Alivus Life Sciences Limited (ALIVUS) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q4FI26 Earnings Conference Call for Alibis Life Sciences Limited, formerly known as Glenmark Life Sciences Limited. 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. Should you need assistance during this conference call? Please signal an operator by pressing star then zero on your touchstone four. Please note that this conference is being recorded. I now hand the conference over to Ms. Chaumee Rao. Thank you and over to you, ma'am.

Good morning, everyone. I welcome you all to the Earnings Call of Alivus Life Sciences Limited for the quarter and financial year ended March 31, 2026. From Alivus Life Sciences, we have with us Dr. Yasir Rauji, our MD and CEO, and Mr. Tushar Mistry, our CFO. Our board has approved the results for the quarter ended March 31, 2026. We have released it to the stock exchanges and updated the website. Please note that the recording and transcript of this call will be available on the website of the company. Now I'd like to draw your attention to the fact that some of the information shared as part of this call, especially information with respect to our plans and strategies, may contain certain forward-looking statements and involve risks and uncertainties. These statements are based on current expectations, forecasts, and assumptions that are subject to risks and which could cause actual results to differ materially from these statements depending upon the economic conditions, government policies, and other incidental factors. Such statements should not be regarded by recipients as a subject of their own judgment. The company undertakes no obligation to update or revise any forward-looking statements. Her actual results may differ materially from those expressed in or implied by these forward-looking statements. With that, I invite Dr. Yasir Rauji to say a few words. Thank you and over to you, Doctor.

Shami, thank you. Good morning, everyone, and welcome to our Q4 and FY26 learnings call. I am pleased to share that this year marks an important milestone in the journey of Alivist Life Sciences as we complete two full years with NIRMA as our promoter. During this period, we transitioned and strengthened the foundation of our business as we positioned the company for its next phase of sustainable growth. The partnership with Nirma brought... We have enhanced financial strength, long-term stability, and greater flexibility to invest in future growth opportunities. Our focus on building a more diversified and resilient business model remained while we have accelerated, strengthening our product portfolio, expanding capabilities, and steadily improving the overall quality of business. During this period, we have faced some headwinds, like uncertainties around tariffs and regulatory shifts. These factors continue to disrupt supply chains, elevated logistics and energy costs, and created uncertainty across global markets, making resilience and agility increasingly critical. Despite these challenges, Alivis has not only navigated this environment successfully, but has also meaningfully improved the quality of its business. This is reflected in the strong and consistent performance of our non-GPL segment. Whose contribution to the overall business has steadily increased over the years from 59% in FY22 to 71% in FY26, thereby reducing our dependence on the GPL business. This growth reflects the increasing diversification of our portfolio and geographies supported by robust demand across regulated markets and sustained momentum from new product launches. We expect the contribution from the non-GPL business to continue to increase going forward. We also witness a meaningful recovery in the CDMO business 3 of FI26 as existing projects gained traction and newer projects scaled up. Notably, the improvement in the quality of our business is reflected in our profitability profile. We continue To improve our EBITDA margins and remain among the industry leaders in profitability. To add more perspective, between FI24 to FI26, our revenue CAGR stood at 5.7%, while EBITDA CAGR during the scene period was 15.8%. In absolute terms, we approximately added 270 crores of incremental revenue. And 270 crores of incremental revenue over the last two years, and 220 crores on the EBITDA side, taking our margins to 33.6%, the highest in our history. What is particularly noteworthy is that this improvement was achieved despite the loss of PLI benefit. This was driven by a favorable product mix, disciplined cost management, operational efficiencies, and an increasing focus. On high-value differentiated products. As a result, we have consistently generated healthy cash flows, strengthened our balance sheet and maintained a net debt-free position. Over the last two years, we have demonstrated the resilience of our operating model and the strength of our diversified portfolio. This has reinforced our confidence on the strategic direction we have taken as this steadily translates into a stronger, higher quality and more sustainable business. Moving to our full-year performance, our revenue for the year stood at 2,552 crore, registering a 6.9% year-on-year growth, and with the non-GPL business leading the momentum with 13% growth. This performance was supported by strong execution across markets, including Europe, Japan, LATAM, ROW, and India. Growth was further aided by new product launches and the recovery in the CDMO business. We have added 11 new products during the year, and the current portfolio stands at 176 unique molecules. We have also added 49 new customers during FY26, taking our total base of customers to about 900. We deliver EBITDA margins of 33.6%, expanding by 360 basis points, highlighting the inherent strength and operating efficiency of our business. On the CapEx front, Sholapur Phase 1 is progressing as planned and is expected to be operational in Q2 of this year, while construction of the new R&D center in Taloja in Navi, Mumbai is also underway. Our pipeline remains robust Thank you. Over 611 DMF and CEP filings globally as on March 31st, 2026. The high-potent API portfolio remains on the development path with 28 products in the pipeline. Twelve of these products are validated, seven products are in advanced stages of development, and the remaining nine products are progressing well through lab development stages. Given the ongoing geopolitical conflicts and uncertainties around global demand, we continue to remain watchful of the external environment. However, we remain confident in the strength of our business fundamentals and our ability to sustain EBITDA margins in the range of 30 to 32 percent going forward. With this, I now turn the floor to our CFO, Mr. Tushar Mistry, who will walk you through our financial performance for the quarter. Over to you, Dushar.

