Strides Pharma Science Limited (STAR) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Strides Pharma Sciences Limited Q1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference calls, please signal an operator by pressing star and zero on your touchstone phone. Please note that this conference is being recorded. I now hand over the call to Mr. Abhishek. Thank you and over to you, sir.

Thank you, Shufi. Very good evening, and thank you for joining us today for Stride's earnings call for the first quarter of financial year 2026-27. Today we have with us Badri, Managing Director and Group CEO, and Vikesh Kumar, Group CFO, to share the highlights of the business and financial for the quarter. I hope you have gone to our results release and the quarterly investor presentation that have been uploaded on our website, as well as the Stock Exchange website. The transcript for this call will be available in a week's time on the company's website. Please note that today's discussion may contain forward-looking statements and must be viewed in context to the risk inherent in our business. After the end of this call, in case you have any further questions, please feel free to reach out to the Invest Relation Team. I now hand over the call to Mr. Badri for his opening comments.

Thank you, Abhishek. Good evening, everyone, and thank you for joining us for the STRIES Q1FI27 earnings call. As always, I will begin with an overview of our business and operational performance for the quarter, followed by key updates across our geographies and strategic initiatives. Vikesh will then take you through the financial performance in greater detail, after which we will be happy to take your questions. Before I get into the quarterly performance, let me briefly comment on the operating environment. The geopolitical situation, particularly arising from the ongoing conflict, continues to remain volatile. There has not been any meaningful change in the situation since our last earnings call, and the environment continues to remain fluid, with new developments emerging almost every day. Across the industry, we continue to see supply chain disruptions, elevated freight costs, longer transit times, and inflationary pressures across the multiple operating cost line items. We have been closely monitoring these developments and taking proactive actions to ensure continuity of our supply to our customers and patients. Despite these external headbands, we have delivered a steady revenue growth, maintained healthy gross margins, and improved PAP, which reflects the resilience of the diversified business model we have built over the last few years. The strong growth we are seeing in our ex-US business once again validates that our diversification strategy is working as intended. Briefly gives you financial overview. With this, I am pleased to report that we have started the FI27 on a steady note. For Q1 FI27, we delivered 13% year-on-year growth in top line, supported by broad-based contributions across our business. Our ex-US markets continue to demonstrate strong momentum, delivering a 17% year-on-year growth. Over the last few quarters, we have consistently spoken about building a more diversified business model, and this quarter once again validates the strength of that strategy. From a profitability perspective, the quarter demonstrated the resilience of our operating model. Despite the additional operating and trade cost of Rs. 131 million arising from ongoing geopolitical situations, our re-bidda margins were maintained at 18.2%, broadly in line with the exit levels of Q4, F526. Our continued focus on portfolio quality, gross margin management, and cost optimization helped mitigate a significant portion of these external pressures. Coming to the U.S. business, the revenue for the quarter stood at $6282 million, or there is $68 million, reflecting the stable performance despite increased competition in certain products launched over the last few quarters. As we have consistently maintained, the U.S. strategy continues to be centered around profitability and portfolio quality rather than pursuing the growth at any cost. During the quarter, we launched two products and increased our commercial portfolio to 72 products. We continue to hold top three positions in 37 products, which contribute approximately 70% of our revenues, underscoring the strength and stability of our portfolio. We continue to see strong demand in our speciality customer base, particularly in products where we have established differentiated positions. We have also made significant progress in the customer engagement over the last few quarters, helping us deepen strategic relationships and improve visibility for our future growth opportunities. Controlled substances continues to be an important growth lever for our U.S. business, and we remain confident in the long-term opportunity. We have experienced delays in few product approvals, which we expect to materialize over the coming quarters. In parallel, we continue to focus on niche domains such as nasal sprays, transdermal patches, films, and controlled substances. We now have multiple projects progressing across these technology platforms and continue to invest in building a differentiated pipeline that can support sustainable growth over the medium term. We expect additional filings