Q1 2027 Gufic Biosciences Ltd Earnings Call
Speaker #1: Ladies and gentlemen, good day and welcome to Gufic Biosciences' Q1 FY27 earnings conference call. As a reminder, all participants' lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Speaker #1: Should you need assistance during this conference call, please signal an operator by pressing star, then zero, on your touch-tone phone. Please note that this conference is being recorded.
Speaker #1: I now hand over the conference to Ms. Amisha from Gufic Biosciences Q1. Thank you, and over to you, ma'am.
Speaker #2: Thank you so much. Good afternoon, everyone. Hi, Amisha, company secretary. Welcome you all to the investor call of Gufic Biosciences Q1 financial result for first quarter of FY26-27.
Speaker #2: The press release and investor presentation relating to today's results have been submitted to the stock exchange on Friday, and are also available on the company's website.
Speaker #2: Let me begin by introducing the management team joining us on today's call. We have with us Mr. Pranav Choksi, CEO and Whole-time Director; Mr. Devkinandan Runta, Chief Financial Officer; and Mr. Avik Das, Head of Investor Relations.
Speaker #2: Before we begin, I would like to remind everyone of the safe harbor statement. Certain comments made during this call may contain forward-looking statements. These statements are based on management's current expectations and are subject to various risks and uncertainties that could cause actual results, performance, or achievements to differ materially from those expressed or implied in such statements.
Speaker #2: Participants are advised to review the relevant disclosures and risk factors available in the public filings. With that, I would now like to hand over the call to Mr. Avik for his opening remarks.
Speaker #2: Thank you.
Speaker #3: Thank you. Thank you, Ami, and good evening, everyone. Thank you for joining us. Starting with Indore, the plant is running to plan. Qualification and validations are behind us.
Speaker #3: Product tech transfers are progressing on calendar. We have set out, and our contract clients continue to migrate across from Navsari. What is new this quarter is capability: the depot and microsphere suite are nearing completion, so during this year, we will manufacture long-acting depot presentations in-house at Indore itself.
Speaker #3: We have also begun setting up a lipid-based antifungal by both an alternate approach, over and above the conventional route. Very few sites in India run either, and both are targeted to be operational during this year.
Speaker #3: In critical care, we launched our monobactam and beta-lactamase inhibitor combination immediately upon expiry of the innovator patent, and it is now introduced across corporate, tertiary, and secondary care networks.
Speaker #3: Early acceptance in large institutions has been encouraging. The division's focus this year is on deepening and widening coverage within the hospital groups we already serve, rather than adding portfolio width.
Speaker #3: Sparsh has completed a full quarter on the rebuild channel. Outstanding days are within standard trade terms. Hospital onboarding has resumed at scale, and coverage is now balanced between nursing homes and corporate chains.
Speaker #3: Two points worth noting are: focus has moved towards our own manufactured brands, which help both margin and supplier reliability. Also, the dual-chamber bag is gaining acceptance in major institutions.
Speaker #3: The division also entered Northeast and Jammu & Kashmir, applying the new channel architecture from the outset. Its launch pipeline for the year is the widest it has ever carried.
Speaker #3: In women's health, Ferticare retains its leadership in recurrent implantation failure. The Puregraph group secured entry into major corporate IVF chains this quarter. Investigator-led studies with senior Indian clinicians have begun.
Speaker #3: Zenova continues its planned shift away from injectables towards prescription-led chronic therapies. The antioxidant range we introduced is now a meaningful growth layer, and the two first-mover launches are ahead.
Speaker #3: One in osteoarthritis, and one addressing the metabolic ovarian segment. On botulinum toxin, we remain the number two brand in India in toxin type A, manufactured from our own strain.
Speaker #3: The in-licensed filler and biostimulator portfolio is progressing through its supply and regulatory steps for launch during this financial year, with no significant capital expenditure from us.
Speaker #3: On the therapeutic side, the franchise continues its expansion beyond the core neurology, into urology, ophthalmology, pain management, as well as neurosurgery. In the nutraceutical and Ayurveda division, our lead joint care range outperformed its relevant product market this quarter.
Speaker #3: Our acid blocker continues to build gastrointestinal therapy into a second pillar alongside pain. And the division has prepared its first entry into an allopathic pain management segment, which launches during the year.
