Indoco Remedies Limited (NSE: INDOCO) Q3 2025 Earnings Call dated Jan. 21, 2025
Corporate Participants:
Rashmi Shetty — Investor Relations, Dolat Capital Market Pvt. Ltd.
Pramod Ghorpade — Chief Financial Officer
Aditi Kare Panandikar — Managing Director
Sundeep V. Bambolkar — Joint Managing Director
Analysts:
Gautam Rajesh — Analyst
Sajal Kapoor — Analyst
Sudarshan Padmanabhan — Analyst
Vishal Manchanda — Analyst
Anush Mokashi — Analyst
Narendra Khuthia — Analyst
Ankit Minocha — Analyst
Pratik Kulkarni — Analyst
Harsh Shah — Analyst
Rajat Srivastava — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Indoco Remedies Q3 FY ’25 Earnings Conference Call hosted by Dolat Capital Markets Private Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star then zero on your touchstone phone.
I now hand the conference over to Ms. Kashmi from Dolat Capital. Thank you and over to you.
Rashmi Shetty — Investor Relations, Dolat Capital Market Pvt. Ltd.
Thank you, Steve. Good afternoon, everyone. I’m Rashmi Shetti on behalf of Tolat Capital. Welcome you all on the Q3 FY ’25 earnings con-call of Indocore Remedies. I would like to thank the management of Indoco Remedies for giving us this opportunity to host the call.
Today from the management team we have with us Ms. Panandikar, Managing Director; Mr. Sandeep, Joint Managing Director; and Mr. Pramod Gorpade, CFO.
I now hand over the call to the management for the opening remarks. Over to you, sir.
Pramod Ghorpade — Chief Financial Officer
Thank you very much. Firstly, thank you very much. Good afternoon, everyone. Thank you for joining this call today.
Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements, which are projections or estimates about our future events. These estimates reflect the management’s current expectation of the future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Indoco does not undertake any obligation to publicly update any forward-looking statement, whether as a result of new confirmation, future events or otherwise.
Thank you so much. I’ll hand over Mike to Adity Madam.
Aditi Kare Panandikar — Managing Director
Good afternoon, everybody, and thank you for joining us on this call to discuss performance for the 3rd-quarter of financial year 2025.
Our business has primarily two aspects to it, demand-generation and demand satisfaction. For the second-quarter in a row, we remain impacted on the supply-side for our international Formulations business. With the earnings impacted the way they have been for the 3rd-quarter of FY ’25, it would be easy for anybody who is not familiar with our business to wonder if fundamentals of the organization are in-place or not.
Let me therefore share a few positive highlights on the demand-generation side first. You will be pleased to note that our order book for international formulations business to Europe and US today stands at about INR180 crore. In the India business, there are many winners. Cyclopalm, the largest brand of the company on the MAC basis in IQVR today is at INR175 crores with a growth in excess of 20%. When one compares IRL, Indocore Remedies Limited with the covered market, across most of the top brands, we are doing better than the covered market on growth and our market shares have also seen a gain.
Almost all our top brands except for ATM, which is in any case doing better than its market, is marginally in negative. New introductions now form 4.8% of top-line vis-a-vis the industry benchmark of 2.8%. As I said in the beginning, most of our issues have been on the supply-side and supplies of finished formulations to the regulated markets for both US and EU have been severely affected in this quarter. While certain delays are on account of the implementation of corrections at facilities as part of the master manufacturing plan which is designed to optimize operations, others and largely are on account of the warning letter that came on the Sarai Plant Plant 2 in Goa by FDA. These two factors have primarily resulted in us not being able to supply and if you compare sales to the regulated markets of US and EU, on a YoY basis for this quarter, we are down by 90 crores in sales and revenues. And all the while costs which are incurred at plant of a fixed nature have continued.
We are working with the US FDA to address their concerns listed in the warning letter and feel confident that over a period of time we will able to get out of this situation. On quarter four as it is a warning letter impact I have to be cautious and say that US will stay partly impacted. EU on the other hand which was impacted because of delays of production, rollout of solid orals at Bhatti site should be back on its feet and from API India domestic sales and services I have an expectation that they will go all out. Other than this there are certain other positives in this quarter.
