Aarti Drugs Limited (NSE: AARTIDRUGS) Q3 2026 Earnings Call dated Feb. 04, 2026
Corporate Participants:
Ardish Patel — Chief Financial Officer
Harit Shah — Director
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Analysts:
Vishal Avinash Manchanda — Analyst
Resham Jain — Analyst
Dhwanil Desai — Analyst
Yash Doshi — Analyst
Aditya Ravindran — Analyst
Shashi Ranjan — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Q3 and nine months FY26 earnings conference call of RT Drug Ltd. As a reminder, all participants line will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your Touchstone phone. Before we begin a brief disclaimer. This call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company and as on date of this call.
These statements are not guarantee of future performance and it may involve risk and uncertainties that are difficult to predict. I now hand over the conference to Mr. Adish Patil, COO and CFO from Aati Drugs Ltd. Thank you and over to you sir.
Ardish Patel — Chief Financial Officer
Thank you and good morning to all our stakeholders. We appreciate your participation in RT drugs. Q3 and 9 months FY26 earnings conference call. Joining me today are Mr. Harshit Chawla, Joint Managing Director.
Harit Shah — Director
Good morning.
Ardish Patel — Chief Financial Officer
Mr. Harid Shah, Full Time Director. Mr. Vishwa Sawla, Managing Director, Pinnacle Life. Sciences. Along with her Investor Relations Advisor sg. We trust that you had the opportunity to review our financial results and investor. Presentation for the quarter and nine months ended 31st December 2025 which have been. Uploaded with stock exchanges and are also. Available on our website. I will begin by outlining the key. Operating and business highlights for the period. Following which we will discuss financial performance. On the business side, it is important. To note that several factors weighed on this quarter’s performance. Utilization levels remained low impacting overall performance and operating leverage. First, weaker antibiotic demand reduced overall market pool leading to lower capacities being utilized. And creating margins pressure. Secondly, we faced delays in shipments from China that disrupted supply chains and extended. Lead times, straining production schedules and added to cost pressures. Third, a one time voluntary shutdown was undertaken in one of our plants for. Refurbishment ahead of the European audit which temporarily constrained production. Finally, the new greenfield facilities operated below optimal utilization as they are in the initial ramp up phase. That also put pressure on profitability. Now on the positive side, on year on year basis, we witnessed 7% volume growth in standalone business segment and a negative rate variance of around 5%. Export markets, especially formulations emerged as a key growth driver supporting overall business stability and contributing positively to margins. Our diversified product portfolio continues to play an important role in navigating such category specific demand fluctuations. The facility of FICA which operationalized in. September 25th has transitioned into the scale of phase. It has achieved nearly 30% utilization in. Its first quarter of operations and we. Expect to ramp this up to nearly 50% by March and April 2026 and upwards to that in the following quarters. Importantly, the facility is currently meeting only 10 to 15% of our captive requirements. For critical intermediates used in our anti. Diabetic portfolio, but going forward it will significantly enhance supply reliability and reduce dependence on external sourcing. In line with our backward integration strategy, we expect to become fully self reliant. For these supplies in coming couple of quarters. Our salicylic acid facility at Tarapur also achieved an important milestone as of now scaling production to about 300 tons per month. Currently, however, the overall December 25 quarter. Utilization for this product was still lower than expected. The facility has achieved improved operational stability in terms of quality parameters and solid. Waste management with further improvements planned in the technology. In terms of the business segments, our formulations business showed encouraging traction during the. Quarter particularly in exports market. The increasing contribution of formulations with a higher share of exports aligns with our strategy of moving towards higher value offerings. And improving overall business quality. As new markets and products scale up, we expect formulations to play a progressively larger role in our growth. On the regulatory front, certification and approval. Processes are progressing as planned audit observations. Are under review and inspections were conducted at one of our facilities as a. Part of ongoing regulatory initiatives including preparations for