Cohance Lifesciences Limited ($COHANCE)

Ladies and gentlemen, good day, and welcome to the Q4 and FY '26 Earnings Conference Call of Cohance Lifesciences Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Cyndrella Carvalho. Thank you, and over to you, ma'am.

Thanks, Darwin. Good evening and good morning, everyone, and thank you for joining Cohance Lifesciences' Quarter 4 and FY '26 Earnings Call. Today, we welcome our Executive Chairman and Group CEO, Mr. Umang Vohra, on his first earnings call with Cohance. Joining me today are Mr. Yann, our CEO, Pharma, CDMO; Mr. Gunjan, our CEO, API+; Mr. Amrit, our Head, Specialty Chemicals; and Mr. Himanshu Agarwal, Whole-Time Director and Chief Financial Officer. Before we begin, I would like to remind you that today's discussion may include forward-looking statements. With that, I will hand it over to Umang for his opening remarks.

Thank you, Cyndrella, and good evening to everyone on the call. I am very happy to be here. Having spent over 3 decades in this industry, I'm excited to be part of a platform that is anchored in science with capabilities such as ADCs and oligonucleotides, which are well differentiated and hard to replicate in terms of a value offering. Cohance is well positioned to be such a platform. It is also important to acknowledge the team behind the platform. The colleagues on this call, along with the broader leadership group and our 640 scientists who bring this science to life every day represent a strong foundation. My immediate priority over the next few months will be to spend time with our teams, customers and sites. By the end of this fiscal year, the intent is to create a strategic blueprint for growth and sustainable value creation. Over the next few years, we intend to focus Cohance's capabilities and science on the predictability of delivery backed by our strong quality and systems, a deep talent pool and a pipeline that matters to our partners and our patients. With that, I will hand it over to Yann.

Thank you, Umang, and good evening, everyone. The Pharma CDMO business reported revenue of INR 8.89 billion for FY '26. Adjusting for the destocking impact in the 2 large commercial molecules, the business delivered an underlying growth of early single digits. Commercial products contributed more than 70% of stand-alone pharma CDMO revenues in FY '26. Overall, we have more than 140 active projects across the pharma CDMO's stand-alone portfolio, covering both development and commercial programs. On small molecules, while FY '26 was impacted by customer inventory adjustments, order phasing and slower reloads, engagement with customers for both the large commercial products currently under destocking continues to remain steady. We added one new Phase III lateral program in small molecules with a large innovator, along with one program each in ADC and oligonucleotide advancing into Phase III. With 2 programs progressing towards commercialization, the total Phase III pipeline now stands at 10 programs. Within the Phase III pipeline, one program is under priority review and another is awaiting clinical data readouts expected in calendar year '26. Of the 2 programs that recently entered commercialization, we have recently received orders for one involving 4 intermediates with the other that is also expected to contribute during FY '27. Reload conversion remains quite high, above 90% and new business conversion with innovator pharma and biotech customers continue to be healthy. On ADCs, customer interest continues in payload linker programs. In FY '26, we have filed 3 payload DMS and many additional payload linker filings are underway. We are also seeing traction in newer payload platforms, including Exatecan-linked opportunities. During the year, we initiated work on adjacent payload platforms based on customer inquiries. At NJ Bio, we continue to expand our integrated ADC capabilities. The platform has successfully completed the first bioconjugation campaign during Q4 '26, cGMP. Expansion work of $10 million CapEx at the NJ Bio U.S. facility is progressing to support future scale-up, Phase II requirements and regulation readiness. In oligonucleotide segment, through the Sapala platform, we have received a follow-on purchase order. The cGMP oligonucleotide building block facility is under validation. Several customer qualifications and higher complexity RFPs are progressing. During the last few months, we completed more than 20-plus audits and customer visits from large and midsized innovator pharma and biotech customers. Several of these included senior customer teams visiting our facilities. To summarize, FY '26 revenues were impacted by restocking, customer inventory adjustments and delayed read-outs. However, RFQ activity, customer audits, late-stage programs and pipeline building work continues. The focus for FY '27 is execution, order conversion and delivery visibility. With that, I will hand over to Gunjan.

