Cohance Lifesciences Limited

S. Padmanabhan

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Venkat Jasti

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Venkat Jasti

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Venkat Jasti

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Venkat Jasti

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Venkat Jasti

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Venkat Jasti

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Venkat Jasti

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Venkat Jasti

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A. Puranwala

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As of now, without having any knowledge from the customer, it is very difficult for me to tell whether this will certainly be 1/3, 2/3 or 0/3, will make it or none of it will make it.

— Venkat Jasti

So, it’s very difficult for me to tell, but I can’t tell number right now.

— Venkat Jasti

It is too difficult to say at this point of time.

— Venkat Jasti

We will not be able to quantify because we always go by the order book position, very difficult to predict that.

— Venkat Jasti

No, nothing has happened and it is very difficult to get somebody on a commitment basis for the long-term basis.

— Venkat Jasti

Q

Thank you for taking my question. Sir, while you did elaborate that largely sales is in line with your thought process. But if I look at the second quarter margin, as you mentioned earlier, the mix was adverse, and therefore the gross margins was lower, but so was the negative operating leverage, below the gross margin. You did maintain that the margin should 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 from the second half wi

Venkat Jasti

I keep telling maybe over the years, 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, 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%) EBITDA margins at the end of the year will be giving you that guidance. 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

Q

Sir, if you could tell us more about if this quarter had a revenue of the COVID that we did commercial 6 months back. And if you could quantify or give a broad range how much is this contributing to our top line? This quarter nothing. I mean it’s very small amount, but likely to grow in the next quarter; it’s not, certainly in the fourth quarter. This is based on the requirement at the innovator level.

Darshit Shah

And sir, how much would that be if you would be able to give any quantification or you won’t? No, at this time, I cannot give the quant, only post factor I can give the quantification because if I say is something then tomorrow somebody will come and say how come you said so much and it has gone there because it is a dynamic thing, it’s not a regular product, it is requirement of the customer and as I was telling this is a one of kind of thing, this year we had order that will be delivered before March. But next we will be only counting 50% of what we are going to do from here. But unless the

Q

Sir, just wanted to understand that you maintained your guidance, but the second half from a product mix point of view, would it look most through 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?

Venkat Jasti

It’ both. And sir, in terms of the CDMO pharma space, how many molecules would be there in the commercial Phase-right now? 8. Does that include the COVID one as well? Yes. And sir, just a final one. On the Vizag side, has the 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 you see, if the same customer who moves same products from 1 unit to another unit takes a couple of years. In this process, there are 3 customers who are regulars, they have taken a validation batch in Vizag. Tha

Q

On the specialty chemicals, earlier I think you guided that it would more or less be for the 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?

Venkat Jasti

As I said that there is no third molecule, 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 have 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 have been revisiting your guidance for specialty chemical business earlier, when we expected the flattish growth for the year or we expect that the second half would also be better and ther

Q

Fist thing was just a clarification to an earlier participant’s answer. You said 8 molecules in commercialization that is including specialty chemicals?

Venkat Jasti

No. That is for Pharma that we have, 8 molecules in the commercial space. Yes. 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? Is it growing, 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 order, I mean new RFP s

Q

Sir, couple of questions, first thing is that you said that now likely to perform in line with the industry for the second half, so are you changing your guidance like 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? This thing I told is that time when we spoke, we said this will be a 5% less compared to last year or flattish year, but we said the visibility and all the stuff, we will yes surpass that, maybe 2 to 5% earlier I was telling, 2 to 5% gro

Amar Maurya

So, basically that way you are saying the second half would be better than the first half? Sunder Venkatraman: Correct. And in terms of the gross margin like overall we maintained that guidance of the full year kind of a gross margin. Yes, as we have said we will be having a +40% EBITDA margin for the full year. Sunder Venkatraman: 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. So, basically if I see average, I think even in the first half the average is around 40%, so w

Q

As you know, over the last 3-4 quarters, the number of inquiries are less, may be 7 or 8 or something like that and now they are going to almost doubling to that level. So, it doesn't mean all these will mature into taking an order and all that stuffs, but eventually that will add up. Similarly, based on the interactions we had after years, we are meeting first time many of the customers during the BHI and they are also hoping, not hoping, they are saying that they are coming back now only and the next year budget should give you better traction and the new molecules that they are going to con

Venkat Jasti

No, nothing has happened and it is very difficult to get somebody on a commitment basis for the long-term basis. We are still trying in-house growth brining in people who are working from our organization. That also is taking time, but as of now, it takes another 6 months before I can have any concrete proposals. Cyndrella Carvalho: And if I can squeeze in one last question, what I understand is our overall traction will be better than 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 th

Q

Sir, my question was related to Casper Pharma, we have inspection you said in July for 3 products you have filed, so wanted to understand what is your status there? By we can accept Commercialization on this product or where we are in approval process stage? As I was answering to the earlier caller, we have filed 4 ANDAs, one we just launched, but it is very small value and the next ANDA are starting in March of next year, March and June or something like that and during this time, we are going to buy another 6 to 8 ANDAs in the next 12 months. So, the revenue generation if at all will be happ

Venkat Jasti

No, as I was telling you until now it was slow and the customers are saying we are getting back to normalcy, not only that will lead to getting of more opportunities and that will be shown in our next 6 months also and hoping that will continue in the new year also. That is what our hope is.

Q

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 incremental molecules mainly for the Retroviral and that its not going to give you too much of a volume in general, but only the numbers goes up because they are launched in something in last year first q

Rohan Samant

So, out of the 8, two are such smaller products, right? Very small product, yes. And one incrementally large product has also gone into commercial because we had 5 earlier, right? No, that was the [molecule]. 6thone was [molecule].

Q

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 had a customer 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 you call travelling and all that stuff. I think this is the end of the year for them it is usually the calendar year, they will plan for some time in the next year and hopefully, 2 or 3 customers shown interest, but we see different departments co

Venkat Jasti

that are there with us. You had to act proactively I think it will be done sometime in 23-24, not right now. And if I may squeeze in one more question, do we have any escalation clauses build 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? In the CRAMS business, because they give you once we take the order it has been already taken care off, but when any increment in the raw material happens when the repeat order comes, we can charge, but once this order is placed nothing we can do, but on Specialt

Q

Just one question on the cash and cash equivalent including mutual fund investments, what is that amount at the end of the quarter? Sunder Venkatraman: Yes, Total cash is about Rs. 350 crore which includes investments in mutual funds and bonds of about Rs. 292 crore.

Management

Q

So, just on these 8 molecules what you have commercialized, would it be fair to assume that in the quarters ahead, it would be the only 5 projects what we had previous would be contributed to the revenue while on the other 3, may or may not contribute ahead? Sunder Venkatraman: They are evenly distributed. You cannot say that which one contributes because we have an order book for next 6 months which we are able to give, they are set for delivery, few of them are to be delivered this quarter or the following quarter, sometimes they may ask us to differ may be one quarter kind of thing. There a

Venkat Jasti

It is 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. And sir, lastly, what would be the fixed operating cost of the Vizag and the Casper side if you could provide this number? Sunder Venkatraman: Vizag, we are not giving plant wise cost.

Q

Thank you everyone for tuning in for our earnings call and as I was mentioning, last time when I was talking to all of you, we are not sure about the traction and hence we gave the guidance of flattish to (-4%) to (-5%) but based on the next six months 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 certain surpass last year’s numbers which posed by us and with the normalcy coming into the global innovator arena and the trials being fast track, the indications that are meant for us originally and based

Management