Thank you, Dr. Yassir. Good morning, everyone. Welcome to our Q4 and F5 26 earnings call. Adding to Dr. Yassir's commentary, I would like to share a few insights on our performance over the last two years, particularly how our growth profile and profitability have meaningfully improved. Our growth has become more broad-based and importantly, our dependence on any single client is gradually reducing. To illustrate these, While our GPL revenues have remained relatively stable over the past two years, our non-GPL revenues have grown at a caver of 7.5% during the same period. This shift in mix is also reflected in our profitability with margins improving from 28% in FI24 to 34% in FI26. This clearly demonstrates the new business we are adding is more profitable and value-aggressive in With ongoing effects and continued investments in new technologies and products, We remain confident in our ability to sustain this margin trajectory moving forward. Now, I would like to highlight the key performance updates for the quarter until the year ended 31st March 2026. For Q4 FY26, revenue from operations stood at 689 crores, reflecting a growth of 6.1% year-on-year. Gross profit for the quarter was Rs. 418 crores, up 14% year-on-year. Gross margins for the quarter stood at 60.7%, up 420 basis points. Year-on-year, driven by new launches, product mix, and operational efficiency. Rebita for the quarter was at Rs. 237 crores, up 13.8% year-on-year. Rebita margin for the quarter was 34.4%, up 230 basis points year-on-year. Pat for the quarter stood at Rs. 163 crores, with pat margins at Rs. 23.6%. For full-year FI26, revenue from operations stood at Rs. 2,552 crores, a growth of 6.9% year-on-year. Cost profit for FI26 was at 1,485 crores, up 13.7% year-on-year. Growth margins for FI26 stood at 58.2%, up 350 basis points. EBITDA for FI26 was at 858 crores, up 19.6% year-on-year. EBITDA margin was at 33.6%, which was up by 366 basis points year-on-year. Pat for FI 26 rule at 565 crores, with pat margins at 22.1%. Turning to the therapeutic mix, CVS and CNS continue to lead the growth during the quarter, with both therapies contributing 50% to the top line. In addition, we are gaining traction in newer therapies like respiratory and anti-algae, which collectively contribute more than 10% of our revenues now. Chronic therapies continue to outgrow acute segment and contribute at 67% to the top line in F526. R&D expenditure for Q4 F526 was Rs.25, which was at 3.6% of our sales. And for the full year financial 26, it was 91 crores, again 3.6% top-off. Before I delve into cash flow details, I would like to first highlight a fundamental shift in how the company is utilizing its cash. As many of you are aware, prior to FI24, while our operating engine was strong and consistently generated cash, a large part of that cash was upstream. FI24 marked a clear inflection point. Over last two years, we have generated cash coefficients of above 984 crores, of which we have invested in capex of 472 crores. Paid dividend of 61 crores and resulted in a voucher of 451 crores. Let me now move to the current year's cash flows. As of 31st March 2016, our cash and cash equivalents stood at 782 crores, with capex for the year being 306 crores. Looking ahead to FI27, we plan to incur a capex of about 540 crores, which includes carryover commitments from FI26, as well as fresh capital investments. Importantly, this entire capex will be funded through internal tools. These investments are focused on building new capabilities at Sholapur, our greenfield project, as well as strengthening our R&D platform. The capacity we are adding today will take us to 1,198 sales from 1,198 KL in F524 to a planned 2,690 KL by F528, positioning the company to drive sustained growth well beyond F528. With that, let us open the floor for Q&A.

So, shall we open the group of questions?

Yes, we can start.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants, you are requested to use answers while asking a question. Ladies and gentlemen, I will wait for a moment while the questions are assembled. A reminder to all, you may press star and 1 to ask the question. We will take the first question from the line of Ahmed Madha from Unify Capital. Please go ahead.

Yeah, thanks for the opportunity and congratulations on the great execution we have delivered over the last two years. First question is, we had a fire incident at the H plant. Can you quantify was there any impact of production and sales and is there any spillover we are expecting in Q1? And also, was there any costs booked related to the same on P&L?

