Q4 23/24

May 30, 2024

Summary

FY24 revenue rose 16.9%, EBITDA 35.9% and PAT 38.9%, with operating cash flow more than doubling. Jammu’s FY25 launch is the key growth catalyst, while CDMO revenue remains exposed to API price declines.

Ladies and gentlemen, good day and welcome to Innova Captab Limited Q4 FY 2024 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectation of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants' lines will be in 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. Vinay Lohariwala, Managing Director of Innova Captab Limited. Thank you, and over to you, sir. Thank you. Good afternoon, everyone, and thank you for joining our earnings conference call to discuss the operational and financial performance for Q4 and FY 2024. On this call, we have been joined by Mr. Rakesh Rakhe, CFO, and SGA, our investor relation advisor. I hope everyone has had an opportunity to go through the financial results and investor presentation, which has been uploaded on the stock exchange and on the company website. I will give you a quick overview of our year-on, and then Mr. Rakesh will take you through the operational and financial highlights. Since many of you are joining the call for first time, let me give you a short brief discussion about the company. Innova Captab is an integrated pharmaceutical company in India with a presence across the pharmaceutical value chain, including research and development, manufacturing, drug distribution, marketing and export. FY 2024 has been a landmark year for the company as we got listed on Indian Stock Exchange in December 2023. As a domestic CDMO player, we cater to India's top 14 out of 15 pharmaceutical companies. We have license to manufacture products through four state-of-the-art manufacturing facilities at Baddi, Himachal Pradesh, Dehradun, Uttarakhand, and at Taloja, Maharashtra, while maintaining WHO GMP, EU GMP, UK MHRA, and other major registrations with these facilities. With the support of our world-class manufacturing facilities and a reliable supply value chain, we are continuously working to maintain high efficient operating. The foundation of our company is our in-house R&D, which help us to focus on build our product portfolio. Continuous development in quality and regulatory requirements are currently causing challenges for the pharmaceutical industry. We at Innova take the changing landscape as an opportunity, and with a quality first approach and with rigorous support of our domestic and international customers, Innova has been adhering to all quality and regulatory requirements since inception and continuously strive to further improve our progress. Coming to core major business area performances. Contract development and manufacturing, CDMO. Our CDMO business continues to get good traction. While the demand continues to remain strong, lowering API price have had an impact on our business. Performance as compared to last year has been to a cost-plus model. We are looking forward for next financial year and quite optimistic that the CDMO business is expected to grow on the back of decent visibility in demand. As on FY 2024, our number of CDMO customers is at 193. Revenue contribution from the business is nearly 68% in FY 2024. Domestic branded generic. Our domestic generic business performance has improved backed by our constantly increasing pan-India network of distributors, stocks and pharmacies. Revenue contribution for this business is nearly 18% in FY 2024. Our international branded generic products business is focused on export to emerging and fully regulated international markets while expanding our business to regulated markets like the U.K. and Canada. We had exported our branded generics to more than 20 countries. Revenue contribution from this business is nearly 11% in FY 2024. Sharon Bio-Medicine. in June 2023, we acquired Sharon through CIRP process. Sharon has strong CDMO formulation manufacturing capabilities, including API end manufacturing, and it caters literally to international markets, including Canada, U.K., Europe, Australia, Korea and Vietnam. Revenue contribution from this business is nearly 13%. Recent development. Our Greenfield plant in Jammu is on track, and by Q2 FY 2025, we are expecting to commercialize and commence operation in all four blocks, that is, cephalosporin, penicillin, penem and BFS to manufacture oral solid dosage, high-power injectable, dry syrup, BFS, large volume, small volume parenteral, respules products and ventams to expected form. Revenue impact is expected from FY 2025 onwards. The company will benefit from the New Central Sector Scheme for Industrial Development of Jammu and Kashmir. In addition to our existing R&D center in Mumbai, the company is also establishing a new R&D center in Panchkula, Gandhinagar. Also with the acquisition of Sharon, we aim to create long-term synergy with additional product offerings like formulation and API. Over the last three, four years, we have grown at a healthy rate of 20% plus CAGR, and with our upcoming Jammu facilities and recent Sharon acquisition, we are positively looking forward to maintain the same 20% plus CAGR in the next three to four years. As a company, we continue to drive sustainable growth by exploring new opportunities and