Q3 24/25

Feb 6, 2025

Summary

Q3 revenue rose 4.6% YoY and PAT increased 36.3%, while Jammu began commercial production in January. FY26 Jammu revenue is targeted at INR 400–500 crore incremental, with ramp-up costs and execution the key near-term watchpoints.

Ladies and gentlemen, good day and welcome to the Q3 and nine months FY 2025 earnings conference call of Innova Captab Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ayush Kumar Garg, Head IR, Innova Captab Limited. Thank you. Over to you, sir. Thank you. Good morning, everyone, and thank you for joining us on our earnings call today to discuss the operational financial performance for Q3 and nine months FY 2025. Joining us today on the call, we have Mr. Vinay Lohariwala, Managing Director, Mr. Lokesh Bhasin, Chief Financial Officer, and SGA, our investor relations advisor. I hope everyone has had financial results and investor presentation, which has been uploaded on the stock exchanges and on the company's website. Now, I would like to hand over the call to Mr. Vinay for his opening remarks. Thank you, and over to you, sir. Thank you, Ayush. Good morning, and thank you all for joining us on today's earning call. We will be discussing our business performance for the Q3 and nine month of financial year 2024-2025. Before I get into the specifics of our business performance, I am thrilled to share a major milestone in our growth journey, the commencement of commercial production at our Kathua Jammu facility, effective from Makar Sankranti, 14th January 2025. This is a significant development, and it enhances both our production capacity and our ability to meet the dynamic needs of our customer. With this facility now operational, we expect it to further drive our growth trajectory in the years ahead. The Jammu fac- I'm sorry to interrupt you, sir. We are not able to hear you right now. Ladies and gentlemen, kindly stay connected while I try to reach- Owing to high demand I'm sorry, sir. Penem- This is the operator. Sir, can you repeat your last line? We cannot hear. Yeah. We couldn't hear you. Thank you. While we already have a cephalosporin block at our existing Baddi facility, the one in Jammu is an expansion owing to high demand. Penem, penicillin, and general blocks are new products and dosage forms introduced by us. To elaborate with the new general block at Jammu, we are venturing into blow-fill seal category of products such as LVP and respules. In general blocks, we also have the dry powder injectable facility. Client feedback has been very good and positive for us, and we are already seeing a strong interest for these new products. With the Jammu facility now up and running, we are proud to have a robust manufacturing footprint of five facilities comprising of nine independent production blocks. We are also set to benefit from the central government's incentive scheme, which will further strengthen our financial position. Specifically, we are eligible for a GST linked incentive of 300% of investment made in the eligible plant and machinery available for up to 10 years from the start of commercial production. Additionally, we are eligible to receive a capital interest subvention on loans based on investment in eligible plant and machinery, reducing our interest cost by approximately 600 basis points. Turning to our business performance, I am pleased to report healthy growth across key business areas. Our overall top line grew by 4.6% year-on-year to INR 316 crore in Q3. Our CDMO, Contract Development and Manufacturing Organization business, continued its growth trajectory and recorded INR 172.2 crore of revenue in Q3 FY 2025. For nine months ended, the business generated cumulative revenue of INR 505 crore. We service our 190 pharmaceutical companies, including some of the largest players in the industry. With the introduction of new products and dosage forms, this business area is poised to continue its growth trajectory. Our domestic business continued to experience strong growth underpinned by our vast distribution network of 150,000 touchpoints, including distributors, stockists, and pharmacies. In Q3 of FY, we have a revenue of INR 58.6 crore, while for the first nine months FY 2025, the revenue from the segment reached INR 169 crore. With product portfolio of 600 products, we remain committed to expanding our presence in tier 2 towns and cities while leveraging our existing networks to drive deeper market penetration. Our international business has been another key growth driver, registering an impressive 17% year-on-year growth, reaching INR 41.2 crore in Q3, cumulating to INR 113 crore in nine months FY 2025. We export to over 25 countries, and we have recently expanded our footprint into regulated