Caplin Point Laboratories Limited ($524742)

Ladies and gentlemen, good day, and welcome to Caplin Point Laboratories Q4 FY '26 Earnings Conference Call, hosted by 360 ONE Capital Markets Private Limited. [Operator Instructions]. Please note that this conference call is being recorded. I now hand the conference over to Ms. Julie Mehta from 360 ONE Capital Markets Private Limited. Thank you, and over to you, ma'am.

Thank you, Farah, and good afternoon, everyone. On behalf of 360 ONE Capital, we would like to welcome you all to the 4Q FY '26 conference call of Caplin Point Laboratories Limited. Today, we have with us senior management of the company represented by Mr. C. C. Paarthipan, Chairman; Mr. Vivek Partheeban, Vice Chairman; Mr. Ashok Partheeban, Vice Chairman; Dr. Sridhar Ganesan, Managing Director; and Mr. D. Muralidharan, CFO. I would now like to hand the conference over to Caplin Point management for the opening remarks. Over to you, sir.

Thank you, Julie. Thank you, everyone, for joining, and welcome to our Q4 and FY '26 results and earnings call. 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 also do note that anything said on this call, which reflects our outlook for the future or which could 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. Please do note that audio conference call is copyrighted material of Caplin Point and cannot be copied, rebroadcasted or attributed in press or media without specific written consent of the company. I would like to now hand over the floor to Chairman for his opening remarks.

Thank you. Good evening, and welcome to our investors call. Let me first list out the differentiation that we have created in the last 5 years. Revenue doubled from INR 1,085 crores to INR 2,300 crores in '25-'26. Liquid assets tripled INR 928 crores to INR 2,726 crores. Free cash results tripled INR 470 crores to INR 1,470 crores. EBITDA, PBT and PAT increased by 2.5x. Investments in CapEx stands at INR 900 crores in the last 5 years. The gross contribution improved due to operational efficiency. Currently, we are building new factories for injectables. All the machines for the new factories are imported mostly from Germany and Italy. In the next 2 to 3 years, we'll have 17 injectable lines for U.S.A. and other regulated markets of the world. Our factories will be digitalized. Every machine that enters the factory will have video master to make the qualifications easier and also for operational efficiency. Our video SOP for which we filed the patent has some unique features. It is visual before verbal. We do not depend on 1 QA or 1 QC or 1 production or 1 engineer. The knowledge will be stored in the video library. Our visual SOP ecosystem is both kinetic and non-kinetic. The kinetic side involves cameras, screen, voiceover, online monitoring and dashboards. On non-kinetic side, visual intelligence, behavioral discipline, institutional learning and memory, compliance consciousness, operator confidence and quality mindset. For example, China rise is a kinetic and non-kinetic story. The present world affects the following: APIs, solvents, freight and lead time to destination, currency swings, energy unpredictability. However, our model of keeping the goods next to the customer in the last 20 years has produced these compounding effects. Hence, we always keep the goods in our subsidiary warehouses for a minimum of 6 months stock in the form of stock in the warehouse, stock in transit and work in progress. This anti-fragile model has really helped us for the best fundamentals even in ROW markets of LatAm in the last 5 years. Now that we have substantial ANDAs in addition to that, we also buy for our business. In the next 3 years, we'll have maximum products registered in the highly regulated markets such as U.S.A., Mexico, South Africa, Brazil, Chile and Colombia. Further, we increased the number of women employees in our shop floor, which ensured the discipline. The discipline that resulted due to women empowerment also guaranteed the integrity and quality, which are very, very essential for regulatory inspection. The financial freedom for the rural women made them comfortable at their home and also in our shop floors. We always arranged to pick them up from their houses for all the shifts, which ensures their safety too. During volatile period, the cash becomes a strategic oxygen. Our cash flow helps us to build new factories, and we are also buying, as I told you before, more and more ANDAs for the U.S. market, and we have been trying to buy a distribution company either in Chile, Mexico or Brazil, and we are sure that we'll be able to register maximum products in this region. That way it will help our distribution company in case if we buy, that will actually take us to the nook and corner of the private markets of these countries. This one is not the mainstay for big companies as the focus of our business will be more on private market in addition to the standard businesses. We will also focus more on R&D for hormone injection and inhaler areas, which are unique in the regulated markets. Further, we're also on the lookout for a meaningful acquisition of a facility as we have enough cash resource in our system. Let me also convey that I've read actually in BS Business Standard 1000 of March 2026. They mentioned that the Caplin stand at 673 among the 1,000 listed companies of India, which comprises of all segments in addition to pharmaceuticals. They also mentioned that we stand at 42nd position among the pharmaceutical companies. When I look into the details, I have found that 16 companies above us had lower profits than us. The statistics is based on the top line, not on bottom line or cash flow. Finally, when our revenue doubled and the liquid cash and liquid assets tripled, we never had the extraordinary fundamentals that we are creating now. We only have 1 USFDA factory with 3 old lines and 2 new lines. Now that we are going for a massive infrastructure expansion, as I told you that we would have 17 lines of injectable in the next 2 to 3 years. And we will also have automation, digitization and visual SOPs. More ANDAs and more registrations, the regular markets of -- regulated markets of LatAm, entering in countries like Brazil and South Africa also will increase the prospects of our business. The variety of injectables in the form of liquid injections, ophthalmic, PFS, bags, BFS, fill/finish, lyo, onco injectable, hormone injectable will be there in the next 3 to 4 years' time -- 2 to 3 years' time and will also take us to the next orbit, which is for sure. Finally, as you all know well, business in the formative years is the puddle of unknown, unknown. When you develop the cadence for your business over a period of time and you establish the KPIs through various SOPs, then it's simply going above and beyond. That is a deliberate growth. Thank you. Thank you very much.