I would like to share with you. In this quarter we launched five new products, Ice Wrap, a suspension which is for acidity, Afebrex drops and a Fabrex syrup both of which are two drug combinations without paracetamol in the Fabrex range, Bilti DX syrup and Vin Brinza which is a benzolamide brimonidine combination. In this quarter we also received final anda approval from US FDA for Cetrizine Hydrochloride tablets 10mg which is OTC. We also received final ANDA approval from US FDA for Varenicline tablets 0.5mg and 1mg a product used to aid smoking cessation treatment. Also happy to share that this quarter Indoco entered into a strategic distribution partnership with Clarity Pharma uk. These are some of the positives.
I now hand over to Mr. Sandeep to take you through the financials of third quarter.
Sundeep V. Bambolkar — Joint Managing Director
Thank you Aditi. Good afternoon everyone. Hope you all are doing fine and thank you for joining the call.
Let me first begin with the business highlights. Net revenues of the company for the third quarter FY24, 25 are at 3,649 million compared to 4,484 million for the same quarter last year. EBITDA to net sales for the quarter is 5.5% at INR201 million compared to 14.6% at INR653 million. The above numbers are on standalone basis. We have declared results with consolidation which include results of subsidiaries.
The domestic formulation business. Revenues from this business for the quarter grew by 5.5% at INR2,242 million as compared to INR2,126 million. Major therapeutic segments, namely vitamins, minerals, nutrients, cardiac, urology and gastrointestinal performed well during the quarter as compared to the same quarter last year.
Now on the international formulation business front, revenues from international business are at 1,074 million compared to 1,947 million for the same quarter last year as has been explained by Aditi earlier. Revenues from regulated markets for the quarter are at INR684 million as against INR1,475 million for the same quarter last year. Revenues from US business for the quarter are at INR280 million as against INR863 million. And revenues from Europe for the quarter are at INR354 million as against INR582 million. Revenues from South Africa, Australia, New Zealand for the quarter are INR49 million against INR30 million. And revenues from emerging markets for the quarter are at INR390 million against INR472 billion. Revenues from API business for the quarter are at 28 million against 33 million. And from services NSI for CRO and Indoco Analytical Solutions are at 6 million against 8 million.
That is all about the business highlights for the third quarter. And I now request the participants to put forth their questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on Their touchstone telephone. If you wish to remove yourself from the question queue, you may press star N2. Participants are requested to use handset 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 Gautam Rajesh from Everflow Partners. Please go ahead.
Gautam Rajesh
Good afternoon, sir. Thanks for the opportunity. I had one question. What is the status of the refurbishment of the plans for Europe and usa? Can you update on which lines are operational now and by when will the balance of the lines be operational?
Sundeep V. Bambolkar
Yeah. Oh, sorry. Okay. From the plant two, that is a sterile plant. Line one is fully operational and we have been exporting one terminally sterilized product to the U.S. from that line, line two, we are taking exhibit batches that is also operational but has not been inspected by the fda. So we can go ahead and take exhibit batches of all the planned products for the future that we are doing already. Line three will be ready by the first week of February to go commercial. And line four will be ready by first week of March. This is the schedule of all the sterile plant. All the lines in the sterile plant.
Aditi Kare Panandikar
Coming to solid orals. For solid orals, the main plant is plant one in Goa which currently largely manufactures for us. And we also have Buddhi one and Buddhi three as we call it. Two plants in Baddi doing solid orals of these. The master manufacturing plan is completely rolled out and work is completed in the third quarter for Plant 1. So impact from supplies, regular supplies from Plant 1 will be seen in the fourth quarter. But on the other hand, as we speak we are rolling out meaning we would have lost one month in the fourth quarter for Baddy.
Does that answer your question?
Gautam Rajesh
Yes. Thank you, ma’am.
Operator
Thank you. The next question is from the line of Sajal Kapoor from Anti Fragile Thinking. Go ahead.
Sajal Kapoor
Yeah. Hi. Thanks for taking my questions. Aditi ma’am. And Sandeep sir. Both, both of you, the question is on the India business, what kind of digital initiatives do you plan to undertake or currently exploring for the India business?
Aditi Kare Panandikar
Yeah, very good question. So there is a. I mean when you say digital, it’s about digitization and digitalization. So just to share with you that over the last 18 months the company has already got into digitization mode where out of the 3,000 field employees now almost 2,000 use iPads to promote products to doctors. That allows us to give a lot of additional data and a lot of audio, visual kind of representation studies. So on that part, of course digitization is done regarding digitalization of India business, other areas we are of course through SAP and other things. The data is already digitalized and we have been using some software for some time which has been helping us for the field to report as they happen. We also use other software which helps any field employee to be updated within 10 minutes every 10 minutes of the status on his achievement on a product to product basis once the targets taken.
