Thank you very much. We will now begin the question -and-answer session. We have a first question from the line of Tushar Manudhane from Motilal Oswal Financial Services.

Sir, with almost 90% remediation of incremented and new approvals or launches expected, could you just guide us in terms of revenue in FY '25 in terms of revenue growth and EBITDA margin?

Tushar the remediation is going on, like I said in my opening remarks. We have voluntarily taken a lot for steps for remediation. We have consultants looking at last 2 years reports of investigation and to just to give confidence to ourselves and the FDA that everything has been good in the organization. And given ongoing investigations also, they will be taken care of. So, so work is happening. And now it all depends. If everything is status quo, and it is OAI, we will not get approval since that is clear, new approval. So the growth has to come from existing products, increasing market in Europe and other places and mainly from the US operations and production from GLS. So we cannot put a number today. But definitely, when you see CAGR, we will continue to maintain it even though there are blips. So CAGR will definitely be around 20% plus. So that's all I can guide on the growth today.

Understood. And for the quarter, there has been a sharp uptick for Europe sales. Anything you would you want to comment on that?

Did you say uptick, did you say that?

Quarter-on-quarter, there has been a jump. But because that reason is last quarter was actually dip. So if you see Europe in a continuing basis, Europe not doing that great, it is also a factor of capacity. Our capacity is not in finite. Until we have the new GLS plant running ,this will continue. And we continue to allocate most of our capacity in US. So if you see the US growth rate and the growth in Europe, you can see the connection. Overall, great growth in Europe. That's all I can tell you.

And lastly on like while this has slightly impacted the EBITDA margin for the quarter, but if you would like to call out what kind of cost has gone in terms of remediation measures, which is sort of not recurring in nature?

Cost has not only gone up on remediation, Tushar. Due to disruption of supply, there was a lot of material that has to be airlifted that has drastically added to the cost. And of course, remediation cost has been there. And a few other expenses, which are not in regular line have happened in this quarter. And I won't say this is one -off for this quarter. Some of these things will happen in next quarter too, though they will be at a much reduced level.

The next question is from the line of Rashmi Shetty from Dolat Capital.

So just a follow -up from the earlier participant. You mentioned in your presentation that your expenses during the quarter has gone up due to the professional fees related to the remediation activity and some SPS expenses also. So if you can quantify that number, what was the cost related to the failure to supply and that penalty is going to recur in next 2, 3 quarters? Or you feel this is one-off in third quarter only? And remediation cost, how much is something which is recurring in nature in the next subsequent quarters?

Sure, Rashmi. So, we have incurred consultancy fees , failure to supply and also there was increase in air freights. Some we could recover from customers, some we could not. All put together, I would say it would be close to $3 million. And some of this may not repeat fully in quarter 4. There will be a reduction in this number in quarter 4.

Okay. So out of $3 million, which you are saying that -- which has been expended in this quarter, how much is something which would be rec urred? I mean is it like 25%, 50% of this amount would recur in the quarter 4? To model in our numbers, we would want to know that?

So it would be a little above 50%, I would say. It's a judgment as of now.

Okay. Understood. That's really helpful. And on the U.S. FDA inspection part, when you're communicating with the agency, anything which you can g auge that the inspection can happen soon? Or you feel that currently, only the timely updates will happen? Anything which you can gauge from them?

We are updating them Rashmi, regularly on the work that is happening here, and which is very positive. But we are planning to request them for the re-inspection. We don't know when they'll give us an appointment and when they will come back. It all depends. As of today, we cannot put any dates on that.

Okay. So the 4 to 5 product launches, which were expected in FY '25, second half, will that happen from other facility or we believe that probably now that will get delayed to next year or till the time it is settled?

So this could get delayed to last quarter. But definitely, these products shifting to other sites. If we start filing those from the other site, it could take in to first quarter of next fiscal, from an, I am talking of '27.

Okay. So net-net, to say that at least 2 quarters' time...

There would be some loss in sales from the new launches.

No, Rashmi, to complete that answer, we have still about 4 to 5 launches from the GPI sites that are planned for Q4, which will go on as planned. And from that, about two products are new approvals, one of which we've already received and three products are from old products that we've already received approvals for, but we'll be launching officially in Q4.

Understood. So those 4 to 5 products will go on?

Yes.

Okay. And related to your API business, what is the update over there? We were seeing some sort of price erosion. Even the demand scenario was weak because of the inventory level at the customer? But we expected that probably prices will recover in second half and also, there would be some inventory, which would get over. So, API growth could improve. So, what is the update on that for this end of year? Also, if you can update related to FY '26?

Priyanka, do you want to take that? Or Shall I?

Sure. I'll take one half of the question for sure. So the API prices, I'm assuming you're referring to paracetamol prices. and in general, they have certainly gone up a little bit, but -- and have stabilized right now at a new base. And going forward, I do expect it to go up from here. And regarding the rest of the API prices, I wouldn't necessarily say there's too much of a change either way in any of the prices overall. In terms of inventory, so again, all other inventory situation is fine. But with paracetamol, there still is a situation of high stockage because customers did take some additional product because of the Red Sea issues on top of the past inventory that they were sitting on. So again, right now, we see it -- we see projections for FY '26 to be pretty good. But Q4 FY '25 will still be pretty flat. But FY '26 looks good for now.

