Biocon Limited (BIOCON.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Biocon Limited's update Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Prashant Nair from Biocon Investor Relations. Thank you, and over to you, Mr. Nair.

Thank you, Michelle, and good morning, everyone. Thank you for joining us today to discuss Biocon Biologics Limited's integration with Biocon Limited. A press release and presentation related to the same have been sent to the exchanges and are uploaded on our website for your reference. Before we get started, let me introduce the management team on this call. We have today Biocon Chairperson, Dr. Kiran Mazumdar-Shaw; Mr. Siddharth Mittal, CEO and Managing Director, Biocon Limited; Mr. Shreehas Tambe, CEO and Managing Director, Biocon Biologics; Mr. Kedar Upadhye, CFO Biocon Biologics; and Mr. Saurabh Paliwal, Head Investor Relations, Biocon Limited. We will start the call with opening remarks from Kiran, which will be followed by an interactive Q&A session. A request to all participants, this call will primarily focus on the transaction and related matters. For all other questions on the business, please get in touch with the IR team post the call. Please note that this webinar is being recorded. The recording will be made available on our website within a day, and the call transcript will be made available subsequently. Before we begin, I would also want to remind everyone about safe harbor related to today's call. Comments made during the call may be forward-looking in nature and must be viewed in relation to the risks that our business faces that could cause our future results, performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. Now I would like to turn over the call to Kiran for our opening remarks. Over to you, Kiran.

Thank you, Prashant, and a very good morning to everyone. Thank you all for joining me today on this special call. And I would like to basically share with you the happenings of the last week. Our acquisition of Viatris' global biosimilars business, if you recall, was in 2022, which really marked a defining moment for Biocon Biologics. This was an inflection point that propelled Biocon Biologics into the ranks of the top 5 global biosimilars companies, creating India's first truly global biopharma enterprise with a commercial footprint spanning more than 120 countries. However, market perceptions around acquisition-related leverage have continued to suppress Biocon Limited's valuation, creating a holding company discount that does not reflect the underlying strength of performance of Biocon Biologics. As a result, Biocon Biologics' intrinsic value is not fully captured in Biocon Limited's market capitalization. In such a situation, pursuing an IPO would not have been beneficial for Biocon shareholders as the suppressed valuation would have failed to capture the true intrinsic worth of Biocon Biologics. In May 2025, Biocon's Board had constituted a strategy committee who appointed Morgan Stanley to evaluate strategic options for value creation with a mandate to protect all stakeholder interests. And I'm pleased to share that last week, their recommendations led to the Board of Directors of Biocon deciding to combine the businesses of Biocon by way of integrating Biocon Biologics Limited with the aim to make it a wholly owned subsidiary, subject, of course, to requisite regulatory approvals. And this decision follows a comprehensive evaluation, which assessed multiple strategic options, including an IPO and a merger. And after careful consideration of key parameters such as strategic alignment, sectoral dynamics, shareholder value creation, the committee concluded that the full integration through the acquisition of minority stakeholders present in -- was the most efficient and value-accretive path forward. Under the proposed transaction, Biocon Limited will acquire the remaining stake in Biocon Biologics Limited from Serum Institute, Tata Capital and Activ Pine through a share swap of 70.28 Biocon shares for every 100 Biocon Biologics shares, valuing Biocon Biologics at USD 5.5 billion. Additionally, Biocon will acquire the residual stake held by Mylan, which is Viatris through a share swap of 61.70 Biocon shares for every 100 Biocon Biologics shares, along with a cash consideration of USD 400 million. The swap ratios have been approved by the Board based on independent valuations by E&Y. The Board has also approved raising additional capital of up to INR 4,500 crores or roughly USD 500 million through qualified institutional placement or QIP, subject to shareholder approval. The proceeds of the QIP will largely be utilized towards the cash component payable to Viatris. I would now like to mention what we believe the combined BL and BBL entity will deliver in terms of value accretion. The merger, we believe, removes the holding company discount that has historically suppressed Biocon Limited's valuation and in turn, masked Biocon Biologics' intrinsic worth. All 4 independent Biocon Biologics' investors received liquidity with Viatris securing a 5-year accelerated liquidity event. The combined entity gains a significantly stronger balance sheet with consolidated debt-to-EBITDA ratios improving from 4.3x in 2020 to 2.5x as at September 2025 and is expected to decline further. You should also keep in mind that in our last earnings call, we had announced that Biocon has settled its structured debt obligations with Goldman Sachs and Kotak through the QIP proceeds and has executed an agreement with Edelweiss to do the same. This will improve PBT margins going forward and the full impact of reduced interest costs, which we had indicated was in the region of INR 300 crores will be reflected in FY '27. The merger also crystallizes Biocon Biologics' valuation at $5.5 billion via the swap ratio, which we believe was an unlikely outcome in an IPO scenario given the prevailing debt overhangs. Most importantly, I do believe that Biocon emerges larger, fiscally stronger, innovation-driven and uniquely positioned as a differentiated global leader in biopharma. Biocon now has a unique value proposition also in diabesity, combining interchangeable insulin biosimilars with a growing portfolio of generic GLP-1s, which we believe is a strategic advantage unmatched in industry globally. The combined business positions Biocon to lead in diabetes, oncology and immunology therapeutic areas that together account for nearly 40% of global pharmaceutical revenues. To ensure a smooth transition and strong governance, we have constituted a Governance Council, which I will chair and a Transition and Integration Management Committee, which will be led by Shreehas Tambe, CEO and Managing Director of Biocon Biologics. Siddharth Mittal and Shreehas Tambe will continue in their roles as CEO and Managing Director of Biocon Limited and Biocon Biologics Limited, respectively, until completion of the integration process. The integration process is expected to be completed no later than March 31, 2026. Post the integration and upon execution of the necessary documentation and receipt of approvals from the Nomination and Rem Committee and the Board, Shreehas Tambe will take on the role of CEO and Managing Director; and Kedar Upadhye, the role of CFO of the combined business. Siddharth Mittal, who has played a strong leadership role at Biocon will transition into an important leadership role within the group. With that, I would like to end this -- end my comments and open it up to Q&A.

