Supriya Lifescience Limited (SUPRIYA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Supriya Lifescience Limited Q2 and H1 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Irfan Raeen from Orient Capital. Thank you, and over to you.

Thank you, Yashashree, and good morning, everyone. On behalf of Supriya Lifescience Limited, I extend a very warm welcome to all participants on Q2 and H1 FY '24 financial Discussion Call. Today on the call, we have Dr. Satish Wagh, sir, Chairman and Managing Director; Dr. Saloni Wagh, Whole Time Director; and Mr. Krishna Raghunathan, Chief Financial Officer. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on exchanges and on company's website. Before beginning with the call, I would like to give a short disclaimer. This call may contain some of the forward-looking statements, which are completely based upon our beliefs, opinions and expectation as of today. These statements are not a guarantee of future performance and involve unforeseen risks and uncertainties. With this, I would like to hand over the call to Satish sir, for his opening remarks. Over to you, sir. Thank you.

Good morning, and warm welcome to all the participants. Thank you for joining us today to discuss the Q2 Financial Year 24 Results of Supriya Lifescience Limited. Let me take this opportunity to wish everyone in advance a very happy and safe Diwali. To take us through the results and answer your questions along with me, I have Dr. Saloni Wagh, Whole Time Director; and Mr. Krishna Raghunathan, Chief Financial Officer and our Investment Relations Department Oriental Capital. I hope everyone got the opportunity to go through the financial results and investor presentation, which have been uploaded on the stock exchanges as well as the company website. At Supriya, we believe that accessible, affordable and effective health care is a fundamental human right and to this effect, especially in a country like ours, I'm pleased to announce the company has signed two agreements with Kalinga Institute of Technology for development of one-of-its-kind novel oral cancer detection kit named Quickblue and wound healing gel named GelHeal. The development of an oral cancer detection kit is in the line with Supriya Lifescience vision of manufacturing, niche products and becoming an innovation led global CDMO player. This product is not only a cheaper option, but it is also found to be very sensitive detector. The global cancer market is estimated at USD 21.5 billion, and the company is expecting to create a 1% to 2% market share. The company has also filed for the patent of the Quickblue oral chip. We also have signed another agreement with Kalinga University Institute of Technology for further development of GelHeal, a wound healing gel is one of the kind of onsite protein matrix technology and is essentially a protein-based cross-linked hydrogel. As the company continues to introduce such versatile product that caters to unmet medical demand, led by the strong trust in its R&D capabilities. We believe more and more of such products, which established Supriya Lifescience Limited as an integrated health care provider. The company committed to build a pipeline of new products which could extend beyond its long-standing competence in the area of anti-histamine and toward Anti-Allergies, diabetic and other areas. The company intent to patent technology and undertake further new projects for CDMO business, which would translate into long-term revenue possibilities. With this, I hand over the call to our CFO, Sri Krishna Raghunathan to share Q2 financial year '24 financial highlights, with your all. Over to you, Krishna.

Thank you, sir. Hello, everyone, and good morning. I will now share the operational performance of the quarter and following which, we will open the floor for question and answers. Company reported revenue from operations of INR 140 crores in Q2 FY '24 as against INR 112 crores in Q2 FY '23. EBITDA in Q2 FY '24 stood at INR 32 crores as against INR 29 crores in Q2 FY '23, and EBITDA margin stood at 22.7% for Q2 FY '24 as against 25.5% in Q2 FY '23. And profit before tax was at INR 30 crores for Q2 FY '24 as against INR 27 crores in Q2 FY '23. PAT stood at INR 24 crores in Q2 FY '24 as against INR 17 crores in Q2 FY '23. PAT margins stood at 17%. Moving to H1 financial year '24 performance. Revenue from operations stood at INR 272 crores as against INR 214 crores in H1 FY '23. EBITDA in H1 FY '24 stood at INR 76 crores as against INR 60 crores in H1 FY '23. And EBITDA margin stood at 28% in both the quarters and in both the half year, respectively. Profit before tax was at INR 72 crores for H1 FY '24 as against INR 58 crores in H1 FY '23 registering a growth of 26%. PAT stood at INR 52 crores in H1 FY '24 as against INR 42 crores in H1 FY '23. PAT margin stood at 19%. We have certain one-off expenditures during the quarter. We had a GST which covered till FY 2021 and around INR 26 lakhs have been paid during the course of this audit. We also had to pay around INR 2.5 crores interest in the pre import case, which we are contesting in Mumbai High Court. Repairs and maintenance were higher due to the impending FDA audit in December. And also, I would like to highlight the company has successfully reduced its inventory days to 158 days, and we have become virtually debt-free and with miniscule interest payments, the company solvency ratio further improve and increase the profitability of the company along with the excess cash of around INR 116 crores, ensuring that the organization will be able to meet all its future obligations. Now we can open the floor for question and answers. Thanks to all of you and wishing you a happy and safe Deepavali.

