Ladies and gentlemen, good day and welcome to the earnings conference call of Divi's Laboratories Limited for the Q3 of financial year 2022. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. M. Satish Choudhury. Thank you, and over to you, sir.
Good afternoon to all of you. I am M. Satish Choudhury, Company Secretary and Chief Investor Relations Officer of Divi's Laboratories Limited. I welcome you all to the earnings call for the quarter ended December 31st, 2021. From Divi's Labs, we have with us today Dr. Murali K. Divi, Managing Director, Ms. Nilima Prasad Divi, Full-Time Director, Commercial, Mr. L. Kishore Babu, Chief Financial Officer, and Mr. Venkatesa Perumallu, General Manager, Finance and Accounts. During the day, our board has approved the results for the quarter and nine months ended December 31, 2021, and we have released the same to the stock exchanges as well as updated the same in our website. Please note that this conference call is being recorded and a transcript of the same will be made available on the website of the company.
Please also note that this audio conference call is a copyright material of Divi's Laboratories Limited and cannot be copied, rebroadcast, or attributed in press or media without specific and written consent of the company. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements which are predictions, projections, or other estimates about future events. These estimates reflect management's current expectations of future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Divi's Laboratories or its officials does not undertake any obligation to publicly update any forward-looking statement, whether as a result of future events or otherwise. Now I hand over the conference to Dr. Murali K. Divi, Managing Director, for opening remarks. Over to you, sir.
Good afternoon. Thanks to everyone for joining us at our Q3 FY 2022 earnings conference. I hope that all of you, your family, and friends are safe during this pandemic. The world is witnessing a new wave with the spread of highly transmissible Omicron variant. Although Omicron is more infectious, the rate of hospitalization is likely to be lower. While our government bodies continue to take swift actions to combat the situation by providing the first two doses as well as the precautionary dose of the vaccine during the uncertain time of this pandemic. Even the fully vaccinated individuals are witnessing the COVID impact. It is time to be more cautious and continue to practice COVID-appropriate behavior. At Divi's, we are highly committed to protecting the health and well-being of our employees and their families.
We are implementing rigorous safety measures across all the manufacturing units, and we'll continue to do so until further guidelines from WHO, CDC, and local governments. All our employees, along with their families, are fully vaccinated at both the units and at the corporate office. The company has put in place several measures to ensure business continuity, completed all expansions to create a steady supply platform. Even during these uncertain times, we continue to adhere to the delivery timelines of our customers, thereby signifying the commitment that Divi's has towards its customers and the ability to supply. We are agile and react expeditiously with the market. Backward integration, in which we have started to invest, is yielding positive outputs, thereby securing the supply chain. We continue to be committed to maintaining strong business continuity and adhering to our supply timelines. There's an increase in sales from DC SEZ and DCV-SEZ.
Now looking at CapEx, we have capitalized INR 196 crores during third quarter, and we anticipate another INR 100 crores CapEx before end of financial year 2022. Being a responsible pharmaceutical company, Divi's has taken up several CSR activities within the communities surrounding the manufacturing units, delivering the needful services that benefited hundreds of locals living in the community. Some of these initiatives include distribution of laptops to visually challenged students at Netriya Vidyalaya , supporting the local government schools in developing infrastructure, such as building classrooms, providing dual desk benches, books, school bags, stationery, benefiting more than 20,000 students, installed 150 RO plants in the 51 government schools to ensure adequate safe drinking water to students in the schools. I'll now ask Nilima to brief on operations and financials. Thank you.
Good afternoon, and welcome everyone to Divi's Laboratories Limited earnings call to discuss the results of our third quarter for the year ended 2022. I hope that each one of you, along with your friends, family, are safe considering the continued existence of COVID-19 pandemic and the anticipated third wave. I would like to update the scenario with Divi's. On the manufacturing front, we are currently operating at 80%-85% production capacity while following all safety protocols. On the procurement side, there was a significant increase in the prices of some of the raw materials due to energy crisis in China. We were able to mitigate some of these cost pressures due to geographical diversification of procurement, along with existing long-term contracts with the key suppliers.
