Q4 20/21

Apr 30, 2021

Ladies and gentlemen, good day, and welcome to the Loris Labs Limited Q4 FY 'twenty one Earnings Call hosted by Ambit Capital Private Limited. 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 Nikhil. Thank you, and over to you, sir. Yeah. Hi. Thanks a lot. Good morning, everyone. On behalf of Amvex Capital, I thank the lot of management for giving us the opportunity to host their Q4 FY twenty one earnings call. Today on the call, we have doctor Sikh Narayan Chawan, founder and CEO and mister V. V. Ravi Kumar, ED and CFO. I now hand over the call to doctor Sikhir for his opening remarks. Over to you, sir. Thank you, Samik. Thank you everyone for joining us for Q4 and annual results of FY twenty twenty one conference call. We are pleased to have this opportunity to update our progress and answer your questions. We hope everyone and their family members, colleagues and friends are safe during this severe second wave of COVID pandemic. To begin with, we will share the status of our locations. Our manufacturing units, R and D center, corporate office all function normally during the FY21. At LARUS, we are committed to protecting the health and well-being of our employees and their families. We continue to implement rigorous safety and hygiene measures across all locations without any compliments. I'm extremely proud of the agility and resilience of our teams have shown in the face of this challenge since last year. I'm very thankful to all our colleagues for raising to this challenge and ensuring business continuity. Our performance focus is on growth driven by excellent execution and creating a platform for our future growth with manufacturing capacity expansions, a combination of brownfield as well as greenfield in API formulations as well as our custom synthesis divisions. In FY '21, we have established a wholly owned subsidiary, lot of Synthesis Private Limited to take care of contract manufacturing for the big pharma. And also, it incorporated another step down subsidiary named LARS Ingredients Private Limited. These initiatives will bring focus to our contract manufacturing division to allocate, create, offer, increase capacity to service customer needs. We believe by the end of FY twenty three, this division lot of synthesis will be self reliant in all respects. We have we have forayed into biotechnology space by acquiring a majority stake in Richborough Life Sciences, Private Limited, which was renamed as Lars Bio. The current promoters will continue to run the operations, and this equation gives us entry into fermentation capabilities as well as flow into recombinant proteins. In the medium term, what we expect, this division to be vertically integrated into offering a contract development and manufacturing services in the right edge space. We're happy to share that FY '21, Lara Slabs has done exceptionally well. Our q four revenues stood at 1,412 crores, showcasing a robust growth of 68% year on year. And for the full year, we have achieved 4,813 crores revenue with a growth of 70%. To begin with, we would like to share the key updates on our various segments. In the formulation division, we achieved 1,664 course, And in the current quarter, we have done 430 crores revenue. The revenue contribution from the formulation division for the whole year is about 35%. Recently, we also got an approval for a triple combination anti retroviral drug containing tenofovir ellokinamide. We are in the process of obtaining in country registrations. We already got orders for this triple drug combination, and we expect to service those orders in the first half of, FY twenty. Apart from LMSC business, we have also seen growth in developed markets in North America as well as in the Europe. To leverage our front end US business, we have commenced the marketing of in licensed products. Out of five in licensed products, two products were launched, and we are in the process of launching the rest of the products, in the next two to six months. We have a total of nine final approvals and eight twenty two approvals, out of the 26 ANDAs filed so far. In Canada, we have eight approvals and before launched, and two more products will be launched soon. For EU, we have validated the additional products as part of the contract manufacturing with our partner, and we expect to significant upside from these products in f a twenty three. We also obtained the approvals and marketing operations for five products. Two of those launched, and we are in the process of launching others shortly. As we informed, we continue to invest in strengthening and enhancing our formulation infrastructure. Capacity expansion through debottlenecking was operational and already commercially used. Right now. Our brownfield expansion on the same side will with similar capacities will become operational in a phased manner from October 2021 and will be fully operational by end of after twenty two. On the r and d front, we continue we continue to invest about 4% of our revenue. And in the generic API division, this year was very good for our anti retroviral APIs. We have achieved 1,850 core, API sale in anti retroviral. This was a yes to a ARVAPI sales so far. And second line ARVAPI has also continued to see LV sales in q four. Due to the increase in the demand for third party APA sales, we are still expanding the API capacity to serve the existing demand from the customers. We expect to maintain good sales for the ARV APIs in FY twenty two as well. In the oncology segment, we recorded a 5% growth in the current quarter over q three. As you're aware, Lars Labs has one of the largest high potent API capacity in the country, and we are expanding high potent API manufacturing capabilities in our, one of our unit, Unit 4 at, Achitapara. We expect the oncology business to grow fairly well in the coming quarters as well. The most important piece of contract manufacturing of generic APIs and non ARV, non oncology, we have seen healthy growth in q four, and we have initiated validation of several APIs, non ARV, non oncology. And we are adding additional manufacturing capacities for these products. So our diversification efforts in generic APIs will be very visible in FY twenty three, as these capacities come commercially utilized. And in the synthesis division, we recorded a