European approvals. This forms a part of a broader. Roadmap to expand presence in regulated and semi regulated markets. After several quarters of pricing pressure, we. Believe the business has reached an inflection point supported by stabilizing realization and improving volume momentum. January month sales shows a trend which. Is encouraging and providing confidence in a more positive trajectory for coming quarters. Going forward. Our focus remains firmly on capacity ramp. Up operational efficiency and margin improvement while maintaining strict capital discipline and regulatory compliance. We remain committed to executing our growth projects efficiently and building a stronger, more resilient platform for sustainable long term growth. Now let’s talk about financial performance at consolidated level. For Q3FY26, revenue stood at rupees 602.9. Crore as compared to rupees 557.1 crore. In Q3FY25 reflecting a growth of 8%. YoY, EBITDA stood at Rs 56.3 crores. Versus rupees 62.3 crores in Q3FY25 down 10%. Royal Y basis with EBITDA margin at 9.3%. PAT stood at rupees 40.5 crores as. Compared to rupees 25.7 crores in Q3FY25. Up by 58% on YY basis translating. To a PAT margin of 6.7%. For nine months, FY26 revenue stood at rupees 1846.6 crores as compared to rupees. 1713.4 crores in nine months. FY25 reflecting a growth of 8%. PY. EBITDA stood at rupees 215 crore versus. Rupees 196.9 crore in nine months. FY25 up 9%. YUI with EBITDA margin at 11.6%. PAT stood at 139.7 crore as compared to 94 crores in Q3FY25 UP by 49%. Y O Y translating to a PAD margin of 7.6%. With respect to standalone business for Q3FY26 revenue strewed at rupees five hundred and thirty crores contributing 88% to the consolidated revenue. Exports contributed 37% to this revenue. Using the API business, the antibiotic Therapeutic category contributed 35.1%. Antiprotozoal 19.8%. Anti inflammatory 12.9% anti diabetic 16.6% antifungal. 12.2% and the rest contributed 3.5% to the total API sales for formulation segment. Revenue from formulation stood at rupees 76.6. Crore in Q3FY 26 up 58%. YY exports contributed 67% to this revenue.
Now with this we would like to. Open the floor for questions. Thank you.
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 their 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. Anyone who wishes to ask a question may press star and one on their touchstone telephone. The first question is from the line of Vishal from Systematics. Please go ahead.
Vishal Avinash Manchanda — Analyst
Hi, good morning. Thanks for the opportunity. So my question is on the formulation bill. So just want to understand whether on the formulation business the primary intention is to do all the formulations of the existing APIs that the large capacities for or we we would also do other formulations beyond beyond our APIs that we are traditionally strong at.
Ardish Patel — Chief Financial Officer
Vishwa, would you like to answer this question?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah. Yeah, I’ll answer. So currently we are doing both we are working on four formulations of APIs that RP Drugs is manufacturing in house. But we are not restricting to that especially on our pipeline. We are focusing more on niche categories into the oncology and cardio diabetic range. Wherever RP has an API, obviously that is, that is a priority. But we are not restricting only to drugs where artisans manufacturing the API.
Vishal Avinash Manchanda — Analyst
Okay, so oncology specifically would, would need dedicated capacities. So those would be like separately created, right?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yes, we have a, we have a within formulation, we have a dedicated oncology U.S. fDA approved manufacturing site.
Vishal Avinash Manchanda — Analyst
Right. And what is the. So if you, if you want to break up the formulation capacity between oncology and non oncology, like in terms of the investment, how would you.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
So the. Firstly, the oncology is still pre revenue. We have not started commercial sales from the oncology side yet because the products are still in pipeline and filing stage. The first product will be commercialized in this quarter in Q4. In terms of the capacities, in absolute terms in terms of tablets, about 90% of the capacity is in the general plant. But in terms of the potential revenue over the next three years, about 40% of the revenue can be generated from oncology.
Vishal Avinash Manchanda — Analyst
And in terms of the investment, would that be in the same proportion, the revenue proportion or.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah, it would be slightly higher because on the product development part also we are investing more into the oncology. So the investment would all would be probably about 50%, 40 to 50% on oncology.
