Gujarat Themis Biosyn Limited (506879) Q4 FY23 Earnings Concall Transcript

Gujarat Themis Biosyn Limited (NSE: 506879) Q4 FY23 earnings concall dated May. 15, 2023

Corporate Participants:

Sachin Dinesh Patel — Director

Rajneesh Anand — Consultant

Tushar Dalal — Group Chief Financial Officer

Analysts:

Vishal Prasad — VP Capital — Analyst

Keshav Kumar — RakSan Investors — Analyst

Yogesh Tiwari — Arihant Capital — Analyst

Saloni Hemnani — Molecule Ventures PMS — Analyst

Tarun Sancheti — Sanchay Capital — Analyst

Rikin Shah — Omkara Capital — Analyst

Keshav Garg — Counter Cyclical PMS — Analyst

Debjoy Bhowmick — Private Investor — Analyst

Gunsal Jain — Private Investor — Analyst

Ankit Gupta — Bamboo Capital — Analyst

Naitik Mohata — Sequent Investments — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Gujarat Themis Biosyn Limited Q4 FY ’23 Earnings Conference Call.

This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. Such statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict.

[Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Dr. Sachin Patel, Director. Thank you, and over to you.

Sachin Dinesh Patel — Director

Thanks very much. Good morning, everyone. I would like to wish you all a very warm welcome to GTBL’s earnings conference call for the fourth quarter and year ended 31st March, ’23.

I would like to begin by expressing my gratitude to you all for taking time to join us today. We have on call with us, Mr. Rajneesh Anand from GTBL; Mr. Tushar Dalal, Group CFO; and [Indecipherable], our Investor Relations team.

Before we get into the business and financial performance, I would like to briefly share the recent developments — key recent developments in our strategic focus areas. The slowness in tendering we had witnessed last quarter continued during this quarter as well, keeping the product uplifting mildly subdued. But our two products: Rifamycin-O continued to see decent demand in the market, leading to sufficient dispatches of this product; however, Rifa-S offtake remained on the lower side during the quarter since this is largely a tender-driven segment. Several tenders continues to be delayed in [Indecipherable], and that reflects in lower sales volume year-on year. Tenders are now opening up gradually, which is why there is a slight growth quarter-on-quarter. Otherwise, based on the inherent demand in the system, we have continued the production of Rifa-S to build inventory to be ready once the tenders open up entirely.

Also based on the bullish demand outlook, we plan to continue with our ongoing levels of production for both the products. As mentioned in the last quarter, this year, we have not undertaken a planned shutdown as we had in the last few years, so that we can continue to build inventory for the anticipated demand. I’m happy to share that despite these challenges, we registered a robust growth in top line as well as profitability versus the previous financial year.

Our revenue realizations improved again in the year which helped offset our input costs, including substantially higher utility expenses. Our capex plan of INR200 crores, spanning over two-plus years is progressing as per plan. We have capitalized about INR16 crores while another INR20 crores is in CWIP and about INR10 crores of capital advances for the equipment have been given. The new warehouse, R&D and API block is expected to be ready by September ’23. The last leg of our capex will be the new fermentation facility, which are expected to be ready by the end of the next calendar year. As already stated in earlier calls, these new facilities will be compliant with global regulatory norms since we shall be targeting export markets in addition to the domestic market.

In conclusion, we believe that we have state-of-art manufacturing facility and our expanded R&D base, we are well positioned to deliver innovative solutions to the healthcare market and create substantial value for us.

Now, I will hand it over to Mr. Rajneesh Anand to take us through the financial performance of the quarter and the year. Thank you very much.

Rajneesh Anand — Consultant

Thank you, Sachin Bhai. Now, turning to our financial performance for fourth quarter financial year ’23, we reported INR28.17 crores in revenue during Q4 FY ’23 as against INR28.76 crores in the previous corresponding period. Our EBITDA for the quarter stands at INR14.93 crores, increasing 14.12% year-on-year. EBITDA margin is 52.98%, which is up by 751 bps. Better realization and lower R&D investment of about INR3 crores helped improve the profit margins. Our PAT during this quarter is INR11.69 crores as against INR9.79 crores in the fourth quarter of financial year ’22. PAT margin stood at 41.50%. Earnings per share for this quarter is at INR8.05.

Coming to the full year performance, we reported INR148.97 crores in revenue during the financial year ’23, a 29.71% year-on-year rise over the previous fiscal year. Growth was mainly driven by rise in volume coupled with better realizations. Our EBITDA for the period stands at INR74.22 crores, increasing 27.86% year-on-year, while EBITDA margin is 49.82%. Our PAT for this year is INR57.97 crores, growing 32.88% year-on-year as against INR43.62 crores in FY ’22. PAT margin stood at 38.91%. EPS for the fiscal is INR39.90.

The Board has recommended a dividend of 20% per equity share of face value of INR5 subject to approval of shareholders. Moreover, the Board considered the proposal for subdivision of one equity share of the company having face value of INR5 each into five equity share of face value of INR1 each, subject to regulatory, statutory and shareholder approval.

That is all from our side. We can now take questions. Thank you very much.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Vishal Prasad with VP Capital. Please go ahead.

Vishal Prasad — VP Capital — Analyst

Hi, good morning. So we have been a fermentation company till now, however, we have decided to get into API where we would be producing fermentation-based APIs as well as synthetic APIs. So could you share your thought process behind our decision to get into synthetic APIs?

Sachin Dinesh Patel — Director

Yes, so on the whole, our philosophy still remains that we are going to be a fermentation company, but at the same time, we see that including the products that we produce and the future pipeline that we have, it may be until the intermediate stage fermentation is required and then we would need to do a few synthetic steps to make the final API. So essentially, just makes a lot of common sense we feel to be a part of the value chain, which is as advanced as possible, and not just to be at the intermediate level. So in a way, if we did not have or if we do not have the capabilities of synthetic chemistry along with fermentation, we might find ourselves short in the market in the future.