and approvals and launches across these domains over the coming quarters. As we indicated during the Q4 call, we believe the growth trajectory in the U.S. should improve over the course of the year, with H2 expected to be much stronger, supported by new approvals, launches, and portfolio optimization initiatives. I expect some of you may have concerns around the evolving developments in the U.S. pharmaceutical market, particularly around the proposed tariffs on generic pharmaceutical products starting August 2028. While the details continue to evolve, there remains limited visibility on the final implementation framework, and we are closely monitoring the developments. From a strides perspective, as a strategy, we have worked on a U.S. manufacturing presence through our facility in Chestnut Ridge, U.S. We have invested significantly in building capabilities at this site, with nearly one-third of our U.S. revenues being supplied from this facility today. More importantly, all the key growth platforms that we have been talking about, including the controlled substances, nasal sprays, transdermal patches, and films, As these domains scale up over the next few years, the contribution from the U.S. facility to our U.S. players is significantly increased, and we believe our business model is fairly balanced to support our long-term growth. We continue to remain committed to an aspiration of $3.75 million in North American business for FY28. While there may be near-time volatility, The building blocks required to achieve this ambition are in place. Moving to ex-US business, this segment continues to be one of the most exciting and important drivers of our growth. Over the last few years, we have invested significantly in expanding our presence across the regulated markets, growth markets, customer relationships, and product portfolio. We are now seeing the benefits of these investments reflected in our performance. Next, U.S. revenue grew 17% year-on-year, Rs. 5,875 million, with growth recorded across multiple geographies. We continue to strengthen our customer relationships across Europe, UK, Nordics, Australia, leveraging our dependable supply chain on strong commercial execution. At the same time, Africa delivered another strong quarter led by the continued expansion of our branch business. I would also like to reiterate a point we made during our Q4-FI26 call. Given the investments we have made across markets, partnership and portfolio expansion over the last few years, we continue to expect the ex-US business to grow faster than the company average over the foreseeable future. We believe that business will remain an important driver of both growth and earnings going forward. While U.S. revenue for the quarter was at $63 million compared to $70 million in Q4, FI26, the quarter was impacted by certain supply chain disruptions, which resulted in shipping delays across few markets. This is more a timing issue rather than a demand issue, and expect this spillover business to be recovered over the coming quarters. Importantly, the underlying demand environment across our P&L in the ex-U.S. markets remains healthy, and our growth outlook for the business remains unchanged. In the U.K., we delivered a strong performance in the prescription business and continue to strengthen our relationships with key customers through consistent supply and execution. We remain encouraged by the progress we are making in this market. Across Europe, including Nordic region, our branded and OTC portfolios delivered a strong quarterly performance. The business continues to benefit from portfolio expansion, customer additions, and improved market penetration, and we expect the momentum in these markets to continue going forward. Importantly, the margin profile of the ex-US business continues to remain healthy, Reinforcing our view that XUS is not only a growth engine, but also an increasingly important earnings driver for the company. We continue to add customers across Europe while expanding our portfolio and filing activity across multiple markets. Our strategy remains focused on building the high-quality and sustainable businesses in the markets characterized by strong customer partnerships Before I conclude, let me also briefly touch upon ESG. We continue to make meaningful progress on the sustainability front during the quarter. We improved our EcoVadis score to 68 out of 100, representing a 19-point improvement year-on-year. This reflects our ongoing commitment to the responsible growth, governance, and sustainable business practices across our operations. As we look ahead, we believe the strategic foundations built over the last few years positions us well to navigate the current challenges. Our growth drivers remain firmly in place with sustained momentum in ex-US markets, continued growth of our Africa franchise, and an improved outlook for the U.S. business in H2, supported by new approvals and launches. We remain committed to achieving our long-term revenue aspirations, and our objective continues to be to maintain the gross margins between the 58% to 60% range and deliver superior EBITDA margins driving operating leverage that translates into sustained EPS and PIT growth, PIT growth, over the medium term. With that, I will hand over the call to Vikesh to take you through the financial performance.

