Sai Parenterals (NSE:SAIPARENT) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Sai Parenterals Limited Q2 FY 'twenty seven Earnings Conference Call hosted by MK Global Financial Service Limited. This conference call may contain forward looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. 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 Please note that this conference is being recorded.

0:53 I now hand the conference over to Mr. Shashank Krishnakumar from MK Global Financial Services Limited. Thank you, and over to you, sir. Hi. Thank you. Good afternoon, everyone, and a very warm welcome to Sai Parenterals Limited Q2 FY 'twenty seven earnings call hosted by MK Global. I would like to thank the management for giving us the opportunity to host this call. On the call today, we have the Sai Parenterals management team represented by Anil G, the Chairman and Managing Director and Mr. Mark, the Chief Executive Officer of Nomad. I'll now hand over the call to the management team for the opening remarks, and then we'll open the floor for questions. Please go ahead, sir. Yes. Thank you, Sashank.

1:40 Good evening, everyone. Thank you for joining our earnings conference call to discuss the performance of Q2 and H1 FY 'twenty seven. I hope everyone had an opportunity to go through the financial results, press release and investor presentation, which are uploaded on the stock exchanges as well as on our company's website. Our Chief Financial Officer, Mr. Anil Kumar, is unable to join us today because of her personal health emergency. We wish him a speedy recovery. In his absence, I will also take you through our consolidated financial results after my opening remarks and March update. As I mentioned last quarter, Nomad Pharmaceuticals has been consolidated from 11/12/2025.

2:32 So our year on year comparisons are therefore not comparable. So I will focus mainly on the sequential trend. Q2 FY 'twenty seven is a quarter in which our transformation began to show in our profitability. Consolidated revenue from operations rose 9% sequentially to INR196 crores. H1 FY 'twenty seven revenue was at INR376 crores, around half of our FY twenty twenty seven revenue target of INR750 crores. We have always guided to a 40 five-fifty five split between the two halves, with the fourth quarter historically our strongest, so we are ahead of our plan. Gross margin rose from 40.9 in Q1 to 47.5% in Q2.

3:21 Raw material cost actually fell by about 3% even as revenue grew by 9%. This was driven by tighter inventory management. Inventory was on the higher side last quarter. During Q2, we worked through a major higher cost inventory, introduced strict fasting, first out controls and implemented a new ERP system, which has brought inventory levels down materially. These controls remain in place and so we see to keep the gross margin above 45% in the next all coming quarters. EBITDA grew 67 sequentially to INR 41 crores with EBITDA margin at 21.1%, again at 13.7% in Q1.

4:08 Employee and other operating costs together rose by less than 6%. So most of the gross margin gains flowed through EBITDA. For the first half, EBITDA stood at crores with margin of 17.6%. Already ahead of approximately 17% we guided for the year. Depreciation and amortization rose to INR25 crore from INR8 crore in Q1. This reflects the capitalization of new medicines and amortization of molecules acquired from Sai Parenterals Despite a more than threshold price in the depreciation, more than a threefold rise in the depreciation, profit before tax steady quarter on quarter and profit after tax grew 33% to INR10.5 crore.

4:56 For the first half, PAT stood at INR18.4 crores. Then I come to IPO proceeds deployed and both acquisitions. Last quarter, I outlined a proposed variation in the use of the of our IPO proceeds. Shareholders have since approved it, and I'm pleased to report that the both transactions are now complete. We will be investing INR 98.8 crores of IPO proceeds, that is INR 83.83 crores in Sai Preeti Pharma. And as I already invested INR 15 crores in Patek Laboratories for each for a 60% stake. The balance of INR 3 crores from the amount originally year markers of the recent center has been allocated to general corporate purposes.

5:47 The purposes for which we raise these funds has not changed. EU GMP compliant injectable capacity for regulated markets and a dedicated research and development platform. Only the manner of execution has changed. And in both cases, we have acquired materially larger assets for the same outlet. So now I come to Sai Parenteral Pharma. This new injectable facility on track for July 2027. At Sai Parenteral, outside the outer indoor, foundation works are underway and construction is accelerated. And as our liquidity comes in, it will progress much more faster.

