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Supriya Lifescience Ltd
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Ladies and gentlemen, good day, and welcome to the Q1 FY '24 Earnings Conference Call of Supriya Lifescience Limited [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Irfan Raheem from Orient Capital. Thank you, and over to you, Mr. Raheem.
Thank you, Michel. Thank you, and welcome to Q1 FY '24 Earnings call of Supriya Lifescience Limited Limited.
Today on the call, we have Dr. Satish Wagh, Chairman and Managing Director, along with senior management team.
Before we begin the call, I would like to give a short disclaimer. This call may contains some of the forward-looking statements about the company, which are based on beliefs and opinions and expectations as of today. Actual results may differ materially as this statement are not guarantee of future performance and involve unfortunate risks and uncertainties that are difficult to predict. At the detailed safe harbor statement is given on Page #2 of investor presentation of the company, which we have uploaded on stock exchanges and company's website.
With this, I hand over the call to Satish Wagh, over to you, sir. Thank you.
Good morning, and warm welcome to all the participants. Thank you for joining us today to discuss the quarter 1 financial year '24 results of Supriya Lifescience Limited. To take us through the results and answers to your questions, allow me, I have Dr. Saloni Wagh, Director; and Mr. Krishna Raghunathan, Chief Financial Officer; and our Investor Relations department, Orient Capital. I hope everyone got the opportunity to go through the financial results and investor presentation, which have been uploaded on the stock exchanges as well as the company's website.
First, let me share some light on our latest announcement regarding the exclusive technology licensing agreement from plasma nutrition. Granting Supriya Lifescience Limited has the sole rights from manufacturing and marketing ingredient optimized protein that is ioProtein in India. India's rapid growing demand for protein supplements make this a very attractive proposition for us its high bioavailability, mixing perfect candidate to be used as a protein powder as well as other coating supplements. This is because injection of ioProtein ensures higher amount of proteins are absorbed quickly by the body, providing consumers with a more effective and efficient protein supplement. We are very optimistic regarding this strategic partnership and believe that the product has a huge opportunity to emerge as a better, healthier alternative Among the protein nutrition products in our country.
Quarter 1 started with a great momentum across segments like anti-histamine, analgesic vitamins anesthetics and anti-asthmatic. We continue to retain our position as the largest exposure by the volume of some product segment and fulfilling the growing and the demanding needs of the prominent global pharmaceutical companies. Our business mix in revenue contributed by various regions, safe stays in line with previous quarters, except North America, which increased from 5% to 9%. Hence, we are -- we see good traction in untapped regulatory products for our key products. Under [ anesthetics ], there will be 3 ANDA projects have been initiated. And we also working on ANDA projects like anti-hypertensive and vitamins, we will keep you all updated as and when progress happens. Now coming to our quarter 1 FY '24 performance. Our continuous efforts to reduce our reliance on China due to the pandemic, along with the enhanced focus on regulating markets such as U.S., Europe and Latin America, have led to substantial Y-o-Y increase year-on-year increasing our revenues, reaching INR 132 crores. As you are aware, we have been consistently maintaining a targeted EBITDA margin range of [ 28% ] to 30%. We are pleased to announce remarkable growth of 42% in EBITDA announcing INR 44.5, resulting into EBITDA margin of 33.7%.
Furthermore, our profit after tax PAT has demonstrated as impressive year-on-year growth of around 13%, reaching to INR 28.5 crores, accompanied by PAT margin of 21.6%. We believe the company is in a good position and with a great start of financial year '24. We are confident to sustain the same level of performance, which we are guiding. As we mentioned previously in the future, of company lies in R&D we initiated the process of setting up enhanced R&D and pilot plant Ambernath lab, which is currently under construction and will be operational by Q4 financial year '24. This would be used for next phase of expansion for rolling our new APIs and CMO and CDMO business. The company focused on deepening its knowledge based across complex chemistries, technologies and patented processes.