Thank you, Yann, and good evening, everyone. The API+ business reported revenues of INR 10.88 billion in FY '26, reflecting a decline of 8% year-on-year. The softer performance was due to product-specific factors, shipment delays and temporary disruption at the Nacharam formulation site. However, performance through the second half improved sequentially as the supply execution stabilized, the customer engagement strengthened and the order conversion improved across key markets. In APIs, the portfolio continues to remain broad and differentiated. Our top 15 leadership products contribute around half of the API revenues, and 8 of our top 10 molecules continue to hold leadership positions. The business remains supported by niche small- to mid-volume products, diversified customer relationships, cost competitiveness and backward integration capabilities. During the year, the demand across therapies remained largely stable with growth primarily volume led. While select mature molecules experienced pricing pressure, this was substantially mitigated through higher volumes, operating efficiencies, portfolio expansion and focused cost actions. Importantly, the challenges during FY '26 were concentrated around a limited set of products and customer-specific situations rather than reflecting any structural weakness in the portfolio. As highlighted over the course of the year, we have continued to strengthen our development pipeline and diversify the revenue base. During FY '26, we completed 10 new filings and validated 6 more new products. We also advanced multiple new customer engagements, including life cycle management opportunities with European customers, which are expected to scale progressively over the medium term. The breadth of the pipeline today is materially stronger than it was a year ago and provides a broader platform for future growth. On the formulation side, revenues were impacted by approximately INR 610 million during FY '26 due to the temporary disruptions at our Nacharam site and the associated shipment deferrals. Production and U.S. supplies have since resumed, and remediation actions implemented over the past several months are strengthening quality and operating systems at the site. While utilization levels are still normalizing, customer engagement and order visibility have steadily improved. In parallel, we have continued to actively manage supply chain continuity through alternate site strategies and closer customer coordination. We expect further normalization over the coming quarters as execution stabilizes and the order book progressively converts into shipment. On the business front, we shifted 5 launches -- we supported 5 launches during the year, while additional 2 launches moved into the next quarter based on customer time lines. Further, there are a few very interesting and differentiated opportunities in our formulation business that are shaping up. Most of these are leveraging our integrated API and FDF base. Overall, API+ enters FY '27 from a significantly more stable operating base. The focus now is on accelerating volume growth, improving asset utilization, expanding customer engagement across both APIs and formulations and converting the strengthened pipeline into commercial scale-up opportunity over the medium-term. With that, I hand over to Amrit.

In FY '26, a marginal decline...

Amrit sir, sorry to interrupt. We missed some of your audio. Request you please restart.

Okay. So I'm starting from Specialty Chemicals. So Specialty Chemicals reported revenue of INR 2.913 billion in FY '26, a marginal decline of 2.1% year-on-year. The business was impacted by customer program phasing, regulatory timing and generic pressure. In agrochemical, we continue to work on active ingredient and advanced intermediates. During the year, we saw progress in qualification campaigns, registration sample work and new lab scale programs. Engagement continues with large global agrochemical innovators across qualification work, registration sample and advanced intermediate programs. In the Performance Chemicals business, photochrome coating application remains relatively stable. The OLED business is going through a product cycle transition. We're also seeing early stage engagement in electronic materials and semiconductor linked chemistries. These are still at an evaluation stage and will take time to scale. For FY '27, the focus is on converting customer qualifications, RFQs and confirmed orders into revenue. FY '27 will be a qualification and readiness year for parts of the portfolio with supplies expected to build as customer programs progress, growth to return in FY '28. With that, I will hand it over to Himanshu. Thank you.

