Gujarat Themis Biosyn Limited (GUJTHEM) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Gujarat Thermos Bios Unlimited Q1F527 Earnings Conference Call, hosted by 361 Capital Market Private Limited. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on date of this call. These statements are not guaranteed of future performance and involves risks and incentives that are difficult to predict. As a reminder, all participants' 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 start and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand over the conference to Mr. Rishikesh Patoli from 361 Capital Market Private Limited. Thank you, and over to you, sir.

Thank you, Pari. Good afternoon, everyone. On behalf of 361, I welcome you all to the Q1FY27 earnings conference call of Gujarat Thames Pires. Hope everyone is in good health and doing well. On behalf of GTBL today, we have with us Dr. Sachin Patel, Managing Director, Mr. Krupesh Patel, Chief Financial Officer. I now hand over the call to Sachin for the management's opening remarks. Post which, we'll open the session for Q&A. Over to you, sir.

Thanks very much, Rishikesh. Thanks very much, Rishikesh. Good afternoon, everyone. On behalf of GTBL, I welcome all of you to our Q1 FY27 earnings call to discuss our financial performance and business updates. As Rishikesh mentioned, on the call with me today is Krupesh, our CFO. It gives me great pleasure to address you all today as GTPL stands at an important transformational juncture in its growth journey. Over the last few years, we have consistently spoken about transforming GTPL into a larger, more diversified, and innovation-driven pharmaceutical company. Today, we are beginning to see this strategy take tangible shape. While our quarterly financial performance remains important, what is more significant is a strategic platform we are building for the next decade of growth. The global pharmaceutical industry continues to evolve with increasing demand for complex APIs, specialty pharmaceutical ingredients, and fermentation-based products. Customers are seeking partners that offer scientific expertise, process development, regulatory compliance, and end-to-end manufacturing capabilities. We believe these structural trends create a compelling opportunity for GTBL, and our strategy is focused on building capabilities that allow us to participate in higher value opportunities across the pharmaceutical value chain. The strategic initiatives undertaken over the last 18 to 24 months are all connected by one common objective, transforming GTBL into an integrated fermentation-led pharmaceutical platform. Our ongoing multi-phase capital expenditure program is expanding our fermentation infrastructure, strengthening our R&D capabilities, and creating downstream API manufacturing capacity. These investments are intended to diversify our product portfolio, deepen technology capabilities, and enable greater value addition. Historically, the company has developed deep expertise in fermentation-based intermediaries. Going forward, we aim to progressively move downstream into APIs and other high-value products, thereby capturing a larger share of the pharmaceutical value chain. Moreover, we have been strategizing to complement this organic growth with inorganic expansion opportunities. As you might be aware, we announced two major strides in that direction recently. We recently announced plans to acquire Microbiopharm Japan, which specializes in precision fermentation and various other technologies and therapy areas. This acquisition Provides access to advanced fermentation technologies, specialized scientific talent, proprietary know-how, more manufacturing muscle, and an established R&D platform. The move adds therapy areas across immunosuppressants, oncology, and anti-infectives, as well as technical capabilities such as peptides, plasmids, ADCs, and enzyme engineering. Overall, this would enhance our capabilities across fermentation science, process development, and next-generation products, and accelerates our aspiration of becoming a globally integrated fermentation-based CDMO player. Complementing our technology expansion is acquisition of selected global brands from Sanofi, France. As a part of this, we are acquiring 13 established brands in the anti-TB and anti-infective segments. This portfolio gives us access to 55 countries across Europe, Middle East, and Africa markets. While microbiopharm's presence are upstream scientific and manufacturing capabilities, the Sanofi portfolio expands our downstream commercial presence to establish brands and international marketing access. It also creates opportunities for forward integration from intermediates to APIs and finished formulations. Together, these acquisitions substantially broaden our therapy area, such as oncology, immunosuppressants, etc., as well as give us a global geographical footprint. Viewed as a whole, these initiatives present a clear strategic roadmap. Expanded fermentation capacity supports manufacturing scale, investments in R&D strength and innovation, API expansion enables forward integration, microbiome enhances technology capability, and the Sanofi portfolio broadens our commercial reach. Collectively, these initiatives position GTDL as an innovation-led pharmaceutical company with a growing CDMO capability, a wide therapy area, and a strong foundation for sustainable long-term growth. Now, I would like to hand it over to Krupesh to take you through the financial performance of the quarter. Over to you, Krupesh.