Vishal Avinash Manchanda — Analyst
And we’ll primarily do contract manufacturing on both the fronts or we’ll kind of have. So we’ll have the dossier zone on both these. Both these categories and then partners.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah, so we do both for. Primarily for the domestic market we do contract manufacturing, whereas for international markets we develop our products and dossiers and then we out license them. So we hold the IP and we work with local partners for the marketing and distribution.
Vishal Avinash Manchanda — Analyst
Okay, okay. And just one on metformin. So the backward integration capacities for the methylamines that we are, that we are creating, would that also be used for gliptins also or that that’s only for metformin?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
No, that is dedicated to metformin.
Vishal Avinash Manchanda — Analyst
Okay, okay. And any sense on Metformin in terms of what would be India’s share in the total metformin capac across the world?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah, we have to do the current analysis, but a couple of years back. We were roughly around 12, 13% of the Indian capacities. But right now we have increased our. Capacities in last one year. So with that increased capacity probably it might have gone up upwards of 15%.
Vishal Avinash Manchanda — Analyst
Okay, okay. And. And we have 180 crores sitting on CWIP. Is that for the oncology block or.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
So? No, no. So, so it will be part. Part would be the oncology dose development. And part is related to a big. 25 tons boiler which will be going. On stream in this quarter. It is a cogent boiler, big boiler. So it will be also generating power along with the steam. And it is part of one of the greenfield projects.
Vishal Avinash Manchanda — Analyst
Right. And finally if you can quantify with the backward integration projects, so the methylamine backward integration projects and all the other cost saving investments that you’ve done in what like at peak utilization, like if we are able to kind of use it entirely 100%, what would be the savings that will generate in the numbers?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah, so I understand it’s slightly difficult. To give a position because with additional. Capacity coming into picture the prices will definitely move. The margins of that product will slightly. Change going forward as the new entrant has come in. But it will definitely help us in improving the gross contribution further. Plus it will also help us in. Improving the sales of couple of specialty. Chemicals which has already increased in this quarter as well. And it will further increase in March. Quarter and then next couple of quarters will be further ramping up the production and the CYCA facility. So overall what we expect is that it should give a boost of say you know, at least a couple of. Percent in gross contribution at the company level when it runs for the, when it runs at full scale. Like, like if you assume current prices and not assume any volatility in going forward. If there is an absolute number, you can check if prices remain raw material. And end product prices. It’s a very, very, very rough number. Very. Is it run at full scale potential? The EBITDA can be slightly upwards of 50 crores.
Vishal Avinash Manchanda — Analyst
Understood. Thank you very much.
operator
Thank you. The next question is from the line of Resham Jain from VVD Asset Managers. Please go ahead.
Resham Jain — Analyst
Hi, good morning. So I have a few questions. So first one is if it is possible to quantify all the things which you have mentioned in your opening remarks with respect to shutdown and some of the new facilities coming up. I assume there will be losses related to that. So if each of those items, if you can just quantify how much impact would be there in this quarter because of all these things. You see a couple of the greenfield projects put together, put together now we. Don’T have any issues at the Saika facility like we had in Silicil equipment because Cyca Facility this is the first quarter of ramp up and we have already ramped up to 30% and it. Is going very smoothly as far as the ramp up is concerned. So both this included probably at the EBITDA level it could have created a. Drag of roughly eight or eight and a half crores. And at the PBT level probably it. Would be around some 14, 15 crores.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
But that is it will change soon for the Saika facility. For the salicylic facility it will change. Gradually in this quarter and then June quarter. And as far as the other lower production capacity utilization, I don’t have an exact number but what happens, what has happened? You know we have sold a lot from the FG stock in this particular quarter. So if you see the numbers around 30 crores of sale has come from the existing stocks and not because of the fresh production. And because of that we have estimated that roughly would have impacted around 1%. In the gross margins. Because when we sell from stock, you know, the inventory, the inventory valuation typically has 80% raw material content and 20% overhead component. So that 20% would be amounting to 6 crores. So that has created a drag in. Gross margins which we see for the December quarter. So definitely there has been multiple factors. So all put together it has created. A drag in the parent company, the. Standalone business which is the API and. The Spectrem company, whereas the formulation department, the division has done quite well in December quarter. But the good part is in Jan. For both the segments we are seeing. Good traction in the business. So hopefully this trend has already reversed. And we should see some positive numbers. In the March quarter.
