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Suven Life Sciences Ltd
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Ladies and gentlemen, good day and welcome to the Q2 and H1 FY '23 Earnings Conference Call of Suven Pharmaceuticals Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Rishab Barar from CDR India. Thank you, and over to you, Mr. Barar.
Good day, everyone, and thank you for joining us on this call to discuss the Q2 and H1 FY '23 earnings for Suven Pharmaceuticals. We have with us Mr. Venkat Jasti, the Managing Director and Mr. Venkatraman Sunder, Vice President, Corporate Affairs and Mr. Subba Rao, CFO of the company.
Before we begin, I would like to mention that some statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Documents relating to the company's performance have been mailed to you earlier.
I would now like to request Mr. Jasti to share his perspectives on the performance and outlook. Over to you, sir.
Thanks, everyone, for tuning in for the call -- earnings call for the quarter ending September 30.
As you know, last conference call, I have mentioned this year is going to be a flat year, 5% reduction in the sales amount. That is at the time and the visibility -- based on the visibility, we will be telling the time and that shows up in our results also. We have results, as you could see, there is degrowth in the CRAMS and whereas de-growth in the specialty chemicals. And also that reflects on the product mix also. It reflects on the profitability. But since that time, we were thinking that '23 will have better traction -- '23-'24, but we see a better traction since the last call I had with you. And now, I'm glad to inform you that we will not be underperforming.
We will be more or less performing the same range as last year as far as the sales are concerned based on the visibility we have, and also based on the traction that is having in the movement of the molecule -- I mean the project. And also the interactions we had recently with innovators themselves, they are saying next year is going to be -- I mean coming back to the normalcy. So even though it is, what do you call, quarter-on-quarter, it is a de-growth we see. But on a half-year basis, it is on the same [indiscernible] as last year and we hope to perform a little bit better than what last year was all about based on the visibility we have.
So I mean, in a nutshell, that's what it is, but also there is a lot of calls coming to us based on the newspaper reports or whatever it is, for which we have clearly indicated to the stock exchanges, informed them. Since we get so many opportunities and offers throughout the year, we keep interacting with people that are coming with us. As you know, all this is happening since 2019 during the demerger time itself. And since that time so many things are happening.
So as a forward-looking company, we keep exploring various strategic ideas that are in the interest of the company and creating a value for all its stakeholders. But I just want to leave you with the thought because there is nothing concrete about anything and these are all the hearsay things and I don't want to comment on those things. And if anything is happening, you would be the first to know because we will be giving the same day the news.
So with this, I think I will give the things to the questions, so that we will give more clarity rather than me giving the upfront assessment.
Sir, can we begin with the Q&A?
Please.
[Operator Instructions] The first question is from the line of Sudarshan Padmanabhan from JM PMS.
Yes. Sir, while you did elaborate that largely sales is in line with your thought process, but if I look at the second quarter margin, I mean, as you mentioned earlier, the mix was adverse and therefore, the gross margins was lower, so was the negative operating leverage below the gross margin. You did maintained that the margins should be over 40% plus, excluding the other income. So would that understanding be right as far as mix is concerned, that probably the mix towards pharma would normalize in the second half and therefore, the margins even in the second half should be better?
I keep telling maybe over the year, you cannot go by quarter-on-quarter basis because of the product mix and various other things, movement of the projects, not going into last week, may go into the first week of next month after the quarter ended. All these things will play a role. But the guidance of 40% plus EBITDA margins -- at the end of the year, we will be giving you EBITDA guidance.
Sure, sir. And sir, on the mix as well, I mean, should we assume that if I look at the mix this quarter historically, the pharma has been contributing between 55% to 60% of the overall mix on sales, which has dropped to 40%. So, this should also normalize as things moving forward.
Yes. As we go into the -- over the year because this year -- I mean this quarter, especially the CRAMS is less. And [indiscernible] as you rightly said, 60% is specialty chemicals. As you know, the profitability, there is a differentiation between these 2, but over the year -- over the quarters it will normalize.