Thank you, Amrit, and good evening, everyone. Let me take you through the financial performance. For FY '26, revenue stood at INR 22.68 billion, a decline of approximately 13% year-on-year. The adjusted EBITDA stood at INR 4.77 billion. EBITDA margin stood at 21%, while our stand-alone adjusted EBITDA margin were at 24.6%. Q4 and FY '26 performance were in line with the guidance we had shared last quarter. Gross margin was at 70.8%. This was supported by product mix, backward integration, cost actions and benefit of INR depreciation. Operating margins were impacted by lower volumes, continued investment in business and weak performance by subsidiaries. Towards the end of Q4, uncertainties in the Middle East region led to escalation in logistics and freight costs, along with selective inflation in certain raw materials and key starting materials. While Q4 did not witness any material impact from the situation, Q1 will experience impact of nearly 100 to 150 bps on our FY '26 gross margin levels, largely on account of API+ business. We are under discussion with some of our customers to share part of this cost inflation. CapEx during the year was INR 2.15 billion. This was focused on ADC, oligonucleotides, manufacturing infrastructure and our quality systems. We expect CapEx spend of nearly INR 3 billion in FY '27. Free cash generated in FY '26 stood at INR 1.73 billion. In FY '27, growth will return from second half of FY '27 onwards. Quarter 1 FY '27 is to be low on both revenue and EBITDA, largely on account of revenue schedules skewed towards second half, escalation in logistics and input costs arising from the Middle East geopolitical situation as well as higher operating cost. Improvement in EBITDA should become visible in the second half as the volumes recover, order conversion improves and product mix normalize. We believe the business is moving towards a bottoming out phase with quarter 1 FY '27 to be the low point. We expect recovery becoming more visible from second half of FY '27, supported by execution on existing programs, customer conversions, reloads and improving utilization across the platform. With that, I'll hand it back to Cyndrella. Thank you, Himanshu. We will now open the floor for question and answers.

[Operator Instructions] Our first question from the line of Karthi from Suyash Advisors.

Mr. Umang, welcome to Cohance. If the stock price is an indication, your presence is greatly appreciated. So I had just a couple of clarifications. One is, if you could, for FY '26 that you split the CDMO revenues into ADCs, small molecules for Sapala and NJ and give an outlook for '27 and beyond? And detail to that would be what is the contribution expected from the 2 products which saw a big drawdown last year? And what would be the likely contribution from the 2 new products which have been commercialized.

Karthi, I'll answer part of the question, and then I'll hand it over to Yann. So from the contribution of the 2 large molecules, commercial molecules that we've seen destocking, as communicated earlier, the impact is around INR 260 crores.

Yes. I said how much of that is likely to return in FY '27? And the 2 new products, what could be the likely contribution? That was my question.

Yes. So from a return, we are in active discussion with both the customers. And we expect there would be a return in both these molecules. However, you would have to allow us to have meaningful conversations crystallize into orders before which -- before we communicate to you on the actual amount. On the new products -- sorry, please?

Yes, sir, you're saying there's no visibility as on date. That's what I'm to take away, right?

No. What I'm saying right now to you is there is a visibility because we are in conversations with the customers. What I cannot confirm to you is the value at this stage. But I can confirm to you that we are expecting these -- both these molecules to return back to us in FY '27.

Okay. And you were talking about the other 2 new products added to the commercial portfolio.

I'll ask Yann to contribute and answer that.

So with regard to the 2 new products that have been approved, as indicated in my speech, we have received 4 commercial orders for 4 key starting materials with regard to one of the commercial drug, right? So that's revenue that will appear mostly in Q2 FY '27 and in Q3 FY '27. With regard to the second product that has been approved, we are in active discussion in order to determine when those will be delivered.

Sure. And would you be able to call out the contribution of ADC to your CDMO revenue this year, FY '26 that is and what is the likely growth in FY '27?

I think we are not providing that color right now. But as we reassess the strategy, maybe a few months later, we could consider that. But at this point, we are not providing that part.

Sure. And one last thing before I get back in the queue, sir. Would you be able to provide the breakup of the onetime expenses over the last 2 years, roughly about INR 109 crores. Can you break that down so we have a clear understanding of the nature of these one-offs?

Karthi, your line is slightly...

