Good afternoon, everyone. I welcome you all to Gufic Biosciences Limited's Earnings Conference Call for the second quarter of financial year '25-26.

We have with us today for the call Mr. Pranav Choksi, CEO and Whole-Time Director; Mr.

Devkinandan Roonghta, CFO; and Mr. Avik Das from Investor Relations Team, to give the highlights of the business and financial performance of the company and to take questions, if any.

Before we begin, I would like to say that some of the statements that will be made in today's discussion may include certain forward-looking statements, which are projections or estimates about future events. These estimates reflect management's current expectations about future performance of the company.

These estimates involve a number of risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Gufic does not undertake any obligations to publicly update any forward-looking statement, whether because of new confirmation, future events, or otherwise.

I hope you have received the investor presentation that we have posted on our website. I will now hand over the call to Mr.

Avik for sharing the business highlights. Over to you, Avik.

Thank you, Shwetha, and good evening, everyone, and thank you for joining. I'll provide a focused update on the direction and what is changing inside the business units.

I'll start with our hospital injectable platforms, which include Critical Care and Sparsh. In Critical Care, our approach remains hospital first and science-led.

We are concentrating resources where protocols drive repeat use, such as sepsis, resistant infections, and invasive fungal diseases. The intent is to win depth in the existing accounts, embed our therapies in care pathways, and let molecules class compound share.

Portfolio additions are chosen to strengthen our AMR stewardship and reduce escalations to the use of last-line drugs. On Sparsh, Sparsh is being shaped as a platform for offering niche products to a wider segment of hospitals and nursing homes where service reliability matters as much as the brand.

Our medium-term focus areas are contrast media, parenteral nutrition, and cardiac critical care. In this division, we are tightening our execution levers, which include coverage, distribution control, and increase in hospital rate contracts.

When contrast media and TPN go live, we scale within our existing accounts, and we don't have to go out looking for greenfield accounts. Moving to our women's health platform, which includes Ferticare and Zenova.

Ferticare's path is category creation in advanced fertility, particularly in the reproductive immunology. The first-to-market immune therapy for recurrent implantation failure is about solving a very difficult clinical problem and earning specialist trust.

Trust there and adoption here will be steady and not spiky. On brands, our working guardrails have remained unchanged as we have indicated in the previous quarter.

Puregraf is trending towards a ₹25 crore annual run rate. Supergraf is on a two-year path to a ₹15 crore brand.

Guficin Alpha is well-headed towards a ₹10 crore brand. Setpocare is positioned to be the top choice in the antagonist class.

The objective is a coherent basket that captures more of the IVF journey and not to have a long tail of just SKUs. Now on Zenova.

Zenova is a stable specialty platform in women's health and ortho. We're building preference at the point of care and balancing the mix with differentiated launches.

The near-term job even here is execution, quality, which is consistent prescription depth, and very disciplined brand rollouts. Growth here is durable rather than promotion-driven.

Now moving to our toxin platform, which has Asstoderm and Neurocare. On the Asstoderm front, we are extending from our toxin anchor into a fuller aesthetic ecosystem, which will include fillers, skin boosters, and biostimulators.

The intent to do this without diluting our focus on toxins. The logic is very simple here: a broader portfolio enlarges the clinician funnel and creates a progression path into toxin over time.

We've advanced our in-licensing for global quality fillers and biostimulators. We are building a scalable practitioner training engine so launches convert efficiently here.

Now on the Neurocare front, in which is our therapeutic toxin, the strategy is a long cycle but high lifetime value, which is create new injectors, widen indications where guidelines already support use, and expand specialty coverage beyond neurology. This is methodical market making, which is covering training, evidence creation, and awareness building so that usage is repeatable and protocol driven.

Now moving to our last platform here, which is the nutraceutical platform, where Healthcare division operates. This particular division blends modern, evidence-based Ayurveda with musculoskeletal care.

Our flagship over here is Sallaki and which is positioned as a care pathway rather than a symptomatic pill. Ridol continues to build relevance in the acute GI segment.

We are adding selectively here. We've added molecules such as Vonoprazan and other molecules where science and prescriber behavior are shifting in order to keep the portfolio focused and relevant to the market trends.

That wraps up our domestic branded formulations business. I'll move to our international business a bit.

Our international business continues to progress as planned with focus on strengthening our global partnering model and expanding regulatory reach. During the first half of the year, Gufic Ireland secured its first marketing authorization in EU.

This gives us direct access to regulated markets, an important milestone that establishes a platform for future filings. We also received 24 key product and facility approvals across regulated and emerging markets, including markets such as South Africa, Colombia, Portugal, Myanmar, Sri Lanka, Cambodia, Thailand, and Lithuania.

These approvals enhance our footprint across critical care, gastro, and anti-infective portfolios. Now on the broader opportunity, which we had indicated in the last quarter, the combined addressable market for our priority molecules stands at about $800 million across identified countries.

