Gufic Biosciences Limited (509079) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 Earnings Conference Call of Gufic Biosciences Limited. [Operator Instructions]. Please note that this conference is being recorded. [Operator Instructions]. I now hand the conference over to Mrs. Ami Shah, Company's Secretary. Thank you, and over to you, ma'am.

Thank you, Dan. Very good evening to all, ladies and gentlemen, and a warm welcome to Gufic Biosciences Limited Earnings Conference Call for the First Quarter and Financial Year '24, '25. Today, we have with us Mr. Pranav Choksi, CEO and Whole-Time Director; Mr. Devkinandan Roonghta, CFO; and Mr. Avik Das, from Investor Relations team, to give the highlights of the business and financial performance of the company and to take questions, if any. Today, we have released our financial results and investor presentation, which are also posted on our website. We hope you all had the opportunity to go through it. Before we begin, I would like to say that some of the statements that will be made in today's discussion may be forward-looking in nature. It is subject to unfortunate risk and uncertainties, and the actual results could materially differ. The company undertakes no responsibility to update or revise any forward-looking statement, whether as a result of new information or future events or otherwise. We will now begin the call with the opening remarks from Mr. Avik, followed by a financial overview from Mr. Roonghta. Thereafter, we will have the forum open for the interactive Q&A session. Over to you, Avik. Thank you.