growth of almost 20% from q four FY twenty two, q four FY twenty one. We have achieved a sales growth of over 35% when compared to FY twenty to FY twenty one. We are pursuing several active projects in the late stage clinical programs as well as the commercial supply of four products which are ongoing. Construction activity is in progress at the dedicated cramps r and d at to Genome Valley Hyderabad. We have also acquired land for new manufacturing site, a greenfield at Wajah, which will cater to the manufacturing needs of this division for the next two, four to five years. We're also in the process of acquiring an additional land for the division, to manufacture steroids and hormones, high protein molecules. That land will be at Parawada, very close to our existing manufacturing facilities. When it comes to LARSBio, we have closed the transaction to acquire majority stake in the each core in the month of January. And LarusBio is on the course of commissioning a large scale permutation capability, 180,000 liters in the next two two weeks. We're also planning to acquire additional land for further expansion of our LARUS Bio by creating close to a million liters fermentation capacity. With that, I would like to hand it over to Ravi to share the financial highlights. Thank you, doctor Satya, and very warm welcome to everyone. I wish and, thank god that everyone is safe at your home and, your offices. Let me quickly take through some of the highlights. Income from operation for the quarter is at, $14.13 crores and, with a 68% growth. For the full year, we did about $4,008.14 crore growth of 70%. With a product better product mix, gross margin improved significantly. Now at 55% gross margin, Our EBITDA is one of the best that she would do so far is 34% for the quarter four. Our diluted EPS for the quarter, thought annualization is 5.5 rupees, whereas our annual EPS for the full year is 18 rupees 30 paisa. Our ROCE is 40% on annual basis due to operational leverage and the higher asset utilization. On a CapEx spend, we have incurred around 700 crores, which includes the capital working progress. Out of this CapEx, we have invested 50% into the APIs, around 30% into the FBF, and 20% to for a contract manufacturing and bio. So the 20%, probably 10% each for bio and synthesis, and we are pay forward in the coming periods also, we will be spending in the similar ratios. And what we are expecting CapEx in the next two years will be 1,500 to 1,700 pro for the two years. So why we are giving them two year guidance is there will be slow us from one year to the other. We have incorporated and have those subsidiary for our LoRa synthesis. Probably in the next two years' time, we are targeting to have an independent the synthesis company. So where it has its own production, r and d, and business development. Of course, business development is separate separate already. So it will be in very independent business unit. The we want to have an, integrated player as we were, and that is the reason we are investing into the backward integration. We are we are investing into the intermediates and APIs. That's the reason 50% of the CapEx is getting into the API side. So the we acquired a second site for our formulations in Hyderabad already. We have not yet started the, the the activities, but we will start in the coming year. So the based on the performance of the company, we have declared an third interim interim dividend of rupees 80 paisa per share. So with this one and all three interim dividends together, it's coming to 2 rupees. So it's like a 100% dividend of first time your company is being offered. With this, I would request the moderator to open the lines 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 the 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 question queue assembles. The first question is from the line of Dabul Shah from Gerrick Capital. Please go ahead. Hello. Yes. Good morning. Yes. Good morning to you. Yes. So a couple of questions from my side. So firstly, on the CapEx, just want to clarify, you mentioned sorry, 15 to 1,700 crore over FY 2223. Am I correct? You're right. That's the plan as of now to invest an additional 1,500 crores in FY '23 and FY '23 put together. Yeah. 2223 put together. Correct. So is this so from the from the last two concourse, what we have mentioned, is there an increase in the amount? We have increased the CapEx for a based on the visibility what we have in the API division as well as formulation division based on the estimated approvals. And, also, we are investing significantly into custom synthesis based on certain projects we need to execute at a new manufacturing site depending on the volumes. So we have increased CapEx by around 500 crores than what we have indicated earlier. That increase is based on the visibility, what we have right now from the customers and projects what we are handling. Yes. Yes. It was around INR 1,011 INR 1,100 crore before. Yeah. Correct. Yeah. It's partly added from the bio also. Okay. Bio, how much you'll be allocating? Bio, this year around INR 60 crores. Okay. '22 will be 60 crores. Okay. Okay. But majority is coming from APIs, the new Majority I would say if we want to put the order of investment, the majority will go to API and then next to our CAMS division and then formulations. Got it. Got it. Sir, the question on the segmental numbers, now formulation, we did around $4.30 crore. I believe there was some debottlenecking done. So is the impact yet to be seen in the number? Because we are flat quarter on quarter. We debottlenecking operation was completed in the month of March and the qualifications were done. That, came into commercial use only in the current month, April. So that will be used in the past two quarters. And from, quarter three onwards, we do expect a significant increase in our formulation capacity because we will be using the very large scale new building by October. Okay. Okay. And sir, on the under the AP and the others category, you've seen a big traction, like $1.66 crore quarterly run rate now. So any one off in this, or or how should we look at this number? When it comes to the other APIs, it consists of contract manufacturing of generic APIs to other generic customers. So this segment, you have to see as a whole year rather than quarter