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Laurus Labs Ltd
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Ladies and gentlemen, good day, and welcome to the Laurus Labs Limited Q4 and Full Year FY '23 Earnings Conference Call hosted by Antique Stock Broking Limited. [Operator Instructions] I now hand the conference over to Mr. Monish Shah from Antique Stockbroking.
Thank you, Doran. Good evening, everyone, and welcome to Laurus Labs 4Q FY '23 Results Conference Call. We thank the management for giving us the opportunity to host this call. Today, we have with us Dr. Satyanarayana Chava, Founder and CEO; and Mr. Vantaram Venkata Kumar, Executive Director and CFO. I will now hand the call over to Dr. Chava for his opening remarks. Thank you, and over to you, sir.
Thank you, Monish. Thank you, Alex, investors joining as part of our Q4 and full year FY '23 results conference call. We are pleased to have this opportunity to update you on our progress and answer questions. '23 has been a year of different achievements and meaningful progress for Laurus Labs in light of a challenging pandemic globally. Our R&D-driven manufacturing strategy, aircraft or key growth fillers did very well. And I'm glad that our team has delivered on several scientific and operational milestones. We are on track with those values road map and executing on opportunities headfirst today, and at the same time, focusing on what matters for Laurus. Some of these initiatives have started giving results, especially in our CMO and CDMO business. We made significant progress in February 23, advancing our scientific capability in offering several key technologies to global customers, including access to technologies like continuous flow chemistry at large commercial scale, biotech analysis, continuous chromatography, engine development and manufacturing, precision fermentation just to name a few. We secured an important breakthrough with the major Big Pharma with regard of large future there. We have several pipeline projects from big and medium-sized [Indiscernible] companies. Revenue from animal products expected from second half of Q'24. We also made important internal success with broadening high-line products, collaborations, process efficiencies, innovative drug product platforms in new, sterile labs and qualified new capacities for commercial, APS and internet exposure. We are confident in the underlying demand for our portfolio and making opportunities to strongly link with technology platforms, customer centricity and manufacturing excellence to seize new business opportunities and widening our target markets across human health, animal health, agrochemicals and consumer health. We wanted to probably an update on our strategic collaboration in this cell and gene therapy platform company in May act. We are making very good progress. And our investments have supported establishing a straight up beyond GMP CAR T cell directly facility in Mumbai. They also initiated a Phase II for CAR 19 in lymphoma and leucomia post positive present data. We'll continue following our disciplined approach to investments in developng technologies, and we will act when scientific opportunity and value allow to do this. We have remained focused on the long-term growth and success by delivering on existing CapEx projects. Throughout F2, we invested heavily into strategic growth activities, while increased our API broadcasting capacities by 30% gearing effect. And these capacities are in various stages of ramp up for commercial production. Our CDMO investment is also to capture high-value opportunity is progressing very well. We are entering FY '24 with greater confidence that we're creating a sustainable engine that will bring greater business resilience and generate long-term sustainable value to our state levels. Moving on to our financial business. Despite the challenges in the business environment, the company achieved strong growth in revenues by 22% to INR 6,049 crores and an EBITDA of close to INR 60 crores, INR 159 crores percy delivering a margin of 26%. The growth we experienced in FY '23 reflects fundamental strength of our key growth pillars, CDMO, generics, other than and directives. The strong growth was after taking into account unexpected and severe pricing led impact in AR formulations as well as APIs. We believe this begin to stabilize, and our Q4 results was challenging, driven by completion of material purchase order supplies last quarter and higher upfront cost on growth projects. We reported INR 1,381 crores in revenues, representing a 4% revenue decline. If you look at from FY '18 to '23 overall, we had a strong cumulative performance. With delivered diverted real growth, strong double-digit sales growth of 21% CAGR, and the EBITDA margin improved by over 500 basis points. In the period FY '18 to '23, share of non-air business improved from 25% to 60%. That was a big achievement for us. Going into detailed performance update, I would like to share key updates on our formulations. In line with the expedition Formulation division continued to recover sequentially and reported overall revenues of INR 1,150 crores per full year, but it declined almost 40% versus APRA. The year sales was impacted mainly due to severe price fall and staff demand of ARV populations. We remain intensely focused to stabilize ARV business growth throughout FY '24 and beyond while navigating pricing edged created by the compensation. We have successfully implemented several measures around expansion portfolio and cost improvements. We believe these measures will substantially ensure our market readiness and confidence of sustaining our nets in cost line ARV treatment, both in APIs as the last for most. Coming to the Dialog market, we continue to perform well across our portfolio despite higher comp intensity. During FY '23, we tried factoring dosages in the developed markets, 6 in the U.S., 4 in Europe and 3 in Canada. In the U.S., we continue to