Resham Jain — Analyst
So what I Understood is that 8 crore dragged EBITDA level which is almost like 30 odd crores in year number and could be more in the earlier quarters. What we could see next year is not just a breakeven but possibly as we move in the quarters it will become positive. So the overall impact at EBITDA level should be much positive in FY27. Is that understanding correct?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yes, that is very true.
Resham Jain — Analyst
Okay, understood. The second question is with respect to the capex this year, I think you mentioned earlier last quarter that we’ll have close to 200 crores capex this year and that will bring an end to our overall 600 crore capex which we have planned earlier.
So what is the capex let’s say in FY27 beyond what we have earlier planned for?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah, so what we had planned earlier. Except for one project, we are almost. Done with the other projects. The one project which was left out. In this was expansion of Metforming facility. To almost around two and a half. To 3,000 tons per month. That was our long term strategy. However because of some land issues initially we ended up doing the brownfield expansion. So we already have reached around 1450. To 1500 tons per month. We will be scaling it up to 1800 tons per month in the existing facility. 18 to 1900 tons per month. Plus we are seeing some positive signs. On the line side. So that will also happen. That and the main, the main idea. Is to forward integrate in the Metformin. The first step is that we are going for us FD approval for the Metformin. We have already prepared a usdna. We are in the process of filing it. Then we’ll try to trigger the audit in the coming year and take it from there. So that should improve our regulated sales. Of Metformin and definitely it will give a very good EBITDA margin from those markets. Plus the plan would be for the US market through Pinnacle we might be. Launching ANDA as well for the Metformin tablets. The forward integration of Metformin is on cards. So that was the one project which was left out from the initial plan. Which we will take up in the coming couple of years. And apart from that there are certain expansion of cardiovascular products from our existing line. Plus we have seen some increased demand for our antifungal products. So for that we are expanding capacity. Plus we are thinking in the lines. Of doing some level of CDMO in the chlorosulfonation chemistry where we are already stronger. We are already doing contract manufacturing for a few MNCs as far as few second products are concerned. So we want to expand in that line as well. Plus the methylamine chemistry which was newly. Introduced through CYCA plant. We are looking at exploring the options. Of various derivatives which will be a part of that chemistry itself. So it will help us. You know there will be synergies in the further expansion. So that should help us reduce cost also and plus get some value addition. So that is the overall plan for the coming years for the Capex. And plus we are identifying new molecules as far as API and other staking. Segment is concerned that that process also on and we will announce soon as soon as something is finalized. Having said that I would still maintain that you know around 150 to 200. Crores of CapEx you can expect for. The next two years each, each, every. Year, every year 150 to 200 crores of CapEX. Considering the formulation oncology expansion and all the ideas I just spoke about.
Resham Jain — Analyst
Understood, very clear. And what is the current debt on books?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Current debt is roughly around 540 crores total date on the console level. On the standard level it would be around 392 crores. And in both the means, both the divisions, the date is equally split between. Long term and short term. It’s almost 50 point something percent each.
Resham Jain — Analyst
Okay, thank you so much. All the best. Thank you.
operator
Thank you. The next question is from the line of Dhuanil Desai from Total Capital. Please go ahead.
Dhwanil Desai — Analyst
Hi, good morning Radish. My first question is that you said that January seemed promising and we are at the inflection point where the negative price variance is kind of coming to an end. So earlier we were expecting 15% kind of a volume growth coming through in H2. So do we see similar trend and should we expect those kind of volume and hence value growth going forward into FY27? Also.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
We can expect. The main reason is the growth which we expected in FY26 hasn’t come to that extent. So which means that the growth will be pushed ahead into FY27. So probably we can expect around, you know, 12 to 15% volume growth in. FY27 with both the projects going smooth. The greenfield projects I’m talking about.
