Aarti Pharmalabs Ltd (NSE: AARTIPHARM) Q3 2025 Earnings Call dated Feb. 07, 2025
Corporate Participants:
Rashesh C. Gogri — Chairman & Non-Executive Director
Hetal Gogri Gala — Vice Chairperson & Managing Director
Piyush Lakhani — Chief Financial Officer
Analysts:
Nupur Jainkunia — Analyst
Prakash Kapadia — Analyst
Rahul Jain — Analyst
Meet Katrodiya — Analyst
Dhwanil Desai — Analyst
Rupesh Tatiya — Analyst
Ankur Bhadekar — Analyst
Aryan Bansal — Analyst
Deep Gandhi — Analyst
Ajay Surya — Analyst
Nitesh Dutt — Analyst
Divesh — Analyst
Shubham Jain — Analyst
Neha Kharodia — Analyst
Kumar Saurabh — Analyst
Yash Chandorkar — Analyst
Vilin Doshi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Arthi Pharma Labs Limited Q3 and Nine Months FY 2025 Earnings Conference Call hosted by Valorem Advisors. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference call, please signal for an operator by pressing star and then zero on your touchstone telephones. Please note that this conference call is being recorded. I now hand the conference over to Ms from Valorem Advisors. Thank you, and over to you, ma’am.
Nupur Jainkunia — Analyst
Thank you. Good evening, everyone, and a very warm welcome to you all. My name is Nipur Kunia from Advisors. On behalf of RP PharmaLabs Limited, I would like to thank you all for participating in the company’s earnings call for the 3rd-quarter and nine months of financial year 2025. Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management’s belief as well as assumptions made by information currently available to management. Audiences are cautioned not to place any due — undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today’s earnings call and hand it over to them for opening remarks. We have with us Mr Rajesh Gobri, Chairman; Mrs Hethal, Vice Chairperson and Managing Director; Mr Piyush Lakani, Chief Financial Officer of the company. Without any further delay, I request Mr to start with his opening remarks. Thank you and over to you, sir.
Rashesh C. Gogri — Chairman & Non-Executive Director
Good evening, everyone, and welcome to Ati Pharma Lab’s earnings call for the 3rd-quarter of financial year 2025. It is a pleasure for us to speak to you today and share an overview of our recent business progress and financial highlights. I’m extremely pleased to announce a record-breaking quarterly performance. In this quarter, we have achieved highest-ever quarterly profit in the company’s history on a standalone as well as consolidated basis. The performance demonstrates our execution capabilities and effectiveness of our strategic initiatives. It is a testament to progress — to the progress that we have made in the growth and we have been striving for. Here are the highlights of consolidated financials for Q3 FY ’25. The consolidated top-line was INR538 crores, which was 20% increase on Y-o-Y basis. The EBITDA was INR129 crore as compared to INR96 crore on the corresponding period of the previous year and it was an increase of 34% Y-o-Y. The profit-after-tax for the Q3 FY ’25 was INR74 crores as compared to INR53 crores a year back, indicating a surge of 40% Y-o-Y. Now let me present a few business highlights. The company operates three separate segments in pharmaceutical industry, that is derivatives, API and Intermediates and CDMO, CMO business. Notably, all the three segments have done reasonably well this quarter. The derivative recorded highest-ever quarterly volume sales and it contributed to 44% of the turnover in Q3. The competition from China continues to be a headwind. In fact, the prices for the sport market have further declined by over $1 per kg. Despite this long-term customer relationships and world-scale capacity helped us thrive in this market. And similar to last quarter was when thin facilities have operated almost at full capacity in this Q3. The API and intermediate business delivered the best quarterly revenue performance and contributed to 43% of the turnover in Q3. The sub-segment wise breakup is 48% regulated market, 40% ROW market and 12% non-reg market, which is aligned with our long-term focus towards regulated markets. The third business segment, CDMO CMO has contributed 13% of the turnover in this quarter. We are presently working with 21 customers, adding two customers in this quarter. The number of active projects is now 56, of which 28 projects are in the commercial stages and 28 projects are at different stages of development, both at customers ends. Given our strong manufacturing capability and global tailwind in CDMO business, we are confident of delivering significant growth in medium-to-long term. Let me also oppress you about the temporary shutdown of our Vapi plant in first week of January. The unit had to be stopped — the unit had stopped operation because of the notice from the State Control Board and the necessary steps were taken and unit was successfully restarted in about two weeks. With no long-term impact, we anticipate that this closure may push some of the CDMS sales, which was originally scheduled in Q4 by 1/4. Let me share the progress updates on key growth initiatives. Our brownfield expansion for the increase of zengene derivative capacity from 5,000 metric tons to 9,000 metric tons per annum is progressing as planned. As per our plan, we will be filing for the regulatory approvals and the US GMF and CEP for the pharmaceutical market from our Tarapu Unit-3 plant in this current quarter. The greenfield project of, Gujarat for CDMO CMO and intermediate manufacturing is progressing with minor dealers and we expect Phase-1 of the Satelli to be commissioned in Q1 with a ramp-up expected towards the end of FY ’26. The Phase-1 will have about 450 KL reactor capacity and has been specially designed to facilitate pilot to commercial scale-up in the same block. As communicated previously, our solar energy project of 21 megawatt DC at Akola Maharashtra was commissioned in Q2 FY ’25 and is operating as expected. Moreover, we have signed-up with another captive solar energy project of 9 megawatt DC for our units in Gujarat. The second project is likely to get commissioned in Q2 FY ’26. And once operational, both these projects combined are estimated to generate more than half of our total electricity requirement. This highlights our continuous commitment to cost optimization as well as sustainability. Lastly, we will be starting two solid multi-fuel boilers capable of using biobriquettes as possible fuel at two of our plants in Maharashtra in Q4 FY ’25 in the current running quarter. And these are expected to completely — completely fulfill the steel requirement of these respective plants using this kind of fuel. And this initiative will not only result in fuel cost-reduction, but also lowering our carbon footprint. Thank you. Okay. In conclusion, we are hopeful to continue the growth momentum debt and growth momentum and remain focused towards driving revenue growth, optimizing cost and enhancing operational efficiency. Given our current trajectory, we are optimistic that we may exceed our previously provided guidance of 10% to 12% of EBITDA growth for FY ’25 and the business prospect look bright and we will discuss the long-term outlook in Q4 FY ’25 conference call. Thank you for your continued trust and support, and we are committed to delivering strong results and creating long-term value for our investors. The moderator may now open the forum for Q&A. Thank you.
