Jubilant Pharmova Limited (530019) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Jubilant Pharmova Limited Earnings Conference Call for the quarter and half year ended September 30, 2021. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vineet Mayer, Head of Investor Relations at Jubilant Pharmova Limited. Thank you, and over to you.

Thank you, Stanford. Good evening, everyone. Thank you for being with us on our Q2 FY '22 earnings conference call. I would like to remind you that some of the statements made on the call today could be forward-looking in nature, and a detailed disclaimer in this regard has been included in the press release that has been shared on our website. On the call today, we have Mr. Shyam Bhartia, Chairman; Mr. Hari Bhartia, Co-Chairman and Managing Director; Mr. Arvind Chokhany, Group CFO; Mr. Pramod Yadav, CEO, Jubilant Pharma; Mr. Giuliano Perfetti, CEO, Jubilant Biosys; Mr. Syed Kazmi, CEO, Jubilant Therapeutics; and Mr. Arun Sharma, CFO, Jubilant Pharmova. I now invite Mr. Shyam Bhartia to share his comments.

Thank you. Good evening, everyone. I hope you and your family are safe and healthy. The company reported 4% top line growth during the quarter, driven by steady revenues in the Pharmaceutical segment and robust growth in the Contract Research & Development Services segment. In the Pharmaceutical segment, while Radiopharma, Allergy and CMO businesses reported growth on year-on-year basis, the API business performance was lower on a higher base last year and generic business witnessed headwinds due to temporary pricing pressure in the U.S. market. Generic business was also affected during the quarter by import alert at Roorkee plant and by the impact of the industry-wide impurity issue in certain Sartan products that led to the lower sales and some product withdrawals. In our Contract Research & Development Services business, we witnessed strong growth both year-on-year and sequentially, driven by continued strong demand from our customers for our drug discovery services. In Proprietary Novel Drugs business, our plans are on track to take one program to the clinic stage by the end of this financial year. Our strategic initiatives of API demerger is progressing well, and we have received consents from the bondholders and term loan holders and have filed the first motion in NCLT in September 2021. We expect to complete this reorganization by the end of this financial year. During H1 FY '22, we grew our revenues by 20% year-on-year and improved our EBITDA margins by 2.44% versus H1 FY '21 due to recovery of Radiopharma business and strong performance in Allergy Immunotherapy, CMO, API and Contract Research businesses. I would like to mention that over the medium term, we have very strong growth levers in all our businesses. To drive growth in these businesses, the company will continue to invest accordingly. I would like to welcome Giuliano Perfetti who has joined as the CEO of Jubilant Biosys Limited and brings with him over 2 decades of experience across businesses and global markets. I wish Giuliano all the best. I'm confident that he would play a strong role in further strengthening and scaling up our Contract Research & Development Services business under Jubilant Biosys. With this, I hand over to Pramod to discuss the Pharma business.

