ZIM Laboratories Limited (541400) Q3 FY2026 Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I'm Akash, moderator for the conference call. Welcome to Zim Laboratories Limited Q3 and 9 Month FY '26 Earnings Conference Call. [Operator Instructions] Please note this conference is recorded. I would now like to hand over the floor to Ms. Deepika Sharma from Go India Advisors.

Thank you, Akash. Good morning, everyone, and welcome to the Q3 and 9 months FY '26 earnings call of Zim Laboratories. We have on the call Dr. Anwar Daud, Chairman and Managing Director; Mr. Zulfiquar Kamal, Director Finance; Mr. Shyam Mohan Patro, Chief Financial Officer; and Mr. Zain Daud, Investor Relations. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. May I now request the management to take us through the financials and business outlook, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Deepika. Good afternoon, everyone. This is Anwar Daud speaking. A warm welcome to all participants joining us for Zim Laboratories Limited's earnings conference call for the third quarter and 9 months ended December 31, 2025. I hope you have had the opportunity to review our results and the accompanying presentation available on the exchanges. Let me begin with an update on our EU-GMP remediation and CAPA implementation plan, which continues to remain our highest strategic priority. We have submitted the majority of CAPA responses and addressed most regulatory queries. Based on our ongoing engagement with the authorities, we understand that the audit is expected to be conducted during the first half of the upcoming financial year, tentatively in the next quarter. In preparation, we are proactively undertaking all necessary steps to ensure full compliance with the regulatory requirements and remain committed to maintaining the highest quality and compliance standards. We recognize that EU-GMP certification is critical to unlocking value for regulated markets. In parallel, we continue to undertake proactive measures to maintain business continuity through alternate certification and site transfer initiatives for select key products, ensuring minimum disruption to customer commitments and strengthening our regulatory footprint. Turning to performance highlights, the Pharma segment continued to demonstrate steady traction during the quarter, supported by improvement in our base business. Nutraceutical segment also witnessed better contribution during the quarter, supported by recovery in the legacy Nutra PFI business. While 9-month performance remained largely stable on the revenue front, quarterly performance ended --performance reflected improvement across key operating metrics, including operating income, EBITDA and overall profitability, driven by better business mix and improved operational efficiencies. During the period, we also completed a preferential issue, raising approximately INR 35 crores. The proceeds will be utilized towards expansion of our dedicated [indiscernible] of the nutraceutical facility into formulation focused facility and strengthening regulatory and CAPA-related compliance initiatives. These investments are expected to enhance our long-term growth capabilities and expand our presence in value-added segments. Further strengthening our organizational capabilities, we also made key senior leadership additions during the quarter. Mr. Vikrant Bendre joined as President, International Business, bringing over 26 years of experience across global pharmaceutical markets. Additionally, Mr. Sridhar Reddy, Vice President, Quality Assurance; and Mr. Jitendra Pandey, Vice President, Human Resources, were designated as senior management personnel, further strengthening leadership across people, compliance and quality functions. Looking ahead, the upcoming quarter will remain important for us, subject to stability in the geopolitical and macroeconomic environment. We remain optimistic about closing the financial year on a strong note. To summarize, we remain focused on completing EU-GMP remediation, strengthening business continuity measures and investing in long-term growth platforms. With this, I now hand over the call to Mr. Shyam Patro, who will walk you through the financial highlights for Q3 and 9 months financial year '26. Over to you, Shyam.