[Operator Instructions] We have a first question from the line of Shubham from Purnartha Investment Advisers.

During the quarter, change inventory has increased to INR 10 crores. Can you throw some light on that?

See, basically, what had happened is we had a lot of inventory. I think for the last couple of quarters, we have been saying that we have to reduce our inventory. So technically, most of our WIP and FG we had converted which were in, what do you call, inventory and everything got converted and got sold, some of which will get sold in the Q3 also. So because of this, there is a huge reduction that could also be seen in our cash flow. This is, of course, cash flow positive, and it's a very good sign for the company.

So it's in finished growth inventory you are saying?

No, it's WIP inventory. WIP and some bit of finished inventory got moved out.

Okay. And what tax rate we can assume for the whole year as sale is fluctuating at quarter-on-quarter basis?

We don't give any quarterly guidance on sales. See, we will maintain an overall around 20% to 25% overall growth on the revenues over the last year number. I think that is anyhow, that will bound to happen. Otherwise, we don't provide any sort of guidance on what you call quarter-wise numbers?

No, I am asking about tax rate. What we can assume tax rate for the whole year?

Tax rate could be somewhere around 26%. This will be on the current tax only at this point in time. The deferred tax, there will always be some impact which can always change. So on the overall, around 26% to 26.5% you can take for the tax rates.

We have a next question from the line of Ridhima Goyal from Acquaint Bee Ventures.

My question is, despite the increase in the absolute number of our EBITDA and PAT numbers, what is the reason behind the decline in our margins? Because as we are seeing in other companies as well that there is an increase in margin? And second question is I wanted to know your volume and price mix growth.

So thank you for the question. The one of the main reasons why the margin has sort of declined is because of the geographic and the product mix. We have also said this in the past because we are an export-oriented company, and we cater to more than 86 countries across the globe, including semi-regulated and regulated market. As a part of our strategy, we have focused in the last couple of quarters to derisk our portfolio and some of the other products, other than our major products, we have been trying to scale up in semi-regulated markets and then, of course, into the regulated markets. So we have seen increased traction in some of our other products in semi-regulated markets. So that's one of the reasons why you see that there is a slight dip in margin, in spite of increased sales and the absolute number increasing. But it is a good thing and a positive thing for the company because we are trying to derisk the portfolio and dependence on some of the key products. And it's just -- I feel like because of the geographic and product mix for the overall 6 months, if you see, we maintained our margin at 28%, which is the guidance that we have given that on an annual basis, we will maintain our 28% to 30% margin. So it is just a quarter play because of the product and regional mix.

Can you please just give us the mix between your regulated and semi-regulated and also unregulated markets mix?

See, basically, the export versus domestic would be somewhere around 81:19. And coming to what you call the regulator, it would be -- one moment -- in H1.

I didn't get this, can you please repeat?

One moment, yes. See, around 46% were there in regulated markets. And the rest would be in semi-regulated and unregulated markets. India will be somewhere around 19% in that.

Okay. And my second question was related to the volume and price growth mix. I mean the growth which we have seen this quarter is what is the mix between your volume growth and prices?