Thank you, Ami, and thank you for joining us today for our conference call and pleased to welcome all the investors and our well wishers. So I'll just quickly give you the highlights of all that's happened in Q1 within all our divisions. So starting with the Indore CapEx. This is one of most [ anticipated ] developments this quarter for Gufic and this project represents a monumental step for us to scale up our operations and meeting the growing demand for our products. I'm pleased to report that we have successfully completed the validation of 2 manufacturing lines at the Indore cility. And these validations are critical to ensure that our production processes earlier to the highest standards of quality and efficiency. And looking ahead, the remaining validations are on track for completion by end of this month with commercial production set to commence in September. This progression following last quarter's trials on the media firm validation studies, ensures that our facility is well prepared to meet stringent regulatory and quality standards and our Indore facility has also passed several key customer audits conducted by leading Indian and some global multinational corporates and our partners. And this is -- well this confidence of the robust compliance and operational standards that we've said and we hope to adhere as we scale up. And as part of our expansion strategy and quickly going live with Indore, we've also commenced product site transfer from our Navsari facility to Indore, the confidence that some of our multinational customers have shown by initiating their own product site transfers to Indore also shows the strong capability that Gufic has and the possibilities of quickly ramping up Indore. So turning to our Critical Care division we continue to fortify our leadership position in this space. This quarter, we've significantly advanced our antimicrobial stewardship initiatives they are engaging with leading health care professionals and over 150 candidate activities across India in 1 quarter. So these sessions are vital in promoting the latest knowledge practices in combating antimicrobial resistance switch is one of the biggest [ vial ] Pandemic, which is unfolding. We are also proud to announce the formation of a dedicated user group for Dalbavancin, which, as we all know, is a unique live-saving antibiotics in treating complex infections. This initiative will serve as a platform for clinicians to share their experiences and further the effective utilization of this very normal and crucial drug. And in alignment with latest primitive guidelines, we are actively allocating for adoption of extended including protocols from [ Europe Union ] a very widely used antibiotic in India and driving better therapeutic outcomes. And additionally, we participated in Euro Asia, where we showcased a comprehensive range of antimicrobials and reinforced our commitment to global health care advancements and further sort of a presence in this space as a leading quality provider of niche anti-microbial drugs. The particular division has also seen continued growth in Q1 FY '25 and we've built on our efforts to address the current implantation failure, we've initiated CME program nationwide or Guficin Alpha. The drug is acceptably is backed by robust patient data and its unique position as the only drug impacting all cytokine parameters involved in recurring implantation failure continues to drive its success. And as of now, this is due, perhaps the only drug available in the Indian market that addresses all the cytokine parameters. We remain focused on our development in cultural purified HMG recombinant FSH with advanced purification techniques and recombinant DNA technology. The ongoing trials and pending approvals, highlight dedication to providing best-in-class medicines in the ERP space. We've also launched Dydro 20 MG and 30 MG sustainable tablets, marking our entry into the extended release formulation called Dydrogesterone. These innovative drug that is still expected to improve patient compliance and enhance treatment outcomes and a new task force, Fertimax comprising of about 40 well-trained field personnel has been launched to boost a field efficiency and drive deeper market penetration especially with a couple of very unique product offerings in this division. And coming to Amsterdam, the division continues to carve out a niche in the aesthetic oncology market, particularly with flagship product Sunnox. And this quarter, we initiated the first ever clinical trial in India for Botulinum Toxin type A with our brand Stunnox focused on [indiscernible] lines and COVID lines. This is a groundbreaking study and aims to gather data specific to Indian patient pool. This will further help us enhance the confidence of practitioners and patients alike. We've also launched a trial for Stunnox in the treatment of hyperhidrosis, expanding its therapeutic scope and positioning Gufic as a versatile player in addressing a broader range of the oncological conditions. Our advanced aesthetic program at Arisia training Center in Mumbai has also seen an expansion. We've now trained approx of 80 doctors within a quarter, and this program is instrumental in enhancing competencies and driving market growth for aesthetic treatments. And now coming to Spark, Stellar and Healthcare division. We've seen growth even in this division. We've expanded our CME initiatives discussing the practical benefits for oral solid manufacturing using the rollout compaction technologies, something that we use and its impact on patient outcomes. And additionally, we've also launched a digital prescription tool, which has helped streamline patient record management and significantly improved clinical efficiency for the doctors. So this becomes another point of partnership with Gufic in this space. We've also made significant strides with a new product development, including the introduction of a cutting-edge potassium channel inhibitor in the proton pump inhibitor market, this is a huge market. As you know, it's almost INR 3,000 crore market, and this is a very novel product there and increased volume for [indiscernible] is another product that we've launched. Our targeted marketing strategies have led to improved market rankings for our well-established products like Stretch Nil Sallaki reinforces our market presence in the [ Australia ] and other [indiscernible] space. Coming to Sparsh. Sparsh remains at the forefront of innovation with its direct-to-hospital distribution model. This quarter, we launched teicoplanin and DCB, dual-chamber bag, and then the dual-chamber bag and expanded resolve, designed to meet the growing demand for advanced therapeutics in these hospitals and nursing homes. And we are also very excited about the upcoming launch of contrast media in this division and strategic expansion into additional territories and planned growth of [ 13 ] to 85 members will ensure that we cover -- we have a very comprehensive market coverage and support for all our hospital partners. And first is the vision's ability to offer a wide range of injectables and secure significant wallet share positions us as a leader in direct hospital engagement. And now on the international business front, the division we've received further new registrations. We received registrations in Lithuania and Sri Lanka, rather diversifying our mobile portfolio and giving us more entry into the European and Southeast Asian market. As we speak, we have almost 200-plus registrations across 20, 25 markets, and we have more than 40 -- 150 products in the pipeline, where we are targeting almost 40 countries. So with that, I think I'll hand over the call to Mr. Roonghta to give a quick update on the financial performance in the quarter that went by.

Thank you, Avik. I'm just going to highlight the Q1 financial highlights for Q1 of '24, '25, compared to Q1 of '23, '24 and Q4 of '23, '24. The total revenue from the operation of Q1 of '24, '25 is INR 202.8 crores compared to Q1 of '24, it was INR 195 crores. And Q4 of '24 was INR 194.9 crores. The EBITDA for Q1 of '24, '25 is INR 37 crores, Q1 of '23, '24 was INR 36.4 crores and Q4 of '23, '24 was INR 35.17 crores. The EBITDA margin for Q1 of '24, '25 is 18.2%. Q1 of '23, '24 was 18.6% and Q4 of '23, '24 was 18%. The profit before tax for Q1 of '24,'25 is INR 28.1 crores, Q1 of '23, '24 was INR 28.1 crores and Q4 of '23, '24 was INR 27.1 crores. The PAT margin is -- for Q1 is 13.9%, Q1 of last year was 14.4%, and Q4 of last year was 13.9%. The profit after tax for Q1 of '24, '25 is INR 20.9 crores, Q1 of '23, '24 was INR 20.6 crores, Q4 of '23, '24 was INR 20 crores. The PAT margin for Q1, '24, '25 is 10.3%, Q1 '23, '24 was 10.6% and Q4 '23, '24 was 10.3%. The result was almost flat because the capacity of Indore [indiscernible], has been holding in price. Thank you.