Thank you, Badri. Good morning, good afternoon, and good evening to all of you, and thank you for joining us. I will now take you through the quarter's financial performance. As Badri outlined, Q1FI27 stayed out against continued geopolitical volatility, elevated freight costs, and input cost increases. Even then, we grew across every key metric year on year, while the quarter was soft sequentially after a particularly strong close we had in Q4FI26. Our gross margins expanded by 60 basis points year-on-year to 60.9%. This was driven by a favorable business mix within the XUS markets, and it helped us drive absolute gross margins grow by 14% to 770 crores. We expect gross margins to remain in the 58 to 60% range. On EBITDA, we reported 230 crores EBITDA for the quarter. It is up 5.4% year-on-year with an EBITDA margin of 18.2%. While this is down 130 basis points year-on-year, it is slightly ahead of 18.1% we reported in Q4 FI26. This also reflects roughly 13.1 crores of incremental operating and freight costs that were attributable to geopolitical disruptions, which were absorbed during the quarter. Employee costs held steady at 19.2% of revenues. Costs excluding freight, they increased 29 crores year on year, which was largely on account of higher manufacturing costs. Freight cost moved up to 6.2% of revenue from 5.3% a year ago, which was an 18.9% increase. While the macro headwinds continued during this quarter, we have been able to mitigate some of these challenges, which has led to a sequential improvement across these cost line items. Below EBITDA, our operational PAT was 123 crores, which was up 8% year-on-year, With an EBITDA to operational PAT conversion being steady at 54%. Our operational EPS at 13.4 rupees per share is also up 8% year-on-year. Reported PAT was at 166 crores, which is up 57% year-on-year, with a reported EPS of 17 rupees per share. This includes the gain we recorded from diverting our majority stake in Pivot Path, which was our captive global capability center. This transaction generated a gain of 74 crores and contributed 53 crores to reported PAC net of tax. On efficiency metrics, our cash-to-cash cycle stood at 123 days, an increase of 7 days year-on-year. This was driven by a 24-day increase in inventory levels as we prioritized supply chain resilience and continuity of supply in the current environment, alongside a 15-day increase in payable days. Together, it led to an increase in absolute working capital requirement for the quarter. After funding for this working capital investment, we generated an operating cash flow of 109 crores for the quarter, which was an EBITDA to cash conversion of 47%. We reduced net debt by 12 crores during the quarter, which brought our closing net debt to 1425 crores, and our net debt to EBITDA ratio improved to 1.52x from 1.55x at the end of March. It is in line with our commentary that our focus on net debt to EBITDA continues. Our net finance costs at 36.1 crores were lower compared to 40.6 crores in Q1 of last year. I am also pleased to share that CARE ratings upgraded our long-term bank facilities rating to CARE A+, stable from CARE A+, during this quarter, and this reflects the consistency of the financial results that we have delivered over the last many quarters. On returns, ROC on a TTM basis moderated marginally to 15.3% from 15.8% in FY26 as capital employed grew on recent investments and currency movements. We expect the return profile to improve as these investments mature. Despite a challenging cost environment, Q1 FY27 reflects our resilience and continued discipline across cost initiatives, profitability and cash generation. And we are happy to take any questions that you may have.

Shuthi, we are good to open for Q&A.

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 answers while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Pratik Kothari from Unix BMS. You may proceed.

Yes, hi, good evening. Sir, one comment on US, I mean, has been a soft market for us for last few quarters. Just anything, any comment you even called out or you have been calling out increased competition there. Just in terms of efforts that we are making, because our F528 target is a steep ask from where we are. So just what's going in the background?

Yeah, so as far as we are concerned, we have really said, Pratik, that the first two quarters will be very soft. And having said that, the bulk of the launches is going to come from the second half onwards. And if you really see the entire construct, there are five levers which we are working on the U.S. business. The one is in terms of the controlled substances should definitely deliver the growth for us going forward, because considering that we have completed one and a half years of the demonstration of our past history, I think that will be a clear lever of growth. Second thing is in terms of the new channels, which we spoke about in the speech, whatever I had. The third one is in terms of the new geographies, new partnerships should definitely add. The fourth one is in terms of the launches. That's something which we are working on. We have been relentlessly working on. Plus, we also are concentrating on OTC portfolio. So, these five levers give us a confidence that while it is slightly muted at this point of time, the next one and a half years, we should be able to significantly accelerate our efforts to get to an aspirational number of $375 million. And as we speak, we have made enough groundwork to get there. And we have to just, you know, we keep executing and keep relatively working towards that goal.