to quarter. This year, FY '22 and FY '23, most of our CapEx in API division is for non ARV, nononcology. So non ARV APIs will see significant sales increase in an partly in FY '22, but big jump will come in FY '23. Okay. So you mean, like, we did around 500 crores in the other category for the for FY '21. Now this number should significantly increase in '22 and, like, more in '23. Absolutely. Yeah. Okay. Okay. And, sir, there's a recent there's the article in newspaper that China has reduced or stopped the cargo planes to India. Now how is the impact you read for the pharmaceutical company in the current time when you have to meet, you know, demand, a lot of, like, pandemic led led demand also plus exports our exports demand. So is there a big impact on us? Still, we depend a lot on China for KSM, couple of intermediaries, APIs. We do depend on chain for our starting materials, which is generally we get through sea shipments. If it is an intermediate, people do get by air, but most of our shipments come by sea. We haven't seen any impact of the logistics challenges. The one thing is logistics cost gone up in the recent past. Other than that, we haven't seen any disruption, which is going to affect our manufacturing in the near future. Okay, sir. Okay. Okay. Got it, Thank you very much. I'll come back in the queue. Thank you. Thank you. Thank you. Ladies and gentlemen, please limit your questions to two per participant. Should you have a follow-up question, would request you to rejoin the queue. The next question is from the line of Sudarshan Padmanabhan from Sundara Mutual Fund. Please go ahead. Thank you for taking my questions, and congrats on great setup number. Sir, my question is to, you know, understand this, you know, investment that you're doing in non CRE, both, you know, with the FDF and the non FDF coming together. You have given fair amount of, you know, threadbare discussion on the CDMO cramp business. And I understand that, you know, we are looking at almost 50 active projects and four projects almost at commercial level. We also developing fair amount of strength in hypo as well as thyroid chemistry. So from the current level of, say, $506,100 crores, say, in the next two to three years, where do we see this business? And also from a longer term perspective, how do we see this, you know, business, you know, standing out for us as well as the industry? This custom synthesis project, unless the project goes into commercial phase, it is very difficult to project. That is the reason we have to do as many number of projects as possible to seek access here. But we are doing good number of projects in the late stage clinical phase right now for which we are building capacities, especially in Ipotent. We are building a large scale capacity for, NDA batches. And we also in the process of building large capacity for steroids and hormones as well. We we cannot give you guidance on where this division will be in next two years, but we are very, very bullish on this division. That is the reason we have initiated construction of the dedicated cramps r and d with an investment of close to 150 crores, with 2 lakh 2 lakh SFT r and d. And, we have acquired land for this division, and we're in the process of acquiring another piece of land for this division. That shows our confidence and conviction that this division will grow significantly in the near future. Sure. And, sir, with respect to the FDS, given that the debottlenecking is going to come this quarter and also the large capacity is coming in the second half, how do we see the, you know, traction to happen, sir? I mean, last time, we were continuously surprised, you know, with the numbers that came in on the formulation side. So should we assume a quick you know, let's say, the next two years, we should be able to completely utilize the capacity? We as in when the capacity is qualified and ready to go commercial, we have products to maybe made there. So the increased capacity, we have visibility that we will use pretty well significantly. Yeah. Yeah. And this triple combination, where do we see, sir? I mean, this market, you know, from the FDF side? This triple combination, we do expect this year could be a $10,000,000 opportunity for us in formulations, but next year could be weak. Okay. Yeah. Out of 10,000,000, we have order for almost half of that. So we will service before, September, and we do anticipate some additional orders for that. Whereas the big revenue is coming from the the most popular triple combination drug, DNT, which we are servicing, and our supply commitment is very, very good. And, our what if score on time and full score is also close to 100. Sure. One final question from my side is with the 1,700 crores of CapEx that we are seeing, I think in various forums, we have talked about, you know, you know, somewhat aspiration of a billion dollar sales, say, in the next couple of years. I mean, would this CapEx more or less suffice for us to take us to that, you know you know, billion dollar sales in the next couple of years, or should we do additional CapEx for this, sir? Actually, the part of the CapEx which we'll do in FY '23 will not be used in FY twenty three. So I I think to achieve that aspiration number, we don't need more CapEx. We don't need. I want to make it clear. Yeah. Thanks a lot, sir. That's slightly different. Yeah. Thank you. The next question is from the line of Tushar Manudhani from Modi Lao Swal Financial Services. Please go ahead. Yeah. Thanks for the opportunity. So just on the risk score side, now that acquisition is done and we have a clarity in terms of the new facility ramping up. So any color you would like to give, like, how the revenue would shape up from this this facility? The Richkor, the Larsbio new facility will go commercial in the next two weeks, actually, by May 15. And by September, entire facility will go commercial. We are putting four fermenters of 45,000 liters each. Two fermenters will go commercial in the May, and two more fermenters will go commercial in the month August, September. And we have order book for all those capacity, and we are also in discussion with current two partners. And we are in the process of acquiring additional land. And we will create a probably a million liters fermentation capacity in the next