Thank you, Sachin Bhai. Good afternoon, everyone. Revenue from operations for Q1 F527 stood at Rs.43. 43.8 crore compared with 35.9 crore in the corresponding quarter last year, an increase of 22.1% year-on-year. This growth came from a robust increase in sales volumes, which reflects a healthy demand outlook for our products. EBITDA for the quarter grew by 49.4% year-on-year to Rs. 20.8 crore with an EBITDA margin of 47.5% up by 867 business points. Profit after tax stood at Rs. 11.1 crore compared with Rs. 9.1 crore in Q1 F526, reflecting a growth of 22.1% year-on-year. Our balance sheet remains healthy and provides the flexibility to continue investing in our long-term growth initiatives.

With that, we can now open the floor for questions.

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, this will wait for a moment while the question queue is happening. The first question is from the line of Harish Papadhyay, an individual in residence. Please proceed with your question, sir.

Yeah. Am I audible? Yes, clearly.

Yes, sir, you are.

Yeah. Good afternoon, Mr. Jintra. It has been almost three years since we last had a convulsor. So, first of all, my question is that what was the reason behind the almost three years of silence?

Or is that the first question or the only question?

No, no, it is the first question, sir.

Okay, no, I think you're right. We have been silent for the past three years. I think we have been in a mode whereby our business has been pretty, I would say, slashed, but at the same time, we've been sold out on capacity, and we have been in a working phase whereby we've been investing in CapEx and building the infrastructure that we have. And admittedly, we have been late by almost about a year in terms of the projects that have been implemented, but now it's all ready to go.

Yes, sir. So, my first question is regarding the 3,000 crore mega acquisition that we are doing. So, we are raising around 1,000 crore for QIP and taking a debt of around 2,000 crore. Now, if we take the modest cost of capital around 10%, then it will create around 200 crores of interest burden every year. So if this new business brings around 1000 to 1200 codes of revenue in the initial year, Then a huge chunk of profit will go directly as an interest payment. So, sir, how does this actually make financial sense for us in the near term? And when do you realistically expect these acquisitions to start adding actual net profit to our company's bottom line after paying the interest?

A couple of points. Although we have signed both the acquisitions at one time, one of them gets over, gets closed right now. The second one is still probably about six months or nine months, if not longer away, because the long-stop date over there is June next year. The reason for that essentially being that there are significant regulatory approvals that have to be obtained from over 50 countries. So it is expected to take time, which is usually does. And with regards to the interest cost, while the interest percentages are significantly higher in India, In the two geographies that we are looking at, the interest cost is significantly lower than the 10% that you have mentioned. So, we don't see interest outflow to the tune of the number that you mentioned. And the way we see it from the very beginning, this business is actually cash flow positive. Okay.

So, my next question is regarding the API block. So, back in November 2023 CONCO, we guided that we were starting additional revenue from the API block in FY25. Now, we are already in the FY27, but our quarterly revenue is still stuck around the historic 40 crore on date. Will you please explain what led to such a long delay of two years when we finally see the actual revenue in the P&L?

So, essentially, our API block. And although we were planning to start it immediately, it took a lot of time because we did not have enough capacity in the fermentation blocks. That is something which has just begun now. And unless we had more intermediate, we had no opportunity to produce API because whatever we were producing was already contracted in terms of sales. So we could not. Get into the API path by cannibalizing or by reducing the supplies that we had to the current customers, which have been long-term partners of ours for a long time.

So, sir, now we are having the additional fermentation capacity that is which we are going to use to make the API, right?

That's right. That's right.

Yeah. So, my last question is regarding the merger, the merger that we have planned with the Thinus Metal Gear, sir. Sir, we noted the announcement happened in around November 2024, but after six months, the decision was made to withdraw the scheme. Sir, could you please explain the insight into the strategic thinking behind pursuing the merger initially, and what factors led you to decide to call it off?

So our initial... Thought was to essentially make this a fully integrated pharmaceutical company with API fermentation and brands in the domestic market. But at a similar point of time at GTBL, we appointed an external firm to give us a strategic option in terms of what all could be doing GTBL. And this is where the whole concept of a fermentation-based CDMO became more clearer to us. And we felt that if we would be doing anything else, we would be diluting what GTBL is doing. And hence, from a perspective of GTBL, it was decided that we want to grow this particular business as a fermentation-based CDMO and not... Get into other businesses, which are predominantly domestic in nature.

Right. Thank you, sir. Thank you. That's all from my side. I will join back to you, sir.

Thank you. Thank you.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one now. The next question is from the line of Ariyant Agribal from Ardhant Ventures. Please proceed with your question.