We are finalizing the sequence and timeline for market entry based on local intelligence and we've begun the filing of dossiers across multiple geographies. The partnering model remains strong with a continued engagement from leading global health organizations and regional partners.

This is enabling us to scale our complex injectable portfolio internationally in a disciplined and compliance-led manner. Now on the last part, I'll give you all a quick update on the Indore facility as well.

The facility continues to progress as per plan. Over the past quarter, the focus has remained on steady scale-up.

Tech transfers have now been completed for 40 products, and an additional 27 are under development and stability testing, expanding the base of both lyophilized and liquid injectable offerings. Vendor audits by more Indian pharma partners continue and with multiple new audits scheduled through the second half of FY '26.

Our global audit timelines remain unchanged with EU GMP and UK MHRA targeted for latest by Q1 of FY '27 and the US FDA milestone to follow client-triggered timelines thereafter. Operationally, the plant is on track to achieve its utilization and EBITDA target for FY '26, and we maintain our guidance of Indore becoming margin accretive by FY '27 onwards.

Overall, the project remains aligned with our roadmap and is scaling in a disciplined compliance-first manner. With that, I hand over the call to Mr.

Roonghta, our CFO, for the financial update. Thank you.

Thank you, Avik. I am going to give the financial highlight of Q2 of '25-26 versus Q1 of '25-26.

Because Q2 of '24-25 versus Q2 of '25-26 is not comparable because Q2 '24-25 do not include the Indore plant because Indore plant was started from January 2026. Likewise, the half-yearly result of H1 of '25-26 is not comparable with H1 of '24-25.

Therefore, I am highlighting the result of Q2 of '25-26 versus the Q1 of '25-26. The total revenue for the Q2 is ₹230 crores compared to Q1 of '25-26 is ₹227 crores.

EBITDA for the Q2 is ₹37.9 crores compared to Q1 of ₹33.2 crores. EBITDA margin has improved to 16.45% compared to 14.63% in Q1.

The profit before tax has been increased to ₹20.5 crores compared to Q1 of ₹16.3 crores. The PAT margin has further improved to 8.9% compared to Q1 of 7.18%.

The profit after tax for Q2 is ₹14.9 crores compared to Q1 of ₹12.1 crores. PAT margin is further improved in Q2 6.47% versus Q1 of 5.32%.

Thank you very much.

Bhumika, we can start the Q&A session.

Hi, team. Thanks for the opportunity.

One thing which I think would want to point out: in PPT that you guys give out, I think somewhere we need to also start putting in numbers in terms of revenue share, as that graphical representation is not giving us optically every quarter how things are shaping up. If you intend to disclose data, I would say, request you guys, do put in efforts to also disclose the numerical numbers so that life becomes easy for us to track your company.

Coming to the question, sir, would like to understand over last first half, things have progressed on the revenue part, but when it comes to gross margin, we have shown a good improvement. However, the employee expense and the other expenditure have been constantly going up.

Could you help us understand what has changed in last four quarters where the costs have been going up, but on the sales mix part, definitely things are improving, hence the gross margins have improved? If you could reflect back what has happened in last four quarters, and as we stand today, would this be the true, desirable gross margin that our business can showcase with the current sales mix or there is any one-off?

Hi, Pranav here. I'll take the question, and I think Roonghta sir, I'll just request you to come in in terms of the margins going forward.

Just to understand, sir, about your question. You say, would you like us to give a break-up of Indore and Navsari individually, or would it be more preferred for you in terms of the four SBU, strategic business units only?

Strategic business unit will help because, eventually, both the plant will start to run at optimal levels, right, while the inherent strength is between the different SBUs. True.

I think if going forward you can give a break-down of how the SBUs have done on numbers, that will help our situation because then we'll be able to closely monitor how things are progressing. Otherwise, indicatively we'll be close, but we'll still not be sure how things are progressing.

True. True.

I think you're right. I think mostly we discuss it during the investor call, but if it's in the form of a PowerPoint presentation, it will really be a help to track that on a Q-to-Q basis.

Fine. We got that message, I'll ask my team also to work on that.

Coming to your question specifically, yes, as we had mentioned earlier a few times also about the Indore plant finally contributing in terms of declogging the backlog of orders, that is one of the reasons where you see the revenue going up. I'll just tell you the reasons for the revenue and the gross margins, and then I'll come to the employee cost specifically.

Also if you've not asked, but the other expenses also would be part of the mind, I would just talk about that also in general, just to give everyone a perspective. The revenue would be because of the declogging.

October 2024 onwards is when the Indore plant commercially started raising invoices. I think December was the month when the first invoice was raised, and that's why you see the capitalization stop from Q4 on a whole, and others were there.

