Granules India Ltd (NSE: GRANULES) Q1 2026 Earnings Call dated Aug. 12, 2025
Corporate Participants:
Unidentified Speaker
Krishna Prasad Chigurupati — CHAIRMAN AND MANAGING DIRECTOR
Sanjay Kumar — SENIOR VICE PRESIDENT – CORPORATE STRATEGY & PLANNING
Mukesh Surana — CHIEF FINANCIAL OFFICER
Analysts:
Unidentified Participant
Prachi Ambre — Analyst
Tushar Manudhane — Analyst
Madhav Marda — Analyst
Krisha Kansara — Analyst
Hareer Ahmed — Analyst
Presentation:
operator
And welcome to The Granules India Limited Q1 FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Prachi Ambri from MUSGR team. Thank you. And over to you, ma’. Am.
Prachi Ambre — Analyst
Thank you, Shruti. On behalf of Granules India Ltd. I extend a warm welcome to all the participants on Q1FY26 financial results discussion call today. On the call we have Dr. Krishna Prasad Chigurupati, Chairman and Managing Director Ms. Priyanka Chigurupati, Executive Director. Mr. Mukesh Surana, Chief Financial Officer Dr. P.V. srinivas, Chief Technology Officer and Mr. Sanjay Kumar, Chief Strategy Officer. Before we begin the call, I would like to give a short disclaimer. This call may contain some of the forward looking statements which are completely based upon our beliefs, expectations and opinions as of today. The statements are not a guarantee of our future performance and involve unfortunate risks and uncertainties.
With this, I would like to hand over the call to Dr. Krishna Prasad sir for his opening comments. Over to you, sir. Thank you.
Krishna Prasad Chigurupati — CHAIRMAN AND MANAGING DIRECTOR
Thank you, Prachi. Good afternoon ladies and gentlemen. Thank you very much for joining us on our Q1 FY26 earnings call. We appreciate your continued interest in Granules. Hello. Hello. I was on mute. I don’t know if somebody muted me here. Can I start again?
Prachi Ambre — Analyst
Yes sir. Please.
Krishna Prasad Chigurupati — CHAIRMAN AND MANAGING DIRECTOR
Okay. Good afternoon ladies and gentlemen and thank you for joining us on our Q1 FY26 earnings call. We appreciate your continued interest in Granule. We have uploaded a detailed presentation of our quarterly performance on our website and I trust you have had a chance to review it. Let me start with us. FDA remediation at our Gagalapur facility. We are in the final stages of remediation following the August 24th US FDA inspection and subsequent warning letter. A fourth status report was submitted on July 31st and so far no concerns have been received from the FDA on the adequacy or pace of our corrective action.
We will reach the six month eligibility milestone for a meeting and re inspection in September and plan to engage with the agency at that time. Meanwhile, the site has cleared inspections by German and Danish authorities with Denmark granting an EU GMP certificate till certificate in July 25. Across our network, multiple regulatory milestones have been achieved at our U s based VPI site. An unannounced FDA inspection was completed successfully with one observation and has been responded to within the stipulated timelines. Our API Unit 1 facility at Guantupalli completed an FDI inspection in June 25 also with a single observation and the response was submitted in a timely manner.
A key milestone was achieved at our new formulations facility at Genome Valley under Granules Life Sciences which underwent its first ever FDA pre approval inspection from July 28 to August 1. This was successfully completed with a single procedural observation and the response will also be submitted within the stipulated timeline. These successful inspections across multiple sites reaffirm our commitment to strengthening quality and compliance across the organization. Our focus remains on embedding a proactive, data driven and sustainable culture of quality for the long Restarting the Growth phase with these developments we are confident of returning to the growth trajectory of our formulations business from India free from delivery constraints.
