Ladies and gentlemen, good day, and welcome to Granules India Limited Q4 and FY 2026 earnings conference call hosted by MUFG. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. 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 the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Prachi Ambre from MUFG. Thank you, and over to you, Prachi.
Thank you, Danish. On behalf of Granules India Limited, I extend a warm welcome to all the participants on the Q4 FY 2026 financial results discussion call. Today on the call we have Dr. Krishna Prasad Chigurupati, Chairman and Managing Director, Ms. Priyanka Chigurupati, Executive Director, Mr. Mukesh Surana, Chief Financial Officer, Dr. P.V. Srinivas, Chief Technology Officer, and Mr. Sanjay Kumar, Chief Strategy Officer. Before we begin the call, I would like to give a short disclaimer. This call contains some of the forward-looking statements which are completely based on our expectations, beliefs, and opinions as of today. These statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties. With this, I would like to hand over the call to Krishna Prasad, sir, for his opening remarks. Over to you, sir. Thank you.
Thank you, Prachi. A very good evening to all of you, ladies and gentlemen, and thank you very much for joining us today. I appreciate your continued interest in Granules India and welcome you to our Q4 and full year FY 2026 update. We have shared a detailed presentation on our financials and operating performance, and I trust you have had an opportunity to review it. Q4 and full year FY 2026. FY 2026 marked a year of deliberate reset and measurable progress for Granules India. Following a period of regulatory and operational correction, the organization stabilized performance, strengthened execution, and made clear strategic choices to reposition the business for sustainable and value-led growth. The year demanded discipline and focus. While external cost pressures and regulatory remediation continued to weigh on operations, Granules delivered steady improvements across compliance, operations, and portfolio quality.
By the close of FY 2026, the company had materially strengthened its foundation and is better prepared for the next phase of growth. Strategic and business progress. FY 2026 was a defining year for the organization's operating platform. The GPI facility in Virginia reached its targeted operating potential and demonstrated consistent performance through the year. Capacity expansion and the ongoing development of a new distribution center further reinforces the site's ability to support future growth and scale. I am happy to share that as per IQVIA, GPI as a company had moved to 27th position of all U.S. generic companies in terms of sales value in FY 2026 as compared to 74th position in FY 2021. It also stands at 4th position in the control substance space. The acquisition of Senn represented a deliberate strategic expansion into the CDMO segment.
The business turned a bit of positive within the third quarter post-acquisition, validating the investment thesis and establishing peptides and CDMO as a meaningful long-term growth engine for Granules. Equally important, FY 2026 saw continued and intentional evolution of the product portfolio. The company accelerated its shift towards more complex and differentiated products. The transition is already strengthening competitive positioning and opening pathways for higher value opportunities, including potential first to files. Financial and operational performance. The fourth quarter concluded a year of stabilization and strengthening fundamentals. Momentum improved sequentially through the year, with Q4 reflecting operational stability across both finished dosage businesses, improved across both API and finished dosage businesses, improved compliance readiness and consistent execution against stated priorities. Finished dosages remain the core business contributing 74% of revenue.
Europe delivered strong growth of 81% year-over-year and now represents approximately 15% of total revenue. Without Senn, Europe represented a 49% growth. Most notably, peptide CDMO emerged as a fourth revenue pillar, generating INR 1,593 million in FY 2026 revenue and delivering a positive EBITDA in Q4. These results were delivered despite elevated logistics costs and ongoing remediation expenditure, underscoring the benefits of a diversified footprint, disciplined execution, and improved business resilience. Quality, regulatory, and compliance. Quality and compliance remained uncompromised priorities throughout the year. At Gagillapur, remediation activities progressed materially with cleaning validation completed across all PFI maps and finished dosage blocks using dedicated equipment. The post-warning letter engagement with the U.S. FDA was completed in January, with all action point responses submitted in February and regular progress updates maintained thereafter.
During the year, regulatory inspections were successfully completed across key sites. The GLS facility at Genome Valley received an EIR with VAI following the inspection. The Chantilly, the GPI facility underwent a routine U.S. FDA inspection in March to April 2026, resulting in four procedural Form 483 observations with no data integrity findings. Responses were submitted within the stipulated timeline. The GCH facility in Virginia completed in its inspection with zero observations. Beyond individual inspections, the organization continued to systematically strengthen its quality systems. Investments in digital quality infrastructure, including electronic logbooks, calibration management, document control, and MES implementation are now materially enhancing compliance rigor, traceability, and operational effectiveness. Safety, ESG, and sustainability. Safety remains non-negotiable across all operations. The FY 2026 closed with a clear reduction in reportable injuries, visible progress towards a more proactive, accountable safety culture.
