Shaily Engineering Plastics Limited (501423) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Shaily Engineering Plastics Limited Q1 FY '25 Earnings Conference Call. 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] Please note that this conference is being recorded. I now hand the conference over to the Managing Director of Shaily Engineering Plastics Limited, Mr. Amit Sanghvi. Thank you, and over to you, sir.

Thank you very much. Good evening, and a very warm welcome to all the participants to the post results investor call of Shaily Engineering Plastics. I have with me Mr. Sanjay Shah, our Chief Strategy Officer; and SGA, our Investor Relations advisers. I hope you've had a look at our investor presentation that is uploaded on our website and the stock exchange. Let me start by giving you some highlights on the operational performance. Despite a challenging situation globally, we delivered a robust top line growth of 14% to INR 179 crores in Q1 FY '25 and have improved our gross margins and EBITDA margins, which stand at 42.1%, and 20.1%, respectively. During quarter 1 FY '25 in the consumer segment, we've been awarded business confirmations for 2 new FMCG products, which are currently under development. In the Healthcare segment, we've entered into new contracts to develop 2 new pen injectors. In the Industrial segment, we have business confirmations to manufacture 2 components for an automotive customer. Three years into operations, Shaily U.K. has grown quite well, and we are now building capabilities, including [ human ] factors engineering to cater to big pharma. The most significant update for the quarter is that we have received purchase orders for one of our pen injectors to the tune of [ 10 million ] per year. Looking ahead, our focus is on expanding our horizons to include contract manufacturing for medical devices, products featuring our intellectual property and specialized packaging and delivery solutions. The dedicated efforts invested in advancing our injection system platforms are beginning to show good outcomes. Within this industry, our business scope is vast, as we have mentioned in the past before, and we are committed -- we remain committed to ongoing growth. We have adopted a scalable approach that will enable us to increase our revenues at a much faster pace over the next 5 years. And we plan to increase our IP contribution going forward. That is all from my side. I shall now hand over the call to Mr. Sanjay Shah to give you the operating and financial highlights. Thank you very much.

Thank you, Amit. Good evening, everyone. I shall share with you the highlights of our operational and financial performance of Q1 FY '25 following [indiscernible]. During the quarter, we processed 5,902 tons of Polymers against 5,822 tons in Q1 FY '24. Machine utilization rate was around 39% in Q1 FY '25, but we expect this to increase in the coming years. Exports during Q1 FY '25 stood at around 80% of revenue. Coming to consolidated results highlights. Revenue stood at INR 179.4 crores during Q1 FY '25 as compared to INR 157.3 crores during Q1 FY '24, a growth of 14%. EBITDA stood at INR 36.1 crores during Q1 FY '25 as compared to INR 27.7 crores during Q1 FY '24, a growth of 31% year-on-year. EBITDA margin stood at 20.1% for Q1 FY '25, an increase of 250 basis points over Q1 last year. PAT, stood INR 17.4 crores during Q1 FY '25 as compared to INR 12.6 crores during Q1 FY '24 a growth of 38% year-on-year. PAT margins stood at 9.7%, an increase of 170 basis points over Q1 last year. Cash PAT for Q1 FY '25 was reported at INR 27.6 crores as compared to INR 20.8 crores during Q1 FY '24, a growth of 33% year-on-year. Our ROC and ROE stood at 20.7% and 15.6%, respectively, as on 30 June 2024. Again, the growth of this business has been achieved with disciplined use of capital. Now coming to consolidated segmental revenue breakup. In the consumer segment revenue stood at [ INR 132.8 crores ] in Q1 FY '25 as compared to [ INR 130.8 crores ] during Q1 FY '24, a growth of 10%. In the Healthcare segment, revenues were INR 27.4 crores in Q1 FY '25 as compared to INR 22.7 crores during Q1 FY '24, a growth of 21%. In the Industrial segment, revenue stood at INR 19.2 crores in Q1 FY '25 as compared to INR 14.9 crores during Q1 FY '24, a growth of 38%. This is all from our side. We can now open the floor to Q&A.