Backward integration on key products and limited product offerings has allowed us to be focused and react quickly to the changes in the market. I'm delighted to mention that the CapEx programs for debottlenecking, backward integration, and upgrading of utilities taken up during the last two years are resulting in minimizing supply risks and production disruptions, achieving a more improved financial performance. The logistical challenges attributed to the cancellation of flights, congestion at the ports, limited availability of the containers, and manpower at the ports caused a huge slowdown, thereby impacting the incoming raw materials and the outbound shipments. We are committed to serving our customers despite all these headwinds. Our operational teams continue to be diligent and closely monitor this ever-changing situation so that we can swiftly act and ensure an intact supply chain.
Coming to operations, I'm happy to state that we have achieved a consolidated total income of INR 2,510 crores during the third quarter, reflecting a growth of 46% year-on-year. Profit before tax for the quarter amounted to INR 1,034 crores, a growth of 61% year-on-year, and the profit after tax to INR 902 crores, reflecting the growth of 92% year-on-year. For the nine-month period ended December 31st, 2021, the company has earned a consolidated total income of INR 6,503 crores, higher by 25% year-on-year, with an EBITDA of 44%. Profit before tax of INR 2,608 crores, reflecting the growth of 31% year-on-year, and a profit after tax of INR 2,066 crores, higher by 39% year-on-year.
During the nine-month period, exports accounted to 90% of the sales revenue, while exports for the quarter constituted 92%. During the current quarter, Europe and U.S. contributed 79% of our revenue, while for the nine-month period, the contribution from these regions was 77%. Product mix for Generics and Custom Synthesis for the period is 43% and 57% of revenue respectively for the nine-month period. During the current quarter, CS business was about 60%. Constant currency growth for the quarter is 59%, while for the nine-month period it is 32%. Our Nutraceutical business for the quarter accounted to INR 166 crores and INR 471 crores for the nine-month period. We have a Forex loss of INR 3 crores for the current quarter and a gain of INR 9 crores for the nine-month period.
We have cash on books of INR 2,323 crores. As of 31st December, receivables amounted to INR 2,209 crores and inventories, INR 2,830 crores. We have capitalized assets of INR 196 crores during the quarter and INR 762 crores for the nine months. For this, the new SEZ accounted to about INR 368 crores. We have a capital work in progress of about INR 450 crores as of 31st December, of which a major part is CapEx at DCV-SEZ. Thank you.
Thank you, madam. With this, we would request the moderator to open the lines for Q&A.
Thank you very much. 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. Reminder to the participants, anyone who wishes to ask a question may press star and one at this time. The first question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.
Yeah, thanks for the opportunity. Sequentially, we have seen a sharp jump up on the sales. Would you like to call out if there is any one-off into this quarter?
It's not one-off. These are several products, projects we've now been working on. Yes, one of the projects has taken little faster, but it is a combination of several projects and also lumpiness in our business which cannot be said quarter- to- quarter. It's more on year- to- year is more reasonable.
From INR 2,000 crores, the sales for the past two quarters, now it is INR 2,500 crores. Can that be now a kind of a base to look for from here on?
I would say that we would like to maintain that. Now, it also varies on the projects we are working on. While our Generic products are very stable, but the quarter, the Custom Synthesis projects we are working on, it more depends on the customer's product movement than we producing and supplying.
Okay. Just secondly, you've been working on COVID products like Molnupiravir, but any further development even on, let's say the Pfizer drug, which is PAXLOVID ?