Thank you, Chairman. Now I request Ashok to give us a few comments.

Thank you all. Thank you all, and welcome to our investor call. I'll be talking about our Latin American facts and a few points about how we've been growing in Latin America. I would like to start with Chile. This is our newest market. We have won 35 products to the tune of $10 million for the next 18 months to be supplied. We have also received 135 registrations in Chile so far. We have submitted around 40 more products. Our private market is the most important in all the countries where we are. So as Chairman mentioned, we have 2 candidates that we are looking to offer to buy are 2 solid distribution companies that reach and corners of the country in Chile. We have these 2 candidates because they are actually -- they actually have their own sales team. They have their own logistics team also. So we are currently doing bio studies for more than 40 different products that are of very good margins and have very few players in Chile. I would like to move on to Central America, where we've been present since 2002. So a peculiar thing about Central America is what happened during COVID was that a lot of independent pharmacies started growing a lot. And during COVID, what they basically did was they just started opening pharmacies wherever they could find a space because a lot of people were going out of jobs and they put their savings into the businesses. So we made sure that all these individual pharmacies survive. And we did a recent inquiry into which we found out that the shelf space for Caplin products are 41% in these individual pharmacies. So while we were talking about this with the Board, we want to start a liquid manufacturing facility. And the reason for this is once we register all these liquids, our shelf space in these independent pharmacies will go from 41% to 57%. We are also getting into brand marketing in Dominican Republic, Guatemala and Nicaragua. We chose the central nervous system line where we already have bioequivalent done for more than 12 products, and we will be starting with that in September of this year. Going forward to Mexico, our biggest market in Latin America so far, we've received 25 registrations so far. We participated in 8 different products for a 2-year tender, which we won all of them. We also participated in oncology tender with a partner of us from China who gave us 4 different products, and we won those products too. We plan to do a sale of around $4 million in the coming 2 quarters in Mexico. As you all know, we already purchased the land in Mexico to build our first factory in Mexico also because we get a 16% advantage of price when you participate in the tenders in Mexico. We will be having liquid [indiscernible] and blister packing facility for tablets and capsules. This is the update from my side, and I would like to pass it on to Vivek. Thank you.

