Operator
Ladies and gentlemen, good day and welcome to the Q2 FY27 Earnings Conference Call of Kohan's Life Sciences. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star followed by zero on your touch-tone phone. Please note that this conference is being recorded. Before we begin, I would like to remind you that today's discussion may include forward-looking statements that are subject to risk and uncertainties. Actual results may differ materially from those expressed or implied. We encourage you to review the disclosures filed by the company. I now hand the conference over to Ms. Cinderella Carvalho. Thank you and over to you.
Thank you, Yash. Good evening, ladies and gentlemen, and thank you for joining the Kohan Life Sciences Earnings Conference Hall to discuss our financial results in the second quarter and the first half of FY27. Today, we have with us Umang Vora, Executive Chairman and Group CEO, Yandir, CEO Pharma CDMO, Gunjan Singh, CEO API Plus, Amrit Singh, CEO Speciality Chemicals, and our new member, Abhimanyu Oja, TFO. I will now hand the word to Umang for his opening remarks.
Thank you, Cinderella. Good evening and good morning to everyone. Before I move to the speech, I'd like to say that we are deeply saddened by the loss of our colleague following the incident at our Surya Pate facility, and our thoughts are with his family and loved ones. We take this incident... Extremely seriously, and I've initiated the necessary corrective and preventive actions. Safety and compliance will remain an absolute priority across all our operations. When we spoke at the end of quarter one, we had said that quarter one would represent the low point for the quarter. We expected performance to improve sequentially from quarter two, followed by a return to year-on-year growth in the second half. Q2 has progressed in line with that trajectory. Revenue increased 13% sequentially to 4767 million. While adjusted EBITDA increased to 458 million, with the adjusted EBITDA margin improving to 10%. As we enter half two, our operating visibility is stronger. In small molecules, the order and reload position for quarter three and quarter four has improved. We have also secured two new commercial programs and one late-stage program with large global pharmaceutical customers. Transming our relationships with these customers and broadening the medium-turn opportunity base. In ADCs, we are seeing encouraging signs of development funnels with improving order activity and visibility, particularly towards the second half. The reorganization at NJBio is sharpening our commercial focus and bringing our bioconjugation capabilities closer to Kohans' payload, linker, and manufacturing capabilities in India. Our bioconjugation capacity expansion remains on track for commercial availability by early fiscal year 28. Further, friends may, our end-to-end ADC office. With the broader funding environment improving, alongside better momentum in the development pipeline and order activity, our focus is on improving utilization and operating performance at NJBIO, with a clear objective of moving the business to break even. In Nucleic Assets, Sapala continues to perform strongly. We are increasingly integrating its specialized chemistry and customer relationships with Kohanser's development and manufacturing network. This is one of the clearest examples of how the capabilities we have brought together can create a broader proposition for our customers. Our API Plus business continues to provide resilience to our portfolio. While in SpecChem, we are progressively repositioning the business towards a broader, innovator-led portfolio. Taken all together, we are beginning to see the different parts of Kohan operate more effectively as one platform. Capital allocation and capability building are an important part of our strategy. We also have a broader capital program directed towards growth capabilities as well as quality, safety, sustainability, and maintenance. We are planning to supplement the capabilities we already have and build the adjacencies required to unlock the full integration potential of the Kohams platform. This includes strengthening bioconjugation, building a more integrated ADC payload linker capability, and enhancing our R&D infrastructure across payload linkers, APIs, and specialty chemicals. While we remain disciplined in deploying capital, with investments faced against customer visibility, The objective is to address a larger part of our customer value chain, improve program conversion, and create a more integrated development to manufacturing proposition. On quality and compliance, we have completed USFPA inspections at Fashmaralam, Shamsabad, and Jagiapeet, and submitted our comprehensive responses. We are progressing the required CAPA actions within the committed timeline, with regulatory compliance remaining an absolute priority across all our facilities. At this stage, we are also assessing any further impact from the Surya Paik closure order. Based on the visibility we have today, we continue to expect HALF 2 of FY27 to deliver year-on-year growth on both revenue and EBITDA. This represents an important transition for us from sequential recovery in quarter two to year-on-year growth in the second half. As I look ahead, I believe there is significant value yet to be unlocked from the Kohams platform. There is a long way to go as we integrate our capabilities and realize the full potential of our platform. With that, let me hand over to Yang.