So, the fire at the hedge impacted only the intermediate side of the facility. The API, the finished area was intact, so we didn't experience any great delays. As a result of that, there is no significant spillover. There is some, but not very significant. And we hope to be able to type that by in Q1.

From an expense perspective, yes, we have booked a loss due to fire in our other expenses to the extent of 20 crores, and that's why you see a jump in the other expenses.

Okay, so just to clarify on this, out of 126 crores, 20 crores is related to the impact, and on the employee cost side, is that jump organic, or is there something else as well?

So on the employee cost side, we have accrued the performance bonuses since the performance for the company is good. and those have been accrued in the last quarter.

Considering the lot of volatility we are seeing in global metros, there is obviously some forex impact we will be seeing, and I'm assuming it will be positive considering we are net exporters. Can you quantify? Does that sort of help us in gross margins? Is that sort of number big in gross margins? If possible to quantify and give your thoughts around, and I'm assuming there will be some impact because of... You are an appreciation and, uh, according imports, uh, cost. So that's first. And second, uh, was there any major, uh, forex gain worked in other income in, uh, Q4 or, uh, and full FAT-26?

Thank you.

Have we seen any challenges in terms of RM procurement, RM costs, pressure in terms of gross margin because of cost inflation, any logistic issues on the business in general? I mean, obviously, we'll be facing challenges, but something significant.

The rate was impacted first, starting from February 28th itself, and more or less that has been passed on to customers. As far as material costs go, solvents were the first materials that went up quite significantly. The good thing is that solvents contribute about 12-13% to our overall cost. So, yeah, there is an increase, but again, on the overall cost, it's not going to have that big an impact. Of course, we are in touch with our customers to give them that view, and most customers are agreeable to take on that added cost. Whether it relates to freight or relates to material costs. So we don't expect an impact.

And the industry environment in general for pricing, how will you evaluate current environment? Is it sort of a steady, I mean, apart from what has happened because of war, but in general, are you seeing any improvement in pricing environment for your API business?

For our markets and our portfolio, the pricing environment has been reasonably stable to begin with, and the war should not have any effect on the pricing environment.

Last question from my side, in terms of inorganic opportunities, if you can give some thinking, how you are thinking about that piece, what sort of profile of business you are looking for, and are we any close to do something?

So we are actively looking, okay, and the direction is to basically enhance the platform that we already have. So our goal is to extract more value from our pretty large and diverse pipeline of APIs. So if we can sort of, you know, milk that pipeline much more. A lateral build-up of allied platforms, then that's the direction we are looking into, in terms of inorganic.

Sure. Thank you so much and all the best.

Before we take the next question, a reminder to all, you may press star and one to ask a question. We will take the next question from the line of Krishnendu Saha from Korten AMC. Please go ahead.

Yeah, good morning. Thank you for having me on the question. Just trying to understand something about the improvement in the margin. So the material cost has been flat, but the contribution of CDM or the percentage of revenue has been flat also. Is it largely because the margin...

You know what, I need to be a little more clear, probably move closer to the mic, not use the speakerphone, I don't know. Can you hear me? Hello? Yes. Yes.

Please continue. Hello?

Hello? Yes. We can hear you. Yeah. Just a couple of questions. On a wire-wide basis, our material cost is practically flat, and our... CDMO share of revenue has been also flagged. Just understanding, has the product mix on the CDMO been largely superior in the past? Does it have an expansion in the EBITDA margin?

CDMO definitely has better margins, but are CDMO businesses grown 18%? Why do we say it's flat? I don't know.

No, I mean, sorry, let me rephrase that question. The percentage of revenue that we've seen flat is 6%, 5.5% and 6% compared to the last year also. So, contribution to the total revenue is still the same. So, I'm just wondering, is it largely because of the larger superiorness of the CPMO or within the CPMO? That's what I'm trying to understand.

Okay, so, improvement in margin has got, like, I would say three to four factors. Operational efficiency has helped. We have had better cost processes implemented. Okay, CDMO has gone from 6% last year to 7% this year. I mean, for FI25, it was 6%. It's not a 7% in FI26. Okay, and that certainly matters. But we've also had some... Good launches of generic API in the multiple markets. So, all in all, that is how we've achieved better margins.

And the backward integration went to the H2O Solapur, has that played out as of now?

No, not yet. Backward integration in a big way still has to, you know, contribute. There's some, but not very significant, because Sholapur is still not yet online, and we don't have the capacity for backward integration, you know, yet in the regular terms. So, Sholapur should be up and running in Q2, and then we hope to, you know, implement those backward integration projects.