[Operator Instructions] The first question is from the line of Ritesh Shah from Investec.

First is congratulations on the purchase order for 10 million tons. Would it be possible for you to provide some more specifics over here?

The 10 million tons purchase orders was supply for the insulin market.

Okay. And what's the duration for this? Like is it over a year?

It's over a year, so it will span -- it will get supplied over a period of this year and also spill over into the next.

Okay. So I understand, I think last year, we did around 11 million to 12 million tons. Is that number right?

Yes. Yes.

Right. So how should we look at the summary including this particular purchase order?

I think given the current capacities we have, we should be able to fulfill somewhere around 60% of the order, 60% to 70% of the order this year and the balance in the following year.

So my question, Amit, was like, are we looking at, say, 11 million, 12 million plus, say, around 6 million, 7 million. So looking at around 17 million, 18 million tons this year? Or could it be substantially higher than this?

No, no, 17 million, 18 million is -- 17 million is correct. So that's also what we said during the last earnings call.

Okay. That makes sense. Would it be possible for you to quantify what would be the average pricing that we put out to sell in the market?

No. Sorry, Ritesh.

Okay. No, no worries.

It varies very, very significantly between different therapies. So.

Sure. My second question is on Semaglutide. I understand for Tirzepatide, I think we were looking at NCE-1 filing sometime in May '26. Is there any specific update over here? By when do we plan to start supplies? Any color on here, please?

So we plan to start supplies end of this year, so either December or January following year. And we've just completed our, what do you call it, our multi-cavity tooling program and the assembly assets. So assembly assets and the new tools will all be qualified to start production in September '24, which will then go through the design verification process over the next 3 months, and we plan to start supplies in December or January '25.

Okay. And by when do we expect the customers to have approval so that we can see that it's gonna be commercialized?

Tirzepatide has a patent expiry of earliest '36. So I don't see customers getting -- I mean, customers, I don't see them starting to go into the market before '36.

Okay. And when we say we will...

There will be some markets as early as '30, but I think most will open up in '36.

Okay. Okay. Just a few related questions. When we say we are supplying to the customers, are we looking to generic companies over here? Or is it potentially innovators or any of the contract manufacturing companies?

We look at contract manufacturers. We're talking about generics and we're also talking about exceptionally large generics. With molecules like Tirzepatide, you also have companies that have a mixed model. They do generic business as well as they are also innovators. So, you'd have a whole range of pharma for Tirzepatide and in Semaglutide.

Okay. And lastly, on the device, I just wanted to understand, I think in the past, you have indicated around spring-driven devices, which is quite unique to us. So wanted to get a sense, like what percentage of the market would that be? And how different is this particular device as compared to what's already in the marketplace?

So I think every single pen on the market, except Novo's FlexTouch and Shaily's Neo are mechanic pens. Mechanical pens, when you dial the dose, you have a button and a mechanism that extends out of the pen, which you then have to manually push back in to deliver those. With the spring-driven pen, when you dial, there's no extension. So when you -- upon dialing, the force is stored into a spring and a press of a button releases that for us to deliver the drug.

Okay. Sir, just last question. Are there any other manufacturers who also have spring-based devices?

No, none that can be marketed globally like ours. None that don't have IT challenges. I think ours will be the only device, which is free of infringement or potential infringement.

Okay. That's fine. And can I squeeze in one last question?

Yes.

I think you had indicated like we have around 22, 23 active projects. You had given a broad split between lira, Sema, Tirzep and Teri. Is it possible to give some timelines around each of the buckets?

So Sema -- Liraglutide is launched on approval now. There's no more -- there's no IP hurdle at this moment. Teri is also launched on approval. So Teri, we are looking at EU and North America launch in the current year. For Semaglutide, you'll see the first markets being launched in 2026, which will be Brazil, India, Canada, potentially China. And then the majority of the regulated markets will see launch in '29 -- I mean you will see uptake from Shaily in '29 but launch in 2030.

And Tirzep?

Tirzep, like I said, '30 to '36. I know, It's a difficult time frame to predict right now, but if you were to just go by IP expiry, I think '36 is the earliest launch.

