Laurus Labs Limited (NSE: LAURUSLABS) Q4 2025 Earnings Call dated Apr. 24, 2025
Corporate Participants:
Satyanarayana Chava — Chief Executive Officer
Ravi Kumar — Chief Financial Officer
Analysts:
Nitin Agarwal — Analyst
Sajal Kapoor — Analyst
Deepak Kumar — Analyst
Ravi Agarwal — Analyst
Unidentified Participant
Jivan Patwa — Analyst
Tushar — Analyst
Balaji — Analyst
Keshav Mundra — Analyst
Kunal Dhamesha — Analyst
Manoj — Analyst
Harshit — Analyst
Aman — Analyst
Rupesh Tatia — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Loris Labs Q4 FY ’25 Earnings Call hosted by DAM Capital Advisors. 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 the 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 Mr Nitin Agarwal from DAM Capital Advisors. Thank you, and over to you, sir.
Nitin Agarwal — Analyst
Thank you. Hi, everyone, and a very warm welcome to Laurent Labs Q4 FY ’25 earnings call hosted by DAM Capital Advisors Limited. On the call, today, we are representing Laurent Lab’s management, Dr Chawa; Founder and CEO; Mr Ravi Kumar, Executive Director and CFO; and Mr Vivek Kumar, AVP, Investor Relations. I’ll hand over the call to the management team to make the opening comments and we’ll open the floor for questions. Please go-ahead, sir.
Satyanarayana Chava — Chief Executive Officer
Thank you, Nitin, for the introduction. Good afternoon to all our stakeholders. Financial year ’25 has been a year of significant acceleration and diversification across our company and I’m proud of continued transformative progress we are making in enhancing capabilities, enhancing capacities, meeting complex needs of our customers, thereby creating value for all stakeholders. We continue to execute our strategic priorities with a strong focus on commercial execution. By leveraging our leading technology platforms, we advanced multiple critical stage projects and commercial-stage phase programs for big pharma that has significant patient benefits and also strong commercial potential for the company. I would say majority of these projects are utilizing cutting-edge technologies like biocatalysis, flow chemistry, continuous manufacturing, high-energy chemistry, action sector as well.
Which have been growing interest from our partners and also companies focus currently. While we continue to work towards realizing the potential of the late-stage pipeline, we’re also strengthening our focus to broaden the project funnel and servicing early-stage clinical programs, especially after commissioning our new small-molecule R&D facility recently, which leverages advanced process development capabilities. These efforts are helping us deepening our cooperation with major clients and thus securing long-term growth for the organization.
Our initiatives in-cell and gene therapies have also reported significant updates for the year. Our associate company, ImmunoAct has supported about 300 patients with very good survival rate using NexCAR19. Also carrying Phase-1 trial for pediatric purpose using and also another product got permission for Phase-1 clinical trials for BCMA. These additional manufacturing capacity for next CARP 19 is progressing as per schedule and will be ready for operations by September ’25. We have got a new leadership recruited to lead our initiatives on gene therapy and also antibody-drug conjugates.
We plan to invest over $15 million to build a GMP facility, which will have to do classmics,, both adenovirus and and also ability to do antibody-drug. Moving to our financial results. FY ’24 demonstrated strong resilience in our core business and we reported healthy operating results. The growth reflects continued robust demand for our CDM offerings and higher sales in FDF business. The company achieved a revenue of INR5,554 crores.
Gross margins were healthy and maintained around 55% range and EBITDA margins expanded by-4 percentage points to 20% following better operating leverage. When we look-back at our last five years, Larus has done successful expansion of the business and product portfolio. Today, our share of ERV revenues have come down from 67% to 43% in the last five years, whereas our CDMO share has moved from 13% to 28% and we are expanding into multiple therapeutic areas within our generic portfolio. These results demonstrate the strength of our business and give us confidence in our outlook.
Before we move the business performance, we have adopted and updated our digital reporting structure to make it simplified and focused along two distinct business models, CDMO and generics. In the CDMO, we are reporting results in small molecules and large molecules. The — in CDMO, small-molecule division has continued to build-on the high market momentum and saw robust demand for our integrated commercial offerings recording Q4 sales outgrowth INR461 crores.
For FY ’25, the division recorded about 39% growth. The growth was mainly driven by several mid to late-stage MC deliveries and steady increase in sales from new non-person assets, which was bought online during the second-half of this year. CDMO pipeline momentum has remained healthy across clinical and commercial pace and our full-year, we have seen the mix shifting towards increased high-value projects from big pharma, which is providing good support for long-term growth. As on-date, we have a pipeline of over 110 active projects, 19 in-human health and over 20 in animal health and crop sciences.
Over 15 commercial projects including APS and inconvens. We are also nurturing additional relationships in animals and crop science ingredients. Key CDMO focused growth projects progressing in-line with our plan. In 2025, small mole players will react to volume enhanced by 15% and we are further expanding our multi-site capacity for various modalities. In the large molecule CDMO, our Laras Bio division reported Q4 sales of crores.
Our sales is transitionally lower due to timing of shipments in certain international markets. If you look at FY ’24 performance is muted due to timing and discontinued lower profitability business. However, we see strong demand continued in AI portfolio. We are looking to break ground for the commercial-scale fermentation facility in by June 25.
We believe the new site will further accelerate on high-quality CDMO service capability and growing our industry position to offer a CDMO projects utilizing our NGM engineering platform. We proposed to invest close to INR250 crore in the projects which will more than double our fermentation capacity by end of 2026. In the generics, our revenue from generic division has continued strong quarter-on-quarter progress led by both ARV and developed market portfolio reporting a sales of INR430 crores. Performance of the FBF division is in-line growing 28% for the quarter and 12% for the full-year.
