Viyash Scientific (NSE:VIYASH) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Viyash Scientific Limited q one FY twenty seven earnings conference call hosted by Sequium Scientific Limited. As a reminder, all participants' lines will be in listen only mode, and there will be an opportunity for you to ask question after the presentation concludes. Please note that this conference is being recorded. I now hand over the conference to Mr. Abhishek Singhal from Sequium Scientific Limited. Thank you, and over to you, sir. Thank you, Paree. A very good evening to all of you, and thank you for joining us today for Viyash Scientific Limited earnings conference call for the First Quarter of Financial Year twenty twenty seven. Today, we have with us Doctor. Haripabhu, Managing Director and Group CEO Mr. Rajaram, Executive Director and CEO, Animal Health and Mr. Ramakanth, CFO of the company, to share the highlights of the business and financials of the quarter.

0:58 I hope you've gone through our results release and the investor presentation, which have both been uploaded on our website as well as the stock exchange website. The transcript for this call is available in a week's time on the company's website. Please note that today's discussion may be forward looking in nature and must be viewed in relation to the risks pertaining to our business. At the end of this call, in case you have any further questions, please feel free to reach out to the Investor Relations team. I now hand over the call to Doctor. Hariwabhu to make his opening remarks. Thank you, Viyash. Good afternoon, everyone. Welcome to Viyash Scientific Investor Call for Q1 FY twenty twenty seven. Thanks for taking the time to join us today. I'm happy to say that Q1 FY twenty twenty seven is again a very good quarter for us and it shows that not a one quarter story, but a company which delivers consistent results quarter after quarter.

1:54 Our integration is now complete. This will be one of the few successful integrations you can find in the industry and set to two in record time period. Starting with the quarter performance, revenue from operations for Q1 FY twenty seven was INR946 crores grown by 20% year on year. EBITDA was INR205 crores grown by 59% year on year. With EBITDA margin at 21.6% expanding by almost five thirty basis points over last year. Profit after tax was INR79 crores, which has more than doubled year on year. Our EBITDA to tax conversion is showing good improvement both year on year as well as quarter on quarter.

2:46 Our balance sheet continues to show improvement. Net debt has come down to INR86 crores and net debt to EBITDA is now 0.1x versus 0.24x last quarter and almost 1x a year back. So in four quarters, we have gone from a leverage combined entity to a company which is virtually debt free on a net basis. This gives us tremendous opportunity with respect to brownfield expansion as well as exploring inorganic opportunities. Coming to segment performance, our Animal Health Formulation business continues to grow very strong across all regions and we believe the growth will continue with our continuous focus on new product launches, geo extension for our existing products to other countries, expanding R and D and accelerating new product development.

3:46 We continue to invest in expanding our manufacturing operations. We are also seeing strong growth in domestic market as well up to 60% and here we are looking to expand our field force and product portfolio further to grow aggressively. Coming to human formulation, our U. S. Business has grown 60% showing results of our efforts to moving towards backward integrated more complex products. That is now translating into real growth along with profitability improvement. API revenue has been broadly flat quarter on quarter due to timing issues on account of raw material price volatility as customers were in wait and watch approach. As all you guys know, the war is continuing, nobody knows when it's going to end.

4:40 During the June, most of the customers wanted to wait and see how it's going to work out. But now we see good traction, lot of orders are coming back and I can see this quarter is going to the best quarter for APA for us. Coming to where we are investing for growth. We have signed SPA for Biopur Life acquisition in Italy and we are expecting to close the acquisition in next few months. This is some fulfillment of certain conditions as per the agreement. This acquisition, as I mentioned on previous call, aligns with our focus on companion animal as number one strategic growth area for the next five years. Bio For Life gives us direct market access in Italy, one of the largest companion animal markets in Europe.

5:29 It comes with a companion animal portfolio about 85 products, which can be extended to other our core markets and sales force with about 85% wet clinic coverage in Italy, plus strong local talent. Combined with our VI partnership in India, which is now scaling up our own R and D and manufacturing investments in companion animals. This is a very meaningful step in building the entire companion animal platform across world. On farm animals, we are focusing on filing the white spaces in our current portfolio as well as expanding the market for existing products to other geographies.

6:15 We want to focus our new product development on molecules, which have potential across multiple geographies. For human formulations, as I mentioned earlier, we'll continue to focus on first to file opportunities with focus on more on important complex formulations with fully backward integrations of potent molecules. In API and CDMA focus is on day one launch complex molecules expanding our CDMA business to create differentiation. We have strong relationship built with innovators across human as well as animal health, strong credentials in manufacturing, which helps us create a mutually beneficial partnership models on the CDMO side.