Thanks, Ashok. I'll just take a few minutes to very quickly brief everyone on our progress in the U.S., which is continuing to be one of the most important pillars of our growth and long-term strategy. As many of you would have seen from the results, FY '26 has been a very strong and meaningful year with progress on almost all parameters. This is -- from a few years ago, we were a cash burn EBITDA negative company. And today, we completed around INR 470 crores with EBITDA that sort of mirrors or comes very close to the parent company's numbers, which have been benchmarked amongst companies of our size. So we are very happy and proud to report that. On the product front, this has been a standout year for us. We've received approvals for 10 ANDAs in the last 4 quarters. And we've also acquired another 15 ANDAs with 5 in Caplin One in May, taking our total tally as on date to 60 ANDAs as of this morning. And importantly, this expansion is not just in numbers, it's also in depth because we cover the entire gamut of sterile products, we have products which is in vials, in prefilled syringes, in IV bags, 3ps dropper bottles for ophthalmics. We are now getting into cartridges. We're also getting into Blow-Fill-Seal. So not only are we showing good progress with the products that we have been doing, we are getting into sort of unchartered territory for Caplin Point as we get into some of these complex technologies. In addition to U.S., we will start seeing some meaningful revenue out of non-U.S. markets in the coming few years as well because we've already filed 54 products globally in non-U.S. markets such as Canada, Europe, Australia, South Africa, et cetera, and we'll start to see some progress there. From a capacity standpoint, as Chairman said, we are building Phase III. It's at a very advanced stage, and we're also expanding capacities internally in Phase I and II with expansion of our IV bag line to 3x the capacity. It's a very niche area where we have multiple products already approved. And as we get into the slightly more complex platforms, this opens up new opportunities for us when we put up our retail arm of the company shortly. So this, I think, would be a good time to touch upon Caplin's own label in the U.S. A lot of people are very skeptical about Caplin launching our own label because our B2B business was doing so well People were a little bit skeptical saying that this might distract our partners, and this might probably show some degrowth. But very happy to say that in our first full-year of operations, we've nearly touched INR 100 crores in revenue. Now we were about $11 million plus in revenue with our own label, and we've done this with no degrowth whatsoever in the B2B business as well. We had launched 30 products under our own label in the last year and another 15 products is going to be launched in the coming year. We have weekly ordering from the 4 largest wholesalers in the U.S. and pretty much most of the large IDNs that do business in injectables are our customers right now as we move from strength to strength. So I would say that in summary, our U.S. business is transitioning from a phase of foundation building to one that is scaling and growing in depth. So with a very strong pipeline, expansion of capacities, entry into complex technologies, et cetera, we are very well positioned for sustained and profitable growth in the years ahead. And I would like to request our CFO to throw some light on the numbers before we open up for questions.

Thank you, Mr. Vivek. Good afternoon to all who have taken time off to take part in this investor call post FY '26 results. The results have been highly gratifying, and we are pleased that we have done well all the across all parameters. Numbers are already there with you for couple of hours now and we would be glad to clarify your queries on the results. So going over the number again I'd like to present distinctive financial points consumption. One, with an exceptional balance sheet compounding effect has happened this year. Our net worth expanded by about INR 745 crores during the year from INR 3,631 crores from INR 2,882 crores in the previous year. This is 26% in 1 year. That is -- signals strong intrinsic value creation by the company. Massive ForEx translation reserve uplift is a hidden value that has accrued to us in the form of net worth also. So ForEx assets are INR 177 million against liability of INR 22.2 million. So as you all know that we are 100% export-oriented company and the assets number the liabilities. So this has resulted in FPTI movement of about INR 141 crores, which has gone directly into the reserves of the company. And then third point will be, as already Chairman put it, cash 0 leverage. We continue to strengthen our balance sheet INR 1,471 crores in cash and INR 2,726 crores in liquid assets. This strength provides us great significant strategic flexibility as Chairman also put it that we are on the lookout for a meaningful acquisition earnings quality and cash conversion. C inflow remained strong at INR 523 crores, representing 80% of the cash conversion of PAT. This shows profits are real cash, not only in books. Profit growth of 20% ahead of revenue growth of 13%. Profitability grew materially ahead of revenue growth, reflecting operating leverage and improving business mix. Next is CapEx. Before CapEx, I would like to inform the investors that our CapEx R&D spend this year has been close to almost 5% of our turnover, and this is the first time we have crossed INR 100 crores R&D spend. And the CapEx in fact for the last year was INR 238 crores. And just the summary of the ongoing project out of INR 1,000 crores what we have envisage we have INR 554 crores. PWIP INR 143 crores, primarily representing what is our injection plant in on [indiscernible] injection plant, which incidentally has been in the month of April post our MOH approvals and whatnot. And advances what we placed, we have talked about enhancing the line capacities. We have already paid an advance of INR 109 crores for various imported equipment. And the balance about INR 500 crores will be incurred in the next 18 to 24 months from out of our own cash. Then fixed asset turnover ratio, people were asking last time. So glad to inform it is about 3.91x. And the inventory held in market and WIP potential -- we had a potential of about INR 900 crores in terms of sales. So our strategy to keep the inventory closer to the customer and then is paying high dividends. This excludes of course inventory in the U.S. facility -- I mean U.S. factory and the [indiscernible] there. To summarize, FY '26 was not only a growth year, but also a year of strong balance sheet compounding net worth increased by INR 743 crores. Operating cash flow above INR 500 crores. Liquidity pool strengthened to INR 2,726 crores while remaining virtually debt free. This is all from me for the first instance. We will be more than glad to take any questions. Over to you, Mr. Vivek. Thanks. If we can open up the floor for questions now, please.

[Operator Instructions]. The first question is from the line of Aman Soni from Seven Alpha.