With this, I hand over the call to our CFO, Mr. Krishna Raghunathan, to share the Q1 financial year '24 financial highlights with you all over to you, Krishna.
Thank you, sir. Hello, everyone, and good morning. I will now share the operational performance of the quarter, following which we will open the floor for question and answers. Companies reported a revenue from operations of INR INR 132 crores in Q1 FY '24 as against INR 101.4 crores in Q1 FY '23. EBITDA in Q1 FY '24 stood at INR 44.5 crores as against INR 31.3 crores in Q1 FY '23. EBITDA margin stood at [ 33.7% ] for Q1 FY '24 as against 13.8% in the same period last year. Thus registering a growth of around 287 bps. Profit before tax was at INR 42.6 crores from Q1 FY '24 as against INR 30.1 crores in Q1 FY '23. PAT stood at INR 28.5 crores in Q1 FY '24 as against [ INR 25.3 crores ] in Q1 FY '23. PAT margins stood at around 21.6%. With this, we can now open the floor for question and answers, and thanks to all of you for attending our conference call.
[Operator Instructions] The first question is from the line of Ashik Chan from Ashika Stock Broking.
My first question is.
[Operator Instructions].
So do we have any [indiscernible] China in this quarter's top line?
Yes. We do have some volume, which has gone to China. In terms of the volume, the business is recovering. So we are seeing a lot of volume traction again happening from the Chinese market. However, because of the current situation in China, there is a little bit of price pressure, which is still there.
See, as far as Supriya is concerned, Supriya concentrates on volume then we have committed a certain volume of 45 metric tonnes above that we go, it will be put under antidumping duty. That is what the sale from the Chinese end. So we concentrate only 45 metric tonnes. And very happy to say we already have sold out for the current financial year.
So we did 45 tonnes in the first quarter.
No, no, what is the product price -- we already have a contract in place to cover the volume out of some quantity we have partially shipped and the balance will come in the subsequent quarters.
Got it. And is the same historical EBITDA margin that we've maintained previously before lockdown?
No, the margins will not be same like what you had in the historical past the margins would be constricted, madam.
My second question is a bit broader question. For our APIs in the pipeline, can you give some qualitative color -- do we have innovator APIs or any highly complex ones or any APIs with high entry barriers, does no competition -- some color on this would be great?
So yes, we are working on 3 different baskets of APIs in R&D. One is the APIs with certain innovators. So these are the kind of tie-ups that we are currently looking at. The other APIs are, again, in the generic space where we currently operate, but these have very large volumes and chemistry-wise, there is a lot of complexity, which we think is our core capability. So some APIs, some categories like anti-anxiety, antidiabetic -- these are some of the therapies that we are evaluating and they would really fit in well with our existing therapeutic basket and then, of course, there are certain opportunities in the CDMO space where a lot of the larger companies, they are now working on reducing the supplier. They have this kind of a strategy. So once we are approved with some of the large multinationals, they want to add more products in our basket. So some type of long time where in the API volume is guaranteed and the term of the agreement as guarantee. These are also some of the products that we are currently considering.
We'll take the next question from the line of Varun Mohan Raj from Scania Capital.
So we've been talking about the new products coming online and as well as CMO contributed to our revenue significantly from FY '25 and '26 onwards. So in the medium term, when all these products and CMO come online, our current exposure to top 3 products is like 35%. So like when all these new products and CMO come online, like how much -- how much can we reduce our exposure to the to our top 3 molecules?
So if you're looking at a long term by FY '26 when most of the CDMO opportunities, new product sales come in, also some of the existing basket products where we currently have no traction in the regulated market, when they also scale up the dependence on the current product, which is around 35% would go down to somewhere around 20%.
Okay. And my second question is Well, we've also talked about debottling one of our old blocks and taking our overall capacity post Ambernath to around 1,000 KL and also about [indiscernible] plan for future growth. So any update on that have been -- have we started working on those plants?