The successful US FDA inspection of our Greenfield Formulations facility at Janome Valley unlocks an additional 10 billion doses of formulations capacity, a 40% increase over the existing $26 Billion dose capacity at Gagalapur and establishes a second source supply of finished dosages and PFIs to the US from India. Supplies of monograft products to the US have already commenced and ramp up of prescription products supplies will follow FDA approval in the coming quarters. Inspections by European authorities for the Genome Valley site are also expected with remediation at Gagalapur expected to conclude in the near future post which we anticipate swiftly overcoming the production slowdown from additional protocols, securing new product approvals and enabling the site to fully support our return to the growth trajectory.
Together these steps will free us from delivery constraint in both the US and eu enabling us to fully leverage the growth potential of our formulations business from India. Additional growth will come from CNS ADHD segment from our GPI facility in the us, scale up of large volume products in the US and Europe, moving up the value chain in Europe as well as oncology capacity monetization from Unit five, creating a balanced platform for near term performance and long term growth. We have also taken a significant step into high growth Peptide therapeutics and CDMO space with CEN Chemicals and Acylase Peptides.
Sanjay, our Chief Strategy Officer will elaborate on this strategic platform later in the call. On the sustainability front, Granules was named to the 2024 CDP Supplier Engagement in a list for leadership in Supply Climate Action and Value Chain Emissions Management. We also joined the Pharmaceutical Supply Chain Initiative furthering our commitment to transparency, sustainable operations and global supply chain excellence building on our SBTI Validated Net Zero Targets, Ecovirus Gold Medal and CDP Climate Score of B. To conclude, we are entering the phase of reviving our growth with a strong, stronger quality foundation, expanded capacity and a more diversified portfolio.
Near term momentum will be driven by the ramp up of prescription supplies from our Genome Valley facility, continued growth from our US operations, moving up the value chain in Europe and finally expected normalization of operations and new product approvals from Gagilapur post completion of the remediation. Over the medium term, medium to long term, our strategic expansion into high value segments such as Peptides, Crucent Chemicals and Peptides alongside Oncology will further strengthen our competitive position. Supported by our sustainability commitment and disciplined execution. We are confident in delivering sustained value to all stakeholders. With this I now hand over the call to Sanjay Kumar, our Chief Strategy Officer who will share more on our website and CDMO growth platform.
Sanjay Kumar — SENIOR VICE PRESIDENT – CORPORATE STRATEGY & PLANNING
Thank you Chairman Sir Good afternoon everyone. I’ll take you through one of the most exciting strategic development at Granules our foray into the Peptides BMO space through the acquisition of Zen Chemicals and the creation of our wholly owned subsidiary Aceryl Peptides. Peptides have rapidly emerged as a cornerstone of advanced therapeutics with applications spanning diabetes, obesity, oncology, cosmetics and therapnostics. The advent of GLP1 drugs such as Semaglutide and Tirzeptide has been transformative for the obesity market fueling unprecedented revenue forecast and exceptional consumer interest with the global peptide market driven in part by GLP1 receptor agonists now at a run rate of 78 billion per annum and projected to surpass US$130 billion by 2030, this segments represent a compelling long term growth opportunity.
It is reshaping industry and buzzing with innovator activity worldwide creating a growing need for a credible CDMO partner. Azelius Anchors granules transition from a primarily small molecule oral solid doses focused business to a diversified platform encompassing peptides and in time oligonucleotides. Sten Chemicals is a Swiss based CDMO with more than six decades of expertise in both liquid phase and solid phase peptide synthesis backed by a strong regulatory credential and a proven track record in peptide synthesis with the leading innovators company. This expertise forms the foundation for Asilis as a full spectrum CDMO solution provider serving innovators across pharmaceutical, cosmetics and theragnostic with flexible high quality manufacturing solutions.
The team at CEN includes more than 80 highly qualified professionals with more than 50% of the managerial roles in R and D manufacturing quality and business development held by PhD graduates demonstrating the depth of expertise that drives our CDMO capabilities. Our execution roadmap for a cellis peptide is anchored on four strategic pillars. First, we are prioritizing the CDMO arm of stent chemicals to deepen engagement with the top innovators. This involves prioritizing flawless execution of ongoing CDMO projects, expanding the customer base to more innovators, enhancing service offerings and leveraging SEN’s long standing reputation for delivering complex high quality peptides.