Thank you, Umang. I will build on Umang's comments and focus on the operating progress across small molecules, ABCs, and nucleic acids. ParmaTDMO led our sequential recovery in Q2 with revenues growth of 34.5% quarter on quarter, primarily driven by a higher contribution from small molecules. ADCs continue to see inventory, destocking in commercial programs during the first half. Also, improving orders, visibility gives us greater confidence in the second half trajectory. While Pharma-TDMO revenues remain lower by 27% year-on-year in Q2 and 32% in H1, we expect the sequential momentum to sustain through the second half. Niche technologies contributed 13.7% of revenue in Q2 and 14.4% in H1. At Coen's standalone, commercial revenues remain healthy at around 78% of sales. Also, the quarter had an adverse product mix. The forward position has strengthened considerably. We have received multiple reload orders across existing commercial programs, providing better visibility into Q3 and Q4, as well as next year. During Q2, we also secured three significant lateral programs from large global pharmaceutical customers, two commercial programs, and one phase three program. These awards are important because they deepen our participation with strategic customers. Our late stage and commercial RFP activity has also strengthened. Our phase three programs stood at net 11, and our commercial products moved to 19. On quality, the improvement program continues to progress. Turning to ADCs, H1 performance was affected by continued customer distocking across two established commercial programs. While this has affected near-term payload demand, the development funnel is moving in the right direction. We are seeing a broader range of RFQs across payload and linkers, including opportunities that can potentially be developed and manufactured from India. We are also progressing a customized payload program for large pharmaceutical customers through scale-up, which could generate higher potential in the coming fiscal year. At NJBio, we have increased and refocused business development resources and sharpened commercial accountability. From a capability perspective, our investments are intended to connect payload and linker development and manufacturing in India with bioconjugation, analytical, and development capabilities at NJBio. This is important because it allows us to participate across a larger part of the ADC value chain. We are beginning to see this translate into execution during Q2, and JBIO successfully delivered two ADC GMP campaigns, including one program that progressed through the school development lifecycle from early R&D and process development through toxicology studies and GMP manufacturing. We also supported an accelerated 28-day drug substance to drug product program for another customer, demonstrating the responsiveness and execution capabilities of the platform.
On the oligo, maintain strong momentum, growing 33.6% year-on-year in Q2 and 83% in H1. Importantly, Q2 growth was achieved without contribution from early Phase III supplies, supported by healthy demand for specialized nucleosides, amidites, and other building blocks for newer nucleic acid technologies. We are also seeing early benefits from integration, with opportunities increasingly being sourced through the broader commercial organization and manufacturing programs being mapped across our network. Our investment, therefore, focused on using the existing network more effectively and adding capability where required to support. Scala, and larger customer programs rather than creating standalone capacity. With that, I will hand over to Gunjan.