get good market share on select products and also increasing volumes on our recently launched product. During the quarter 4, we filed 1 ANDA taking the 4 to 6 for FY '23. Cumulatively, we have 37 ANDAs. Of this, we have a total 14 approval in 12 20s. We continue to have a diverse portal products, including 5 for GT1 and ARVs, Cadista, CMS and ATG products. In Canada, we tried on product billing Pater,taking the total of 20 filings. Of those, we at approvals, 9 were launched, and we expect to launch 3 more during 2024. In the EU, we have a basket of 12 approved products, out of which 6 were launched, and we have continued to deepen our contract manpack relationship close to '24 and anticipate more volumes in the coming quarters. During the year, we invested significantly into expanding our non-ARV formation infrastructure with the total commission capacity of 10 million units. We anticipate that some of these brownfield capacities that we added during this year should start to get better implied during FY '24 as we begin to see better demand visibility in ARV business, CMO portfolio and key product approvals across U.S., Europe and Canada. On the R&D front, our overall R&D spend to sales was about 3.5%. We continue to make good progress and invest in portfolio with product specific approach based on complexity and economies upscale. During FY '23, we filed our past NDA for novel HIV Pediatproduct using [Indiscernible] technology. And we intend to magnify opportunity by leveraging this platform to create innovative pipeline in our therapeutic areas. Our sterile R&D labs, which are commissioned during the year 2022 is already working on several priority projects. We have a total of over 60 products in the R&D pipeline, either on or in development, having address market shares of $4 billion. We have filed so far 37 ANDAs in U.S., 15 doses in Europe, 20 in Canada, 9 with WHO, 7 doses in South Africa, 1 dose here in Australia, 20 doses in India and 23 products filed in various ROW markets. As we explained in multiple times, our outlook remains product-specific not market specific. Going to generic API. Our generic API division during FY '23 reported strong and along growth of 28% to INR 269 crores, supported by continued CMO opposites in API as well as healthy growth in non-ARVs as well as co-APIs. Antiviral API business delivered 21% growth, and we achieved INR 153 crores. This growth was partially due to low base effect, which was impacted by channel destocking. We continue to maintain a leading market share in the current product line. Our API business reported a growth of 10% during FY '23 at INR 318 crores. Q4 saw a strong recovery following uptake in one of the key products, AloStar, a lot of labs as one of the largest Alport and API capacities in India and a real to strengthen the storage by partnering with the global companies. Non-ARV, non-onco business also did very well, which includes carbon last year that we did different products. We have seen steady ramp-up of these products for the quarter and full year after. During Q4, this segment reported INR 200 crores sales growing at about 38% year. While FY '23, the growth is robust at more than 50%, supported by continued ramp up in new contract supplies. In Q4, we'll find 2 DMF. In the full year, we filed 6 business, all ARV and non-RV categories. With this total number of BMS side today is 79%. We also are working with a few more generic customers for fee more opportunities, and some of them are in very advanced stages of this. During the year, [Indiscernble] has been at recorded sales of INR 2,061 crores, representing an increase of over 136%. This growth was driven by high-quality delivery of a large data on time and accelerated demand from existing and key projects from new customers. We have further strengthened our partnership and signed several new clinical stage projects with a few big pharma customers. We continue to welcome over 60 at projects. and ongoing commercial supplies for about 10 products, including 3 APIs as well as several advanced intermediates. As indicated earlier, we are making good progress on new sites for CDMO division, both ran Center as well as manufacturing facility for animal health. New sites, we have Capabilities, Armone, and iPumecules apart from large volume products. Commercial GMP manufacturing of animal products is big during the second half of FY'24. Going onto Laurus Bio. Bio generated a full year reported strong growth of 20% at INR 125 crores for the entire year. The growth was driven by substantial increase in the uptake of [Indiscernible]. During FY'23, where enhanced technical expertise on biocatalysis to promote the application of these in small molecule manufacturing, which will strengthen our offering in the APIs and CDM segment. We have completed scheduled expansion at Argon, including new R&D block, along with balancing downstream equipment. And our new capacity implement is in the ramp-up phase with large-scale CDMO partners. New greenfield site at Apri is in design finalizing pace. We expect expansion to happen in a case manner should further strengthen Larabar capital decaffeinating press in the animal arsine, growth factor apart from large-scale precision fermentation. We believe local opportunity in alternate food proteins is an exciting pace, and our purpose is to have the right scale, cost and functionality. This will drive our technology differentiation. Now let me turn on to our FY '24 outlook. While we continue to focus on operational excellence and evolving R&D platform, we anticipate FY '24 to be a consolidation year of sales growth. As mentioned before, we are working on several new projects from big pharma and the meaningful contribution from these products likely to happen in the years to come. Also, new capacities invested during FY '23 is expected to get optimally utilized towards second half of this year. With that, I will hand over this to Ravi to share some financial highlights.