Thank you, Mr. Bhartia. A very good evening to all of you. Pharmaceutical revenue was at INR 1,543 crores versus INR 1,516 crores in Q2 FY '21. Our Radiopharma business witnessed improvement in sales year-on-year. However, sales of recovery during the quarter was affected by increase in COVID-19 cases in the U.S. I would like to mention that we continue to maintain majority market share in key products in this business. The RUBY-FILL installations during the quarter were affected by the higher COVID-19 cases in the U.S. We remain, however, bullish on RUBY-FILL, given its unique benefit to the patients and have completed the doubling of RUBY-FILL manufacturing capacity which will enable continued growth in this product over the near medium term. Our NDA I-131 MIBG clinical trials, both for Phase II and Phase III are progressing satisfactorily. Radiopharmacy business witnessed steady performance year-on-year. However, volumes were somewhat impacted during the quarter due to intense flow of COVID-19. Our aggressive turnaround plan is on track to grow top line strongly with new customer needs, expand network to service newer geographies, and enhanced cost and procurement efficiencies. And we have witnessed positive outcome over the last 2 quarters. The Allergy Immunotherapy reported robust performance, both year-on-year and sequentially with strong recovery from COVID-19 backed by healthy growth in revenue resulting from volumes higher than pre-COVID levels. In our CMO business, we witnessed year-on-year growth in revenue, driven by continued strong demand from customers as well as due to COVID-related deals. In addition to INR 200 crores COVID-related revenue that we realized in Q1 FY '22, we booked around within INR 150 crores of COVID-related revenue in Q2 FY '22. This is against INR 93 crores in Q2 FY '21. The pandemic cases showing downward trend. The CMO performance is expected to return to normal levels in coming quarters. The capacity expansion project at Spokane is underway and is expected to complete by end of calendar year '24. Once completed, this will open further growth avenues for the CMO business. Performance of our API business was lower year-on-year due to higher base last year, but sequentially, it witnessed a strong growth stable margins. We expect this trend to continue. Though offset, we are seeing price increase for some of the starting material to be imported from China as well as increasing solvent and utility cost in India. We expect this cost to be passed through finished goods prices. We are also reducing our dependency on imports from China or [ KSM ] by developing them indigenously. Our API business demerger, as mentioned by Chairman is underway and once completed, it will create a robust platform that provides end to end services. [Technical Difficulty] I am sorry, there was some people in the background. That will provide end to end services from that discovery services to the clinical research to contract manufacturing of innovative and the generic APIs and would unlock massive potential for growth over the medium term. Our generic business reported lower revenue and profit during the quarter due to several factors such as pricing pressure in the U.S. market, lower volumes due to import alert at the Roorkee plant and industry-wide import issue in Sartans that led to voluntary withdrawals. This was partly mitigated by higher remdesivir sales. The EBITDA for the quarter was at INR 324 crores as compared to INR 343 crores in Q2 FY '21. In H1 FY '22, Pharmaceutical business revenue was up by 18% year-on-year, driven by recovery in Radiopharma and strong growth in Allergy Immunotherapy, CMO and API businesses. The Generics business also grew by 8% year-on-year in H1 FY '21. The EBITDA during H1 FY '22 grew by 32% versus H1 FY '21 with 2.28% improvement in margins to 22.2%. With regard to Roorkee import alert, our remediation activities are ongoing as per the plan, and we expect to complete the same early in the next calendar year. The Nanjangud revised status remains as it is. We have completed remediation activities and await USFDA inspection. With this, I hand over to Giuliano to provide insight into Contract Research & Development Servicing business.

Thank you, Pramod. I'm excited to become part of the Jubilant Biosys Group. And I'm glad to interact with you all to this earnings call for the first time. At Jubilant Biosys, we have a robust platform that delivers to significantly scale up this business, both in terms of capabilities and capacities. In our Contract Research & Development Services business under the Jubilant Biosys brand, we delivered another quarter of strong performance during Q2 FY '22, driven by continued strong demand from biotech companies for our integrated discovery as well functional services such as chemistry, DMPK and discovery biology. The business has a healthy pipeline of new contracts and customer acquisition for FY '22. Q2 FY '22 revenue grew 44% year-on-year and EBITDA grew 73% year-on-year with a margin of 32.9% versus 27.4% in Q2 FY '21. Our H1 FY '22 revenue was up by 49% year-on-year, EBITDA by 81% year-on-year and margin stood at 35.6%. I'm also glad to mention that our new state-of-art chemistry research innovation center at Noida is now fully operational. The new facility has been designed with highest global compliance standards to support both biotech and big pharma by delivering speed, quality and innovation. In view of the strong demand from our customers, we have approved further expansion of the grid of Noida facility, which will deliver both chemistry and DMPK services. With this, I'll now hand over to Syed to discuss the Proprietary Novel Drugs pipeline.