We have executed on multiple integrated CMO contract in the year and for some new contracts. We expect these increased sales to continue in future quarters, driving continued improvements in our utilization rates. Karka JV collaboration is progressing well and land acquisition completed. We expect to break ground for GMP facility by June ’25. Moving forward, 2026 will be year of rebalancing the generic R&D and resources mainly to enhance product pipeline and meet delivery commitment to our customers. On our R&D front, we have spent about 4.5% of our sales, sales which is higher by 7% year-on-year. Let me share brief on our quality and ESG side. In 2025, the company underwent close to 160 quality by multiple regulatory agencies and several customers, which was over 20% more than the previous year. Company has successfully completed audits without any critical findings. The company received AIR for Unit-4 with this no pending regulatory inspection outcomes for the company. We remain committed to advancing quality systems, meeting highest compliance standards from clients and global regulators. We’re also making good progress on ESG and initiative agenda for long-term success. Now turning into our broad FY ’23 outlook, our business is well-positioned and we are readily evolving towards our goal to become a more diversified CDMO CMO company with promising pipeline, enabling technology platforms and coupled with commercial excellence. We’ll continue to increase our — and deepening our collaboration with major clients and execute on CDMO potential while improving resources and. Operating margin is expected to improve from better asset deviation and also product mix. I acknowledge of a dedicated team, which remain committed to the unified vision of providing high-quality integrated solutions to global customers and creating value to our all stakeholders. With that, I would like to hand it over to Ravi to share some financial highlights. Thank you, Dr, and very warm welcome to everyone on our quarter-four and full-year FY ’25 earnings call. Our total income from operations is around INR5,554 crores, registering a growth of 10%. For a quarter, we have completed INR1,720 crores with a growth of 19% year-on-year. Despite the ongoing macroeconomic challenges, we are continuing to see high-level of demand for our offerings. Gross margin maintained at healthy level of quarter-four at 54.5% and per 12 months it is at 55.4%, mainly due to better product mix as well as the process improvements carried in some of our key large-volume APIs. Our EBITDA for quarter-four stand at INR477 crores and margins at 27.7%, whereas for the full-year, it is around 20.1%, which is in-line with our outlook provided a couple of quarters back. On full-year basis, we expect these margins to be higher as we continue on path to operational deleverage, especially execution of our long-term long-lead programs, new asset ramp-up, driving better capacity utilization. Our profit-after-tax for quarter-four is INR234 crores and per 12 months increased to INR358 crores. So this is with a growth of 122%. Our ROCE improved from 6.4% to 9.7% and but of course, still it is at a lower — close to double-digit, but it will improve further based on the asset utilization. On the capex front, we invested close to INR211 crores in the quarter and INR659 crores for full-year. The majority of the expansion, the capex is being invested into the CDMO or CMO projects. Our net-debt stood at INR2,594 crores and net-debt to EBITDA is 2.3 versus 3.1 in the last year. On the capital allocation front, our strategy remain unchanged and we will continue to prioritize investments into high-value business segments to drive near and long-term growth. You can refer our IR presentation for more details. With this, I request moderator to open the lines for the Q&A.
Operator
Thank you. Thank you. Thank you, sir. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star N1 on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star N2 two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Sajal Kapoor from Antifragile Thinking. Please go-ahead.
Sajal Kapoor — Analyst
Yeah, hi, thanks for giving me this opportunity. Before I ask my question, I would like to acknowledge that fat and during difficult times, you assumed responsibility and Dr and Raviji, both of you. But now that you have made significant turnaround, you are fully acknowledging the team’s contribution in your press release. And I mean this signals everything about the culture at Laurus Lance and I’m sure and Krishna will take this a strong fabric of culture and to the next level internally. And coming — coming to my question and slide 14 says 30% increase in continuous flow and 40% increase in biocatalysis. And then on Slide 26 and 25, we are saying 1.5 times expansion in client base Y-o-Y and we can see that 20 new projects are being added to the human CDMO. And can you add some color and help us link these very strong indicators together? And so we know that ex-China Laurus holds a leading position in the design and manufacturing of our enzymes as well as large-scale continuous flow manufacturing and how can we leverage this unique advantage to secure partnerships for those projects where innovators are actively seeking for a credible option outside China. Thank you.
Satyanarayana Chava — Chief Executive Officer
Thanks, Rajal for your comment. Leveraging our engine engineering and manufacturing capabilities in our integrated offering is quite visible now. We have many projects at different phases where we are doing multiple biocatalytic steps and some of the engines are manufactured in our bio facilities in Bangalore. And that trend is increasing. We also started developing our own engines for our big pharma partners. And I think the overlap and in-between chemistry and biology is a clear win and we have seen in some projects and the trend is increasing
Sajal Kapoor — Analyst
Okay. That’s helpful. DR. Satya, as many innovators are looking for a China-free supply-chain all the way to KSMs and intermediate today, what’s our preparation at the moment and what are we doing to derisk our indirect dependency on China? So by indirect, I mean, our intermediate supplier may be dependent on China for KSM today, but innovators are actively seeking for 100% indigenous India supply-chain. And what is the recent INR5,000 crore capex announcement and is a step-in that direction, if at all?
Satyanarayana Chava — Chief Executive Officer
We have that a team focuses on backward integration. There are some projects where people partners are very particular about avoiding certain sources. Some parts are okay. We have to balance it. Using all starting materials from one country are avoiding one country is not a scenario where we can do currently. I think we have to balance it depending on what customer is looking at. And finally, the outlook on the annual and gross lines CDMO now that we are commercial across both capabilities and crop included this quarter.