Yes. Thank you, Dr. Chava, and a warm welcome to all the participants for our FY '23 and quarter 4 earning call. Total income from operations for the full year reset INR 641 crores taken INR 96 crores with a growth of 32%. During the quarter, INR 381 crores rest revenue against INR 14.5 crores, a decline of 3% year-on-year. The gross margin on the full year was moderately down to 54.1%. This is largely due to significant price fall in ARV portfolio and change in product mix. Our EBITDA for FY '23 is at INR 154 crores with 26%, whereas for the quarter 1, 21% with INR 287 crores. For FY '23, the business mix has positively contributed as margin pressure and ARV business got material offset by increase in CDMO of CMO business and the negative operating lease on new capacities commissioned and higher inflation impact less to the margin compared to the last year. We are working on several initiatives around productivity and cost improvement to manage its impact in FY '24. We are using 3 con strategy. One is the raw material price improvements. Second is on the process improvements. Third is on the in-house manufacturing of some of the intermediates ARV. We expect that impact will be minimized in 2024. Our diluted EPS for FY '23 is INR 14.6% with a decline of 5%. Our return on capital employed is at 23.1% versus 26.3%. We have been able to manage due to better net working capital management when compared to the March from numbers. On the CapEx front, we are in line with INR 2,000 crore guidance for the 2 years, I said 23 24, INR 990 crores was spent on the CapEx side in FY '23. Next step 24, our majority for CapEx is on sites and bio and almost like INR 800 crores, we are trying to invest into the synthesis business. And the CapEx investment made in F3 will start generating revenue from the second half of FY '24. With this, I would request the moderator to open lines for the Q&A.
[Operator Instructions] The first question is from the line of Ravi Agarwal from Agarwal Investment.
My question is what type of growth you see India as a key supplier of API or intermediate when we consider energy crisis in Europe due to work inflation or any other region, whether due to energy crisis in Europe, many plants are set up for API and it will be created an opportunity for a company like Laurus in India?
The energy crisis in Europe will definitely make cost of manufacturing higher. And if you look at the opportunities for countries like Narita will be intimate APIs, not in the large volume products like specialty chemicals and other performance chemicals. For the opportunity being captured, people need to our capacity. If you look at Laurus Labs almost INR 1,000 crores in the last year to see such kind of opportunities. If you go to companies who wanted to look for contract manufacturing. If some company says, please give me contracts and I will put up capacities and we do take 15 to 18 months to set up capacity. So Laurus is well positioned to take such advantage. And we are seeing some opportunities like that, what you have mentioned.
And sir, one more question. What type of competency in CDMO we have, when you compare our company with Lonza or Consent Biologics or book engines because they are been heard from Consent Biologics that if they are opening to clip the plant for biomanufacturing. So what type of competency we have as we compare to other companies?
We are not into recombinant or bio CMO right now. So our Laurus Bio is not into the therapeutic business. Laurus Bio is into engine manufacturing, is into protein manufacture, not into therapeutic protein manufacturing. That's it. So we are not offering recombinant mAbs for therapeutic use as of now.
The next question is from the line of Madhav Marda from Fidelity International.
I just wanted to understand a couple of things. Firstly, you've been mentioning about front-ending some costs because we are adding new capacity. Could you quantify broadly how much is the comfort cost, which is not as new at this point?
We can give you how much capacity is not replaced, but we will not give you how much cost we add. But one standard principal once we followed since inception, the 3 operating cost of any capacity which is coming online until commercial ingestion we expensed mailing dollar is capitalized. Currently, for example, Q4, we have utilized our capacities between 55% and 60%. So therefore great capacity is available right now for us to see any opportunities.
Okay. And are plant skin potentially run at 100%? Or is the peak utilization like 85%? How does it work in our industry?
Is about 85%.
