Q3 23/24

Feb 8, 2024

Summary

Q3 FY24 posted record EBITDA of INR 97 crore and PAT of INR 53 crore. CDMO/CMO growth and exports supported margins, while API and xanthine pricing pressure persists; FY24 EBITDA growth guidance is 8%-10%.

Gentlemen, good day. Welcome to Aarti Pharmalabs Limited Q3 and nine months FY 2024 earnings conference call hosted by Valorem Advisors. 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 and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumeet Singhania from Valorem Advisors. Thank you, and over to you, sir. Thank you, Sagar. Good evening, everyone, and a very warm welcome to you all. I am Sumeet from Valorem Advisors. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the third quarter and nine months of financial year 2024. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call are forward-looking in nature. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those stated. Such statements are based on management's beliefs, as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on such forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We have with us today Mr. Rashesh Gogri, Chairman; Mr. Kedar Gubbigala, Vice Chairman and Managing Director; Mr. Piyush Lakhani, Chief Financial Officer. Without further delay, I request Mr. Rashesh Gogri to start his opening remarks. Thank you, and over to you, sir. Thank you. Good evening. We welcome all the analysts and investors to this call on the FY 2024 quarter three performance of Aarti Pharmalabs. I will start the discussion with business highlights. Businesses. As company operates in three distinct areas within the pharmaceutical industry, API intermediates, CDMO/CMO, and xanthine intermediates. The company is actively engaged in production and sales of API-related intermediates and adhering to regulatory standards as the primary focus is on selling in the regulated markets. Q3 share of regulated market was 53% of the sales in this segment. In CDMO/CMO business, strong scale-up and commercial manufacturing expertise of over two decades is helping us enhance our customer confidence in us. For Q3, the revenue share of CDMO/CMO business sits at 14.2%. We have added one new customer, three new commercial products, and six new R&D products in this segment. Let me now cover the key financial highlights for Q3 FY 2024. I am pleased to announce that in Q3 FY 2024, we have recorded the highest-ever EBITDA and the net profit till date. In absolute terms, the EBITDA stood at INR 97 crores. On the quarter-on-quarter basis, the consolidated revenue increased by about 2% to INR 448 crores, whereas, EBIT increased by 10% to INR 78 crores against the previous quarter EBIT of INR 71 crores. Consolidated PAT stood at INR 53 crores, marginally higher over the previous quarter. The consolidated EPS for the quarter gone by was INR 5.82 per share. The board has approved an interim dividend of INR 2 per share in the just concluded meeting yesterday. Let me now share update on ongoing expansion projects. The greenfield expansion project at Atali, Gujarat continues to remain on track and with the expected completion targeted in H2 of FY 2025. The project to manufacture primary raw material of xanthine is expected to begin in this quarter, thereby limiting our import dependency. The semi-commercial production block at our US FDA intermediate manufacturing site in Vapi, to cater to smaller test size requirements is aiming for completion in Q2 of FY 2025. In addition to above, the company is planning to further expand xanthine capacity over the next 16-18 months. All these efforts signify our commitment to growth, self-reliance, and adhering to diverse client needs. With the current stable demand outlook, we expect to have an EBITDA growth of approximately 8%-10% in FY 2024 and remain well-positioned to achieve our long-term goal of 12%-17% annual growth in next 2-3 years. We believe that Indian and global pharmaceutical industry is poised for sustained growth, and we aim to continuously improve our performance by leveraging our strong R&D capacities. We envision ourself solidifying our leading position in xanthine segment of our business. In API CDMO segment, we plan to strengthen our position by introducing more value-added products and acquiring new customers. This will help us solidify our position in the market, bringing long-term value for all our stakeholders. I will now request moderator to open the floor for Q&A session. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and 2. All participants are requested to use handsets only while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The next question is from the line of Samkya from Geric Capital. Please go ahead. Hi, good evening. Am I audible? Yeah. Yeah. Just a couple of questions. First, you can see a big jump in the gross margins in this quarter. Can you please elaborate into, can you break down the gross margin expansion reasons? Yeah. As you will see that, we had higher margins in export and our CDMO, CMO business is also expanded, and both of these have resulted into overall margin expansion in our business. Okay. The xanthine RM project was supposed to be commissioned in this quarter, in Q3. That has been pushed to Q4, right? Yeah. That has got pushed to Q4. However, we are able to buy at a similar price range from alternate suppliers. That doesn't have any cost impact on our xanthine production costs. Okay. When this project comes on stream, we can see a similar kind of gross margin, not a big expansion from this level, right? Yeah. That project is mostly