Zim Laboratories Ltd (NSE: ZIMLAB) Q1 2026 Earnings Call dated Aug. 12, 2025
Corporate Participants:
Unidentified Speaker
Deepika Sharma — Moderator
Anwar S. Daud — Chairman and Managing Director
Chandrashekhar Mainde — Technical Director
Zulfiquar Kamal — Director Finance
Analysts:
Unidentified Participant
Dhwanil Desai — Analyst
Mohit Jangir — Analyst
Gautam Gupta — Analyst
Deepesh Sancheti — Analyst
Ankit Gupta — Analyst
Satyam Vadera — Analyst
Rohit — Analyst
Rohit — Analyst
Shreya Chatterjee — Analyst
Jasmeen Kaur — Analyst
Mohit Jain — Analyst
Presentation:
operator
Ladies and gentlemen. Good day and welcome to The Zim Laboratories Limited Q1FY26 earnings conference call hosted by Goindia 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 Deepika Sharma from Go India Advisors. Thank you. And over to you.
Deepika Sharma — Moderator
Thank you. Vishakhon. Good afternoon everyone and welcome to the Q1FY25 earning call up in Laboratory Limited. We have on the call Dr. Anwar Taut, Chairman and Managing Director. Mr. Wilfrikar Kamal, Director Finance. Mr. Chyam Mohan Petto, Chief Financial Officer and Mr. Zandaut, Investor Relations. We must remind you that the discussion on today’s call may include certain forward looking statements and must be therefore viewed in conjunction with the risk that the company faces.
May I now request the management to take us through the financial and business outlook subsequent to which we will open the floor for Q and A. Thank you. And over to you sir.
Anwar S. Daud — Chairman and Managing Director
Thank you, Deepika. Good afternoon to everyone. This is Anumar Baut speaking. I just wish to add that along with me we also have Our Technical Director Dr. C.N. mande. A warm welcome to all of you joining us today for Wind Laboratories Ltd. Earning confidence call for the first quarter ended June 30, 2025. I trust you have had the opportunity to review our results and the earnings presentation available on the exchange. FY26 has commenced in a period of both operational focus and external challenges. While we continue to advance our strategic priorities. The quarter also reflected softer order inflows in our innovation led segments and the impact of an EVGMP inspection.
Let me begin by sharing some key performance highlights. In Q1 FY26 FIN reported a total operating income of 718 million compared to 818 million in Q1.25. EBITDA and fat margins were impacted by lower top line and increase in depreciation and finance costs resulting in a net loss of 19 million against a profit of 9 million in the same quarter last year. Pharmaceuticals continue to be the cornerstone of our top line. The innovation led market comprising new innovative products and oral 10 films accounted for a lower share this quarter in addition to reduction in top line primarily due to some deferments linked to geopolitical events in key markets in the Middle East.
During the quarter our facility underwent an EU GMP inspection conducted ahead of schedule in preparation for the launch of our Orapin film product in Germany. The inspection concluded with two critical observations and a few major observations. We have engaged external experts and are on track to submit our corrective and Preventive action plan by August 31, 2025. Post regulatory review and approval implementation is expected to take at least six months. Our direct business Presently the exposure to the EU remains limited on the regulatory and filings front, our development pipeline remains strong with 12 nib products in Probet, eight of which had been filed in EU and the remaining nearing development.
Our focus remains on accelerating product filing across markets while beginning partnerships in key geographies. In the quarter ahead, our priorities will be clear to close the EU GNP Kappa process on schedule, sustain momentum in our base business and strengthen our innovation led growth in India while near term headwinds persist. Our diversified market presence, strong partnerships and disciplined execution position us to navigate these challenges and remain on track with our long term growth strategy. With that, I will now hand over to Mr. Shyam Patron who will walk you through the financial highlights for Q1 FY26 in greater detail.
Thank you Sir. Good afternoon to all our esteemed participants. Let me present the overall financial results for Quarter 1 FY26. The total operating income for Q1 student will be 718 million reflecting a decline of 12.3% year on year basis. This degrowth was primarily driven by NIP orders not materialized due to ongoing disruption in the Middle East. Additionally, the contribution of the innovative products to the top line declined, impacting the supply challenges in the MENA region arising from the geopolitical instability. That said, our income from licensing is steadily progressing and this quarter we reached a revenue of 40 million rupees from NIP license.
On profitability, our EBITDA stood at 57 million rupees with a margin of 7.9% reflecting a 36.7% decline on year. On year basis the PAC came in at a loss of rupees 19 million rupees compared to the profit of 9 million rupees last year, a margin of minus 2.6%. In terms of business M, our Pharma segment contributed to around 78% the revenue while the neutra contributed 22%. In line with our historical trend, the year on year drop In Neutra, revenue was mainly on account of lower neutra PFI business, particularly in the Mena region. Our export contributed 602 million rupees, a decline of 15.2% year on year basis compared to rupees 709 million in Q1FY25 driven by lower innovative product contribution and supply challenges in mena.