See, price have been remaining stable. So whatever the growth is like what Dr. Saloni has already said, it is due to all the other molecules picking up momentum. And there is nothing -- not much of a movement in the prices across all the molecules per se. We haven't seen any sort of price erosion or also the price increase also.

Sir, most of the growth actually has come -- majority of it is through the volume increase.

See, any new product when you enter, you cannot straight away into regulatory because it takes minimum 1 year. To establish that API, you have to go with non-regulated markets, and then you can make establishment in the regulated market. That's the API for me.

Okay. And this you are saying, sir, on a year-on-year basis, right?

Yes, on a year-on-year basis.

When we said that out of 100%, we have 82% export. That means that export has been continuously coming for a couple of years. So it will continue, it will not drop down. So the focus is on regulated markets only as far as the business is concerned and more focused as far as the business in exports only.

Okay. And sir, what is the proportion coming from China?

Whatever is there, that continues in China. I have in the past also regularly telling that we cannot focus China. The day you focus more and more in China, I'm sure you all are aware we are reading in the newspaper, anti-dumping duties will be put on the product and there will be no say in the future. It's an actual property, which we do with them, they are also trying to do. So we are trying to derisk whatever has been committed in the China market, that quantity, we already have sold for the next 2 years. And balance, we sell in the other markets, we have no interest in increasing that in China market.

[Operator Instructions] We have a question from the line of Jagvir Singh from Shade Capital.

So sir, earlier, you were guided around 30% to 32% margin, so now you are talking about 28% margins for the full year basis.

If you actually have attended our earnings calls for the last 4 or 5 quarters plus, you will know that we have corrected our guidance post our impact of the China business in the last financial year. Since then, we have corrected our margin guidance to be 28% to 30%, which we have maintained. And that is the margin that you will see also for the first 6 months.

Okay. So in this second quarter, we have been around 23% margin. So you are saying in the next 6 months, margin will be around 28% to 29%?

Yes. So...

It is not a quarter-on-quarter guidance, it is basically...

No, no. If you want to -- sorry to interrupt you, if you want to do 28% full year, so you have to do 28% in the next 6 months also.

Correct.

Correct. Correct. If you see last quarter, we already had a 34% plus in our margins. Yes, the average would be around 28% to 30%.

Okay. And there is also some seasonality also in the businesses second half is better than the first half, if I am correct?

Yes. Usually, second half is slightly better than the first half. So that's why we are confident that we'll be able to maintain the guidance of 28% to 30%.

And 20% to 25% in the top line?

Yes, yes, which you can see in the first 2 quarters as well. In terms of the absolute revenue, we have seen a good increase. In fact 24% if you compare it with the last year -- last quarter as well. Last year's 6 months and this year's 6 months, we have done a 24% growth in our sales. So that trend will continue.

So my last question is related to China. Is there any pickup or not in the China?

So for China, like our CMD just said, we have already finalized our contract, which is a fixed volume contract, and we don't expect anything additional coming in from China. The volumes have stabilized. The pricing we have said it in multiple earnings calls before as well, that it will take some time for the market to stabilize. We don't see it happening in the near future. So whatever growth and margins we are guiding, it is including the China contract that we have finalized for the entire year.

We have a next question from the line of Richa from Equitymaster. We'll move on to the next question from the line of Rahil Shah from Crown Capital.

Just going back to the growth guidance you mentioned. So I just want to ask you what helped in the first half, the growth we have seen and you're confident that this will continue. So again, what will help it, can you give a general scenario, how is the market right now? And how will we achieve the guidance?