[Operator Instructions] The first question is from Damayanti Kerai.

This is Damayanti Kerai from HSBC. My first question is one of the key merit which ma'am has mentioned for this transaction is operational synergies through consolidation of group resources. So can you elaborate a bit on this? Because till now also, I understand BBL was a majority -- sorry, BL was a majority owner in BBL, right? So how does this change post this transaction? And what are the key merits, if you can really elaborate on those?

So Damayanti, I will start by answering or responding to your query by saying that even though Biocon was the main stockholder or shareholder of Biocon Biologics, Biocon Biologics from a governance point of view, did operate very separately. And there, obviously, this -- becoming a wholly owned subsidiary and merging with Biocon brings in a number of synergies. Let me give you some examples. One is, of course, the whole supply chain opportunities that we have to harmonize the entire organization in a much more efficient supply chain, starting with procurement all the way through distribution and the whole commercial -- the engine also benefits from this merger. I believe that the fact that Biocon Biologics has its own presence in many key emerging markets and has a very strong presence in the advanced markets also enables us to basically leverage this engine for Biocon's products which where many of these emerging markets have seen Biocon partnering with other companies to operate in those markets where we have our own presence now. Those are only some examples. But from a manufacturing point of view, we believe that both these businesses are very different. We've always been a lean organization. So the manufacturing activities carried out in small molecules is distinctly different from those carried out in the biologics business. So that is more a complementary fit. But we believe that there are going to be a large number of synergies when it comes to harmonizing the group resources even in terms of fungibility of manufacturing assets, which gives us much greater flexibility and many other such operational advantages that we have of coming together.

Okay, ma'am. Okay. That's helpful. My second question is from minority stakeholders of BL, what kind of approvals will be required for this transaction to go through?

These are just regulatory transactions. We have to have an EGM where shareholders have to approve these transactions.

Okay. I think one of the points mentioned is for the cash payment to Viatris, there are some special requirements?

Yes. So we -- that is why we are planning to have a QIP in order to raise the money required to pay the cash component to Viatris.

[Operator Instructions] The next question is from [ Bharat Shettigar ].

Just 2 or 3 questions from my side. Firstly, in terms of approvals from minority shareholders of Biocon Limited, do you need to get a majority of minority approval for this transaction?

I think largely, it allows every shareholder to vote.

And the threshold is 50% of approval? Or is it higher?

I think, Kedar, you need to answer it.

Yes. Yes. See, [ Bharat ], there are various lanes that we call it. If you would have seen the Board meeting outcome and the EGM notice, there are various resolutions for which except one where promoters are not allowed to vote, everywhere else, promoters are allowed to vote. And there are both. There are special resolutions as well as simple majority required.