Hello. Yeah, hi. I had a question with regard to your group company, Themis Medicare. And, you know, post the merger, the acquisition that you have, you know, the Sanofi brands and MBJ, what are the benefits that can actually move towards formulation for Themis? Do you see that happening over the next one to two years where I think a formulation which is currently outsourced will eventually move towards FEMIS?

So I think a couple of things. I'll divide the discussion or the response between Temista and GTBL because we are really on the GTBL earnings call. So from a GTBL perspective, the Sanofi business, which is there, will be contracted. Two, a certain part of it will be contracted to CMOs, which may or may not be Temes, but as plans stand right now, it will not be Temes because there are projects which are going on in Temes already or some other category of products. So we don't envisage that, but yes, we most certainly will be moving production from Sanofi to other sites, but on a CMO basis, which may or may not be inside India.

Thank you. That answers my question. Thank you. Thanks.

Thank you. The next question is from the line of Nirali Shah from Ashka Investment Managers. Please proceed with your question.

Yeah, thank you for the opportunity. I have three questions. So, first one is on the MDJ. We have a lot of capabilities that we are bringing in from the MDJ portfolio, like the precision fermentation, ADC, the enzymes. I just wanted to know which of these platforms are already commercialized or commercially validated today, and which are essentially like a five-year option, and what revenue is currently being generated from each of them?

And welcome to the call.

At MBJ, apart from ADCs, which is a relatively new technology that they have developed and patented, all the other areas are already commercialized, which means they have experience of at least one project that they have put into development and also commercialized, which means they have the respective GMP acquisitions to which would be required. In terms of revenues which are coming in from each of the verticals, that we are not in a position to leverage at the same stage.

Okay, so ADCs is something that will be coming up now, right?

ADCs is something which will be, so they have the technology, but there is no project which is still bad from a CDMO perspective. But it's an innovative technology, which only time will say how much interest it gains. From the prospective customers, but all the other technologies, meaning peptides, plasmids, onco, precision fermentation, immunosuppressants, anti-infectors, these are all commercialized. At least one product from each of them is commercialized.

Understood. The second question is on the, so we are seeing a global product market shift from rifa-micin towards rifa-pentin. What is the downside to our existing rifa-micin as economics, and how much of that risk is offset by the Gujarat Samish moving downstream into rifa-pentin APIs?

We actually like. From a RIFA-S manufacturing perspective, we like the fact that the market is moving towards RIFA-Penton, although not as rapidly as we would like, because the requirement of RIFA-S to manufacture one kilo of RIFA-Penton is more than what you require to manufacture a RIFA-Penton. And from our perspective, it doesn't matter either way because we are ready with both the APIs.

Understood. And lastly, on the fermentation capacities, you can help bridge the utilization, the additional 540KL capacity that we have come up with, and more color on the customer qualifications and how much of it is currently unallocated.

So we have, as you mentioned, we have practically doubled the capacity. Thank you. All of the expansion is going only for recompersing because there is some expansion which has also gone for R&D and CG and the pilot facilities, but practically double the capacity. And the manufacturing site starts full steam by the end of this month. So we have to basically commercialize everything that we produce.

What will be our utilization level from that incremental plant?

From a fermentation perspective, it's zero or 100, you know, so basically we will be running capacity at full scale. So the expanded capacity will be fully operational and running and producing by the end of this month.

Okay.

In terms of customers, etc., obviously our target is everyone who is using the intermediate in and outside the country.

Understood. Okay. Thank you.

Thanks.

Thank you. The next question is from the line of Kaloni Aria from Molecule Venture PMS. Please proceed with your question. Hello, good afternoon, sir.

So, I just have one question on the Microbiopharm Japan deal. We are made aware this deal is expected to be closed by August end. So, has the funding been secured to close the deal?

Yes, pretty much. Pretty much. So, I think there would be some last minute approvals required, but yes, otherwise it is in place.

Okay, so if the funding is secured, sir, may I ask what this extra 450 crore desk flexibility option plus 1,000 crore guarantee that we have recently taken from the group companies? What's the purpose for that, sir?

So we are preparing for multiple avenues in terms of funding. So we have one avenue closed, but we would like to work with the optimal mix of debt and equity. So we are keeping everything ready by the end of this particular month when we have to do the closing to figure out, or rather to ensure that we have the best mix that is required to close this particular transaction. And hence, there are multiple approaches which are being explored and being exercised also. At the right time, we will take a call on what works best for us.