On the other hand, for Indian business recorded robust growth of 30.2% year on year reaching rupees 100 million aided by higher value added value institutional business. The revenue contribution from NIP in OTF student rupees 46 million, compromising rupees 12 million from NIP and rupees 34 million from OTF representing 6.2% of the operating income including like license fees, the contribution student rupees issued at 12.9%. The licensing, milestone payments agreements or of the innovative products across region stood at rupees 48 million in Q1 compared to 4 million in Q1 last year. On the R and D front, the total of rupees 79 million was allocated in this quarter focusing on product development, doer upgrades and infrastructure.
This includes Rupees 19 minutes specifically for these studies, I.e. biculin studies and registrations to advance the innovative product pipeline. During the quarter we made a progress in NIT product development and filing with eight products developed and filed in the eu. Our pipeline remains strong and we continue to strengthen our presence in ROW as well as emerging countries while we await further assessment regarding our entry into the European region. Thank you. Hello. I wish to. With this I like to open the floor for Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press STAR and 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 is from the line of Dhuanil Desai from Turtle Capital. Please go ahead.
Dhwanil Desai
Hi, good morning everyone. So my first question is, you know, if you can give us some sense about the kind of observation we have on the two critical and eight major and whether the data integrity issue is involved in this or not. And on the same line we have already cleared Eagle Price. So in your view, what has gone wrong this time? Time in terms of, you know, processes or infrastructure and what do we need to do to kind of, you know, get back to that UGMP approval status? And what is the cost involved? What are the steps that we need to take in terms of Papa.
You know, if you can elaborate on that.
Anwar S. Daud
I think this question has been most of the attendees mind. So it was a good answer. So none of the observations are on direct product quality issues. Most observation including the critical ported to documentation problems and to reliance on manual systems as judged by the inspectors who came this time. You know this. The last three inspections which we have faced, these observations were not there from the various inspectors who have come. We are trying to correct this in a fierce manner through appropriate automation and electronic data handling wherever feasible.
We will be ready with the Kaapa plan in a month and we are confident that we will have the Kaapa plan in complete within six to nine months. So. And that’s the idea. We have some alternate plans as well. As we proceed we can brief you about the plan. We do have a robust emerging markets and RW business and we continue to obtain registration at this moment. As I have already said, the EU business is not part of the equation for we don’t have that won’t have that much of an impact this year that we don’t foresee that maybe I hope to some extent it can clarify the question.
Right? Yeah, it does. So what’s the cost that you think will. You know, we like to, you know, spend money. It’s related to documentation and of course whenever you change your system of documentation and other things, definitely there’s a cost of training, cost of hiring consultants who will actually take the company through that process and purchase and implementation of the electronic system which will be procured and and data management system. So that’s not a very high cost because the questions were not on the facilities and the infrastructure that we have. It’s on the excessive reliance on manual documentation as observed during this inspection, not before This
Dhwanil Desai
second question is, you know, since now.
operator
Sorry to interrupt you sir. I will request you to get back to the question queue for follow up questions as there are several participants waiting for the turn. Thank you. Ladies and gentlemen. In order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow up question, we would request you to rejoin the queue. The next question is from the line of Mohit Changir from Invad Research. Please go ahead.
Mohit Jangir
Yeah, hi, good morning. We had asked in earlier concourse whether the EU and UK inspection was compulsory or due for us. But in the earlier con call the view of the management was that we are already EU Approved for EU compliant. So was it a surprise inspection from the authorities and will we keep on getting emails from them even if we are non compliant? Even from UK?
Anwar S. Daud
Yes. Let Dr. Mainly answer this because it’s little bit of a nitty gritty here.
Chandrashekhar Mainde
Hi, this is Dr. Man. Good morning. See UK is a independent entity and all submission after the Brexit are handled independently. So our UK program will not at all get affected by this inspection. However, we are as Dr. Anwar, MD has mentioned, we will be ready with the Kapa so that that may not affect in our actual financials for the EU business this year.
Mohit Jangir
Okay sir, my second question is on the near term guidance. As you clearly stated that your base business will not be affected. So what is the kind of growth that you are targeting in FY26 and will there be any reduction in R and D cost pertaining to this EUGNP non compliance? Because the filings will be reduced from rn.
Zulfiquar Kamal
Good morning, this is Finance Director. So the guidance what we are giving right now is on the base business which will continue as per the as usual and that will not have any impact as far as the regular business is concerned. The upside of EU was considered in the second and third quarter. Then there may be chances there will be some shift from that to the next year. As far as the RND cost is concerned, it will continue to on the same lines our development and the filing will continue as per the same spending. What we are doing on the ratio in the previous year.
Thank you.
Mohit Jangir
Okay sir, my last question is on when we are filing that CAFA and the timeline by when we will be compliant again. Thank you.
Anwar S. Daud
It will take us six to nine months from our site. Now it all depends on because whenever you have these kind of observations usually there is a reinspection. It depends upon them coming for the reinstation and after that we hope things as far as the EU gm this the plan will be accelerated because we’ll keep filing, we’ll keep investing. We have a strong pipeline as well. So there’s a delay but the story continues.
Anwar S. Daud
Yeah, thank you. Thank you.
