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Solara Active Pharma Sciences Ltd
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[Audio Gap] Our website as well as the stock exchange website. The transcript of this call will be available in a week's time on the company's website. Please note that today's discussion will be forward-looking in nature and must be viewed in relation to the risks pertaining to our business. After the end of this call, in case you have any further questions, please feel free to reach out of the Investor Relations team. I now hand over the call to Jitesh to make the opening remarks. Over to you, Jitesh.
Thank you, Abhishek. Hello, everyone. We welcome you all to Solara's Q3 FY '20 Earnings Call. I believe you have received our press release, the earnings deck and the SEBI results that have also been posted by the company on the stock exchanges. Joining this call with me are Hariharan, CFO of the company; and Bharath Sesha, the new CEO of the company. As you are already aware, Bharath joined us in December 2019 to take over the helm of affairs and contribute to our value creation journey with his wealth of experience managing P&Ls and strategies of several leading companies. I firmly believe that he brings the right expertise, which the company needs to step up its progression towards achieving stated outcomes. That said, Bharath, Hari & I are available today to answer any questions that you may have for us. Coming to the financial results for the quarter. I'm pleased to share that quarter 3 FY '20 is yet another quarter that demonstrates our strategic acceleration towards achieving profitable growth. While the ordering pattern led to a marginal dip just in the revenue growth, our performance in the quarter was noteworthy for many first -- and new milestones that we have achieved. First, for the first time in our journey, we have surpassed 25% operating margins for the company. It is worth to note that this is the fifth successive quarter where our margins have continued to expand quarter-on-quarter and have been over 20%. Second, in the quarter, we have clocked our highest ever profit after tax at INR 412 million, which is 2x over the PAT reported in the same period of last financial year. Third, our efforts in Ambernath have started to result in better capacity utilization as we continue to reduce the under recoveries. Fourth, our R&D efforts continue to progress as planned. While we had one additional DMF filed in the U.S., our efforts on market extension are fructifying and we have completed extensions in new markets for 7 of our existing API. Fifth, the initiatives around the CRAMS business are on track.As I mentioned in my previous calls, we have an opportunity pipeline on $10 million and we are confident some of these will start yielding results in FY '21. We continue to grow our opportunity pipeline through a multifaceted market outreach in involving our network of consultants, current relationships, legacy customers and direct marketing efforts. We are also in the process of recruiting a global head for our CRAMS division. Lastly, as you may have seen in our press release, during the quarter, one of our top 10 key APIs, Ranitidine Hydrochloride, experienced regulatory concerns due to U.S. FDA's notification around the NDMA impurity in the product. While we voluntarily suspended our sale of the API in the month of September, we were able to quickly turn around in addressing the issue around the NDMA and resume production in a phased manner in quarter 3. To summarize, the financial year FY '20 to date is in line with the approach. We have continued our focus on improving our efficiencies, which has been one of our major contributors to the margin uptick. At the same time, we are also focused on revenue growth, the foundation of which has been laid out in last financial year as well as in this financial year. We believe that the financial performance of this quarter is an excellent validation of the business model we are establishing. We are confident that the new products and new markets will continue to enable the growth of our revenues in the coming period. We also remain confident on our medium-term guidance of 15% CAGR on revenue and 20% CAGR on EBITDA, considering FY '19 as a base. Thank you, everyone, and we are now open for question and answer.
[Operator Instructions] The first question is from the line of Vaibhav from Ashmore Group.
This is Ashwini. Jitesh, Hari, Bharat and the rest of the team, congratulations, very, very solid and encouraging set of numbers, very heartening congratulations. So I just had a couple of questions. One is the revenue line. So obviously, while the EBITDA margin expanded and EBITDA has shown a phenomenal growth, how should we read into sort of the revenue line, which is lower as compared to the September quarter, and it is lower as compared to the same quarter last year as well?