The next question is from the line of Nirali Gopani from Unique PMS.

Sir, from FY '24, you started mentioning all the order wins every quarter. So does Q1 of FY '25 have any contribution of revenue from those orders?

No. Q1 FY '25 does not have contribution from the orders we mentioned in the -- in our earlier speech right now.

Okay. Sir, because if I sum up all the orders, it's more than INR 180 crores, INR 200 crores of orders are that, wherever you have specified the number. If I understand correct, from Q2, the revenue growth should be much higher than the 40% that we saw in Q1? Not any number, but directionally yes?

Go ahead, Sanjay bhai.

Nirali, I think we didn't want people to look at -- or you guys to look at Shaily more from a quarter-on-quarter basis. If you probably look at more on a year-on-year basis, I think whatever you've indicated in terms of year-on-year growth, we are quite confident of getting to that growth number.

For 20%, 25% that you have mentioned, right?

No. On the Healthcare, we have set a higher growth number if you look at the transcripts...

No, I'm talking about on a consolidated basis?

Give us [indiscernible] basically talked about what we will grow in the Healthcare space. And that's what it is.

But sir, just to confirm this number, the order wins are roughly about INR 180 crores, right? Wherever you specify the numbers and there are places where you have not specified the numbers. So INR 100 crores is only from Home Furnishings, right?

Right.

Okay. And for Q4 and Q1, we have announced orders for knobs. So are they for [indiscernible] or any new customer?

They're for an existing customer, which is what we talked about.

Okay. So this is additional than that INR 40 crores, which we had announced in Q1 of FY '24?

Yes.

Okay. And we've also announced a lot of orders for payment vectors in FY '24. So do we see any revenue contribution in FY '25 from those orders? I know you've just mentioned about...

Platform fees coming in and you will see some of the revenue coming in from when we make start supplies also.

Next question is from the line of [ Anant Jain from HNI ].

Congratulations on a good set of numbers. The first question is on this 10 million device. Is this our own IP or is it an IP that we have from other companies?

No, it's our own IP.

Congratulations on that. The second question that I have is, in the domestic, what we are seeing is a bit of degrowth. Is it like that we used to do INR 45 crores every quarter and we've have seen a degrowth this quarter? And also on a year-on-year basis, I think we are either flat or we have gone down by a few crores. Any reason for that? And how do you see the trend here?

The domestic business, if I were to look at from an overall, in your perspective, I think the domestic business will also grow. Quarter-on-quarter, there could be some areas where some dispatches have not happened or some dispatches have been delayed. But I think on a year-on-year basis, you will see the domestic business grow.

Okay. Great. The third question is like for -- like what I understand is like for every auto-injector -- injectors that we supply, at least for the projects that we have, we have like 25 projects right now, the exhibit -- we supply 3 exhibit batches. That is what my understanding is. And the companies which we partner actually look for consistency across these 3 batches. Is that a fair understanding? That's the first thing. And secondly, in these batches, out of these 25 projects, for how many have we supplied at least 1 exhibit batch? And what is the approximate quantity per exhibit batch?

Typical exhibit batch per variant of the molecule will be essentially what we call a 3 [ PQ ] batches, each PQ batch will be at least 10,000 pens. So per variant, we would be supplying about 30,000 pens to a customer. For example, Semaglutide would have, let's say, it has 3 or 4 strengths depending on which market you look at. So we would then be supplying anywhere between 90,000 to 120,000 pens per customer. And of course, that's just the exhibit batch. You would then have batches that you do for operational qualification, for design verification for assembly, final assembly trials, et cetera.

So out of these 25 projects, for how -- sorry, go ahead.

Yes. To answer your first question, [indiscernible], almost any -- when we make -- when we supply a product the first time, it has to be 3 PQ batches. We cannot supply without establishing the consistent performance of the product, which can only be done after you've done 3 PQ batches and design verification.

Okay. And out of the 25 projects, for how many have we supplied exhibit batches already? .

I think all exhibit batches on Teriparatide, on Liraglutide, most on Semaglutide, Ozempic, have been supplied. Now is also the start of Semaglutide Wegovy, which is the weight loss version of the molecule.

