Hikal Limited (524735) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '26 Earnings Conference Call of Hikal Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] With this, I now hand the conference over to Mr. Sameer Hiremath, Managing Director from Hikal Limited. Thank you, and over to you, sir.

Thank you. Ladies and gentlemen, good afternoon, and a warm welcome to all of you. I extend your gratitude to all of you for participating in our Q1 FY '26 results conference call. We are pleased to provide you with an update on the progress made by our company. We trust that you have had the opportunity to review our comprehensive earnings release, investor presentation and the financial statements for the quarter ended 30th June 2025. These documents can be accessed on both Hikal's official website and the stock exchanges website. I am Sameer Hiremath, Vice Chairman and Managing Director of Hikal Limited, and I'll be leading the discussion and presenting the financial results. On this call with me, I have Anish Swadi, our Senior President and Head of Business Transformation; Kuldeep Jain, our Chief Financial Officer; Manoj Mehrotra, our President, Pharmaceutical Business; Vimal Kulshrestha, our President, Crop Protection business; and Strategic Growth Advisors, our Investor Relations advisers. Q1 FY '26 marks the continuation of the challenging industry environment, characterized by global overcapacity, intensified price pressures and demand volatility across core markets. The chemical and life science sector continues to experience uneven recovery with pricing compression in select geographies, especially from Chinese competition. Tariff shifts and procurement variations due to trade realignments further complicated the external landscape leading to a muted first quarter. In this quarter, Hikal reported consolidated revenue of INR 380 crores and EBITDA of INR 25 crores. Our consolidated performance was impacted primarily due to the deferment of shipments in our pharmaceutical business. Our Pharmaceutical business saw 11.7% revenue degrowth on a year-on-year basis on account of delayed offtake from key anchor customers. During the quarter, the U.S. FDA issued an official action indicated OAI status to our Bangalore facility following the inspection in February 2025. We want to assure all stakeholders that Hikal has taken this matter seriously and has already implemented comprehensive corrective and preventive actions in line with the agency's observations. These observations were procedural in nature and did not include any issues on data integrity. We have submitted a detailed response update outlining these actions and remain in active communication with the U.S. FDA. We are working diligently to ensure full compliance and alignment with all regulatory expectations. We continue to uphold the highest standards of quality and remain committed to strengthening our regulatory systems and culture. We did have some positive news during the quarter. GMP audits at our Bangalore API facility by 2 global regulatory authorities, EnVSa in Brazil and PMDA in Japan were successfully concluded. This reinforces our regulatory credentials and positions us well for future growth in key Latin America and Japanese markets. This is in line with our current strategy to derisk our market concentration in view of the uncertainty in the ongoing tariffs. In the CDMO segment, the pipeline remains healthy, and we are engaged in multiple projects with global innovator customers. Most of these are in the early to mid-development stages. Commercial revenues is expected to happen towards the end of this financial year. The Crop Protection business continued to maintain a stable trajectory, largely driven by sporadic global demand in specific segments and while having persistent pricing erosion from oversupplied markets. Revenue remained largely flat on a year-on-year basis. Despite this, we maintained operational efficiency through tighter cost controls and process optimization. We anticipate a gradual volume recovery in the second half of the year as seasonal demand picks up across global agrochemical markets. In summary, while Q1 FY '26 reflects a slow start and a negative start to the financial year, we remain confident of delivering on our yearly guidance, which we spoke about in the last investor call. We expect performance to improve meaningfully in the second half of the financial year with Q4 being the strongest quarter of the year, led by enhanced plant utilization, increased offtakes and new product commercialization. Now, I will hand over to Kuldeep Jain, our CFO, who will provide an overview of the financial performance.