6:34 The layout design is complete and purchase orders have been placed for all the four process lines, liquid and lifeless injectables, GLP prefilled syringe injectables, prefilled and packaged combi line for GLP products, dry powder in filling and ample filling. Cleaning utilities and HVAC systems are in detailed engineering. We are targeting completion in July 2027. The facility is being built to EU GMP and USFDA standards. It will take our injectable capacity to approximately 154,660,000 units, above 47% more than the upgrade of Units one And two would have delivered.

7:21 More importantly, it adds two new capabilities, lyophilization and GLP-one manufacturing. Our existing domestic critical care franchise of around INR52 crores will also be manufactured from this facility. Unit one and two at Girmetla will be discontinued once it is commissioned. We expect accreditation within about twelve months of completion with exports from FY 2028 and Europe from FY 2029. The total project cost is estimated at INR $2.15 crore. Our contribution of INR 83.83 crore is unchanged from the originally earmarked figure. The promoter of SAIPARITI fund the balance 40% of equity and the remainder comes through project debt with a three year moratorium and seven years repayment schedule.

8:11 Now I'll come to Sai Parenteral Laboratories, a group R and D consolidated division. We completed the acquisition of 60% stake in Parenteral Laboratories on fifth September fifteen, twenty twenty six and has been remained renamed as the Sai Parenteral Laboratories. It is now our dedicated R and D subsidiary and all group R and D has been consolidated there. The residual 40% may be acquired through a rights of right of first official at the same valuation. Sai Parenterals brings 65 personnel including 28 research scientists with three years of operating history in lifelike, liposomal and nano based complex injectables and in oncology portfolio.

9:01 Its portfolio spans 174 molecules and two eighty five SKUs across critical care and oncology. It will develop further products for SAIPARENTERS, for NUMAD and for SAIPARENTERS. The biggest advantage of this acquisition is technology transfer. Sai Parenterals has already delivered a complex critical care injectable portfolio, which will be transferred to Sai Parenterals new facility for our own manufacturing. That means we do not lose time developing products after the Sai Parenterals facility is built. Pre acquisition molecules remain with Sai Parenteral existing shareholders, but the group may use them manufacturing. And Sai Preeti is entitled to transfer them to the upcoming site.

9:47 Until now, Sai Preeti has been developed only for its own use and has no revenue stream. From next quarter, we are beginning to sign R and D and CRO development contracts with external clients with revenue generation projected from FY 2028. Our in house dose reports supports this R and D platform. We have developed 98 doses in house on-site standalone, 45 products are commercialized and further 76 are under development targeted for FY '28. Besides them, we sit on five zero nine approved registrations and more than four fifty one TGA associates acquired with Nomad.

10:36 Now I'm coming to Unit 3 expansion. The expansion at Unit 3 Boon Gir is almost completed. The new block will start commencing from December 2026. Production capacity will rise from 85,500,000 to 155,000,000 units a month, an increase of 81% from this after completing this new block. The expansion adds a high capacity ointment manufacturing, a dedicated high speed capsule filling line and the high speed liquid oral manufacturing and filling lines. Output will ramp up from Q4 FY twenty twenty seven and most of the additional volume will serve Australia and New Zealand. In the fourth quarter, while the Adelaide facility prepares to start the production, we will also supply bulk cabbage from India to support it.

11:32 Australia accounted for 76% of the export revenue this quarter against 83% in Q1. The Q1 share was higher because size stepped in with additional volumes for NOMET when third party contracted manufacturers fell short. We plan our export capacity broadly seventy-thirty between Australia and other markets, and this quarter returned to that pattern. In The Philippines, we added 11 molecules and 22 SKUs during this quarter, led by cardiovascular therapies, including telmisartan amlodipine, scrovatril valsartan and rosuvastatin. The Philippines rose to 16% of export revenue from 12% in Q1 FY 'twenty seven. At today's Board meeting, the Board approved the acquisition of balanced 25% stake in SP Analytical Private Limited. On completion, SP Analytical will become a wholly owned subsidiary.

12:31 Now coming to outlook. The first half has run ahead of plan and the second half is seasonally a stronger period. Three developments will shape next in the next two quarters. One, the expanded Unit 3 capacity ramps up from Q4 FY twenty twenty seven with most of the increment directed to Australia and New Zealand. Two, the Adelaide facility begins operations in the Q4 of FY 'twenty seven with commercially supply expected in Q1 of FY 'twenty eight. It will progressively move numerous outsourced volumes in house and convert a distribution margin into a manufacturing margin.