Vishal Prasad — VP Capital — Analyst

So sir, if we have to manufacture the API so — and which is fermentation-based, so all the intermediates would be fermentation or it could be mix of synthetic as well as fermentation-based Intermediates?

Sachin Dinesh Patel — Director

Our plan as of now is essentially only to work on products where the intermediates are fermentation-based because that is where we feel we can add maximum value as a company in GTBL.

Vishal Prasad — VP Capital — Analyst

Okay. So, sir, out of INR200 crore capex, how much we are planning to spend on fermentation block?

Sachin Dinesh Patel — Director

I will hand this over to Mr. Rajneesh Anand to give you details on this. Please go ahead. Hello? Have we lost Mr. Anand?

Operator

He is connected with us, sir.

Sachin Dinesh Patel — Director

I think he’s probably on mute.

Operator

Mr. Anand. If you could unmute your line, please, from your end. Let me go ahead and call him back, just give me a moment.

Vishal Prasad — VP Capital — Analyst

Yeah, meanwhile I’ll ask maybe a question, sir. So during our last call, we mentioned that in the API block, we would be doing one high-value product, but many small-value products. So these small-value products would be — and this will provide us good margin. So are we trying to get into a job work to what kind of scenario for some other companies or this will be just we trying to fill the capacity?

Sachin Dinesh Patel — Director

No we are not intending to get into any job work scenario at least in the foreseeable future. If circumstances change, we will look into that particular possibility and if there’s prospect opportunity which is very interesting, we may consider that. But for now, all the plans are based on our own manufacturing and sales [Indecipherable]. And we stated these are small products, but we feel that it can add significant value to our bottom line and hence those are the products that we would be considering.

Vishal Prasad — VP Capital — Analyst

So I’m guessing we would not get into related party transaction with our parent as well.

Sachin Dinesh Patel — Director

No, these are all independent businesses that are being lifted.

Vishal Prasad — VP Capital — Analyst

Sure.

Sachin Dinesh Patel — Director

Is Mr. Rajneesh back with us?

Rajneesh Anand — Consultant

Yes, yes, I’m back.

Sachin Dinesh Patel — Director

Perhaps you could just give us a bit of perspective on the capex plan and what percentage or what value of that is allocated to fermentation off of the INR200 crores?

Rajneesh Anand — Consultant

So out of the INR200 crores, we are going to invest INR80 crores in the Phase 1 of the fermentation block. And rest of it is into the API block, we are putting up two R&D pilot suites and we are putting up a new R&D lab. With all this, we will require wastewater treatment system with zero discharge and we will require a solvent yard. So we’ll require some surrounding infrastructure with the fermentation block also. So rest of the investments would go into these things, plus the API block and our synthetic pilot plant for developing processes.

Vishal Prasad — VP Capital — Analyst

Okay. And how much we are spending on the R&D block?

Rajneesh Anand — Consultant

R&D block, this will be like one pilot suite, one is INR25 crores, the rest — the two is INR8 crores and the lab is INR9 crores. So INR17 crores plus INR25 crores, that will be about INR42 crores in all.

Vishal Prasad — VP Capital — Analyst

So, sir, last question from my side on the R&D block and we are spending lot of money in R&D. So could you share your thought on where do we see our R&D effort going in next few years? What kind of people you would be recruiting and what kind of products we would be focusing on?

Sachin Dinesh Patel — Director

So I will put it this way that with regards to the people, we already have a fair number of people in our team. Of course, with these blocks coming in, we’ll be expanding the teams from where we have right now, but we don’t expect that there will be a significant change happening over there. And in terms of our plans over there, the reason why R&D block is quite high in terms of costs is because strategically we have decided to put in a CGMP pilot — in fact, two CGMP pilot facilities over here so that all the products that are being developed at the lab scale can be actually scaled up from these particular pilot plants and also filed for regulatory filing. Because as Mr. Anand said, the cost of putting up a fermentation facility in Phase 1 is about INR80 crores and we’ve got three phases to go through after that. So we would like to make sure that we have maximum filing from our CGMP pilot before we move to the large-scale commercial.

Vishal Prasad — VP Capital — Analyst

So INR80 crore for first phase and then two more phases, so an additional INR160 crore we will be spending apart from INR200 crores, is it?

Sachin Dinesh Patel — Director

Yes. So that is something that we have not planned as yet. That is not included in the INR200 crore. So that will happen as the year go by.

Vishal Prasad — VP Capital — Analyst

Got it, thank you so much, sir.

Operator

Thank you. Our next question comes from Keshav with RakSan Investors. Please go ahead.

Keshav Kumar — RakSan Investors — Analyst

Hi. Sir, wanted to have some clarity regarding rifaximin. So the product is under patent till 2029 in U.S. and there is a Lupin product available in India. So can you help us understand what the patent status for rifaximin is for different geos, apart from U.S.?

Sachin Dinesh Patel — Director

So I think the way we see it in RoW market, a fair amount of market has opened up and that is why we see the volumes of rifaximin and our sales of Rifa over that, that we see right now. We understand that certain parts of Europe will be opening up over the next year or so and then the rest of the world will open up with the U.S. So I think we have two stages to go through, one is Europe, at least a few countries in Europe which will open up in the near future, and U.S. is ’28, ’29, maybe a bit earlier, depending upon what the formulators can do at the back end.

Keshav Kumar — RakSan Investors — Analyst

So sir, currently whatever Rifa-O we are supplying, it’s — does some of it also go for the innovator supply or it’s for the RoW market?

Sachin Dinesh Patel — Director

It is also the RoW market.

Keshav Kumar — RakSan Investors — Analyst

Okay, all right, sir. That’s all from me. Thank you.

Sachin Dinesh Patel — Director

Thank you.