Thank you, Dr. Daud. Good afternoon, everyone. Let me provide a summary of our financial performance for the quarter ended December. The company reported a total operating income of approximately INR 1,087 million, reflecting improvement in both a sequential and year-to-year basis, supported by strong traction across our core pharmaceutical business and recovery in the selected nutraceuticals orders. EBITDA for the quarter stood at approximately INR 145 million, translating into a margin of around 13.4% compared to 13.8% in the previous quarter, supported by improved product mix and operating leverages. Profit after tax stood at INR 44 million, reflecting improvement compared to the previous quarter. For the 9-month period, the total operating income stood at approximately INR 2,691 million, broadly in line with corresponding period last year with profitability remaining impacted due to the higher operating expenses and continued investment towards regulatory and compliance initiatives. On a sequential basis, we continue to grow with a steady momentum. Margins in Q3 FY '26 improved compared to previous 2 quarters. Export business increased significantly in quarter 3 FY '26 to INR 961 million, an increase of 23.2% year-on-year, contributing 88% to the total operating income. Revenue contributed from NIP and OTF stood at INR 132 million, representing 12.2% of operating income. On R&D front, INR 74 million allocated for BE studies and registrations, advancing the innovative product, NIP and OTF pipeline. To summarize, the company delivered steady sequential improvement in operational performance in the quarter and remains focused on strengthening the core business, improving margins and supporting long-term strategic initiatives. With this, we now like to open the floor for the Q&A. Thank you.

[Operator Instructions] The first question comes from Mr. Madhur Rathi from Counter Cyclical Investments.

Sir, I was looking at our previous annual reports. And sir, I'm trying to understand, sir, what is the issue with this NIP and OTF products because even in during 2013 to 2015 period, we were very optimistic on these products, but they haven't been able to scale up. And I think we were at a conference in 2017 or 2018, we were speaking about this for the European market, but even that hasn't been able to scale up, sir. So is the problem in product selection strategy or the product offtake strategy for these differentiated products, that's why it's taking so long? And how do we plan to scale it up going forward?

Well, as I've already taken in my opening remarks, NIP products are Europe-centric. And as you know, last July, we were inspected and we have received a noncompliance in GMP. So that's why the products -- the traction which we were supposed to receive with a few of our products, which had completed the final run on the way to receiving could not be put inside the market in spite of our having very solid contracts, which points towards an inflection point in the company's NIP business. So we are waiting for this noncompliance to be completed. We have strong support from the partners with whom we have signed agreements and out-licensed these NIP products. And as I said earlier, we are just waiting for the remediation-related inspection. And if everything is going well, we will be well on the way to actually be able to demonstrate the promise that [indiscernible] has shown to us through these agreements.

But sir, this issue is very near term, right? So this issue was only persistent for the last 6 months. But prior to that, in 2018, we had done a conference at CPHI, something like that in Europe, and we were speaking about NIP and the OTF products. Sir, so if I were to consider any generic molecules in which we are providing this differentiated delivery products, sir, on a conservative basis, sir, how much of the market can actually shift to these kind of products, which are either the NIP or the OTF kind of products?

Yes. So Madhur, this is Zain here. 2018 was the period when we started developing these products. And as you know, in pharma, there is a development time line about 3 to 5 years. So we completed development of these products around 2023. Now these are not molecules which don't have a market already. These are already well-established molecules, which are $1 billion-plus markets. So we don't fear that this will not take up the market. There has been momentum in this, which you can see in the innovative product market and the revenue coming from the innovative product mix, which we have shown in the presentation. So these are already picking up in the ROW and pharmerging markets. The only question is about the EU markets where this has to be commercialized. And as Dr. Daud explained, this will happen once we complete our remediation. So I think on the time lines, 2018 is when we started development. It's not when we were planning to commercialize. Our commercialization time line was set for 2026, which has been moved up by a year or so just because of the EU-GMP remediation process that we are in.

Right. Sir, so where should I look at our business from FY '27 perspective in terms of top line and bottom line? Where do we see our business growing?