Thanks, Giuliano. Good evening, everyone. In our Proprietary Novel Drug business, we are developing a pipeline of first-in-class and best-in-class agents to deliver precision medicines focused on addressing unmet medical needs in the area of oncology and auto-immune disorders. We are also leveraging our industry validated drug discovery platform to identify novel promising assets and move them from discovery to development on an accelerated time line. Our first-in-class LSD1/HDAC6 dual inhibitor addresses multibillion-dollar market segments in both hematological malignancies and solid tumors and has successfully completed pre IND meeting wider with a goal to file the IND by end of calendar year 2021 and initiate first-in-human clinical studies in early 2022. Three more programs are following this lead, a first-in-class PAD4 initiative targeting auto-immune disorders such as rheumatoid arthritis subset as well as metastatic cancer. Our differentiated PRMT5 inhibitor with potential best-in-class profile which uniquely shows broad and brain exposure and therefore, can address brain tumor slide GDM and brain metastases. And finally, an overall brain comic trend PD-L1 inhibitor first ever potential checkpoint therapy for brain tumors. We anticipate the submission of additional INDs by the end of 2022. In our Proprietary Novel Drug business, we are developing very high potential assets that have attracted significant interest from institutional investors and strategic partners. The company is working towards creating shareholder value in this business through an external capital raise on our potential partnering with major global pharmaceutical companies. With this, I now hand over to Arun to discuss the financials.

Thank you, Syed. Very good evening, and I thank everyone for taking out time and joining us on our quarterly earnings conference call. I would like to highlight the company's financial performance for the quarter and 6 months ended September 30, 2021. For quarter to quarter financials, revenue from operations during the quarter was at INR 1,657 crores as compared to INR 1,591 crores in Q2 last year. Pharma revenue stood at INR 1,543 crores versus INR 1,516 crores in Q2 FY '21, while Contract Research business reported revenue at INR 108 crores as compared to INR 75 crores during Q2 FY '21. Reported EBITDA during the quarter was at INR 344 crores as compared to INR 353 crores in Q2 FY '21, with a margin of 20.8% versus 22.2% in Q2 FY '21. Depreciation and amortization expenses during the quarter was at INR 100 crores versus INR 85 crores in Q2 FY '21. Finance cost during the quarter was INR 35 crores versus INR 46 crores in Q2 FY '21, a reduction of 25% year-on-year. Reported PAT during the quarter was at INR 143 crores as compared to INR 147 crores in Q2 last year. EPS for the quarter was at INR 8.97 per share versus INR 9.21 per share in Q2 FY '21. Now moving on to H1 FY '22 financials. For H1 '22, revenues stood at INR 3,292 crores versus INR 2,747 crores in H1 FY '21. Pharmaceutical revenue was at INR 3,085 crores versus INR 2,612 crore in H1 corresponding year. The Contract Research & Development Service revenue was recorded at INR 196 crores against INR 132 crore last year. The reported EBITDA for the period was at INR 723 crores versus INR 536 crores in H1 FY '21. Depreciation and amortization expense was at INR 188 crores versus INR 167 crores in H1 last year. Finance cost stood at INR 69 crores versus INR 94 crores in H1 FY '21. Average blended interest rate at H1 FY '22 stood at 4.62% versus 5.17% in H1 FY '22. PAT for the first half was at INR 303 crores versus INR 182 crore in H1 FY '21 with EPS of INR 19.06 per share versus INR 11.44 per share in H1 FY '21. Net debt on a constant currency basis on September 30, 2021, was at INR 1,823 crores versus INR 1,928 crores as on March 31, 2021. Net debt to EBITDA improved to 1.14 as on September 30, 2021 from 1.42 as of March 31, 2021. During the quarter, we saw a net debt increase by INR 173 crores reports mainly attributable to temporary increase in working capital, which is expected to normalize during this financial year. On YTD basis, net debt on a constant currency basis was lower by INR 105 crores. Capital expenditure, excluding R&D capitalization, was at INR 131 crores for the quarter and INR 238 crores for H1 FY '22. For full year, we maintained the same spend around INR 700 crores to INR 800 crores for this financial year. With this, I would like to conclude our opening remarks. We will now be happy to answer any questions that you may have. Thank you.