Operator

Thank you. Our next question comes from Yogesh Tiwari with Arihant Capital. Please go ahead.

Yogesh Tiwari — Arihant Capital — Analyst

Good morning, sir. Am I audible?

Sachin Dinesh Patel — Director

Yes, yes, very clear.

Yogesh Tiwari — Arihant Capital — Analyst

Sir, I had some few balance sheet questions for modeling purpose basically. So if I look at the balance sheet at the end of March, there is a component of Others under current assets of about INR90 lakhs, which has dropped from about INR11 crores last year. And correspondingly there’s another Other financial asset under assets — non-current assets, which has increased from INR9 crores to about INR41 crores. So first is like, what I understand is this is all deposited to financial institutions with different tenure like a long-term tenure and certain tenures, am I correct?

Sachin Dinesh Patel — Director

Mr. Anand, would you be able to answer this question or should we pose this to Tushar?

Tushar Dalal — Group Chief Financial Officer

I am Tushar Dalal. So as you rightly said, that we have part of surplus fund to financial institution and some of the money that we have also kept it with the Union Bank of India as short-term deposits.

Yogesh Tiwari — Arihant Capital — Analyst

Sure, sir. So this Others in the current assets, that has declined from about INR11 crores to INR90 lakhs and correspondingly the long-term has increased from about INR9 crores to INR41 crores. So have we moved from short-term assets to — like short-term tenure to long-term tenure of the deposits?

Tushar Dalal — Group Chief Financial Officer

Yeah, some of the deposits which were due within this year, so now we have taken it for the period of, say, 15 to 18 months. So that is why, once it goes beyond 12 months, then it goes to the noncurrent assets rather than the current assets. So that is the composition has undergone change wherever some renewals have taken place, so it is an extended so that — because we get some higher rate of interest. And that’s where this particular adjustment has been made.

Yogesh Tiwari — Arihant Capital — Analyst

Sure, sir. So this is reviewed every year? Like — or is there a policy for it?

Tushar Dalal — Group Chief Financial Officer

No, whenever the renewal takes place then we relook at how much money will be required in the current year and how much money will be required in future and accordingly, there we carry out this particular [Technical Issues].

Yogesh Tiwari — Arihant Capital — Analyst

So sir, just to model for FY ’24, can we consider that the short-term or the current portion would remain at lower levels, like around at INR90 lakhs, and the long-term will be the major portion?

Tushar Dalal — Group Chief Financial Officer

It is quite possible, but we’ll be also utilizing this particular money for the purpose of our expansion plans, so we have to review every quarter, every month, that how much money will be required. It will represent [Technical Issues] our internal accruals. So we will utilize this fund so that only the time will tell us, by how much will be in the long-term and how much will be in the short-term.

Yogesh Tiwari — Arihant Capital — Analyst

So, sir, for modeling purpose, any assumption we can take for FY ’24, whether long-term will be a bigger amount than short-term?

Tushar Dalal — Group Chief Financial Officer

Quite possible, quite possible.

Yogesh Tiwari — Arihant Capital — Analyst

And we can take it as a percentage of total assets for modeling — total assets or it would be like non-current?

Tushar Dalal — Group Chief Financial Officer

Yeah.

Yogesh Tiwari — Arihant Capital — Analyst

Yeah. And sir, the other point is on the loans under current assets. So about INR17 crores we have, loan under current assets. And I understand it is — this is all inter-corporate deposit and it is our constant. So can you share some details on this component? And like, can we take it as constant going-forward around the current numbers, the loans to current assets, INR17 crores?

Tushar Dalal — Group Chief Financial Officer

So we have part of some money with ICDs with some companies which are known to us, because [Speech Overlap], these are all the public companies, wherein that we have given Biosyn ICDs wherein we also get a good amount of interests also on this.

Yogesh Tiwari — Arihant Capital — Analyst

So can we assume the same, like it will be in similar range next year also?

Tushar Dalal — Group Chief Financial Officer

It should be, yeah.

Yogesh Tiwari — Arihant Capital — Analyst

Sure, sir. And sir, lastly on the component, other non-current assets under non-current assets, which has increased from about INR3 crores to INR10 crores. Other non-current assets, INR277 lakhs to INR1,069 lakhs.

Tushar Dalal — Group Chief Financial Officer

That is because some capital advances have been made by us to purchase the equipments, so those things are major — say it’s a INR10 crores, we have given Biosyn advance to the capital suppliers, so that means coming under the non-current assets.

Yogesh Tiwari — Arihant Capital — Analyst

Sure, sir. And this is part of the capex program which we’re doing?

Tushar Dalal — Group Chief Financial Officer

Yes.

Yogesh Tiwari — Arihant Capital — Analyst

And, sir, prepaid would — okay, and sir, prepaid would be a small amount, right in that Other non-current?

Tushar Dalal — Group Chief Financial Officer

It’s a very small amount.

Yogesh Tiwari — Arihant Capital — Analyst

Major is capital advance.

Tushar Dalal — Group Chief Financial Officer

Yeah, yeah, major is — INR883.50 crores [Phonetic] is capital advances and to some of the creditors also that we have given some advance to get the material on time, so it is also INR100 lakhs [Phonetic]. And some security deposits are there to the extend of INR75 lakhs that you have to give it to the — some of the regulatory bodies.

Yogesh Tiwari — Arihant Capital — Analyst

Yes, sir. So sir, like, we are still in the process of capex going forward, so can we assume the percentage of non-current assets to the total asset would remain same going-forward also about — say, something about 6%?

Tushar Dalal — Group Chief Financial Officer

It may come down, non-current asset, it may come down because we might be utilizing some of our fixed deposits since we are [Indecipherable] the financial institutions. It may come down to some extent.

Yogesh Tiwari — Arihant Capital — Analyst

What I meant is, like the capital advance, which we have given, if you would like to moderate for next year, it would be in the same range kind of a percentage of total asset?

