Caplin Point Laboratories Limited (524742) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Caplin Point Laboratories Limited Q3 FY '26 Earnings Conference Call hosted by Dolat Capital Markets Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Candice Pereira from Dolat Capital Markets Private Limited. Thank you, and over to you.

Thank you, Ikra. Good evening, everyone. I, Candice Pereira, on behalf of Dolat Capital, welcome you all to the Q3 FY '26 Conference Call for Caplin Point Laboratories. Today from the management team, we have with us Mr. C.C. Paarthipan, Chairman; Mr. Vivek Partheeban, Vice Chairman; Dr. Sridhar Ganesan, Managing Director; Mr. D. Muralidharan, CFO; and Mr. Sathya Narayanan M, Deputy CFO. I now hand over the call to the management for the opening remarks. Over to you, sir.

Thank you, Candice. Thanks, everyone, for taking time out to attend our earnings call for Q3 FY '26 -- actually, FY '27 rather. So well, please note that a copy of all our disclosures are available on the Investors section of our website as well as on the stock exchanges. And note that anything said on this call, which reflects our outlook for the future, which should be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. The conference call is being recorded and the transcript, along with the audio will be made available on the company's website as well as the exchanges. Also do note that the audio and conference call is copyright material of Caplin Point and cannot be copied, rebroadcasted or attributed in press media or social media without specific written consent of the company. I would like to hand over the floor to our Chairman for his opening remarks, please.

Thank you. Good evening, and welcome all to our investors call. I think that most of you must have gone through our press release. Further my colleagues will also highlight the salient features of our company. Hence, I would like to convey 2 major steps that we have taken recently. This, I sincerely feel, will be a game-changer or black box of our company in the future. Number one is our video SOP. It is also a visual SOP, acts as a visual hammer to replace the work cues. Our video SOP will convert invisible execution into inspectable evidence for compliance and also this will enhance productivity. In pharma manufacturing, noncompliance is not training failure, is an execution visibility failure. Pharma factories run on SOPs, which is a traditional test book one. Compliance is demonstrated in seconds, which leads to issues. Hence, Caplin converts current SOPs into visual scripts that shows best practice actions in step-by-step details. We also included regional languages for our factory workers. We further have plans to use videos to celebrate the best-performing operators as role models. The remote control online monitoring [indiscernible].

Sir, sorry to interrupt you, but your voice is sounding a bit muffled.

The line is breaking a little, Chairman.

Can I go ahead and repeat or?

Yes, now it's better, please.

[indiscernible]

Yes, continue, please.

Have I to repeat the whole thing? Where exactly we were not in a position to [indiscernible].

No, no. Only in the last 20 seconds. Only in the last 20, 25 seconds.

[indiscernible]

Sorry to interrupt you, sir. But your voice is a bit muffled. Shall I add you again?

Is it possible to add a land line from there, Candice, is that possible, please?

No, I'll call these guys and I will [indiscernible].

In the meantime, I will complete my discussion and then Chairman can come back for his remarks.

Yes.