Second, we are creating the backbone of amino acid derivatives and peptides fragments out of India to serve multi segment application across target peptide markets. This capability will ensure a wide range of therapeutic and specialized specialty application ensuring that we have the essential building blocks for both the current and the future customer needs. Third, we are building a dual site manufacturing network for high value peptide APIs, leveraging Switzerland for small scale high complexity production and India for large scale cost efficient manufacturing to serve global market. This structure provides both flexibility and scale enabling us to meet the diverse requirement for innovator customers in the CDMO space.
In addition to the pharmaceutical peptides, CEN chemicals operate in two niche but attractive segments, cosmetics and theragnostic. Forming the fourth pillar in cosmetics, CEN and Azelis are positioning as an early mover and a credible player in the cosmetic industry’s transition from towards the TFA free peptide actives addressing both performance and sustainability expectations of the customers in Theragnostic peptide serves as a precise targeting agent that can be radio labeled for imaging and conjugated with therapeutic for treatment offering strong potential in oncology, rare disease and personalized medicine. The path Forward As I mentioned we are advancing on two parallel fronts enhancing SEN capabilities to target more number of high value PDMO projects through customer expansion and integrated R and D manufacturing capability while simultaneously established a robust India based R and D and manufacturing infrastructure for amino acid derivatives, peptide fragment and eventually full length peptide.
A key milestone of this journey includes the Peptides R and D facility and center of Excellence at the Indian Institute of Technology IIT Hyderabad scheduled to become operational by October of this year and a commercial scale peptide manufacturing facility in India targeted for completion by the end of the next financial year. The integration of CEN chemicals into the ACELIS platform is progressing well with cross functional teams driving synergies across R and D engineering quality and regulatory function while harmonizing systems, strengthening governance and accelerating business development. These initiatives are aimed at positioning ateliers as a credible mid sized CDMO players in tight modality.
Over the next three to five years serving as an innovation aligned growth engine for the next decade. With this I will now hand over the call over to Mukesh Khurana, our Chief Financial Officer who will take you through the financial performance.
Mukesh Surana — CHIEF FINANCIAL OFFICER
Thank you Chairman sir and Sanjay, let me take you all through the top financial parameters now. Revenue the first quarter revenue were Rupees 12,001 million as compared to Rupees 11,799 million in Q1FY25 reflecting a growth of 3% and revenue grew by 1% as compared to Q4FY25. This also includes the revenue generated from CEN Chemicals AG or Rupees 291 million. North America had a year on year growth and Europe grew sequentially lower. Sales in row was primarily because of PFI supply backlog from Gagalapur in the sales breakup as per the business divisions and geographic regions are presented in our investor presentation which is available on the website.
Gross Margin we delivered a strong gross margin of 64.9% in Q1 FY26 representing an improvement of 593 basis points year on year and 148 basis points sequentially. Gross margin improved primarily with consolidation of Fen Chemicals AG, EBITDA and EBITDA margin. EBITDA for the quarter was 2,467 million that is 20.4% of sales as compared to 25. 93 million that is 22% of sales in Q1FY25, a decline of 159 basis points from Q1FY25. The decline in EBITDA was primarily due to increase in professional expenses incurred for consultancy and remediation efforts. In responses to years of the observation, EBITDA as a percentage of sales for Q1FY26 is down by 69 basis points from Q4FY25.