ESG performance continued to strengthen and gain external recognition. During the year, Granules achieved the EcoVadis gold rating, received an A rating from CDP for climate change, and recorded strong scores across water security and forests. The company's S&P corporate sustainability assessment score improved to 62, placing Granules amongst the top 10% of the global peers. The company further reinforced its commitment to responsible growth by becoming a signatory to the UN Women's Empowerment Principles. Gagillapur facility achieved zero waste to landfill platinum plus certification, with similar programs progressing across other sites. R&D filings and portfolio development. R&D efforts were firmly aligned to portfolio depth, complexity, and future readiness. During FY 2026, Granules continued to advance filings and approvals across APIs and finished dosages with a clear emphasis on complex generics.
During the year, we filed a total of six U.S. ANDAs, three EU dossiers, one Canadian dossiers, 15 filings across various regions. We filed six U.S. DMFs, all to support integration of complex products and 10 other DMFs across various regions. Complex generics accounted for a meaningful share of total filings, reinforcing the long-term direction of the development pipeline and the company's focus on sustainable value creation. Outlook. Granules enters FY 2027 with improved stability, clearer priorities, and greater organizational confidence. The focus in the year ahead remains unambiguous: achieving sustained U.S. FDA readiness in Gagillapur, scaling commercial contributions from GLS, accelerating the shift towards complex and differentiated products, and maintaining disciplined capital allocation. The company is also preparing for potential U.S. product launches as approvals progress, including 9 applications awaiting clearance from Gagillapur site. Ongoing product transfers across sites will further strengthen continuity, resilience, and risk mitigations.
While external uncertainties remain, Granules is materially positioned today than a year ago. The strengthened operating platform, healthier balance sheet, and sharper execution discipline provide a solid base for delivering long-term shareholder value. FY 2026 was a year of recalibration and rebuilding. The progress achieved was necessary, deliberate, and foundational. Granules now moves into its next phase with greater clarity, confidence, and control. Thank you very much, and I pass this on to Sanjay for a detailed explanation on the Senn Chemicals peptide business.
Thank you, Chairman, sir. Good afternoon, everyone. Let me briefly update you on the progress of our peptide CDMO platform, Acelys Peptides and Sen Chemicals. Q4 performance was in line with the direction we had indicated earlier. Revenues improved meaningfully, supported by planned pharmaceutical deliveries and robust cosmetic offtake during the quarter. The quarter also marked a return to positive EBITDA performance, reflecting progress from transition into execution phase. We did incur certain additional operating expenses linked to an important customer program, including higher manpower deployment and additional shifts. These are largely associated with first campaign of such nature. During the quarter, we also executed multiple programs across R&D projects, development of TFA-free cosmetics and supplies, and sample seeding initiative for prospective pharmaceutical customers.
On the organization front, we have moved to a leaner management structure at Sen, with a focus on execution and accountability. We have rolled out our long-term incentive for key executives at Zurich facility. We are also progressing well on infrastructure upgrades at Zurich site, planning the next phase of peptide API capacity. On the India side, our peptide COE at IIT Hyderabad is now fully active and working in a very close collaboration with our Zurich R&D team on multiple live customers' projects. The next stage in India journey will be a brownfield manufacturing facility for peptide intermediate, which is expected over the coming months, followed by a peptide API capacity in India at the appropriate stage. For FY 2027, though, our focus is to deliver a PAT positive performance on an annual basis while recognizing quarter-to-quarter variations inherent in a project-driven CDMO business like ours.
Overall, we are highly excited by the opportunity in the peptide CDMO space and by the fact that customer access, credibility, and technical heritage that Sen brings to our peptide playbook. With that, I will now hand over to the call back to Mukesh to take you through the financial performance.
Thank you, CMD, sir and Sanjay. Good evening, everyone. I will now walk you through the financial performance for Q4 FY 2026 and the full year FY 2026. FY 2026 has been a landmark year for the group. This year we crossed a landmark number of INR 50,000 million in revenue, posted six straight quarters of sequential growth, record gross margin, and demonstrated that the strategic priorities we placed three to four years ago, including complex generics, are now delivering the revenue growth. Revenue for the year stood at INR 53,656 million, registering a 20% year-on-year growth. Growth was broad-based, driven primarily by formulations in North America and Europe. Peptide CDMO business is a new revenue vertical following the acquisition of Senn Chemicals AG. This vertical added INR 1,593 million revenue, contributing 3% of the overall revenue.