Okay. Thank you, Chairman. So while we wait for the line to get cleared up, I'll provide a little color on the latest developments, especially when it comes to the regulated markets, specifically Caplin Steriles and also Caplin Steriles USA. We've had another good quarter of growth in the U.S. entity -- U.S.-focused entity rather, and with the growth in both product revenue and also profit share and milestone revenues. And it is a good mix of 75-25 at the moment with product revenue bringing in 75% and milestone and profit share bringing in about 25%. This trend has been very consistent in recent quarters. And there were a few questions that were raised by investors themselves when we decided to take the front-end route and then launch our own label over there. But this goes to show that this was a decision in hindsight was a good one. We have also been receiving consistently good number of approvals from the U.S. and the latest one was a complex suspension injectable product named Methylprednisolone that we got an approval within first cycle. Quite glad to share that our approval timelines are between 14 to 15 months on average compared to industry timelines of about 20 months. We've also had first cycle approvals for emulsion injections and emulsion ophthalmic products as well. And this is not only goes to show the progress that we have in R&D and regulatory domains, but both these products that we have had recent approvals for have been launched in the market and has been consistently garnering higher market share quarter-on-quarter. So even from a productivity and execution standpoint, we've been delivering. We also have another 10 products pending review with FDA, and we expect these products to come through within the next few months. So we will be close to -- we'll be having close to around 65 ANDAs approved under Caplin's name within a short period. So with all the new approvals coming through, obviously, it looks like it's going to be a hectic next few months, but in a good way. We have also acquired around 14 ANDAs from outside over the last few months, and we are actively working on bringing these to market sometime in the next year. So not only 2026, but 2027 also looks like it's going to be an exciting year for Caplin Steriles. Because of all the activity that is happening with new products getting approved and launched and also some of the acquired products being activated, we understood that our vial lines, which are Line 1, 2 and 5 are going to be busy over the next few quarters. So strategically from a development pipeline, what we have done is we've started focusing more on Line 3 and Line 6 when it comes to scale-up and submission batch products. Line 3 is our ophthalmic line and Line 6 is the latest one that we have activated, which is a prefilled syringe and cartridge product line. In the next 12 months, we expect to complete at least 12 to 13 products in this range, in the ophthalmic and also prefilled syringe range. That should come up for approval sometime by end of next year, which gives us good hope that 2028 also is going to be quite full of activity when it comes to product launches and revenue. In addition to this, to ensure that we are investing consistently into unique capabilities in the sterile space, we are getting into the blow-fill-seal [ field ] range of products. So we've just placed an order with one of the best manufacturers in the world from Europe named Rommelag for this machine. It's a state-of-the-art completely integrated machine that is capable of manufacturing products at very high levels of compliance and speed in the blow-fill-seal [ field ] range. We have taken on around 14 products for development in this space, and we expect the first products from this line to get approved sometime in late '27, '28 as well. So the last range that we are getting into is, again, in the sterile space, which is ophthalmic ointments which is also sterile in nature. So once this is done, we will be catering to pretty much the complete gamut of all sterile products from Caplin. And to cater to this significant pipeline of products that are being developed, we are fast tracking our completion of Phase III, which is internally what we call as Caplin One Labs Unit 2, which will be housing eventually 8 product lines, of which we are going to start by early next year with at least 5 lines active. Out of the 5 lines, 2 are already completed, 3 more will be completed by September to October of this year. Taking into account all of this growth and development, we knew that compliance is something that we need to consistently innovate on as well. So of course, Chairman will cover that in his remarks. But in the midst of this all, we've completed our EU-GMP audit and also a Saudi FDA audit with no critical observations. And we're happy to inform that our consistent compliance record stretches out even further, and it's going to get better. One word on the U.S. label. As I said in the beginning, we are very pleasantly surprised with the progress that we are making with our U.S. label. We are nearly at $10 million in revenue since inception last year. And we have been able to do this without slashing costs or we've just been disciplined with the strategy of keeping the products closest to the customer and the general shortages and supply chain efficiency that we are able to demonstrate is bringing these revenues in. This is how we have built our Latin American business, which is by keeping products closer to the customer. And the same thing is continuing on in the U.S. as well. For Caplin Steriles and Caplin Steriles USA, we expect double-digit -- high double-digit revenue growth in the next years onwards as well. A couple of more updates from our side is that our Vizag API plant, which is going to be, by and large, used for backward integration of filing our own DMFs for our ANDAs that are in the market has already scaled up 3 critical APIs, and we are targeting at least 2 to 3 more APIs to be scaled up on a monthly basis from this site and expect our first DMF filing from the site by end of this year. Finally, our oncology injectable plant is also geared up for exhibit batches, which will be starting this month. Out of all the acquisitions of ANDAs that we had done, 4 of them are oncology injectable products as well, and we also have an organic pipeline of 12 more products that we are working on. All of that will be scaled up for submission within this year. We expect to have the first few products going for approval -- going for filing within the end of this year. So that's basically what covers the regulated market side of it. I will -- we can check if Chairman's line is better now.

It's fine now.

Yes, very clear. Please go ahead. Yes, please.

Good evening once again. Now let me focus only on the 2 major steps that we have taken recently. Number one is our video SOP. It is also known as the visual SOP, acts as a visual hammer to replace the verbal cues. Our video SOP will convert invisible execution into inspectable evidence for compliance. In pharma manufacturing, noncompliance is not a landing failure or a training failure. It's an execution visibility failure. Pharma factories run on SOPs, which is a traditional text-based one. Compliance is demonstrated in seconds, which leads to issues. Hence, Caplin converts current SOPs into visual scripts that shows best practice actions in step-by-step details. We also included regional languages for our factory workers. We also have plans to use videos to celebrate the best-performing operators as role models. Remote control online monitoring tracking of who has done what in the night shifts, which will not only be monitored by our own factories, but also by our Latin American team where it is daytime. We make video viewing mandatory before operating the machines. The other advantages of visual SOPs are as follows: number one, it will help networking with many companies of our size for outsourcing of products that we don't manufacture, especially from China. Number two, the CMOs will get the advantage to view the entire manufacturing of this production of our facility online through the video SOP, and it helps them to understand our practices and timelines for the delivery. It will also help engineering department to replace the models as FAT, SAT, IQ, OQ, PQ, which is nothing but factory acceptance test, site acceptance test, installation qualification, operational qualification, performance qualification. The video will help actually the new employees to do the requalification, preemptive maintenance and predictive maintenance. The guys who do this FAT, SAT, IQ, OQ and PQ, even if they leave the company, the new guys who enter a factory will use the videos and do the requalification and predictive maintenance. We'll also add AI governance architecture to our video SOPs in future, and we have already filed patent for this. In the next 2 years, we will also have 14 to 15 injectable lines, as you know well, will be up and running. And our culture will not be in the words of our website, but in our facilities. Our people will also follow 4 non-negotiables, which are integrity, quality, safety and productivity. Now the number two, we recently recruited 2 erstwhile senior inspectors of Colombian INVIMA as our executives, mainly for audit readiness in all our factories. They are doing the mock audit in line with the U.S. FDA guidelines as the guidelines of regulatory bodies are almost similar. Our onco facility and CP I are expecting the INVIMA audit in April, and these professionals will play a vital role in ensuring integrity and quality there. They have inspected many biosimilar facilities in China, South Korea and Russia, and their contact with these companies will also help us actually to find an opportunity for outsourcing. We are known as asset-light models -- we are known for asset-light models from China. Now we'll go for an asset-light model for the specialties in places like Korea and also Turkey and Russia, too. Biogenerics will definitely help us actually to improve our bottom line over a period of time. Hence, the video SOP will act as a tool for networking with the companies mainly in China and Korea. We also understand that to achieve our goals, we must change the current version of ourselves. And it's not about doing more activities, it's all about doing right activities. Hence, the 2 right activities are the one that I highlighted now. Thank you. Thank you very much.