Questions and Answers:
Operator
Thank you very much, sir. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone who wishes to ask a question may enter star followed by one on the touchstone telephones. If you wish to remove yourself from the queue, you may enter star and two. Participants are requested to use only 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 Prakash Kaparia from Spark PMS. Please go-ahead.
Prakash Kapadia
Yeah. Thanks. A couple of questions from my end. No, Zenthin contributes around 45% of our revenues and caffein prices have seen a 4%, 5% correction in the last three months. And in the opening remarks, you alluded there is some more downfall in the prices. So you know what would you expect in the coming months? And if you could highlight some sensitivity profile as to what impact can it have on falling realizations for this segment because that’s a large segment for us? Okay. And secondly, in the CDMO segment, we are seeing number of products which are in the commercial stages increasing to around 28 from around 19 last year. So yet we’ve not seen any major growth in revenues from the CDMO segment. So on an annual basis, what could the contribution of CDMO be like? And I guess this would be a higher-margin business for us. So as this contribution increases, what could the margin trajectory be for the company as we scale-up the CDFO business? Those are my two questions.
Rashesh C. Gogri
Yeah. The overall the caffeine prices, as I mentioned, have softened little bit overall for the spot market. However, there is a different profile of customers which are, you know, offering — where we are offering different kind of price proposal. And due to which we are able to now focus, as mentioned, we will be filing the USDMF and CEP from our Tarakur Unit-3 plant. So we have tried to change the profile of the customer and making it more regulatory oriented customers. And with that, we will be able to focus on higher price — customers who can pay higher price to us. So that way we are trying to ensure that we are not selling more spot volumes for our customers. Secondly, the lower prices are compensated by higher quantity production also. So overall, the we have seen from last year to this year a growth in overall production of our zanzene portfolio. And with that, we are able to grow our overall absolute pie of the contribution in gross profit for this segment. For your question on CDMO, you rightly mentioned that we have increased the number of projects from 19 to 28 on the commercial side. And overall, I think the number of customers have also increased to 21 customers with 56 parent running products that we have. And as mentioned, we see good opportunities in future for this. And of course, this current year also as earlier we had guided that we will be increasing our top-line from last year. And we are hopeful that we will still be increasing because till now we have only done around INR7,678 crores of, you know, sales of this product CDMO segment, but we will be exceeding last year’s number, which was INR170 crores. So that will happen in the current quarter. And we hope that next year we will be able to do significantly better sales of CDMO products..
Prakash Kapadia
And you know, with this scale, what could be the margin trajectory be like because I’m guessing CDMO would be a higher-margin business as compared to Zentin and Zentin, if you could give some you know more insights into the changes which you talked about supplying to regulated markets, what does it take to get more visibility from these kind of customers who are willing to pay us more and you know what could Yana that reduced volatility look in terms of sensitivity to our margins or you know this can affect margins in the segment also if regulated markets don’t buy more from us, what would be the contribution of customers from regulated markets? If you could give some color, that would be helpful.
Rashesh C. Gogri
Yeah, basically for Zanthe, currently we may be in spot bucket for 30% 40% of our total volume currently. And with increase in the capacity, our capacity will go up from 5,000 tonne to 9,000 tonnes. So we are hopeful that we will still maintain a contractual or not contractual, but spot price number to that restricted level of 30%, 40% only. So that our better priced your customer-base will grow with a higher capacity. That is what is the anticipation. And currently with the DMF and CEP filing that we are doing from second location, which is currently used for the spot market. So we will try and get these customers to validate us and as soon as our capacities are up and running, we will be able to commercially supply these customers in future.
Prakash Kapadia
Okay. Okay. And the CDMO margin,
Operator
Mr Kapadia, could you return to the question queue, please?
Prakash Kapadia
Sure.
Operator
Thank you. Participants, it’s a request, please limit your questions to two questions per participant. The next question is from the line of Rahul Jain from Credence Wealth. Please go-ahead.
Rahul Jain
Thanks for the opportunity and congratulations, Rashish by and the team for a wonderful set of numbers. So just to have a follow-up on CDMO part. So you mentioned that your 4th-quarter is you plan to exit for the full year’s numbers. So that is quite heartening to note. At the same time, you have pushed some sales to quarter one of next year. So how do we look at growth for ADMO in FY ’26, given there will be some spillover of the current year for — to the next year. So overall, what kind of growth numbers should we look at for FY ’26 for JDMO?