[Operator Instructions] The first question is from the line of Rahul Veera from Abakkus.

Congratulations on decent set of numbers. Sir, just a couple of questions from my end. Even though we executed a couple of CDMO contracts in this quarter, in terms of margin, sir, we are on the much lower side, usually with CDMO contracts you've seen the margins being on the upper end. I understand our Radiopharma business is not at fully back to the 2019 levels. But even after that -- even after considering that, the margin of 20% is much lower. So can you throw some light there?

Thank you for your compliment. This is Pramod here. So the margins in CDMO were a little lower because of 2 regions. One is that the CDMO deal value in comparison to previous quarter in this quarter was slightly lower. And in our CDMO business, we also include the API, where we mentioned that for some of the Sartans, there was the product withdrawal. So that impacted the margin for the quarter.

Okay. Okay. Sir, one also on Specialty Pharma, there is Radiopharma compact to normalization. Do we see our margins moving close to 25% plus?

The margins ultimately will move up to the very healthy levels. And that will be driven by our increasing installs of the RUBY-FILL by our increasing launches of more of the generic products and our NDA I-131 MIBG. And as the COVID continues to get normalized, overall those dispensings will increase because the elective diagnosis will come back to the normal level. So yes, the margins in the near term, like in the next 2 to 3 years will bounce back to very healthy levels.

We take the next question from the line of Vishal Manchanda from Nirmal Bang.

Thanks for the opportunity.

Sorry to interrupt. Sir, maybe request you to use your handset, please. We can't hear you that well.

Am I audible now?

Yes.

Sir, with respect to the Radiopharma business, so the Radiopharmacy business, has that completely normalized? Or even that is yet to normalize?

This business in the month of April and May had almost normalized because during that time, the number of COVID cases in U.S. had gone down substantially. However, from the June onwards, the COVID again started increasing. And June, July, August, September were the months where we were impacted by COVID. So those dispensing in that business has gone back to between 90% to 95%. But on the last -- from the last one week, we are again seeing the overall better trend in the U.S. So let's give this invest cost.

Okay. And I just want to understand the margin impact of the decline in Radiopharmacy business. So at a gross margin level, it would be a healthy business. So all that you lose would kind of come out of the EBITDA. Is that right?

Yes. Yes. So we have been mentioning from the last 2 calls that we have put the very robust strategic initiative in place in that business to grow the top line. You are right that in the top line growth, the fixed cost at the pharmacy level is more or less remaining same or it doesn't go up in the proportion of the top line. So you get a very healthy bottom line in the process. And along with that, we are also looking at improvement in operational efficiencies and the procurement efficiencies. And we mentioned that in 2 years' time plan, the business will be at the breakeven. And we are tracking it, and we are on track as well.

Okay. Any improvements that we can see this year in terms of so 100 basis point margin improvement on account of the efficiency steps -- the efficiency measures that you are taking?

Since we are already taking efficiency measures and we are already seeing the improvement. If the COVID situation doesn't deteriorates further, we expect this year, our margins will be better than last year.

Okay. And where would be DTPA in terms of the normal volumes? Will it be down 50% or even lower?

Sorry, I couldn't get the question. If you can please repeat.

Where will DTPA in terms of the volume, normal volume. So is it still 50% lower or it has started to come back?

So it's actually difficult to track the exact number on quarter-on-quarter because this all will depend upon how many doses have been dispensed from the various pharmacies from ours as well as from others. But we have seen an uptick in DTPA as well as MA in this quarter. But however, this is not yet close to the normal level. It is still much lower.

It is not close to the normal level, you think?

Yes.

Got it.

So we have seen slight improvement, but we have yet a lot of parts to cover.

The next question is from the line of Tushar Manudhane from Motilal Oswal.