Yes, yes, fully audible. I request our CFO to throw some light on the numbers before we open up the floor for questions.

Thank you, Mr. [ Vivek ]. Good evening, everyone, who has taken time off to take part in this call of Caplin Point Laboratories for the third quarter ending December 31, 2025. Results for the 9 months ended are very gratifying. The group has achieved good growth across all financial parameters. And we are happy to say that we have compared ourselves to the peer group ones which have been announced till date, and we are in good stead, and we are comparatively higher than many of them have reported in terms of the profitability and growth. Now coming to the operating revenue. The revenue grew by 10.6% year-on-year and total income grew by 11.2% year-on-year. 9 months revenue is close to the entire year revenue of 2023-'24. Growth in other income of INR 16.47 crores has primarily come from deployment of incremental cash. As I told in the last meeting also, we have a mandate of investing at least INR 300-plus crores year-on-year additionally over and above what we invested in the past. This year, the mandate is even more stringent to invest about INR 400-plus crores into the instruments of -- financial instruments. So COGS has grown only by 9% in spite of the increase in turnover. If you see the last 3 years, the COGS as a percentage of revenue has come down from 43% to 39% is significant growth. OpEx grew only by 6%, way below the revenue growth and OpEx as a percentage of total revenue stood at 24.46% as against 25.62% for the correspond period, and you will be glad to know that come down to 27% in 2023-'24 to 24.46% in the current year. Both factors whatever I mentioned have resulted in a growth of 17% way above the revenue growth in EBITDA margin and it is at 38.5% as against 36.5% in the last year corresponding period. Capitalization of about INR 62 crores primarily in CSL has absorbed additional depreciation of INR 5 crores and PBT again grew by about 17.8% on 500 plus -- INR 500 crores to INR 589 crores stands at 35.2% and this is -- happy to say that this is higher than the entire year of '23-'24, which was INR 565 crores. Then PAT again is INR 477 crores higher than the PAT of INR 461 crores achieved in full year of FY '24. All the above positive factors have resulted in growth of 20.5% in PAT. PAT stands at 28.5% as against 26.3% in the last year. It will be convenient to know that we have been promising around 25% as the target PAT, we are [ very modest ]. And coming to the balance sheet, net worth stands at INR 3,338 crores as on December. Cash and cash equivalents is at INR 1,381 crores as against INR 1,180 crores after the investment of [ INR 180 crores ] in CapEx. [ CWAP ] stands at under [ INR 195 crores ] majorly accompanied by One Labs injections, which is under -- final stages of completion and [indiscernible] plant, which we are setting up near [indiscernible] Pondicherry. Inventory as we have been paying the closed customer winning [indiscernible] Caplin and it stands at about 51% including the transit. 55% are there in our warehouses and 12% in transit reaching any time now. Receivable stands at 171 days as against 118 days even though we've been promising 120 as a benchmark, it's slightly more because last week of -- last 10 days of December, we couldn't get the remittances [indiscernible] because of [indiscernible] abroad. But that has been more than compensated by the more remittances in the month of January, and we hope to get back to the old level by March or if not by June. The cash flow from operations stand at INR 368 crores as against INR 284 crores in the previous period -- corresponding period. And free cash flow, as I said, after investment of INR 180 crores in CapEx stands at INR 151 crores for the 9 months period ending December '25. I think these are the few points which I thought would brief you. Those results have been with you for a while now, and we would be more than glad to take any questions. Over to Mr. Vivek. Thank you.

Thank you, Mr. [indiscernible]. So we can open up the floor for questions now, please.

[Operator Instructions] The first question is from the line of [ CA Garvit Goyal from Serene Alpha ].

First question is on oncology API facility. It is getting further delayed, sir. Earlier, we were speaking about Q1 FY '27 and this typically are -- we have mentioned Q3 FY '27. While I understand that we are doing the CapEx by internal accruals and all. But sir, these delays are now going beyond the normalcy. I'm sure like an efficient and experienced capital allocator like you, this must be in your mind because ultimately, we have to grow the business. So for that, we need to assess at the right time. So what is your view on it? Like why are these delays happening on a consistent basis? So that's my first question.