We start with what we have in our hands is our regulated and emerging market business. We'll continue to see the traction there because one by one, most of these NIP products are also getting registered in our markets where we already have a presence. As you must have noticed during my remarks, we have in place now a fantastic team of business development region-wise and very dynamic leader of the team has joined the company recently. We hope even in the ROW and emerging markets, you will see -- we don't know -- I can't give you the numbers yet, but I can -- I'm sure that there will be strong traction in the NIP products. We are all excited about there -- getting registered one by one in the markets that we have and this year, you will see demonstration of that in the ROW and emerging markets in terms of the business that we can get for these NIP products. And of course, a critical milestone is getting the remediation for our EU accreditation, which is expected-- tentatively by June or July for that. And after that, we already have the agreements in place. So we are positive. We have -- as you must have, we have made various announcements like some of our products getting approved by TGA in Australia, a few products getting approved in U.K. MHRA. Few approvals have also been -- our filings have been consistently progressing and a few announcements have been made about the approvability of some of our products during these 9 months. So the EU certification or U.K. MHRA inspection and certification, these kind of inspections will be the trigger for the business starting moving forward, and that's when we can give you better numbers.

Right. Sir, so would it be fair to assume that post this EU inspection clearance, we can scale our NIP plus OTF product revenue to INR 20 crores plus on a quarterly basis?

I think Madhur giving a number right now will be too premature. We'll keep you updated as the quarters progress.

The next question comes from the line of Shreya Chatterjee from Ageless Capital Finance.

I wanted to know a bit about when is the audit for this EU-GMP scheduled? What are our plans for site transfers? And like what is the outlook from the like Q1 FY '27?

Okay. So except for the last question, I'll go straight into the CAPA part. I think most of the points raised by the auditors were addressed through CAPA submitted by the company, which were accepted by the authorities. And then we have been working very steadily and aggressively towards addressing all the CAPA-related development that we need to actually provide the authorities. And several action taken reports have been submitted to the authorities. And by this time, except for 1 or 2 points related in the CAPA, most of the points have been considered as resolved by the authorities in the responses to the action taken reports. They have also indicated to our partners who are related to this audit that they would -- they were intending to come in the first or second financial year, not the financial year, the first or second quarter of the year. The first quarter is almost through. I think they take about 1 to 1.5 months, they set a date, and that's about a month to 1.5 months before they actually come in. So we believe April, May or June would be -- the next quarter would be -- we would be -- we would have a specific date where we would be told when the authorities will visit to actually inspect. So the CAPA has gone on. And we are very positive about the way the [ CLIA ] team or the operations team has handled this issue respecting the observation and taking proactive action to show an improvement in the entire quality culture in the company. So that's where we are with the CAPA. And of course, we have also been triggering different inspections because we cannot just wait for one milestone. We have been filing for the 6 inspection in a couple of countries. Related to the alternate facility, we have transferred 1 product and are in the process of transferring 2 more products to alternate sites, thereby derisking the entire NIP business time line regardless of this inspection. So that has been going on. Now regarding your quarter numbers, I think I'll hand it over to Mr. Patro. And based on what we have at this moment, maybe better provision to release the numbers if they are available to us.

Quarter 4 will be in a single line. So since it is in the middle of the quarter, I will not disclose much of numbers as such, but it will be in a single line.

Hope that clarifies.

Got it. And regarding the alternate sites that you mentioned that you are transferring the product, where are these sites located? And...

More than that, we are not at liberty to disclose because we need their confirmation as well.

And this will have an impact on our margins, right, given that we are taking the other sites. If you could quantify the impact?

It will have a nominal impact. It will have a nominal impact, something where it drastically effect something because we would also be having similar expenses when we manufacture, right?

Okay. So if I understand correctly...

For them it's a contract manufacturing business, the net impact would be actually the cost it takes us to manufacture for ourself versus the cost it takes them to contract manufacture for us, which is a very small actual addition to the entire cost. The margin remain with us substantially.

Okay. So then with all your like 4 or 5 products that are supposed to be launched, when do we see the impact of launch given that you clear the EU-GMP orders? Will it be the second half of the year when we see a sharp uptick? If you could just give a time line to that?

In the second half of the year or more [indiscernible] in the last quarter. We are being conservative here. Last quarter is when we would see.

Got it. And sir, how much of spending are required for this CAPA remediation and everything, like the recent fundraise that you did, how much of that is utilized for all this regulatory process?

How much of the? I didn't get you.

How much -- how much funding do you need like for doing this CAPA and everything? Like how much of the fundraise that you did, what amount have you utilized for all this regulatory process?