13:20 And three, Sai Parenterals begins taking external development contracts, building a new revenue stream for FY 2028. We are well placed for FY 2027. FY 2027 remains a year of building and FY 2028 is when the results of that building should start to show in our performance. With that, I'll hand over to Mr. Mark Tundone, Chief Executive Officer of Nomad Pharmaceuticals for an update on the Australian platform. Thank you. Mark, over to you, Mark. Thank you, Anil, and good afternoon, everyone. I'd like to cover off three things in our conversation today. One is our contracted book, our portfolio, and our new product development incorporating the discussion around the progress on the Adelaide manufacturing facility.

14:11 Last quarter, I spoke about a seven point five year exclusive OTC supply contract with the eBOS Group covering across Terry White and Pharmacy Choice brands, renewed on the 07/01/2026. This contract was valued at $2.00 2,000,000 AUD. And on the twenty fifth of August this year, we renewed a second OTC medicine supply contract with Westfarmers covering across the brands of Crossline and Pharmacy Health, which is another one of Australia's leading pharmacy chains. This contract has been renewed for a further three years and is valued at 30,000,000 AUD or approximately 204 crore. Both renewals carry an expanded product portfolio and a higher agreement of value than the one that they replaced.

15:02 Together, these two renewals take our contracted Australia OTC supply business over this period of time to 232,000,000 or approximately 1,506 crore. These renewals earned through years of consistency and delivering in one of the most tightly regulated markets in the world. Both agreements are built to grow with new products and line extensions added over their terms. We would also hold the exclusive long term supply agreements as we also hold four fifty one TGI approved dossiers. Our agreements commit us to introducing new products each year. Growing forward development now happens within the Sai group rather than with us using third parties.

15:51 Coming to the Adelaide facility, to date, we have invested 46,000,000 AUD of the $53,000,000 planned for Adelaide. The program has been supported by the $20,000,000 grant from the Australian federal government under the modern manufacturing initiative, and we expect the facility to be commissioned in January 2027, slightly behind where we previously advised, and this delay has been caused by logistics disruptions due to the Iran conflict. The TGA license inspection is anticipated in second quarter twenty twenty seven, with the commercial supply expected to commence thereafter upon the granting of the license. As Mr. O'Neill indicated, Sai will be supporting the supply of tablets from India and the initial packing operations once onshore manufacturing is underway.

16:44 These things will change directly for us. One, packing that is outsourced today and using house, enhancing our current distribution margin so it resembles more of a manufacturing margin on the same contracted revenue. Second, we will bring the inventory down from nine to ten months closer towards five to six months, freeing warehouse space and working capital. And third, supply chain to our pharmacy partners improves and becomes more reliable, at which point our recent shipping disruptions inhibited supply issues. I'll now hand over to Mr. Anguyen, the Chairman and Managing Director, for further comment. Thank you, Mark.

17:31 I'll now take you through our consolidated results compared with Q1 FY twenty twenty seven. First, I would like to bring out to your notice that from this quarter, we present other income below EBITDA. Prior periods have been restated on the same basis. On this basis, Q1 FY twenty twenty seven EBITDA is INR 24.7 crores at a margin of 13.7% instead of INR 27.3 crores at 14.9% as reported last quarter. The difference is entirely other income and PBT and PAT remains unchanged. As mentioned earlier, I'll focus on the sequential comparison with Q1 FY twenty twenty seven.

18:20 Revenue from operations rose 9% to crores from INR179.9 crores in Q1 FY 'twenty seven. Raw material costs fell to INR 103 crore from INR 106.2 crore sequentially, so gross profit rose 26.4% to INR 93.1 crore and gross margin improved from 40.9% to 47.5%. Employee and other expenses together rose by INR2.8 crores. EBITDA therefore rose 67.4% on Q o Q basis to INR31.4 crores. And EBITDA margin improved from 13.7 to 21.1%.

19:06 Depreciation and amortization rose to 25.1 crore from INR 8.1 crore for the four reasons I described earlier. Finance cost is to INR 9 crore from INR 9.4 crore. As a result, profit before tax was INR 9.9 crore, in line with INR 9.8 crore in Q1. We recorded a tax credit of INR 0.6 crores this quarter as compared to the tax charge of INR 1.9 crores in Q1. Profit after tax, therefore, rose to 37.7 percent to INR 10.5 crores from INR 7.9 crores with a PAT margin of INR 5.4 crores 5.4%. Coming to H1 FY 'twenty seven consolidated performance.