Thanks, Sameer, and good afternoon, everybody. Let me now walk all of you through the financial performance of Hikal for the quarter 1 FY 2026 and share key updates on our financial trajectory, capital allocation priorities and balance sheet strengthen. For Q1 2026, our consolidated revenue stood at INR 350 crores compared to INR 407 crores in the corresponding quarter of the last year. This reflects the impact of continued softness in select product categories and deferred offtake from key anchor customers, particularly in the Pharmaceutical division, partially offset by stable performance of our crop protection. EBITDA stood at INR 25 crores with an EBITDA margin of 6.5% as against 14.3% in Q1 FY 2025. The margin compression was largely driven by under absorption of fixed costs, less favorable product mix and lower capacity utilization in a few manufacturing blocks on account of scheduled maintenance shutdowns. Depreciation and finance costs for the quarter were INR 39 crores and INR 17 crores, respectively. The cash profit for the quarter stands at INR 16 crores. During the quarter, we improved our working capital utilization, resulting into a positive free cash flow of INR 15 crores. Our CapEx for Q1 FY 2026 was INR 31 crores, primarily towards the debottlenecking, regulatory upgrades and CDMO capacity augmentation. We are maintaining our full year CapEx guidance of INR 200 crores and remain disciplined in allocating capital towards high ROI projects aligned with our long-term growth strategy. Our debt equity ratio remains stable at 0.54. Our balance sheet and cash flow remain strong. Now I would like to hand over to Vimal, who will provide an overview of Crop Protection division performance. Over to you, Vimal.

Thank you, Kuldeep. Good afternoon to all the participants of this earnings call. The global crop protection industry continued to face uneven recovery in Q1 FY '26. This is led by persistent overcapacity and aggressive price competition from China. Despite these market challenges, we at Hikal have remained focused on disciplined execution, prioritizing operational efficiency, product mix optimization and strategic customer engagements. During the quarter, our Crop Protection revenue stood at INR 178 crores with EBIT at INR 17 crores, largely flat on a year-on-year basis. Margin remained under pressure as pricing pressure continues due to oversupply in the global system. The performance is expected to remain stable during the year on an annual basis. Adding to the industry level pressures, global innovator customers in the Crop Protection segments are undergoing significant strategic shifts. This includes portfolio realignment, business segment restructuring and the pivot towards next-generation innovation platforms. This alignment is influencing procurement patterns, contract time lines and in some cases, impacting commercial decisions across the value chain. While this presents near-term volatility, it also opens up longer-term opportunities for differentiated partnerships, co-development programs and supply chain localization. In addition to crop protection, we are also making measured progress in personal care and specialty chemical space. In line with our broader diversification strategy, during the quarter, we continued to deepen engagement with global customers for innovation-driven cosmetic and personal care ingredients, supported by our capabilities in complex chemistries and sustainable manufacturing. The response has been encouraging from customers with early success as we have received multiple RFPs. This segment remains an emerging growth lever, and we are focused on building a differentiated product portfolio aligned with evolving customer and regulatory expectations. Accordingly, we have intensified engagement with strategic accounts, realigning our technology pipeline to reflect customer prioritization and focused R&D efforts on developmental molecules that align with innovation-led demand. We continue to maintain a healthy development pipeline of 8 projects. Our R&D team continue to play a pivotal role in accelerating these projects and delivering with innovation. In terms of cost control, we have implemented several initiatives across procurement, energy optimization and yield improvements, helping us protect contribution margin with an aggressive pricing -- in an aggressive pricing environment. In summary, while near-term market dynamics remain fluid, our fundamentals in Crop Protection business remain intact. We are confident that the strategic choices we are making today, both in terms of portfolio and operational excellence will enable us to deliver profitable, sustainable growth as the industry rebalances. Now I would like to hand over to Manoj, who will provide an overview of Pharmaceutical division performance. Over to you, Manoj.

