Thank you so much sir. Our first question comes from the line of Harith Ahamed from Avendus Spark. Please go ahead.

Sir, would you be able to comment on the pricing environment for paracetamol and metformin currently? Has there been any increase following the situation in West Asia? And also, looking at a 33% growth for the API segment this quarter, so wondering if there were any benefits from a better pricing environment?

Interesting question, Harith. Definitely, there were no price increases we wish we had, whereas raw material prices have gone up and are still going up. There's a small -- I mean, there is a little bit of uncertainty, but we are sure we should be getting price increases to compensate for the raw material increases. So, to answer your question and to clarify, the growth in API was due to new APIs that we have been launching. And the APIs that we develop for our own integrated formulation development, we also sell outside, and those have contributed mainly to the growth in APIs.

Okay. Got it, sir. And on Ascelis Peptides, good to see the strong performance this quarter and the EBITDA breakeven. Just wondering how we should think about the coming quarters? Is this a sustainable level of performance that we should extrapolate into the coming quarters?

I think let's hear from the horse's mouth. Sanjay, can you answer that? [inaudible 0:22:18 ] peptides and chemicals. That's for your clarification. Go ahead.

Sure, sir. Harith, so our objective is very clear, to move towards sustainable profitability from FY '27 onwards. Individual quarters may vary, depending on customer milestone and shipment timing, but the platform is now far more execution-led and operationally aligned than before. So the direction of travel is firmly towards annual EBITDA and PAT positivity.

And Sanjay, if you could comment a bit on the business mix here, pharmaceuticals versus other segments like cosmetics? And within pharmaceuticals, what exactly are we supplying, peptide building blocks or fragments or APIs? Some qualitative color will be helpful.

Sure. So what you just mentioned already that our business is a mix of pharmaceutical and cosmetics, and both are important, although the opportunity space for peptides, APIpharmaceutical is quite good. Our customers vary multiple across, I would say, 3 dimensions. One is the big innovator, the big pharma itself. And the second one is the virtual biotechs, the start-up biotech ecosystem that is looking for a very agile and responsive CDMO to work on their early clinical program. And the third interestingly is, we are all partners while we might be a competitor in certain spaces. So there are different players across the value chain of peptides and the CDMO space. And we also work collaboratively with the other players in the pepti des value stream. So that's on the pharmaceutical side. On the cosmetics side, that's definitely a strong pillar for us. And we've seen some increased traction starting last 2 quarters, especially in the last quarter, where our focus on developing and supplying TFA-free peptides has got a good attention and a good traction with customers. So we are working on multiple projec ts on making the cosmetic peptide TFA-free. So those 2 are the broad, I would say, details on the 2 sides. Since the base is quite low on both the businesses, the growth opportunity is quite immense. So it's a complete blue ocean for us.

And last one, sir, specifically on Granules CZRO. So we had set up a pilot plant for DCDA in Vizag. And so, if you can comment on the scale -up on this front? And what are our plans and what's the kind of capex that we're looking at? How has been the progress? So these are some of the questions.

Yes. It was and is still a dream project being the only DCDA manufacturer outside China. And yes, we did stabilize our production. But then, what has happened during the process is, the Chinese competition, they started reducing prices drastically. And we have been trying to do better than them or at least meet those prices, and we have been still improving our processes. So I think we are close to wrapping up the pilot stage and getting into commercialization. I think in another 2 months to 2.5 months, we should wrap up, and then we should go ahead with ordering equipment for the commercial plant. So the project should cos t somewhere around INR200 crores, and we'll freeze the numbers shortly.

Our next question comes from the line of Shashank Krishnakumar from Emkay Global Financial Services.

My first one was on the gross margin expansion that we have seen Q-o-Q. I think the sale of API this quarter was still higher. So just trying to understand what has driven the sharp GM expansion on a Q-o-Q basis. And I also wanted to try and understand ho w should we look at it -- look at gross margins going forward, given that input costs are sort of inching up, though the mix improvement will also sort of play out? Just want to get your thoughts on how we should look at GM for FY '27.