Now, in specifically regard to the margins increasing is because we also have in this first six months won a little bit more higher in the international business, and I think that is something which again answers your question. If we give you that break-up of how the international business has a little bit moved up as compared to the other sectors, that would give you an understanding of how the margins would go up and also would continue to go up in the next few quarters also.

Domestic business is also growing. CMO business has a little bit, I would say, suffered in these six months because most of the capacity which was available, we are mostly focusing on exports.

We have already requested most of our CMO partners to shift to Indore, but this is a long-drawn process because of audits involved as well as also validation batches and three-batch data they wait for at least six months stability. Then every company have their own, I would say, requirements in terms of QA, and then they transition to the new facility.

We hope that the CMO business also would start picking up from Q3 onwards, and we would see an whole some, I would say, revenue to be captured hopefully by Q4 or maximum by Q1 2027. Coming to the employee cost.

As you must have seen the announcements in the last, I would say, three quarters in terms of getting Dr. Rajiv Agarwal or we got Mr.

Vijay Kumar from Galderma, Dr. Rajiv Agarwal from BSV, or we had taken Dr.

Rajshekhar from international business. He joined way back also in end of Q4 last year, and Q1 was when he was full-fledged there this year.

Then also followed by Mr. Rajesh Kaul, who joined in Q2 this year.

There have been some in case of domestic business as well as international business some recruitments and additions done. I'm just highlighting the top people, and along them also the team has been structured by which we have got some additions coming in, which will of course they will already have started contribute, but you'll see the add-ons happening in the quarters to come in terms of the regulatory, in terms of the market penetration, in terms of business intelligence, and so on and so forth.

Also with the regulatory department also being a little bit more expanded keeping in mind the demands of Indore. That's why there have been some products which have been, I would say, validated for the Indian market where there are some Phase 3s going or maybe there are some validation batches and testing going on, bioequivalence being done for certain products which we are going to launch in the next year.

As well as some clinical data being worked on some complex injectables. That's the reason other expenses also have a little bit gone up in terms of R&D as well as dossiers.

Employee, like I mentioned, because of these restructurings and addition of team members, this is what has happened. Plus the area has also of course is one of the point.

Again, I'll hand it over to Roonghta sir. Maybe he can elaborate in a little more specific manner.

Roonghta sir, please take it forward.

Basically, if you see, employee expenses has been gone up because of the Indore plant. We have to incur approximately 4.5 crores per quarter salary.

That is one of the reason that employee expenses has been gone up absolutely high because 9 crore is the extra employee expenses in the Q2 of current year compared to Q2 of last year. Other than this, there is an annual increment has been given to the employees.

That is another one of the reason for increasing the employee expenses. The finance cost has been gone up because of the capitalization.

Previously, the interest was capitalized in Q2 of the last year, whereas the current quarter, the interest has been charged to the P&L. Similarly, the depreciation has been increased only because of the Indore.

Interest is also increased because of the Indore. Other expenses has been increased because of the Indore also because there is a electricity bill, there is a consumable consumption, and there is a fuel expenses.

All these expenses is also contributing because of the Indore because, including interest, depreciation, employee cost, and other expenses, around 18 crores per quarter we are incurring for Indore expenses.

Got it. This is very clear, sir.

This is very helpful. Apart from this, just wanted to understand on the domestic part, how this business is scaling up, because we don't have the past track record of how the quarterly numbers have shaped up.

Any heads-up how first half the domestic growth would have been? Same for the international business.

Yeah. International business of course is growing in, almost by I think 32% to 33%.

That is also a reason because of some tenders from the UK market, as well as some new markets also opened up like Canada and South Africa and Brazil. In terms of the domestic market specifically, the infertility division is really taken steam with the Puregraf and the Guficin Alpha along with even Supergraf, which was launched.

The infertility division is one of the growth, I would say, players. The critical care as well Sparsh, I think, are growing at around 8% to 10%, but that is in spite of that is the value growth, but the main issue would be of course the erosion of units.

I'm sorry, the units are growing much higher, but the value is being eroded, you see a net of around 4% to 6% only coming there. Because there has been some erosions in pricing, it's not the margins getting affected, but the top line being affected because there's a overall price downward trends of the API, which has to be passed on to the market.

That's not that major. Like I said, because of the capacity priorities, the CMO has definitely taken a dip in this first six months.

Again, coming back to the domestic market, the Healthcare business and Zenova are in that 10% to 15% trajectory. This Ferticare is a little bit on a higher, 18%, and the domestic Ferticare Critical Care and Sparsh would be around 5% to 6%.

Perfect, sir. Very clear.

I have more questions, but I'll join the queue and come back later.

All right. Thank you.

All right. Oh,

actually, before we go to the next question, I just got a nudge from my colleague, we forgot to mention the botulinum toxin part of the business. The botulinum toxin business was also growing at around 22% for both, that is neuro as well as aesthetic.

That completes our domestic basket. That's it.