Yes. So capacity enhancement, we are doing in 2 parts. One is the existing capacity, which we have at Lote site, which is our USFDA approved site. The current capacity is around 550 KL, there we are adding another production block, which would add another 400 KL to our capacity. So all in all, the load price capacity would be around 1,000 KL towards end of this financial year. Ambernath would be an additional capacity, which is around 70 KL to 100 KL depending again on the kind of product mix, which we put there, but it's also multiproduct facility. So these are the 2 areas where we are doing the capacity enhancement and then the same plot, we have already taken the plot. However, construction has not started there. That is something that we will keep for the next leg of group. Whatever we have said FY '26, the top line well achieve would be through the Ambernath plant and the existing Lote plant.
Okay. And just a follow-up on that. Can you give me the current utilization levels across our plants?
So the current utilization at Lote site is around 70%. This, I would say, we optimize utilization because it is a multiproduct facility. So there is a lot of product changeover that happened once the new block gets added to or handles this year, definitely, we'll have more capacity.
Okay. No, I mean the overall utilization at the company level.
At the company level is around 70%.
And this is the optimized level or if you can go above this?
So considering it's a multi product facility, I would say 70% to 75% would be the most optimized capacity utilization because of the current product mix, what we have.
[Operator Instructions] We will take the next question from the line of Rita Goel from AquaVenture.
Thank you so much for giving me the opportunity and congratulations to the team for such a set of numbers. I have 2 questions. One is I just wanted to know our CapEx plan for FY '24? And what will be the estimated gross block going forward at the end of FY '24?
See, when it comes to the CapEx plans, specifically, we are looking at 2 areas. One would be the module, which Dr. Saloni has just pointed out. that we will be spending our major part of it. And of course, some bit of it will also go to the pilot plant in the Ambernath site. So these are the 2 areas where we would be spending the major CapEx. I think the CapEx range would be somewhere between INR 70 crores to INR 90 crores, depend some of which might be in the current year, some of which might also spill over into the next year. This would be the plans for CapEx in the current financial year.
Okay. And...
I'm sorry and gross block would be somewhere around, I would say, around [ INR 250 crores ] to [ INR 300 crores ], I think this will add up to our overall existing gross block.
So currently, we have -- like in FY '23, we had INR 260 crores of gross fixes, right?
Correct. And on the INR 70 crores from the current year. And then the next couple of years, we might tell another INR 120 crores. That would be the overall total, which we will be adding up.
Okay. And what would be the asset turn we are targeting for this?
Asset turns would be in the around 2 to 2.5x we are targeting at the current moment.
Okay. And sir, how much time does it take to optimum utilization level for a new capacity?
So I would say about 2, 2.5 years, it needs for optimum utilization because the first year, whenever you introduce any product, it would be mainly in the semi-regulated and domestic market. And then once the regulatory approvals come through, then we can start focusing the product into the more regulated market space. So let's say, 2, 2.5 years for optimum utilization.
Okay. And this new plant will be dedicated for the new products, which we are going to introduce or it would be used for the existing products as well?
So it would again be a multi product product block. So it would be a mix of both to cater to the new product, what we are introducing into the basket as well as some of the volume scale-up, which we envisage in our current basket as well.
Okay. And just final question on the China part. So what is the on-ground situation over there like -- do you see the demand is recovering? Or when do you see this pricing pressure going to and it will turn into a good revenue contribution?
Let me tell you about China. As I told you, China, we started supplying. I have recently made in the last 45 days, 2 visits to China. And the current situation in China is not that good. In fact the Chinese are asking even intermediate and APIs from India. Wonder to me is that they are also asking formulations to be registered in China. This was the scenario and the discussion which I had, which I had never in the last 15 years. So you can understand there is a big opportunity, but time will take as far as our API sales is concerned in China. We have already closed with them with the regular financial year, the quantities. And for that, we have also received the one almost some amount of money as the deposit security for the 2 years contract from those companies.