Revenue for the quarter was INR 14,706 million, up 23% year-on-year and 6% sequentially, marking our 6th consecutive quarter of sequential growth. The sales breakup as per business divisions and geographic regions are presented in our investor presentation, which is available on the website. Business diversification is improving the resilience and sustainability of revenues. Gross margin. FY 2026 gross margin expanded to 65%, an improvement of 355 basis points year-on-year. This expansion is on account of a sustained shift towards complex generics and higher contribution from value-added formulations. Q4 FY 2026 gross margin improved to 65.7%, up 233 basis points year-on-year and 186 basis points quarter-on-quarter, with growth particularly from peptide CDMO converting into margin expansion.
Gross margin rose from 50% in FY 2022 to 65% over four years, demonstrating our sustained strategic progress. EBITDA and profitability. EBITDA for FY 2026 stood at INR 11,851 million, up 25% year-on-year, with margins expanding by 100 basis points to 22.1%. This clearly demonstrates the structural improvement in earnings quality. This EBITDA in FY 2026 includes loss of INR 445 million in Acelys, the peptide CDMO platform acquired during the year. Q4 FY 2026 EBITDA stood at INR 3,521 million, growing 40% year-on-year and 14% quarter-on-quarter, with margins expanding to 23.9%. Q4 FY 2026 marked the first quarter of positive EBITDA in our acquired peptide CDMO business, which is an important milestone. R&D. R&D remains central to our long-term strategy.
R&D expenses for FY 2026 was INR 2,853 million, representing a 5.3% of sales. Our focus area include C2 ADHD, oncology, MUPS and other high barrier formulations. These investments are laying the foundation for sustained differentiated growth. We will continue to invest in R&D in the coming quarters. PBT and PAT. FY 2026 PBT before exceptional items grew 26% year-on-year. PAT grew by 19% year-on-year, INR 5,590-50 million post exceptional items. Q4 FY 2026 PBT before exceptional items grew 48% year-on-year and 22% sequentially. PAT grew by 33% year-on-year to INR 2,013 million and 34% sequentially post exceptional items. Net debt. Net debt reduced to INR 4,021 million from INR 7,061 million in FY 2025.
Net debt to EBITDA improved to 0.34x from 0.75x. The reduction in net debt was supported by an additional equity infusion of INR 6,656 million during FY 2026, in addition to EBITDA growth in FY 2026. Working capital. Net working capital percentage to sales remained at 33% to sales in line with FY 2025, with higher working capital to support growth in FY 2026. Cash flow from operations. FY 2026 cash flow from operation was INR 7,933 million compared to INR 8,666 million in FY 2025. Cash conversion was moderated due to planned working capital buildup to support growth and new launches. CapEx. CapEx spent for Q4 FY 2026 was INR 1,000 million compared to INR 1,298 million in Q3 FY 2026.
Full year FY 2026 CapEx was INR 5,547 million compared to INR 5,700 million in FY 2025. ROCE. ROCE improved to 17.6% as compared to 16.8% in Q3 FY 2026 and 16.6% in FY 2025. With this, I open the floor for questions. Thank you.
Thank you so much, sir. Ladies and gentlemen, we'll begin with the question and answer session now. 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'll wait for a moment while the queue reassembles. The first question comes from the line of Harith Ahamed from Avendus Spark. Please go ahead.
Good evening, everyone. Thanks for the opportunity. Sir, will you be able to comment on the pricing environment for paracetamol and metformin currently? Has there been any increase following the situation in West Asia? Also looking at a 33% growth for the API segment this quarter, wondering if there were any benefits from a better pricing environment.
Very interesting question, Harith. Definitely there were no price increases we wish we had. Whereas raw material prices have gone up and are still going up. There's a small, I mean, there is a little bit of uncertainty, but we are sure we should be getting price increases to compensate for the raw material increases. To answer your question, I need to clarify. The growth in API was due to new APIs that we have been launching. The APIs that we developed for our own integrated formulation development, we also sell outside, and those have contributed mainly to the growth in APIs.
