Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Aman Vora from Premium Capital. Please proceed.

Hi, thanks for the opportunity. So, I will just start with where Anish left. So, congratulations on the ramp up in the Animal Health vertical and in record time. When we talk about the business, Rs. 400 crores of top line by FY30, and you mentioned that the margin profile of the business is better than that we report for the pharma division. But could you help us understand what kind of margins do we expect out of this business?

So, the margin profile that we expect once we reach that operational leverage will be 20% plus EBITDA margins for the Animal Health business.

Okay, got that. And second is on the Crop Protection side. So, this is not only for Hikal, but for the industry too. It has almost been two years of first tepid volumes, then tepid pricing now. So, what would it take for the industry or for Hikal specifically to get back on trajectory in this business? And how do you look at, I understand FY27 would be a year of recovery and all of those things. But how do you look at this business on a three-year basis? What should we expect out of this business over three years?

So, I will take that question. So, the problem is that the crop industry, the end customers are also not doing very well. And as you know, the end customers, which are five or six big players, contribute to almost 80% of the total global market by value. So, they don’t do well and there’s a lot of pressure put on their suppliers and innovation is also not exactly accelerating in the Crop Protection side. So, we are expecting very marginal growth in the crop division. That’s why we have diversified into allied businesses. We are not investing a significant amount of new capital in the crop business. We are managing the crop business with what we have, very strict capital

allocation and financial discipline to ensure a healthy cash flows for the business. While being focusing on operational discipline, we are onboarding a few new customers, but projects are taking time to materialize and the margin that we are getting on a new CDMO contract are lower than what they were maybe 3-4 years ago because of the competitive nature and the pressure being faced by our end customers in the end market. So, that’s how we see the crop business. We will see marginal growth, mid to high single digit growth going forward.

Right. Got that. Thanks. Sameer. Just continuing a couple of more questions from my side. So, as I hear your commentary and think about Hikal, we are positioning more like I think five, six years back, we were seen more as a chemical company or maybe a decade back. Now, if I think about next five years, we are positioning ourselves more as a pharma company. Is my understanding correct?

Yes, I think if you look at us, maybe five, six years ago, we were a chemical company. Then by 2023, we became like a pharma and a crop two division company. And in the last three to four years, we have incubated two very exciting businesses. One is the Animal Health business, which is already ramping up quite nicely and the Personal Care business, which is somewhere between crop and pharma. So, now we have built up a new asset in our multipurpose plant in Panoli to run the first manufacturing line for Personal Care. So, yes, as a percentage of our total revenue, while we were known mostly as a chemical company, maybe 7-8 years ago or 10 years ago, and maybe like a two-division company, maybe 5 years ago. If you look at our business going forward in the next 2 to 3 years, we will be more into a four-division type of approach, where pharma and allied pharma, human, non-human pharma, and even the skincare line, Personal Care, which is like pharma, will be almost 70% to 80% of our total business with crop division coming to about 30% of our total business.

Got that. Thanks. Thanks for that clarity, Sameer. Because Personal Care would now be another growth driver other than Animal Health, any thoughts you can share on what that business could be in the next three years, maybe near term or three years as you want to share and what the margin profile of that business could look like?

So, I think that if you take this year as we are just launching this year, I would say it is a launch year with very small volumes. But as we grow in the next three years, post this year, we expect to cross about Rs. 200 crores in revenue in the business.

Okay and margins would be like between 15% and 20%? Is that a safe assumption?

Over 20%, EBITDA. Typically to the Pharma business.

Got that and just one last question from me, Sameer. First of all, thanks a lot for sharing your guidance in a very turmoil geopolitical environment. When we talk about, so I think your guidance was 15% to 16% top line growth on FY26 base and about 30% EBITDA growth. So, and we are talking about flattish top line for crop this year. So, the growth would be Animal

Health and Pharma led this year because Personal Care would be low volumes. So, when we are talking about say, better than that growth in pharma, shouldn’t our margins be better? Because if I just put your guidance to work, we are talking about between 14% and 50% EBITDA margins for FY27. If pharma does better than crop, which is generally a better margin business, and we are ramping up Animal Health also, shouldn’t our EBITDA growth and margins be better than that?

Absolutely right. This is a transition year where the FD A remediation costs are still hitting our fixed cost numbers, so it’s depressing EBITDA. Once the FDA remediation goes away by end of this year, next year onwards, the EBITDAs will start improving even more substantially. Since the remediation costs have been pretty substant ial, which is hitting our fixed cost number. So, there will be growth in EBITDA margins compared to last year. But the real meaningful numbers will be in FY’28 and beyond.

Thank you so much . The next question is from the line of Rohit Sinha from Sunidhi Securities. Please proceed.

Thank you for taking my question, sir and pardon me for the audio disturbance. Just wanted to know, as our U.S. FDA final clearance is I think due by end of this year, and you were stating that 2-3 contracts are in process. So, how will you be looking at the addition of incremental revenue in FY28 post this U.S. FDA clearance?

Yes. So, I mean, I have given an overall guidance for this year’s growth, right? I think that will get accelerated even more in FY28 over this year because we expect, once the remediation happens, we have some filings that are pending approval for want of the FDA approval. Once that approval comes, those filings will be done and that will have a ramp up in revenues in the next financial year in FY28.

Okay and that too with the better margins from the existing one.

That’s right. Absolutely right.