Rashesh C. Gogri
Yeah. As we mentioned, we will be doing the entire budgeting exercise and all guidance revision also because normally we end-up giving yearly and a three-yearly guidance. So once we — on the next con-call, next quarter, we’ll be able to guide you in more details. But we will see significant growth in this segment. And we would like to let you know that you know the 2025 number will be better than 2024 numbers. So currently, we have just done INR75 crores INR77 crore. And then so to better it, we have to do more than INR100 crores. So that is what we are anticipating that in current quarter, we’ll be able to do significantly more than what we have done in first 3/4. Yeah.
Rahul Jain
Sir, on the API side, last year, our quarterly run-rate was around INR150 crores. And this year that run-rate has jumped to INR170, then INR190 crore and now INR203 crores in this current quarter. So typically, as we speak today at INR200 crores, what kind of utilization we are working out on the API? And is there any bunching of any of the orders in 1/4 or do we feel that with this INR200 crores, the run-rate could further increase going ahead and how do you look at the growth for FY ’26?
Rashesh C. Gogri
So basically,
Rahul Jain
Adali expansion ramp-up will happen somewhere in probably the fag end-of-the next year.
Rashesh C. Gogri
So the Adali plant we will be utilizing for CDMO CMO program as well as the API as well as the intermediate manufacturing. And overall, you know the numbers of API have remained — you have been increasing and we are seeing that we will operate at these kind of numbers or higher numbers in future. Our overall utilization would be around 75% of our capacity. However, we are we are going to add one more line in our new block, so that will also get debottlenecked. So with that, we will add another 10% additional capacity. So with that, you know we will get growth there as well. And of course, in, we have completely new site where we will have more than 58 reactors with 450 KL. So that itself will give us lot of push. But primarily that will come to intermediate and CDMO CMO business and not to API, because API will only manufacture on the risk mitigation basis there.
Rahul Jain
Yeah. And sir, Atali could contribute to what kind of revenues from the next year onwards in FY ’26. We have a six months revenue from Atali?
Rashesh C. Gogri
No, nothali will take two to two years plus to ramp-up. And so we are anticipating those numbers, I think we’ll clearly clarify in next call. We are just in the process of quantifying the same.
Hetal Gogri Gala
Yeah. But then typically in a pharma space of for it to become commercial, we’ll have to book rigger all the regulatory audits and everything. So that will happen in FY ’26 primarily.
Rahul Jain
Sure. I have some more questions. I’ll come back.
Operator
Thank you. The next question is from the line of Meet Kathrodia from. Please go-ahead. Your line is open.
Meet Katrodiya
Yeah, sir. Thank you so much for the opportunity. And I have one question on the part of CDMO and CMO. So we have an active project around INR56 already. So I want to know the molecule size, like any molecule can contribute significant like 100 crores INR200 crores going-forward from a single molecule or every molecule is like 40 crores per molecule. What is the opportunities highest for the CDMO going-forward?
Rashesh C. Gogri
In the CTMO CMO, we have 56 ongoing projects out of which these 28 are commercial and few projects have this kind of possibility in future and of course they are in the launch phase and once they get launched then you know the significant volumes can get triggered. So we are quite hopeful that we will have those volumes and that’s why the entire new manufacturing at was being set-up by us, is being set-up by us to meet the customers enhanced requirement in this segment
Meet Katrodiya
Okay, okay. So I read someone that somewhere that we are targeting of INR500 crore in CDMO, so by which we are hopeful that CDMO will touch crores.
Rashesh C. Gogri
I don’t want to give you any futuristic number without wettings. So I think we’ll give the guidance next quarter.
Meet Katrodiya
Got it. Thank you.
Operator
Thank you. The next question is from the line of Dwani Desai from Turtle Capital. Please go-ahead.
Dhwanil Desai
Hi, good afternoon, sir and congratulations for very strong set of numbers. Sir, my first question is, I think we were aiming for 20% kind of a growth on PDMO this year and whatever slippages that will happen now because of the plant shutdown. So are we still aiming at those 15% 20% kind of a growth, so maybe INR130 crore INR150 crore kind of a number from Q4 or are we looking at a more like almost same number as last year?
Rashesh C. Gogri
So number will exceed last year’s number, that is what I have mentioned. To what level we will see how we are able to push the product out of you know-how the dispatches happen from India, yeah. So it’s a speculative number, but we will definitely exceed last year’s number.
Dhwanil Desai
Got it, sir. Got it. And sir, so from your commentary, currently, we are at INR200 crores-odd run-rate on API and with 75% kind of a utilization and you are saying that you are putting one more reactor. So with the current capacity API can reach INR1,000 crore-plus number. Is that a safe assumption to make? And since we will be utilizing Atali largely for intermediates and CDMO, beyond one year, how should we think about growth? Are we looking for any greenfield expansion over there? You know-how should we think about that?
Rashesh C. Gogri
Yeah, basically this segment can give INR800 crore INR1,000 crores depending on the product mix and what we are able to produce at that site. So that kind of capacities are available and further we have land there to expand further and we can actually put up additional 300, 400 KL capacity there as well. So there is always a possibility to further increase capacity at the same-site and which can be done in a one year time. So as we plan for that, normally what happens is that once we occupy around 80% of our capacity, then we do one round of expansion. And then we want to make sure that we are at 75% kind of utilization and then we have always pair capacity available to plan newer validations and take-up newer projects and stuff like that. So that’s how we are planning the expansion. So we have space for that. That and which can last us for another two, three years at the same-site, three years, yeah.
Dhwanil Desai
Okay. Okay. And on, sir, I think we are doing this capex. So in terms of ramp-up, you know-how should we think about — I think we are doing that in two phases. So when the first phase will get completed and I think you mentioned in the last call that it will be not — it will not take very long-time to kind of pill up the capacity given the demand environment in our contracts. So how should we think about growth on the entene side and feeding up of the new capacity in Phase-1 in terms of timeline?
