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Suven Pharmaceuticals 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 made 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 to the call -- earnings call for the quarter ending September 30. As you know, last conference call, I have mentioned, this 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 -- the results have exceeded the growth in the [indiscernible] and whereas the growth in the specialty chemicals. And also that reflects the product mix also, the reflects then the profitability. But since that time, we were thinking that '23 will have a better traction 2023-2024. 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 the sales are concerned based on the visibility we have and also based on the traction that is having the movement of the molecule -- I mean, in the project.
And also the interactions we had recently with investment innovators themselves. They are saying, I mean, next year is going to be -- I mean, coming back to the normal speed. So even though it is -- quarter-on-quarter, it is a degrowth, you see, but on a half-year basis is on the same region as last year. And we hope to perform a little bit better than what last deal is all about based on the visibility we have.
So I mean, in a nutshell, that's already. And also, there is a lot of calls coming to us based on the newspaper reports. or whatever it is, for which that we have clearly indicated to the stock exchanges, informed them. Since we get so many opportunities and offers during -- throughout the years, we keep interacting with the people that are coming with us. As you know, this is happening since 2019 during the [indiscernible] 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 hear and say things, and I don't want to comment on those things. And if anything is happening, we will be the first to know because we'll be giving the same day.
So with this, I think I better give the things to the questions, so that we'll 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.
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 that's why the gross margin was lower. But so was the negative operating leverage below the gross margin? You did say maintain that the margin 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 more normalized in the second half and therefore, the margins even from the second half would be better?
Sir, I keep telling every -- 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 in the last week, they may go on to 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 will be -- we are giving you first 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 a drop to 40%. So this should also normalize as things moving forward?
Yes. As we ended -- as you going to see over the years, because this year -- I mean, this quarter, especially the CRAMS is less and only 40% and 60%, as we registered, 60% is in Specialty Chemical. As you know, the profitability is, there is a differentiation in between these two. But over the year, over the quarters, it will normalize.
Sure. And sir, one final question from my side is that we have a very strong pipeline. I mean have -- 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 spate 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 aspect. So over the next 3 years, I mean, do we expect a fair lion share of these molecules coming into commercial and probably the growth prospects coming back really strongly? I'm talking about over a phase of say 1 year, 2 years 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 solved by the customers that something is going to the next level. As you know, we have 5 molecules -- I mean, 5 compounds which go 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 three can move into the commercial or maybe one can move or maybe none can move. I cannot tell because that's effected as the clinical trial will give us these opportunities.
Meanwhile, there are -- as i was telling, if the traction is there, the movement is there and some of the Phase II molecule should move into the Phase III also. And in way, it's also -- I mean the other way also Phase I to Phase II also, as the traction is between, let's say, stronger. I hope success of the molecule, fraction is one thing that gives you the initial revenue for now. But as you rightly said, the commercial only that we see better margins and longevity of the visibility. So that depends on the success of the molecule at the clinical trials.
As of now, without having any knowledge from the customer, it is very difficult for me to tell whether we see certainly we are 1 out of 3 or 0-3 would make it and none of it will make it. Okay. I have no idea.
The next question is from the line of Darshit Shah from Nirvana Capital.
If you could tell us more about -- if this quarter had revenue of the COVID and as we did commercialized in last 6 months back. And if you could quantify or there were a broad range where -- how much is this contributed to our top line?
This quarter nothing. And I mean, it's a very small amount, but likely to go in the next quarter, if not, certainly in the fourth quarter. It's based on the requirement of the individual.
Got it. Sorry. And sir, how much would that be -- would you be able to give any quantification or you won't?
No, at this time, I can't argue that only push factor I can give you the quantification, because if I say something then tomorrow somebody will come and say, hell, somebody has full mindset and you guys had gone there. I'd say that I think it's not a regular product, it is a requirement of the customer. And as I was telling, this is a one-off kind of thing, still we had the order, that will be delivered before the March. But the next year, we are only counting 50% of what we're going to do from here. But unless it changes in the direction, and then things can go on. So it's very difficult for me to tell, but I can't give the number right now.
Got it. Sir, when we are hearing or -- we've been talking to different management, we are hearing that the opportunity of our citizen [indiscernible] given the cost rise everywhere that's happening in Europe, U.S., you're seeing a good amount of traction for quite a few of the Indian sales. So what's our view on that? And are we kind of seeing that kind of normal traction, which we used to see earlier?