Congratulations on a good set of numbers. The question is on growing cash generation, how does management is going to prioritize between the inorganic opportunities and the incremental CapEx and the higher shareholder payout?

As I told you before, the inorganic opportunity, in fact, we are waiting in the wings. It can be in the form of actually buying the ANDAs, which, of course, we have been doing actually. We are waiting for more and more opportunity on that aspect. As I told you, the distribution company will also open up a bigger opportunity for us for the private market, especially in Latin America. See, going for acquisition for the sake of acquisition, I'm sure we would not actually -- would not advise us to go for actually acquisition without going for a meaningful acquisition. That will be a vanity. I don't think it's advisable. As I told you, what is important today, especially in the VUCA world, we are going for the completion of facilities. We'll be completing most of the facilities that are injectable, which are -- there are hardly 3 or 4 companies who would have 16 or 17 lines of injectables actually in India. When we complete all these injectables, all these injectables we are aiming to go for U.S. and other major markets. That means that's a great opportunity, which will open up in the form of not only for our own products to be sold in U.S., but also in the form of CMO. Second one is we are concentrating more on R&D for complex products. This is one of the things which is very important as you know well. The third one, we are increasing the registration in many of the larger geographies. These are a few things which are very important. If you need any other questions, please tell me, I would be able to answer to your question also.

Secondly, on the receivables part, receivables have grown materially ahead of the revenue growth. Is this timing related thing or any other reason for that, sir?

I could not hear properly. Vivek, are you able to hear?

Yes, I request CFO to take this, please.

As we have mentioned in the press release also, while the FX reserves, which I talked about improving my net worth has also increased my receivables. Out of 136 days what we have reported, 11 days is attributable to this [FCR], which has gone into receivables, but not through the P&L. This my receivables would have been 125 days. We have been promising on 120. As rightly said, timing also is one of the factors that have gone last quarter, we have won a big tender in Salvador and a lot of supplies have gone into that, which are in the process of being received in the market and the receivables will be collected by end of Q2. This is a big tender and most of the supplies have gone during February, March and are in the process of received today. This is one of the factors that also contributed to the increase in receivables. I would like to add one more. The currency in El Salvador is dollar, U.S. dollar. When I was working in this Latin American market, I used to see Colombians giving a lot of credit in Ecuador, where the currency is dollar. the currency of Colombia is to get weakened and they allow -- deliberately, they used to give credit more so that their is also more because of the depreciation of their own currency. Here, of course, we don't want to do that way. Even if the delay that happens from El Salvador is going to contribute to actually in the form of increased profit for our company. As you know well, the dollar actually is getting strengthened and the rupee is getting weaker. In no way, this is going to affect our bottom line also.

Just last question on the outlook for FY '27 in terms of the top line and specifically on the kind of margins, these are very exceptional margins we are doing. How much structural are these margins are going ahead?

We will continue to do well. As I told you in course of my speech, the best is yet to come. Maybe the best will come after 2 to 3 years. If you look at actually the past, in the last 5 years, I don't want to repeat again actually what all tripled, what all doubled and all you have seen. The next 3 to 5 years is going to be the best period for Caplin Point. Of course, we will do well actually, but it's difficult to tell anything on a quarter-on-quarter basis or on a yearly basis. Whatever we say, everything actually is happening in the form of building the factories or whatever it is because you don't see many companies of our size building so many factories without a debt. After having invested in the CapEx, still we have enough cash flow, that will also help us to go for inorganic growth, as you have mentioned. We are waiting for actually that kind of opportunity. It will happen. When it happens whatever you expect in the form of the growth can come even in actually 6 months or 1 year also if you go for inorganic actually opportunity. Again, we don't want to simply grab anything and everything, but rather, we would prefer to wait and actually go for something which is meaningful.

[Operator Instructions]. The next question is from the line of Ahmed Madha from Unifi Capital.

I have a few questions. Firstly, the revenue growth in the LatAm Africa business ex-U.S. has been pretty strong. Last few quarters, we added close to high single-digit, mid-single-digit growth, and this quarter is relatively exceptional. You can give some sense what has led to high growth in the specific geography?

Sometimes markets fluctuate. Whether it is B2B or B2C, generic business is based on supply and demand. We know we have an advantage of keeping the goods actually in the warehouse. If the profitability is not there in our sales, we will not sell. Selling for the sake of selling doesn't make any difference to the company. Sometimes you wait and actually do it. Sometimes, of course, we bundle it and sell also. At that point of time, there is a possibility the profit may come in single digit also. Overall, if you look at it, as you rightly said, the overall profitability for the year '25, '26, I think is fairly good. Am I right?