Does that answer your question?
Sajal Kapoor
Yeah, that’s helpful Aditi ma’am, thank you. And just a follow on really. And I mean what’s your sort of current thought process and experience with, you know, this gen AI and AI in general? I mean how can that new technology impact Indoco’s, you know, manufacturing and operations? Because we could perhaps use this to improve product quality and compliance. You know, things like detecting faults, automating inspections or almost kind of predicting any quality issues. So are you thinking along those lines? Because there is a lot of upgrade and capacity expansion happening.
Aditi Kare Panandikar
Right, right. So again very interesting. So for all the new projects, whether it is a project at ORIC of toothpaste block or APIs or all the new lines which are coming in at Grant 2 from day zero, the equipment that’s coming in is aligned to be part of anything digital by way of, you know, for us to sort of collate data and help us to work on AIML basis. The challenge really comes in the equipment and machinery that is already there in the system. Because you know, the OEM vendors are all very different. Each of them is at different stages of their readiness to support data collection, collision, etc. However, coming to departments like Quality, Stability, RD where we already generate a whole lot of data which is in the system, we have already started using small applications to help us to do more predictive work. Also in a very small way work is also started in fnd. In fact we are looking at any and every other department in the company where a whole host of data is sitting today which we can work on to help us get efficiency.
Sajal Kapoor
No, that’s helpful. And the implementation of SAP S4 HANA, is that integration fully complete within the organization and with that kind of an infrastructure backend and the digital initiatives that you spoke about, I mean is it fair to assume that the efficiency and productivity will take a significant jump going ahead?
Sundeep V. Bambolkar
Yes, definitely. The SAP S4 HANA implementation happened almost two years back and we did it in record time of less than eight months and we won an award from the SAP. So that is well settled and that has made the entire organization very efficient.
Sajal Kapoor
So once these compliance challenges are behind us. I mean no one can predict the timing of the US FDA audit because there will be a physical audit at some point. But you know, at some point we’ll get over those challenges. And then at that point in time, as we started scaling up this, I mean there should be better productivity compared to where we were before these issues erupted, right?
Sundeep V. Bambolkar
Yes.
Sajal Kapoor
Yeah, yeah, yeah. Okay. And lastly on this Florida Pharma, I mean how much is the. So from simple perspective, I think our fixed cost have increased because we have acquired this front end in the US and we are kind of facing a near term pain because of that increase in fixed cost and our output is not commensurate with that increase in fixed cost. So I’m just trying to understand what is that amount that we are bleeding and is it 10 crore, 20 crore, what is that additional fixed cost? And that is currently hitting our P and L, but it’s not giving us the output because of supply challenges.
Pramod Ghorpade
Yeah. So Fijal, I’ll just take this question. FTP though, we are incurring certain additional spend there. But if you see from a revenue perspective, we started generating revenue from day one, that is on account of two. One is about certain, you know, recurrent with the existing arrangements with third party suppliers and sales from hpp, that is one. And secondly our supplies in the course supplies to HTTP. So that is helping us to cover up certain fixed costs. But still there is on an average about 6 to 7 crore per quarter is the, you know, fixed cost which currently we are incurring certain portion we are recovering from sales.
Sajal Kapoor
And, and do we expect this fixed cost of 7 crores, 8 crores per quarter or let’s say 30 cr on an annualized basis. Is it, is it expected to go up maybe because of you plan to hire more people or salary increments, that kind of a thing?
Aditi Kare Panandikar
No, no, no, no, no. So there are just six employees in SPP and it is more of kol management of generics. So there is no expectation to increase number of employees.
Sajal Kapoor
Sure. And finally as you see ma’am, is it still kind of 60:40 ratio that we expect 60% to go through our own front end in the US and 40 would still be through partners.
Aditi Kare Panandikar
Yes.
Sajal Kapoor
Okay. Okay, wonderful. Thank you so much. I’ll join the queue. Thank you.
Operator
Thank you. The next question is from the line of Sudarshan Padmanabhan from JM Financial. Please go ahead.
Sudarshan Padmanabhan
Yeah, thank you for taking my question, ma’am. I would like to understand a little bit more on qualitatively where are we from this of, you know, getting the remediation?
Aditi Kare Panandikar
Your voice is not very clear. I’m sorry. Hello. Your voice is not very clear. Can you repeat? Yeah.