Pardon again, question is?
My question is pertaining to given the cost price, we are seeing in Europe and U.S. and thus giving a lot of opportunity from the given CDMO players, that's what the management are seeing. So are we also seeing that kind of a traction in terms of inquiries or [indiscernible]?
No. That may be true for the generic renowned players. But in general, what I said, the traction is much better is because the integrators are now going into the normalcy and more projects will be started by them. That means more fees will come. And also the fees also will go in the EBITDAs, are we targeting -- I think COVID is gone now, now we are progressing on the regular molecules, and that is giving attraction, the clinical trial is being ran on a much faster pace that also gives you some traction. But on a cost basis, 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 innovation panel stands at not many players outside the other countries. So we see the traction, but not like China plus one kind of thing like in generic.
Got it. And sir, lastly, when we are seeing that we are kind of exploring opportunities for us and 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 strategically, if you could broadly throw some light on what we are looking at when we sell probably [indiscernible] are we looking at a very strategic special or probably some given significant kind of stake at a given values we are getting from someone is offering good value. So if you can throw some bit of light, that is probably clear there?
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 -- is that the value add for us or not. Is it going to give you 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 mean anything, it can be or even there is somebody else or it can be -- whatever we're doing, strategy collaboration they bring in through the fund infusion or whatever it is, they're -- already, they have a partner with them. They would like to be a part of that one. So we'll listen to them.
I mean, whenever those options come up. This is not the first time, and this is happening since '19. The only we're taking the getting a value-added thing like a cash for eventually, that's based on our capability -- I mean, our money that we have. But if we were to take a 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 and we'll be able to give you a clear picture. And we are open and what it has to be a long-term benefit and with the shareholder value creation, and it should be -- because we cannot take the another mill kind of things because 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.
I just wanted to understand whether you maintained your guidance. But I mean, second half from a product mix point of view, would it lead more 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?
No, it's a combination of both. It's both.
Okay. And sir, in terms of the CDMO pharma business, how many molecules would be there in the commercial phase right now?
Eight.
And does that include the COVID one as well?
Yes.
Okay. And sir, just a final one on the Vizag site, sir, has the site been expected by any of the customers or any color you could provide with regards to the commercialization starting from that would be helpful.
No, because it depends the most same product from one unit to other unit takes a couple of years. In this process, there are three customers who are regulars. They have taken a validation batches in Vizag. I think that will give us another six months fee, I mean, what do you call, let's say, whenever the requirement comes, the next orders can sometime go to that place also. So within next six to nine months, these validations will be taking place.
The next question is from the line of Rashmi Sancheti from Dolat Capital.
On specialty chemicals, earlier, I think the guidance that it would more or less be [indiscernible]. But in the first half, we are seeing a good 21% growth. So are the sales coming from the existing three molecules or any new molecule has been commercialized in this?
As I said, there is no third molecule, there is only two molecules, and we clearly take only one 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 it at growth based on the two molecules plus a small sale of the either molecule. So as of now, it's only two molecules for this year.
Sir, but you in your guidance, the specialty chemicals 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, because [indiscernible] it will be maybe 5% more than what we thought of, I'd say, not much higher than that.
Okay. You mean to say for the full year, maybe 5% to 6% on FY '22?
Right. When we started [indiscernible] 5% to 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, which is over our portfolio. Because it is being a COVID one-off, we checked at what was the quantity between that [indiscernible] again, which is like one-off. Otherwise, we don't really give it details of individual molecules commercial.
Okay. Sir, 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 you expected to come in H2, and that is why you're guiding that H2 would be -- will be performing better?
Yes. Not only the visibility on the orders, but also some deferment is, there but also [indiscernible] that's why we said that it will be.
Okay. 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 into next quarter or may go into the fourth quarter, but the intended will go, but I cannot give you a content [indiscernible]. I will only give you the way things are moving so that your long and et cetera, I'm going to make it to last year's numbers, I was making, because originally, our selling price became low, but this time based on the what we call the traction and also the visibility and also some of the things that are existing, we are confident of reaching and surpassing that number.