Sorry, let's proceed to the next question. Sorry, I just had to add that.

Thank you for the opportunity. Am I audible?

Yes, you are audible, Bhavya. Please go ahead.

Yeah. Just two questions.

Last call you had kind of spoken about how we were in talks with some US brand for in-licensing of Stunnox. Has there been any update on that?

Are we still in talks?

Yes. I think that was around two quarters ago.

Last quarter already I also clarified that we had received an commercial offer, which we found not worth pursuing in terms of the bandwidth which we had to employ in terms of setting up a separate entity only for the regulated markets. Talks are still on, but like I said, for us, the priority right now would be to completely scale up Indore.

Because as you understand, even if the money comes in from someone else, the entire bandwidth to create a new facility again would put us into some sort of a capital investment for the next two years, and my team would be engaged. The priority right now as a conscious call between the CFO, myself, and the team that we have Indore, we have the dual chamber bag, we have botulinum toxin, let's, I would say, focus on these three things, which already available with us, get the debt off the books, go for a top line and increase the margins.

Also, there'll be a GLP-1 contract manufacturing opportunity also where we'll be putting in some money, which is anyway ongoing since the last few months. Let's focus on all this where our, I would say, bandwidth is already there and we already have our hand in the field, and then maybe after a year or after two years if that opportunity comes up, we can explore it.

Understood. These other opportunities like GLP you spoke about, the timeline would be another few quarters to get some solid kind of business coming in?

The GLP is a GLP-1 is a pure CMO model with Hetero, which is there, and one more company, but mostly with Hetero, where they are going to take the brand for, like remdesivir, as you all are aware, Gufic had tied up with Hetero for the front-ending. Similarly, here we're purely looking at a CMO role for Hetero for semaglutide for the India and some other markets also.

Those I think from Q1, the patent goes off in March 2026, we see that I think Q1 revenues should capture that depending on the other market players, depending on the regulatory approvals, DCGI approval that is, and depending on how the market goes, you know. It's too preliminary to talk about GLP-1, but like I said, there is important bandwidth being utilized for that, but yes, that should be if whatever comes upside would come in Q1.

Understood. Just the last question.

I think you spoke about it, but just kind of reconfirm: from the last quarter to this quarter, the revenue increase has been quite nominal. Is that of the result of one that you spoke about, some API prices have taken a dip, and the second, that the CMO business has taken a hit, because I'm assuming Indore would have scaled up quite a bit considering 40 molecules are already tech transfer has been done?

Is those reasons or is it something else that is kind of making the revenue [unclear] very marginal in terms of last quarter?

When you compare April to June to July to September, if you see the additional revenue, whatever you can see as compared to the last year, is purely Indore related. Because, as we were almost out of capacity in Navsari.

Now, answering your question specifically about Q1 versus Q2, there's always a transition where some quarters you take a product like a teicoplanin and in some quarters you take up a product like a pantoprazole. Even though the capacity utilized in terms of units is increasing from Q2 to Q1, but of course we had more production of like a vancomycin, azithromycin, and pantoprazole products happening in Q2, whereas in Q1 we had orders more of tigecycline and teicoplanin where the top line was a little bit more higher.

As the batches get transferred, they are campaign-based production, which is happening in Indore. You will see the cumulative effect coming in maybe Q4 where you'll have both the basket and products being stabilized.

Because the advantage of Indore is that once I take a batch of a teicoplanin is 105,000 vials or a tigecycline, which is almost 44,000 vials, then the repeat orders come after almost a quarter. With the existing clients what we have or even our domestic business, the inventory builds up.

The advantage of the large, I would say, batch size in Indore helps us to keep the capacity free for any opportunity business coming in. The Q1 was mostly where you had high pricing and high revenue molecules as a mix.

Even though the quantity increased in Q2, you had then low-revenue products like a pantoprazole or vancomycin or azithromycin being part of the tech transfer. As we go more in the Q3, there'll be some fungins with a mixture of even, I would say, glutathione and doxycycline, which again are a mixture of medium and high-end products, but the volumes of fungins are less and the low transfer pricing models are high.

That mixture will continue, and you will see the benefit from Q4, like I said, as a whole.

Thank you so much. I'll come back in queue.

Thank you. Yeah.

Hello. Am I audible?

Yes, Aditya ji, please go ahead.

Thank you so much for the opportunity. Just, a lot of my questions have been answered.

Just, wanted to understand. Now that a lot of, CMO partners have have audited or are in the process of auditing our Indore plant, a large part of that revenue, will move to Indore.

The there'll be a dual effect, right? Navsari will start contributing a lot to exports and the CMO will move from Indore.

If we can just touch upon how Q3, the current Q3 is looking in the Q4 is looking in terms of, plant audits for my existing customers?

Yeah. Almost four of our clients have already gone full-fledged to Indore except, of course, there's some residual products which always go depending on the media fill.