Sudarshan Padmanabhan
Yeah, yeah. I would like to understand qualitatively, where do we stand on the US FDA as far as remediation is concerned and when do we start seeing, you know, the, you know, approvals and you know, kind of a ramp up that we initially expected.
Aditi Kare Panandikar
Yeah. So as I discussed already, we’ve just got the warning letter and our response, initial response to the warning letter has gone off and we have committed a certain time period in which we will be giving a more concrete plan in the interim. We are constantly now in communication with the FDA to keep checking whether we can supply which products we can supply safely. We are also in constant touch with all our customers who are all auditing us to evaluate the risk in taking product from our site.
Coming qualitatively to the issues in the plant, the team is looking at each of them in greatest detail. And we have already hired remediation partners and they’re working with the team as we speak.
Sudarshan Padmanabhan
And in terms of cost curve, man, I mean broadly, since you’ve hired the consultant, I would assume that a fair amount of cost would basically be spread between the third and the fourth quarter and probably towards that it should come out.
Aditi Kare Panandikar
Yes, that’s the correct assumption. Rather than third, I think because it came towards the FAG end of third quarter. I would expect it more to be in the fourth quarter this year and the first quarter of next year.
Sudarshan Padmanabhan
And any idea what would be the quantum map?
Aditi Kare Panandikar
It’s difficult to say at this stage as we are still evaluating the amount of work to be done.
Sudarshan Padmanabhan
Sure. And just focusing a little bit more on the US, I mean, we also have certain interesting products like Combigen and Brazil Amide. Is there a way where we will continue to supply or this is an opportunity that we will still benefit from in FY26.
Aditi Kare Panandikar
So what we have done is, as in any business, once you see the risk and it is not after this has happened for some time now, we have recognized that we have only one site for sterile and the company has started strategically working on creating other manufacturing locations from where we can source it. But it will take some time.
Sudarshan Padmanabhan
Sure. And just moving on to European business, I mean, as you said, this quarter had various issues, but the order book looks good for the near term. Qualitatively, you know, FY26, FY27, I mean, I understand us, is a little bit of a difficult puzzle given that the regulatory issues have to get detangled. But how do we see Europe, you know, kind of driving growth in that?
Aditi Kare Panandikar
We are actually not giving much guidance, to be honest. But one would have to expect close to 15% at least.
Sudarshan Padmanabhan
Sure. And with respect to the semi regulated markets, I mean, what are the specific issues that we saw this quarter?
Aditi Kare Panandikar
No, semi regulated, you know, is a typical model where we are actually selling our brands. So if you see the secondary performance, it is pretty constant. It is just because of the, you know, distributor model. As and when they sort of give you orders and you get to sort of sell out, then you get the primary. So as such, it is typically, you know, a business which is very heavy in the fourth quarter. We have got the team to start working on making it more predictable around the year.
Sudarshan Padmanabhan
Also, you know, spending a little time on, you know, patient queues from the previous participant on the cop side. I mean, this quarter or specifically the last two quarters has been a confluence of negative operating leverage and various costs. But if I’m saying the next two years or so means our gross margins is good, which means that the majority of the impact is below the gross margin. So as we see the ramp up, how do we see the margin expanding?
Aditi Kare Panandikar
So we’ve come down from EBITDA at the level of 18 and 20% to 15% last year, averaging 13 this year. And with the shocker of this quarter, it has come down for a nine month basis, down to I think 10.5% and or 11%. So naturally one quarter like that really puts you back a bit, quite a bit. So we had said very clearly that this year we were confident of maintaining close to between 13% and 14%, but that has gone for a toss. So now we’ll have to work back slowly and steadily. But as you rightly said, fundamentally there is nothing. Why, you know, we should, I mean, we will not allow another such quarter. There’s so many sort of headwinds seek us at one time.
Sudarshan Padmanabhan
Can you talk a little bit more on the cost cutting strategy? Because, I mean, I understand that the businesses come off and you know, we also are seeing some kind of escalation on the fixed cost. I mean, that is from a longer term perspective. But is there any kind of a fact, you know, you see in the system that you can cut, you know, which can kind of allay the kind of issues that you’re seeing on the negative operating level?
Aditi Kare Panandikar
Yeah. So, you know, like I said in the, in the opening, when you sort of have a deficit of close to hundreds in sales, but the fixed costs of the Plants and sites stay the way they are. That has been the reason for this quarter going forward as part of the master manufacturing plan. In any case cost per unit was to go down. So I see in the fourth quarter itself we’ll be able to see on geographical business basis we’ll start seeing some improvements for sure.