markets like Canada and the U.K., which we believe will drive future growth. Sharon Bio-Medicine. Sharon has a well-established international formulation and an API business, both of which strategically align with Innova Captab business well. Sharon clocked INR 44.5 crore of revenue, which was 6.5% below last year's revenue. This was largely because certain orders have been deferred to our fourth quarter. We are confident with the ongoing strategic initiatives and leveraging on the benefits that accrue with Innova Captab. Sharon is well-positioned to drive strong performance in the year to come. With the success launch of our facility and our on enhancing existing, we are confident in our ability to sustain strong growth. We are excited about our future prospects and remain committed to driving strong revenue and growth for shareholders. We look forward to continuing as we execute on our strategic. Thank you. With that, I will now hand over to our CFO, Mr. Lokesh Bhasin, to take you through the financial performance in more detail. Hi. Are we audible? Yes, sir, you are audible now. Please continue. Thank you. Thank you, sir, and good morning, everyone. I will now take you through the financial highlights for Q3 and nine months FY 2025. Q3 FY 2025. Our consolidated revenue stood at INR 316.5 crores, registering a year-on-year growth of almost 5%. Business mix was largely in line with the trend this year so far, with CDMO business contributing 54% to the overall top line, clocking INR 172.2 crores. Domestic generic business was at 19%, that is INR 68.6 crores. International generic business stood at 13%, recording INR 41.2 crores and Sharon contributing 14% overall revenue from operations with INR 44.5 crores revenue in absolute terms. We witnessed decent improvement in our profitability with the overall EBITDA margin improving by 8.5% to INR 50.9 crore. EBITDA margins improved by 60 basis points to 16.1%. Profit after tax witnessed year-on-year improvement of 36.3%, reaching to INR 34.2 crores. PAT margins also improved to 10.8% versus 8.6% in Q3 FY 2024, mainly led by better EBITDA margins and reduction in interest costs. Coming to nine-month FY 2025. Overall revenue for nine months FY 2025 stood at INR 928.9 crores with year-on-year growth of 13.5%. Business mix was 55% from CDMO business, 13% from domestic branded generics, 12% international generics, and 15% from Sharon. In absolute terms, business area-wise revenue for nine-month FY 2025 were as follows. CDMO, INR 505.1 crores. Domestic generic business, INR 169 crores. International branded generics at INR 113 crores. And Sharon at INR 141.9 crores. With this, we would like to conclude the presentation and open the floor for question and answers. Thank you very much. Thank you very much, sir. We will now begin with the question and answer session. Anyone who wishes to ask questions may press star and one on their touch-tone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press star and one to ask questions. The first question is from the line of Sudarshan Padmanabhan from JM Financial PMS. Please go ahead. Yeah, thank you for taking my question. My first question is a little bit more on the operational side. You talked about some spillage happening on Sharon. If you can quantify it, and does it also explain a drop, I mean, we've seen about 130, 120 bps drop in your gross margin. My understanding would be Sharon has higher margins. So that would also explain the Q-on-Q drop in margin. I have another question if I may come back. Yes. There are slightly reduction of Sharon revenue in Q3, which was mainly due to certain orders spilling over to Q4. It was to the tune of around appear very much within Q4. And talking about gross margin, the gross margin is slightly higher. Mainly, yes, one of the reason contributing factor was that Sharon, which is having a slightly better gross margin, contributing to a lower revenue contribution. And at the same time, other business also, there was a certain product mix change which contribute to the slightly higher gross margin. Sure. Sir, and coming to the- Price reduction in the play, in this quarter, as CDMO is more of a pass-through pricing model, which has also slightly contributed to the higher gross margin in percentage. Sure, sir. Sir, my second question was a little bit more strategic in nature now that your Jammu capacity is coming. Just to understand from a demand perspective, ramp-up perspective, and also given that the product is slightly more complicated and a little bit more differentiated from what we have been doing. So do we have the technology and the manufacturing, everything in place? So how do you see the ramp-up, say, in the near term as well as the Jammu facility