Marksans Pharma Limited (NSE: MARKSANS) Q3 2025 Earnings Call dated Feb. 12, 2025
Corporate Participants:
Mark Saldanha — Chairman & Managing Director
Jitendra Sharma — Group Chief Financial Officer
Analysts:
Bino Pathiparampil — Analyst
Agastya Dave — Analyst
Unidentified Participant
Hiral Nandu — Analyst
Dhruv Maheshwari — Analyst
Nirali Shah — Analyst
Presentation:
Operator
Good day. Ladies and gentlemen, good day, and welcome to Pharma Q3 FY ’25 Earnings Conference Call hosted by Elara Securities India 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 star then zero on attached and phone. Please note that this conference is being recorded.
I now hand the conference over to Mr Binov Pathi Parimpal from Elara Securities India Private Limited. Thank you, and over to you, sir.
Bino Pathiparampil — Analyst
Hi, good evening and good morning to all of you. This is Dr Bino Patri Parambal from Elara, welcoming you all through Marks and Pharma quarter three FY ’25 Earnings Conference Call. We have today with us Mark Saldana, Founder, Chairman and Managing Director; and Mr Sharma, Chief Financial Officer of Pharma.
Before I hand over the call to the management, please note that certain statements made by the management in today’s call may be forward-looking. These reflect management’s best judgment and analysis as of today. The actual results may differ materially from the current expectations based on a number of factors that affect the business. We will begin the call with opening comments from the management, followed by a Q&A session.
I hand over the call to Mark. Over to you, sir. Thank you.
Mark Saldanha — Chairman & Managing Director
Thank you, Beno. Welcome, everyone, and thank you for joining us in our Q3 and nine months FY ’25 earnings conference call. We sincerely appreciate your interest and continued support for the company. I’m pleased to report another strong quarter with an all-time high quarterly PAT. This strong performance was driven by sustained 12 successive quarter of double-digit revenue growth. Our revenue grew by 16.3% year-on-year in Q3 FY ’25, led by a continued strong performance in the US followed by UK, which has improved during the quarter.
The US market continued to grow strong, reflecting the strategic focus. It grew by 37% year-on-year, more than double of the overall company growth rate. UK and Europe performance improved both year-on-year on a sequential basis. However, Australia and New Zealand was soft due to seasonality impact, while the rest of the world was impacted by continued geopolitical turmoil. We expect the performance to improve in the coming quarters. The improvement in the product mix and the softer input price helped in the gross margin expansion over the previous years. However, investments in the acquired facility and increased freight costs compared to the last year put pressure a bit on the margin.
Nevertheless, we delivered a strong EBITDA and an all-time high path of INR105 crores in Q3 FY ’25. The acquired manufacturing facility is ramping-up as per plan and will help us boost our growth in the coming quarters. We remain focused on our strategic growth pillars of growing the company in the coming years. Expanding our business with new product launches and ramping our new facility will help us achieve our next milestone of INR3,000 crores of revenue.
With this, I would like to turn this over to to update on the financials.
Jitendra Sharma — Group Chief Financial Officer
Thank you, sir. In Q3 of FY ’25, our operating revenue stood at INR682 crores, an increase of 16.3% year-on-year compared to INR586 crores in the same quarter last year. Revenue from US and North-America markets stood at INR353 crores, an increase of 37.1% on a year-on-year basis, driven by the new product launches and increased market-share. UK and EU formulation business grew by 2.6% year-on-year to INR258 crores. We witnessed mixed demand trends in this market. Australia and New Zealand market recorded revenue of INR47.2 crores, down by 2.8% year-on-year, affected by seasonality. The rest of the world recorded revenue of INR24.1 crore in Q3 of FY ’25, affected by geopolitical issues.
Gross profit was at INR384 crores, up 22.4% year-on-year. Gross margin expanded by 279 basis-points from 53.5% to 56.2% in Q3 of FY ’25. This was driven by a better product mix and lower raw-material prices. We recorded EBITDA of INR138.8 crore in Q3 of FY ’25, an increase of 4.3% year-on-year. The EBITDA margin for the quarter stood at 20.4%. The reduction in EBITDA margin by 234 basis-points was primarily due to addition of new employees at Teva facility and increase in freight costs. Profit-after-tax was at INR105.1 crores compared to INR83 crore in the Q3 of FY ’24, an increase of 26.6% year-on-year. EPS for the quarter was at INR2.3. The R&D spend for Q3 came in at INR11.8 crores, which was 1.7% of the consolidated revenue.