Dhwanil Desai — Analyst
Okay, so is it, is it fair to assume that large part of volume growth will come from the new projects and existing basket of products? You know, there, you know, we are not expecting much of a volume growth or maybe single digits volume growth. Is that a fair way to look at it?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah, so. So the existing product basket should give single digit volume growth, but the main growth driver for the volumes would be. The new projects, both salicylic acid and the cycarb lines.
Dhwanil Desai — Analyst
Okay, second question is on the gross. Margin side, even if we adjust for the 100 basis point because of the inventory challenges, you know, that is still below that, you know, 36, 37% mark that we wanted to hit. So you know, how should we look at this margin trajectory going into FY27 and because lot of backward integration that will also come into play. Chlorosulfonation also, you know, will kind of pick up specialty part of it. So how should we look at that number going forward?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yes. So this particular quarter for the console basis, what we can see it is. Roughly around 37, 35.9. The main, as I was talking about, we have sold from inventory. So that has also impacted the GROSS. Contribution around 1% is what we feel. That and another Thing is the export. Content of the standalone business in December. Quarter was slightly lower and typically the. Export market is better selling prices. So when the export percentage is higher the gross margin is automatically bit higher. So penetrating more into export market is also one of the very critical strategy of us. Along with that pushing our existing product basket into the European markets because we are already strong in those products and we are in the process of getting. European upgrades for those products from our regular volume plants. So from there if we supply to Europe markets that will definitely add to gross margin backward integration. Definitely. Yes. As I was telling that currently in December we were only able to achieve on 12 odd percent of backward integration. For the anti diabetic I’m talking about specifically. So that will go to you know almost 1900% in 2 3/4. So that will also definitely help to. Improve the gross contribution. And along with that the formulation business, formulation business will impact gross contribution positively probably from second and third year may not be in 27 immediately but as the oncology starts flowing into the sales. Then that should also definitely improve gross contribution.
Dhwanil Desai — Analyst
Okay, so a follow up on this. So on a standalone EPI FY27, should we expect 35, 36% kind of a gross margin or you know, should we pencil in lower number?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
No, I think 36% gross margin is fair to assume. It is not that tough to achieve 36% gross margin.
Dhwanil Desai — Analyst
Okay, and when we’re, when you are saying 36% is achievable, what are the underlying assumption that we are building in that calic acid plant will kind of, you know, stabilize?
Ardish Patel — Chief Financial Officer
That’s a major assumption. Or the European, you know, supply picking up is also part of it.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah, overall means one is the regulated. Market sales plus the sales pickup from. Our E22 plant, which is USFDA plant and the backward integration improvement in salicylic acid will definitely do a lot of. Impact on the overall gross margin. These are the main assumptions.
Dhwanil Desai — Analyst
Okay, got it. And last question. So we, we said, you said that we should expect 150 to 200 crore of capex for next, you know, every year for next two years while we are just come out of a large CAPEX cycles where plants are still scaling up the you know, translating into you know, gross margin and EBITDA numbers are yet to take place. So why is it that you know, we don’t want to kind of first you know stabilize and get to the good operational efficiency level and then do the capex rather than getting into newer projects where we’ll again and continue to hit our margins.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
You are absolutely correct in that analysis. So there are a couple of factors to that. One is the CYCA plant that has operation is very smoothly. We have scaled up very smoothly so. We haven’t seen any issues. So and plus that is a captive consumption mainly more than 50% is captive. Consumption from that plant. So scaling up of that project will happen very quickly. So we are talking more from 24 months and this Saika results will start coming in six months itself. So we’ll know within six months we’ll. Come to know whether one of the. Greenfield capex is fully operationalized or not. So that will give us one comforting factor after six months and salicylic acid we are almost at means towards the end of improvement. And one more thing, that 150 to 200 crores a part of that will also go for oncology dossier development, you know. So that is also important because they have already oncology approved foundation plant, USFD. Approved plant in Buddhi. So we want to capitalize on that. Plus we got European approvals for our. OSD facility in Buddhist. So we also want to capitalize on that by having more doses on regular therapies for formulation. And plus this will also include the maintenance capex plus the incremental expansion what. We do, brownfield expansion that will also. Be the part of this. And plus we are doing a bit of capex both in that solar power plant also and some energy related improvements. What we want to do. So that will also be taken care. Of in this capex.