I think my co-promoters will explain this to you better because this is a plan. I just said that we are planning to have a preferential issue. And at this moment, I would say that we are comfortable with the funding that we have planned earlier in the last year for the CAPA and we are comfortable with the budget that we have. We are well within the budget, but we are planning to have a surplus with a buffer with us so that after --something could come up during the remediation inspection, we should be ready to be able to bring any other compliance that is required and put it in place very fast. But this is just budget and plan to keep some reserves aside for remediation just in case something comes up. So what we have and what we have done and the time that we have taken, we are very near the end game, and we are waiting for the authorities to just announce the dates.

Any amount that you would want to quantify for this CAPA remediation whole thing that is going to happen?

Yes. So out of the funding what we are taking around INR 35 crores, around 10% we have allocated for the CAPA.

Got it. Got it. And sir, could you please disclose the inventory days and receivable days for this 3Q third quarter or 9 months?

I think they are on the same line. Inventory, we should be around -- inventory is around 94 days and receivables is around 105 days.

[Operator Instructions] The next question comes from the line of Mr. Gautam Gupta, individual investor.

Mr. Daud, I want to ask about this preferential issue. Like why do we have to do this preferential issue at this price that would to Florintree Trinex.

We've just given you the -- that's already there in the public domain the reason for that. We have a small CapEx remaining and we think that in the interest of the company and its investors, it's not prudent to borrow this kind of money at this moment we are well funded for the business that we are doing, but we need to complete and tie up certain end, which would result in better cost control, better margin for the company, better regulatory compliance as well. So all those initiatives which were on the line at some point, which were to be funded if we had not had this noncompliance inspection. And if those funds have been available, we would have used our internal accruals for doing these things are necessary and need to be done. So now we are using the fund. For the lone investor, we met the investor and in the interest of all investors as well that the company completes its CapEx program, initial CapEx program so that it is well prepared for the next wave where the NIP business takes strong traction. And for the future -- in the future, we do not come across very easily, we can change the culture and the infrastructure is in place to be able to support the kind of business that we are looking forward.

Just as we are at the bottom of the cycle that we are having a deleverage right now, and we can see that the end to this tunnel is just 3 to 4 quarters away, then why do we have to do this at this price that to the director or the person who was already an investee in the company prior to this. That was such a big chunk, around 9% to 10% of the company. That is my main concern regarding this.

Well, it helps the investors doesn't it? Instead of company getting over leveraged and taking on more debt, this is a better way to go to investors who are known to the company and who know the company and believe in the company trajectory and suppose management achieving its targets in spite of the small hiccup that has happened here. The company has achieved [indiscernible] for a very long time. This is a hiccup for a year. And I think if the existing investors benefit at this moment from whatever [ impact ] we have had, we are happy for them. They have taken it at a price which is reasonable and which is in compliance with all the regulations. This one offers to anything really. I think also it does not damage any other shareholder's prospects. All minority shareholders have been privy to their [indiscernible].

Rights issue can also be done if that's the case.

Sorry?

Rights issue can also be done if that's the case.

Again at the same, price right?

Have you considered doing a rights issue instead of preferential issue?

Yes. The promoter has to then contribute. And as of now, we have not thought of that on that angle.

The next question comes from the line of Mr. Darshil Pandya from Finterest Capital.

Yes. Just to take over from the previous participant and then I have some questions for the main business. Sir, the participant -- the issue that we see as an analyst is that such a big investor coming again in the company and then there might be some selling in the company again in the near future, we do not know. And such issues are being highlighted in the past also. So that was the concern of giving one big chunk to an investor rather than us distributing to some other people as well so that there is not a pressure on the company in near future whenever there is some good or some bad news. So that was something that we wanted to highlight as well. But I hope that since management has a relationship with our investor.

We have considered this. I think we have gone to an investor who is very comfortable with the way the company is managing its affairs and as of today, if you see as of today, the investor hold what in totality is about 19%. Earlier he had started with 23%. Isn't that right?