And how can these two segments drive our CDMO segment in the near-term? We have more clarity on our Animal business. By end of next year we’ll complete all our validations and go into commercial. We see significant jump-in our animal health revenues in FY ’26. Coming back to our Sciences, we commercialized the facility last quarter and then we delivered material to a partner. And this year also we’ll deliver some quantity.
Ravi Kumar — Chief Financial Officer
There are few projects which are at the negotiation stage, one project we had feasibility being done, another is at negotiation stage. We have encouraging discussions. But maybe we need another year to give more confident results about the partner programs and then future of our business. We need one more year to match division
Sajal Kapoor — Analyst
Sure, sure. And many more questions of the Satya, but I’m cognizant of the fact that there are many waiting in the queue, so I’ll rejoin and thank you. Thank you for all your responses.
Satyanarayana Chava — Chief Executive Officer
Thank you.
Operator
Thank you. The next question comes from the line of Deepak Kumar from Growth Partners LLP. Please go-ahead.
Deepak Kumar — Analyst
Hello. Yes, Deepak, please go-ahead. Yeah. Hi, sir. Congratulations first of all, on the fantastic results. In your slide, you have mentioned that tariff is trading very soft-term for your business. Deepak, can you speak little louder Deepak?
Satyanarayana Chava — Chief Executive Officer
Hello. Am I am audible now not really audible now? Yeah, not better. Yeah, so in the presentation you have mentioned that tariffs also did all this noise around US tariffs and all. This is creating — this won’t create much impact on your business. So just can you highlight a bit more on that how you are seeing that play-out in your case? You haven’t commented any on ta tariffs and it is it is too early to take any call on the tariffs.
Deepak Kumar — Analyst
Okay no, so what? So what exactly? I mean there would be some impact which you be. You must be a business on all the things which are going on in the global order right now
Satyanarayana Chava — Chief Executive Officer
I think Deepak we are not clear on your question can you please repeat no see as of now I think the there is no clarity on the we people are monitoring the US tariff situation. That’s what we mentioned. We won’t come to anything on the tariffs as such.
Deepak Kumar — Analyst
Okay, okay. Thank you.
Operator
Thank you the next question comes from the line of Ravi Agarwal from Agarwal Investments. Please go-ahead. Hello. Please go-ahead.
Ravi Agarwal — Analyst
Yes, Namas, sir, thanks for having me. Sir, congratulations first of all for a wonderful result. My first question is on your CAR-T technology. What is the — what can be our exact source of revenue in CART business sir?
Satyanarayana Chava — Chief Executive Officer
Hello is our company we only reported the full-year result revenue results from that profitability. No, profit proportionate the results we mentioned that the overall results will — and also they are also scaling up manufacturing capacity to 2,500 treatments and which will be ready by September this year.
Ravi Agarwal — Analyst
Okay, okay, sir. So whether it will be any royalty from hospital or in what way we can be — and what kind of opportunity or market we can have in. It is a sales by our associate company Immunoact to the hospital the product sale will be the revenue source.
Satyanarayana Chava — Chief Executive Officer
Okay, sir. And sir, one more thing I have to ask that last financial year, I have seen that many Chinese companies are forming joint-venture for biotech supplies in China. Since US company and European company form JV, a Chinese company. So whether it affect Indian biotech and Laurus last year actually my question, my, my question is my, my question is just the last financial year, many Chinese company has formed joint-venture with US and European company for biotech supply. So whether it affects Indian biotech company and our also, no, we are not planning any.
Ravi Agarwal — Analyst
Yeah. Okay. Thank you.
Operator
The next question comes from the line of Bharat from Quest for Value. Please go-ahead.
Unidentified Participant
Hello, hi., can please throw some light on KarXT and like with this new on subsidy coming up with computer patient capacity getting commercial this year. May know-how many patients are you expecting to be treated per year. See when we mentioned 2.5 treatments, the facility can produce enough CAR-T to treat 25 patients
Satyanarayana Chava — Chief Executive Officer
Yeah, I think now I think 300 patients were treated I got three years. So current facility can treat 300 patients per year, but the new facility, once it is ready, it can treat up to 2,50 patients per year. Okay, thanks. And due to this recent trade war between US and China, did you notice any pattern like increasing demand from innovators for the current commercial molecules like, for example if China is first source and is second source, then our innovator thinking like to reduce quantities from China and increase trend. You know adding a vendor validating a product, getting approval is a three, four-year process. So I think a two, three year — six months time may not change the prospects significantly. We haven’t seen much change in our customer behavior in the last three months.
Unidentified Participant
Yeah. Okay. Thanks. And my last question is regarding this ARV FDF sales.
Satyanarayana Chava — Chief Executive Officer
I guess that for the current quarter, it is around INR450 crores is what my guess is because we didn’t reporting the PPT, but I think it should be around INR400 crores, which is quite high compared to the normal run-rate. Did you prepone the deliveries to global funds due to uncertainty in the US funding sorry no preponement was done no sales were advanced because of these yeah you know what is the year the but we have done about INR2,500 and 50 crores, but for every quarter similar revenues to last year.
Unidentified Participant
Yeah, thank you. That’s it from my side.
Satyanarayana Chava — Chief Executive Officer
Thank you.
Operator
Thank you. The next question comes from the line of Jivan Patwa from Sahasurar Capital. Please go-ahead.
