Akums Drugs and Pharmaceuticals (NSE:AKUMS) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Akums Drugs and Pharmaceuticals Limited Q2 FY 'twenty seven Earnings Conference Call. 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 Mr. Ankit Jain from Akums. Thank you, and over to you, sir. Good afternoon, everyone. Thank you, Subnalli, for introducing me. Welcome everyone to Akums Q2 FY twenty twenty seven Earnings Call. I am Ankit Jain and I head Investor Relations at Akums Drugs and Pharmaceuticals Limited.

0:52 On today's call, we are joined by Mr. Sanjeev Jain, Managing Director Mr. Sandeep Managing Director Mr. Sumit Sood, CFO Mr. Javinder Dograf, Deputy CFO and Mr. Tahir Maheshwari, Head Strategy. I will commence with our standard disclaimer that any discussion on today's call might include certain forward looking statements, which are predictions or projections of future events. Our businesses face several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied in such statements. At Akums, we do not undertake any obligation to publicly update any forward looking statements, whether as a result of any new information, future events or otherwise. I hope you've had the opportunity to go through our financial results and review our investor presentation that was shared yesterday.

1:38 I would now like to hand over the call to our Managing Director, Mr. Sandeep Brand to discuss our comments. Thank you. Thank you, Ankit. Namaste everyone and thank you for joining us today for our Q Q2 FY 'twenty seven and H1 FY 'twenty seven earnings call. I am pleased to announce another quarter of strong performance by Akums, one of the world's leading pharmaceutical CDMO. The performance was driven by double digit volume growth during the quarter. The revenue grew by more than 30% on year on year basis and EBITDA more than doubled during the corresponding period. Even sequentially, the quarter on quarter revenue growth stood at an impressive 15% and EBITDA increased by 11.5%.

2:31 Led by strong order book and improved utilization of newer facilities, the CDMO business achieved a volume growth of more than 20% on September met basis, showcasing increasing penetration of our offering within the India pharma market. The improved performance is also an indicator of our resilience during times of global headwinds and geopolitical uncertainties. While the availability and the prices of input materials remain volatile, the demand outlook for CDMO remains strong. We today operate at healthy utilization levels of above 50%. During the quarter, we successfully integrated the two manufacturing plants acquired from MoriFlame.

3:20 With this, we have strengthened our beauty and personal care play as a fast growing category in India. To cater to growing demand, we will operationalize a new facility at Bardee. The plant will have oral solids in Phase one with an annual capacity of over 6,000,000,000 units, which will fully operationalize by Q1 FY twenty twenty eight. With this plant, we will have two plants in Bharti in line with our stated objectives of geographical diversification. We remain steadfast on expanding as well as deepening our global footprints with special emphasize on regulated market. We have two products approved in Europe, eight filed and over 30 in R and D, which we expect to commercialize over the next three, four years. Our two facilities are EU GMP certified and few more in pipeline.

4:17 Our European CDMO project is progressing as per our stated plans with supplies commencing in FY twenty twenty eight. Our JV with the Zambia government is also progressing smoothly with commercialized supplies from the Indian plant scheduled during Q4 FY twenty twenty seven. And considering the prolonged shipping time to Zambia, we expect to book revenues during Q1 FY twenty twenty eight. The process for setting up the plant in the Zambia is well underway with technical discussions already complete. The plant is expected to become operational in 2029, expanding our manufacturing presence outside India.

5:03 Our domestic branded formulation segment had a steady quarter with 8% year on year growth in revenue and marked improvement in profitability on a sequential basis. We expect the segment to deliver growth on par with IPM by FY twenty twenty eight as the current initiatives start bearing fruits. Our international branded formulations business saw growth accelerating both on year on year and quarter on quarter basis. It is expected to maintain this momentum going forward in the year and will be key engine to drive Akums growth. API segment continued on its journey towards becoming EBITDA breakeven as our endeavor continued. The Trade Generics segment remained EBITDA positive during the quarter with the third straight quarter of achieving profitability.