And then just the second question I had was if you could just talk about the opportunities that we are seeing from -- like you mentioned just in the previous question about opportunities coming from Europe. We won the annual contract that starts in the second half. Is there any more such contracts, which could potentially win in the next 1 year? Just wanted to understand your thoughts for this period.
We have several programs in Phase II, Phase III. But we don't know how many of those will advance in the commercial. So we have no control. And typically, we don't get a contract for future supplies until the molecule moves into commercial phase. There are several programs we have. And the good thing is the capacity is to capture those opportunities, if they move into commercial phase.
The next question is from the line of Nishant Shah from Emkay Global.
Yes. So basically, my question is why not Big Pharma?
One of the large contracts we excluded Big Pharma, we haven't considered any sales in FY '24.
Okay. And what was the numbe?
We can't give you a number. We are not disclosed.
Okay. Another question is outlook. You have outlook on the near term and the long term. And you are talking of the cost improvement and the technology improvement ongoing projects and pipeline on the new crosses. Will you be able to maintain the 25% of growth that you are saying? And any new addition of geographies?
Our growth will come from capturing more opportunities with existing partners. We are not anticipating growth coming from new categories.
Okay. And is there any line item in the revenues virulent or it not be a part of our next quarter or the future revenues?
Is there any line item future revenues captured in the current year? No.
And the last question is if we have seen the slowdown in the U.S. and the news of our U.S. marine or assertion. What kind of an incremental impact that can be seen on the company?
Our generic sales in the U.S. is not significant for us to get impacted.
The next question is from the line of it from Harith Ahamed from Avendis Spark.
The 50% quarter-on-quarter growth that we see in the FDF business. I'm trying to understand how much of that has come from ARV formulations versus the exports to U.S. and Europe. So if you could share the formulations number for the quarter, it would be helpful.
Generally, in the quarter 4, we did INR 390 crores sales in formulations. Above that, the ARVs, I would say 60% is ARVs and the rest is non-ARVs.
Okay. And then going forward for the overall ARV business in the past, we have based on guidance of around INR 2,500 crores of revenues for the API plus the FBS ARV combined? Are we maintaining that number for FY '24 and beyond?
Yes. We'll definitely maintain that number in FY '24 and beyond.
Okay. And then in the presentation, you mentioned that you've completed supplies until the last purchase order in December '22, while Pfizer has talked about continuing or guided for fairly large revenues from the product in calendar '23 as well. So can we expect further orders under this partnership in the future?
We don't know. And we have no knowledge on that how things will go
Okay. Last one with your permission. NSPL, you did 3 unit 4. How should we think about the time line for commissioning of those 2 capacities?
See, NSPL2 will be for animal health, but we'll go into commercial person in second half of FY '24. And NSPL4 for agrochemicals, but we already have a pilot plant for registration batches and the commercial version will happen maybe by second half of FY '25.
Okay. And then we've had a couple of years of close to INR 4,000 crores of CapEx and you're guiding for us in the number of FY '24. How should we think about CapEx beyond FY '24? Or will there be a reduction in the CapEx intensity in the business?
So I think we take another quarter to give a guidance for an FY '25. We are working on that. Probably may be lesser than the -- what we are spending in the current pay in the next year.
It just depends on what opportunities will come for us. If the opportunities are there we're happy to invest. So with 2 years back, we never count will invest INR 2,000 crores in CapEx but we are investing because there is a visibility for us. What to make, how much to make to move to sell.
The next question is from the line of Bino Pathiparampil from InCred Capital.
Just a couple of clarifications. So when you say FY '24 is a consolidation year, can you assume that it looks like broadly a flat year for the revenue level?
I think you can think that way because we were saying last year despite not having that large contract in FY '24, we still maintain our growth slightly lower than FY '23 is a big acumen. So we are not giving any quantitative guidance. Even if you assume it will be flattish despite not having the large contract, we will still grow what previously is a good achievement.
Understood. And the 4Q EBITDA margin level, is that a good base to work with? I'm not looking for any specific numbers for FY '24, but generally, is that a good reference point for us to work forward?
So I think we will get back to you appropriate time about how -- so maybe our Q1 and Q2 results will give you some guidance, which direction we are going in the margin. But we can assure you now EBITDA margin will not go below 20 -- 21.
Yes. Understood. Great. And I see that you have adopted the new policy for tax. So what would be your reported tax rate for FY '24 onwards?
25.17%. We are moving to a new rate.
Okay. So it will be 25%.
Yes.
The next question is from the line of Jeevan Patwa from Sahasrar Capital.