Sure. And sir, 1 final question from my side is, we have a very strong pipeline. I mean, have a pretty -- I mean, 5 to 6 products on the Phase III on the pharmaceutical side, about 2 to 3 molecules on the specialty side. We are also embarking on this CapEx of INR 200 crores annually and plus also investing into the formulation side. I mean, just to get a sense, I mean I'm not talking about specifically quarters over here. Now directionally, if you are looking at the sales between, say, that FY '18 to FY '20 where we got a slate of commercial molecules coming in and the growth was significantly higher. I mean that was really a very good time for us in terms of margins on every aspects. So over the next 3 years, I mean, do we expect a fair lion's share of these molecules coming into commercial and probably the growth prospects coming back very strongly? I'm talking about over a phase of say 1 year, 2 year rather than 1 quarter, 2 quarter, 3 quarter.
As I was telling all the time, my visibility is only 6 months. As of now, nothing is called by the customers that something is going to the next level. As you know, we have 5 molecules, I mean 5 compounds, which goes into the 3 different molecules and they can come. But there is no guarantee in this business, as you know, because this is 0 to 1. All 3 can move into the commercial or maybe 1 can move or maybe none can move. I cannot tell because that's [ reflective ] as each clinical trial will give us the business opportunity.
Meanwhile, as I was telling you, the traction is there, the movement is there. Some of the Phase II molecule should move into the Phase III also. I mean we also -- Phase I to Phase II also, as the traction is becoming actually stronger. I hope the success of the molecule is actually the one thing that gives you the -- gives the initial revenues and all. But as you rightly said, for the commercial only, that gives you better margins and longevity of the visibility. So, that depends on the success of the molecules at the clinical trials. As of now, without having any knowledge from the customer, it is very difficult for me to tell whether this will certainly be a 1 out of 3 or 2 out of 3 or 3 out of 3 would make it and none of 3 will make it, I have no idea, sir.
The next question is from the line of Darshit Shah from Nirvana Capital.
Sir, if you could tell us more about the -- if this quarter had revenue of the COVID drug that we did commercialize last 6 months back? And if you could quantify or give a broad range there, how much has this contributed to our top line?
This quarter, nothing. I mean it's a very small amount, but likely to go in the next quarter. If not, during the fourth quarter.
Got it. And sir...
It is based on the requirement at the individual level.
Got it. And sir, how much would that be? Would you be able to give any quantification or you won't?
No, at this time I cannot give, but only post facto, I can give you the quantification. Because if I say something, then tomorrow somebody will come on and say, you said so much and it has not gone there because it is a dynamic thing. It is not a regular product. It is requirement of the customer. And as I was telling, this is one of kind of a thing. This year, we had orders that will be delivered before March. But the next year, we are only accounting 50% of what we are going to do from here. But unless there is changes in the direction, then things can go on. So it's very difficult for me to tell, but I can't give you a number right now.
Got it. And sir, when we are hearing or viewing and talking to different management, we are hearing that the opportunity of Indian CDMO players, given the cost rise everywhere that's happening in Europe, US, you are seeing good amount of traction for quite a few of the Indian players. Sir, what's our view on that? And are we kind of seeing that kind of normal traction which we used to see earlier?
What is it again? Question is?
Sir, my question is pertaining to -- given the cost rise we are seeing in Europe and US and thus, giving lot of opportunity for Indian CDMO players, that's what the management are saying. So are we also seeing that kind of a traction in terms of inquiries or such things?
No, that may be true for the generic dominated players. But in general, what I said the traction is much better is because the innovators are now going into the normalcy and more projects will be started by them. That means more RFQs will come and also the speed also will go up because we are forgetting that the COVID is gone now. Now, we are progressing on the regular molecules and that is giving a traction. The clinical trial is being done on a much faster pace that also gives you some traction. But then the cost basis is not really for us. But then eventually, this may come when the new projects, which are supposed to go to another countries may eventually come to India. But as far as the innovators are concerned, not many players outside the other countries. So, we see the traction, but so not like China plus one kind of thing like in generics.
Got it. And sir, lastly, when we are seeing that we are kind of exploring opportunities for us, [indiscernible] are meeting people. Obviously, I understand that those are the people who are coming to us and not we kind of specifically going to them. So, sir, strategically, if you could broadly throw some light on what we are looking at now when we say we probably have stake sale? Are we looking at a very strategic stake sale or probably [ come across ] significant kind of stake at a given value we are getting from someone is offering good value? Sir, if you can throw some bit of light that will probably clear the air?