Okay. Got it, sir. On Acelys Peptides, good to see the strong performance this quarter and the EBITDA breakeven. Just wondering how we should think about the coming quarters. Is this a sustainable level of performance that we should extrapolate into the coming quarters?
I think let's hear from the horse's mouth. Sanjay, can you answer that?
Sure.
Sanjay is driving the growth of Acelys Peptides and Senn Chemicals. That's where your clarification. Yeah, go ahead.
Yeah. Harith, our objective is very clear, to move towards sustainable profitability from FY 2027 onwards. Individual quarters may vary depending on customer milestone and shipment timing, but the platform is now far more execution-led and operationally aligned than before. The direction of travel is firmly towards annual EBITDA and PAT positivity.
Sanjay, if you could comment a bit on the business mix here, pharmaceuticals versus other segments like cosmetics. Within pharmaceuticals, what exactly are we supplying, peptide building blocks or fragments or APIs? Some qualitative color will be helpful.
Sure. What you just mentioned already that our business is a mix of pharmaceutical and cosmetics, and both are important. Although the opportunity space for peptides, API pharmaceutical is quite good. Our customers vary multiple across, I would say, three dimensions. One is the big innovator, the big pharma itself. The second one is the virtual biotech, the startup biotech ecosystem that is looking for a very agile and responsive CDMO to work on their early clinical program. The third is interestingly is we are all partners while we might be a competitor in certain spaces. There are different players across the value chain of peptides and a CDMO space, and we also work collaboratively with the other players in the peptides value stream. That's on the pharmaceutical side.
On the cosmetic side, that's definitely a strong pillar for us, and we've seen some increased traction starting last two quarters, especially in the last quarters, where our focus on developing and supplying TFA-free peptides has got a good attention and a good traction with customers. We are working on multiple projects on making the cosmetic peptide TFA-free. Those two are the broad, I would say details on the two sides.
Since our base is quite low on both the businesses, the growth opportunity is quite advanced. It's a complete blue ocean for us.
Last one, sir, specifically on Granules CZRO. We had set up a pilot plant for DCDA in Vizag. If you can comment on the scale-up on this front and, you know, what are our plans and, you know, what's the kind of CapEx that we're looking at? How has been the progress? These are some of the questions.
Yeah. It was and is still a dream project, being the only DCDA manufacturer outside China. Yes, we did stabilize our production. What has happened during the process is, the Chinese competition, they started reducing prices drastically. We have been trying to do better than them or at least meet those prices and we have been still improving our processes. I think we are close to wrapping up the pilot stage and getting into commercialization. I think another two months to two and a half months we should wrap up, then we should go ahead with ordering equipments for the commercial plant. The project should cost somewhere around INR 200 crores and we'll freeze the numbers shortly.
Got it, sir. Thanks for taking my question.
Thank you. Our next question comes from the line of Shashank Krishnakumar from Emkay Global Financial Services. Please go ahead.
Hi. Thanks for taking my question. My first one was on the gross margin expansion that we've seen quarter-over-quarter. I think the sale of API this quarter was still higher. Just trying to understand what has driven the sharp GM expansion on a quarter-over-quarter basis. Also wanted to try and understand how should we look at it or look at gross margins going forward given that input costs are sort of inching up, though the mix improvement will also sort of play out. Just want to get your thoughts on how we should look at GM for FY 2027.
Thanks, Krishna. Mukesh this side. Quarter- on- quarter sequential, you know, gross margin improvement is primarily because of CDMO business, which has significantly, you know, grown from INR 33 crores to INR 70 crores, where the VA percentage gross margin percentage significantly higher. That has helped the margin expansion for the quarter. With respect to your second question, our chairman has elaborated, you know, and also, you know, current war situation, cost escalation situations. It is little uncertain in terms of giving margins clarity in terms of percentage, but of course we are trying our best to get the entire raw material cost escalations.
Got it. Just my second question on the CapEx plan for FY 2027, 2028. If you could just sort of highlight how you are looking at it in terms of the overall figure and as well as which are the areas where we should see the incremental investment being deployed. If you could just share that.
Next year the CapEx will be broad-based. You know, there is a new API facility which we are doing. In addition to that, we are also investing on the IT side, and we are also planning for, you know, as part of Chairman's speech also it was covered, the distribution center, warehouse, distribution center in U.S. It will be broad-based multiple CapEx projects in the coming year.
Any figure which you could sort of share?
We are talking about in the similar range of INR 600 odd crores in the upcoming year.