EBITDA percentage is impacted on account of higher manpower cost with consolidation of CEN Chemicals AG R D R D expenses for the quarter were rupees 678 million which is 5.6% to sales as compared to rupees 620 million which is 5.3% to sales in Q1FY25 and rupees 665 million which is 5.5% to sales in Q4FY25. We will continue to spend similar amounts to support our long term strategic growth. Net Debt Our net Debt stood at Rupees 9480 million post acquisition of Sen Chemical AG as compared to Rupees 7061 million in Q4FY25 cash to cash cycle Our cash to cash cycle was 205 days in the current quarter as compared to 202 days in Q4FY25 cash flow from operations Cash flow from operations for the quarter was rupees 2806 million as compared to rupees 3183 million in Q4FY25 capex capex spend during the quarter was rupees 1137 million and as compared to rupees 1598 million in Q4FY25 ROCE ROCE for Q1FY26 is 16% with increased capital employed post appreciation of SEN Chemicals AG as compared to 16.6% in Q4FY25.
With this I open the floor for question.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue you may press STAR and two participants are requested to use answers while asking a question. Ladies and gentlemen we will wait for a moment while the question queue assembles. The first question question is from the line of Tushar Manudhani from Motilal Oswal Financial Services. Please go ahead.
Tushar Manudhane
So thanks for the opportunity. Am I audible?
Krishna Prasad Chigurupati
Yes we are all audible.
Tushar Manudhane
So now that the remediation measures are more or less done we have got ramp up of Genome Valley as well. So for FY26 sort of what kind of revenue growth and the EBITDA margin one can think of.
Krishna Prasad Chigurupati
Tushar remediation We are going to meet the FDA next month and by the time they come and re audit us and clear this could take up till end of December so we see good. And also for the new GLS site the approval we expect in another 40 days or whatever 35 days so after that only the real growth would start and also the new approvals that are pending with us FDF Regalapur site will also be cleared and they’ll take some time to revamp. So you can see FY27 as a very good growth year and starting from last quarter of this year.
Tushar Manudhane
Got it. So this peptide segment what kind of investment one should sort of think of for FY26 to start with and then. Over a period of time overall what. Kind of amount are we sort of talking for this space.
Krishna Prasad Chigurupati
To share? Okay, this slide we have acquired this business equity plus debt overall enterprise value of about 450 crores and this year we are looking at Additional investment of probably close to 100 crores in Switzerland and also another 20, 30 crores or so for the backend in India for R D lab. This is for the financial year 26 and the financial year 27. We may want to spend a little capex on the back end manufacturing capability. We are still estimating that.
Tushar Manudhane
Thirdly on the EU sales we’ve seen slight uptick upper FY25 to be sort of muted. So as we are also moving up the value chain. So. So what kind of growth prospects can be sort of thought for Europe business?
Krishna Prasad Chigurupati
I think. Let the experts answer that. Priyanka, are you there?
Unidentified Speaker
Yes, I’m here. I can take that question. Europe. Yes, there was a small uptick this quarter. There continued to be an uptick. This is essentially because of us. And we’re getting more off based on the amount that we’re catering. So going forward.
Tushar Manudhane
Ma’, am, couldn’t hear you.
Unidentified Speaker
Oh, I’m sorry. Can you hear me now?
operator
Yes, ma’, am. Now we can hear you. Please go ahead. Thank you.
Unidentified Speaker
Over the last year. I’ll just repeat myself. Over the last year we’ve actually had orders for Europe. So now that we’ve started increasing, well, slowly freeing up our capacity, we started supplying more products to. In addition to that, some of the approvals that we got earlier, we started launching them in Europe through some partners. That’s essentially it. Going forward, you’ll see this getting to about 15, 20% of the revenue.
Tushar Manudhane
Got it? Got it, ma’. Am. Thanks. That’s it from us.
operator
Thank you. Our next question is from the line of Maitri set from Choice Institutional Equities. Please go ahead. Hi.
Unidentified Participant
Thank you for the opportunity. Just a couple of questions. One is on the CDN and the Peptide segment which is now contributed to this.
operator
Your voice is coming very low. Can you please take the device close to you? And we.
Unidentified Participant
Is this better now?
operator
Sorry ma’.