See, we never look for anything other than the strategic option. If somebody comes in, we listen. We don't say no to them. And what they bring to the table, we don't know. There are various people that are coming, there is a -- is there a value add for us or not? Is it going to give a long-term benefit or not? Is it going to be matching with our requirements or not? All those things we take into consideration.
It can be anything. It can be a, what you mean, a merger with somebody else or it can be -- whatever they bring, strategic collaboration they bring through the funds infusion or whatever it is, already they have a partner with them, they would like to be a part of that one. So, we listen to them. I mean, whenever those options they come, this is not the first time and this is happening since '19. See, only we take in kind of getting value-added things like a [ gas ].
But eventually, just based on our capabilities -- I mean our money that we have. But if we have to take little bit bigger things, then we need to involve third-party also. These are some of the things that are coming into the things, and we have not yet taken a decision anything. Because only when we take it up, then we'll be able to give a clear picture and we are open. But it has to be long-term benefits and shareholder value creation. And it should be -- because we cannot take run of the mill kind of things because the business model is different compared to others. So, all those things we need to consider.
[Operator Instructions] The next question is from the line of Abdulkader Puranwala from Elara Capital.
Sir, just wanted to understand that you've maintained your guidance, but I mean, second half from a product mix point of view, would it lean to most towards pharma or the run rate what we are seeing right now in specialty chemicals, that will more or less largely continue for the next couple of quarters ahead?
Sir, it's a combination of both.
Okay. And sir, in terms of the CDMO pharma space, how many molecules would be there in the commercial phase right now?
8.
8. And does that include the COVID one as well?
Yes.
Okay. And sir, just final one. On the Vizag site, sir, has that site been inspected by any of the customers? Or any color you could provide with regards to the commercialization starting from that would be helpful?
No. Because, as we see, the same [indiscernible] same products from one unit to other unit takes couple of years. In this process, there are 3 customers who are regulars. They have taken validation batches in Vizag. I think that will give us another 6 months, I mean, what do you call [indiscernible]. Whenever the requirement comes, the next orders can come and go to that place also. Within next 6 months to 9 months, these validations will be taking place.
The next question is from the line of Rashmi Sancheti from Dolat Capital.
On the specialty chemicals, earlier, I think if I did that, it would more or less be [Technical Difficulty] for this year. But in the first half, we are seeing good 21% growth. So are the sales coming from the existing 3 molecules or any new molecule has been commercialized in this?
As I said, there is no third molecule here. There is only 2 molecules. And we clearly said only 1 quarter that third molecule was there and this will not come back until '24 end. Similarly, the fourth molecule also will not come back until '24. That's why we said that growth is based on the 2 molecules, plus small scale of the third molecule. So as of now, it's only 2 molecules for this year.
Sir -- but you said you were picking your guidance for specialty chemical business earlier when we expected flattish growth for the year. Or we expect that the second half would also be better and therefore, the growth would be much higher?
It may not be much higher, right? Maybe 5% more than what we thought of. That's all. Not much higher than that.
Okay. You mean to say for the full year maybe 5% to 6% on FY '22.
Right. Because we thought it would be flat towards the end 5% or 6% more.
Okay. Sir, and on CDMO pharma in second quarter of FY '22, how much was the COVID sales product? Can you quantify that?
I don't have the number handy.
I mean, usually, we don't really quantify individual molecules size with the overall portfolio because it is seen as COVID as one-off, we checked what was the quantity, which may not get it again, which is like one-off. Otherwise, we don't really give the split details of individual molecules commercially.
Okay. Sir, then in second quarter whatever lower sales which we have done in the CRAMS, it is generally the sales which had gone low or there are any deferment of the orders which is expected to come in H2 and that is why you're guiding that H2 we will be performing better?
Yes. Not only we get visibility on the orders, but also some deferment is there, that also is there. So, I hinted that it will be....
Okay. So can you quantify how much orders have been deferred from second quarter, which will go in third quarter? Any number if you can quantify?
