Ladies and gentlemen, good day, and welcome to the Earnings Conference Call of Davies Laboratories Limited for the Q1 of Financial Year twenty twenty one. 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. Please note that this conference is being recorded. I now hand the conference over to mister M. Satish Chaudhry.
Thank you. And over to you, sir.
Good afternoon to all. I am Satish Chaudhry, company's executive and chief investor relations officer of Dish Laboratories Limited. I welcome you all to the earnings call of the company for the quarter ended thirtieth June two thousand twenty. From DBplus, we have with us today doctor Muralik KD, managing director with Nizma Metaparty, full time director of commercial and General Manager Finance and Account. During the day, our board has approved the financial for the quarter, and we have released the same property changes, as well as updated the same on our website.
Please note that this conference call is being recorded, and a transcript of the same will be available on the website of the company. Please also note that the audio of the conference call is the copyright material of DeVis Laboratories Limited and cannot be copied, rebroadcasted or executed in press or media without specific and written consent of the company. Let me draw your attention that on this call, our discussion may include certain forward looking statements, which are predictions, predictions, or other estimates about future events. These estimates reflect management's current expectation 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.
DG players or its official do not undertake any obligation to publicly update any forward looking statements whether as a result of future events or otherwise. Now I hand over the conference to doctor Murali Kadiri, managing director for the opening remarks. Over to you. Thanks. Good afternoon to all of you.
I welcome you all for the earnings call of Business Laboratory. Hope you are all doing well. First, let me update you on global scenario on pharma and COVID nineteen pandemic. COVID nineteen has heavily impacted several industries, small, medium, and large. Pharma industry as such is less impacted because of need for life saving medicines.
This also creates a responsibility to manufacturing new APIs for COVID as well as to developing new vaccines for COVID. Moreover, the pharmaceutical companies are busy in developing new clinical entities and vaccines for COVID-nineteen. Vivint, as a responsible large API manufacturer, quickly developed the process from indigenous raw materials for hydroxychloroquine and sulfur based these are the drugs used in COVID, and are geared up to supply large volumes to prevent any shortages of these APIs used to treat COVID nineteen. This is also developed a process for four different intermediates of REM death wave, which is also used as an investment in COVID patients and to supply quantity to prevent shortages. As a corporate under CSR, the deep distributing provisions for about 60,000 families benefiting 160,000 people around 98 villages near our factories.
Has taken sanitization program for 98 villages benefiting 220,000 people. Also supported 15,000 frontline warriors benefiting police and health workers. Business compliance support for migrant workers benefiting 21,000 people. Business support for quarantine and the voluntary district by supplying equipment required for the quarantine center. This is also contributed to local government to support the initiations of the government.
I'd like to set few words on CapEx. The point in the beginning, the date has been made about '18 CapEx. Apart of this is called the docking machine, backward integration for a few to minimize dependency for supply fee for raw materials from China, A part of the brownfield project already has gone into operation, qualification batches are completed, waiting for regulatory approval. For the rest of this effect, our contractors are experiencing delays due to shortages of technicians and also the equipment vendor. Our engineering department is closely coordinating with contractors and vendor for the expeditious year's completion of the CapEx program.
I'll now ask Nirma to brief on operations. Thank you.
Hello, everyone. This is Neelma, director, commercial. I welcome you to Dehis Laboratories Limited earnings call to discuss the unaudited results for the first quarter ended thirtieth June twenty twenty. Before we begin, I hope that everyone along with your friends, families, and colleagues are safe during this COVID nineteen pandemic. The COVID nineteen pandemic has greatly complicated the outlook for global pharmaceutical industry.