Zulfiquar Kamal
Yeah, I think will not get affected because we can file. Also we are officially we are submitting the Kaapa by end of this month and as mentioned, within the next six months we will get a RE inspection. So that’s our plan. So it is like that eight to nine months is a total timeline for all activity.
operator
Okay, thank you.
operator
Thank you. The next question is from the line of Gautam Gupta, an individual investor. Please go ahead.
Gautam Gupta
Hello, I’m audible.
Anwar S. Daud
Yes you are?
Gautam Gupta
Yeah, Good afternoon. I wanted to ask that this time we can see an operating deleverage because of Middle east issues. So when can we see an operating leverage? I mean at what income level? Quarterly can we see an operating leverage to play out? Sorry, I think somebody.
Anwar S. Daud
Okay. Have you muted.
Gautam Gupta
Yeah, mute myself. I’m not able to. Hello? Yes. Yeah, I wanted to ask that this time we can see an operating deleverage playing out because of Middle east issues that we have faced thereby resulting in an decrease in an top line.
Anwar S. Daud
It’s coming back to normal and in the next two quarters we’ll see the you knowing out. And can we see an operating leverage to play out at what income level, top line level can we see from being an generic generic player to a branded generic player margins usually go up to 16, 18, 20. When can we see that?
Zulfiquar Kamal
I think we are not able to as far as the specific guidelines of the brand and the market mix as of now the base business is continuing and as we have discussed our EU only business has been little bit impacted at the start the second to from the third quarter onward it may be shifted to next year as far as the base business and regulatory business will continue as a generic generic the formulation business will be started basically in Europe and emerging market which will be as per the existing product mix which is going on.
Gautam Gupta
Okay, thank you so much.
operator
Thank you. The next question is from the line of Dipesh Sanchiti from Manya Finance. Please go ahead.
Deepesh Sancheti
Hi, am I audible? Yeah, yeah you are. Okay. Could you share the updates on the progress of the new innovative products nips and their expected commercialization timeline?
Anwar S. Daud
Yeah, so you know we’ve been filing in various geographies so RW and emerging market already ongoing and we keep on reporting these the. These milestones will do. The last milestone was receiving TGA approval for Tamothen and Dutasteride one of our existing products. I think a back so that will continue. We are also our partners are also filing anyu. What was the next question?
Deepesh Sancheti
I mean now the expected commercialization timelines.
Anwar S. Daud
Yeah, most anyway most of the commercialization accepting for the commercialization in UK were to take place in the last quarter of this financial by three to six months and 26 is what we are looking at commercialization to happen as they’ve already given this guidance the last time it stands some of the milestones are delayed by six months approximately.
Deepesh Sancheti
Okay. And what proportion of the revenue this quarter came actually from the recently launched products? We don’t give them minimum actually no, I’m not talking about the guidance, I’m talking about this quarter. Whatever revenues we did, how much of it came from the recently launched products?
Anwar S. Daud
Most of the existing products which had been. The company has been producing them. They are part of the revenue mix in the last several quarters. So if you ask about the new or recently launched. No new product has been launched in this quarter.
Deepesh Sancheti
Okay.
Anwar S. Daud
Launched in new geography. So that’s a different question and it has a different answer as well. So we’ll, but as we. I don’t have the mix with me, maybe the next call, we can break that up for you.
Deepesh Sancheti
Okay. And are there any partnerships or licensing deals in this, in the pipeline? Yes, yes. Partnerships are continuing.
Anwar S. Daud
The partners show. The partnerships and the agreement are showing a strong traction. We are, we are discussing with various partners. They understand that the company has very interesting products which can make a difference in their respective portfolios. We are in touch with them. Even during this period of the GMP inspection and everything, we have seen that the clients, the potential and existing clients have shown continued interest in the partnership with them.
Deepesh Sancheti
Okay. So even our setback of EU GMP has not affected the clients or the other partnerships.
Anwar S. Daud
Yeah, that, that seems to be the, the feeling and the, that seems to be the, the.
What should you call it? That is the trust of all our partners that even a little bit setback due to this thing. All our partners are with us and we are continuing our EU program, EU UK program with them.
Deepesh Sancheti
The guidance is the company and the, you know.
operator
Thank you. The next question is from the line of Ankit Gupta from Bamboo Capital. Please go ahead.
Ankit Gupta
Yeah, thanks for the opportunity, sir. You know, if we look at our company, the kind of transformation we have been looking in the company was expected to largely come from the NIT products directed towards the EU market. With this new issue, regulatory issue, I think this has been significantly pushed back. When do you expect to, you know, to start selling some of the products from plant, let’s say FY27, second half or when do you know, like practically expect to start, you know, supplying these products from there.
Anwar S. Daud
This question has a different, actually elements to it.
You know, that we already have a name. So it comes to mind that when the reinstation takes place, after that we’ll be in a position to be in the market and all our partners continue to support us. That’s number one. Then there are different methods of continuing business even in the EU and even in the other regulatory markets, such as shifting the products that have already have MA to alternate sites. We are also trying to look at those possibilities. They already started speaking to different sites which are EU and have other regulatory approval as well.