Should we begin with the Q&A session? Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from the line of Vishal from Systematics.

Can you break up your sales between the various segments?

As per the strategic guideline the company that we are only in 1 segment, that is we call it a pharma company, but I can give say that around 50%, 55% is domestic sales, around 25% -- between 25%, 30% as per the remaining [Foreign Language].

So API should be around that 5%?

5% to 7%.

Got it. All right. And I could hear you on your opening comments about a launch of a product called Fertimax. Can you share some color on that launch?

Yes, sure. Vishal, Pranav here. So Fertimax are basically a division, as you have seen the [indiscernible] infertility, and we have the [indiscernible] but the focus there was already they had more than 42 different SKUs to focus on. Now there are 3 new launches that is Dydrogesterone 20, 30, but more importantly, Guficin Alpha, which is for your current implantation period. At the same time, there's a trial happening on this product with the [ DCGI ] for endometriosis. And #3, we have our super purified or ultra-purified HMG where we have ensured that in for poor responders when their quality is an issue. We have come up with a much more highly purified version, which requires a separate task force. The Fertimax is basically a task force to focus on the product. Of course, the task force was trained in the month of June and the launch happened in June end that's why it's part of the last quarter. The actual sales impact came from July. But that was the basically launch of Fertimax, which is division to handle these 3 brands or these SKUs which are for Dydrogesterone SR, Guficin as well as Supergraf.

Got it, sir. So these have been reallocated from a different division to the division and you have not recruited new people. Is that the right way to look at it?

Not exactly. So I tell it's a hybrid model. So we already had around more than 108 people in the Ferticare division. Where we took around 18, 20 people from there because there were some scientific-driven people who could go and who also wanted our expiration to become leaders there. And anyway, there were some headquarters where the ROI or the PCPM was lower. So we have to shut down some, I would say, I would say headquarters in Ferticare. Thus, we have recruited around 15, 20 people from the market. So with the combination of 18 people to 20 people from the Ferticare, plus new recruits, that's how Fertimax has gone? Because we wanted the leadership and the expiration of the people, of course, been taken care of and hence this hybrid approach was taken.

So would you be able to share what position Gufic would be in the infertility market? And how large is this market currently, the infertility market?

I think the represented market where we have the existing products because dydrogesterone itself is a INR 900 to INR 1,000, maybe more than that current market. And when I talk about HCG, HMG, FSH projects they don't have another, I think the total market size would be around 4,000 to 4,500 I can get, try to give extra numbers as per [ ORG IQ ]. Coming out of that, we would be, I think, #4 I would believe, because there's a mark in as BSV and then Gufic would be there in terms of the total share. That's what the [ all-Indian ] share as per [ ORG IQ ].

And like when BSV being acquired by Mankind, do you think there's going to be more aggressive competition in this space going forward?

It'll be interesting to see that because in the past, if you see JV Chemicals also had acquired a [ unit ] product, and then JV had a different flavor to it. So it will be a very interesting thing to see how Mankind, who has been still now in a different specialty, how do they handle the IVS and [indiscernible]? I'm sure Mankind being a wonderful company, they will definitely be aggressive. But it's a very different ball game as compared to the mass marketing in terms of prescription and cardiac, diabetes all that. It's more different. So let's see -- as [indiscernible] you to see how they take it forward, right. And you would have quite a bit of overlap in the portfolio, like what BSV offers and what you offer there would be a significant over.

Okay. And just one final one on the -- I heard about another launch on a potassium channel in the PPI, I'm not sure, if I heard that correctly.

Yes. You heard it correctly? Potassium channel. So it's a different technology of a molecule, which works on a different mechanism as compared to the [indiscernible] inhibitor as we have [indiscernible]. It's the new launch, again, the product was launch in the month of, I believe, the stocks came in June and I think July first week is when the billing happens. So this is opening another market. So if you see in ortho as far as in Gynec the softey and the tolerability and long-term use of antacid, let's put it that way, is important. So even in orthos, when we have anti-inflammatories, and anti-analgesics. So there is a side effect of gastric irritation. And normally, PPIs are the main go-to drugs whereas we feel that the new launch is I think even called recently U. S. FDA approval and I think last year or I think in the beginning of this year, they got U.S. FDA approval. And in India also, it got DC approval in the month of March, April and this will be something very interesting, which will definitely work on the landscape part of it. So let's see how it all goes there.