7:02 So to summarize, Q1 FY twenty twenty seven shows continuity, sustained double digit revenue growth, EBITDA margins around 20%, 22% as indicated earlier, Balance sheet now strongest ever in the history. With this platform and this balance sheet strength, we are very well positioned to keep investing both organic in R and D and manufacturing and selectively organic wherever we find the right asset, while maintaining the discipline on margins. With that, I will now hand over to Ramakanth, our CFO, to take you through the detailed financials. After that, we'll be happy to open the floor for questions and answers. Thank you.

7:51 Thank you, Doctor. Good afternoon, everyone, and thank you for joining us. I'm pleased to present the financial performance of Viyash Scientific Limited for the first quarter of FY twenty twenty seven. We have started FY 2027 on a strong note with continued momentum in revenue growth, significant improvement in profitability and sustained expansion in margin. Our performance reflects the benefits of initiatives undertaken over the past few quarters across businesses, along with continuous focus on operational efficiency and disciplined cost management. Revenue from operations stood at INR $9.46 crores, registering a strong 19.5% year on year growth and a 2.9% sequential growth. Gross margin improved to 54.1% compared with 51.9% in Q1 FY 'twenty six, representing an improvement of approximately two twenty basis points year over year.

8:42 Adjusted EBITDA increased by 59.2% year on year to INR205 crores, with EBITDA margin expanding to 21.6% compared to INR 16.2% in the corresponding quarter last year. Profit before tax increased by 132% year on year to 112 crores compared to INR 48 crores in Q1 FY 'twenty six. Profit after tax increased by 115% year on year to INR 79 crores compared to INR 37 crores in Q1 FY 'twenty six. Our finance costs declined to INR 12.5 crores from INR 20.4 crores in Q1 FY 'twenty six, reflecting the benefits of our continuous focus on balance sheet strengthening and debt reduction. Pursuant to the composite scheme of amalgamation and upon receipt of necessary approvals during the quarter ended June 30, company has granted INR 1.3 crores employee stock options, 2.8% of post amalgamation paid of share capital of the company.

9:38 This has resulted in an incremental expense of INR 19 crores for the quarter ended 06/30/2026. Profit before tax of INR 112 crores and profit after tax of INR 79 crores for the quarter ended 06/30/2026 are after considering the expenses on account of these additional employee stock options. We remain encouraged by the strong start to Slide 27 and continue to focus on disciplined execution and capital allocation to deliver sustainable and profitable growth. With that, I conclude my opening remarks. Thank you for your attention. I would now take with the moderator to open the floor for question and answer session. Are you able to take questions? Okay. Thank you very much. We will now begin the question and answer session.

10:29 If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, please wait for a moment while the questions are assembled. The first question is from the line of from IIFL Capital Services Limited. Please proceed with your question. Hello. Can you hear me? Yeah. Yeah. Thanks. Thanks for the opportunity. I have a couple of questions. It's starting with the the EU region. If you look in terms of the y o y growth on constant currency basis, EU revenue has been largely flat.

11:24 Anything to highlight over here? And what would be the outlook? Rajiv, you want to explain? EU region, actually, Q1, it's showing 13% in euro, but it's saying, actually. Constantly In terms of the EU constant currency, if it was €16,800,000 would be the sales figure versus 1.8556, the €16,900,000 So on zero terms, the QR terms, it's subject to that. Yes. But actually, if you look at the fourth quarter tends to be a little bit more of a management of how the sales have gone. Because on a full year basis, if you look at it, the growth will be closer to 20% for the EU region. So some of it is more a bit of phasing between one quarter and another quarter.

12:22 But by and large, we are growing volume over there. And the volume growth in that market plus the pricing growth should get us back to the levels at which we have typically been which should be in the close of the 18%, 20% growth. So this is more a question of how the quarter on quarter looks. But really, the way to look at some of these businesses on a year to year basis because EU is a set of markets where one market may in one particular quarter show a little bit of a lower sales than the other quarter. So is there any seasonality in terms whether 1Q is lower versus, let's say, 4Q? Underly, it's quarter is better. So we generally have a peaking around third quarter. Third quarter. Third quarter.

13:10 It's also a question of some businesses are which are tender linked or some of them are linked to outbreak of vaccination related issue. So you could have a bit of a movement on that. But yes, you tend to have a higher sort of growth coming typically in quarter three, a little bit in quarter one, yes, than in But quarter you're really talking of growth. So from a growth point of view, if you look at it quarter on quarter, it is more a question of phasing of what was last year same quarter versus this quarter. But there's nothing which indicates that we are this is anything that is disturbing. It's more like a steady volume plus pricing plus foreign exchange growth. Yes.

13:59 No. No. So actually, I was comparing it on a Y o Y basis only, not just on the on quarter basis. So Y o Y also, it is flattish only in the EUR terms. Y o Y, think you're saying on FY... 1Q FY 'twenty six versus 1Q FY 'twenty seven in constant currency? Yes, yes, yes. But that's what I'm saying. So on the quarter, very specifically, it's more a function of the phasing of what kind of contracts may have been there in the respective two quarters. The way to look at it is really on a full year basis, which is when you will have some movements between different quarters. And so EU continues for us to be a market which is closer to an 18%, 20% kind of a growth.