There’s a third opportunity where the product which are in short supply in some markets can if the partners who wish they can obtain special permission to supply to special approvals for such products and the supplies can continue if they are willing to. The partners are willing to trigger these kind of approvals. So these are the three kind of, you know, proactive measures with the company planning to take and we have received some positive feedback from some of our partners on being able to do these things with us.
Ankit Gupta
So are you referring to some of the products like Pancreatin? There’s you know, but for that I think MA is yet to be received, right?
Zulfiquar Kamal
Yes, it is the 105 days we as per our calendar 105 days response on the you has been received and hopefully by end of this month our response will be filed and as a product at priority it will not get affected to grant ma.
That is a for this thing and our other program like as I mentioned in the beginning that our UK program as the UK is separate entity from the Brexit, it will not get affected. So the product is in the shortage will go ahead. Will go ahead if we get a the marketing will be happened for that product.
Ankit Gupta
Second question was on you know, our existing NIP plus OTF and the base business. So this quarter we have seen significant pressure even on you know, NIP plus OTA product that we sell in our existing markets like India and Middle East.
So what is the reason for that? When do you expect to come back to you know, 15, 20 crore of costly run rate on that front as well as on our base business.
Zulfiquar Kamal
You know, the geopolitical thing can be described in a little more detailed manner just for everybody’s understanding as well. There was basically a lot of the airspace problems in supplying to the Middle east for some time for a month. Most of these, you know, most of our actually go through air no money transfer availability of LCs as well as the airspace problem existed for some time material was ready but dispatch was not possible.
So after that things have started kind of, you know, easing out and we have supplied some of the products with school go in the last quarter and we hope we are, we are looking forward to the compensation taking place in the next two quarters.
Ankit Gupta
We should see improvement in the sales.
Zulfiquar Kamal
That’s our expectation. Sure. Okay. Okay, thank you.
operator
Thank you. The next question is from the line of Rajat, an independent investor. Please go ahead.
Unidentified Participant
Am I audible? Yeah. Good afternoon, Dr. Anar. So Dr. Anar, I feel like we are putting almost 78% of our revenue into R D and also we are developing lot of NIT and new products into the market. But still numbers are very weak. I’m not able to see any significant contribution of our effort into the revenue. So could you please explain on that?
Anwar S. Daud
Yes, of course. I mean you, I’m sure you follow pharmaceutical companies. Our products get developed over a period of time. We are only three years in the market. So expenditure into these mark into these products have been there and the development also includes BI equivalents and registration filings.
All these things take a time. There is a big cycle and we are nearing the maturation of the cycle for some of our products. In about nine to 12 months you will find products, everything going well. Of course you will find many of these products entering several markets including the regulated one hopefully. So it’s a cycle issue rather than any other issue because this is a company transition transiting itself into regulatory markets and regulatory space. Lot of as you must have heard Dr. Mande speaking about 100, 508 days, 110 days and then the reply. All these things take their own time.
We are ready with the products of course, but the filing there are sometimes the queries require an answer where at least a month or a month and a half is spent in providing more details if they are required by the regulatory agency. As you know there is more and more, there has been more and more regulatory tightening all across the globe on all these filings. There’s not neutral. Unfortunately for us, the entire, the work that we have done in the last five years as you know, is just entering that phase of an interesting phase for the company and we are waiting and we have a partner who also believe in us.
So it’s not the same laboratory which is filing these storage. The partners are also filing sometimes we depend on them to their approval in place and then we have to depend on them to file the products.
Unidentified Participant
Thank you for this Will very detailed explanation and it’s very heartening to see that we are getting so many approvals in the Australian market. And I want to congratulate for you all for them. That’s all for my side. Thank you doctor. Thank you.
operator
Thank you. The next question is from the line of Satyam Videra from Profitmart Securities. Please go ahead.
Satyam Vadera
Hello. Am I audible? Yeah, actually I have a couple of questions. Which segment showed the Highest growth in Q1 and what drew the performance? And my second question is how did the export market perform this quarter compared to domestic market also. Are there any new product launches or regulatory approvals contributing sign significantly in Q1?
Anwar S. Daud
I think the export PER showed the highest growth. ODS business has shown a very interesting traction in export as well as in the institutional domestic business. Government business in general is showing a doubled actually so on interesting things happening. NIP products are doing well in the domestic market as well.
Satyam Vadera
And are there any new launches or regulatory approach that will be contributing?
Anwar S. Daud
Some regulatory approvals took place. We have reported them. Approvals have taken place. There are some approvals in the African and the Middle Eastern markets as well. But from time to time we keep on putting these, you know, disclosing these. So probably, you know, shouldn’t take your time on that. We are very, I mean we are very. We frequently come and make these fin. These things public.
Satyam Vadera
Okay. Okay, thank you. Thank you.
operator
Thank you. The next question is from the line of Rohit from I thought pms. Please go ahead.
Rohit
Hello. Hi. Yeah, good afternoon sir. Just a few questions. One was you mentioned that. So, so we bought the MA for Tamsulosin from the Australian authorities. That’s right. Given this EU GNP issue. So does it get, does that have an impact on. On the sales?