Okay. So 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. Of course, that is a little bit back the number, it's not that it will be any 2% to 3% 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 debt. 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. I mean, it's now many things, because as you know, it's 60-40 towards the -- being towards the specialty and also some other things which is bad and the effort to the next quarter. And so it's many, but at the end of the year, it will match out. And if you see in the 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.
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 numbers, but how is the total projects looking, say, compared to a year or 2 years back? And is it growing? What is -- 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 price. But at the same time, the movement is we see the traction much better as I was telling. And the movement of the new malls as we've ordered, I mean, as you know, or else it should be increasing there certainly in the next year, it's not product, based on the conversations we have recently in the [indiscernible] show.
Got it. And are we also getting any molecules or compounds in later phases, you say, like Phase II or Phase III where the requirement from the innovator is that they need to fast-track the 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 I or Phase II, anything, [indiscernible] unlike back as the COVID molecule, already comes suddenly into Phase III and give you a molecule, but it has QCA regularly following and all that stuff. So that kind of thing is not happening only the new molecule, I mean new offer is increases, I mean, [indiscernible] transportation 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, we have fell under Q3, 6 and replacement CapEx, but one of them have started only -- we spent about 1/3 of what we are supposed, I mean, pending and the rest of the 2/3 of that pie, that will entirely will be spent before the end of the fiscal or is the March 23rd. And with respect to the Formulations, we got the CFO, as you know. But at the same time, the oldage for the molecule side was that will start, I mean, one started were the follow-on, but it will start sometime in March onwards next year. So we expect some revenue attrition to take place from the beginning of traveling, it is not '22-'23, it will be '23-'24 for our ports.
The next question is from the line of [ Amar Maurya from Alpha Aqua Data Devices. ]
So a couple of questions, sir. First thing is that 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?
This thing I told is that time when we spoke, we said it will be a 5% less compared to last year or a flattish year. But we bed the rest on the visibility in August. We'll just surpass that maybe 2% to 5% earlier, as 2% to 5% growth will be there on the overall. So the trade and also second half looks good and both products, both on the CRAMS -- pharma CRAMS and Specialty.
Okay. So when you say the second half looks good. So I'm saying -- I'm trying to understand, so in a second half versus second half, are we going to see some growth? 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 will compare things compared to the last year. And it will come. I mean, you'll know when it comes in then. But right now, I cannot give you a -- which is a split down back now. But totally, we are being with the guidance, and so minus 5%, it maybe plus 2% to 5% rather than the flattish quarter.
Last year, the overall revenue was about INR 1,320 crores. During the last quarter, we have found that it will be more or less, trying to need that -- despite the COVID-related policy which was there at one off. However, as we are in the last 6 months, now we have better visibility. Based on this, it looks like that we didn't surpassing that INR 1,320 crores overall, which includes the mix of pharma products, which includes commercial, as well Specialty Chemicals. All put together, we'll be crossing, it might be flattish, there will be a minor growth, which could be 2%, if likely it could be as much as 5%. That's unfortunately [indiscernible].
Based on what we see is, had given last INR 1,320 of last year's turnover, for the 6 months, we have achieved about $617 crores, which means, literally next quarter, next half, obviously, that'll be better than the first half, to reach whatever is we are talking about Specialty Chemicals. That's what.
Okay. Okay. So basically, that way you're saying the 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'd earlier said, we will be having a plus 40% EBITDA margin for the full year.
For the full year. So, Basically this is basically based on the product mix, right? So, probably at the end of the year, we will talk exactly what it could be, but we always give a guidance of 40% plus.
40% plus. So basically, sir, if I see average, I think even in the first half, the average is around 40%. So basically, what we are saying here has been the second half in terms of the EBITDA margin perspective also, it will be better than the first half.
Yes. To meet that, it will be going right. If there is a pharma CRAMS to Specialty Chemicals, the ratio changes, this will also up slightly.
We are giving basic guidance.
Yes. Okay. Okay, sir. And how 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 are starting back to normal fee and that should lead us to enter traction and better opportunities. So other than that, I cannot say.
We do not want to quantify this, because they always go with the order book position. It's very difficult to predict.
We'll now move to the next question. [Operator Instructions]. The next question is from the line of Cyndrella Carvalho from JM Financial.
And sir, I just wanted to understand your view, as you're indicating that we are in terms of R&D projects, inquiries, we are reaching the pre-pandemic level, can you help us understand the traction a bit more from our perspective and from the industry perspective, depending on your interactions with the industry, participants?