Okay. So this will be an alternative to PPIs with promise of better efficacy or better tolerability or both?

Tolerability, I would say, is better efficacy, of course, right now, the patient pool data, what we have in mostly western countries, keeping the Indian DNA and the Indian diaspora, we will come to know, but yes, definitely as per published data, it's a better tolerability. The efficacy is comparable. I think [indiscernible] is quite a good standard, very frankly. But it's more about tolerability and long-term view. So there are -- the mechanism is some different than a total comp inhibitor by which the wear and tear is much lesser, that's what my medical experts say me. But of course, time will tell me when we get more publications coming on that also.

And like there's an acute kidney injury risk that PPI have been labeled for...

Like I say in extreme cases, you're right, with very high term long-term use per case. So yes, you are right. In that cases this will have some advantage. But I'm restricting myself because I'm not a medical expert. Even though I was educated by the medical team, but I would still wait for more publications before I can comment for sure.

And you are among the early entrants in this category...

Yes. That is what is going to be making. Like how we did it for it, Dydro we would like to be for us earlier entrants in this also.

[Operator Instructions]. The next question is from the line of Bhavya Sonawala from Samaasa Capital.

Yes, Yes. So just 2 questions. First question is, again, with regard to the Indore CapEx. I just wanted to understand, does it usually take this much time in terms of media sales as well as validation batches? Or are we doing something different? Because I think last quarter, we had estimated some of the revenues to start coming from July 1st week. So I'm just trying to understand, are we doing some other layer of audit or something different, apart from how long it takes?

Sure. So on expense. So if you see in Indore, we have total four lines. Line 1 and Line 2 are livelier drugs, Line 3 is actually liquid vial and Line 4 is ambient machine. So now depending on -- if you see from December, January, we have started marketing the products in terms of the capability to many companies, both in India and abroad also, especially keeping in mind the export market exposure. There, we also had one ex-U.S. FDA inspector come and audit us also in terms of giving her relevant thought that we could make the modification before the actual media can happen. So depending on the product line, the Media pill has to cover a matrix, since this is the first media pill of the factory, different vial sizes and different products have to be considered. So for example, every product which we go for, there has to be 3 runs, which have to be in multiples and where there's a whole time study. So I will not bore you with the technical know-how. But let's say, today, we are looking at in Phase 58 different products to be started from Indore where almost 26 products out of them will be sort of a tech transplant capacity expansion coming from Navsari. So when I talk about a basic 2 ML vial of [indiscernible], or maybe let's say vancomycin, which is almost -- I mean till now the vancomycin, which we did in Germany or U.K. or other markets for mostly 500 milligram and 1 gram, but we are right now talking to clients who would like to also source 5 grams and 10-gram wise. So I have to get a validation done of 2, 5, 10 ml vials, 20 ml vials, 50 ml vials and even 100 ml vials in the same setup and that has to be replicated in 3 lines, Line 1, Line 2 for [indiscernible] and Line 3 on the liquid filling, where we are planning to do a [indiscernible] and we are trying to do even paracetamol. So out of these 58 molecules, whatever media fill needs to be done, we do it now. Now let's say we don't do it now. we right now for the next 6 months, so media fills have to be repeated every 6 months just FYI. And based on that, you have to do -- when you first introduced a particular vail size, you have to introduce 3 different runs and then you have to monitor that for 28 days. I mean, that is including the 14 days of stability, also. Now if we try to do something after 6 months, again, this entire 28 days type data. So the dilemma, which we have in front of us is that we don't -- with one of the production starts, we cannot expect a closure or disclosure happen, where we'll have back pending orders already right now in Navsari you are facing serious issues in terms of backlog which we need to -- I would say -- I mean, just get them shipped into Indore very fashort-term. So the intent of the company will take the input of the ex-U.S. FDA inspector that we had already done by 3 of our other international plans. Combine them and that include all the 58 different products, and then you can get a complete validation. Just to share with you what Avik said, Line 4 was already finished, and we have started some runs and this month they like I said, this month or September 1 week is when production. I mean the commercial production, where the invoice will be raised from Line 4 and Line 3. Line 1 and Line 2 being [indiscernible] in the main part of the machine, we have gone for a complete like I say from 2 ml to 10 ml batch price in media fill validation, which normally on an [indiscernible] it is around 3 to 4 months. Even this is in 3 to 4 months after finishing the other machine qualifications also because, again, you have different diameter, different height size and different things. Yes, it was an option to do it now or then after 6 months take a break of around 1 to 2 months, which would not be advisable as per our internal calculation and our decision making. So that's why it's taking long, but hopefully, I think, it is more frustrating for you and more for us, be won't -- we have backlog, in it, you can see orders in [indiscernible] cannot cater to them. But at the same time, be very vigilant that it's the right time because then you can take a break after 6 months. So let's hope in September, we should start making around at least our target is that we would start INR 25 lakh while of life [indiscernible], in September starting with another INR 10 lakh while is of liquid. So that's our target from September.