Anwar S. Daud
So doctor, when may I will give you this answer because we are you know taking formal care of this
Chandrashekhar Mainde
actually if you see this is a very unique product and the Australian government is a very particular, very scientifically evaluated and we got the approval here. Of course we can say that little bit, one or two months it can be affected due to this thing.
But we are finding the TGA approved site already we are in the negotiation with them. So we have, we can transfer our product to that particular TGA approved site which will take a three months for the approval. So we can have a chance to market this product in this year. In this year maybe at the last quarter. That is a. That is what we are thinking in a very optimistic way.
Rohit
Just on the opposite side of this, if you want to take a larger pessimistic view, then what would be the. I mean what are the challenges on the other side? I mean just to get
Anwar S. Daud
the optimistic as well as the pessimistic view is that Ziman filed this accrued subsidiary through its partner.
The idea always was to license it to the right partner. Those discussions, even after they received the approval, those discussions were ongoing because there were two or three partners who were intensely negotiating with us. That negotiation will be over in a month or a month and a half. So in that sense we have not lost time because of any issue. And once those negotiations are over, whichever partner takes it up will need at least three or four months to prepare for the launch. So I think there is some loss of time in the product being in the market.
But it’s not an impact of. It’s not a very large impact because for this product in Australia, because there was no agreements and we don’t have feet on the street in Australia. We always intended to outline. Now we’ll be sending the MA after we conclude our agreement with the partner. And as I said there are two or three partners already in discussion with us.
Rohit
Okay. So so in if that concludes then we have the option of manufacturing.
Anwar S. Daud
We are taking all proactive measures. I mean we are trying to mitigate this and I think we have that capability to mitigate these kind of events.
Rohit
I think also in an earlier question, response to an early question, you said there are three options. One is you can transfer the site to an approved. To an EAGMP approved. Yeah. For your other MA products. So in this the two part question one is is it, is it something that our partners are telling us? Because we would, I mean they would have had their own plans of launching these products wherever we’ve got the approval.
Anwar S. Daud
If you see the our filing and our partnerships are already been listed. Most of the partnership actually are quite recent. If you see once upon a time the agreement would take place the moment the product was ready. But you know or there would be co development now in Europe that the trend is for the product to be re even filed when the partner becomes interested and starts discussing the agreement with us. So most of the agreements, the agreement we have at this moment are in the last three or four quarters. And the as these agreements are quite recent. The filings also are quite recent. They are not, not more than six months, six to eight months old.
Yeah. So they are ongoing filings. Even though filing that for example the filing for TDF or tangible since data stud is about or the MA is about one and a half years. So it’s a very early time at this moment as far as the ZIM is concerned for the filing. And there’s always a window and as Dr. Mendo said that there’s an alternate site we can within three months we can add as an additional hide and continue to provide the product to the client. And there are other clients as well if they are in a position to launch.
Although it’s early, I would say they will take that a little bit of time. Excepting for the UK launch which could come this year. As Dr. Mandel said, all the other filings would, you know, by the time the mas come in we would either be ready with our own premises be, you know, complied or we would have an alternate S. If not us, then most of the agreement that we have signed. The partner also have their own preferred sites and we are discussing with them. I would like to mention one thing. As earlier Dr. B has mentioned.
We are writing a Kapa and we are very much confident that within the eight, eight to nine months we will come back. Because our. Our deficiencies are not related to any product related deficiency. They are just deficiencies are related to the manual system. Manual system of handling the documents. That’s all. So we have to just put that electronic. This thing. Electronic system. So it’s not very serious thing which you can see from the time to time. You can see that also in the progress.
Rohit
Okay, so actually my question was specific to the MA that we’ve already received and where the partnership is already in place. Yeah. So because our partner would have also made some arrangements, right? I mean because. Because we already had the EU gmp it was. One would have thought there would not be any issues. Of course. I mean there could. I mean contingencies are never known. So I understand that
Anwar S. Daud
we have at this moment are our own mas which are. I. I don’t know. Last time many of the participants who are there also visited our site. This is a fallback or we don’t believe in being in. At this moment in being in Europe on our own with our own MA and distribution system. Obviously we are so new that we don’t foresee ZIM being there on with its own own MA and distributing the products. So there is no. There are very few ma. There is some oral thin film MA which are obtained by the partners. There is no MA which I can. Which I know of of the NIP product which have partner because he’s in a position to lost.
Rohit
You know, for short. Sir. No, I understand that very well. And my only question. No, sir. Like if. Let’s say new racks from which we are partnering with which you’re probably.
Anwar S. Daud
Yes. They have shown an inclination to launch their product in the last two quarters of 26 year. 26. So that’s the information we have. They are preparing a big launch strategy. But they will be one thing is in the last 2/4 of 26 financially. Okay. So probably would. So they wouldn’t have that impact financial.
Rohit
So which is. Which is Q3 and Q4 for us, right? Essentially.
Anwar S. Daud
Yeah.
Rohit
Okay. Okay. So in that sense that product does not have any impact as such. Exactly. Got it. So. So from your.
operator
Sorry to interrupt you. May I request you to rejoin the Q4 follow up questions as well?