We already told the earlier caller that I cannot tell. They may go in the next quarter or may go into the fourth quarter. But at the end of the year, it will go, but I cannot give you a quantification of each and every item, how much it is. I will only give you where things are moving so that you will know when I said that I'm going to make it to last years numbers. I will make it because originally, our selling prices kind of is less. But based on the, what we call the traction and also the visibility and also some of the things that are existing, we are not going to talk about reaching capacity.
Okay, sir. Sir, then on your overall revenue guidance, you stick to it that we would be doing a flattish growth on a high base of FY '22?
Yes. Little bit it will impact the number. It will be 2% to 3%, 2% to 5% growth will be there.
Okay. 2% to 5% growth would be there. And sir, on your gross margin, in this quarter, we are seeing that quarter-on-quarter there is a dip. It is only related to the business mix because we have a higher specialty chemical business and lower CRAMS. Or is there any other ForEx element or anything, which has impacted it?
Yes. It's many things. Typical, as you know, it is 60-40 towards the specialty and also some other things, which is made and deferred to the next quarter. And so it's many. But at the end of the year, it will match out. And if you see half year, it is almost same. So the guidance will remain the same like the plus 40% EBITDA margin by the end of the year for sure.
The next question is from the line of Hussain Kagzi from Ambit Asset Management.
First thing was just a clarification to an earlier participant's answer. You said 8 molecules in commercialization that is including specialty chemicals?
No.
That is for pharma that we have 8 molecules in the commercial chemicals.
Yes.
Okay. And the other thing was just to get a quantitative sense of the total projects that we have in pipeline. I know we don't share the number. But how is the total projects looking, say, compared to a year or 2 years back? And is it growing, what is the -- can you give some sense over there? Because eventually, those will translate into revenue, right?
Yes. But they are more or less flat on the number side, but at the same time, the movement is, we see the traction much better as I was telling and the movement of the new orders should be increasing certainly in the next year, if not [indiscernible] based on the conversations we have recently in the [ CNS ] show.
Got it. And are we also getting any molecules or compounds in later phases, say, like Phase II or a Phase III where the requirement from the innovator is that they need to fast track, say, manufacturing for that? So are we seeing some kind of projects like that also?
No, we see the normal thing only. I mean, it can be either Phase 1 or Phase II entry. That's all it is. Unlike the COVID molecules, nobody comes suddenly into Phase 3 and give you molecule. But [indiscernible] regulatory filings and all the stuff, that kind of thing is not happening. Only the new -- I mean new offering is increasing, I mean new request for quotations are increasing.
Understood. Understood. And the last question was, what is the update on the CapEx that we were undertaking? And is it going on plan and any future change in the CapEx plan? And also on formulation segment, if you could give some update, what is the outlook in the near term that you are seeing?
CapEx is, as you know, I mean now we are [ INR 400 ] in Q3 and replacement CapEx. But when we started, we spent about one third of what we had proposed, I mean pending. And the rest of the 2-thirds for the site would be spent before the end of the March '23. And with respect to the formulation, we got the FDA approval as you know, but at the same time the old date as per molecules point for that will start. I mean one we started was the following one, but it will start sometime in March onwards next year. So, we expect some revenue attrition to take place. From the beginning, we were telling, it is not '22 to '23, it will be '23-'24 onwards.
The next question is from the line of Amar Maurya from AlfAccurate Advisors.
Sir, couple of questions, sir. First thing is that you like -- you said that now likely to perform in line with the industry for the second half. So, I mean, are you changing your guidance? Like, I mean, at the starting of your call, you had indicated something like that. So just wanted to understand what was exactly that? How the second half for the pharma and for the specialty CDMO looks like, sir?
The thing I told is last time when we spoke, we said this will be 5% less compared last year or flat this year, but we said based on the visibility and all the stuff. We will just surpass that maybe 2% to 5%, earlier I was telling. 2% to 5% growth will be there and overall. And also second half looks good on both fronts, both on the CRAMS -- pharma CRAMS and specialty.
Okay. So when you say, sir, second half looks good, so I am saying -- I am trying to understand, so in the second half versus second half, are we going to see some growth in this because I believe CDMO pharma, otherwise, there is a high base, right, of the COVID molecules, which was there largely in the second half, right?