And this new approval and launches at Raleigh, this is from the existing basket that we have?

Yes, that is correct.

Fair enough. And second, sir, you had a plan to go net debt free. I mean, last year, we kind of accelerated a lot of investments. Now, what would be our trajectory in terms of net debt free, if at all?

From an overall perspective, the current net debt is about 14.2 billion rupees, like 1,420 crores. If you really see, it does not include the one source investments, which is currently valued at about 3.2 billion, that is 320 crores. If you really see, from our perspective, the way we are looking at it is like, if we keep Keep delivering and keep continuing to, you know, work on the growth in the next one and half, two years. Maybe in two to three years' time, we should be fairly neutral in terms of the debt. And also, you have to understand, Pratik, like when we started the debt conversation, the dollar was 82. Most of our debts were at 82 rupees. Today, as we speak, it is at about 95, 97. It's not that company has not reduced debt. Company has reduced debt last year. Unfortunately, the thing is since the rupee depreciation was more, that was not seen. It's almost 3 billion of debt we reduced in the last year.

Fair enough. Thank you and all the best. Thank you.

Thank you. The next question is from the line of Anand Mudra from Soar Wealth. Please proceed.

Hello, sir. Thanks for the opportunity. Sir, with respect to US business, you mentioned in your opening memoir that you were not able to register some revenue because of higher freight costs. It's possible to quantify the amount, sir?

No, no. We said that the performance is because of the freight cost. There has been some supply, elongation, elongated supply. We never said that we lost revenue because of the higher freight cost. It's not. As far as a non-US, ex-US business is concerned, yes, supplies to some extent affected us in terms of the revenue, but definitely it's a very temporary matter. We will be able to catch up during the year.

Okay, noted. Sir, also, sir, with respect to non-US business, which is a key market for us, and how are we seeing the growth over there?

Thank you. It's a business consisting of the LATAM, MENA, APAC. These are the regions we are working on. And the last category, we are in the process of regulatory filing. With the real new dollars, you'll start seeing it from 28, 29 onwards. And we are working very aggressively on the portfolio optimization as well as the go-to-market efforts on these markets. And if you really see the entire thing, it is very broad-based. The ex-U.S. markets is quite broad-based. It has got B2C business, it has got B2B, and B2B gives the stability to B2C, and it's very widely spread. And the margins are also improving, as we speak, between these markets compared to the U.S. markets. And overall, we believe that the growth trajectory should continue. And our endeavor is to mirror the markets in the next one and a half, two years. And that's what we are trying to do. And you should be able to see that quite often from now on until the next few quarters.

Thank you, sir. Thanks a lot.

Thank you. Before we take the next question, we would like to remind participants that you may press star and want to ask a question. To ask a question, please press star and 1 now. The next question is from the line of Gautam Yagarwal, an investor. Please proceed.

Hello, am I audible?

Yes.

So, my question is that to reach the $75 in the US by FY28 from currently $284 million as FY26 based, If you effectively need to add around 90 to 115 million in eight quarters. So can you just walk us through the bridge as to how to come from controlled substance, how much will come from controlled substance, dormant, ANDA relaunches, OTC launches, etc.?

Yeah, so that's what I spoke about in my previous question also. So there are five levers for that in terms of getting that additional $90 million. One, the first lever is in terms of the OTC business. We don't want to give any specifics with respect to the dollar revenue on each of these markets, but all may be similar. I'll put it that way. From an OTC business perspective, we are working aggressively on the OTC space. You should be able to see a lot of green shoots immediately. The second thing is in terms of the controlled substances. The reason why we say that is because we have already completed the two years of controlled substances launches and the past history demonstrations, so the growth should start from now on. The third one is in terms of the new products and domains. We have got almost 100-plus products which are yet to be launched, and we are launching very systematically, keeping our profitability thresholds. We should be able to do that starting from Q2 onwards. The fourth one is in terms of the new and specialty channels which we operate. I think we have made enough inroads into those channels. That's something which is very important for us as we go forward. The last one is in terms of the expanding the partnerships in Canada and other geographies. We are already in discussions with the strategic partners for us. This will give us a stickiness from a long-term perspective. And all these five or six initiatives should give us the pathway to that 90 million.