Speaker #3: On the international front, the model change is now producing fee income alongside supply revenue. During the quarter, we progressed licensing in Europe, executed a contract manufacturing and licensing arrangement with a North American counterparty, and received our first contract manufacturing orders in Australia.
Speaker #3: On our registrations front, we secured approvals across eight countries during the quarter. And in one of them, five presentations in a single therapy area were cleared on the same day, which is exactly what the therapy basket approach was built to do.
Speaker #3: So the platform is in place, and the pieces are moving to schedule. The medium-term expectations, which Pranav and Runta sir have set out in previous calls, are unchanged.
Speaker #3: With that, I'll hand over to Runta Sir for the finance update.
Speaker #4: Thank you, Avi. I will now give the highlights of Q1 of 2627 versus Q1 of 2526. Total revenue from operations in Q1 of 2526 was ₹226.9 crores, compared to Q1 of 2627, which was ₹260.8 crores.
Speaker #4: The EBITDA for Q1 of 2025-26 was ₹33.2 crores, whereas for Q1 of 2026-27 it is ₹47.2 crores. EBITDA margin in Q1 of 2025-26 was 14.6%, whereas in Q1 of 2026-27 it is 18.09%.
Speaker #4: Profit before tax in Q1 was ₹16.3 crores, whereas Q1 of 2027 is ₹30.1 crores. The PAT margin in Q1 2026 was 7.1%. In Q1 2027, it is 11.56%.
Speaker #4: The profit after tax in Q1 of 2526 was 12.1 crores. In Q1 2627 is 22.46 crores. The PAC margin in Q1 for 25 2526 was 5.3%, whereas in Q1 2627 was 8.61%.
Speaker #4: Now I'm giving the financial highlights of Q1 2027 versus Q4 of 2026. The total revenue for Q4 of 2026 was ₹252.1 crores, whereas for Q1 of 2027, it is ₹260.8 crores.
Speaker #4: The EBITDA margin in Q4 of 2526 was 44.7 crores. Q1 of 2627 is 47.2 crores. EBITDA margin in Q4 of 2526 was 17.74%. Q1 of 2627 is 18.9%.
Speaker #4: PAC margin profit before tax in Q4 of 2026 was ₹27.6 crores, whereas Q1 of 2027 is ₹30.1 crores. The PAC margin in Q4 for 2026 was 10.96%.
Speaker #4: Q1 of 2027 is 11.56%. The profit after tax in Q4 of 2026 was ₹20.6 crores, whereas Q1 of 2027 is ₹22.46 crores. Thank you.
Speaker #1: Thank you. We can now proceed to the Q&A session.
Speaker #2: Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.
Speaker #2: 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.
Speaker #2: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Bhavya from Samasa Capital. Please proceed with your question.
Speaker #4: Yeah, thank you. Am I audible?
Speaker #2: Yes, you're audible.
Speaker #4: Yeah, congratulations. I just wanted to know two things on GLP. Are we also participating in terms of our own brand? And also, has the third-party GLP we were manufacturing started coming into our revenues?
Speaker #5: Yes. Hi, Bhavya. Pranav here. So, in terms of GLP-1—specifically semaglutide—as we have mentioned in the calls before, we have partnered up with Hetero.
Speaker #5: So Hetro got their permission in May 2026. So our traction of their revenues was residual in Q1. But yes, to answer your question, we have started the CMO operations, which will, I would say, gain some steam in Q2 but have further steam in Q3.
Speaker #5: In objective would be CMO in the domestic space on maybe a 30% level, but 70% we hope at the end of the year would be a capacity use for the international market—where Hetro and Gufic as a single channel have filed in more than 22 countries.
Speaker #5: But of course, our revenues would be purely as a CMO. Again, I'm reiterating, we are not going to do any front-end, neither in India nor abroad.
Speaker #5: We will be using this as a CMO opportunity to support Hetero, like we did in the past with Remdesivir, and they will be front-ending the product internationally as well as doing CMO in India.
Speaker #4: Understood. And also, in the international market, there was a change in model from a distributor-led to an IPO. So, I mean, if possible, can you just explain how that changes things and how that kind of benefits us?
Speaker #5: Oh, sorry. Can you repeat your question again? I lost your voice in the middle.