Correct.

So earlier the questions were coming from the people that why Matthew was selling and why they were reducing their equity. So as a matter of confidence, they said, okay, then whenever you need fund, they added. So as a strategic investor, what Dr. Daud mentioned that to just show the confidence that we are going on the right track, he added to -- he offered further.

So if it goes through, it will become 22%. It will become 18%. He has actually started with 22% in the -- there was a period when it was dilution. Promote 11%, now he always repose confidence the way the management is running this company. When the company needed fund he came back, so that shows vote of confidence in that. When we want to borrow and show that on the balance sheet, and we need to complete this regardless of whether it has the biggest [indiscernible], because regulatory cannot wait for the business to start, right? Company has looked at it in a very logical way and in the interest of all the shareholders.

Correct. No, absolutely, sir. We understand that investor's trust is kept on with the management. It's just that it was a suggestion nothing else. And I hope that this turns out to be in a good way for investors. Sir, second question is on the Pharma segment, which continues to be our growth driver. What is the expected growth that we see for next 1, 2 years and in that only in the Nutraceuticals...

Understood. Yes. What we are doing is we are withholding our remarks on the numbers at this moment and those numbers specifically because the trigger would be any regulatory market accreditation that the company has now going forward, where us informing our shareholders on where we will end up with the number would be a much more logical and realistic way of describing the future course of the company. As of this moment, we are in reality so we are saying that emerging markets will continue to grow and rewarded because we are taking all the measures on a conservative basis where we have strengthened our emerging markets team. I already spoke about the kind of people who have joined and in a position to take even without the regulatory market entry with our NIP products, I believe the company will start doing well with the NIP products in the emerging markets and the kind of other products and the kind of other offerings that we have for the existing markets and existing clients. So it will continue to grow especially the overall [indiscernible] on NIP business as a percentage of the entire business. So we have shown quarter-to-quarter traction in those offerings regardless of us being in Europe. So that will continue. That momentum will continue because more registration, more [indiscernible] have been filed and registrations are coming in one by one in these markets as well. And now with a very well strengthened business development team, we are expecting better results in a quarter or 2. The investors will be able to see that.

Understood. We'll wait for your update on this.

[Operator Instructions] So the next question comes from the line of Mr. Deepesh Sancheti from Maanya Finance. [Operator Instructions] I'm taking the next question from an Amit Bajpai, an individual investor. [Operator Instructions] I don't find any response from Amit sir too. So taking the next question from Mr. Rohit Balakrishnan from ithought PMS.

I just wanted to first understand your base business. This was a good quarter. So how do you see this quarter, Q4 in terms of the base business?

Basically on the line, we already informed you. We are going ahead with the base business as we have already conventional growth 10% or like that. The NIP business inside this base business is showing increasing traction. NIP and base business has been growing and you will see it in the fourth quarter results.

Okay. So there are no geopolitical headwinds. I mean, basically, last quarters, we were going through some challenges.

Yes, those challenges are easing out, but not gone altogether. As of this moment, we can give -- all we can say is that it will be similar to the last quarter, depending upon the what premium numbers we've already been given.

Right. Because historically, Q4 is our heavy quarter, usually a very good quarter. So you don't see any change in that is what I should take it from you.

As of this moment.

And sir, on this -- in the proceeds of fund, you mentioned we are making one block for a product. So from what I can read is that we have not yet received the MA for that. So what is it that -- I mean, so when can we expect that and because you're going to put more money. So what gives you that comfort? And how are you thinking about the time lines towards getting the MA, et cetera?

We believe we already have this 1 product -- 1 block, is a separate block because the product requires a separate block to be there. So we believe once we start we will be able to add in accreditation by next March. And this would become the second site for manufacturing this product because this 1 product we feel has the potential to actually -- made traction to the company -- already in shortage in Europe on the regulated market. So once we start manufacturing this product, this is also a derisking measure because the existing facility as well as this block when it is converted into a separate site would give us actually 2 places where we and continue to manufacture this product because the volumes are very high according to the agreement that we have signed. So it's a very strategic product for us and by March '27, we would have this block converted into a site. It's not that we will not be able to manufacture now in the existing facility, but converting it into a separate facility, a separate site with its own accreditation makes sense for the company. And derisks depends on one site for such a key product.