19:51 For the first half, revenue from operations was INR376 crores, above 50 percent of our full year target of INR750 crores. Gross profit was INR166.7 crores at a margin of 44.3% and EBITDA came in at INR66.1 crore with a margin of 17.6%. After depreciation and amortization of INR33.2 crore and finance cost of INR18.3 crores, profit before tax was INR19.7 crores, profit after tax was INR18.4 crores. Coming to revenue mix, CDMO contributed about 73% of Q2 revenue and branded generics about 27%.

20:38 For the first half, the split was 70 five-twenty five exports made up about 73% of Q2 revenue. Within exports, Australia contributed 76%, The Philippines contributed 16%, South Africa 4% and other markets at 3%. Private sector customers accounted for 80% of the revenue and institutional customers for 20%. So coming to the balance sheet. At 09/30/2026, total borrowings stood at INR $3.57 crore against about INR $3.20 crore at March 2026 and the cash, cash equivalents were INR 129 crore. We have spent about INR 70 crores on projects in FY 2027, mainly on headlight facility and Unit 3.

21:28 FY 2026 will be our peak debt year as we complete our CapEx program, and we expect debt to come down from FY 2028 and FY 2029 as these assets start earning. Five previous project debt will be raised and set at the subsidiary level and will be drawn as the construction progresses. So some of the first half is ahead of our plan, margins has improved and projects are moving from construction to operation. We are all well placed for the second half of the year. With that, I request the moderator to open the floor for questions. Thank you. Thank you, sir. We will now begin the question and answer session.

22:24 Participants are requested to use handsets while asking a question. We will wait for a moment while the question queue assembles. The first question is from the line of Heath from Access Capital Limited. Great set of numbers, sir. My one question would be, so expansion really, really strong. And previously, highlighted that it's 45% of our business. So apart from the strong outlook, any number you would like to quantify in terms of sales growth or in terms of margins because margins also this quarter it was around 20.7%.

23:16 So anything on the any quantitative guidance? Yeah. Thank you, Heath. Thank you very much for your appreciation on the numbers. See, this quarter was the gross margin was the hero this quarter according to me. As I said to you in my opening remarks, we have worked very thoroughly on the inventory management. And it's just the beginning. We are going to work through that a lot in the next two, three quarters. So and as I promised you in the my opening remarks, we'll try to keep the gross margin above moderate of 45% in the coming quarters also.

24:09 And Australia will be coming up in the next two quarters, its revenue from its own manufacturing after two quarters will give a strong guidance for the business to come in. And the three key points what will add more revenue and more margin coming in the next two quarters is one is the Q3, the unit three, which is the ramped up productions, which is going to start giving the delivery from Q4. And most of that will be dedicated to Australia and New Zealand. So we see there are a lot of margins coming from there from Q4. And the second important is Prateek Laboratories revenue model, which will start from next quarter Q4 and Q1 of FY 'twenty eight.

25:02 Currently, it's a non revenue model, which was being developed only for in house till date when we took over. Now it's going to start its own revenue base because we are already in discussions with a few clients for CDMO projects for that particular laboratories. And we see a lot of margin coming in from there. So these would be the two big issues in the next two quarters. And as I promised you revenue of INR $7.50 crore, I think we'll be very, very comfortably crossing that and the margin side 17% whatever I promised it should be, we should be seeing you get comfortably more than 17%.

25:51 It. Got it. Thank you, sir. First of my second question would be in the presentation you highlighted biosimilars and MAD from 2028 onwards. What is the plan of action over here? Just a qualitative thing on it. Yes. Heath, I will be releasing a paper in a month about this Onco maps and and and the biosimilars. We've already prepared a ruling map, and a planning has been put in. It was with the... My project management consultants. We were evaluating it. It has to be taken to the board and approved, then I'll I'll put the news to the exchanges and in the public domain because I can't can't give you any information on that. So so just just one question on that. So will it be India centric or will it be, like, for the global thing?