I think we should not be discussing products. We should not be discussing names of the company. At least I should not give you the freedom. Me, the directors, we are bound by confidentiality agreement. We cannot discuss on the specifics of the product. Yes, we are involved in anti-COVID drugs. We are the largest manufacturers of active ingredient. We have the largest capacity. Out of the 1,700 reactors, the occupancy is 83%. That means you still have about 300 reactors that can accommodate any requirement of any of the APIs. If somebody needs volume, we are the place. Now, coming back to your specific question of anti-COVID drug, it's not just these two drugs only. If you are seeing, they are now saying that the combination drug is much better than the single drug, number one.
There is a new variant coming, NeoCov, which again needs a different modification of the drug. Several big pharmas are now coming up with a variant in chemistry, more or less concentrating the nucleotide. I think we are following very closely to see what kind of new technologies, new synthetic chemistries are required to quickly develop and manufacture and supply. When I say quickly develop, supply, manufacture, there is a reason. Because you don't know what was in demand three months ago, six months ago. There may be no use six months from now. As we have seen with the earlier drugs, molnupiravir, and prior to that, uh, Hydroxychloroquine and a few others. The variants demand newer COVID drugs and newer probably mechanism of action. We are, the chemistry is same.
If you are good in technology, good in newer chemistry, we can make them.
Sure, sir. That helps. Just lastly, on the raw material side, while the backward integration has helped us, you know, in terms of maintaining or improving the gross margins per se, do you see this to be sustaining even for the upcoming over near to medium term?
Yes. The raw material backward integration is a strategy, not only just for the sake of saving some costs, but also from the point of assurance of supply, both from the Generics as well as from the Custom Synthesis.
Sure, sir. That helps. Thanks a lot.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants on the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. Next question is from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead.
Hi, good afternoon, everyone. Sir, given the big COVID upside in FY 2022 numbers, how should we look at growth in Custom Synthesis over the next couple of years? Maybe if you can throw some light on the order book, that would be really helpful.
I think I was just explaining here about the COVID drugs. They may be stockpiled or they may die soon. The new requirements of the newer ones is probably coming much faster to work on the variants. I think it's not the order book, but it's not. It is how quickly you can accommodate a new product, how quickly you can scale up and supply will be order of the day today. That's where we are very strong. Now, yes, we wish to maintain the speed, we wish to maintain the sales profitability. I wouldn't say just Custom Synthesis because our Generics portfolio is very strong. Our future portfolio is very, very strong. I think it should be balanced because it's not just Custom Synthesis alone. A balance of Custom Synthesis and Generics will be the win-win.
If you just concentrate on one, you can be in trouble if that drug all of a sudden stops.
Okay, sir. Yeah, sorry, sir. Go ahead.
No, please go ahead.
Okay. Sir, my second question was in terms of capacity, how are we placed over the next few years? Any update on Kakinada? Are there any backup options? Is there any further delay in Kakinada?
On the capacity, we never had an issue because always we invest ahead of time. We have been investing for the last three years, about INR 2,500 crores, and this probably what we added is close to INR 3,000 crores. Always keeping two or three blocks ready to take products, because we don't build product-specific buildings. We build always multi-product, multi-purpose blocks. That means any product could be produced in those blocks and for very specific technologies, they will go to different blocks. That's the concept from day one we have been doing. I was explaining for the first question that out of these 1,500+ reactors we have, 80% occupancy, it still leaves 200-300 reactors available. These are all very large volume, which can accommodate one, two, three anti-COVID drugs coming.
It should be able to. Also the new additional substance we are coming into. Also the other new Custom Synthesis projects and the new Generic that would go off the NCEs that will go off patent in the next two, three years. I said $20 billion goes off patent between 2023 and 2025. We are geared up to get the business.
On Kakinada, any update?
Kakinada. It has moved quite a bit in terms that the APIIC finally agreed, and they will be handing over the final acres of land to us shortly.
Very much, sir. Thank you and all the best.
Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Thank you, and good afternoon, everyone. Sir, when you give your disclosure in the annual report, you give your largest product, it was 20% Naproxen last year. This year, certainly, you will call it out. Let's assume it's Molnupiravir. What is the kind of number that you think is, are we doing specifically on Molnupiravir?
