Caplin Point Laboratories Limited (CAPLIPOINT) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Kaplan Point Laboratory's Q1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Candice Pereira. Thank you, and over to you, ma'am.

Thank you, Atharvah. Good evening, everyone. I, Candice Pereira, on behalf of Dollar Capital, welcome you all to the Q1 FY27 earnings call of Kaplan Point Laboratories Limited. Today, from the management team, we have with us Mr. C.C. Partipan, Chairman, Mr. Vivek Partipan, Vice Chairman, I would like to now hand over the call to the management for their opening remarks. Over to you, sir.

Thank you, Candice, and thank you to Dolat Capital. Welcome, everyone, to our earnings call to discuss the results of Q1 FY27. Please note that a copy of all our disclosures are available on the Investors section of our website as well as on the stock exchanges. And do note that anything said on this call which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. The conference call is being recorded, and the transcript along with the audio will be made available on the company's website as well as the exchanges. Do note that this conference call is copyright material of Kaplan Point and cannot be copied, rebroadcasted, or attributed in the press or media with a specific written consent of the company. With that, I would like to hand over the floor to our chairman for his opening remarks.

Thank you. Good evening, all. Welcome to Investor's Call for the quarter ended June 2026. When everyone said Kaplan was no more, we proved that we are now here. You know, ours is a turnaround story. Today, we are neither a parrot that talks too much, but can't fly, nor an eagle, which has the power to touch the sky. However, Kaplan is a Jonathan Seagulls. He tries to fly like an eagle, and eventually makes it also. Now, let me present you the operating architecture of our manufacturing and marketing. My colleagues will present you about the various factories that are being built and built for the regulated markets. Further, our restoration in smaller and larger geographies created the confirming effort to our company. The proof of the competitive note is the free cash flow stands at, free cash reserves stands at 1,000 crore, and the total liquid asset is in the region of 2,875 crore. Our assets in the form of actually factories and others will become the engine of growth in the years to come. And now we encourage actually women empowerment in our shop flows. We are more obedient and disciplined that has really brought a few productivity also in the shop floors compared to actually the earlier days. Now, most of our machines are totally automated. Either they are imported from Germany or Italy for our future facilities and also for the expansion in the current facilities. And we digitized the entire factories. In fact, CSL, we have completed it to 80% to 90%, and in the next actually six months, it will become paperless. We will try to replicate the same in all our facilities so that the digitalization will be completed and the factories will become paperless. In addition to that, we also are introducing the video masters for visual learning, which will help the individual actually, from the individual memory to the institutional memory, and also that will give us the institutional intelligence. Video masters will help us actually to capture the end of qualifications, so that what will happen, even if the person who is actually involved in the qualification leaves the company, the knowledge will remain in the video in the company. And we also further introduced the AI cameras, and then we are planning to go for digital twins maybe in one or two years from now, which will help us to do the remote monitoring, which alone can help us actually to understand the transparency in the facilities also. Ours is also a vertically integrated infrastructure with intermediary APIs and finished threads for the regulated market. Okay. And most of the APIs that we want to manufacture will be for the curative consumptions. And the commodity APIs, we will not go for our own manufacturing. We will rather buy either from India and China for our regulated market business. Now, marketing. Today, products may get commoditized, but the business model, if it is unique, it will never get commoditized. That's the reason, now, our cash flow and profit continue to be actually growing in spite of actually the presence in the smaller geographies of Latin America. We have created the comforting effort to our business, as I told you before, now that we are entering into the bigger geographies, where we currently have a mix of tender and private market business. However, we will focus more on private market where there is less competition for generics from India and China. We now plan to buy a distribution company in Mexico, which will make our job easier to understand the product selection and customer identification. Our current challenge is not in the form of death of orders, but lack of capacities in our two major factories, which is CP1 in Pondicherry and the CSL in Jumadipundi. Hence, we are expanding to new factories. It's a question of time before we complete these factories. Once we complete these factories, although it may take one, two years or two and a half years, we are sure of increasing our business many-fold. Our profits and cash flow will continue to be there because of our business model, and most of the time, our business, as I told you, continues to be flourishing because 20% of our products, the fast-moving products, Always stay in the warehouses, which is next to the customer. And the goose, 20%, which I say, is always for six months of goose in the warehouses, which helps the customer, and it has created, actually, a fan club for Kathleen products. Once we complete our all regulated market factories with all kinds of pharmaceutical formulation in 200 years from now, as I told you, we are sure to reach greater heights. The compounding effect will build our business on the strategic redundancies that is created in our factories will protect our business. We are moving from a manufacturer to customer towards a customer proximity inventory model by planning to buy registration in the desert geography street. The proximity plus strategic redundancy plus compounding effect model of Kaplan will continue to actually flourish in the future too. Also, the manufacturer far away, that is either India or China, with inventory close to demand, and intelligence even closer to demand, with data dominance of facilities, are going to be our operating philosophy for tackling point. We define our business. Our business is not defined by us. Let me end with a nice narrative. The flame of the can also does not clear the dark. It defines us. It defines it. We are sure of creating the right transition from to great. Thank you.