He wants to know the breakdown. Maybe you can just tell them this years.

Yes. So I'll tell you about this year. I think this year on our onetime expenses, there are 2 large elements. One is that we have taken one-off inventory provision, which is around INR 195 million. And we've also provided for certain customer adjustments that's in the range of around INR 126 million. On to the point of ADC and oligo, we've called out in the presentation that our niche tech as a percentage of revenue is 16.2% for the full year.

[Operator Instructions] Our next question is from the line of Shyam Srinivasan from Goldman Sachs.

Welcome Umang. So, I think first question, just on -- from a forward-looking perspective, I think I've seen the guidance that has been mentioned on the opening remarks and in the investor presentation; Q1 supposed to be weak and the second half recovery. So just if you could share as well the base effect, is there anything tangible or qualitative that you could add? And if you could also give color across the 3 segments itself, Spec Chem, API+ and CDMO please.

So Shyam, this is Himanshu. See, at this stage, as we have said that the second half would be when we would see the growth returning, right? And the first half is weak with quarter 1, in particular, weak for both revenue and EBITDA. We do expect that there would be -- I mean, in the order of revenue, it would be API followed by CDMO and followed by Spec Chem. That would be the order. But I would not be able to give you more dimension on it, but that's essentially what we are looking at. So quarter 1 would be low. The quarter 2 is our understanding where we expect the quarter 2 to be stable and then H2 is where we are calling out growth moving forward.

Just second question to Umang. From your own vantage point, you have spent so much time in the pharma industry. Sir, what are some of the things that you -- I know it's been a short time since you've been at Cohance, but just want to understand, just to double click on your role and what are some of the best practices you think you would like to bring or is it just enhancing already existing systems? Just some philosophical thoughts around the paths forward for Cohance.

Yes. I think the -- I mean, if I was to broadly -- and again, look, I'm sorry, please don't hold me to it. It's been 9 days or 10 days, but it seems to me that Cohance has attentioned significant places or significant portions of the value chain in the ADC oligonucleotide chemistry. And I think there are some that we will continue to augment and build so as to offer a value offering that is probably unique and maybe more integrated. That's one of the things that we will do. I think there are some chemistries on the small molecule, on the API and the API+ side, which are pretty unique to what Cohance does, which are around the areas of color compounds, around certain types of chemistries, which are important for Cohance. And I think the intention is to build these further while improving the product offering here. So I think basically, the capabilities of science, the capabilities of the ability to offer differentiation is what I think Cohance would position itself to do. And linked to that would be operating leverage that hopefully will come out from the business, as we begin to pull -- as we begin to get more revenue and we begin to optimize the type of expenditures that the business has invested in over the past couple of quarters. So I think I see those as important areas to go. It's really about embedding Cohance into the value chain of new drugs as well as off-patent and unique drugs that exist in our marketplace.

Our next question is from the line of Sajal Kapoor from Antifragile Thinking.

Now with Umang on board and some reshuffling and some rethinking will invariably happen, we just -- as shareholders, we look forward to some growth. Can I just clarify that when we say H2 from current fiscal of H2, we will revert back to growth, will we be measuring ourselves against the previous Y-o-Y basis or the FY '25, which was the last growth Q3 and Q4 of fiscal '25? Are we benchmarking our growth or expecting that growth to come on that base, the higher base?

Yes. So Sajal, this is Himanshu. So first of all, I think the growth would be on a year-on-year basis, okay? I think that's important for us to relate to, right? Having said that, I'm not saying that there may or may not be a growth versus the previous to previous year. I think what we must understand, and I think I've mentioned that to Karthi that there is a large commercial which got up in the FY '26. And as you know, that we are ramping up our commercial. Our Phase III pipeline, as we've called out, has moved up to 10, and -- from the 9, it moved to 10 with 2 molecules moving out into commercial. So we have actually added 3 molecules into the pipeline. So the commercial gets strengthened However, it does take time for the commercial to improve or for the innovators to make these products commercial. And therefore, we would see a lag effect on the revenue. And that's essentially what we are looking at from a business perspective.