So just would like to understand how much would have been the impact of this voluntary withdrawal and come under the raw material cost, right, and affecting the overall gross margin?

It will be difficult to mention the exact amount that how much has been the impact. But if you can see our overall EBITDA margin in comparison to the previous quarters has gone down by about 2% to 2.5%, though our revenue is more or less same. So that much of the impact majorly has come due to these withdrawals as well as the import alert into the generics business and overall U.S. pricing pressure into generics business.

So at least, at least in this withdrawal...

Excuse me, this is operator. I'm sorry to interrupt, Sir, your voice is not very clear. I will request you to use your handset, please.

I'm audible now?

Yes.

Okay, okay. Sir, just taking this further now. Is this withdrawal SSI is more or less done? And so will not have this impact in the coming quarters or that will still continue?

So the withdrawal is done, but we will take about -- we will be back in the market in the next quarter.

Okay. So broadly, basically trying to understand how the gross margin will have the trajectory going forward?

Yes. So even in this quarter, so we will start putting the products back into the market, which will be free of the impurities but it will get to the normal level in the last quarter of this financial year. So we will also see some impact of that in Q3.

The next question is from the line of Tarang from Old Bridge Capital.

Two questions from my side. One, what is the gross block associated with the Roorkee facility? And how much of remediation cost do you anticipate over the next 12 to 15 months?

So your first part of the question, I missed if you could please repeat again.

What is the gross block associated with the Roorkee capacity?

Okay. So when you're asking the gross block of the Roorkee capacity, exactly what is it you're asking?

The value of the gross block associated with the Roorkee plant.

I think, Pramod, it's about the fixed assets. So I think Chris will be able to answer. You can answer the second question.

Yes, Chris, Arun, would you like to answer?

Yes. Let me look at that we have to react.

Okay. So Chris will look at it. I can answer the second question, which you were asking about how much could be the remediation cost. We had already incurred quite a lot of remediation cost while we were taking actions on the volume letter observations. The observations which have come again in the last audit because of which we have got the import alert, they require more of the -- some of the changes in our SOPs and the training to the operators and that kind of the remediation efforts, which really doesn't incur much cost except much of the remediation cost. It's nowhere material.

Okay. So it's only a matter of time and getting those processes in place that this should help with the remediation, correct?

Yes. And let me indicated that we expect that we will be completing -- we will be completing all that in early next calendar year...

And then, yes, sorry, please go ahead.

No, I was saying that then we will let the FDA know, and then we will have to wait for the FDA to come and audit us.

Okay. My second question is relating to the CRDS business. I just read that you have recently just completed the expansion of the Noida Research Center. And correct me if I'm wrong, you suggested that maybe perhaps you're going in for a larger expansion given the demand environment, the verging demand environment for this business, would that be accurate?

So I request Giuliano to answer this.

Yes, I'm here. So that's accurate. The capacity expansion I was referring to has been completed, and commercial operations commenced from September 2021. Then I mentioned further expansion we plan to do for DMPK and chemistry. And this will start generating additional revenue from first quarter 2023 on.

Sure. So Giuliano, I just wanted to check, I mean, are these new campaigns that you're getting from your existing customers or new customers that are approaching you?

Yes. Our current customer base is strong. And so -- We are leveraging existing customer, as well further developing the customer base.

I'm sorry, please come again. You're saying that you're getting new projects from your current customers or is it really a mix of both?

We are leveraging our existing customer base, which is strong. And at the same time, we are continuing to further expand this customer base.

Okay. That's it from me. I just wanted the gross block number. That will be helpful.

Yes, the net assets of Roorkee are 35 million net book value.

You were not audible, Chris.

The net book value of our assets at Roorkee are 35 million.

We take the next question from the line of Rahul from Abakkus.

Sir, two questions from my end. Any other CDMO contracts from the COVID that we are forcing?

So we continue to explore the possibilities and the opportunities. And as and when we will be concluding any of the contracts, we will be informing about that.