Speaker #4: No, I was saying in the presentation, you had a specific model for international, from distributor-led to IP-led. So can you just...
Speaker #5: So, I think I got your question. Correct me if I misunderstood. So your question is basically that, in our presentation, we have mentioned we are going from a B2B as well as to a B2C. In other words, earlier we used to just manufacture products and give them to certain distributors in the emerging markets.
Speaker #5: Now, our strategy specifically for markets like Africa, Southeast Asia, as well as South Asia—Africa is where we have a front-end, I would say, ambition.
Speaker #5: So just to add to that, we have just recruited a team which is based in Mexico and one person who is based in, I mean, Africa, recruiting for the people.
Speaker #5: One person who's based in the Philippines, and two more people who have an African and a Southeast Asian, I would say, legacy in Mumbai.
Speaker #5: They will be seated in Mumbai, but of course, traveling 15 days a month. So gradually what we are trying is, you know, as we have done in Europe in the past—by trying to get our own subsidiaries made in Ireland and the UK, where the marketing authorizations remain with us.
Speaker #5: In these markets also now—actually, not now, but for the last two and a half years—we have always been saying that we are trying to get registrations in.
Speaker #5: So, some of our registrations have started coming in, and we hope that in this coming year and next year we should have more registrations in place.
Speaker #5: So right now would be the best time for us to actually have a separate team. Of course, in some countries, maybe start off with the distributor field force till we reach economies of scale.
Speaker #5: Wherever we have enough registration and economy of scale, we would like to deploy our own, I would say, field experts, which help us to get better pricing.
Speaker #5: So, you know, in some areas, if we are getting, let's say, a 50/50— I mean maybe anything around 40% to 50% margins— we hope we can push them upwards by 15% to 20% more when we have our own field force. At the same time, also the IP and the trademark belong to us.
Speaker #5: It's also creating our own IP and, you know, intangible assets going forward. So that's the strategy which we have started doing since March, once Dr. Raja started coming in last year.
Speaker #5: We started first in Europe and then, this year, in emerging markets. So this recruitment has happened in Q1.
Speaker #4: Okay, that was very helpful. I have a few more questions—I'll get back into it. Thank you.
Speaker #5: Sure.
Speaker #2: Thank you. The next question is from the line of Aarav, an individual investor. Please proceed with your question. Yes, you're audible.
Speaker #5: Sir, I actually wanted to ask—first of all, congratulations on the quarter. I wanted to ask if you are expecting a certificate for the Europe export.
Speaker #5: Any update on that? So, yeah, I think in Navsari we already have an EU certification, which we have already continued for the exports. The EU certificate I think what we are referring to in the presentation would be for Indore.
Speaker #5: So, the Indore certificate—I think we are just waiting for the feedback from the authority. There was some compliance, which we already have replied to since the last two to three months, and even the finalist data also has gone.
Speaker #5: So, hopefully in the next, you know, maybe a month or two, we should be hearing something from them. Okay. And sir, about the Indore factories—it was unused, it was only used at like 30% capacity. Are we expecting a jump on that?
Speaker #5: Yeah, of course. So if you see quarter by quarter the capacity utilization is going up as more and more products for the domestic or for CMO or for our own branch or for that matter wherever certain two three countries which we have just been able to go for the transition and I would say cite addition we have already started that apart from that we have taken validation batches so in terms of pure capacity expansion yes the amount has gone from 18 to 22% last year 20 to 25% last year then this year close to 30 35 and hopefully like I said we should end up the year on around 40 45% capacity utilization so we are on course for that margin expansion using the Indore facility would of course come once we have what do you call our you know EU in place EU markets EU certification really opens a lot of markets for us so we are just waiting for that and also apart from that one of our I would say partners have also triggered their I would say submission for US from our site so we expect them also in the next you know I would say a quarter or two to visit us as per the goal period so yes we are looking for all these movement of export markets which would help us to not only utilize the capacity but help us in our margins also.
Speaker #5: Yes, sir. Regarding the margins, from June 2023 to—I think—September 2024, we had an operating margin of 18%, but it dropped after that. But now it is 18%, so is 18% the new normal margin for the coming year?
Speaker #5: Yes, and I'm sure I explained this in the last two calls also, because in the period which you have mentioned, at that time the total expense of Indore, as well as the depreciation and the interest, were being capitalized.