14:45 So 18%, 20% kind of growth on an INR basis, right? You... Yes. An INR basis. On an INR basis. Also, as you know, a few of the European countries, we started building last few years. But our major countries like Spain is doing extremely good. There are few other countries like Bremer, Benelux, where we are building. So that's taking some time, but we are very confident this year will grow much better. Okay. Got it. Got it. And in terms of the emerging markets, emerging markets are actually surprised positively in terms of growth this quarter. I mean, we're looking at more of a mid teens kind of a growth, but on a constant currency, let's say, if I go on a dollar terms, it is going on some 23% odd.

15:37 Do you expect this momentum to continue or what I mean, what were the drivers of such a strong growth? So emerging markets, mainly Turkey, Brazil, we have very strong product pipeline, of course. So a few launches also happened last quarter. And both countries started growing volume. Because from last year, we are seeing the volume growth earlier. You know that there used to be only pricing increase. But last few quarters, we see good potential to growing volume. So looking at the volume, looking at all our product launches, we are confident to go close to that. That's how we see. Both markets are doing extremely well. These are the three countries, Turkey, Brazil, Mexico. So all are doing extremely good on this business.

16:31 Got it. Got it. If I may, I mean, are few couple of questions in terms of, let's say, The U. S. Business also has reached a very strong growth. Why... I mean, I'll be on a lower base. Anything particular to highlight why it was such a, you know... I mean, also on 45% Y o Y, 6% on a POQ basis in dollar terms. So as I mentioned earlier calls also, yes, we've been trying to restructure a little bit last two, three years. So post COVID, we struggled a little bit pricing issues since we had manufacturing in The U. S. That's how we started moving volume products to India and also couple of products we try to fully vertically integrate. So those actions happened last year. Couple of products started shipping from India with our API, that's where margin profile improved and also we are able to maintain our market share.

17:33 And last year, of course, we had one good launch. We're able to make good still we are having 50%, 55% market share. So these are the few things changing the strategy, moving volume growth to India, full integration with APIs and adding few new products and R and D also stepped up actually. Our R and D revenue also is slightly improved. So all these actions actually worked out very well this year and it's going to work on that. But if you ask me, is it going to 60%, answer is no. So but it's pretty stable. We have very confident now actually to grow this business on that. Because all most of the products, whatever we develop our commercial launch goes with fully integrated thing. And all volume products, we tied up with Indian manufacturers strategically.

18:30 So we can see strong growth potential in this business as well. Okay. So just to summarize in terms of whether my understanding is correct. So basically, earlier, the all, let's say, for few products, the API is now getting manufactured in India, which was not happening earlier, and hence, we saw a margin increase in, let's say, FY twenty six versus FY twenty five. I mean if I look at ATCO's income statement, I mean EBITDA margins have sharply improved from 134%, 35%. Do you expect this to continue, this kind of EBITDA margins for this for The U.

19:15 S. Business? So we are expecting this will continue. Okay. Okay. Okay. Also, if you could highlight in terms of how has been the animal API growth and the human API growth for the quarter? So API, as you see, it's a flat because of few reasons. We don't see any business loss in this. So basically, quarter, especially June, everybody expected war is going to end by June. In fact, it stopped in a few weeks, you know that. So whether our raw material prices was high in last quarter, we also increased the price. So most of the guys where they have inventory, they try to actually little bit postpone their procurements.

20:07 So it happened one month. But when they realized after July, now it's not going to over, now we are getting back all product orders. And this quarter is going to be very good quarter for API. I can see I think this quarter is going to the best quarter in the history for us. We see a lot of traction, lot of inquiries to get back to the It's the only timing issue that QVICs. Everybody wanted to take that advantage, okay, if it's raw material solvent prices come down, we may reduce that. But now it's stabilized. Everybody understood, realized. So now this quarter is going to be good. So it's the only timing issue, nothing wrong in the day care business. This quarter is going to be the best quarter for both Animal Health and Human Health. Of course, animal health, alvendazole we have been talking capacity expansion, couple of approvals.

21:03 Now we have expanded capacity. We got The U. S. Approval also for VIYASH side. We also expanded at VIYASH side. Just started commercialization from July. And this quarter is going to be the best quarter for APA. Any color in terms of what would be the revenue run rate for the animal APA business? If I remember, we had crossed the 100 crore mark. I think, like I I I mentioned earlier, we'll grow 20 plus, but we'll grow a little more than that. Okay. Okay. Now IVS, we are growing. We'll grow more than 20 plus, I can see. One for Damakan, sir. Sir, if you could highlight in terms of how should we look at Isof cost going ahead, whether it should be like INR 5 crore, the sequence is of plus now the Viyash employees getting that INR 190 sorry, 19 crore kind of additional for this year on a quarterly basis? Or it will increase from the from Q1?

