SUVEN PHARMACEUTICALS LTD (SUVEN) Q3 FY23 Earnings Concall Transcript

SUVEN PHARMACEUTICALS LTD (NSE:SUVEN) Q3 FY23 Earnings Concall dated Feb. 07, 2023.

Corporate Participants:

Rishab Barar — Investor Relations

Venkat Jasti — Managing Director

Venkatraman Sunder — Vice President, Corporate Affairs

Analysts:

Rashmi Shetty — Dolat Capital — Analyst

Cyndrella Carvalho — JM Financial — Analyst

Darshit Shah — Nirvana capital — Analyst

Damayanti Kerai — HSBC — Analyst

Abdulkader Puranwala — Elara Capital — Analyst

Gokul Maheshwari — Awriga Capital — Analyst

Tushar Manudhane — Motilal Oswal — Analyst

Pratik Kothari — Unique Portfolio Managers — Analyst

Unidentified Participant — — Analyst

Rajasekhar MS — Individual Investor — Analyst

Hussain Kagzi — Ambit Asset Management — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q3 and Nine Months FY ’23 Earnings Conference Call of Suven Pharmaceuticals Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Rishab Barar from CDR India. Thank you and over to you.

Rishab Barar — Investor Relations

Good day, everyone, and thank you for joining us on this call to discuss the Q3 and Nine Months FY ’23 earnings for Suven Pharmaceuticals. We have with us Mr. Venkat Jasti, Managing Director; and Mr. Venkatraman Sunder, Vice-President, Corporate Affairs; and Mr. Subba Rao, CFO of the company. Before we begin. I would like to mention that some statements made in today’s discussion may be forward-looking in nature and may involve risks and uncertainties. Documents relating to the company’s performance have been mailed to you earlier. I would now like to request Mr. Jasti to share his perspectives on the performance and outlook. Over to you sir.

Venkat Jasti — Managing Director

Thank you, Rishab, and good afternoon, everyone for tuning into the update on the quarter 3 results of Suven Pharmaceuticals Limited. As you know, we have quarter-on-quarter a sequential increase in the revenue. But if you see the nine months, it’s more or less flat. At the same time, the EBITDA is less by about INR30-odd crores. This is mainly due to the product mix. As you know, the specialty chemical has more or less equal to the number, the whole year number of last year, we have achieved this quarter 3 itself.

Because this is — because of the seasonality of the uptake because when we grow — I mean, starts[phonetic], sometimes it will be front and sometimes mostly backward. And this time, it has moved to the third quarter itself and a little bit going into the quarter. And that means this keeps happening, and it may not be the same year-on-year. Next time, it may be a little bit later also, it’s possbile, but it will be bunched up in one quarter, like compared to the last year, third quarter this year, third quarter, the specialty can be almost doubled.

But whereas the [Indecipherable] has come down mainly due to the less solid revenue out of this year. And — we have mentioned in the last con call that, I mean, originally in the beginning because of the less COVID molecules, the revenue will be down by around 5% or so. And in the middle of the year, we have said we may be able to catch up to the [indecipherable] compared to last years number or maybe a little bit better. So as of now, these things stand, I think we — maybe we’ll be able to come to the same number as last year, maybe a slight growth too also is the possibility.

And if you see on the macro level, since I can not give you any kind of projections since our future visibility is only six months. I just wanted to give you some kind of macro scenario. As you know, the CDMO business is globally growing around 7%[phonetic] with a market size of about $140 billion. And after this COVID now the R&D thing is coming back from the global pharma into the original field. And also, we have heard from our customers during [indecipherable] in November that they are also looking to change from China to other countries and India is likely to get benefited.

It may not happen overnight, but things are going in the right direction overall. So with what we have seen over the last 20 years, we’ve been doing customer interaction and customer stickiness and more opportunities for us with increased capacity and increased chemistry and as you know, we have been doing very good for the last four years with CAGR above 41% growth. So all in all, we see — you may see this up and down, as you know, in our business model, it’s not quarter-on-quarter. Sometimes it may not be year-on-year, but at the same time, things are looking good, but there will be ups and downs in between which you — most of you are well aware of it.