2 years contracts you have taken with the Chinese people?
So we don't want to make a longer for a because when you make a longer contract, you may land up into trouble also. So we have done for '23 and '24 and that already signed and the materials has started moving, things are on positive, track.
These are calendar years. what ever sir is saying are all calendar years.
Okay. Okay. And so as for the situation, which you are looking at currently, what is the revenue growth which you can easily achieve in FY '24 or '25 looking at the orders, which the customers are giving and the demand as per the demand?
So we have always indicated that 20% to 25% year-on-year growth in revenue. Considering our baseline was slightly lower last year, 25% is something that we are very confident of achieving. And that's the minimum of I feel that we can achieve. Definitely there is an aspiration to achieve a higher number as well.
The next question is from the line of Tushar Bohra from MKVentures.
Congratulations to the management for a very good set of numbers. So just a quick clarification. As you had mentioned the previous calls as well, the utilization, when we say 70% is typically volume-led volume-based. And depending on the product mix, some of your products being very high margin the absolute revenue figures can be dramatically different across quarters, right? So we've achieved INR 180 crores or so in 1 of the quarters in the past. So it's fair to say that the utilization level will not be a constraint for revenue given the product mix changing to more favorable products. From the higher margin products?
Yes, absolutely. Depending on the product mix and therapy mix also, in fact, we can achieve much higher numbers from the same capacity. So capacity has never been -- or in fact, going forward will also never be bottleneck for us for our growth.
Great. The capacity that is being added also since you have incrementally a lot more traction coming in from regulated markets maybe beginning this year or next, plus as well as the management has guided that the CMO products, the CDMO projects will essentially be similar or higher margin than the base. So is it fair to assume that the asset turn that we are guiding at 2 to 2.25 is slightly on the conservative side aspiration should be for higher because historically, you've maintained more than 3x asset turn quite comfortably across a few years.
Correct, Tushar. The only thing why we want to be a bit on the lower side is like what Dr. Saloni has already said, it will take 2, 2.5 years to fully -- what do you call, optimally use the site at say 70% to 75%. When you are looking at 70% to 75% utilization levels, is where your 2.5 to 3x, whatever you are saying is going to come. So that is the only what do you call thought difference which you and me are having. That's nothing beyond.
So let's say, when you're -- whatever is your existing capacity whenever it gets optimally utilized and with a reasonably good balance of regulated markets to semi-regulated, 3x is closer to what we should assume, right, rather than 2x?
Yes, pretty much, yes, you are right.
Okay. Great. Sir, if you could share more details on the 2 CMO opportunities or CDMO opportunities that have been announced in the last quarter, 1 on the ioProtein and 1 on 1 of your projects with the European company as well as if you could share more details on -- there are a few projects mentioned that you're also working on potentially. If you could just share more details quantitative, qualitative around the entire CMO, CDMO pipeline.
Yes. So first, the CDMO opportunities currently, we have already signed and announced to.The first one, it is a very large opportunity for us. This is why API sale and exclusive tie-up with one of the leading companies in Europe. And will be supplying a certain volume of API, which is fixed and the contract actually stands over 10 years, and we will be selling these APIs exclusively for them in all of the regulated markets. So this particular contract has very large potential, and we will be seeing a good volume uptake from the next financial year itself.
And '26 is when we'll see the maximum volume coming in and the contribution to the revenue would be much higher. The second CDMO opportunity, which we have just recently announced is with the U.S. company, Plasma Nutrition, we are trying to bring in a very new and groundbreaking technology in the protein space, it's a patented technology, which plasma Nutrition has and Supriya will have an exclusivity for the Indian market.