Thank you, Vimal, and good afternoon, ladies and gentlemen. Let me now walk you through the performance of our Pharmaceutical division for quarter one FY '26. During the quarter, the Pharmaceuticals segment recorded revenue of INR 203 crores and EBIT loss of INR 27 crores. Customer offtake patterns were impacted in part due to the recent U.S. FDA OAI status at our Bangalore facility. This has led to a degree of volume deferral from the first half to the second half of the fiscal year. Margin realization was impacted by lower volumes and changed production mix. Our profitability was affected by lower operating leverage. However, based on our current visibility and the pace of engagement with customers, we do not anticipate an impact on overall revenue and margin performance for FY '26. Now I would like to give an update on our regulatory compliance. A major milestone this quarter was the successful completion of [indiscernible] audits at our Bangalore facility by 2 global regulatory agencies, ENVISA. Brazil and PMDA Japan. This reaffirms our regulatory credibility and significantly enhances our access to key Latin America markets and the strategic Japanese market. I would like to reaffirm our unwavering commitment to compliance and quality excellence, as Sameer mentioned earlier. The OAI status received by our facility post the U.S. FDA inspection is being addressed through a structured time-bound remediation program. We are working closely with regulatory experts to ensure that the corrective and preventive action, which is CAPA, meet the highest standards of global regulatory expectations. We have till date completed majority of the corrective actions, and we expect the remaining balance to be closed out before end of this quarter. We have kept the U.S. FDA appraised of the progress on a regular basis. For our API business, we demonstrated volume degrowth on a Y-on-Y basis, driven by shift in offtake patterns from anchor customers and product mix. We have seen particular traction in certain markets where our long-standing portfolio is complemented by growing market share in select molecules. Our product development pipeline remains strong with 8 to 9 molecules currently under development, and we remain on track to launch 2 to 3 new products annually in line with our medium-term road map. As part of our risk mitigation strategy, we are progressing towards dual-site validation for all our critical APIs. Our CDMO business continues to benefit from the structural momentum driven by the China Plus One strategy, which is reshaping the global outsourcing landscape. We are observing a sharp uptake in our early-stage RFPs, particularly in high-value small molecule and advanced intermediates. This demand is being driven by global innovators and emerging biotech firms who are looking to diversify their development and manufacturing away from single region dependencies. While commercial scale-up time lines remain staggered, the volume and quality of engagements have significantly improved. We are currently working on various CDMO projects, of which a few are transitioning from early development into pilot scale. In the food and nutraceutical ingredients, we are on track to gain scale and expect it to reach peak output over the next 18 to 24 months. We are working towards further expanding our product portfolio in this segment. Our initiatives in this segment are progressing well. Separately, the key starting materials being manufactured for global innovators have advanced into Phase III clinical trials, and we expect this to translate into commercial launch by FY '27. To support this momentum, we are investing in enhancing pilot scale capacities and dedicated project management teams for CDMO clients. These enablers will allow us to better serve early-stage programs and establish ourselves as a long-term strategic partner. On the overall pharma business outlook, the API volumes are expected to improve, supported by regulatory approvals coming through across geographies and increased penetration in semi-regulated markets. In CDMO, while near-term visibility remains tight, the pipeline is robust and diversified with engagements growing in both volume and technical complexity. We have completed several customer orders during this quarter. Our near-term focus remains on improving contribution margins through cost productivity, scaling differentiated API projects in both segments, strengthening customer partnerships to compliance, quality and responsiveness as well as enhancing regulatory readiness for new markets and molecules. Now I would hand over to Anish, who will provide an overview of our business strategy.

Thanks, Manoj, and good afternoon, ladies and gentlemen. First, I'd like to discuss our Animal Health business. Our Animal Health business continues to make steady strides both operationally and strategically. Under our long-term supply agreement with a global animal health innovator, the development and validation of the APIs -- API portfolio is progressing as planned. Several more products are currently in the validation pipeline and commercial filings are underway for multiple markets. We expect commercial launches in FY '26 and beyond. We are also taking a step further with 2 complex chemistry molecules that are moving to the development phase. Our relationships with several global innovators spread across the U.S. and Europe in the Animal Health segment have been built over the last several years based on reliable delivery, technical collaboration, which continues to strengthen further. We are increasingly positioned beyond just a manufacturing partner driven by innovation and our proven track record in complex synthesis, compliance and agility in process development. We are now focusing on expanding our footprint with Tier 2 innovator customers, the biotech segment and the own product portfolio focused on several key geographies. This will further provide diversification to the Animal Health business and act as one of the key growth levers in the long run. Turning to our Project Pinnacle, which is our enterprise-wide transformation initiative. We continue to make disciplined progress in reorienting Hikal for the long-term sustainable value creation. Well into its execution phase, the program is delivering measurable outcomes across critical levers, including supply chain resilience, digital modernization, operational excellence and ESG integration. A core pillar of our strategy under Project Pinnacle is the diversification of our businesses across multiple dimensions, spanning end markets, customer segments, geographies and product portfolios. We are actively expanding our footprint in high-growth regions such as Latin America, among others, and increasing our presence in differentiated chemistries and deepening our participation in adjacent verticals such as the Animal Health business and specialty chemicals. This multipronged diversification approach is designed to structurally derisk the business by reducing reliance on any single market or segment while enhancing our ability to navigate external volatility whether regulatory, geopolitical such as tariffs or macroeconomic. Project Pinnacle is central to our ambition of building Hikal into a more resilient, innovation-led and globally competitive platform, well positioned to capitalize on emerging opportunities across the life sciences value chain. In summary, although we have hit a slight hurdle in our Pharmaceutical business, it is expected to recover in the second half of the year. Global prospects for all our businesses remain strong. We remain optimistic about the road ahead. We have focused initiatives on reducing costs and streamlining operational efficiency. Our geographic and product diversification is reducing concentration risk and reinforcing our ability to navigate global headwinds. Now I would like to open the floor to Q&A.

