Q4 Red Sea + Biosecure tailwinds vanished.

On the GLP capacity buildup, what is the capacity buildup that we are doing? Can you give some update on that front further?

On GLP-1s, we have already completed construction of a pilot plant. We have also completed one of our commercial building, which has several large-scale SPPSs, which is basically designed based on one of our customers' requirements. I'm not at the liberty to speak about capacity created, but the validations are going on as we speak right now because pilot work is done, now it's moving towards validations.

The 3 dedicated custom synthesis facility, what we have got the contracts for and which are likely to see the commercialization starting from the fourth quarter of FY '27. So any of those are relating to peptides?

I cannot comment on that, but what I can tell you is it's a mixture of everything. It's also in chemistry. There are several projects which are involved in it.

Relating to this India EU FTA, what we have seen, any opportunity that you identify out of that in the medium term?

It's too early for us to comment on that. It just happened recently, right?

Safe to assume that 3 to 6 months to get this process and then subsequently, if the regulatory approval comes in place, then the volume discussion starts happening. So effectively second half FY '27 as a broad time line?

It depends on product to product, right? Some we already completed validations in this quarter. Some validations are going on. Some we planned it for the next month. Based on whenever it is being completed, we will immediately supply all the data and the product to our customers. While these are being done, we will start negotiating and planning for what quantities they would be requiring and from when we should be starting commercial supplies to them.

On the quarter-on-quarter basis, the product mix remains almost same at 55-45. So on a quarter-on-quarter, what is driving this improvement beyond forex INR depreciation? Has there been significant benefit coming from the Kakinada unit?

There is always product lumpiness. There are some products which would have higher margins, some products with lower margin. We would prefer you looking at full year growth rather than quarter-on-quarter because certain shipments would happen in certain quarters and wouldn't happen in certain quarters. So you need to look more from a 9-month period point of view rather than Q3 to Q2 point of view.

The molecules that we are believing would get commercialized over the next 1 year, what proportion would be already approved for the innovators (additional source) and what proportion would get first-time approval?

I'm sorry, I cannot answer this question because we are bound by CDA. I cannot disclose their plans and at what stages any of our customers are. At an aggregate level, Divi's works in 3 segments: innovators in Phase III/Phase II up to launch; secondary source after their primary source is in-house; and late life cycle support during the last 5-6 years. Most of the molecules fall in these 3 phases.

Like which bucket would have the highest share for the molecules getting commercialized in the next 1 year?

See I told you that there are 3 molecules. If I tell you the ratio, even the innovator would understand, right? I have to be - if they were like 10, 12, I could easily say a ratio. I gave you broad - I think that's fair enough.

Don't you think this would also benefit us on the generic side of the business where we have China as a competitor because their competitiveness also goes down?

We are seeing this more from chemicals and the raw material point of view. There are some exceptions that they have given, and that happens to be more from API and the end product. Because most of the basic chemicals that are used in the pharma industry are also used in the agrochemical industry. So that's where we see most of the effect coming from. But whereas intermediates and final APIs, we don't see that much of an effect.

On Unit 3 backward integration strategy - is there a utilization level that Unit 3 is benefiting in our numbers? Is there a way for us to quantify it? Once Unit 3 gets approved for moving to API, does that backward integration benefit go away?

Unit 1 and Unit 2 in the past were making their own pre-chemistry and backward integrated raw materials. Once Unit 3 started, phase-wise, we have been emptying Unit 1 and 2 as and when there is demand. New CS projects coming in are going into already existing GMP facilities of Unit 1 and 2. We already started qualifying certain intermediates, which once approved by FDA over time, maybe in the next 1, 2 years, if Unit 1 and Unit 2 are full of capacity, we will then move to Unit 3.

On dedicated facility - do you just need go ahead from the clients to start supply or these facilities also need to undergo some sort of GMP inspection?

This is something hard to say. We have just been inspected in the last 1 year at both the facilities. So will the agencies look at it as okay they have seen us once they would go ahead, or would they call it for a pre-inspection product-specific inspection. This is hard for us to say. Once our customer files, it would either trigger an inspection or the agencies will look at it as okay we have just seen the facility, so let it go through.

On the dedicated building block for peptides with various SPPS reactors - will that be good enough to cater customer demand for next 4, 5 years? Or may you need to expand the capacities?

We are working with customers on several projects at various phases. There are several projects from several customers where we are working on the different phases of clinical trials and a lot of pilot work has also been going on. As and when we have demand, we will keep increasing capacity or building new blocks whenever the demand and decision arises. For this customer, what we have dedicated, it is based on what his requirement and his designs are.

Is this like an injectable product or the oral peptide product that you're working for?

I'm sorry, I cannot discuss this.

How are these custom synthesis products going to have impact on the company's overall margin trajectory? Is there a substantial improvement in profitability?

I would say that's all we hope for. As our Managing Director would say 'the sky is the limit for you to dream'.

On growth outlook - 8.5% constant currency growth, you talked about a 10% kind of growth. Given one of our top products is going more generic, are there enough other things in the pipeline to mitigate?

Divi's have been in CS since 2000, and it's not that CS is just 1 product or 2 products, it's a vast basket. Products do start in the patent phase and go under expiry, and we do have other products that keep coming in. So it's just an ongoing process for us.

On generics - given China tax rebates being reduced, should we down the road this year see generic pricing actually improve on a generic API?

This is too early for us to say that because right now, they're talking about it. We have to see how China will react towards it. Volume-wise, our customers have been with us. We have not lost any volume. Actually, we have increased volume in generics. And we are having a healthy share of market share in several countries. So I'm quite wishful that this year, a correction should take place at some point.

On change of GLP-1 manufacturing to reduce cost - mix of LPPS versus SPPS changing. Are you involved in that kind of discussion with any customer that you can change the process?

It's hard for me to comment on what you asked. But what I can say is we're actively involved in manufacturing fragments for several MNCs. We're also involved in their new technologies, whatever they are looking at, and we are actively engaged with them at various phases because we are also their support system going forward, both at LPPS and at SPPS.

Our gross asset turnover ratio was 1.2 in FY '25. With visibility of revenues from dedicated capex and pipeline in CS segment, can it go back to historical high level of 1.5 to 1.8 level in next 4, 5 years?

Based on the forward-looking statements and a few clarifications that Dr. Kiran Divi has provided, we can say that's what we are aiming at and that's what we are trying to go towards.

We have incurred capex of around Rs. 1,500 crores in first half of FY '26 vs guidance of Rs. 2,000 crores. What is the targeted capex for FY '26 and hint for next couple of years?

We did intimate that we are doing a capex of Rs. 1900 crores to SEBI in the last many months. We are going through quite a few designs and phases at Unit 1 and Unit 3, mainly at Unit 3. As and when we come up with the futuristic outlook of where the capex is going to be heavily invested, we will come out with the SEBI intimation. If you exclude the Custom Synthesis project, I would say we would prefer looking at the historical numbers and the rate being approximately the same.