Also in the India business given that we are not increasing the number of people we will also see an improvement in per head yield, phy. That should help and certain costs especially of the like other expenses where there is lot of work being put in right now to sort of contain them, check etc. Those will come under control. As you rightly said in the next two quarters because of the extra cost on remediation, this impact we may not be able to see correctly but I think after such a quarter we will in future calls try to give more data on operational efficiency that we are achieving at site. Yeah
Sudarshan Padmanabhan
On the domestic business I mean since you’ve taken a lot of measures to improve the efficiency digital as well as know on the MR side. I mean, how do we see the prescription, you know, the penetration of our products, the kind of you know, market share or the mind share that we are seeing that if you can just elaborate it, you know specifically you know, with certain products especially you know you’re talking about the top two products, you know how do we see that picking up. And also with respect to the new launches, I mean how do we see the new launches?
Aditi Kare Panandikar
Yeah, so just to give you a glimpse for because we get prescription data from outside sources is a bit delayed. So I can talk for the October November period. So October, November 2024 over same period last year prescriptions of Cyclopam have grown by 23%. And QVR has classified Cyclopam as one of in the top 100 brands growing fastest in prescription. Rexidine M which is a dental product prescriptions have grown by 18.7%. Pensoden K which is actually we took OTC through Warren Remedies. The prescriptions have grown by 23%. On your Oxypod CV it is growing by 40%. So typically if you see the prescription trend is across the legacy products we are really concentrating on the fundamentals of the business. So the prescription growth is very much there on the new products. Also if you look at products like Noxa they have done exceedingly well.
And let me just try and give you some details. Clovengy and age old product is number one prescribed antifungal by Ents. Cital is the number one prescribed urinary alkalizer by urologists and GPs. Sitar and Sital UTI together have crossed 100 crores and 100 crores Mac December your Noxa is number one prescribed ozinoxazine antifungal, new launched antifungal. So lot of good happening in the India business and this has come through both good strategies and good strategies being implemented properly as well as sales effectiveness improvement.
Sudarshan Padmanabhan
One final question before I join back with you is you know now that we have certain losses what is the kind of tax rate that we should be looking at?
Aditi Kare Panandikar
Tax rate. They are already at the lowest tax and the losses are only for this quarter on YTD we are still positive so we will have to pay tax.
Sudarshan Padmanabhan
Sure. Thanks a lot.
Operator
Thank you. The next question is from the line of Vishal Manchanda from Systematics. Please go ahead. Mr. Vishal, your line has been unmuted. Please go ahead with your question.
Vishal Manchanda
Am I audible?
Pramod Ghorpade
No, no Vishal, you are not audible at all.
Operator
We will move on to the next question. It’s from the line of Anush Mukashi from Yajna Academy Private limited. Please go ahead.
Anush Mokashi
Yeah, hello, I’m audible?
Aditi Kare Panandikar
Yeah.
Anush Mokashi
Thank you. Thank you for the opportunity. So ma’am, I was actually looking at our fixed asset turnover ratio. It was around 2.5x in FY24 and now it is around a 2-ish like 1.9x and I’m considering both the PPE and all the intangibles both. And now going by the way that we have spent about 800 crore to 1,000-odd crore into our capex. So do you feel, I mean do you have any number in your mind like I mean can, can it reach back to those, those levels given everything is behind us about all these warning letters and all?
Aditi Kare Panandikar
We should at least do two times.
Anush Mokashi
Okay, two times is what actually and next question was about the margins. So given as compared to peers we are at a bit lower side and I’m assuming that is because of some lower chronic mix. And I heard you saying that you want to increase a chronic mix going ahead. So any guidance on what target number you’re looking about chronic mix going ahead?
Aditi Kare Panandikar
No. So the sales may not be lower because of the chronic mix but you know we have always grown India business in a stealthy fashion. So I really didn’t get your question. Are you saying that because we don’t have chronic we are lower in size? Is that your question?
Anush Mokashi
No, I’m actually assessing the impact on margins. Maybe I miss saying that.
Aditi Kare Panandikar
No, on margins, whether it’s chronic or acute. In fact, legacy products are much better on margin because the brand is far more established in the market. Yeah.
Anush Mokashi
Okay. Okay. So going ahead, I mean, is there any chronic mix percentage you’re targeting?
Aditi Kare Panandikar
We have been — right now it is around 9% to 10%. It can inch up. But when the other side also is growing rampantly, it would not be correct to talk of increase in contribution from chronic. Okay?