Got it. So you're saying March '26 or March '27?

We will start converting the existing block into a site. There is already block in our premises. It will become another site. So we will continue to use this block, but we will convert it into a site by March '27. So it doesn't actually affect the manufacturing capacity that we have. It ultimately derisks the company's operations in terms of a very key product that the company has where it believes that it can achieve some kind of a dominant position in several markets. So we will have 2 sites for this going forward, and that helps the company. It makes the company and its customers comfortable.

And in terms of the approval for this...

Rohit, sorry for interrupting.

Can I just finish this question? I'll join back. This is just a follow-up to the.

[Operator Instructions] The next question comes from Mr. Deepesh Sancheti from Maanya Finance.

The question was regarding the fundraise only. Do you think that was the price at which we did the fundraise was the fair value of the company? And what benefit does the strategic investor get?

Hello? I didn't get your question.

I'm saying that the price at which we bought -- we got the strategic investor. Do you think that is a fair price?

It settles the SEBI guidelines, isn't it? It is in full compliance of the SEBI guidelines. It's a fair price because these are the guidelines for bringing in a preferential issue. My thinking whether it's a fair price or not a fair price doesn't matter here. One thing you will agree with me here is that some internal accruals which the company was looking forward to be able to complete its different CapEx initiatives to prepare the company for the future growth and traction that we believe once we enter the regulated market we will have, we shouldn't wait for the business to restart to be able to do those things because that will actually put us behind. And in the future, that could lead to more technical and logistics issues, we wanted to avoid. That's in the interest of the company's overall strategy to enter the European market with the key products. The customers also -- there was agreement that has been signed are of substantial nature. They are very important for the company's growth and sustainable growth in the European market. And they are the best way for the investors as well as the customer, the best way for this company to go forward is to actually manufacture these products in a compliant -- in GMP-compliant atmosphere so that confidence to the customer is always there that whatever happened was an accident and move on from there. Also capacity is being increased through these CapEx initiatives because as I said that we have an excellent ROW and emerging markets team now led by a very capable leader who has 26 years of experience. So it's a capacity planning, execution planning for and actually demonstrating that the high R&D costs that this company incurred actually result in growth that the investors expect from us.

[Operator Instructions] The next question comes from the line of Mr. Ashok Shah from Eklavya Invesco.

Sir, again, the question is regarding the preferential allotment. Sir, the said investor had not any trust in the capability of the management and also promoters and was holding a large number of quantity of shares and he sold out. And again, we are giving shares to the same investor. Why management has got trust in this investor where that same investor doesn't have a trust in the capability of the management and the promoters. And also, sir, this allotment is done at the last 3 years lowest price, not at the highest price. Sir, my suggestion, I am unable to understand many replies given during the call. So it is not justifying the allotment. So I suggest that it should be canceled immediately if not allotted to that.

You could ask a question the other investors because we already asked it, why did you suddenly decide. I'm saying that I don't have an [indiscernible]. Every investor has a right to buy a company's share. In fact, the idea should be, that we must be appreciate that this investor came in the moment the company need money. It's in the interest of shareholders that there is no debt on the balance sheet beyond what we have already borrowed. So how it has been done. Certainly in spite of selling or whatever that is when the company needed fund, he has come forward and showed -- reposed his confidence in the direction that company is taking. So any investor, including the investors present in this call cannot be blamed for selling or buying a share. I mean, every individual investor is showing his confidence in how the company is moving forward and putting his money on the line. So if all other investors feel that this is a bad side we wouldn't be having this right.

As I understand from your reply that company was unable to raise the fund via debt because equity is always a costly affair. And since our accounts are not proper there or something like that, so we are unable to raise the funds by debt. So we raised the equity at such a lowest price.