Thank you, Srinivasan.

And I invite White to give his presentation. Thank you. Thank you, General.

Once again, welcome to everyone for joining us on this call. We have always believed the real strength of Kaplan is not just in any individual product or geography or any particular quarter. It is a consistency of the underlying business model. Our ability to grow across existing markets and new markets, while at the same time generate healthy cash flow, profitability, and grow our top lane as well, meticulously reinvest in capabilities that will support our next phase of growth. I think Q1 is another good reflection of that. Our emerging market business continues to be a very dependable growth engine for us. Latin America has been built over two decades by Kaplan through a combination of a strong distribution network, supply chain consistency, and more importantly, a deep understanding of the markets in which we operate. We continue to see opportunities virtually across all the existing markets, which goes to show you how Kaplan's existing markets continue to grow. What is particularly encouraging is that we are not just trying to extract more growth from existing businesses. We expand the addressable opportunity through new areas such as oncology segment, branded generics, and also new markets such as Chile and Mexico. Coming to Mexico, we have a substantial pipeline of our internally developed products and also in-licensed products planned for filing. Chile and Central America are continuing to see good traction in tender and private market business. Coming to U.S., we continue to see robust growth in cash flow, bottom line, and top line, which are the three most watched parameters for us in that particular order. We have spent several years building the capabilities to participate meaningfully in the U.S. carail injectable space, and we are slowly starting to see the results of that now. We have a very good blend of critical care injectable products that are used in every health system in the U.S. and other markets, also supplemented by a growing ophthalmic products portfolio. Going forward, we will also see products with a lot more complexity coming out of CSN, which should add to our bottom line. The important point for us is that this is no longer about only supplying products in the U.S. We are gradually building a much more integrated platform from R&D and manufacturing to regulatory capabilities and also having our own label for commercial operations and direct relationships with customers. This will shortly be augmented by our own API, which will also give us very good control on our supply chain, which is a critical area in this space. Kaplan-Seren's US is an important part of our evolution. We have already launched a meaningful number of products under our own label, and we are increasingly developing direct relationships with the large and small ideas, in addition to the big wholesalers in the U.S. We believe this gives us greater control over the commercial side of the business, longevity on products, and over time, it should allow us to capture more of the value we are creating. And this brings me to the most important part of our strategy. We are investing ahead of our growth. As the chairman was saying about the CapEx we are putting in, the next phase of Kaplan is going to be very different from simply adding more products to our existing platform. We are building capabilities across the entire value chain. We are increasing our serial manufacturing capacity. We have already expanded into oncology. We are developing API capabilities to increase backward integration. And we are expanding our oral solids and dermatology capabilities also. Soon enough, we are also planning to build manufacturing capabilities closer to the market in Mexico. We are investing also into expansion in our Ameris Clinical for a larger number of BAE studies for our growing portfolio of products. And importantly, we are doing this from a position of financial strength. We have not taken a single dollar from outside in the form of a bank loan. Our CFO will throw more light on our balance sheet strength. So when we talk about being future ready, this is what we mean. And as we look ahead, our ambition is not just to become a larger pharmaceutical company. We want to build more into a platform with a strong presence across geographies, broader portfolio, and greater vertical integration, and strength across manufacturing and R&D capabilities. And the first phase of Kaplan was about building a successful business model. The next phase is about scaling that model and building capabilities around it. So we try and identify what patterns have worked for us in the past and try to repeat those patterns for our growth and future as well. With that, I hand it over to our CFO to take us through the financial performance for this quarter. And we'll be opening up the floor for questions after that. Thank you.