22:13 Yes. So as we mentioned, this INR 1.3 crore additional options were granted during the quarter. Charge for the quarter was about INR 19 crore. In total, lease up costs for Q1 was about INR 25 crore. Q2, Q3 and Q4, the number in total would be about INR 40 crore. And from next year onwards, this will come down. So next year, it's going to be flat small maybe after completing this INR 1.3 crores. You know that why it's happened. We had a sub purpose scheme in Viyash. So when we met as part of the organization, of course, it was clearly mentioned in the merger document also. Since actually it's allotted, it's delayed.

22:59 So when the sales price was high, So whichever that INR $2.30, that's the reason it's showing more. But it's going to complete by mostly this year and the next year, first quarter something. But after that, it's a routine very small. We don't see any big things or onetime things after that. Next question. The next question is from the line of Taril Singhri from Monarch Network Capital. Congratulations on an excellent set of numbers. So with respect to the kind of traction you're seeing on the API side, is it possible that we will exceed the 20% growth for, say, maybe a couple of quarters now going ahead? And would that mean you would you would do higher on the whole year basis on your side? API API, I mentioned animal health.

24:05 Okay. We are going to grow 25 percentage. But overall, I mentioned, actually, the whole digit 13, 14% this year. Mostly next year, it's going to increase. We have few launches. But this year, we can expect double digit, maybe mid teens or that level together because other API business is bigger, much bigger than animal health, but we see good traction. But human health, most of the products big launches is going to come in future. So this year, we can expect that mid teens 13%, 15% kind of thing together. Got it. Secondly, during the Investor Day, you had also alluded upon adding new tablet capacity for companion animal and building some more R and D capabilities as well. How is... How are those things tracking? I mean, progressing?

24:58 R and D already initiated last quarter. We hired people also, whatever approved and equipment also replaced order. So coming to the manufacturing, we finalized the design. Mostly, it's going to start next few weeks or next month. And the target to complete by January, February to be ready for taking the exhibit batch. So we are on track on that. Mostly, it will be done by January, February. Got it. Got it. And just one clarification from Ramakanth, sir. You... I think what you said is the ESOP cost would be ranging in roughly 40 crores for the nine months. Is is that correct understanding? Yeah. Yeah. For FY '27, the total would be about 150 crores.

25:43 For FY '28, it will come down to around $25.37. So remaining three quarters, 40 crores is around... That's right. Okay. Yeah. I get I get it now. Thank you. Thank you, sir. Thank you. The next question is from the line of Bharat Seth from Quest Investment Management. Please proceed with your question. Good afternoon, and congratulation, Adi Babu, Raja Ramji, and on excellent performance. Hello? Yeah. Yeah. Thank you,. Please continue. Yeah. Sir, my only... I have one... Two question. One is particularly you stated in your opening remark about, I mean, growing the business of high potent human health care.

26:33 Mhmm. So if you can give a little more color what kind of a current run rate is and how do we see what is the capability that we have and capacity also we have built up and how do we see that high potent? I understand it's a more complex and we'll have a better EBITDA margin also. So if you can give a little more color on that? Sure. So, you know, I potent is mostly oncology products. Correct. We started with the... We started building the capability two years back API. Last eighteen, twenty four months, we build R and D potent lab, we build manufacturing, of course. We have three modules and we started developing lot of products last two years.

27:20 That's the API thing and started selling and we partnered also with many customers in the form of partnership or CDMO or direct selling. That's one of the core business for future. And recently, last twelve months, we also initiated formulation development and partnering with that. So as I indicated earlier also, we are investing on formulation R and D, Hypotent Lab. It's done now. It's going to be operational. In fact, last week, we completed Ipodin formulation development lab. So we started actually all Ipodin products formulation now. And also we tied up with one of the strategic manufacturer who is having oncology manufacturing side.

28:11 So we aligned with R and D manufacturing. We started working with partners. But these things, we have to keep in mind, it's a long term. All these products, IVYASH unless you start developing minimum five, seven years, fairly patent expiry, we're not able to get the business. So most of the revenues, whatever we develop, the APIs and partners, is going to start from '29. And the big product revenue with the formulation, it starts after '30, 2030. So we we get up now. We have r and d. We have manufacture. And also, we have couple of partners, but we are waiting for filing and patent expert. Most important patent expiry. We filed at least five, six products, three pays already.