Tushar Dalal — Group Chief Financial Officer

It should be, but then everything depends upon how fast that we take up these particular payment to the parties to get the materials to get our machineries and everything.

Yogesh Tiwari — Arihant Capital — Analyst

Sure, sir. That is…

Sachin Dinesh Patel — Director

I think it would really depend upon, as we move along the project, which are the vendors which would require advances and which are the vendors, which would not require advances.

Yogesh Tiwari — Arihant Capital — Analyst

Okay, sir, so just for modeling purpose, can we take the ratio of non-current asset to total asset in that similar range, which is for this year, around 6% for FY ’24, for modeling?

Tushar Dalal — Group Chief Financial Officer

So we have not worked out the balance sheet for the whole year, but we should.

Yogesh Tiwari — Arihant Capital — Analyst

Yeah, thank you. Thank you, sir. It’s very helpful. Thank you.

Sachin Dinesh Patel — Director

Thank you.

Operator

Thank you. Our next question comes from Saloni with Molecule Ventures PMS. Please proceed.

Saloni Hemnani — Molecule Ventures PMS — Analyst

Hello. Hi, sir, my first question is regarding the tender fund. So I wanted to understand the nature of this tender delay. How often do we come across this? Because since we have shifted our business model to manufacturing, we hardly have seen these kind of delays happening on the business side. So I just wanted to — wanted you to describe more about it.

Sachin Dinesh Patel — Director

These are global tenders for tuberculosis, which come in and the biggest one is the Global Fund. And once these tenders open up, usually the supply contract is for two years, if not a bit more. And depending upon when the last tender opened up, what is the inventory, what is the requirement and how much time did the authority take in terms of protecting it, they would be delayed from what is [Indecipherable] a few quarters that we have given. But as I mentioned during my brief, it has now started opening up, Global Fund has started opening up which means that the requirements should be steady over the next couple of years.

Saloni Hemnani — Molecule Ventures PMS — Analyst

Okay. Sir, my next question is regarding the capex part. So you mentioned the sub-realized INR16 crores and CWIP INR20 crores [Technical Issues]?

Sachin Dinesh Patel — Director

I will ask again Mr. Rajneesh Anand to…

Rajneesh Anand — Consultant

Yes, that’s right.

Saloni Hemnani — Molecule Ventures PMS — Analyst

Okay, so how much more capex are we expecting to spend till September ’23, the remaining [Technical Issues]?

Rajneesh Anand — Consultant

Yeah, I think we will spend another INR30 crores or INR40 crores by that time.

Saloni Hemnani — Molecule Ventures PMS — Analyst

Okay, okay. Sir, can you tell me the current [Technical Issues].

Sachin Dinesh Patel — Director

Your voice is breaking actually, Saloni. Can you — we’re not able to…

Saloni Hemnani — Molecule Ventures PMS — Analyst

Is it clear now?

Sachin Dinesh Patel — Director

Yeah.

Saloni Hemnani — Molecule Ventures PMS — Analyst

Sir, present capacity utilization of Rifa-S and Rifa-O?

Rajneesh Anand — Consultant

We are running the plant at full capacity right now. And whatever surplus production is there is in inventory and we are hopeful of liquidating the same in the near future.

Saloni Hemnani — Molecule Ventures PMS — Analyst

Okay, okay.

Rajneesh Anand — Consultant

Once the tenders open up, I think everything will be sold out.

Saloni Hemnani — Molecule Ventures PMS — Analyst

Okay. Sir, what is the timeline that we are expecting for these tenders to open up?

Sachin Dinesh Patel — Director

They have started opening up. Now it will depend upon what is the supply chain inventory at various of our customers, all those things, and — but as Mr. Anand said, we will not be able to deliver this month or next month, but if they’ve opened up now, which means that the inventory is — inventory build-up that we had, because as I mentioned, again, we did not close down our facility this year as we did for the last two years for two months, which means that we have stocks In our warehouse, which are ready for dispatch and those dispatches are happening and will keep on happening as the months go by.

Saloni Hemnani — Molecule Ventures PMS — Analyst

Okay. Sir, my last question is regarding our growth estimates that we had already given in the last [Technical Issues], sequentially 30% that you were expecting after the API blocks comes into the picture. So are we sticking to that?

Sachin Dinesh Patel — Director

So you have seen that in about probably 80% capacity utilization, the previous year we had about 70%, 75% capacity utilization, this time it’s higher — I’m talking now in terms of sales. In terms of production, it’s 100% capacity utilization. So one would expect that if this year we have higher capacity utilization only on the fermentation part, we should have both growth on the top line and the bottom line. The API block once it becomes — if commissioned and we start manufacturing, which will take some time because we are staffing the API block in September, and then we will start validation backfills, we will have to go through stability. So there is a new process involved in that. So I think realistically speaking, one can expect the API block to start giving us both top line and bottom line in the next financial year or perhaps in the — a little bit towards the end of this financial year.

Saloni Hemnani — Molecule Ventures PMS — Analyst

It’s clear, sir. Thank you so much. And wish you all the best.

Sachin Dinesh Patel — Director

Thanks.

Operator

Thank you. Our next question comes from Tarun Sancheti [Phonetic] with Sanchay Capital. Please proceed with your question.

Tarun Sancheti — Sanchay Capital — Analyst

[Technical Issues]. Am I audible?

Sachin Dinesh Patel — Director

Not very clearly, it’s a bit low on volume.

Tarun Sancheti — Sanchay Capital — Analyst

Better now?

Sachin Dinesh Patel — Director

Much, much.