Speaker #5: So, hence, all those factors were till, I believe, October 2024, or that Q3 2024, were part of capitalization, and that's why after that you saw a drop post Q3 and Q4 2024.
Speaker #5: But now, with capacity utilization, natural business progression, and export margin expansion along with the domestic business also, what you are seeing, as you rightly said, is, I would say, the start of the improvement of margins going forward.
Speaker #5: Yes, okay. Thank you so much. That cleared up a lot. Thank you.
Speaker #2: Thank you. The next question is from the line of Agam Shah, an investor. Please proceed with your question.
Speaker #5: Yes.
Speaker #4: Just two questions. One, if you can, you know—it may be still early, but can you elaborate on the toxin type, which we did last quarter with the Canada fillers thing?
Speaker #4: How can it scale up this year in terms of revenue and going ahead? And one more question on the GLP-1: you said you're doing the CMO route, you have partnerships, so how much revenue or how much growth can it bring this year?
Speaker #5: Sure. So, the first question is about our aesthetic division. There, I think we did the tie-up last year for the fillers. The fillers, as a category, complement our Portland toxin products because toxin and fillers are two important tools in the hands of aesthetics practitioners for their therapy.
Speaker #5: So, the fillers market in India is around ₹200 crores. I think this is as per the import data and other data which we have derived from.
Speaker #5: So, we feel that this filler market is much bigger than the toxin market as of now in India, and anywhere we used to go to meet our doctors, they always, you know, expected the same company to have a toxin and a filler.
Speaker #5: So you know, this just helps us in our practice. It helps us in our training. It helps in knowledge dissemination. And we just didn't want to tie up with any other filler provider.
Speaker #5: So, we are fortunate enough, and you know, I and my team did a great job that revenues Prolinium from Canada, who's number two in the US and also present in more than 30 to 33 countries in the world, they have selected us to partner with them for India.
Speaker #5: So we feel that the revenue would be captured maybe by post-December because we have started the registration process in Q1—sorry, Q4 last year.
Speaker #5: So, we feel that maybe by Q2 or the middle of Q3 we should get the registration. And we hope that at least by December, if not December, maybe January, we should launch the filler in the Indian market.
Speaker #5: So our first year projections are are decent but let's again instead of me giving you numbers I've given you total market numbers and we hope that with the help of these fillers we can also not only strengthen our number two position but very close to you know very close we can grab the number one position in terms of toxin and fillers in the next you know three to five years in India.
Speaker #5: So that answers, I think, part one of your question. Part two of your question is about GLP-1. So, yes, in GLP-1 again, I reiterate that our focus is purely on CMO. In Q1, also, we had a 10- to 15-day planned shutdown because we were introducing the new machine, assuming that in March Hetero would get the permission. And Hetero got some part of the, I would say, strengths of semaglutide approved in May, and some other strengths also are in the process of getting approved or have been approved last month.
Speaker #5: I'll check and get back to you. We hope that the traction will pick up from Q2. Some traction has happened in the month of July.
Speaker #5: Much more we see in August. We hope there's, again, some media fills involved, by which the plant will be closed for five days and there are visits. Q3 is when we will see the actual traction happen.
Speaker #5: So again, in terms of numbers, they would be part of our 15% year-on-year growth, which we always tell people, and they are already embedded in this.
Speaker #5: And again, I'm seeing our role is purely as a CMO. We have no front-end plans or revenue forecast for the GLP-1 on our own.
Speaker #4: For docs also, and are you being conservative when you say you want to grow by 15%?
Speaker #5: You mean 15% euro as a company? Yes. I'm not being conservative because there are some product mix we are also leaving out and we'll be getting away which are low yielding.
Speaker #5: So, I would say 15 to 20% is what we say we should grow year on year, overall as a company. Yeah.
Speaker #4: So, so, so is it that maybe from next year you'll be reaching that inflection to grow beyond 20%, or has the business just said that we'll be growing only at 15-20%?
Speaker #4: So the thing I'm trying to understand is, is it somewhere or is it something? I mean, can we push the pedal and, you know, grow beyond 20% at the scale we are? It does look like, you know, 20% plus is achievable.
Speaker #5: All right, so I think I would love to give you any other comment right now on the call. Otherwise, our efforts are on to grow much beyond, but 15% to 20% is what we commit to you—that would be a bare minimum.