So, I mean, totally, what I am saying is total sales will be -- we are surpassing compared to last year and it will come. I mean you will know as and when it comes in, but right now I cannot give you a split on that one. But totally, we are saying that the guidance instead of minus 5%, it may be plus 2% to 5% rather than the flattish growth.
See, last year the overall revenue was about [ INR 1,320 crores ]. During the last quarter, we have informed that we will be more or less trying to meet that. It will be difficult to...
Despite the COVID.
Despite the COVID-related molecules, which was there as one-off. However, as we are in the last 6 months, now we have better visibility. Based on this, It looks like that we will be surpassing the INR 1,320 crores overall, which assumes a mix of pharma products, which include commercial as well specialty chemicals. All put together, we will be crossing -- it will not be flattish. There'll be a minor growth, which could be 2%. If you are lucky, it could be as much as 5%. That's what we're trying to give a picture. Based on what it is like last INR 1,320 crores of last year's turnover, for the 6 months, we have achieved about INR 617 crores, which means that basically next quarter, next half obviously that will be better than the first half to reach whatever we are talking about INR 1,320 crores. Touch wood [Technical Difficulty]
Okay. Okay. So basically, that way you are saying that second half would be better than the first half?
Correct.
Okay. And in terms of the, sir, gross margin like, overall, we maintain that guidance of the full year kind of a gross margin?
Yes. We clearly said that we will be having 40% plus EBITDA margin for the full year.
For the full year?
Yes.
So, this is basically based on the product mix, right? So probably at the end of the year, we will know exactly what it could be, but we always give a guidance of 40 plus percent.
40 plus percent. So basically, sir, if I see average, I think even in the first half, the average is around 40%. So basically, what we're saying here is in the second half in terms of the EBITDA margin perspective also, it would be better than the first half?
Yes. To meet that it will be improving, right? If there is the pharma CRAMS, specialty chemicals, the ratio changes. So, this will also slightly [Technical Difficulty]
We have given basic guidance. Yes.
Okay, sir. And how, sir, then FY '24 will look for us?
It is too difficult to say at this point of time. We always give guidance only for 6 months.
Qualitatively, customers are saying they're coming back to normalcy. And that should lead a still better traction and better opportunities. So other than that, I cannot say anything.
We are not going to quantify at this point because we always go by the order book position, very difficult to predict.
[Operator Instructions] The next question is from the line of Cyndrella Carvalho from JM Financial.
And sir, just wanted to understand your view as you are indicating that we are -- in terms of R&D projects inquiries, we're reaching the pre-pandemic level. Can you help us understand the traction of it more from our perspective and from the industry perspective depending on your interactions with the industry participants?
As you know, over the last 3, 4 quarters, the number of inquiries are less. Maybe 7 or 8 or something like that. And now they're going to almost doubling to that level. So doesn't mean all the RFQs will mature into a commercial -- I mean what you call, placing an order and all that stuff. But eventually that will add up.
So similarly based on the interactions we had for years, we are meeting first time our new customers during [ BHI ]. And they're also hoping -- not hoping, they're saying that they're coming back to normalcy and the next year's budget should give you a better traction and the new molecules that they are going to concentrate on compared to the repurposing of the old molecules for the COVID-related activity, which was the case for the last 2 years.
So on that basis, we -- also the speed with which we -- commencement of the clinical trials happens also gives us the -- based on the fact, gives us more opportunity for us to get the revenue. So all-in-all, the traction is good and whether it will ramp up to be a real positive, it's always a lag time of 6 months to 9 months or it is 1 year to 2 years. So that's the question. So only time will tell on that.
And sir, if anything that you would like to highlight on our hiring of new CEO? Any update on that, which you'd like to share?
No. Nothing has happened. It's very difficult to get somebody on a commitment basis, on the long-term basis. So, we are still trying in-house recruits, bringing in people who are working for a long time in our organization. That's also taking time. But as of now, no, I mean it takes another 6 months before I can have any concrete proposals.
That's helpful, sir. And if I can squeeze in one last question. What I understand is our overall traction will be better in the second half. But given that there are certain easing of raw material, inflation also easing, does that carry forward into the next year also? Is that the understanding correct from the margin perspective?