Right. Understood. And in terms of the U.S. dollar bond issued by Biocon Biologics, do you need any approval from the bondholders to complete this transaction? And if not, then post transaction, will there be any change in terms of the bond structure, whether issue a guarantor, et cetera?

See, this is a credit-enhancing event, [ Bharat ], because the group is coming together and synergizing together for the cash and EBITDA and the earnings. So that's one. Secondly, the bond structure will remain with biologics. See good thing about this is the biologics entity survives in the legal form. So the bond security package, covenant package, that doesn't change. So we don't need any specific approval from the bondholders at this stage.

Right, right. And the final question is on the point mentioned about raising commercial paper of up to INR 1,800 crores. So just trying to understand this $400 million payment to Viatris, is there multiple components to it? And is there something which needs to be paid immediately? Just wondering how is that structured?

Yes, that's the bridge finance, [ Bharat ]. So along with the allotment of shares once the swap transaction gets approved, there's an interim payment due so that commercial paper is a bridge finance structure that we have put up. In total, the cash outflow remains $400 million and the long stop date is 31st March.

Right. So by 31st March, we need to raise the full equity. But in the interim, we need to make INR 1,800 crore payment. Is that right?

That's right. About $200 million. Correct.

Right. Right. Okay, this was helpful. I'll get back into the queue.

Thank you.

The next question is from Abdulkader Puranwala.

Yes. Just on -- quickly on how do we plan to take over the balance 1.6% stake from the employees and RSUs?

So that will be taken care, Abdul, in the subsequent shareholder approvals. That represents both granted and ungranted value of the ESOP. So that will be taken care subsequently.

Okay. So that happens after March '26, that's right?

Yes, I mean after this transaction is over.

Okay. Okay. And Kedar just quickly, I mean, is there a fairness report what you guys have shared for this entire transaction? Is that available...

A fairness opinion is -- report is available. Correct.

Okay. Okay, I will get back.

The next question is from Shyam Srinivasan.

This is Shyam from Goldman. Just the first one on the back on the biologic -- Biocon Biologics' debt again. While we made our debt structure there much more easier from a cash flow perspective, we still have a large bullet at the end. So just want to understand how the financials of the subsidiary need to kind of evolve over time to, one, make that net debt to EBITDA at the subsidiary level more palatable? How are we planning to get cash flows in time? And the sub-question there is on does the parent need to infuse capital into the subsidiary in the interim?

Yes. Maybe I can take that question. See, the subsidiary structure, Shyam, as you have got from Kiran's speech, paves the way. That's the beauty of this whole transaction. So the cash flow, the IP and the global footprint of biosimilars stays with BBL. It's just that BBL becomes fully owned subsidiary now of Biocon Group. So I think the cash flow gets generated appropriately in respective businesses and respective subsidiaries below BBL. In terms of interest repayment, principal rollover, I think all that continues as planned.

No, no, Kedar, I'm not worried about the structure. I'm only worried about fiscal '30, let's assume, when you need to make a $1 billion payment out of BBL, right? So what are the things that we need to -- one needs to look at from a BBL perspective needs to evolve for us to generate that kind of cash flow. I think that's the question.

Yes. The cash flow continues, I mean, the launches and the approvals and the global commercial footprint, that stays with BBL in the current structure.

Yes.

So the cash flow gets organically generated, and we have rollover options as well.

At that point of time.

Got it. So you're not worried, Kedar. You're basically saying the $250 million-odd EBITDA that we are generating right now and hopefully, that grows over time, and that is good enough for us to honor some of those debt obligations.

Absolutely. Absolutely.

Got it. Got it. Helpful. Second question, just on the differential swap ratios for Mylan. I know there's a cash element, so I don't know how to calculate, but maybe you could clarify. One is the 70 share swap and the 60 share swap. So just want to understand the differential and what drives that?

Yes. Maybe, Kiran, do you want to take this?

I think it's just what you just mentioned, Shyam. It's really because of the fact that the Viatris sharehold -- the structure has been part cash, part stock. And the fact that Viatris also has been given an exit 5 years ahead of time has actually resulted in this differential swap ratio. The others have taken a full stock swap. So I think that's what gives them a slight premium over the Viatris share swap.