Now talking about the Nine-Month financial performance. In the Nine-Month of FY ’25, our operating revenue stood at INR1,914 crores, an increase of 18.4% compared to INR16,000 compared to INR1,617 crores in the same-period last year. The US and North-America market stood recorded revenue of INR908 crores, up 34.9% on a year-on-year basis and contributing 47.4% to the total revenue. UK and EU market grew by 6.4% year-on-year to INR758 crores, contributing 39.5% of the revenue. Australia and New Zealand market recorded revenue of INR176 crores, an increase of 13.4% on year-on-year basis. The rest of the world recorded revenue of INR74.3 crores. Contribution from these two markets stood at 9.2% and 3.9%, respectively.
Gross profit was at INR1,096 crores, up 29.1% year-on-year. Gross margin increased by 475 basis-points to 57.2% in the nine months of FY ’25. EBITDA for the period was at INR403 crores, an increase of 15.5% year-on-year. EBITDA margin stood at 21% compared to 21.6% in nine months of FY ’24. The drop-in margin is primarily due to the investments in the acquired facility and increase in freight costs. Profit-after-tax was at INR292 crores compared to INR237 crore in the Nine-Month of FY ’24, a growth of 23%. EPS for the Nine-Month was INR6.4.
In the Nine-Month of FY ’25, the cash from operation came in at INR131 crores. The capex during the period was INR129 crores, which is in-line with our plan to scale-up the acquired facility. We spent INR34.5 crores in R&D in nine months of FY ’25, which amount to 1.8% of the consolidated revenue. We continue to remain debt-free and the cash balance stood at INR669 crores as of 31st December of 2024. With this, I would like to open the floor for questions-and-answers.
Thank you very much.
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 the on telephone. If you wish to remove yourself from question queue, you may press star N2. Participants are requested to use answers while asking a question. Ladies and gentlemen, wait for a moment while the question queue assembles. First question is from the line of Dave from CAO Capital. Please go-ahead.
Agastya Dave
Hello, am I audible?
Mark Saldanha
Yes, you are.
Agastya Dave
Sir, thank you very much for the opportunity and congratulations on fairly decent set of numbers. Sir, I had two questions. One is the quarterly fluctuation in the — in the gross — in the EBITDA margins. So is there something you would like to call-out which happened during this quarter or probably happened last year same quarter, which is effectively giving an optical decline of 300 basis-points, around 250 basis-points in EBITDA margins.
Jitendra Sharma
Yeah, hi, this is here. So mainly, if we see the expenses which we have incurred that during the Q3 in this quarter against the last year same quarter, there was in employee cost and also in the freight costs like a major like contributory to this reduction in the EBITDA margin.
Agastya Dave
And so the employee cost I understand completely, sir, freight, is this still the problems are continuing, sir, there is still no resolution on that side?
Jitendra Sharma
No, it has started coming down. So I think that impact you should see in this quarter, in Q4. So I think this will no longer be a drag on EBITDA from this quarter onwards. And the employee cost also, I think as revenue grows, you know it will — it will be again no drag on EBITDA next one or two quarters.
Agastya Dave
So any headwind or tailwind from the from the raw-material costs?
Mark Saldanha
No, the raw-material cost is now quite stable. Obviously, it has over-time softened. So we don’t expect any increase right now on the raw-material per se. We do see a bit of stability arising out there, but like said, you know our employee cost because of the new facility, so that will happen. Yes. I will have a slight drag till operational leverage kicks-in.
Agastya Dave
Right, right, sir. That is completely understandable. Sir, the second question is a hypothetical one. I wanted to understand the setup of the distribution channel in the US and how the pricing mechanism is working out, especially for you guys? The hypothetical part of the question is that there is a lot of talk about the government there imposing universal tariffs on all pharma imports. So I’m assuming that if they actually do it, then we’ll also be impacted. But I also think that a lot of it will be passed on to the End-User.
So how exactly does the pricing pass-through mechanism work-in the distribution channel that we have today. What kind of lag can we expect if there is a price pass-through, first of all, can we do a price pass-through, will the market absorb it? How exactly will it work-out for the portfolio of products that we have? Are there any local competitors there who can become more competitive with respect to our offerings if there is a completely irrational import duty imposed on our products?