growth. Right. So for this existing four DSRs, now that order book is in place, so there are any visibility would also be there, I think. So any number you would want to put to that We're not giving a number, but, see, we work over double the revenue in the division, at least in FY 'twenty two itself. Got it. And just lastly on this, so to create this 1,000,000 capacity, 1,000,000 liter capacity incremental investment that 60 crore would be good enough or would you need that? That 60 crore is for the current one eighty thousand liter ferment fermentation capacity. For one milliliter, we are in the just to a dying mode stage, what could be the size of the fermenters and all. So maybe we will be able to provide you with a number in the next six months. Got it. So so this 1,500, the road CapEx for two years kind of that building the investment for this INR10 million crores? Partly considering, but that is the reason we're giving a range between INR1500 crores to INR700 crores. Understood. And just lastly on formulation, just to clarify here, like, how has been the volume growth compared to the volume growth and the price Tushar, your question was not audible. Can you repeat your question, please? On the formulation side, for the past three quarters, just would like to understand how has been the volume growth and the price growth in the FBF segment? It's volume growth. So our revenues is coming from volume growth. We are we are not in we haven't increased any price for any of our APS or formulations in FY twenty one. It is the only prem only coming from volume growth and product expansion and volume growth. I see. Thanks. Thanks, Anupamish. Thanks. Thank you, Prayan. Thank you. The next question is from the line of Krish Mehta from Inam Holdings. Please go ahead. Yeah. Thank you for taking my question, and congratulations on a stellar number. I have two questions. The first one is what is the percentage of non ARV revenues for Q4 FY 'twenty one and for the entire year end of 'twenty one? Non ARB, revenues are out of 1,413 crores of total company's revenue, 570 came from the ARVs. 40%. About 40%. 60% is non ARV revenue in q four, Chris. Okay. And what is the expectation for non ARV revenues going forward for FY '22? FY '22, we are not expecting major diversification of revenues. The FY twenty two revenue base will be very, very similar to FY twenty one. But we do believe FY twenty three, good diversification will happen, and we are working towards completely diversification of revenues by FY 2025. So that will be visible from FY twenty three onwards. Okay. Thank you so much. Thank you, Chris. Thank you. Thank you. The next question is from the line of Bharat Kumar from Quest for Value. Please go ahead. Congratulations, doctor Shahram. Good set of numbers. My question is, regarding custom synthesis. The current share of custom synthesis is around 10%. In an interview with, media a couple of months back, you said that, four to five years down the line, the share of custom synthesis, which is very, very high margin business, would be around 20%. So it's almost double the share. So and it means that good working custom synthesis would outpace the growth in API and formulations. And already, API and formulations for LARS is growing at very, very high rate. So what I'm not clear is, like, what makes you to be so bullish in custom field segment to grow faster than API and formulations? I understand that you already answered this question saying like you have some base stage molecules and all, but I mean, how many molecules and all? Can you give some visibility on that? We can't give you these details of what molecules, what phase, and all. But we are very hopeful FY '23 onwards, our custom synthesis growth will definitely outpace rest of the divisions. Mhmm. So this will be from the Wiseric manufacturing plant, is it? Yes. That is the reason we're investing in the capacities to in this division. Once the capacity is come commercial, I'm sure the growth in this division, will be very good. Yeah. Got it. So once WiZac plant is commercial, then you have more growth in this custom services. Right? Thanks. That that's the, you're right. Yeah. And, also, you have a new r and d for discussions in the sales in Hyderabad. So that is mainly for the CRO services? We we are not doing any FP service. We this is Okay. To do CDMO. We we don't do any FP business. This is Okay. Yeah. Dedicated site for, cramps business. Okay. Okay. Got it. And my second question is regarding LARS Bio. Where do you see LARS Bio in three to four years from now? Like how much LARS Bio would be contributing in terms of percentage to the top line three to four years from now? It's a difficult question. Maybe right now, the last bio, the FY '21 is about 50 crore revenue. That is about one person one time to 2% of revenue. Will it be 10% of revenue in three years? I doubt. But, well, crores become 200 crores. 300 crores probably has. But but that division's growth, will we need to attract to big customers, and we do expect to we need another four, five years to make that division also very sizable. See, if you look at our cans division, was size moderate right now, but it'll be more sizable in the next couple of years. But it took seven, eight years for us to not share the division. So we will start putting our resources, our thoughts, our strategy, execution into the division. We'll become a sizable in the next five to six years. Okay. Got it. Yeah. Thank you very much, sir. That's it. Yeah. Thank you. Thank you, Bharat. Thank you. Ladies and gentlemen, please limit your questions to two per participant. Should you have a follow-up question, would request you to rejoin the queue. The next question is from the line of from Choice Broking. Please go ahead. Hello. Thank you for taking my question, and congratulations on a very good set of numbers. I just wanted to know, like, we have achieved the highest EBITDA margins ever. So just wanted to know, like, can we sustain these kind of margins? Or should we assume that we have peaked out going forward, the margins would be continued to come in from the product mix or from the cost rationalization? How should we assume if you can throw some color on that? As we are mentioning in the previous calls also, we are confident to maintain 30% EBITDA