5:55 Sustainability is core to Akums in whatever we do. We are proud to announce that our company has an EcoVedic bronze medal. We are on our journey to be amongst the top global companies focused on environment, labor rights, ethics and sustainability. We also won the Water Management Champion Award by CII for green practices. We also successfully transitioned to S4HANA this quarter. This will provide real time analytics across key business performances indicators. With number of initiatives underway, we remain confident in our ability to create long term shareholder value and delivering positive results. I shall now request our CFO, Mr. Sumit Sood to take you through the detailed financial for the quarter. Over to you, Mr. Sumit.

6:50 Thank you, sir. Thank you very much. Good afternoon, everyone. I'm pleased to present the financial highlights for the quarter 09/30/2026. Revenue on a consolidated basis stood at INR $13.42 crores, an increase of 31.9% year on year. Quarter two FY 'twenty six, it was INR $10.18 crores, an increase and an increase of 15.1% quarter on quarter. Q1 FY 'twenty seven, it was INR $11.67 crores. EBITDA for the quarter stood at a healthy INR 195 crores, a multiple increase of 106% year on year. Q2 FY 'twenty six was INR 94 crores and an increase of 11.5% quarter on quarter. Q1 FY 'twenty seven was INR 175 crores.

7:43 Margins were healthy at 14.5% as against 9.3% in Q2 FY 'twenty six and fifteen percent in Q1 FY 'twenty seven. EBITDA with other income stood at INR $2.24 crores, an increase of 76.3% year on year and an increase of 9.1% quarter on quarter. Profit after tax stood at INR 115 crores, an increase of 168.3% year on year. Q2 FY 'twenty six, it was INR 43 crores and an increase of 13.5% quarter on quarter. Q1 FY 'twenty seven, it stood at INR 101 crores. If we come to the segment wise performance, if we look at the CDMO revenue, it stood at $11.15 crores, an increase of 38.6% year on year and an increase of 15.6% quarter on quarter.

8:45 The revenue growth, as explained by Sandeep ji, was largely driven by a healthy increase in volumes. EBITDA for the quarter for this business stood at 168 crores, an increase of 99.6% year on year. For the quarter two FY 'twenty six, it was at 84 crores and an increase of 2.9 quarter on quarter. Q1 FY 'twenty seven, it stood at INR 163 crores. Domestic branded formulations revenue stood at INR 132 crores, an increase of 8.2% year on year and an increase of 14.4% quarter on quarter. EBITDA for the quarter stood at INR 24 crores, a decline of 8.9% year on year.

9:34 Q2 FY 'twenty six, it was INR 26 crores and an increase of INR 103% quarter on quarter. Q1 FY 'twenty seven, it was INR 12 crores. For the International Branded Formulation, revenues stood at INR 44 crores, an increase of 95.2% year on year. Quarter two FY 'twenty six, it stood at INR 22 crores, an increase of 26.7% quarter on quarter. Q1 FY 'twenty seven, it was INR 35 crores. EBITDA for the quarter was at INR 9.9 crores, an increase of 80.5% year on year and an increase of 43.8% quarter on quarter. If we look at the API, the revenues stood at INR 29 crores, a decrease of 35.3% year on year. Q2 FY 'twenty six, it was INR 44 crores and a decline of 9.1% quarter on quarter. Q1 FY 'twenty seven, it stood at INR 32 crores.

10:36 EBITDA loss was slightly higher in this quarter, which is 5.7%, while significantly lower than Q2 FY twenty twenty six, 14 crores, however, higher than Q1 FY twenty twenty seven at INR 3.9 crores. We continue to focus on higher gross margin products and expect the full year losses to be lower than last year. If we come to the Trade Generic business, the revenue stood at INR 23 crores, a decrease of 5.4% and an increase of 10% quarter on quarter. EBITDA for the quarter stood at INR 1.2 crores. Our balance sheet continues to remain healthy and cash and cash equivalent as has been constantly increasing standard INR $16.80 crores.