Okay. Got it. Thank you. That's it for my side.

Some of my questions have been answered. I think the first participant asked about the growth. I think sir said, we are targeting a CAGR of 20% plus. Is that fair like for FY '26? Have I heard that correctly, sir?

No, Mukesh you want to answer that question?

Yes. So in the long run is what you were trying to say, not quarter -on-quarter. In the long run, we are expecting to achieve 20% plus CAGR in the long run.

Okay. Fair enough. And so in the short term, like how do we see FY '26 planning out for in terms of like revenue? Because we can't launch fully that all the products that we want. So how much will be able to maintain the current pace or quarterly run rate or how would it go, Sir?

'26 will definitely be a lot better than '25, Darsh il, which will be aided by GLS where we are likely to have a European inspection early next -- very early next fiscal. So that will help us to start the European business and the business will go on. We expect very positive growth in next year. And maybe we are looking at something like a 20% growth next year.

Okay. Fair. That's helps a lot, sir. And sir, margins like we had some nonrecurring expenses, as you've said. So 20%, 22% margin range, that's also a fair assumption, sir?

Yes, definitely, very much. If you see our gross margins are only improving, but some of these one-off expenses have been eating into that.

Yes, correct, sir. And sir, I just wanted to know like any potential implications of the Trump presidency that we can expect, like even like we have some facilities in US also. So what do you see as the political risk? Is there like something that can maybe hurt us or can it be a gain for us? Anything on that sort of, sir?

I mean this administration could be a little unpredictable, we cannot say. But overall, this administration is industry friendly. So I personally think there could be a lot of positivity that can happen to the pharma industry from this administration. And we having a facility in US also definitely will help.

Okay. Fair enough, sir. And sir, just last on my end sir. So FDA, we are continuously updating them. So any rough timeline? Nothing that we can hold on to, but in your experience, how much like timeline, like it can be maybe a few months or maybe a quarter or two? what do you feel, sir, can -- when will they come back for an inspection? And how would it go on? So just any timeline that you could like to give, sir? Nothing specific, some range will also do?

It's very difficult to fix a timeline, but we're going to request them for a meeting any time from next month onward. And let's see what happens. Maybe within a quarter, I am sure they would definitely visit us.

The next question is from the line of Abhishek Pipariya from ICICI Bank.

See, some of those capex, there is some carry forward also of the current year plan ned. So, we are estimating as of now, we have not yet done the budgeting exercise, but anywhere between INR500-odd crores.

Okay. And sir, in recent past, there has been USFDA observations. So , what would have been the contribution from the Gagillapur plant, which has been affected? And what is the decline you are expecting in the current year from this?

We expect that revenues wil l not decline any more. This quarter, they could have declined because we took a pause in production. We expect that we will continue with Q1 numbers from this site and possibly improve a little bit, because some of the new launches are taking off. Their sales are improving.

And sir, what is the kind of overall contribution in the top line from the Gagillapur plant in a financial year?

Sorry, come again?

Top line from the Gagillapur plant percentage.

It is in the range of 60 -plus percentage, 60 percentage to 65 percentage on overall total consol sales.

We have our next question from the line of Sahil Vora from M&S Assets.

Yes. My first question is, is Granules planning to participate in the GL -1 market, given it's growing significance in the pharmaceutical landscape?

Yes, Mr. Vora. This is a market which no company should neglect such a huge opportunity, and everybody should aim for a piece of that big pie. We are definitely looking at it and possibly you will hear from us in future quarters on what we are doing.

Okay. Thank you for the update. My next question is, with the finished dosages contributing 76% of revenues, what is the outlook for this segment? And are there plans to diversify revenue streams further?

FDs has always been the ultimate target. And the reason we make -- even though we were selling a lot of APIs and PFIs, our target was to convert the PFI business into FDs. So that we have been achieving, and focus will be totally on FDs. While we need the API s and PFIs to feed into our FDs, so all these will be for in -house consumptions. So , we do make a lot of APIs today, but they're all going into internal consumption. And regarding diversification, if I got your question right, we are looking at various new APIs, again, based on the FDs, which we have filed. And also possibly you'll be hearing from us about our foray into a few different dosage forms in the coming quarters.

Got two quick questions. The first one is, even in Q2 in your Investor Presentation, I couldn't see a balance sheet there. If you can give a balance sheet that will be great. You don't need to give it on the third quarter, etcetera, but it will be greatly helpful. That's the first one. Second is, every year, you just mentioned that you probably have around closer to INR500 crores capex in FY'26. Did I hear right?

Yes.

Yes. If that's the case -- you have been doing your investment, the capex also has been increasing, rather on the high side at every point of time. But my question really is when do you start to see your cash flows going to keep funding your capex and your debt continues to reduce?