Dhwanil Desai — Analyst
Got very clear. Thanks and wish you all the best.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Thank you.
operator
Thank you. The next question is from the line of Yash Doshi from Unifi Capital Private Limited. Please go ahead.
Yash Doshi — Analyst
Thank you. Am I audible? Yes. The sacred asset line. If I remember on last we said that we break around 800 metric tons per month and we also talked about Chinese dumping. So have the realization stabilized or they are. They are still. The dumping is still on and the relations have come. Yeah. Can you answer the silic selling prices string?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah. So Chinese dumping is still on but due to dollar rate going up we are getting little better realization than last quarter. But we are also trying to apply NTW duty from beginning of next year against Chinese imports which will take up to six to eight months, nine months whatever time after April because we are not eligible as of now. So maybe from April we are eligible to apply for NTWT also. Let’s hope that you know and on the operational side we are trying. We are improving our overall efficiency so. That you know, we come out of this break even for next year.
Yash Doshi — Analyst
Yeah, sorry, yeah, just for confirmation. So the cyclic acid line and cycle plan Both combined reported 8.5 crores of EBITDA loss this quarter. Or it’s a single planned 8.5 crores. It’s a combined combined. Okay. And regarding next year, if you look at the EBITDA margins like this quarter, because of multiple headwinds, we reported nine for him for next year, steady state, what EBITDA margin will be around.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
See first of all initially we would like to hit the target of 12 to 13% because right now it was. Struck down well below that. Right now it is around 9.3. But just previous quarter in September it was around 12.9%. So first we’ll come there 12 to 13% and then from there the ideal steady state margins when everything starts going. Smoothly should be somewhere in 14 to 15%.
Yash Doshi — Analyst
Okay. And on the psychop line, what we are targeting Next initially target 50%. I think Q4 exit rate will be around. So next year what is our target?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah, first quarter, first quarter we were able, we were able to do around 30 utilization immediately. In this current quarter, March quarter, we are planning to ramp up to around 50% utilization. And then in the subsequent quarter we are planning 75% utilization of the facility. So the ramp up should be pretty fast. So within, hopefully within 12 months. We. Should be almost there till 80, 90%. And same for the sacrylic acid plant. Next year we are targeting around 800,000 metric tons.
Yash Doshi — Analyst
Yes. So salicylic acid, we are going slightly slowly. There have been a lot of changes. So what happened? The story is like this. We started the plant almost in April. 24 and in January 25. We saw.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Sorry. So around one year back we saw. There were drastic changes in the specifications. Of salicylic acid since the time we commissioned the plant. So we had to take care of that quality parameters as well. So we had to tweak our processes a little bit. And currently what we are observing is. That. I’m talking about the industry and the competitors. The process, the physical chemistry of the organic chemistry has remained same, but the physical chemistry is slightly. The new technology is coming in for salicylic acid. So we are also exploring that part to adopt that technology in our plants. So that index is important for us. To be competitive going future in going forward. So that is the only reason why salicylic acid, I’m saying still we are going a bit slowly, but within 12 months probably we should try to Hit. That thousand tons per month mark. That should be our target. But we are also cautious about the new technologies which are coming in which haven’t been adopted yet. But they are in the discussion of. Getting adopted at plant scale. So that also we are exploring.
Yash Doshi — Analyst
Okay, understood. Yeah, that’s from my side. All the best.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Thank you.
operator
Thank you. The next question is from the line of Aditya from Sovilo Investments. Please go ahead.