Thanks, Krishna. Mukesh this side. So quarter-on-quarter, sequential gross margin improvement is primarily because of CDMO business, which h as significantly grown from INR 33 crores to INR70 crores, where the VA percentage gross margin percentage is significantly higher. That has helped the margin expansion for the quarter. With respect to your second question, Chairman has elaborated, and also current war situation, cost escalation situations, It is a little uncertain in terms of giving margins clarity in terms of percentage. But of course, we are trying our best to get the raw material cost escalations pass through.

Got it. My second question on the capex plan for FY '27-'28. If you could just sort of highlight how you are looking at it in terms of the overall figure and -- as well as which are the areas where we should see the incremental investment being deployed, if you could just share that?

So next year, the capex will be broad-based. There is a new API facility, which we are doing. In addition to that, we are also investing on the IT side. And we are also planning for -- as part of Chairman's speech also, it was covered -- the distribution center -- warehouse distribution center in U.S.A. So it will be broad-based in multiple capex projects in the coming year.

Any figure which you could sort of share?

Got it. Got it. Just last one, if I may squeeze in. So if you can call out the remediation spend cumulative for FY '26? And what is the kind of remediation spend that we should expect probably from 1Q onwards?

FY '27 onwards, it should be substantially lower, which has already come down Q3, Q4. The expenses were very high in H1. Cumulatively, only the remediation expenses we have incurred close to INR50-plus crores in the current year.

Our next question comes from the line of Tushar Manudhane from Motilal Oswal.

Sir, as far as the West Asia issue is concerned, as far as freight cost will -- just to have understanding correct, the freight cost increase will get reflected immediately in the coming quarters. But as far as passing on of the increase in the raw material prices, will that have a lead lag impact? And secondly, we would have certain inventory already, which will take care for at least 1, 2 quarters. If you could just help us with that trajectory?

There are inventories, and we can wait for a while. It's not going to be overnight price increases. It's going to take a while, and that will take care of -- the current inventories will take care of that. But all said and done, still uncertain period. While we are confident that over the year, we'll be fine, quarter -on-quarter variations may be there. And yes, we have got to get used to the uncertainty and work towards improvement.

Got it. And as far as the peptide or the Senn Chemicals business is concerned, if you could just break down the revenue into projects which are at R&D and do the commercial manufacturing?

Tushar, we would rather not get into that exact split, but I think it's sufficient that this is a project- initiated pipeline. So whatever is at the commercial stage are result of our development in the past. We do have a lot of exciting projects underway, but I will not like to, at this point in time, split the revenue and give the details along those lines.

Broadly, just to understand that, at least for FY '27-'28, while the investment is underway, which is INR200 crores, but prior to that, how the scale-up of business is expected to happen? Is it like more projects-driven increase or it's more commercial manufacturing increase?

So I understood the question, Tushar. So let me just give you that we are working on some active projects, which would have a commercial supplies pipeline, although at the development stages, various clinical stages that we are seeing a few interesting pr ojects. We got at least one project graduated to a stable commercial supply, starting this financial year. So we are working on a few of those as well. Given the business size is low currently, low base effect, it may be not prudent for me to call out those specifically and club it together into -- but we do have a very interesting program, which could drive the future growth.

Got it. And just lastly, on the overall net debt for the company, considering the projects in terms of capital expenditure, as well as working capital probably increased requirement, maybe not immediately, but if the situation prolongs, then what kind of net debt we should sort of build for FY '27?

There can be a flattish net debt or a slight increase, depending upon the timing of the capex and increase in the growth. In the current uncertain period, because of the cost escalation, the working capital investment is also going to be higher side. So there will be a small increase -- very small increase in the net debt.

Our next question comes from the line of Sajal Kapoor from Antifragile Thinking.

Congratulations on an amazing execution despite the Gagillapur constraints. I have a few questions, please. What proportion of Granules' current and upcoming CDMO capacity is already tied to committed or late -stage customer programs? And what utilization level would you fall to if, let's say, a hypothetical scenario, your top 2 or top 3 projects were to be delayed or canceled?