Okay. So I'm basing this quarter, formulation and API has picked up very well. But CDMO is actually much below expectations. So is there any kind of deferment of shipment or anything?
No, no, there's no deferred shipment Jeevan. This is -- we delivered what others we were supposed to deliver in Q4 deliveries. Nothing was Q4.
Okay. Because even if I look at the whole year and if I just remove that onetime -- not onetime, but the large product delivery, one-time deliveries and the CDMO of sales year-on-year doesn't look any growth?
So CDMO, you can't have a flat -- a straight line. So it will be depending on what customer needs there to deliver. So it will be a little bit bumpy sales, you can expect in CDMO, not just for us but any customers.
Sure. And secondly, the gross margin has actually dipped below 50% this time. So I'm asking these last 2, 3 quarters, I think. But I'm still not able to understand the gross margin trajectory has been down since last few quarters. So earlier there was large CDMO, then gross margins were almost 50% to 58%. Then CDMO percentage of sale, but still gross margin actually came to almost 54% and 53% and now it's below 50. So any kind of gross margin you think we can assume as going forward? Is it 50 to 53 is a good consistent sustainable gross margin we can assume?
We see the gross margin impact was mainly due to depressed pricing in ARV API partners. As we implement some measures in process improvements, manufacturing cost increment, purchase pricing improvement, these margins will improve. I'll not give you a quantitative number, how what we will grow, but definitely, margins will improve.
Okay. Perfect, sir. And the last question is on the populism side, any estimate on how much will be our utilization on a per billion tablet basis? So how much will it be right now? And how much you think will be at the end of the year?
Currently, we are around 50% capacity utilization out of $10 billion. We expect that will go to 70% by 2024.
The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services.
Sir, just on your guidance of FY '24 remaining stable compared to FY '23 in terms of the overall financial performance. So will that be spread across 4 quarters and are considering that fourth quarter FY '23, we are INR 100 crores back. So should one expect rebound in Q4 FY '24 onwards? Or it will be more back ended as the animal health contract picks up second half FY '24? That's my first question.
Tushar, actually, we don't want to give a guidance on the quarterly basis. On the annual basis, whatever Dr. Chava indicated are based on annual.
Okay. And sir, secondly, on this formulation capacity, while we had a good number of ANDAs filed over the past couple of years, but not seeing good, so great traction, at least on the U.S. generics side. So this new non-ARV formulation where do we see the business prospects strong? Is it more from ANDA? Or is it more from the customer-specific contracts?
Significant growth in formulations in non-ARV will come from contract manufacturing and also increase sales in Europe by increased sales in U.S. and Canada.
We have the next question from the line of Gaurav Singer from Aspex Management, Hong Kong Limited.
So one is, can you share how many projects you have in Phase III of the CDMO project? Or how could we see the segment or any other farther on Phase 3 that you are working on?
We are only giving the total number of active projects over 6, we are not giving the detailed breakup of only in Phase I, Phase II, Phase III. Yes.
Okay. No worries. And then secondly, on the -- on the slide that you have for FY '24 outlook, you mentioned that one of the negative factors is lower prices for ARV API and FDF. So is this -- are you suggesting that the prices in FY '24 can be lower from Q4 because my impression was that the API prices, for example, already stabilized. And also on the SBS, we've got this global sun contract, is that the price is kind of known. So maybe if you can share some thoughts on why you feel prices can be lower in Q4 FY '24.
We don't expect the prices to be lower than compared to Q4 to Q1 FY '24. We're not expecting that. We believe the prices have bottomed up.
So it's more a full year FY '24 is concerned. And just one last thing on this global fund project for the ARV formulation, when do we expect to start the shipment and what can be the cadence of the ramp up?
That shipments started already.
Got it. I'm sorry, just one more, if I may. For the large project in CDMO, did we have any contribution of that increase for? Or did we have no contribution in Q4?
No.The large charter much be delivered has no contribution in Q4.
The next question is from the line of Bharat from Quest for Value Capital.
In the presentation, I see there is a new greenfield CapEx line, in Hyderabad. May I know for how many -- how much began tablet sites is to?
So that capacity, we purchase land, but we haven't started construction of formulation presenting AgriBank. The first facility will come up in that site will be Caralcommercial manufacturing and then followed by Goralsolid manufacturing.
Okay. Because I think in Visa, I think we have -- we have all the structures ready. And then if we just add the lines, I think we could increase the capacity from INR 10 billion to INR 15 billion, I guess, right?
You're absolutely right. So that is the reason, the new pharmacy will come up in Adabas will be the sterile commercial manufacturing, not for oral solids.