Thank you, sir. Good afternoon, ladies and gentlemen. Let's take this opportunity to thank everyone for taking time off to be participating in this call. I am pleased to reiterate what I said during our Q1 university calls for FY26. What is well begun is half done. So we have well begun this quarter with a few of the highlights which I would like to throw. Overall revenue grew by 20%, supported by 18% growth in our conventional market, and more importantly, 26% growth in the U.S. market. The last time business recorded strong growth, supported by a major tender, one in El Salvador and supplied mostly in the last quarter. U.S. revenue growth predominantly driven by the U.S. Subsidy Victims Projects mentioned, where revenues increased from 14.4 crores in the previous year to 43.1 crores, this is a three-fold increase, an absolute growth of 40 crores over a base of 14.4 crores. The business is well positioned to make a significant contribution to CSL and the group's overall growth going forward. Gross margin spread 59.8%, which is a line which was targeted and expected, and we expect to remain at similar levels through the year. In-year's contributed approximately 28 crores of the total 50 crores increase in the gross profit. This shows how CSL is coming into party, and then there will be a more significant layer in the future growth of the company. Operating expenses increased in absolute terms from 137 crores to 151 crores. However, as a percentage of revenue, they declined from 25.7 to 23.6 percent, with improvement in operating efficiency more than off the G movement in gross margin, resulting in an increase in EBITDA margin from 37.1 percent to 38.4 percent. So, depreciation increased by 5.3% primarily due to the capitalization of line 15 PSL and the non-college project injectable project in Kakulu and Vaitag API plan from addition to over and over what we initially purchased. CBT grew by 22.1% increasing from 194.5% to shown in 22.2% the effective task rate should be 20.5% in line with target of 20.3%. So, fast to death, 139 crores, representing a 19% increase over the previous year. Translux from operations is expected to improve from the current 98 crores reported for the quarter. This is primarily due to on-shear decision to increase zero stock from 49-29 crores in March to 505 crores, an increase over about 75 crores, which in terms of scale can be at least 2.5. Okay. To shield against potential supply destruction and ensure supply chain continuity amid the ongoing geopolitical situation. Additionally, to shield against potential increases in raw material prices arising from escalation oil situation, we have increased our RMPM inventory by 15 floors. Right? So, these are the two factors. And apart from that, the receivers also have gone up by 46 floors as compared to March, right? Primarily, due to supplies to government, the quarter, and then these are all expected to be received by 2-3-4-5-27. So, these are the primary reasons why you see a separate moderation in the CFO as compared to our conventional risk. So, these increases are not likely to be seen. The same concept going forward in the 2-2 onwards, so the entire process will flow into the CFO. Cash and cash accounts, as the government put it, increased by 266 crores. We were at 1,307 crores, 1,237 crores as of last June, and we were at 1,500 crores as of June 26. Liquid assets increased by 30%, that is, 668 crores. From 2207 crores to 2008, 75 crores, primarily consisting of cash, receivables, and inventory. Shareholders funds were net worth increased by 25% in the last one year, or 362 crores. From 2013 crores, it has increased to 3775 crores Thank you, Mr. Murali.

We can open up the floor for questions now, please.

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 one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Abhi Jain from AJ Capital. Please go ahead.

Hi, good afternoon. Is my model? Yes. Congratulations on a steady set of numbers. Good to see you as the growth rate is maintained and you're on track to achieving your long-term goals. So, congratulations on that. I have two questions. First, I wanted to discuss the rest of the world's profitability on the PPP level. If I look at the numbers, year on year, you know, in Q1 of F526, that was at 37.5%, the PBT profitability for the rest of the world. That came down to 34.6%, 7% in Q4 or F526. This quarter is just down again to about 33 odd percent. So I just want to understand that, what do you see this holding up to? Will you be able to, can you guide us in terms of what this level would be? For FY27 and future purposes, because we have seen that quarter-on-quarter, you know, it's been down by 1% to 2% in the last 12 months. Can you tell us something now?

Yes. Okay. You have one more question to complete, or is it okay to answer?

Yes. The second question is on capital allocation, so I can ask. Once you have answered this, we can get on to that.