And I think that’s where I want to — the long-term growth prospects are very good. And we expect that to benefit us in the long run, especially with the China plus 1 and China minus 1, whichever way you fall in. I think all-in-all, we look at it, but this is the status as of now. I think it’s better for me to answer you on the outlook. So I now look forward for your questions.

Questions and Answers:

Operator

Thank you very much. [Operator Instruction] We have our first question from the line of Rashmi Shetty from Dolat Capital. Please go-ahead.

Rashmi Shetty — Dolat Capital — Analyst

Well, thanks for the opportunity. Sir, on the Specialty Chemical business, though you alluded the growth through seasonality. Just want to understand that the current sales during the quarter and in the first none months of that sum, is it from the only two molecules or we have received some repeat orders from the third molecule also? And how do we — earlier, we guided that there would be a flattish growth in FY ’23 in Specialty Chemicals business, but now because of the higher growth in the nine months, do we upgrade our guidance on this piece of business for this particular year.

Venkat Jasti — Managing Director

Yes. As I was telling you it’s cyclical in nature compared to other businesses in Specialty Chemical. The situation we expect to the drought, the rainfall or whatever it is, we’re starting a new crops and all, they keep changing it. So this year, it was preponed, it looks like, and they got more requirement came in. I think they have taken based on that [indecipherable] also that’s why if you see nine months itself, we have [indecipherable]. With respect to the product, one product being a small amount of the third product also sold in the first quarter, which we have told you earlier. Otherwise, these two products are the main things. But at the same time, it can happen that the next requirement well maybe pushed to the first quarter, second quarter, maybe to the third and fourth quarter, again, all bunched up in one go. But all in all, we look at — as for the customer thing only, we are saying it’s a flattish growth on the Specialty Chemical. But when the things are good, suddenly they may get the requirement, and we were able to supply in time the way it is that’s where it goes.

Rashmi Shetty — Dolat Capital — Analyst

And sir, on your CDMO pharma business, we — in the middle of the year, we expected that probably for this year, we will be able to do some small single-digit growth. But considering the fact that we have shown a decline in second quarter and third quarter do you think that for the full year, we will see a decline in the Pharma business, CRAMS business? Or you think that some sales were deferred and it will come back in quarter four?

Venkat Jasti — Managing Director

I think a slight decline will be there, but we hope to — I mean quarter 4 may not make it to the concrete number to that level. But in general, based on the feedback using this [indecipherable] last November, I think now in the past quarter all the year starts where most of you working in very big companies in January. So I think we should be able to see more number of opportunities coming and of course, repeat business will be coming in. I think as of now except the COVID and some generic molecules, other things are all on track on. I think they’re not much different. So we expect a single-digit growth should still happen.

Rashmi Shetty — Dolat Capital — Analyst

In the Pharma business, you expect that ex COVID molecule? Or you still expect a single-digit growth?

Venkat Jasti — Managing Director

Yes.

Rashmi Shetty — Dolat Capital — Analyst

Okay, sir. Thank you. That’s it from my side.

Operator

Thank you. [Operator Instructions]. Our next question from the line of Cyndrella Carvalho from JM Financial. Please go-ahead.

Cyndrella Carvalho — JM Financial — Analyst

Thanks for the opportunity, sir. We are looking at this quarter and.

Venkat Jasti — Managing Director

Cyndrella, your voice is very timid.

Cyndrella Carvalho — JM Financial — Analyst

Is this better sir.

Venkat Jasti — Managing Director

Yes.

Cyndrella Carvalho — JM Financial — Analyst

Am I audible.

Venkat Jasti — Managing Director

Yes.

Cyndrella Carvalho — JM Financial — Analyst

Sorry for this. So if you look at this quarter, we have higher contribution from the Specialty Chemicals side, and still, we have maintained our EBITDA margin. So is that a better contribution from the new products that we have in the Specialty Chemicals? Or how should we understand the margin aspect for this quarter?