My question was from the front of revenue growth. If I look at the revenue growth of non-U.S. piece of the company, that revenue growth percentage was in single digits for last few quarters. We have spoken on the call that it will take a couple of years for us to jump up, and you have been doing a lot of initiatives on Chile, Mexico and other markets. The question was that this growth is higher in this quarter. Is there any specific factor which explains that?

There are 2 issues I can even highlight. Today, we don't have a depth of orders. The facilities we have is running actually at the optimum capacity. If you look at actually our business, you will see at least 40% to 50% of it is in the form of actually outsourcing for LatAm market. We don't want to -- especially when we go for outsourcing, it's not easy to get a good facility where you can't do the outsourcing very effectively. That's also one of the reasons for us to actually limit the top line. At the end of the day, what is important, whether it is a Latin American growth or U.S. growth, overall, only you'll have to look at it. Am I right or something? The Latin American growth will start doing or start flourishing actually after we complete the registrations, mainly in markets like Mexico. Now that as Ashok told, the business of Chile will start from this year, and it will start actually increasing many folds over a period of time.

Increase what you are referring to the growth from INR 432 crores to INR 470 crores in the quarter, especially just I was answering the previous question on the debt has bearing on this as well. We did supply a lot of material close to about INR 50 crores, INR 55 crores during the quarter to the Salvador. The tender valued is about 15 million and most of the parts have gone from India. That is the reason this growth in Latin America is showing a better normal U.S. has grown about 20%. Mix is slightly distorted, but this is the reason.

Yes, sir. tender business, of course, we had to rush and then export everything. Probably that's the reason you're telling. Okay. I didn't get it properly, so.

On the U.S. side, this year, I mean, we have done exceptionally well in terms of growing the business and having our own label. From here on, with whatever ANDAs we have acquired and organic approvals we have got about 10 of them, is it fair to assume the growth rate of 20%, 25%, that sort of run rate in U.S. shall continue until we reach a larger number?

Yes, we're very confident that current numbers can be sustained. In fact, we are confident that it can grow from here even further. Again, the most important thing as what Chairman was saying is we are not seeing a dearth of orders. In fact, we have an order book that's full for another 6 months almost. To an extent where some of these lower margin, very high-volume products, we're not even taking them on board. I think we are certainly on track to see a very strong next year for CSL. In fact, very strong next few years for CSL with all the capacity coming through. When it comes to our own label, the target we've set for ourselves is to double what we did last year. I'm fairly confident that we should be in a position to achieve that.

Would you like to sort of give a range of number, what sort of growth we can achieve at least for the next year?

Of course, we don't.

You don't provide guidance, but I'm just trying to...

When it comes to what current growth was, I think it was close to 30%. I think we can see another 25% to 30% next year on the overall Caplin syringe business. When it comes to our own label, we did close to INR 100 crores. The idea is to touch or go very close to INR 200 crores for the coming year.

Last question from my side. In terms of -- you've spoken about acquisition -- considering an acquisition even last quarter and similar this quarter. You spoke about obviously buying ANDAs and the sort of profile. Considering the amount of cash balance we have, what profile of acquisition we'll consider apart from buying ANDAs, which I'm assuming won't be a large ticket size. If you can give some sense of the profile of a company we are looking for.

When it comes to acquisitions, there are many things. I see, of course, being a listed company, all of our reserves and surplus, everything is in public domain and for everyone to see. You won't be surprised when I tell you that almost on a weekly basis, we receive a few opportunities. There are some opportunities that come in the U.S. There are some that come in Latin America, 1 or 2, in fact, come for the domestic market as well. The ones that we will be targeting is similar to what Chairman was saying is good distribution entities, especially in countries where we are very early or we are very new or in countries like the U.S. where it makes meaningful sense in terms of the knowledge that we gather. When it comes to ANDAs, I'm looking at it personally. We'll be very opportunistic in terms of what we can acquire because we need to sort of strike the right balance between making sure that we launch all our approvals on time and at the same time, not run into any dirt in the pipeline because typically, for most companies, including ours, the R&D outstrips the capacity. In injectables, an area of high criticality in terms of compliance and manufacturing, scaling up is not as easy as it is in oral solids. Taking that into account, we'll be very opportunistic in terms of acquiring some ANDAs in place of doing exhibit batches for new products and stuff like that. That's what we've done in the last year. We are actively working on another one right now. Hopefully, that should get over the line in the coming weeks.

[Operator Instructions]. The next question is from the line of Chirag from MS Capital.