Okay. Yes. And my second question is like this is more on the long term. I want to know your vision, like 5 years down the line, may I know like how you see the product mix changing, how much could be the share of CDMO and Biogen 5 years down the line?
Very interesting question Yes. So this year which is in discuss at '23, our CDMO revenue was 36%. CDMO bio in 5 years, it should be 50% maybe. That's really a broad number.
Broad number Yes. Got it. Yes. That comes to my next question. Like we have many divisions now which you see we have human health CDMO. We have animal health CDMO. We have AgroCDMO. We have Bio, we have genetics, we have ARV as well. So I just want to know like do you think you have enough men bandwidth to manage all these divisions?
There is -- in the CDMO, how we define in part of CDMO or not. We are selling any product where technology comes from partner and sell it to only one, that's CDMO product. So there is no technology risk, there is no market risk, there is no pricing risk because all those are predetermined. So our management bandwidth is only in the manufacturing space, not in the business development space and procure space. That's the easy business and for us.
Yes. So we have enough of management bank with at this juncture, and we have been reviewing on a periodical basis. And as and when necessary, we inject more people into the system.
Okay. And when you say that you want to accept for 50% of shares from CDMO and Bio 5 years from now. So it means I understand that the management focus is more towards CDMO than generic.
It's not focus. If you look at the investor presentation, what we posted, the revenues coming from non-ARV has gone up significantly.
In your question, there is an answer. So when you say 50% to the CDMO and Bio, the 50% is generic. It is not that we have unequal focus
The next question is from the line of Monish Shah from Antique Stock Broking.
They have answered all my questions. Thank you.
The next question is from the line of Neha Agarwal from SageOne Investment Managers.
Dr. Chava FY '24 revenue growth and is the last day for the case. Just wanted to understand the growth guidance is also in terms of profitability or more of top line growth that you are more
We'll give you more guidance as we declared results in Q1 FY '24 and Q2 FY '24. So we can't give you more granular digits right now.
No, are you looking at numbers here, but if you could just suggest whether this is in terms of top line or not.
Gave a guidance on the top line.
And another question from my side would be on the CapEx that we did in the last 2 years of FY '22 and '23 and then the plan that you have for '24, also to the close to INR 5,000 crores. In how many years subsequently do you think we could age full utilization of the state?
I think the current capacities will be fully replaced the FY '25. And I'm sure that '25 will put more CapEx to increase your capacity. So if you don't increase capacity to grow opportunities are limited. So we need to continue to invest. If you look at the added 30% pay capacity in the last 24 months. And we have added 50% more capacity in formulation in the last 24 months. So that's a significant improvement in the capacity.
The capacity out so far, at least for that, you are expecting in '25?
Yes.
And just one last question, if I may, for Marta. So out of the 6 factors that you have currently in the intersite any new projects that we are expecting to go commercial in FY '24? Just on the expectations side.
I'm sorry, we can't give you those kind of business, but we broadly mentioned, we are putting capacities not to make how much to make room to sell. At least there is clarity.
The next question is from the line of Anuj from Nova.
My question related to 2 parts. One is that your CDMO business. I'm in your CDMO is in your PPP, if you have released. So if you look at your CDMO business is doing INR 200 crores on an average, if you exclude whatever the one-off numbers are. So just trying to understand that if you look at even 5 quarters, your CDMO business remain in same level at INR 200 crores per quarter, right? And what is the, I mean, say, guidance you are giving for this business because it has a very high base. And so making that high base, it will be very difficult even to achieve the same kind of number in FY '25. Am I correct? Or you have some different views?
I can't comment on your use in use appreciate. What we feel, since we are existing to capture CDMO, we see opportunities to grow. We remain at INR 200 crores, INR 250 crores per quarter, and there is no need for us to invest.
But you need to look at how the -- on a year-on-year, it has grown it. So it was INR 500 crores a couple of years back. It moved from INR 100 crores to INR 900 crores, INR 900 crores, which the only one I can say one point of few is, we always say that one of one-out the kind of my last on the execution of the contract, we do not give any credit. So basically, as we are indicating repeatedly for the last 4 to 6 quarters, we are bullish on CDMO. We still do our bullish on CDMO. We can't give more specifics of this, but it may be worried of time you can see the numbers.