Sure, sure. No, that's helpful. And if I could just conclude with my second question. I mean, what is likely to be the hardest decision for you as a team you will need to make at Cohance in the next 18 to 12 months because see, ours is a regulated business. It's a relationship-based business where trust compounds over many years with our customers. So in that context, what you think is the biggest priority for the team to sort of rebuild that confidence both with regulators and the customers so that when we get back to growth, we stay in growth mode for a very long period.

I think our -- I can think of 2 things or maybe 3. Let me put out 3 things here. One is the operational rigor. When we have the green light to go, we can't be short of capacities. We can't be short of product robustness and the quality systems have to be strong. The second point is customer relationships have to deepen. And like Himanshu was mentioning, there are some places where we are beginning to see diversified customer base and diversified customer orders coming in versus our historical reliance on 1 or 2 customers. And I think the third is just the science engine. We need to keep progressing our science engine, whether it's in the area of ADCs and oligonucleotides and other amidite chemistries to even beyond into regular solid dose chemistry and solid dose capabilities. So I think pushing the science envelope, which means talent, pushing our quality envelope and the robustness of our offering, right, as well as pushing the ability to create and sustain long-term relationships. I think those are the 3 things around which I think we will be making decisions going forward. I don't know if we're at a point where we will make tough decisions at this stage, but wherever a tough decision is needed on where we allocate capital, it's likely to be in these 3 areas.

Our next question is from the line of Sidharth Negandhi with CWC.

Umang, you just mentioned about a certain program concentration. If you could share the program and customer concentration in revenue for each of the 3 segments. The second would be any specific examples of AI implementation that you are seeing, which is enabling you either to get better quality output or get output faster, especially in the later stages of your programs? And lastly, if you could share any color on the FY '27 guidance in terms of what growth can one expect? And I hear you on the H1, H2 piece.

Yann will take the first one.

So let me clarify. Could you repeat the question on the customer concentration?

So could you share your customer concentration for the CDMO segment by program or molecule and by customer? So what's the revenue salience of the top 1, top 3 and top 5 customers, top 1, top 3 and top 5 molecules?

So -- I mean, we don't give this level of details. Nevertheless, I mean, I can answer some of the question on customer concentration, right? And you can see that in our results, right? So we have had by the past reliance on a few molecules, right, historically. And that's the reason why we are in the situation we are in today, especially on the small molecule side of the business, on the CDMO business. This concentration is changing positively year-on-year, meaning that there is less concentration in FY '26 than there was in FY '25, and there will be less concentration in FY '27 versus FY '26 as we continue to develop our customer project pipeline. And that's essentially the message. That's one way to derisk long term. I hand over to Mr. Gunjan for the same question.

And in the API+ case, which is a products business, our top 15 products contribute nearly half of the API revenues there. And if I give you a flavor around the kind of customers, so nearly 2/3 of the revenues come from customers who are innovators or large global generic or regional leaders in generic space, and only nearly 1/3 is with the smaller customers there.

Got it. And any FY '27 guidance and any specific AI implementations that is helping you either get through programs faster or get better quality output for any of your programs?

Maybe I can answer. This is Yann here on the AI-related topic, right? So what's important for us is customer centricity and how we support our clients in their projects. And that's how we are successful as an organization. As such, we've implemented some AI tools in order to improve our analysis on essentially our results, right, in order to be able to have proper communication with clients and offer as well opportunities for improvement. So that's one example of use of AI tools that we currently have in our platform to support the clients.

And I'll just add a couple of points there. On the AI use, we are in active discussions and evaluating some tools around, which can help improve operational efficiencies and can also support us on the regulatory aspects in terms of reducing our time to file and improve the quality of filings. That's the limited use that we are doing so far. Additionally, we are also exploring the creation of data lakes and the databases that can help take better and faster decisions going forward, both on operational as well as customer side.

Any FY '27 guidance across the 3 units?

