Dishman Carbogen Amcis Ltd (NSE: DCAL) Q2 2025 Earnings Call dated Nov. 14, 2024
Corporate Participants:
Pascal Villemagne — Chief Executive Officer
Harshil R. Dalal — Global Chief Financial Officer
Paolo Armanino — Chief Operating Officer India
Analysts:
Tarang Agrawal — Analyst
Prit Nagersheth — Analyst
Subrata Sarkar — Analyst
Sajan Kapur — Analyst
Purva Jhaveri — Analyst
Prafull Rai — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Dishman Carbogen Amcis Limited Q2 FY ’25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Pascal Villemagne. Thank you, and over to you, sir.
Pascal Villemagne — Chief Executive Officer
Thank you, moderator, and good afternoon, dear shareholders. I’m glad to be among you and give you a bit of feedback on what’s happening during Q2 this year at Carbogen Amcis but also starting maybe with a bit of market updates. As you all know, our business is going through a kind of a difficult moment from a market perspective. A few of the venture capital are delaying the investment in new biotech funding in U.S. especially. So we see a kind of a slight slowdown in capturing new business because the Dishman is becoming a bit dry on the main markets. Hopefully, we’ve — now the election of the new U.S. President, that phenomenon will stop, and there will be more investment in the coming weeks and months, and we can start to capture new projects in our product portfolio.
From a Carbogen Amcis perspective, the end of the quarter end and of the half of the year results are pretty good. The first quarter was not great, but the second one was really better, bringing us to nice results by the middle of the year. So we are exactly where we expect to be and Harshil Dalal, our Global CFO, will give you more figure around the results of Carbogen account but we are very happy with this end of the quarter results, which are giving us a lot of good perspective for the end of the year.
This is mainly driven by our commercial product portfolio, where we have a number of products that are well performing into that. And as I was saying, on the front of the development project. This is more a bit of a slowdown because of the reasons I was mentioning earlier. But the second part of the year, we have other amounts that are giving us a very good perspective for the end of the year and we will be able to match the target of the project at around CHF255 million for the year. All in all, we are happy with the results.
A few words about our new facility in France. You know that we were facing a number of challenges on that facility. Now they’re all gone, the facility has been fully validated and now it’s running, not entirely fully because we are on the ramp-up of the activities and we are looking at a number of new projects. We have — two days ago, booked a very nice contract with a German customer for more than 1 million, which now gives us a total order in hand for that facility above 10 million, so it’s pretty good results.
The rest of the Group is performing relatively well. We’re still struggling a bit with the cholesterol market. As you know, after the big boom during the COVID period, the high consumption of Vitamin D on different markets. The last two years has been difficult. So that’s one of the reasons our Dutch facility is not overperforming as it used to be. And we are working and we work on our strategy to change and to approach different markets with different products over there, and we hope that we can change the transfer for that Dutch facility.
Above all, we are also engaging much more collaborations between the two entities, Carbogen Amcis and Dishman Carbogen Amcis with a lot more of projects that can be ever transferred directly to our Indian facility or new projects that are, right now, in discussions for production in the coming months. So, Paolo will tell you certainly a bit more about this very attractive and to their feature for the new collaboration.In terms of digitalizations, we are finalizing the digitalizations on Carbogen Amcis’ side. The new tools to manage the labs, manage the deviation in quality almost implies, we have achieved the technical go-live that we wanted to have a — from a system perspective. And we are now aiming to have an operational go-live of the SAP software for the new fiscal year ’25 with the perspective of the strategical vehicle.
In terms of organizations, we are finalizing the organization, as I was mentioned in the previous calls, to get more efficient to pull all the leverage of the industrial excellence, and we are starting to see some first fruits, especially in terms of savings and purchasing savings that we can do around that. So that’s very promising.We still need to fine tune few positions, hire new people to get the organization very stable. But we are very happy with the first outcomes of this first three months of the new organization. So that’s who should help us with the digitalizations, high expectations on profitability in the next fiscal year and the following years.
That’s it from my side. And now, I hand over the call to Mr. Harshil Dalal, our Global CFO. Thank you.
Harshil R. Dalal — Global Chief Financial Officer
Thank you very much, Pascal. A very good evening to everybody. Regarding the financials of the quarter, as all of you would have seen, this has been one of our strongest quarter at a consolidated level. We brought a revenue of INR789 crores, which is the highest ever that we have done in a particular quarter. And the reasons for this high amount of revenue is largely on account of the higher commercial revenues coming out of Carbogen Amcis plus increased commercial revenue coming out of India. And also, as we explained in the conference call of Q1, there was also a deferred amount of shipment at Carbogen Amcis, which also brought at times [phonetic] sales revenue in the current quarter.