Yes. I mean, you may have -- the raw material prices goes down, but the other thing is going up on the environmental angle, year-on-year expenses going up and secondly, the fuel and power costs also going up. So it's a mixed bag. But right now second half, we are telling, based on the visibility. But the future we are taking up on the -- quantitatively based on the interactions we had with the customers.
We'll move to the next question from the line of Ranvir Singh from Edelweiss Wealth.
Sir, my question was related to the Casper Pharma. We had the inspection [indiscernible] July for 3 products we have filed. So wanted to understand what's your status there? So when we can expect commercialization of this product or where we are in approval process stage?
Yes. As I was telling -- answering to the earlier caller, I mean, we have filed 4 ANDAs. 1 we just launched, but it is very small value and the next old ANDAs are starting in March of next year, March and June or something like that. And we are -- during this time, we're going to file another 6 to 8 ANDAs within the next 12 months. So the revenue generation, if at all, will be happening during '23-'24, not much during '22-'23.
Okay. And just a general question on CRAMS side because we saw other players in CDMO business also reporting a weaker number. So wanted to understand at a macro level, is there any shift or any change or sluggishness in demand? Or if you have witnessed any slowness in inquiries? So any sort of indication are you witnessing? Or this is just that a cyclical things that is -- that happens more often and next quarter we will see most of these coming back?
CDMO has 2 different quotations. One is the regular products. Another one is [ revenue ] products. Innovative products itself depending on the specific molecular [indiscernible]. We are saying that here it could be a negative growth and value growth. Now we're saying we're going to surpass that. And if you see, despite the additional revenue we generated in the COVID would be not that much going into this year. So that means the traction is there. But based on the qualitative interactions with customers and they're coming back to normalcy, that should lead to give us more opportunity. Doesn't mean that will give us -- generate some revenue because at the end of the day, the success of the molecules at the clinical trial will give us more benefits. So as and when it happens, as I said, as of now, we have only 6 month visibility. Based on that, we will give you better than last quarter's performance over the next 6 months.
Okay. From a perspective, I wanted to understand, like in after COVID, during COVID, there was a lull in demand. There was slowness in clinical trials overall. There was a significant fall in new inquiries. And then again, there was a pent-up type of demand just after the COVID. So then suddenly, the inquiries have started gearing up. So that I wanted to understand. Is there any angle here that because in last year, just after COVID, there was a lot of inventory supply, the inquiries are already being met. So now, there is some sluggishness or some slowness here in this quarter. So is there any kind of these traits you are seeing in the business?
No. I mean -- if there is one -- as I was telling you, and now it was low and the customers are saying they are getting back to normalcy, not only that will lead to more opportunities and that will be shown in our next 6 months also and hoping that will continue in the first -- in the new year also. That's what our hope is.
The next question is from the line of Rohan Samant from Multi-Act Equity Consultancy.
Hello. Am I audible?
Yes.
Yes.
Yes. So, my question was on the number of molecules that we have in the commercial phase. You said that we have 8 molecules in pharma CRAMS. So, I think earlier we were saying that we had 5 products. So are these 8 molecules from those same 5 products and different variants we are counting as different molecules? Or we have had incremental molecules flow into the commercial?
Yes. There are couple of [ containment ] molecules mainly for the retroviral. And that is not going to give you too much of volumes in general, but only the numbers goes up because they are launching something in last year -- first quarter or this year first quarter. So that's why we said, we thought until -- because being a very small volume, we never know that it reaches the Phase III also because it is difficult for us to know until it goes into commercial, because they do not diverge, what's the therapeutic area and what stage it is there. So suppose when we're assuming Phase II actually based on the quantity, there we would find out that it was in the launch stage. But the volumes, it cannot rise. Even though the number goes up, it is only a very small volume like it is to a value like only -- but the numbers have gone up to 8.
Okay. So out of the 8, 2 are such smaller products, right?
Very small. Yes.
Okay. And 1 incremental large product has also gone into commercial because we had 5 earlier, right?
No. That was, in fact, closed.
Okay.
It was, in fact, closed. Yes.
The next question is from the line of [ Ayush Vimal ] from Clearview Capital.
I have 2 questions. Is there any discussion with customers on forward integrating into API manufacturing? I think you had updated last quarter that some of these discussions might start.