Okay. That makes sense. And just a follow-up. In your presentation, it said that 2 manufacturing lines and validation coalition has been completed, so are these...

Time for a [indiscernible]?

So none of them are the [indiscernible] so what is the PFS, right and the other one will be...

No, no, no. One is ampoule and one is the liquid vial PFS is what we have already, Navsari and we already are doing it Line 1 and Line 2 are the [indiscernible] which are ongoing, which should be done by August and September first week. So that is where the commercial production would start concurrently. So right now, what we expect in Line 3 and Line 4 is done.

Okay. And you had mentioned something about starting with 56, I think, units right initially. So can you just explain that? Are we shifting some from Navsari to Indore and...

58 different SKUs will be shifted. I'm sorry, 58 different SKUs will be introduced into Indore, but also comparing '26, '27, I'll say, I'll give the exact number, will be shifted from -- so I'll tell you an example. So we're going to take INR 16 lakh, while of [indiscernible] start of it to derisk. We'll see how everything is going and then next product will be [indiscernible] see these are those 20 odd, 20+ odd products which are already having capacity constrains in Navsari, which will be shifted here, plus addition of 30-odd more products which will be brand-new entrants for Gufic as a whole in term of manufacturing also. So that is how the plan is.

Okay. Okay. Understood. Just the last question. You spoke about -- you told that in, I think, December, Jan, you said marketing all the products that you're going to kind of manufacture in there, so what kind of initial remarks have we got from our clients and probably after their audits, some -- if you can give us some light on that?

Yes. So very frankly, what we did, we approached the problem in a different way. We went to [ ORDG IQ ] earlier in October, November last year, then we spoke and these are not only for India, but we went into certain 40 to 43 different countries, which we feel our focus are there with us. We found out these list of the shortlist is of 58 products because of the market size and what is the capability of the factory. Then we went and approached different lines who are right now the leaders or at least in the top 5, top 10 of those what you call a [ ORG IQ ], we have for these 58 molecules. And after that, we filter -- filtered and came up with partners, who actually take care of at least 2 products season, so there is 1 client who is ready to trigger the U.S. FDA instruction with the 2 molecules of [indiscernible] . Then someone else is coming with us for a 100 ML liquid formulation. And ampoule again, I'm saying it's only focused to the European market where it goes as a diluent. Otherwise, Line 1, Line 2, Line 3 will be the main focus of U.S. because of the capacity. And that is what the efforts came in, and then DCAT was attended in March. And then finally, we have some contracts which we are getting into because after media fill, their team will come for the final what you call audit, and then we will start validation batches from October till March onwards. So October to March, we have land at least for the U.S. market, at least different filings via our clients. Most of them are tech transfers now because right now, as I clearly said, initially, even otherwise, we don't want to be an ANDA applicator on our own. We'll be looking to working with our clients and new partners to get these products. And side by side, we already are targeting EU approval by the end of the year. There are lot of our capacity problems, which are there for Germany, Portugal and now very soon, even the other countries like Spain and France will be then cater to from I mean, from the Indore setup. So that is the plan and results are positive, but it's only like I said, it's more frustrating that once the ball starts rolling the production start, then automatic more people get attracted when the delivery starts coming out. That's what we are targeting.

[Operator Instructions]. The next question is from the line of Vishal Mehta from Wealth Guardian.