Sure. So as of now, CDMO will largely be running on these previous one contracts, which are relatively low margin business. Is that correct to say?

No, it's -- let's not say low margin even though our -- the normal business in the CMO also had a very healthy margin. They started booking this less in comparison to much better margin into COVID-related deals. So yes, the COVID-related deals in Q3 and Q4 are not what -- we had mentioned that the business will be coming back to the normal level.

Sure. Sure. Sir, a quick question on the Jubilant Biosys side. Since we are entering in the clinical stage, are we looking to raise any funds for that?

Sorry, could you kindly repeat this?

And Jubilant Therapeutics and Jubilant Biosciences, are you planning to raise any funds in either of them?

Let me answer this. This is Hari Bhartia. As we have explained in the past that in the Therapeutics, we are looking to raise the crossover round for our projects, which are going into clinic. In Biosys, we have no plans of raising funds right now.

The next question is from the line of Runjhun Jain from Nirmal Bang.

One clarification. So when is -- sorry to counter on this again and again, but when we got this import alert in the month of July, in the press release you have mentioned that there is not much impact on non-exempted portfolio. So we have stated that it would be less than 3% of the revenue. So what has changed and -- or if you can quantify the impact in this quarter, and it is likely to continue for next at least 2, 3 quarters going forward also?

So for the non-adjunctive products, we had mentioned that there are the 3 conditions, which FDA has put on us, which we have to comply with. And those 3 conditions included testing of the product at an independent laboratory and also taking the entire GMP verification by independent consultants. You may appreciate in the GMP process to get the product tested at a different lab needs the meta transfer, the analytical method validations and then the product testing, et cetera. So it took some time. And same way for a GMP consultant also to virtually remotely have excess of all the production records and verify them and then give the GMP certificate also took some time. So that impacted the performance during the quarter. However, now we have geared up on both those things and the exempted product shipments have started going to the U.S..

So you mean to say that during this quarter, Q2, we -- there was kind of low sales from Roorkee which would start of the assumptive product on the Q3. Is that right?

Yes. Yes. So after the import alert, the sales of exempted products from the Roorkee has started about 2 to 3 weeks ago, and it's ramping up.

And sir, just last on Nanjangud. You said that we are doing -- and the remediation is almost over from our side. So when we are expecting the next development on this, probably reinspection or online reinspection. What is the next logical step there would be?

Yes, FDA to our best of understanding, FDA had not been doing online inspections for the normal GMP audit. They were doing online inspection for the selected -- the product approval, et cetera. But now in the recent past, FDA has restarted doing the audits in India. We don't know that our Nanjangud plant comes where into their priority list, but we expect FDA to come and audit us soon.

The next question is from the line of Alankar Garude from Macquarie.

My first question is amidst lowered Sartans prices. What were the drivers for the strong sequential growth in the API business?

Could you please repeat that question?

So amidst lower Sartans prices, I just wanted to understand what were the drivers for the strong sequential growth in the API business?

So other than Sartans, we also have many other products. And even in the Sartans also, there was a demand. It's only -- the pricing pressure was mainly on the Valsartan, where in the Valsartan, the prices during the [indiscernible] impurity since the supply was very limited had gone up substantially, which now has come back to the normal level. But other than the Valsartan, we have a huge product range for various applications. And as you know, there is a higher demand from the API from China because there had been lot of discussion about reducing dependency from the Chinese supply chain. So we saw the additional demand coming up because of that. And we had a higher volume sequentially, though in comparison to a year ago, it still looked a bit lower because the last year was exceptional quarter. In Q1, our plant was close. So in Q2, the dispatches were very high.

Understood, sir. And sir, is it also a factor of the debottlenecking exercise, which is currently happening. So have you realized any benefit of that in this quarter?

That -- that exercise is not like it's onetime exercise. We have 6 plants and the various streams over there at that site. And plant by plant is still by stream, we are doing the debottlenecking. And those action plans are on track. So depending upon the product in some of the product where the debottlenecking has happened, we may have realized the benefit of that. But it has not been completed for all the products for all those streams.