Regarding the cost of goods sold, that was at roughly about 24%. If you see historically, our cost has been around 20% as an average. But since the share of the commercial revenue in the total revenue was much higher, the cost as a percentage of revenue is also a bit higher than our annualized business.Employee expenses for the quarter stood at about INR320 crores. So this is more or less in line with what we had in Q1 of this year. So that is not a major increase in the employee expenses. However, the employee expenses largely are denominated in Swiss francs. And hence, there is an impact of the adverse FX movement on the employee expenses.
The other expenses stood at about INR130 crores, this also included certain amount of motion FX loss. But even after that, we dropped an EBITDA, which was about INR148 crores. This is also one of the high EBITDA dip that we have reported in our history. What we see is that this also translated into significant profit before tax for us after accounting for the depreciation, which has increased on account for — on account of the capitalization of both the manufacturing lines in France and the monetization of the goodwill.
So, post that as well as the increased finance costs, which we saw on account of the increased LIBOR across the group across the world because of inflation. After that, the cost of profit before tax of INR42 crores. And all of these numbers are significant growth over what we had in Q2 of the last financial year as well as sequentially compared to Q1 of the current financial year.The tax expense stood at about INR9 crores, which is roughly about 20%, 22% of the profit before tax. And the PAT stood at about INR33 crores, which translates into a PAT margin of about 4.2%.
Regarding the [Indecipherable] Carbogen Amcis CRAMS business contributed significantly to the revenues. So, just doing a comparison to Q2 of last year, the revenue for the Carbogen Amcis CRAMS business, driven by the commercial revenue grew by about 52%, so from INR437 crores, it increase to INR663 crores. And this translated into our first half revenue of roughly about INR1,002 crores. The Cholesterol and Vitamin D analogues business that is done out of our Dutch facility, we saw a decline in revenue as compared to Q2 of last year, and that is largely on account of lower sales of cholesterol assets as compared to the analogues. So, we did a revenue of about INR55 crores as compared to INR86 crores in Q2 of last year.
As we have mentioned in the call of Q1 that we are negotiating with the suppliers on reducing the price of the key ingredients, which is whole cream, we have taken significant steps for the same. And we do expect that the benefit of the reduced price should start approving from January of the next year.We were expecting that it should happen from Q3 of this year. But because of the existing stock, which needs to be consumed, we expect that the benefit will start accruing from Q4 of the current financial year.
And that will also help us in increasing the revenues for the Cholesterol and Vitamin D analogues business because then many of the products become profitable as compared to the current profits that we’re generating on those products.The India CRAMS business also showed a growth by about 37%. So, as compared to Q2 of FY 2024, where we had a revenue of about INR36 crores. In the current quarter, we had a revenue of INR49 crores, and this is obviously, on account of the revenue through clearances that we had received where we are seeing an increase in the order book from the existing customers as well as potentially new customers.
India [Indecipherable] and generic business, which is the business that we do out of our Naroda site, the revenue stood at about INR21 crores as compared to INR27 crores in Q2 of last year. We still keep on seeing a bit of a slack in that particular segment, largely on account of the slowdown in the agrochemical industry. Hopefully, that should pick up from the beginning of the calendar year.So, overall, all of this translated to INR789 crores for the quarter as compared to INR586 crores in Q2 of the last financial year. As far as the composition is concerned, the CRAMS Carbogen Amcis contributed about 84% of the total revenue, a significantly higher margin.
So, just going through the segment-wise margins, the CRAMS Carbogen Amcis delivered growth about 20% EBITDA margin compared to Q2 of last year, where it stood about 12.2%. What is translated into the H1 FY 2025 margins was 14.3%. We should see the margins for the full year, increasing somewhere to 14.3% as the revenues keep on increasing in Q3 as well as in Q4 of the current financial year.The Cholesterol and Vitamin D analog business, we delivered a margin of 14.7% as compared to 10% of Q2 of last year and this was on account of lower sales for cholesterol effect which is a low margin product for us and a higher share of Vitamin D analogs in the revenues that we generated out of the Dutch business.
The India business on the current side generated a positive EBITDA of about 14%, which is obviously linked to the higher amount of revenues that we had from the Bavla site and that contributed in difficulty in overall margins. The India of course can generate business kept on going close to about 7% EBITDA margin, which is more or less the average that has been really in the past. Apart from this are the total capex, which has been done in the first half of the financial year was close to about INR125 crores and we expect that for the full year, it should be close to about INR250 crores. This includes largely the maintenance capex as well as the capitalization of the digital transformation activities that we are undertaking across the group.