INR 200 crores plus will be for distribution.
Correct.
Got it. Got it. Just last one, if I may squeeze in. If you can follow the remediation spend cumulative for FY 2026 and what is the kind of remediation spend that we should expect probably from 1Q onwards?
Sir, FY 2027 onwards it should be substantially lower, which has already come down Q3, Q4. Our expenses were very high in H1. Cumulatively, only the remediation expenses we have incurred, you know, close to INR 50 plus crores in the current year.
Got it. Thank you. I'll join back.
Thank you. Our next question come from the line of Tushar Manudhane from Motilal Oswal. Please go ahead.
Yeah. Am I audible?
Yes, you are.
Sure. Sir, as far as West Asia issue is concerned, just to have understanding correct, the freight cost increase will get reflected immediately in the coming quarters. As far as passing on of the increase in the raw material prices, will that have a lead lag impact? Secondly, we would have certain inventory already which will take care for at least one, two quarters. If you could just, you know, help us with that trajectory.
You have asked the question yourself, Tushar. There are inventories, and we can wait for a while. It's not going to be overnight price increases. It's going to take a while, that will take care of the current inventories will take care of that. All said and done, still uncertain period. While we are confident that over the year we'll be fine, quarter-on-quarter variations may be there. Yeah, we have got to get used to the uncertainty and work towards improvement.
Got it. As far as the peptide or the chemical business is concerned, if you could just break down the revenue into projects which are at R&D and do the commercial manufacturing?
Sanjay?
Tushar, we'd rather not get into that exact split, but I think it's sufficient that this is a project initiated pipeline. Whatever is at the commercial stage are result of our development in the past. We do have a lot of exciting projects underway, but I will not like to at this point in time split the revenue and give the details along those lines.
Broadly just to understand that, at least for FY 2027, 2028, while the investment is underway, which is INR 200 crores, prior to that, how the scale-up of business is expected to happen? Is it like more projects-driven increase or it's more commercial manufacturing increase?
I understood the question, Tushar. Let me just give you that we are working on some active projects which would have a commercial supplies pipeline. Although at a development stages, various clinical stages that we are seeing a few interesting projects. We got at least one project graduated to a stable commercial supply starting this financial year. So we are working on few of those as well. Given the business size is low currently low base effect, it may be not prudent for me to call out those specifically and club it together into state. We do have a very interesting program which could drive the future growth.
Got it. Just lastly, on the overall net debt for the company, considering the projects, in terms of capital expenditure as well as working capital probably increase requirement, maybe not be immediately, but if the situation prolongs, then what kind of net debt, you know, we should sort of build for FY 2027?
There can be a, you know, flattish net debt or slight increase depending upon, you know, the timing of the CapEx and increase in the growth. In the current uncertain period, because of the cost escalation, the working capital investment is also going to be higher side. There'll be very small increase in the net debt.
Got it. Thanks. Back it from my side.
Thank you. Our next question comes from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead.
Yeah, thanks for the opportunity. Hi, team. Congratulations on an amazing execution despite the Gagillapur constraints. I have a few questions, please. What proportion of Granules' current and upcoming CDMO capacity is already tied to committed or late-stage customer programs? What utilization level would you fall to if, let's say, a hypothetical scenario, your top two or top three projects were to be delayed or canceled?
Sanjay, you want to go with that? Thank you, Sajal, first of all. Sanjay, yeah.
Thank you.
Yeah. Sajal, see, in terms of utilization, our capacity today is not very large, but we are not expanding unresponsibly. Our approach towards CapEx deployment is always demand linked, and as the customer program progresses, we are investing, and that's the promise with which we are approaching the customers. Having said that, the utilization in the Q4 was at a healthy level, and at the same time, we are building capacities that will come online towards the second half of the year. Our visibility, if everything is all right, we will be quickly seeing a full utilization to that.
There are capacity that we're building in Zurich, there are capacity that we will be building in India, especially on the intermediate side. We see a quick utilization turnaround within the year itself on those capacities. But the larger point is we haven't built a capacity ahead of time. We are doing it concurrently, we are doing it as an optionality in a close, I would say partnership with the customers and quite close disclosure where we have been open to them and open with the willingness to invest in the future CapEx should they choose to and as and when their program advances.