Thank you, Jan. I will take you through our ATI Plus business, which brings together our established ATI franchise and formulations. What is encouraging this quarter is the improving commercial momentum across both businesses alongside the long-term opportunities we are creating through new products, regulated market development, and greater participation across the pharmaceutical value chain. API Plus reported revenue of Rs.2671 million in Q2, representing a growth of 5% year-on-year and contributing 56% of the consolidated revenue. Performance during the quarter was significantly impacted by a heavy audit schedule across our facilities, which disrupted operations and affected the timing of certain customer shipments. Formulations revenue increased. Supported by product sales as well as profit-share income. Taken together, this represents an improved quarterly performance, although our first-half revenue remains slightly below the previous year. On profitability, higher raw material prices affected select API products during the quarter. We've been working with customers on appropriate price revisions while also driving focus sourcing and process cost improvements. Selective price or tools are helping mitigate part of the pressure. Importantly, despite a challenging global environment, our year-to-date material margin percentage remains ahead of last year. We remain focused on protecting both the competitiveness and the contribution of our niche portfolio. The API business continues to be anchored in a differentiated portfolio across the TNS, respiratory, and gastro therapy. Building on the customer qualification and regulatory progress we discussed last quarter, we received further commercial orders during Q2 across several established products. More importantly, the opportunity funnel continues to broaden through the new grades, new customers, and the lifecycle management opportunities. Our focus efforts to develop relationships with innovative pharmaceutical companies is also yielding encouraging results. Last quarter, we highlighted progress with three innovative pharma companies on the lifecycle management solution. We have now advanced to sampling stage with two of them. On R&D, we are on track with our targets for the new product development and validation work across selected niche products. The regulatory filing work completed during Q1 provides a strong foundation for these programs. Our broader objective remains to move further up the pharmaceutical value chain, bringing together intermediates, APIs, products, and finished dosage forms, wherever we can provide customers with a more integrated and comprehensive solution. Turning to formulation, during the quarter, our financial performance was as per plan. We have also secured a new extension of a key product in the emerging markets and are advancing further opportunities in pellets, modified, released formulations, and differentiated products. Our ability to offer integrated solutions continues to appeal to our customers. We are seeing a good traction in new opportunities on the formulation business driven by geographical diversification across EU markets. On the regulatory front, Recent USDA inspections across three of our API and formulation facilities have concluded. We submitted all required corrective and preventive action responses within the stipulated timeline. Our teams are progressing remediation actions in line with our commitment, closely monitoring implementation milestones, and providing appropriate updates to the regulatory review processes call-through. We remain fully committed. To strengthening our quality system, ensuring sustainable remediation, and engaging constructively with the regulators. Looking to the second half, we have improved order visibility across both APIs and formulations. We are encouraged by the level of customer engagement, the progress through new product development opportunities, and our ability to participate more broadly across the value chain. Overall, we believe these initiatives are strengthening the foundation of API Plus and supporting our ambition to build a sustainable, growing business over the medium term. With that, I will hand over to Amrit.
Thank you, Gunjan. Good evening and good morning, everyone. Specialty chemicals revenue declined 40.6% year-on-year to Rs. 417 million, primarily reflecting lower agrochemical CDMO volumes, pricing pressure, and program phasing. Performance materials remain relatively stable. We are nevertheless making measurable progress in the differentiated portfolio. Commercial manufacture and initial dispatches have begun for a crop protection program with two new Japanese innovators. Registration progress for new AI with an existing innovator is progressing according to plan. And we are expecting commercial launch from S2 calendar year 2028. Performance chemical has been more stable, supported by existing coating business and customer programs in advanced materials. We continue to develop opportunities in OLED and electronic-related chemistries, including early discussions around semiconductor applications. Our strategy is to reduce reliance on a limited number of mature crop production products by growing the share of differentiated, innovator-led business. Targeted automation and environmental upgrades at our multi-purpose agrochemical facility together with a dedicated R&D laboratory are intended to speed up new customer qualification process. F2.27 is therefore an important qualification and portfolio transition year. We continue to focus on our media term strategy of two new product qualification per annum and adding one new customer each geographically like US, Europe and Japan. We had previously expected FY27 revenue in this business to be broadly flat, held by second-half deliveries. Given the performance of legacy agrochemical products and the continuing generic pressure, we now expect specialty chemical revenue recline year-on-year in FY27. Our newer programs are progressing, although they will not fully offset this pressure in the near term, while we are confident that over the next 2-3 years, the trajectory should be improved.
With that, I will now hand over to Abhimar. Thank you, Amrit. Good evening and good morning to everyone.