Okay. See, that 1.5% which you are talking, yeah, is actually true. But again, I would request you to look at actually the free cash results and the total liquid assets. See, it's quite normal actually for any company. There is a possibility of 1% or 100% decrease because when the business actually, Especially the generic business is in a position to actually generate cash and generate profitability, which is substantial compared to our peers. I think it's fairly okay. But now our focus also, in addition to these markets, we are moving to other markets also. And then the second most important thing is our expenses are also slightly increasing in these places because the products that we have been marketing, you know, is more of generic. And the second level of marketing, you know, it takes that, of course, increase the expenses also. So that 1% or 0.5% is not going to be like, you know, getting reduced every year on year basis or every quarter on quarter basis. It might even improve. I'm sure it will improve, actually, after a point of time when we are planning to go for, actually, more and more of products, which will actually create value to our generic business also. The reason being, this is not a commodity kind of a business where no generics gives you this kind of a property. It's because of the business model differentiation. Yes, please.

Please go. Can I, the Parnis of the Director of the Office, I have one more point for the information. Actually, if you recollect what you have set as a target or committed is about 55% of the contribution margin. Okay, we are way ahead, we have performed better, and then if you compare with the 55% what you have committed and 59.8%, there is nothing to worry about. And this is, as Chairman rightly put it, it's a quarter and quarter, we can't say, because you have to see as a year as a whole, depends on what product you sell, which market you sell in a particular quarter, and what contributions they eat. So, please, we have given a, we have said that in my remarks also, you said 50.8% is lost, actually, we stay put around that, about 60% is lost. So, those 55% and 25% is the fact we committed, but they are ahead in both the parameters.

No, no, I understand that. So, you are obviously maintaining and achieving your overall numbers. I just wanted to get into, you know, details of it. I wanted to understand what is a steady state level of, you know, profitability in rest of the world that you can expect. That's what my question. So, coming on the second part of the question, actually, you answered that, you know, the cash can result in a bit of a drag. I wanted to understand your capital allocation. Now, I see that, you know, you have this thousand-odd crores of cash in hand, and most of them is invested in the ventures and bonds, etc. Any thoughts around improving the yield by investing in index funds? I mean, if you look at 50-50, 50-500, right, these have a steady compounding of 9% to 10%, given that any

four-year Pfizer or IBM you see.

So, any plans to invest part of it in index funds, these are relatively safe. You know, they provide a yield of 100% to 200% higher than the corporate bond. So, I just wanted to, you know, keep it on the table. If you could put it into consideration, it will help improve the profitability also, final profitability by 100 to 200, looking at the 1,000 broads of cash reserves that you have.

Yeah, so, no, thank you, and valid suggestion. In fact, this was discussed during our, you know, recent board meeting also. So we've gone from a state of being ultra conservative and having everything and only in SD to slowly moving up the, you know, risk chain, if you want to call it that, you know, but your points are well taken. In fact, one of our directors also suggested that, you know, we can be slightly, you know, I wouldn't call it adventurous, but we don't have to be

right at the bottom in terms of the risk appetite when it

comes to investing our reserves. I think slowly, slowly we'll be moving up. Already, I think we are into credit funds and debt funds and things like that. I think index funds could be the next in line for us to evaluate. Maybe what we can do is, over a period of time, work on having an investment policy, per se, for excess funds. But, again, we always want to make sure that capital protection is more important than the returns. But, once again, point well taken. I think one or two percentage points with this kind of a quantum will certainly be a large number, and we should not be ignorant to that.

Yes, sir. I'm going to say, sir, and then. Yes, sir, go ahead.

Yes, sir, if I add more points, in terms of the long-term investment, Actually, as we have been discussing in every meeting, that we are also keeping our eyes and ears open on inorganic opportunities as well. So, we would like to have the cash at our disposal, at any point of time, that equates. So, if we yield, yeah, so...

So, but a part of the portfolio, a part of the thousand crores can be part of it.

You make a small beginning, quite well taken, you do that. And capital production...

The biggest investor, Mr. Warren Buffett, uses his cash reserves and investing in index funds, investing in, you know, state equities. So, obviously, I mean, we shouldn't be so scared about it. And Indian equities, especially the index funds, have, you know, a long track record of over a four to five period horizon, giving at least nine to ten percent return. So, I think we can be a bit more open about it. It helps improve our profitability by one to two percentage points every year. So, why not do that? That's the only suggestion. You can start with maybe 200-300% of growth, 25% of the portfolio, and 30% you can use it for, you know, inorganics and acquisitions, etc. But I was just thinking that Mr. Wanda can do it, but he can do it at our stage. Thank you. Thank you.

Point to you. Thank you.

Thank you.

Thank you. Ladies and gentlemen, to ask a question, please press star and watch. The next question comes from the line of Prakshal Sakarya from Sakarya Investment. Please go ahead.