Jivan Patwa — Analyst
Yeah, congratulations, sir, the wonderful set of numbers, especially the CDMO has shown a very good impressive growth. Just wanted to understand next year FY ’26. So we have given a qualitative comment, but I just wanted to understand how — how do you see the growth coming on the formulation side, specifically. One, I
Satyanarayana Chava — Chief Executive Officer
Understand with the new CMO contract starting in December, that will add to the growth in the formulation. But apart from that, how do you see the growth coming in the formulation side, especially non-ARV formulation side. So non-ARV formulations increase we are getting few approvals in US and Canada, okay. And also our expansion to our existing CMO partner will also be commissioned by last quarter of this calendar year. So the non-ARV formulation revenue will go up from Q3 onwards.
Yeah. So for first two quarters, there may not be significant growth in the formulation. That’s what you’re saying. Yeah, yeah. Okay. Okay. And on the CDMO side, this first — second-half of the FY ’25 has been really impressive. But do you think the similar pattern will be for FY ’26 that H1 will be a little weak and H2 will be strong. Maybe I think I think let’s — we should not look at quarter-on-quarter basis. So as we are you have to compare and typically what happens in CDMO is — is — so I have seen this pattern since many last two, three years. But first-half is typically a little weaker and second-half is stronger with more deliveries. So is it going to be similar for FY ’26, maybe we’ll give more information during the next quarter conference call. But right now, we can say the FY ’26 growth looks good then we will you significant growth in revenues and profits. That’s what we can tell you.
Jivan Patwa — Analyst
Yeah. Perfect, perfect. No, that’s sufficient, sir. Thanks a lot.
Operator
Thank you you. The next question comes from the line of Tushar from Motilal Oswal Finance Service Limited. Please go-ahead.
Tushar — Analyst
Thanks for the opportunity. Sir, firstly on the — so if you could just call-out a bookkeeping question in terms of ARV, API and formulation sales for the quarter, ARV API sales for the quarter was INR800 crores.
Satyanarayana Chava — Chief Executive Officer
Yeah, INR800 crores. So API and formulation separately, if you can share INR800 INR3 crores Tushar. And so probably we can — you can take the numbers from Vivek after call any more or less INR50 cro INR400 crores from API and INR400 crores from formulations. Sure. So while the — there has been quarter-on-quarter significant increase in the ARV sales as I could see. But at the same time, the gross margin reduction is relatively lesser. So is it that — is it to do that the gross margin for the ARV as well as non-ARV generics business is similar to that of CDMO business. Is that the safe assumption?
No. See, as we mentioned, our ARV sales, you look at in year-on-year, we increased only by 1% from INR25 — close to INR2,550 crores. Yeah. So not much significant growth in ARV sales. And we expect FY ’26 also will be in the similar range. When it comes to our gross margins is always we maintain at around 55 levels. That means our operations were running very efficiently. The processes were were running efficiently and our product gas margins are also very healthy. Maybe if our CDMO revenues grow significantly higher than current quarter, then our margins may improve further. I’ll put it that way.
Tushar — Analyst
Got it. And so just explaining that the CDMO is now like INR400 crores to be a sustainable base to look for given the kind of contracts you have at hand, is that a sustainable base to look for? Or does it have any sort of launch quantities which might have some repercession in the near-to-medium term?
Satyanarayana Chava — Chief Executive Officer
I think I can say that we have good projects on-hand and the opportunities looks interesting and we expect growth of CDMO revenues from year FY ’25 to FY ’26. We are not going to quantify how much we are going to grow? So just one more on the overall capex for FY ’26 and if you could also further break-down that into different areas? FY ’26 capex will happen on a multiple fronts. The capex we are doing to increase our formulation CMO that will be capitalized in FY ’26 and we’re also doing some — we’re also plan to do some specific capex for another partner in our formulation. And our fermentation capacity, we’re investing close to INR250 crores in and we are adding more production blocks at for our API and CDMO business and by year INR250 crores. That’s one. Fermentation is INR250 crores where we are investing.
So this year also maybe closer to INR1,000 — around INR1,000 crore will be capex and we will be increasing debt to support the capex no, that we may not increase significantly right.
Tushar — Analyst
And just lastly, with these sort of new facilities coming on-board in FY ’26, the absolute increase in the operational cost, if you could in terms of employee and other expenses, which currently maybe the quarterly result is about INR500 crores per quarter, is the new facilities coming up because this is something very certain, right, irrespective of what kind of revenue, if you could help us understand what kind of quarterly offsets will be there?
Satyanarayana Chava — Chief Executive Officer
In FY ’26, we don’t — we are not expecting any new greenfield facilities come to operations. There will be more production blasts in our existing facilities only. So the NAM addition may not be very significant. So we don’t expect significant operational deleverage in the financial year ’26, because we are not adding more new sites of.
Tushar — Analyst
Got you, sir. This is interesting. Thank you. Thank you. That’s it from you sir.
Operator
Thank you. The next question comes from the line of Balaji from Kotak Mahindra Bank. Please go-ahead.
Balaji — Analyst
Congratulations sir for a healthy result. Almost year. I think last three years, these are best results as of now. Sir, what was your projection on PEU, which is uncomfortable as of now at 175 at this level. After these results, what is we were to stand the PE might be around INR100 or something like that, sir. How can we comment on PE like we can only comment on business prospects and products, facilities, regulated inspections.
Satyanarayana Chava — Chief Executive Officer
We have no control on how much multiples and all. So we are not the right people to comment. And we don’t have experience in that.
Balaji — Analyst
Okay, sir. Okay. Thank you, sir. And actually your business and everything is going on very right way. So we are comment on business only the fundamental side only, the number side only I have a doubt. That’s the reason I attended the question. Thank you, sir. Thank you very much. Thank you.