Fluctuations in cost and availability of raw materials, supply chain costs, and management have been a few threats posed by the pandemic to API industry precisely. We are closely monitoring the constantly changing situation relating to this pandemic and are optimistic in ensuring uninterrupted supply of our APIs. Q one resumed to witness a few challenges posed by COVID nineteen, especially after late March due to the national lockdown restrictions. However, the lease has been able to sustain the impact, close down our operations, and continue to operate at normal pace at both our manufacturing facilities by mid March twenty twenty mid April twenty twenty. At Diliz, we remain committed to focus on health and well-being of our employees by closely monitoring the information provided by WHO, CDC, and local governments and adapting to the safety plans that reflect the constantly changing guidelines.
We are also engaging with the help of the state and local governments to support various activities taken up to ensure community safety. I would also like to briefly touch upon how we handle business during this unprecedented COVID nineteen pandemic. The company has put in place several measures in order to fortify our business continuity by ensuring timely procurement of raw materials, strategic implementation of production schedules, and swiftly organizing the shipment of finished products to our customers. We have been constantly communicating and updating our customers about the supply schedule and ensuring commitments with minimal impact. We have been able to move goods to our manufacturing site from both the domestic and import sources by constantly communicating with our associated vendors to ensure strong supply, capturing minimal impact due to COVID nineteen situation.
I would like to thank our employees across all aspects of our business who are safeguarding the continuity of all the business activities while maintaining social distancing and hygiene guidelines throughout their time in the workplace. Moving on to our q one FY twenty one revenue. On operations, I'm happy to state that we have achieved a sales revenue of $17.30 crores during the quarter, reflecting a growth of 49% over the corresponding quarter of the previous year. This has been a volume led growth across our product portfolio. While the profit before tax for
the quarter is rupees $6.61
crores, a growth of 77%, the profit of after tax has accounted to rupees $4.92 crores, reflecting a growth of 81% year on year. Have a cash on book of rupees 1,343 crores, receivables of rupees 1,550 crores, and inventions of rupees 1,742 crores as of thirtieth June twenty nine. Business administration across the region is similar to last year. Europe and America accounted for 74% of the revenue. Product mix for generics to custom synthesis is 5941% of the revenue, respectively.
Constant currency growth for the quarter has been 39%. Thank you.
With this, I request the moderator to open the line for Q and A. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press and one on your touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the questions you assemble. The first question is from the line of Sudarshan Parmanaban from Sundar Mutual Fund. Please go ahead.
Yeah. Hello. Thank you for taking my question. So my question, you know, is, you know, to understand a bit more, you know, about capacity expansion and, you know, we also talked about backward integration program. And, I mean, just taking an example of one of the molecules, like, for example, gabapentin when there is a lot of competition.
When we are talking about expansion, are we looking at, expanding the, you know, capacity of gabapentin? Or, for example, expanding the backward, you know, capacity for, say, the raw materials like CDA. You You know, know, on that side, you know, curtailing the dependence on China. So if you can talk a bit more about CapEx, where this CapEx is going and specific molecules, I mean, we have talked about it in the annual report that we have an endeavor to be a, you know, a leader in these molecules. So whether it's going to be a volume leadership, or are we going to be backward integrated?
Some color on this one.
Somehow, you seem to be loving data printing. We're definitely we won't be our leaders in Java 20. We want to maintain our leadership. So we are expanding both in terms of volume and also the intermediate for Java ten team. So we will be producing the intermediate as well as expanding the Java ten team, both.
That will reduce our dependency on import of the the intermediate as well as it will bring, and margins will be better. And we have taken in Java ten team, and it's growing well, and we are ready to take the benefit of the growth. Regarding CapEx excuse me?
Yes, sir. On the CapEx. Yes, sir.
Regarding the CapEx, there are we have already implemented last year about thousand crores for about the 1,800 crores. The 800 crores is here capital working for these under implementation. What we would like to face that the debottlenecking where your margin in tens of crores would increase 20%, 25%, 30% of the production in the same process, same building, those we were able to complete. That's what we are seeing some of the jump in production, which is a double side in sales and profitability. And some of the intermediates, which we were importing, where we started manufacturing also have contributed to the bottom line.