Basically, we are utilizing our USFDA approved plant and our manufacturing capability. So we would be the manufacturing and the marketing partners. And as you know, the Whey Protein in the last couple of years, the demand has just gone up significantly. Under proteins space in general, the demand is growing year-on-year. With this new technology coming in, and if we get the right kind of traction for the product, this could potentially be a very large opportunity for Supriya and it would potentially change the protein landscape drastically in India as well. So this is something which we are very excited to work with them. And hopefully, from next year, the volumes would start picking up.
Other than these 2 large opportunities, which we have already announced. There are a couple of other opportunities also under discussion, but they are at a little premature stage. But the focus of the company is to add such opportunities, which in another 2, 3 years, would start giving significant contribution to the revenue. So we have a derisked portfolio of APIs plus some of the other CDMO opportunities. That's one of the reasons why also we chose the product in the protein space because it would just diversify our current portfolio and product basket.
So when you say couple more opportunities, is it fair to say that these are maybe more advanced stages of discussions relative to the others? Because in the previous call, we mentioned we are working on 15, 16 potential projects or discussions or something around that number. So is it fair to say that when you say 2 more opportunities, these are maybe more advanced relative to the others, what would be the overall number of discussions we would be having across intermediates and maybe other products also APIs?
So currently, there are about 8 to 10 active discussions, which are at a slightly, I would say, at a more concrete stage where we are discussing on how we can pick up and we are mapping internally in terms of capacity and all. But out of this, I would say there are 2 or 3 opportunities which are at a much advanced stage rightly said, we are very hopeful that in the coming few quarters, we would be able to make another announcement very soon.
Great. And if I may just ask 1 last quickly. Just a clarification. This China, when we say that we have resumed some supplies, is it fair to say that you're still quite low relative to the and the contracted commitment that 45 metric tonnes. So that is, say, maybe beginning calendar year '23. And would that be at least at a similar or higher margin than the corporate, given that in the past, this product was possibly one of our higher -- very high margin opportunities, the reduced margin, is it still in line with corporate or higher or lower?
So definitely, like our Chairman saying that in terms of volume, we have seen a good recovery happening in the China market. As far as volume is concerned, because of the contract that we have in place, now we are assured that at least the volumes would move. But like we said, the current situation in China is not very favorable in terms of pricing, and there is a lot of pricing pressure. So definitely, as compared to the previous margins, what we were enjoying in those markets, they have reduced.
However, they are still in line with all slightly higher, in fact, than the current EBITDA margins what we are making.
We'll take the next question from the line of Mohit Calian from Arihant Capital Markets Limited.
So my question is on the ioProtein from plasma nutrition. So what kind of contribution are you expecting from that contract in the top line and from the -- can you just please highlight that?
So currently having are still bound by confidentiality. So we will not be able to share any numbers in terms of what would be the addition in our revenue just yet, but in the coming few quarters, we will definitely be in a better position to share what would the forecast be.
Okay. And on the China front, you mentioned that there was a restriction of only 45 MT of supply to China. So the API deals that you have signed right now is for the whole year, is it 45 MT and you have supplied only some part or is there some different volume for that?
See, I told you every product, when you think about supplying to China, you are already seeing the situation that there is a war between 2 countries for antidumping duties. From the day 1, we have said previously last 2 years also, that we have a certain share which we should take. If we try to exceed they will do that, putting an antidumping duty. So we should not concentrate more and more on China. As far as the prices and the quantum is concerned, we already have shifted this current financial year almost, we will cover 70% to 75%, balance, 30%, it goes as for the financial year, will go in the next year. So we are assured. One thing I would like to tell you that China is currently facing a lot of issues for their major exports to Europe and U.S. The major exports are formulations, large facilities where our [indiscernible] consumes. And we participate in big tenders in various areas of the world. Unfortunately, current situation they are not able to access Europe, access U.S. and other markets. So they are taking with the minimum quantities, which we have discussed, and they continue with the business supporting and that's already signed by them, and we are taking the material.