The liposomal amphotericin B and the depot injections are not shifted to Indore because there we want to go for a one-time validation for international market and domestic market together. We hope that around three more clients would be onboarded along with the four clients also.

I'm looking at purely domestic CMOs right now. Of course, there are small small individual clients which normally have one product or a couple of products at max, which also are going to be added.

The major, like I said, we had around 12 to 14 major clients. Out of the 12 to 14, we can assume that 50% should be onboarded there by Q3.

Also there will be another new product line in terms of the vials as well as the ampoules, which we're looking at CMO beyond the existing product line in Navsari. Those also should start kicking in from Q4 and Q1 next year.

That's why I mentioned that by Q4 you get a little bit of a holistic view. Again to say that the erosion in prices do not contribute much in terms of the Indore project as such, but that is mostly the Critical Care and the, I would say, Sparsh division, which is normally an ongoing thing, which happens year on year also.

This is what I feel. I think Q3 you'll see three more, and then by Q4 you'll see a little bit more of mixture of existing clients coming in plus new clients coming in for new product lines.

Just a bit of color also, can I say Q3 and Q4 will be because I assume Q2 will be flat in terms of CMO revenue, but Q3 and Q4 could be a large bump-up in terms of CMO revenue along with our existing scale-up of our domestic branded business as well as slight uptick in exports because of bandwidth being cleared in Navsari. Is that the way to look at it?

I think large as compared to your definition, my definition might be different. I'm just saying that on a lighter side.

Definitely there will be an upside. How much will that be, we are trying to fit in as many pending orders as possible.

I would hope that the QA clearances from other clients come a little bit faster so we can shift them. You also have to understand that these clients also actually build up almost three months inventory from Navsari before they shift because they also keep this transition risk in place before they actually shift from site A to site B, keeping in mind any issues or anything which comes in troubleshooting.

This is a normal protocol which happens. I would say, yeah, I would expect that upside in Q3, but in Q4 I would definitely expect a little bit, I would say, more decent or better upside.

Understood. Just one last question.

Congratulations on the GLP-1. The other thing is just wanted to understand your view in terms of biosimilars or biologics because large part of those molecules are lyophilized.

Are we planning to enter that value chain either through CMO or export? Are we already in discussions?

What is your view on that?

Biologicals become, I would say, defined in many parameters like a monoclonal antibody or a recombinant set of products or, for that matter, even conjugates going on and there are the molecules also. Botulinum toxin also I consider as a part of that thing, which we already are into.

The vaccine thing is something which we already do, but that will have its own time period of whatever, X, five years. Recombinant products in terms of in hormones beyond hCG, hMG, FSH is what we are already working on, and we're working on hCG also.

We have our own set of biological work happening in our pipeline or maybe launch in terms of botulinum toxin, which would be more relevant to our therapeutic focus. In terms of monoclonal antibodies, I think we would not be going into because that's not our core competency.

Plus, all other companies already have a better lead than us, and we are too late or, very frankly, we first of all don't have our basic therapeutic prowess there. I think even if we want to get into there, there are better people than us who are doing it, and the pricing and the lead they have, I think it'll be not economically viable for me to get into the monoclonal antibodies.

This is my opinion. I may be wrong, but this is my opinion as of now.

No, no, just wanted to understand your thought process. It's very clear.

Thank you so much, and wishing you and the team all the very best for the upcoming years.

Thank you.

Congratulations, sir, for a good set of number. Sir, our revenue have grown by 6% quarter-on-quarter basis.

Can I assume that it is wholly contributed by Indore division? In the last conference call, you told that you were utilizing around 18% to 20% of Indore total capacity.

It would be around 24% to 25% this quarter?

Right. I think Roonghta sir can give a better percentage idea because he does this also on a monthly and a quarterly basis.

Yes, you would be somewhat right. Roonghta sir, would he be right that 18% would have evolved to 24% or around anything?

I'm sure that 22% to 23% was last to last month. I'm sure it would be around 24% now.

Yeah. Basically, whatever the top line has come basically is only from Indore.

There is no change in the revenue from the Navsari because Navsari capacity has been fully utilized. Presently, the production capacity is around 25%, but the sale will be around 23% during this quarter.

Because certain materials are lying in the stock, but the production was around 25% and sale is around 23%.

Because something will be the validation, which we'll keep, which will not be selling also. Absolutely, yeah.

Okay. Sir, there is a steep increase in our current tax asset.

Can you give a brief about it?

Sir, can you repeat that again?

Basically, what's happened, it is not increased in the debts. If you see the cash-in-hand, it is 70 crores lying in the cash-in-hand.

Because on 30th September, the bank has requested that instead of you repaying our cash credit, you fully utilize our cash credit and keep the balance in current account. That is the reason, if you remove the cash, the 65 crore rupees which has been showing as a cash-in-hand compared to last quarter, last half-yearly, then you will see the loan has also been come down.