And I think these are the main two. The upgradation of our faulty control, both at Unit 1, Unit 2, upgradation of our wastewater treatment plant, which are going to be the state of the art for the year, what is being powered in the world. These upgrades and also are part of the CapEx, and some of them are complete. All introduction of few new products and new They have been already calling the production validation of the batches happened and submitted for the regulatory. We are waiting for the regulatory clearances.
As and when we get, we will see the jumps in those quarters. We are in expansions in our Zenbook products where we're already number one, number two in the world, mostly number one. We further increase our capacities because it generates what we started even as in '96. They still are growing, maybe anywhere between five to 10%. So such growth on six, seven thousand times, if somebody needs seven, eight hundred times each year, urgent.
I think you BPs are able to invest such money to make sure and maintain the leadership in addition to the backward integration, which we have they have done long strengthening the backward integration and applying the tools of green chemistry to control and resources and recovery. I think the atom chemistry principles what we are following in addition to the green chemistry is making us more stronger for sustainability. I think the CapEx between I would like to sum Number one, debottlenecking, which has which has already resulted from both in terms of bottom top line and bottom line and expansion products existing, introduction of new delivery products, also some custom sensitive products, and expanding our manufacturing the key building blocks for some of our key generic APIs, which we were dependent on China. I'm not I'm not saying just delete everybody. And I think we are going to repeat on that as we already installed the plan.
Sure, sir. Sir, one question, if I may. The reason to think about, you know, the government proposal of, you know, the API parks and, you know, identifying the APIs, you know, in which India was dependent on China. You know, if you can talk a bit more about when do we see, you know, what kind of benefits that we see, whether we are gonna see the benefits in the next three to four years across the industry. And a lot of people are talking about this whole China to India story.
I mean, India geopolitically, you know, being better, you know, in con contrast to China. A lot of companies willing to bet more in India. So do you
think that this is more of
a structural story from a longer term perspective as well?
See, the strength of India, in the API manufacturing for sure, I think it's very difficult for somebody to take it away. And to build the math, chemistry capability, technology capability, training of these people, both in chemistry manufacturing and in medical, and the ESS environment and safety, this cannot be by any European or US companies. This will take several years. And top of the all these, there is what is called cost structure. So everywhere where is your call, you moments are planning to bring bring the prices of the formulations down, thereby, the patients get benefited.
So it's very difficult to compete, starting new plans now, API plans, and compete with the existing ZenRisk API platform.
Thank you. Actually, we will take over to please come back in the questions for any follow-up questions as we have seven participants waiting for their time. Also, will take over the participants to please limit your questions to take the participant. The next question is from the line of Prakash Abhaywal from Access Capital. Please go ahead.
Yeah. Thanks for the opportunity, and congratulations on good numbers, and thank you for keeping the call. So my first question is on the CapEx. You know, you clearly outlined the the 17,000,000,000 rupees of CapEx, out of which 6,000,000,000 each was for Unit 2 and Unit 1. Just wanted clarification that both these units would be completed by end of this year, and when would it be revenue generating, and do you expect US FDA to come in first, give the clearance, and then we start booking revenues?
Or just give us some pathway to that, please. Thank you.
The capacity is at both Unit 1 and Unit 2. Again, the CapEx is for debottlenecking at both sites because we'll make generic products where we have generic products at both sites. The CapEx is also for backward integration intermediate for both sides. This effect is also for new products at both sides, because we also have a d c s e z, which we started in Unit 1, and also a new DCB SCZ in Unit 2. These are the two main, I think, growth engines with all SCZ benefits with I mean, now we will be able to complete before end of the financial year at both times, all these CapEx.
Now when I said we will be able to complete, it also includes that we will be running validation backers and put them on stability, doing the certain literary submission, and waiting for the clearances. Your second to the sales growth. I think they're the most discussed questions to answer. At least I don't run The US or BA. I don't run the European agency.
But I think we keep track record of what we have, the way we see these are like to like and similar technologies, similar products. So we're going to see them clear very soon. So as in it gets cleared, you will see the sales jump or sales impact.