Okay. Can I give you the answer to this one? Okay. Delay, yes, it's happened. But in the current context, what is important actually is not the delay. It's not totally denied actually. It's not a denied opportunity today. It is fully completed. And that too, when we get into the next level, that is for the regulated markets, this facility is ready for the U.S. FDA actually. And we are also planning to go for 10 to 12 injectables at a time in the form of filing and invite the U.S. FDA inspector for the audit. So hence, what happens, you are aware that sometimes the facility completion, it takes its own time. It may be because of various reasons. The reason one here, I would like to say like this, the ecosystem in actually Tamil Nadu has not been extraordinary, like what you call Hyderabad or Bangalore or Vizag or Ahmedabad or Mumbai. Hence, it also gets delayed. That's one reason. At the same time, as you rightly said, the money is not borrowed. There is nothing in the form of actually interest loss. I won't say there's an opportunity loss also because sometimes it is for a greater good, which is difficult to understand. What is not obvious many a times actually, it will create some tangible opportunities also. Yes, please.

So one other point also, Garvit, is the API units are going to be only for backward integration. But remember that we are not really relying on our own API as the first source. This is going to be a second source. So even if the API get delayed by a further 2 to 3 quarters also, which will not happen. But even if they do happen, it's not going to be materially of any effect to the company because our R&D and our filing continues to happen despite it being our own API or from external API. Till this point, 100% of all the filings and approvals we have received are from external API. So please remember that this thought process of getting into our own API is strengthening our supply chain. But by no means it is going to have any material impact immediately.

When you say the ecosystem is not extraordinary, like what kind of challenges are we facing? Can you further elaborate that?

Talent, whether it is in the form of consultancy or in the form of some project heads actually. People who come in, they don't stick to it. See, if I want to give you an example, see, at one point in time, you know ours is a turnaround story. Today, we are the #1 company in Tamil Nadu. There are companies which are 10, 12 years ahead of us. In fact, they started the company much, much earlier to us. Still, they have not even reached 50% of our sales also. I don't want to mention the name of the company. Since you asked me, I have to answer quickly.

Understood. Secondly, on the growth part, first 9 months, our sales are up by 10% to 11%, whereas -- which is well below our last 3-year average of 15%, which we used to use as a benchmark in the recent calls. Even if I see your fixed assets, these have doubled in the last 2.5 to 3 years, but our top line is up by only 40%, 50% against that. So why are we slowing growing our top line? Sir, I agree that base has become high, but I'm not asking for like we should grow 30%, 35% on this higher base, which I understand from the earlier con call, earlier interactions as well. But not even doing 20%, 25% despite having the strong CapEx, and we earlier speaking about entering into the new markets and new product approvals that we are getting on a continuous basis. So I'm not able to understand why it is taking us like so much time to ramp up on the asset of the CapEx or the efforts that we had made over the last 2 to 3 years?

Vivek, can you answer this question?

Yes. See, we've been very consistent with our messaging that the next 18 to 24 months is going to be a gestation and a consolidation phase for us, right? So there are multiple things that we are working on. Number one, our entry into the larger markets of Mexico, Chile, Colombia. Number two, our oncology business is still at a very nascent stage. And number three, our U.S. label and our U.S. B2B business is getting consolidated right now. Now remember, we are not in the domestic market, where the minute you come up with the product, you can directly go and then start making sales, right? We are all in either emerging markets or regulated markets where things take at least 3 to 4 years for some amount of gaining maturity. So we feel that '28 and beyond looks very exciting for the company on all fronts, on all these fronts that I was talking about, which is larger markets of LatAm, U.S. [ piece ] and oncology, et cetera. So we need to be a little patient. But during this time, we've been able to consistently still grow at low-double digits. And our U.S. business, which is gaining much more traction is showing growth of almost 25%, 30% also. So we are also able to put away a significant amount of cash into our reserves where we are building up a war chest where if there is even an outsized inorganic opportunity that comes through, we will not be shy to do that as well. So I don't think we are slowing down by any means. I would say that we are consolidating and '27, '28 and beyond could be something that is very interesting for us all to look forward to.

Got it, sir. And regarding on the margin front, is there any further scope of improvement in the margins?

I think we're at a path of 27%, 28%. I'm not sure.

[indiscernible]

I'm not sure if there are too many peers within this range, Garvit. So -- but regardless of that, I think once we start firing on all cylinders from these newer initiatives that we take up, there is a potential for that to go up as well. I don't deny it. But I think at 28% for us to stabilize this and maintain itself would be an excellent achievement, yes.

Understood. So more probably because margins are at peak and for next 18 months, we are speaking about lower double-digit sales growth. So bottom line should be more or less in line with the sales growth only. Is that understanding correct?

The bottom line will remain where it is. I mean, look, there might be 1 or 2 percentage points up or down, but the 26% to 29% path is something where we are comfortable with, and we expect that to continue.

The next question is from the line of Ahmed Madha from Unifi Capital.

I have 3 questions. Firstly, the buyoff we made for a few ANDAs on the oncology side, if you can give some sense what amount we have paid for the ANDAs, I think we got? Secondly, what will be the timelines do the site transfer and the commercialization take? And from the $473 million addressable market size, what sort of potential market share Caplin Sterile can gain?