Mark Saldanha
So presently India does not have any tariffs being imposed. It is on China right now. That said and done, we really don’t know what will come tomorrow. It’s a very valid question so technically, if it is more if all countries or all major suppliers to the US, whether it’s raw-material or finished product, if tariffs are levied, I think it is fair to say that the price will be passed on, there will be a time lag that maybe depending on the inventory being held at old prices, so you are looking at possibly a six-month time lag to pass it on to the retailers or to the clients. But it is not impossible — it will be a higher possibility if it is uniformly if there is no advantage per se.
So there are local manufacturers in the US. We have a factory in the US, but we import all our ingredients from different parts of the world, including China. And obviously now that China tires have been have been you know, effective so technically anything that comes in from China, the cost will go up by whatever 10% if we do get it — continue getting it from China and if we don’t get any price reduction of those materials to compensate that tariff. So what’s going to happen is, obviously, the cost is going to go up and that cost will have to be passed on to the to the retailers. But that’s where India comes into play.
Yeah, if India does not have any tariffs, then India becomes more advantageous. But we also have our own manufacturing capabilities in India. So we are in a good spot right now where we are where we can leverage both our capabilities to mitigate any target implications. But if tomorrow if tomorrow there is tariffs on all countries, then literally whether you make it in US, whether you make it in China, whether you make it in India, it’s not going to matter, the cost will go up and that cost will have to be passed down.
Agastya Dave
Among the plants that you had about with respect to US that growth was coming — like is coming in, is expected to come in the future as well and it’s supposed to become a sizable market for us. So all those sales, were you planning to sell everything by making in US or something was supposed to be exported from India? How were — how are you planning the setup — the manufacturing and supply setup.
Mark Saldanha
So our distribution — all our distribution happens from US, but the manufacturing happens both from US as well as India and India contributes a substantial amount of manufacturing support to US. So technically, we do — we do have a balance and we do manufacture a lot in India, while we also manufacture in the US also. So the growth — the growth will be — obviously we will leverage low-cost manufacturing base, which is India and that will be always our focus point of manufacturing more in India and shipping out into the US.
Agastya Dave
And Mark, for exactly if I compare. Yeah, okay. I’ll go back-in the queue. Yeah. I have other questions. I’ll come back. Thank you very much.
Mark Saldanha
Thank you so much.
Operator
Thank you. A reminder to all participants, you may press and one to ask question. The next question is from the line of Aditya Pal from MSA Capital Partners. Please go-ahead.
Unidentified Participant
Hi, am I audible?
Mark Saldanha
Yes. Yes, you are.
Unidentified Participant
Yeah. Thank you so much for the opportunity and congratulations to the team for a great set of numbers. So if I were to just say that the reason that EBITDA margin has decreased this quarter and obviously the highlighted during the introduction call, it is — can I say that because our revenues from the Europe and UK market, maybe UK market didn’t turn out to be as good as we expected. And a sub-part of this would be that now that we have approval 34 products being filed in UK, do we see growth acceleration coming from this market? And see, this is — this is what will increase our EBITDA margin — EBITDA margin of that facility.
Mark Saldanha
Yeah. So there are two sets of questions out here. But so basically, we are very bullish on the UK market and it’s very difficult to analyze it in on a quarter-on-quarter basis. Definitely the season in UK, the winter was not all that great in UK. It was a warm winter, you could put it this way. So there was a bit of a seasonality part of in the UK softening of number. But that said and done, we are very bullish on UK. We see — we have a — we have a growth plan of doubling our revenue within the next five to seven years in UK also. So we do see UK. Being also a potential growth driver after the US. So we have a robust product pipeline you know which is awaiting approvals plus what is being filed and plus what is being developed. So we have an exhausted pipeline out there.
The UK is a much more matured market compared to the US. So we do see that revenue getting unfolded when — as and when approvals do come in-place. With regards to the Teva plant, you know, it is — it has to evolve. We still do believe it will do INR800 odd crores or INR800 plus odd crores, but it is a process. First is obviously get the plant operational to the level we want. Then the second step is to increase the capacity and the third step is to get all the variations in-place so that the plant — that increased capacity can be utilized. We can’t do — we can’t go — we can’t skip the process because we can’t go and get the business or get the variation before the capacity is there, whereas you will not be able to deliver the service needed out there. So it is a process that one has to go through. Until then, in the pharma industry, you invest today, you see returns after later.