Right. Makes sense, sir. Sir, regarding the standalone CAPEX that we have done, the fomentation block as well as the API block, I just wanted to take an update from you. Since last we spoke, we were expecting the commercialization to happen from this month onwards. So, has it started yet, and what is the update on this? When can we expect numbers coming in from the standalone entity?

We should start seeing the outputs from the expanded capacity to a certain extent from this quarter, and then finally from in the second half of the year.

So, from both the API and the fermentation block will be up and running? That's right.

Okay. Okay.

That's it from my side, sir. All the very best for your venture. Thank you.

Thank you.

Thank you. Before we take the next question, we would like to remind the participants that you may press star and want to ask questions. The next question is from the line of Mithun Mehdi from MMM Capital. Please proceed with your question. Good afternoon, sir.

Sir, my question is regards to the Sanofi acquisition, which is more on asset-like models, as we are not acquiring any of their assets, manufacturing assets. Since there are no factories being acquired, the Sanofi's portfolio molecule will be manufactured immediately by whom, as in who's closing the deal, as in where it will be manufactured, will it be manufactured directly by us, or will it be doing it some other party?

Sorry, the line was not very clear. Was the question if Sanofi's product is going to be manufactured directly by us or by someone else? Was that the question? After the post-closing, there is a transition service agreement between us and Sanofi for three years, whereby in a step-by-step manner, all the transfers will take place. And it starts with... A country-by-country transfer of the marketing authorization from their name to our name, which will finally culminate into all the manufacturing moving into our control. Not the sites, not the people, but just the manufacturing. So essentially, we will be using CMOs, some of them which already our fellow is using, and some of them we will create at the end of three years' time.

So, after three years, it will be completely manufactured by us. That's the plan, right?

We hope much earlier. We hope much earlier. But, yes, three years is the maximum time that will take. So, all the tech transfers, etc., will be completed in the first year itself.

Okay. Sir, my question is, regard to the fundraising activity, how much we are raising by our debt? Is it 2,000 or 1,500?

So, we are keeping ourselves ready to do the transaction completely or significantly by debt and also planning on equity. So, as I mentioned to the previous person who was asking the question, we'll do the right mix as the time comes by.

But we haven't decided any, as in any absolute amount in terms of that is one of the, as in what's the exact amount. We have kept that option open.

Right now, I think what we have decided is that we are raising equity to the, to up two. Up to 1,000 crores. That is what we are looking at right now, to raise equity up to 1,000 crores, and then we will figure out exactly whether we raise 1,000 or how do we go about the debt, sorry, what do we do with regards to the debt path. We are keeping everything ready for us.

Okay. Okay, and this MBJ is proprietary technology like E450 enzyme laboratory, as in, how quickly we can absorb it and commercialize it in, as in, within Gurdjieff's image?

Sorry, was the question about enzymes and how we can commercialize it in GTVM?

Yes, how soon is it going to be?

I think we have some clear ideas on this and we can do a fair amount of work within the first year. So I think it won't take too much time for us to bring in some quick wins in terms of synergy between the two companies.

Great. That answered most of the questions. Sir, my only request is, can we have this call going on on quarterly basis, if not quarterly, on a semi-annual basis, regularly, rather than just one-off?

Yeah, most certainly.

Okay, great. Thank you. Appreciate it, sir. Thank you.

Thank you.

Thank you. The next question is from the line of Vignesh IS from SeekMed Investments. Please proceed with your question.

Yes, two questions from my end. The first question is on the promoter encumbrance. Could you guide me? If I'm not wrong, in the month of July, around 2% of the encumbrance got released. So what is the action plan from here on, one part of that? How would we see the, you know, encumbrance going down?

Sorry, I'm not aware about this particular detail.

The 2%?

I mean, the pledge of the shares that has happened. I guess it is around, as on June, it was around 48%, 48.5%, and a certain 1.5%, 2% got released in July. So, I wanted to know what is the action plan on this part, you know, to reduce the promoter pledge.

I think within a year, a year to 15 months should be going down significantly.

Okay, and wanted to understand on our base business, what kind of CapEx can we expect in this year, in FI27?

So, most of our CapEx is now completed. I think probably to do some last... I think the last question is after. Sorry, to do a... Sorry, was that? If we do the last mile thing, we may have a little bit left, about 10 to 15 tours, but otherwise, most of the capex is already done by the company.

Right, and some amount of maintenance capex would also be there, right, in this year? Yes, some amount, that would be there for sure.

But typically, capex has been a few crores, not much.

Okay, so around 20 or 40 can be expected, I mean, on the base business for the year. Yes, including everything. Including everything.