numbers for the FY twenty two. And by from FY twenty three onwards, we we do expect to maintain the same profit ratios. Okay. And, on the pricing side, we have not taken any price hike in FY twenty one. So do we do we want to take any price hike in f y twenty two? See, our growth is not driven by price hikes. And don't know why we didn't think growing business by hiking prices. We want to grow business, make more money by increasing our product basket, increasing our market share. Our growth will be primarily driven by market share gain gain and portfolio enhancement, not by price hikes. We haven't done that in FY 'twenty one. I do believe we will never do that in FY 'twenty two also. Okay. That's it from my side. Thank you. Thank you, Ms. Parekh. Thank you. The next question is from the line of Ranveer Singh from Sunidhi Securities. Please go ahead. Yeah. Thanks for taking my question. My question is around ARB API. So this time, the growth has been led by volume. What has been the growth, in volume and price, if you could give some ballpark number? This year, the significant revenue increase in the AI APIs came only because of volume gain. Earlier, we used to supply one or two APIs of the fixed dose combination trigger combination. In the most recent year, for the triple recommendation, we got approvals for all the three APIs in the triple recommendation. That's the reason our volume in the area the APIs went up significantly, which led to, growth. And we do anticipate continue to have the same momentum in FY twenty two also. So we don't see that there is one off in our AI APIs. Yeah, sir. So just wanted to understand that macro scene. In ARB API, why this volume growth has suddenly been so high in this year? Is there any supplier from China or any anybody has stopped supplying in API segment? Because I think the ARV market itself has not grown, especially during this COVID related, you know, impact. So in this scenario, what actually have led this volume growth and whether this will sustain? Look. One reason for volume growth, earlier, the most preferred treatment was the FRN based, where we don't have many approvals for lamivudine or tenofovir from many customers. When the therapy moved from f hour and based to dolutegravir based, we got approvals for lamivudine and tenofovir with most of the customers. So people started buying three APIs, Dolby, and Tennofleet from us, where, earlier, people used to buy majority f orange and some Tennofleet. So that's the primary reason for our volume growth last year. Okay. So it's a preference of product for consumers. That is Yes. Yes. Okay. And you said that in '23, diversification in API will see. So despite this diversification, our EBITDA margin would be the same or we see some negative or positive impact due to this diversification? We don't see any dilution of margins because of diversification. So diversification means see, if we have to look at to there is a limited growth in the RV APIs right now. So we we are already having a lion's share of market. So it is not easy to grow beyond. So we are adding the, diabetic segment, cardiovas segment, which will be commercialized beginning last quarter, FY twenty two onwards. So that's the reason we're investing more into non ARV API infrastructure. Even our formulas now, so we have most of the brownfield expansion, what we are doing right now, will be used for money early. Okay. Last And one, can you give just broad breakup of CapEx INR fifteen hundred crores to INR 1,700 crores you mentioned? So how much of, would be on FD and API and synthesis? It is, 50% is going into API intermediates, and then maybe 25% in FDF and 25% in custom synthesis. That's the broad breakup. Okay. Okay. That's it from my side. Thank you. Thank you. Thank you, Venkatesh. Thank you. The next question is from the line of Nimish Mehta from Research Delta Advisors. Please go ahead. Yes. Thanks for the opportunity, and congrats on a great set of numbers. Just to continue from the previous project, you mentioned that the growth in formulation has been driven by the shift in the product side from a product line based on the product line on the So how do you think like, what is the scope of further growth in terms of the shift happening? And, what is the competition outlook there? I mean, are we likely to continue higher market share in the expanded market? That would be great for me to understand. Nimesh, we will see some growth both in ARV, APIs as well as formulations in FY twenty twenty two. But FY twenty twenty three onwards, the growth will be driven by non ARVs both in APS as well as in formulations. And from FY twenty to FY twenty one, the majority growth came from therapy shift from based to based. Once that is done and we do have the product basket. Even there is a shift from one therapy to another therapy in ARVs, we are fully prepared to take that opportunity, to our favor. Correct. No. So what I'm trying to understand is the shift, towards, delta gravity based therapy has it kind of peaked in the sense, like, there is no more increase in BTG based therapy over a part of this as we reach that point, or you still see that that is yet from far away and, you know, that is further spoken through in that category, the DTG category. Not just for lot of, but in general, that is the DTG category likely to grow? Based on the reports, the DTG penetration will contribute to increase in this year as well as next year. Okay. So that is okay. That is good. Okay. The other thing I just wanted to know, in the API segment, I mean, we are a leader of, like, an expert in anti antiviral medication drug. So are we not seeing any opportunity, you know, related to COVID drugs where, you know, the the the API was right from them that we'll do. Many of these protein inhibitors are now being touted as the potential drug for COVID like that, you know, and COVID all of those things. So do we not, you know, opportunity there at least maybe older drugs or new drugs that's COVID related. Finally, if you can also let us know the opportunity related to regulated manufacturing of API. Thank you very much. So at the beginning of the COVID crisis, we produced hydroxychloroquine sulfate, but, it was never became popular. So we never had any significant sales coming out of that. Other than that, we haven't