The net debt as of 30th September stood at about INR110 crores to INR115 crores, which is a bit of an increase compared to the March numbers. And it is mainly on account of — I would say it’s more of a timing thing more or less at the end of the year, we should see decrease in the overall debt number from what it stands right now. This was just on account of the increased working capital that was required in order to service the increased orders as well as the revenues that we have generated in Q2 of the financial year.
With this, I would like to ask the moderator to open the queue for Q&A.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions] First question is from the line of Tarang Agrawal from Old Bridge Capital. Please proceed.
Tarang Agrawal
Hi. Good evening. A couple of questions. First on the Carbogen Amcis business, the order books reduced materially from about CHF142 million to about CHF110 million as on 30th September. So is it a transient development or there is more to read into? And also, if you could give us a sense on how is the pipeline for early stage projects shaping up in that part of the business?
Pascal Villemagne
So regarding the decrease of the other pipeline, as I was saying, we have — that’s a global pipeline so there’s a product commercial pipeline and that one is pretty stable. But yes, we have seen over the last few months some difficulties to capture new projects on the market, mainly caused by the fact that they are in kind of a slowdown or more than a slowdown, I would say, the market was on a waking mode. This was a bit on hold especially in U.S., where we have our main drivers for this biotech projects. So we were not able to capture new things. So that’s why we have consumed part of the other pipeline that we have.
However, it was honestly speaking, very, very high so far. So we don’t see that as a concern. And like this week, we start to see some few movements on things that have started happening so I’m pretty confident that in the next few weeks, months, we will be able to recapture a new project and come back to a high level in the pipeline. So yes, it’s very true that we have consumed part of this. But I’m still very confident that in the next few weeks, we will be able to capture new projects and then regain some of the last brand we have on the development pipeline.
Tarang Agrawal
Sure. Also, you made a comment about CHF250 million. What was that about? Is that the kind of turnover that you’re looking at for FY 2025?
Pascal Villemagne
That’s for the Carbogen Amcis target for the budget CHF255 million.
Tarang Agrawal
And we are on track to achieve that?
Paolo Armanino
Yes.
Tarang Agrawal
Okay. Sure. And any update on the project for a customer where you are specifically put capacities for bioconjugation, — not for bioconjugation, but for the manufacturing specific substances. So has that started flowing in or?
Pascal Villemagne
That’s one of the reasons the development project during the first half was lower than expected because it was postponed from a customer point of view also. And then we are going to manufacture during this second half and then come with the numbers as I was mentioning. So project is moving forward. And we are engaging new discussion with that specifically to customers to further invest in the Novo facility to debottleneck the supply chain for the future as well and we are speaking about a two-digit million investment in that particular facility. So the project is really promising from our perspective. And the customer is in full confidence, full trust by also managing that we can prepare the future and invest several million into your facility to re-secure high volume for the supply chain in the coming future. So that’s very promising.
Tarang Agrawal
Superb. Thanks, and Harshil, just a couple of questions. So India, when do we see the Bavla business getting to that INR70 crore to INR80 crore run rate, because my sense is in Q1 ended expectation from the remaining part of FY 2025 was quite high. That hasn’t panned out. So how are you looking at it now going forward?
Harshil R. Dalal
So basically, for the currency — it looks like the second half should be stronger as compared to the first half. But the ramp-up since we are already seeing an increase in the orders, overall, the cycle time is anywhere between four to six months, depending upon the product. So as far as the shipments to the customers are concerned, we are expecting most of them to go out in the fourth quarter of the current financial year. But the run rate that you are mentioning, roughly about INR80-odd crores for quarter, that should be, I would say, visible from Q4 or Q1 of the next financial year.
Tarang Agrawal
Super. And just a couple of more, Harshil, your leverage you did in that you’re going to see the net debt number coming down. From a year-on-year perspective, if I go back to March, in the sense is that the number was in the ballpark of CHF160 million if I’m not wrong.
Harshil R. Dalal
Yeah, CHF160 million.
Tarang Agrawal
So Sir, where do we see this number? Where are you penciling in this number as on March 25?
Harshil R. Dalal
So I think as of March 25, we expect that it should be somewhere between CHF150 million to CHF160 million.
Tarang Agrawal
Okay. And then last is the French facility now breaking even? While it’s good to hear that new contracts are flowing through but how are your operational line items for the French facility currently?
Harshil R. Dalal
So the French facility in the first half of the year did a revenue of close to about CHF3.5 million and the EBITDA loss was about close to about CHF4 million. What we expect is that in the second half of the year, the revenue should be close to about EUR6 million. And what that would mean is that the EBITDA loss should come down to roughly about EUR1.5 million or so. So that is how the current year will go by.