Yes. Ashwini, this is Jitesh. First of all, thank you for your wishes. On the revenue part of it, we had a temporary dip in 1 of our top 10 key APIs. We believe that to be a temporary phenomenon, and we are confident that as in -- as a 3-year guidance what we had given, we are confident of achieving the 15% revenue growth on a CAGR basis. So this is more of a temporary phenomenon on 1 of our key top 10 API. Plus Ranitidine, we only initiated production in the month of November, as we have stated in our press release. So I would say there is no concern from a revenue growth perspective. It's just a temporary phenomenon.
Okay. No, I was just wondering because in your presentation and your press release, you speak about efficiency multiple times. So I was just wondering that have you taken some sort of product rationalization or market rationalization where you stepped away from certain APIs or certain markets, which are lower margin markets and therefore, the EBITDA focus has driven that revenue decline, but you're saying that's not the case?
Yes. As I said in my previous calls also, we are looking at the CIP for all our key APIs. And we do want to maintain a minimum 50% gross margin as a threshold. Of course, that has also increased because of some of the CIP, which has come into effect. And we continue to see if some products don't give us that. Then we look at replacing with the new products what we have in our pipeline. But this one specific to the quarter 3, it's more of a temporary dip in the supply of our key APIs.
On similar line, I mean, the 500 basis point increase in EBITDA margin is obviously very, very encouraging and well ahead of what we might have expected. In your view, are the EBITDA margins that you posted for the December quarter, is there a seasonal or onetime element to it? Or this is what you would think as a sustainable number from a medium term perspective?
Yes. We are confident that this number of INR 82 crores as EBITDA is a sustainable one.
INR 82 crores or a percentage 23.5% EBITDA margin, which one is sustainable?
So one is our absolute value number. And from a margin perspective, if you take at the year as a whole, then we are confident that the number would be in high teens to early 20s.
Okay. And looking at your filings, you speak about 8 to 10 API or DMF filings each year. But this year, we've seen only 2 -- so is there a reason -- is there a -- sort of a reason why you've gone slow or there is some regulatory bottleneck that's holding you back?
So I'll tell you, Ashwini. Our R&D pipeline is on track. For this year, instead of 10, we may end up with 6 to 7 filings solely. We would have validation for 1 more product, but that we can only file once we have a confirmation from the customer. So in effect, we would be around 7 to 8 for this year. But apart from that, that is -- those are those new filings. And we are confident that the pipeline, what we have and the status of each of the products at the R&D stage, we are confident that we will hit that 10 number in the next year.
And how do you account for your R&D? Do you expense it out as the expenses are incurred? Or you expense it out when you submit the file to U.S. FDA. So what I'm asking is that by what you're telling me, you will obviously have spate of filing in the Jan to March quarter. Because you filed only 2, so you will have 4 to 5 filings in this quarter. So will there be a significant corresponding R&D expense jump? Or that's more of a steady as we go kind of a number?
So we don't defer our expenses, Ashwini. As and when it is incurred, we expense it out.
Okay. All right. Okay. Then coming to Ranitidine, what are you seeing in the marketplace? Are there any other suppliers who come in who have been able to meet the U.S. FDA's NDMA contamination standards? Or are you pretty much the only game in town?
As of now, we are the only ones. But I'm sure the other API players are working in order to ensure that they resume supplies. But right now, we are the only ones.
And it would be a fair comment because what you seem to indicate is that this margin increases on account of new product introduction introduced by you and new product introduction and market extension, so that now makes up about 5% of your revenues and the margin increases on the back of that. So the full upside of Ranitidine is still to come. That would be a fair statement, right?
Yes, because we had only 2 months of production in Q3 for Ranitidine. So in Q4, we see a full 3 months of production.
Right. And the last question from my side is that how do you see this China lockdown hinder or help your business case, especially for the raw material supply or key starting material supply, I mean obviously, you must be also looking for alternative sources, i.e., do you have an alternative source for pretty much everything you buy from China? How do we think about that risk?