made any COVID related APIs or formulations, and, we are not planning to do that also. Sir, any particular reason because that looks like to be one of the fastest or or you can correct me if my understanding is wrong. And I see a lot of other experts in antiviral medications or drugs. So, like, you know, why not? So we are operating our capacities fully. And for us to divert these capacities for any opportunity, we have to meet our commitments to existing suppliers on the ARBIS. You know, ARBIS is equally important to for twenty million patients. So our commitment to supply ARBIS on time, we honored in the COVID crisis. So we looked at, but we were, I would say we were we didn't get an opportunity to serve. I'll I'll put it that way. Yeah. Okay. And finally, word on the unlimited API opportunity now that there's anything likely to make The US market next year. So Okay. Your thoughts on that for us for a lot of. Nimeshu, we didn't get the name of the API you're talking about. I'm not on. Can you Can you hear me? Okay. Thank you. Thank you. Thank you. The next question is from the line of T. Shrihari from PCO Securities. Please go ahead. Mister, your line is unmuted. Please go ahead. There's no response from the line of the current participant. Ladies and gentlemen, please limit your questions to two per participant. Should you have a follow-up question, I would request you to rejoin the queue. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi. Thanks taking my question. Sacha, on the formulation business, in for FY twenty one, what will be the typical composition of this business? How much would be LMIC business of of this segment? Within the branch, it is three fourth in LMSE and one fourth in Europe and North America. We do anticipate similar actually, seventy, thirty in f A 22. And f y twenty three onwards, we do expect it will go to two third, one third. As we mentioned, the formulation diversification benefits will start showing in FY '23 onwards. So FY '23, we will expect to seventy, thirty. From '75, '25, it will be seventy, thirty. And FY 'twenty three, that will be even bigger. So we will have maybe sixty, forty in FY 'twenty three. But on the LMIT business offer, do we see opportunities for further growth from where we are? And how much further can we see grow on from from here? So when they're saying the percentage is coming down, that doesn't mean the number is going down, Nathan. So we are increasing the our revenue significantly, but it isn't coming down. We do anticipate growth in LMIC market when compared to FY twenty one to twenty two. We see good growth in FY '22. We do some growth in FY '23 also, but the other non ARV, non LMS business will grow significantly in FY '23 based on the product launch we our file, launch we are going to file. And and, doctor, on that point, on the non LMICD business, what proportion of this so this is what largely gonna be developed market business, US and Canada, Europe and European business that will drive it, or what will drive the non LMIC business for us? If I'm going through on that. Non LMIC business is predominantly not predominantly, only from Europe and North America. Nothing else for us. So that is based on the visibility of the a and b. These are all the product that we do in our own under our own, a and b or our own filing. Yeah. The fully integrated offerings, we can And then when do we capture the contract manufacturing for formulations, or is there a business like that? Contract see, there are three types of contract manufacturing we're doing. Contract management, generic APIs will come in generic APIs itself. We do contract manufacturing of formulations, generic formulations that comes in formulations division. The contract manufacturing clinical programs, it comes in synthesis division. And how big is this contract manufacturing for formulations in the formulation business? Most of our European sale is as of now, contract manufacturing. Okay. Got it. Thank you, sir. Thank you. You. The next question is from the line of Tushar Baurav from MK Ventures. Please go ahead. Morning. Thank you for the opportunity, and congratulations to management for a very good set of numbers. Sir, I wanted to understand, you know, when we discuss custom synthesis, are we including the, you know, the specific opportunities in cosmaceuticals and nutraceuticals within that? If you can just help understand if there are any, you know, significant triggers in this part of the business, That's one. And second, I wanted to understand, are there any vaccine related opportunities, like, as an adjuvant or, you know, any such opportunity for Lourdes going forward that we are exploring? I'll answer the first question. Whatever the nutraceuticals dietary supplement we sell to multiple customers is not part of the synthesis business. Any product we make exclusive to one customer will be part of the synthesis business. Although we are putting those one customer exclusive products will be in synthesis business. When we sell to multiple customers, that is not part of that. The second question, are we making anything for vaccine business? Our bio division makes, cell culture ingredients which are used in the vaccine manufacturing. We are not making advance right now. Okay. So but is there a COVID related vaccine play also then, for our, bio division? If not now in the future, are we exploring? I don't think, we will be catching the COVID vaccine wave by supplying ingredients from bio division. I I I don't think that will be an opportunity for us. Sure. Sir, second, you mentioned the sterile facility. You know, we are setting up a plan specifically for sterile and hormones. In in previous calls, we had mentioned the possibility of an m and a in in this space. So does this investment preclude that in that m and a activity, or is that something we are also looking at entirely? I didn't remember we mentioned m and a activity in steroids and hormones. Our reinvestments into steroids and hormones is based on the, our discussions with the potential customer, and the volumes what we're talking. So we need a specific exclusive capacity for steroids and hormones. So we're investing based on our discussions what we are doing with the potential customer. Okay. Sure, sir. And, just one last one, the overall capacity