Tarun Sancheti — Sanchay Capital — Analyst

Okay. Thank you. Well, congratulations for good set of numbers. First question I have is based on some of the research report and [Indecipherable] level on the public domain, etc., it looks like that WHO and also some of the funding agency etc. have adapted to a medication regime change, wherein they are preferring [Indecipherable] rifapentine-based treatment as compared to the current prevailing rifampicin-based treatment regime. So any perspective on that one, how big that could be, if not in near-term, at least in the medium to long term?

Sachin Dinesh Patel — Director

So there are two aspects to this. One is, the WHO recommendation for moving from rifampicin to rifapentine is a very recent development I think. It happened some time during the course of last year. I think WHO will also go cautiously because they need to figure out, on the larger population side, how rifapentine is actually effective. But let’s put it this way, we consider a scenario where rifapentine is going to be the mainstay instead of rifampicin tomorrow, it really affects us very positively, if I may say so, because the — so first of all, Rifa-S that we currently supply to manufacture rifampicin is the same intermediate that is required to manufacture rifapentine. So that’s the good part.

The second, this is that the amount of rifapentine which needs to be given as per the new WHO treatment is quite significant, albeit, if it’s for shorter period of time. So it’s for four months and for up to six month therapy with rifampicin. The amount of rifapentine which needs to be given in terms of grams is quite high. Coupled with that, the ratio of conversion of Rifa-S to rifapentine is lower than that of rifampicin, which means we need more Rifa-S, to make that amount of rifapentine, vis-a-vis, rifampicin. So both these factors, in summary: one, you need more rifapentine, and the second is the amount of Rifa-S, that we need to manufacture rifapentine is higher than that to manufacture rifampicin. Both of them are very positive outlook from a Rifa-S manufacturer perspective. And, of course, not to lose sight of the fact that we are coming out with a API block, so we also have very much plans to manufacture rifapentine.

Tarun Sancheti — Sanchay Capital — Analyst

That’s very encouraging. Another follow-up question to that would be that, is it right to conclude that we’ll have to go through some environment clearance or regulatory approval, etc. before we really go into rifapentine? Essentially, I’m trying to understand if we really decide to work towards that, how much of a lead time it would take?

Sachin Dinesh Patel — Director

So I would put it this way that certain regulatory requirements would definitely be required — will have to be put into place. And hence, I said that realistically speaking, we can expect rifapentine business to start in the next financial year or the API business to start in the next financial year or end of this financial year because we would — our API block would be ready in September, which means we’ll start taking validation, it will take a month, two months to take validation from which we need six month stability. After which, we can go to the regulatory authorities and get approval for the particular API and the good news again is that, there’s a market locally for this, because as in line with WHO, even the Indian government is moving from rifampicin to rifapentine. Now, how much, we don’t know, we have to wait and see. But we believe that there is going to be a reasonably good requirement for rifapentine in years to come.

Tarun Sancheti — Sanchay Capital — Analyst

Just last question on this topic, how this is going to impact our customer today? Say, predominantly, there are two player who are very significant on rifampicin treatment. Will there be any change in customer mix or the contribution of customer mix if, at all, we move to rifapentine?

Sachin Dinesh Patel — Director

There are two aspects. Rifapentine in no way affects rifaximin. So the Rifa-O business remains as it is, there is no impact that one gets from that. With regards to Rifa-S, whether it is rifampicin or rifapentine, as I said, both the products need Rifa-S and whatever we plan, whether it is in terms of rifaximin or it is Rifo-O, Rifa-S, rifaximin, rifapentine, rifampin, it will all be in cooperation with our current customer base which is — I think we have a relationship which has been over a significant period of time and who have worked well for us. We hope it has worked well for them also. So I think there will be things that we will do, but only in consultation and cooperation with customers [Phonetic].

Tarun Sancheti — Sanchay Capital — Analyst

Sure, that’s very helpful. And last question, and I can come back to the queue again. One of the high-value API that you alluded towards, I do understand you may not give a directional view therapeutically [Indecipherable] is going to be, but it’s still going to be, let’s say, B2G kind of a business arrangement or is it going to be a B2B?

Sachin Dinesh Patel — Director

Sorry, B2G and what is…

Tarun Sancheti — Sanchay Capital — Analyst

So those two government and tender agencies, so the end products will be towards tender or it would be a commercial product?

Sachin Dinesh Patel — Director

It will be a commercial product. I think those clauses is where globally, all the countries have come together and said that it will be countries that control this particular [Indecipherable] and not private enterprises. But the other areas that we’re working in will most certainly not be in the tender area.

Tarun Sancheti — Sanchay Capital — Analyst

Okay, thank you very much.

Operator

Thank you. Our next question comes from Rikin Shah with Omkara Capital. Please go ahead.

Rikin Shah — Omkara Capital — Analyst

Hi, am I audible?

Sachin Dinesh Patel — Director

Yes, yes, you are.

Rikin Shah — Omkara Capital — Analyst

Sir, can we please reiterate about the timelines for the capex?

Sachin Dinesh Patel — Director

The timelines?

Rikin Shah — Omkara Capital — Analyst

Yeah, when the API block comes in, when the fermentation block can come in?

Sachin Dinesh Patel — Director

So I had mentioned this in my talk, and also I think Mr. Rajneesh Anand threw some light on it, but I will repeat this. Our API block, our R&D center and all the things which are required to support these two cases — these two initiatives come into effect in September of this year. And our fermentation block, we expect will be up and running by the end of next calendar year.

Rikin Shah — Omkara Capital — Analyst

Thank you. So is there any impact in the recent time from the supply side that we have saved [Phonetic], has the supply side changed in the existing products?

Sachin Dinesh Patel — Director

Not really, but Mr. Rajneesh Anand can comment if indeed there has been any change in our suppliers.

Rajneesh Anand — Consultant

No, no. I think we have gone very smoothly. We have actually multiple vendors for every product, so we don’t have any such issues.

Rikin Shah — Omkara Capital — Analyst

So I meant that for Rifamycin-S and Rifamycin-O, are we seeing new supply sort of coming in or any pricing correction that will be made?