No, I think this is Zain here. See, the important part is that we needed the swiftness. The speed was important. We needed this fast because we need to complete this project and the customers are looking for supply quickly. So that is why we went to an investor who is trusted, who has confidence in the management so that this process could be done very swiftly. So speed was of utmost importance here. And price-wise, like I've already said, and Dr. Daud has mentioned, it is a SEBI mandated price on the base of last 90 days volume. So that is not much we can do there, which is the reason we have gone to this investor and done this raise because we did not want debt and we wanted this money to go past.

So what I was wanting to add was that it's not that the company was unable to raise debt. The fact is the company did not want to raise any more debt.

Sir, does that mean as per your answer, does company was unable or any of the bankers in India was unable to give fastest money to company?

I'm saying that the company did not want to raise any more debt in the interest of the balance sheet and the other shareholders and what they look at and the kind of questions, all investors, including the promoters have in mind, the balance sheet should be stable and able to service all interest comfortably. In the interest of the company -- interest of being conservative and prudent financial management.

Sir, have you already allotted the share or are you going to cancel it?

[Operator Instructions] The next question comes from the line of from Maitry Shah from Safire Capital.

Just one question. You mentioned that our NIP products are doing well in the regulated -- in the emerging markets. And so could you give me like a quantification of what the sales are from emerging markets and what the sales are from regulated markets for the current quarter?

Already been provided. I can give that to you again.

Yes. I think the regulated markets is not there right now. The entire business is coming from ROW and pharmerging markets. So the entire sales that you see of the innovative products is from ROW and emerging markets. There is no regulated market sale in there right now.

Okay. And once this remediation is done, we can expect sales coming from the regulated markets. So any sort of targets you have of what percentage of NIP and OTF products would they contribute to the total overall revenue?

I think like you said, we don't want to quantify it right now. Once EU-GMP comes back, that will be a better time to quantify this, you will have better visibility. So in coming quarters, we will be able to give you that number.

The next question comes from Pujit Agarwal, an individual investor.

So I just had 2 questions. The first question was -- am I audible? Yes, yes. So the first question was in terms of key hires, like I think that is a very solid move, and I congratulate you on that. I just wanted to understand, like, I mean, how much value can we extrapolate from ROW and pharmerging markets, which are the key ROW and pharmerging markets that you're currently targeting since we genuinely have a very broad bandwidth of products. I just want to understand regarding the...

We are in several key markets in the Middle East and CIS at this moment. We believe the kind of products that we have very good opportunities there. And we are looking at about 20% growth in the ROW markets.

Got it. Got it. So these are ex Bangladesh, right? Because Bangladesh, we are very heavy as a company. So these are ex Bangladesh, we are focusing on?

Yes, yes. It was in totality, but Bangladesh is [ seventh ]. The 20% growth would substantially come from new markets. And we are talking about the formulation business, not the PFI business in Bangladesh.

Yes, yes. Definitely. And the second question was regarding like how is the buyer confidence or the people who we partnered within Europe, I mean, like I just wanted a sentimental check, I mean, how exactly is the buyer confidence?

They have been very supportive. And we have been in constant touch with them. And we are quite a transparent company in terms of what goes on inside the company, and we believe in sharing with you guys also every quarter. So we have been keeping them abreast all the action happening here, including the actions taken and the report that has been filed with the authorities. Every time the authorities come back with some formal note about what has been accepted and especially the date at which they are looking at visiting for remediation inspection for a repeat inspection. All those things are being shared with them. We keep meeting them. At this moment, I would say substantially, we enjoy their support and we are looking forward to launching these products in their own markets. Also, they are also engaging with the authorities at some level to expedite inspections in their own territories. That would bring confidence in the products as well.

The next, we have a follow-up question from Mr. Rohit Balakrishnan from ithought PMS.

Sir, just 2 questions. One was -- so just on the previous question that I was asking. So from -- so while you said that you'll be able to make it as a separate facility by March of '27, but you can still manufacture from your existing plant. So I just wanted to understand by when do you sort of see this contributing? Because I feel that we've not yet got the MA from -- for this. So that was my question actually by when do you see this...