constraint that we've been facing and, you know, the continuous upward revision in CapEx. Have we also looked at or or, you know, why haven't we looked at the acquiring plans, USFDA, you know, designated plans? I'm sure that there would be a few available. Have you explored that route to augment capacity faster? We looked at earlier, but we believe building our own capacity, is much more cost effective. See, no capacity will come at one x of sales. So whereas we our asset turnover ratio is 1.5 right now. So we believe putting CapEx, greenfield or brownfield to enhance capacity is much more cost effective than acquisition. Sure. Good. And a clarification on one of the points you've mentioned in the call. So this 1,500 to 1,700 CapEx over FY 2223 is not likely to be contributing or at least the FY twenty three portion is not going to contribute to your 1,000,000,000 revenue target. That that's the point you mentioned. Right? Part of it will not be required to go to the target. Yep. What we do in f y twenty three, will not be fully utilized in f y twenty three itself. Okay. Fair enough, sir. Thank you very much. I'll join back in the evening. Thank you, sir. Yeah. Thank you. The next question is from the line of Ankush Agarwal, an individual investor. Please go ahead. Yeah. Hi. Thank you for taking my question, sir. Just one question. We have been saying that we are we as a business will not grow much for us given that we're already a big player in the market. So for LORDIS to grow at a high rate, our other business of non ARV and other businesses are very faster pace because non ARV business is still relatively small for us, like around 25%, 30%. So what are the initiatives and objectives that you're targeting over next couple of years for this business to grow that fast, if you can highlight those? The cost? There's two things. Non ARV, API and formulation growth, we already developed the products. We have filed the DMX. We have filed dossiers for marketing authorizations. That is already, I would say, midway in that, diversification. When it comes to the custom synthesis investments, what we're doing Mhmm. Half of it to based on some kind of a commitments, what we are having from our customers with respect to capacity. And the rest is to increase the product portfolio in customs and disease. See, not every product will go to commercial when we do phase one. So we wanted to increase our phase one pipeline. Right now, we are constrained to take more phase one projects. That is the reason we are creating a dedicated capacity. Right now, when there is a project allocation of resources is becoming a challenge both in r and d or in manufacturing. We wanted to take away that constraint and bring some redundancy. We're creating two lakh s f d r and d for cramps, and we're creating two new sites for cramps division. So by I think twenty three cramps division will have three manufacturing sites, hopefully four, and an r and d center. So that will be a pay fairly big organization itself. Okay. Got it. And secondly, on the FDM business, the entire growth we are targeting for next couple of years is on the contract manufacturing, of course, with the European customers, wherein they're adding more products. Right? No. Majority growth will come from, noncontract manufacturing. Okay. So this is apart from the portion that we will have based on the European customer with those added capacity that we're adding? We'll grow contract manufacturing, but the noncontract manufacturing revenues in formulations also will be significant. Oh, okay. Got it. Thank you. That would be all so much. Thank you. Thank you. The next question is from the line of Unkar Gugardhari from Shri Consultancy. Please go ahead. Yeah. Based on the CapEx number you talked about for the next two years, what kind of a sector you are expecting on that? You can give broad number, Pankaj. It's about 1.5. What we have achieved right now, you can expect that. Okay. And now what would be the maximum revenue potential in that? Expecting 100% capacity utilization? Do a math, say, 1,500 into 1.4, 1.5, that could be the opportunity. But, see, we continue to invest. See, we we if we stop investing, how we'll grow? So, see, for these investments, we are not, raising debt. Probably everything will be done through internal accruals. And we also need to be careful in whenever ROCE and return equity numbers are so high, and our cost of debt is so low. So the question and our challenge for us is to go for CapEx, which is giving very high good returns versus returning all debt. See, our debt by EBITDA is less than 1.9, a little bit lower point nine. So we are doing that constant to debate internally, whether to, retire debt or to put to more CapEx. So, see, we are very cautious in putting CapEx. See, why we will do recklessly CapEx? We do we're doing CapEx because we have seen visibility, and then customers are asking for it. We know what to make. We know whom to sell. And because of those comforts, we are investing in CapEx. Okay. So the second question is, you have been selling stake in the open market to reduce the edge which you have done. So what would be the plan on that front? Well well, there is no pledge of shares from my side. Everything was removed. Okay. Okay. Okay. Thank you. Thank you. Thank you. The next question is from the line of Gagan Thareja from Kotak. Please go ahead. Hello? Sir, your voice is not audible, sir. Am I audible now? Yes, sir. Go ahead. Yes, sir. Ahead. Yeah. So I just wanted to clarify. There there will not be any additional debt for the CapEx that be undertaking next year? Gavin, it is not very audible. There may not be any significant debt increase. Yep. And and and also, will be probably a fixed cost increase as the CapEx comes in. If you could give some idea of the OpEx, the expectation, which will come in because of the additional capacity? Can you repeat your question? Your question is not very clear. Your voice is not very clear. So my my question is that with with the additional CapEx, there will be additional, you know, OpEx and depreciation also coming in. So what could be the magnitude of OpEx and depreciation related to the additional capacities? The most of it is a brownfield. It is in a proportionate to the the CapEx and the operations utilization. I'll answer, Gagan, to