Rashesh C. Gogri
Yeah. In the first-half, we will be able to do phase for first phase of the zene and that second phase will happen in the second-half of next financial year, where by we will reach this 9,000 metric ton capacity for zene. And in the subsequent year, we are hopeful that in FY ’27, we will be able to achieve 90% of the capacity utilization of this overall capacity that we are going to put up. So basically in 20 year financial — next financial year and a year-after that, we will achieve the 90%.
Dhwanil Desai
Okay, sir. I have more questions. I’ll come back-in the queue. Thank you.
Operator
Thank you. The next question is from the line of Rupesh Tatia from Intel Sense Capital. Please go-ahead.
Rupesh Tatiya
Hello, sir. Thank you for the opportunity and congratulations on a good set of numbers. Most of my questions have been answered. One question, sir, on API margin profile. It looks to me that our APIs are slightly differentiated and the margin seems like 20% — if it’s my guess, it’s like 20% plus kind of margin. So is that a fair assumption? And do you see any risk to the margin? I mean, currency depreciation, maybe import prices going up, do you see any risk to the API margin also?
Rashesh C. Gogri
Yeah. So basically, we are doing almost 50% of our sales happens to the export market and that is across segment. Also, our APIs basically are targeted towards regulated and semi-regulated markets. So where the change from us to some other supplier becomes not very, very easy. And then we are in this niche product portfolio, which are anticancer and steroids, which are not offered by many. So all these factors put together allow us to operate at a reasonable margin in this segment as comes — as opposed to the other API pure-play manufacturers. And we are backward integrated also in case of this, most of the APIs, almost 70% of our portfolio is backward integrated where we have our own intermediate manufacturing happening internally. So regulated wise, we are insulated from any China-related issues and stuff like that. So that’s how we have a robust model for API business and we are hopeful that we will be able to grow this with the newer anti-cancer and general block products that we have, which are going to get launched in next year and we are quite hopeful of this grow.
Rupesh Tatiya
Okay. Okay, sir. And other question, sir, is I mean we — I think we supply to these toll manufacturers in Europe who eventually supply to innovators. And I think one of the accounts has scaled-up very, very well to I think $25 million. I mean, do you see that account, let’s say, scaling to $50 million in two, three years and then maybe some other tall manufacturer going to $25 million in two, three years? Existing account scaling up and new account coming up to level of $25 million in two, three years. Directly, sir. I mean, I don’t want to guide us.
Rashesh C. Gogri
No, no, I think those numbers that you have needs some verification because those numbers are not correct numbers that you have mentioned. We have several projects at several stage of development and we have invested almost a significant amount in new facilities. So you please understand what kind of growth prospect that we are seeing that we are investing almost INR500 crore INR400 crore for a new project. So it’s an exciting business area where we have successfully delivered and customers have come back to give us more progress. And we work with direct innovators as well and we work with the partners of innovators, but of course, innovator would know what our value is with their partners also. So in a way, it is a very close-knit supply-chain and once the innovators understand our value, we can of course move-up because we have internal capabilities of doing API as well in-house and we are doing few of API products projects also with some of the innovators, some midsize innovators.
Rupesh Tatiya
Okay. Okay, sir, final question is on this IN 335 crores capex.
Operator
Turn to the question queue.
Rupesh Tatiya
Okay.
Operator
Thank you. The next question is from the line of Ankur Padikar from ULJK Financial Services. Please go-ahead.
Ankur Bhadekar
Hi, sir. Thanks for the opportunity. So a couple of questions from my side. So the first question is regarding the Wapi plant, which was shut-down due to pollution issues. I just wanted to understand the quantum of impact on the numbers going-forward, say, in Q4, like if you could just give some light on that part?
Rashesh C. Gogri
Yeah, basically the — there is no material impact. So the impact is going to be lower than 5% of the turnover and 2% of the profit. So that’s why we have not given the number on stock exchange. So it’s going to be a minor impact. Only what is going to happen is that this is going to delay certain shipments, production and everything. So we don’t see significant impact overall company-wide but there is an impact and but however, I would like to reassure that you know we have you know, convinced the authorities that everything was fully compliant and now we have successfully been able to get this revocation within record time because otherwise they take too much time for revocation as well. So that shows that you know, overall we focus on compliance and make sure that you know we are very careful on these kind of situations in future as well.
Ankur Bhadekar
Okay. So my second question was, so like in the CDMO segment, how much growth has come from the commercial molecules and how much is from the development phase molecules, if you could give any ballpark number?
Rashesh C. Gogri
Yeah, basically commercial, it will be difficult for — because growth overall growth will come from commercial-only. The smaller projects, whatever that we are running may not contribute significantly because they are in early phases and the quantity required would be smaller value. So that’s why you mostly the growth is coming from the projects which are getting commercialized, yeah.
Ankur Bhadekar
Right. So lastly, currently your gross margins on a standard
Operator
Question queue?
Ankur Bhadekar
Yeah, sure. Thank you.
Operator
Thank you. The next question is from the line of Bansal from Global. Please go-ahead.
Aryan Bansal
Hello, sir. Congrats for the good set of numbers. Sir, I wanted to know that how are we differentiating our CDMO offering from other — another CDMO companies in India, particularly for innovators.