Venkat Jasti — Managing Director

No, no. I mean, see you cannot attribute everything to one product or other. It’s a total product mix, especially everything that goes in, the specialty chems are same as last year. There is no difference. So the improvement if at all is in the CRAMS side of the business, even though volume is less, the product mix value addition and all our stuff will play a role. This year-on-year basis it will even out. It will not be the same.

Cyndrella Carvalho — JM Financial — Analyst

Okay. That is helpful, sir. So just wanted to understand in case like we are seeing higher profitability coming from the specialty side. That’s the reason I was trying to understand.

Venkat Jasti — Managing Director

Right. Right. Okay.

Cyndrella Carvalho — JM Financial — Analyst

And in terms of our CDMO business, how should we see any visibility that you can provide on the — in the coming like — on the coming fiscal FY ’24?

Venkat Jasti — Managing Director

It’s very difficult, you know that. And I never give you the whole fiscal thing, but a — that’s why I gave you the macro level things that are happening, whether that translates into the business as I asked, we don’t know. But as of now, we are hoping that around 10% growth as I was telling you all the time, and we expect the same, if not better. But right now, we can only tell you what we have on hand less than five months visibility for now. The business is looking good.

Cyndrella Carvalho — JM Financial — Analyst

Okay. That’s helpful, sir, again thank you so much for that and sir, if we look at the Advent deal, where are we in terms of the process right now? Any timelines that you can elude and in terms of process, you can highlight any details on that side?

Venkat Jasti — Managing Director

Regarding the Advent thing, I mean they have to do the — all the approvals we have to get it. And we have the timeline up to August of this year to get all the approvals like CCI and the DOP or whatever you may call it. And they have applied and waiting for the approval process to take place.

Cyndrella Carvalho — JM Financial — Analyst

Okay, okay. Thank you so much sir. I’ll join back the queue.

Operator

Thank you. [Operator Instructions]. We have a question from the line of Darshit Shah from Nirvana Capital, please go-ahead.

Darshit Shah — Nirvana capital — Analyst

Yes, thank you for the opportunity. Sir, just a couple of things. One, on power integration on the API part, and we were in talks with few of the clients who were probably planning to come and see the facility and then give a goal, so any update you would like to throw on that?

Venkat Jasti — Managing Director

On what again, Darshit? Forward integration of the API. Okay. Yes. We’re talking to them. As you know, last time itself, I told you, we are now — I mean talking, but they have to come and audit because they are different departments. And they have to come and audit, and they are expected to come second and third quarters — I mean according to their second quarter and third quarter that means first quarter and second quarter of ours. We are likely to show up and it takes time, but we are working on that direction. Yes.

Darshit Shah — Nirvana capital — Analyst

Got it. And sir, currently, how many products do we have under commercial and Phase III if you would tell us, I mean, including the COVID one?

Venkat Jasti — Managing Director

Well, we have around seven products.

Darshit Shah — Nirvana capital — Analyst

In the pharma CRAMS?

Venkat Jasti — Managing Director

Yes.

Darshit Shah — Nirvana capital — Analyst

Okay. And any color on the Phase III products.

Venkat Jasti — Managing Director

No, as of now there is no indication — no indication from the customer unless they get the results out and then only if we get the intimation. As of now, there is no indication whatsoever then that will happen things that are in Phase III, then they will move likely to the next level. We don’t do it as of.

Darshit Shah — Nirvana capital — Analyst

Got it. Yes. That I understand sir, that you don’t have any indication, but any late-stage products, if you can see — I mean that might happen in six months, 12 months, but any number of late-stage products we have in the pipeline?

Venkat Jasti — Managing Director

Yes. We have always number of projects in the Phase III, and they keep changing it, and they have to withdraw some and they will add based on molecules. We have about five in the pipeline.

Venkatraman Sunder — Vice President, Corporate Affairs

We do have late stage project, but we’ll like to do a projection[phonetic] based on that. That’s what we are trying to do.

