Suven Life Sciences : Conference Call Transcript on December 26, 2022

Suven Pharmaceuticals Limited

Conference Call

December 26, 2022

Moderator:

Ladies and gentlemen, good day, and welcome to the conference call of Suven

Pharmaceuticals Limited. As a reminder, all participant lines will be in listen

only mode. And there will be an opportunity for you to ask questions after the

presentation concludes. Please note that this conference is being recorded.

I now hand the conference over to Mr. Gavin Desa from CDR India. Thank you,

and over to you, sir.

Gavin Desa:

Thank you. Good day, everyone. And thank you for joining us on this call to

discuss today's announcement of Advent International proposing to acquire a

significant stake in Suven Pharmaceuticals from the Jasti family. We have with

us Mr. Venkat Jasti - the Managing Director; and Mr. Venkatraman Sunder -

Vice President, Corporate Affairs.

Before we begin, I would like to mention that some statements made in today's

discussions may be forward-looking in nature and may involve risks and

uncertainties.

I would now like to request Mr. Jasti to share his perspectives on the

transaction and his view. Over to you, sir.

Venkat Jasti:

Thank you, Gavin. Thanks, everyone, tuning in for the call this afternoon. And

as you are aware we have announced a structured deal with Advent

International, which is known to everybody. I think rather than me telling what

it is all about, I would rather answer your questions. But we'll have much more

clarity than saying whatever it is existing on the website and the stock

exchanges. I can now take the call, and I can explain the rationale of the deal.

Moderator:

Should we start the question-and-answer session, sir?

Venkat Jasti:

Yes, please.

Moderator:

We have our first question from the line of Ankush Agrawal from Surge Capital.

Ankush Agrawal:

Congratulations on the deal, sir. Firstly, if you can clarify a little bit on your role

in the business going forward, like based on what you have provided to the

news outlet during the interviews today. What I understand is that you would

be continuing in your current management role for the foreseeable future till

the time Advent gets Cohance to merge with it where and when the entity as a

whole will become a bit larger entity. And then you will be phasing out and then

acting broadly as an advisor to the company. So, if you can clarify on that, sir.

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Venkat Jasti:

Yes, you're absolutely right. That's the way it is. As you know, consummating

this deal itself will take 5 to 6 months. After that, I will continue to run the

business. Only when the merger has happened, I will be looking after as a

strategic and advisory role. But the aim of Advent and ourselves is to value

creation, using the added platforms that are existing. So, we have a certain

speed, certain growth and certain capacity. But things are looking good. And

with deep pockets of Advent and their global outreach and not only in the

platform here and abroad and they have a reach into the global customers. We

can get more business opportunities. And whatever the opportunity that comes

in, it is a value-added proposition for which I will be the focus, and I will be the

advisor on that aspect and that's the way it will work. And I'm keeping my rest

of the stake in there as is because I believe that it will have a value accretion

in the very near future. That's the rationale.

Ankush Agrawal:

Sir, secondly, could you be able to elaborate on the Cohance's business model

currently because Suven's business model is relatively different from what a

lot of other players in India does. So, if you can help on that front. And secondly,

like on the Suven side itself, like historically, we've been planning to get more

on the life cycle management front and transition from the intermediate to the

retail. So, would this merger help accelerate that in your sense?

Venkat Jasti:

I mean when the focus is towards value creation, the merger will allow us to

use the facilities that are existing and also the customers that are existing.

Some of the things which you are not able to do at this time can utilize using

the platform at the side. And those platforms, which they are unable to use

some of the value-added services that will be done at the Suven Pharma. And

eventually, the value-added production and the global reach of the customers

through the management personnel of Advent, which are in the Life Sciences

field will be able to help us. The Cohance platform has some API and CDMO,

but the value creation will be the future focus.

Ankush Agrawal:

Sir, lastly, just a smaller one. Does this valuation change our existing capex

plan that we are undertaking?

Venkat Jasti:

No, not much. Business is as usual. There will not be any change, change in

even the people, not even a single person will not be left out from the existing

operation.

Ankush Agrawal:

And H1 initiative also stays intact, right?

Venkat Jasti:

Yes.

Moderator:

We have our next question from the line of Sudarshan Padmanabhan from JM

Financial Services PMS.

S. Padmanabhan:

Sir, my question is today when I'm looking at us, largely, the business comes

from the API part whereas I would understand that a fair amount of sales also

goes towards generics, and we are largely focusing on CDMO part with a

significant portion with innovator. Just if you can give a little bit more color apart

from synergies, I mean what can add as far as the scale is concerned? And

second is on the margin side, I mean I would understand that Cohance margin

should be significantly lower than our margin. So, from that side, do you believe

that on a pro forma basis, is there any kind of synergy that can come through

and expand the margins?

Venkat Jasti:

As we were telling you, the platform will be utilized for the value-added

products, which Suven is good at. That's the whole team which we want to

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