Yes. So we are about to receive the MA. We have completed the required number of days. At the moment view positively there in our hands. I think within a couple of months, we would have the MAs also in our hands. And in some products and some territories, like U.K. we have already got the MAs and so that once we are inspected or once the EU-GMP comes in, we can start supplying.

So you got MA from U.K. you said, sorry, I missed that.

Yes, yes. We have 1 MA from U.K. already there with us. 1 MA from Australia for one of the products already there. We have a few I think ready to approve products. I think about 5 products are already under approval. That means the moment we have inspection completed, we would get the MA. The filing has continued, the submission has continued.

Right. No, actually, I was asking about the specific product was my question, sir. I know that we have got the approval from Australia. My question was specific to this product which we have for which we are trying to create a separate...

We are at the last fag end of receiving our MA in U.K. And even in Europe, the last answer has been given. We are just now waiting for the inspection to be over before we approach them again for the MA. So that is needed from our side.

So essentially, you are expecting some sales to happen in financial year '27 post the receivable of MA and audit, right?

Yes for this product. Yes.

Okay. Second question on this was, sir. So you mentioned that you have given your -- almost everything from a CAPA point of view, some things are still left, but more or less it's done and you're expecting an audit sometime in the next 3, 4 months. So -- and also you mentioned that you have initiated 1 product transfer and also initiating product transfer for a few more products in terms of site transfer. Yes, 2 more.

Between 3 to 4 products will be transferred to different sites. But they will be alternate sites.

So sir, if, let's say, there will be -- let's say, there is some delay because of unexpected reasons, et cetera, in the audit, what is the -- how do we see like the site transfer like can you just explain that process?

Yes. Once the site transfer happens, then with the 6 months of stability for these products, we can file variation and introduce this alternate site as a site. The sites we have in mind are already registered or registerable in the various regulated markets that we are looking at and within I think after 6 months of stability and all those things the filing application can be done. And after the filing application, it requires between 3 to 4 months for the variation to be accepted and then we can start manufacturing in these sites and supply according to the agreements that have already been signed.

Okay. So worst case, you are saying that this year -- the coming financial year, you will have some sales from the transferred site.

Exactly. The last quarter, that's what we're saying.

And in case you get the...

[Operator Instructions] The next question comes from Prathna Paris from Altis Financial Partners.

My first question is EBITDA margins improved sequentially but remain under pressure on a 9-month basis. When does management expect margin normalization?

I think the entry into Europe and the regulated market is one inflection point where you will see the margins improving what we -- has been delaying very fast on quarter-to-quarter because proportionately -- the proportionate sales of these products in regulated market territory is another ball game and margins and the business also going on will be addition. So there are two effects; addition to the existing business and also addition of high margin products. And both these effects will be visible in our balance sheet. Or still more or less remain the same.

Next question is depreciation expense has increased. Is this primarily due to recent CapEx or capitalization of regulatory and facility upgrade investment?

During the process we completing the projects as well that has been giving incremental depreciation because we have several projects. On the project have been completed and put to use. So that will transfer in the long run to the revenue generation part.

In the interest of time, that will be the last question for the day. Now I hand over the floor to the management for closing comments.

Thank you very much for joining us on this call. And we appreciate the patience and the interest that the investors have shown and we want to assure all the investors present here that we'll continue to work towards resolving this hiccup. And of course, thank you for your patience and thank you for your understanding that this is just a hiccup in the long history and all the effort that this company has put in. We certainly are very positive about coming out of and resolving this hiccup and we well on the way to delivering on the promises that the company has in the form of products that is [indiscernible] it has had. So I think the strategy remains the same. Therefore we look forward to more interaction during the coming quarters in the form of being able to give you better results and good performance -- better performance of the company on all fronts. Thank you very much. Have a good day.

Thank you.

Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation. You may disconnect your lines now. Thank you, and have a pleasant day.