Okay. So would it be fair to think that debottlenecking intermediates could start immediately, whereas the new products would require a new set of approval, you know, regulatory approvals, like regulatory post inspection?
I think you are right. If you want to make it one, you see immediate impact on already, you started seeing it, and you will see more. That was integration, not only will help us to for sustainability, but it will also help us the bottom line. Because when we do it, we design the best process, and that will also improve our bottom line. That we will see the impact in the coming quarters.
The expansion of the generic product, probably, we don't want to wait that long for the regulatory agencies to clear because these are not new products. It is the same technology, same generic. It's a like to like the some of the new products, yes, that make it little time for the clearance for the regulatory clearance rate.
Perfect. Thank you. And my second question is on, you know, the 39% dollar terms growth, CC terms growth. Ma'am clearly said it's volume led. So is this a onetime phenomena or the things that you said about that, you know, that the voxel making has started playing out?
So this kind of growth is expected going forward also. And why there's an expenses q and q decline? I mean, that piece, you could not understand. Thank you.
I think it is always the API industry, in API industry, nobody should look at it on a quarter on quarter basis. I think it is very difficult because we have a product mix, we don't just don't make one product or two products. We have a basket of products both generic as well as the big pharma customer centricity. So sometimes the product mix is such that lumpiness happens and there could be increase in volume. That doesn't mean our business is not improving.
I'm not saying what you have seen all that is a growth rate and you can go and draw a line close into the sky. But I'm saying that, yes, part of it is a growth, part of it is a lumpiness, and some of it is favorable for us to make. But in this basket of product, I think we are very strong to take significant all our Zendesk products where we have long term contract contract with our customers, and the customers are always increasing their business.
Okay. And the expenses q on q declined, sir?
Pardon?
The other expenses are down q on q. I mean, if production and fluids are full blown, why other expenses has come down on a quarter on quarter basis, sir?
I wouldn't say they have come down probably between increases. Maybe one minute. So the other expenses actually hasn't come down. If you compare it from the if you if you compare it with q four of last year and q seven of this year, we are almost on the initial rent. Last time, it may be because of some more expenses on PeerSpot.
And this quarter, this is more or less same same set of expenses we're continuing. I think I think one of the reason is that during last year or the prior, we have it used we have now a lot of legal issues when we were trying to address that. And now that it's being done, so we have come back to our normal expenditure. I think that's one of the main reasons. Thank
you. Prakash, we would request you to please come back in the person queue for any follow-up questions as we have several participants waiting for their turn. Next question is from the line of Tushar Manutani from Motilal Oswal Financial Services. Please go ahead.
Thanks for the opportunity, and congrats for the good set of numbers. I just would like to understand, like, so at least for this quarter gone by, most of the API companies have delivered strong numbers and the general feedback is more or less led by volumes rather than pricing. So are you seeing any structural changes happening at the API industry level and in specific on the on the set of products, which are the major product for us. Thank you. Can you please speak little loud?
I couldn't get exactly. So so basically, at least for the quarter gone by, the the numbers has been phenomenal for most of the API companies. So just would like to understand here and more so driven by the volume than the prices. So just would like to understand whether this is more of a structural change happening at the API industry level and it's driving more of the shift for the business towards the Indian companies, or it is more due to the supply disruption on account of COVID and which might tie it down as the COVID scenario is resolved? I think in in there are two or three things that may be happening that probably Chinese supplies have come down, API supply that has probably helped every company to sell more API.
That's number one. Two, the based on the COVID and the disease pattern, right now, what is happening in the last four, five months, I think there is less usage of antibiotics, there is less usage of some other therapeutic segment, more usage of antivirals and the anti inflammatory and other therapy segment. So in the therapy segment where we are, the demand is quite high. Maybe in some of the therapy segment, the demand could be less. Okay.