Hello, hi. Am I audible?

Yes, please.

I have three questions. The first question is that I think Mr. Vivek mentioned that they are looking at a distribution company in Mexico. So, have we narrowed down to any right now?

Yes, I am the one who pulled that one. There are opportunities, like, you know, three to four companies. The Whitechap and other company, Ashok Parthipan, has looked at it, and, of course, is going to collect the details and send it to us. After that, you know, let's do the due diligence and take a call.

Okay, so we can expect an acquisition soon?

It does depend on the meaningful acquisition. As I told you, the idea of going for a distribution company is to understand, actually, the products, mainly for selection of products and selection of customers. And this will also give you an opportunity about the entire reach of the distributor. If distributors come out to the entire country, that's a major opportunity, so that you will understand which are the pharmacies, which are the small chains, which are the smaller hospitals, which are the private hospitals, Because the distributor is covering, then accordingly, you'll have to take a call. You'll have to take a decision.

Okay.

Those pre-times are very crucial. If he is actually selling only multinational products, it doesn't make a difference to us. If he is selling the local company products, he will be very keen. He would like to actually buy even at a little higher cost. But if he is only selling multinational products, you know very well, Multinational products have been sold in this kind of, any market for that matter, say, 100 years or 60, 70 years and above. Local companies means it will not be more than actually 20, 30, 35 years. So that also makes a lot of difference. Multinational products, most of them are actually, you know, patents and they get expired and that became actually a generics. Local companies, they only manufacture the patent-experience products, so something similar to our model, generic business.

Okay, okay, understood. And my second question is to Mr. Vivek. I think we are right now running five sterile lines and moving towards 17 sterile lines, which will be one of the biggest in the country. So, I mean, what gives us the confidence about the healthy utilization of those 17 lines? Because 17 lines is, like, huge. So, are we expecting that much demand from us? Do we have, are we getting a lot of queries right now?

Yes. Can I get into it first, and then now I'll actually answer.

I mean, anyone can answer. I mean, I won't be asking.

Currently, last four years, I've been sitting in the factory, So, I would like to actually give a bit of no, this thing, no, the right question to you also. See, now, out of seven lines that we have here today, we find it very difficult to handle, actually, the orders that are coming to us. One main reason is when we were smaller, when we didn't know much of, actually, the technology, we didn't balance it properly. Most of our, like, you know, three of our lines is a mix of TS and aseptic. And then whenever we expanded, we expanded in such a way that, you know, it was not very actually correct also. So it leads to a lot of complications. In the sense, you know, it is not a major issue in the form of quality issues or integrity issue or a safety issue, but it leads to breakdowns. The first phase of our injectables, it took 10-12 years already. We got our first USFD inspection in 2016. Then the second phase, they're all new lines actually, like line 4, 5, 6. So when we go for actually the phase 3, we will not go for all the 7 lines. So, we'll start with three lines, and move all the aseptic to the aseptic, actually, the same line, where it will be with isolator, which means the aseptic practices will be totally eliminated, because isolator lines doesn't require aseptic practices. Then when we go for, actually, ophthalmic products, ophthalmic machines, which we are going to import from Germany, this one also is a very sophisticated line, and then it involves lesser human intervention. Then the third one is, you know, as I told you, we are not only, you know, getting into the automated machines, we are also getting into digitization. Once you comply with digitization, especially the LIMS and QC and micro, And then the entire digitized in the form of e-log, e-DMR, e-BPR, it becomes the paperless. Now, the third one, as I told you, actually, the visual intelligence, people will learn everything through video because seeing is believing. People can learn by, you know, if someone teaches there is a possibility of projecting, but if someone happens to see and do the work, it becomes easier also for them. So, with all these additional advantages in addition to AA cameras and all, when we go to the customer, it will be one of the few companies of our size who has actually the wear with us. So, I am sure that we will be in a position to get actually, you know, good business going forward. Because of A, the entire actually state-of-the-art actually model that we have told you in terms of mission, And in terms of actually digitization, in terms of video way of doing things in the form of the entire qualifications, most of the time it was done by people. And people, when they leave, the memory, you know, and the intelligence both leave. But now that it will leave actually in the video library. So not necessarily you'll have to worry about the people. You'll have to bother more about the system. But, too, if the system is integrated with AA cameras, then the MAS also comes to us easier, and it's easier to manage also. And then someone who is actually in the U.S., if they want to see whether we have taken up the products for production, they can also see from the U.S. also when the production is on, actually, in the night's year. You know, actually, the night's year is day there. You know, injectable is one thing now which goes 24 by 7. So, like that, I can tell you there are a lot of advantages every customer will have. And the CMOs, most of the CMOs of our size may not have this type of, actually, advantages. And on top of it, we also have R&D, both for API and formulation. We'll be in the position to also do something, actually, for the R&D and the other things in the form of, you know, tech transfers, everything. Okay. These are a few advantages which we have. So, I am sure, you know, we are very confident we will be in a position to increase our business. Now, I will invite, actually, the Vice Chairman to say a few words about it also.