11:25 The company had a free cash flow for H1 of INR 45.5 crores after non core business acquisition, driven by healthy operating cash flow to EBITDA at a ratio of 69.2%. Based on the above, we conclude the financial highlights for the quarter. We would request the moderator to open the forum to a question and answer session. Thank you. Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question.

12:15 Ladies and gentlemen, we will wait for a moment while the question queue is sent. A reminder to all the participant, you may press star and 1 to ask a question. We have the first question from the line of from advisory. Please go ahead. Hello. Am I audible? Yes. You're audible. Okay. Thanks for the opportunity, sir. So my first question was that, like, I just wanted an update on the European business, like how is it going and where do we stand currently? In the previous conference, you mentioned that we expect the business to deliver a revenue of 85,000,000.

13:03 So I just wanted to know the what's the progress so far on that? Sure. So this is Sail Saxam. So both the businesses, as we have been telling, both are businesses which are well with us, right? These are confirmed businesses. I'll first take example because that is closer to delivery. So post the mid year elections for the president where the current regime was reelected. Soon after it, we went into discussing the purchase order and we have now received the purchase orders. We are in process of now supplying the purchase orders, which we think post the manufacturing lead time, we should be able to supply them in Q4. Since this like most of our CDMO is ex works, right? So in our factory, once it leaves our warehouse, we book the revenues, ex works. Here, we have to deliver at Lusaka warehouse of the Zambian government, right? So that shipping time lines to from Haridwar from where we'll mostly manufacture to Lusaka in Zambia is roughly one hundred and one hundred and twenty days. So while we will dispatch the goods in Q4, which will be as a good in transit in our financial accounts, we'll be able to book the revenue once we have a delivery, which will be in Q1.

14:22 So the business is, as you rightly said, 25,000,000 fully intact with the margin profile, which are slightly better than our CDMO margins, right? So that all remains consistent. And subsequently, when we deliver this, we will again have a discussion on the another 25,000,000 round of supplies have committed by the government of Zambia. So that's on the Zambia business. On the European business, as we said, we have compiled that dossier. The dossier has been filed. While it is up to the regulator, we believe that it could take one or two quarters by the time we receive the approval of the dossier. The plant has been already approved from where we do the commercial supplies.

15:08 So once we have it, the dossier approved by the European authority, we will go to our partner and then get the purchase orders for it. So maybe in one quarter time, we'll be in a more better position to tell you on the when we started the price for the Europe. But as I said, both of these businesses are confirmed well within our reach. Okay, sir. Understood. That's it. And my second question is on the setting up of Badi facility, like what's the current status and how much CapEx is it going to take to establish the facility? Sure. So Badhi is Badhi, which is a second plant in Badhi, which the MDs are also mentioned in his opening remarks. So this is a large facility we'll commission, right? So in the Phase one of it, we will start with oral solids.

15:57 So this will be 6,000,000,000 tablets, right? So we largely have 50,000,000,051 annual capacity. So this is 6,000,000,000 on top of it, which is oral solids, which will have across various forms of tablets. Then we'll have another phase of it, which will contribute another 6,000,000,000 odd tablets from it, right? So we'll have roughly 12,000,000,000 tablets from this facility. Apart from this, we are also planning some other doses forms within this facility itself. So this will as I said, this is a large facility, the Phase I of which will be operational in the next three, four months, subsequently the other phases of this. So broadly, this is what we'll do. On the CapEx, as we mature the facility, we will let you know. But broadly, what we have seen is our CapEx is usually what we do observe in oral solids, we usually have 3x the turn in our gross block for the revenue.

17:04 Okay, sir. And how are you planning to fund that? Like is it going to get funded internally or you are trying to raise debt for that? So we have the flexibility of raising debt and we have our own funds. I mentioned during our presentation that the company sits on a healthy free cash flow. We will weigh our options of what is more beneficial if the loans are available at lower the cost of our investment, we'll take loans. Otherwise, we'll liquidate our investment. Okay, sir. Understood, sir. And lastly, I just wanted to get an update on the API segment since its contribution to the overall revenue is 2.1%, right? So how are we planning to improve that? And by when can we expect to see a growth in that contribution?