focusing on value-added products. Indian pharmaceutical companies are set to experience significant growth in mid to long term as both domestic and global manufacturers seek reliable and sustainable suppliers like us. I now request Mr. Rakesh Rakhe to take you through our operational and financial performance for the quarter four and FY 2024. Over to you, Rakesh. Thank you, sir. Good afternoon, everyone. Quarter four and FY 2024 has been a good quarter for us, as all our key products witnessed healthy demand. The financial highlights for quarter four FY 2024 are; our total income stood at around INR 258.3 crore with a growth of 10.2% on a year-to-year basis. The business highlights for the quarter are as follows. CDMO contributed 53% for the quarter. Domestic branded generics stood at 18%. International branded generics stood at 11%, and the balance of 18% is contributed by Sharon, which is into the business of formulation and API. EBITDA came in at INR 43.8 crore, talking a growth of 48.7% on a year-to-year basis. EBITDA margin stood at 16.7% as against previous year of 12.2%. Profit after tax for the quarter came in at INR 48.7 crore with a growth of 66.5% on a year-to-year basis. The FY 2024 highlights are as below. Total income for FY 2024 came in at INR 1,083.8 crore with a growth of 16.9% on a year-on-year basis. The business highlights for the year are as follows. The CDMO contributed 58% for full year. Domestic branded generics stood at 18%. International branded generics stood at 11%, and the balance of 13% is contributed by Sharon. EBITDA for financial year 2024 came in at INR 156.9 crore with growth of 35.9% over last year. Profit after tax for FY 2024 came in at INR 94.3 crore with a growth of 38.9% on a year-on-year basis. For FY 2024, our net cash generated from operating activities stood at INR 136 crore as against INR 57 crore in FY 2023. We are delighted to inform you that utilization of our IPO proceeds is on track as per target utilization committed in the IPO prospectus. Excluding the term loan borrowed for our Jammu project, we have repaid all our existing debt. With this, I would like to conclude the presentation and open the floor for questions and answers. Thank you very much. Thank you very much. We will now begin the question and answer session. Participants present on the audio bridge who wish 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amey from JM Financial. Please go ahead. Yeah. Thank you for taking my question. The first question I have is on the CDMO fees. I understand that there is a pricing decline during this year, and we have to pass it on. Is it possible for us to give breakup in the volume and the pricing for CDMO fees for the quarter and for full year? Also, I have seen the decline was sharper during this quarter. Should we assume that the prices have dropped sharply for Q1 and Q for the business? Thank you. Thank you, Neha. There are two parts of the question. One is that the price correction and the other is the volume growth. Historically, if we see, Q1 and Q4 are the lower quarter, and Q2 and Q3 are the upper quarter. If we take 100 as the base, then generally Q1 is 20% to 23%, which are Q4 also is 23%, 24%. Then the Q2 and Q3 are generally at the higher level of the yearly phase. One is that if you compare the Q3 with the Q4, there is always historically, if you see the previous quarter also, the number declines in that also. The second is there is API price correction. Due to that, as we are working on the cost-plus model and that is benefiting pass to the customer. Due to this, there is a decline in the top line. But there is a healthy growth in EBITDA and PAT. Which means that there is a volume growth in the volume. Right. The impact change is particularly the volume growth. Right. Sir, the reason I ask because going ahead. Sir, this quarter has the pricing gone down again from Q1 to that, the main question, because that will have impact into going into FY 2025. That's the reason I ask. Yeah. If you compare year-on-year, there is a price decline. The base is lower due to the price decline. If you compare Q-on-Q, we cannot say that there is a 10% price decline. What we can know there is 2%, 3% price decline. Yearly compare, then there is a 6%, 7%, 8% price decline. Okay. Going into FY 2025, now the base is right here. Do you expect a growth for the CDMO business if the prices are stabilized at this level? What we can say is that volume will still grow 10-plus, in double digits. Whereas pricing impact, we cannot speculate. If the pricing impact is, say, on the positive side, then the top-line growth will be more than 15%-20%. If the price erosion continues, then that can nullify the volume growth. But overall, if you see, our EBITDA is not linked with the top line. EBITDA is linked- Got it. With the unit margin. Right. The second question I have is on the GM improvement. Throughout the quarter, we are seeing. Across four quarters, we are seeing there is a gradual improvement in the gross margin. Is it solely led by the API pricing, or is our export business or the advantage on the domestic gross margins are significantly higher than the CDMO? I like to highlight one more thing, that gross margin depend on the product mix also. Say if the product mix sways towards