've been able to launch them in the U.S., and our gross margins are upwards of 50% over there.
I think margins are not so much of a concern for us in both.
I would like to add one more thing. After six years, I've been to China in the recent past and China is the one actually where we started our outsourcing initially. Now of course we do in India too. The second stream of revenue in the form of asset-light model will start actually from China. That will also add to our bottom line. That will help, that will create a healthy bottom line. The product that we are outsourcing, we are going to outsource actually in China are value-added generics in the form of Biosimilars and some of them actually are biological products too. This definitely, no, we are not very confident of actually our bottom. It may take a little time to increase the top line and our cash flow and profits will continue to be good actually, that is for sure.
That's very hard thing to know.
My second question, sir.
We've started the warehouse in Chile.
In this quarter Q1 do we have some revenues and if not we expect some good revenues in this financial year.
Yeah, Chile of course. We can't expect extraordinary business from Chile in the first two years because the Chilean market is 80% tender and 20% private market unlike Mexico. Initially, we select products, we don't go for all the products where the margins are very meager and you know that's one of the reasons we are more of a bottom line driven company, not a top line oriented company. Yes, definitely we'll do some business which will be better than before.
Okay, thank you so much, and wish you all the best.
Thank you very much.
Thank you.
Thank you. The next question is from the line of Arjun Tuck from ICICI Bank. Please go ahead.
Hello, am I audible?
Yes please.
Yes sir.
Yeah. Hi, sir. Congratulations on the result, sir.
Thank you. Thank you.
I wanted to know about the CapEx plan, sir. You have already allocated more than INR 1,000 crore in CapEx with 50% already spent. Can you break down the remaining?
Allocation and what will be the expected ROI for the same?
Sir?
Yeah, I think when it comes to the remaining part, our two pending CapEx that we have on hand, three I would actually. One is phase III of our injectable plant, which internally we call as COL. This would be close to, overall this would be close to around INR 280-300 crore, but around INR 80- 100 crore is already spent on that one. Our Oncology API facility also is likely to incur around INR 85- 90 crore, and then our OSD with a design drawing and very early stage. We need to work out what will be the CapEx outlay for this. We expect this to be around INR 150 crore, around the INR 150 crore region.
ROI, look, when it comes to pharmaceuticals, I think it's very difficult to put a figure on it because these are all going to be multi-product facilities and the marketing is very, very dynamic. We can't really give you a specific number. If it was an API plant that did only about three or four different products, then you'll have a bit more stability in terms of pricing, output capacities, etc. I think ROI is something that we will, not just that, I think most companies will get to know that only as and when it happens.
Understood, sir. About your CapEx programs which were ongoing, your API facility in Vizag was gaining.
A lot of attraction, sir.
Apart from that, your oncology and.
Injectables CapEx are also underlined, sir.
Only on the oncology part, I wanted clarification, sir. How will it contribute to your bottom line? Strengthening like oncology is an ongoing, very.
much developing market space in India also. We see a lot of new players coming up in this department.
What will be Caplin's contribution to
our strategy is actually to have a mix of various products. Rather than putting all our eggs in one basket, we will have actually different batches that will add volume and value of using one basket. Today we are into the injectable specialty, injectable and generic injectables. Right? Confirmation what we are doing is 15 to 16 products. Actually they are working on whatever mistakes you have done in U.S. market in the initial days. We will not do it here. Rather than filing one or three products, you would like to file at least five, six products at a time. That way it becomes easy for us to generate some revenue and coming to the market also as you mentioned, once we complete the registration in ROW market, there are also opportunities for supplying these oncology products to the government.
This may not be very fast. I do agree with you. These are things which of course now is selective. Although the disease is on the rise, this product cannot be sold like any other generics. We have opportunity. We know markets where we will be in a position to sell. We're waiting for that to happen.
Thank you, sir. In the past, sir, we have seen you delivering on your promises, sir. We expect you to take care.
Of your shareholders this time also, sir.
Thank you, sir, and all the best.
Thank you. Thank you very much. Thank you.
Thank you. The next question is on the line of Avnish Barman from Varkaria. Please go ahead.
Yeah, hi.
Thanks for taking my question.
My question is again, on the oncology part, I mean it's a.
Your plants are getting commercialized in FY 2026.
I just wanted some color on the profitability front.
On the oncology side, when this business scales up a little bit, does it improve your overall margins of 33-34% or is it expected to be a.
Little lower than that.
Initially.
You know, we don't want to tell you that, you know, we'll be in a position to make huge money. In fact, this is something, you know, which happened sometimes it happens like last year in one of the markets we never expected we would get that kind of orders. We made it and we made good profits. We are working actually in a different market, not in the same market. Now there are people who also stop playing at lower prices to the tenders and reasons best known to you. Also because tender is one thing, when the government decides and some of the governments, they think of the quality. Some governments, they think of only the price and the vested interest and the bigger geographies.
As we enter into markets like Chile, which we already told you, when it comes to applying to this market, standard market, these are straightforward. There is an opportunity, we will do well. Again, it takes time. Markets like Costa Rica, although the markets are small, they want us actually to sell in Europe or U.S. after that only they'll allow you to enter into the tender. Coming to Mexico, we in fact registered a few products, three or four products through our associates from China. We are trying to register many products through our associates in China, then change those service station to our own facility in India. We have certain models that's going to help the company. When and how easy? It's too early for us to tell you now.