That's nice because...

Cross version of the devices.

Okay. And when do we expect our first regulated market launch? I think, is it going to be in Q2 or Q3? Any ideas on that?

Sometime this year for teriparatide and potentially liraglutide.

So we expect lira launch also this year?

We're looking where we have commercial orders to manufacture. Launch could happen next year, early next year, maybe end of this year. But teri, we are more confident on regulated market launch in the current year.

And in case of lira, is it both the variants?

See lira is launched on approval. So if a customer has filed both variants, which is Victoza and Saxenda, then the launch would happen for both variants.

And we have devices -- Is it the same device for Victoza and Saxenda or are there different devices? I assume they are different device.

They are different devices. The Saxenda device is a spring-driven device and the Victoza device is the mechanical pen.

Okay. Great. All of that is a wonderful update. Just two more questions, if I can sneak in. For Shaily U.K. As of now, from how many projects are we getting our revenues from? And how many additional projects will start contributing to Shaily U.K. this year?

Pipeline for the current year is quite strong, I'd say. We're looking at growing Shaily U.K. also at upwards of 35%, 45%. With the development project, it's always a little, I wouldn't say lack of clarity, but a little -- you've got to be careful when you commit timelines and on revenue at least because projects still over can happen very easily. We're -- I think every project we have in Shaily U.K. generates revenue, except maybe 2 which are -- which aren't. I wouldn't call them like fully active projects for their creation of technology that we have started on 2 new types of drug delivery devices, which don't have -- which aren't generating revenue. But every other project, active project we have generated revenue.

The next question is from the line of Kumar Saumya from Ambit Capital.

Just one question from my side. So what are the growth opportunities that we are looking at outside of the current driven market? Are we looking into looking at electronics, are we looking at mobile phones? Can you just throw some light on it?

Could you repeat your question? Your line is not clear.

So sir, I had a question. What are the product segment or product growth that we're looking at outside of our current driven markets. So are we looking into electronics, mobile phones, something like that?

We're looking at consumer electronics. But again, I think we're at very, very initial stages of evaluating the business. We're talking to several potential customers in the industry. So too early to tell -- to comment on it right now.

The next question is from the line of Aman Vij from Astute Investment Management.

My first question is for 3 of each project, basically Home Furnishings, INR 50 crores, Pharma New Applicator, INR 35 crores. And then the Knobs business, around INR 40 crores. So these 3 were expected to start in Q2 as per the initial communication. So any of the projects which is delayed or all of them will start in Q2?

So all of these projects that we talked about will start in Q2.

Okay. That is clear. On the Home Furnishings side, sir, there was -- last year, it was a little flattish. Demand was an issue from Europe, I believe. So if you can talk about both on carbon steel as well as the normal plastic business. How is the demand? Is it back to the initial levels? Because we were expecting good ramp-up last year, but because of demand issues, we could not. So can we see the full recovery happening this year, both on carbon steel and plastics, if you can talk about it.

Sure. I do say Europe is [indiscernible]. So we're not seeing a demand recovery coming up in Europe. You will see some growth in the business, essentially on account of new projects which we have taken on. In carbon steel, we have taken on fewer new projects, which we will be commercializing between now and -- between Q2 and Q3, essentially a large part of it in Q3. So you will see that ramp up happening once this project is commercialized. We are also bidding for new projects and as I said and hope to add businesses before the end of the current calendar year.

Sure. So combined for the plastic divisions individually and for carbon steel, do we see good growth this year?

We see growth on both these segments.

Sure. On the Healthcare side, sir, if you can talk about that we were talking about that, we're talking about 50% volume growth. So Q1, did we see this kind of volume growth? Or is it back-ended? It will start in maybe Q2 or Q3 only?

Look Q1 this year, Q1 was also to the tune of, I would say, of course, it will be a little bit more back-ended for sure. But the order book was quite strong. We did have a technical engineering challenge in Q1 with one of our products, which got resolved, and the supplies have already been made in Q2 for that particular product.