I did mention in the earlier answer that we cannot talk about a product or a big pharma. It's highly confidential, and I'm sorry I cannot disclose. The reason even this name came out of Divi's and the product is because the big pharma did this voluntary licensing scheme. That's how the name came out.
Okay, sir. Helpful. Let me ask this question differently. Your partner, Merck, has said we have done 10 million treatment courses in the calendar year 2021, and this is going to 20+ million courses next year. Should we assume that we are tied to the hips in terms of how that movement calendar year 2022 or fiscal 2023 for us relative to the last nine months at least?
What I would say is, again, we are ready to manufacture whatever they need, irrespective of whether it is company A, company B, company C, company D. Their requirements will be met. As I said that it's a very dynamic situation. It can be 50, it can be 100, it can be 0. It can take three months, six months, one year. It's very dynamic because nobody could predict this pandemic, how quickly it would come, how it would disappear, how we should dress up and how we will dress down. It's a very, very difficult situation. What I am saying is that we are ready to take all the opportunities. We can meet the capacity requirements, and we will produce and supply. There's no question of any shortage. We'll make sure of that.
Got it, sir. Thank you. My last question, I'll quickly ask it, is on the Generic API. If I were to use the 43/57 ratio for the nine months and back out the Generic API, and I'm also reducing Nutraceuticals here. Generic API piece is still declining 10% year-over-year, at least what math I could do. Correct me if I'm wrong, but do you see that the pain in the Generic API is probably over in terms of inventory drawdowns? Do you think fourth quarter or next fiscal you will likely see growth back again?
I would not say that Generics have declined. We did not lose a single customer. We did not lose volume. The Generic business and the Custom Synthesis, I have been saying from the beginning, 40/60, 60/40. Now it may become 57%. It may become 57% on the Generic side or on the Custom Syn side. It's not our intention to drive towards that.
Sure.
It so happened in the lumpiness. It so happened that it is now 57% or 60% or maybe 63%. That does not mean that we lost contribution in the Generic. No. Yes, competition is there in Generic, will be there. We just have to be agile. We just have to try more green chemistry and see how we can improve our margins all the time and face the challenges of the raw materials and work on it.
Got it, sir. Thank you and all the best.
Thank you. The next question is from the line of Surya Patra from PhillipCapital. Please go ahead.
Yeah, thanks for the opportunity, and congratulations on the great set of numbers, sir. I think the best ever numbers that we have reported, although influenced by what was. Dr. [Murali] , I just wanted to understand your view. Going ahead, do you think the growth in the Custom Synthesis will be higher than the Generic growth? Because at least this year we are seeing almost like over 50% kind of growth in the Custom Synthesis in the nine-month period. Whereas obviously on a high base of last year, Generic is looking relatively softer. Your view on that.
I've been saying for several quarters that we'll reach a 50/50.
Okay.
Because Generics we decide what to produce, how much to produce, when to produce. Custom Synthesis, the customer demands you produce this, you produce this much quantity, you supply at this time. So the combination of these two gives us flexibility, productivity and highest reward. That is our school of thinking. But on quarter-over-quarter basis, we should not get confused. We should see more on year-over-year basis, whereby this lumpiness of quarter-over-quarter should not be. Now,
Okay.
I think I said that with $20 billion Generic API going out of patent between 2023 and 2025, and we are aiming at them. That's when you will see the Generics again growing faster. We are launching the original patents. We are launching the original, the contrast media, which I already explained in the last quarter.
Yes.
They are all our growth engines. Also the new Generic growth engines. I think one should not get carried away about their one product or one COVID division, but I think we need to see what is the overall, and is the company geared up to be able to handle a multi-product task. I think that's where we are experts in doing it.