from a standpoint of supply security. Okay and Indianization of the raw materials. Okay. So that the import dependence goes away. Okay, got it. Last question on my part was, is there any change in the theophylline realization? Because as seen from the import realization seems to have gone up quite a bit for theophylline, aminophylline and that other bronchodilator category. Are you seeing anything on that front? No, it is at a more or less a similar level. Mainly aminophylline and theophylline margins or realization has been pressurized as a similar level to the pricing pressure. Okay. Got it. Thank you. Thank you. The next question is from the line of Ankit Gupta from Bamboo Capital. Please go ahead. Yeah, thanks for the opportunity. Good to see the ramp-up from the CMO and CDMO side. We have seen a significant jump in CDMO segment in this quarter, and our product basket, both on commercialized molecules as well as under development molecules, has increased significantly. We also added one new customer. Would the ramp-up in the CDMO that you've seen in the last quarter, is it sustainable, do you think? And the traction that we have seen in CDMO segment, is that going to continue going forward as well? Yeah, we expect the ramp-up of these projects continuing. As you see now, we have a basket of more than 39 products that we are dealing with our 16 customers. And they are at various phases of development, and some are commercial also. So depending on their plans and the approvals that they get, these products will become commercialized and, provided they pass their clinical research, and launch this product. So on that basis, we will have a visibility of these products in the future. But do you have good visibility on the products which are already commercialized, which are already launched in the market? Yeah. All the three. That's why, yes, we are saying that we have a good conviction that we'll be able to grow the current business of CDMO, CMO in the future. So, Akash, given this segment is in last quarter specifically 14% of our overall revenue, do you think, over the next given visibility that we have, this segment can become 20%-30% of our overall revenue over the next 2-3 years? Next two to three years, it has a chance to become 20%-25% of the total revenue. Or even bigger, because it depends on how the products are commercializing at the customer end. Depending on that, we will have more visibility. But I think going forward, we see this number to at least reach this 20% mark and go above. Got it. On the API and intermediate side, in general, API and intermediate, how is that segment doing? There have been pressures on the pricing front. How is that pressure staying and- Sorry to interrupt. You're sounding a bit muffled. Is it possible to use the handset mode in case if you're using the speakerphone? Sure. Is this better now? Is this better? Yes, sir. Yeah. On the API and intermediate side, how is the demand scenario currently? The industry had been facing some challenges on the pricing side as well as demand. How is the segment doing for us, and what is the outlook for the segment for the FY 2025 and FY 2026? Yeah. Basically, in API and intermediate segment, in API side, particularly mentions the company operates in the steroids and cancer segment along with the lifestyle drugs. In this product segment, we are feeling stable to good demand. There is a compression in pricing overall due to overall competition. I think since we operate largely on the regulated market, and export market, we are quite okay with this business and growth potential of this. Okay. Can we expect 15%-20% kind of revenue growth in this segment in the next two years? Yeah. It depends on the new launches and how our partners are becoming successful in future. We expect definitely this business to grow. The absolute number can be 10% also, yeah, in that range. Okay. The last question was on the xanthine side. How is the pricing scenario now? I think last quarter also, we think that we have seen some pressure on pricing. Where do you see the pricing pressure ending and what is your outlook for second quarter? Yeah. Overall, we have seen xanthine segment pricing pressure. But we have been aided by lower raw material costs also. Ultimately, pricing pressure is there, but margin pressure is not as much as the pricing pressure overall. We feel that, I think it is all the China-based dumping of these kind of products also that we are seeing in other APIs will eventually end in next couple of quarters. This can't continue because everything is becoming quite challenging to others. Yeah. Okay. Thank you. Thank you. The next question is from the line of Prishali Shah from Unifi Investment Management. Please go ahead. Hello. Congratulations on the set of numbers. I have two questions. First is on xanthine segment. It was earlier mentioned that we hold 15%-20% share in the segment, and then there is one Germany player almost equal to us and Chinese players which are larger. It appears as if xanthine is a very consolidated market. How do we expect growth there? Is it incremental opportunity coming in this industry which will lead to growth, or am I missing on something in case of industry growth? As you see that the overall market of the xanthine derivative is growing, and particularly it is growing significantly in Indian subcontinent, and that is resulting in overall growth of the business. The customers that we are focusing on are convinced about our ability to partner with them for their growth, and that's how we are seeing