Unidentified Participant
Am. Hello.
operator
Yes ma’. Am. Now it’s my.
Unidentified Participant
Is this better?
operator
Yes, yes ma’, am, Please go ahead.
Unidentified Participant
So I was. I just had one question on the CDMO and Peptide payment. Now that it has started contributing to the revenue, how much do you expect? Total revenue contribution.
operator
Sorry, your voice is breaking when you are speaking.
Unidentified Participant
I. I’ll just join back.
operator
Okay, ma’, am, please. Thank you. Next question is from the line of my Madhav from Fidelity. Please go ahead.
Madhav Marda
Hi, Am I audible?
operator
Yes, sir. You’re audible?
Krishna Prasad Chigurupati
Yes, madam.
Madhav Marda
Yeah, yeah. So I just wanted to understand that for this Peptide CDMO franchise which you’re looking to invest in generally CDMO businesses have a slightly longer gestation period. You know, to get the pipeline with the innovators and build it up. Just wanted to understand where we are in that journey in terms of client relationship or projects in the pipeline and how much time does it take before we see some of these molecules commercializing and scaling up for us. You could give some timeline there. It will be helpful just to understand where we are in the cycle here.
Krishna Prasad Chigurupati
I think Sanjay will answer that. Madhav.
Sanjay Kumar
So Madhav, you are right. The CPMO business by very nature is a long distinction projects by itself. But having said that, Fenn Chemicals already have a book of business and ongoing projects at various level though at a small scale that gives it some revenue visibility. Right. Again, what we are seeing today is both from the innovator company and other players in the CDMO supply chain geared towards serving the innovator customers. We are seeing inquiries and demands all across the spectrum and we are responding to those. We believe with Penn Legacy, its own customer connect, both with the innovators and with the other pharma partners, we are in a good shape.
So the priority is first on to execute well on the ongoing CDMO project that we are partnering on some of the in clinical assets and simultaneously execute well on the all the RFP RFQ that we are receiving through them. So we do have a visibility and the story of legacy of SEN backed by the backbone infrastructure that we’re creating also out of India in a cost efficient environment is the story that has been getting traction through our initial conversation with the customers. So I will stop short and we’ll be able to stop there and we’ll be able to provide additional visibility in the coming quarters.
However, it’s sufficient to say that we have an existing book of business and existing set of employees that we are responding to giving us a good visibility on the, the expected business that we can expect in the future quarters.
Madhav Marda
But just a quick follow up in terms of projects in the pipeline, generally, you know, peers in the space, they give a breakdown in terms of, you know, how many projects they have in, you know, phase one, phase two, phase three, something like that. Is there any, are there any projects which are, you know, in phase three today or are we doing more phase one, phase two kind of projects if you could give some color so you know, we can make some assessment there. Thank you.
Sanjay Kumar
So Madhav, we are bound by confidentiality on these assets and we are not at the freedom to disclose those. But yeah, these are in clinical early stages.
Madhav Marda
Understood. Got It. Thank you.
operator
Thank you. A reminder to all participants, anyone who wishes to ask a question may press Star and one on their Touchstone telephone. Our next question is from the line of Krisha Kansara from Molecule Ventures. Please go ahead. Krisha ma’. Am. Ladies and gentlemen, as the current participants is not answering, we’ll move to the next question. The next question is from the line of Devanshi Shah from SDA Finance. Please go ahead.
Unidentified Participant
Hello. Yes ma’. Am. Please go ahead. Yes. Am I audible?
operator
Yes ma’, am, you’re audible. Please go ahead.
Unidentified Participant
Sure. So I had a few questions. First one was with the new Peptide R and D facility and integration of Cenn Chemicals, what is the roadmap for scaling peptide APIs and CDMO services? And how do you see this contributing to differentiated growth in regulated markets?