So we cannot force them much more because we also have certain quantities to be given in certain quantities, we are trying to explore the market, in other areas, since China is not taking the completed large quantity, but we are getting benefits in other markets, that is Latin America, South America, in Europe. Many people have started asking the material with a better price also.
We'll take the next question from the line of Siddharth Purohit from Invesco Investment Advisors Private Limited.
Yes. Some of my questions has been answered. Some more data points, I want, sir. Since we'll be also be capitalizing some assets during the year, so how would the depreciation number look like? And also since you have a sizable like export revenue. So still, we are ending up paying -- like tax on a higher side. So any like clarification?
See, the tax percentages, if you see it is hardly 25% along with the deferred tax, the numbers might be, what do you call it, depends on various other factors because of the deferred tax. With respect to your question on capitalization, see, if you are talking about another INR 80 crores, INR 90 crores worth of capitalization, is somewhere around INR 7 crores to INR 8 crores will add up as a depreciation. I think that is how it generally is if you take around an average around 8% to 9% of the life of -- I mean the value of the asset could be coming and hitting us depreciation every year. That is how generally the depreciation numbers move. So if you are having INR 100 crores of CapEx, somewhere around INR 8 crores to INR 9 crores will come and hit us depreciation every year. That is how it is.
Okay. And just to like ask again that the 20%, 25% growth that we are seeing is on the volume side, right?
We are talking about the revenue, the value.
The next question is from the line of Viraj Mahadevia, an individual investor.
I'm new to the company, but fascinating development. Just to probe a little further on the China question. So you mentioned for the specific products we are supplying up to 45 for the reasons you've mentioned. But given the conversations you're having with the customers there, are you looking to increase your product basket exposure to the Chinese market. Are you talking to the eventual formulators -- or are you going through a distributor that is going to distribute your product to the various formulators?
Yes, definitely. We have a lot of other products in the basket, which we are currently registering in China. The volumes are not as big as some of what we have for the anti-histamine therapy are around 6 molecules which we are in registering. I mean they are already in the pipeline other than the anti-histamine there are some other molecules where we already have the registration approvals also from [ NNCA ]. So definitely, there are other products which we are promoting. In China, the business model is always through distributors because there is a lot of language barrier, which is there. so directly working with the end user is very difficult. So it's always distributed driven model.
Right. And they help you with the registrations and that paperwork, et cetera, because that's also challenging?
So we have very experienced handling in registrations because we were one of the first Indian companies register our product in China. So the regulated apartment is the one who handles the complete registration part. That is something as strategy, we don't give to our partner or our distributors. So the registrations are completely taken care of by Supriya. It's only the commercials where we are using our distributors.
Understood.
Happy to say that, one more thing I will say, Supriya is the only first company, which was audited by NMPA China in India.
Excellent. And for your other products that you're looking to register or are registering, can the some total opportunity size be equal to your current product of 45 tonnes? So I'm just trying to understand, can you double your business in China in 12 to 24 months?
No, it is not possible to double the business in China because the registration process in China itself is around 3 to 3.5 years. So it would not be possible to double it. But yes, maybe if we have a more 5- or 6-year view, it is then possible that we will be able to double through the other multiple products. But as a company for us, if you look at our revenue split for this year also, out of the INR 134 crore top line that we have done for first quarter, our major focus region actually is [ Europe ] around 35% of the revenue is coming in from Europe. If you look at our North American share also, it has gone up with around 10%. And then 10% is also coming from the Latin American market. So if you put that together, that's a more significant chunk that is contributing to the revenue. So our focus market going forward as a derisking strategy are Europe, North America and Latin America. So that's something that I would like to highlight. The product portfolio is also more driven by these markets going forward.
Understood. And are many of these European and U.S. customers, first-time customers where they're running a pilot or have they moved to commercial? Are they sourcing one product? Are they looking at your whole basket? Can you give us a flavor for where you are in that life cycle with these customers?