utilization, say, over the next two to three years? Hi, Pathanadam. This side, Vinay. We have the four block in the Jammu, and three blocks is new to our basket. We have already developed almost 30-plus products in our R&D, and that will be rolled to the production floor. We have started doing the process validation and validation of the data. We are discussing with all our customers and clients, and we are getting a very positive feedback from there. As it is backed by the GST incentive. We are very hopeful that the revenue will be very high, at a very high speed. As we already communicated that we will be able to achieve a revenue of, say, INR 400 crore to INR 500 crore next year. I am sure. We will start seeing some revenues in the fourth quarter as well, right? Yeah. So fourth quarter there will be some revenue as we already commenced the production on 14th January. I am sorry to interrupt, sir. We are unable to hear you right now. Is it now clear? Yes, sir. Can you repeat your last line? We are saying that as we have already commenced the production on 14th January, we definitely will have some revenue in this quarter as well. One final question before I hand back to you is, it is my understanding if Sharon has got better margins so that you have a benefit from Jammu. From this current margin, if I am not looking at necessarily the fourth quarter or the first quarter of next year, say FY 2026, FY 2027, FY 2028 where the capacity gets fully utilized, where do we see the return ratios and margins of the overall company? Sharon margin profile is already factoring our balance sheet. From Jammu perspective, if you see, not the first year, but down the line, say FY 2027 or FY 2028, the overall margin should improve. So it should be probably mid-teens or high teens. Would that be the right understanding, sir? Come again. I am not able to listen. Somewhere between mid to high teens should be something that we should be looking at moving from, say, 13%, 14%. There is 100 basis point or 200 basis point. It will be difficult for us to comment now. As we progress, say, down the line one year, then only the picture will be more clear. Sure. Thanks a lot, Vinay Jain. Yeah. Thank you. Participants who wish to ask questions may please press star and one now. We will take the next question from the line of Amit Sarke from JM Financial. Please go ahead. Yeah, thank you so much for taking my question. I have first question on the CDMO side. Is it possible to give some color how has been the pricing trend now that are we seeing any revision in the prices in the quarter or is it still at the similar level what it was last quarter? Yes, Amit, can you please repeat your question? Amit, please use your handset to ask your question. I was asking, on the CDMO side, is it possible to give some color on the pricing trend? Are we seeing any uptick or revision in the prices this quarter, or is it still at the similar level what it was in the last quarter? Amit, pricing of the API, if we see, is more or less in a stable region. But if we compare, say, year-on-year basis, slightly we can say it is on a lower side. Okay. On year-on-year basis, it is still negative and impacting our CDMO business basically. Yeah, on year-on-year basis. If Q-on-Q basis, we see more or less stable. Okay. Second question I have is on the Jammu side. We said when INR 400 crore, INR 500 crore revenues would come in next year, how much would be by shifting our production from existing to Jammu, and how much would be the new contract basically? Yeah. This INR 400 crore, INR 500 crore, what we are discussing is the incremental revenue. We are already factoring that, the shifting of the product. That is the only one block, and there we have a capacity constraint. Say, if we are transferring our domestic business to the Jammu facility, that will be fulfilled with the ROW business. We are counting that only the incremental turnover of INR 400 crore to INR 500 crore. Okay. You mean to say the actual revenue generating from the Jammu would be higher than INR 400 crore during that year? Slightly higher. It will be like INR 50 crore-INR 60 crore business will be transferred. Okay. You can say the range will be like 450-550. Okay. Initially, this INR 400 crore-INR 500 crore would be coming from which formulation particularly? Would it be only tablets and capsules or any other line? All four block and all four category of the product. There we have like dry syrups, dry powder injectables, tablets, capsules, then ampoules, large volume parenteral, water for injection, general dry powder injectables. So in revenue, everyone need to contribute, then only we can reach to the INR 500 crore mark. Okay. But all these lines, do we need a validation