Yeah. So, from the commercial side, if you see, we are actually booked out till almost February of next year. You know, so, we have been, you know, just about barely able to keep up with demand. And we know that expansion of capacity is extremely crucial for us to keep up with the growing demand. Number two, out of the 60-odd Andas that we have, only 39 has been launched. We have to continue working on launching the remaining products as well. Number three is we have another 40-plus product for the pipeline in both refill syringes, you know, ophthalmic suspensions and all of that that needs to also come into play. And in the new facility, we're also getting into rail-leash areas such as blow-fill seal products, inhalation products, and potentially also getting into other sterile dosage forms. All put together will be close to 15 plus 9, you know. So, and I'm not even taking into account any of the capacity requirements that we will need when we get into full-scale operations in Brazil and Mexico and stuff. So, by no means we think this is overexpansion or anything like that. In fact, we are expanding a little bit ahead of time. Finally, the last one is we've always had an eye on getting into early stage biosimilars, especially with a partnership with large Chinese companies that we're only in touch with over the last couple of decades from our presence in China. So all of these put together, we feel that with all the automation that Chairman has been talking about, We feel very confident that the Seren space is going to be an important space for us to expand it.

And the most important point I forgot to mention, it's not debt-driven. It's all from the internal cash flow, which means, you know, suppose if it's slightly delayed also, you don't have to much worry about it. Of course, which will not happen. However, this is not actually a debt-driven infrastructure that we have created. Okay.

Just to draw a parallel, without mentioning names, the largest capacity of injectables in India has close to 30 lines, like 29 or 30 lines, you know, and that company also continues to invest into more, just to draw a parallel.

Okay. Okay. Thank you so much for such a, you know, detailed answer. And I just have one last question, is that I'm tracking the company since the past five years. Thank you. And I have this, you know, I really look up to you, but I just want to know one thing that as a visionary, what do you see the company in the next three to four years? Maybe by 2031, 32, you always say that you will be a big company, big company. How do you define big? And how do you see the company in the next three, four years?

This is actually something what you're asking is actually, you know, like farmer self to future self. So what is that? See, if not that, how much we have grown, what kind of a company are we becoming? So, if I want you to actually tell me the size, more than the size, look at actually the kind of infrastructure we are building. Be it injectable, be it tablet and capsule, be it alignments, be it any area. We'll have all the facilities which will be in line with actually international standards so that we can get into the regulated markets worldwide. It could be a global dose here in future. Second important thing, in addition to that, you also have plans to go for markets like, sorry, countries like Mexico to start our factory where we have already bought the land. The advantage is if you set up a factory there, 16.7% of price advantage for getting into the tenders. Then the business that we do, we are not only interested in doing business in tenders, we are also interested in doing business more in private market, Which, of course, is not easily replicable by companies of our size. And the big companies are not very keen to get into the private market. You can even verify. Maybe a few products the importer buys and sells it to the local people. And even if they have an office there, they will sell to actually the top distributors. Whereas we will go to the length and breadth of these countries. is because my son, who is the vice chairman of the company, he has been there in this part of the world for the last 22 years. Our maximum actually focus will be there in Mexico and Brazil by Ashok and U.S. by Vivek. So, even in U.S., 70% may be controlled by actually, you know, three top companies. But there is 30%. You look at the 30%. If you do at least 10-15% of 30%, that itself is a huge market. So, once you create the infrastructure, once you digitalize it and modernize everything, once they understand this is going, these four pillars in the form of integrity, quality, safety is ensured, the productivity will not be an issue. I'm sure. So, if you ask me to quantify it, see, I would prefer to be one among the top 20 companies of the country.

Okay. Okay. Okay. Got it. Got it. Thank you. Thank you so much for answering. Thank you. Thank you. Thank you and good luck. Good luck.