So for the existing product basket, because we have already commercialized these products since a long time. And we are just getting the CEPs and the Latin American and visa registration, the USFDA registration, I think it would more be -- we are currently at a more advanced stage like we have already supplied the validation for some trial quantities that business growth will come in faster. So this is for the existing products where we didn't have a presence in regulated market. For the new products, we are at a very initial stage. I mean the product has just come out of R&D. So it will say take time for us to just that maybe sampling level and not yet at the validation and commercial level. But the existing product market set other than the top 3 products, there are many products coming from the congestion category, antihypertensive vitamins where we can see a good growth happening in these markets.
We'll take the next question from the line of Ridhima Goel from ANP Rangers.
Just wanted to understand that there is an increase in our net working capital majorly because of the increase in our inventory level. So I just wanted to move a reason for?
Our inventory was somewhere around, say, last March, it was somewhere around INR 92 crores. And this March about around INR 115 crores. Even for the year ended -- I mean, for the quarter ended June, we were still at INR 115 crores. I don't see that this is causing any sort of a major issue, okay? See, we had stocked up because of China was totally uncertain on certain raw materials. So major of this were raw materials. And -- with INR 115 crores -- if at all, if there is going to be a turnover of somewhere around, say, INR 500 crores to INR 600 crores. I think it's a decent amount of inventory to hold, I believe.
We'll take the next question from the line of Naresh from from Isha Capital.
Firstly, congratulations to the management team and very happy to see the business coming back strongly. My first question is I wanted to understand the gross margin trajectory is slightly better. So earlier when we are getting higher margins in the CPM sales to China. We used to grow 65% plus gross margin. Then subsequently, we had issues and then we saw the margins going below -- below 55%. And now again, last since last 2 quarters, we are seeing the gross margins have come back to the 65% level. So can you help me understand -- I understand that the regulated share has gone up earlier. But which are thes products which are contributing, and it has helped us to regain our gross margins.
So we can't discuss unfortunately anything specifically in terms of products. That's something I think is confidential on be able to discuss product wise details. However, like you rightly pointed out, the share in the regulated markets have gone up. And as you know, in the regulated markets, you have a better average selling price as compared to the semi-regulated and domestic market, and that's one of the reasons why the gross margins back up.
Okay. And in Latin America, would you be enjoying similar gross margins, let's say, compared to Europe or U.S. or it would be lower than there? And if you can quantify that?
So again, that's something confidential, which we'll not be able to quantify. However, in general, regulated markets, there is a better. You get a better average selling prices compared to the semi-regulated markets.
Okay. And what will the contribution of anesthetic and anti-histamine range of products in this quarter?
One moment. somewhere around 45%.
Okay. And just one last question. So based on the visibility you have for the orders, is this range of -- is this gross are of in 63%, 64%, sustainable in the upcoming quarters as well. If you can give us some color on that?
We never guide on our gross margins here. Our gross margins would be a mix of a product and a region mix. So we have never given any sort of guidance and at least to be a very fair -- I think between 60% to 65% is a possible number, but please don't hold us to it and this is not a guidance.
The next question is from the line of Nitesh Dutt from Berman Capital.
I just have a clarification on one of your earlier remarks on China. So you mentioned that China is facing one of it was situation in terms of API and intermediate supply in last 15 years or so. So just want to understand, number one, is it for a few specific products or across the industry. Number two, what is driving this? Is it going to continue? Or is it there only for a short time? And number 3 is Supriya able to benefit because of Chinese issues, let's say, while supplying to U.S. or Europe, do we have those specific products which China is not able to supply any more?
So overall situation in China, they feel that India is becoming now competitive ages China because the things like will cost and other things are already going up. they are not able to penetrate from China to European markets currently. In U.S., they find a lot of problems. So considering all these things, there was a message and some discussion I had from my -- from my friends also. China is coming with some insurance policy for a common man. And they feel that the Chinese manufacturers will not give the justice to them. That is why many people were coming in meeting the many manufacturers in recent our visit to CPHI in the exhibition that they were looking for the formulation intermediates, API registrations in China. In fact, they were ready to spend the money also for that. This situation, very frankly, in my 36 years of life, I have ever seen. This was the first year, which was giving some sort of hope that the Indian companies should get in China. Only the registration is a long period. So that is what they have to wait.