[Operator Instructions] The first question comes from the line of Dhrumil Vani from [indiscernible] Capital.

So a couple of questions. So first on the agrochemical. Recently, there are some media reports suggesting some increase in the prices of the agrochemical by Chinese supplier and also the Chinese policy of not operating at such lower margins across various industries. Do you -- with this in mind, do you see any positivity and would like to change your outlook for the year, which you had -- -- so last quarter, you had a flattish growth outlook for agrochem. But given this scenario, for example, [indiscernible] prices has been increased and a couple of other molecules also. So any comment on that? And on pharmaceutical, it has mentioned in the press release that there has been some deferment of orders -- the lifting of the orders by clients in CDMO and API division. So -- and you expect recovery in Q2 and then going forward. So what are the actions the customers are taking? Are they sending their team to check the plant and be satisfied? And by when and how will they increase the offtake? And also what is the deadline for us to submit the report to the U.S. FDA? I think in last conversation was some September, October. But if you can just revisit the deadline that by which as investors, can we find that beyond this, there would not be any negative surprises coming. These are my 2 questions.

Sure. So I'll let Vimal take the crop section and Manoj can answer the pharma part.

Yes. So in China, though -- I mean, there are news that some products slight price increase is there. But by and large, prices are flat. And we -- based on that, we anticipate a flattish revenue growth for the Crop Protection division.

Okay. And what about the inventory situation at the end client level? Is that easing off because the numbers what the other companies are reporting are good so far.

So in some pockets, it is improving. In some pockets, still customers are holding high inventories. And they expect to rationalize inventory in the second half of this year.

And what's the exposure to Brazil?

Sorry?

What is the exposure to the Brazilian market?

For us, I mean, it is not very high. It's...

Understood, yes. And the pharma bit?

Yes. On the pharma part, we received the OAI status from U.S. FDA towards the end of May. So that does mean that the customers do their own risk assessment. So many of them did it virtually. Some of them decided to come over to Bangalore and see for themselves. So that process takes around 6 to 8 weeks, and most of our customers have completed that their own risk assessment. And they have found that everything is in order, whatever corrective actions we are taking. It does not give any risk to their products. The shipments have restarted now. And over the next 2 quarters, we'll be able to cover up the setback what we had in Q1. Coming to the corrective action, we have corrected almost 75% to 80% of the CAPA, which we have taken in our first response, followed by the updated response. By end of September, we'll be finishing all our corrective actions. And we are in regular touch with U.S. FDA and giving them a monthly progress update. The last one was given as recent as July 31, which is just a week back. We hope to hear from them by end of August on our responses.

Okay. And the entire cost of these corrective measures, has it been expensed completely on the P&L in this quarter?

Many of it is a little ongoing. That is on facility upgradation and quality control upgradation. So that is ongoing and there is some bit of capital expense, not much of P&L impact.

Okay. So there's no P&L impact of this -- because I think in last conversation, there was INR 10 crores, INR 12 crores.

Let me introduce -- let me. We have hired these consultants so that we expect INR 10 crores to INR 12 crore impact for this year, almost 50% has come in, in the first quarter. And we expect it to continue for Q2 and Q3 as well.

Okay. So that -- so around INR 5 crores is on the P&L?

For this quarter, that's right.

Yes, its expense from the P&L.

That's right. In the other expenses, yes.

In the other expenses. Okay. Okay. So this year-over-year fall of around INR 20 crores, INR 23 crores in our pharma business. So this gap is of this low uptake and the growth also has been postponed, right? That's the bridge, right, the revenue bridge?

Yes, shipments have been deferred. Shipments have been deferred. So that will be recovered in the next 2 quarters.

Okay. Okay. So they would be adjusting the inventory at the customer end by purchasing it from some other customer or they have a buffer and they can -- they are okay with this [indiscernible].

Most of them have a buffer. The big ones have a buffer. So no orders have been canceled for us due to this.

Okay. Okay. Okay. So -- and can you reiterate your guidance for the year? What was it?