It's a privilege to speak with you all today on my first earnings call at Cohen. I joined the Cohen family recently, and in these first few weeks, I have had the opportunity to engage with our team and start building an understanding and appreciation of our business and capabilities across this platform. What stands out is the opportunity to translate these capabilities into consistent financial performance, stronger cash flow generation, and disciplined return on capital. With that, let me take you through our Q2 and H1 financial performance, followed by the balance sheet, cash flow, and capital allocation. Revenues increased close to 13% sequentially to about $4.77 billion compared with about $4.2 billion in Q1. Adjusted EBITDA increased to $458 million from $92 million in Q1 with an adjusted EBITDA margin, with our adjusted EBITDA margin improving to around 10%. Adjusted TAT. Also, returns to positive territory during the quarter. On a year-over-year basis, performance remained lower, principally reflecting the reduced contribution from Pharma CDMO, Adchem, and an unfavorable business and product mix. Let me spend a moment on gross margins, because the year-on-year movement is best understood through the change in mix. Both volumes and an adverse product mix impacted the quarter and the first half. Higher raw material prices affected product margins, while selective pricing and procurement actions are also underway. These headwinds are partly offset by the stronger contributions from our nucleic assets and formulation business lines. Our focus in H2 is therefore not simply on higher revenues, but on improving the quality of revenues, mix, and utilization across the platform, which should support our operating leverage. Turning to the balance sheet, Kohans remain cash positive at the end of September. Cash and liquid investments were close to $2.9 billion against borrowings of around $2.3 billion. Receivables improved materially during H1. Inventory, however, increased to about $7.3 billion from about $5.6 billion. A significant portion of this is supported by the continuous business requirements. And the expected H-2 orders scheduled in the second half of the year. Our focus is on maintaining collective discipline and improving the overall cash conversion cycle. Let me now put the capital program into financial context. During H-1, the group deployed a little over a billion in capital expenditure, excluding acquisitions and ownership investments. We are working on additional capital programs that over the next few years will build adjacent capabilities in ADC payload linkers and bioconjugation. As among indicators, we expect second half of the year to be stronger than the first half. The key drivers are scheduled small molecule deliveries and reloads, continued resilience in our API Plus platform. Sapala growth, approaching break-even in NJBio, and progressive improvement across the broader portfolio. Overall, higher revenue conversion, better utilization, and an improved business mix is expected to support EBITDA growth in the second half. With that, I hand it back to Cinderella.
Thank you, Abhimanyu. Now, I request the operator, Yash, to open the floor for questions and answers.
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Dr. Kunal Damesha from Macquarie Capital. Please go ahead.
Hi, thank you for the opportunity and season's greetings to everyone. The first question is on the two additional commercial projects. That we have kind of caught in this quarter. Umang, if you could highlight the nature of these projects, you know, in terms of whether these end products are paid and protected, are they from innovative companies? And I assume that, you know, there'll be a tech transfer, so there'll be some lead time before these projects can start contributing. So what could that lead time be?
Yeah, certainly. I think both are patent-protected, but I will request Yarn to give his view on this.
I can respond. Thanks, Umang. Thanks, Kunan. First of all, those are two products that are patent-protected and have been launched or are being launched as we speak. Okay? They are from large pharmaceutical innovators, which means that they will contribute for the foreseeable future to the revenue generation of brands. That's point number one. Point number two, revenues on the first campaign is expected. Either in Q4-FY27 or in Q1-FY28 for the first deliveries to the customer.
So, and are these a small molecule or on ADC side, or what should, what's the technology involved here?
Here, this is a small molecule. Small molecule, okay.
Sure, so... I mean, it is quite quick, right? So, whatever we are going to deliver, is it intermediate or final API, and would it be the GMP output that would be delivering?
So, those are RSM, registered starting material.
Okay, we'll be delivering RSM. Okay. And then, let's say, in terms of the overall unit economic-wise, would it be comparable to some of our small molecule CDMO projects?
Yes, and of course, as those products are just being launched, there is also uncertainty from our customers on how... The forecast will develop moving forward, right?