26:53 It will be for the global. The next question is from the line of Mr. Amol Rao from Plutus Wealth LLP. To ask questions. Sir, just going through your financial statements. So I noticed that our receivables have increased to around 250 crores in this first half. Could you provide some color on this? I mean, what's the reason for this increase?

27:40 Because... Is it because the consolidation has resulted in something untoward, or is there anything else? And secondly, what's the aging profile of this receivable? Yeah. So you have to divide this into two parts, Mohit. One is the Yes. The branded generic receivables, and the other one is the premium on export receivables. The aging of export receivables and the CDMO receivables are between always less than one twenty days. And the other aging branded generics domestic is between anywhere between one hundred and thirty to one hundred and fifty days. See, if you see this quarter, there was a little high because of the the receivables were little on lower side from some of the two export biggest export customers.

28:38 But the normalization will be you can see the normalization in the next this coming quarter, Q3 and Q4. Mostly, it will be in line. This is the one such quarter because on the sales side also, there is... This increase in sales also happened in the last one one and a half month, so which is not a due. So it's more up for that number, which which will normalize in the q three and q four. But as I said to you, all the export receivables aging are less than ninety to one twenty days. And the domestic branded generic formulations either to the b to b or a private customer or the institution is anywhere between hundred and twenty to hundred and fifty days, which was always a challenge for us. So we are trying to slowly reduce because it will used to be a little more high.

29:27 So we we started reducing it down. But in the next two quarters, maximum three quarters, I think it should be less than one twenty days across the board. Oh, so just basically a timing issue. Things got bunched up towards the end of the quarter, which is why Exactly. Exactly. Alright. Thank you very much for that clarification, sir. Sir, secondly, sir, I mean, I was just reading some press. I mean, something in the press and, you know, our old interviews. So we we are talking about the launch of 11 molecules for The Philippines. So so we had previously announced, I think, a 10 or $11,000,000 contract. So is this covered into that for The Philippines? Yes. Or is that... I mean I mean, is there is there anything else?

30:15 Two contracts in Philippines, Samoa, if you if you can just recall. One is that 11,000,000 is an anti TB contract, which is a specific requirement of the program of the government of Philippines. That's completely different. Apart from that, our regular business of 14,000,000 contract is already there before our IPO itself, sir, for a client for a regular projects. So this has to be seen in the two contexts. One is 11,000,000 for anti TB, the 14,000,000 which we have signed earlier before IPO for our regular contract. And the business of Philippines has started in January 2025 and Yes. For the 14,000,000 contract. Now the 11 molecules, whatever we have added in this quarter is mainly predominantly to our regular products.

31:07 Whatever the 11 products, cardiovascular and everything we've added as part of our regular portfolio of this 14,000,000 contract. Whereas this 11,000,000 contract, anti TP, we have done the validation batches. The commercials will start anywhere from after January 2027 about. Got it, sir. Got it. And, sir, last question is a little... I mean, it's it's a little bit on on on your calls on SAIPARTEO. Basically, the thing is, sir, I mean, you already mentioned that, you know, we should... I mean, it's going to turn into a revenue generation kind of a business model from quarter four, quarter one of next year, quarter four of this year, quarter one of next year. But, I mean, in terms of... As as an investor, how do we how do we assess what could be the revenue potential for this for this business? I mean, what...

32:00 I I mean, is there... I mean, what what could be the possible internal contribution not only to to external numbers, but also to our internal internal to our company, sir? I mean, any any any any qualitative and quantitative thing would be great. See see, you have to view this in a in in a separate angle. Is the first... Why we have acquired Sai Patek, Patek Library. First, we are spending lot of amount on development within Sai stand alone, and we are spending lot of amount at new mid level for year on year product development. So we are spending this amount and outsourcing to the outside R and D centers and the CROs.

32:46 Now first thing what we want to plug in the gap is that we want to have our own R and D center in house because of our growing businesses and growing development and growing premium offices. That is the first reason why we bought this... Why we have taken over this site. Once that is back and all the revenue, all the R and D development, CRO, everything will be done through our SAIPARTEK both for Nomad and Sai, our purpose will be resolved in the next two, three quarters. But as we are already doing this, we also want to extend our services for the outside people, which will be a revenue model for us. And it will be an added revenue to the... Because we have 36 products capacity at Prateek as of today. As of today, we can develop 36 molecules in any year.