Yes, perfect, perfect. Yeah, that's all I'm going to say. Thank you.

Thank you. The next question is from the line of Viraj Paret from JMP Capital, Family Investments Office. Please proceed with your question.

Good afternoon, sir, and thank you for the opportunity. My first question is slightly broad-based. So, basically, what I would like to mention is since FI 23 to FI 26, We have been more or less in a similar range of revenues as well as operating profitability. So firstly, I would want you to throw some light as to what is the vision of the management team and the company for the next, say, three to five years. I understand we have been in an investment phase. So if you could give us some flavor, it will be very helpful. That's the first one. And if I may, so second is a little bit on the bookkeeping front. If you could guide us as to how the gross block has moved from F523 to F526 in absolute terms, if you can just re-mention it, sir. Thank you and all the very best.

Thanks. So I'll answer the first question, and I'll let Rupesh answer the second one on gross stock. So over the last, I mean, four or five years, our numbers have been pretty flat in terms of revenue and in terms of margins, because essentially we've been sold out. And to increase capacity and fermentation is not very easy. So it's taken us first two years have been there in terms of upgrading our current facility, which were quite old. And then the next three years have been spent in terms of creating the new infrastructure that we have done now. So the flatness really comes essentially, as I said, from the fact that we're being sold out and nothing else. In terms of our future vision and goals, as I mentioned in the introductory statements that I made, we want to transform. So besides definitely growing on the stack that we already have organically by selling more of what we are producing and perhaps some more products, We want to transform ourselves into a fermentation-based CDMO, so that is what the focus is. That is what we are working on through this Japanese acquisition. And at the same time, financial strength is extremely important, and that is where the Sanofi portfolio comes in because it is forward integration of some of our APIs, which gives us a healthy stack of margins over there also. Vision is quite simple. Fermentation-based CDMO grow on that and improve our financial performance. Let's group A to answer the cross-block question.

So, if you see on gross block sites, our gross block was around 62 crores in F523, and if you see the F526 balance sheet, it is around 435 crores, including CWIP. So, if you see, we have incrementally added around 370 crores in last three years in gross block. These three 70 crores comprises of new fermentation facility, EPA facilities, new R&D infrastructure, and the hybrid power project, which is recently going on.

All right, right. Sure, sir. Sure. So, just a follow up on that. Thank you for your answer, firstly. So, secondly, you know, is it or would it be right to say that we can replicate our historic asset terms? And, you know, just on a growth side, sir, next three to five years, if you can just give us some sense on the growth, sir, you know, what is the kind of top line we would want to achieve, you know, seeing the kind of investments, long-term investments that we've made. And again, my question is for the longer term, sir, not for the near term, just to clarify.

So, on asset tonne, if I can say out of 370 crore, around 200 crore, if you can consider an asset tonne side, because this 200 crore comprises new fermentation facility and API facility. So, if I can say on asset tonne basis, it is on 200 crore, you can say 1.4 to 1.5x is asset tonne.

Got it. Got it, sir. Got it. So, will it be fair to say that across, say, next 3 to 5 years, you know, putting conservatism also, you know, we would want to reach that 500 crore odd number in terms of our top line?

So, I can just want to say, I don't want to specify a certain number here, but I can say that we are, on basic basis, we are, we want to grow on high-team basis, I can say.

Got it. Got it. Understood, sir. Thanks a lot for your patient hearing and answers, and all the very best to the team. Thank you. Thank you.

Thank you. The next question is from the line of Nimesh Pandey from NB Investor. Please proceed with your question.

Good afternoon, sir. Thank you for giving me the opportunity. Hope I am audible to you.

Yeah, clearly.

So, I have a couple of questions. So, I just wanted to know, could you take us through the key factors that shaped, I mean, FY26 revenue and profitability and what key development should investors watch over the coming two to three years, particularly around the company's KPEX and acquisition plans?

So, for FI. So FY26, in terms of numbers, if you see, they are pretty much in line with the previous few years. So there may have been one year where you would have seen a little bit of reduction because of some production-related issues because of excessive rains and power fluctuations. But otherwise, on the whole, FY26 has been pretty stable and pretty steady with others the previous few years. All I can say is I think we were pretty much sold out in terms of capacity, so we were producing to the usual efficiency and we were sold out, so I think there's nothing else that I can add to that. The second question was, again?

Yes, so second question was, how do, I mean, and what key developments and should investors watch over the coming two to three years, particularly around the company's CAPEX and acquisition plans?