larger allocations to us for future demand from them. Any particular factor leading to this kind of growth, or is it just a trend involved in? Yes. Xanthine is essentially caffeine and other products, and there is lot of demand of this kind of drinks and other food application, which is increasing overall usage in particularly Asia and Indian subcontinent. Okay. That answers it. Thank you. Another question was on CDMO/CMO front. As we saw the sharp rise of around 700 basis points, that is from 7.2% to 15.2%. What led to this kind of growth? Yeah. See, in the CDMO/CMO place, we have customer orders and we had significant orders which got set in this current quarter that we are reviewing. Which resulted in growth of sales. Also, if you can bifurcate the margins into these three segments. You had mentioned that CDMO/CMO is the margin contributor. If you can just bifurcate margins as of how much contribution is of xanthine segment, how much of CDMO and how much of API. Yeah. Currently, we are not giving the bifurcation of margins. Probably later on from next year onwards, we will give you the bifurcated margins because the assets are common that we are utilizing for API intermediates and CDMO/CMO. It's a little bit trickier to give this breakup. Okay, no problem. Thank you so much. Thank you. The next question is from the line of Ankit Gupta from Bamboo Capital. Please go ahead. Am I audible? Yeah. As we discussed in this call as well as in the past, the margins in the CMO and CDMO segments are higher than the overall company margin compared to the xanthine as well as API intermediates. With the proportion of the segments increasing, I think our overall margins can be like 21% over the next 2-3 years. Yeah. See, margin percentage is kind of rising also. There are two factors which have led to higher margins in this quarter because we focus more on absolute growth. But lower price of xanthine derivatives has also factored in overall, because actual margin compression has not happened. Okay. Just overall pricing has come down. So that has resulted in the percentage increase. Sure. Okay, got it. Yeah. And sir, on the volume side, on xanthine, in the nine months, have you seen growth in the overall volumes? And if you can probably give an indication how much has been the growth in volumes in xanthine. Yeah. Growth over last year has been 25% YTD, if you compare YTD of last year and this year. We have done a growth of close to 30%. Okay. That's commendable. Okay, cool. Thank you, Nishant. Thank you very much. Rajesh, I am able to hear a lot of background noise from your end. No. It is not from my end. Hello. Piyush? From the line of Mr. Anil Desai. Should I take the next question? Yes. Next question is from the line of Anil Desai from Kotak Capital. Please go ahead. Hi. Good evening, everyone. Rajesh, my first question is on the xanthine side. In the xanthine, we are indicating that in couple of quarters, the China companies, like all other APIs, is stopping prices again, kind of move up. Given that, and I understand you do annual contracts for xanthine for most of the large customers. How does it work? You revise it somewhere middle of the year or you go through with the same pricing, and then next year only the prices get revised. How does it work? Yeah. So, all our 100% quantity is not on an annual pricing. We have a mixture of quarterly pricing, annual pricing, and spot pricing. So it's a mixture. However, significant portion is on the annual pricing and that gets reset every year. Okay. That is as a part of the financial year or calendar year? Yeah. Sir, second question is, I think we have given that 12%-17% EBITDA growth patterns. I think at that point in time when we were discussing on the call, one of the thing was that the xanthine realization are under some pressure. Now, from here on, if the xanthine realization again comes back and we remain backward integrated, do we see any upside potential to what we have said? No. We have a wide range, 12%-17%, so I think we still fit in that range. Even if there is an uptick in and there is lot of dependency on our partner's success of the projects for which the launch will happen. We have series of launch which will happen in 2024, 2025. With that, intermediates as well as API, how they fare and how our partner fares, that will determine the overall margin profile. Okay and absolute number on our project. In terms of xanthine, we will have another 7%-8% increase in quantities that further some debottlenecking will happen starting next fiscal. That will complete our current debottlenecking program that we started last year. We further plan to do one more round of debottlenecking by further investment, and we are still working on that. Once we have some detailed figures, we will get back to you in the next call. Okay. What is the total capital we are making to have an upside, both Atali and xanthine expansion put together? Overall, there are several projects which are under development. Atali, we have announced a CapEx of INR 375 crores. Then there is a solar project where we are doing a INR 90 crore CapEx. The xanthine CapEx number is still being worked out. All in all, everything largely will get spent in 2024, 2025. Okay. Over next 12-18 months, we are looking at somewhere in the region of between INR 400 crores-INR 500 crores of CapEx. Okay. Out of that, INR 90 crore is for the solar, rest is for the processes and increasing the capacity, right? Yes. We can assume around 2x asset turn on whatever CapEx will be. Solar is going to be not adding anything. Not