17:52 Sure. So I think as we said, so one is percent of revenue to the overall business. So while the CDMO is a fast growing, right, so I've seen 20% volume growth over four quarters now. Coming quarters also look healthy and encouraging, right? So and then we'll have Zambia, then we'll have Europe, then all the efforts on the Europe. And so can the percentage of API in overall scheme of things dramatically move up? Not in the near term. The focus of the management over there is how do we curtail the losses, right? And by which we are meaningfully driving it with improvement of our product mix as well as by product mix, mean removing products which have low gross margins and focusing on general products which have better gross margins. And secondly, also the geographies which we sell. Today, almost 90%, 92% of our revenue comes from the Indian markets, right? We have two CPs which are approved.

18:52 Two more CPs are in pipeline. Also, we have our EDQM, which is a European audit, which we conducted, right? Or which we expect to receive an approval. Right? So all of those things will help us diversify the products as well as diversify the geographies, right? So based upon which we see that in the next few quarters, we should achieve a breakeven in this Okay. So do we have any rough time line by when we can expect this there's an improvement of the contribution of this API segment? So no time lines as of now. I think consistently around we 've seen the numbers roughly 5 crores plus minus one is roughly what we bleed as on today. But the endeavor is that over the next three, four quarters, we should be breakeven in this segment.

19:47 Okay, sir. Thank you very much and all the best for the next quarter. Thank you. Thank you. We have the next question from the line of Abhijan from AJ Capital. Please go ahead. Hi. Good afternoon. Hope I'm audible. Yes. You're audible, sir. Okay. Congratulations on good number. So my first question is that just in terms of the H1 FY 'twenty seven revenue and EBITDA, I wanted to understand what part of it was recognized against the $100,000,000 advance that you have, including product development revenue under the input method? And what will the cash and noncash split of European revenue be like in between FY 'twenty eight to FY 'thirty when this realization and open the revenue realization start coming in from the business?

20:42 So let's first come to the accounting for the European contract, right? So the revenue recognition starts happening at the time when we have the dossier approval, right? So typically, if the plants are approved and the dossier is approved, then the revenue gets recognized, right? The pre preparation for this is the capital investment in the plant trying to do the work at the R and D centers to have a quality product. And then you start revenue recognition once you have your plants ready. Now this will more be a composite accounting because you'll first have to look at how much is already spent on those endeavors and then how do you spread it over the contract period. This is slightly complex because you're also earning interest on the money that you've got, right? While you see in our balance sheet, there's a notional interest cost also.

21:44 So largely, the revenue starts kicking in mostly from the time when you start supplying and you and the revenue gets recognized at the time when you get your approval. So you will probably see an abnormal revenue coming when you get your plant approval. So typically, that's how the revenue recognition will happen. Okay. So if you have anything else, I'm happy to answer. All right. No. So just building on so as of now, in the H1 figures, we don't see any impact of this in the P and L. Although my second question builds on that sorry. Yes. I said there's nothing that's built on that front.

22:30 All right. Okay. So all of that is sitting in the balance sheet I'm assuming right now. My second question builds on that only that the interest income is about 20% of the PBT, and I think it's on the advance. So what happens to other income and to OCF as the deposits are used FY 'twenty eight onwards and this commercialization starts kicking in and coming in the P and L? So what typically happens is that because you've got an advance, right, so the advance will be proportionately used over the contract period. Let's say if the contract is for sixty months, right, so you probably have have the the advance, which is the $80,000,000 which is left of the first $20,000,000 That will probably get set off, and the remaining money will start coming in with the supplies, right? So this has to be proportionately done. As I said, it's a detailed working.