Operator
The next question comes from the line of Keshav Mundra from Guardian Capital Investment Advisors. Please go-ahead.
Keshav Mundra — Analyst
Am I audible? Yeah, you are audible. Hi, so congratulations on the amazing set of numbers, right? So two questions. Can you speak louder by? Hi, is this audible now? Slightly better, but I think we want you to use handset, okay, not speaker. Okay. Yeah, I’m using the handset right now. Okay. Okay, can you just speak louder, please?
Yeah. So basically my question is on the share of API and CDMO segment, right? So we see that the share of CDMO is gradually picking-up and API segment is slowly not reducing, but it’s slowing down, right? So could you give us an idea about how do you see the margins and the revenue growth rates for these two segments in over next year in FY ’26? And on the same front, can you give us an idea of where you would be focusing upcoming capex move towards these are my two questions,
Satyanarayana Chava — Chief Executive Officer
Sir. As our share of CDMO increases, we also expect the margin improvement should happen. The second, the majority of capex is happening to service CMO or CDMO products and could it be — would it be possible to give an idea of what revenue growth you’re seeing in the CDMO segment for FY ’26. We are not giving any forecast or guidance in terms of how much growth we are going to expect. Maybe as we mentioned, we expect growth in revenues and also profitability in FY ’26 than come in FY ’25. I think we would like to stick to that statement as
Keshav Mundra — Analyst
An elaborating further. Understood, sir. Thank you, sir. Thank you for that.
Operator
Thank you. The next question comes from the line of Kunal Dhamesha from Macquarie. Please go-ahead.
Kunal Dhamesha — Analyst
Yeah. Hi, thank you for the opportunity. So I wanted to understand on the ARV business, I know that USAid is not a big part of our ARV business. But after the announcement, what are you seeing on the grounds and what are some of the latest development on that front.
Satyanarayana Chava — Chief Executive Officer
We recently, once we came to know the USAD is supporting treatment, but not willing to support prep, that is prevention. So we haven’t seen any significant decrease in orders, our inquiries coming for treatment and we don’t see significant impact to our revenues going-forward in FY ’26. So we — we will maintain revenues closer to that 2,400, 25 2,600 around that level. And sir, let’s say, as a risk mitigation plan because we would be deploying meaningful capacity towards this — this business.
Kunal Dhamesha — Analyst
So I want to understand is it possible to pause capex for us for now and utilize these capacities for the CDMO business rather than doing incremental capex, because anyway, there are lot of uncertainties, the margins are not that great. So is it a possibility that you would put on the — when you look at the all business segment?
Satyanarayana Chava — Chief Executive Officer
, we are a strong leader too to close to 40% of the emerging HIV patients and we expect we’ll maintain that leadership position. We don’t see any impact coming from either product replacement or lack of funding will be a problem for us to lower or allocate our ARV capacity to something else. We don’t expect so. Yeah. We’re running our ARV API capacity fully. And going back to your question, we are using maybe 10% — 12% of our formulation capacity for HIV manufacturing, not more. But API would be higher, right right? So API is higher and we are running at full capacity. We are — and we don’t see that going down in the — not just FY ’26, even next two, three years, we don’t see any challenge there.
Kunal Dhamesha — Analyst
Okay. Sure, sir. Thank you and all the best.
Satyanarayana Chava — Chief Executive Officer
Thank you.
Operator
Thank you. Thank you. Participants, please request — please restrict yourself to two questions. If you have any more questions, kindly rejoin the queue. The next question comes from the line of Rajat from Tata Mutual Funds. Please go-ahead.
Unidentified Participant
Yeah. Hi, sir. Sir, Kunal just asked my question. So more bit on it. Can you just quantify how much is the business dependent on all these agencies like Global Fund, Melinda Gates. If you could just quantify that would be really helpful.
Satyanarayana Chava — Chief Executive Officer
Based on reports about 20% of HIV treatment is dependent on US state, real state. US government funding so, and for us also that number would be similar if you divide our sales is not two-third, maybe 55% is API and 45% is formulations. So for our formulation business, maybe you can take — I think that 20% exposure of our formulation business. That is maybe INR1,000 crores in 25 crores to INR50 crores coming from US supported programs globally.
Unidentified Participant
Sure. So in case there is this risk which comes in on the treatment as well. So in that case, how do you think about the business like do you renegotiate with countries for tenders? How does it happen? Are you thinking anything around this
Satyanarayana Chava — Chief Executive Officer
. We are not renegotiating. I think we will service what orders are placed. See, most of these aren’t replaced by global agencies except to South Africa. So I think we will get the allocations and we service those orders.
Unidentified Participant
Sure. And lastly, sir, last quarter one project. Those were your two questions.
Operator
I would request you to rejoin the queue. Okay. Thank you. The next question comes from the line of Manoj from Asset Management. Please go-ahead.
Manoj — Analyst
Hello. First of all, congratulations, Dr and Ravi for a good set of numbers. So my first question is if I look at the operating cash-flow and particularly working capital, can you help us understand the reason for slight deterioration there? And I believe that is the reason for a slight increase in our debt also. Is it temporary — is it because of higher sales during the quarter, if you can help us understand on that side?
Satyanarayana Chava — Chief Executive Officer
So partly because we are handling very long complex projects in CDMO, our order-to-delivery is much longer when compared to programs. So some of the working capital is stock in our CDMO programs. That’s one reason. And second reason is as our sales of formulations increases in US and Canada, our working capital is also going up because of longer lead times in logistics right now. So these are the two reasons for our increased working capital.