In the next year, what we are expecting is that it should generate a revenue of at least EUR18 million to EUR19 million, which would mean that it should breakeven in the next financial year and turning to EBITDA positive.
Tarang Agrawal
Sure. And this is mainly in Euros, CHF or dollars?
Harshil R. Dalal
No, this is all in euros.
Tarang Agrawal
Okay. Sure. Thank you guys. All the best.
Harshil R. Dalal
Thank you very much, Tarang.
Operator
Thank you. Next question is from the line of Prit Nagersheth from Wealth Finvisor. Please go ahead.
Prit Nagersheth
Yesh, hi. So actually numbers in great recovery. Just a follow-up on the question that I had asked last quarter as well. Are you on track to deliver, say, the 5%, 10% top line growth and 15% EBITDA on a full year basis?
Harshil R. Dalal
Thank you for question. So, yes, I mean, we do expect that the revenues for the full year to grow by at least 8% to 9% and what that would translate into is into an EBITDA margin of at least 16% to 17%.
Prit Nagersheth
Wonderful. And in terms of opportunity landscape, given that CRAMS could also see a lot of move or a lot of tailwinds coming into. Have you started seeing additional inquiries coming your way from the US?
Harshil R. Dalal
You mean inquiries on the CRAMS segment?
Prit Nagersheth
That’s correct.
Harshil R. Dalal
Sure. Pascal, do you want to take that?
Pascal Villemagne
Yes, for sure. As I was saying, in the election, the market was a bit on hold to see what people were — they knew what to do if one or the other candidates were going through, now they know, so now they act. So that’s still unclear. We have seen very quickly some things starting to change from last week.
Nothing concrete yet, of course. It’s a bit new, but we have the feeling that now the election is done, that’s going to really move forward and especially from a venture capital perspective, reinforce some of our customers that they were looking for an additional stable to come out. So it should — need to perform their next step in their clinical development. So we should be able to see in the coming weeks and probably not that particular quarter, but the first quarter of ’25, clearly, the market that is going to pick up and progress in the right direction for us.
Prit Nagersheth
Super, great. Thank you guys and wish you guys all the very best.
Harshil R. Dalal
Thank you.
Operator
Thank you. Next question is from the line of Subrata Sarkar from Mount Intra Finance Private Limited. Please proceed.
Subrata Sarkar
Yeah. So a couple of questions. First is, sir, you have shared that there 19 molecules in late stage. So I just want to understand and first, a small 16 molecule in Phase VI. So first request is most of the other CDMO players and contract manufacturing research players, actually do share the total number of molecules by each phase. So request will be, if you can incorporate that so it helps a lot, basically? So in this context, so first requests in your presentation, if you can start sharing that, like, what is in Phase I, Phase II? And what is the commercial variation, this is number one.
So from that perspective, if you can highlight currently what is the total number of molecules, and which is in what phase? And let’s say, from the starting of the year, is there any movement from one phase to another? This is my first question.
Harshil R. Dalal
Thank you for question, Mr. Sarkar. So obviously, the most important number, what we try to highlight are the number of molecules in late Phase 3, and also the molecules which have gone commercial. We can also mention the molecules in the early phases, but as you know, as part and parcel of our business, there will be a huge amount of dropout rate in the early phases. So the relevance is not that much in terms of mentioning all of the early phase number of molecules, and also that movement, because that could be something too technical an information. But we can share the total number of molecules that we work upon at any point in time for the development.
Subrata Sarkar
Okay. And, sir, if you can highlight, like, we have 16 molecules in late phase. So any ballpark understanding, like, out of these 16, do we have any molecule which is relatively bigger and which, if moved from Phase 3, let’s say, to commercialization stage, can have a good significant impact in our portfolio? So there is a few molecules on that. So and if that, like, how many molecules we can expect, sir?
Harshil R. Dalal
So what we specify, which is also there in our annual report, is the character-wise break-up of the total molecules that we have been developing, as well as the character-wise break-up of the commercial molecules. But if you talk to the customer, all of them would think that all of the molecules in late Phase 3 are going to be blockbuster drugs. But then it is up to us to kind of derive at a probability of success, as well as try to see, what could be the potential revenue from each one of these. But that really doesn’t kind of drive any of the decisions that we have to take.