No, that's helpful. I think if I translate what you said, Sanjay, it's not a speculative. It's tracking either a verbal commitment or tracking a late-stage client program, so the capacities are not created for the heck of it. That's how I translate it. If you could also clarify what is the level of customer concentration. I mean, typically what happens is at a low base, and this has been the journey with Mylan Labs, Roussel Labs, all of them. Typically, when your base is low, you are really dependent on just one or two customers. Are we also having that level of high dependency or customer concentration or are we having a broad base participation, albeit, despite having a very low base today?
Sajal, on part one, your interpretation is correct on the CapEx investment, and we are very transparent with the customers and giving them the optionality to choose across the two components, two continents across the timeline during their journey. Number one. Number two, our customer base is not overly concentrated. We will definitely like customers with a big share in our portfolio, but right now we are working on a multiple projects, and they're very well spread across double-digit customers. And they're all at in the initial stages with a good pedigree across both the big pharmaceutical and startup biotech, and interestingly, the cosmetic side as well.
Having said that, what differentiate us with the other CDMO, apart from diversification, is the quality of the customer itself. The quality of customers that we have access to through the legacy of Sen is quite remarkable, and this is the value that this acquisition has bring on the table. We got the proof of concept. We got the validation of access. What now lies ahead is our ability to execute on these two continent model, which is going well with the customers.
Sure, sure. Thank you. Second question is for Dr. Chigurupati, if I may. Sir, if you had to pinpoint the single biggest constraint to scaling the business over the next two, three years, whether it's pricing pressure or customer concentration, regulatory timelines or execution, I mean, what would that constraint be? What specifically are you doing to make the business stronger and counter that potential constraint?
Sajal, I think, you have part of the answer. It's mainly regulatory timelines and execution, the quality of execution. I think the regulatory timelines also depends on how we execute the project and the quality of the filings. I think we have almost got it right, and we are fairly confident that we should be able to reduce regulatory timelines. And of course, you know, other thing is the GMP remediation and FDA acceptance, which, where we are already ready and waiting for the FDA to come in. We can't push them, but we keep letting them know that we are ready.
Sure. On that basis, Dr. Chigurupati, assuming that we get the Gagillapur back in action because we have got some outstanding filings there, that should. Assuming that the gross margins stay where they are despite an imminent threat that, you know, some input, solvents, et cetera, will get expensive, you may already be facing some packaging, cost escalation due to what's happening in the Middle East. Adjusting for all those, broadly speaking, if we stay at 64%-65% gross margins, is it fair to expect a 24%-25% EBITDA margin going forward?
I think the raw material prices and packing material prices, freight prices have gone up. There's a lot of uncertainty in the market. Hopefully, you know, we are sure that we'll get some price increases. This uncertainty continues till we get the price increases. Gross margins, while we were very confident of that some time ago, now we are taking a step back and not committing to anything, but we remain confident and positive.
Sure. That's helpful. Thank you so much. All the very best.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address all the question from the participant, we kindly request you to please limit your question to two question per participant. If you have a follow-up question, please rejoin the queue. Our next question comes from the line of Tarun Krishna from ithoughtpms . Please go ahead.
Thank you for the opportunity. My question is on the large scale peptide that we're going to set up in India. So we have indicated that we'll be manufacturing DLP there, and we also have an option to manufacture the peptide drug conjugates and oligonucleotides. When this site comes live, which product will we exactly be manufacturing? Will all these three products come at the same time? Can you please give some light around that?
Sanjay?
Yes, sure.
More a question for you and P.V., but I think you should go ahead.
Yeah, sure. Dr. P.V., please feel free to come in. First of all, we are doing a measured CapEx investment, and the way it has been sequenced is building a peptide API capacity at Zurich at certain scale, followed concurrently by investment in a brownfield manufacturing facility for the intermediates in India. Once we complete this, we are right now at a planning stage of the India peptide API facility, and that will be out by at least a year to begin with. We are looking at peptide drug conjugate as a market stage, as a market segment, and we are at a planning phase in assessment side of it. Our focus is completely the peptides business as for the moment.
This platform does give some optionality on the oligonucleotide side in the future, but our current attention and the focus is completely on the peptides and its value chain, and making sure that our investments are sequentially well aligned and proportionally upgraded across the two locations, which is aligned with the customer's demand. Dr. PV, you want to add something to this?
No, no, you have got it everything and at this point of time, we are just focusing on peptides and then certainly we will have a look at ADCs and then oligonucleotides, but still it's at a selection phase. We're in the process of selecting the portfolio. Yeah.