Okay. So Q2 onwards, we'll see a much stronger growth compared to what we have seen in Q1?

For Healthcare, yes.

Sure. That helps. Sir, on the 2 new projects which we have won, if you can talk about which is the therapy? These 2 platforms, 2 new projects in Healthcare.

Yes. The therapy remains in. One is Lanreotide. Second is Semaglutide.

Okay, sure. And on Tirze, we were expecting more customers? Will we see that in next 1, 2 quarters?

Yes, yes, absolutely.

The next question is from the line of Sanjay Kumar from ithoughtpms.

Hi sir, I have a bunch of questions. First, so how does the relationship work with the CDMO fill/finish partner? I spoke to one of them and they said that they validate the pen or the injector design on behalf of the client. Can you talk about these dynamics? And how many projects out of the 23 or 25 is through these CDMO partners?

Sure. So there's 2 parts to completing a program. One is our -- where our part ends is design verification. After design verification, you put the batches on stability. And during stability, various time points of the stability, you have to test your pens for performance or test your combination product for performance, which is what the CDMO partners does. I think -- I don't think there will be -- the know-how at CDMOs in general is quite limited, especially in India. So full design verification at CDMOs is possible. It's not that it's not possible. But typically, in the industry, what happens is that the specific know-how on your device is so much higher with the manufacturer and the designer of the device that customers prefer to do full design verification at the device supply. In a lot of cases, even the testing, ongoing stability testing happens outside the scope of the CDMO. So either they would look at a first party testing lab, their own testing lab or go back to the supplier for doing even instability testing of the devices. So it's a combination, but design validation potentially happens at the CDMO space.

Okay. And how many of our projects are through these partners? And does the realization vary if we tie up with the client directly or does it decrease if you go through a CDMO partner?

We haven't tied up directly with any of the CDMOs. So we tied up with the pharma companies who may or may not choose to execute the project at a CDMO.

Okay. Okay. Got it. And second, sir, you spoke about 2 new devices. Can you explain what these are now on the application and also where we are on our Precision Electronics journey?

The 2 new devices, one is that we're seeing sustainability being a very significant topic in regulated markets. So we're looking at coming out with a premium reusable device. And the second one is we're working in the respiratory space. So nasal. We're looking at developing some unique technology for a soft mist inhaler.

Okay. Okay. And another peer, global peers makes devices for almost 15 indications and they're targeting 18. Are we working on any monoclonal antibodies or any biologics apart from the ones that we have already announced?

We have -- we are working on monoclonal antibodies using one of our auto injectors. But again, too soon to talk about it. When we have more view, we'll certainly inform the markets.

Okay. And finally, on our drug device capacity, I think it's 40 million devices. By when do you think we'll be able to utilize this? And when do you think we should go for the next round of CapEx in healthcare?

The 40 million devices is, yes, generally speaking, you've got -- on every different -- on every device, you've got slightly different capacities installed. But we are -- we would be looking at expanding some capacities in over the next 18 to 24 months, where we'll be looking at doubling up on some pen platforms.

18 to 24 months timeline?

Yes.

Next question is from the line of [ Ganesh Rao ] from Rupani Capital.

A couple of my questions were answered earlier. The one question that I have is, can you please provide some clarity on the fungibility between the non-health care side of your business, which is the toys non-health care side of the business from the toys machine. What needs to be incrementally added, be it value wise, to switch the capacities over to these other areas?

We don't do any toys any more, Ganesh. Capacities that we created for the toys business about 2 years ago will -- some of it have been utilized for the appliance business that we secured last year. Some of it is being utilized for some LED lighting that we manufacture, and the balance of it will get utilized once we have the increase on our consumer side of the business. Those capacities will not be utilized for healthcare.

Yes. I mean that's helpful. But one question as a follow-up. Do you need to invest anything additional? Or is it easily fungible, say, to move this to produce something for the automotive division?

No, no. There is no further investment needed. It's fungible. There might be a specific investment needed on some sort of testing equipment or some sort of robot handling for materials, but nothing significant. We say marginal, very, very marginal investment.

The next question is from the line of Nikhil Jain from Galaxy International.