23:31 Once we have the approvals, we'll have those clearly spelled out in the notes of the balance sheet that we will have. Right, sir. No, I understand that. Lastly, just a hygiene question. Just wanted some update from the management on this one hundred fifty eight BC Shopal notice that was there for the FY 'nineteen to twenty five year period. Any update that you can provide to the investors and potential investors about what amount is in dispute? And have you made any provision on the balance sheet for that? No. So this is the NPPA disclosure that we made is what you're talking about, right? Yes. Yeah. So so if you look at the disclosure, we've clearly mentioned that we are doing job work for a marketing company.

24:21 Right? And in the disclosure, we've clearly mentioned that the contract with that company states that anything that comes, which is on account of NPP or others, is not our liability. So because the way the notice was issued both to us and them, As for the LODR, we are supposed to make a disclosure. So we do not have any financial liabilities clearly mentioned over there. All right. So no provisioning, sir? No provisioning. No. No. Nothing at all, sir. Nothing at all. Alright. Alright. That's it from my side, sir, and thank you, and all the best. Thank you. Thank you. Thank you. We have the next question from the line of from Entegrity Ventures and Partnerships?

25:11 Please go ahead. Yeah. Hi. Good. I have a couple of questions. My first question is on the CapEx plans on the. Can you please give some numbers on how much CapEx you'll be doing in the next three years annually? So the historic numbers are there in the financials. But for H1, because we as Sayul was just mentioning and Sandeep, you mentioned about the Oriflame acquisition, and there has been an investment in the Badhi plant of around INR 43 odd crores. Oriflame deal, which was in public domain, was of around INR 56 crores. For this quarter, as I mentioned, there is an investment of INR $2.10 crores for H1 total is INR $2.10 crores that we made.

26:04 So we historically have been around a number of close to 300 odd crores. We see this slightly higher this time because we are operationalizing, but... And we've acquired this plant. There may be some small investments further required at some of our plants, as I keep mentioning that on a gross block of INR 2,400, if we are spending 5% on the maintenance CapEx, 100 crores gets into the plant, right? And there has been a small investment in our HANA also. So that's about it. Got it. Got it. On the growth side of domestic branded and international branded, do you guide any growth numbers for the coming years in the margin side?

26:59 So while we don't specifically call out any guidances on any of our business verticals, right, so but the general tone is both of the businesses are performing fine, right? You have the international business segment, which is one of our focus business segments as we diversify from Indian markets, right? Not just in the core business core geographies, which we are currently present, which is Africa and Southeast Asia, the intent is can we also move beyond into the further regulated markets across Latin America, Middle East as well as Europe, right? So this is a business which we continue to do, and it's a high EBITDA business, which we do, right? The second is the domestic branded business where we today are largely strong in gynecology followed by cardiology, right? So these are the two business segments that we focus on. We today have almost 1,600 people on ground. We recently added people, as we mentioned in our last call, right? So we have grown roughly 8% year on year in this business and then there is how can we maintain an 8% to 10% growth in this business as well with continued improvements in PCPM and profitability. Right?

28:20 So this is how we look at these two businesses, which form integral core part of our Akums Drugs, which have a better EBITDA profile than the core manufacturing business. Good. Good. Thank you so much. That's it from my side. Thank you. We have the next question from the line of from Global Securities. Please go ahead. Hi, sir. I have couple of questions. First, can I know the contribution in revenue and path from Auditly? Sure. So let me explain this. So Oriflame, we bought it at around 56 crores.

29:15 Right? This is, again, as I was mentioning to an earlier question, we expect that Peak should deliver a 3x revenue for us, right? As we said, we are entering into color cosmetics, so we are building up revenues. We also have existing manufacturing revenues that would also come in from Aurifilm, right? So this year largely is a period where we will build upon customers and revenue. And gradually, this business in couple of years should start meaningfully contributing. What was the contribution on past level from Polyflume? Negligible. Negligible. Okay. Okay. My next question is, as our... By the facility CapEx happened, I don't know how much contribution in top line will be there from it, and when will it start?