Just had one question. Once the capacity from the Indore plant comes on stream, what will be the total revenue potential for Gufic as an entity? And if you can just highlight how will we get there? I mean in terms of utilization year 1, year 2, year 3 that would be great.

So if you see Indore is around 1.5x to what Navsari is, I'm not counting the Penem capacity and the boot length option capacity. Just a like-to-like comparison of [Indiscernible] liquid vial and 1.5x. Of course the ampoule which is a 1.5x and of course in ampoule and liquid much more, but I'm looking at [indiscernible] as 1.5x. The total peak -- right now what we are struggling in Navsari that because of the contract and because I think, if you do a pantoprazole we cannot do a [indiscernible] or cash flow funding, where the top line of pantoprazole would be around INR 30, INR 40 as vis-a-vis our cash would be around INR 1,500 [indiscernible] would be around more than $40, $50. So the issue is the capacity with the peak of INR 700 at Navsari can go to a maximum -- again, because of the product mix, to around INR 1,200 to INR 1,500 depending on the product mix from Indore itself with the existing capacity what we have installed, not founding the other lines, which are coming in the future. But this is what we think I foresee that -- we hope that by full running year will come in '25, '26. It is where we expect that we should reach at least 30% to 35%. Internal our target is 40%, but I think 30%, 35% then it would go to around 60% in the year after. And then hopefully, at the end, so I'm clearing up 27%, 28%, we should have full capacity. 27%, 28% would be almost close to full capacity.

So that will take our total sales potential to almost about INR 2,000 crores, INR 2,200 crores?

I would say, INR 1,500 is what we tell everyone is what we are targeting in the next 3 to 4 -- 3 I mean, let say it's around 4 years. 4 to 5 years, maximum.

Okay. And this would be at a better margin, right? Like when we get there, it will be a higher-margin business?

Yes, would be. If you already see in the last 3 quarters also, because of the challenge we are facing our capacity, we're trying to do more profitable business and trying to get out a little bit, when is the capacities are against us for the time being. So definitely profitability would be a part of it, especially where the export markets and the job works and the U.S. and Europe business would come into play. Domestically, again, the scale will help us. Also, as we mentioned, Sparsh is already started kicking in. As far as Sparsh also a little bit products, I would not say a little bit. I think a decent amount of products from Indore will help Sparsh. Till we replace them with them international markets -- so yes, profit margin expansion is the way to go from Indore. At the same time, what we have done from Navsari, let's say, what was the total cost required to make a particular while in Indore, even after doing the 3, whatever, INR 300 crore plus CapEx, we have tried to get the running cost and the maintenance cost we either same as Navsari a little bit less. So that would be the target. So a lot of automation, a lot of technology equipments have been kept in the entire factory for I'll give you 2, 3 examples, just to give you a nutshell. So the cost of water in Navsari will be a little bit higher than Indore because Indore has only WFI, but it has part of a injection, which has been a better efficiency and running costs. The packing in Navsari, where we had 100,000 vials were packed by 150 people, wherein Indore only 16 to 17 people would be required to pack 100,000s. So again, all this will add up in the margin expansion, which answers your question. So it's not about efficiency. It's about scale, it's also about running costs, which helps us eventually to take care of it.

Great. Sorry, if I can just squeeze in one more question. What is our debt currently? And where do you think that will peak? And how do you see that panning out over the next couple of years?

I think Roonghta, I'll hand it over to him, but I think peak is already there, but still, he will give his comments.

Technically, we are having 2 types of loans. One is term loan. Term loan of INR 160 crores, we have taken from the Indore property out of INR 160 crore around INR 5 crore has been repaid and around INR 15 crore is -- term loan is outstanding for our Penem plant and [ Navsari ] plant down was around INR 170 crores to INR 175 crores -- between INR 170 crores to INR 175 crores is a term loan and we are having a sanction of around INR 150 crores of cash credit limit out of which, I can say on 80%, 85% has been utilized. So total loans will be around INR 175 crores plus INR 120 crores, it will be around between INR 295 crores to INR 300 crore. This will be the peak loan. I don't think there will be further requirement of any additional loans.

And in terms of deleveraging, how do we look at that over the next couple of years?