33:43 So barring Nomad and Sai, whatever the leftover is there, I can't really use the exact number, but whatever the leftover is there, we want to do it for the third party customers, wherein it will start generating the revenue. So it is an additional thing for the Sai Parenterals. So we want to employ that. That's the reason we started working with some of the good CDMO customers where we are we are going and telling them that we have this this good lab, which we are doing the development. So we want to have a long term agreements with them. Them. So that will start to unfold in the next step by 2080, where we will be doing for Nomad, for Sai, and also we'll be doing for the. So, sir, if I could just clarify for my own understanding, what we're trying to do here is that it's it's not only going to be a cost center, which will make us more efficient, but it also basically starts becoming a little bit of a profit on a revenue center to mitigate those costs.

34:46 That's that's that's the long long and short of Okay. The Absolutely. Alright. Absolutely. It's a self sufficient and it becomes a revenue more... Cost center revenue model. Alright. So... But could we hazard any any number to... Or what is earnings potential? Just a stand alone external earnings potential could be revenue generation potentially? As of now, we have not worked on the numbers, Amol. But by next quarter earnings call, I should be able to give some guided... Guidance on the side of site. We are... Because we are... We keep on working with so many clients. Correct. Now something will come up in the... I'll come up in the next quarter. When I'm there in the quarter, I'll definitely give guidance on Sai Parenterals side.

35:33 Thank you so much, Anil, sir. Thank you, and Vishal, a very happy Diwali, sir. Thank you. Thank you. Happy Diwali for you. Thank you, sir. Thank you. The next question is from the line of Mr. Murli, an individual investor. Hello, sir. Sir, just In one your slide on injectables, you have mentioned U. S. As well. So is there a change that you will also look at US FDA from injectables standpoint? Sir, can I can I? Can you repeat the question a little more louder? Because I'm not able to exactly hear it. Sorry for that. Sure. No problem. So so in your slide deck on injectables Yeah. You have mentioned USFDA as well in addition to eGMP.

36:35 Mhmm. So are you now thinking of USFDA as well Yes. From an approval standpoint? Yes. Yes. So I have cleared this question last time also. I'll just explain you. See, initially, our target was UGMP. But once we aligned with CreditGen Pharma and we are building a larger project on the JV sixty forty, we said, why don't we build it for a USF based standards? Yes. Then we took a call. Let's let's do it in regulatory USF based standards. Now going on the business front, our prime focus will be EU GMP, and our market focus will be more of a Southeast Asia, Latin America and Middle East for the next two to three years.

37:23 So we will be focusing more on these lines because we are building a life realization, GLP one, ample, and critical care injectables, sir. For these markets where we had a complete extensive study report we have generated from this, and we also have a client base in this in this regions where we're in discussions for the launching of the injectable space. But said that, as of today, we don't have any idea of launching ourselves into USFJ for at least two, three years, but we are keeping the option open if there is a CMO client who is coming up to us and who wants to manufacture the product within our site. We are well open for the discussions. And if he... If it is his product which we have to manufacture, we are open for that. But as Sai projections, maybe we don't have anything on The U. S. Side, at least for the next two to three years.

38:24 Sir, next, I know you've not given an FY 'twenty seven actual guidance increase, but do you at this moment for the next three years, is there a forward guidance you can decide, I guess, as to what could be the target that you're looking to grow your business at? Yes. Probably for the next three years, maybe it's too preemptive. But for the FY 'twenty eight, I will release my guidance in the next earnings call definitely. So FY 2528 guidance are coming in the coming earnings call in the month of Jan Feb. I'll definitely put my earnings call, but not because too many things we are doing at at this point of time, too many revenues are being expected at every level.

39:15 So three years putting up the numbers of guidance at this point of time may be difficult for me. But for FY '28, for sure, I'll put it on on my next earnings call. Okay. So if possible, I'll squeeze in two more. Please. The site that you're now closing down, right, the injectable earlier one. Do you have an idea right now what you intend to do with that? Or Two things two things might happen now because this become a very commercial site, both of them. We have two, three options with doing that. Now we are we are preparing a comprehensive report to present it to the board.

40:02 How to capitalize them or how to commercialize them? So it's under the part. Once it is presented to the group, I will reveal it to the exchanges in the public domain. Okay. Thank you. And lastly, on your leadership next hires, are you confident on you having a good next line with so many things happening at the same time? Now you're talking about MAP and biosimilars as well. So how does the next line look like? Yes. If you see consistently in the last two quarters, the expenses on the people, on the management and people is increasing very high when compared to this last year numbers.