Rashesh C. Gogri
Yeah, basically we are late phase and strong manufacturing-backed organization. So what we are good at doing basically is providing manufacturing services and partner with the innovators for long-term supply security of their advanced intermediates as well as the KSM, RSM APIs long-term. So that is the differentiation that we have. We have strong chemistry skill-sets and engineering skill-sets, which allow us to operate different kind of difficult to do reactions and difficult to do solvent recoveries, difficult to do catalyst recoveries and stuff like that. And then we have a manufacturing setup, which has good volume availability so that we are able to scale-up quickly as against some other suppliers, which may not have this kind of volumes to offer to them. Also, we are — we can do backward integrated work also. So we can do four, five, six stages in-house. So we are able to give a proposed proposal to innovators that we will try to do maximum steps in India only and having least dependency on China. So these are the differentiating factors that we would have over others.
Aryan Bansal
Okay. Okay, sir. And can you tell me that how much of our CDMO business is in form of innovators like it’s from innovators.
Rashesh C. Gogri
The entire number is going to innovate us directly or indirectly
Aryan Bansal
Yeah hello. Hello. Thank you, sir. Thank you. Thank you, sir. Got it.
Operator
Thank you. The next question is from the line of Deep Gandhi from PMS. Please go-ahead.
Deep Gandhi
Yeah. Good afternoon, sir. Congratulations for very good numbers. Sir, my first question is on the zentine side. So if I look at the nine months data, the export business has grown at almost 15% and this is despite you mentioning that there was a price reduction in Q3 by $12 and you are already operating at full utilization. So you can correct me if I’m wrong, but is it fair to assume that the export business is mostly long-term contract business for you and that is why you are able to grow the revenue despite the price correction which we are seeing in the market. Is that a fair assumption?
Rashesh C. Gogri
See, we have long-term partnership with our large customers and that is allowing us stable business. So and we are able to grow our volume with our offerings that we have with them. Also, we did increase in last year, our capacity was 4,000 ton, which we increased to 5,000 tons. So basically there was an increase there also. So that 20% increase, 20% 25% increase has happened, so which allows us to operate at that level. And further in first-half also further, we will enhance this capacity. So with that you are slowly, slowly doing the debottlenecking and having more products and offering, you know to customers which are more regulated — regulatory focused in future. So with our CEP filing and US AMF filing, we will be able to penetrate in those markets from our Unit-3 plant as well in future.
Deep Gandhi
Sure. Yeah. And sir, two more questions. So second is on — actually on the API side. So if I just see the revenue breakup and for Nine-Month FY ’25 and compare it with Nine-Month FY ’24, so most of the growth which is coming is from the rest of the world markets and the regulated market-share is actually reducing. So if you can broadly explain us how are the margins different in both the markets? And is there some kind of risk that because you are focusing more on the top-line, there might be some margin compression because of this change in the revenue structure going ahead.
Rashesh C. Gogri
Yeah, I think largely you know the regulated market business is steady and that could be 1/4 where you know the business we may have shipments in ROW and 1/4 we may have ship. But the price points in both the markets are similar only the regulated and ROW market because ROW market is largely Brazil and Russia and China where the prices are in fact sometimes better than the US and European prices. So in a way to differentiate between both may not be a good idea. I think non-reg should be the lowest and that’s what we are focusing on and trying to put everything to the regulated market itself. And we have had good launches in last couple of years and we have a good pipeline of products, which will get commercialized in next two to three years in future. And we have built-up capacity to cater to the customers for these products.
Deep Gandhi
Sure, sir. So just one last quick bookkeeping question. So it’s just a bookkeeping question, if you can won’t take more than a minute. So sir, you had mentioned in the past that the asset term from Atali will be around 1.25 times and initially from INR400 crores capex, but I think into the previous participant, you mentioned almost INR400 — on a INR400 crores capex, INR900 crores revenue. So are you budgeting increased asset turn from the Atali project now?
Rashesh C. Gogri
No, no, that was for the Tarapur asset that up to what level we can do on API side. So I think those numbers have been mixed up, but we will be at that, you know 1x plus asset turn-on Atali, so 1.25 asset turn-in the occupy significant capacity.
Deep Gandhi
Okay.
Operator
Thank you. The next question is from the line of Ajay Surya from. Please go-ahead.
Ajay Surya
Thank you for the opportunity. Sir, my question is on API intermediates. Sir, our share of revenue if I look around then from FY ’23, it has gone from like 37% to now in nine months, like 46% for API and. So sir, I wanted to understand like with from our Atali capex being completed and post one, two years of commercialization, as a company, how do we see the share of this segment going-forward? Like do we see the share to increase to like maybe 60 odd percentage where we can have maybe incremental margin as well. So just wanted to know your thoughts on that?
Rashesh C. Gogri
Yeah, basically you know, as you know, we are operating in three business segments, API intermediate segment, segment as well as CDMO, CMO segment and we are seeing, as mentioned in the segment also, we are increasing the capacity almost by 1.8 times of what is current capacity is available. In API intermediate also, API, we have current facility where we are further expanding. And in intermediate and CDMO CMO use common facility where I have fungibility of changing the product mix overall. So overall, we see good growth in everything and this percentage revenue mix will ultimately depend on how much we are able to crack products in CDMO, CMO. Of course, derivative will remain steady in terms of absolute percentage, it would be, — but as API and CDMO CMO grow, you know, overall the number as a percentage point will reduce. So — and the profit margin profile of ABI, of course, course CDMOCMO being little bit higher but not very, very different 5 percentage point difference between both since we are doing multi stages in CDMO/CMO as well as API intermediates so that’s how you percentage differences may not mean to too much. Overall we will see a good growth in future the way in which we have invested in the newer facilities and as they come on-stream and as the patent expiry happens in future of this generic product that we have in our portfolio, so we see good potential going-forward.