Mr. Dutt, does that answer your question? Do you have any further questions, sir?
Can you hear me?
Yes.
Just wanted to understand, will Supriya able to benefit, let's say, China is facing supply crunch in exports also, right? You mentioned that they are not able to crack Europe and U.S. markets anymore. So those specific products will we be able to cater to the gap created by Chinese suppliers if any, if there is an overlap in gross product segment?
Yes. There are -- I mean, as margins this year. Since COVID actually, a lot of the larger companies based out of U.S. and Europe, they have been looking at India as an alternate source. And I think the trend still continues. So a lot of the products which we were alien buying from, let's say, China they have slowly started moving the base to India. And in fact, some of the opportunities that we are currently discussing with our existing multinational customers are also on the similar lines.
We'll take the next question from the line of Jagvir Singh from Shade Capital.
And my question is related to the margin. So we have a lot of improvement in the margin in Q1 versus Q1. And I think first half is lower than the second half. So what is the guidance for the full year EBITDA margins?
So like we have always maintained that 20% to 30% is margin that we are very confident that we will be able to achieve in the long term. But definitely, depending on the product mix and the regulated market traction that we have seen in the first quarter, if the same trend continues, there is a possibility of achieving a higher number as well. But the 30% is something that we are very confident we'll be able to maintain long term.
Okay. And second question is how much revenue we got in the second half in percentage right, generally because there is some seasonality, I think, in the numbers?
See, our H2 numbers would be slightly better than our H1 numbers. That is how we have always planned generally, what will happen is around Q3, there will be a slight dip because all your regulated market customers will go for the holidays. Technically, in Q4 would be a better quarter than Q3. And of course, between Q1 and Q2, Q2 would be somewhat better. That is why we generally look at it if you have a look at seasonality per se.
We'll take the next question from the line of Ankur Kumar from Alfa Capital.
Coming to the last question on seasonality. So Q1 and Q3 are like similar, that is what my understanding. Is that right?
Yes, you are pretty much right. Yes.
Got it. So in terms of guidance, I think that is looking quite conservative now and even on margins, you are saying 28% to 30%, but Q1, which is a lean quarter has done 34% and in terms of growth also, can you please comment on that?
So like I tell you, multiple, I think, 28% to 30%, yes, it is a conservative margin, but that is on an annualized basis. What happens is that a lot of the margin profile is driven by the product mix and in which regions the product is going in certain quarters, it is possible that the margin levels are very high. But 28% to 30% is on an annualized basis, the guidance what we are very confident. We have -- still we are ready accelerational that we will be able to achieve a slightly better number than this. But to be more conservative, yes, 28% to 30%.
Got it. And last question is on the tax rate. So that is like 33% this quarter. Any change in policy or should be 26%, 27%?
I think, see, every one of you are making the mistake here. On the current tax only, the 25.6% would be applicable along with the deferred tax, the deferred tax will always go for down based on the capitalization and all various other timing differences on the assets, various assets. Okay. So please don't include the deferred tax. If you want the compute, you can always look at the current tax line. See, there is always a difference. When you see a tax lending any financial, it is a combination of current tax plus deferred tax. So the 34%, there is no policy change or anything. It is only based on various timing differences of the various assets, which caused the differences.
That's all. Ladies and gentlemen, in the interest of time, that was the last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
We would like to thank everyone for joining the earnings call for quarter 1 FY '24. Thank you very much from the entire management team of Superior Life Science Limited.
Thank you very much, ma'am. Thank you, members of the management. Ladies and gentlemen, on behalf of Supriya Lifescience Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.