Speaker #4: Okay, okay, okay. And Butox, are we launching in export markets?
Speaker #5: We have started the process of registering Stanox. Again, Botox is not our brand name; that's from another seller. So, Stanox is our brand name.
Speaker #5: So our botulinum toxins, Stanox and Zarbot, we are in the process of registering in some countries, which takes around 12 to 18 months depending on the different geographies.
Speaker #5: But the limitation would be our facility. Our current facility is only WHO Phase One with limited capacity. So we are, right now, looking to register them only in the Southeast Asian markets and African markets to start off with.
Speaker #5: For the other global markets, we have a strategy—maybe post next year—once we see further cash flow coming in.
Speaker #4: Okay. Okay. And as an indoor, are all the capabilities now operational, or is there something yet to come in Q2?
Speaker #5: No, indoor as a unit is completely operational. What I think Avi meant from his call is that there are different product lines which we'll keep on introducing.
Speaker #5: So earlier, Lyophilized liquids were introduced in the form of small molecules. There was one GLP-1 validation batch taken last year in the last two quarters, and this year in Q1, we have initiated, I would say, the installation and qualification of the depot as well as the liposomal injection.
Speaker #5: So these are just new product lines which we'll keep on adding to the indoor facility. It's not that any new infrastructure or equipment or anything of that sort is required, or any major capex is being done.
Speaker #5: Is it that in the existing capex, we are just adding product lines—nothing else?
Speaker #4: Okay. Okay.
Speaker #5: Yeah.
Speaker #4: Got it, thanks. I'll join the queue.
Speaker #1: Thank you. Ladies and gentlemen, anyone who wishes to ask a question, please press star and one on your touch-tone telephone. To ask a question, please press star and one at this time.
Speaker #1: The next question is from the line of Nitya Shah from Kamaya Kya Wealth Management. Please proceed with your question.
Speaker #5: Hi. Congrats on a good set of numbers. I saw in the presentation that there was a mention of a tie-up with a global health organization. Could you please expand a little bit more on that? What is the opportunity here as you get access to 109 countries?
Speaker #5: Actually, Avi, can you refresh me—what was this tie-up about? Is it in which sector?
Speaker #3: This was with respect to some of our anti-fungal antibiotics with CHAI.
Speaker #5: Okay, okay. So yeah, so for you, there are global types— inwards and outwards—so I had to ask this question, please pardon me. So, in terms of the special type which you're referring to, is that for the European markets? And, apart from the European markets, there are these specific markets for the liposomal product, where we have signed up with the CHAI Foundation for liposomal amphotericin B, and they will help us to access more than 100 markets for the molecule of liposomal amphotericin B.
Speaker #5: For that, there are certain bioequivalence studies which will be done. So, we initiated this already last year, and I believe by August or September we should have the studies ready. Then we'll be filing it for further submission to WHO PQ, as well as to other countries.
Speaker #5: So this is a relationship, and we hope that this molecule will then be taken up. This molecule is from Navsari itself, and now we are in the process of introducing the same to Indore also.
Speaker #5: Okay, understood. Yeah, that's it from me. I just wanted clarification on this. Thank you. Yeah.
Speaker #1: Thank you. The next question is from the line of Arvind Arora from A Square Capital. Please proceed with your question.
Speaker #5: Hi, thank you for the opportunity. So, with the current capacity, what could be the peak revenue without any further capex? Is it near to 2,700 approximately?
Speaker #5: So I think before I ask Rungta sir to answer this question, just to tell you that the revenue would depend on the number of vials the product makes, and there are several permutation and combinations there.
Speaker #5: However, considering the current, I would say, average revenue per vial that we already have as per legacy, Rungta sir will reply to your question.
Speaker #3: Basically if you see the expected revenue from our side for 26 27 will be in the range of around 1100 crores. And you multiply it by every 15% increase over year two years you will able to get the revenue because 1100 into 15% 1250 then 1450 then it can go up to maximum it can touch up to 1600 crore with existing facilities.
Speaker #5: Okay. One answer, I think it's mentioned that we will be closing our capacity utilization by the year-end at 40 to 45%, correct?