your question. In FY 1819, we have created so many greenfield facilities, had an impact on our OpEx and depreciation in the our, PAT numbers. But this time, most of the expansion is happening in the brownfield, and, we don't see the investment impacting our numbers from now onwards. Okay. Okay. And, for your, LNIC, the formulations fees, I think this year, all the sales would have been from the TLD combination. You also have the approval for TLD 400 where, you know, you'd probably be from a competitive standpoint, it's probably a better market, although probably at the lower side. If you could give, you know, some idea of what could be the size for the TLE 400 market, going into next year? We can give you the TLE e 400 usage in general. We're not gonna give you what market share we have. It is between $1.20 to $150,000,000, t l e 400 opportunity. Okay. Yeah. Okay. And TLE 600? TLE 600, the the opportunity is very small. Very small. Okay. Yeah. Okay. But TLE 400, the number of approved companies would be only two to three at most? Yeah. Three as of now. Okay. And you also indicated you have the approval for three years based formulation, if I understood it correctly, or is it for the API you're talking about? We got approval for dual tech, we're emtricitabine, CAF, NDA, and we also got orders. We also got orders for these formulations and Google service that in the next six months. And we do expect more orders for that. Okay. On on task, just wanted your, you know, your expert opinion. What I am able to understand is that because of that, the the weight gain, especially in the female cohort of the African population is very high, not the same k d. And and, you know, mean, that that's a concern for comorbidities. Do you confirm that therefore do you see that being a limited sort of market right now or do you see this as a product that will substitute TDS in a very big way? See, the difference between switch from f r one g two, Dolby is a class. So f r one g is a NNRTI and Dolby is integrated in a meter. When it comes to 10 of the year and the tab, it's the same class. So I we don't see the disruption like FRWIR is the TENOFUIR. FRWIR is the dual degree similar to TDF and TAF. Yeah. Thank you. That's all from my side. Thank you. The next question is from the line of Taran from Old Bridge Capital. Please go ahead. Hello, sir. Good afternoon. So just one was reconciling the some numbers. So, you know, Lourdes, today would have a gross log of about 2,600 crores, and there's about a CVIP of 400 crores, so that's 3,000 crores. And about 1,500 crores of CapEx going in the next two years, part of which will not help in the revenue in FY '23. So if I add all of this up, about 4,000 crores of brush log, so 1.5 x would translate about 6,000, 6,200 crores of revenue. So whereas, you know, you've been, you know, indicating that maybe this asset base could help us reach about a billion dollars of revenue. So where is the disconnect, sir? You're talking about NetBlock, probably. Our our GrassBlock could be bigger than 4,000 crores. If you take 1,500, it's like a big it'd be maybe close to 5,004 GrassBlock. Okay. Yeah. So that's the math. 5,000 crore of glass block and, 1.5 extra. Yeah. Correct? Yeah. Yeah. Okay. Okay. Thank you. Thank you. The next the last question is from the line of Prashant Rami from Exclusive Advisors. Please go ahead. Thank you for the opportunity and congratulations for that set of numbers. My question is about what we are expanding our businesses in so many new areas, and there are a lot of challenges which will be going ahead. So how it works out in terms of management bandwidth and attracting talent as part of the soft plan. So I I think what is so I would like to know the management piece about it. And do you think this is soft as one off to dilution, or it is going to be a feature for a terrific talent? Thank you. Thanks for asking. Very interesting question, Prashant. We continuously allocate stock options to attract, retain talent, and we are setting a benchmark in the pharma industry with the number of stock options. And the value of the stock options, what we have given to our colleagues. Right now, we are not seeing any challenge in attracting talent in any of these divisions. And we constantly in look out for adding mid to senior management talent in other divisions, and we continue to add that. See, one good thing is we are not in the process of adding hundreds of handouts. We are not having the strategy of filing hundreds of DMFs. So our approach is develop few products, maximize those products into many geographies, and get leadership position and gain market share. So with that, our commitment to scale, commitment to quality is very well appreciated across the, in industry, and that is helping us to, retain talent very well. And is that revenue per employee, is that the metrics which you track internally? Pardon me, Prashant? Yes. Yes. So as revenues per employee, is that the metrics which you track internally? And if you can also answer about the management bandwidth going ahead, is it sufficient or you expect some more pressure changes? We we do monitor revenue per employee, EBITDA per employee since inception. And, currently, our revenue per employee is little over a core per employee. And when it comes to the bank, but if you look at our Richcore acquisition, we didn't acquire a company. We acquired the talent. In fact, the current leadership team and the founders will continue to run. So there, we don't see any bandwidth management bandwidth challenge. When it comes to the other business, we are running the same business, adding more blocks, more products. So we are adding talent, and, currently, we don't see any challenge in, senior management bandwidth, right now. Yeah. Thank you and all the best. Thank you, Prashanth. Thank you. I would now like to hand the conference over to the management for closing comments. Thank you, Nikhil, for organizing this call, and thank you for all of you for participating and giving us your prospect to how we should perform and how we should invest. And thank you, and keep safe during this pandemic. Thank you. Thank you. Thank you. On behalf of Ambit Capital Private Limited, this concludes this conference. Thank you for joining us, and you may now disconnect your lines.