So Sajal, see, we are -- in terms of utilization, our capacity today is not very large, but we do not want -- we are not expanding unresponsibly. Our approach towards capex deployment is always demand-linked. And as the customer program progresses, we are investing, and that's the promise with which we are approaching the customers. Having said that, the utilization in the Q4 was at a healthy level. And at the same time, we are building capacity that will come online towards the second half of the year. And our visibility, if everything is all right, is, we will be quickly seeing a full utilization to that. So there's capacity that we're building in Zurich. There's capacity that we will be building in India, especially on the intermediates side. And we see a quick utilization turnaround within the year itself on those capacities. But the larger point is, we haven't built capacity ahead of time. We are doing it concurrently, and we are doing it as an optionality in a close, I would say, partnership with the customers and quite close disclosure where we have been open to them and open with the willingness to invest in the future capex, should they choose to and as and when the program advances.

No, that's helpful. So I think if I translate what you said, Sanjay, it's not speculative. It's tracking either a verbal commitment or tracking a late -stage plan program, so the capacities are not created for the heck of it. That's how I translate it. And if you could also clarify what is the level of customer concentration? I mean, typically, what happens is, at a low base -- and this has been the journey with Neuland Labs, Laurus Labs all of them. Typically, when your base is low, you are really dependent on just 1 or 2 customers. Are we also having that level of high dependency of customer concentration? Or are we having a broad-based participation, albeit -- despite having a very low base today?

So Sajal, on part one, your interpretation is correct on the capex investment, and we are very transparent with the customers and giving them the optionality to choose across the two components -- 2 continents across the various timelines during their journey, number one. Number two, our customer base is not overly concentrated. We will definitely like customers with a big share in our portfolio. But right now, we are working on multiple projects, and they are very well spread across double- digit customers. And they're all at the initial stages with a good pedigree across both the big pharmaceutical and start -up biotech, and interestingly, the cosm etic side as well. Having said that, what differentiates us with the other CDMO apart from diversification is the quality of the customer itself. The quality of customers that we have access to through the legacy of Senn is quite remarkable. And this is the value that this acquisition has bring on the table. We got the proof of concept. We got the validation of access. What now lies ahead is our abi lity to execute on these 2 - continent model, which is going well with the customers.

Sure, sure. And second question is for Dr. Chigurupati, if I may. Sir, if I -- if you had to pinpoint the single biggest constraint to scaling the business over the next 2, 3 years, whether it's pricing pressure or customer concentration, regulatory timelines or execution? I mean, what would that constraint be? And what specifically are you doing to sort of make the businesses stronger and counter that potential constraint?

Sajal, I think you have part of the answer. It's mainly regulatory timelines and execution -- the quality of execution. I think the regulatory timelines also depend on how we execute the project and the quality of the filings. I think we have almost got it right, and we are fairly confident that we should be able to reduce the regulatory timelines. And of course, other thing is the G GP remediation and FDA acceptance, which -- where we are already ready and waiting for the FDA to come in. We can't push them, but we keep letting them know that we are ready.

Sure. So on that basis, Dr. Chigurupati, assuming that we get Gagillapur back in action because we have got some outstanding filings there, that should -- and assuming that the gross margins stay where they are, despite an imminent thre at that some input solvents, et cetera, will get expensive, you may already be facing some packaging cost escalation due to what's happening in the Middle East. But adjusting for all those, broadly speaking, if we stay at 64%, 65% gross margin, is it fair to expect a 24%, 25% EBITDA margin going forward?

I think the raw material prices and packing material prices, freight prices have gone up. So there's a lot of uncertainty in the market. But hopefully, we are sure that we'll get some price increases. So this uncertainty continues till we get the price in creases. And gross margins, while we were very confident of that some time ago, now, we are taking a step back and not committing to anything, but we remain confident and positive.

Our next question comes from the line of Tarun Krishna from ithoughtPMS.

My question is on the large -scale peptide that we are going to set up in India. So we have indicated that we'll be manufacturing GLP there, and we also have an option to manufacture the peptide drug conjugates and oligonucleotide. So when this site comes live, which products will we exactly be manufacturing? And will all these 3 products come at the same time? Can you give some light around that?

First of all, we are doing a major capex investment. And the way it has been sequenced is, building a peptide API capacity at Zurich at certain scale, followed concurrently by investment in a brownfield manufacturing facility for the intermediates in India. And then, once we complete this, we ar e right now at a planning stage of the India peptide API facility, and that will be out by at least a year, to begin with. We are looking at peptide drug conjugate as a market space -- as a market segment, and we are at a planning phase in assessment side of it. But our focus is completely the peptides business as for the moment. This platform does give some optionality on the oligonucleotide side in the future, but our current attention and the focus is completely on the peptides and it's the value chain and making sure that our investments are sequentially well aligned and proportionally upgraded across the 2 locations, which is aligned with the customers' demand. Dr. PV you want to add something.