So out here you have to get your scheme ready, you have to have your headcounts, you have to have highly qualified people, you have to invest, you have to do the training. And so you have a gestation of six months out there before you actually see a optimization or operating leverage happening once they come on-board. So there will be a time lag. I’m not saying this quarter, you will see what we want to see, but definitely from the first-quarter, I mean from the first-quarter of next year, you know, sorry, from the next quarter, you will probably see a much better.
Unidentified Participant
Fair enough, fair enough. So in terms of Teva, right, Teva, are we — are we — on the operational front, operational expenses that is employee benefit expenses and other expenses that we’ve invested in Teva, are we done with that process or do you see that there’ll be a slight bit more ramp-up in our employee benefits business, which is today it’s INR88 odd crores. Do you see this ramping-up furthermore? This is the run-rate along with somewhat and increases, there should be the run-rate of equipment in terms of.
Mark Saldanha
80% of the employment investment is already done in terms of people. I don’t see a big variation in people. From a capex point-of-view, there is still a small percentage which is left in capex to get us to what we want to achieve. But that, you know, once we achieve the next milestone of INR850-odd crores, then we will top of doing INR80-odd crores. So today, we are doing maybe INR30-odd crores on a month-on-month basis, which is INR360-odd crores in a year. That’s our run-rate and we want to now hit INR50-odd crores, which will be INR600 odd crores. And then we talk of INR80 crores, which will be basically INR1,000-odd crores, INR1,000 odd crores in a year.
Unidentified Participant
And if I can just slip in one last question so just wanted to understand more from a longer-term perspective. So now we have two plants, cumulative capacity would be INR3,000 crore 3.5 crore odd thousand crores of revenue generation. But now — and we plan to achieve INR3,000 odd crores of revenue milestone by FY ’26 and then that is the capacity, then there is an entire Europe market that we were planning to tap. So from a longer-term perspective, how do we look at the company? One is from the capacity once we hit 3,000 and the other from a geographical point-of-view.
Mark Saldanha
Yeah. So basically — so basically from a company point-of-view, obviously, we no longer talk of INR3,000 crores. We are already working towards the INR4,000 crore mark, the business model and the strategy. Our growth drivers will still be the top two countries that we talk about always, that’s US and UK. From a geography point-of-view, we basically are working on — we are working on Europe. So we are in dialogue with companies, but that will — that I think should be more from a medium to long-term outlook.
There is no short-term outlook in Europe per day. So immediate revenue drivers will be the two markets that we already-strong in and getting stronger but from a medium-to-long term you will see Europe contributing and you will see the markets that we are already into growing, you know, doubling our revenue in the markets that we already doing well.
Unidentified Participant
Understood, understood. So from — now once we achieved INR3,000 crores in FY ’26, do we see capacity being constrained because as you rightly highlighted, right, that pharma business is a long gestation for your business. Even if we start a greenfield or brownfield project, it takes its own way time for the — either the plant to stabilize or to get these regulatory. So now because once we achieve IN 3,000, there might be some capacity constraints that we might face in the shorter time period, not from a medium to long-term perspective.
Mark Saldanha
So we do see our present capacity taking us beyond INR3,000 crores and probably closer to INR4,000 odd crores. But you know, but the question is by the time we start crossing INR3,000 crores and we talk of INR4,000 crores, our business model will take shape to go to the next level up already. So that’s where eventually we would need to look at capacity infrastructure gain to support the growth beyond the INR4,000 odd crores.
So it’s not that we wait for us to achieve INR3,500 crores or INR4,000 crores and then look at our facility. We would — because obviously then our target would be INR5,000 crores, right? So we would have to probably look at a facility maybe mid of next year, you could say or towards the end of next year to take us beyond INR4,000 odd crores.
Unidentified Participant
Perfect, perfect. Sounds exciting. Wishing you and the team all the very best and thank you so much.
Mark Saldanha
Thank you very much.
Operator
Thank you. The next question is from the line of Binov Pathi from Elara Capital Securities. Please go-ahead, sir.
Bino Pathiparampil
Hi, thank you. Good evening again. Mark,, we have heard in bits and pieces from large Indian players about a renewed focus in the OTC space. Are you seeing any increased competition from larger Indian players?
Mark Saldanha
Sorry, I didn’t get you. Did you say retail players or I didn’t get you. Could you repeat it again?