28:57 The first product we are expecting '29. If you get there also there's opportunity for exclusivity that product. You are likely to get exclusivity, that's a big thing. But majority revenues are going to be long term after 30. Okay. So how many products are we have in that pipeline? First to file also which you say? I think last time I indicated API multiple products, first two file and a few formulation, but I don't have the number, but at least 50% of our portfolio is either first two file or first two launch. Okay. And one more question just only for Ramakanthi. So Ramakanth, how do we see interest cost from here onwards annualized?

29:42 And second thing, I understand last time, mentioned that we see depreciation side. Okay. I can explain you a little bit. I'm also learning little finance now. So the depreciation, the goodwill amortization, you must have seen every quarter INR 25 crores. So this year, first quarter, 25 crores. Next quarter is going to be INR 10 crores, so close to INR $10.11 crores. After that, you can see that INR 25 crores is not going to reflect depreciation. Third quarter onwards, next quarter, I think you can see INR 15 crores benefit. Third quarter onwards, so the INR 25 crores is going to be bad conversion.

30:31 And the interest rates today, we are working and optimizing a lot on those things. Of course, you can see our finance cost also is coming down continuously. We are trying to restructure where the interest cost. Last year, we did sequent India debt we restructured. Now we are currently working with the Ireland interest restructuring. We are working various things on that to reduce interest burden as well as tax portion. I think you can see next year, it's good. But we are at par with any big companies in the interest. We are not paying too much on those things even today. But we are going to save more on that.

31:32 Thank you. The next question is from the line of from. Please proceed with your question. Yeah. Thank you for giving me the opportunity. Good afternoon, team. Just a couple of questions from my side. First is, as Viyash moves from integration now into much more complex phase of R geographic expansion and M and A hopefully. What are the few nonnegotiable principles that management uses to ensure that growth does not compromise execution, quality and cash generation? Thank you. If I had to put it to three things. One is compliance, no second thought and discussion whether it is regulatory compliance, finance, statutory or quality compliance or EHS.

32:30 There is no second thought on that, the governance thing. And as you mentioned, we are actually going in multiple complex area, but in fact, it's not already we are in most of the things. And most of our team is very well experienced on those things. If you see complex products like Onco, we have been doing last two, three years and the entire team is very experienced. We know the market, we know the products. So that's not the thing. Then the second thing, if you see that combined company overlap is very limited to the API and the formulation is still animal health and human health is going to run parallel. So these are the two, three things, compliance we never compromise, governance we never compromise, of course, the financial discipline also is most important.

33:21 After seeing the sequence story four, five years back, we know what we can do. And we can see a lot of opportunities keep on coming on M and A, but we always look at only whatever is going to fit into our strategic direction defined even our Analyst Day, whether comparing animal or CDMO or actually complex areas, we are going to stick with that. It's not just go and acquire since we our balance sheet is strong, go and acquire to add numbers. That's not the plan. It's only whatever is going to fit into our strategic direction, it's going to do that, whether it is inorganic or organic expansions. Hope I think I clarified the question. Yes, yes. No, that explains. M and A is one of the key areas, obviously, because if you see the history of Sequin, the earlier management used to pay a single digit EBITDA for most of the acquisitions.

34:20 But again, it depends on the quality and the strategic fix. So valuation alone can never be the criteria, but you answered all my questions. And Doctor. Haribabhu, thank you. My second question is, given the long gestation periods and uncertainty in pharma, where, you know, uncertainty in terms of where the downside from major capital allocation decisions can take years to emerge because the game is... The clock speed is such that it's a long cycle game. So capital allocation today may not deliver the the desired outcome or may may not even signal, you know, green or or red for many years. What do you... In that context, what do you consider an appropriate level of personal economic exposure for those making such decisions?

35:14 And does the current ownership in senior management, I know Carlisle has got significant ownership. How do you reflect that principle within the organization, not just at the senior management level, but also at the middle management level? Because whatever as a team, the decision is being made at the management level, then presented to the board, and the downside, if any, may not emerge immediately. That's the kind of question I have. Thank you. So long questions. You for that. First thing is this company, whatever decision we take decision to consider the long term growth for the company, not based on the investor, whether the management or Carlyle or XYZ.

36:01 Whatever we have been doing last two years investment, we never compromise on the short term and long term benefits for the company. So when you say the long gestation period, okay, use capital thing. When you are doing for new company, new setup, for example, if I am doing only I put in separately as a separate vertical, okay, that investment is used, There's a lot of risk involved in that because of discretion period is high. But in our case, if you see today business is 90% is a matured business where we don't need to do too much capital allocation. And whatever we are doing actually, if you look at existing business versus what CapEx we are going to put, it's not substantial that it's existing business is able to take care of all these things.

36:56 So because of that, we have a large portfolio and we have multiple geographies, multiple businesses where there is no dependency on either one country or one product or few products. That's where risk is already mitigated. And our new capital allocation is not that much compared to our existing business. That's where I don't see much risk. Whatever you are putting the CapEx, whatever we indicated, I think INR2500 crores, INR300 crores for a year. That's not the big looking at the company's size and business. So that's where I don't see any risk on that. One is investor perspective or the company perspective, I don't see any risk on that perspective. Looking at the size, our investments, Thank I don't see you.