So sir, same, you said that we are investing, and therefore, we are very confident that this -- what I can get from your words, right? We are investing if the number will be remain INR 200 crores that we should not have been investing. But if you look at your investment in last 2 years, you have almost invested like INR 3,000 crores, INR 2,500 crores. And I presume that most of the business has gone to CDMO. If I do any kind of calculation and if you're utilizing in 50%, 60%, it is not even matching your onetime asset to turn over, if I exclude your one-off number. Anyway we can discuss it offline if you want to.
But I've just given glance and then we can discuss offline at any point of time, Anuj. The -- if you look at the INR 2,000 crore investment, we never said it was invested for CDMO business. What we are saying is we are going to invest INR 800 crore into the CDMO business in FY '24. And those kind of results you will see in the FY '25 onwards. So we can discuss further on this if you have any clarification or offline.
And second question is related to guidance. If you look at your 5 quarter guidance, right, just 2, 3 quarters, you toned down your guidance, right, that you will not be able to achieve $1 billion. I can understand that there are a lot of uncertainties in business, right? But this is human suggestion that when you guide something, right, you should have some kind of margin of safety for that, right? Again, if you look at this year, if I -- whatever I can infer from your word, you are saying that in FY '24, you will be probably flat, right? If you do any kind of calculation, even you said that your FDA business, which is that fix -- I mean, say, your generic business in U.S. will not see any kind of competitive pressure. You answered for certain very specific question, which was that recession related. I can understand that a recession may or may not. But in India or anywhere in the world, no generic company can guide that our business will not see any kind of pricing pressure. And you have done extremely well in last 12 to 15 months. So this is my humble suggestion that when you're speaking with a lot of investors, at least 1,000 people are listening to you, it is have some kind of margin of safety when we speak as far as the guidance is concerned. This is my suggestion to you.
Thanks for the suggestion. What I mentioned, our formulation revenue coming from U.S. is not that large to get impacted. That's the comment I made. I think Ravi, you want to make some..
Yes, I don't hear -- we never gave any quantity to guidance until we gave a $1 billion. Of course, our investor friends also making some kind of a provocative approach in this not a negatively positive way, what you will do, how we will do. Then in one of the point, actually, we said $1 billion. In the next quarter, when we came to know that the $1 billion is not going to happen, we gave a guidance, revised guidance, and we are on par with our revised guidance. In our investor presentation also, we mentioned that. So we are cognizant of what we speak. It's not that -- we know we are very well aware many people are watching us. And we're also aware that how the performance has been improved for over several quarters, not 1 quarter or 2 quarters. And we also know that how we have been built the organizations. So in the 16-year time, we have invested INR 5,400 crores into CapEx. We have 6,500 families have been working for us. So the -- we are very cognizant of it. We also know the margin of sale. Thank you.
The next question is from the line of Sudarshan Kapadia from Sundaram Mutual Fund.
So what was the one-off in Q4 that is part of EBITDA margin?
There's nothing in Q4.
Okay. So how do we look at the margins for '24? You mentioned about the top line to be probably maintained at orals. But any color on margins, how we should look at the margins in '24?
As we mentioned, I think you will get more clarity and color when we give results for Q1 and Q2 FY '24. I think we'll leave at this stage.
Okay. The next question is from the line of Yasser Lakdawala from M3 Investments Private Limited.
I had a busy question on our -- on a non=ARV API side, probably the oncology API business is low volume, high-value API business. Sir, what about the other APIs there? So what is our right to win in the other APIs? Are they large volume products? Do we have some cost advantage there to give some qualitative insight around the investment? And tell us on that, are these older or newer molecules, basically, things that have lost IP protective in the near past. If you give some color on that, that would be very helpful.
Sure. So if you slide the API revenues of INR 600 crores, we mentioned INR 1,530 crores coming from ARV APIs and INR 328 crores is coming from oncology, INR 308 crores and about INR 780 crores is coming from non-ARV, non-onco. In the -- I think about say INR 770 crores, half of the revenue coming from contract manufacturing have generic APIs to generic customers. So we are offering manufacturing and service to our generic companies where they include our price into their FDF. So technology is based, DMF is based. And we make with a different margin. At least it is a good business because we know the raw material. Our partner also know the raw material cost. We are not changing process. We most likely we have not changed the bad sales also. We create capacities for them. So we are giving our manufacturing facility, kind of a toll manufacturing curate. That's about half of them is recipes. Again, medium to large margin products, we are not doing small volume products there. Those -- most of those products are well established generic molecules. We are not trying to get into day 181, or Q4 markets there. They're well established markets.