Rajneesh Anand — Consultant

[Speech Overlap]. Yeah, prices do fluctuate, many of the inputs are seasonal, they are seasonal products. So their prices do fluctuate from time to time, but not very major fluctuations. So this is normal, we face this kind of fluctuation every year.

Sachin Dinesh Patel — Director

Rikin, I think your question was with regards to the, is there any other producers of this particular product, right?

Rikin Shah — Omkara Capital — Analyst

Like, lot of chemical and pharmaceutical-based products having seen impact from Chinese in the recent times. So I’m trying to get if we are also seeing something like that.

Rajneesh Anand — Consultant

All our inputs as of today are domestically available. We are not going to China for anything.

Rikin Shah — Omkara Capital — Analyst

No, I’m saying they might be dumping, is that something that we actually…

Rajneesh Anand — Consultant

Well, so far as our products are concerned, the prices have — from China have only gone upward.

Rikin Shah — Omkara Capital — Analyst

Okay. Thank you. And in terms of the new products, our pipeline was — earlier we were just in two products and perhaps six more in the R&D. So can we have an understanding of what stages they are in?

Sachin Dinesh Patel — Director

So in the lab, the work has begun and it continues to go on. And really the next stage will be one CGMP pilot is ready, which we are expecting in September, as I mentioned, and that is a critical timeline that we are also working towards, because that is when, not only the API block starts but also from the product which are in R&D starts getting filled up from where we can do some filing and also supply quantities to our future customers for their respective filings.

Rikin Shah — Omkara Capital — Analyst

That’s it from my end. Thank you.

Sachin Dinesh Patel — Director

Thank you.

Operator

Thank you. Our next question comes from the line of Keshav Garg from Counter Cyclical PMS. Please proceed with your question.

Keshav Garg — Counter Cyclical PMS — Analyst

So I’m trying to understand that last quarter we mentioned that in FY ’24, we will operate at full percent at 100% utilization, which basically entails 25% to 30% revenue growth Y-on-Y. So are we on track in your judgment to reach a top line of around INR190 crore to INR200 crore in FY ’24?

Sachin Dinesh Patel — Director

So I think that would involve us speculating in terms of what the pricing tomorrow is going to be like and a lot of other things. I think what we can tell you is on the basis of what we see. Right now, we don’t see the need of stopping our facility in the foreseeable future. We did not stop our facility last year, as we traditionally have done for the last two years for two months. We did do that because we saw or we anticipated demand. And right as we speak, we don’t see any reason to change that decision in the near future. And if we do happen to take that decisions, we will most definitely keep everyone informed.

Keshav Garg — Counter Cyclical PMS — Analyst

So are we already operating at 100% utilization?

Sachin Dinesh Patel — Director

In terms of production, yes.

Keshav Garg — Counter Cyclical PMS — Analyst

Okay then. And sir, also wanted to understand that if we see our other expenses for this quarter, fourth quarter, sir, it is INR1.86 crore versus INR4.15 crore, quarter-on-quarter. So what has led to other expenses halving quarter-on-quarter, even though the top line is the same?

Sachin Dinesh Patel — Director

We had — in the quarter where the expense was high, we had a couple of expenses on the R&D side which are not expected to be repeated again and again. So those expenses will come in, in bursts, but they will not be constant and that is why there is a reduction in this particular quarter because that particular expense is not there.

Keshav Garg — Counter Cyclical PMS — Analyst

Sure, sir. And sir, also we did a peak quarterly revenue of around INR48 crores in the second quarter of last year. So like you mentioned in your opening comments that now tenders have started opening up and meanwhile we have built-in inventory also from the past two quarters. So you think in your judgment, sir, when can we surpass the top line of around INR48 crore that we did in last quarter — in second quarter of last year? You think in first or second quarter of this financial year, we’ll be able to surpass it?

Sachin Dinesh Patel — Director

Let’s see how it goes. We all work towards maximizing sales and profit and making sure that our production is as efficient as possible.

Keshav Garg — Counter Cyclical PMS — Analyst

Sure, sir. And sir, just lastly, sir, how close are we to commercialize the one API we were expecting by March or April 2024? Are we on track to reach that goal?

Sachin Dinesh Patel — Director

As I mentioned, our API block will be operational in September, we will start our validation. So it may not be March, but It would certainly be Q1 of next year.

Keshav Garg — Counter Cyclical PMS — Analyst

Sure, sir, thank you very much and best of luck.

Sachin Dinesh Patel — Director

Thanks, thanks.

Operator

Thank you. Our next question comes from the line of Debjoy Bhowmick [Phonetic], an investor. Please proceed.

Debjoy Bhowmick — Private Investor — Analyst

Yeah, good morning, sir.

Sachin Dinesh Patel — Director

Good morning.

Debjoy Bhowmick — Private Investor — Analyst

Sir, I just wanted to know that how much will be the expected top line growth this year?

Sachin Dinesh Patel — Director

As I mentioned on the previous question also, I think that would really be speculating in terms of where we’re going from here and that is not something that we’ve been doing traditionally and even now.

Debjoy Bhowmick — Private Investor — Analyst

And are you focusing on domestic market or international market? Means the main focus of the market?

Sachin Dinesh Patel — Director

Currently, our business is all of the markets. And our partners would then be selling it in other markets, because we are selling intermediates, they’ll be converting and selling the finished API into multiple markets.

Debjoy Bhowmick — Private Investor — Analyst

Thank you, sir.

Sachin Dinesh Patel — Director

Thank you.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Keshav from RakSan Investors. Please proceed.

Keshav Kumar — RakSan Investors — Analyst

Hi, thanks for the follow-up. Sir, in your opening address, did I hear it right that we intend to get into innovator molecules going-forward?

Sachin Dinesh Patel — Director

No, we did not — I did not mention innovator molecules.