I think that's well understood in the industry. Sure, and let's say because it happened only in this quarter, I would assume that it would be incremental to our initial guidance of H2 being higher than H1, right? That is correct. H2 being higher than the H2 last year, sorry.
That's correct. Sure, sure, sure.
And one question I have is for Gunjan. Just a second. The life cycle management project that we talked about, Gunjan, if you could explain how this life cycle management projects work in terms of, you know, the sampling to, let's say, you know, commercial quantities, how much time does it take, how does the ASPs kind of, you know, evolve during this time period, And then eventually, whenever the product goes off patent, is there a meaningful change in pricing or volumes? How should we think about it?
Yeah, thanks for the question. See, in life cycle management, the off-income hour side focuses typically, you know, when the product is already off-backed or about to go off-backed. So, in terms of price erosion, it's not very significant. In fact, the pricing if the product is already off patent, the pricing which we get from innovators is slightly premium to what is typically in the general generic space. And that's the reason for going after in a dedicated manner towards these kind of opportunities, because these provide a better margin profile, at the same time, a higher degree of predictability. The way it progresses is that typically you have to start engaging with the innovator for a big pharma company. There are a series of gates that one has to cross in terms of the qualification process, audits have to be closed, everything, on multiple accounts. And once all those things are completed, you move to a sampling stage. After sampling, if everything is good, it goes to a validation stage. If validation is okay, they initiate the filing in multiple markets. And once the filing approval is secured, it goes commercial. So typically, the lifecycle of something like this could range from if you have been able to give a sample and everything goes well, somewhere between, you know, from 18 months to 36 odd months would be the time when the monetization would start on these.
Sure. And these three pharma companies that you would have engaged, are those, would you say, are those existing clients of Kohans or are those new clients?
Of the three, two are new and one is an existing one. Sure, I have more questions. All are European, all three.
All are European. Okay. Perfect. Perfect. I have more questions. I will join back then. Thank you.
Operator
Thank you. Before we take the next question, we would like to remind participants to ask a question, please press star and one on the phone. Next question is from the line of Sajid Kapoor from Anti-Sajid DC. Please go ahead.
Yeah. Hi. Thank you for the opportunity. Couple of questions on Surya Pair. Roughly, what share of your H2 revenue or order book is scheduled to ship from that unit, and does the guidance for YOY growth in H2, assume it reopens by a particular date, I mean, if it stays shut through Q3, does that guidance still hold?
Thank you. Yeah, thanks. Thanks for that question.
I think we are, you know, very early stages of assessing our... Assessing the developments that are taking place at the site. So we are very actively understanding how soon the engagement with the authorities can bring us back into an operating mode. I think you'll have to allow us some time to be able to get to a position of some clarity, and then I think we can further guide in terms of the time it might take and what that time might mean for the second half of the year. This, as you would appreciate, is a development in the last 24 hours, so attention is more on the engagement with the authorities on all the regulatory front as of now.
Yeah, yeah, sure, sure, definitely appreciate that.
And of the 260 crore of de-stocked revenue identified last year, how much do you now expect to recover in FI27, the second half, and how much in FI28? And has the second molecule's restocking order been received yet?
Jan, can you comment on this?
Yeah, thank you. Can you repeat exactly the question? I understood your question. Please.
Yeah, sure. So, of the 260 crores of de-stocked revenue that identified last year, the question is, how much do you now expect to recover in FY27 second half, And how much... They'll slip over into FI28. And in continuation to that, has the second molecule's restocking order been received as we speak? Thank you.
Okay. Thanks for the pointed question. So, I think I explained before, right, our situation with our binodal distribution, right? On the small molecule, which means that two of our small molecule KSM are essentially becoming generics in the next one to two years. And as such, the volume here for those two molecules has gone down this year, and that will continue as well for the foreseeable future. Right. Nevertheless, one of the molecules that was not part of that second node, right, that was that had been approved maybe a few years ago and that's still under patent protection. It has received very good reloads for N of FY27 and also for FY28, and we are in discussion for more coming forward. I cannot exactly provide the revenue to be expected here for obvious reasons, but nevertheless, this is contributing to the improvement. In H2 FY27, and to the improvement expected in FY28. Sure, sure.