I think. Over there, you clearly mentioned, I think, Kupesh mentioned in the previous caller's response also in terms of how the CapEx has come through and what we expect in terms of asset terms from the new CapEx, which is coming. So, obviously, we would very much hope and expect growth coming in on a quarter-and-quarter basis, so that is one part. And the second part is with MBJ coming in the fold, with all the capabilities coming in the fold, I think some exciting synergies is what we are foreseeing coming through, which would essentially obviously lead to a lot of... New projects that we can do together, we should also add further to the revenues and earnings of the company. And I think integration with the Sanofi portfolio, that will also be a very interesting space to see because that will definitely add value in terms of

both top line and bottom line.

Okay, so my next question is, what strategic value do the microbiopharm acquisition and the Sinophie portfolio bring to the GTV, and how do they strengthen the company's CDMO capabilities and growth prospects?

So, to have a fermentation-based CDMO title or, you know, to call yourself a fermentation-based CDMO, besides doing fermentation, we need a large. There's a large number of capabilities that one needs to have to be able to say that, yes, we have all the capabilities that a typical fermentation-based bio-CVMO would require. So if we had to build those capabilities in-house, it would take us seven to eight years. Now, with microbiopharm, it gives us a jumpstart of seven to eight years because all these capabilities are there, projects are there. Supplies are there. And of course, relationships with big pharma in Japan and a few big pharma globally also. So this is what microbiome brings us from one day to another. And with regards to Sanofi, you know, we were producing intermediates till yesterday. Now we are producing APIs. One also wants to produce the formulations because you want to make sure that you have the entire value chain under you. That is the benefit that the Sanofi portfolio brings us. It essentially secures our bread and butter, which is what we are making right now.

Okay, got it. Understood, sir. So my last question is, how do you expect GTBI's business mix? And the financial performance to develop over the next few years. And what returns do you expect from the investments being made as a part of the current group strategy? I mean, it's pretty generic, but if you could please answer.

I think, again, this was probably answered in the previous caller. The expanded capacity, we are expecting that's the terms that Kripash mentioned, and we should start seeing that as time goes by in the future. So I think that's a GTVL standalone. Objectivity is there.

Understood. Thank you. Thanks a lot. Thanks for answering me, Bishop.

Thank you. The next question is from the line of Tafit from South Key Capital. Please proceed with your question.

Hi, am I audible?

Yes, sir, you are.

Yes, clearly. Sir, just one quick question vis-a-vis the Sanofi equation. So while you have clarified that you will be manufacturing some of these products in-house or via CMO, depending on the capacity at hand, so are we going to market this product as well? Because it seems currently Sanofi is not really aggressively promoting these products. So will there be, say, a more aggressive stance on marketing these offerings? These might be, I think, branded generic products in their respective markets. So any color on that?

So all of them are branded generic. You are absolutely right. And you are absolutely right. Sanofi is not marketing them at all. So wherever we want, we have the opportunity to take Sanofi distributors, and some of them are pretty strong. So we intend to go ahead with that. In certain markets where we feel that not enough is being done, we have already tied up with distributors who are strong over there in terms of taking these particular products to market. So they're already there in the market, but much more can be done with aggressive marketing, and that is definitely something that we are very excited about.

Okay, and are these products not promoted via, say, medical representative, something that is there in the Indian space? Like, these are all more like, seems more like a trade generic products, like distributed via distributors. Is that the case?

These are branded generic products. So in certain markets, distributors are marketing it through their free force. In certain markets, no one is promoting them. So there's a mix of, there's a mix. There's a mixed bag. Country to country, there's a difference.

Okay, sir. Now, sir, whatever we have gathered so far, it seems it's already operating at that segment or that those brands are operating at a reasonably high margin because, again, the marketing cost per se is relatively low and Sanofi's premium pricing is anyway giving them that. So, is there a way and means by which we are looking at, say, expanding that EBITDA margin or the value-add or, say, the better owner thesis that we want to bring to this table is largely through better distribution rather than margin expansion. So, can margin expansion be relatively ruled out given that it's already operating at a relatively high margin even for a branded generic play?

No, in fact, both the opportunities are there. Besides the fact, as you rightly pointed out, we improve distribution through a lot more aggressive approach. We also are expecting significant improvement in margins by integrating our API that we are using into the supply chain, which is the API that currently Sanofi uses.