the lower cost product, then our EBITDA or the gross margin increases. It's a hybrid or complex scenario that how the top line and EBITDA come out. It is very difficult to analyze as we are manufacturing more than 400 to 500 products. Got it. Should we assume that this is led by product mix and not the business mix? So if we historically compare, our CDMO business is at a lower margin comparing with our own Univentis Medicare, on generic business and the SBML business, Sharon Bio-Medicine business. So with the addition of SBML also, it helps us in improving our margin. Sure, sir. And this last question is in the Jammu plant, the block which is getting commissioned in Q3, what would be the gross block for that block which is getting commissioned? So in Q2, we will start all four blocks, and the size of gross block will be approximately INR 450 crores. INR 450 crores. Okay. And how fast you expect to optimally utilize this INR 450 crores block? Once we start, we are having a good visibility. We are discussing with our existing customers, and we have a very good feedback from all the existing customers. We are eagerly waiting to start the commercial production. We expect that once we start the commercial production, down the line after four to five months, our revenue should start ramping up. Sure. Thank you, Thomas. I will log that in. Thank you. Thank you. The next question is from the line of Lakshmi from Tunga Investments. Please go ahead. Thank you. First, what has been the revenue from Sharon last year, and what has been the revenue contribution? I think revenue contribution has decreased, you mentioned. How the company has actually grown in the last one year? Basically you were talking about Sharon, right? Yes. Yes. Basically, we acquired Sharon on June 23. We acquired Sharon through CIRP process, and it was in the IBC for last four, five years. Before acquisition, during the FY 2023, they had crossed in full year revenue of around INR 192 crores. This year, on a full year basis, they had crossed their revenue of INR 190 crores. While the revenue seems flat on a year-on-year basis, but after the acquisition, we have started our efforts to strengthen our pipeline, start working on adding new products to the basket, as well as working on new customer addition to the team. We are very hopeful since it's an exposed business and the decision period to bringing on new customers on board or introducing new product is slightly higher. It may run into years also, but we are very hopeful that the effort that we have started putting in after our acquisition will start reflecting on incoming periods. Sorry, I guess I interrupted. Actually, your voice is little unclear. If you can just try to stay away from the mic, that would be better. It's coming little noisy. I see. The second question is that this CDMO, India CDMO business, which has shown an underperforming performance in the last two years in succession, if I look at it, how does it compare with the industry? When I talk to the industry, already one player is listed, one player has actually filed their DRHP. I just want to understand whether it is an industry issue or a client-specific issue, or our company's specific issue, or is it reflective of the industry in general. However, you talked about the pricing scenario. I just want to hear your thoughts. CDMO, our business is basically in CDMO category focused on the domestic business. Is this time clearly audible? Yeah, it is clearly audible. It is enough. Yeah. Our business is basically the domestic CDMO focused business. In domestic CDMO business, if you see that there are some regulations coming up, and due to that, there is a consolidation in domestic CDMO also. Our CDMO growth depends totally on our own capability, our capacity availability, and of course, the price. If you see like we have the two facility, existing two facility in Baddi region. One is cephalosporin and the other is general facility. In our cephalosporin facility, we are already operating at a high utilization level. In our general facility, we have the free and spare capacity. We are operating at 40%-45% of the utilization. Compared to cephalosporin, there we are utilization is 70% approximately. We estimate that 65%, 70%, 75% is the optimum utilization where the facility on the yearly basis can operate, looking at the seasonal variation also. In the last year, our growth is depend on the our general blocks increase, quantity increase or volume increase. These are means the price increase impact as negatively. If you see, still the overall volume growth we have observed in approximately 10% in the last year also. That reflected into our EBITDA impact. Looking forward, we are letting our capacity of cephalosporin block with Jammu, and we are putting three more blocks. We are very confident and hopeful that in the coming year or the next year, we can grow at 20%+ in CDMO category also. Mm-hmm. Can I just see what has been the growth yearly, last two years? If you see the market data, the growth in the pharma market is like 3%, 4% only. Whereas in CDMO space, the bigger client is benefited with the consolidation also. Due to the revised regulation, the business is concentrating more towards the combined side. Mm-hmm. Is it right to say that