Ajay Surya
Got it, sir. And sir, my next question is on CBM. Sir, you mentioned that for this year as well, we are expecting to exceed the numbers for FY ’24. I mean, wanted to understand with the spillover and all this, like how do we see the growth in FY ’26 with our capacities and all, like the enquiries and the significant traction we are seeing from customers with the product pipeline also getting more commercial, like on the CDM, how do we see the growth for FY ’26?
Rashesh C. Gogri
Yeah, we are in the process of making budget. And I think once we firm it up and once we have the next con-call with the complex set of this year gone by we’ll be able to, but we see good significant growth possibilities and good traction in this business segment and we have also a sizable order book on this business segment already for next financial year.
Ajay Surya
Okay. And sir, one last
Operator
Return to the question queue. That’s just a please return, sir, we have many questions waiting. Thank you. The next question is from the line of Nitesh from Berman Capital. Please go-ahead.
Nitesh Dutt
Hi, sir, thanks for the opportunity. So we have delivered around 24% EBITDA margin at standalone level, which is 200 to 300 basis-points higher compared to previous two quarters, even though CDMO contribution was at 13% or so. So what drove the margin expansion? It primarily seems to be from increased contribution of API. And is the 24% pace sustainable for future quarters now?
Rashesh C. Gogri
Yeah. I think overall this quarter we had significant CDMO CMO sales. As you know, in the previous two quarters, those numbers were not as much. Also, our solar energy project also got activated and so we did some savings there also. We had a overall INR7 crore dividend income, which got accrued in this quarter. So all these factors put together, we got a record quarter results in this quarter and we are hopeful that you are able to replicate this kind of performance in future quarters as well. But of course, we can’t have a certain linearity, there will be ups and down. But overall, I think we will see a growth going-in that — so whatever the earlier guidance of 15% for three years. So we are working on those lines and we are hopeful that all our strategies are working well, as I mentioned in my opening remarks. So with that, we will have good growth possibility.
Nitesh Dutt
Got it. Sir, second question is on API front. So we have seen really good growth. In the first-nine months, we have seen 27% growth on Y-o-Y basis. Just want to understand what is driving this from a demand-side. And also you mentioned that you can potentially increase capacities in Tarapur and you have a good pipeline of products. So it will be helpful if you just give some flavor around what kind of pipeline do you have, what visibility, etc., do you see? And how do you see API business specifically ramping-up over next couple of years or two to three years?
Rashesh C. Gogri
So typically, what has happened is the expansion that we did in Tarapur API side, where we added a Block 5 currently is running at full capacity and that is the reason why we are able to see this kind of a growth. And also, as mentioned earlier, we are adding one more finish line in that particular block to be able to cater to additional product-line. And this the last block that we added, we wanted to have a large-volume product from our existing product portfolio to be shifted to run as a more of — more or less kind of a dedicated. So that has given us some benefit definitely. And overall in API and intermediates, there is very exciting product pipeline, which is getting generate sized in next couple of years and up to — we are targeting various products up to, 20 30 generalization. So both you see what we do is we are present in key intermediates which is like n minus 2 where we have we are supply to all the regulated API and formulation manufacturers of India and then we are also present in some of those APIs as well. So we are looking at a good growth opportunity there. As the product becomes generic, we will be present for the launch. And typically, since we are backward integrated, in fact, we start from maybe n minus 4, n minus 5, in some cases even further back-end. We are a very good choice for our customers for their regulatory support and every ought to reduce the dependency from China. So that’s where you know we have positioned ourselves and we feel that we will be able to grow in the steadily in API and intermediate space.
Nitesh Dutt
Got it. Thanks. I’ll get back-in the queue.
Operator
Thank you. The next question is from the line of Divesh from Finchest Capital. Please go-ahead.
Divesh
Congratulations on a good set of numbers, sir. Sir, my first question is on the API front. So which molecules are the most — which molecules are getting the most revenue in the API front, sir?
Hetal Gogri Gala
So we have not yet giving that information because we manufacture 50 molecules and all it is and we have 100 intermediates in our portfolio so you know the spread is very good and it is very difficult to comment on.
Piyush Lakhani
Yeah. So we have some anti-hypertensive and several products which are large products in our portfolio generally.
Divesh
Okay. Okay, sir. Sir, my second question is on Ganesh, sir, in your previous call, you have mentioned that this subsidiary will be transferred to RT. So what’s the update on it, sir?
Rashesh C. Gogri
No, we have not mentioned about the subsidiary getting shifted to RTL. See, what we did mention was that there was some trading activity business which was ongoing with RT Industries and RT USA Incorporation and RT USA Incorporation was earlier jointly doing pharma and chemical business in RT Industries where 100% owner of RT USA. But when we split the business, incorporation ownership we took in Pharma because we had some licenses and businesses investment from that entity. And RT Industries till now have been using RT USA incorporation, but now they have incorporated one subsidiary in USA, so the entire trading business will get shifted there. So instead of doing — using RT USA Incorporation, which was a stock gap arrangement from next financial year, mostly, you know, RTI industries will use their own 100% subsidiary to do the distribution in USA.
Piyush Lakhani
Okay, the subsidiary name is USA, not Ganesh.
Rashesh C. Gogri
Yeah, yeah. Ganesh is a joint operation company 50-50 joint-venture between Arthi PharmaLabs and the family and which operates a manufacturing facility at and. So that’s a different entity that we have.
Divesh
Okay, okay, sir. Thank you. That was helpful.
Operator
Thank you. The next question is from the line of Shubham Jain from NV Alpha Fund. Please go-ahead.