and filing of these products? Will that take some bit of time, or is it already factored in our numbers? Yes. That is already factoring. We have doing that, all these studies and all that from the last, say, August or September. Got it. Yeah. So you would be having fair bit of idea, like who would be the customers and how the revenue will ramp up basically next year. Yes. Our BD team is working hard to onboarding the customers, and the number is worked upon all the commitment and internal workings. Sure. The third question I have on the trade generic side, is there any seasonality which we should keep in mind while factoring numbers quarterly basis? In trade generic business, there are two factor. One is the seasonality. If we see the trend from the seasonality point of view, generally Q2 or Q3, sometimes Q2 top or sometimes Q3 top. The September or October are the top months. Sometimes it is like the consumer demand sector, like Diwali is the top. The pharma, the worst season is like from the health point of view is the September, October. Sometimes our Q3 drops. Okay. But as such, there is no issue as such in the segment. It is just the impact of, let us say, the Q2 was higher this year, so that is why the Q2 saw some lower growth basically. Yeah. But the segment is growing at a very healthy pace rate. Overall sector is growing at a very healthy rate. If we see our nine months, we have registered 18% growth, and this quarter, we have registered a 13% growth. As I explained, sometimes Q2 top, sometimes Q3 top. Got it. Overall, if we see the nine-month performance, then we have grown by 18%. Right. Sure, sir. Thank you so much, sir. I will join back. Thank you. Thanks. Yeah. Thank you. If you wish to ask a question, you may please press star and one on your touchtone phone. We will take the next question from the line of Karan Shah from GC Holdings. Please go ahead. Thank you for the opportunity. One question on Sharon. How do we see the growth going forward from this line of business, which is Sorry, you are not audible. Am I audible now? Yes. Could you highlight how do we see the growth from the Sharon business in the coming years? Will it be at the company level, or shall it be a tad bit lower than the company level growth for the Sharon business? Sharon business is growing at a decent pace, and we had been working on multiple fronts like R&D, RA, international BD team, and we expect it to grow in early teens in coming years. How do we see the margin profile from this business? Margin profile would remain stable at where it is as of now. Okay. One question on Jammu. Sorry if I would have missed it earlier. At a sustainable level, can we see a 17%-18% margin levels from the Jammu plant? As we already shared earlier, at a long-term perspective, yes, we are looking to accrue certain benefits coming out of the GST benefit, which is going to add up our normal gross margin. We will still working on it and in the coming years, we are very much positive that, yes, our stabilized EBITDA margins is going to be slightly higher than our baseline margins. Okay. Last question on the qualitative front. How are we seeing the customer traction at the Jammu plant? Yeah. So customer audit and facility visit is already getting a very good attraction for the Jammu facility. It's a state-of-art facility, well-designed, and it is having all the imported, a lot of imported equipment. So that fulfills the current needs or it is a well cGMP compliant facility. Okay. That's it from my end. Thank you. Thank you. Thank you. The next question is from the line of Akul Broachwala from Avendus Investment Managers. Please go ahead. Yeah, thanks for the opportunity. So sir, talking about the ramp up at Jammu, just wanted a qualitative sense as to the incremental revenues that you are emphasizing. What's the profile like? Is it that you are expecting a large part of this to come from existing customers, or are there new customers as well who are looking into these new blocks? Most of the revenue will come from the existing customer. We cover a large percentage of the top Indian domestic players. As the 80-20 rules, the 80% business lies with the top players. We are hopeful that the customer is already on board. For Jammu, we are trying to increase our wallet share. Understood. Secondly on the kind of delay that has happened with the Schedule M implementation for the lower basket of below INR 500 crores. Do you expect any sort of tailwind that you were emphasizing this year, or you are not building anything from that implementation of policy? Can you repeat the question? My question was on Schedule M implementation. This year the government has kind of postponed implementation of Schedule M for the pharma