We would just want to have that molecule go into commercial before we think about any kind of capex or any kind of other investment that we have to make for the customer. And in many of the cases, we also have the customer be a co-investor into the investment to be done for the particular customer. So it will be very difficult to say, like, what would be the potential of each one of these molecules. But what we can say is that, yes, many of these are in niche therapeutic areas, oncology being a major focus area for us. And you can also refer to our annual report where we have the character-wise break-up. Pascal, do you want to add anything to this?
Pascal Villemagne
No, you’re absolutely right. It’s extremely difficult to predict which molecule is going to come to the market. And once the molecule is on the market, what kind of success is going to really have? And I think that’s also very difficult for our customer. We have, of course, market information. We have a number of scenarios that we are discussing with the customer for the commercialization phase. But the reality over my 25 years of experience in that industry is very often the marketing figures that was provided were not totally right. So there was always either an overestimation, very often an overestimation, and sometimes, yes, an underestimation. But it’s almost impossible to predict which molecule is going to happen.
Lately, we had a project that we are working on since 15 years that was very, very promising. And then the last point, the molecule was just dropped off. So — and besides that, all the molecules that are very attractive come to the market and meet their success. So it’s very difficult to give you an answer. And even if we would try, we would probably be wrong by communicating something. So we are extremely careful. And what we can say is, yes, we have a number of molecules in the pipe. We know by nature a number of them are going to come to commercial, but if you could say, this one or that one and give a particular number on the perspective.
That said if you want my opinion on that, we are currently in our portfolio, one of the molecule, which is very, very likely to happen, because the clinical trials are extremely good and very promising. So yes, it could come as a nice to have for the future for us. But maybe I will be wrong, we’ll see. But I have big hopes for that particular molecule, yes.
Subrata Sarkar
Sir, before I move to another segment, let me make another try, sir, if you can help me. Out of the 60 molecule whether let’s say — whether any of this is from — I suppose all of them are from niche biotech client only, but whether there is some exception to that? And if any of your clients in last one or two years has been taken over by relatively bigger company, at least one molecule is in late phase with you.
Pascal Villemagne
Not all are from the biotech. We have several molecules that are belonging to the pharma company. They are coming from collaborations, we have directly with them or, as you mentioned, some of them were acquired by a big pharma.
So once again, very difficult to say, and we are not involved in the discussions, the bio-techs may have with some of the big pharma. We never involved. We’ll get to know this when the deal is done.
So it’s very difficult for us to predict. We’re going to be acquired by when. Unfortunately, I would like to have that information as well, but we are not in a position to say anything around that.
Subrata Sarkar
Okay sir. Okay. No issue. No issue on that. Just last one clarification I want to get is like regarding Bavla, previously, we have guided for around INR350 crores of revenue for this year. So where we stand right now, maybe we will fall short of that. But as right now, the way we are evaluating the situation, what kind of revenue we can achieve for this year?
Harshil R. Dalal
So for the current year, it looks like, we should be closer to about INR300 crores. And we expect close to about 25% to 30% kind of growth in the next financial year.
Subrata Sarkar
Okay. Okay. And the INR250 crores you are expecting for — sorry rather CHF250 million that you are expecting from Carbogen?
Harshil R. Dalal
Yeah. It’s about CHF255 million.
Subrata Sarkar
Okay. Sir this include cholesterol and Vitamin or purely ex of that sir?
Harshil R. Dalal
No, it includes everything ex-of India sir.
Subrata Sarkar
Okay. And sir, the INR300 crores, which you are suggesting, this is a ex-of Generic and Quats or this include that also, sir?
Harshil R. Dalal
No, this is just Bavla site so Quats and Generic is something that we manufacture out of number.
Subrata Sarkar
Okay. So any understanding on that sale, how much revenue we can achieve for this year on Quats and Generic?
Harshil R. Dalal
For Quats and Generic, I think it should be close to about INR80 crores to INR90 crores.
Subrata Sarkar
Okay. And sir, this kind of 6% to 7% margin or that may improve for the
Harshil R. Dalal
Right now, I think 6% to 7%.
Subrata Sarkar
Okay. Perfect. And sir, just last question, if you don’t mind. Sir just two points on the debt side sir, sir what is our kind of hedging mechanism regarding that, apart from natural hedge? And sir, do we have any plan to raise some funds and repay back some debt, sir?
Harshil R. Dalal
So as far as our hedging strategy is concerned, what we try to do is try to see the exposure to various currencies at a good level — at a net level because even if there are payable in certain entities, US [Indecipherable] and certain others. So that is something that we would hedge on an ongoing cable based upon our hedging policy. And that is something that we will keep on doing on a regular basis. We will also swap some of our loans, which are denominated in INR into foreign currency because we hardly have any INR-denominated revenues, but that is also something that we will keep on doing on the right level basis.