Shubham Jain
Hi, I just wanted a clarification on the CDMO capacity that we support. We’ve done a capex is above capex of about INR350 crores, correct?
Hetal Gogri Gala
Yeah.
Shubham Jain
And what is the revenue that we can get-out of this? Is this 1.2 times asset turn-on the whole 350 or only on the plant and machinery?
Rashesh C. Gogri
Yeah, no. So basically, we have — in longer-term, we will be able to get that kind of number from it. But in future also we’ll add more blocks. So current investment that we have done there includes the infrastructure investment that we have done there and which is in excess of 125 to that kind of a number, which includes the admin QC, pollution control position, warehouse and roads, all that stuff. But manufacturing blocks, as we add more-and-more, there the asset turn could be a you know in that proportion that 1.25, but we will add more blocks there. Basically, this is just the first block we have capacity to add more than 10 blocks there. So in future, we will have more investment. And these kind of blocks will be done at much significantly lower investment and much weaker also. We will be able to build a block within a year there.
Shubham Jain
Got it. And the 450 KL currently can do a revenue of about INR200 crore INR300 crores?
Rashesh C. Gogri
Yes, yes. Yes.
Shubham Jain
Okay. So that — okay. So it’s a one-time asset on right now, but given we’ll do brownfield for 10 more blocks, it can be much better.
Rashesh C. Gogri
Yes, yes. And it also depends on the product profile and how many stages where we are doing, but this is possible. Yeah.
Shubham Jain
Got it. And on the API front, right, like you mentioned that this seems to be a steady sort of run-rate that we hope to achieve going-forward. Just wanted to understand what are the top three, four therapies that we’re doing? And how much of this delta from last year to this year is driven by volume and-or versus pricing, given we’ve inched up our regulated market-share in the business.
Rashesh C. Gogri
See, currently, we have three large categories, anti-hypertensive steroids and anti-cancer that we operate in. And of course, you know, anti-hypertensive is a large business area that we have, which has grown and we had a few successful launches in that segment, one significant successful launch in that segment, which has given us lot of growth. We also operate in CNS, even therapeutic areas. These are large four therapeutic segment that Arti Pharma operates on. And overall, I think we are — and these are mostly lifestyle kind of APIs and that’s why we are able to have sustained market on these products. Also, overall top-line you know and the prices always fall, so you have to make it up because in the generic market, I have never seen prices go up even in rupee terms. Except the product become extremely genericized when you are at the rock-bottom and then you have to pass-on the raw materials. But in our set of products, I think there is constant R&D and savings that you have to do and that’s what we end-up doing in our products to remain a significant player in these products. So that’s a constant innovation and cost-saving exercise that we end-up doing every couple of years in each of the products..
Shubham Jain
Understood. And what kind of pipeline do we have for,
Operator
Please return to the queue.
Shubham Jain
Thanks.
Operator
Thank you. The next question is from the line of Neha Karodia from. Please go-ahead.
Yeah, hi. Good evening, everyone, and thanks for the opportunity. Sir, I wanted to understand regarding the consol minus standalone EBITDA, so which basically comes from the additional subsidiary business and maybe the Ganesh. So just wanted to understand that the kind of growth that we have seen in the current quarter versus last quarter. So EBITDA, that additional EBITDA this quarter is about 14 cR versus nine CR. So just wanted to understand that more in a granular manner.
Rashesh C. Gogri
Can you replay?
Piyush Lakhani
Yeah. Can you repeat the question? So you are saying that the consol EBITDA compared to standalone is higher by INR14 crores. Is that the question?
Rashesh C. Gogri
Yeah, INR129 and at 14th year.
Hetal Gogri Gala
Yeah, one year for last quarter, yeah.
Piyush Lakhani
Yeah. So basically it has come from Ganesh. So Ganesh has contributed about so Ganesh, we consolidated 50% of their EBITDA and their EBITDA was about 20 —
Rashesh C. Gogri
This quarter was in excess of INR25 crores total. So yeah, Nehav, we will get back to you with the numbers.
Piyush Lakhani
INR13 crores, yeah, so basically most of it — so 15% of the EBITDA share that we have got from Ganesh’s comes to INR13 crores. So that’s basically explains the increase in the EBITDA on consol basis as compared to the standalone basis.
Neha Kharodia
Understood. So going-forward, do we see it as a sustainable number or how should we look at — look at this number?
Rashesh C. Gogri
Yeah, Garnesh has traditionally been operating at INR15 crores to INR20 crore EBITDA every quarter and I think largely that number should continue on a 100% basis. And then depending on how as we are consolidating, you know, we can add 50% of that in our EBITDA. So that number will be around INR8 crore every quarter, every quarter.
Neha Kharodia
I understood, sir. And also regarding the —
Operator
Can you return to the queue?
Rashesh C. Gogri
No, letter on letter ask one question here.
Neha Kharodia
Yeah. So just wanted to understand on the CDMO. So since we have shifted — some orders got shifted to next year. So do we expect to see higher-growth for FY ’26, let’s say we are guiding for about 25% to 30% growth for FY ’25 initially. Do we expect 25% or similar kind of growth in FY ’26 from CDM business?
Rashesh C. Gogri
See the order shifting or that 25% may become 15% over and above last year — in this year. So practically around INR10 crores INR12 crore order may get shifted, that is what we are trying. But in last-minute, the number can go a little bit up or down. So overall, I think that number is not going to be significantly driving next year’s number. But next year’s number independent of this shifted number also is going to be a significantly higher number in the CDMO, CMO segment because of the way in which the pipeline is shaping up and the kind of pipeline that we have, you know that number will look much better.