Thank you. A reminder to all the participants to ask a question, please press star and watch.

Ladies and gentlemen, to ask a question, please press star and watch.

The next question comes from the line of Abhi Jane from AJ Capital. Please go ahead.

So, just one follow-up question on capital allocation. Do you foresee an increase in dividend payout going ahead, or do you think that, you know, you can deploy the capital better in acquisitions and investment by ourselves? Is there some clarity around that?

It is difficult to answer to this question because if you find a very good opportunity, definitely you would like to put our money actually in acquisition. Otherwise, you know, we would like to share actually this thing in the form of dividend also. I'm sure Allah would be able to continue this way. That's not going to dent our actual cash flow.

Okay. No, obviously, you should prioritize acquisitions and increase in your capital base, for sure. But if in any level you see that you don't have that opportunity, then probably a special dividend or an interim dividend, you know, can be affected. That is up to you. Correct.

The next question comes from the line of Rakshal Sakarya from Sakarya Investments. Please go ahead.

Hi, just a follow-up question. When are we expecting all the 17 lines to be running, you know, completely? And when can we start expecting numbers from those 17 lines?

Yeah, it will start from one end of year to three years. Like, you know, in another six to seven months, we will start our nine-seven. And then, you know, in one end of year, actually, we will start. See, at the end of the day, when we say we start, the commercials will start. But again, the restation of the products, even if you have extra, actually, A&Ds, it has to be transferred to the other facility, which is totally a different company. It's not actually a part of CSL. It's a possibility of Kaplan Point, but it's not part of CSL. So that registration and other, sorry, the change in dose, how to change the dose here, all these things, of course, Vivek will be in a position to tell you. Please go ahead, Vivek, and tell you.

Yeah, so right now we have six lines in the facility, and the seventh one is coming up. And then if you look at our oncology facility, we have a line over there as well. So, at this point, we are talking about eight lines already. In the next year, this time next year, we should have five more lines for the new facility. That is what we call as phase three. And then, finally, we have provisions for three, four more lines, which we will activate potentially by 29 and beyond only. So I would say we have complete visibility on when 13 lines are going to be around, including the oncology side. But the provision for the last three, four lines, I think we will have to take a call closer to commissionizing of the existing one. Revenue YC, when you're talking about moving a product from a current line to a new line, especially in the U.S. market, Okay. You're looking at at least around nine to ten months for that to start because there is something called a post-approval supplement where you need to run batches, put them in stability for three months, and then file it. That takes six months to get approved and all of that. So any product that gets converted from current facility to a new one will take about nine to ten months for it to start getting commercially operational from it.

Okay. Okay. Okay. Okay. Got it. Thank you.

Thank you. Thanks.

Thank you. The next question comes from the line of Ajay and individual investors. Please, go ahead.

Yeah, so I had a couple of questions. The first one, I think last quarter you mentioned that we had a chunky tender, I think it was in the Ecuadorian market. So, I just wanted to know, what would the spillover from that tender be in this quarter, and what can we expect next quarter onward? Is that tender completely done?

Yeah, I think this is El Salvador, not Ecuador. Yeah, and our CFO can throw some light on. It might not be completely accurate, please, because these are, you know, you continue to, you know, get replenishment tenders and all of that. So, we can give you a basic picture. Go ahead, Mr. Bolin.

Yeah. Yeah. Thank you, sir. So, the original tender has been all completely supplied, and then there are supplementary tenders which we have been getting in do not in the original volume, say 10 to 15 percent of the original volume. We expect that repeat. So, we have obviously participated in one. We are expecting that we decided in a couple of months. Hopefully, we should get it also, but we are not committing anything as of. No, but supplementary senders will keep coming, whatever product is supplied, additional quantities keep coming quarter and quarter.

And can we do this contribution to our company right now as well as…

Yeah, so Ameris will be, by and large, a backward integration for us. We used to have some commercial operations out there with third-party companies, But right now, with the existing 70 beds and our increase up to 120 beds in the near future, will be largely to cater to our internal bio-study. Just to give you an idea, if we did bio-studies at an external B center, if something costs us around, let's say, $100,000 per study, at a marriage, it will cost around 50% of that. So the value addition will be indirect, not directly in terms of numbers.

And in the future, do you expect it to be internal, or would we be willing to offer service?