Darshit Shah — Nirvana capital — Analyst

Got it. And sir, lastly, if I may ask on Suven Life, sir, any update you would like to — since we hold Suven Life shares as well. So any update you’d like to throw on the Suven 3031, what’s the progress? How has been the safety part being addressed? I mean, since we have enrolled quite a few number of patients there.

Venkat Jasti — Managing Director

Yes, we are almost 90% enrollment, coming to the 90% this quarter, but the according to the estimate by them because of the seasonality and all the stuff and enrollment, it will likely to be in September quarter, October quarter, we should be able to get the data.

Venkatraman Sunder — Vice President, Corporate Affairs

See, last patient may come in around the June time frame. That means from here an impact of about at least 90 days to 120 days to get the data crunching on the [technical issue].

Darshit Shah — Nirvana capital — Analyst

Okay. But how has been the safety part, it’s been safe enough if you.

Venkat Jasti — Managing Director

Yes. Yes. We just started. We have about nine patients already enrolled in 503 Phase III.

Darshit Shah — Nirvana capital — Analyst

Got it, thank you sir.

Venkat Jasti — Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] We have a question from the line of Damayanti Kerai from HSBC. Please go-ahead.

Damayanti Kerai — HSBC — Analyst

Hi sir, thank you for the opportunity. Sir, can you please elaborate a bit more on your CDMO business from what is happening mostly at the customer level? So you mentioned about R&D and in China plus 1 strategy, et cetera. So can you throw some more color there and how we should look at this business for say next two to three quarters?

Venkat Jasti — Managing Director

As you know, the customers’ interaction happened finally this last BPHI before that was only the regular meetings and you do not have any other thought processes and the pipelines and all that stuff. Only the transaction-based activity we’ve been doing it. The way have said it now they are coming out of the COVID situation, and we are starting the new — I mean what you call, putting the purchase for the new products and all the stuff. And that’s one thing. That means it will start flowing out the new projects eventually. And the second thing they said is they’re also looking to outsource more.

I mean one is the R&D spending is going up. The second thing is we are going to change their sourcing strategy which will not happen overnight, as I was telling from the China to some other territories. And more likely, India will be the most opportunity for them, and therefore, they are looking at it. So in that process, we think — that’s why I gave because I don’t view you any projection. I just gave this because until that time, everybody is at China plus one, I was saying no, it may not happen. But after the BPHI we are kind of inclined to say, yes, this is not only the increased R&D spending, but also the increased outsourcing in the global market scenario with [technical issue] happening in CDMO, our Indian players are likely to get more benefited and we being in the long-term player of more than 2.5 decades. So it will be all the big pharma and with all the kind of infrastructure and the mindset and the focus with which we do the activities, we are at the front end to get any opportunity that will come to us.

Damayanti Kerai — HSBC — Analyst

Okay. That’s I think good to hear. So are we seeing more like more inquiries from the customers? Or things are still in discussion stage and it might take some.

Venkat Jasti — Managing Director

Yes, yes. It will come, but it’s only a couple of months ago it happened and I mean all the holidays are over. Now they are fully back looking things and then they will start now going this thing. I think you’ll see it in two to three months, the flow is hopefully great.

Damayanti Kerai — HSBC — Analyst

Okay. And just a clarification on R&D. So I guess till a few months back, we heard about some curtailment or pullback by customers in terms of R&D spend. Now that you are saying things should improve from here on. And you are already seeing some.

Venkat Jasti — Managing Director

We heard that. We heard that, but it is not seen on the ground yet. I mean only you’ll see that if I get into two, three requirements, then I’ll say, yes.

Damayanti Kerai — HSBC — Analyst

Okay. So considering all most likely say, another one or two quarters, we should be seeing things moving up from here after.

Venkat Jasti — Managing Director

That’s what our hope is based on the feedback we have.

Damayanti Kerai — HSBC — Analyst

Okay, sir. That is very helpful. Thank you for your response.

Venkat Jasti — Managing Director

Thanks a lot.

Operator

Thank you. We have our next question from the line of Abdulkader Puranwala from Elara Capital. Please go ahead.