Okay, understood, sir. If you can give me some idea of the timelines between, let's say you file a product today.
On an average, how much time does it take.
It takes to, one, get the approval, and two, basically to ramp up to the potential of that product.
Yeah, it differs from country to country. See, if you look at actually those deals, when we went to Central America, the fees was lower and we used to get the registration in three to four months' time. The same Central America, it takes one year. It's not regulated markets. The regulated markets, it takes 15- 18 months. That's the most important one. Once you are registered, then the most important is actually you need to have at least 40, 50 products to open up actually your own warehouses in the form of stock and sale. If you have that kind of a product, then you know the bundle.
Like most of the big companies that they do in the U.S., you may not make money in 10, 12 products, but you know what they will do if they have actually 100 products, they'll try and make money actually in some 80, 90 products and bundle it. The product that they don't make money also gets bundled and supplied to the customer. We do it actually in Latin America, to Central America. Your registrations to the tune of 400, 500 products, of which 20% will give us the 80% of the revenue. However, the customer who comes here, he may buy one or two products. Very rarely, I still prefer that product also to be there so that he does not have to go to another warehouse to buy the product. These are the things which really contribute to the business.
We want this type of situation, the situation in such a way that we have assumed the registration in the current country, sorry, current business. Same things will happen in the Vidaja. What is doing is they're also buying products rather than acquiring the facility whereby we are acquiring product. That will also add a tree, some value to the kitty. We are sure we'll do it. That's the reason I said next two years we will not be in a position to tell you, no, like we'll do extremely well. Two to three years after, yes, we will do extremely well.
That is for sure.
Let's say 15, 18 months in a regulated market to get the approval.
How much time to basically reach.
Like ramp up that product?
I think typically.
Yeah, go ahead.
You go ahead.
Yeah, typically when it comes to the U.S., it takes us around three to four months for us to launch the product. In Latin America, we actually do it in slightly quicker time as well, you know, because when it comes to us, most of the time the bottleneck seems to be in the API side because many of these products are especially integral products that we deal with where the API is on a campaign basis. It's not in tons and tons, right. They have typically shorter campaign run, so that planning has to be very, very carefully done. You can assume anywhere between 90- 120 days for the product to hit the market after registration.
Okay, understood. Thank you so much.
Thank you. Thanks very much.
Thank you. The next question is in the line of Vaishnavi Gurung from Craving Alpha Wealth Fund. Please go ahead.
Good afternoon, sir. Thank you for taking my questions. I just have two questions. The first one was regarding the market share in Latin America. If you can give us that in terms of numbers, please.
Actually does not figure in the IMS except in one country, GT, where we are next to the multinationals. Yeah, because that's where, you know, this is a country where the population is only 17- 18 million, but we do a business of $50 million there. The rest of the countries, the profitability is good and the business is good, but the population is hardly 6- 7 million or 9 million. Here we don't do anything in the form of actually IMS or other this thing because they don't do anything in these countries. To give you something in the form of percentage of market share is very difficult in all other geographies except GTXM growth or mala.
Understood. Thank you, sir. My second question was regarding the plans to increase outsourcing from China.
Yeah, that you want at least revert to the outsourcing in China, please.
Yes sir. Currently our outsourcing, if I'm not wrong, is around 30%. What is our plan to extend it or to increase it by the next two years, and if so, what impacts are we going to see on the margin side?
Yeah, the idea of outsourcing now, if not to increase the top line, is mainly to add value to the bottom line. What we will do, it may be 10% or 5% or 15%, which may happen actually over a period of time. Whatever we outsource, that will add value. For example, recently one product, which of course there are not many manufacturers in the country, whereas in India, China, in fact, we were able to locate it from one quarter of China and they supplied the product and our customers are happy. We also made money and the country, also the government, they're very happy because we were able to identify the product. We are going for products which are always in scarcity and we are going for some of them, like, you know, blood products.
Some of them are actually Biosimilars, some of them actually products which have just come out of the patent. These are things which will add value to our company, that is for sure.
In terms of numbers, in the next two years or the FY 2030, what can we expect the outsourcing numbers to be to China?
It will continue to be on the rise because outsourcing from China will increase to the outsourcing of India. In India, the difference between India and China outsourcing is there is one company called CSPC in China that is considered as number one or number two in the country. We have been doing outsourcing with them for the last 18, 20 years. It's something, you know, in fact it is bigger than even our number one company in the country. Whereas in India, the bigger companies go for outsourcing to the smaller companies, that's not the case with China. In China, they only look at actually, you know, how much is the profit I get out of this business. Is there any consistency? Initially, they may not give you exclusivity, and if the people are known to you, they give you exclusivity.
When you go for different kind of models, which I told you in course of my actually speech, in the form of like, you know, 50%, 50, 50 partnership, they'll take care of the R&D and manufacturing, we'll take care of the regulatory and marketing. The profits will be high and it will be also consistent.
Understood. Thank you, sir.
Thank you very much. Thank you.
Thank you. We will take that as our last question for today. I now hand the conference over to the management for closing comments.
Thank you, everyone. Thanks also to Dolat Capital Market Private Limited for hosting the call. Thanks to all participants that took time out to attend the earnings call and we hope to stay in touch with you in the future. Thank you so much.
Thank you. Thank you very much to all of you. Thank you. Thank you very much.
Thank you. On behalf of Dolat Capital Market Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.
Thanks. Thank you.