the industry, as per the data what you have, the CDMO growth is around 7.5% for industry, at least for the last two years, I mean the FY 2021 to FY 2023, if I look at it. Within that, the consolidation is going on. Then our growth should be ahead of at least 7%, 8%, right? Something I'm just trying to get my numbers right. You can say that, but there is no clear cut data visibility available by any research agency, I think. But due to this consolidation and free capacity availability, new plant introduction in Jammu with the benefit of GST, we are very hopeful and confident to achieve a 14% plus CAGR within the coming years. Yeah. While agreeing on that, I'm just trying to understand why last two years, when the same thing is being played out, we haven't grown the Indian market. If you see. There is still double-digit volume growth in our business. But due to the COVID, the price get impacted like anything. For example, paracetamol has gone up to INR 600, INR 700. Now it is at INR 300. So the price is less by 40%, 50% in few of the APIs. Right. That top line impact is there due to that. As we are working cost-plus model, so we need to pass through the price benefit to our customers. Got it, sir. Sir, recently, we have seen your balance sheet that there is a high capital working progress as well as increase in capacity. I just want to understand where the next coming years, how much you are investing and how one should think about it. Yeah. Let Rohit answer this. Yes. The capital working progress that has been reflected in our consolidated balance sheet mainly depends on the amount of capital that we have invested in our upcoming project in Jammu. This is around INR 330 crores. As we discussed during the call, we are planning to start or commercialize our Jammu plant in Q2 FY 2025. The overall project cost will be somewhere around INR 450 crores. We are anticipating around INR 100 crores in the coming quarter to be invested in Jammu plant. Got it. On a longer basis, maybe three years or five years out, what kind of taxation you think you would actually have on a blended basis, given that you are actually going to expand in Jammu and some few other places where the taxation regime is lower. How does this work, let's say, in next five years? Yeah. As on date, we will have the GST benefit from the Jammu plant. Approximately, say, INR 85 to INR 90 crore approximately will be the yearly GST benefit available to us. On sale of, say, INR 800 crore, approximately we can say that 12% GST will be the reimbursement as per the central scheme. Other benefits will be like, we have a few income tax losses benefit available seven bio years. We have the INR 235 crore project loan for Jammu facility. That is at 6% interest per annum. These are the few benefits available to us by the Government of India. Got it. Sir, another question. I think this year taxation came to around 27%, so that is why my question on this. The last question from my side is, when clients decide to give the contract to you or the other CDMO players, how does it work? What is an advantage you would have over others? Is there a niche area where you are actually much better than the others, or you actually share clients across multiple other similar service providers? Clients select their supplier partner. It totally depends on the technical capability, sale capacity, previous track record, previous relationship, and of course, pricing. Based on all these, clients select the partner to work with. Okay. In which areas we are stronger? Our plants are well quality compliant. We have the highest certification, like WHO GMP also. And Jammu facility is also state-of-art facility with all the high automated machines like formular and all that. As per the current CGMP norms, we have been doing all the erection and commissioning of the facility. We are far ahead with the, or we can say that the facility is well state-of-art in the dosage form what we are offering to you. Got it. I put it slightly different. When a client goes to Akums or when a client comes to you, while these are the table stakes that you have to have, basic hygiene, basic quality parameters, et cetera, which you have, is there a specific therapeutic area or a particular science where you are better, or a particular dosage format where you are actually better than the others? Or you have a stronger capability in terms of R&D, or just from that angle. Sir, when we talk about a usual CDMO player, it all depends on the sale capacity availability, technical dosage availability, technical know-how availability, and with the supplier relations, they select the vendor. Based on that, the business comes. Mm-hmm. Okay. Thank you, sir. I'll get back to you. Thank you. Thank you. The next question is from the line of Nitesh Dutt from Burman Capital. Please go ahead. Hi, sir. Thanks for the opportunity. First question is on our gross margin. So both for our standalone and control businesses, gross margins have gone up. So in standalone, I think the margins are now at 27% versus earlier levels of 22%-23%. As well as in control, the gross margins are now at 36%. So I just want to understand from your perspective, what should be the sustainable levels of gross margins, assuming normal prices, et cetera. Going