And finally, record bookkeeping, subsidiary-related cost. And so regarding NJBio, the expenses, I think, on the subsidiary side fell from 41 crores in Q1 to almost nil. So the question is, how much of this is the recurring savings from NJ BIO restructuring, and how much is, you know, one-off write-backs?
Thank you. Yeah, so, yeah, thanks.
Thanks, and happy to clarify that. And you can let us know if we got the drift of your question. I think we have fairly limited cost in this quarter on account of, you know, the efforts towards completing those restructuring transactions. So we do not anticipate any further costs in the second half of the year on account of these transactions, which were, you know, done in the last 30 to 60 days.
Okay. Now, that's helpful, and all the very best team. Thank you so much for answering all my questions. Thank you.
Operator
Thank you. Next question is from the line of Shivlal Khandelwal, and I think you should discuss. Please go ahead.
Thanks for the opportunity. I would just like to know, which are those two plants were under UAS FDA inspections? Is there any stream there will be effect on second half of the working because of the inspection going on?
So, inspections are over. We have responded to all three audits already to the FDA, and from here, it will take its course of FDA determining our classification. So, as of this time, we do not know what the FDA has, the FDA's classification, but we are hoping to hear over the next one month to 45 days or maybe one to three months. on what the how the FDA classifies the facility.
But will it going to affect the second half?
Well, it depends on how the FDA classifies it. But, you know, at this point, we're not seeing, you know, any impact. But it depends on when the how the FDA classifies it. So I don't want to get ahead of Trying to figure out what the classification will be, but we have responded comprehensively to the FD.
But we are receiving this USFD inspection in Form 483 consecutively. So is it true? How the things will get normalized in future means? When will we come to all these auto inspection things and all that?
But this is, it will depend on when the FDA deems it is complete, right? If they have to audit our facilities, they will audit. Some facilities are due for audit, so they will come for the audit. So I cannot predict what timeline the FDA will take for the resolution of their issues. Our job is to respond comprehensively and respond with the right kappa, which is what we have done.
Operator
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. Next question is from the line of Sham Shrinivasan from Goldman Sachs. Please go ahead.
Good evening. Thank you for taking my question. I'm on the road, so just bear with the noise. So, first question is on these three contracts that we have won with BigSama. Maybe you've elaborated it a bit, but I just want to know what are some of the key ingredients of why we were able to secure these orders, and do you foresee looking at your capacity and network and capabilities? Can we repeat this success with other customers?
If you want, I can take the question, right?
Yeah, so, Jan, let me, I'll give a view, and then you can give one as well. I think from our perspective, our objective is to constantly feed our pipeline, right? I think the key products that we've got are, two of them are relationships with deep customers, which we hope to, you know, which we hope will continue. And obviously, some of these have also been opportunities that we have been working with these customers for a while. It's not arrived suddenly out of things. So I think we have a pipeline that focuses on that. And that is where we are trying to aim, to add more to our pipeline, to work with some bigger accounts and our existing customers.
Jan, do you want to give a perspective further? Yeah, I can add Umang
on what you just indicated, right? At Cohance, right, we have a good relation with several large pharmaceutical customers that was confirmed during the CPHI meeting, right? That happened about a month ago. And those large pharmaceutical customers have trusted co-hands on their commercial products, right, in order to be their supplier. So this is a very important win, I would say, for the organization as it's... A demonstration that all our effort in quality improvement, in business development, are starting to deliver significant results, right? So that's how I want to thank here also the entire team at Corens who has contributed to it. Since we added capacity about two years ago, so we have normally the capacity within our network to support this additional business as well.