As far as the repayment of debt is concerned, we don’t intend to make that the caution today’s equity in order to pay off any of the debt because, I mean, now with the interest rate cycle also now going in the reverse direction, that is the LIBOR rate or the SOFR rates across the world are now expected to keep on reducing that we also have a positive impact on the interest cost for us which can be cheaper than equity.
Subrata Sarkar
Okay. Perfect sir. Thanks a lot.
Operator
Thank you. [Operator Instructions] Next question is from the line of Satya, an Individual Investor. Please go ahead. Satya, your line is unmuted. Please proceed with your question. As there is no response from the current questioner, we will move to the next question from the line of Sajan Kapur, an Individual Investor. Please go ahead.
Sajan Kapur
Hi. Thanks a good afternoon to everyone. A couple of questions. When it comes to ADC, the value chain recapture as the group is partial, right? So we just see the linker and the payload for small molecules, of course. So whereas the market is over the last couple of years, especially, has been gravitating towards this end-to-end solution providers who could do antibody conjugation as well. So from that perspective, don’t you think that Dishman Carbogen has a disadvantage in the marketplace today?
Harshil R. Dalal
Thanks for your questions and good analysis on the ADC market, you’re absolutely right. We are showing the three part of the value chain we are describing. So we are offering what we call the chemistry, the drug, so the payload and the linker, so the molecule that links the payload to the antibody. That’s one thing. We are offering the conjugation. So once you have the molecule and the linker, you linked that to the activities that we have. And we are offering the [Indecipherable] because all of those products are injectable from. So we are able to propose this. The only thing we are not opposing, you’re right, is the antibody manufacturing, which is mainly based on cell culture technology, so it’s tire technology.
And it requires very specific equipment and very specific knowledge and very intense and high capex requirement. So in that perspective, you’re absolutely right. Some of the main actors on that market are providing a kind of an end-to-end, but most of the time, they also missed the financings that we have. So very, very few are really offering the Four elements. So we are offering three out of four, which is not bad. And as mentioned, the antibody part is probably for us one step we have to look at. But as I mentioned, it’s also very intent in terms of capex and knowledge and that would have to go through a major acquisitions in the next few years. But for the time being and from a market perspective, this is not a disadvantage if we don’t have that, knowing that the antibody is really something special in the value chain and the fact that we are mastering the rest is also seen as an advantage in economic flexibility.
Sajan Kapur
Right. So when you talk to customers and today versus two, three years ago. I mean, do you get a sense that the innovators are pushing for a more integrated and solution kind of a partner? And, I mean, do you get that sense or is it business as usual from your perspective or your vantage point that, despite not having the antibody capability, you still find and relevant opportunity in the marketplace. And Dishman is still very competitive as an ADC provider.
Pascal Villemagne
So from a pure ADC perspective, if you speak to a young biotech company coming on the market with a new molecule stage, yes, there is an appetite for a fully integrated partner because for them they are managing only one partner and they have everything under the same roof.
That said, very quickly they realize that, despite of the fact that they have one company in Toronto, and they still need to speak to several types of experts internally, so they need to have anyway on their side, as well as several experts. And very quickly they also see the advantage where they don’t have to put all their eggs in the same basket.
So having a strategy where you are not offering everything and having the flexibility, and that’s what we are offering at this point. So I think the flexibility for our customers to choose either the full package or only picking up on didn’t finish conjugation or chemistry. It’s also an advantage because they don’t see us pushing them to have one solution and only one solution.
So our business model is pretty flexible on that. And what’s also is attractive for the companies, because they don’t feel they are under pressure with only one partner that can basically manage the pricing as they want. So they have the freedom to play a bit with our competitors and try to get us the best price possible. So on our side, we play the card of being experts and top notch in our market. And then we have the price that we have, that so I think we have now a flexible but very, very attractive approach from a technical perspective. And that’s what the customer are looking at.
Sajan Kapur
But that’s very helpful, Pascal. Thank you. And my next question is on the reverse. So from a U.S. Biosecure perspective and our costs are high, but we make higher gross margin as well. And so our costs are as high as us. But our location is several thousand miles away from the U.S. East coast, right. So from that side and are some of the Indian or the Chinese companies. So Indian in particular is [Indecipherable] anti-China in a sense. So what I’m trying to understand is there are certain Indian companies who have development and manufacturing presence in the U.S. And so logically thinking, I mean, they will have an upper hand or an advantage over additional provision because we have physical presence in the Western Europe though, but we have no presence in the mainland U.S.