But the goal on, I think with the what we are seeing in US and Europe, less encouragement to China and more encouragement to India and more collaboration with Indian companies, more and the Indian companies, I think that's what we are seeing. Whether Indian companies are going to invest there or how we're discussing where make up the n minus one and maybe finishing can be done by one of our associate companies in US. I think things like that will evolve over a period of time, but definitely it is encouraging for the API industry. And you see this Chinese supply coming down even now, or it's now coming back to little bit of normalcy? I think it is the definitely, Chinese supply has come down.
I I do not know whether this due to they're unable to manufacture or there is a resistance to buy. I cannot comment on that. But what I would say is we are geared up to make sure there are no shortages in the API we are in. Got it. And just checking if you would just help us with the for the further.
Hello? Hello? I could not hear. Just on the sales for the quarter. Carotenoid sales improving behind 127 crores for this quarter, and the business is growing Both the the COVID nineteen issues are not only in India, both in Europe and everywhere else.
So maybe there is a slightly less going to be less growth in the next three to six months, but eventually everybody would like to have the current noise or the natural phenomena to create immunity. I think everybody is saying immunity has to be big. Thank you. I request the moderator to connect connect to the next call. I repeat, I request the moderator to connect the next call, please.
Hello? Moderator, are you able to listen to us? Hello? Can you listen to us? Please connect to the next call.
Ladies and gentlemen, thank you for patiently holding. We now have the lines of the management reconnected. Over to you, sir. Will you kindly
I request I request the moderator to connect to the next caller, please.
Yes. The next question is from the line of Tushar Malutani from Motila Local Financial Services. Please go ahead.
I just asked, but now that you've given a chance, let me just ask one more if if that is okay. Just would like to know the capacity utilization for DCESUZ unit and DCESUZ, which we commenced in February and March? Pardon? Just would like to know the capacity utilization for the two units of the DC SCZ, which we commercialized in Feb twenty and DC SCZ, which we commercialized in March 20. K.
In terms of these ACZs, these ACZs are still under construction, and the part of like, have gone into only validation, and you can pretty much state that the APJs are still these two new APJs haven't commercially haven't added any commercial value, any significance. Okay. Thank you. Next call, please.
Thank you. The next question is from the line of Ashish Tavkar from Motilal Oswala Asset Management. Please go ahead.
Yeah. Thanks for the opportunity. So you spoke about volume growth being very good this quarter. But can you also help us understand what was the impact or, from Beckstrom, Metropolitan and some something like Metropin, they will restart them on our portfolio. Had the prices for these products gone up as well?
No. Yeah, the your question is that whether the prices have gone up. I think prices are about stable. I think that's pretty much a as I said, that in case you must you may just to be airlifts and some of them, those prices, sir, maybe may because of, sending the air may have been added, but, otherwise, the prices remain same. There's no nothing like $1.20 to $10 price.
Okay. I think just one last question on this CapEx part. The CapEx for Kartinada, are we, like, going to announce any incremental CapEx for Kartinada, or you feel we are still some twelve to fifteen months away?
The Cartinada plan still will going to the legal issues to be resolved by the government. We are ready, and our clients are ready on the board. We are waiting for the on the project industry infrastructure corporation to complete the legal issues within the base structure and give us the clearance. That's where we are waiting.
But, sir, as I understood, a part of that, popular update here is already, being cleared. Right? And there's, I mean, there's no claim on that land.
There is there is nothing cleared by the government. It is only probably a decision, but nothing is we are still waiting for the legal issues to be cleared by the government. You.
Ashish, you would be happy to please come back in the question queue for any follow-up questions as we have several participants waiting for their time. The next question is from the line of Anmol Ghunj from JN Financial. Please go ahead.
Yeah. Hi. Thanks for taking my question. Congratulations on a good set of numbers, and thank you again for hosting the call. My first question is that is this hosting of call going to be a regular feature from here on or you made an exception because of certain of the environment?
Can you I think it was not clear. Can you please speak until now?
Yeah. I said that are we now going to have this kind of an interaction every quarter? The the good good step that you've taken on posting an earnings call, will this be a regular feature from here on?