Sure, sir. Also, slightly differently. Let's say over the next three-year period, a couple of things that I wanted to understand your view. In the next three-year period, what is the growth that you are expecting, let's say, in the Custom Synthesis as well as the Generic business? You may not be required to give the number, but I think directionally if you can share some idea. Also, what is the CapEx that you are planning over the next three years? I am asking these two questions because there is a kind of, I would say, new wave of opportunity for manufacturers, particularly Indian manufacturers and, to be specific, a player like Divi's, that the supply chain replacement from China, like, or de-risking supply chain from China, what the global world is looking for.
Considering that and that is in kind of the strongest wave for Indian manufacturers, what is the kind of growth momentum that you are looking at for Custom Synthesis opportunity as well as the Generic opportunity, and what CapEx that you are anticipating over next several periods?
Okay. It's a quite complicated question, but I would like to be transparent. As an investment, there's no investing because the results, the funds are available in the bank. We don't need to borrow.
Sure.
INR 2,300 crore in the bank in the fixed deposit. We never invest or take up investments. I mentioned that always we keep two or three multipurposed blocks getting ready, equipment installed, ready for validation, ready for erection of equipment. Equipment ordered, received maybe about 50, 100 reactors and several of the other equipment to see which path to go. That when we give the go either for a Generic product or for Custom Synthesis project, we need not look for the land, we need not look for buildings, we need not look for. What we need to look for only chemistry and technology. We have to strictly work on that. The reason I mentioned is that we still have 200+ acres at Unit- 1. We still have 150 acres land at Unit-2 .
We could quickly, if required, more block we can install in those facilities. Now, coming to Kakinada. Yes. Once the Kakinada or the Krishnapatnam, they are cleared where when we start, yes, there will be good investment, at least INR 500 crore-INR 600 crore at each place. Whereas at the current, I think in the next one, two years, we can see an investment of about INR 1,000 crore at the current places, current settled, both Unit- 1, Unit- 2. If the new projects will start, and it's probably to be much higher. Again, it's all from internal accruals.
Yes, sir. Okay. Just on the opportunity from the China supply chain replacement, particularly on the Custom Synthesis side or the intermediate for the innovator molecules, that business opportunity, if you can throw some light, sir.
You must be reading quite a bit about reactions from United States recently in the last one week from the FDA, both on vaccines as well as APIs, putting a red list on some of the companies which really making the big pharma as well as other companies to worry about how they can source from China. Yes, it's an opportunity. Since several companies have been sourcing from China, they are looking at an alternate source, either Europe or in U.S. or in India. Definitely it costs 10x in Europe, U.S., and also it takes a minimum of five years to bring a new plant there. Forget about expansion if they are close to the towns, remaining land-locked small areas. India has lots to gain in the next five years in the API industry.
We are geared to take all the opportunities both from the big pharma side as well as the indigenous side.
Sure, sir. Thank you. Wish you all the best, sir. Great. Congrats for the great set of numbers.
Thank you.
Thank you. The next question is from the line of Prakash from Axis Capital. Please go ahead.
Hi. Thanks for the opportunity. Good afternoon to you, sir. Just wanted to understand, I mean, obviously we've done a good job, great job. You've mentioned that these opportunities will keep on coming given the, you know, the chemistry skill set that we have. From a number perspective, you know, there is a big step-up function that we have seen in this quarter. Would you suggest that this number will continue this way for the next couple of quarters also? And will we grow on this base for next year also? Would that be correct understanding trend-wise?
I think I just answered that in very detail. It all depends upon the customer product performance in the market. It's not one product. It's not one project. We have few projects lumped up, and the lumpiness is what you're seeing. Yes, so far so good. We anticipate next quarter definitely we should be doing good. What happens year from now is the especially the COVID drugs is very dynamic. Even non-COVID drugs are also getting dynamic because during COVID we have seen several therapy segments, the demand went down. Like, nobody was using antibiotics, nobody was using few other compounds. People were just concentrating on vitamin D, vitamin C and few other compounds.