Rohit
Yeah, I will join. Thank you.
operator
Thank you. The next question is from the line of Rohit from Samatva Investments. Please go ahead.
Rohit
Good afternoon sir. Thank you for the opportunity. So a couple of questions. The first question do we have any direct or indirect exports to Iran at this point of time?
Anwar S. Daud
We are exporting to several customers in the Middle east. So we are not because of competency related reason we are not in a position to know exactly who is using because there are very large markets from Dubai like Yemen, like Iraq. Iran is also there. So we are not in a position we you know we have. We try to verify as much as possible. Of course you know that under the delivery convention help and not covered by any sanction anywhere in the world all our
Rohit
so how much Middle east as a overall in the basket how much would that contribute to our revenue and how much did we lose because of the air space being shut?
Anwar S. Daud
We are seeing some turbulence and disturbances which are periodic and temporary. I don’t think we’ll lose anything because the business is quite sticky. It’s the legacy business of the company which has remained all things you know Middle east has been this political turmoil not today only that the intensity is great for since the last 35 years. So we haven’t seen because of the stickiness of the business we haven’t reached any decrease the business. We foresee, we don’t foresee any acceptance of temporary disturbances any permanent effect on the business.
Rohit
So my second question is if so this EUGMT assume if in a worst case scenario if you don’t get it within the six to nine months are there any penalties that you have to pay to our partners or are there any penalties if the EU GMP doesn’t come through?
Anwar S. Daud
There is hardly any product in the EU with the company has and at this moment not only do we have a backup strategy to have our own mas and other things but you know this is not something which is unique to Ming Nav.
Many companies get these kind of observations and they come out of it in due course of time. Fortunately for us our is not really infrastructural quality related. So that’s at least the positive side of it that none of these NIP products which are so complex to develop and supply are so you know there have not been shown to have any effect or quality issue. So we, we are heartened by that because those were also during the inspection, those were also touched upon and verified. So at least that story I would say is very strongly there.
And regarding the. I think I lost a little bit of my track there. What was my question again?
Rohit
If there are any penalties on the. Because of the.
Anwar S. Daud
There are no, no penalties. All agreements have the, you know, clause for them being able to supply from alternate sites. In case Zim is not able to get a, you know, successful alternate site, then there are billions on certain terms and conditions to provide the technology transfer to the partners two alternative sites of their tools which is also, you know, an option for them because that will trigger technology transfer field.
So these are all opportunities, we are looking at all of them as opportunities which can open up as time passes. At this moment we are clear very focused on getting the Kaapa in place and implementing it for ultimate size of our own where the product can be transferred with full confidence.
Rohit
The Middle east number, what is it as an overall percentage of our revenues right now?
Anwar S. Daud
30%. Approximately
Rohit
30. And last year, what would be the number? Similar.
Anwar S. Daud
Yeah.
Rohit
Thank you so much and all the very best.
operator
Thank you. Thank you. Ladies and gentlemen, please limit your questions to two per participant. Should you have a follow up question, we would request you to rejoin the queue. The next question is from the line of Shreya Chatterjee from Ageless Capital. Please go ahead.
Shreya Chatterjee
Hello, Good afternoon. Yeah, I. I have just two questions. So one is when you mention about the two critical failures like that has been mentioned by UGNP and you see that it is all related to process and facilities, nothing related to product quality issues. So then why are they being classified as critical? So and then if.
If you don’t get the approvals like as you mentioned that you have a technology transfer everything in place. So then what will be your guidance? Your product launch, especially the ones that have been approved or the four. The four products that have already got nas.
Chandrashekhar Mainde
Yeah. I would like to mention here that you mentioned that we have two critical. The first of all the critical observations are given where we need to have a go for the reinspection. In our case we are using a manual system for the documentation and in current GMP practices and all this thing manual system is accepted. But particularly at this moment considering our lot of products going to the EU and a lot of critical product going to you. The German auditors who visited, they taken a view that it will be better to have a electronic regulatory system.
So their major objections are to the data entry in a manual way. So that is the observation they Given So because this, this is the observation which can say that your data is has to be electronically entered. We have not received any observation particularly to the failure of our product. We have A8 products submitted to you, no product, no observation regarding any product product quality issues or any of the subsequent issue related to stability or not this thing. So that’s why, that’s why we had engage external consultant who has got extensive experience on this type of activity.
We are very mature see. And of course another way we this thing. Every company in their tenure has get some some sort of such non compliance for a short time. So this is a usual activity. Also you yourself mentioned that we are gearing. We are making a risk mitigation strategy where where we are also getting it to the another alternative site. So in the future we will have a more robust system and which will not affect our financials in future. So we are already on that line.
Shreya Chatterjee
Now what is the alternative site that.
Chandrashekhar Mainde
We cannot disclose at this moment to you? Once we finalize everything and then only we can do companies highly compliant and we keep on making these disclosures as and when the time is appropriate.
Shreya Chatterjee
And so my second question is on this business has always been quite volatile like last year also we had seen that these issues take up in the first quarter results. And then you had mentioned that you are taking some strategies also like Forex management and all. So could you give a bit of highlight into those? What exactly are you doing to.