So about the China situation, it's really -- we need to see how it pans out because as everyone would have read, they are talking about resuming office on Feb 9, which now could be to mid-Feb. As far as this quarter is concerned, we are well covered, but we need to assess the situation how soon they are back in office and resume supplies. As I also mentioned in my previous calls, right? Our -- we have started to look at alternate sources away from China. We have identified sources in India and Europe. And that qualification stage is -- qualification is in process. So hopefully, if we -- if there is a risk for our Q1, we should be able to source from these alternate vendors. That's what we are working on it right now, Ashwini.
And your Vizag expansion, is that on track for trials to start in the next, whatever, 3 months or so?
Yes. It is on track. In fact, it could be sooner also, but it is on track.
The next question is from the line of Vinay Bafna from ICICI Securities.
First, congratulations on good set of results. What I understood from your commentary is that your revenue decline by Y-o-Y and quarter-on-quarter is largely because of key particular molecule. Is it possible that the temporary disruption in Ranitidine was one of the reasons for this sequential decline? Or would it be a large part of the reason?
No, I'm sorry -- I now mentioned that the dip in the revenue was all because of Ranitidine, right? We had only 1-month loss on the Ranitidine production. Rather than Ranitidine was 1 of our top 10 APIs, that has been a temporary dip.
Okay. Sir, I mean, would you -- I mean, considering how the Ranitidine market has shaped up, and since you're the only supplier now. Before the disruption and after the disruption, have you seen a significant gain in market share or in price, which has contributed to a certain jump in the EBITDA margins in this quarter?
The situation is still evolving right now. And it's too early for us to comment. And as you know that we don't comment on any product to product margins. But it is too early to say anything on what could be the potential upside on Ranitidine.
No, I understand. I mean, I'm not asking for any quantitative values. Just qualitatively, I mean, has there been a market share gain post-resumption or even in these 2 months? Or are you seeing that in a couple of weeks or maybe in a month or 2, you'll gain a higher market share than you were before? And I mean, has the pricing been better in general? And just qualitative indication would be good.
So Vinay, these -- our formulation partner has just started to kind of get back into the market. Possibly a quarter down the line, we'll be able to give you a good sense of how the market share for our formulators is evolving. I think at this point of time, it's too early to give you an indication whether we had an uptick on the margin -- I mean, on the market share side. Of course, the profitability would have increased a bit, but we don't want to kind of specific comment on that.
Fair enough. Fair enough. Next question would be that about the China issue. So another participant also alluded to how there's a risk and you're trying to mitigate it through alternate sources. But the key question remains that even for the alternate sources, the key raw materials or ingredients are from China. So have you a ballpark number of indirect or a direct dependence on China for your key starting materials?
So of our total raw material cost, around 35% is imports and 25% -- so of that 35%, like 25% is from China and 10% from other markets, as we look at it.
Okay. Got it. And now considering this is my last question. Could we see the China situation to be an opportunity, as in, are there more people trying to reach out to you for you to become their alternate source of supply?
Not yet, Vinay. We have not seen that anyone reaching it out to us because of this situation, not yet. [indiscernible] also waiting, right? What can pan out in this month, I mean this 15th Feb, 15 to end of this month is very critical.
I understand. I understand that there's still inventory lying around in the supply chain. So -- but it's just as a risk mitigation procedure like you were looking out for alternate sources. I was just wondering if other companies are also looking out for alternate sources and have they reached out to you? Just trying to gauge if you are getting more clients, that's all.
Not yet.
The next question is from the line of Anand Bhavnani from Unifi Capital.
I have 2 questions. First is on this entire NDMA impurity turning up in various APIs. So first, it will start now Ranitidine broadly from what we've read in the media, it is because of a solvent change, DMF is being used now whereas it wasn't used earlier and that solvent change could be one of the reasons. So I just wanted to understand for our product set. Are we, at this point in time, using any DMF in any of the manufacturing process for any of the products? A. And b, whether we have contemplated changing our manufacturing processes to avoid -- preemptively avoid any -- NDMA on any other of the API that you manufacture?