Okay. So see, some of this information is of confidential nature. So I won't be able to go into too much details of it. But what I can give out is we are very, very prudent in how we spend our cash, and that includes these acquisition targets also. The one clue I can give you is that we sort of try and make it a point that any acquisition of an ANDA that we do is always equal to or lower than the cost of actually filing that ANDA itself. So you may draw your inferences from that. And in addition to that, the timelines wise, what happens is we need to do the site transfer by way of what we call as a post-approval supplement, PAS. Now we need to run at least one batch of that product and then put that in stability for 3 months and then apply for the PAS, which is 6 months. So all put together, we expect some of these products to come to market by early next year -- late this year or early next year. And finally, when it comes to the market share, out of the 14 products, there are 2 of them that are fairly large in size, but they're also extremely tricky because they need completely dedicated lines, dedicated units, et cetera. We might not be doing that in-house. We are very actively scoping out contract manufacturing companies for that. We have narrowed it down to 2, both in Europe, and we are in late-stage discussions to take transfer it to their site. So in general, I think you can always expect the first couple of years to have about single-digit market share. And then when we consolidate and then when we have a larger portfolio of products to offer, then that slowly starts inching up towards the double digits in terms of market share.

Sure. That's very helpful. On the Mexico and Chile business, we have made a lot of progress in terms of approvals, building the pipeline, getting the inspection and the plant, everything ready. If you can give some sense how far are we from meaningful top line generation from those markets? And what sort of progress we have made in terms of commercialization and getting the top line ready?

Yes. When it comes to, again, Mexico and Chile, I would still put the same timelines at about 18 to 24 months is when we can start to see it firing on all cylinders. Of course, when it comes to both these markets, typically, they are a little bit tender heavy as well, right, especially Chile. But there, again, we are trying to get into the private market, which is what the base of our business in Latin America is. We've been -- more than 80% of our revenues from LatAm comes from the private market, which is what we are trying to do the same in Mexico and Chile as well. Chile is a little bit further ahead compared to Mexico because we've been in Chile for some time now, but mostly on tenders. Now we are getting into the private market and the same for Mexico in 2026 as well. So I would still say that 18 months is a good timeline for us to see something meaningful on the top line to the parent company.

Sure. Lastly, on the P&L, if you look at the operating cost, it has been very stable for the last few quarters. We have made progress in the top line growth gradually. I'm just trying -- I'm just curious to understand that despite the new plants coming in, both the plants which got commercialized, I think, in the last 3, 4 months, I'm assuming. And top line growing gradually, the cost has been broadly steady state. Would you like to help us understand what sort of explains that?

I'm not fully clear on the question.

I think the CFO will be able to answer to this.

I'll put it a different way. If I look at last year, the operating cost, which was apart from the employee cost was about INR 89 crores. This quarter, it is about INR 88 crores, and we have grown top line by 10%. So broadly, the costs are similar. We have grown top line by 10%. While we have also commercialized new plants, which I'm assuming will have incremental costs coming in with hiring and other initial OpEx cost. So I'm just curious to understand what explains that the costs have not gone up despite top line going up and new plants getting commercialized.

Go ahead.

Yes, correct. So a couple of years back when we were in the same meeting, we were asked for this lower turnover [indiscernible]. We have built the infrastructure, we've built the [indiscernible] employees have been recruited for the enhanced capacity. So also, as mentioned by one of the previous speakers that most of the projects are in the final stages. Nothing has been put to operation yet. So initially you capitalize whatever the [indiscernible] operating expenses are getting capitalized. And then we -- once the products are put on -- products are put on steam and start commercial, we'll see the impact on the OpEx. And as we have mentioned in the past also, previously our sales [indiscernible] and almost a year back, 1.5 years back, we've converted [indiscernible]. The credit cost [indiscernible] has also come down. It has gone into the other [indiscernible] seen in the past. Okay, [indiscernible].

Sorry to interrupt, sir, your voice is a bit muffled.

Am I audible now, clear?

Yes, it's better now. Yes.

So I'm trying to say [indiscernible] and then when we build that [indiscernible].

Sir, again the line is a bit muffled, and we can't hear you clearly.

Am I audible now?

Yes, you can try again. Let's see.

Okay. So as I was mentioning that the infrastructure has been created, the manpower has been created, facilities are created for the enhanced capacity. Once these projects are put on commercial, we will not see any big spike in the expenditure as such. So that is one of the reasons why the -- even though the top line is growing and operational efficiency has also improved. As I said the productivity has improved, that is also giving a room for a percentage -- as a percentage of revenue, the OpEx is either lower or around the same level.

The next question is from the line of Shrinjana Mittal from MS Capital.

Just one quick question. Mr. Sathya, you can help me with the Caplin Steriles EBITDA number, that would be very helpful.

Yes. Thank you for the question. For the quarter ended December 2025, the EBITDA for CSL consolidated is INR 31.09 crores.

The next, we have a follow-up question from the line of [ CA Garvit Goyal from Serene Alpha ].

Sir, is there any further material update on the inorganic acquisition that we are evaluating right now?

Nothing to report at this point, please. So if there is something material, definitely, we will update as and when necessary, but nothing is at very late stages or anything like that at this point.