Abdulkader Puranwala — Elara Capital — Analyst

Hi, sir. Thank you for the opportunity. Sir, could you please provide some flavor on the product.

Venkat Jasti — Managing Director

[Foreign Speech] Can you please increase?

Abdulkader Puranwala — Elara Capital — Analyst

Yes. Is it better now, sir?

Venkat Jasti — Managing Director

Yes, this is better. Yes.

Abdulkader Puranwala — Elara Capital — Analyst

Yes. Sir, can you please provide some color on the products, which on the pharma as well as on the specialty chemical side, which would expect to go commercial in the next two, three years? Any time line or anything that you would heard from the customers since you mentioned that the global pharma activity is picking up. So on the commercialization side, if you could provide some clarity would be very helpful.

Venkat Jasti — Managing Director

You know very well that it’s very difficult even for the customers to say anything. And Hardeep[phonetic] would tell it is highly impossible because unless the data comes out, they cannot tell. So as I was telling to the earlier caller, I have an indication of whatsoever. With respect to specialty chemicals, we’ve already mentioned the fourth molecule should come sometime in the ’24 timeframe. That’s the only thing we have an update on that. Not an update. We are reiterating whatever we said earlier. So it’s very difficulty for me to [technical issue] until they know, we don’t know. It can happen maybe two months from now, but we don’t know that thing because we know — because you understand, we also know how the [indecipherable] work. So do we not be knowing our 3031 what will happen until suddenly until November timeframe, right? So similar things for our own customer also. They will not be able to tell. The only thing they can tell whether we study is going on or about something or whatever. That’s the only they can tell. But right now, the results they’ll not be able to forecast because these are all double blinded steps.

Abdulkader Puranwala — Elara Capital — Analyst

Got it, sir. So sir, on the third COVID molecule on the Specialty Chemicals side, sir, has that started contributing in Q3 was there any contribution or.

Venkat Jasti — Managing Director

No. No. It’s only — and the quarter one is over. But that said, again, 18 months later on, only it will come back if it comes back.

Abdulkader Puranwala — Elara Capital — Analyst

All right. Got it. And sir, lastly, on the margin front, if you could provide some clarity as to where the margins would sustain? Would this 42%, 43% range would be something which could sustain ahead? I mean when you talk about from an FY ’24, ’25 perspective?

Venkat Jasti — Managing Director

Yes. I mean, we always — if you remember, we always say plus 40% is normal for us. As of now, it expands, okay? There will be 2% extra next quarter, but plus 40% is a normal for us. And as of now, I don’t see any reason why it will go down as of now. It can also go up, as you know, some quarters all in all, in the year, we are in the range.

Abdulkader Puranwala — Elara Capital — Analyst

Sure sir. Understood. Thank you so much for answering my questions.

Operator

Thank you. We have our next question from the line of Gokul Maheshwari from Awriga Capital. Please go ahead.

Gokul Maheshwari — Awriga Capital — Analyst

Thank you for the opportunity. Sir, could you give an update on where you are on the Casper facility in your — your plans to really scale up the production facility which you acquired in the way that requires more investment.

Venkat Jasti — Managing Director

Can you repeat the same.

Gokul Maheshwari — Awriga Capital — Analyst

Yes. So can you just give an update on the Casper facility which you acquired last year? And whether you are on track to increase the active utilization there? And would you require more investments in that facility.

Venkat Jasti — Managing Director

As of now, we have filed about 10 already, and there are some filings still going on. The approvals are coming one by one. In the first quarter, it will be sometime in April, May time frame will be going out. And right now, I don’t need any capital expenditure for the Casper only when these things we have 1.2 billion capacity on that. And only when that is done, we’ll be knowing it. And as you know, we also have the capability at Pashamylaram site. So miss and match, we can do that. We have enough time to create [indecipherable] if needed. That’s not a problem. But right now, we don’t need any additional capacity.

Gokul Maheshwari — Awriga Capital — Analyst

In the nine months, what would be the contribution of Casper in our scale for sure?