No, you got it everything. And at this point of time, we are just focusing on peptides. And then, certainly, we will have a look at ADCs and then oligonucleotides, but still we are -- it's at a selection phase. We're in the process of selecting the portfolio.

Understood. And exactly which products will we be manufacturing from there and what would be the split for it, if there are multiple products from there?

So Tarun, your question is about what? Which one? Are you looking at India API manufacturing?

No, It's about the large scale peptide manufacturing, which we're setting up in India intermediates?

So those are intermediates and basic amino acid -- protected amino acid derivative that actually is required for the peptide API manufacturing. So think of it as a backward integration and a common element across multiple projects where it could be used internally for our own program and whereas it could also be supplied from India to other players also to go into their peptide APIs.

Our next question comes from the line of Krisha Kansara from Molecule Ventures.

I'm sorry if this is a repeat question. I had a weak connection. But I had a question on our Gagillapur facility inspection. So you already mentioned that we submitted additional documentation with them after our meeting in January. So could you give us an update on when is the reinspection expected? And my question is because it's been more than a year since we received the warning letter. So I wanted to know your opinion, your take on this. Why is it taking so long? And how confident are we to clear this follow-up USFDA inspection? And what is your estimate on the timeline?

Hi, Krisha, this is Priyanka. I'll take your question. You're right in saying that we have been corresponding with the FDA for the last 2 years since we got the original observations. After the warning letter, our updates continue. We had a meeting with the FDA, and we have continued to update the FDA with our progress. In our updates, we did mention that a lot of our activities, like CMD mentioned, would be closed by the end of March, which we a re on time for. So we are in -- like CMD said, we are ready for an audit. And it really depends on when the FDA wants to come in at this point. From our side, we've notified them that the activities are essentially complete. But now, I don't think we can estimate when they would walk in, but we're ready for an anytime audit. But that said, just -- we are actually confident in getting through with the FDA because we've had almost -- if you look at the investor presentation also, we've had a lot of audits in the last year across several regulatory bodies and many, many customers. And every -- there is nothing critical that came out of them. So we're very positive about getting through.

Right. But not even like a tentative timeline that you can give?

See, last time, we mentioned something, we got comments now saying you skipped the timelines. We can't read the FDA's mind, right? So it really depends on when -- there has been no communication from the FDA, but we are in touch with them.

Okay. And given that we recently received ANVISA GMP certificate for Gagillapur facility, has this prepared us in some way for the U.S. FDA re-inspection? Or is it not the case? How do we read this?

Like I said, it's not just ANVISA, but 108 customer audits and 13 regulatory audits happened in FY '26. And we welcome these audits because like you said, it prepares us better to be audit - ready when the FDA walks in. So yes, to answer your question, the ANVISA audit and the other audits all prepare us for the FDA.

So, in summary it is like a wait and watch situation for us?

Priyanka Chigurupati: Yes

Next question comes from the line of Preet Jain from Niveshaay.

Basically, my first question is, for Lisdexamfetamine, you had 5% prescription share in CY '25? So what quota did DEA assign you for CY '25? And can I know the same quota for current year '26 and current year '27? And is this quota will support your sales of the products, specifically this product?

With lisdexamfetamine, I mean, we obviously cannot share the quota details, but we got everything that we wanted. And I think we have demonstrated our ability to supply to the customers on time and in full, which essentially is a precursor to why you would get quota. And even for FY '27, we expect the quota situation on this product to be as we budgeted for.

I don't -- again, I can't give you names of any products. I think it's best you wait and watch because the products -- actually, the products -- 2 of them are already in the public domain. So you can just research that. Two of them, we've received tentative approvals for already. So based on -- the next steps will be determined based on an ongoing litigation, which I would not like to talk about over a call. But we also have 1 to 2 other products that we'll be launching on the generic side of things and 1 or 2 products that we'll be launching with a potential first -to-file outside of the tentative approvals that we got.

And the last question is, can you -- have you any current order book in Senn's project, the CDMO Senn project? Is there any order book for that project?