Yeah, understood. Exactly which product will we be manufacturing from this, and what would be the split for it, or if there are multiple products from this?
Tarun, your question is about, what? Which one? You're looking at India API manufacturing?
No, it's about the large scale peptide manufacturing which we are setting up in India, so the intermediates.
Those are intermediates and basic amino acid, protected amino acid derivative that actually is required for the peptide API manufacturing. Think of it as a backward integration and a common element across multiple projects where it could be used internally for our own program, and whereas it could also be supplied from India to other players also to go into their peptide APIs.
Understood. That is it from my side. Thank you.
Thank you. Our next question come from the line of Krisha Kansara from Molecule Ventures. Please go ahead.
Yeah, hi. Sir, I'm sorry if this is a repeat question. I had a weak connection. I had a question on our Gagillapur facility inspection. You already mentioned that we submitted additional documentation with them after our meeting in January. Could you give us an update on when is the re-inspection expected? My question is because it's been more than a year since we received the warning letter, I wanted to know your opinion, your take on this. Why is it taking so long, and how confident are we to clear this follow-up U.S. FDA inspection? What is your estimate on the timeline?
Hi, Krisha. This is Priyanka. I'll take your question. You're right in saying that we have been corresponding with the FDA for the last, well, two years since we got the original observations. After the warning letter, our updates continue. We had a meeting with the FDA and we have continued to update the FDA with our progress. In our updates, we did mention that a lot of our activities, like CMD mentioned, would be closed by the end of March, which we are on time for. Like CMD said, we are ready for an audit. It really depends on when the FDA wants to come in at this point. From our side, we've notified to them that the activities are essentially complete.
Now I don't think we can estimate when they would walk in, but we're ready for an anytime audit. That said, just, we are actually confident in getting through with the FDA because we've had almost if you look at the investor presentation also, we've had a lot of audits in the last year across several regulatory bodies and many, many customers. Well, there's nothing critical that came out of them, so we're very positive about getting through with this.
Right. Not even like a tentative timeline that you can give?
Last time we mentioned something, we got comments now saying you skipped three times. I mean, we can't read the FDA's mind, right? It really depends on when. There has been no communication from the FDA, but we are in touch with them.
Okay. Given that we recently received ANVISA GMP certificate for Gagillapur facility, has this prepared us in some way for the U.S. FDA re-inspection or is it not the case? How do we read this?
Like I said, it's not just the ANVISA, but 108 customer audits and 13 regulatory audits happened in FY 2026. We welcome these audits because like you said, it prepares us better to be audit ready when the FDA walks in. Like to answer your question, the ANVISA audit and these other audits all prepare us for the FDA.
Sure. In summary it is like a wait and watch situation for us.
Yes.
Sure. Thank you.
Thank you. Our next question comes from the line of Preet Jain from Niveshaay. Please go ahead.
Congratulations on good set of numbers. My first question is, for lisdexamfetamine, you had 5% prescription share in CY 2025. What quota did DEA assign you for CY 2025? Can I know the same quota for current year 2026 and current year 2027? In this quarter, w ill support your sales of this product, specifically this product?
With this tech transfer to mean, I mean, we obviously cannot share the quota details, but we got everything that we wanted, and I think we have demonstrated our ability to supply to our customers on time and in full, which essentially is a precursor to why you would get quota. Even for FY 2027, we expect the quota situation on this product to be as we budgeted for.
Mm-hmm. Sure. My next question is, you have said that you plan to add 1-2 new controlled substance products annually for next two to three years. Can you name or give us the light on which products you expect to launch in next coming two years, and what is the addressable market size for them?
Again, I can't give you names of any products. I think it's best you wait and watch because actually, the products, two of them are already in the public domain, so you can just research that. Two of them we've received tentative approvals for already. The next steps will be determined based on an ongoing litigation, which I would not like to talk about over a call. We also have one to two other products that we'll be launching on the generic side of things and one or two products that we'll be launching, which are potential first to files outside of the tentative approvals that we got.
The last question is, can you have you any current order book in Senn project, the CDMO Senn project? Is there any order book for that, for that project?
Sanjay, if you wanna take that question, please.
Preet Jain, we can't disclose those kind of information.
Okay. Sure, sir. Thanks.
Thank you so much. Our next question come from the line of Ritwik Sheth from One-Up Finance. Please go ahead.
Hi. Good evening, sir. Two questions from my end. Firstly, what are the plans of deploying the money that we raised from the promoter and QIP a few months ago?