Okay, sir. Okay. Now, just in case I missed out, so within the microfarm space, what percentage is currently coming via, say, patented offerings or, say, if not today, say, for three to five years out, depending on the kind of pipeline that we have? So what could be the, say, patented with, say, generalized portfolio mix? And is it safe to assume that entire revenue from Microfarm currently is – they are out-and-out formulations CDMO, right? Not the typical API CDMO that we have in India space, the major ones primarily.

So, Microbiopharm is 100% API CDMO. There is very little formulation, probably about 4% or 5% formulation which is there. And APIs which are predominantly made by fermentation. And 60% of their business is currently CDMO. So, significant amount is CDMO.

And how much would we save under patent?

Um, so from what we understand, most of it is already off patent.

Okay.

But their development pipeline, obviously, the new projects they are working on are under patent, but they are yet to be commercialized. But the commercialized projects are now off patent.

And is the clientele largely based out of, say, Japan because there are a lot of innovators over there, or they also have, say, clientele outside that, like, say, Europe or U.S.?

60%. 60% is in Japan. 40% is outside Japan.

Okay. And this is clientele or this is revenue?

Revenue.

Okay. Okay. Thanks for answering my query.

Thank you.

Thank you. The next question is from the line answer page from Portia Capital. Please proceed with your question.

Am I out, Ruben?

Yes, sir. You're out, Ruben now.

Sorry, I'm not able to hear anything.

Am I well now?

Yeah, so you had mentioned that you are basically acquiring capabilities and getting a head start of seven, eight years with the acquisition of MicroBioFarm. Could you please share what are these capabilities and with whom will we be comping with these capabilities in the global enemy now? That's the first question, sir.

So in terms of capabilities, so besides a wider product category, I mean, we are making anti-infectors or other prefrontal-based products. They have immunosuppressants, they have oncology, and they have anti-infectors. And in terms of capabilities, they have what? They have peptides, they have plasmids, which essentially is a base to manufacture DNA, RNA, gene therapy, CAR-T. They have precision fermentation, they have enzyme engineering, and the capability that they are now building up is ADCs.

Sir, and who, in terms of, yeah, corporate finance.

I think globally, there are quite a few companies. Not too many, but probably, and that is also another interesting part for us, not too many implementation CDMO, which covers all these things, but a few. I think the large ones are obviously the likes of Lonza and perhaps Wuxin China. And of course, in India, we've got Anthem Biosciences. So I think this would probably be a summary and a few more.

Sure, got it. And so, second is, both these acquisitions, the acquisition of Sanofi's brands and this one, will it be margin dilutive or will it be on the similar margins that our current GTPL business has? I mean, once we stabilize and integrate our operations successfully.

We would hope that, you know, in it. Once this integration is completed, once the stabilization is done, we would be close to where we are right now.

Got it. Thank you so much. All the best.

Thank you. Before we take the next question, we would like to remind participants that you may press star and 1 to ask a question. The next question is from the line of Horshupadhyay, an individual investor. Please proceed with your question.

Yes, sir. Thanks for providing the opportunity once again. My question is regarding what exactly we are cooking right now in our API blog. Is it mainly lipopentine, lipoxamine, or any other molecule?

All three.

All three. All three. Okay, sir. And, sir, I'm asking about the Sanofi deal. Sir, what will happen in the future? So, suppose Sanofi is selling a medicine of anti-tablerculosis, and Sanofi is written on the medicine name. So, in the coming future, we will see the name of BTBL on that medicine. How will it happen, sir?

Yes, the brand will remain as it is, whatever it is right now, and the manufacturer will change from Sanofi to Thamesbiacin. Right, sir.

And, sir, are you planning to use the API that you are manufacturing from the Indian facility? To the Sanofi, is it how the integration happens?

Eventually, yes.

So, is there any inspection or audit happen from the Sanofi side that we are going to utilize our API on that?

No, but we are expecting approvals for our APIs in the coming years. So, we don't need to wait until the integration with the Sanofi portfolio happens. We'll be ready much before that. Okay, sir.

And, sir, regarding that hybrid power plant that recently has gone live, so what kind of actual saving or percentage boost that we can expect in our EBITDA margin from lower power cost?

So, it has not gone live yet. We are expecting phase one to go live in September, and then two months later, the second phase will start. And it should be, it should improve our EBITDA margins for sure, because this will allow us to get power at a significantly lower price.

Yes, sir. Sir, my last question is regarding that recent dispute with Optimus. Could you please explain, sir, what was the main reason behind their initial decisions of not buying a product?

So, I will, because of confidentiality reasons, I will not get into the details of it, but the good news is that that dispute is behind us, and we are restarting this.