Got it. And last data keeping question. Just on the CCPS to equity share conversion at BBL for Viatris, there was some ratio of 1.26 I noticed, CCPS going to whatever equity. So what is that calculation?

Yes. See, that's in line with the contractual arrangement, but that's an interim ratio. So in that sense, that doesn't matter since the full BBL shareholding gets converted to Biocon. And that thing doesn't matter. That's in line with the contract.

The next question is from Surya Patra. Mr. Patra, we are unable to hear you right now.

Yes. Am I audible right now?

Yes.

Yes.

This is Surya, Surya Patra from PhillipCapital. My first question is on the, say, synergy that we have discussed. Is it possible to get more sense about the cost synergy that is likely to accrue to the consolidated operation because -- or let's say, whether we are talking about the corporate cost synergy or it is operational cost synergy that we are talking about when we talk about the synergy aspect?

Surya, it is -- I don't think we can actually quantify the benefits at this stage. I think we will keep sharing the improvements or the benefits that we are tracking on a regular basis. But I think at this point in time, I think you will have to understand that there are inherent synergies that we will make sure that we take advantage of.

Sure, ma'am. The second question is on, let's say, the priorities that we will be having post integration because post integration, it is small molecule generic as well as large molecule generic for these 2 businesses that we will be seriously focusing on. And separately, the GLP-1 is also a kind of a big upcoming opportunity for us. So how the priorities will be set for the integrated operation, if you can share something on that side?

I think I mentioned in my comments that we have a very strong focus on diabesity, which you just referred to, which is really our interchangeable biosimilar insulins in combination with the growing portfolio of GLP-1s. And this will be a very major opportunity for Biocon because we are uniquely positioned and differentiated from any other company globally. And of course, we are going to be very focused on oncology, immunology and a few other metabolic areas. But what I would say is that it brings a lot of complementary strength even to our oncology portfolio because, as you know, right now, we have a very strong growing portfolio of oncology biosimilars, which has gained leadership in global markets. And the small molecule oncology generics will also add to this strength. Likewise, when it comes to immunology, of course, you know that Biocon has been always leading in immunosuppressants. And this will also add to the leadership that we have gained in immunology. And then there are miscellaneous other segments where Biocon's portfolio will add to that. So I think it makes us very uniquely placed as a very large and differentiated biopharma company with -- and if you recall, we are one of the few companies that have got an end-to-end integrated model. And we have got a very strong research pipeline that has delivered 10 biosimilars to global markets. So I think we are very excited with what this combined business can offer us.

Okay. Just last one for [ Kiran ], say, is it fair to believe that you are buying out at a discounted price, the stake just before all these opportunities are -- before the freshening of all these visible opportunities. So both...

No, I don't think your perception is accurate at all. We believe that Biocon stock has been undervalued because of the holding company discount and the concerns around the debt overhang. And this has also intrinsically lowered the valuation of BBL and which would have never gone. Even if we had taken it to the IPO, it would have never gone. And remember, the benefits that we are getting is from GLP-1s as well. going forward, which is a Biocon Generics division. So I don't think that what you are referring to is right because I think it's the combination of these 2 businesses that will unlock much bigger value.

Yes, correct. Sure. Ma'am, wish you all the best for the great transaction.

Thank you.

The next question is from Neha Manpuria. Ms. Manpuria?

Am I audible?

Yes.

Yes, ma'am. Please proceed.

This is Charul Agrawal from BofA Securities. So my question is with regarding to the shareholding that BBL minority stakeholders get in Biocon. Would there be any lock-in period that would be applicable for this?

Yes. Charul, there is a regulatory lock-in period of 6 months for this kind of transaction.

Okay, that was my question.

Thank you.

[Operator Instructions] The next question is from Sidharth Negandhi.

Just a couple of things from my end. First, on the synergies that you mentioned on the commercial and manufacturing front, should we expect the consolidation of the commercial workforce for these synergies to be realized? That's one. On the manufacturing side, similarly, given that the facilities are really biologics versus small molecules, just wanted to understand that a little more in detail in terms of how the fungibility of manufacturing facilities come in? And should we expect better capacity utilization because of this? So that's question number one on synergies. Question number two was, again, on the swap ratio, just wanted to understand, effectively, if we look at very broadly Viatris gets half the shares in cash and -- half the stake value in cash and half the stake value in stock. So accordingly, the effective stock -- the swap ratio comes to 122. Is that driven by a commercial arrangement prior to the transaction that was existing with Viatris? Or is there anything else that's driving that? Those are my 2 questions.