Anush Mokashi
Okay. Okay. Thank you. That’s it from my side.
Operator
Thank you. The next question is from the line of Vishal Manchanda from Systematics. Please go ahead. Mr. Vishal, your line has been unmuted. Please go ahead with your question.
Pramod Ghorpade
Hello?
Vishal Manchanda
Yeah, am I audible now?
Aditi Kare Panandikar
Yeah.
Vishal Manchanda
Yeah, sorry for that. So basically, with respect to your collaboration with Clarity Pharma, you expect to sell around 18 products in the next. Sorry, I think 18 products over the next 18 months, is that right? Hello?
Aditi Kare Panandikar
Yeah, yeah, can you hear me?
Vishal Manchanda
Yeah, I can hear you.
Aditi Kare Panandikar
Yeah, yeah, yeah, yeah. A basket of 18 SKU over 18 months. I mean, gradually get added. Yeah.
Vishal Manchanda
So are these products already approved for you and whether you own the dossier or Clarity Pharma?
Aditi Kare Panandikar
No, no, no, we have the dossiers. We — over the last 20 years, we inched up from being pure contract manufacturers to eventually owning the IP to eventually owning the dossiers and ma. Okay. It’s only that we were in supplying to others. So now we supply to Clarity, which is our partner. So we have a state.
Sundeep V. Bambolkar
Clarity will be only a distribution partner.
Vishal Manchanda
Understood. Okay, so you have these products approved and supplies would start in the next eight, over the next 18 months to the partner.
Aditi Kare Panandikar
Yes.
Vishal Manchanda
And any sense on what, what revenue can this generate? Maybe a range, if not a number?
Aditi Kare Panandikar
No, we are not giving out numbers at this stage.
Vishal Manchanda
Okay. Okay. And second, on the US the new lines that have been refurbished, I just want to understand what, what, what was the need to refurbish the lines? Whether these lines were kind of obsolete and that led you to refurbish or was it for compliance reasons?
Aditi Kare Panandikar
Yeah, compliance. So we had audits last February and then this July. So the last February audits were initially when we gave responses where we got the OAI in those responses we committed to. So there was some, you know, on sterility, sterile practices, as in how the workers moved inside because of lack of space in areas, etc. Such things were identified. Also certain improvements towards serenity, you know, like glow ports, you know, and going for isolators, larger LAFs, those commitments we made and therefore the refurbishment.
Vishal Manchanda
Okay, so you would, you would have replaced the entire line in that case. And the old line has been.
Aditi Kare Panandikar
We have not replaced the line. We have not replaced the line. We have refurbished the area and, and sort of upgraded the lines wherever required.
Vishal Manchanda
Okay. And the total capex that we would have incurred for this?
Pramod Ghorpade
Total in this year we incurred close to about 200 crore including some new machines, upgradation, all the projects, some advances.
Vishal Manchanda
And specifically for this refurbishment project.
Pramod Ghorpade
Sorry, sorry Vishal, just to give you more clarity for the line upgradation it was more of a repairs and maintenance cost. So it is not entirely capex. Certain — of course certain components we got which is a part of the capex.
Vishal Manchanda
Okay. And just one final one. The other expenses line is quite elevated this quarter around 165 crores. I think about 15% jump and probably the highest ever we have seen. So any details there?
Aditi Kare Panandikar
So some amount of remediation costs have started coming in. There is also, there was also I think good amount of payout on incentives for India business. And as Pramod correctly said repairs and maintenance has absorbed a lot of the, you know, remediation from for the lines in Plant 2.
Pramod Ghorpade
Well, Vishal, when you talk about 165 that is at consolidate level which include certain expenses related to Warren, HPP and Indoco. At Indoco standalone if you see our average this quarter we are at 139. So which we had indicated like you know our average is between 120 to 130 but because of certain additional cost related to remediation we are at 140 at this point of time.
Vishal Manchanda
Okay, okay. And we like how should we expect this to be in the future? The other expense line around 150, 140 or 150 levels.
Pramod Ghorpade
No, no, no. Certainly you will have you know range of about 120 to 130.
Vishal Manchanda
I mean at the consolidated level, I mean.
Pramod Ghorpade
Consolidation level at around another 20 for other two entities, ATP and Wallet. So about one project.
Vishal Manchanda
Got it. I think that’s it from my side. Thank you very much.
Operator
Thank you. The next question is from the line of Narendra from Robo Capital. Please go ahead.