So we have always maintained that other than our top 3, 4 products, we have a basket of about 8, 9 products in the portfolio where there is a very large potential in semi-regulated and regulated markets. And a lot of the growth for the next couple of years will also come with the volume scale up of these products, which is getting reflected in the quarter 2 sales this year. A lot of the other products in antihypertensive, vitamins, decongestants, these products have really scaled up well in semi-regulated markets. We are seeing a lot of volume traction, and we are just waiting to get these approvals for the regulated market. Once they move into the regulated markets, the margin for these products will also eventually improve. One growth we are seeing in these products. The other thing is that we are introducing a lot of new products into our portfolio, three therapies where we are focusing is an anesthetic, anti-diabetic and also cardiovascular and anti-anxiety. These are the four categories that we are currently focusing on. A lot of new products are getting infused in the portfolio, which are just out of development and in validation stage. In the next 9 to 12 months, we will be in a position to start filing for these products. Once they also come into the pipeline, the product portfolio would be more derisk. The growth rate comes from existing products scale up in regulated markets and also the new products what we are infusing in the portfolio. These are the two main areas. Of course, the CDMO opportunities that we have, they will also start scaling up the whey proteins we had announced 2 quarters back, some volumes we will start seeing from the next quarter. Then the Riboflavin, I mean the vitamin project, what we had announced with the European company's tie-up, those volumes have also started coming in. DSM is the name of the company with whom we have tied up for the vitamin product. Those volumes will also start coming in. These three areas are where we are looking at growth mainly.

Okay. Okay. And just clarifying again. You mentioned this growth, which you've suggested or guided for is including the China business or excluding? I missed that.

It is including the China business because for us, like I said, more focus on other products, derisking the portfolio, reducing our dependence on some of the key products. This is including the China business, which we have said multiple number of times that the volume is staggered. We don't anticipate the volume to grow any longer in China market. It would be the constant volume for at least next 2 years because we have already signed the contract at the same price. We don't expect any changes happening in China business anymore.

[Operator Instructions] We have a question from the line of Richa from Equitymaster.

Sir, my question is on these two announcements that you have made about wound healing gel and -- as well as the oral care. If you could help us understand what this means for the revenue and margins of the company, what kind of investments you guys need to make for this opportunity to materialize in a meaningful way? And if it is a unique product, if it is patented, is it B2C, just if you could add more color on these developments?

So both the products -- I mean both the announcements that we have made recently with Kalinga University is in line with our strategy to derisk our business, and focus more on CDMO activities. Both the products are extremely novel, they are one-of-a-kind in the world. I would say the best technology in the world in terms of the product cost. I mean, the cancer, oral cancer detection kit, it is the cheapest available fit in the world which detects, and is a preliminary test for oral cancer, which detects oral cancer in less than 2 to 3 minutes. There is no product of its kind globally. And even for the gel, it is an extremely innovative product, which helps in wound healing and scar-free wound healing. Again, no significant competitors globally for both the products. The strategy is that we will help Kalinga University codevelop these products. So they are already developed at the lab stage. But now we have to take them through the commercialization stage. The patents for both the products are filed. In fact, for the quick oral kit already the international patents, the PCT is also filed, and we will also now file for country-specific patterns in the next couple of quarters. We anticipate that this entire project will take at least 3 years for commercialization for both the products. The market itself for both the product is extremely large. Today, it is valued at around $21 billion globally. So it's a very, very large market. And with the kind of products that we are bringing into the market, we are very, very confident that we will be able to at least get 1% to 2% of this global market. The strategy, like I said, is to codevelop and then take it to commercialization with Kalinga Institute. And then while we keep the manufacturing of the product to us, we would probably out-license these products to some of the larger pharma companies. So this is in terms of the strategy behind both the products.

Okay. And could you also talk about utilization and potential CapEx that you're likely to undertake if any in FY '24 and '25?

See, utilization were around 72% to 73% during this quarter. And CapEx, of course, for the first 6 months, we had somewhere around INR 50 crores. I think we will spend around INR 50 crores most probably in the second half also. And for next year, I think we need to have our planning in place. As of now, I think we should be in the range of around INR 100 crores max. We'll have to see next year, we haven't -- we're -- our planning cycle is on and the work on CapEx will be happening, and I think most probably in the next quarter, we will be in a position to announce what sort of CapEx number can go in the next year. Current year, we will be finalizing somewhere around INR 100 crores, out of which INR 50 crores has already been spent in H1.