Bino Pathiparampil
Yeah, sure. Off-late, the large Indian pharma companies, some of them have indicated a renewed focus on the OTC segment in the US. So are you facing any increased competition from the larger Indian pharma players in the US market?
Mark Saldanha
Well, it — you know, it’s — I mean, this is not a market that we’ve invented, so we can’t say it is like our — it is something very normal we have invented. It’s been there. There are bigger players than even Indian companies out there, there have been Indian companies. So I don’t think — I don’t think anything has changed. And I don’t think anything will change at least in the near-future as to how it operates. We obviously have an added advantage. We are one-step ahead of the industry. So we have that advantage to our side. But nevertheless, I don’t — like I said, it’s the nature of the beast, right? So it’s not something — it’s not something that concerns us right now.
Bino Pathiparampil
Understood. Second, coming to M&A, you were, I believe, open to looking at some small bolt-on acquisitions in new geographies, especially Continental Europe. Anything coming around on that?
Mark Saldanha
We are in dialogues — we are in dialog with two companies right now as we speak. We have very initial set of dialogues. We are far away from any due-diligence or putting pen to paper, but again, it’s difficult. Many of times we’ve gone down the road, we haven’t gone to a due-diligence stage and we had — we didn’t come to paper for whatever reasons. So it is very difficult to actually — it’s got a bit more difficult to bridge the expectation gaps of — in M&As. So we are still optimistic. We still we still work towards achieving those objectives, but we are very conservative in what — in our approach so that we ensure that our shareholders get their turn-on investments.
Bino Pathiparampil
Understood. One last question for Jitra. Our depreciation amortization expense has come down Y-o-Y. Why has it happened despite the facility ramping-up?
Jitendra Sharma
Yeah, Binu, see, when we acquired facility, we got the valuation done like as per the requirement. And then basis the remaining life of the few assets, which we got in acquisition, there was accelerated depreciation we had to provide in the initial quarters. And subsequently now it has normalized. So that’s why you see a bit of lower depreciation in this quarter. Now, of course, as we are doing more capex, eventually it will go up only. So I think it is because of the accelerated depreciation based on the remaining life of the few acquired assets from Teva, the depreciation was high during previous quarters.
Bino Pathiparampil
Understood. Thank you.
Jitendra Sharma
Thanks.
Operator
Thank you. The next question is from the line of Pipesh from Manya Finance. Please go-ahead.
Unidentified Participant
Hi, am I audible?
Mark Saldanha
So can you speak question here.
Unidentified Participant
Yeah. My question was actually reverse of what the first participant had asked. Firstly, who is the major competition in our OTC segment in US? And if India is not no tariffs levied on India, will that give a s a greater advantage over its competitors abroad?
Mark Saldanha
Well yes and no because most of the players do originate from India like Beno mentioned there are players originating from India so we are at level three but India always gives us a low low-cost manufacturing base advantage and we leverage that out when needed. If tariffs do come into India, then I guess it’s level fields for everybody and that’s where we have to then look at the cost implications and then work on passing those cost implications down if we don’t get any price advantage. So presently it is not there on the horizon but you never know you know, we never know-how politically things change very, very rapidly. So we always hope for the best. So sorry did I answer your questions or is it because.
Unidentified Participant
You can continue on if you want to add-on anything?
Mark Saldanha
No, no, I’m fine. I mean I just — I try to club both your questions and give you a single answer. So I’m just trying to figure out.
Jitendra Sharma
If there are no tariffs on Indian products, then definitely India, India will have that edge to answer your question.
Unidentified Participant
Right. No, I was trying to understand that whether will get a better edge than other companies. But since you said that most of the competition is from India, but again, just modifying this question, since we have a manufacturing facility in USA, is it possible for us to ramp-up this facility if need be, because I mean trump being trump, we can get up in the morning and just announce some tariffs and I mean he’s going to meet Mr Modi maybe in this week or maybe tomorrow and looking at him, he might just remember, okay, I import a lot of drugs from India. So let me put tariffs. So if that kind of thing happens, can we expand our American facility or can we have a significant advantage — I mean, can we use that as an advantage to our company?
Mark Saldanha
So basically, we’ve got to understand when tariff sign are put in play and it depends on how they put sweeten tires. Let’s take, for example, China, right? So they put sweeten tires on China that anything and everything even what you said that Korea has a parent indication. So basically, now our US plant imports material from Europe, from India, a lot from India, a lot from China, some from Europe. So technically, all the cost costs will go up because the raw materials originate from countries which have tariffs, you know.