As you know, over the last 2 quarters, the number of inquiries are less, maybe 7 or 8 or something like that. And now they are going to almost doubling to that level. So it doesn't mean all the our actives will mature into a commercial -- I mean, only talking about placing an order and all that stuff. But eventually, that will add up. So similarly, based on the introductions we had after 2 years, we are waiting for strand Ammonia, the customer living [indiscernible] and they were also hoping -- just not hoping they are saying that they are coming back in [indiscernible] and the next year budget should give you better traction and the new molecules are delivering to concentrate compared to the repurposing of the old molecule for the COVID-related activity, which was the case for the last 2 years.
So in that basis, we -- also the speed which we commencement the [ dental practice ] happens also, and gives us the -- based on the factors, it gives us more opportunity for us to get the revenue. So all-in-all, the traction was good and rather that it will ramp out to be a real positive, it's there is always a lag time in. Is it 6 months to 9 months or it is a 1 year to 2 years? So that's the question. So the only time will tell us that.
And sir, if anything that you would like to highlight on our hiring of new CEO? Anything -- any update on that, which you'd like to share?
No, nothing has happened, and it's very difficult to get somebody on a commitment basis for the long-term basis. So we are still trying in-house, and as through bringing in people who are working from our organization, that also takes time. But as of now, 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 price easing or the 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 go down, but the other things is going up on the environment, like the -- year-on-year expenses going up and the -- secondly, the fuel is also going up. So it's a mix -- mixed bag, but right now, second half, we're telling based on visibility, but the future, we are taking up on the qualitatively based on the attractions we had with the customers.
We move to the next question from the line of Ranvir Singh from Edelweiss Wealth.
My question was related to the Casper Pharma. We had an inspection -- the inspection in July, for 3 products we have filed. So I wanted to understand what's the status there? So when we can expect commercialization of this product or where we are in approval process sales?
Yes. As I was telling -- answering to the [indiscernible] we have INR 5 crores of ANDAs, one just last productivity is small value and the next goldage starting in March of next year -- March and June or something like that. And we are doing this time we're going to acquire another 6 to 8 ANDAs in the next year March. So the revenues, -- generation EBITDA we will have many during '23-'24 and not much during '22-'23.
Okay. And just, Ranvir's question on CRAMS side, in the CRAMS, we saw other players in Suven [indiscernible] also reporting a weaker number. So I wanted to understand a macro level, is there any strict or any change or if you have witnessed any demand or if you have witnessed any [indiscernible] inquiry, or are you -- this sort of authentication are you witnessing or this is just a tactical things that is, that happens more often in next quarter, we'll see more of that is coming back?
CDMO has two different convocation, one is the regular product, the other is innovative product. Innovative products are depending as a specifical molecule or [indiscernible] We are saying this year, it could be a negative growth or it could be a positive growth. Now we're saying we're going to surpass that. And this is despite the additional revenue we generated in the COVID, which is not that much going to be in India. So that means, the fractioning is there, but -- and based on the qualitative interaction with the customers and they are coming back to pharmacy, that should lead to give us more opportunity. That does mean that, that will give us a -- generate on the revenue at the end of the year. The success of the molecule, particularly in the trials, will give us the more benefit.
So it's as and when it happens, as you said, as of now, we have only 6 months, basically -- based on that, we could give you better than last quarter's performance for the next 6 months.
Okay. From a perfect figure, I wanted to understand, like after COVID, during the COVID, there were some, a lull in demand, there is a slowness in clinical trial for the -- your significant trial in earning inquiry. And then again, there was a pent-up type of demand after the - just after the COVID. So, then suddenly that your inquiries have started gearing up. So that I wanted to understand, is there any angle here that because the last year after, just after COVID, there is a lot of inventory supply inquiry, there has a limit in net. So now there is some sluggishness or some slowness here in this quarter. So is there any kind of this [indiscernible]?
No. It's one of that. As I was telling you now, it was slow 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 [indiscernible] also and hoping that will continue in the new year also. That's what our goal is.
The next question is from the line of [ Rohan Sawant ] from Multi-Act Equity Consultancy.
Am I audible?