I think the last year -- for 1 year, there will be challenges because the Indore is coming up and for additional requirement of working capital for the stock working capital requirement for stocks and collection datas, there will be a need of additional working capital, which we are planning to be generated from the existing cash flow. So we'll not decided to go, I'll take additional borrowing for our Indore plant. And from last year onwards, we were '25, '26, I think cash generation, we would be able to utilize around INR 75 crores, INR 80 crores to repayment the loan, and it will be repaid in the 3 to 4 years.

The next question is from the line of Bhavya Sonawala from Samaasa Capital.

Another 2 questions. Sorry for my ignorance, but when you say that there is a backlog in Navsari. So do these clients have enough stock for -- until and/or comes online? Or how does it work?

So what we have done very frankly, Bhavya if you see in the March, our datas had taken a rise because of parisian critically where the hospitals are a little bit of a concern for us, which we have a little bit taken on a serious note on April to June. So I mean just using the example of capacity. And generally, we cannot fulfill that we have taken the option to take care of those -- I would say, orders, which are a little bit more forthcoming and futuristic. Certain discipline in terms of datas, where you already have seen improvement in these 3 months and when we come up with the September numbers, you will see the changes in the datas also. That is something which we are using to maybe take care of, I mean, postponed or not take care of certain orders in the domestic critical care space, which would otherwise we would have added INR 15 crores, INR 20 crores more on our top line. So that is where we are managing because exports are something which are very water type contracts we cannot get out of. Like for example, I'll tell you in the month of July and -- sorry, in the month of May and June, we had some PPI orders, which we needed for Europe, which you can not go through. Now instead of that if I did take care of tipper planning for U.K. I would have got a better top line. So instead of a INR 30, INR 40 we would have got a INR 300, INR 400 top line in the same capacity going forward. So such thing for the time being, we are pushing a little bit to this quarter, certain times are Sparsh are not critically allowed and it will be getting pushed ahead because anywhere that financial discipline has been coming in, in terms of certain hospitals. So that is how we are managing. Of course, with Indore coming in, we hope that it will be relaxed a little bit hard -- not at the cost. Datas but, yes.

Okay. But then do you -- is it possible that you kind of lose business because you are either pushing it or kind of you're choosing between orders you have. So does that pose a risk in future?

Frankly, it's a very thin red line on that is the CFO and our team is being very prudent and restricting and I would say, guiding our team properly getting the business, the margins vis-a-vis the debtor days are more crucial for right now because we are putting enough scope in the international market in spite of this also. So there has to be some place where we draw the line at beyond 120, 150 days if a hospital is not ready to pay, then it's difficult for us to sustain. So yes, we would be losing those businesses, and I will not definitely not deny that. I think it's better in the long term. There'll be other opportunities which will get us through, so I don't foresee anything as of now.

Okay. Understood. Just the last question. In the whole process of auditing the Indore facilities validation in the last steps involved or...

Yes. Media fill validation in the last step then you wait for 14 days for the results to come and then use it for commercial production.

Okay. And then when we would like to kind of get more export market, more kind of countries get approval. So -- does that happen once the capacity is up and running? Or is that.

Yes. So unfortunately in pharma, the gestation time is a little bit longer. The moment the commercial productions will be happening in like for U.S., if you take any batches, we have to show the batches and the actual inspection happens. In Europe, whenever you take a batch, let say of 100 vials, I'm just giving an example, 30 vials which are required for valuation will have to be kept or 40 vials depending on the batch size. The remaining 60 vials was you can liquid in the Indian market or somewhere. For any country, when you have to enter, you have to have a tech transfer done from Navsari here or maybe a dossiers made for Indore, then the dossiers is submit. First of all, the plant has to be approved by that country. And then -- so that's why our strategy to get a new inspection done by the end of the year will help us because once the EU approval is done, most of the countries open out in the world, except for U.S. and Japan. Now with the EU approval in place, at least dossiers can be a, we can start filing dossiers from November, December -- I would not say November, I think if your production starts in September, then around December, where January with 3 months stability data, we start filing the dossiers. So let's say 2025, we start filing dossiers, the approval starts coming from next year. The advantage of having an existing business in Navsari helps us to do the tech transfer much faster. So that is the thing which we are harping on. So certain products which are already being made in Navsari, but capacity contains are there. Those are the once the new approval happened by the end of the year or early 2025 we can start seeing that business being amplified and transferred to Indore. So domestic will be the space for the first 3 to 5 months or 6 months? Then tech transfer businesses starts keeping kicking in from the next 5 to 12 months and so on. And then the new approvals and the new registration will start coming in after 1.5 year to 2 years. Like U.S., we are looking at doing all the hard work in 2024, 2025 and hopefully for the 2026 mid or end commercialization?