We can't disclose those kind of information.

Our next question comes from the line of Ritwik Sheth from One Up Financial.

Sir, a couple of questions from my end. So firstly, what are the plans of deploying the money that we raised from the promoter and QIP a few months ago?

Yes. Thanks for the question, Ritwik. We have clarified in our EGM as well as last earnings call, this is to strengthen the balance sheet and also invest for organic as well as inorganic growth. Organic growth is capex, as well as working capital and R&D. And inorganic, if there are any good opportunities, we're continuously exploring. That money is also available based on the balance sheet strength.

Sir, second question is that on Senn Chemicals, how should we look at Senn Chemicals with a medium-term to long -term view in 3 to 4 years? What kind of growth and margins one can expect? Can the margins be at company level? How should we look at this business?

Ritwik, we cannot comment on the growth -- I mean, percentages of growth. But all I can tell you is, that's a key pillar for our growth, and that is what will also drive a good percentage of the company's growth. I can't go into specifics. But it's very, very important for us. We see a great future there.

Sir, just one last question. In the past, you have mentioned that we are looking to launch controlled substances outside the U.S. market also. Can you throw some light when do we launch these products, say, maybe in EU and then ROW? How far are we? And wh at kind of infrastructure readiness we have for this?

So I'll just give you a little bit of background. Amongst all the controlled substances or, let's just say, medication for ADHD primarily -- I don't want to say controlled substances -- medication for ADHD, there's 2 that are globally prevalent -- sorry, globally relevant in terms of size, et c. So out of the 2 products, one has already been tech transferred and we started filings across the globe. So within the next couple of years, 1 or 2 years, we'll start seeing -- not 1 or 2 years, that's 2 years, we'll start seeing revenue from those produ cts on the finished dosage side. But APIs, we should be seeing the numbers come in a little bit sooner.

Okay. So finished doses, EU can see sometime from FY '29 and API maybe a year earlier?

Not just in EU. We're filing in multiple countries.

Our next question comes from the line of Shreya Chatterjee from Ageless Capital.

Congratulations for a good set of numbers. So my first question is regarding the statement that you say that controlled substances you are now at the fourth position. So would it be possible to give out the number like total revenue of controlled substanc e? And also, in the controlled substance space, basically ADHD, you have a very high potential drug, which is lisdexamfetamine dimesylate, or the generic Vyvanse. So how is that going on? Because for the other generic companies also, there had been some issues of product recall. So if you could just comment on that.

Shreya, we have a good history. I don't think product recalls and such is a great constraint for us. The revenue, we cannot -- by product, we cannot go into details. But lisdex is a good product for us, but we also have equally good products in our portfo lio, and more are in the pipeline. And it's just not one product. That's all I can tell you.

I just want to mention, Shreya, because the prior participant had the same question on lisdexamfetamine, if you look at all our historical investor calls also, and if you just, I guess, track the number of approvals we have received, you will know that it 's not just lisdexamfetamine like CMD just said. There are other products. And the name of the game is to make sure that we're consistently growing in all the products to achieve this position in the ADHD/controlled space.

Got it. And would it be possible to give out the market share for this Vyvanse, the current market share that you have captured? Okay. And any comments on the pipeline for both the controlled substance and the oncology drugs? Like in the next 3 to 5 years, how big you see that opportunity to be growing?

See, the market size is heavily -- I think in the investor presentation, we said 41 billion$ as the TAM. But that said, that is the combination of the brand and generics. All I'll say is that the quality of filings are significantly improving. They're moving more and more towards complex products, more in the controlled space and oncology space, 2 big drivers for us. And we have a first -- well, we have a few first -to-files targeted, a lot of NC E-1 targeted, and we plan to be there on day 1 with a very, very good value proposition.

Got it. And would it be possible to guide on the working capital situation maybe this year, FY '27, given the volatilities going on?

Ladies and gentlemen, as there are no further questions from the participants, I would like to hand the conference over to the management for the closing remarks. Thank you and over to you team.

Once again, thank you very much, ladies and gentlemen, for joining us today. And I just wish you all the best for the rest of the week, and have a great weekend after that. Thank you.

Thank you so much, sir. Ladies and gentlemen, on behalf of MUFG, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.