Yeah. But particularly, receivables have gone up like from receivables, I wanted to understand particularly why there is such a big increase on the receivable side. Look, if you look at the 4th-quarter revenue is in higher revenue, right, that is one of the things. But when you — when you take a number — number of days as for the full-year, it looks like a higher. But if you look at INR17 crore INR50 crores is a sale-in the 4th-quarter, the receivables are INR2,000 crores.
So that’s how you have to look at. Got it. Got it. And sir, my second question is like on Slide number 25, you highlighted that there has been a significant increase in RFPs and active pipeline projects, which is 110 now 90 is on the human side and 20% is on the animal. So can you help us understand that what this number was like two years back and how do you see as an investor, how do we see the revenue potential of this and at what stage these pipeline projects are? This number used to be about 601 lakh number.
Yeah. It has almost doubled, right? 60 to. Yeah, around 60. Yeah. Yeah, right, right. Okay. And sir, the second part is that I mean some color on the quality of this pipeline project, how do we see revenue potential out of this pipeline which particularly I’m asking whether a good amount of that are near to Phase-3? Yeah, have mix of projects. But I’m sure the projects majority in Phase-2 and 3, not in Phase-1, I would say that.
Manoj — Analyst
Great. Thank you for taking my question and wish you. Thank you.
Operator
Thank you. The next question comes from the line of Harshit from Diamond Asia. Please go-ahead.
Harshit — Analyst
Hello. Am I audible? Yes. Yeah. Thank you. Thanks a lot for taking my question, sir. Sir, one question related to ARV when the — Mr President of said multiple times that they have stopped the USE funding. So as you have highlighted that it is impacting around 22% of our sales. Is it understand also? Yeah, said it is affecting the formulations business,
Satyanarayana Chava — Chief Executive Officer
Which we are catering, which is funded by US funds is maybe around INR250 crores. That’s what we said. It’s not that we are going to lose INR250 crore sales.
Harshit — Analyst
Okay. Okay. Got it, sir. And the second thing, we have been a tested partner of the denovators and during the COVID time also we have — we have given them the time we supply and all. And the partner has recently called up a molecule. So will it have impact on us or not? Actually, we didn’t get your question very clear.
Satyanarayana Chava — Chief Executive Officer
Can you repeat?
Harshit — Analyst
Sir, we are a partner of a big innovator and we have given them timely supply them during the COVID and helped the world a lot. And now that the big innovator has called off a big molecule which delivered everything and also be a very trusted supply to them, different able to can you get onto the handset mode in case if you’re on the handset because your voice is quite muffered. Is it better now?
Satyanarayana Chava — Chief Executive Officer
The letter has been has been known as one of the trustal supplier of the big innovator of the world and is supplied them at the magacent and the time and then as a trusted supplier, the business supply-chain and big innovator has called a big molecule in the development. So will it have impact on? It — I mean just you know that the is closely with them. So will it impact on Loris or not? Maybe you had to write to Vivek we can answer, but we have a lot of difficulties in understanding your question. I’m sorry for that.
Harshit — Analyst
Okay, sir. Thanks.
Operator
Thank you. The next question comes from the line of Chandra Moli, an individual investor. Please go-ahead.
Unidentified Participant
Thank you for giving me this opportunity. I’m happy with the quarterly result that has posted. I wanted to know when will we reach a return of capital employed to the early now, ’21, 22 year levels and also on the return-on-equity going back to those levels. If I compare with TV for other competitors they are already there.
Satyanarayana Chava — Chief Executive Officer
So would I be as an investor right in expecting that now on the growth path, therefore the next 2, 3, 4 years, you will be reaching those higher-level. I think your point and observation is very, very valid. If you look at the ROCE numbers, we were there earlier. It is not that we never had that number. It will take few years for us to get there again. I think we have a desire and putting our best efforts to get there. I think we’ll get there. I don’t want to attach in here when we’ll get there, but we are putting efforts to go there.
Unidentified Participant
Thank you, sir. The second question is now that you are getting into multiple optionalities, cell therapy, hospital derivative formulations, crop sciences, now would you be rewarded the long-term shareholders with optionalities of creating value by divesting such businesses as and when they reach scale and when do you think you expect them to reach such scale if you look at we have created well-diversified CDMO offerings, human health, animal health, crop sciences, dietary and cosmetic ingredients small molecules in this and large molecules like enzymes and cosmetic proteins. Out of these I would say we need some time to get to a scale.
Satyanarayana Chava — Chief Executive Officer
Our majority of CDMO revenues are coming from human health right now and that will continue to grow. Our annual health will peak in FY ’27 maybe, but we are also nurturing a new partnership in, then that partnership will give some additional revenues. In Craft Sciences, as I mentioned to one of the question, we need one more year to give more granularity in the division how growth looks like.
Unidentified Participant
Thank you, sir. I’ll come back-in the queue for more questions.
Operator
Thank you. The next question comes from the line of Aman from Nomura. Please go-ahead.
Aman — Analyst
Yeah, hi, sir. Can you hear me? We can hear you. Yeah. Yeah. Sir, in the press release, you mentioned that the generics performance was softer with a lower in the oncology API side. So when do you say this oncology API performance picking-up and could you just quantify what was the API sales this quarter?
Satyanarayana Chava — Chief Executive Officer
So we — as we mentioned, we’ve modified our reporting system to a simplified for giving generic APIs, formulations and we are also giving overall API, ARVs, combining APIs and formulations. I think if you look at oncology APIs are not going to define the growth path of Larus Labs previously, currently and in the future also. So if we grow by INR100 crores or sell less by INR100 crores, it’s not going to impact significantly. That is the reason we modified our reporting pattern to make it simple.