It will be a regular feature for the for every quarter here onwards that having a call. Yes.
Thank you. That's very helpful. That helps us understand the business on a quarterly basis. So thank you for that, first of all. So my first question is that, you know, given that most of the revenue growth has been volume there and we expect some debottlenecking, from the current capacity standpoint and what lies ahead in terms of bottlenecking, how comfortable are we in terms of driving growth?
And directionally, with the current capacity plus debottlenecking, what what does it allow us in terms of room for growth?
The the the out of the 1,800 growth investment, debottlenecking still needs very, very little. Okay. The majority of the CapEx is for DC at unit one and DCV ACZ at unit two. That is where the majority of the capacity is. So those would give the external product, increasing capacity for our generic and also making some of the backward integration for issuance of supply and cost savings and to improve the bottom line.
So there's not going to be we are not going to there is going to be enough capacity to meet any surge in demand or increase in demand of of Zambix.
Thank you. The next question is from the line of Damian from HSBC. Please go ahead.
Hi. Good afternoon. First of all, thanks to doctor Moli Dewi and the team for hosting this call, and congratulations on strong set of number. So my question is on the customer custom synthesis segment. In the post COVID era, we believe there will be more and more emphasis on cost synergies by customers.
So how do you see this part of business going for you? Are we seeing more inquiries or interest from customers who are right now not our traditional customers? If any comment you can provide on it.
In the customs and trade, there are only x number of big pharmas, and we are connected with most of them. The business is already happening. Now what we see is that looking at the relationship with China, looking at the China going towards the China, maybe we'll get India will get more opportunity in terms of the custom changes. Yes. I agree with you on that.
And we are we are we are able to access such opportunities.
Okay. So, sir, we are seeing already, I'll say, higher interest on India, compared to, China on this part of business, and we hope to, go from here.
That's correct.
Thank you. The main thing we would request you to please come back in the question queue for any follow-up questions. Also, we would request the participants to please limit your questions to one per participant due to shortage of time. The next question is from the line of from Dalal and Prochakt from Broking Bank Limited. Please go ahead.
Yeah. Can can you give me the gross block value in this quarter? And second, I wanted to know whether how much is our dependent on China in value terms or percentage terms? Yes. You repeat?
The the gross lock addition during this quarter
Yes.
Okay.
And have we added any more APIs to our product basket in the last two quarters?
Let's see. Always, there will be additional products. As I mentioned, I think, with in the beginning of my present my presentation, I did mention that the COVID nineteen products, hydroxychloroquine, fiber wear, and the intermediate for remdesivir, they were all are all new products in addition to few generics. So definitely, we have added products, and we'll continue adding products both from the generic and consumption space.
Thank you. The next question is from the line of Fatima from ICS Residential Life Insurance. Please go ahead.
Hello, sir. Great set of numbers, congratulations. So we've had discussions before, and, you know, we said that because we were nearly at, you know, peak utilization levels and, you know, and you also, like, rightly pointed out that the current mix is not because of COVID. So what are you seeing, sir? Is this kind of a mix of savings?
Because I remember because like you said, your new capacity will come in mostly by your end. So do you see this improved mix of training? And so the next thing that I want to ask, everybody is talking about the government's real life scheme. Do you think, you know, companies like Delhi can significantly benefit from this team and we want to do a dedicated project for this?
The clarity was like, can you please repeat your question, please?
Sir, the first question is I remember that at 1,400 per quarterly revenues, you practically said that you were operating at peak utilization. So I understand that the mix change, so are you seeing that kind of mix of permanent change or it was more like a COVID induced change that you saw in the quarter when things are normalizing? And the second thing is the government pay life scheme, which they're talking about the API related PLI scheme. Are we planning to do something on that line or setting up a dedicated capacity? Can it be a very meaningful opportunity for us?