That helps us in the margin, I suppose I understand that, right?

Yeah, we hope to have some benefit from that.

And sir, sir, something about Solapur being re-inspected or something, are we going for any regulatory inspection over there, or is it going to be normalized as well?

I think you're probably referring to Ankhrej, sir, because Solapur is not yet commissioned.

No, I know. I mean, in the future, do we look at implementing Solapur for regulated markets, because we only have Solapur for the ROW markets. So, I was wondering, do we go for the regulated markets for Solapur also?

Yeah, yeah, that is the plan, very much.

I see. And last question for my head. When we talk about high-potency API has been validated, the validation is, when I understand, when I hear that, I mean, just to clarify, I understand less of the subject. So, I mean, the innovator or the client has validated this object or the API or the molecule, right?

Yeah, yeah. So, the thing is that it's a progression. So, before we validate, we've already sort of engaged with the... A potential customer, and then when they are ready to take exhibit batches is when we validate the material in the plant, so that larger quantities are also generated as a result.

Okay, so the validation, they have started taking small amounts, validation amounts for MUST for the 7-8 molecules which we have right now and the high-potency API. That's what I can understand.

That's right.

And high-potency API will be a better margin than the rest of the business, right?

Let's see. That has to play out because most high-potency APIs that we are working in have patent expiry that are going to come in from the year 2028. So it remains to be seen. But yes, typically these molecules do attract better margins.

I see. Oh, okay. Thanks. Thank you. Thank you for your time. I'll get back in the queue.

Sure, sure.

Thank you. We will take the next question from the line of Shubh Mehta from ICICI. Please go ahead.

Hello, sir. Thank you for the opportunity. So, building on to the question of previous participant on high potent molecule contribution, I wanted to understand. This year, we had 12 molecules which were there, and last year, if I see, the size was 7 molecules which were there, submitted and accepted. So, can you help me understand what was the contribution of high-potent molecules this year? Can I have what we would hold you with this last year?

So, see, the only contribution that we get is from the sale of exhibit batch quantities. Because, like I explained, the patent expiries are not going to happen until early 2028. So, until then, our customers would not be able to launch and would not be able to buy API from us for those launches. So, the only sort of revenue that comes from the high-potent segment. Right now is the sale of exhibit badge quantities.

So, it will be said that it will not be the material contribution for us in the revenue? Not very significant, no. Second question is, sir, that growth, how much would be the growth contribution from the 12 new introductions which we had for this entire year? And what would be the price erosion in our base business if I exclude GPL and CDMO business?

See, again, these 12 molecules are new molecules, their patent expiries are, you know, going to happen in the next five to seven years.

Sir, I'm not asking about a site, but...

No, no, it's a regular one. You know, because typically, we don't go for already genericized APIs, no? That's the idea. And you wanted to know the base business solution, Mohdib, what were you asking?

Price erosion in base business, excluding GPN and TDMO.

Yeah, so, on that, the price erosion is about 5.5% is what we have seen on the non-GPL on CBMO.

Okay. Okay. So, if I exclude, despite that, we have grown pretty well, 13% kind of growth in the base business, if I exclude GPL and CBMO, that seems pretty healthy. Are we expecting to continue that traction over there?

Yes. That is what we are seeing.

Thank you. Thank you very much.

Thank you. We will take the next question from the line of Sunil Kothari from Unique BMS. Please, go ahead.

Hi. Thanks for the opportunity, sir. Congratulations for this transformative journey under this Nirma and Yon Lidishik. The way we achieved our cash flow control, then the way we started investing, and the way we leverage the benefits of better operating margin. My question, sir, first is... Yet another scope, which are the another area where you feel you have scope to improve further the margin or maybe maintaining this very respectable margin?

See, this year is going to be a bit challenging because of the war. The supply chains do have a little bit of constraint, but there is enough demand visibility is pretty good. We'll have to see how the whole margin thing shapes up. But the thing is, we are still confident of maintaining between 30 and 32 percent. So let's see how it goes. It's a bit early to give the whole year margin guidance.

Sir, I just wanted to understand which are the areas where you see internally where you find the scope to improve the margin, without giving any numbers, but you see any area where you feel internally you can do something which will help us to improve the margin.

So see, backward integration is certainly one area where, you know, we see some scope. For margin improvement, and once Shodapur comes online, in the second half of the year, we will be doing backward integration on a few key projects, and that momentum will build up as we go along. Excellent. Yeah, please.