ahead, what kind of GM will it be? Thank you. So generally, in Innova, our gross margin historically remained at 25% plus or minus 2%-3%. So if you see that increase in gross margin, that is because of firstly, there is decline in API, but increase in volume. So if that situation reverts, so the gross margin could be like 25%-36% range. And then if you see at a control level, that is because of the consolidation with Sharon as that business is in a regulated space and we have the better gross margin than Sharon Bio-Medicine. So looking forward, the range will be like, for Innova, that will be like 25% plus or minus 2%-3%. And with Sharon, sorry. With Sharon, we have the benefit of GST. So 12% GST benefit is there. Something will be like passed through to the customer, some benefits will be passed through to the customer, and still we will be able to manage some better GST benefit and can retain the GST benefit. That will improve our EBITDA margin further. Correct. And sir, for the existing business, if I split it up in the four divisions, CDMO, domestic branded, international branded, and then Sharon, can you just give a rough idea on the gross margin? CDMO, you gave like 25%. But for the other three segments, what should be the gross margin? Breaking with the different domain is a bit difficult for us because they are a consolidated theater. But you can say that we have the better margin in our own branded business, better margin in our exports, and better in Sharon compared to CDMO. Correct. Sir, next question is on the CDMO business. If I look at an yearly level, FY 2024, FY 2023, 30 CR. Similar in FY 2023 and FY 2024 is at 622. Now I understand there is some impact of price decrease. But what you're effectively saying is there has been 10% kind of volume taker in the CDMO business. Does that mean that prices have corrected by 20% or so from the FY 2022 level? Is that a fair assessment? Correct. Yeah. There are two factors. As I earlier explained also, that one is the price factor, the other is the product mixing. If I am making one product, INR 1 per tablet, or one product like INR 4 per product. If the product mixing, that also change my revenue number. More or less, our EBITDA margin is based on the unit economy. Sir, but even at an EBITDA level, if I look at the EBITDA of standalone, in March 2024, this quarter it was INR 23 crore versus INR 31 crore of last quarter. Roughly 25% decrease. At one level, FY 2022 and 2023, I think we were at INR 100 crore. FY 2024, we are at INR 108 crore in the standalone business. EBITDA also, we haven't grown that much. Q4. If you see yearly basis, Innova EBITDA grown from INR 107 crore to INR 118 crore. There is approximately 10% increase in EBITDA in Innova standalone. Okay. Standalone, you're saying it's INR 118. INR 118 compared to INR 107 last year. There is a 10% increase in EBITDA compared to last year. You can say that the cost of operation margin increases year-on-year. The employee cost will increase, all operating costs increase. Maintaining in the same template in the CDMO, there is a 10% increase in EBITDA. That is basically drive from the volume increase. Typically during your pricing contracts with customers, is this the EBITDA that you have fixed? For example, if your cost of production is INR 100, are you maintaining a fixed rupees or are you charging percentage EBITDA, trying to maintain percentage EBITDA? Is it rupee EBITDA that is fixed or is it percentage EBITDA that you try to manage? Yeah. There are generally two category of how we cost release, like the bill of material cost, and then let's say we have the CTTC, conversion cost, packing cost, and then we have the profit margin. The profit margin increase, decrease with the API cost or bill of material. But CTTC is basically fixed and increase year-on-year basis. You can say like 70% of our profit margin, 60%, 70% profit margin of the gross conversion is in a fixed form, and 40% is in a variable form. Got it. Variable basically relates to your cost of production. Yes. Yes. Below material of cost of production. Yeah. Understood. Last question from my side is on the other income this quarter. I think we have had roughly INR 6 crore of other income. I just want to understand the nature of this, because the cash on books, I do not think it was that much. The ending cash was around INR 80 crore. So where did this INR 6 crore come from and will it continue in future quarters? Yes. Our other income is basically, if you see there is a foreign exchange loss, then government incentives of the export sales. Then there is a INR 64 crore, INR 63 crore, I think, approximately from the IPO. There we are bringing the invest from the fixed deposit as well. So what will be the export incentive versus fixed deposit and interest? Yeah. That working will be- Talking about this INR 6 crore other income. The major constituent is the FD income that we have generated. See, out of our IPO. Let me take you slightly backwards. Our IPO proceeds was planned to be deployed spread over two years. Out of INR 293 crores of IPO proceeds, INR 62 crores was planned to be deployed in FY 2025. That unutilized IPO proceeds along with some of our internal accruals, which come to around INR 70-INR 75 crores, had been deployed in a fixed deposit till the time it is utilized in FY 2025. That is bearing an interest. That is one of the reasons of our increase in our other income. Got it. Does that answer? Yeah. That's clear. Just one more question is on depreciation. Quarter on quarter, it has gone down from INR 5 crore to INR 3.4 crore. Sorry to interrupt, Mr. Nitish. I request you to rejoin the queue for your follow-up questions. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your questions to two per participant. Should you have a follow-up question, we will request you to rejoin the queue. The next question is from the line of Harshit Gaveri from Pi Square Investments. Please go ahead. Congratulations on the good results. I just wanted to understand that we are coming up with new phases in the Jammu facility, which will have a greater contribution of the overall CDMO space at the consolidated level and the corresponding API prices and the lower margins in the CDMO space. What type of margins can we expect as a consolidated level over the next two to three years? Hello. If we talk specifically about Jammu. Jammu, while it's an exciting location for manufacturing capabilities, at the same time, business model will remain as the core CDMO. On a business-as-usual basis, we look at the same margin profile as we are sharing on your existing model. But considering the added incentive that we are going to have in Jammu, which is basically the GST benefit on CDMO strategies, we are expecting since we may be able to drawback some of the incentives to our margins, despite passing some of the portions to our customers. We are looking at a better margin profile in Jammu as compared to our existing business. Understood, sir. And sir, again, just being what is your take on how long the API downturn will continue? Are you expecting another one to two years of these lower values, or do you expect the prices to stabilize and then go up again? During the COVID period, prices get inflated, and in the last one or two years, we have witnessed that the prices have declined. We expect that next year there should not be any further decline in the prices. That is expected. The market is also speculating the same thing, that further price degradation should not happen in the market. Understood. And sir, do we expect export sales to remain the same, or are you planning to increase the exports? Our export revenue? Correct, sir. Currently around 23%-24%. We are working focused on all the verticals of our business operations, whether it is our own market, domestic business or CDMO or international sales. We are equally focused and concentrated on all the things which are on the whole four verticals. Each business is growing on its own at a healthy rate. In the future, if some business segments grow at a faster pace, then there can be a 1% or 2% shift to our overall books. Okay, understood. Last question. We are planning to spend another INR 100 crore-INR 120 crore for Jammu in this year. Do we also plan to spend any other maintenance? Obviously, a smaller sum, but how much do we expect to spend for the maintenance CapEx of the existing plant in Baddi? Our normal maintenance CapEx should be in the range of around INR 5 crore-INR 7 crore per annum, not more than that. Okay, sir. And another INR 100 crores in CapEx. Yeah. This fiscal year. Okay. All right, sir. Thank you. The next question is from the line of Miten Lathia from Fractal Capital Investment. Please go ahead. Good afternoon, sir. What would be our FY 2024 chronic acute mix, and what could we expect it to be after our Jammu facility comes online? Chronic acute mix, if you see like in a CDMO, it will be not classified chronic acute, but still our acute is like 50%, and chronic is like 50%. And with Jammu our acute will increase further as most of the infection in Jammu is from the antibiotic side. Got it, sir. Thank you. Thank you. The next question is from the line of Jayant Shah from JM Financial. Please go ahead. Hi. Thank you for the opportunity. Sir, our working capital days have significantly improved. Is this sustainable now, and is there room to improve this? Yes, our working capital, I will talk more about our cash numbers as well. Since we have devised the strategy of our IPO proceeds and while maintaining the operational efficiencies and keep on working on those efficiencies, we are looking to be in the range in which we are existingly operating in the quarter, slightly here and there. Sure. Just one more question on the CDMO piece. Our revenue from CDMO customers which will be our relationship for 5-10 years. Is there any specific reason that you would like to call out over here? Jayant, can you please repeat your question? In our presentation here, we have shown revenue from CDMO customers who have been with us for five to 10 years. There is a dip this year. Any specific reason that you would like to call out? If you see our relationship, revenue from CDMO customers more than 10 years has increased. It is more of a shift from five to 10 bucket to more than 10 years. That is the reason. Okay. But nothing specific on that segment? If the relationship is there for nine years, now that relationship has shifted to 11 years. There is a column shift. If you refer to the third column, greater than 10 years, there