On the scheme, what you all mentioned that a 10% benefit, 5% benefit to the API manufacturers for selling in India, it is less applicable to us. The reason we are still evaluating because most of our products are exported. We are very little, very less sale in India. We are still trying to understand what will be the really benefit and whether the PLS team, whether how we should be addressing it.
Thank you. But now we would just proceed with this come back in the questions if have any follow-up question. The next question is from the line of Rahul Sharma from KRVY. Kali Stock Broking. Please go ahead.
Yeah. So just wanted to carry on where Fatima has left. Is is this quarter having the more of one off sales due to Executors and then this will API intermediate supplies which are there? And will this sustain going ahead, sir? Because SQS is already peaked out and lot of people are coming off it.
I think I think I did mention in my in his beginning presentation that we have only validated the process of SEQ, validated the we have we have developed the process for paperware and manufactured and intermediate for run this way. It is not that we want to, this did not contribute any significant number at all for this quarter. We just started sales. Our interest is to make sure there are no shortages, if these are proven to be the drug of choice for COVID. Because when it came in March, they said, hey, decrease the drug, then they said, run that will be drug of choice, then they said purvey for the drug of choice.
Tomorrow there may be three more bits will come, but we would like to develop technology and be available, so that if there is a shortage, we can supply what is required for the world.
Sir, sir, sir, what were there any one offs which you you foresee that will not recur in future, which happened in this quarter because of volume growth?
I think I did mention that it is a favorable product mix and lumpiness in business. These are quite common in the API industry. I think that's what I would like to say.
You. Rahul, we would definitely please come back in the question queue for any follow-up questions. The next question is from the line of Praful Bora from MK Global. Please go ahead.
A bit more color on your custom synthesis business, especially in terms of the number of molecules you currently sell or any outlook there?
We have not been mentioning anything about how many number of molecules. Now what we can say is that the number of molecules always gets added, and, of course, there are less number of molecules compared to ten years ago or five years ago, because the new NPEs less number are coming. But where they whenever they are launching these new numbers, new NPEs in phase two, phase three, most likely they will be launched and they will grow well. And I think we are here to take advantage of those, and we do have good opportunities.
Thank you. The next question is from the line of Girish Baku from Bank of America. Please go ahead.
Yes. Hi, sir. Thanks for taking the question and great quarter. So just one question on customer centric side. What are the long term areas you're looking in terms of skill development within BDs?
I mean, by besides these, regular APIs and, some of these COVID drugs, are you looking at some technical technologies, for future?
I I think you will hit the right point. It is not what product you want to make. It is what technologies you can handle, what kind of chemical difficult to make with chemical reactions you can handle in a large scale. That's what has put BB into a very strong position from the beginning. Because we always new technologies into the pipeline, whereby personal chemistries where the yields were less or conversions are poor, the impurities are high, we are able to get over with these new technologies, new chemical reactions.
It is already a challenging thing to do and we are in the front run of those. Yes. That gives us more opportunities with the big pharma. In addition to the ESS, which is which they do expect for the big environmental safety as well as quality and regulations.
Thank you. The next question is from the line of Nitin Agarwal from IDFT Securities. Please go ahead.
Sir, on in the custom, is there any major margin difference between a custom synthesis and a generic API business? It's very difficult to say that. I think both custom synthesis and generic are good for us. It's not that one makes more margin. One makes less margin.
I think it all depends upon which are those products and what kind of technological strength we have in in conversion, in h a and c and productivity. So as you can see in the margins, we vary between 40 to 60%, whether custom sensitive sometimes go to 55, then it goes to 45, sometimes then it goes to to 60, custom sensitive 40. I don't think we we drive them to those percentages. It happens. Okay.
Thank you.
Thank you. The next question is from the line of Rohin Bhatt from BNP Securities. Please go ahead.
Yeah. Thank you for this opportunity. Doctor, just wanted to know, recently, announced plans to set up a API company globally. So by '22, they are hoping to generate about a billion dollar euro from API operations. So if a innovator company gets into API manufacturing, what kind of impact would it have on companies in India or from the Asian region?