So let Kedar take the last question, and I'll comment on the first.

Yes. Sidharth, the swap ratio doesn't change. So I think saying Viatris gets 120, that's not the right way to look at it. They get 62 roughly and the other shareholders get 70. So the cash is different. The cash component is different.

And to your other question about fungibility of manufacturing, let me give you a very good example. GLP-1s use a very similar infrastructure as our insulins business. The devices, the cartridges and of course, in certain cases, the manufacturing, fermentation-based manufacturing that even insulin use can be fungible. And I think this makes it a very flexible model in terms of both insulins and GLP-1. So that is one example of synergy. When it comes to other manufacturing facilities, as I said, there are -- obviously, small molecule synthesis plants will not -- will be complementary to the biologics plants, which are very different. But having said that, as you know, procurement of raw materials, the operational synergy that you'll get with the structural reorganization, et cetera, will give you those benefits.

That's very helpful, ma'am. And just wanted to understand, you also mentioned about commercial synergies. So should we expect certain workforce consolidation?

Yes, so yes, workforce consolidation. Yes, I forgot to mention that, obviously, the commercial organization will be one.

So some workforce consolidation and according cost synergies that we should expect there?

Yes. But I think whilst you keep on focusing on cost synergies, I think operational synergies will throw out a lot of good benefits is what my view is because Biocon has never been a company that has overemployed people in any of its organizations. We are a lean organization, and we will bring it together in a very efficient way in terms of the operational governance.

That's very helpful. All the best to you and the team.

Thank you.

The next question is from [ Abhiram Iyer ].

This is [ Abhiram Iyer ] from Deutsche Bank. My questions are pertaining to the acquisition debt. You answered the query around the bonds, nothing changing the structure pertaining to Biocon Biologics. But is there any change in the acquisition debt or any consents required there? And my second question is just a follow-on from that. Going forward, if we are borrowing for CapEx needs, whether it's Biocon or Biocon Biologics, would it be done at the respective entities? Or do you envisage future borrowings to be consolidated at the parent level?

Yes. I think we clarified in the first question. The acquisition -- original acquisition date doesn't exist. Now it's been refinanced through the bond structure and the syndicated debt structure. We don't need permissions at that level. And if the question is whether we need to shift the bond structure to the main entity, that we'll think about later. That bondholders would appreciate anyway if we do it that way. So I think all of that stays. And at this stage, the focus is on deleveraging. So I think the operating cash flows factor all kinds of needs, cash needs, including R&D, coupon payments, CapEx and working capital. Thank you.

And just my second question is pertaining to has there been any discussion with getting a ratings upgrade or rating agencies here because this would definitely improve the capital structure as the agencies require. So would this -- would you see borrowing costs being lower in the future?

No, absolutely, this is a credit-enhancing event. So I think we were all focused upon getting the transaction concluded, and we'll be in touch with the rating agencies hereafter. But this is a credit-enhancing event. You are right.

All right. Best of luck for the transaction.

[Operator Instructions] The next question is from Tushar Manudhane.

Yes. This is Tushar from Motilal Oswal. Am I audible?

Yes.

Yes, sir.

Right. So ma'am, just with respect to the Viatris with the early exit conceptually, while the holdco discount definitely benefits reduction in holdco discount. But the early exits, just would like to understand whether the full integration, the purpose of acquiring Viatris from, say, since 2022 to till date, is that sort of whatever the milestones we intended to achieve given that we had this binding agreement with them, where do we stand as far as that part is concerned?

I didn't quite understand your question, Tushar, but let me tell you -- put this whole thing into context. If you recall, when we first started our partnership with Mylan for biosimilars, Biocon Biologics was created as a business division of Biocon to really ring-fence the investments into biosimilars. And over time, I think one should make note of the fact that we have attracted almost $1 billion of capital towards both building global scale manufacturing and creating a very strong research pipeline, which I mentioned has actually delivered 10 molecules, 10 biosimilars to global markets. Now when the opportunity to acquire the commercial interest of the partnership, which really was capturing almost 2/3 of the value of our partnership arose, it was necessary to create Biocon Biologics as a subsidiary of Biocon so that we could make that acquisition. And as I mentioned earlier, the plan was to consider an IPO, but then things changed because we didn't expect the market reaction to be so negative for such an important acquisition. And over time, we saw that the only option we had was -- and as the advice has been given to us that the best way of really unlocking value is to revert to the original structure of making Biocon Biologics a business division of Biocon as a wholly owned subsidiary rather than even considering an IPO, which we were told would not have delivered the value unlocking that we were anticipating. So I hope that clarifies the matter. And maybe, Shreehas, you might want to comment. Shreehas, are you audible?