solar. I am excluding the solar part. I am saying other processes and API and CDMO. Yes. Okay. Thank you. Thank you. Participants may press star and 1 to join the question queue. Next question is from the line of Nikesh Pathak from Broking. Please go ahead. Good evening. My question, first question is on gross margin. This quarter, the number of 46% is a lot higher than our usual 14.2. You explained the reasons, but is this a sustainable number? Also, can you price it the impact of product mix and lower RM prices, et cetera? This 46% number is definitely due to the lower sales price and lower raw material cost percentage, plus improved margin due to exports and CDMO/CMO segments. All three have contributed to this. I think we will have to really work on that number. However, we are looking at absolute number increase and how we are able to get this absolute number to grow as a percentage. That is where company is focusing more rather than this percentage. Understood, sir. Second question is on API and intermediate. You have given a pie chart, right? Basically, it seems like the revenue from API intermediates has gone down a little bit in Q3. Have you diverted some of your API capacity towards the CMO and CDMO? Yeah. We have diverted some of our capacity of intermediates for CDMO/CMO. Correct. Utilization. Yeah. You have committed a CapEx of nearly INR 270 crore in FY 2023 and H1 of FY 2024, right? With the new Tarapur API block and the hydrogenation reactor, et cetera. Now impact is still not visible in our top line. When will it start getting reflected in the top line? Also related to that, if you can share some details on Atali ramp, right? It is the peak revenue potential, expected utilization, et cetera. Yeah. Regarding this earlier expansion of hydrogenation as well as the new API block, I think now we have onboarded most of the customers on this newer block, and we ultimately have to look at the consolidated API capacity availability. What has happened is that we have moved our larger products to this newer block, and we have emptied out our current multi-purpose block. Overall, these ramp-ups are going to happen over the next 2-3 years, and then we will get these API capacities getting fully occupied. Whereas in case of Atali, it's a very large land parcel that we have where we have almost 80 acres of land, and we have only started the first phase of Atali, where we are investing INR 75 crore, out of which the infrastructure cost itself is going to be INR 125 crore, and the balance is going to be spent on the blocks as well as the utility, et cetera, for that particular block that we are going to utilize. Overall, that ramp-up will happen slowly initially, but ultimately we will put up more and more blocks at that site because we have space to almost put 12-15 blocks in that particular site that we are developing. Every year we can put one block depending on our customers' growth, and we don't have to change the sites. Got it. Any target on capacity utilization or revenue potential, et cetera, for FY 2025, FY 2026 or FY 2027? See, our endeavor is to do more than 1x or 1.2x kind of X of our net fixed asset. We have to completely do the more product mix and manufacture more value-added products to achieve this number. Got it, sir. A couple of more questions. R&D spend, what will it be for FY 2024? Also FY 2024, what is the total CapEx? R&D normally our run rate is about 10-11 crores per quarter. We will spend almost about the same amount that we spent in 2023, which is about 40 crores of gross R&D spend. CapEx, we have spent about 40 crores so far in H1 and we are capitalizing. We have 102 crores of WIP. Basically, the CapEx number for this year would be about 150 crores or so, excluding R&D. The number of 400-500 CR you mentioned is in addition to this 100 CR of senior debt, right? This is fresh 100 CR of 400 CR. Yeah. But some of this would be spent in 2024, this financial year as well. 25. And 2024 last quarter also. So in 15 months we will spend this INR 500 crores. The last question from my side on the xanthine segment. I just want to understand the market dynamics better. Can you help me explain the entry barriers in xanthine? Do you expect any sort of large capacities coming up in India or globally in the medium term? Also, if the market is attractive in the Asian subcontinent, what stops other players setting up capacities in India or in, let's say, other China or elsewhere? As you know that overall the xanthine market has seen pressure on pricing and margins currently. For any new player to enter and create this kind of market is becoming difficult to get the scale at which we are operating. Also, there are regulatory approvals and qualification requirements with large customers where it takes a lot of time for any new entrant to get qualified and all that. That is the entry barrier that we have in this segment. That is what will deter other operators from entering into this segment. From last year, this year, it has become more difficult because overall other customers and those markets have also, pricing has become more challenging. Also, we can offer 100% India. China, like with cyanoacetic acid or Sorry to interrupt. Ma'am, we are not able to hear you properly. You are sounding- Yeah. What she is trying to say is that we are giving our customers India-only product advantage. There is no Chinese element in our product. That is the advantage that people, if there is any competitor from China, it will not get entertained as much as we get entertained from India as a