Aditya Ravindran — Analyst
Thanks for the opportunity. I just wanted to understand like you know the API pricing and as such a couple of quarters ago there were discussions that that could be the bottom and. But looks like you know, dumping is going on and prices also there has been pressure. So what kind of trajectory are we seeing especially for API?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah, so see what we have observed. Is that overall rate, negative rate variance. In December quarter with respect to September. 25Th, that is quarter on quarter, it is roughly around two to two and a half percent. But having said that it is mainly. Not mainly, the entire reason for that. Is the antibiotic segment, the other segments. Frankly speaking, in some of the other segments we have seen positive growth as. Well in the prices. So it is product specific. So we will still maintain the stance that the prices have stabilized from September onwards. Just product specific variations are there. Little bit. But more or less the prices have already stabilized. So we don’t see any reduction of prices from this point.
Aditya Ravindran — Analyst
Okay. And just recent, I mean I’m just trying to understand whether that affects us or no. This recent we had the government establish MIP for penicillin. Right. So would that have any kind of bearing in terms of our input costs?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Not. Not now. Right now we don’t deal in that segment. But the concept of mip, we are trying to explore that in few of the cases which will help us benefit to get better realizations for our. For the products which we sell as import facilities.
Aditya Ravindran — Analyst
Understood. Okay. Thank you. That’s it from my.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Thank you.
operator
Thank you. The next question is from the line of Sashi Ranjan from Sashi Ranjan Hospital Hospitality Private limited. Please go ahead.
Shashi Ranjan — Analyst
Good morning. Thank you for the opportunity. I would like to understand the molecule that was banned on the 31st December 2085 talking about nimesulide. So how it’s going to impact our. Up to 100 milligrams. So how it’s going to impact our revenue in future. Regarding.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yes, sir. Okay. Harish bhai, can you. Yeah. Basically the recent band was for nimucilide, more than 100 milligrams. And typically in India this product we have all formulations where we are selling is less than 100 milligrams. So we are not affected as far as demand is concerned. These are for very high dosages which only two or three, four companies were doing it actually. So all our customer base are within the range and so there is no problem with the demand for that molecule as of now.
Shashi Ranjan — Analyst
Just a clarification on that. Can you quantify the revenue that we get from Nimusilide from the below 100 milligram formulations?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Most of our sales in Nimiculide is.
Shashi Ranjan — Analyst
No, I’m asking for the revenue, sir. We don’t have that number right now. Probably we can get it to get. It get back to you later on.
Shashi Ranjan — Analyst
Thank you. So my next question, if you may allow, what is the capacity utilization currently in API and FDS? Is it again 30 and 50, which you answered right a while ago?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yes. So what I was, I was talking about that in the opening remarks that this particular quarter, even when we compare to our capacity utilization for the first. Two quarters of this current year, that. Is the H1FY26, we were almost down by 4 to 5% even from what we achieved in the first two quarters. So. And we also highlighted the reasons why it happened. So most of the reasons are behind us. So going forward we don’t see such disruptions for coming quarters. At least.
Shashi Ranjan — Analyst
Coming to the last question, what is the gross margin and the revenue that we’re getting from CDMO and are we going to use the backward integrated products in the CDMO products that we are currently operating?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
So no. So backward integrated. So whatever products we are doing in. Spec in. You can call it CDMO or cmo. So they are okay. This chlorosulfonation chemistry, we are already backward integrated in chlorosulfonation. So these are all derivatives of that chlorosulfonic chemistry. So we are that way backward integrated already. It cannot quantify in terms of percentage. Because right now it is not that big for us. So that is the reason why we. Still club it under spectrum segment as of now.
Shashi Ranjan — Analyst
Okay, so now coming to the last question, the European approval that we got from product in buddy, is it related to oncology or any other. Can you. Do you want to answer that?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah. It’s for the general tablet and capsule facility as well as the oncology facility. So it was in joint inspection for both the facilities and now we have EOGMP for both the oncology as well as the general oral solid site.
Shashi Ranjan — Analyst
Thank you so much. That’s, that’s all from my side. I’LL get back in.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Thank you.
operator
Thank you. The next question is from the line of Vishal from Systematics. Please go ahead.