Okay. Okay. Understood. And do we have an active -- you saw plan right now? Because I think a couple of quarters back, we had kind of...

Yes, I think it's already in place. I think I would like Ami to answer that because I believe we already have announced for a certain type of management, like the head of Indore and the head of certain marketing team. Ami, can you comment on this?

Yes, sir. So in the last meeting held in the month of June, we have granted [indiscernible] 6 of our employees, and they have accepted it. So we are waiting for the vesting period to get over post which we would be initiate the business.

The next question is from the line of Nikhil Chandak from JM Financial Family.

Yes. I just wanted one clarification on the answer you gave on the financials. So I think you mentioned INR 1,500 crores of top line. I'm just trying to understand the annual top line says roughly INR 800 crores at this point of time. And if the new capacity is 1.5x the existing capacity with the higher margin. Then shouldn't be the numbers be much higher? Or this is like a conservative estimate of INR 1,500 crore top line?

So I'll tell you Nikhil, why? So the issue is why we are giving the, you can say, conservative or pragmatic for worst commerce numbers or whatever you say, is because all -- like I was explained in the earlier question, depending on the country where we get the dossier, permissions, what we get the markets what we get, the product mix is from a INR 30, INR 40 item to like, let's say, INR 3,000 item also. So depending on -- there'll always be 40% to 50% of our capacity, which will be taken by these volume products, which are like say, like a vancomycin or a pantaprazole or for that matter, any one x, y, z, I'm just naming 2. Then you have the high-end products like antifungals and then antibiotics, which like dalbavancin or amphotericin b liposomal or even right now, we are trying to work in our liquid injections also for aripiprazole expansion or a depot injection with [indiscernible]. So the product mix is very crucial. And depending the orders in the countries, of course, we try to aspire and we said that the total recognized market is around INR 2,000 crore to INR 2,200 crores. there will always be on a [indiscernible], we get only Vancomycin, Pantoprazole, we missed out on that. So even though there will be a margin expansion are happening on either the margin expansion of pantoprazole is lesser than as compared to amphotericin b or Dalbavancin [ rabeprazole ] also. So that's why when we put our neck on the line, we try to give you the most achievable thing rather than saying what is not -- of course, our efforts will be to do much more because of the product mix and come up with new avenues. What we have invested in last year and a lot of R&D projects on dossiers and for things which are anyway getting us ready for the next 3 to 5 years?

So just to understand, so 800 -- so for fiscal '22, just ballpark-ish kind of a number, is INR 800 crore from the current operations and say, roughly INR 700 crore from the Indore new facility? Is that the way you're looking at it?

No, no, no, sir. I think, like I said, for us, I mentioned the capacity will be 25% to 30% or like a 30%, 35%. On year one 25%, 26% and where 30% of that amount is what we are seeing on a [indiscernible] capacity expense happening from here also. So I would say, INR 1,500 in 2 years or 1.5 year, let's put it that way, what you expect might not be possible because that's too ambitious because when we have an export market, the gestation period is very high. So I would suggest from '28 onwards, I'm saying on a '27, '28 onwards is where we should targeted -- where -- which is much more. And then you will see the bigger number jumps coming after that because of the product mix going forward. So roughly, say, INR 1,500 crore total company top line by 27%, 28% is what you're expecting based on the gradual ramp-up?

Yes.

Roonghta, sir, is that right? Would you like to comment something?

27% and 28% or maximum there will be around 6 months.

[Operator Instructions]. As there are no further questions, I would now like to hand the conference over to Ami Shah for closing comments.

Thank you very much. I appreciate all of you joining us today. And if any of the questions remain unanswered, you can get back to our Investor Relations team, and we'll be happy to take those separately. With that, we conclude today's call. Take care.

On behalf of Gufic Biosciences Limited concludes this conference. Thanks for joining us. You may now disconnect your line.