And just a quick addition to this, the kit, the global market size is $21 billion. But for the gel, the global market size is valued at about USD 26 billion. So both put together is more than $47 billion. So it's a very large market, which would open up for us as a company and plus, the products are extremely novel and innovative. So we would like to bring the products out to as many people as possible.

Okay. And I mean, do you have any sense of the investments that can go into in codeveloping, commercialization over next few years?

We are working around with the innovators at this point in time. I think once we have our what you call full strategy in place, specifically on the numbers, I think we can always come back to you and then we can let you know. As of now, we are working with the innovators as to at what stages what are the things which we need to do, all those working are going on at this point in time as we speak.

All right. And sir, just one more question on margins. I think there was an erosion in margins because of the regional mix, but like 2 years from -- 2 years ago, our regulated share market used to be much lower than what it is now. And yes, there is a significant decline in the margins. So if you could just talk a little bit more about that, and what gives you the confidence to maintain the margins that we have, what is the supply side situation, pricing scenario?

Like I said previously, more than the region mix, it is the product mix. Because of the other products -- other than the top 3, 4 products, the next basket of products which are moving into the semi-regulated market because we are still in the sort of market gaming stage for those products. We don't have a leadership position for those. Hence, the margin profile of those products would be definitely lower than our leading under. So more it is driven by the product mix and the derisking of the product basket that we have. So that is why you are seeing that erosion on margin, plus one of the reasons also for this quarter, slightly lower margins is on the expense front, like Krishna also explained, there have been certain one-off expenses which also have had an impact on the margin. So it's a play of both the things, but mainly, it is the product mix and the other products getting more attraction in semi-regulated markets other than the top couple of products. So that's one of the reasons why we are confident of maintaining the margins because once we get more market traction of these products, once we get the regulatory approval, we would sort of replicate the success and the leadership position that we have in the top product in this product basket as well. And then the margins for these products would also improve. Also backward integration, although for the top 10, 12 products, we are fully backward integrated. For some of the new products, what -- we are seeing good traction. We are in the process of further backward integration. So once all these things happen together, the regulatory approvals, the backward integration and the movement into regulated markets, margin, again, would sort of stabilize to that 28%, 30%, which is the situation even today.

So I further want to add that in this world now, there are two more countries which are becoming the regulatory one now. Earlier, people were neglecting about the Latin America, that's Brazil and Mexico. Now let me tell you, in the last year, these two countries have come up with the regulatory notification, that they had earlier, previous China was the sole supplier for a couple of years left, more than 35, 40 years. But now these people have said that they require the GMP standards where Chinese are failing and Indian companies have a good opportunity like Supriya already from last year started in the regulatory -- in the Brazil regulatory body to file the products out of 70. I'm very happy to say successfully within last 9 months, we have filed 12 products with the regulatory authority in Brazil. Now once you file and you become a sole source of that product, you must understand, this is second source, but this is the first source for Brazil, and that will continue. It will not replace by any other. So you will get more profitability, more charge in Brazil and Mexico markets, which are now becoming a regulatory markets.

Okay. And sir, this INR 100 crores kind of investment every year that you're making, like FY '24 and '25, is this mainly going into backward integration? Or I mean, where are investment has happened?

Basically, this is mainly volume into capacity enhancement, capacity enhancement for volume growth of existing product basket as well as the new products what we are infusing into the portfolio. We will also need capacity to grow those products. This is mainly for capacity enhancement to cater to the growing product demand.

[Operator Instructions] We'll take our next question from the line of Naresh from Sameeksha Capital.

So my first question, if you can quantify the onetime expenses which you have made during the quarter. And also the employee expenses Q-on-Q has increased quite a bit. So what would be the reason for that?

Let me take the employee first. So basically, if you look at it between last year and current year, we had our annual increment cycle and that will increase the expenditure correspondingly in the current year. And of course, there were a couple of hires also, I think, on which we had given the press releases. There are also -- these are the reasons why the employee benefit expenses are comparatively higher. So with respect to one-off, technically, we had a GST audit and a pre import case. I think that is something which I have already covered in my speech. And of course, we are also expecting an FDA audit in December, for which we have to have our repairs and maintenance and upkeep of the plant. So these are the three expenditures, which are onetime in nature, and this were somewhere around INR 3 crores to INR 4 crores which we had to spend in as a onetime expenditure. So these would be the one time. And of course, the employee had already talked about.