Krishna Prasad Chigurupati
So Devanshi, we. In our earlier question I alluded to the ongoing traction that we have on the CDMO side with few existing project in line and additional inquiries that we received. I can provide additional color the nature of those inquiries. Some of these are linked to the early phase in clinical assets and some of these are by the big innovator company to check for our capabilities as they ramp up their pipeline and more and more assets are expected. They are scouting for the right kind of assets and capabilities, asking the partners to demonstrate these capabilities specific peptide segments.
So we are getting those tractions as well. In addition, there are needs for amino acid derivatives and small peptide fragments which is a common element across most of the players. And they are looking for a reliable and a cost efficient source outside of China. That is another tailwind that that industry is facing. And chemicals is well suited with this specialist platform to serve those demands.
Unidentified Participant
Okay, Got it, sir. Also, Europe’s revenue contribution has improved sequentially. What factors really drove this recovery? Was it like volume growth, say customer additions or improved supply dynamics? So what was it?
Krishna Prasad Chigurupati
I’ll take that question. I just answered it with the earlier gentleman. But it’s an increase in our capability of supply to Europe in addition to some additional launches that we actually pursued this quarter. So we actually launched one product this quarter and you’ll see increased revenues coming from that one product going forward as well. And going forward for Europe, we have about 10 approvals that are pending within this year and next year. Out of which one or two products we can only launch later because of patent situation. But we have about six products that we can launch upon approval.
So you’ll see revenues from Europe going up sequentially.
Unidentified Participant
Got it. Thank you so much. Thank you for Answering my questions.
Unidentified Speaker
Thank you.
operator
Thank you. Our next question is from the line of Maitri Seth from Choice Institutional equities. Please go ahead.
Unidentified Participant
Hi. Is it better now?
operator
Yes, Mahiti ma’, am, it’s better. Please go ahead.
Unidentified Participant
So I just have a couple of questions. One is on the CDMO peptide segment that has now started contributing to the revenue. So if you can share any color on how much contribution we are expecting by this fiscal end that is 1/2 is on the API segment if we are expecting any recovery going forward because the segment has been seeing a drag for quite a few quarters. So maybe by this current can we see a low single digit or mid single digit growth in the segment. That’s all.
Krishna Prasad Chigurupati
On the API. Let me take that question and prepare. Sanjay, take that. API has never been a focus. It’s been. We are always trying to move forward in the chain. APIs are converting to PFIs and PFIs to tablets. If you see our formulation growth, most of it has come from using our own APIs. And also there was a drag on paracetamol in the past that has slowly started picking up paracetamol, PFIs and APIs. So we see some growth happening in APIs. But overall most of the APIs made in our facility will be for in house use.
Sanjay, you want to take
Sanjay Kumar
on the peptides matrix, the current book of business on an annualized basis in the range of 15 to 20 million CHF. But the good thing is now the sand chemicals would be out of certain delivery constraints. Earlier it was not able to take certain opportunity because it didn’t have the backbone of India based supply infrastructure that we are able to bring to the number two. It did not have the scale of capability beyond its sales size. We are addressing both of these constraints and trying to get the best use of again.
I keep on saying the once in a lifetime opportunity that we see in more inquiries, more interaction with the customers so that SEN is now well suited to leverage and execute on those opportunities which earlier it was unable to do so.
operator
Thank you sir. Ladies and gentlemen, the line for the current participant has been disconnected. Our next question is from the line of Krisha Kansara from Molecule Ventures. Please go ahead.
Krisha Kansara
Hi, am I audible?
operator
Yes ma’, am, you’re audible. Please go ahead.
Krisha Kansara
Thank you. Thank you for letting me join again. Sir, I have one question related to our Gazilapur facility. So you mentioned that the remediation activities will be concluded in near future. So I have two questions with respect to this. One is till date how Much have we spent towards this remediation initiative for our formulation facility? That is one and second is somewhat similar to what the first participant asked. So I just wanted to reconfirm the timeline because I missed your point. You mentioned that you’re going to meet someone from FDA in this month and then they will plan for a RE inspection at our facility by December this year and post that it will take one or two months for the approval or the final outcome to come.