40:52 That itself tells the story, sir. What happening is the senior management under KMT, we have substantially increased in the last six to eight months. And in the next three months to four months, again, there is going to be substantial increase on the on the KNP side. So I'm preparing the entire team at all levels, be it at the site, it at Sai Pit, or Australia. We're doing everything to ramp up the bandwidth of the management to take up the individual responsibilities, and I myself want to focus more on the strategy, not on everyday business. The next question is from the line of Mr. Gopal Bhatt from Baroda BNPP Asset Management.

41:50 I just want to sorry, just double clicking on this cash flows. So if I look at last year's numbers also for the for 1H FY 'twenty six, again, cash flows from operations were negative. And then I see that for the full year, they have kind of normalized to positive levels. If So you could just help me understand the cyclicality in this Yes. In the cash flows and the overall cycle, please. Yeah. Yeah. So one thing, Rupal, the cash flow for the last year, h one FY twenty six, is for a standalone because now it is is done on November 2025. So the numbers are done... Not there in the cash flow for h one f I twenty five. So it may not be right to compare both the things, but still there is a I'll give you the explanation about the difference of INR205 crore.

42:49 So in that, if you see INR113 crore minus the cash flow increase and decrease in other financial liability, that's an OFS. So we have raised INR $4.13 crores. We have so we have raised INR $40.09 crores from the IPO, out of which INR 113 crores has been dispersed to the earlier shareholders under OFS. So it's majorly because of the OFS of 113 crore and the increase in decrease in current liabilities and increase in the receiving I'm just referring to cash flows from operation... Operations, so that won't include all of that. Right? Just operations, I'm saying. So operations was minus 60 crore last year, and it's minus 200 crore last... In this first half of this year. Yes. So I understand that you have an acquisition here at all, but I am trying to understand that there is a... There seems to be some kind of cyclicality in the business where you are carrying the receivables, I think, in the first half.

43:51 No. That's what I'm telling. If you if you refer that cash generated from operations, are talking about 205 crore minus. Am I right? 201 crore for this year. 201. In that, if you see increase, decrease in other financial liabilities, have you seen that? 113.1 crore. Okay. No. I was just seeing abbreviated. Okay. That's fine. Okay. So so in that, if you see the breakup, what we have submitted into the exchanges, there is one column called increase decrease in other financial liabilities. That is 113.1 crore out of 200 crore. 113.1 crore, which is an increase decrease in the financial liabilities is towards the OFS payment. Okay. Fine. Got it. So that is the OFS payment which has gone out of the account from the proceeds of the IPO.

44:43 Okay. And the second one is increase in decrease in payables and current liabilities and increase in decrease in current liabilities and the term trade payables is almost 49 crores. Okay. So these are the two major hikes. Otherwise, everything is in line. The major thing has come from the decrease in financial liabilities, decrease in current liabilities, and decrease in trade payables. Okay. Fine. And then if you could explain that, how does it all then normalize back usually by the end of the year? Because we are sitting on IPO of $2.85 crores where we have cash on the books around INR 110 crores is already there on the books with the in FD deposits is also there. So that's sitting in cash.

45:41 Yes. But I'm just saying that your cash flow from operations for the full year was positive last year as well. How... Last year, it was 154.20. This year, it is 129 point... Last year, it was 15.42 crores H1, and this year, this is 129.33 crores. I see. I mean, I'm just referring to your presentation, but I'm saying that I see INR 98 crores as your... You just take the cash flow from the cash flow, whatever we have submitted yesterday to the exchanges, the complete cash flow, we have given a detailed cash flow from where it has come and it has come.

46:29 We have put as a part of the present exchanges information, wherein it clearly emphasizes exactly on which side it has come up and which has... Which which side is it has gone up. Understand that. No. No. I do understand that, and I can get into those details also. But I... I'm sure the overall submission would not differ from what you have in the PPT. Right? Yes. And, yeah, as I said, I just wanted to understand the business part of it, not just the number change, but just overall that how come it fluctuates from quite negative to then positive for the end of the year. One thing is, let's not compare h one FY twenty six to h one FY twenty seven because the the reason being, it's a stand alone with a turnover of 89 crores last year.