is an increase from 239 to 279. It is merely a reclassification. Yeah, reclassification. It is more of an aging thing, the way we look at our aging. We normally gauge the relationship from the day we have started our first billing with the customer. Hopefully in the coming year, more of the work since we always, I will take it on the positive side because normally we work hard to maintain and retain our customers. Slowly and steadily, the customer which is at less than five years, will move to five and 10 year bucket, and then further it will move to greater than 10 year bucket. Got it. Just one last one. What is the EBITDA margin for Sharon in this quarter and for FY 2024? EBITDA margin remains in the range of, for FY 2024, for three quarters that we have reported, EBITDA margin is around 24%. For quarter four, it is in the range of around 26%-27%. Okay. All right. Thank you. Thank you. The next question is from the line of Nitin Gandhi from Inoquest Advisors Private Limited. Please go ahead. Thanks for taking my question. Regarding the Jammu block, what is likely to be the optimal revenue against INR 450 crore? Today, looking at past, we used to be four to five times of the sector. This loss is comparable in being the same effect terms. In three, four years, we are looking at a revenue of INR 1,000 crore plus. Okay. What is the Sharon net profit? Because you said accumulated loss is somewhere high. Can you share that figure also? Accumulated losses is basically when we acquired from the CIRP, IBC process. That time it is all clear. Right. Now this year our net profit was- Okay. For FY 2024, our net profit for three quarters that we have reported, Sharon it was a back off around INR 12 crore. When we say about carry forward losses, it is more of a benefit since Sharon was in IBC for last so many years, and there had been some accumulated losses and that taxation benefit has passed on to after acquisition through our CIRP process. Can you share that number? What is the accumulated loss which will be setting off? It is range of around INR 20 crore-INR 25 crore. INR 25 crore. Okay, so that will be set off this year itself. Okay. Thank you. Thank you. Thank you. The next question is from the line of Karan Shah from GC Holdings. Please go ahead. Thank you for the opportunity, sir. Just one question. How are we seeing the inflows into new inquiries from new customers and from existing across geographies and especially for the retail branch? Then as you see that we are already working with 14 top customers and we have a healthy relationship with all the top pharmaceutical companies, and we are discussing about the new facility, and we are getting very good feedback from most of the customers. In pharmaceutical, generally, there is no free agreement. Once we start the facility, then they do the audit and orders start flowing to us. We are in advanced stage of our discussion, and once we start our commercial production, immediately the relationship will start there as and when wanted. And sir, what about the existing facility at Baddi? Because we see there is huge headroom for increase in utilization as well. Earlier also I explained that we have the two blocks, cephalosporin and general. So in general, we have the same capacity. We are working at a capacity of 40%-45%. Whereas our cephalosporin is at a higher utilization. We look forward to improve the general facility utilization. Are we getting new inquiries which are getting converted for the existing facility as well, right? Yes, that way, that is increasing the volume share with our existing customer, onboarding the new customer, increasing the product number of SKU, number of products with new and existing customers. Okay. That's helpful. Thank you, sir. Yeah. Thank you. Thank you. The next follow-up question is from the line of Hitesh Bhatt from Burman Capital. Please go ahead. Hi, thank you for the opportunity again. I just had one question on our depreciation this quarter. It has gone down from, I think, 5 crore last quarter to 3.4 crore. I just want to understand if there have been any write-offs or anything else. No. This, so the lower depreciation is mainly on account of Sharon, which they have done through some realignment with our group policy, accounting policy. That is all. Understood. So the 1.5 we have changed because some accounting policy has changed. For example, increasing the life of asset. No, it is not like this. Basically, see, when we acquired Sharon, so they were on some different accounting policy. Now, as it is part of our Innova group, this quarter, the auditor, with the help of our staff, we have realigned their accounting policy with overall group accounting policy, and this is the same impact on Sharon side. That is it. Clear. Thank you. Thank you. Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Vinay Lohaniwala for closing remarks. Over to you, sir. Thank you. Thank you everyone for joining us in the earning call. We appreciate your time and strong interest in our company. In case of any inquiry, you can get in touch with us or SGA, our investor relation advisor. We look forward to meeting all of you on the next call. Thank you. Thank you. Thank you. On behalf of Innova Captab Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.