Neha Kharodia
Okay. Understood. Thank you so much.
Operator
Thank you. The next question is from the line of Kumar Saurabh from Scientific Investing. Please go-ahead.
Kumar Saurabh
Hi, thanks for the opportunity. So my first question is around Zantin and I joined late, sorry if the question is repeated. In terms of realization, do you think we have bottomed-out? That is one. And we are coming up with the expansion. So how confident we are that the new capacity will be consumed? So how the client contracts work-in the side?
Hetal Gogri Gala
So business, the cost contracts are on annual basis. However, you know as a part of continuity, we have certain customers who have been — we are discussing about increasing of their share with us, purchasing share with us and we are very confident that a significant part of increased volume will go to contractual and you know the high-margin business of pharma where we are applying for US DMF and European CEP and we will — we are targeting to cater that market, market which once we acquire will be a very steady-state business and we would want to reduce and keep our spot business to current numbers of 30% to 40% only.
Kumar Saurabh
So have we seen the worst or how do you see the trend?
Rashesh C. Gogri
Yeah, yeah. We see that you know now with the current cycle, the kind of pricing that we are seeing, you know, have bottomed-out and the margins have bottomed-out basically. So any raw-material reduction will not trigger a reduction in prices, but otherwise, we see that we are operating on the spot market, not at a very-high margin — thick margin.
Kumar Saurabh
So that’s great to hear. The second question is, you have lot of patents, you have applied for a lot of patents. Also as a part of this INR600 crore capex, I think the INR40 crore is going-in R&D. Can you give some qualitative insights in terms of where the business — where we are investing in terms of R&D, what kind of chemistry or molecule and how it is going to commercially impact our sales and margin numbers?
Rashesh C. Gogri
Yeah. So basically, we have filed 58 patents. We are having three R&D centers currently, three R&D centers are operating for different businesses. One R&D center is exclusively for the innovators and then we have one R&D center which is focused towards the API business, the third R&D center does largely scale-up and also the product raw-material saving idea generation from that R&D center. So these three R&D centers, you know, as you rightly mentioned, we are almost spending close to 2% to 3% of our revenue, 3% of our revenue is getting about 3%. I think last year it was 6% of R&D spend overall. And these are basically supports all the three businesses. And as you already know that we have a pipeline of products, you know in our API line also. So 12 new APIs are under development and they also require constant R&D. And as I also mentioned that every second year, we also do a cost-reduction exercise, which also requires R&D. So basically the API and intermediate business and CDMOCMO requires constant research and development.
Kumar Saurabh
Great, great. Thanks and wish you all the best, sir. Thank you.
Operator
Thank you. The next question is from the line of Yash Chandorkar from Cap Commercial Limited. Please go-ahead.
Yash Chandorkar
So hello, am I audible?
Operator
Yes, sir. Please go-ahead.
Yash Chandorkar
Hello. Yes, my all questions are answered, but just wanted to know, are we increasing our given guidance for this year? And how do we expect quarter-four reasons for us?
Rashesh C. Gogri
Yeah, basically, as I already mentioned, you know on the call that we will be able to, you know, meet our guidance and exceed our guidance number that we have mentioned earlier. And I think Q4, we are fairly optimistic. Of course, this was a record quarter. We will see how it goes. And future guidance we’ll give next quarter. Once we have the budgeting and overall strategic review of our all businesses, then we will be able to guide you in future.
Yash Chandorkar
Okay. Thank you. Thank you.
Operator
Thank you. The next question is from the line of Vilin Doshi, an Individual Investor. Please go-ahead.
Vilin Doshi
Sir, thanks for the opportunity and excellent set of numbers. I think most of my questions has been answered. And on also, I think as you have reiterated that margins have bottomed-out. So irrespective of the price direction, the margins will remain intact. Is that understanding correct?
Rashesh C. Gogri
I would like to say that the spot business, now, prices have bottomed down. Of course, we are not operating 100% on spot business. So that is what we have. But overall, we are fairly optimistic that we will be able to grow the absolute number with the expanded capacity that we have. Even if there is competition, you know Arti is positioned in such a way that it has a global size, it has a risk mitigation strategy, which doesn’t depend on China at all. And all these factors are put together, I think and also you might have heard that 10% additional duty was put on US by US on Chinese goods and that will get implemented on caffeine as well. So with that, I think we are fairly hopeful that we’ll be able to expand our absolute number with the higher capacity that we have upcoming in next financial year.
Vilin Doshi
That’s great to hear. And just a little bit longer from three to five-year perspective with US we are hearing from a lot of companies that there are a lot of inquiries and the things are heading in the direction where after three to five years for most of these companies, things will look much better depending how they execute. So are you also seeing the similar direction?,
Rashesh C. Gogri
I think both in terms of overall traction towards India and CDMO, CMO has increased. And overall, I think the capability that Indians have built also recently is significantly more, a lot of focus has come to this business area with the capabilities and the newer capacities getting added. And with that, I think there will be a lot of traction with the biosecure also and also the 10% additional duty on Chinese goods. I think overall, India will get definitely benefited by all these factors in future.
Vilin Doshi
Thanks. Thanks a lot, sir. Thank you so much.
Operator
Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the floor over to the management for any closing comments.
Rashesh C. Gogri
Thank you. I would like to thank all the participants for joining the call. Thank you.
Operator
Thank you. On behalf of RT Pharma Labs Limited, Pharma Labs Limited, that concludes this conference call. Thank you all for joining us and you may now disconnect your lines. Thank you.