Okay. That's all from my side. Thank you.

Thank you. The next question is from the line of Kiran from Tabletree. Please proceed.

Thank you for the opportunity. Sir, I have a couple of questions. So first question on the ex-US market. So we have grown from 59 million last year to 63 million. But if I look at the last four quarters, we went from 59, 61, 64, 70 back to 63. So I was expecting the ex-US market is not as cyclical as the US market where we are heads to heavy. But we seem to have gone back to 63. So, if you could just explain why this has happened, and I'm still expecting the Sandoz acquisition numbers are not in this. So, it's just a sub-question, right? One is cyclicality of this, and the Sandoz acquisition numbers, are they there in the XUS or not?

Yeah, sure. So, as far as the one thing you have to know is, if you really see the 63 million, whatever we have done is corresponding to the Q3 of last year, right? It's not that it's not grown, it's grown. So, if you really see, it has got a combination of B2B and B2C markets, right? The few orders we could not fulfill because of the logistical and as well as the few issues Thank you. Those are concerned. These are all not part of the current numbers. We expect a close sometime in Q2, if you are lucky, because we are waiting for permissions. And this will start adding up to the numbers in the H2. Which month in the H2, we don't know at this point of time.

Got it, sir. Got it. Sir, then second question. Thanks for the detailed answer. So second question, just very confusing, sir. So pivot path had about 144 crore revenue. We sold this IT or GCC business, not IT really, but GCC business for 125 crore valuation. It is less than 1x sales. We retained 20%, but I mean, I'm just trying to, you know.

See, I think from your perspective, the way you have to understand this entire pivot path is like, it is like a GCC, right? And you should not take the standalone of pivot path and try to arrive at an equation. What we are saying is that from our perspective, we sold the business for 100 crores, and Peer Path has got two businesses. One is the third-party business, and the second one is the in-house, the captive business. So don't look at it on an overall basis. It does not contribute significantly to the revenue of the Stripes Group. All I can say is that these are all standalone revenues, And we believe that this business will do extremely well the moment we start going into the third-party business. And hopefully, it should add to our path in the next four to five years.

Okay. Thank you so much.

Thank you. Before we take the next question, we would like to remind participants that you may press star and want to ask a question. Participants who wishes to ask a question, may please press star and one at this time. The next question is from the line of Anupam Jain from Perception Investing. Please proceed.

Thanks for the opportunity, sir. What is the weighted cost of debt borrowing?

It's about 7.6%.

So there is no further improvement from here, I think, as our rating upgrade?

We've stabilized at a reasonable level, and we've got debt across geographies, because the way we align our debt to each of our individual geographies, we've got an optimum and healthy mix, and we've continued to focus on interest costs. You would have seen a consistent reduction quarter-on-quarter for the last seven, eight Okay.

Okay. Major mix will be from this 1,400 crore rupees, major mix will be in U.S., 70, 80, I think.

It is between India and U.S., these are our major geographies.

No, major debt portion, that will be in our U.S., subsequently.

Right, major debt is in India and then in U.S.

Okay, and one thing was, in care rating, we are seeing at 1,100 crore or something, and we are seeing here 1,400 crore. What is the disconnect?

I didn't follow that. See, this is based on certain categories of the loans which are getting evaluated from a credit rating perspective. And so, they have taken certain long-term loans and then they have done the rating. So, it's not that the entire debt book is given a rating.

That's the point you are talking about.

Mr. Anupam, you may proceed. You can take the next question. All right. Yes, sir. The next question is from the line of Yogesh Soni from Highton Securities. Please proceed.

Yeah, sir. Thank you, sir, for the opportunity. My question is with regards to the nasal spray portfolio. So, in the last one year, you have filed two nasal sprays in the U.S. market. So, if you could give us some update on FDA review with regards to the same and any expected approval timing.