Yes. We have the customer, what we call -- we had interactions with them. And it will be, as I said last time itself, it will start sometime in the year 2023 because now only they started, what do you call, traveling and all the stuff. I think this is the end of the year for them. It is usually the calendar year. I think that they will plan for some time in the next year. And hopefully, I mean, 2 or 3 customers show interest, but we see different departments compared to where we work with them because we are in the developmental cycle. So, there is a mature cycle and a generic cycle. So, we are looking in that direction. I mean it will start next year as well.
Okay. One more question I had was on the CapEx of INR 600 crores that we earmarked for the next couple of years. Just to clarify, this is entirely replacement CapEx and this is not going to increase our capability or capacity in any form, right?
No. All this is -- one is full year paid is replacement CapEx, purely that is going on. That will be finished before the end of the year because that is a 35 year old unit. So, you need to have a new block. And the second one is contingent upon the government asking us to move out of the [indiscernible] on the R&D side, for which we just taken permission from the Board for INR 200 crores, that we don't know because only when the Pharma City opens, I think then they will ask us to fast forward our activity. So, nothing is the impact on that. Only INR 150 crores is for the future CapEx and that we will get, and the traction of the molecules that are there, because it is -- you have to do proactively, I think it will be done sometime in '23-'24, not right now.
Got it. And if I may just squeeze in 1 more question. Do we have any escalation clauses built into our contracts, given that we face raw material escalation, are we in a position to pass it on to our customer? And if yes, then with what lag?
See, in the CRAMS business, because they give you only once in a year and then once we take the order, it is already taken care of. But when any increment in the raw material happens and the repeat order comes, we can charge. But once the order is placed, nothing we can do. But on specialty chemicals, that will be in a regular basis, so that we will be requesting there. And if the prices have gone up by more than 10%, then we will the split up the price -- I mean split up the escalations. It will be given to us. And that's only where you can get the escalations and so on.
The next question is from the line of Darshit Shah from Nirvana Capital.
Yes, sir. Just one question on the cash and cash equivalents, including mutual fund investments. What is that amount that you have earned in the quarter?
Total right now is about INR 354 crores, of which the investment is about INR 292 crores [Technical Difficulty]
Okay. INR 354 crores as on September.
Yes. Total cash is about INR 350 crores. It includes investments in various bonds and such things about INR 292 crores.
The next question is from the line of Abdulkader Puranwala from Elara Capital.
Yes. So just on these 8 molecules that you have commercialized, would it be fair to assume that in the quarters ahead, it would be the only 5 projects? What we had previously would be contributed to the revenue while on the other 3, it may or may not contribute ahead?
They're equally distributed. You cannot say that which one contributes, because we have an order book for next 6 months which we are able to give. There are certain deliveries. Few of them are to be delivered this quarter and the following quarter. Sometimes they may ask us to defer for about maybe 1 quarter kind of thing. There are cases where it happened actually they wanted us to supply much ahead of time, which we did actually, like last year also we did, in the first quarter also we did. So, this is based on the -- one thing is like we don't have a stock [indiscernible], stock based on the order book. And they are pretty much distributed. It's like -- we can't say that actually whether the contribution is going to be there only for 3 products, 4 products because some of them will be there, a small quantity, need not be a big quantity, but it may be there.
Sure, sir. Got it. And sir, lastly, what would be the fixed operating cost of the Vizag and the Casper site, if you could provide that number?
Vizag, we are not giving plant wise cost.
[Operator Instructions] Ladies and gentlemen, as there are no further questions, I now hand the conference over to management for closing comments.
Again, thanks everyone for tuning in for the earnings call. And as I was mentioning last time talking to all of you, we are not sure about the traction and hence, we gave a guidance of flattish to minus 5%. But based on the next 6 months visibility and the qualitative interactions with the customers and the movement of the molecules and the order book position, so we say now that we will certainly touch that last year numbers with a positive bias. And with the normalcy coming into the global innovation arena and the clinical trials being fast-tracked for the new -- I mean the indications that are manufactured originally and based on that, we hope that '23-'24 will be a good year. But I can't give you any quantitative guidance on that.
With this, I thank you, everyone, and hope to catch up with you in the next conference call with quarter 3 results. Thank you. Thank you, one, and all.
On behalf of Suven Pharmaceuticals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.