Pascal Villemagne
From the Biosecure perspective, once again, there was also a bit of — and we are still waiting a bit to see what Donald Trump’s is going to emphasize and what’s going to be his strategy with or against the Chinese government. So that has to be seen how this thing is going to be evolve, for sure.
But we can probably bet on the fact that this movement of America first is going to continue and then the Biosecure as it is now or reinforce or lighter versions become. That said, a number of Chinese companies and we see who was the figure for the Biosecure act. They have a facility in the U.S. as well. That preventing the American government or putting the pressure to get things back in the U.S. and not at the facility. So having a facility in U.S. is not the Alpha and Omega and the full answer for the biosecure Act. It’s a bit more complex than that for sure.
And to add on that, we have a number of inquiries that are coming with very aggressive pricing request. And when we come to the point that where we cannot match the expectations on the pricing all we think is really worth to really go out of Oceana or to stay. So from my perspective, we are still in a moment where — yes, the Biosecure has triggered a number of inquiries — has triggered a lot of agitation in the market, but I don’t have the feeling that everybody has really taken a quarter stand on that.
Molecules [phonetic] will be back to the Western World. Yes, part of them, but not all. What we are trying to do on our side, as you can imagine, we are really trying to push our Indian assets in front of that to try to be as competitive as placebo and capture on your new products. That’s part of what I was mentioning during the introduction of the call where the Carbogen team is trying to capture a number of opportunities for the [indecipherable] for instance, Carbogen we are trying to supply [phonetic].
Sajan Kapur
That’s right. So you mentioned the number of inquiries have increased on the back of this proposed Biosecure Bill. It’s not an act yet. So — but hopefully, it will become an act in the future. So you mentioned about the inquiries. I mean — on a magnitude on a scale, I mean, is it double of what the number of inquiries that is have they double over the same period last year? Or is it a 50% improvement? I mean can you just give some quantitative.
Pascal Villemagne
No, it’s not doubling. It’s not that much actually. It’s probably like 10%, 15% on top of what we are getting, but not that much. We don’t see that much on our side. Where it’s very true is Carbogen Amcis and Dishman Carbogen Amcis we are very well known also for oncology type of work. And a lot of the projects were already manufactured around the Western facilities anyway. It’s more around the midsize and the large size molecules that are currently manufactured in China and that there is a lot going on. But those kind of inquiries are not crossing our offices in those days because we are not identified as a player for a very large volume manufacturing.
Sajan Kapur
That’s helpful, Pascal. Thank you. And one question for you, Harshil, if I may. On the balance sheet side, now that the CapEx spend is hopefully behind for the near future, at least. So over the next couple of years, the incremental cash flow that we intend to generate, I mean what kind of net debt to EBITDA and the absolute debt number and you can forecast of Q4 over the next two fiscal — So the fiscal year ending FY 2027.
Harshil R. Dalal
Yes, Sure, Sajan [phonetic]. So what we expect is that over the next years, the major capex that — or the major expenditure that we will be doing will be on the maintenance capex and not so much on the growth capex because as you correctly pointed out, most of the capex has already been completed. What that would mean is that we should be generating free cash flow, which should go towards reducing the net debt. And over the next two, 2.5 financial years, that should come down to less than two. So that is what our net debt-to-EBITDA target.
Sajan Kapur
So net debt to EBITDA of less than two fiscal year ending FY 2027?
Harshil R. Dalal
That’s correct. It should be somewhere between 1.5 to two.
Sajan Kapur
Okay. 1.5 to two. Okay. Thank you so much, Harshil. Thank you. I’ve got all the questions correct. Thank you.
Harshil R. Dalal
Thank you, sir.
Operator
Thank you. Next question is from the line of Purva Jhaveri from One Up Financial Consultant. Please go ahead.
Purva Jhaveri
Hi. Thank you for the opportunity. I just wanted to ask you, Harshil, on the EBITDA margin guidance for the whole year would be how much?
Harshil R. Dalal
So for the full year, we expect it should be at least 16% at a consolidated level.
Purva Jhaveri
Okay. And you just also mentioned that 150 million to 160 million, as of March 2025 it is regarding what?
Harshil R. Dalal
Sorry, the 150 million to 160 million? Sorry, that was regarding the net debt.
Purva Jhaveri
Okay. That will be maintained. All right. And you also mentioned about the net debt to EBITDA should be around 1.5 to 2 at the end of net debt additional.
Harshil R. Dalal
Yes, exactly. So as we keep on generating the free cash flow, that should help us in reducing the net debt. And obviously, the EBITDA should increase from here on.
Purva Jhaveri
All right. Thank you. Thank you so much.
Harshil R. Dalal
Thank you.