Yes and secondly, just on the Crop Protection side, as you said that pricing is a main concern right now for us. So, aren’t we getting our cont racts revised or how basically these contracts with the customers are placed in order to price revisions?

There is a pass-through in some of the contracts, but some of the contracts, where it’s competitive in China, customers are partially compensating us because of the nature of the end product. End product prices to the farmers are not increased much and there’s no price elasticity, very less ability to increase prices in the end distributor level. So, it’s a mixed bag while some were able to get, but in our quarter one number itself, we got impacted by almost 7 crores to 8 crores of raw material increase in our crop division because of raw material energy prices, which impacted our EBITDA in this one quarter itself. We are expecting now that oil prices are beginning to

drop, that prices will start to normalize and we hope that by the end of Q2, prices do come down. But if the war starts again, again, the prices might go up. There’s so much volatility and uncertainty in this geopolitical scenario right now.

Got it. And one last question, just in terms of overall growth, which we are looking at in FY28 and beyond that, let’s say for FY29, probably what kind of overall margin profile and top line we would be looking at, if at all you can guide us?

We expect this 15% to 16% CAGR to continue going forward and the base will keep getting bigger, but we are expecting 15% to 16% CAGR every year and that’ll bring in a lot of operating leverage because fixed costs, as you know, will not go at this level because a lot of fixed costs have already been spent in the company. And the next year, the remediation also will not be there. That remediation cost benefit will come to the P&L. So, we expect next year FY28 to be a substantially better year compared to this year, which will also be a good year compared to last year.

Thank you. The next question is from the line of Raghuram Kuchi from Bestpals Research & Advisory. Please proceed.

I would like to understand about like on this U.S. FDA issue. So, when you’re saying that you are in the final stage of remediation plan, like how should we understand on this thing, sir? And how confident are you of Hikal clearing this year’s U.S. FDA thing? Like what gives you the confidence that you can clear it?

No, I think we are working towards success. The FDA remediation plan is now going on for almost one year. And it’s a stage gear approach where we are continuously dialoguing with the FDA and giving them our continuous updates which happen on a bi-monthly or a quarterly basis, updates are going in. Based on the feedback we received from the FDA, they have told us that we are moving in the right direction. We have a few open issues that we need to close out in the next few months. And once that is done, they’ll be ready for a re-inspection. We are hoping that they come by the end of this year and we will be ready for a re-inspection by end of this year. It may get delayed by a few months here and there, but we are quite hopeful that we will do it. We are putting in a lot of controls, a lot of system upgradations, a lot of training, a lot of SOPs have been upgraded, and a lot of checks and balances have been put and there’s a continuous auditing happening on the site to ensure that we have a successful FDA re-inspection.

And your customers, they are satisfied with whatever remediation measures that you have taken with regard to this thing?

Absolutely right. And because I said that in opening remarks, after the FDA, which happened in August, we had three big regulatory global authorities come and inspect the facility. And all three of them have cleared the facility. And these were also very tough inspections. We have also had over 86 customer audits in the last one year, who have come and re-inspected our site,

and all of them have re-approved our facilities and have continued to buy products from us. We have not lost a single contract or a single customer in the last one year.

That’s very helpful for that.

We are working with the innovator pharma customers that we have on our remediation program. They are helping us remediate. So, they are handholding us to know, putting in the right documentation with the FDA. And they have got a global knowledge and global expertise for that. So, that knowledge is being passed on to us. How do we respond to the FDA?

That’s very helpful, sir. Thank you. And sir, like in the comment, you have mentioned that you are very confident of a stepwise recovery of re venue and profitability. So, regarding this, like once you clear the U.S. FDA issue, how should we look at the growth in the Pharma business? Like would it be a stepwise or would it be a slowly ramp up? Or how should we understand that part of the business once the FDA issue is clear?

I think the CAGR will start improving. I mean, if you look at a 14% to 15% CAGR for the company, I think pharma will be 18% to 19% CAGR going forward and maybe even faster. If some of the approvals ramp up and some of the NCE filings that are pending, if they ramp up, the growth could be even faster in the next few years.

That was very helpful. And on the Animal Health business, like did I hear right that you have guided for 300 crores top line by FY30?

Yes. So, we had talked about this in last conference call is, you know, we have a vision of FY30 where we planned out a strategic plan, including FY30. So, we have guided for about Rs. 400 crores of revenues by then, based on what we see and what a target that we put in place for the businesses.

And for this business, you’ll be exporting to which part of the world? Is it to developed markets in the U.S., Europe, or what part of the world would it be going to?

Yes, globally, we are agnostic in terms of market. Obviously, our customer base is, you know, primarily innovators, right? So, that’s where we are, so we sell to all the markets in which they are selling their end product. So, Europe, U.S., Japan, and of course, ROW, including Latin America and other markets.

That was the last question for today. I would now like to hand the conference over to the management for the closing comments. Over to you, sir.

Thank you, everyone, fo r joining our quarterly earnings call and for your continued interest and support. We remain fully comm itted to executing our turnaround strategy with discipline and focus. The actions we have taken over the last several quarters and the last few years have laid

a very strong foundation for long-term sustainable growth. We are confident that our progress will become increasingly visible in every passing quarter going forward. As we conclude this call, we want to assure you that we are here to address any further questions or concerns. Please feel free to reach out to us or Investor Relations Partners, SGA. Once again, thank you for your participation. Have a very good evening. Goodbye.

On behalf of Hikal Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.