Sidharth, this is Himanshu. And yes, we really appreciate the need to give a guidance, but I think you would have to allow us some time to come back and give guidance. At this stage, I think we are comfortable to share that the growth will return from second half and quarter 2 would be stable, while quarter 1 is a weak quarter both on revenue and EBITDA.

Our next question is from the line of Ashish from UTI.

Given that between the standalone and the consol, there's a difference in the margins. So I wanted to have some details on Sapala and NJ Bio. What is the projected time line for consolidated margins to return to the historical benchmark of 30%? So if you could give some color around this would be helpful.

So Ashish, this is Himanshu. So I mean at this stage, one, the results will enable you to get a sense and appreciation of how the stand-alone and subsidiary results are, right? So that could give you a good indication of the 4% to 5% plate that we are looking at it. And I think there is a recognition that is there. We've called out that Sapala has a reload on Phase II, Phase III, and that would kind of help the Sapala business accelerate from here onwards. On NJ Bio, there is work being progressed with NJ Bio team in terms of bringing the business back to profitability. But as I said, we do need some time to kind of come back to all of you on how this would shape up in the coming year. And maybe I'll ask Yann to further contribute on this subject.

So on the NJ Bio situation, right? We have a very important investment that is currently being implemented to be able to support the bioconjugation program through Phase I, Phase II. So this is where a lot of the value moving forward is. As such, I mean, it takes always some time here because it takes about 1 year to implement plus some time for validation and then being able to execute all the different programs here. So give us here a little bit more than 2 years to get back to this growth.

Okay. This is helpful. Lastly, since you said recovery -- the order of recovery would be API first, I just wanted to understand the second half recovery that you mentioned, is that dependent a lot on the API segment recovering? And to that extent, what I was trying to understand is the Nacharam formulation facility. So what's the kind of dependency that we have when we say it would be a second half recovery?

I think what I've mentioned to Shyam was how we were looking at the H1. When you're looking at recovery from an H2 perspective, we expect the CDMO business to have an accelerated recovery. And in fact, all the 3 businesses, we expect the recovery to be strong in the second half. So it's just that the order book is skewed towards the second half, which is why we are looking at a weak quarter 1 and stable quarter 2.

Our next question is from the line of Shreya Chatterjee with Ageless Capital.

My first question is just confirming the fact that you had mentioned that there would be 4 commercial molecules launch in FY '27. So I guess 2 molecules have already launched. So is that in progress like 4 total molecules to be launched in FY '26 and '27?

Yes. So I confirm, right, 2 launches, and we expect -- have launched right when we expect 2 others to launch, of course, depending on the clinical performance, and we expect this to be known within the next 12 to 18 months.

And would it be possible to give any color like in H2, how much are you expecting from this new commercial molecule launch?

I mean I think Himanshu had provided already the response. I mean we are not yet ready to answer that question. That will come later.

Got it. And also on the new Phase III molecule that you have added on the small molecule side and the ADC molecule that you had commercialized [indiscernible]. Would it be possible to give some color to these two molecules?

This is Yann again. Phase III, we normally don't provide too much color, right? This is early Phase III. So we need a little bit more time given that the client might not know himself, right, the kind of volume that is expected here.

Got it. And also, if it's possible, like this question is to Himanshu, to provide the breakdown of other expenses for the full year, which is like a big amount, INR 671 crores. If that's possible, like where are the major expenses heads going? A rough breakdown of that amount would be helpful.

Shreya, I mean the financials have been declared and they have the necessary split from that perspective. I mean I'm not sure what additional flavor you are seeking. If you can help me out, then what is possible, we will certainly want to share.

Like what are the major heads of the expenses under other expenses, which is like a big amount, INR 671 crores. Because our gross margin seems to be quite high, but when we convert it to adjusted EBITDA margin, we're losing out a lot. One part is employee benefit expenses, but then other expenses is also a big hit. So just trying to understand what are the major expense currently in FY '26, under the expenses.