I just wanted to ask a couple of questions related to the U.K. business. I actually wanted to understand a little bit about the projects that we are actually doing in the U.K. business. Are the same projects that we are actually supplying, let's say, products from our India business? Or are there different projects?

No, the project starts in the U.K. So first, you've got to execute the project, come up -- complete the device development program, which goes all the way up to the design verification. And that's the only point when you can make supplies from India.

Right. So basically, so then there is some kind of a technology transfer from U.K. to India and then go ahead and do own supply, the commercial supplies or like you exhibit that supplies from India, right?

That's correct.

Okay. So basically, all -- so the U.K. business will give you an indication of what is the commercial business or let's aggregate that business that will come to India, right, at some point of time?

Yes. The U.K. business, exactly, that's where the project starts with the customer and then project ends with supplies from India.

All right. Just one last question. See, I see that in our profit, let's say, if I look at the consolidated numbers. So almost 40% of our profit is today contributed by the U.K. business, right? But basically, the design and development activities that are happening over here. And rest of the business actually including, let's say, whatever exhibit price supplies that we are doing and all the other businesses are contributing probably [ 60% ]. So do you think it will change significantly over -- once the product starts to commercialize from India from the manufacturing facilities?

Yes. Profitability in India will go up as we scale up. U.K. profitability is not going to come down. It's also going to go up. So combined consolidated numbers will -- should be healthier than they are at the moment.

Okay. And one last question. So on liraglutide and on, let's say, teriparatide, we are expecting from approval. So is there any pending deficiency from our end, which is, let's say, kind of holding back or from our customers and if you are aware, which is holding back any approval? Or is it like just a regular process of FDA that is going through?

No, it's a regular process. We are -- there's no deficiencies that we have to answer to at the moment on either teri or lira. So just, yes, just about the timing.

The next question is from the line of [ Anant Jain from HNI ]

One question. I think one of the previous calls, you mentioned that we are working towards something on the Precision Electronics side. And you said that you will share more on this as time passes. Do you have any updates on this as to what are we planning here? How big can the opportunity be here? Anything on this, if you could share?

I think the opportunity is very large and you would know the market because most of it is public domain knowledge in general. We are at a very nascent state. So we're still just having discussions with maybe half a dozen potential customers. And when we have something more concrete to share, we will certainly do that.

The next question is from the line of Sanjay Kumar from ithoughtpms.

Again, a bunch of questions. One, we have won 1 IP for insulin, but someone like [indiscernible] has announced that it will do insulin only for 1 or 2 more years. This is contract manufacturing, CMO. So are we getting more inquiries from our existing customers like Sanofi or is there any other one IP insulin under pipeline? Or are we in talks -- or is it just the one that we have won so far?

There are several ongoing discussions, and you will see the order pipeline becoming stronger on insulin as well. I'm glad [indiscernible] has announced that they're getting out of insulin, gives us -- successfully gives us a better opportunity.

Okay. Okay. And second, on liraglutide, I think in one of the previous con calls, we have said that we can do 2 million pens in lira itself. Can that -- can we do that in FY '26, 2 million pens in lira?

FY '26, yes, launch happens. And yes, 2 million will happen, for sure.

Okay. Let's say, 50 million is the lira market. Safe to assume a 10% market share for us?

I mean it really depends on how the launches get or approvals come in. I think the customers we're working with do have good success rates. So we are hopeful that if lira launch happens, we should see starting with nothing less than a -- potentially about close to 1 million pens in the first year. And maybe not FY '26 but, maybe FY '27, maybe 2 million to 3 million pens.

Got it. Okay. And are you still confident of -- in one of the con calls, we said that we'll be having 70% of the generic players filing for these GLP-1s. Is that still holding through?

Yes. Semaglutide, I believe it still holds true.

Okay. Okay. And have you signed or at least talking to any of these MNCs for GLP-1s or any small biotechs working on GLP-1s?

We're doing both. We're doing both.

Okay, sir. And finally, on consumer. You did mention consumer electronics. I don't know if you can reveal the product, but is it similar to our existing capabilities of working with the ABS?