47:18 With a turnover of INR $3.75 crores this year, it is completely different picture. And there is only one subsidiary last year. There are four subsidiaries under this year. So the comparison between H1 FY 'twenty six and FY 'twenty seven may not be the right thing. But on h one, y twenty seven, the cash flows are majorly... The cash flows were majorly because of the operations both at Oh, there's no items you told me. Yes. Yes. Fine. Yes. Fine. Okay. Then I'll... I mean, I'll just... I mean, relook into it and then connect. Please. Please. Please. Okay. Thank you. Thank you. Thank you. Participants, The next question is from the line of Ms. Bhavika Singhvi from Navusheh.

48:15 Yeah. Am I audible? Yes, ma'am. Yes,. Yeah. Thank you for the opportunity. So, sir, basically, like, I'm new to the company. So just wanted to understand, like, how we see to make Sai Parenteral over, like, next two to three years? Like, because we are doing a lot of things currently. And if I see, like... Also, I wanted to understand because, like, we are doing expansion in the complex injectables, oncology, and GLP. So one... First, I wanted to get this understanding, like, how we try to decide, like, with CDMO players we want to onboard, like, how we have the mindset over it. And also on the product level as we have our own brand where we... Like, our own manufacturing where we do the product selection. So, like, here, I wanted an understanding, like, how we make the decision.

49:12 And second, like, because we are doing a lot of things, so what currently we... Challenges we are facing and how we are, like, putting things to resolve that, if you can answer both of them. That would be helpful. Yeah. Two things. How do you see Sai in in next three years, sir? So so the the the pace that we... Which we've built from the last three years is is is very, very massive and very fast. So to keep up the pace for the next three years, we have to work little more hard, and the proper planning has to be there and we are doing that.

49:58 At end of the three years, if you see, Sai will be having a very formidable manufacturing facility, be the dosage forms, be it the regulatory approvals, what it will have, and be it the kind of products we're going to develop, and this new set of molecules which we are going to work and launch through our site... SAIPARTECH. All this will help to see a different kind of portfolio of products along with the backward integration of manufacturing. So that is what we will be. You you name anything. You name Encore will be there. We name you name tablets, we will be there. We'll we'll be there in maps. At the end of the three years, we want to put up the facilities, backward integration facilities where we will be covering all dosage forms, and we will be there manufacturing with every product.

50:57 But a very differentiated products and product development will be also in house, and we will be developing a lot of products in house development. We will be doing it going forward. One is that the second question is about the challenges. So, yes, every project integration is is is a challenge for us. But because of our thirty years experience in this in this manufacturing, we know exactly how to tackle them. But, obviously, while finally looking, we will be happy if the integration is completed in fully. So for us, business is not a challenge, be it at Australia, be it at India. We have the business and the certainty in business. We have very long term contracts.

51:45 Now constructing the units, going for the CapEx, completing the CapEx, making the plants run effectively and delivering it and increasing our margins. This is the only thing what we were looking at that integration part is what we were going to look in the coming future. And the new bandwidth of management, we have increased, as I told my... In earlier call also, that we are working on that new people around us, new bandwidth of the people around us to care... Take care of every integration part at every level. Every subsidiary level, it has to be integrated in a proper way. So there are challenges for the integration parts, and we are taking care of that.

52:33 And finally, by end of that 2030, when this all these facilities are in full force, you can expect Sai as a very good technology company, both with the development, backward integration, and forward integration. Sir, sorry. But the line for the the line for miss has been disconnected. Oh, okay. Okay. Sir, since we don't have any other further questions, I would like to hand it over to you for any closing comments. So thank you very much for your support and the insights, whatever you give us to us.

53:19 And we'll be open for any kind of data requirements. Anything more understanding on the balance sheet will be open, and you can just always write to our c s, CFO, and personally me, which were available. Our emails are available on the website. And thank you very much. And everyone, wishing you a happy Diwali. Thank you. Thank you so much, sir. Thank you, ladies and gentlemen. That was the last question for today and the closing remarks from Mr. Ranil. For any further information, you may reach out to SGA, the Investor Relations Advisors. Thank you. Now on behalf of MK Global Financial Service Limited, that concludes this conference.

54:08 Thank you for joining us, and you may now disconnect your lines.