So, in case, suppose they have not adjusted with our needs and whatever the agreement that happened earlier, so what was the option that we had, except that the dispute and the lawsuit that happened, but what are the alternate options that we had to handle our inventory?

We, so there is, there are more than enough buyers for the same product in the country, so that was not a problem. And over the last six or nine months, we have not, we have not supplied to them and still we could easily sell out our capacity. So that was not a problem. But as I mentioned, both the companies have worked constructively to resolve the dispute and continue business.

Is there any plan for further value of the customer concentration going forward?

I think I mentioned in one of the previous answers that our endeavor is to get into the supply chain and sell intermediate to anyone in the country and outside who is manufacturing these APIs.

Okay. Thank you, sir. Thanks a lot for all the replies. Thank you. And best of luck.

Thank you very much.

Thank you. The next question is from the line of Hitesh from Kosha Capital. Please proceed with your question.

Hi. Sir, thanks for the opportunity again. One very strategic question. Sir, very few Indian companies have been able to digest a large overseas acquisition. We have very few examples of Indian companies turning around, and I think in our case, two back-to-back major acquisitions given the size of our company, the current business. Just trying to understand how thin are we spreading in terms of management bandwidth and also the kind of risks that we are taking because there's a leverage coming in, there's a huge integration that needs to be done, and then there's a group company also where, again, we have some inherent challenges. How are you, you know, I mean, as an investor, it looks a little worrying how things could play out given this context.

So both the businesses that, so let me put it this way. First of all, I think you will agree that over the last five or seven years, GTPL business has been pretty steady and capital has been pretty strong. So, from a GTPL perspective, things have been, I think, reasonably robust. In case of our endeavor, when we were looking at both the acquisitions were that, yes, we are getting into a new geography, and we don't want to really look at inorganic opportunities where there is uncertainty of business or there have been too many ups and downs over the last five years. Both the businesses that we are looking at have been very steady historically. There has been no major upside nor downside in any of the businesses. And as a result of that, and for example, in MBG, a very strong management which continues to be there. So we are not getting into any geography or any business where we are taking the responsibility of turning the business around. We're simply bringing in the synergies in both the places which can add value, whereby one plus one is equal to significantly more than two. I think that is where strategically we are aligned. We have no intentions of going to Japan and managing the company in Japan, but integration for sure, where both the teams are very excited to work together on that. In my introduction, I mean common projects where both the India-Japan advantage can actually come out.

Yeah, so because, I mean, I haven't done, I couldn't do a very detailed research on micro bear farm, but you know, in the last five years, now this is the second time it is changing hands. So I think the first time it happened in 2021, 21, 22 or something. And then I don't see, at least, you know, from whatever limited work that I've done, I haven't seen much of improvement in the last. Four, five years after the last management took over, I think the private equity firm took it over. So, do you really, I mean, in this context, when do you think the benefits or the synergies that you are anticipating will come to us? How much timeframe? What is the timeframe you're looking at when we can realize that benefits?

So, the private equity firm came in five, six years at once. As the fun closes, the life of the fun closes, they are up for sale and that is what has happened. And with regards to the journey, their journey over the last five years. Although the top line may have not improved, there is a significant improvement in the bottom line, which has happened by then creating a lot of value-added businesses and technologies, which have improved EBITDA line significantly. So I'll leave it to that and say that. As a top line, it may not seem as interesting, but from the capabilities that they've built up and the bottom line that they have managed to get and the cash flows and the cash flow situation that they have, it's a very interesting proposition. And I should also state that two and a half years ago, we went to them to ask if they were ready for sale. So, the initiation in terms of sale was actually very well thought of from our end.

Sure, sure. And so, the second part, when do you see these synergies playing out? What is the timeframe you're looking at, sir?

We expect some projects to start within the first year.

Got it. Sure, sir. I look forward to learning more on this as we move along. Thank you so much and all the other things. Thank you.

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand over the conference to Mr. Dr. Sitchin for the answer for his closing comments. Over to you first.

Thank you. Thank you very much. So as we look ahead, our priorities remain focused on executing our expansion projects, integrating recent acquisitions. Commercializing new capabilities, broadening our product portfolio while staying focused on strong financial performance. We believe these investments may foundation for a greater and stronger and more diversified globally competitive GTBL. We remain committed to discipline execution, innovation-led growth, and sustainable value creation for all our stakeholders.

Thank you all for joining this call today. Take care. Bye-bye.

Thank you. On behalf of 361 Capital Market Private Limited, that concludes this conference. Thank you for joining us and you may not disconnect your night. Thank you.