And sir, second question is, we think last year, our objective and our basic strategy is to we don't want to go for a very commoditized any activity or business. And that's why we are very respectable, very highly profitable and business only. But looking at the cost structure, the way we invest, the way inflation is working, if we don't grow in a double digit, then it becomes very challenging to give a better bottom line. That is our understanding as an investor. What is your thought process for next two, three years? Will we be able to move from single digit, lower single digit, mid single digit to maybe a little higher or mid double digit revenue growth?

See, in the non-GPL business, we are already growing at double digits. So, the thing is that the GPL business is a bit wavy. So, it remains to be seen, but we are not seeing it, you know, keeping, you know, staying in line with the non-GPL business. So, that element will be there, but what's also happening, Is that as the non-GPL business grows faster, the contribution of the GPL business is going to be much less as we go forward. And honestly, see, I mean, we've interacted with you, right, before as well. The thing is that the focus for us is on, you know, having a good margin profile for the business and generating good profits which translate into good cash generation. So, maintaining a high quality business is a much bigger priority for Alivas. Okay, and growth will come, I am not saying that growth will not come, but growth will not be pursued at the cost of, you know, margins, because it creates a lot of other challenges then.

Great, sir. Lots of good wishes. Thanks a lot. Thank you.

Thank you. Before we take the next question, a reminder to all, you may press star and 1 to ask a question. The next question is from the line of Yog Rajani from Omega Portfolio Advisor. Please go ahead.

Hello. Thank you for taking my question, and I just wanted to congratulate the team on great results. I had a question regarding the capacity utilization for the newer facility that will be coming up in Amkeshwar Dhaej and Solapur. So as I see in Q2 and Q3, we will have a bulk of our CAPEX coming live. So how much time would it take for it to get to an optimal capacity utilization? Because like if it's coming in Q2, I don't believe that it would like be ramped up immediately. So could you share timelines in terms of capacity utilization we see in our new brownfield and greenfield facilities?

Yeah, sure. So, see, capacity utilization in the brownfield will be pretty rapid in terms of bringing it at the, you know, 80-90% level in a matter of two to three quarters. Because that's brownfield, that's an approved site expected by FTA and other agencies. So, that capacity will get taken up pretty quickly. As far as Sholapur goes, We have done a fair amount of product mapping in Sholapur. So we expect that when Sholapur starts off, we should start off with a robust 40-50% utilization and then probably take it up to 60-70% in the following year. So, see, we have always been calibrated in terms of building out capacity. We have not been too adventurous. Right. And here it helps us because we can do it, you know, in phases. And that's why what we are doing at Sholapur to start off is, you know, phase one, where we will have 370 KL for the BI block and then 120 KL for the API block. Okay, so capacity utilization should be, like I said, around 40% to 50% to start off, inshallah. And brownfield will kick in pretty quickly, two to three quarters.

So, as I understand, FI28, because of the huge bulk of the capex coming live, would give us a huge revenue jump, but again, in FI28 and onwards. Is that a good understanding?

It will definitely give us a runway for new launches and volume growth. Okay. But mind you, see, the Shodapur capacity, like I said,

the 370 KL is for backward integration.

Okay. So that won't contribute directly to front end sales. Okay, that capacity should not be factored into any kind of model you're building.

Okay, fair. I completely understand. And just wanted to understand, given the greenfield and the brownfield expansions that have happened, do we have further available land bank expansion down the line, or would the next phase again be greenfield?

Do we have any?

I'm sorry. I could not hear you clearly.

I'm just asking for some clarity in the question. I'm not sure I got the question right. Could you please repeat?

So, for our further capacity expansions beyond what is already planned, would we need to again go greenfield, or do we have land available in our existing plans to continue with the expansion?

So, Sholapur is on 40 acres, and we would comfortably be able to add another 700-800 kilolitres of capacity, of API capacity in Sholapur. Right now, we have only 120, right? So, Sholapur should give us a good runway once we hopefully get inspected soon and, you know, are through with that. Then we can ramp up the Sholapur expansion and then that should give us a run way for at least 3-4 years, you know, in Sholapur. Ankleshwar has capacity, we can ramp up there further, but the thing is, it's still, it's quite, you know, it contributes almost 65-70% of our revenue today. So we would like to go a little slow with Ankleshwar and the hedge is full.

Okay, thank you for answering my questions.

Sure, sure.

Thank you. We will take the next question from the line of Meghna Agarwal from Mount Infra. Please go ahead.

Hi, good morning. Am I audible?

Yes, yes.

Yes, ma'am, you are audible. Please proceed. Hi, good morning. I just want to have a question with you. I just wanted to understand the API system, like how is the pricing and volumes going on?

Pricing him.

Can you please repeat that thing, no? ...and volume moving in API. I didn't... Can you repeat that question?