Keshav Kumar — RakSan Investors — Analyst

Okay, all right. Thank you.

Sachin Dinesh Patel — Director

Thanks.

Operator

Thank you. Our next question comes from Gunsal Jain [Phonetic], an investor. Please go ahead.

Gunsal Jain — Private Investor — Analyst

A very good morning, sir. Am I audible?

Sachin Dinesh Patel — Director

Yes, yes, you are.

Gunsal Jain — Private Investor — Analyst

Actually I wanted to understand the INR24-odd-crores of investments. So in which areas you have invested that amount and what type of asset turnover we can expect from that?

Sachin Dinesh Patel — Director

I’ll turn it to Mr. Rajneesh Anand to answer the question.

Rajneesh Anand — Consultant

You see, the investment that has happened till now, we have built a new warehouse, this is the GMP warehouse and this was a pre-requisite for us to do future business in the regulated markets. So as such, this is not going to contribute directly into any increase in turnover, but over a period, when we implement all the other projects, this would be essential paraphernalia, essential infrastructure requirement there.

Gunsal Jain — Private Investor — Analyst

Right, sir. Understood. And second, sir, we are operating at 100% efficiency. So I was checking year-on-year employee cost, so it is not moved much, but revenue has increased around 30%. So any comment on that? Are we using more automization [Phonetic]?

Rajneesh Anand — Consultant

Not automization, but as we explained, in the previous year we had to take shutdowns to upgrade the plant and to do renovation work in the plant because fermentation plant, it’s working around the clock, it doesn’t have any holidays. It’s a microbiological process, once we start we have to run through the year and in this year under discussion we have not taken the shutdown. So that is one of the — that means we had excess production and also we had excess revenue and excess sales.

Operator

Thank you. Our next question comes from Ankit Gupta with Bamboo Capital. Please go ahead.

Ankit Gupta — Bamboo Capital — Analyst

Sir, can you please provide us any update on the new products which are — which we were developing and any progress on that? Or we’ll come to know about the status only post completion of the new capex?

Rajneesh Anand — Consultant

No. We will come out with the product that we are launching when we are launching it. We will not discuss the product mix at this time.

Ankit Gupta — Bamboo Capital — Analyst

Yeah, yeah, but like I think six products we were developing. So any update on like how confident you are of commercializing all of the six molecules or some of them are expected to not commercialize also?

Sachin Dinesh Patel — Director

We are making reasonable progress in terms of developing these products. We feel, from a commercial perspective, I think we have selected the product need to be well. But we have been — take this with a bit of caution because we are still at the last stage and fermentation is a tough cookie. We need to move the next stage, which we will be able to only after September once our pilot facilities are ready and then subsequently on the commercial side. So it is a step-by-step process. And it’s not straightforward. The only thing I can say is that we have the team and an experienced team with prerequisite knowledge to be able to do that. But I don’t think I would give a guarantee stamp that everything will work out the way we want it.

Ankit Gupta — Bamboo Capital — Analyst

Sure, sir. And just, let’s say, if our product is successful on the pilot suites, can we expect that most probably it’ll also be successful at the commercial stage? [Speech Overlap] Or there are failures at commercial stage after successful pilots stage also?

Sachin Dinesh Patel — Director

It is possible that scale-up from pilot to fermentation is tricky, but as I’ve said, we’ve dealt with multiple products in the past, our team has dealt with multiple products in the past and we are confident enough, let me put it this way, to invest in the whole project.

Ankit Gupta — Bamboo Capital — Analyst

Sure.

Sachin Dinesh Patel — Director

So that — I think that should give us kind of an indication of what is our confidence level.

Ankit Gupta — Bamboo Capital — Analyst

Sure, sir. Okay, thank you. Thank you so much and wish you all the best.

Sachin Dinesh Patel — Director

Thanks, thanks.

Operator

Thank you. Our next question comes from the line of Naitik Mohata with Sequent Investments. Please proceed.

Naitik Mohata — Sequent Investments — Analyst

Yeah, thank you for the opportunity and congratulations on good set of numbers. I had just couple of questions on adding on to the plant shutdown that we haven’t taken this year. So are we obligated to take a shutdown or a maintenance shutdown in next quarter or next year, probably for the fermentation plant?

Sachin Dinesh Patel — Director

Anand can answer this question.

Rajneesh Anand — Consultant

Yeah. I don’t think so. I think the plant is in very good health and the shutdown which we took last two years, we had taken practically after seven years. We split our work in two parts and then we finished it in two years. So, in my view, we will continue to produce through the next year.

Naitik Mohata — Sequent Investments — Analyst

Okay, also on this capex plans for the API block that we are coming up with, and also the fermentation capacity, so I understand that it will take time to ramp up these capacities, but at — probably at peak capacity, at peak utilization, what are the kind of asset turns we’re expecting from these units?

Sachin Dinesh Patel — Director

Hard to give numbers at least at this particular stage. I think as we go through a few quarters, we have our these pilot facilities in place and we have done some trials, we’ll be able to give back the numbers simply because there’ll be some numbers — there’ll be some products which are very-high value but low in terms of volume but high in terms of GP and some would be on very low value but again the GPs would be low. So it’s a mix-and-match and hence we are more looking at in terms of how quickly can we get the ROI, rather than asset turnover.

Naitik Mohata — Sequent Investments — Analyst

You’re right. Okay, that’s helpful. Thank you.

Sachin Dinesh Patel — Director

Yeah.

Operator

Thank you. Our next question comes from the line of Tarun Sancheti with Sanchay Capital. Please go ahead.

Tarun Sancheti — Sanchay Capital — Analyst

Thank you for the follow-up opportunity. One follow-up question related to the API block. I think last quarter you mentioned that this was supposed to come online by Q2. As to why that is? Hello?