Congratulations, Vivek, Chairman sir, for a strong set of numbers. I just wanted to first ask a question on the Central American and Latin American operations, and we have the chance to hear from Ashok Vice Chairman also. If you can just elaborate a little bit on the operations in that region. A couple of annual reports ago, we heard that we have almost 14,000 daily touch points. How much has that grown to? We also believe that there's a split between smaller wholesalers and distributors of around 60% direct pharmacy 20%. Could you just overall give us a view of the operations in the Central American market, if that's possible?

Yes. Every time we open a new country, obviously, the number of points that we touch actually increases. We opened Chile this year in a very big way. Obviously, so there are 4 big paying pharmacies in Chile. On top of that, 30% of the pharmacies are also independent. We obviously do not reach all the independent pharmacies right now through our own sales team, but we reach them through distributors that we sell to. I cannot give you an exact number on how many points we have grown by, but what we have -- what we are doing is, as I said, our shelf space in these individual pharmacies that we sell to in Latin America is about 41%. What we are trying to do is strengthen our shelf space to get to 50%, 55% where we are completely indispensable to these pharmacies.

Ashok, if you can also sort of give us a little bit of an understanding on what proportion of our customers would be still distributors or middlemen, what proportion would come from pharmacies, institutions or smaller wholesalers?

In the whole of Central America, the business that we do, about 18% to 20% is institutional, which is government. The rest is completely private market. What we do have to do in Central America in these countries is you have to have 2 co-distributors at least so that they reach to those pharmacies that cannot sell in everyday ticket sale, which is, let's say, we only do around about 300 products, a pharmacy that does, let's say, a sale of $150 per day cannot buy all the 300 products. They have to buy through our core distributors. Each of these countries, we have 2 or 3 strong core distributors. They sell around about 10% to 12% of our sales, and the rest of it all is us going directly to the pharmacy.

Just to clarify, you said 10% to 12% through those distributors.

Yes, 10% to 12% of our sales is through the core distributors and 20% through the government and the rest is all directly to the pharmacies. When I say the rest, it also includes the chain pharmacy also.

The second question is just doubling down on a previous participant's question on the receivable days. I understand CFO mentioned that a part of that is just FX change between the time the sale was booked and I guess, the closing of the books. That still brings us down to 125 days, which is at least 25 days higher than what we have seen in the past. Is this how we think the new normal would be? Is this a strategic call? Or how do we understand that?

Yes. Chirag, in the past as well, we've been giving the messaging out that we are comfortable with somewhere around the 100 to 120 days range. Now we are still within that range pretty much. As CFO and Chairman was saying before, we've entered into a tender in one of our Central American markets, a very highly profitable tender, by the way, where we needed to make sure that the supplies were done within 60 days. It was a fairly large tender as well. Those numbers sort of moved it up by 5, 6 days. Typically, I think we are happy to be anywhere between the 100, 110, 120 days, and that's a sweet spot for us. The larger picture that I want everybody to really see is we've been consistently able to invest hundreds of crores into our own CapEx, our own distributions. Despite all of that, we are still increasing our reserves and surplus by a considerable number every year. You can imagine that even if we do see another 5 days or 10 days increase in the future, we are going to be okay with it because when that money comes in, more often than not, it comes in at a higher exchange rate compared to what it was previously. The cash flow, I would say that we are benchmarked amongst peers. We are probably most other companies in the same segment. We're not worried about that. Anywhere between, like I said, 100 to 130 days even is probably still okay for us going forward.

Just to add to what Mr. Vivek said, our history of writing off debt has been virtually negligible and close to 0. We have not been had any bad debt in the past, which could not recover. There is only a delay, but not writing off. Most of the receivables now attributing the higher number is from government. For sure, it will be [indiscernible], give or take a few weeks here and there.

The next question is from the line of Richa from Equity Masters.

My question was on what's happening around the world, the Middle East tension. I know that's not your core market, and being closer to the customer helps to overcome the short-term disruption. How do you think, if at all, this could impact the business or margins or prices or maybe because of economic slowdown in the end geography, if it could have any impact on your business and any vulnerabilities that you may want to highlight?