30:11 So, Badi, as I said, will gradually, in three phases operationalize this facility, right. If we speak about it, this facility should deliver at least 10% to 15% of our CDMO business in three years from now. So this is how we look at this business. Okay. And my last question is, as I can see throughout Concourse, there is some delay in Zambia's execution, I guess? So execution is on track. This is what we are mentioning is since they were midday regular elections for the president's post which you would understand we could only get a government contract post which.

31:00 Right. So then it was extensively fast tracked. We received, discussed, negotiated the purchase order, the quantity and the pricing. Post which we have now received it, it is within our back. We are in process of operate like procuring the raw materials then manufacturing it, which will take three odd months for us to do. And once we do it, we'll ship it, which will again take three to four months, right. So we'll dispatch it in Q4, book revenues in Q1. Okay. So is there any target for this year's top line? How much are we going to As as you mentioned, right, this this year, we don't expect top lines from Zambia to come. Of course. But in general, overall top lines?

31:49 No. We don't give very specific guidance on this. The business remains healthy as we have discussed all the business segments. Right? So the businesses remain healthy across all. Okay. So that's all I have. Thank you so much. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address all the questions from the participants in the question queue, we request you to kindly limit your questions to two per participant. If you have a follow-up question, please rejoin the queue again. We will take the next question from the line of from Capital. Please go ahead. Hi, ma'am. Thank you for the opportunity. Am I audible?

32:37 Yes. You're audible, sir. Right. Thank you. Congrats on a great set of numbers, sir. A couple of questions from my end. I see that our CDMO revenue has gotten a revival since the last two or three quarters. I just wanted to get an understanding of which therapeutic area specifically has in this growth of us. I mean, is our portfolio tilted heavily towards anti infectives, cardiac segment? If you could share some light on that, please. So... Right. So I correct. It's been performing well for the four, five quarters now. So on on the therapy segment, we are largely a contract manufacturer. Right? So what matters to us is whether it's an injectable, is it a vial, is it a tablet, is it an oral liquid, right. Therapy has little meaning for us in one sense, right. Also since we almost have a 10%, 11% market share within the Indian market as overall, right? So we broadly mimic the market in a way, right? So our large contribution would be therapies, which are large in the Indian market only and similarly would be contribution across the unit dosage forms, right? So to answer your question, we don't have any tilt towards any therapies skewed towards any dosage forms. We largely have fair share as it is here in the Indian market.

34:03 Understood, sir. And is there any specific tailwind that's helping us increase the volumes in our CDMO business for the last two, three quarters? I understand that, of course, the ICM has been growing well as well. We've had record volume growth this quarter. So I just wanted to get some understanding on what is driving the volume growth in our CDM business. So so while we did deepen into this, like, for the last four quarters, year on year, we have been, for every quarter, delivering almost a 20% volume growth now. Right? So this is across existing as well as new customers, right, existing also are running well. This is across our prescription oriented customers, our private label customers, right, regional customers, right. So this is something which is as a basket in the whole IPM, we are seeing the growth on.

34:53 On top of it, since we have added cosmetics, our Nutra facility is also there, Right, so beyond pharma as well, we would soon show growth, right? So that's what I wish to submit. Got it, sir. And so for our domestic branded formulation business, I believe you've been guiding for about double digit volume growth for the past two or three quarters. However, when you look at our top line growth in the segment, it's been about 78% for the past two quarters. Are you facing any challenges or headwinds that is preventing us from going in double digits? And also if you can share the current PCBM of your domestic branded businesses, Salesforce, that'll be great. Sure. So once maybe...

35:40 We always would have guided volumes on our CDMO business. Right? For individual for marketing business, we don't guide volume growth. But you're right, our growth has been a single high digit 8% to odd percent that we do. This is what we think will remain as we speak, right, near to the IPM is what we think our volume growth will be. Specifically on PCPM, PCPM is roughly 2.5% for us, right. As I said, we have gyne, which is our most important therapy, almost 45% of our revenues come from Gynne, where we have three divisions, which are mature divisions, where the PCPM is almost above 3.2, right? Then we have Cardio, which is our large division. We have, as I said, had 200 new field force members joining us in Q1, which have dragged overall acumentus PCPM down to 2.5, but the endeavor obviously remains how do we have a better Physician Connect launch better products in the market and subsequently as the divisions mature, how can we achieve a PCPM above three.