Shreehas, sir, I would request you to kindly unmute yourself and speak right now.

Kiran, you covered it comprehensively and no further comments. Thanks.

And Siddharth, maybe also wants to comment on this because he's also been involved.

Yes. I think, Kiran, you've covered the rationale of what led to separating or spinning off biologics in 2019 and the way the current market situation is in this decision, which, of course, the important consideration of removal of holdco discount and Biocon shareholders having a stake -- a larger stake in biologics or biosimilars business is also something which is important consideration when we arrived at this decision.

Got it, sir. Got it. Just one more point extending to this that this also, as I read on to the Viatris press release, they are -- the -- this also accelerates the expiration of the biosimilars non-compete restrictions placed by Biocon Biologics. Any thoughts on that?

Yes. No, I don't think so because there was -- it was going to expire in 2026, and it has accelerated that.

Got it, ma'am.

[Operator Instructions] The next question is from Alankar Garude.

This is Alankar Garude from Kotak Institutional Equities. Kiran ma'am, can you confirm that now there is no need for us to sell any further stake in Syngene?

No, I confirm that, that is not being planned at all.

Got it. The other question is, I mean, you also had the option of merging Biocon with BBL. And you spoke about the reasons for not doing it. I think debt is possibly -- the bond structure is one of the things. But can you clarify that going forward, whether a merger between Biocon and BBL, whether it would [Technical Difficulty].

You have lost connectivity, but let me answer that question by saying we do not see any need to do that. We believe this is the most elegant way of basically unlocking value and hopefully eliminating the holdco discount because it basically makes it a very clean structure. And as we have done in the past -- and if you look at the way even Biocon's current business is structured with Biocon Pharma having a wholly owned subsidiary and many other parts of Biocon Biologics having wholly owned subsidiaries in different parts of the world. I think this is a structure we can live with. It's an elegant structure. It allows us to do everything in a very clean and elegant way. And from a governance point of view, it's a very easy-to-manage governance model.

Got it. And one final question from my side. From the perspective of minority shareholders of Biocon, you spoke about the benefit of undervaluation as well as some synergies. On the other hand, they will also have to face dilution because of the...

Alankar, the most important person who has to face dilution is me, okay? I think minority shareholders will get a huge benefit out of this model that we are creating because it will unlock huge value. And I think for minority shareholders, getting a good shareholder return is the most important thing.

Got it. So basically, undervaluation of both the entities is the primary factor driving this transaction?

Yes. And I think one should not even look at dilution because the only dilution that will happen with this transaction and the QIP is my dilution as the majority shareholder of Biocon, which I think is important to drive this business and to unlock value for every shareholder.

Got it. That's it from my side.

The next question is from Amey Chalke.

Yes. Congrats to the management on this arrangement. So I have just one question. Most of the questions have been answered. Since you were talking about the dilution of your own stake, are you going to participate in the QIP any which way to increase the stake?

Amey, thanks for that question, but I don't plan to.

Sure, ma'am.

The next question is from [ Manoj Jain ].

Can you hear me?

Yes, sir. Please proceed.

Yes. Two questions from me. One is on deleveraging. You mentioned that you are at 2.5x and you're going to delever further. May I check like going forward, deleveraging is going to be completely organic or you plan more corporate actions like what you have done to clear up all the structured instruments. Can we expect more going forward?

So let me start and Kedar can add to it. I think we have a growing EBITDA, thanks to a very strong business performance. We believe organically, we can manage this debt level very comfortably. Kedar, do you want to add to it?

Yes. Yes. That's right, Kiran. [ Manoj ], 2.5x is actually trailing. If you take forward EBITDA, it will be far lower. So the idea is to leverage on the launches which have been made and focus on organic deleveraging hereafter.

No, I totally agree. It's going to improve as EBITDA grows. I just wanted to check whether you want to have like a faster deleveraging by more corporate action or you can have it like smoothly down with EBITDA growing?

Yes. But Kedar just said, I think coming down -- declining the ratio from 4.3x to 2.5 and now going below hopefully 2 in the next fiscal, it is a very manageable and respectable debt leverage. You would -- I'm sure you'll agree.