We don't want to discuss the process details out here. All that we maintain is that we had gone through the due process that FDA had asked to, and our process was -- the NDMA was very much within the limit. And we have resumed our supplies. Now exactly what the reason is for others, we don't want to specifically comment on that in our call.
Sure. But in general, from a risk perspective, I guess, this would have, in any way, triggered us to kind of reassess other APIs that you manufacture from any impurity perspective. And if you can just broadly share as to -- if we are -- is there any particular set of any such impurity NDMA in any other APIs? Because I was reading in Singapore now, they are starting Metformin for this impurity and in some batches, they have found -- seen Metformin as well. So broadly, from our portfolio perspective, how are we managing and avoiding this risk?
So coming to your question about the NDMA on other APIs, this is Jitesh here. Yes, we are evaluating in a very proactive manner if these -- any issues could be on our other APIs, and we have those instruments also to monitor that. So we are proactively doing it for all our APIs.
Sure. And in case of our CapEx plan, I think the Vizag unit should be commissioning sometime this calendar year. My understanding is correct?
Yes.
So if you can give us a broad sense of, a, how do you anticipate this capacity utilization in this unit? And would there be any follow-on CapEx after the Vizag unit commissioning?
So once the Vizag unit is commissioned, of course, is -- we are targeting this for the regulated markets, but the entire capacity coming to us full fructification in the next financial, of course, will not happen because we have to go through the regulatory approval process of the U.S. FDA as well as other regulatory agencies like the MHR. Then post those approvals and once our capacities come to an optimal utilization, we will, of course, look at if there is a need to put in additional CapEx in Vizag because that's a huge land area, and that's going to be the flagship site of Solara. So all what we are talking about our future expansions will happen in Vizag.
Sure. So it's fair to assume that Vizag approvals will take maybe another 6, 8 months. So maybe only from Q3, Q4 of FY '20 and you might see some revenues or it could be even FY '22? So second half of FY '21 or FY '22 the time to see some revenues? Is my understanding correct for that?
Yes. If our regulatory approvals come in place, yes, we could have sales in the second half of FY '21, and that's what we are targeting towards.
Sure. And we -- this is because only regulatory, we won't be in the intervening period using the production for nonregulated markets. Is that a possibility?
Yes, there is a possibility if we get the price, what we get because sometimes the nonregulated markets have also price challenges, which we don't really want to get into it, which disturbs our margins. But it's not that we are not looking at it, we are looking at it. But you can consider that the major utilization of the capacity is for the regulated markets.
[Operator Instructions] The next question is from the line of Mahek Talati from YJ Investment Advisors.
Congratulations on a good set of number. Sir, I have a question regarding the Vizag plant. Now since you are raising bonds to the tune of INR 460 crore, was the reason behind raising debt to fund the CapEx plan?
Can you repeat the question, please?
Since you are raising funds to the tune of INR 460 crore, what was the reason behind raising...
Excuse me, sir, Mr. Talati. Sir, we're not able to hear you clearly, can you use the handset mode while speaking?
Sir, since you are raising funds to the tune of INR 460 crores. What's the reason behind raising debt for the CapEx plan?
The equity funding is expected by next year, only the maximum amount to ensure that the plant is fully [indiscernible] with the CapEx. Now we have taken the term loan, which is repaid over a period of time. And you could fund the expected maximum in next quarter only -- Next year only.
Okay. And is that raised or not, sir?
Pardon?
Is that debt raised? Or is it yet to be raised?
Yes, we have raised some debt. And the -- if you look at our gross debt, the term loan, there is not much increase. Whenever the loan gets raised to the extent there is a repayment, there's not much increase in the gross debt.
Okay. And sir, last question. What's the current capacity utilization?
Which plant you're asking?
Ambenarth.
We will not be able to give you a plant-wise detail, which you've indicated earlier.