Also on the formulation side, I saw that we had a few sort of paraprofilings and FDF. So just sort of a on question, just to understand this better. We have a PBM of business, which is dealing with Big Pharma. On the one side, we are doing IP protected work for them. And on the other side, we are having these Cataford and FDF. So how does -- do you feel that from these 2 businesses independently is there any sort of case of conflict of interest? Or should you just help us understand how this what is the thought process there? And how do you see your customers reacting to this?
That is a very pertinent question you have asked. It all depends on the customer and how we are approaching customers in IP. Typically, from the class of compounds, we work, we don't want to work in generics. And more often right now, we are not working on any peer opportunities with the partners which we are working. So we don't want to have a conflict in business. So we are also very clear on our approach right now to the severe of the business.
Sure. And last question here. We've had this one-off opportunity during COVID. Just to understand from a company-level margins, how do you see or if you could give us some color on the EBITDA level, profitability of our API and FDF business as compared to CDMO had higher? What would be our normalized margin?
We gave a translate to qualitative guidance, but in the order of increasing profitability, APIs, formulations and CDMO. That's the only guidance we give and we stick to that. We don't want to give you any absolute numbers there.
The next question is from the line of Gaurav Single from Aspen Management Limited.
Just one follow-up. On the CDMO side, can you share some thoughts on the competitive land miss and the supply of capacity that is coming up in India and also specifically for Laurus Labs. Some of the advantages I can see, obviously, is we are working on 60 active projects. So as they get commercialized, you can be the vendor of choice and then you also completed this large project on time. Are there any other advantages that can help us stand versus the competition when we look at the new supply of CDMO in India?
The Indian CDMO companies are well positioned to capture the opportunities because of supply diverse initiated by Laurus Labs. I think it is a good opportunity, not just for Laurus. There are many other CDMO companies will do very well. That's what we feel. The advantage or the ability to create capacities, the ability to recruit people to support the capacities. And the current global scenario is also helping India to get more projects a bit back here.
The next question is from the line of Ratish Varier from Sundaram Mutual Fund.
So just one clarity on one of my colleagues also asked us on margins. So no guidance. But if you see in the previous by 6 quarters because of one-off opportunities or specific contracts, et cetera, we had certain margins, right? So I just wanted to understand, as you move forward over the next 1 or 2 years, are those margins aspirational? Or those are one-offs which went by and it will go by what current Q4 exit run rate is there from that slowly improvement is what we have to see. Just wanted some color on that, again, give us some thoughts there.
When the business was very prosperous, even before this large contract, we were interested to about 30% to EBITDA even before this large contract in the global pharma company. I think we'll put our efforts to improve our margins and the change in business mix and improvement in margins of ARV business and our dependence on ARV business goes from our margin profile should also increase. If you look at our FY AT&T FY '23, the numbers, we grew our average business for INR 500 crores, but now the ARV is INR 4,000 crores. So -- but the other challenge what we're having is, since we are adding a lot of capacity, a lot of deleveraging. So as we move away from deleverage of our capacities and teams, I think our margins will improve.
Okay. Just one more follow-up, sir, regarding the revenue guidance. So I'm not asking for any number, but a year when we are seeing consolidation, et cetera, this is -- we are seeing, based on still we are left to sign certain contracts, as you're saying, they're in pipeline. Because of that, we are not that confident from a guidance perspective or we want to be more cautious this time?
We have to be more cautious.
Ladies and gentlemen, we will take the last question from the line of Madhav Marda from Fidelity International.
No, I had one last question on the PPT in the beginning, you had mentioned about you want to invest up to 10% of profits on disruptive technology. Has it already started in the previous quarters? Or this is something we will be starting FY '24 onwards?
When we mentioned the disruptive technology, the investments we made in mine is part of that. And we are evaluating a few more opportunities. And we are also very conscious not to invest more than 10% of our profits in such kind of initiatives. So we did one, and we are evaluating one more and probably when it is materialized, we'll let you know.
So sir, has this already happened for FY '23? Or is -- I'm assuming it's already that's happened in the last few months.
This will happen in FY '24. The new investment will happen in '24 not in '23. Our investment in immune happened in FY '22. FY '23 round on any such investments. We evaluated, but we are moving forward and we'll let you know when we will leave something there.
And sir, 10% of PDP or EBITDA, what is profit?
It is very qualitative 10% of our profit back.
I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you all stakeholders for engage in discussions. And whatever steps we do, whatever investment we do, whatever initiatives we do is for the benefit of all the stakeholders, and we wish you all the best. Thank you.
Thank you. On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us. You may now disconnect your lines.