Chandrashekhar Mainde
Only in the first quarter we have seen little bit of traction. We are the things have been now sorted out. The second and third quarter we are able to compensate everything and on the Forex front it is on the favorable side. So as of now there is no major worry on that angle. Thank you.
operator
Okay, thank you. Thank you. The next question is from the line of Mohit Jain from Devan Choksee pms. Please go ahead.
Unidentified Speaker
Hello.
operator
Hello. The participant has dropped out. I’ll take the next question. So the next question is from the line of Jasmine Core from Fortuna pms. Please go ahead. Yeah. Hi, can you hear me?
Jasmeen Kaur
Yes. Yes. Okay. Thank you for taking my question. Sir, Regarding the MA for the NIP products we have in in EU we currently have two, but there are many other filings that are there already in place. So with the current compliance issue that we are facing, are the MA timeline also going to get affected? What is your view on that?
Chandrashekhar Mainde
Yeah, I would like to tell you the grant of the MA is not at all affected by this inspection. The marketing, actually marketing of the product sales of the product may get affected. May get affected affected but not MA will continue to run. Okay.
Jasmeen Kaur
Okay. So for the balance mips we can see the MAS coming.
Chandrashekhar Mainde
Yeah.
Jasmeen Kaur
Okay. So you also mentioned in a previous participant question that for new REC harm partnership we are expecting that the launch will happen in the second half half of the current financial year but ultimately.
Anwar S. Daud
Calendar year 26 next year.
Jasmeen Kaur
Calendar year 20. Okay.
Anwar S. Daud
Next they have actually postponed this by. They have already postponed it by six, six to eight months because they have a big launch plan. But I think they were preparing for this. They have filed a few variations also in the the ML they are waiting for the variations to be approved. The MAS are there. They find some variations on those as well.
Jasmeen Kaur
Okay. Because ultimately the manufacturing of those will be in your plant only, right? I mean once they launch it.
Anwar S. Daud
That’s right. That’s right. It will be in our plant. I hopefully we’ll be in time too for the launch because the launch is a little delayed by them, not by them.
Jasmeen Kaur
Okay, so one more thing on say a UAE partnership with Global Pharma. So how is that coming along and how does that fit?
Zulfiquar Kamal
Yeah, so this is the global part. Pharma partnership is well within going on. Very nice. We have already they have filed the our own five products and we have received the MA in their name and there we have received the first order and we expect it to complete the order within this month or in the second quarter.
Jasmeen Kaur
Okay so any quantification on.
operator
I will request you to join back the queue for follow up questions. Thank you. The next question is from the line of Mohit Jain from Devon Chow. Please go ahead. Hello, can you hear me? Yes sir.
Mohit Jain
Yeah, so you mentioned in the last question that you had two critical infection which was shown and one, you are saying that it’s mainly because of manual data which needs to be done electronic. This is one or both the critical information which has come over is regarding this only dependence on manual documentation. Both the critical are actually dependent. Okay so my question is, my second question is on the follow up on this. So if you need to visit the you know, manual things to be done electronically and I guess we’ll also be hiring few external, you know, exports and all.
What would be your total cost in the next six months in terms of if you could quantify it just on the cost that would be spent just on rectifying these issues.
Anwar S. Daud
We are just starting but you know companies like us actually we every year we invest in upgradation of our facilities and our infrastructure, our systems. This is something which because of the last three inspections we thought was not that important for the inspector. But I think it will be in the budget that we already have. I mean we don’t need any extra budget to any extra standout extent.
We have a consultant, we have already had consultants which signed everywhere. This consortium will specialize in helping us in the electronic data. And. And in fact in the end it could result in some saving as the over dependence on manual system is reduced. Perhaps it would help to actually control the manpower and man hours which we spend on documentation would be reduced. So it could lead to some efficiencies.
Mohit Jain
All right, thank you. Thank you for listening.
operator
Thank you. The next question is from the line of side as an individual investor. Please go ahead.
Unidentified Participant
Yes. Yeah, my questions are being. Yeah, my questions have been answered. Thank you. Actually. No, no. Hello? Are you able to hear me? Yes, please. Yeah, yeah. Actually, let me just ask this. So now you say that you know, you can basically source your you know, those products that you have the ma from third parties. I mean assuming that you don’t get the UGMP on time. So once you let the source it from third parties you need another kind of any kind of an approval, regulatory approval or once you source it you can just go ahead. That’s all. That’s my question.
Chandrashekhar Mainde
Yeah. Here what we are doing, we are not going to any new party. We are going to the parties who has already approval of that particular agency. Once the the party has got approval for that agency then we have to just take it some technology transfer to that particular site and we have to submit what we call the validation data. Validation data. Once we have submitted this thing, they generally approve the product. If we have not made any changes in the whatever the we grant. If we adopt same process everything it a matter of three to four months only. It is not much variation, but variation has to file and it is a minor variation of the side chain.
If the. If the site is already approved by that particular agency. Like we have got any of the distinct from TGA Australia and now we are finding out the site which has already been approved by the tga. So yeah, so this involves only the product transfer. Product transfer. And that product is also sellable. Whatever the batches we take for the technology transfer that batches are sellable. So this is something which doesn’t affect much as of this time.