I think this dynamic situation will be there at least for another one, two years until the COVID variants. The new variants which are going to come out in the very near future, I think that will determine whether the current COVID drugs work, may not work, or the combo treatments work. That means if a compound A from X company has to be mixed with compound B of Y company, and the new combo drug will do better than a single drug either currently available or in future invented. Because there are still handful of more works where these anti-COVID drugs are coming out with new structures, and they may all of a sudden show up to be very, very promising on the new COVID variant.
It's how vigilant we are, how quickly we can develop that structure, how quickly we can validate and supply to the customer is the challenge. Because somebody supplying 20x or 100x in three months or one year doesn't mean anything because it may be zero is the requirement in next six months because on the variant it may not work, just like that of Hydroxychloroquine or Favipiravir or something else. I cannot. I don't want to comment on that. We are geared up. We are fully manufactured. We have technology to handle various types of chemistry, and we are ready to take the challenges and do it.
Totally understand, sir. I was just trying to understand even, you know, we have order book kind of system, so we would have some visibility for the next three, six months. That's what I was trying to get some color. I hear you. My second question was on, you know, the input cost and many companies have talked about this, freight cost, et cetera, since we have large exports. And, you know, the Generics business in exports would require all these and obviously Custom Synthesis also. Would you like to call that out, that the cost in general has gone up significantly?
I mean, because of Custom Synthesis it might be looking small, but business as usual, is there a substantial jump in input prices as well as freight costs and as the trend started to come down?
If we had not done anything six months ago, one year ago, two years ago, we would have been in a mess. Because we anticipated this from China, we started working on backward integration, making our own starting material, investing on them two years ago. That's why our impact on our industry is much less compared to several other companies. We think the industry cannot pay these higher prices for a longer time, or always people will find alternatives instead of those solvents, instead of those phosphorus compounds, instead of those derivatives. What I am saying is that the impact on us is much, much less because we were prepared, backward integrated, and purchased raw materials. You know, the Nilima team have planned and anticipated. Probably we have purchased some of them six months, nine months, one year stock.
Now, will this continue? Can people, other generic companies, will they be able to bet? I doubt about that. We are prepared.
Right. Thank you and all the best.
Thank you. The next question is from the line of Chirag Dagli from DSP Mutual Fund. Please go ahead.
Yeah, sir. Thank you for the opportunity. In your opening remarks, did you mention that the Custom Synthesis contribution for the third quarter is 50%, five zero?
I did mention that we would like to maintain 50/50. That is my deep thinking. The Custom Synthesis is I think 57% and the Generic is 43%. That's how it was. It's not our intention to either put 60/40 or 40/60. It varies quarter-on-quarter because of the lumpiness of the Custom Synthesis projects. I would prefer 50/50. This is what I said.
I think Nilima mentioned 50%, sir. I just wanted to double-check on that number. Did I hear it correctly?
Um-
No, I didn't mention it.
No. I think it is 57% Custom Synthesis, 43% for the Generic.
I did mention that for the current quarter, Custom Synthesis business is about 60%.
Six zero. Okay. Sorry. You mentioned 60%. Okay. That is it. The other thing was ex of, you know, the COVID business, how would the Custom Synthesis business have grown in the last nine months? I understand you don't look at it quarter-over-quarter, but when you look at the first nine months of the year, ex of the COVID business, how has this performed, sir?
We don't reveal or disclose what segment-wise business. From the beginning, we only have been revealing or disclosing what is Generic, what's Custom Synthesis. As I said, we maintain highest confidentiality, both customer, product, numbers, and that's how we are respected by Big Pharma, and we would like to stay that way.
Understood, sir. The last questions are on the Custom Synthesis business was that, you know, typically the fourth quarter is very strong, seasonally the strongest for us. This year also, do you see similar seasonality?