supplier. Sure. Thank you for the answer. Thank you. Thank you. The next question is from the line of Mr. Vikas Shah from AV Asset Management. Please go ahead. Good evening, everyone. I just wanted to confirm one thing which you mentioned earlier. Has the volume growth for the nine months was around 20%? There was some background noise, I couldn't hear you. On xanthine segment. Yes. Okay. Secondly, on the CDMO side, the favor side which you are in this quarter, would you expect that to remain more or less stable going forward for the next few quarters or would you see a very high volume here? Yeah, CDMO, CMO, quarter to quarter, we can't give the guidance. However, on an annualized basis, we are pretty confident of growing current segment. Last year, we did almost close to INR 95 crore to INR 100 crore. This year, already we have crossed that number and we are near last year's number, and this one quarter, we are giving another round of sales to our customer. Going forward- Yes we expect growth to continue at, say, 40% or 50% annualized. What would be the nature of these products like? It's more like commercial launches of the product or it's in R&D stage? Yeah. So we have 19 products which are in commercial, 20 products at R&D stage. Of course, R&D stage share in revenue is very hardly anything. But currently the products which we have been working with our 16 clients are more where the numbers are showing up from few products which have been either their validation quantities or commercial launch. Okay. Thank you very much and all the best for the future. Thank you. The next question is from the line of Basmit Nayak from RW Advisors. Please go ahead. Thanks. Sir, what do you see on ground that you believe China dumping would be over in the next 2 quarters? We feel that overall in the chemical segment and other segment also, the overall, I think, pricing and sustainability of China at this lower pricing has entered in certain product segment in chemicals. I think the same will continue in pharma also because once the chemical prices start moving up, we are seeing in China, the API prices also will slowly start mirroring that. Understood. Sir, final annualized guidance, I could not hear it properly. CDMO is expected to grow at 20%-25% as a segment every year? CDMO next year will grow faster. We are anticipating 40%-50% growth over this year in CDMO, CMO segment. Okay. Sir, on gross margin, I think, can you give us a sense of how better CDMO or CMO or better compared to company gross margin on an annualized level at least? Yeah. Physically, gross margin currently, we were at 41%, now we are at 42%. But on the CDMO, CMO side, I think our gross margin is in excess of 50% in most of our products that we do. Yeah. However, as the product will become more and more commercial and the quantities will ramp up, I think those margins also will rationalize going forward. However, we will get compensated by absolute quantity increase, an absolute number increase. So it is a balancing number. It depends on which place the products are and how we are doing. Understood. If I have a campaign of innovator every year, then the margins cannot be 50% or plus of 50%, but initial launch batches or those can be higher. Understood. Sir, this CapEx of INR 400 crore of solar, which we want to do in the next 15, 18 months. So the commissioning of it should be expected around Q1 FY 2025? Yeah. See, we have guided H2 FY 2025. Basically, we will have in the next 15 months, the projects will start operating. Understood. Thank you. Over. Thank you. Next question is from the line of Kunal Deshmukh from Doron Capital. Please go ahead. Sir, one clarification. In the business vertical sheet that you have given, is that is for the standalone number or for this quarter or nine months, or is it for the combo numbers? Standalone. Standalone for the quarter, right? For the quarter. So sir, the question is that, if I look at the API and intermediate segment, if I look at the overall numbers, they are close to INR 550 crore in that segment. Given that we have such a good customer base and very good products, and we have three new APIs under development, all regulatory approvals across various countries. Can we close this business at 80, 50%? If not, what are the restricting factors for us to grow this business at that rate? Yeah. Globally, API business for newer generic launches has seen a lot of pricing pressure on day 1 launch and also subsequently. There is a lot of pricing pressure which is there on this launched new APIs. However, the advantage that our company has is that, we are backward integrated, and we have our own multi-stage synthesis that we carry out for these APIs, which make us position our product differently than other players of API. Basically, absolute number increase is one thing, but what we are trying to do is how we can grow the absolute margins. Because the assets which we are using for API, we are not using for any other usage. How we can do more absolute contribution in this manufacturing asset is what is our goal. Okay. Is it safe to assume that your volume growth could be at 50, 60% rate, just the realization pressure because of which the growth may be still lower? I think those numbers we can guide for absolute EBITDA increase that we plan. However, these top-line numbers are ultimately with. Because if you see, we have not increased our top line over last year, but however, EBITDA and other numbers have shown increase. One more question, sir. I think we have given earlier that 15% EBITDA guidance in terms of improvement