Aman — Analyst
Yeah. Okay, sir. Thank you. Sir, my next question is on the CDMO market that you have present in Slide 7. You said at a market which is impacted by the pricing pressure from the IRA.
Satyanarayana Chava — Chief Executive Officer
So have you seen these pressures in your customers to — in your CDMO customers trend what has been the impact of the IRA on your pricing or on your revenues per last two, three, three years. So I think that is a general commentary we made. It is not that broader commentary but we — a lot of assumptions. We gave market scenario and in a concise there, but it has nothing to do significantly with Laraf Labs offering in GDMO.
Aman — Analyst
Yeah. Okay, sir. Okay. That helps. Thank you, sir. Thank you for answering my questions.
Operator
Thank you. The next question comes from the line of Chirag from Wine Pine Investment Management. Please go-ahead.
Unidentified Participant
Thanks for the opportunity and congratulations on good set of numbers, sir. Sir, my first question is with respect to the CDMO revenue that we reported this quarter and in Q3. So first question, sir, can you just comment a bit on the contribution coming from big pharma and late-stage because we have been mentioning that and can this sustain for a reasonable period of time, at least for three, four quarters or there is element of lumpiness which is there. One good thing in our CDMO revenue is coming from majority big pharma partnerships.
Okay. So what we can expect, we have a partnership with big pharma. So there is a continuum of projects where we are not working on a success of one project forever. So our partners have a very strong pipeline. We keep on getting more-and-more projects and our project — that is the reason our project pipeline is increasing.
Satyanarayana Chava — Chief Executive Officer
Okay, so this was not the case earlier, but two years back, this was not the case. So the volatility that we have been seeing in the past on CDMO will subsidize significantly. That is the right way to look at it can you repeat your question? So I was saying, in the past, this was not the case, right? So the volatility that we used to see in CDMO revenue should subsidize significantly going ahead given more number of projects which same big with the similar same customer and more number of big pharmas in our CDMO — CDMO revenue, right? And given that they are late-stage also.
Yeah, earlier, we have a lot of revenue volatility because we are handling several early-stage clinical programs, whether they go to late-stage or not, there’s a lot of volatility now some volatile will be there. I’m not saying there will be no volatility, but that is reduced significantly because our number of active projects gone up. Yeah. And sir, next-stage would include Phase-1, right, sir? Yeah, you’re right. Let’s say we’ll include Phase-1. And the second sir, you made a comment that you want to invest in ADC. I think if I heard correct, 50 million-odd dollars, right? So can you talk a little bit about it, what exactly you are intending to do in ADC, what part you are running to cover in ADC and what is the thought process? Because your plate is already full in that sense, given our balance sheet and the debt level. So if you can just talk more about it. So we already make payloads and linked-ups in antibody-drug conjugates. We have request from our partners to get into conjugation. We are not going to make maps, we made very clear earlier also. We only do conjugation because we have good experience in making payloads and linkers. Sir, what would be the revenue of the ADC currently for those were your two questions I would request you.
Unidentified Participant
Yeah, just a clarification. Just a clarification. What is the revenue of ADC currently for us because we are doing payload and linkers and currently it is a few million dollars, nothing more.
Operator
Yeah. Okay. Okay. Thank you. Thank you. The next question comes from the line of Utsav Jaypuria from DAM Capital. Please go-ahead.
Unidentified Participant
Hi, sir. Thanks for the opportunity and congrats on the strong performance. Sir, if I look at your revenue mix today, CDMO is close to 30% of revenues. So how do you see this mix evolving over the next two, three years? Like is there a number that you’re targeting internally.
Satyanarayana Chava — Chief Executive Officer
We expect the revenues coming from CDMO segment will grow and we are not giving a number for. So it will grow, as you have seen, our ARV revenues are — we believe it’s going to stay closer to INR2,500 crores in the medium-term as well. And our efforts in increasing our product portfolio and adding more products in generics is also happening. Our CDM — CMO in generics are also growing. So as we mentioned earlier, we expect significant growth will come from our CDMO division. So it will grow and we are not adding any percentage to that.
Unidentified Participant
Okay, sir. Thanks. So, sir, what could this mean for margins over the next two, three years EBITDA margins perhaps? As we see the more revenues contribution goes up, we expect margins will also — should also improve. Yeah. Okay, sir. And just lastly on the JV, what are your plans for this business in terms of the targeted products and therapies that are the planning to introduce. I think it is at the early-stage right now and maybe our partner is more keen to diverse those details than us. Okay, sir. Thank you, sir.
Operator
Thank you. The next question comes from the line of Rupesh Tatia from IntelSense Capital. Please go-ahead.
Rupesh Tatia — Analyst
Yeah. Thank you sir for the opportunity. My first question, sir, is this 15 commercial projects, how many are human health and how many are animal health? And then whatever projects are there in-human health, are you like a single-source supplier or a dominant or primary supplier in post? That is question number-one. Yeah. Thanks for raising that comment. So raising that 15, I think those are human health only. We are not adding any animal health into that. Maybe next time we’ll add those everything into one and then show. But like harmonizing will also link those two together and then give one number. So 15 what we mentioned is human health yeah, sir but are you? Are you like a single-source supplier or a primary supplier in those 50 no, we don’t want to reveal that information but that I mean that gives some indication on quality of business, sir, right?