Rajneesh Anand — Consultant

Hello, I couldn’t hear properly. I’m sorry. Can you repeat?

Sachin Dinesh Patel — Director

The question was essentially related to the delay in the API block by a quarter.

Rajneesh Anand — Consultant

So basically — yeah, so this kind of fluctuation can happen when you are doing such a big project. Sometimes we come up with intricacies and we have to do some modifications and additions as we go along. So this was because of the delays. [Speech Overlap].

Tarun Sancheti — Sanchay Capital — Analyst

Yeah, sorry, go ahead.

Rajneesh Anand — Consultant

But at a later date, we decided to put up a pilot inside the same block, one floor level. So that is how this delay in one quarter happened.

Sachin Dinesh Patel — Director

I think I would put that as a primary reason. We — our project was going on reasonably well and we were matching up with all the timeline. But within the project, we decided to make some modification because we felt that they would be important for the long-term future of our business. And those modifications essentially led to a delay of a quarter or so, which we expected when we decided this particular call. But we still felt it would be worthwhile the delay, considering the capabilities that now we would have in this particular block. It’ll be in our flexibility.

Tarun Sancheti — Sanchay Capital — Analyst

Sure. That’s very helpful. And a related question to this would be, we do understand that right from, say, completion of the capex, there would be exhibit batch, there would be sterilization etc., etc. So right [Technical Issues] commercialization, how much of a timing you anticipate to [Technical Issues]?

Sachin Dinesh Patel — Director

So I would put it this way, that it will be product-by-product, but if our capex is getting over for the API block in September, one can consider two months max or three because it’s a new infrastructure, we have to get back with the batches and from there we have to wait for six months for stability to get completed before we can start selling this particular product in the domestic market.

Tarun Sancheti — Sanchay Capital — Analyst

So probably we are talking about, say, June or July of next year.

Sachin Dinesh Patel — Director

That’s right.

Tarun Sancheti — Sanchay Capital — Analyst

Okay, great, thank you very much again.

Operator

Thank you. Our next question comes from the line of Yogesh Tiwari, Arihant Capital. Please proceed.

Yogesh Tiwari — Arihant Capital — Analyst

Yes, thank you for follow-up question. Sir, just one question, when I look at the balance sheet, under current assets, we have bank balance — we had bank balance of INR12 crores last year. And Others, we have of INR11 crores. So INR11 crores has declined to about INR90 lakhs and INR12 crores to about INR3 crores. So just to understand, both are bank deposits with less than 12 months. So what would be the difference between the two line items? Is there any policy of the company with regards to the two: bank balance and others?

Sachin Dinesh Patel — Director

Tushar Bhai?

Tushar Dalal — Group Chief Financial Officer

Yeah, last year, the deposits which are maturing less than 12 months was under the current assets. Now, this time, now whenever the renewals have taken place, so we have renewed it for more than 12 months of the year and that is why it has moved from current assets to the noncurrent assets.

Yogesh Tiwari — Arihant Capital — Analyst

Yes, so sir, actually my question was regarding the current assets itself. So if I look at bank balance, last year was INR12 crores and there is a Others component of INR11 crores. Now if I get into schedules, both Others — I am talking about last year, so…

Tushar Dalal — Group Chief Financial Officer

You are talking about the bank balance?

Yogesh Tiwari — Arihant Capital — Analyst

Bank balance and the Other component, yeah. So Other is about INR11 crores, which has declined to about INR90 lakhs now, and bank balance has declined from INR12 crores to INR3 crores. What I understand is both bank balance and the Others component, both are bank securities, so bank deposit with less than 12 months. So what would be the difference between the two line items? Like, both are same component or is there any company policy? While taking bank balance, there is something else and Others something else? Because both are, at the end of the day, bank deposit of less than 12 months maturity.

Tushar Dalal — Group Chief Financial Officer

Yeah, so whatever has been shown under the bank balances, so the INR11 crores or INR12 crores has come down to INR3 crores as the bank balance and the bank deposit which are less than 12 months. [Technical Issues], we get a higher rate of interest.

Yogesh Tiwari — Arihant Capital — Analyst

Yeah, so sir, what I understand is like Others and bank balance both would be less than 12 months. Correct?

Tushar Dalal — Group Chief Financial Officer

Yeah, the current assets which has come from INR11 crores or INR12 crores to INR90 lakhs, out of that, [Indecipherable] have moved from current to the noncurrent one.

Yogesh Tiwari — Arihant Capital — Analyst

So, okay. I was just — I just wanted to understand what is the difference? So what is the — what would be the difference between Others and bank balance, because both are less than 12 months of maturity. So what would be the difference between the two line item? That would be my question actually.

Tushar Dalal — Group Chief Financial Officer

Now, let me tell you, the bank balances are always in the Union Bank of India, that is with the bankers only and as far as the another bank is concerned, that is with the HDFC Bank and all other financial institutions. That is why there we are showing it separately. [Speech Overlap] other financial assets.

Yogesh Tiwari — Arihant Capital — Analyst

Okay, got it. So bank balance would be mainly with your main bank account, wherein, and Others would be like the others you are investing, right?

Tushar Dalal — Group Chief Financial Officer

Yes, yes, yes. It is with the financial institutions.

Yogesh Tiwari — Arihant Capital — Analyst

Sure, sure. That is very helpful, sir. Thank you very much.

Tushar Dalal — Group Chief Financial Officer

Okay.

Operator

Thank you. As there are no further questions, I now hand the conference over to Dr. Patel for closing comments.

Sachin Dinesh Patel — Director

Thank you. Thank you. So finally, I would like to thank the entire team of GTBL for their untiring effort, hard work and dedication which drives the company forward through various market conditions. Also, I appreciate all of you for participating in our conference call. Please do get in touch with our Investor Relations team for any further questions that you may have. Thanks and good afternoon — good morning.

Operator

[Operator Closing Remarks]