Is it... Hello? I'm asking that I want to tell you something that's surprising and evolving thing on in the API segment.

Your voice is not clear. It is... Can you be a... Hello?

Is it better, no?

Yeah, it is a little better, yeah. Please.

Sorry to interrupt in between eight, no? I would request you to please use your handset mode and speak.

Yeah. I just wanted to understand the API segment as a whole, like what are the pricing and the volume chart improving and how do we see that going forward?

So, see, there's a significant volume growth in all segments of our business. With respect to the pricing environment, I answered to an earlier question that we have not faced any major challenges with respect to pricing in most of our geographies because we have a newer portfolio. And so, it's not that commoditized. So, we don't get that much pressure on pricing. Although, on the overall bucket, we do see an erosion of around 4.5%, you know, because of some price reduction that we have to give on some of the products. So, that's the overall sort of situation with respect to our portfolio. And the volume growth is pretty good, and we expect it will continue to be that way.

Thank you, thank you so much.

Thank you.

Thank you. We will take the next question from the line of VP Rajesh from Banyan Capital Advisors. Please go ahead.

Yeah, hi. Thanks for the opportunity. Most of my questions have been answered, but just on the answer turn over, how should one think about that?

So did it interrupt in between Rajesh? Your voice is not audible. Could we please use the handset mode and speak?

Now?

Yes, please proceed.

Yeah. So, I was just saying that most of my questions have been answered, but just on the asset turnover, do you think it has stabilized at 2.2, or do you foresee it going down further from here as other facilities ramp up?

So, it would go down a little bit more, because, you know, like we said, Sholapur will be coming online soon, and some of the brownfield capacity will also be coming in. But when you compare us to the industry, we are still, I would say, pretty much on top of the table there.

Okay, so let's say two, is it probably a reasonable level that one can expect, or could it go down further from that?

I mean, it would temporarily go down below two as well, right, but it would come back up once the utilization picks up, like I explained earlier. Sure.

Got it. Thank you.

We will take the next question from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead.

Hi, good morning, everyone. Sir, we have seen R&D spends increasing consistently over the past few years as a percentage of sales. We've spoken about flow chemistry earlier. You're also talking about high potent API, ion complexes, as well as an evolving CDMO pipeline. Can you help us understand a bit more in detail as to where exactly your focus lies as far as R&D is concerned and where do you see this R&D number as a percentage of sales settling over the next two to three years?

Alankar, the areas that you outlined are where we are focusing on R&D and that's really going to drive the growth, okay. As far as settling down, I don't think we'll cross 4%, right, we'll probably be at 4%, you know, in the next year or two, and then it should settle down, I mean, you know, but then we need it to fire off on many cylinders here because the thing is that That's how the growth will come, right? You mentioned all the areas, I don't need to repeat. I mean, you know, you talked about flow chemistry, you talked about, you know, the CDMO side, and, you know, we are looking seriously into pellets and granules. That's also an area that we started working on. It's that whole lateral expansion of the API. I mean, we call it API plus, right? So, a fair amount of investment is going into that. And then, of course, the pipeline build-up also is geared more towards the more complex molecules. So, all in all, you know, put together, yes, it is, our R&D spend is going up, but again, it is going to pay off, I mean, you know, much, much more than what we are investing today.

Got it, sir. The second one is more of a clarification. When you're speaking about pricing, would it be fair to understand that given our portfolio is slightly more niche, more chronic-oriented, non-commoditized, as you said, any benefit of price hikes will be limited compared to, say, any other company or any other portfolio, which is much more commoditized than ours amidst this Middle East situation?

Yeah, so I don't know if I said it, but I think I did, but most customers are pretty comfortable taking price rises because they understand the situation, right? And rather than have a slowdown in supplies or not have supplies, they've kind of given us the green flag that, yeah, that's fine, you know, you go ahead, but, you know, as long as it's going to be reasonable, we are okay to, you know, absorb that price increase. And there will be some. The good thing for us is that the only area where we see that increase is on the raw material side. You know, on the operations side, our operations are going to be stable because we moved away from gas. So we moved from gas to, you know, operating brick-it boilers. So there is no impact on operational cost, you know, because of gas shortages or because of hikes in price. And that way, you know, the operation cost is going to be stable going forward, even in a war situation. But yeah, certain raw materials have gone up and are likely to go up even further. But we've got a kind of, you know, green light from our customers that, yeah, we can charge them more. It's going to be fine.

Understood. So, basically, more or less on the gross margin side, we should not really expect too much of an increase, and on the other hand, not too much of a drop as well.

Yeah, you're right.

Fair enough, sir. That's it from my side. Thank you. Thank you.