Venkat Jasti — Managing Director

As of now, there is no contribution much, it’s only the expense. And we clearly mentioned it will be about 12 to 15 months when we go this company before we see the revenue, and we expect the revenue to only the breakeven will be about 36 months from the day they’ve taken over. So — it depends on how the molecules get approved and when they go and what is the profitability out of that. And as of now, it’s only one or two that are going. So based on that, it is very difficult to tell until it goes to the market.

Gokul Maheshwari — Awriga Capital — Analyst

Okay. And what is the estimated capex for this year, FY ’23 and also for FY ’24?

Venkat Jasti — Managing Director

The FY[phonetic] as you know, we have taken a principal approval of about INR600 crores altogether. Out of that is the only one that is — we are using INR200 crores towards the Suryapet facility lab, I mean new building creation, which is the main thing that is going on. Half of it is spent, half of it is being spent within the next six months, and we hope the second quarter onwards we start, it will be first quarter, but it is delayed by a couple of months. That will be the second quarter onwards we’ll have the validation take place and that will be utilized. The rest of the capex was advancement changes the R&D location whenever the government asks us to move, that’s why we’re taking proactively in principle approval, so that’s not going to happen now because no indication is given, based on the things that are going on, political lease, it may not happen, within the next one year because the election will be coming in.

The other one is the Pashamylaram site. As of now, we are qualifying the Vizag site and Pashamylaram site for any new projects also. Right now, we are okay. And as and when it requires based on the pipeline and the progress and the requirements, then we can start the activity. Right now it may not be until maybe six to nine months, we will not be able to — we will not be starting that actively the third portion of it. Other than that, we have a regular capex of which is the balancing equipment because it’s a mix and match thing, which we do all the time, multiproducts about INR60 crores to INR80 crores every year, we’ll be getting replacement capex or the balancing capex, that will be a continuous cost.

Gokul Maheshwari — Awriga Capital — Analyst

Okay. Great. Thank you so much.

Operator

Thank you. We have a next question from the line of Tushar Manudhane from Motilal Oswal. Please go ahead.

Tushar Manudhane — Motilal Oswal — Analyst

Thanks for the opportunity. Sir, firstly, on now that over a period of time and given the kind of CRAMS traction there has been — so basis, your experience, if you could share in terms of what kind of technology platforms or chemistry skill sets that has been little — or rather unique or differentiated to Suven, which sort of drives the business in the CRAMS segment in particular?

Venkat Jasti — Managing Director

I would not say the technology platform that differentiates itself. It is the focus with which we work to the innovator products in the ones that we find because knowing fully well, the first [indecipherable]. That is keeping us things. Other than that, I mean, the technology everybody has it, but their focus is going mainly on the generic side and backward integrating into some kind of CRAMS. Ours is more or less than the 90%, 95% is on fee-based activity, and we do the leverage on to the generic side a little bit. You cannot say it’s a technology, but as far as the chemistries are concerned except the coordination and postilion since we do many number of projects, we have done about 980 projects so far from — since inception are being dabbled in each and every chemistry at the gram level, to kilo level to multi-ton level.

Tushar Manudhane — Motilal Oswal — Analyst

Okay. Okay. Also, if you could break down the, let’s say, gross block into CDMO Pharma and CDMO Specialty Chemicals?

Venkatraman Sunder — Vice President, Corporate Affairs

I’ll provide you. Right now I don’t have this information. I will provide you. We’ll update you on that.

Tushar Manudhane — Motilal Oswal — Analyst

So just maybe if the asset turn into different segments, what it could be approximately if that you could share?

Venkat Jasti — Managing Director

Yes. I will.

Tushar Manudhane — Motilal Oswal — Analyst

Okay, sir. That is it from my side.

Operator

Thank you. We have our next question from the line of Pratik Kothari from Unique Portfolio Managers. Please go ahead.

Pratik Kothari — Unique Portfolio Managers — Analyst

Hi, good afternoon sir. Sir, just one clarification, this fourth molecule in chemical that we expect to come in — so this is already commercialized in the past and does that ask us for a supply next year. This is not a new molecule.