The next question is from the line of Richa from Equitymaster.

Am I audible? Sir, I wanted to understand, like I'm new to the company. In the last con calls, I've gathered that you had a INR 1,000 crore CapEx plan, of which half was nearing completion and your other half was expected to happen over 2 to 3 years. Part of it is backward integration. If you could give some clarity, how much has already been incurred? What is the plan for next 2 years? And what kind of asset turn you are expecting over this CapEx?

I request CFO to take this, please.

Could you please repeat the question, madam? You were not really audible.

Yes. The question is out of the INR 1,000 crores of CapEx expansion that we have taken how much has been spent already and what is expected to be spent in the next 2 years? And the last is asset turn, is it?

Yes. What kind of asset turn are we expecting? Because there's some backward integration element is there, so.

Yes. Can I go ahead?

Go ahead, please.

So what we have capitalized [indiscernible] INR 153 crores and INR 127 crores is in WAP. This is adding up to about INR 280 crores, INR 290 crores. And what we have further advanced about -- what Mr. Vivek talked about ordering certain 4 lines, we have advanced already about INR 88.54 crores, about INR 100 crores. INR 385 crores is already spent. The rest is to be spent over the next 12 to 18 months.

Okay. And asset turns also, if you could give some clarity?

Asset turn depends on when these projects get capitalized and start earning revenue.

I understand. Let's say, over 3 to 4 years, I was asking that because some of it is going into backward integration as well. So it might look very different from your historical turnover. So at maturity in 3 to 4 years, what kind of asset turns do you expect over this CapEx?

It will be difficult to predict as of now because our asset turnover doesn't directly [indiscernible] denominator with numerator because as Chairman also put it, we are into asset-light model also. So we are working with various CMOs, CDMOs and whatnot, and then that will give me a top line where without any contribution from the plant. So we have mixed and also we are investing heavily into R&D, which would not directly give to the commercial operations. So our existing product or the company is a mix of both asset-light model, R&D-heavy and then project based. So it will not be lower than what we are today.

And also, I think much of it will depend on the kind of products that we do and the market positioning for those products at the time when they come to market, et cetera. So typically, for a multiproduct facility, typically for a facility that focuses on -- I mean, for a company that focuses on different kinds of markets, the asset turn is something that is difficult to really pin down. I think it's more -- if I'm not wrong, I think it's more applicable to an API industry rather than formulation.

Okay. And sir, one more thing, like how should we look at the tax rates? Are they going to stay where they are or inch up?

Yes. Again, request CFO to take this, please.

Yes. Tax rate, we have been telling that about -- we have some avenues and we are at about 20%, 21%. We expect that to be around that in the coming years as well.

[Operator Instructions] We have the next question from the line of [ Ketan ], an Individual Investor.

First of all, I'd like to place my appreciation for the Chairman and his entire team for doing a fantastic job. I've been invested in this company for the past few years, and I've seen that quarter-over-quarter, you guys are delivering revenue growth, margins, cash, everything is fantastic. Sometimes I feel it's too good to be a true story, but I mean it is what it is. So really, my appreciation for the entire team.

Thank you.

Now coming to my query, my question is for the 9 months, is it possible to provide the revenues for the Chile market?

Chile market, what is happening there as has been told actually by Vivek, this is a market where it's all tender-heavy, like 75% to 80% is tender and 20% is private market. And very recently, we told our guys to actually focus on private market. In the first month itself, they have done some $100,000 business, although it's not huge, it's really good actually for a market where people focus only on the tenders. So hopefully, the revenues are there, but the issue is this market being a tender market and then the import duties are very high and the payments also from the government, it comes a little late compared to some other countries. Starting from this month or next month, we are likely to do around $200,000 to $300,000 of remittance. We are likely to get it from Chile. That's what I've been told by our people in Chile. Chile takes time. But once we complete the OSD, we have completed more of injectables. Injectable goes only into the institutions. Private market, of course, as you know well, we should sell more of OSD and other products. But of course, now only we are submitting some products for registration. Hopefully, in the next 1, 2 years, we will do very well in Chile.

And the other query I have is on the U.S. margins. Now when I look at your segmental figures, for the 9 months, the figure is about INR 323 crores for the U.S. market revenue and the profit before tax is 34%. So I just wanted to know that right now, the margins look about 10-odd percent. But going forward, is this likely to inch up? I mean, in terms of the margins for the USA business or is it likely to go up in the next few quarters and few years?