Am I correct on the timeline? Thank you.
Krishna Prasad Chigurupati
Yeah you’re perfectly right Krisha on the timelines and the remediation. Basically we are not supposed to go back to the FDA for six months from the date of the warning letter. So that six months will be over next month and then we plan to go there. And regarding the other part of your question will take it.
Mukesh Surana
Yeah Krish. So with respect to remediation expenses and also there were some air freight costs also we have incurred quarter on quarter both put together over the last three quarters we have spent about 80 crores on the OPEC side. In addition to that on the CAPEX side we have also incurred close to about 50 odd crores. Some are improvement and some are also, you know, related to IT infrastructure and MES which is estimated at 50 crores. You’re not fully spent but capex side is another 50 crores.
Krisha Kansara
Okay, sure. Thank you.
operator
Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star and one on their touchstone telephone. I repeat, anyone who wishes to ask a question may press star and one on their touchstone telephone. Our next question is from the line of Devanshi Shah from SDA Finance. Please go ahead.
Unidentified Participant
Hi. Sorry, I have a few more follow up questions. So my first question was manpower costs have risen following the acquisition. So should we expect these to stabilize over time or will they remain elevated due to ongoing integration and expanded operational scope?
Krishna Prasad Chigurupati
So this increase in manpower cost is primarily with the consolidation of SYN chemicals. So this will remain at these levels going forward.
Unidentified Participant
Okay. Also the ROCE has declined to 16% in Q1 FY26. So partly due to increased capital employed following the same chemicals acquisition. So how do you plan to improve return metrics over the coming quarters? And what timeline do you see for realizing synergies from this investment?
Krishna Prasad Chigurupati
So it is primarily because of synchemicals AG acquisition, the ROC has slightly dipped quarter on quarter. We may not see a significant improvement because it’s a long gestation period where Sanjay has clarified earlier.
Sanjay Kumar
Yeah sure. So we are working on quickly turning this around to a profitable business and we believe within 12 to 18 months it will match the return metric that the parent organization.
Unidentified Participant
Okay. Okay. And my last question was can you share more on the progress of the Gavilapur remediation program and its expected impact on operational readiness and supply continuity?
Krishna Prasad Chigurupati
Devanshi answered this question initially but let me repeat it. Yeah. We are close to the mediation and we expect that sometime in December we will have a pre audit and maybe a few a month or a few weeks after that we should get our clearance and the impact is we will be able to produce more in our regular food facility. Today we are constrained to some extent. We have business but we have supply issues and also we will have new approvals coming through and as we start launching those and again there will be uptick in sales.
So next year, next fiscal we see it as going to be a good year back to our growth trajectory.
Unidentified Participant
All right. So thank you for taking my questions again. Thank you.
operator
Thank you. Our next question is from the line of Hareet Ahmed from Evandest Park. Please go ahead.
Hareer Ahmed
Hi. Thanks for the opportunity. Sir, if you can comment a bit about the new GLS facility and how we should think about ramp up of utilizations there.
Krishna Prasad Chigurupati
Yes, Harith gls. We have been producing some monograph products for the US so far small quantities now that is getting ramped up. And also once we get the approval for the first molecule which we have done a site transfer to GLS that’s a large volume molecule and the capacity at least 40%, 35% of the capacity of GLS can be taken up just by that one product. And then there are other filings which we have made for site transfer as they come through. And those are all basically CBE 30 so they won’t take too long. So I think by first quarter of next year we would have been fully ramped up in this site.
Hareer Ahmed
Okay, understood sir. And now when I look at our R and D spend, you know we’ve stepped up versus let’s say four to five quarters back. So the current spends of around 300 crores on an annualized basis. Can you provide some color on the areas where we’re spending and if you could quantify or talk about the number of filings that we’re targeting.
Krishna Prasad Chigurupati
Ankara, you want to take that question?