Thank you. We will take the next question from the line of Prateek Kothari from Unique PMS. Please go ahead.

Yes, hi. Good morning, sir. So, just one on CDMO, if you can talk about the base three projects, if the run rate kind of continues and the ramp up that you are expecting for fourth and fifth, and also the new deals or pipeline that we had from the CDMO piece, please.

So, CDMO, the fourth and fifth project have kicked in really nicely. There's some revival even on the earlier projects and so we expect that CDMO will continue this momentum. As far as new projects go, we hope to close two new deals in the early second half of this year.

Great. Thank you and all the best.

Thank you.

Thank you. We will take the next question from the line of Deepak Dalwani from Unify Capital. Please go ahead. Deepak, please proceed with the question.

Yeah, a couple of questions. Firstly, if I look at the new launches, which probably have given the gross margins, if you can give some sense what percentage of revenue incrementally has come from the new launches which happened in FY26, that sort of a benchmark number or something you can give.

I mean, we do have a sense, I mean, you know.

Just to answer your question, as Dr. also explained earlier, new launches are not a very significant contributor to the top-line revenue role. They are new launches, and the ramp-up will continue to happen on those products. It's not like they are contributing significantly to the growth.

When you look at the HP API pipeline building, obviously it has built up very well last couple of years, this sort of contribution, when you say, will start coming in, will it be from the same enclosure and the head sites and it will start coming in from, say, FI28 or it will take some more time?

It will start in FI28. Because customers order material, you know, at least six to nine months before the launches happen.

And do we have, like, any meaningful big launches coming in FI27, or will that take some more time? I'm just trying to guess whether the gross margin expansion which has happened will continue.

Yeah, we have launches.

Okay, thank you so much.

Thank you. We will take the next follow-up question from the line of Krishnendu Saha from Quantum ANC. Please go ahead. You're not audible, Krishni Hindu. Could you please use your handset more?

Yes, I'm on the handset only. Can you hear me? Hello?

Yes, now audible.

Please go ahead. Sir, just on the financial question, just to understand that we are, closing cash balance is just 20 million rupees, which has increased by 3,000, sorry, 350 crores, capital working program has also increased. So, like, how do you, like, are we comfortable in the cash position? That's what I'm trying to understand.

Cash position is about 784 crores. Including the investment in...

Yeah, yeah. That's what I said. And your working capital has already been paid for halfway through, I suppose, because of the 540 crores capex we have to do. So, we're just very comfortable in the cash position, right?

Yeah, yeah. Absolutely, yeah. The entire capex will happen for internal crores, yeah.

Internal crores. Yeah, that's what I'm driving on. Thank you. Thank you very much.

Thank you. We will take the next question from the line of Bhavna Israni from Ambit Asset Management. Please go ahead.

Yeah. Hello. Hi, sir. Good morning. Am I audible? Yeah. Sir, just wanted to check. In last call, we said that the CDMO2 contracts will come in next six months, like it was roughly June, July, but now this time we are saying that it will come in the early second half of FY27. So we are expecting some delays in two CDMO contracts?

Not really expecting delays, but then I do want to, you know, moderate it a little bit. It may come in the first half also, a little late in the first half. But just to be on the safe side, we are saying it will happen on the first, you know, early part or second half.

Okay, okay, okay. Okay, got it. Thank you, sir.

Thank you. We will take the next question from the line of Nitin Agarwal from Dam Capital. Please go ahead.

Thank you. I think we alluded to that in the opening comments around the fact that, you know, how are we looking at a business differently in terms of capital allocation after the changeover of the management and the promoter ownership? If you, you know, if you can probably just take a couple of minutes to sort of reflect on the journey since the time the ownership change happened to how the strategic priorities have the business, you know, what have you been, from a strategic perspective, what have you been doing for the last, you know, three, four years? And now, you know, as you look forward from the base that you've built out over the last three, four years since the ownership change, how are things going to change? Is there any meaningful change, you know, the way you're looking at approaching the business from here on?