We had given it last time, it was -- Crop Protection was flat and Pharma, we expected low teens growth.

Yes, 12% to 14%, right?

12% to 14%. Revenue growth, yes.

And margins.

Margins -- EBITDA in margins will improve slightly more or less in the Pharma business. Crop will be about flattish.

[Operator Instructions] The next question comes from the line of Venil Bagadia from Equicorp.

Sir, some clarification based on the previous participant. Sir, what is the revenue loss that we see due to the deferment of orders? And once you said that the orders are fine and the shipments have started, so we haven't taken any onetime inventory markdowns due to any quality or any possible suspect from the end of customers, right?

No. [indiscernible] nothing wrong.

And what would be the -- I mean, the revenue loss because -- I mean, there has been a...

Yes, I'll take that. So revenue -- it's not a revenue loss, it's a revenue deferment, which is about INR 50-odd crores in the first quarter, which is getting deferred to Q2 and Q3.

Okay, sir. Sir, I actually had a question related to the plant -- animal plant -- animal health plant. So we have commercialized the plant in FY '24, I guess, the third quarter of FY '24. So usually, the pharma and chemical industries, I mean, the sooner we commercialize the plant, the better it is. And usually, people have 3, 4 or max to max or a 5-year cycle to which they actually get to optimum utilization for good paybacks and IRR and returns. So we have not commercialized it in -- I mean, it's almost 2 years and we have not commercialized it still, and we are still waiting for more validation. So I mean, when do we actually expect the commercial runs? And how has been the returns since we have not commercialized for the next 2 years? And also, is that -- how do you see the situation on the spec chem plant that you just recently capitalized? I mean what kind of payback you see there? How fast you want to commercialize and get into actually commercial batch orders and ramp up the digitalization?

Yes. So I'll take the first stab. When we say commercialize the plant, we had a portfolio of products. So when we started in late FY '24, we started with validating a few products and all through this last 12, 14 months, we've been validating the products. Once the first original products have been validated, now they're going through commercialization. So it's not correct to say that the plant is not commercialized. It's not for a single product. As we finish the last validation that we have coming up in the next quarter, all products will be validated through the plant and commercial quantities will thereafter start between 12 to 14 months post validation. So we are supplying small commercial quantities already for the products that we had validated originally in late 2024, right?

So that test batch quantities. That will be test batch quantities and it won't be a significant part of the revenue, right?

No, they're starting out small where they change -- basically, they have some inventory on hand from their original suppliers. So that inventory, they're going to stop. And then from 20:80, it's going to become 80% us and 20% the second source supplier.

Okay.

And your second question regarding the specialty chemicals. So what we've done is basically the growth rate that we see in pharma is surpassing that what we see currently in the crop protection business. So what we've done is we've taken that spec chem plant and we've converted partly into pharma and animal health for future business that we have backed by contracts. So we expect that currently, what we're doing is we are undergoing some reffitment in terms of equipment, clean rooms, closing out some of the plant. And we expect that in the next 6 to 9 months, we'll be able to start commercial production, at least validation and then commercial production for some of these products.

So just a clarification, sir, when you said you're converting some part of the spec chem plant to pharma use, so what will be our investment that we would be doing in terms of clean room and additional some reactors or so? And would we have to go through the entire process of getting approvals from, I mean, the regulatory authorities or the markets where we plan to supply these quantities?

So mostly, what will happen is since the plant is already on the U.S. FDA property, right? So it's also considered to be U.S. FDA approved per se because of the quality standards and the procedures are all following global regulatory standards. So from that perspective, we're fine. Individual customers may or may not come and do their own audits per se. And obviously, when you commercialize a new plant, especially for pharma and for potentially animal health, those products will be validated and then commercial supplies will start thereafter. So it's going to be a mix of products that we already have in the pipeline. So for example, we have some commercial products in the pipeline that we're already manufacturing. So as a derisking measure, we may put some of those products in this new asset to meet capacity that we want. And in addition to which we'll have a diversified range of new products that are coming from pharma and animal health. And of course, we have our spec chem business also that continues to happen.

Okay. And on the payback and the -- I mean, the return metrics for both the animal health plant and the [indiscernible] plant, when do you see optimal utilization and breakeven and then your peak utilization?

Yes. So it's the same as [indiscernible] mentioned, we follow the same metrics. It's anywhere between 5 to 6 years, as you said earlier. We follow the same metrics.