Okay. Sir, are we expecting EBITDA break-even in Indore facility in this year?

In Q4 we are expecting the EBITDA break-even will going to come.

Sir. Thanks for answering the questions.

Thank you.

Good evening. Thanks for the opportunity.

Can you hear me?

Yes, sir, please go ahead.

Yeah. Sir, just a few questions.

The first one is on the capex that you've incurred so far. I just want to know what is the maximum asset turn we can expect?

I think we have about ₹500 crores worth of capex, right? In terms of fixed assets.

Is four numbers a good number to look at, or? Sir,

if I understood your question correctly, what is the total capex and what sort of returns can we expect on that capex? Is that right?

What the top line can do.

Top line. Top line.

Yeah. Roongtha sir, you want to take that?

No problem. The total capex for Indore including the interest capitalization and everything is around 350-355 crores.

According to our estimate, Top line is depending upon a lot of factor: product mix, then it's also depending upon international market as well as domestic market, but we are expecting that the top line will be in the range of 750 to 800 crore at 70% to 80% capacity utilization.

Okay. That's about two times the number.

Okay. Sir, the next question is, what is the outlook on the borrowing side as do we see this number in the next two to three years?

Basically, we do not have any major capex planned in next two years, and there will be revenue generation. Today, our borrowing, including working capital as well as term loan, is around between 350-360 crores.

For Indore also, whenever there is an increasing in the working capital requirement, because whenever there is a top line increase, you require to have a outstanding debtors as well as working capital requirement for inventory also. Whatever the increasing in the top line will going to come, that working capital requirement we will not going to borrow.

We feel that two years till whatever the additional working capital is required for Indore plant, we will able to generate from internal revenue, and the loan should come down to from 350 to 300 after two years.

Okay. Thank you so much.

Thanks again. Sir, this would be more broader question.

I wanted to understand over next three years, if one were to understand the pecking order in which the business is going to shape up, I think from bandwidth perspective, Indore utilization is the top priority. Then, within the business segment, if you could help us understand where does botulinum or women healthcare or CMO business, how do they stack up on priorities?

We understand the efforts that you're putting in through the PPT or press release that you give out. How should we understand the gravity of those efforts in terms of what is the big picture looking like?

Would hospital segment become the critical part of our cog, or would women healthcare will become a critical part of our cog in 2028? If you could just help us put the broad jigsaw puzzle.

Yeah. I divide our entire business into purely injectables.

Injectables also if you see the product lineup, we have a lifesaving and we have a lifegiving, let's put it that way. Botulinum toxin of course becomes the third anchor because that's sort of a separate thing.

Let me first focus on the lifesaving part, that's the critical care part of business, where we have two divisions, which is Critical Care, of course it has further divisions down, but major parent divisions Critical Care and the second parent division is Sparsh. Because of the product baskets which we are getting from Navsari and now in Indore, we have gone for a little bit more of a focused approach.

In the Critical Care we have the CX and Mycocare, and then we have the Primacare. In Sparsh, we have a complete focus on dual-chamber bags, contrast medias, as well as total parenteral nutrition.

We have clearly done that the entire manufacturing, backward core competency of Gufic should be focused in the market going forward by which in the pipeline we have also more products coming in in all these, I would say, two divisions, which will take it through. This in spite of having no product approval in this year.

If you saw in the last two years, the ceftazidime-avibactam was the only launch of prominence, and then in DCGI we have almost now three, four products coming in in terms of aztreonam-avibactam and omadacycline and then brexafungin. Every year if we hope to even launch one new product and increase the penetration by, I would say, more hospitals, we hope that in Critical Care with the erosion, 8% to 10% should be the way going forward.

Sparsh would be a little bit of a different approach because there we are looking into contrast media, total parenteral nutrition, and dual-chamber bag, where even after two years of launching the dual-chamber bag, we finally got the approval of the price increase in the month of September 2025. Meropenem bag, which we always wanted to have almost a 30% premium, we finally got a 15% premium allowed by the government.

That is a big headwind for us that'll help us to now launch the dual chamber in a much more relevant way because hospital also has to look into the margins. They also get selling a vial against a DCB also.

Sparsh would go for a higher trajectory in terms of growth because the base is also hardly ₹50-60 crores, whereas Critical Care is around ₹200 crores. That is what is it.

Infertility, which is right now around 100 combined with two segments of Ferticare and Ferticare Life, or we call it the Fertimax, these two would combined to cross close to 100 or more than 100 this year again, and then after the launch of the new u-hMG, that is super pure FSH, we hope that that journey would be around 15% to 20% year-over-year. Botulinum toxin is a very small base, even though we grow by, like I said, 22% or we grow by even a little bit higher, we hope that that requires a little bit more of brand building, category building.