over FY 2023. Now we are saying 8%-10%. Is that largely because of the pending market changes or anything else which it likely affects than what we had anticipated? Yeah, I think you are right that we have tagged lower our absolute growth. As we pass quarter on quarter, we have more surety on what number we are going to achieve. We are at this number. We are seeing some postponement of orders of certain projects also, which have resulted in moving these sales to next financial year. Both these results would result in tagged lowering of this EBITDA growth. Okay. Just one more. Earlier, Javid was 10%-12%, not 8%-10%. Thank you. A reminder to all participants that you may press star and one to ask a question. Participants may press star and one to ask a question. Participants may press star and one to ask a question. Next question is from the line of Nitesh Dutt from Burman Capital. Please go ahead. Sir, my question is on Atali. We are committing significant CapEx, right? INR 375 crore in the next year. Is it more from a longer-term growth point of view, or are you also seeing some near-term visibility given by customer orders, et cetera? Yeah, it is more from overall growth perspective. I think it's a large manufacturing site that we are trying to put, because we would like to see consolidate our place where we do further expansion because regulated customers and innovators don't like us to shift the sites from one site to other site. From that perspective, we had to decide on putting up this very large manufacturing site, and it will have, I think, multiple phases of newer CapExes that we will do at this site. Current phase one includes the infrastructure as well as two large blocks that we are constructing there as part of this current phase of expansion. We will have all the permissions and land and everything to do further expansion also there, which can come up every year as additional blocks. That is our strategy. There we can, longer-term, we would have one site which will give us consolidated control over our expansion. Are we also adding some new capabilities, like the chemistry capabilities or newer kind of products in Atali site? Yeah, overall in the new R&D center that we have started, we are looking at doing more peptides and flow chemistry as well as the newer reactions and newer chemistry we would like to add. Once we form our R&D capabilities, I think in the future projects we will see more such production capabilities coming into Atali. Got it. Finally, on the 90 CR CapEx on solar side, will it help us help reduce our energy cost in any way? Yeah, please. Yeah. The cost increase that we are looking at is about INR 6-INR 7 per unit. Currently, in Vadodara, the per unit cost of electricity is almost INR 10. There is definitely going to be a savings, and we are consuming about 40 lakh units on an average per month. Yeah. Roughly INR 10 crore of annual savings. No. It will be more than that. Yeah. Cool. Got it. Thank you. Thank you. Next question is from the line of Krishna from Capitalmind. Please go ahead. Hi, sir. Am I audible? Yeah. Hi. My question is regarding the xanthine pricing pressure. Are we at the tail end of the pricing pressure or how long do we expect for the pricing to come back to previous levels? That is one question. Second question is on the, you mentioned that EBITDA, we are expecting 8%-10% growth, right? That is for next year, next quarter or next financial year? These two questions, sir, from my side. Yeah. Overall, I think the xanthine pricing pressure will end in, we anticipate that it will continue till middle of next year. In terms of the growth that we will end FY 2024 with 8%-10% EBITDA growth, and for future, next two to three years, you can anticipate 12%-17% annual growth of EBITDA. Okay. This 8%-10% is for next year? Okay. This year. Next quarter. Next quarter only. Okay. Got it. 20 to 24 overall, compared to 19 to 21. From 2025 onwards, we can expect 12%-17% for next two years till 2027. Yeah, three years. Got it. Okay, sir. That's it from my side. Thank you. Thank you. The next question is from the line of Bharat from Neomile Capital. Please go ahead. Hello, am I audible? Yes, sir, you are audible. Yeah. Thank you for taking my question. I just wanted to ask, how do you plan to fund your CapEx within the next two years? Like in terms of internal growth, how do you plan to fund it? It will be a mix of both internal growth as well as borrowings. As you can see, our net equity is, we have quite well-placed and if you see the business opportunity also, we are in a quite good place to basically expand on the equities as well as the future that we have. We think that at some point that kind of CapEx is really in a much better place, and we'll do internal growth as well as some sort of borrowing. But we will keep a tab of where we want to be in terms of equity. So our target is between 10% to 15%. That's it. Thank you. Participants, press star and 1 to ask a question. If there are no further questions from the participants, I now hand the conference over to the management for closing comments. We thank you everyone for taking the time to join us for our Q3 FY 2024 earnings call. Hope we have addressed all your queries. If you have any further questions, please feel free to contact our investor relations team and they will revert back on the same. We look forward to connecting you together again next quarter. Wish you good evening and bye for now. Thank you. Thank you. On behalf of Aarti Pharmalabs Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.