Speaker #5: And if I extrapolate that, then the number would come near to 2,700. No, actually, that's—yeah, sorry, go ahead, Rungta sir. Then I'll answer this question.
Speaker #3: I don't understand what 2700 means.
Speaker #5: So I think what I'll come back to, what we are referring to, if you see, 40 to 45% can be of a 10 ml vial for a pantoprazole, which might be giving us a revenue of around 60 to 80 rupees per vial.
Speaker #5: However we are also trying to improve the what do you call the product mix by which we come up with molecules which are costing maybe you know anything around 300 to maximum to 1000 1500 rupees per vial and that's why the introduction of you know depot long acting injectables as well as liposomals.
Speaker #5: So, it'll never be a single category—always the product mix of all these things. So, what Rungta sir is trying to say is that, you know, Navsari had mostly capped off at around 800 as the total capacity—maximum extraction—which was possible.
Speaker #5: Of course, toxin and 10 ms were the only two blocks which were not saturated, so we could go to around maybe 900 or 950.
Speaker #5: Of course, in toxin there is no limitation. It's more about market creation. Otherwise, without toxin, it would be around ₹800 to ₹900 crores maximum, where the capacity would be maxed out.
Speaker #5: So, in indoor, anything around ₹800 crore to a maximum of around ₹1,200 crore, depending on the product mix—that's the maximum, I would say, capacity extraction. I mean, I would say, revenue extraction possible from the current investment, what we have done, without any capex.
Speaker #5: So, the total capex is around ₹300-odd crore. I think the exact figure is again mentioned in the balance sheet. But we feel that anything around ₹800 to ₹1,000 crore, or ₹800 to ₹1,200 crore—again, depending on the product mix, the different geographies, and the improvement in product basket that we do—that is possible from Indore.
Speaker #5: So, totally, when I add both of them up—800 plus around 800, plus 1,000—it comes to around 1,600 to 2,000 crores as the maximum capex.
Speaker #5: I mean the maximum revenue which is possible with the current product basket and current legacy. If you also refer to our presentation, that's what we also mentioned—that what we were doing as B2B, we are now trying to also change to B2C.
Speaker #5: So, wherever possible, what we were getting maybe an X price a year—now with us going with our front end in those certain markets, hopefully in the next one year, two years, three years, four years, we can get at least 2X, 3X, depending on having our own field force and our own penetration.
Speaker #5: So that will be another natural progression, which adds. Also, then, you know, in licensing, product mix, new product addition— all that adds furthermore.
Speaker #5: So answering your specific question that with no capex keeping in mind the current product mix keeping in mind the current realization per value then we are looking at anything around 1600 to 1800 going forward.
Speaker #5: However, efforts are underway to use the same infrastructure to make product basket changes, which will allow us to extract further revenue.
Speaker #5: So that is how the operation happens. Regarding the capacity that I mentioned—again, I'll repeat that—the 40 to 45% is where the capacity utilization would be, on the current product mix, which are mostly at the ₹80 to ₹100 level.
Speaker #5: We hope that, going forward, with the product mix changing, we go to around 300 and 400 rupees, and eventually then to an average, you know, 500-rupee per vial model. Then another, you know, price benefit or revenue extraction is possible.
Speaker #5: So, I hope I've given a long answer, but I hope it gives you a good understanding of how the revenue projects. Yes. Yes.
Speaker #5: Yes, fair enough. Yes, thank you. Thank you so much, and all the best. Yeah.
Speaker #1: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. To ask a question, please press star and one now.
Speaker #1: The next question is from Amaya of Value Equity. Please proceed with your question.
Speaker #5: Hi. Am I audible?
Speaker #1: Yes sir you're audible.
Speaker #5: All right. So, my first question is in the same spirit. In the annual report, I've seen that the company has seen substantial employee addition. So I wanted to know, what is the strategy here?
Speaker #5: Is it more linked to indoor, or as you had initially highlighted, on the export side you are taking in multiple folks? So what are the kind of targets that you are setting with this kind of employee addition?
Speaker #3: So, yes, a majority of it would be with the indoor addition, as the capacity, I would say, is going up and also as product baskets are being added.
Speaker #3: That would definitely be one of the things. The other thing we are also adding is, when we go into the international market—which we will—but the international market would not be more than, I would say, 2025.