Understood. Sir, my second question is, you spoke about higher [ increase ] in solvent prices and your ability to pass it on to consumers -- the customers, can there be some lag in passing on this higher input cost?

Yes, there could be some lag because one is that we do not know how much inventory our competitors are holding at the old price. So customer may take time to negotiate and give us a revised price. So it could be lag. But in the API business, we have seen that whatever is the cost increase, generally, it gets passed on into the finish book prices.

Understood, sir. And sir, just a small follow-up there, so these issues specifically pertaining to the China power outage problem that could continue in this third quarter as well. So would it be fair to assume that the higher prices, which we are seeing right now, those could continue in the third quarter as well?

We will start seeing the impact of high prices, some impact we will start seeing in Q1, and we will see more impact in Q4 because we also are holding some inventory of the raw materials. But yes, in some part of Q3 and Q4, we will see impact of those prices. And we have to make the assessment how much we'll be able to pass on. As of now, we expect we will be able to pass on complete increase with some lag.

The next question is from the line of Roshan Nair from Equentis Wealth.

Just my question pertains to more of generic business. So with that, the pricing pressure or lower volume due to import alert and all these problems pertaining to generic business. So when can we see the revival in this segment of business.

Let me try and address that in 2 parts. In terms of revival in the U.S. generic market, it's a cyclic pattern. Every 1 or 2 years, price pressure comes. And when the price pressure comes, some of the weaker players who are not making margins in the market, the market again becomes short and then prices again start going up. So this cyclic pattern continues. And currently, we are at the bottom of this cycle. The other impact on us is because of the import alert. So the products which currently are restricted for import into U.S. we are making arrangements to get them contract manufactured at third party. And then from those locations, start bringing them into the U.S. but this process takes time. Generally, the process takes about 8 months to 12 months. For the products which are exempted that, as I mentioned earlier, that we are streamlining the issue, and we have started supplying the products to the U.S. market. And the fourth and last is that we don't expect that import alert would last long. We are hopeful that in the next audit, we will be able to get this import alert lifted. Once that happens, then any other situation becomes normal. Till then whatever capacity we are having, we are also trying to maximize that capacity for the non-U.S. markets. So we are taking the various initiatives to minimize the impact of this import alert to us.

Okay. And my other question is relating to the capacity expansion at RUBY-FILL manufacturing capacity. So when can we expect the ramp-up or in the first year, what would be the percentage in terms of ramp-up of the facility?

You're asking for Roorkee or for U.S.?

The one which saw the doubling of manufacturing capacity?

So we have almost doubled the capacity in the Cadista in our U.S. facilities. And in my station capacity of the RUBY-FILL at our Montreal facility. Your question is for which business?

The U.S. one.

U.S. one. So the capacity, whatever the investments we have made in that is now available. And as I mentioned that we expect to put the Sartans back in the market towards the later part of this quarter and ramp up into the next quarter. This increased capacity will help us quite a lot to that much -- to better market share in FY '23 in the U.S. market.

[Operator Instructions] The next question is from the line of Vivek Gupta, an individual investor.

So probably some of the questions are answered earlier, but a couple of questions still are left in my queue to ask. So first one is I see that the trade receivables are towards the higher end during this quarter, along with inventory. So what would be the reasons for it?

The inventory is higher because of the few of the disturbances we talked about, about the market withdrawal or the import alert where we had continued the production of the exempted products, but we were in the process of fulfilling the conditions of the FDA. And so that as soon as those conditions are fulfilled, supplies can go. So that was the reason on the inventory side. On the trade receivables side, I'll say that it may be only the timing and the product mix impact.

Okay. Sir, one more request I would like is, like i find there are no exchange filings coming from Jubilant Pharmova side about the update. And it is only at the time of results that you mentioned all the details in your presentation. So it would be great if we have some intermediate press releases to better understand what is going on from the company's business perspective. Other question is -- go ahead, please, sir.