Coming to U.S. business, I would like to say something afterwards, Vivek will actually bring the horse. If you look at actually injectable facilities, whether it is in China or U.S., this is always big boys' game. In 2 years, we will be in a position to complete 14, 15 lines exporting products to U.S., which is, of course, it's not that easy, and we'll be one among the 4, maybe 3 or 4 from India. And I've also seen companies which are very advanced in China in the form of producing biosimilars and a lot of biological products, hardly 1 or 2 companies concentrate on U.S. market. It is also true compared to other markets, this is not that actually lucrative. But why we will have to get into this market because this is the biggest market in the world. If you can create many lines like 14, 15 lines, then what will happen, you are part of the big boys' game. It's not that we are going to compete with the big boys, but what we will do is we will have to increase the number of lines to be -- to tell you honestly that I hustled my way out of the person I used to be. I used to be a person in charge of marketing. I didn't know anything about actually manufacturing. I had to play a different role for the last 3, 4 years. And now I understood actually that we will be in a position to handle even 13, 14 lines also over a period of time. Once we get into that state, maybe if I spoke in the form of video SOP and other things, I'm sure now one more -- in addition to that, we are also going for women empowerment. Most of the women in the rural areas, they are totally deprived actually and then the economic independence makes all the difference to them. And the men in rural areas are different from the women. So the women on one side, actually very disciplined. They come to work and they do their work also only thing you'll have to teach them. We are trying to teach them through video SOPs. Once that happens, as I'm 100% sure this market, especially the U.S. market will start fortifying us in such a way it has happened to some of the big companies of India.

Yes. Thanks, Chairman. And when it comes to margins, Ketan, how we look at it is, see, out of this INR 320 crores of revenues from the first 9 months is all from the existing products itself. And some of these products are what others would call us slightly commoditized kind of products. So despite that, we've been able to have a fairly decent EBITDA number and a fairly decent PAT number. But remember, all of these acquisitions that we have done for the ANDAs, all of this R&D work that we do, everything gets expensed out. We don't capitalize anything. So there is a bit of a drag because of the plans that we have for the future. Over a period of time, especially when some of these newer products, et cetera, come through, you will start to see the bottom line numbers go up. In fact, even now, I think we are comfortable with where they are, but this will definitely start to go up. And '27, '28 and beyond, as Chairman said, when we have 13, 14, 15 lines, your expenses start to cap out after a bit. And every additional revenue that you have will be a direct impact to the bottom line positively. So we'll have to wait it out a little bit. We are happy with where it is today because we know that this is in addition to all the drag that we've had in terms of the R&D and the inorganic ones, et cetera. So it should only go up from here.

Once again, my deep appreciation to the entire team at Caplin Point. Kudos to all. Keep up the good work.

The next question is from the line of Sachin Kasera from Svan Investment Managers.

As mentioned by the previous participant, congratulations to the team for the consistent performance that we have delivered even in difficult times in the last few years. So that's a great job by us. Just coming back in terms of the current opportunity and the growth that you're talking of. So the presentation mentions that Chile will be in the top 5 markets in the next 2, 3 years. So can you just quantify, give us some sense, if not an absolute number. So when you say top 5 markets, are we talking like $10 million, $15 million type of revenue, some sense on that when you say in the top 5 markets for us in the next 2 to 3 years?

$10 million to $15 million per year, definitely is possible. Maybe we will even actually go beyond that one. That is for sure. If you look at 1 or 2 companies who are from India, they have been doing a very good business in the form of $1 million to $1.5 million. But again, they all have more of OSD in the form of like 80 to 90 products, whereas we have more of injectables. You are aware that we manufacture injectables for the U.S. market. And we are also focusing on OSD now, plus our oncology facilities also in the next 2 months, we will start the commercials. We are planning -- we are also doing some -- we think BE/BA studies for our oncology products, which, of course, we will submit for registration. So we'll definitely do well actually in Chile. That is for sure. It's a question of time before it happens.

And can you comment a bit about Mexico? We have mentioned about putting up a facility also there. So what type of investments are we looking at the Mexico facility and that will be primarily for serving the markets of Mexico or will that facility also serve markets other than Mexico?

Mexico, there is an advantage for the local industry. They give 10% to 15% advantage to the local factories for the supply of -- supply to tender business. That's one of the reasons we are keeping this facility there. Second, these are the products actually where the transportation cost also is quite high because ointments and others, we may even go for liquid orals also there. We'll be transporting water from one continent to the that continent. It's ideal to start a factory in this part of the world because the cost of production will not go high because of the other factors which I mentioned now. Second, we also get an advantage of supplying to the tenders with 10%, 15% additional margin. And that, we always believe in catering to the private market, especially to the bottom of the pyramid. I'm just waiting for the first inspection to be completed here from the U.S. FDA. After that, I'll go back to Mexico and see how exactly the market responds. The initial work, I always used to do it afterwards, the Vice Chairman who happens to be my son [indiscernible] to take over. I'm just waiting for that to happen.

But any sense in terms of the type of investment we are looking in Mexico broad range in terms of the CapEx plan there?

The investment may not be very high for ointments and the liquid orals. It will be in the region of INR 100 crores to INR 125 crores. It will not be more than that. And most of these products, there is nothing in the form of bioavailability or -- sorry, bioequivalents or bioavailability. So once we complete the project, we'll be in a position to get into the market immediately.

Sure. My next question is regarding GLPs. You have mentioned that we are developing our own GLPs and some of them, we are doing some sort of a tie-up with the Chinese companies. So next 3 to 4 years, what is the type of opportunity do we see that? Can it be like a very meaningful contribution to overall revenue and profits?

In the next -- are you mentioning about the next 3, 4 years?

Yes.