Unidentified Participant
Okay, then can we say that this three to four months of data validation which your teacher saying is going to be a minor issue, not an issue, minor process. This can basically you know, blend well into our timelines. You know, since we already have a six to six month time when to start our, you know, you, I mean new supply for whatever supplier. So this will definitely blend into that will.
Anwar S. Daud
Yeah, it looks like that. Although we are not giving that guidance as yet. We are saying we are delivered by. Yeah, yeah, yeah, yeah. They come a little late but probably in the end we might end up with a few months.
Unidentified Participant
Okay, thank you. Thank you very much.
operator
Yeah, thank you. The next question is from the line of Sujith Agarwal, an individual investor. Please go ahead.
Unidentified Participant
Yeah, hello and I, I just had two questions. The first question was related to the commercialization of tech transfer. Like how exactly will the commercialization work? What kind of. Will we get a one time fee? Will we get a recurring fee? Will it be royalty based? I just wanted to understand a little bit about that.
Chandrashekhar Mainde
Yeah, I will just explain you. We are not transferring our product to anybody. What we are going to do, we will have a toll manufacturing or contract manufacturing arrangement. There are many facilities which are approved by the particular agencies eu, TJ or MHRA but they do not have any products.
So what they does, they accept the product. So. And they charge the tool manufacturing fee or what we call the conversion fee. Conversion fee. So it is the same amount what we are also incurring in the fee for our manufacturing slightly here and there will be there.
Unidentified Participant
So like in terms of margins effectively can we still generate like let’s say like 15 odd percent EBITDA margin on this? Like I mean in terms of gross margin. Like I just want to.
Chandrashekhar Mainde
In a different way. Our NIB product has a, has a. We already get the scope of that. So it will not affect overall to the costing of the product.
Unidentified Participant
Got it, got it. And just wanted to understand the second question was regarding the fact that our H2 revenue has been deferred quite a bit. So like I just wanted to understand like year on year like will we still have, will we still be able to achieve a revenue of let’s say around 380, 390 odd crores and like how will the debt repayment look like? Like going ahead.
Zulfiquar Kamal
Yeah. So yeah as we have mentioned in the earlier part of the call that our revenue, the EU revenue upside has been pushed for the in the next year, next financial year rest.
Our base business remains the same, that overall guidance remains the same as far as the base business is concerned and you will be able to achieve similar growth. What we have achieved last year on the base business and as far as the debt repayment is Concerned we have already the gearing is much under control. It is around 4.47. That is 47% of the equity. And the DCR again remains the same. It is around quite comfortable and we have been able to do the commitment for the revenue repayments for the coming year with the last year basis turnover with some similar growth.
Unidentified Participant
Okay, thank you.
operator
Thank you. The next question is from the line of Rohit from I thought PMS. Please go ahead.
Rohit
Yeah sir, just two questions again. So one was on Mr. Kamal sir’s statement this now. So sir last year we saw some degrowth in the base business. So like we did around 305, 306 crores x of the OTF and IP business that we had so out. So do you see those kind of levels this year or do you see a growth on that given whatever challenges you’ve seen in Q1? And so second question on the you. So I think one part of our strategy was that we will use TMA in other markets also which is what we did last year around 70 odd crores of revenue.
So how do you see this year excluding of that excluding your euro which is delayed by say 2/4 or so. How do you see that business which we did 70 odd crores in the first. So what is the growth? How are you thinking?
Zulfiquar Kamal
Yeah. No. So the nip product business for other than new market that is in the row market will continue as it is. And there is also some growth in the base business as well as on the NIT business from the other emerging and row markets. As we have already mentioned in the previous call that we are filing our nip products in other markets so that market they are not directly dependent on new supplies and to and we can have a specific country wide inspection which is already there and we can supply the goods to other markets.
Except the EU part only the EU upside has been postponed. The base business and the nip business in row market have strong. We are getting the strong signal and we will be able to continue to supply that
Rohit
business. How do you see that excel when it in the auto markets it will have a similar.
Zulfiquar Kamal
It will start picking up from the Q2 and we will be able to give the Exact guidance post H1.
Rohit
Okay. Okay sir. I think all the very best sir. Thank you.
operator
Thank you ladies and gentlemen. As there are no further questions I now hand the confidence over to the management for closing comments.
Anwar S. Daud
Thank you for opportunity to be able to present our. And I think we have answered and we look forward to your support in these coming months. As well. We remain confident on the product and the overall strategy that we have. Maybe a little bit of delays due to the inspection, as well as some geopolitical. But this is part of every organization journey as well. We, in general, there the there is no market which can be called stable at this moment, including the regulated market. So it’s, it’s something which every business, every pharmaceutical business, as well as a non pharmaceutical businesses, are facing as an organization, as a country, we remain optimistic about the results that we will be and the performance that we will be able to deliver to our shareholders and stakeholders in the coming days.
Thank you very much.
operator
Thank you, ladies and gentlemen, on behalf of GO India Advisors and Zim LEP Laboratories limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.