Satyanarayana Chava — Chief Executive Officer
I mean, you have always talked about your business. About INR1,000 crore revenue is coming from commercial supplies. I’ll put it that right. Okay, okay. And sir, I mean next year has — there is a very clear trajectory. I think we have some INR100 crore INR600 crores of asset, very clear trajectory, INR150 crore INR200 crore of agrochemical asset, I think very clear trajectory in-full three. But the rest of the business I mean, there is no kind of like a way for an investor to guess.
So either you give the financial guidance or you give capacity utilization guidance or in some way — either you give the financial outlook or you give some things about operational outlook? Otherwise it becomes very difficult. So that is my question. Non-annual, non-agrochemical CDMO business, how will the look in two figures? One thing I wanted to give information, when you have animal health, crop sciences, supplements into our CDMO, because all those doing have similar gross margins.
See, we don’t want to club low gross margin business with high gross margin business. So we club that into one because all those — all the revenue coming from one-product to one customer and mostly it is for branded companies. So we don’t need to segregate revenues come from Health, Sciences, supplements and then give you five headings. All those business lines have similar gross margins because maybe what is the total gross block in the CDMO business as of today and how much, how much are we utilizing? Grass block for these division so we don’t have a specific. Some ballpass number — some ballpark number will be fun. No, we can’t because it is in — it can utilize for both generics as well as CDMO, how can we give a separate asset? It’s very difficult. And well less than, we put down INR700 crore that number we can give you. Yeah. Rest of the business crores? You’re done with your two questions.
Operator
I would request you to fall-back into the queue. Thank you. The next question comes from the line of Sajal Kapoor from Anti-fragile Thinking. Please go-ahead.
Sajal Kapoor — Analyst
Yeah, hi. Thanks for the follow-up. Dr, with close to 40% employee base in R&D and quality, assuming a more industry level 15% attrition rate. How do you — how do you see the demand-supply dynamics given the fresh capex that we need to undertake the recent an agreement that we had with the Andhra government, I mean, do you — do you see us getting into a challenging situation where we are not getting the right kind of talent for our requirement, because our, our, our requirement for R&D and quality will be in few thousands, right?
Satyanarayana Chava — Chief Executive Officer
I think attrition is in early teens, mid-teens. So even our quality and R&D, as you rightly mentioned, about 40% of our employees in that division in that both divisions put together. We have to recruit 400 people every year to maintain at the same level and we have a well-established first mechanism in internally in terms of graduates from the universities, people with one or two experience, I think we are managing and we believe we will continue to do that okay. So you don’t see that to be a challenge, including the fresh greenfield brownfield capex that we have just announced, it should not be a problem. We believe it shouldn’t be a problem. Okay, okay. Fair enough. Thank you.
Operator
Thank you. Thank you. Thank you. The next question comes from the line of Manoj from Carneal Asset Management. Please go-ahead.
Manoj — Analyst
Hello, sir. Thank you for taking a follow-up again. So I was just looking at like from FY ’22 to FY ’25, total capex which you have done is around INR3,200 crores. And in one of the slides, you mentioned that the slide just before that, that our current asset turnover is around 0.83 vis-a-vis average of 1.1 times. And considering large portion of this capex must be towards CDMO. So I was just trying to understand that with this kind of capex, which is already done, in two, three years’ time, if INR8,000
Satyanarayana Chava — Chief Executive Officer
Crores kind of top-line from CDMO possibility of on the capex which we have already done and looking at the pipeline of Phase-2 and Phase-3 which we are having. It’s a mix of capex in the greenfield sites and brownfield investments were done. So our investment in animal health and craft sciences will take lot of time to go beyond one as well ton ratio because those are new investments and our formulation investments are yielding good results. So once the idea we put that slide is to give, there is a possibility to go back to those levels. That’s the confidence want to give it to our investors.
And we had 1.1 asset tonne earlier. Currently, it is under-utilized. And once utilization goes up, we can get back to that number. Yeah. And sir, the question — the reason for asking this question because your ARV is not going to grow and growth will come from CDMO only. So if this 0.83 to 1.1 happens, then CDMO has to contribute to that. So is INR3,000 crore a possibility because if we have to read — historically we have done even 1.5x because of the one-time order, but if I take only 1.1x also, is that a possibility?
See, we were — observation is very right. The asset turnout ratio for CDMO is higher. And once — it all depends on the projects scale and the complexity of the projects. I think you have to watch — I think we have to watch — we can’t give you a number right now where we’ll go there. I think the capex, what it went or what is going to be and a CDMO and apart from that, even a formulation we are investing it.
So I think you will see the growth because we can’t specify the numbers, we are looking at as an asset turn. So we — we can’t give more details, but yes, it is a potential to grow more in a CDMO and a formulation. These are the two are the growth drivers. And just one last you mentioned that next year your capex will be INR1,000 crores. With this INR1,000 crore capex and the way the working capital has moved, how do you see the debt level — whether that level will go up or you will be able to manage with the current debt level and INR1,000 crore capex will happen out-of-the internal cash-flow? The debt level will not significantly grow. We were indicating before also like maybe 10% minus or plus. In that range actually we will move. Okay, 10%. So has happened this year, so that next year that if it is at 10% to the current level, it is maybe INR250 crores plus or minus.
Rupesh Tatia — Analyst
Okay. Got it. Thanks for taking my question.
Operator
And thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for the closing comments.
Satyanarayana Chava — Chief Executive Officer
Thanks, Vijin, and all the investors for their very insightful questions. Thank you.
Operator
Thank you. Thank you, sir. Ladies and gentlemen, on behalf of DAM Capital Advisors, that concludes this conference. You may now disconnect your lines