37:45 Yes. Okay. Thank you, Doctor. Haribabhu. The clarity of thought is amazing and really appreciate it. Thank you so much. That's all from my side. Thank you. Thank you. The next question is from the line of Gentan Shaikh from Greek Capital. Please proceed with your question. Yes. Thank you for the opportunity and congrats on the excellent set of numbers. Sir, one question is on the minority interest. You know, last year we had a 18% minority share. The VIYASH, sorry, pre minority profit, right? How should one look at minority interest going forward?

38:31 We are evaluating No, we are evaluating continuously that. We have minority share into geographies, one is U. S. And Spain. So we since you know that last quarter, we were busy a few quarters with integration. We are busy a few quarters actually to finish our roadmap for strategic direction. Now we have clarity what we are going to do. So we are evaluating continuously whether to we can buy back, that's not an issue today. But still we are exploring whether to buy back today or actually when there is a opportunity to invest M and A to do that now, we are exploring. But next one, two years, it's going to be at 100%.

39:19 That's what plan, next one, two years. We never know. It may happen soon or but the outer limit, I can say two years. So we are going to do that. So meanwhile, we are looking at various opportunities like for recent things. We're also exploring if something comes out to accelerate our strategic growth areas. So we are exploring those things. Maybe we'll come back soon on those things. But annually, how much outlay we should expect for this year or next year in terms of fee minority charge profits. So last year, it was around 18%. How much I don't know... Minority interest, if you look at for the quarter, is around 17%.

40:06 And last year, full year was about 20%. You can assume that it will be in the same range, around 16%, 17% of the total profit. 16% is 17 Got it. Got it. And the CapEx, you mentioned about INR 50 to INR 300 for the year, That should be the number we should work with? Okay. CapEx at minority thing. No, no, the total CapEx is what? No, no, CapEx overall. No, no. Total investments on the gross stock, you mentioned around INR 50 to 300 crore for the year. That should be yes. INR crores. Okay. And sir, if I had to look at the business, the API portion basically, What will be the split between human API and animal API within that?

40:56 And formulation also, if you can provide how much is animal? No, you can see the formulation whatever we reported even the 10 list tag. Europe emerging markets, India together are the animal health. Only just human health, we reported INR26 crores out of actually INR554 crores, INR26 crores for human health formulation. And API, at this point actually INR100 crores run rate at animal health, but it's going to grow now. So today, bigger portion is human, but Animal Health is growing very fast this year.

41:42 Got it. And within the animal sorry, human API, do you see the growth rate to increase? You mentioned some impact likely to positive impact likely to be happening in Q2. But do you see stronger growth over there versus overall business? So Human Health, as I mentioned earlier also, since we moved to more complex areas where products are coming out of patent later, okay? But major growth is going to come from 28%, 29% onwards. But till that time, we are anticipating 13%, 14% growth. Okay. Sometimes if you are lucky to get one or two products, when you're targeting for day one launch, it's ended up actually one player or 10 players. If you're lucky one player, I feel it's a bigger. But looking at my experience, we expect next two years, 13%, 14%. But later '29, since most of the complex products, more than 50% are first to launch kind of things, we'll have bigger advantage on that.

42:53 Animal Health, since it was not yes, sorry? Sorry, the 13%, 14% growth you're talking about the overall consolidated revenue or just the earning VPI? Yes. API. Yohan actually, it's the overall, it can you can take to 13%, 15%, whatever it is. Animal Health is going to be 20% plus, but since it's a contribution is small, actually, you can take 13%, 15% kind of thing. As I said, since most of the products are 80% portfolio, we develop the new products, which are coming out very gently. We don't do mature too many mature products, commodity products. That's not our sort of thing. So we start developing volume mature products. We are more trying to do differentiated products where we can have good margins on that perspective.

43:43 Right. Animal Health formulation, how should one look at overall piece growing? It's good, but we mentioned to you $1,000,000,000 in 2032 altogether, it's going to happen. Got it. Got it. All the best, sir. And thank you, sir. I'll turn the call. Thank you. The next question is from the line of Subhamma Girval from Berman Capital. Please proceed with your question. Hi, sir. Thank you for the opportunity. Sir, I just had one question on Europe. We talked about 18% to 20% growth this year. Is that including the benefits of the new acquisition, the Viyash or will those be over and above this 18% to 20% growth?