Venkat Jasti — Managing Director

Which one is that?

Pratik Kothari — Unique Portfolio Managers — Analyst

The fourth molecule, which we mentioned on the.

Venkat Jasti — Managing Director

No, no, it is a brand-new one whenever supplied. We are only qualified our [indecipherable] calendar ’24.

Pratik Kothari — Unique Portfolio Managers — Analyst

Okay. Fair enough. And sir, regarding this new capacity, we mentioned that we’ll only start to think about it six, nine months down the line. And also we say that there’s a lot of customer demand, the China plus one of the whole supply chain retail. So usually, how long does it take for us to put up a new capacity and your thoughts on that.

Venkat Jasti — Managing Director

Okay, for everybody’s information, compared to any other generic molecules creation capacity — the kind of what you all pre-determine. In our case, what happens is when the molecule is getting stabilized and opportunities coming in by the time the peak requirement comes it takes three years. So what I’m saying in the beginning, we do is the, what I call is campaign-based activity. But we’ll be knowing that it will come back. So based on that, we’ll put it. If it is only making it with the balancing equipment, it takes six months. If I need to create a total block then it takes 18 months. So it depends — most of the time, we don’t create the block itself. But when we create the block, it will be a multi-purpise things. But it will be more or less what happens if I’m doing a campaign now, I want to continue the campaign then I may need to use a couple of balancing equipment, the UB unutilized capacity to the new product.

For that, it will three to four months only as that balancing equipment[phonetic]. So luckily for us in this business model, the time will be known, but the time is at least two years to three years. So we can certainly create the capacity to do that. Secondly, we also can do the early stage steps in some other units, suppose they want more quantity suddenly for whatever reason. We have done that earlier, and we’ll never have any problem because — most of the campaign is active[phonetic] except for the speciality chemicals. So even though we have — we say 100% capacity utilization is only 70% because not all of the equipment can be utilized — so that 30% can be using the balancing equipment, I can put more products. So we will never have a shortage of capacity. But at the same time, when the new capacity is required, we have with us our ample time to do it. And we have the backup in the other units also based on the customer success we can do also at least [technical issue]. So this is the way it works.

Pratik Kothari — Unique Portfolio Managers — Analyst

Fair enough. Very clear. And sir, last question, even on the last call, you had mentioned that we might get the management of Advent on the call and maybe just years from the maybe on the next phone call, we can do that.

Venkat Jasti — Managing Director

Management of the Advent will come only when the transaction takes place. Until that time, we are still here.

Pratik Kothari — Unique Portfolio Managers — Analyst

Okay. Sure. Thank you sir and all the best.

Operator

Thank you. We have our next question from the line of Darshan Shah from Multi Act. Please go ahead.

Unidentified Participant — — Analyst

Thanks for the opportunity. This is Rohan. Sir, my question is with respect to the proposed merger with the Advent owned entities are those entities carrying any unutilized capacities that we could potentially use for our CRAMS operations and does need for us to do capex gets reduced? Or are those unutilized capacities if they exist, cannot be used for our CRAMS business?

Venkatraman Sunder — Vice President, Corporate Affairs

Let me tell you it is not wise on my part to just estimate what’s going to happen to the capacity, how much they are utilizing. Until this transaction is over, we are not going to talk anything about the platform. Yes. But the general question is, yes, certainly, it will be a plus now for anything whatever I’m using like because it’s all I was telling if I need to do additional steps in other unions, I can do that. Similarly, when that comes in, same thing can be done, right? But right now, we’re not going to talk about that. We have clearly given you the statement made by the Advent during the signing of the ceremony that they have an intent to do the launching that platform into Suven so that can be capacity enhancement will be really back when [indecipherable] technologies can be coming into the picture and more customers will be there and they have a global outreach and which they can bring more opportunities also. But that is post thing. Right now, we are concentrating what we do. And when then once that happens, I think then only I can talk to anything about it and — but not knowing fully where aspirations I will not be able to comment anything on that at this time.