Narendra Khuthia
Hi. Hi. Thanks for the opportunity. So I’m new to the company so pardon me if the questions become a little repetitive. Just wanted to know that the recent, recent warning letter that we have received, what is it regarding and what kind of products are we still you know allowed to supply to the US? That’s my first question.
Aditi Kare Panandikar
So we are at this time, as I said earlier, we are in communication with FDA to find out what we can and cannot supply with zero risk, some risk, etc. And we also talking to our customers. So sterile products are basically of two kinds. Aseptic filling and terminal sterilize. Terminally sterilized products have very low risk because they are sterilized at the end. So we are going ahead manufacturing and supplying those products but they form a very small percentage of our portfolio. So we are still waiting for okay to start manufacturing the aseptically filled products. Since our outline response has gone to fda, we have to give them some time before they come back to us and we can start, you know, getting clarification from them.
Narendra Khuthia
Okay, okay, understood. And what, why are we seeing in the European region? Any reason for that?
Aditi Kare Panandikar
Yeah, so I think in the beginning we spoke of this, that couple of our sites where the master manufacturing plan is being rolled out, there were delays in, you know, certain completion of projects because of which supply from the sites got impacted. That’s it.
Narendra Khuthia
Okay, so going ahead from 20 — FY26 onwards, except Europe, except US, all of our geographic geography should go back to the earlier levels of performance, right?
Aditi Kare Panandikar
Yes.
Narendra Khuthia
Okay, okay, great. And on the margins front, right. So this quarter it was only because of these two reasons or was there any other factor that contributed to this and also related point, Would it be possible to give out the range of what kind of margins do we make in the US business on a steady state basis?
Aditi Kare Panandikar
No, it would be very difficult for us to give you that and we are anyway not giving out that kind of data. But your question is correct. As I said, it was only because of non supply of product in this quarter that the margins were so severely impacted.
Narendra Khuthia
Okay, okay, understood. And on the capex which you have done I can see around 400-odd crores in the past two years. So is it fully for the refurbishment or is there any component other than that as well?
Aditi Kare Panandikar
No, there is refurbishment. We have set up a new unit at Oric which is for making cosmetic toothpaste where we now manufacture the OTC toothpaste. We also have added a block for increasing capacity of API because otherwise we were dependent on our old site at Pataganga alone. That is largely where the capex has happened and some amount of capex has gone into the. Into sort of going for newer equipment in order to increase efficiency at the solid odor side.
Narendra Khuthia
Okay, okay, great, understood. I’ll follow back in queue. Thank you.
Operator
Thank you. The next question is from the line of Ankit Minocha from Adizi Ventures. Please go ahead.
Ankit Minocha
Yeah, hi, good afternoon. I mean margins this quarter, obviously you mentioned the reasons, but margins the previous quarter were also on the lower side. I mean, if I was to kind of understand when do we move back with all your issues with remediation, with all the issues with supply into the existing markets. If I was to look at the next four quarters, say Q4, upcoming Q4 and then Q1, Q2, Q3 of the next year, when do we think we kind of will move back to business as usual and Maybe like touch 15% EBITDA margins in this time period.
Aditi Kare Panandikar
So as I said, the next two quarters we will stay impacted at least for the warning record related issues and sales to us from the sterile plant. So nothing before that, I don’t expect we will be able to come back to 15% for sure. But the 13% we were going at, possibly by Q3 of next year, we could start seeing some early signs of it.
Ankit Minocha
Okay, and this 13% you’re mentioning, say if it’s by Q3, then would you have an estimated, say some sort of a target for the entire year of…
Aditi Kare Panandikar
Let’s just not talk of any estimates. Nobody, you know, you can understand the kind of pressure the organization is under right now with the warning letter and two more quarters of having to sort of not be able to supply product. But we hope against hope that from FDA we will hear something and be allowed to make more. If that happens, we can try to do better. So no commitment, no guidance.
Ankit Minocha
Sure. Thank you. And in terms of the warning letter, I mean do you think the worst. We’ve seen the worst in terms of this quarter or could the following quarter be even worse coming ahead?
Aditi Kare Panandikar
No, I think this is the bottom because we couldn’t supply anything this quarter from at least from sterile product perspective.
Ankit Minocha
And finally these remediation costs which are kind of coming up extensively, do these costs now start to taper out slightly and reduce slightly?
Aditi Kare Panandikar
No, the remediation costs will continue for at least two quarters and after that also in a certain measure.
Ankit Minocha
Okay, thank you. And all the best.