44:34 Raj, you want to answer? No. This does not include anything of the acquisition. The acquisition is not yet closed. We expect it to complete. FY 2022 growth, right? Yes. It will the thing. In FY '27, I think a general sort of growth of volume plus price, even leaving out the ForEx should take us into double digits, and then we'll see what comes out of the ForEx. Understood. Understood. And sir, one more question. The Emerging Markets business this quarter grew by 36%. Is it like possible for you to take out this between 100 volume growth and then the pricing growth and then there is some benefit from currency favorable currency, if you can break that out?

45:24 So we say good volume growth last quarter. Emerging Markets volume has grown by 25 plus 25%. So, majority growth came from volume. Okay, of course, there's one or two new launches, but don't expect a volume is going to grow every quarter 25, but we can see the good volume growth in these countries' markets. Understood. Thank you, sir, for answering my questions. Yeah. Thank you. The next question is from the line of Gaurav Shukla from Fin Investor. Please proceed with your question. Thank you. Thank you, sir. Yes. Please go ahead. Please go ahead.

46:20 Mister, we can't hear you. Can you speak loudly? Can we take the next question in the meantime? May I understood? Still, it's not clear. Take next right now. The next question is from the line of Kumar Saurab from Scientific Investment. Please proceed with your question. Yeah. Congrats on great set of numbers, sir. My question is regarding human API. You said we have almost 50% of us to file opportunity. If I'm not wrong, some of those are my record team,.

47:08 The brand TAM is around 2,000,000,000, if I'm not wrong. So if you can highlight what is the target opportunity for us, sir, in terms of opportunity size for this purpose of file and what kind of market share we plan to take in initial years? When you compare brand for API, that may mislead you. Okay? If I put it all our products or development pipeline today, brand is more than 20,000,000,000 kind of thing. But API always you have to discount depending on the API, how much actually it's going to price arose when it comes to generic launch. General APIs are going to price arose by 95%. When it comes to oncology of this Ipotent, we can expect at least 50%, 60% price erosion.

47:54 And the API contribution is around 20% of the formulation thing. So all these things, we always every product, whatever we try to do, we want to do as much as possible, majority market share at least 25%, 30%. But the average we are expecting 10%, 15% market share. And one product actually can do bigger, other product maybe actually depending on the competition. We can expect we target always 10%, 15% market share. But it's very difficult to see based on the $2,000,000,000 actually brand today, then formulation price erosion, then API contribution, 50%, 60% erosion that we need to do product wise. But we see our target is actually try to do day one, where we take reasonable market share and most importantly, sustainability.

48:45 So if we enter day one, the chances of sustainability is high compared to coming as alternate APA supplier. Got it, sir. And sir, my second and last question is, so as you said, next two years, we should expect around 15% to 17% kind of growth. And then some of the first to five launches will happen. So is it like we will have a better runway of growth from 2029 given our 2032 aspiration? And this 2032 aspiration, is it something which we are fairly confident of or this is something which is highly aspirational? Or do you feel this is the bare minimum we will do given things will go on a better track from 2029?

49:32 Better means some of these molecules going live. So I will not go either way, either, okay, too ambitious or too conservative, but we see the realistic if you calculate from FY '27 numbers, 1,000,000,000 is actually working out to 18% CAGR. And we feel that's very comfortable practical aspiration. So and we have clear plans on that both organic and inorganic. There are two things, if I clock, one is 18%. Second thing is looking at our balance sheet, we have flexibility to do some M and A, not just to take up for doing M and A. Doing these together, I am personally very confident to achieve that, okay? But if not more, but definitely that.

50:26 Thank you. The next question is from the line of Mehul from forty Cent. Please proceed with your question. Hello, sir. Good afternoon. Thank you so much for the opportunity. Thank you. Sir, my first question is regarding the acquisition in HDD. Sir, once the acquisition is complete and we are able to leverage the capabilities in other parts of Europe, how much would it add to the top line in the next one year and in the next two years? So it takes normally two years. All the process, it works, you know, once we complete acquisition.

51:16 Mostly, it will be done in next two months to three months. Once you start that, you have to start registering that product into other countries. So our first phase of doing that is wherever we have front end presence like Spain or Turkey or Brazil, whatever is accessible and have market, we are going to do that. So all these process normally takes twenty four months out. Okay, if you are lucky, few things can happen early, but the minimum expectation is eighteen, twenty four months. We can see bigger revenue coming from after twenty four hours. So there's a two way strategy. One is expanding those products into other region wherever it's possible. And we are doing lot of new products we started. Like we said, R and D is ramped up. Now we started developing company and additive products.

52:06 We are getting ready our manufacturing plant by January. So we are preparing all bigger launches with full integration from 2019 onwards. These are the products mostly one or two products are coming '27. It also we are targeting launch that one. So that's the two way, it takes two to three years practically. So you don't expect actually jump from next year. Whatever it is, the natural growth from Italy that's going to grow double digit. But bigger growth is going to happen after two years by the time we complete all these stations and prepare for marketing. Sir, after two to three years, what kind of top line is it completed to? All put together, we mentioned 150 to 200,000,000 company in animal by '32.