Overall? Sir, overall?
Overall, we are at 70-plus.
The next question is from the line of Vaibhav from Ashmore Group.
This is Ashwini once again. So I just want to ask more about the CRAMS business. So we've been sort of speaking about this, we also were trying to see if we could get an M&A sort of an opportunity there. But it appears that you started to look for the organic build out because you're saying that you're looking for a global head for the CRAMS business, and there's a pipeline of $10 million. So I just wanted to get a sense of this business plan. I mean, by when do you think the revenues start to come in? What would be -- would you need to invest a lot of money into labs and into capacity for CRAMS? Or is that something that can be done into your existing R&D without requiring much CapEx? How should we think about this revenue line? When do they start, et cetera?
Yes. Ashwini, Jitesh here. So on the CRAMS business, we do have some legacy CRAMS business, and we are building upon that. And as I said that we have started our efforts organically also by various channels, and we have received RFPs, which we have bid also $10 million of RFPs. We are confident that as in more opportunities we are getting and building up on the $10 million, we would see the new business starting to occur in the next financial year. From an inorganic part, we are continuing to look at the acquisition opportunities. But as of now, we have not got one, but it doesn't mean that our efforts are sunk, but we are actively in that space. The third is on the OpEx or CapEx. So we have 2 R&D centers, and we have enough capacity from the lab point of view to accommodate CRAMS project. What we would have to do is, probably it will be more on the OpEx front, where we'll have to probably hire manpower to run those projects. So yes, I hope that answers your question.
Yes. And second is that, is the margin profile at the EBITDA level because there's no -- these are all cost-plus projects from how I understand the industry thinks about them. I mean are these kind of margins in CRAMS higher than what you report at the company aggregate level or similar or lower? I mean over the next 3, 4 years, as this business scales up, how does it impact margins?
So on the CRAMS margins, right, Ashwini, going by our past experience when we have done this business, now for us, as Solara, we are a new entrant even though we have legacy years of experience in manufacturing. So in some projects like a big pharma, I'm just giving you an example, when you have to get in it, it's more about proving our capability. So the first few projects would not yield those desired gross margin, what our CRAMS business would yield, right there in the range of 60% plus. But we have to then establish our credibility by delivering what we have promised. Then there are some opportunities, which we have received, where the margin profile is much higher even for the first opportunity. But as we establish, and when I say as we establish it, for a big pharma to convert into a real business, takes about 2 years. So we can say in the next 2 to 3 years, we would have established ourselves as a reliable CRAMS player. And the margin profile, what others get in this business, I'm sure we will enjoy those margin profiles as well. I mean classic example you will see is Divis, where they have a mix of both the business and their EBITDA margins are 30% plus. So that's our aim also, right, that as our CRAMS business build out, that even we improve our EBITDA margin profile.
The next question is from the line of Ranvir Singh from Sunidhi Securities. [Operator Instructions]
Again, on CRAMS side, is there any timeline when we can see CRAMS contributing some meaningful revenue in our overall revenue?
A meaningful revenue would be, at least, it is contributing in double digits of 30% and higher. And that we would see in next 2 to 3 years because our current business is also growing, which I've alluded previously. So it'll take at least 3 years for the CRAMS business to have a significant revenue impact on our overall revenues.
So you say 30% kind of contribution we can expect from in 2, 3 years. That's what you are saying?
No, no, no. I said after 3 years, not in 2 to 3 years.
Okay. Okay. Fine. And on Vizag unit, what has been the total investment in this unit?
We have not given specific details, what kind of investments we are making. What we have said in the past is that this equity raise we have done of around INR 460 crores. Part of that would be used for this greenfield capacity expansion at Vizag and part for other acquisition activities.
And what's the work in progress as of today? What amount is lying there?
We have around INR 100 crores of cash, if you can see on our -- the disclosure that we have given on the presentation. It's around INR 88 crores of cash we have on our book sale. See, the equity raise of complete INR 400 crores has not yet happened. What you have to be mindful is it's an option structure. So around INR 148 crores of cash that has come in in the last year. And of that, some is still lying on the books. Once the conversion for other happens, that's when the cash comes in.