ABS?

Yes, [indiscernible].

No, no, not necessarily. Consumer electronics, you'll be looking at the high-performance engineering polymers more than ABS.

Okay. Okay. Okay. And are we also looking at other segments, let's say, today, India imports almost 90% of its eyewear frames and sunglasses from China. And some of it is plastic cellulose-based plastic. Are we looking at this market?

No, we're not at all.

The next question is from the line of Ritesh Shah from Investec.

A couple of basic questions, sir. Specifically on the device. What gives us confidence that our devices won't influence innovative device patents? How should we look at it?

We've done -- we've spent about good close to $180,000 conducting the FTO, freedom to operate, on this particular device.

Okay. And are there any patents in the emerging markets which are expiring earlier? How should one understand that?

Yes. So you've got Brazil, India, Canada, where you have Semaglutide launches in '26, right?

Okay. Fair. And just last one question. I think in one of the earlier calls, you had indicated that there is a margin differential between GLP-1 and insulin, insulin being lower over. How should one understand this, comprehend this given it looks like over the next 3 to 5 years, you wouldn't have the option to choose what you want to do? So how should one -- how are you thinking about the opportunity? And what would be the differential in margins?

So margins are healthy on both GLP-1 and insulin. Insulin obviously will be lower. But the way we look at it is that we're looking at scaling up the business right now very significantly. We are not going to -- either now or in the foreseeable future. The insulin business is a very steady, stable, healthy business. So we don't -- we have no intentions to pick one over the other. We will look at continuing to grow the insulin business as well as the others.

The reason to ask is I think in the prior question also, the gentleman did ask that it actually opens up an opportunity for us, which is a good thing. So I'm just trying to get a sense on the margin side. Even for insulin, can one presume that the number would be up for the [ 30% ] plus at the EBITDA level?

It's a contract to contract, it will vary. But insulin is price sensitive. It is significantly commoditized. So I will not give, Ritesh, I will not more clarification on this.

The next question is from the line of Aman Vij from Astute Investment Management.

Sir, just on this insulin part again. So this order which we have won. Is this the customer has won a tender kind of thing? Or can it be a repeat kind of business for us?

No, it would end up being a repeat business. You can't go in another insulin, you have to supply.

Sure, sir. So the reason for asking is what we keep hearing is that the big 3 companies are now focusing on GLP-1 and they are exiting the insulin tender market and maybe even normal insulin market, they're not focusing on that. So does that mean, are you seeing much more inquiries from our potential customers because of this vacant space being created? And if yes, do you think -- so one is 10 million orders you have talked about. But do you think insulin pen itself, we can supply the own IP pens maybe much higher numbers in the next 1, 2 years because of this vacant space being created?

The short answer, Aman, is yes. But the reason behind the answer, as you stipulated, I would not fully agree with because if you look at even Europe today, most of Europe is a tender business. I don't see the big 3 exiting any tender businesses just like that. Regardless of how well GLP-1 does, it's still a combination therapy. And for diabetes, insulin is absolutely needed. So I don't see how -- one can aid the sale of the other, but exiting the insulin space for the big 3 would be quite devastating, if I would imagine.

Yes. So let me clarify, not in regulated market, but we were hearing, say, in South Africa or in emerging markets, they are kind of not participating in tenders. So maybe there's an opportunity in the Middle East?

Yes, but South Africa volume will be what, it will be less than a couple of hundred thousand pens. So that is possible. And we do, I mean, we have customers who will consolidate volumes for several markets.

So you are seeing such kind of orders from other customers on that also, such big orders possible in the next 1, 2 years?

Yes. It's possible next 2 years, yes, we're seeing the orders coming for insulin, yes.

Ladies and gentlemen, that was the last question for today's call. I would now like conference over to the management for closing comments.

Thank you. Thank you, everyone, for joining the call. We hope that we've been able to answer your questions adequately. For any further information, I request you to get in touch with SGA, our Investor Relations advisers. Thank you, and have a great evening.

Thank you. Bye.

On behalf of Shaily Engineering Plastics Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.