Yeah. Thanks for the question, Ritwik. We have clarified in our EGM as well as last earnings call. This is to strengthen the balance sheet and also invest for organic as well as inorganic growth. Organic growth is CapEx as well as working capital and R&D. Inorganic, you know, if there are any good opportunities, we're continuously exploring. You know, that money is also available, based on the balance sheet strength.
Sir, second question is that on Senn Chemicals, how should we look at Senn Chemicals with a medium term to long term view in three to four years? You know, what kind of growth and margins one can expect? Can the margins be at company level? How should we look at this business?
Ritwik, we cannot comment on the growth, I mean, percentages of growth. All I can tell you is that's a key pillar for our growth, and that is what will also drive a good percentage of the company's growth. I can't go into specifics, but it's very, very important for us. We see a great future there.
Sure. Sir, just one last question. In the past you have mentioned that we are looking to launch controlled substances outside the U.S. market also.
Right.
Can you throw some light, when do we launch these products, say maybe in EU and then ROW? How far are we, and what kind of infrastructure or readiness we have for this?
I'll just give you a little bit of background. Amongst all the controlled substances, or let's just say medication for ADHD primarily, I don't wanna say controlled substances. Medication for ADHD, there's two that are globally prevalent. Globally relevant in terms of size, et cetera. Out of the two products, one has already been tech transferred, and we started filings across the globe. Within, within the next couple of years, one or two years, we'll start seeing. Not one or two years. Actually two years, we'll start seeing revenue from those products on the finished dosage side. APIs, we should be seeing the numbers come in a little bit sooner.
Okay. Finished dosage, EU can see sometime from FY 2029 and API maybe a year earlier.
Not just in EU. We've been filing in multiple countries.
Okay. Great. Okay, sir, that's it from my side. Thank you and all the best.
Thank you.
Thank you. Our next question come from the line of Shreya Chatterjee from Ageless Capital. Please go ahead.
Thank you for taking my questions and congratulations for a good set of numbers. My first question is regarding the statement that you said that controlled substances, you are now at the 4th position. In the controlled substance space, basically ADHD, you have a very high potential drug, which is lisdexamfetamine dimesylate, or the generic Vyvanse. How is that going on? Because for the other generic companies also there had been some issues of product recalls. If you could just comment on that. Thank you.
Shreya, we have a good history. I don't think product recalls and such is a great, I mean, constraint for us. What was the other question you had, Shreya? Sorry.
What is the current, like?
No, revenue, we cannot by product, we cannot go into details. Lisdex is a good product for us, but we also have equally good products in our portfolio, and more are in the pipeline and it's just not one product. That's all I can tell you.
Would it be.
I just wanna mention, Shreya, because the prior participant had the same question on lisdexamfetamine. If you look at all our historical investor calls also, and if you just, I guess, track the number of approvals we've received, you'll know that it's not just lisdexamfetamine, like CMD just said. There are other products. The name of the game is to make sure that you're consistently growing in all the products to achieve this position in the ADHD/controlled space.
Got it. Would it be possible to give out the market share for this Vyvanse? The current market share that you have captured? Okay. Any comments on the pipelines more for both the controlled substance and the oncology drugs, like in the next two to five years, how big do you see that opportunity to be growing?
I can, I think in the investor presentation we said INR 41 billion as a TAM. That said, that is a combination of the brand and generics. All I'll say is that the quality of filings are significantly improving. They're moving more and more towards complex products, more in the controlled space, and oncology space, two big drivers for us. Well, we have a few first to file targeted, a lot of NCE-1s targeted, and we plan to be there on day one with a very, very good value proposition.
Got it. Would it be possible to guide on the working capital situation, maybe this year, FY 2027, given the volatility that's going on?
This is, of course, uncertain period, Shreya. The cost escalations are currently there. Whether it will continue for few months, few quarters, we are not so sure. Considering that, we would, you know, would want to maintain our working capital to sales ratio of 33% range.
Got it. Thank you. That's it from my end.
Thank you. Ladies and gentlemen, as there are no further question from the participant, I would like to hand the conference over to the management for the closing remarks. Thank you, and over to you, team.
Once again, thank you very much, ladies and gentlemen, for joining us today. I just wish you all the best for the rest of the week, and have a great weekend after that. Thank you.
Thank you so much, sir. Ladies and gentlemen, on behalf of MUFG, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.