ARV stabilization narrative quietly raised from 2,500 to 2,600 cr.

Can you add some color and help us link Slide 14 (30% increase in continuous flow, 40% increase in biocatalysis), Slide 25/26 (1.5x expansion in client-base YoY, 20 new projects in human CDMO)? How can we leverage our ex-China leading position in enzymes / continuous flow to secure partnerships?

The leveraging of our enzyme engineering and manufacturing capabilities in our integrated offering is quite visible now. We have many projects at different phases where we are doing multiple biocatalytic steps. And some of the enzymes are manufactured in our bio facilities in Bangalore. And the trend is increasing. We also started developing our own enzymes for our big pharma partners. The overlap between chemistry and biology is a clear winner.

Outlook on animal and crop science CDMO, now that we are commercial across both capabilities, crop included this quarter, how can these two segments drive our CDMO segment in the near term?

We have more clarity on our animal health business. By end of next year, we will complete all our validations and go into commercial. We see significant jump in our animal health revenues in FY26. Coming back to our crop sciences, we commercialized facility last quarter and delivered material to a partner. There are few projects at negotiation stage. We need one more year to nurture that division.

On CAR-T technology, what can be our exact source of revenue in CAR-T business?

ImmunoACT is our associate company. We only reported the full year revenue results from that. They're scaling up manufacturing capacity to 2,500 treatments, ready by September this year. It is a sales by our associate company, ImmunoACT to the hospitals. The product sales will be the revenue source.

Can you please throw some light on CAR-T? With the new Navi Mumbai facility with 2500 patient capacity getting commenced this year, how many patients are you expecting to be treated per year? Also, due to the recent trade war between US and China, do you see any pattern of increasing demand from innovators for current commercial molecules?

Current facility can treat 300 patients per year, but the new facility is ready, it can treat up to 2500 patients per year. On trade war: adding a vendor, validating a product, getting approval is a 3-4 year process. So a 2-3 year or a 6 month time may not change the prospect significantly. We haven't seen much change in our customer behavior in the last 3 months.

ARV FDF sales for the current quarter appears around INR450 crores - quite high compared to the normal run rate. Did you pre-pone the deliveries to global funds due to uncertainty in the US funding? And what is the ARV, FDF sales for the quarter?

No preponement was done. No sales were advanced because of this. We have done about INR2,550 crores ARV sales (full year). Similar revenues to last year for the quarter.

ARV, API and formulation sales breakup for the quarter? Is CDMO INR400 crores a sustainable base? And capex for FY26?

ARV sales for the quarter was INR800 crores. INR803 crores. More or less 50/50, INR400 crores from API and INR400 crores from formulations. We have good projects on hand and expect growth of CDMO revenues from FY '25 to FY '26. We are not going to quantify how much. FY '26 capex will happen on multiple fronts - CMO capacity, fermentation INR250 crores in Vizag, more production blocks at Vizag. So this year also maybe close to around INR1,000 crores capex.

Will there be any increase in debt to support the capex? And what kind of quarterly opex impact from new facilities coming on board in FY '26?

No. We may not increase significantly. In FY '26, we are not expecting any new greenfield facilities come to operations. There will be more production blocks in our existing facilities only. So the manpower addition may not be very significant. So we don't expect significant operational deleverage in the financial year '26, because we are not adding new sites.

On ARV business, after US AID announcement, what are you seeing on the ground? And is it possible to pause capex for now and utilize these capacities for the CDMO business?

US AID is supporting treatment but not willing to support PREP, that is prevention. We haven't seen any significant decrease in orders or enquiries coming for treatment. We don't see significant impact to our revenues going forward in FY26. So we will maintain revenues closer to that 2400, 2500, 2600, around that level. ARV, we are a strong leader, catering to close to 40% of the emerging world HIV patients. We don't see any impact coming from either product replacement or lack of funding. We are using maybe 10%-12% of our formulation capacity for HIV manufacturing, not more. API is higher and we are running at full capacity.

Can you just quantify how much is the business dependent on all these agencies like Global Fund, PEPFAR, Bill and Melinda Gates? And how do you think about it if treatment funding is impacted?

Based on reports, about 20% of HIV treatment is dependent on US aid, US government funding. If you divide our HIV sales, maybe 55% is API and 45% is formulations. So for formulation business, maybe you can take that 20% exposure - INR250 crores coming from US supported programs globally. We are not renegotiating. We will service what orders are placed. Most of these orders are placed by global agencies except to South Africa. We will get allocations and we will service those orders.

Operating cash flow and particularly working capital - can you help us understand the reason for slight deterioration there? And on slide 25, significant increase in RFPs and active pipeline projects (110 now). What was this number two years back and how to see revenue potential?

Partly because we are handling very long, complex projects in CDMO. Our order to delivery is much longer when compared to generic programs. So some of the working capital is stuck in our CDMO programs. And as our sales of formulations increases in US and Canada, our working capital is also going up because of longer lead times in logistics. The pipeline number used to be about 60, around that number two, three years back. We have mix of projects, but I would say the projects, majority in phase 2 and 3, not in phase 1.

Mr. President of the U.S. has said multiple times that they have stopped the USAID funding. So is it right that it is impacting around 20% of our ARV sales?

We have not said it is affecting the formulation business which we are catering, which is funded by U.S. funds. It is maybe around INR250 crores. That is what we said. It is not that we are going to lose INR250 crores sales.

On CDMO revenue this quarter and Q3 - contribution from big pharma and late stage, can this sustain for 3-4 quarters? And on ADC investment of $15 million - what exactly you are intending to do?

One good thing in our CDMO revenue is coming from majority big pharma partnerships. So there is a continuum of projects. We are not working on sectors of one project forever. Our partners have a very strong pipeline. Earlier we have a lot of revenue volatility because we are handling several early stage clinical programs. Now, some volatility will be there but reduced significantly. On ADC - we already make payloads and linkers. We have a request from our partners to get into conjugation. We are not going to make mabs. ADC revenue currently is a few $1 million, nothing more.

With close to 40% employee base in R&D and quality, assuming 15% attrition, how do you see demand-supply dynamics given fresh capex, the recent Andhra government agreement?

Attrition is in early teens, mid-teens. About 40% of our employees in R&D and quality. We have to recruit 400, 500 people every year to maintain at the same level. We have a well-established mechanism - interns, fresh graduates from universities, people with 1 or 2 years experience. We're managing. We believe we will continue to do that. It should not be a problem.