So, there is -- yes, so the large portion of that is the conversion expenditure that's almost in the range of INR 400-plus crores and then the balance INR 260 crores is a function of the marketing expenditure, as you know, that we had a merger and therefore, we were building the brand. So brand building expenditure as well as the entire SG&A. Actually, the entire SG&A, if you look at it, whether it's the office expenditure, travel expenses, these are all branded expenditure, which is typically there in the business.

[Operator Instructions] Our next question is from the line of Chirag Shah from White Pine Investment Management Private Limited.

I had 2 questions. Question one on, some indication on the vacuum that has got created because of loss of 2 molecules. So Yann, and specifically for you, what is being done right now to ensure this kind of vacuum doesn't get created in future? So that's question one I have. And second question I'll ask once you respond to it. It's for Umang, the second question is for actually, Umang.

So thank you for the question, right, and that's true. We mentioned it several times. I mean we have a dip because of the high concentration in a few molecules and the fact that some are getting close to becoming generics, right? So what do we do about it, right, in order to bring growth is essentially expansion in terms of number of customers and being able to get projects that are later phase in the customer project pipeline to accelerate recovery. So that's what we are doing at the moment. We see a good traction with a strong funnel that has been multiplied by 2, essentially in the last 6 months with regards to small molecules that give us a strong hope that we are going in the right direction.

Okay. And second question for Umang, actually a slightly different question. So since you have joined the organization, have you been able to focus on corporate governance and strengthening the processes or it has not been on your agenda as of now? Why I'm asking that, in your absence, when you were not there, it's coincidental that certain information and certain investor category have co-aligned in that sense. At the peak, some information has got out and some investors have exited, they've reentered at the bottom of the stock price and since then, again positive announcements have started. So if I request you to look at the strengthening of corporate governance/information flow, which I believe was happening selectively. I could be absolutely wrong and I hope I'm wrong. So, if you have not been able to spend time, I would request you to focus on that. That's my second question.

No, certainly. I think as part of this role, the governance requirement is paramount, and I will be spending time on that as well in the next few months. But thank you for raising this.

And I hope you would be able to update us whenever you can, maybe 2 quarters down the line on what changes have been made on this side.

Yes, absolutely.

Our next question is from the line of Sidharth Negandhi with CWC.

Just a follow-up on the [ claim ] that you put in respect of the onetime settlement with the customer. A; if you could give some color on what that was towards? And does that have any impact or bearing on that customer relationship and therefore, the revenue -- likely revenue impact going forward? That was one question. And on the brand building expenses that were there, therefore, do we expect those also to be more onetime in nature and therefore, some cost savings on that in FY '27 and going forward? That's question 2. Question 3 is, if you could give us a little bit of a breakup on the number of programs that you have underway and breakdown by sales into how many of those are Phase I, Phase II, Phase III and commercial?

Sidharth, on your first point, I think the customer settlement is purely commercial. And therefore, given the nature of the settlement, we don't see any impact on the revenue or on the relationship with the customers. On the second question, yes, we would see a reduction in the marketing expenses given that a part of the brand building has already been done. So, to that extent, your observation is right. And on the third...

And could you quantify that? Sorry. Sorry, I'm interjecting. Could you quantify that?

No, I would not prefer to quantify that at this stage. I mean we do not give specific categories of expenditure. But yes, there would be a reduction that would happen on that. And on your third question, I'm going to request Yann to address that.

So I think we -- thank you, Himanshu. On the programs, I think we communicate on the Phase III and commercial programs quite extensively. It's part of the quarterly report as well, right? So I think this information is available. What I can tell you as well is the quality of the programs that we are onboarding right now in Phase I, Phase II is also pretty strong with some clients also asking us to produce the API or the complex molecule for them. So that's good news. I mean, of course, it's Phase I, Phase II, takes some time to develop, but that shows as well the strength of the platform.

Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to the management for closing comments.

Thank you, everyone, for your time and joining us today. See you next time on the quarter 1 call.

Thank you. On behalf of Cohance Lifesciences Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.