Yeah, so as far as the first one, we filed, I think, in the last year, and it has gone to the very advanced stages of the review. We should expect the approval sometime in the second half. That's where we have been told, and it can change between month on month. We don't know. But we think it will come in the Q3, Q4 time period. Okay. As far as the second one is concerned, we have just filed about one month or back, and we expect to have a faster review on this. And the review process will take at least 12 to 15 months.

Understood. Sir, one more thing. You have mentioned of adding five to six more nasal programs for next 12 to 18 months. So, seems to be very positive on the U.S. business. Can you quantify how many more products are there in the pipeline or how many products can we expect to get approval over the next two to three years?

Yes, as far as we are concerned, we are concentrating on all the three domains, that is nasal sprays, transdermal patches, thin films, and we have got capabilities to address that demand, and we are working very hard on this. The nasal spray will be about five to six programs. At this point of time, we are working, similar with respect to the other domains also. So we should gain significant traction in terms of filing in the next 12 to 18 months. And that will be the driver of the growth beyond that $375 million which we have kept for ourselves. And we are very confident and we are filing it in time. And that's what we try to do at this point of time. And also, one more point to note is that we will also be filing for the third product in the next few months.

Thank you, sir. Thank you for your answers. I really appreciate it.

Thank you. The next question is from the line of Park Soha from 3Needs Asset Manager. Please proceed.

So, yes, am I all right? Yes. Good evening, and first of all, thank you for the opportunity. My question is, like, over the three years, Stride has successfully diversified beyond the US, but the long-term aspiration of around 400 million US revenue by, 400 million US revenue by FI28 remains largely dependent on complex products and controlled substance. Let's say if those opportunities take longer than expected, what will be the next structural growth engine that can sustain double-digit earnings growth beyond FI28?

Yes, so there are three domains we identified. If you had listened to my earlier introductory call, there are three domains which we have identified. One is nasal sprays, second is transdermal patches and thin films, and this will drive the additional few dollars of growth, so the additional dollars of growth beyond the $375 million we get for ourselves. And we are on track to get there, and we are accelerating our filings on all these three domains.

Got it, and thank you so much, and all the best.

Thank you.

Thank you. The next question is from the line of Rupesh Tantia from Longwoodi Partners. Please proceed.

Hi, hi, Badri. Thank you for the opportunity. Thank you. First question, Ravi, is how many product launches are we looking to do this year? Because it seems like product launches have slowed down quite materially. So that is the first question.

Thank you.

And so these 10 product launches, right? I think previously we were working on smaller products, $3-4 million type, then I think we pivoted and we wanted to go to, you know, $10-$2-15 million type of products. So is it fair to assume majority of these 10 that are going to launch, these are, you know, $10 million plus revenue potential molecules?

Yes, we don't want to put a specific number to this because at the end of the day, the way you have to look at this entire business is we have to make up another $80 to $90 million. And as I said, this can come from multiple channels, multiple levers, which we are working on. And the new product introduction is one part of the lever, means of the six levers which we have identified for the purpose of moving the business from $285 to $375 million. And I personally think that if we are able to stay to the path and be able to launch the 10 launches in the next six months, We should be able to see the full impact of that in the next quarter, next year, and also plus the launches which can come in the AFI 27 and 28.

That is good to hear, Nabi. The second question on controlled substances, I mean, this quota issue now has been going on for quite some time. So maybe just a little bit, maybe comprehensive overview, if you can give when do quota allocations happen, do they happen, you know, every three, four months, How many products are we not able to launch because of the quota? Because every quota now, for two, three quotas, we are saying quotas. We don't have quotas. We don't have quotas. So some basic understanding will be very helpful.