Unidentified Participant — — Analyst

Okay sir. Thank you and all the best.

Venkatraman Sunder — Vice President, Corporate Affairs

Thank you.

Operator

Thank you. We have our next question from the line of Rajasekhar MS an Individual Investor. Please go ahead. Rajashekar?

Rajasekhar MS — Individual Investor — Analyst

My question has already been answered. Thank you so much.

Operator

Thank you. We have our next question from the line of Hussain Kagzi from Ambit Asset Management. Please go ahead.

Hussain Kagzi — Ambit Asset Management — Analyst

Hello, hi. Thank you sir. Am I audible?

Venkat Jasti — Managing Director

Yes.

Hussain Kagzi — Ambit Asset Management — Analyst

So I wanted to get a sense on when is it that our pharma molecule is coming up for patent expiry[phonetic], I guess, the first two molecules that we launched that were commercialized wo to three years back where the patent was expiring somewhere in 2024, 2025. So if you can give some idea on that.

Venkat Jasti — Managing Director

Yes. I mean, the earlier[phonetic] I think is 25%. But as you know, the big pharma, they will have the original indications that were given and they will be going for another five years or so I don’t see anything under 28 actually to be going out of our suppliers. That’s based on the traction we have with the customers that we don’t see any even though it’s going out of patent, but it will be three to four years from there only, if anything at all, there will be a reduction in the revenue out of those things. Otherwise, they are staying the same, maybe not more. It doesn’t matter if there’s — next two to three years it will not effect certainly.

Hussain Kagzi — Ambit Asset Management — Analyst

Got it. Got it, two to three years. And sir, one thing was that you were talking about that now, probably you’re seeing increased inquiry from customers to shift from China to India and talk happening in that regard. So in your assessment, how long does it take for this to happen or probably translate anything into a meaningful opportunity for you or other players? Because I think for example, in generic, you have to go and modify the DMF or the NDA or something like that. So in kind of a related to innovator negotiations, suppose they are doing that conversation now. So how long will it be that you would anticipate this to reflect into any tangible numbers?

Venkat Jasti — Managing Director

Yes. As you rightly said, it is not going to be overnight, right now this is only the discussions — based on the discussion we could gather what’s going to happen. As you know, change in the existing molecules takes a year to two years in fact three years also. Similarly, changing the source of some of the [indecipherable] especially with the regulatory period it will take time. And I know the process — when they say something, it takes at least a year before you see real tangible sort of it. So in general, but when has that happened, it will have a win-win situation for both the customers and the partner. And we hope to get those opportunities not only persistent with all the players in India. Eventually that’s why it will not be the next six months or something like that. But even for the flow of projects, we have only said that we have heard this on the macro level we are telling in general, it will happen. — in the long run. And being a first in the line we are the first one to start the CRAMS project way back in ’95 and nobody knows what the CRAMS is all about. We thought we will be the best one to get some advantage out of that [indecipherable].

Hussain Kagzi — Ambit Asset Management — Analyst

Understood that is helpful. That is it from my side. Thank you.

Operator

Thank you. [Operator Instructions] As there are no further questions, I now hand the conference over to the management for closing comments. Over to you, sir.

Venkat Jasti — Managing Director

Thank you, everyone, for tuning in to this third quarter results and year-to-date results. As you know, and our flattish growth as of now, and we expect to end the year with a slight positive growth and maintaining the margin. And in the long term, with the new opportunities that are coming in, new thinking are happening in the global pharma outsourcing and the opportunities because of the China plus one and also affecting the long-term relationships we have and the existing capacity building that is taking place and also the number of projects that we have in the pipeline and all the things bodes well. But at the same time, you will be seeing not only quarter-on-quarter variations, but year-on-year variation also will be there. But in, I mean in the long run, it is a very promising things, especially the change in the mindset of the global pharma for outsourcing and targeting towards India. And being Suven is on a different run, I think we like to get a bit out of it. With this, I thank each and everyone, and hope to catch up with you during the next con call. Thank you.

Operator

[Operator Closing Remarks]