Operator
Thank you. Next question is from the line of Prafull Rai from Arjav Partners. Please proceed.
Prafull Rai
Sir, just two questions. One, we said that we want to bring down net debt to EBITDA to less than 2. As we speak, we have a long-term borrowing of almost INR1,150-odd crores. So we are talking of that and the current level of EBITDA we are doing is something like, say, INR150 odd crore in the current quarter. So that way, what we are saying is that in the next two years, we should be able to get to that less than INR500 crores kind of a long-term debt. Is that the number I should include short-term, long-term growth?
Harshil R. Dalal
No, this was combining the short term as well as the long term. So if you look at it right now, most of our debt is denominated in foreign currency, and that will be the right way to look at the net debt. Because in INR, it gives the wrong picture, otherwise it just showed an increase because of the depreciation of the INR being.
So right now, with about 170 million — or even by the end of the year, say, 160 million of net debt and an EBITDA of, say, close to about 45 million to 50 million, we would be close to about 3.2 times, 3.3 times and that is something that we expected in the next little over two financial years, we should really be able to bring it down to about less than two times.
Prafull Rai
Let’s say around $70 million to $80 million kind of debt?
Harshil R. Dalal
Yes. So one would be a reduction in the net debt. On the other side, there will be an increase in the EBITDA, the combination of the two should help us in reducing the net debt to EBITDA.
Prafull Rai
Great. Second question was on the EBITDA margin. On a steady-state basis, if I have to make a two-year kind of outlook, what should be the steady state EBITDA at the consol level, I should think about?
Harshil R. Dalal
At the consol level, we expect that the EBITDA margin should keep on improving from here on. The major reasons for that would be obviously, the French entity getting to an EBITDA breakeven and then generating positive EBITDA. So that will be one of the key factors. The second figure would obviously be the India business, where historically, we have done in excess of 30% EBITDA margin. So as the India operations normalize, that should be the kind of target that we have in mind. And thirdly, if you see in Netherlands, the margins have actually dropped from what historically they were, so now there’s a reduction in the raw material prices that we’re expecting in the coming quarters that will also help us from a margin perspective.
So we do expect that we should eventually get back to the 25% kind of EBITDA margin that we were doing prior to the EDQM issues that we have for the Bavla site in India. So there is a threshold for the next two to three years. That is where we want to get it. And then we could move towards the 30% margin.
Prafull Rai
So we are talking of almost 15% odd kind of a growth given the kind of intake we’re talking, and we are talking of EBITDA margin going up to 25% is what we are estimating that should occur in the way the business is shaping up currently, correct?
Harshil R. Dalal
Exactly. Absolutely.
Prafull Rai
Can I ask one more question. There was one point you made in the presentation that there is some spillover of revenue from Q1 to Q2. Can you just quantify that? Because what was the exact number so that we know what was the revenue growth last year versus this year out sequential?
Harshil R. Dalal
So we had mentioned that in the Q1 presentation, so that was about CHF9.8 million of revenue, which would spill over from Q1 to Q2.
Prafull Rai
9.8 million — dollar or–?
Harshil R. Dalal
That was CHF9.8 million.
Prafull Rai
Okay. I think this is it. Thanks a lot sir.
Harshil R. Dalal
Thank you.
Operator
Thank you. Next follow-up question is from the line of Subrata Sarkar from Mount Intra Finance. Please go ahead.
Subrata Sarkar
Hello.
Harshil R. Dalal
Yes, Mr. Sarkar.
Subrata Sarkar
Yes. Just one clarification, if you — the accounting clarification, if you can provide, like under other comprehensive income, there is a few big numbers like movement in foreign currency translation — can you just explain a little bit these numbers?
Harshil R. Dalal
This largely pertains to — because we have so many overseas subsidiaries and the major one being the Swiss entity. There is a mark-to-market that keeps on happening on the assets for the consolidation purposes. And all of that mark-to-market on the balance sheet items related to the fixed assets is something which goes in to the moment of the foreign currency translation reserve plus that is also the foreign exchange fluctuation we expect of the cash flow hedge. So, that hedges that we undertake — that NTM hedges also goes as part of the ACI. So, this is what comprises the ACI-related to the foreign currency translation.
Subrata Sarkar
Okay. Thank you.
Operator
Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Pascal for the closing comments.
Pascal Villemagne
Thank you very much, dear shareholders. Thank you for being with us today. We are looking forward to speak with you on the next call in February. I wish you all a good evening and a good end of the calendar year. Bye, bye.
Harshil R. Dalal
Thank you very much everybody.
Operator
[Operator Closing Remarks]