Right. And second question in terms of diversifying the product portfolio. So while you have been speaking about the 6 to 8 new products, which you expect to start selling in the regulated markets. But if you can explain in a bit more granularity that at which stage, these products are -- do we already have CEPs and DMFs in place, and have you started sending the validation batches to the customer? And how much time realistically it would take for these products to ramp up in these regulated markets, so that the volatility which we see currently that sort of normalizes?

So in terms of the 6 to 8 products, we already are selling these products for many years in semi-regulated market. For some of these, we have already received CEPs and the USDMFs, and we have already started supplying some small quantities for trials and validations. For some of them, the CEPs are still awaited. In another 6 to 9 months, we will get the CEPs. I would say, the full effect of these products in regulated markets, you will be able to see at least in the next 3 quarters. That is when we anticipate that the trials and the customer validations would have been completed and they would start buying the commercial quantities. So that would approximately be the time line for the commercialization of these.

So is it fair to say that the new blocks which are coming in the next quarter, so largely on an incremental basis, this would be utilized for selling these products in those regulated markets, so that we have some understanding as to what time it would take to reduce the concentration of the product portfolio.

Yes. So the new block, which we have put in -- I mean, which we are putting in the module E that would be driven for two things. One is, of course, the existing products scale up. And the other is the new products that we have infused in the portfolio. Like I said, we are focused on anesthetic, anti-anxiety, anti-diabetic products. These products, we have now completed the development and now we are in the phase of validation. So in another 6 to 9 months, we should be in a position to start selling some smaller quantities at least for market seeding and for customer trials and samples. So the new module is for the existing product scale-up as well as some of the new products that we have infused in the basket.

Let me add one more thing because I have already said in my speech, but I think people have not understood that. The new regulated market is coming up, which is, large is Brazil, people are ignoring that. Brazil was catered for the last 40 years by China. But all Chinese manufacturers was supplied without GMP standard, GMP documentation. And for the first time, the government of Brazil has come in 2022 in force that any supplier would like to change the vendor, they should come with the GMP certification from that company. So 99%, we are seeing that Chinese are failing to give the documents on GMP. So looking the new notification of Brazil and Mexico, Supriya immediately started entering into and giving the documentation to the regulatory authorities. And out of the current 16, 17 APIs, 12 have been registered with the regulatory authority of Brazil. Now you will understand when you register means what, you become the second vendor, but the first vendor for that particular end user. And once that end user finalizes name, lifetime, it will not be changed because second vendor will not come in the picture. So this was the opportunity given by the authorities to their final formulation units that you should qualify the second source now, and that second source will continue as the first source. So you have a large basket which is available in Brazil and Mexico, which is a large market today for APIs are concerned.

[Operator Instructions] We have a next question from the line of Anmol Das from Arihant Capital Markets.

Very good set of numbers. So I wanted to ask regarding couple of things in the future pipeline that you have two agreements with the oral cancer detection and wound healing gel and there was a collaboration with the Plasma Nutrition. So I want to understand how these collaborations are going to materialize in the future? And in terms of the revenue, what amount kind of the revenue you are looking for these collaborations? And what will be the opportunities in similar kind of business and collaborations that we see in the future?