Sure. Rupesh, just to give you this, okay, as a company, we also want quota, right, for us to have a future growth. So the way it works is like this. The quota allocations usually happen twice a year, sometime in June and sometime in December. The quota depends on your past sales history. For a company which gets into your control substances for the first time, demonstrating the past history is very difficult. So naturally, how will you demonstrate the past history? is like some customer has to back you up, and you will have to take some, say, saying that, okay, he is interested to buy the controlled substances from you, and it cannot be a binding contract, because he cannot give a binding contract, because he is not very sure that you will be able to get the quota and able to demonstrate manufacturing, purchase, sale, and all of that. As we speak, the entire controlled substances portfolio is about, maybe contributing You can go to them only when you are able to demonstrate that you are able to sell those controlled substances, what you have manufactured, and go and ask for a new quota. Right now, we have got about four products which are there in the controlled substances, and we have demonstrated over a period of one and a half years. And if you see most of the companies, okay, the ramp up in the second and third year and the fourth year, once they demonstrate, is much higher than the first two years. And first two years is all about a sponsorship or a sponsorship from a key customer or a key buyer. And then we go back and then we have to demonstrate. And as you see, we have demonstrated that for almost about 20 months at this point of time. And we should be able to, you know, we believe that from the next cycle onwards, we should be able to get a higher level of quota to grow the business further.

I just wanted to tell a clarification. So one, this 5% is for this quarter or are you talking last year? No, last year.

The entire last year, if you really see, that is the level we are in. And see, if you really see the Rupesh, you have to understand from a context perspective, Like, we are looking at 285 to 375 million, right? So one of the levers is control substances, right? It's not that control substances is going to contribute from 285 to 375, right? So we are, see, we thought, okay, we'll get better quotas, better this thing, but it is taking much slower. But we believe that when we see other companies, once we demonstrate the first one and a half, two years, the quota allocations can be much higher, and we should be able to drive growth from now on.

Okay. And the second clarification is, in the June cycle, then, we didn't have much success, and then in December, those cycles...

So, we are able to get a response. The response will come sometime in the next month. So, we will...

So, June cycle results are not out?

Yes. So, that's correct.

Okay. Okay. Okay. Thank you. Thank you, Badri, for the answers. All the best. Thank you.

Thank you. Before we take the next question, we would like to remind participants that you will press star and want to ask a question. Participants, who wishes to ask a question, may please press star and 1 at this time. The next question is from the line of Shilpa from Lotus West. Please proceed.

Hello, thank you for taking our question. Sir, can you discuss the brownfield and greenfield CAPEX plans for the next two years?

Yes, as far as the CAPEX plan is concerned, the way we view CAPEX, the combination of hot CAPEX, maintenance CAPEX plus the R&D. So, if you really see, we have already stated in the previous call that the – and also the many meetings before that we spent about 2.5 billion to 3 billion rupees per year. That's what is the thing. It's a combination of maintenance, capex, plus R&D expenses, plus the hot car. As far as the green field is concerned, we are not looking at it at this point of time. This is on the existing factories, as well as the CapEx is more on the high-impact line items from that perspective. I think we lost it.

Let's see the next question. The next question is from the line of Janice Shah, an investor.

Yes, sir, you have to speak loudly, please. Yeah, yeah, please.

My question is with regard to the Bangalore plant where the USFDA infection happened and there were observations. Can you just give us status on what is going to be the course of action now and is it going to have any bearing on the revenue aspirations that you have for US in the next 18 months?

Yeah, so the inspection happens sometime in the month of May, and we have replied to the US FDA. Usually it takes about 90 days to two months to three months for us to get a reply from US FDA. And it does not affect any current supplies at this point of time. And we believe that we are given a very comprehensive response. And you should be able to hear from USFDA maybe by end of August or June or September. That's what we think at this point of time. And we will let you know once we get a confirmation from them.

Yeah, but is it going to have an effect on the U.S. business?

I'm not able to hear you.

James, can you be a little bit more?

Yeah. Is it going to have an effect on the U.S. business? The growth, which we are aspiring for next four or five quarters.

So, we don't anticipate anything at this point.

Okay. Okay.

Thank you. Thank you very much. Thank you.

Thank you. As there are no further questions, I would now like to hand the conference over to the management for the closing comments. Over to you, sir.

Thank you, and wish you all the very best. Thank you.

Thank you. On behalf of Strides, Pharma Sciences, that concludes this conference. Thank you for joining us, and you may not disconnect your line.