Yes, I said whenever there any material event, which as per the requirement we have to inform, we ensure that, that information goes to stock exchange.

Just to quote with an example is like recently, you mentioned in the presentation citing that you have submitted to NCLT about the reorganization scheme for this Jubilant Generics with the Jubilant Pharmova, there was no exchange filing corresponding to the same. It was done in September, I suppose. Correct?

I think there was the action filing. We have Arvind on the call.

Yes. That's right.

We have Arun on the call. Can you?

Yes, recently we did the filing on the relevant date also.

It was done, Vivek, at the time of the last quarter results announcement, and it was very, very covered with the proper exchange filing, Vivek. You might have a look at that.

No, that is fine. About -- I'm talking more from the NCLT submission perspective.

So these are the intermediate steps. These are the intermediary steps. Yes. So these are intermediary nobody. There are 5 or 6 steps in the path, as you know, Vivek. So when we informed in the last first quarter results, the -- along with the exchange filing, and we announced a public announcement. In that it was clearly mentioned and we can share that with you that announcement, and you can get that from the stock exchange website. It details all the steps and procedures.

This is just an intermediate update we are giving in the journey. And it said that it will be effective of 1st April next year, and there'll be all kinds of processes that will run in the net.

The next question is from the line of Jai, an individual investor.

Congratulations for decent set of numbers. And I believe with the kind of product and management bandwidth we have got. We would be able to pull up. A couple of questions, sir. One is on Europe for RUBY-FILL. And second one is on if you can throw some lights on SOFIE Biotech partnership, how is it going? And do we look at increasing stake in SOFIE Biotech? And third one and probably there are many management interviews being done by the various business channels. So I could hardly see our management coming on the business channels and discussing the business updates. So if you could do it more sequently, would be helpful for individual investors.

Jai, thank you for the compliments. And your third point which you made is duly noted. And we will take the necessary action on that. On the 2 of the questions on the RUBY-FILL Europe, so we got the approval in the RUBY-FILL Europe -- in Europe, and we have started doing the installations in the Europe as well other than the U.S. and Canada where we have been doing earlier. So that's a -- that's an additional geography, which we have started developing, and we are getting a good traction on that. And your -- the second question was if you can just let me recall again?

It's on SOFIE Biotech partnership. What plans we have got?

Yes, Yes. It's SOFIE Bioscience. They have 3 business verticals. They have the network of PET Radiopharmacy. Where we have many of the complementing things with them in terms of overall distribution and acquisition of the customers. So there, the corporation is continuing. The other piece is they had the very -- the novel assets called for of the diagnostic and therapeutic applications. For the therapeutic, they have out-licensed this to Novartis. And for the diagnostic they have kept it themselves. They are as of now in the process of taking the approvals of that from the USFDA. So they are making the filings. And their third business vertical is being contract manufacturing for this radioactive isotopes along with the ligand. And paying the other -- the biotech companies, pharma companies and universities to double up the product. We see a lot of synergies into our business with their business. About the pharmacy, I already talked about. They have good products for them to -- for the distribution and I can speak about them because that's in the public knowledge. You know that Biogen product is approved for the Alzheimer. They also have agreements with a company called [ NMI ], Neuraceq which is a product which is required for the diagnosis for the Alzheimer. Earlier, the Neuraceq was not getting too much of the traction because therapeutic application was not available. Now with therapeutic application being available, they will have a substantial to the business for the dispensing of the new asset. And same way they also have the other contracts for the PSMSI -- of the PSMSI, which is also expected to bring healthy revenue and the margins for that. So we are very happy and satisfied with our investment. And we are very confident that this investment will give healthy returns.

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

Thank you so much for the conference call, and wishing all of you a very happy Diwali in advance. Thank you.

Ladies and gentlemen, on behalf of Jubilant Pharmova Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.