Yes. I would like to clarify. Our Investor Presentation has all the balance sheet key parameters in Slide #8, where we cover the fixed asset turn , net debt, CCC days, cash flow, capex and ROCE. So probably you can refer that. And also detailed balance sheet is anyway uploaded. With respect to the INR500 capex, as I have clarified, as of now, I'm just giving an estimate because the budgetary exercise is still under process. And the third question is with respect to cash flow generation. If you see with the significant increase in capex, our net debt has still not gone up. And we are building this capex. One important capex, which we are building, is on the gran uels life science, which is an additional INR10 billion capacity, which has already started commercialization to the extent of INR2.5 billion. The run rate of INR2.5 billion, we will see it soon. And also the next INR7.5 billion also will happen. So, it's a matter of 2 -3 years. So , the capex, whatever we have spent is going to give returns in the next 2, 3 years. So , the cash flow as such is managed well. We are not taking additional borrowings.

No, I appreciate that. My only point was, yes, you are generating cash, you are generating. But when are we going to see rundown in your net debt? That was the only question. I take your point on Slide 8, I can see that, but it would have been much easier if the entire balance sheet also is given. So, you've got a P&L, you've got a lot of those things that are given. So that was a suggestion, that's it.

We have our next question from the line of Madhav from Fidelity.

I just had one question basically for our Gagillapur site, it has an OAI classification. I just wanted to check my very basic understanding that generally, OAI is followed by either a warning letter or an import alert. So, do we expect that final classification to come in very soon? Or is it already -- I don't know how does it usually work? Am I missing something that -- or is it like stays at OAI without either of these coming out, or how does that work?

The worst case in an OAI, of course, is import alert, but intermittent is the warning letter. We are pretty pretty confident based on our conversations with our consultants that import alert is a very, very remote possibility. And warning letter is a possibility, though we feel and they feel confident that it may not happen. And the best case scenario is to keep it as OAI come back and inspect us.

And that I answered a little while ago, it could happen in a quarter or so possibly.

Okay. So basically, sir, just again, a basic question, so it can just stay at an OAI without going to either warning letter or import alerts? Or it still gets resolved there itself...

Yes, they may want to come back for an inspection and there's an intermittent letter they give. I don't know the exact name of the letter, that letter will say we will come and inspect you. So that could happen.

Okay. And given that our inspection was in September -- August or September. So generally, the re-inspection, what's the earliest from sort of -- is it like 1 year that they come back or it could be even faster than that? Any sense there would be...

So, it depends, like if our responses are good and the APA is convinced that we are doing a good job, they'll definitely come back earlier.

We have our next question from line of Rashmi Shetty from Dolat Capital.

Just one question. If you can call out your total gross borrowings, not net. Total gross borrowings and your average cost of debt?

See, the gross debt is INR1,025 crores. And -- the cost of borrowing has a mix of PCFC , term loan and also different banks. So if I have to say, largely we borrow in PCFC and USD borrowing. So the sp read ranges from 0.2 to 0.7 range for working capital. And for long -term loan, it is also 100 to 150 basis point kind of a range. And then obviously, there will be an IFRS accounting of INR equivalent cost, which goes into the interest cost. It's foreign currency borrowing.

We have our next question from the line of Mamta Agarwal from ABN Investments.

Sir my question is, can you share retails about the greenfield formulation expansion at the GLS? And elaborate more on contribution to future revenues?

This capacity, Mamta, is going to be about 10 billion capacity. 2.5 billion is already online in one phase. And since we do not have an FDA inspection or a European inspection so far, we are producing US monograph products for the U.S., and we're shipping them out today. And we are expecting a European inspection late March or early April. And after that inspection, within a few months, we expect to start shipping for Europe -- and later on, Europe doesn't need any filings. It can be a separate process. And US inspection, we have already done some filings, and we expect it could be 6 months, 9 months, whatever. We're trying to push them. We'll see what happens. But meanwhile, European sales and US monograph sales will continue to happen from that side.

Okay. Fair enough. Sir, follow up question is, what is the company's focus on launching new products or entering untapped therapeutic areas in the near term?

Untapped from Granules side, different dosage forms, we are working on. And therapeutic areas, as you know, everybody now is into diabetes, weight loss segments, the GLP -1s. So, we will definitely be looking at that. And like I said, you will hear from us in the next few quarters.

Yes of course in the therapeutic segment, we are focusing on diabetes like the CNA segments, some of the segments we are focusing on. But beyond that, we are looking at different things.

We have our next question from the line of Harith Ahmed from Avendus Spark.

What was the R&D spend for the quarter? I couldn't find it in the presentation.

Yes. So, I had called it out, it was INR568 million for the current quarter.

Okay. And you mentioned there was an increase in receivables during the quarter. So, we would share the current debtor days and this increase was related to which market? If you can throw some color on that.

The DSO days that also I had read in my CFO speech. It is in the same level. Currently, it is 76 days and last quarter, it was 73 days. So, it is largely because of the increase in sales in the Q3, sequentially, Q2 to Q3.

As there are no further questions, I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Once again, thank you very much, ladies and gentlemen, for attending the call and your continued interest in Granules India. So, I just wish you a great weekend and a Happy Republic Day. Thank you very much.

Thank you. On behalf of Orient Capital, that concludes this call. Thank you for joining us, and you may now disconnect lines.