Because they are also trying to reduce their dependence on Asia. Your views on this will be helpful.
Okay. I just need to which is the company?
Sanofi.
Sanofi. Sanofi Aventis.
Sanofi Aventis.
I thought you were saying Kodak from Amrika.
Yeah. I mean, Kodak was also there, and Novartis also announced plans to get into penicillin API.
Yeah. So what I mean is I understand.
Yeah. There are two things we need to understand.
Sure.
The big pharma ran pretty much stopped the API production. Most borrowers sold the API manufacturing clients because they could not sustain cost. That is the reason they started outsourcing, and they don't have any more manufacturing capabilities in US, definitely, and the majority of the European companies, number one. Yeah. Two, it's not only not only them not having the manufacturing plant, being somebody who's still manufacturing plant is very difficult to create their human resources.
Number three, the training. Number four, the regulatory impact, regulatory clearances by the FDA and European authorities. All these will take time even as the big pharma concentrates on local production, number two. Three, at what cost they will make these generic products? Can they sell Nepos net 40?
Can they sell Java printing at $40 a kilo? No. Then they are unable to produce at $100 a kilo and start to bring it in and started outsourcing, I think it's very difficult to put new plants now in Europe and US, and that goes with all companies.
Thank you. The next question is from the line of Sameer Baizhewala from Morgan Stanley. Please go ahead.
Hi. Thank you. Good evening, sir. Quick question. How much contribution do you get from biologics or antibodies in your overall business, and what are possible building capabilities around these?
Didn't hear right you would like to know about biologics.
Hello? Sorry?
No. Did you say biologics?
In the biologics, antibody, monoclonal antibodies, let's say, biotin drugs.
We are not in biologics. We are not in antibiotics. We are not in injectables. We are API manufacturing company. That is where our strengths are, and that's where we are counting on our future.
At this time, I I think we are not contemplating on biologics at this moment.
Okay. Great. Thank you so much.
Thank you. The next question is from the line of Naresh Subdha from FBL Life Insurance. Please go ahead.
Yeah. Thank you, sir, for taking my question. So my question is, when last year, we announced the effect of $1,718,000,000 rupees. That time, we had some certain outlook for the industry. After that, the COVID thing happened and the the outlook has improved over time.
So so whatever you assume for the order book of the a positive price for the time of announcing this $1,718,000,000 rupees effect. Has it gone up essentially after this post COVID scenario?
Can
you please repeat the question again?
So, sir, my question is, last year when we announced the question, sorry, yeah, the the CapEx, the outlook for the size of opportunity which might we might have seen at time maybe certain. And after that, the COVID happened and the outlook has it's been improving. So so whatever you were seeing in terms of opportunity size that time, has it increased substantially after this COVID?
I think the opportunity to remain the same because COVID has been has been influenced in a different way, but the requirements of this graphic segment, the API, either for generic or circumstances remain. The opportunities remain same, our focus remains same, accepting which is the challenge of making even the COVID API to prevent shortage of supplies in the world.
Okay. So I think I I continue. So my question is after this increasing inquiries based on the COVID, effect issue, and people are now thinking more about moving from China to India. So in this scenario, have your inquiry increase and for that, you are you are now seeing more effects or further down the line based on this increase from the group outlook.
Okay. If I understand, right, the big thing is we should choose from China, whether there are going to be more opportunities on Yes. And more number of products. Yes. Definitely, there will be opportunities in custom synthesis.
There will be opportunities in our own generic products, not necessarily new products with additional volume. And we are ready to take in if we need to miss more as a CapEx.
Okay.
Thank you. Due to time constraints, I would now like to hand the conference over to the management for closing comments.
Thank you all for joining us today for the earning call of Dilip Laboratories Limited. In case you need any clarifications, please reach out to our investor relations. Thank you.
Thank you. On behalf of Genius Lab, that concludes today's conference call. Thank you for joining us, and you may now disconnect the lines.