The next question comes from the line of Ankit Gupta from Bamboo Capital.

So first question is on the pharma side on the OAI being issued by the U.S. FDA. So do you -- like given how the OAI works, so what happens to our existing pipeline of products that we'll be doing for the -- on the CDMO side for our innovator partners? So are we trying to shift it to the Panoli plant? Or what kind of corrective action are we taking? And are our innovator partners shifting these products that they plan to launch to other CDMO companies?

So what we've done is that after this OAI status, all our customers obviously reached out to us and came and checked out all our systems and all the projects that were awarded to us. And irrespective, even before this, many of our products as part of our risk mitigation were already being filed from Panoli. For example, almost 80% or 90% of our Animal Health new portfolio is being filed from Panoli irrespective of this OAI status. So that continues as is. On the API side, on the human API side on both the generics and the CDMO space, all the new filings we are doing from Panoli, the existing products which are in Bangalore, which we were launching, we've given the customers the option of either keeping it in [indiscernible] and Bangalore or to moving it to Panoli. So far, they're comfortable with keeping it with -- in Bangalore based on the orders and the quality satisfaction that they've done post the orders that have been carried in the last 2, 3 months. But there is a move to derisk, as Manoj mentioned, all our critical APIs, and we are proactively doing the filings from Panoli and also giving the customer the offerings to move the products to Panoli if they need. But very few have said that they want to actually move. Most of them are comfortable with keeping it in Bangalore itself. And they expect.

The reason is that they are comfortable as of now with the corrective action, which we have taken. So -- and their audits have also shown that there is definitely a possibility in the next few months or maybe early next year, we can reverse this OA status.

But given Hikal's track record and your focus on the regulatory compliance, this overhead comes as a big surprise. You have also -- have always been harping on spending a lot on [indiscernible] assets, which keeps our asset turnover low because you have been guiding for a very good compliance track record. So can you talk about the nature of observations which have been issued and what corrective actions are we taking to reverse this? And any update on when is the inspection for the Panoli plant also due now?

First of all, none of the observations were to do with data integrity and they were procedure in nature. So that's where we are on the observations. Regarding the Panoli plant, the last audit was in 2023 with 0483 observations. And we're ready for an inspection. They come every 2, 3 years for an inspection. So we're due for an inspection maybe next year if not earlier.

The same facility was approved by ANVISA Brazil and Japan PMDA, which are equally stringent. So okay, it has been a bit of aberration the way status by U.S. FDA. But we are sure confident that we'll get back where of our original track record.

Sure. So -- but do we have sufficient capacities available in the Panoli plant over the next year or two to fulfill the kind of demand that can come from the new product launches, which are planned for this year and next financial year?

Yes. We have -- as part of -- anyway part of our risk mitigation and our Project Pinnacle, Panoli site was being expanded. And most of the new CapEx that Kuldeep spoke about is being done in Panoli. And the Panoli plant is building up new plants and new assets. So this is part of the plan, and we'll be moving all our new launches to Panoli. And this was done before the FDA status as well. So we're just intensifying that now.

The next question comes from the line of Rohit Sinha from Sunidhi Securities.

So one question on this deferment side. I know you already have answered so many similar questions. But one thing on this deferment. Earlier actually, I mean, people are thinking about because of the U.S. tariff issues, people are deferring the shipments or ordering. So now although we know these are deferments and complete in second and third quarter. But given the kind of rate hikes came into picture, are we seeing any change in these orders or rates given the kind of tariff is there?

Manjoj, do you want to take that?

Yes. When you say rate hike means, tariffs?

Yes, yes.

So as of now, tariffs are not impacting the pharma business at all. And we believe that these deferred sales, as we mentioned earlier, will be recovered in quarter 2 and quarter 3. And I explained in our opening session as well, as Sameer mentioned that, yes, there's a process. Customers do their own audits and risk assessment post the FDA. And we have maintained the full transparency with all customers. There's nothing systemically wrong with Hikal facility or practices. Observations were mostly procedural, and we are confident of resolving them by end of September. We'll complete all the actions and then wait for the U.S. FDA to respond. And we are actively engaging with the agency to come out of it at the earliest.

Okay. Okay. Got it. And secondly, on the Personal Care segment, I know it's too early, but just if you can give some color on this opportunity which we are looking at and how much time definitely it would be to get the final approval from the customers? And how big revenue contribution could be there from this side?

Vimal, can you take that?