We will definitely do well in the next 3 to 4 years' time. The kind of investment which you make, it is not an investment which is very shallow, like we are investing in hard assets. Our assets actually will definitely fructify over a period of time. Already, we are around 50 doses in our CSL. And then in the next 3, 4 years, we'll have 100-plus maybe 125 ANDAs. In addition to that, we will also go for global doses from that facility. And then we are also in the process of completing another facility. I'm talking of the APIs, both API, that is for captive consumption. It will be a vertically integrated company like any other big company. The only difference is most of the big companies, their API volumes are quite high, whereas ours is for the captive consumption. But these big companies also, they slowly move actually from one area to the next area. But the companies of our size, they will not get into the space. There will be hardly few companies. If you look at the injectable companies, most of the companies that you see in India, either they are big or people who are into CMO business. We are not in the CMO business. We are like big people -- sorry, big companies. We are following the footstep of big companies for manufacturing as well as filing the ANDA -- filing the dossiers also for ANDAs. So we are sure to actually do very well, not only in the U.S., but also in Latin America and rest of the world, too.

But sir, my question was more to do with GLPs. We have mentioned in the press -- yes.

So when it comes to GLPs, Sachin, we are entering into the smaller markets in Latin America to begin with. And we are doing something very unique, which we will reveal that as and when the right patents and everything are set up. But at this point, I would say that it's a little bit of an unknown space because what happens is the GLPs have been very extensively used in the developed markets. So in the developing markets, we are just slowly starting to see some amount of usage. And only now, I think this year, all the patents and everything except U.S. will expire. So we will start to see a little bit -- I think there will be a little bit more clarity on how these products are going to get picked up. Of course, in India, one of them has picked up significantly more than the other one. And the truth is it is moving in a different direction in our opinion. But again, this is a conversation that will take a long time. I would say that we would be in the second wave of people that start to commercialize it, not in the first wave. To be honest with you, that might actually work out better for companies like us to be in the second wave rather than the first wave.

Sure. Just one question on CapEx and also linked to that in terms of our overall cephalosporin production. So once we complete this CapEx of INR 1,000 crores, from what I understand, right now, we have a model whereby we partly manufacture in India and partly we get it outsourced from China. So do you see -- how do you see that mix changing? Is it remain the way it is right now or in the next 3 years, is there going to be a change in terms of the mix between what we produce in India versus what we get it sourced from China?

I would like to say a few words on that one. If you look at China, we will now be able to compete with them in cephalosporin and penicillin area. And we have been sourcing products of penicillin and cephalosporin from China, and we will continue to source from them. If you look at, again, biosimilars, they are much, much advanced, even GLP products, the API at one point of time, it was actually $500 semaglutide today, it has come down to $80. So this is a market where we can chase the economies of scale. And some areas, we will not be in a position to actually compete with them. It's better to join somebody whom we can't compete with. That's one. Second, how the change will come maybe in 5 years from now, the most important thing one has to worry about it actually not this one, how the AI will impact the industry. If robos can replace 100 to 200 people, the manufacturing actually in U.S. and the manufacturing in India will be one and the same, probably the cost-wise because Indian -- if you do it for India, then, of course, export may not be back. That's the reason what we are doing now. We are slowly trying to also create some facilities in countries where they may allow actually robos without any hesitation. So this is one thing which is the most important one than any other things because we are also thinking of fill-finish biosimilars. We are also thinking of various areas where India is positive. India, of course, India-centric products, we are trying to do China-centric products, we are following the asset-light model.

So fair to assume that 60-40, which is in-house versus outsourcing, probably could become like 65%, 70% in-house and 30% outsourcing because we are doing almost INR 1,000 crores CapEx. So that should mean that going ahead, we are able to produce more in-house rather than outsourcing?

You're right. You are right. It will happen. It will happen. But again, what we will do is the outsourcing part from China will -- we don't want to reduce it. The reason being we are outsourcing from big companies. And then we are outsourcing, again, actually products which cannot be actually manufactured that cheaper in India coming towards cephalosporin and penicillin. And even if you want to go for a biosimilar facility, it is better to test the waters in the form of fill-finish rather than going actually for a factory from the scratch. So we will have some collaboration with the Chinese partners and continue to do the business in the form of asset-light model. What you said is true, the 60-40 may even go actually 70-30.

And just one last question. Once we complete this INR 1,000 crores CapEx, are we going to look at another round of large CapEx or then for the next 2, 3 years, the CapEx intensity is going to come down?

See, what will happen probably is we'll have to think of actually meaningful inorganic growth after that. This can be in the form of acquiring the products, can be in the form of acquiring a distribution company, which will help us in the private market. It can be in the form of acquiring some companies where there will be a value addition for Caplin Point.

But not too much in terms of manufacturing. Manufacturing CapEx will go down.

I don't think so. It will come down. It will go down. It will go down.

Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for the closing comments.

Thank you, everyone. Thanks for taking time out to join the call. It was excellent interacting with all of you as usual. We hope to stay in touch with each and every one of you. Thank you.

Thanks to all of you. Thank you so much. Thank you.

Thank you to Dolat Capital and your team as well, please. Thank you.

On behalf of Dolat Capital Markets Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.