So in terms of the three collaborations that we have announced, the Plasma Nutrition, the protein project that would be slightly faster as compared to the other two. For the Plasma Nutrition, we have already started manufacturing some small trial quantities of samples, and we have started giving them to all the larger protein distributors. So we anticipate that in another 6 months -- 6 to 9 months, we should start seeing good commercial volume coming from this particular project. That would move much faster. For these two, the oral kit as well as the gel, like we said, the market potential is extremely large. It's $47 billion globally, and the products truly are extremely innovative. And for the value add, which they will be available in the market, there is no competitor which can match those globally. It would actually be a revolutionary change in oral cancer detection as well as wound healing. We are very confident. These two projects would take 3 years to commercialization, but we are very confident that when we come out in the market, they will gain significant market traction. We are working on multiple such opportunities that are there in the pipeline currently at a very premature stage. But we are very confident that such innovative opportunities, we will be able to convert in the next 2 to 3 years into commercial business. Also, the other CDMO opportunity, which we had announced a couple of quarters back, which was with the European company, DSM-Firmenich, they are one of the largest companies. Globally, we had sign an exclusive vitamin supply agreement with them. Those commercial volumes also will start coming in from the next quarter itself. The CDMO in general in the next, I would say, 9 to 12 months will start contributing commercially to our revenue.

Okay. Understood. And one thing regarding the geographic mix that has shifted and then went for like from Europe to Asia, it shifted in Q1 FY '24 now that again that Europe mix is gaining approximately 25% share. So what is that makes this change in these two geographies between Q1 and Q2?

So one of the main reasons is, I would say, more than the geography this time for the margins, the product mix, like I highlighted, was one of the main reasons was the margin dip. What the other than the top 3, 4 products, there are other products like the decongestant products like Diphenhydramine vitamin products like Riboflavin 5 phosphate sodium. Bisoprolol fumarate, which is an antihypertensive product. Some of these products, we have seen good traction in European market and the other markets. So one of the -- these are the products where we don't have currently a leadership position. We are still trying to gain more customers, gain more market share. Once we have a significant market share, we do the backward integration, all the regulatory approvals come through, then we will start seeing similar margin what we have for our leading product. That is one of the main reasons. As such, there will always be quarter-on-quarter because it's a multi-product, we have more than 30 products in our portfolio. That will always be a shift in the product and the geographic mix. But our real focus, like our CMD said, remains on regulated market. Year-on-year, we will try to increase our regulated market share. That is one of the prime focus area. And if you see, even for this quarter, the export percentage has gone up. We are at 81% export as compared to the previous quarters. The more focus will always be on more regulated markets.

[Operator Instructions] We have a question from the line of A. M. Lodha from Sanmati Consultants.

Am I audible, ma'am?

Yes.

Ma'am, I have got three questions. One relating to our plants, number one, Lote plant. The expansion in the Lote, when it will be an operations, madam?

So the Module E, it will get commissioned by March or April next year.

That's 300 something -- 400 kiloliters?

Yes, It will add around 400 KL per day to our capacity. So the total capacity of the Lote site would be somewhere at around 900 KL.

It will be operationalized in the commercial operations in the month of March FY '24?

It might not be commercial operations. Validation will start, and then we will have our commercial operations following up immediately.

Okay. So what about sir, Ambernath, when it will commence, the 72 kiloliters?

So the Ambernath site will also be commissioned around March and April. So maybe from me onwards, we can start some commercial production from that side.

So let me add to this. I want to add to this also. Anything when you think in your mind, you might understand that it requires huge requirements of rules and regulations and the formalities all the licenses in place without that, you cannot manufacture anything. These are always taking time. Once you get, then only we'll start because the company has principles and ethics. Unless and until they get the regulatory and all the permissions, they won't enter into any product, that's the point. And that is why we always try to get everything in the hand then we start.

Okay, sir. My second question is, sir, relating to export, what is the percentage of export in that present quarter turnover, sir?

81%.

81%, sir?

Yes, sir.

Yes, 81%.

Okay, sir. My third and last question is relating -- what is the growth the company expects in FY '25 and FY '26, growth in the sales tentatively?

Okay. So we have always maintained our guidance that year-on-year, we will grow anywhere between 20% to 24%, so that is the same kind of guidance we would like to give. The revenue growth would be anywhere between 20% to 24%.

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Wagh for closing comments. Over to you, sir.

See, we would like to thank each and every one who has attended our call. We would like to wish each and every one a happy and a prosperous Deepavali. And thanks and all the best.

Thank you, sir. On behalf of Supriya Lifescience Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.