We don't see any reason for not. It is not our business that last quarter goes on should move. No. Probably it so happens. I don't even monitor that way. I think it looks good. Opportunities are good. Validations of several of our projects are underway, both in the Custom Synthesis, in the contrast media, in the pass-through projects, as well as our new Generics. All things are happening for good, and let's hope for the best.
Okay, sir. Thank you so much, and best of luck.
Thank you. The next question is from the line of Damayanti Kerai from HSBC Securities and Capital Markets. Please go ahead.
Hi, good afternoon, and thank you for the opportunity. My first question is on G eneric API segment. Here, obviously you mentioned about volatility in commodity prices, supply disruption, et cetera. In some of your contract with customers, do you have headroom to pass on some cost?
Yes. In most of the contracts, when I say contracts, not order book quarter-on-quarter, year-on-year. We usually have contracts for about five years. These contracts we will have some built-in system whereby neither our customer will have an issue nor we will have an issue. When the prices go either too high or too low, there is a built-in system whereby we can pass on some of these extra costs. Yes.
Okay. Sir, it's applicable for some contracts, but you mentioned like five-year or longer contracts, but do you have similar leverage in shorter-term contracts, say like something is one or two year, and then you can pass on cost there too?
What I meant is that most of our contracts are multi-year, and they all are covered under that. Some of our newer Generics, some of our development products, they all are recent, in the last six months, one year, two years. These will take time before we enter into the, for longer contracts. This is what I meant.
Okay, sir. Understood. Sir, can you call out your CapEx plan budgeted for next two years?
I have mentioned just a few minutes ago that it may be anywhere from INR 1,000 crore- INR 2,000 crore in the next two, three years.
Okay
Based on our investments into the greenfield projects and also our brownfield projects.
Sir, last question. Like how much is maintenance CapEx for you per year approximately?
It's about INR 100 crores.
Okay, sir. Thank you. I'll get back in the queue.
Thank you. The next question is from the line of Bharat Sheth from Quest Investment Advisors. Please go ahead.
Hi. Good afternoon and congratulations on good set of numbers. Sir, in view of this performance, we were earlier talking of. Sorry, first let me take that. We were setting up several new technology of microreactor. That which can give a much better higher asset turn than the existing. I mean, on the whole. What is the status of that, and how do we see that as a when we are talking of new technology?
Can you repeat your question again, please?
Hello? Am I audible?
Yeah.
Sir, we were working on, I mean, setting up several micro process, I mean, reactor, so, which can give, where the turnaround time is faster, and it can give a better asset turnover than the existing one. What is the status of that project?
It's not a project, it's a process development capability or technical development capability. It is number one, most of the products are made by batch process.
Correct.
We are trying continuous process, number one. Two, we are also doing automation into process. Three, yes, micro-reactors or micro cell production. It is in the laboratory stage. There are advantages. When you look at highly energetic reactions, the micro-reactors are very helpful because whatever is the quantity of highly reactive compound you have small quantities available at a given situation. It's an advantage for such reactions. Yes, we are involved in those. They are still in the laboratory or in the scale-up. They have not gone into the plant. Not only the plant, anywhere, maybe for some research chemical manufacture they may be using. For the commercial, still it is on the bench.
Okay. Sir, in terms of this good, stellar performance, would you like to revise our full year, FY 2022 and 2023, growth number? Approximately, some kind of a ballpark that, range if you can give.
I think some of the dreams I have to do and some of the dreams you need to do.
Okay.
We have been giving only a guidance in the past of a 15% year-on-year, and we would like to maintain that. There will be lumpiness, there will be project start delay and projects coming forward, and I think we don't give any futuristic guidelines.
Okay. Thank you very much, sir. All the best.
Thank you.
Thank you. The next question is from the line of Sonia Lalwani from Stratford House Advisors. Please go ahead. Sonia Lalwani, your line is in talk mode. Please go ahead with your question. Miss Sonia Lalwani, please unmute.
Hello?
Check your audio from your side if muted. Yes, ma'am, please go ahead.