companies below INR 500 crores. Just wanted your sense on as to how you are looking at this move by the government and were you sort of building any sort of business from that particular policy move this year in the coming calendar year? No. We are not building any data based on the Schedule M. Our facilities are well-compliant to the domestic regulation as well as the international regulation. This being a new facility, when we do any new facility, we see the future, say, 20 to 30 years ahead. The facility should last for the next 40, 50 years. That is the reason behind doing any new project. Understood. Last question is- Well compliant. Yeah. We have our own sense other than speculating on the government's implementation of the Schedule M and all that. We have our own sense. Our customers are generally the large domestic player, and we have a healthy relationship with them. Based on that, we attract the business. Understood. Last question is on the CDMO revenue. Is there any element of service income or R&D income in the CDMO revenues that you have? Just wanted a clarity on that. Yes, we have, but that is very less. Only few percentage points. Okay. Got it. Thanks. That's it from my side. Thank you. We will take the next question from the line of Hiten Boricha from Sequent Investments. Please go ahead. Yeah, good morning, sir. My question is on the Jammu facility. You mentioned we have recently started a facility. Assuming this facility will be operating at lower utilization in Q4, but the operating cost will come in the Q4 itself. Will this lead to a margin decline in Q4? Is my understanding correct? Hiten, we have just commercialized our facility this January 25, and we are working continuously with our BD team and operation team to mitigate any headwinds that we accrue. We are still working to mitigate any EBITDA headwind on that part. Yeah. Okay, sir. Sir, but eventually the cost should come in Q4, right? That is what I am trying to understand. Just let me Yeah. So it will impact our margin, right, sir? See, it is a start of the project. We are in revving-up stage. Yes, we have certain semi-variable and fixed costs. We are working to maximize our sales to mitigate that EBITDA hit or EBITDA cost, which may come to our EBITDA. By try to maximize our top line and gross margin within this quarter itself, we are working hard to mitigate any cost that may hit our EBITDA. Understood, sir. Sir, my next question is on the Sharon. You mentioned there was some decline in revenue and order has been delayed to Q4. What exactly is the reason for this, if you can elaborate more on this? A few international customers have the December closing, and they have deferred the delivery to the Q4. We are hopeful that the Q3 hit will be covered in the Q4. Understood, sir. Thank you for clarification, sir. Thank you. Thank you. The next question is from the line of Abdul Puranwala from ICICI Securities. Please go ahead. Hi, sir. Thank you for the opportunity. First, on the CDMO growth. I understand in your opening remarks you talked about some of the pressure on API pricing, but we would also want to know if the growth slowing in this quarter, was that also because you have already started shifting some products from Baddi to Jammu? No. Abdul, just to clarify, we started our Jammu facility in January itself. So these results were till December 31. So there was no impact of any shifting, and we have not shifted till December 31 itself, and the numbers does not represent any shifting of revenue from our Baddi to Jammu. Okay. Secondly, on the deferment, as some previous participant was asking. Would it be possible for you to quantify what was the quantum of the order which has moved from Q3 to Q4? You are talking about Sharon? Yeah, Sharon. The tentative number is somewhere around 4-5 crores. Okay. That was my only question. And sir, just for next year, I understand there will be some costs which you are trying to mitigate from the Jammu. So what could be the sustainable margins, EBITDA margins of your business if you have to look from a 2-3 years perspective, where should this settle? Would this be between the range of 15%-16%, or it can be slightly higher than that? Abdul, as our current margins are, our blended margin at consol level are within the range of 15.5% to 16%. In the long run, we are very much positive that we are going to get a slightly more benefit out of it as Jammu is ramping up and other business also contributing to this. Yes, it is going to be slightly higher. And within next coming period, as and when Jammu will get more mature and more established, we should be able to get a more quantifiable number around it. Got it. Thank you, and I wish you all the best. Thank you, Abdul. Thank