That I always talk about the hockey stick. I don't know when it'll come, but our efforts are on to get the hockey stick going on because of the margins available on the product that we can really invest in the category-building part of it also.

The international business of course would be growing at a much higher percentage, and that would come once as Indore declutters Navsari, you'll see more and more backorders being taken care of from Navsari. That is the time, and we also have an audit coming up.

We hope that by January to March, our Indore also would be EU GMP approved. Then we can see some site add-ins or product transfer happening for the international market also from Q1, Q2 2027 to Indore, which will again, I would say, declutter the capacity further.

International business overall, which is mostly injectables, the same thing, they are the same injectables what we sell in the India market, there's no separate product basket. Lifesaving, the lifegiving, and also the toxin, that's our focus in the international market also.

The approach is different: in some countries, we have a field force; in some countries, we do it via distributors; in some countries, we direct supply to the MA holder, and then they distribute. These are the three approaches which will continue.

Overall, we hope that the focus of a jump of 20% year-over-year or 15% to 20% year-over-year should continue with all these things, once they start kicking in together.

Very clear. Selvax, if you could help us understand SVX, how much amount we are putting in as an C-R&D or any budget or any timeline that you have in mind how much you want to invest behind this kind of product

features? Selvax was just a pure investment in terms of to see how it goes.

It's a very interesting thing where we have taken the India rights and also the development thing, but I believe the company in South Australia is still working on the preclinical and the cell line capitalization. I think the total investment also would not be more than $100,000, $150,000 right now, and then followed by certain milestones, where we have taken some I think 6% stake in that company, and hoping that once we get a breakthrough there, we should get the front-end advantage in India and also some other countries where we have exclusivity.

Because I feel in solid tumors, there's nothing better than the immuno-oncology, which was my thesis topic also way back in US. I really believe in what they are doing.

The combination of anti-CD40 antibodies and interleukins are a solid science to take care of solid tumors specifically. I think in the next two, three years, we'll come to know whether the success is there or if they cannot take it through, I'm sure someone else will show interest and might just take it over.

For me I'm more of a passenger there rather than, I would say, a contributor here. The vaccine and the toxin part is something as biological which I would like to pursue taking it forward.

That's the reality of Selvax as of now.

Got it. Very clear.

Today's gross margin, do they reflect the true picture or the potential that our company carries over next three years, or we should also expect change over here?

I think Roonghta sir will answer

gross margin. On the gross margin part.

I understand that there's an operating leverage available because of Indore. Oh,

you're referring to the gross margin, right? Sorry.

Please go ahead, Roonghta sir. I interrupted.

Please go ahead, sir.

If you see the past history of Gufic from last two years, the gross margin is between 18% to 19%. After The

EBITDA margin, yeah. 18%

to 19%. EBITDA margin.

It's between 18% to 19%. After two, three years, after three years, after Indore, I feel that the gross margin should at least be at 20%.

It may touch 21%, 21% after we increase our sale ratio. Presently our sale ratio is around 20%, 20% to 25% to international market.

If it's touch to 30%, 35%, then the gross margin may touch to 21%, 22% also. EBITDA margin may touch to 21%.

I think EBITDA, yeah. Got it.

Perfect, sir. You're doing a good job, and we want to back you up for that.

It might be a long journey, but, yeah, good show, sir.

Thank you, sir. Thank you.

Hi, sir. Am I audible?

Yes, go ahead, Nitya ji.

Firstly, I want to thank you for the detailed question and answer that you do every concall. From my understanding, I feel that you have a novel product in the Botox space.

You have intellectual property, and you mentioned that in the future you may have to do a capacity expansion to cater to the proposal which you said that you will consider at a later point in time. Sir, I realize that there are a lot of segments which you're already catering to.

Why not focus more towards the Botox side of things considering it's a novel product, rather than trying to cater to so many different segments? Maybe throw some more light on that.

Yeah. If I understand your question correctly, if you see our legacy and our core competency is injectable, lyophilized manufacturing, and all these lifegiving, lifesaving, and toxin, I call it Stunnox just because it's our trademark.

If I avoid telling Botox, but yes. All these are part of the legacy of the same lyophilized and the core competency of the company.

If you see today also the scalability, I'll first answer your toxin question first, and why the focus is India and then maybe the world. If you see in the entire world, the total market would be anything around $5 to $7, $5.5 to $6 billion, or with a projection of around $7 to $8 In some reports, it's around $7 to $8; in some reports, it's $5.5 to $6.

There, already there is a legacy of Botox, Allergan, AbbVie, or Galderma, for that matter. In India, with the current infrastructure what we have created and what we can really focus on the Indian market where the total revenue of the toxin both in therapeutic as well as neurological segment is only 25% $25 million.

Or even less than that. It was, if I'm correct, it's around living around $18 to $20 million.

That's the only revenue of toxin in India. If I compare the population of every other country and the actual, I would say, sales thing, I think India still the penetration and a lot of work has to be done.