And what is the debt as of today?
INR 600 crores is the net debt.
INR 600 crores is the net debt.
Okay. And one more, in this quarter, I believe that there has been some one-off kind of revenue, which I assume, or do you think this is a sustainable base?
The -- I think, Jitesh did highlight. We did not have any one-off. What we said was that for Ranitidine, which is one of our key APIs, we just had 2 months kind of contribution for this quarter. So definitely, we see what we have done this quarter is sustainable. Secondly, Jitesh did highlight that we had 1 of our top 10 molecules where we have seen some disruptions in terms of demand, and we think that should revert back to normal next financial year. And we've already started, so some improvements should happen in the next quarter.
Has there been a contribution of Tamiflu also there?
No.
No, Tamiflu is Oseltamivir.
Oseltamivir.
I mean, see, we do have Oseltamivi as one of our top 10 APIs. And that is a normal business for us.
The next question that is from the line of Ranjit Ramrakhiani, an individual investor.
Congratulations to the whole team for a good set of numbers. I have 2, 3 questions. The first one is this that earlier, a couple of quarters back, as I understood, the focus on moving from commoditized products to more value-added products. Now the question is, how much have you progressed in that? And from Q3, what is it that we can decipher in terms of new products, which are non-commoditized making an impact?
In our current base products, as we have said before also, we continue to do the CIP and that has paid the results, so that has also improved our margin profile. And as I've said that, we continue to look in the portfolio of products. If we are unable to do a CIP, which, which yields us our normal gross margin, then we would exit gracefully in that API. And the new products, we've had new product introductions in this financial year, and that also contributed to 5% of our overall revenues. And the other aspect of it is where we have done market extensions of our current API, so we are also increasing sales and that we'll see in the following quarter as well as if we are able to get better price realization in other markets, we would look at compensating our existing sales to other customers with these new markets. So all these efforts is what we are undertaking -- undertaken in the last financial year as well as in this financial year.
Okay. Obviously, the point which you mentioned that...
Sorry? We are not able to hear you.
Are you able to hear me now?
No, it's not clear.
Sorry, I don't know. Is it better?
It is slightly better. Can you please speak through the mic?
Yes. Is it better now? I'm very close to the mic now.
It is better.
Yes. So the question is now, I do remember the products being explored for other geographies. This is a couple of quarters back now. Is it showing traction and which areas or which other geographies are you seeing traction, if any?
No, we don't give a specific geography. Though, once a year, we give our geography split, but the information what you're asking specifically, we'll not be able to provide that.
Fair enough. Also, you mentioned that the new products are contributing around 5%. Now has it captured the market to your expectations? Or you believe that the new set of products can do much more, and we are just in the initial phase where it is kind of progression phase where the market is just accepting it and finding whether it is good or not or something like that?
So in the new products, what we have launched for that specific market, we are happy with our market share. And those products also, we have extended to other markets where once we get the approvals, we'll initiate the sale in the coming financial year or depends on the regulatory approval. But for what market we have launched, we are happy with our market share.
Excellent. Excellent. I did hear your clarification on CRAMS, you took a few questions which were asked before. I just want to extend the question a bit. There are some players who are saying CRAMS is a bit of a difficult ask and it's better to exit and some probably are deciding that. Now do you see any specific challenges in the CRAMS business? And if they were, what would be top 2, 3 challenges, which Solara would face? And how well geared are you to make sure that the risk is mitigated?
In the CRAMS business, you have to be really patient. You don't expect that the business will come tomorrow. And that's one of the main things in the CRAMS, and we have experienced that in the past, and that's why I'm very confident that we will do well in the CRAMS because we have the patience to do it. The second thing is you promise what you -- you have to deliver what you promise. That's the second part of it. And the third part of is, what is the differentiation you're bringing on the table, right? So those are the 3 main things, at least what we see is one of the successful parameters for CRAMS.