36:52 And sir, have you seen any improvement in our PCPM sequentially for the last one, three quarters? So as I said, we have had new 200 odd folks, which has temporarily resulted in a dip, but the mature division still operate at a PCE number above three, which over the last three, four years has meaningfully increased. If you would go through it, it has sizably increased. Understood, sir. And also, sir, in the prior quarters, we had discussed that you're working on some first to launch products. Is there any update on the same? So you said fast launch products? First first to launch. First to launch. In some niche markets, we So these are within the CDMO businesses as we would have communicated within That's right. That's right, sir. We have DCJ approvals, right? So we usually get almost two to three DCJs every month, right? So which takes our tally to almost 30 odd DCJs annually, right? So these are the products which are early in the market, maybe first, second order there in the market who would have received it. And that always remains our focus, right?

37:58 R and D, if you see it upward of 3% of our CDMO revenues investment, which flows into part of it flows into these new launches. Understood, sir. That's all from my end. Thank you. Thank you. You. If you have a follow-up question, please rejoin the queue again. We have the next question from the line of from BBD Asset Managers LLP. Please go ahead. Thank you for the opportunity. And,, congratulations for excellent execution in CDMO business, sir.

38:43 Sir, my question is that can you give some highlights on how the EPI prices are moving right now, and how is it expected to move in next six months? Sure. So API prices have gone up. Right? If you really look at it quarter on quarter, these have moved roughly two to 3%. While if we compare it to last quarter two, these would have moved up by 5% to 7% as a basket, right? So this is on the API prices. While one can only guess these are mostly traded as commodities, right, and extensively depend upon the input material cost, which is basic materials in KSM, and also depend on husk and solvents, so these prices have also gone up dramatically.

39:34 We expect there should be some slight upward movements only in the API prices, at least in this quarter. And that's how we view the two, three months. Subsequently, we'll see how the quarter four or January onwards the pricing will look. But as of now, this is on a slight upward trajectory only. Okay, sir. And sir, I see that your CDMO business has grown roughly 31% to 39% in terms of revenue. And you say that the APA prices has moved by five to 6%. So volume growth is more than 20% in that case? Yes. So as I also mentioned in my earlier call, for the last four quarters, every quarter, you know, compared to the previous quarter last fiscal, we have grown above 20% in our volume.

40:25 So can you share what was the volume growth in this quarter, volume wise? So broadly, this is above 20%. So margin wise as well as quarter wise, this should be above 20%. Okay. Thank you so much. Thank you. We have the next question from the line of Praveen Jayaraman from Evidence Park Institutional Equities. Sir, my first question would be on the R and D side. What would be our R and D expense as a percentage of our top line? And what could be a steady state R and D expense? So this is broadly 3% of our revenues.

41:15 We largely do roughly INR 130 odd crores in our R and D, right? The whole endeavor is for R and D is how can we have good products identified, researched upon as we move into the regulated markets, we expect this R and D expense also to move up, right. But broadly 3% odd, 3.5% is something from the CDMO revenue that we expect to reinvest into quality pipeline assets. What would be the manpower behind this, sir, in terms of count? It broadly has three seventy five scientists and roughly 100 people who support the R and D apart from scientists, right? So that is broadly our pool of R and D manpower.

42:03 Sir, in terms of the major contracts which we speak upon, the the the European one, which which will be the upcoming ones, do we have a, like, a big similar contracts in pipeline, which we are working on, which would be the upcoming ones in the near future, which we could end up on? So so there's nothing which we have disclosed as of now. Right? So I'll rest over here while the endeavor always remain how do we grow the business. There's nothing which we have disclosed as of now. Most of my other questions are answered, sir. So thanks for your time. Thank you for the opportunity..