you. We will take the next question from the line of Karthikeyan from Suyash Advisors. Please go ahead. Yeah, good morning. Just one question on the Jammu facility. What would be the peak headcount at the Jammu facility, and can you talk about the challenges you're facing in terms of hiring there? You are talking about the headcount at Jammu facility? Exactly. As of now, our existing Jammu facility headcount is somewhere in the range of 500 to 600, plus certain apprentices also. As and when it is going to ramp up, the headcount is bound to increase. The recruitment, we had already been working proactively on the recruitment of our manpower right from our starting at helper level till our senior management at plant level. The crucial and the sensitive positions has already been filled up around one year or even two years back. If I talk about plant head, we are having a plant head around two years back in our We have already hired them when the plant was in construction phase. The other sensitive positions like QA, QC, other regulatory affairs, that has already been filled up. We had been doing this recruitment drive through each and every medium, that's word of mouth, by walk-ins across the country, by references and other portals also. Right. What would be the peak Even we have went to as far as Sikkim to get a good workforce and an experienced force in pharma. We had done some walk-ins there also. Interesting. What would be the peak headcount according to you? Peak headcount, at an optimum level, should be in the range of, say, 1,200 to 1,300 employees. Right. If you have it readily, what would be the current split of locals versus non-locals? That I have to check from HR. We can come back on that. Fair enough, sir. Thanks for clarifying. Thank you. Thank you. The next question is from the line of Rohan Vora from Envision Capital. Please go ahead. Hello. Sir, thank you for the opportunity. The first question was, as I understand, in three blocks for Jammu facility, we are going to manufacture new products. Are these products products which our clients are manufacturing in-house and we win those orders, or are we winning those from our competitors? I mean, increasing market share. Which one would it be? That was my first question. Second question was with INR 400 crore odd additional revenue coming in from Jammu. Do we see ourselves growing at 25% plus in the next year? That was second question. And third was on the CDMO business, year-on-year growth was in low single digits. In addition to the API price erosion, was there any other reason to that? Thank you. Your first question was that whether the new three blocks that we are going to get, whether the revenue is coming from the in-house shift of our clients or is it going to be addition of new products. Was that the question? Yes. Is it in-house shift from our clients or are we winning from our competitors, those products? As the three new blocks are new to our product basket, product portfolio, the business will be new to us. That will be, say, the principal, that the first line company that already doing the market and that will be transferred to us. From the other side or maybe from their in-house. Okay. It is possible that we might be winning market share. Yes Or it is possible that it is an in-house product that are getting transferred. Yeah. Both. Mix of both. Got it. Your second question was around Jammu revenue, were coming here? Yes. We said that we will be doing around INR 400 crores. Are we on track to do 25% plus growth in the next year? Yeah, of course. Just a ballpark number on consolidated revenue growth, if you can, for FY 2026. We will try to refrain from giving guidance on the overall numbers as of now, but in the coming period, we will surely be able to comment on that. Okay. The third one was, is there anything in addition to price erosion to the single-digit growth in CDMO business? If you talk about CDMO business, see, the CDMO is just a business segment, whereas our main core strength is our manufacturing capabilities. Our manufacturing capabilities basically drives and pushes all our business segments, whether it is our CDMO, domestic generic business, and international generic business. If you see in overall perspective, our each and every segment is growing at a healthy pace. Even from a manufacturing capability point of view, our volumes has also increased from year-on-year basis. If I talk about a very ballpark figure, it should be in the early teens itself. Yes, after considering the pricing impact, it is showing a year-on-year increase of around 7%-8% at a standalone revenue level, but volumes has been better on that part also. You said mid-teens? Yeah, early teens. I would say early