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 a couple of containment molecules mainly for retroviral. And that is not going to give you too much of a volume in general but only the numbers goes up because they are launched something in last year, first quarter or this year, first quarter. So that's why we said with thought until, because, being a very small volume, we never know that it is within the Phase III also because it's very difficult for us to know until it will go in the commercial because they do not divest what stay in therapeutic area and what stage it is there. So a couple of them when we are assuming a Phase II, actually, based on the quantity. They were -- when we find out, that it was in the only fall in the launch stage. So the volumes so you cannot write, if even those numbers goes up, it's only a very small volume like a Phase II value like [indiscernible] but the numbers have gone up to 8.
Okay. So out of the 8, 2 are such smaller products, right?
Very smaller products.
And 1 incremental large product has also gone into commercial, because we had 5 earlier, right?
No, that was the backflow [indiscernible]
The next question is from the line of [ Ayush Vimal ] from Clearview Capital.
I have two 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 that customer behind all this all, we have the interaction to 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 you call traveling and all that stuff. I think this is the end of the year for them. Here the year is the usually the calendar year. I think the they'll plan for some time in the next year. And hopefully -- I mean 2 or 3 customers show interest, but we see a different department compared to where we work with them because we are in the developmental cycle. So they are in a mature cycle and in generic cycle. So we are looking in that direction -- I mean it will start next year.
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 fully purely replacement CapEx, purely that is going on that will be finished before the end of the year because that's a 35-year-old units or you need to have a new block. And then the second one is contingent upon the government asking us to move out of the Jeedimetla for the R&D side, which we just taken permission from the board for INR 200 crores that we don't know because only when the pharmacies do open, I think they will ask us to fast forward our activity. So nothing is being spent on that. Only INR 150 crores is for the future CapEx, and that will get on 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 one more question. Do we have any escalation clauses built into a contract, given that we say it's raw material escalation, are we in a position to pass it on to a customer? And if yes, then what lag?
In the CRAMS business, because they give you only one from a 1 year and once we take the order, it's already taken care of. But in any increment in the [indiscernible] happens, when the repeat order comes, we can charge. But once it's ordinary space, nothing we can do. But on Specialty Chemicals, but that will be in a regular basis. So that will be requesting and if the prices are gone up by 1% and 10%, then it will be a split of the prices -- I mean, split of the raw escalations will be given it to us. And that's the only way we can get the escalation part.
The next question is from the line of Darshit Shah from Nirvana Capital.
Sir, just one question on the cash and cash equivalents, including mutual fund investments, what's the amount at the end of the quarter?
Total right now is about INR 354 crores, of which the investment is about [indiscernible]
Okay. INR 354 crores as on September.
Total cash is about INR 350 crores, [indiscernible] investments in various sponsors fee, more [indiscernible]
The next question is from the line of Abdulkader Puranwala from Elara Capital.
So just on the scape molecules, what you have commercialized, would it be fair to assume that in the quarters ahead, it would be the only 5 projects that we had previously would be contributed to the revenue, while on the other 3, it may or may not contribute ahead?
They are recently distributed. We cannot say that which one contributed, because we have an order book for the next 6 months, which we are able to give. There are certain deliveries. Three of them are to be delivered this quarter, and then following quarter. Sometimes they may ask us to defer for us at maybe one quarter kind of thing. There are cases where it happened, actually, they wanted us to supply much ahead of time if we did actually.
And last year also you gave in the month of frozen [indiscernible]
So this is based on the -- one thing is like, they don't have a stock and sale like us. It's all based on the order book. And they are pretty much distributed. It's like we can't say that Italy, whether the contribution is going to be there only for 3 products, 4 products because some of them will be there a small quantity. May not be a big quatity, 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 side, 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.
Really, thanks for the time for joining in for the half year earnings call and as I was mentioning last time and was talking to all of you, we are not sure about the traction and hence we gave guidance for the flattish to minus bias, 4%, 5% minus. But based on the metrics only we will be and the qualitative interactions with the customers and the movement that the molecules and their operations. So we say now that we will certainly surpass last year numbers with a positive bias. And with the normalcy coming into the global arena, [indiscernible] trials being fast tracked towards the new -- I mean, the indications that are maxed for us 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 on the next conference call, with quarter 3 results. Thank you. Thank you, one and all.
Thank you very much. On behalf of Suven Pharmaceuticals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.