52:55 So it's... We didn't work out this particular thing because one is that this is going to use as a launchpad for Europe. You know Europe like how it's going to work when you develop and file the product, you have to start filing one product. And that country when the regulator is reviewing its extent to other markets. So this is going to be the bigger portion, not only by our core products. The intent of acquisition is not only promoting those products. It's using as a launch pad for all those things. I may not able to give you that separately those Biophore products, but we are going to grow bigger actually. Maybe you can expect actually definitely 25%, 30% growth after 2829%. Of course, today also we are growing bigger than that, but the base is small.

53:41 So we see good potential there. Sir, this is very helpful, sir. How much does the API contribute to our top line overall? Overall API contributes if I put this quarter from the time. What $3.83 gross is what you're saying. It's all maybe put together 40% yearly, maybe 4045%. Around 40% you can expect. Around 40% is the current contribution of API to our top line? Yes. Yes. Whatever we assume this year, close to both of it is that you can expect 40 plus percent or In between 40 to 40... 54. Right, sir. And sir, this API, it is partly animal health and partly human.

54:32 Yes. Yes. Yes. Majority human at this point, but animal we are growing. So today it's maybe two third human, one third animal. Animal is growing to grow faster now. And for whatever products we have for animal health is only a 100% API, or is there anything else as well? Animal health, you have bigger formulation. Right? Okay. I'm not getting your answer. Animal health, if you see, our bigger question is the formulation. And we are expanding API now. We have API, but bigger thing is formulation. You.

55:18 That question or something? Don't think. Okay. The next question is from the line from Kiran from Table Tree. Sir, a couple of questions. The first question is our acquisition by Viyash Life. So last time, Sequant acquired Alveera. I mean, we had apart from the purchase price, obviously, we had a lot of issues, structural changes, local market stresses, restructuring, insurance payout. There are too many issues. And that's an experience that India Inc, right, not just pharma or Viyash in particular, but everybody who acquires Europe has an issue. Right? The purchase price looks too cheap, but eventually, the costs are too high to pay eventually, right, in the in the life cycle of the business. So in general, what are the guardrails you've had to purchase Bio For Life? Because our past experience wasn't sequenced through acquisition and the India Inc. Experience for acquiring Europe has been terrible.

56:22 Yeah. You're right. Five, ten years back. So all of... We experienced from that. Right? Even from my side also, we have seen one acquisition. So those days always Indian companies, we want to acquire cheaper and try to manage like India car. It never works out. Now all we experienced on that, what is the complication of it works actually. You can't actually Indianize Europe operations. So when you are working in Europe, you have to understand that Europe business, right, and do it that way. So earlier, quite ten years back, whenever everybody acquired, we thought the products can move to India, and it never happens. So we are very clear strategy on that. Of course, it's a small thing.

57:09 Most important, it's utilize our launch pad and we know. And also there's no manufacturing, it's mostly brands there. We have clear idea with earlier experience. We have taken care of everything. We don't see any issue on that. But now you can see last, I don't know whether you have reviewed last few years, Indian companies operating in Europe are doing pretty well. So it's not only us, but we don't fully own that sensitivity. Got it. Got it. Very heartening to hear, sir. Sir, second question, sir, rate of growth will increase because of patent shift, both on the animal side and the pharma side. And animal side, the latency is happening twenty eight, twenty nine and pharma side is 29, 30. Is that the right way to think about why the growth will accelerate beyond this year?

58:07 Talking API, most of the human API, we have our portfolio development, it's up to 2040. Most of the products are coming to after 2030. Animal Health, they pay since there was some lag, we have taken product development up to 2035. Majority of the products in animal health, the bigger products are coming out patent from '27 to '33. After '33, mostly biological is going on. So we are attacking both actually animal health as quickly as possible. And most important, try to vertical integrate also formulation in that. But any product API, whether it is human or animal health, once you start developing the product, it's a minimum gestational period is three to five years.

58:55 So this company is new company. Viyash, we started two years. We can expect the registration period three to five years minimum kind of thing. So that's how I always say the majority revenue is going to come from 29. It's we can develop and manufacture, that's not an issue. But the registration, tying up with somebody, all and more than that patent expiry, these things will take its own time. It takes minimum five years kind of thing. That's where we see from 2019 onwards. Real revenue product revenue is going to come for us. Got it. Got it. Very helpful, sir. Thank you so much. Congrats. Thank you.

59:41 Ladies and gentlemen, that was the last question from the participant. Now I would like to hand over the conference to management for their closing comments. Over to you. Thank you, everyone, for our continuous support. I can tell we are in a good position. So our team is committed. We are going to do good. That's what I can tell you guys. Thank you so much. Thank you. On behalf of Sequin Scientific Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.