In future as well, at least, you know, next couple of years, we expect this to be, because we have a significant number of products that we are doing from our oncology side, from our soft gel side, and also in future, if we get into the inhalation space, this is something that we envision doing internally as well, the bio studies of it, you know. So, we expect Next couple of years for it to be catering only to Kaplan's requirements.

Thank you.

Thank you. Thank you.

The next question comes from the line of Ashish Srivastava, an individual investor. Please go ahead.

Hi. Is my line already? Yeah.

First of all, conversation on the setup number.

You have been very consistent on every quarter-on-quarter, great set of numbers. My question is around, in the last Q4 result, we mentioned about GLP-1 products approved for Central American region we were pursuing.

I did not saw any update for the same in the current quarter presentation.

Yeah, so it's a work in progress, the GLP-1 products, they are under registration, we don't have any commercial business of that products yet, as of when we have some updates on that, we will let you know, they continue to be under registration at the moment.

Okay, thank you, sir, that's all my question. Thank you, thank you very much.

Thank you. The next question comes from the line of Ketan Cheda, an individual investor. Please go ahead.

Yeah, hi. Thanks for the opportunity. I really don't have any questions. I just want to convey my compliments for a wonderful performance. You keep delivering quarter or quarter. So, we should go straight. Thank you so much.

Thank you. Thank you so much. Thank you so much.

The next question comes from the line of Ajay, individual investor. Please go ahead.

Can you speak a little louder, please?

You are not fully audible.

What about now? Hello.

Yes, yes, yes. Much better.

So, I just had a follow-up on, like, our organic growth strategy. Are we also looking at some opportunities in the Indian market and distribution or otherwise, like, normal generations?

No, we are not looking for any distribution companies in India. But if there is an opportunity for us to go for a meaningful acquisition in the Indian market, we will also look at it. But not a distribution company, because generics in India, you don't make money in generics. Only in brand marketing, which, of course, you are also our. And we always prefer to go for a distributor in Latin America, mainly, or maybe in the U.S., that, of course, you know, Vivek will be in a position to design. We have been taking care of that area. And coming to Latin America, we know that will add value to our entire business, the entire business that we are doing currently, you know, that will add some value to it. That can help us to increase our base from one level to the next level because the countries currently we are into in the form of Mexico, Chile, and later actually in Colombia and Brazil and all. These are all huge countries. And once you get this distribution company, you will be in a position to understand the entire client list. That's why we are interested in a distribution in Latin America.

So, not in our main plans to enter the Indian market, but there is an opportunity that we might.

To the Indian market, to be very honest, you know, we don't have that kind of expertise, actually, to take care of brand marketing in India. And moreover, you also will agree with us, it's better to focus on our core competence. We have been doing well in Latin America. The pattern, of course, you know, which you have seen also, we continue to grow well. So, we'll focus more on that one, actually. That's what we are planning to do. And we will do more, actually, in the U.S. too. So, it will be more of North and South America, which will be our focus in the future.

Okay. And just a last question on the new tariffs that have been announced on the pharma companies by the Trump administration two years down the line. How do we fit it?

I could not hear it properly, please. Please tell me.

So, recently, the American administration announced a wave of tariffs on Generic, right, which will come in two years later. So, I know it is down to nine months.

See, you must be knowing also, he has been announcing a lot of tariffs, and of course, we will craft the bridge when we reach there. And every country, of course, every country will go for a – they have to protect their own industries. That's how they are different because they're de-globalized world. Definitely, there will be opportunities when we go for our own factories in various bigger geographies, but we'll have to see whether it's the ideal time to go. Probably it will take some more time because starting a generic factory in the U.S. will not be, you know, cost-effective. And maybe when the machine learning in the form of, you know, how do you call, seeing robots, when the robots come into manufacturing of generics, yes, every country, even if you manufacture in the U.S. or in the country where the cost of production is high also will be one or the same like India. So we should wait and watch, should wait and watch. Thank you very much.

Thank you. Participants who wish to ask a question may press star and one.

I repeat, participants who wish to ask a question may press star and one. As there are no further questions, I would now

love to hide the conference over to the management for closing comments. Thank you, and over to you.

Yeah, thank you. Thanks once again to everybody that participated in the investors call. We also appreciate Dollar Capital for hosting it, and we look forward to more interactions in the near future with all of you.

Thanks to all of you. Thank you very much.

Thank you. On behalf of Dollar Capital Markets Private Limited, that concludes this conference. Thank you for joining us, and you may not disconnect your lines.