No, yes. No, that's fair. And my second quick question is your promoters shareholding is coming out to 44% as per your PBT. Any plans to take it above 50%? Or if you can give some color that whether promoters are going to be participating in planned QIP or if you can share something on that front.

I just mentioned I'm not participating in the planned QIP. And I think having a stake as large as 44% is adequate for me. I don't think a promoter, as we often refer to this class of investor -- founders, really gets any additional advantage by having even a 51% control. I think today, we have to do what's right for the business, and that's what I will do as a founder of Biocon.

Understand. That's all from my side.

The next question is from [ Jonathan Tan ].

This is [ Jonathan from CreditEx ]. I'd just like to clarify something on dividends. So from my understanding, the U.S. dollar bond covenants have some restriction on dividends made by Biocon Biologics. Does that change post this deal?

That stays, Jonathan, that doesn't go up.

Okay.

The next question is from [ Vikram Damani ].

Am I audible?

Yes, sir.

Just a quick question. Post the new INR 4,500 crores QIP as on 31st March, what will be our estimated gross and net debt, if you can clarify that?

Vikram, that QIP will be largely used for the cash component in this transaction for Viatris. So in that sense, that particular thing doesn't change the gross debt.

Okay.

Thank you.

[Operator Instructions] The next question is from Nitin Agarwal.

This is Nitin from DAM Capital Advisors. Ma'am, on the -- for the biologics and the biosimilar business, I think F '27 should be a little bit of an inflection year with most of our recent -- the multiple recent launches as well as aflibercept getting launched. So in general, when you think about the biosimilar business trajectory from here on, from a -- not from looking for a specific guidance, but what should the revenue trajectory for this business really look like given the fact that we'll have a much broader portfolio of commercial products in markets, especially developed markets from next year onwards?

Maybe, Shreehas, you would like to take that question?

Yes. Nitin, am I audible to you?

Yes.

So Nitin, thanks for the question. I think you're absolutely right, given that we've got several products that we've launched in the current year and in the year going forward, we expect to see them starting to deliver results. We've not given specific guidance on how we see them growing, but we've said that growth will continue to remain strong. And if past is a reflection, then it will continue to build on that.

Secondly, just pulling on that, Kedar, what should be -- how should we think about the debt-to-EBITDA metrics moving from here on? Again, do you -- at what stage do you envisage the debt-to-EBITDA coming closer to a sort of a 1x number? And two, is the business in a position to generate free cash from next year onwards?

Yes, that's true subject to the launch trajectory shaping up, Nitin, that's our plan. We don't give forward-looking guidance, but I think our -- all our efforts have been to deleverage to very respectable metrics. And this is a credit enhancing event, Nitin. So I think the idea is to optimize on the coupon payments, optimize on the rate and optimize on the leverage. So all the debt metrics are expected to improve as the EBITDA inches up here after, Nitin.

And Kedar, on the free cash generation, should be -- that should be a -- I mean, a realistic situation to expect from next year onwards?

Yes. See, like what we clarified earlier, I think be it R&D or CapEx or working capital or coupon payments, all of that are being fully funded in the current EBITDA. So going forward, yes, that's our objective.

The next question is from [ Bharat Shettigar ].

Yes. A couple of things from my side. Firstly, on the Edelweiss debt, can you remind me how much is the amount? And how will that be repaid?

Yes, [ Bharat ], we are not public with the redemption amount. I think as on 31st January, that will get repaid. We have some proceeds from the last QIP still with us. So primarily, that will be used. And if there is a small deficit, we'll fund it through commercial papers, which will get refinanced through the fundraise, [ Bharat ].

Understood. And then the other question is with respect to the Mylan payment now with the share swap as well as the $400 million cash payment. Is that like the final settlement for the CCPS or could there be some future liability pending as well after this transaction is done?

No, no. The full CCPS structure gets collapsed after this transaction happens. So there is nothing in future.

Okay.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Nair for closing comments. Thank you, and over to you, sir.

Yes. Thank you, Michelle, and thanks to all the participants for taking time out to join the call. If you have any further questions, do get in touch with the IR team, and we'll be happy to address them. Thank you once again.

Thank you, members of the management. On behalf of Biocon Limited, that concludes this conference. Thank you for joining us, and you may now exit the meeting. Thank you.