Yes. I would like to actually give you an answer on this. In fact, if you look at our past business, in fact, we increased the business. Our profitability and everything actually went up only during COVID time, after COVID and during COVID. What is happening today, as our Prime Minister said, is something closer to COVID. We all have to actually follow the frugal ways and we started addressing is very, very correct. As a businessman, we should not allow the crisis to go waste. How we are managing it, as I told you before, for the next 6 months, we don't have to produce any products that we have to sell in the market in Latin America. The same way, even in our U.S. market, the goods are already available there in the U.S. warehouse. In addition to the 6 months, we have also bought raw materials. Yes, there are some increase in the prices, but it's not going to impact as the reason being when the prices go up, if you have already agreed actually to price to your customer in the form of a B2B business or an LC, then of course, what happens is you have to honor the commitment and then that's how you lose money. In our case, we are selling actually through our own actually subsidiaries, through our own warehouses. That's not going to create any major impact to our business. On the contrary, this will open up the opportunity, the reason being, a, these smaller geographies where we are today in Latin America, the big players are only into brand marketing. I'm talking of multinational. Second, small companies, they don't have anything in the form of actually stock and sale. They all actually sell it to some importer, so they will be very worried if they supply to the importer, they may or may not pay. The reason being most of the transactions today happens on credit. Nobody actually pays cash for January. If you have your own warehouse, if you have people, like we have more than 700 people working in the whole of actually Latin America. It helps us to collect the money. We are there for the last 20, 22 years. Coming to currency crisis also, Guatemala is very stable. There is nothing in the form of no fluctuation in the currency. Coming to Nicaragua and Honduras, maybe slight fluctuation in the form of 3% to 4%. The rest of the markets like El Salvador and then Panama, Ecuador, the currency is dollar. It's not going to create any issue. Costa Rican currency also is stable. Chile also for the last 4, 5 years, the currency is stable.

[Operator Instructions]. The next question is from the line of Prince from Family Office.

I have just one question. Going forward, can the company maintain around double-digit revenue growth rate and the PAT margin between 25% to 29% consistently during the FY '27, '28 and '29.

Yes. As explained previously, we remain very confident that the business will continue to do well. We need to be patient for the next 12 to 18 months at least because there is a period of stabilization in pharmaceuticals always what happens is there is…

Prince, is your line on handset or the speaker mode? Could you please switch to the handset?

Okay. With all things when it comes to pharmaceuticals, especially the regulated markets, things take a lot more time because your product development to approval itself takes around 2 years-plus. As we enter into the larger markets of Latin America and the U.S., things are going to take a little bit longer. Once it starts fructifying, I think it will be a very sticky business. 18 months and beyond, we feel that these numbers are going to get back to what they were before. I'm talking about Latin America. What we are seeing today in terms of the bottom line is -- please take into account that we have certain segments of our facilities that are not breaking even yet. If you're talking about our API unit and if you're talking about Amaris Clinical, which is basically completely backward integration. Despite all these drag on our bottom line, we are still looking at 27%, 28% PAT and 38%, 39% EBITDA, which, in my opinion, at least from whatever I've seen in our size segment, nobody else has these numbers. With all these drags, if we can continue to maintain these numbers, you can imagine that 18, 24 months beyond, these are going to be definitely maintained at the same level or potentially even inch up a little bit.

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

Just one question on ForEx gains. Can you quantify what was the gain on foreign exchange booked in Q4 as well as for financial year, if CFO, sir, can help?

The unrealized gain would be the order of -- we have about INR 20 crores, INR 21 crores of realized gain over the year. The remaining about INR 40 crores, INR 50 crores will be unrealized gain, which is reflecting in the receivables.

Out of INR 116 crores other income, what number would be roughly ForEx gains for the full-year, if you can give just one number?

We can even write that to you, Ahmed, so that we don't take everybody's time on this, please.

Just another question considering -- I think you answered on the volatility part, but considering the volatility in RM costs in general, obviously, a lot of ForEx volatility and assuming we are net beneficiary of the INR depreciation. Overall, considering everything, are we able to manage the current supply chain raw material volatility? Or has there been any issues considering we have a fair amount of dependency on China? How will you judge current situation? If you can give some remarks on that.

Our business in the form of outsourcing is much lesser compared to actually what we used to do in China and all. There was a time it was more of a natural hedging. Now that, of course, I think it's in the region of 25%, 30%. Coming to the volatility, the global economy is drowning in debt rather than water. That, of course, that will happen. Coming to us, what is happening to big companies will not happen actually the same way to a company where the fundamentals are unique or the business model is unique. If you try and do something which is unique, then of course, you will not allow this crisis to go waste. That's what I told before also. Prices are going up, no doubt. There definitely is going to go up also. When it happens, it is the model that makes actually to make money or lose money. The moment we understand that the price of a material which we bought is higher, we also actually design the price at which we have to sell the product in the market. That's why we don't face any major issues to be honest with you.

Yes. Just to quantify, obviously, with regards to input materials like glass and plastics and all of those things, we keep getting increases from suppliers. Of course, we fight all of them back and then try to rationalize it to the lowest amount possible. Just to give you an idea, the highest impact product for us that we've been doing, especially for the U.S. is less than 1.5% to 2%. The COGS I'm talking about, that's gone up by. We haven't yet seen any major negative impact in the form of input materials going up significantly.