And what would be Solara's differentiating factor?
Can you please go back to the queue?
The next question is from the line of Tushar Manudhane from Motilal Oswal Securities.
So just on this corona, we're seeing all the China issue, maybe we might get an alternate supplier. But will that have any impact on prices? And in that sense, how are we positioned to pass on or to get the benefit of that on the good side?
Yes, correct. Good question. Thank you. So there are going to be price increases from the alternate vendors. We will have no option, but to pass it on to our customers. Now when would that come into effect is also because as we operate in regulated markets and the customers also have a time period or a notice to give to the end retailers. But to answer your question, if there is going to be increase in the cost, we will have to pass it on with the API price.
And that would be not so difficult given being in the regulated market, alternate sites filing would not be there with your customer. Is that the reason why we are so confident to pass it on?
Yes, because there is a valid reason. And with our customers whom we've had long-term relationships, we are very open with them and we will explain to them why there is cost increases.
Got you. And I understand you don't answer product specific, but because, I mean, the Ranitidine, the way the issue has been -- so for this also, the KSMs would be dependent on China, if you can clarify?
We have to assess because someone rightly said that though the KSM maybe from India, there may be some components which comes from China. So that's the evaluation process what we are doing with our vendors as well.
The next question is from the line of Anand Bhavnani from Unifi Capital.
In case of CRAMS, we have seen that there have been a lot of players in the Indian pharma industry who have significant capital, but the business hasn't come in and the overall returns have been weak. So I'm very sure you would have studied them. If you can just give us a sense as to how do you plan to avoid similar such errors? And if you have particular return-oriented strategy of investments in CRAMS? For example, would you be doing it in stages so as to avoid any big capital being invested with present yield returns?
So we have the necessary infrastructure to take on the CRAMS business as well as present to our clients. As I have mentioned before, this business is all about -- you need to have the patience. You don't expect that you meet the client and you get the business tomorrow. That's a key factor. And we are patient enough and that's how we are also mentioning in our calls that it takes, at least, minimum 3 years for CRAMS to be a significant revenue contributor.
So in terms of our CapEx, if you can give us a ballpark sense of how much would be the initial CapEx solely towards CRAMS? And over the next 3 years, as we keep trying to build up the business, what would be the ballpark CapEx that would have been done by 2024 or '23 in CRAMS?
We don't give CapEx by our business units, but as I said, we have the infrastructure to take on our CRAMS business. And if there is any specific buildout, which is required for a certain project, we know that on the CRAMS side, even the customer funds for the CapEx investment if it is very specific to that project.
And in our attempts to do CRAMS, would it be on Solara on its own or you're also exploring some kind of joint ventures. Isn't joint venture or inorganic route open as far as our strategy goes? Or you're primarily relying on our own efforts?
So we are growing the business organically also, and we are actively looking for an acquisition target in the CRAMS space.
Ladies and gentlemen, we'll be taking the last question. That is from the line of Vaibhav Gogate from Ashmore Group.
Ashwini here, once again. So 2 questions. One is when you speak about your 15% revenue growth guidance and 20% growth in EBITDA, starting with the financial year '19 base. That doesn't include any CRAMS. Am I correct?
CRAMS would be not as significant, Ashwini. Though as I said, our business of CRAMS contributes about 5% to the total revenues.
Okay. And second question is on the partnership that you have with strides on Ranitidine, do you have to supply all your ranitidine API to them? Or are you allowed to supply Ranitidine to others? Or do they have a right of first refusal or something like that?
They are the largest -- one of the largest players in the U.S. market, and we supply to them as well as we have other customers in other geographies where we supply.
Ladies and gentlemen, that is the last question. I now hand the conference over to Mr. Abhishek Singhal for his closing comments.
Thank you all for joining us. Thank you very much.
Thank you. Thank you so much.
Thank you.