Speaker #3: There are other operational I think team members regularity team members also comes up but I would say the majority chunk would be it would be indoor as well as maybe just like say around 50 to 60 people which would be added on a domestic business side in terms of domestic expansion.
Speaker #5: Okay. And what are the specific—like, because the kind of addition—do we have in place some kind of metrics that we use to measure productivity from these incremental employee additions? Because it's quite a large number, if I take it in context of the previous years' additions, right?
Speaker #3: So one of the reasons it also might be is that in certain core areas where we had a strategy in indoor, you know, we had certain core areas where people were put on training first, and they were first part of a contract and then they were taken on board.
Speaker #3: So you must have seen that transition also happening in terms of the people coming on payroll. So it's not something which is just added as such in a big way, because if you see, our employee cost is still growing at the same percentage.
Speaker #3: We just, I think, have certain people on contract, not only in indoor but as a strategy in Navsari also, which earlier, for, you know, visual inspection, would be part of our packaging, or would be part of maybe a core— you know, which is linked to quality and efficiency.
Speaker #3: Those people have just been decided to be taken on board to ensure that consistency, as well as the output both in terms of quality management systems and as well, is consistent.
Speaker #3: So that is one step which we took, which you might have seen, that increased last year. But that would be a last year phenomenon.
Speaker #3: This year, you would not feel such a huge addition happening on. So, that was a one-time thing.
Speaker #5: Okay. And my second question is on the indoor utilization. How do we look at—like, in your mind, what would be the ideal production mix maybe over the next three or four years? What’s the kind of ideal mix that you’re targeting to get that better operating leverage from indoor?
Speaker #3: So, if you see now, we have around four lines there. The fourth line is of ampule, which I'll talk about separately. The third line is of suspension and liquid vial, which we feel that with certain contracts and certain projects, we should have suspensions and liquid formulations, which would, I hope, in the next three years, come close to 80% capacity utilization.
Speaker #3: The first two lines are basic for lyophilization, which is our core business. So, there we have—right now, we had small molecules; now we are introducing the depot and the liposomal products also from Navsari to do capacity expansion there.
Speaker #3: So there also, since we have, you know, out of the two lines, we have a total of six lyophilizers, where four lyophilizers have a 100,000-vial capacity and two lyophilizers have a 44,000-vial capacity.
Speaker #3: The two lyo, which are 44,000 vial capacity, will be ones which will be for more high-value complex injectables, as well as, you know, even small volume products in anti-infective or any other critical care space which are very unique in their offerings.
Speaker #3: And in the four lyophilizers, which are quite big in terms of output, we aim to do also those basic commodity but at the same time essential products, also from a PPI, from a large-selling antibiotic to an antifungal and so on and so forth.
Speaker #3: At the same time, there will be these depot products and these liposomal products, which also will be added on one of those big lyophilizers for capacity expansion, which is where the current validation batches are happening.
Speaker #3: So we see a product mix of around you know like a liquid would be 20% in indoor a liophilization would still be around 50 60% but the remaining 20% would come 20 30% would come from the you know the complex injectables also.
Speaker #5: Okay. So would it be fair to say that, from a mix point of view, maybe by the midpoint of FY28 we would be starting the real operating leverage gains?
Speaker #3: I hope before that, because there are other things also coming in. So I hope before that we can see something. But you mentioned mid '28, right?
Speaker #5: Yeah, mid-2028. Maybe, maybe a year out from now for that.
Speaker #3: Oh, yeah, yeah, yeah. You meant mid 2028 financial year—sorry, 2027-28 financial year. So yes, you can say by mid-2027-28 financial year, the leverage should start kicking in, in your view.
Speaker #3: Yes.
Speaker #5: All right. Thank you. Thank you so much.
Speaker #3: Yeah.
Speaker #1: Thank you, ladies and gentlemen. That was the last question from the participants. I now hand over the conference to Ms. Amisha for closing comments.
Speaker #1: Thank you, and over to you, ma'am.
Speaker #2: thank you. Thank you Par and thank you everyone for joining us today. If you have any additional questions or you would like to have any further information with regards to this call please feel free to get in touch with the IR team.
Speaker #2: We will be happy to assist you. Thank you once again for your participation, and have a great day. Thank you.
Speaker #1: Thank you. On behalf of Gufic Biosciences Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.