Yeah. Congratulations on a very good set of numbers, sir. My questions have been answered. Thank you.
Thank you.
The next question is from the line of Abhishek Sharma from Jefferies. Please go ahead.
Yeah, thanks for taking my question. Just trying to understand why there is so much uncertainty around the Kakinada expansion, that you're finding it difficult to commit to CapEx over a two-year period despite the land handover in near future.
It's not the difficulty from our side. I think it will be regulatory bodies, the APIIC, with whatever is the situation with the farmers and the government. That is where it is. We have already fully paid. We have constructed a wall around this part of the land, and we are ready to go with our blueprints and the drawings and the whole thing contracted. It is the government, APIIC needs to hand over the land. As I mentioned that we have about 200 acres of land at Unit- 1 and 150 acres of land at Unit -2. We can invest based on the opportunity, and we will never lose an opportunity.
No, that's fair enough, sir. If I heard you correctly early on in the call, you said that APIIC was close to handing over the land to you. What is still holding it back?
There was farmers who raised questions to the government that they paid less or whatever it is APIIC paying to the farmers. We have paid extra. They went to the court. Court dismissed it. That's why APIIC is able to now probably handing over the land to us.
Is there some uncertainty around the timeframe here that's making you a little tentative on when to start the project?
We only can say that what we have been told by the APIIC. Once it is handed over, our timeline is clear. We will start work right away.
Understood, sir. Thank you.
Thank you. The next question is from the line of Amar Mourya from AlfAccurate Advisors. Please go ahead.
Yeah, hi, sir. Thanks a lot for the opportunity. First question that, you know, we all are trying to understand, I think the same thing. I mean, as you indicated that, you know, there is a customer lumpiness and lumpiness can be both on the positive side and the negative side. I believe this quarter was more of a positive lumpiness for us and that kind of momentum is not likely to sustain, let's say, you know, after one quarter. That is what you are indicating or how should we read this kind of lumpiness in the number?
I said lumpiness is common in the API manufacturing industry when somebody's making both Generics and Custom Synthesis. Number one. Two, when lumpiness happens, you know, it's like the curve. It can go a little higher than normal lumpiness because there could be combination of few projects. Also I mentioned when you say will it continue the next quarter or the following quarter, I made it clear that it's not what we decide. It is what our customers compound, sales, performance, that decides. But we are and what I said was we are not looking at one project. We have many projects going on with many customers. I think in contrast media, in sartans, in the COVID drug, in our own Generic drugs that will go out of patent in between 2023 and 2025, $20 billion worth of products.
These are the various combination of projects that are going on.
Okay. Basically, is it like, you know, I mean, you also indicated that you would like to continue this run rate going forward. Are you indicating that you have various such projects lined up so that, you know, this kind of step-up in the revenue which we have seen is likely to continue going forward?
I don't think anybody will wish that the business will go down. No promoter will wish that it will go down. Every promoter will wish that he will at least maintain where he is now, and maybe he will do better. That is my wish. Now, what happens besides on is decided by how is this COVID variant were going to work, and what kind of new drugs are required, can they be supplied faster? At the same time, I don't want to only look at COVID drugs. We have a number of projects going on, both in Custom Synthesis as well as our own Generics and new Generics. That is what I would like to see that.
Okay. Thank you.
Thank you. Ladies and gentlemen, due to paucity of time, we will take one last question from the line of Priya Harwani from Perpetuity Ventures. Please go ahead.
Hi, sir. Good afternoon. I just wanted to know the net cash as on 31st December.
Can you please repeat? I could not hear.
What's the net cash as on 31st December?
About INR 2,323 crore.
Okay. Thank you.
Thank you.
Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. M. Satish Choudhury for closing comments.
Thank you all for joining us today for the earnings call of Divi's Laboratories Limited. In case you need any further clarification, please reach out to our investor relations. Thank you.
Thank you. Ladies and gentlemen, on behalf of Divi's Laboratories Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your-