We feel that for me to tomorrow to create another asset of $25 million in terms of and very frankly, we're not looking at taking any debt also to create that asset maybe after one or two years. We're very clear that there would be a debt funded by a partner, which is something in lines of what we got earlier as an offer.

Tomorrow, the partner will get the rights of the front-end in certain markets, and certain markets would open to us also. That's the strategy which we're going to follow.

The important strategy is that when you come up with that sort of a setup, you need the entire bandwidth of regulatory, of quality, of my COO, Mr. Nagesh, also to be there, hands-on.

We've seen what happened with Indore also where the entire bandwidth gets sucked on to that. We feel that already we are sitting on quite decent, I would say, pillars or bases which we can focus on.

Even in case of toxin, if we focus on the Indian market with the current setup which we have, we should do that. Just to cater that international business and the international market where anyway competition is higher and there's a lot of a different mindset because once you get into the regulatory process, there you need a pharmacovigilance, you need something else.

There's a lot of other things also which get associated with the toxin business. It's not as simple.

I feel even if in the next two years, again I'm saying, if we focus on India, get it to a ₹100 crore level business, as a Gufic as such. Already we have now only we have launched the product three years or four years ago, four years in I think aesthetics and three years in aesthetics and maybe two, two and a half years in neurology, and we already are number two.

We already have crossed the other players and reached to a revenue where we are number two after AbbVie. We feel let's focus there.

Of course, focus on our critical care, infertility, for which we have this amazing infrastructure in Indore. We have a great pipeline coming up also.

With the 15%, 20% headway coming up, round the line once we are cash positive much more than what we are right now, we already are cash positive, but a little bit more cash positive and the debt has been repaid, we can take a little bit more bolder steps in terms of the regulatory as well as the bandwidth creation also. That's why I'm saying, in this year also if you see, a lot of bandwidth has been created by addition of these new, I would say, leaders for our international business, gynae infertility business, our botulinum toxin business, and even for Sparsh with Mr.

Rajesh Kaul. This structuring happened this year, and we'll see the benefits in the next two to three years.

Then once we are ready and a little bit much more mature there, then of course we should look at the bandwidth addition also. For me as management also, we should be very clear how many reviews, how many MIS we need to take.

Any new division coming up always takes more time of ours. I feel we are okay for the next two years to go for that 15% to 20% year-over-year and become a little bit comfortable more with debt and more cash flow, and then I would more than happy to satisfy you also in terms of the international appetite of botulinum toxin, yeah.

Right, sir. Because I remember just a few, I would say, a year or two ago, we had discussed this where you had mentioned that there was a clear price differential between the pricing of botulinum toxin here and abroad.

That's why I just thought that capturing export market share through a lower price differential would really benefit, and it's a very niche novel product, which is why I was saying that maybe we could be more

When I meant at that time also, I didn't mean the pricing part of it. The price was there, but in order to get that price also, today, if you go to a Dubai or to a US or Europe, when anyone is going for an aesthetic use of a toxin, they want to do the best.

For them, a small delta of price doesn't make a decision that I want. They always say, "If I'm paying so much for my," I would say, "cosmetic treatment," which is anything around ₹50,000 to maybe ₹5 lakhs, whatever, "I would prefer to have the best of the brands."

For us also to grow, it's not the infrastructure which would be there. There would be a lot of clinical trials which need to be done, a head-on data which has to be created country-wise.

We also have to go for, which anyway we are doing in India right now. Right now, a lot of our revenue goes in creating all this data for the India market, but that would have to be replicated on a much higher scale and where the cost is also much higher to enter for the regulatory process, to go for the clinical data.

Even the entry point to all these countries for getting that delta and pricing would require a very high upfront, which I feel we should do after two years. Of course, and I think in the last 30 years of this molecule, there have been only six to seven players of this toxins.

I'm sure the next two, three years will not get a plethora of people coming in. We still, I feel, we still have time.

Exactly.

That's a great point, yes.

Yeah. Sir,

last question from my side is that you had mentioned regarding semaglutide, right, that you would be contract manufacturing? Could you throw some more light on that, what is the potential of this?

Very frankly, I don't have that knowledge because here we are pure CMOs of Hetero. Okay.

They have done the market analysis. We have invested in the back end to support them.

It'll be very preliminary of me to comment on this because the front-end strategy is completely handled by Hetero. Of course, we have the projections for next year and all that, but like I said, it's not something I control, I would refrain from talking anything right now.

I would rather let the lead company to take the initiative. I'm more than happy as a CMO partner backing them up.

Got it. Thank you, sir, for the detailed answers.

Wish you all the best.

Thank you.

Thank you very much for joining us today. If you have any further questions, please feel free to reach out to our Investor Relations Team, and we will be happy to address them separately.

With that, we conclude today's call. Thank you.

Take care.