Yeah, I mean, I'll take a little time, but yeah, you'll explain that. See, what was happening is in the earlier, the pre-Nirma ownership, right, our focus was purely on portfolio, and we had to, you know, cherry pick the right kind of molecule so that, you know, the growth came as a result of that. There wasn't much scope, you know, to go laterally. Okay. So, essentially the R&D investment continued to be in picking the right molecules and taking them forward, which is helping us now for sure. And then the CapEx investment was again geared up to just ensure that whatever volume expansion happened, you know, as a result of overall volume growth, but also as a result of new product introduction as the patents expired and the customers launched. So, that was very limited. Now, I just answered Alankar's question on, you know, why the R&D spend is going up, and that is basically what has significantly changed in terms of our thinking, in terms of the various directions that we can get into, and so it obviously starts with R&D, and we are looking at various, various new areas. We have done enough market analysis to see whether all this will pan out. One example that I can give you is the kind of work that we did in flow chemistry. And very recently, we have even commercialized one flow chemistry product, which is doing exceedingly well. And the confidence we have now in employing flow chemistry has gone up multifold because we've had commercial success on our very first project in flow chemistry, using flow chemistry, you know. And so the investment in flow chemistry in more complex molecules. In a lateral growth of the current portfolio are the areas where we are investing and we are able to invest relatively freely because we are not just limited by a capacity build-up for the future portfolio. So, I mean, these are areas that we believe that will drive growth in various different directions. You know, only time will tell, of course, but that work has begun, in honest.

And if I will sort of take that forward, so when you look around, you obviously, when you look at India, the Indian environment, as well as probably some of the global ones, I mean, when you look at your peer set, what is it that we, in your mind, do differently versus the others? Which, rather, what do we do better than the others, which sort of gives us this probability metrics, the way they play out, and confidence in growth that we have?

I think the others are also doing well, but they've chosen their path. I mean, you know, with respect to our own sort of path or DNA that we've picked as we, we want to, you know, have some element of uniqueness or, you know, higher entry barrier in whatever we are doing. Okay, the thought process here is that, you know, at least get a fair amount of differentiation going. So that in the longer term, we can sustain, you know, our business much more profitably. This is the whole point here. See, what happens is that, you know, this is a choice you make way before. I mean, we made this choice, you know, seven years ago when we became, you know, Glenmark Life Sciences and took that direction, you know. So that directional, you know, sort of... You know, that we define for ourselves and then consistently stayed along that is what has helped us. This is what I would say. And look, at the peers also, there are people who are doing really well. I mean, if you look at, you know, there are companies that have done exceedingly well. They branched out, you know, pretty smartly into various areas. Of course, some, because of portfolio choices and because of the overall competitive intensity in the market, there are challenges, right? But still, I would say overall, you know, people are focusing on the direction that they set for themselves.

Thank you so much.

Thank you.

Thank you. We will take the next question from the line of Ketan Arjeda, a retail investor. Please go ahead.

Hi, thank you for the opportunity and congratulations on a very good result. Doctor, could you help me with what is the revenue contribution from the geographies or at least the top two geographies, be it US or Europe or any other geography, could you help with percentage revenues?

So see, I mean, we have mature geographies that are contributing quite evenly. So if you look at India, Europe, you know, Latin America, these geographies, and even the U.S., they're contributing pretty significantly. The newest geography for us, you know, that has come in in the last four to five years is Japan. And so that's relatively small compared to the others, but that's also growing quite well. But we have pretty evenly distributed across the geographies, you know, with respect to, you know, because the product selection that we've made, and again, this goes back to the, you know, answer I gave to Nithin Agarwal from DAM, is that the selection of portfolio that we made over the years has been... You know, for all geographies, we've tried our best to, you know, make sure that we select those molecules accordingly. So, you know, the overall growth in all the geographies has been pretty significant. And like I said, even Japan, which is a relatively smaller geography, has, you know, is beginning to shape up very nicely.

Okay. Okay. Thank you. And the other question I have is with respect to the contracts that we have with our customers. Now, you know, if you could just help me understand whether these contracts are like long-term in nature or they are kind of, you know, short-term, like, you know, you get contracts for deliveries few months out, something like that. If you can just give a flavor, give an understanding of how the contracting, how the ordering from the customers work in our thing. And if there's a differentiation in terms of the older molecules versus the recently launched molecules, if you can put some light on these aspects.

So, in our business, right, in CDMO, we have contracts. And these are longer term contracts. But on the generic API side, we have fewer contracts. But even where we have them, they are not that long term. It could be about, it could be, you know, for a year or a year, you know, two years at the most. That's how. And we prefer that really because the environment is very dynamic. And we can't get locked into, you know, very cumbersome kind of, you know, clauses and, you know, get stuck. Now, if you see this war situation, we are asking for price increases. If you are contractually bound, then, you know, we would have trouble, right? So here it's much better that we, you know, work with the customers as and how things progress. So, and we don't see any downside to that either, you know, I mean, it's better really. Not to be too badly tied up in contracts.

Thank you very much. Ladies and gentlemen, that was the last question for today. And with that concludes the question and answer session. Thank you, members of the management. On behalf of Alivist Lifescience is Limited, we conclude this conference.

Thank you all for joining us and you may not disconnect your lines. Thank you.