teens. Early teens. Okay, got it. Thank you, sir. Thank you for the clarification. Thank you. Thank you. We will take the next question from the line of Naman Bhansali from Nine Rivers Capital. Please go ahead. Yes, thank you for the opportunity. First question is more on the industry side, wherein last quarter, the largest player in our segment alluded to some sort of slowdown in the industry led by slower ordering from the pharma company as well as slowdown in the volume growth for the IPM in India. What are your views on this and how are the trends shaping up in terms of growth for the CDMO side? Yes. If you see, sir, there are the two sort of school. One is that the overall market increase from the IPM point of view, and the other one is that from the CDMO perspective, right? From the overall IPM perspective, yes, you are correct that the volume growth is like 4%, 3%, right? And there are the generics also that is not counted in the IPM, so that business is not covered by the IPM. Then from our perspective, you see, so we are largely working in the area of CDMO. So there the growth come not only from the IPM growth, but from the product shift also. The product shift may be from site to site or from in-house to site. That is why if you see that from the past also. So we have delivered the CAGR of 20% plus. Mostly because of the expansion, additional facility, additional product line. If you see that in Jammu also, we have expanded ourselves in the three new category of the products. So there currently our business is zero. Most of the business will be come not from the IPM growth, but from the existing sites. Got it. Second question, as you talked about generics, there was a news article wherein it was talked that generics is being accepted by certain other countries globally, in the more of a non-regulated side. Does that open up a next level growth opportunity for us going forward? Let's be clear that other than innovator, everything is generic, right? From that perspective, the business in the ROW and the other markets is already being covered by the generic of the- Right. Sir, I am talking about the trade generic side, wherein a lot of unregulated countries are talking about adopting the Jan Aushadhi model, which is in India. In those sense, are we catering to those opportunities? No. Currently, it will be difficult for us to comment on this point because as and when the opportunity comes, then only we can envisage on this front. Got it. Thank you. Thank you. The next question is from the line of Neha Karodia from Abakkus. Please go ahead. Yeah. Hi. Thanks for the opportunity. My question was regarding the Jammu facility. So we are talking about INR 400-500 crore revenue for FY 2026 from the same. Just wanted to ask regarding the margins for the facility, whether with the mitigation efforts, it can be in the early double digit or high single digit, or will it only be break-even for us? Neha, if you see that our margin are in the range of, say, 15%-16%. So once we will do the full year at a level of INR 400-500 crore. So the margin profile should be in line with our existing base business. Understood. For the facility, do we expect peak utilization in FY 2028? 2028. Still we have the headroom for growth in FY 2029 and FY 2030 also. Most of the growth will be covered up to FY 2028, 80%, 70%, and then it will grow like a 10%, 12% type of growth further to FY 2029, FY 2030. Understood. How we see from the manufacturing facility perspective, whenever we put a new facility, initially, we have a large mix of 30%, 35% capacity utilization. Then in the year 2, year 3, we reach to, 50%, 55%. After that, in some 9, 70%. That is the peak utilization. I am sorry, I missed your last line because of some disturbance in the line. Can you please repeat the last line? Yeah. The first year is like 35%, then it increased to 45%, 50%, 55%. After that three, four years, then the growth rate will be like 10%. Understood. Peak utilization would be somewhere around 80% to 90% and- 70%. 70%. Yeah. Because throughout the year, there may be some months where we get the utilization as 85%, 90%, or there may be some few months where the utilization will be like 50%, 55%. That is why we factor in that all seasonality to our numbers, then the peak utilization, we estimated 70%, 75%. Understood. At that level, the revenue that we can do would be probably about INR 1,200-INR 1,300 CR, or do we have a potential to have higher revenue maybe with the product mix or Our estimate is that the peak utilization is like INR 2,000 crores somewhere. 