Vishal Avinash Manchanda — Analyst
Yeah, hi, thank you. Can you share what would be the total investment including the dossier development cost we’ll be making in the oncology business?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah. So the facility Capex in both phases, what we initially did and we have a brownfield expansion going on would be about 50 crores and in terms of the product development and regulatory related it would be about again 50 to 60 crores every year for the next three years.
Vishal Avinash Manchanda — Analyst
Okay. That is what we’re spending on the product development so broadly. 200 crores, right? Including.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yeah, 200 crores spread over time. Yeah. Including. Capex as well as product development in regulatory. And we can, can we expect an asset turn of 1.5 here?
Vishal Avinash Manchanda — Analyst
Yes, we can expect about 1.5 to 1.75 capacity.
Vishal Avinash Manchanda — Analyst
And do we already have partners for the dossiers that we are filing?
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yes, usually we in most of the territories we are having B2B partners before we file.
Vishal Avinash Manchanda — Analyst
And our capacity roughly would be 300 million pills for oncology.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yes, that’s right, 300 million. Okay. Okay. And just one on salicylic acid. If you could give some sense on why we kind of went to kind of why we, why we kind of chose salicylic as a import substitute option while there were so many, you could have also chosen a backward integration project for metformin. And why did we go for salicylic acid?
Vishal Avinash Manchanda — Analyst
Yeah, yeah. So. So we studied pricing trend of salicylic. Acid for the five, five to six. Years when we selected that product. That time no one was manufacturing that product. The technology, what we had developed, you. Know, it showed very high profit margin. IRR of the project were upwards of 20% for that product. But what happened was when we entered the market then that is the time. When China started crashing the prices probably. Because they were fearful that a new entrance will come. So if they keep the prices to rock bottom for the initial period that. Will discourage us from going in, you know, going ahead with salicylic.
Vishal Avinash Manchanda — Analyst
So we foresee that as a, you can say entry barrier or a temporary entry barrier what they’re trying to create. Fortunately this also becomes the case of anti dumping because they crashed the prices when the Indian manufacturer came in. So if we get that benefit even for, you know, the first few years, we are sure that we will turn it up. Because the same thing had happened for Metro and ciprofloxacin also in past we had got Anti dumping duties for four or five years and by the next round when it came we were so profitable that we did not qualify for anti dump duty.
So we feel this will turn around. And the thing is, salicylic acid also opens up a big opportunity for us to enter into cosmetic and healthcare line. Of business and not just restrict ourselves to atrium. That is one another advantage what we. Have through salicylic acid. It is a base product used to manufacture salicylates which goes in flavor and fragrances industry. So we’ll do downstream products from this.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
So the thing is right now the situation is such that we are compared to do. We have already developed technology for that. We have done piloting also for the downstream products. So we are coming up with salicylate. Block as well very recently in a quarter or two. So let’s see how how that fixes.
Shashi Ranjan — Analyst
Sir, have you made an application for anti dumping duty?
Vishal Avinash Manchanda — Analyst
So as I was pointing out that earlier we did not qualify but now I think by April or so. Right. We will be filing for the. Yeah.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Yes, by April we’ll be filing the application probably so April.
Shashi Ranjan — Analyst
Okay, sir. Okay. Thank you. Thank you very much.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Thank you.
operator
Thank you. Ladies and gentlemen. Due to time constraints that was the last question for today. I now hand over the conference to management. Closing comments.
Vishwa Savla — Managing Director – Pinnacle Life Science Private Limited
Thank you. Strategic investments and initiatives we have implemented over past year is beginning to align setting the stage for new phase of. Growth for RT Drugs. We anticipate a more pronounced impact on. Our financial performance in the upcoming quarters. As capacity utilization scales up and our enhanced product mix begins to deliver drive a higher profitability. We appreciate your continued support and trust in Arthur Trust. Should you have any further question, please reach out to sga, our investor relations advisors. Thank you and have a nice day.
operator
Thank you. On behalf of RT Drugs limited that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.