Very helpful. Just on the API plus business, you know, in some of your commentary, you have talked about pricing action. So, I just want to know, Umang and team, is the pricing environment for generic API, are you seeing a turn for the good, especially given competition from Chinese may be abating or may not be? So, just some color around the overall API plus as well, and if there is any outlook that you could share for that team.
Thanks, Sham. I think, Steve, just broadly on the generic API side, I don't think we're seeing an environment where prices are massively rising. I think that they're at a situation like the normal generic industry, but I think Gunjan's strategy was a little bit more about going a few extra steps beyond generic API as well as moving From one stage to the other, which creates some amount of pricing power for ourselves. And I think that's the path that coincides on. But on the generic API side, we don't see, you know, too much of price increases happening. At the same time, we also don't see too much of price decreases happening. I think the environment in the market is relatively stable.
Thank you. Thank you and all the best.
Operator
Ladies and gentlemen, to ask a question, please press star and one on your phone. Next question is from the line of Suresh Buram Sethi from Buram Financial. Please go ahead.
Good morning, sir. Thank you very much for your attention. Sir, actually, present quarter sales, sorry, I'm sorry, sellable order. Please ask the person intelligent.
Yeah, we would prefer if you could ask it in English, please.
Sir, I am asking the question, in further quarters, improve the sales and net profit or EBITDA OPM in further quarters guidance, sir? I am asking.
Yeah, I understand. So I think as we have all, you know, sort of indicated in our remarks that, you know, there is going to be an acceleration in the operating platform in the second half of the year. And therefore, yes, you should expect that, you know, the half over half performance will be improving.
Yeah, that's what I said.
We're expecting it to improve.
And how much EBITDA, Mindy? How much capital you can maintain, sir?
See, we are not giving that level of guidance. All we are saying is that sequentially our business will improve. So if you have sequential EBITDA already, like this quarter we have shown 9% or so, you can assume that it will improve from there. Specific guidance we are not providing.
Operator
Thank you. Next question is from the line of Vikas Palt, an individual investor. Please go ahead.
Yeah. Hi. Hi. Hi, Dean. I'm Audible.
Okay. Yeah. Thanks for giving me an opportunity. I have two questions. One is related to the Suryapid facility. So, how much revenue was generated from this SuryaPet facility in FY26, so which is put on hold due to orders from the PCB? That first question.
We are not providing that level of guidance because we are assessing the impact and the situation at this stage. From a commercial manufacturing perspective, this is actually one of our smaller plants. It is not our largest plant, and so we are not providing that level of... This is also a plant which is a non-GMP facility. It's not one of our regular GMP plants. And the other thing that I would just like to also add is that, look, the closure notice will also eventually, you know, our attempt would be to resolve the closure notice, right? So it might take a little bit of time. It doesn't mean that the facility will be perpetually. You know, it will be perpetually shut because it also creates employment in the area that it operates. Right? So, I think that's what we would say. We are not providing that level of guidance. Okay, thank you.
But it is one of the most smaller facilities.
Yeah, so the next question.
No, I said it's one of the most smaller facilities.
Now, you please go ahead. We have answered the question. Please go to your next question. Could you please?
So, the next question is related to the USFD observations. So, we have been quietly getting these observations from, you know, the inspections that USFDA conducts. So, the question is related basically, so how are we learning from these USFDA observations reported for one facility and making sure that we does not get those kind of observations from other facilities?
I think we have global CAPAs that we implement, which means the corrective and preventive action is across all facilities, and whatever we do as actions in one facility, we try and take them in other facilities, but at the same time, all facilities are at a different stage of evolution from a capability and from a remediation perspective. But our endeavor is that whatever we have as observations in one facility, we will remediate across all facilities.
Operator
Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to management for closing comments. Over to you.
Thank you, everyone, for joining us and wishing you all a very happy Diwali. See you in the next call.
Operator
Thank you. On behalf of Kohan's Life Sciences, that concludes this conference. Thank you for joining us. Human Health is Connection.