70% is like INR 1,500, INR 1,600. Understood. In 2 or 3 years' time, that start with the INR 400, INR 500 crore, we can reach to the INR 1,000 crore mark in the Jammu facility. Understood. Thank you. Yeah. Thank you. The next question is from the line of Aniket Nikum from ABN Capital. Please go ahead. Hello. Yes, Aniket. Am audible, sir? Yes. Thanks for the opportunity. Sir, I have two questions. The first question was a little bit covered by an earlier participant. Just on this Schedule M delayed implementation for MSMEs, can you comment a little bit on what are you seeing on the ground? Do you think a lot of the industry can transition to compliance, or will they lose share? What's the feeling you get when you are chatting to customers? Yeah. If you see from the regulatory perspective, in India also, if you see all the segments, everywhere there is a tightening of the regulatory framework, and as we proceed with the timeline, it happens in all the segments. Similarly in our pharmaceutical also, there is a continuous tightening of the norms, and that is at par with the international norms. Our revised Schedule M also, it is at par with the all international regulations. I want to comment that our facility, like the Jammu or Baddi and Sharon's, Dehradun facilities, we are having the, say, in Dehradun, we are having the EU-GMP. In Baddi also, we have the EU-GMP. Our facilities are well designed and complying to the international certification also. From the market perspective, yes, there are some hiccups with Schedule M. Let's see how it proceeds. The government has relaxed one year. From MSME point of view, that is good that they have relaxed for the one year. Got it, sir. But do you think it's practical for some of these sort of smaller units to get to the right manufacturing standard, or will it be too expensive for them? Just trying to get an industry perspective, and is it even possible for them to do that transition? From our side, it is difficult to comment on this question, sir. Okay, sir. That's fair. My second question was a little bit on the bookkeeping side, sir. Just wanted to get a little bit of guidance or just some pointer on how do we expect the depreciation to move now that obviously we've done a fair bit of CapEx. What do you think will be the depreciation for next year? Yes, we are still working on the final depreciation workings, but we estimate that our annual depreciation from Jammu plant should be in the range of INR 20-25 crores per annum. Okay, sir. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Raghav from JM Financial. Please go ahead. Hello. Hi, am I audible? Yes. Yes. Hi. Just one clarification. Did I hear correctly that for CDMO segment this quarter, the volume growth was in early teens? The early teen growth has been on for nine months year-on-year. Could we assume that even for quarter 2 in FY 2025 it will sort of be similar volume growth? Sorry, can you please repeat your question? I was asking in Q4, do we assume that volume growth would be at a similar level or can it be higher? Because I think the base quarter in FY 2024, you were impacted by the pricing decline for APIs. I just want to get a sense of how Q4 will pan out. As I already covered that, if you see Q-on-Q, then the prices are stable from our perspective and year-on-year there is a bit decline in the prices. From here onward we see a stable price visibility. There may be few price decrease and few price increase. Overall now there is a stable price visibility. Okay. Yeah. Thank you for the clarification. Typically, from the two prospectors, one is the existing volume growth, other is from the Jammu angle. Okay, understood. Just one quick question on Jammu. How do you see the Q4 revenue panning out for this year? Raghav, we are still working with the order book and the delivery team, but at a high level we estimate that Q4 Jammu revenue should be in the range of INR 20 crore-INR 40 crore. Okay, understood. Thank you so much. Thank you. Ladies and gentlemen, due to time constraint, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir. Thank you everyone for joining us on the earning call. We are pleased with our progress this quarter and nine months FY 2025. The successful commencement of our Jammu facility marks a significant milestone in our growth journey, complementing our ongoing business performance. With growth drivers already in place across our existing business area, we remain confident in our ability to deliver continued growth over the years to come. We look forward to build on this success as we move into the final quarter of FY 2025 and beyond. Thank you for your continued support. Thank you very much. Thank you very much, sir. Thank you members of the management. Ladies and gentlemen, on behalf of Innova Captab Limited, that concludes this conference. We thank you for joining us and you may now disconnect your lines. Thank you.