Unidentified Speaker
Yes. Like we mentioned in several calls earlier, two of the. While we continue to spend on our regular products that we work on the large volume integrated products. Two special areas that we’re focusing on are ADHD and oncology. The spend of Each is a little bit higher than what we regularly, what we typically spend on. Two. We are working on global expansion of these products and that in itself increases the filing cost, et cetera, quite significant in each region. So if you combine both of them, that’s why you see that the spend has gone up over the last couple of quarters. And also the quality of filings that we’re doing have significantly improved. Only because you can see that we have a couple of first to file products which we can get into details about a little bit later, which we’re very excited to launch in the next couple of years. And again, like I mentioned, oncology products, you’ll see them being going off patent in about three to four years.
So we’ll start launching them in about three to four years in global markets.
Hareer Ahmed
Yeah, basically. Go ahead. Sorry.
Krishna Prasad Chigurupati
No, no, I was thinking about, you know, some qualitative color on the various segments like controlled substances or some of the other areas. Okay.
Unidentified Speaker
ADHD meaning control substance. Right. And apart from, apart from therapy agnostic.
Krishna Prasad Chigurupati
Concentration is mostly on Onco and ADHD as of now. And like is like Priyanka said, we are therapy agnostic but we are mostly concentrating on first two files and possibly some 505B2. So that’s where the cost is going up.
Hareer Ahmed
Sir, also about the, you know, recent leadership change, you know, if you can give some color on how we are planning the transition post Dr. KVS Ram Rao’s resignation.
Krishna Prasad Chigurupati
I’m fully back in the seat and I’m very excited and I think I’ll be able to make a positive difference. And also family is getting involved more and more and I’m very confident of a very positive outcome.
Hareer Ahmed
Thank you sir. And last one, with the permission on peptides, you know, not very familiar with the capabilities that send chemicals. So you know, what exactly are our capabilities there in terms of protected amino acids, peptide fragments, APIs and how do we see the capabilities evolving in the peptide space? And if you can also comment a bit about the competitive landscape here, some of our peers are fairly advanced in terms of their capabilities and capacity enhancements. So are we a bit late in terms of our entry into the space given that the market is fairly established and supply chains are fairly evolved currently?
Krishna Prasad Chigurupati
Hi, this is so regarding CEN chemicals. Yes, they have very experienced peptide chemists and with a good pedigree and then they are considered as experts in liquid phase peptide synthesis. But they also practice even solid phase peptide synthesis too. And of course they are there in amino acid derivatives and then serving to the needs of both pharmaceutical industry as well as cosmetics. And so and the amino acid derivatives they are supplying to, they’re all custom made peptides. And to the innovators as well as, you know, to cosmetic industry innovators, when I say that, you know, both in the case of, you know, pharmaceutical as well as, you know, in cosmetic industry, so they are there in that field and essentially they have the capacity to produce up to kilogram scale, if not more than that.
So that is what about the capability of CEN chemicals as of now? And we are backing it up by, you know, setting up the R and D facilities here in India. And essentially what we are trying to do is that we are setting up both the synthesis as well as characterization facilities. And so that whatever API development that goes on, whether it is in India or in Switzerland, the characterization will happen here. Harith, let me just add today people are moving away from solid phase synthesis to liquid phase. There are so many advantages in liquid phase which was not realized before.
And the capability Sen has on liquid phase is recognized by many of the companies. And they’re giving us products or discussing products with us which will only be made in liquid phase and not in solid phase. So that gives us a differentiated advantage as of today. And the fact that sun is an expert on liquid phase is known throughout. Okay, sir, also let me just add another one. The future is liquid based synthesis for websites.
Hareer Ahmed
Okay, Got it, sir. Thank you for taking my questions.
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Krishna Prasad Chigurupati
Thank you very much, ladies and gentlemen, for being with us today in spite of having many other investor calls today. So thank you once again and look forward to meeting with you and being with you for the next.
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