43:02 We have the next question from the line of Sangeeta Pourishotam from Fogito Advisors. Go ahead. Yes. Hi. Good afternoon. Can you hear me? Yes. You're audible. Okay. Firstly, congratulations for a great set of numbers. I have two questions. One is that as far as the CDMO business is concerned, what is what should we take as an outlook in terms of growth for the rest of the year as well as for next year? If you could give some color on that. The second question is on the domestic branded formulation business. You know, if you could give us some sense of, you know, what is actually happening there? Why is it that, we have seen a dip in the EBITDA?

44:00 Are there any challenges that you're looking at which are likely to get resolved going forward? Just some color on what's happening there and what are your expectations of this business? Sure. So I'll address both. First is on the CDMO side of the business, right? So our top line is governed by two things, volume and price, right? Yes. As I just mentioned, price is on a slight upward trend, but we really don't know how the long term trading of the API prices would look like. On the volumes, as of now, as I said, we have been we have seen seen multiple quarters where the volume growth was significant, and we have a 60 of order cycle visibility, right? So for the current quarter as well, we see good traction in our penetration in the CDMO services, right? The volume will continue to remain healthy.

44:54 As we progress, we'll be able to tell, but there's no reason why to believe that the volume growth will not be there in the IP market, right? So that's there on the CDMO segment. On the acumen test, if you really look at on the gross margin level, this has continued maintaining a 74%, 75% gross margin business, right? Most of our EBITDA drag was driven investment into the manpower, right? So we broadly moved up from a 1,400 MR count to a 1,600 MR count on top of which there is a four fifty line manager across first, second and third line managers, right? So the idea today is since it's a growing business, it's sub-five 100 odd crores business. We today are almost fifty sixth, fifty seventh odd rank in India, right?

45:47 The whole idea is how can we further grow their business vertical, right? So we are investing into our manpower. We are investing into launching new products. Our new product launches almost contributed half our growth, right? So these are the initiatives which we are taking from a long term vision of how do we see this company three or four years down the line, right? So and hence, we are doing all the right initiatives, which will help us grow this, Right. So not specifically looking at quarter to quarter, whether it was 10 or 12 or 24 or EBITDA. Investments are going into manpower, which I would like to say. Okay. And if I can just squeeze in a related question, how do the TradeGenics then fit into the picture? What do you expect from that business?

46:38 So TradeGenics was if we had to just have a historical flavor onto it, TradeGenics was a key business segment for us, which at one point in time even contributed about 400 odd crores for us. Right? It had two major challenges. One was there was a huge working capital cycle, which was involved in the business. And secondly, the margins were not supportive of driving this long term growth, right? So we decided to prune down this business, which was well stated as our objective for FY 2025 and subsequently in FY 2026. We also had time where we reduced EBITDA losses. This quarter, for the last eight quarters, right, we have been doing it. Now what we have done is so TradeGenics will also have to appreciate is that there might be an opportunity in the future where TradeGenics get sizable momentum, right?

47:28 There have been talks around that. You would have discontinuation of branded play, right? You had talks around Tier three, Tier four geographies where the supply network would be built around the resilience in supply chain, so all of this, right? So we have pockets of the businesses which are profitable, right? Extremely lean structure. So if you see, the idea is not to lose money over there, but to keep a foot in the door that if any time this business becomes a meaningful opportunity, we still have distributor connects products in the shelf of the chemist and also some lean field force, which will help us grow this business. So that's where the group today thinks is we are not losing money. It is not asking us to employ more capital. And hence, this is the current state of our ambition with this business.

48:22 Okay. Thank you. Thank you very much. Ladies and gentlemen, that was the last question. And with that, we conclude the question and answer session. I now hand the conference over to Mr. Ankit Jain for the closing comments. Thank you, everyone, for attending the earnings call for Akums. If you have any remaining questions, you can reach out to the Investor Relations team. Thank you, and have a good day. Thank you very much. Thank you, members of the management. On behalf of the Akums Drugs and Pharmaceuticals Limited, we conclude this conference. Thank you everyone for joining with us today, and you may now disconnect your line.