Operator
Thank you. The next question is from the line of Pratik Kulkarni from Kamiyaka. Please go ahead.
Pratik Kulkarni
Hello ma’am. Good afternoon. I just wanted to ask that even after, you know, all the compliance challenges and the remediation things going on, the master manufacturing plant going on, I see this, that the company is currently in, you know, complete rehaul and revamp in its business process but as it is taking some delay. So, I just wanted to know that how much per quarter revenue are we, you Know losing because of these delays.
Aditi Kare Panandikar
So as we said in this quarter alone we have not. We have seen a sales drop from the reg market of close to 90 crore. And I said in the beginning that we have orders of 180 crore in hand so that 90 could have easily gone to 100. So the largest impact has been seen only in this one quarter where 100 cr additional revenues could have been collected.
Pratik Kulkarni
Okay, that’s — that was from my side. I just had one question.
Operator
Thank you. The next question is from the line of Harsh Shah from RERA Holdings. Please go ahead.
Harsh Shah
Yeah. Hi, good afternoon ma’am. So my question is relating, related to the previous question asked by one of the participants. Since we are losing out on certain amount of revenue because of the remediation measures and even also because of the USMD issues if someone else would be filling in the market since we are not supplying. So just want to get a sense that once we get back on track how do we get that market back? Because I’m sure there would be multiple competitors who would be operating in similar drugs would be supplying the market. So when we get back on track how do we, how do we regain that market again?
Aditi Kare Panandikar
Yeah. So you know our business to international markets reg markets is of two kinds. One where we contract manufacture for the and other where we have our product front ended. So even if it’s FPP or clarity they are our products. So there we are pretty much in control of the whole chain directly or indirectly. And here of course in the shortest run there may not be much impact because there is also stock carrying in these markets. So that will not cause too much problem. I see more impact possibly in the contract manufacturing side if our partners lose confidence in us where I have to say our business teams are doing an exceptional job. Also within limitations, whatever we are able to supply we are trying to satisfy everyone to a little extent so that they do not any one single party does not get too much impact.
Harsh Shah
Okay. So and so currently the day your customers would be engaging with some other vendors to fill in the…
Aditi Kare Panandikar
They always have, Harsh, we are in business for making paracetamol for UK for the last 20 years. And you know the parties we supply to, they are taking products from many other parties. So question is whether they will want to come back to us or no. Whether they will stay with us or no. That pretty much depends on a the relationship and reputation we have built over so many years working with them. Also the cost and I have seen at least that you know for a few pennies they have not moved because, you know, the partnership and sort of logistic kind of support which we have faltered for the first time in 20 years where we probably have not given people what they have wanted. This is the first time it has happened and I am very hopeful that we should not lose long term business because of it.
Harsh Shah
Sure, sure. Thank you so much.
Operator
Thank you. The next question is from the line of Rajat from Tata Mutual Funds. Please go ahead.
Rajat Srivastava
Yeah, hi. Thanks for taking my question. Am I audible?
Aditi Kare Panandikar
Yeah.
Rajat Srivastava
Yeah. Aditi. Ma’am, just one question from my side. If I look at your employee expenses for nine months, that seems to be pretty much flat on a yoy basis. Could you just elaborate what has led to this? There is absolutely no increment. Is there any rationalization in the field force or the incentive? There is some reclassification of incentive. What has happened here?
Aditi Kare Panandikar
Yeah. So we have been watching employee costs for a long time. And as part of the checks and controls to bring in efficiency at sites, there is great improvement seen especially in areas like R D and some of the areas like contract workmen and others where there is various improvements certainly seen in employee costs and even in the field. While we have not cut down the number our new restructured divisions like the second division of Ophthal or any like we recently launched a division in the north. It has come from reconstituting existing field force.
Rajat Srivastava
Sure. So we should not expect any material jump in employee expenses in terms of incentives in the last quarter. Right. It should not be materially different from this quarter.
Aditi Kare Panandikar
No, no.
Rajat Srivastava
Sure. Okay. Thanks.
Operator
Yes. Yes, sir. Does that answer your question?
Rajat Srivastava
Yeah, I am done. Thanks.
Operator
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for their closing comments.
Aditi Kare Panandikar
Yeah. Thank you everyone for your active participation and all your questions. And thank you for joining us today. Yeah. Thank you very much.
Sundeep V. Bambolkar
Thank you.
Pramod Ghorpade
Thank you.
Operator
Thank you on behalf of Daulat Capital Markets Private Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.