The next question is from the line of Pavan Kumar from RK Capital.

Can you comment on the CapEx that is expected in FY '27 and '28 and what would that be spent on?

Yes. When it comes to CapEx, the residual CapEx that we have is the Phase III of our injectable plant, we call it internally as COL2. Also 2 other ones, which is we are conducting a much larger capacity oral solids and derma facility in Pondicherry, next to what we call our CP1 plant, our existing plant. Thirdly, we also will be completing our oncology API plant. In addition to this, we are drawing up plans for our building in Mexico that should happen sometime by Q3 or Q4. I mean it will start by Q3 or Q4. When it comes to exact numbers, CFO, any numbers you can shed some light on?

As I mentioned during my opening remarks of envisage CapEx plan of close to INR 1,000 crores, INR 510 crores remains to be spent. The rest have been spent, they are in the form of PWAP. The CapEx is INR 550 crores and INR 143 crores is WAP. We paid advances to the extent of INR 109 crores for various lines that are being imported. This leaves about INR 500 crores, give or take some -- it can vary. This INR 510 crores will be spent over the next 18 to 24 months. This is the plan as of now. We expect this does not contemplate the inorganic growth. It does not contemplate Mexico, does not contemplate the Chile warehouses and the quality control lab, which we are planning right now. These are all not even the drawing table right now. Once we get some clarity, probably we'll update in the next quarter. INR 510 crores for sure will be the amount that is already identified and will be spent in the next 18 to 24 months.

The next question is from the line of Julie Mehta from 360 ONE Capital.

Firstly, congratulations on a great set of numbers to the entire team at Caplin. My question basically it caters to the U.S. business. The U.S. business has now picked up decent scale and size. If you want to understand the growth breakup, how much of that would be organic? How much do we still have to account for through the new launches, be it the ones coming in the pipeline or the ANDAs that we are yet to acquire? If you could also share the EBITDA margins for CSL for 4Q and FY '26?

Okay. On the breakup in revenue, I would say that more than 90% of the revenue has come from the older products that were already in the market. The 10 ANDAs that were approved over the period of the last 12 months, we've launched a couple of them, but the majority of it, especially the larger ones are in the process of getting launched in the next few weeks. In addition to that, I would also suggest that the 10 -- so 15 ANDAs that we acquired from outside, we are in the process of launching them, which will only happen this year. You can assume that, like I said, around 90% of all the growth that you've seen is from products that were already launched in the market. This is actually a good statistic as well because when most other companies, I think, are somewhere in the region of their average earning per ANDA, I believe, if I'm not wrong, is somewhere around $800,000 to $1 million, whereas ours is almost twice that number, more than 50% higher itself. Of all the products that we have approvals for, we were just discussing about this yesterday, literally, just one product is the one that we've technically taken off the market because there were no sales. Every other product continues to show good sales, and we continue to receive repeat orders. When it comes to the EBITDA margin for CSL, request Satya to answer this, please.

Thanks for the question. The EBITDA of CSL for financial year '25, '26 is INR 142 crores, which is 30% as compared to INR 102 crores last year, which is 27.9%.

For the 4Q, if you could get your specific numbers for 4Q?

Sorry, can you please come again. For the fourth quarter, you are asking EBITDA?

Yes.

Yes, it is 33%.

Last question, if I may squeeze in. Also since we're almost on a last leg of CapEx now, so do we have any plans for CapEx going forward in the next 2 to 3 years? Or will that largely be maintenance and nothing like major?

No. As we just discussed, we had taken out close to INR 1,100 crores of CapEx, of which 50% is done and then other 50% will be completed in the next 18 to 24 months. This doesn't take into account the ones that we are going to be planning in Mexico, Chile, etc. Yes, there is still a certain amount of residual CapEx that needs to be completed. In addition to that, I would just give you some statistics. Last year, we were able to add close to INR 400 crores to our surplus. That is over and above what was spent in terms of CapEx. If you were to do some numbers over the last -- over the next 18 to 24 months, you can assume that despite the CapEx that we will be putting up, the likelihood is that our reserves and surplus will continue to rise even further.

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

Yes. Thank you to 360 ONE Capital Market and Rohit and Julie for conducting. Thanks to everybody that took time out to attend our call, and we hope to stay in touch with you in the future as well. Thank you.

Thank you very much.

Thank you very much.

Thank you.

Thank you. On behalf of 360 ONE Capital Markets Private Limited, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you.