So the cost will go up, whether you if you make it in US and you know that said and done, the finished product cost will also be tariff or to that level. So there is no escaping in terms of cost implications. We just hope that we can leverage that advantage being in the low-cost manufacturing base to our advantage I still believe I still believe that all let me put it, rephrase it. I am hopeful that India would not be a tariffs and and that way we can have a balance in that.
Unidentified Participant
Right because these are uncertain times of if we can have opportunities for our company in this, it will be great. Also, just wanted to understand we are increasing — we are planning to double our low-cost manufacturing in India from INR8 billion to INR16 billion. When is that going to happen?
Mark Saldanha
That’s already happening, right? So we have already — we have already — the has — has come — has done — has finished its first objective, achieved its first objective, which we had kept INR30 odd crores of revenue and now the next milestone is INR50-odd crores and then INR80-odd crores. So we have achieved the first objective. So we — so if we have broken-down to three phases, first phase is complete, we are in the second phase and then we have to look at the third phase.
Unidentified Participant
Okay. And if I can squeeze in one question that what is the capacity utilization of all the plants right now?
Mark Saldanha
So right now, Teva, our utilization is very low, maybe 20-odd percent. I would be surprised if it’s 20 odd percent, it’s low. So because we have increased capacity because we have increased capacity, our utilization is low. But that gives us a potential of growth, right? So we are working towards utilizing that capacity to fuel our growth to our next milestones.
Unidentified Participant
What about the rest of the plants?
Mark Saldanha
The rest of the plants are at 70 odd percent.
Unidentified Participant
And what is the — I mean, maximum they can go? Sure, sure. But what is the maximum they can go, if you can just answer that?
Mark Saldanha
I would like to say 85%, 85%.
Unidentified Participant
Thank you so much.
Operator
Thank you. A reminder to all participants, you may press star and one to ask question. The next question is from the line of Hil Nandu from Capital. Please go-ahead.
Hiral Nandu
Thank you and congratulations for a good set of numbers. My one question on tariff has already been asked and answered by you in the previous participant question the second question broadly, I would like to understand, in the last 10, 12 years of our journey, we had a peak margin of around 25% and maybe the PAT level 18%. So when do we see we reaching towards that goal in near-future or in what timeframe we have it for us?
Jitendra Sharma
Again difficult to answer this question so we are at, like you know around 21% right now. And it all depends. I think as sales are growing, we are experiencing operating leverage benefit kicking-in and that definitely will help us to improve our margin. So it will depend on the overall market situation and you know, our market-share. So given timeline is difficult.
Hiral Nandu
Okay. But is there a possibility because that was one of the case with some, I guess some surprise gain or that margin are still achievable or possible with whatever conditions remain favorable and all. So can we expect we going back to that margin at some point in time with some positive and all?
Jitendra Sharma
I would say in business definitely it is possible. Again very difficult to give timeline or we cannot give any specific commitments on these kind of numbers.
Hiral Nandu
Sure. Sure. No problem. Thank you. Thank you and all the best.
Jitendra Sharma
Thank you.
Operator
Thank you. The next question is from the line of Chirag Shah, an Individual Investor. Please go-ahead.
Unidentified Participant
Yeah, hi, Mark and hi, rest of the management. First of all, I’d like to thank you for the tremendous value that you have added to the investors over the last three to four years. Most of the guidances and vision which you set for us, you have exceeded them. I have two questions. One on a longer-term, how do you envision this company now by 2030? What are the large goals that you’re working towards? And the other one is short-term. You’ve targeted INR3,000 crores by March ’27, but you will be INR2,600 crores by the end of this year. So are you going to revise that target because the target — short-term target looks very small. So those are the two questions. Thanks.
Mark Saldanha
Well, I I’ll maintain my target nothing is small in this industry. We we face geopolitical uncertainties on a on a daily basis, like you rightly heard one of the investor says it depends on which side the person — the president wakes up, but we will — we will maintain the target of INR3,000 odd crores. But we no longer sure we no longer talk of INR3,000 crores now. Now internally, we are already — our team is already working on the next milestone, which is INR4,000 crores. So when you talk of 2030, I would like to see beyond that, if you ask me my frank opinion, but it’s difficult to give a give a number right now because you know that makes it a statement. But we would like to be — we would like to keep our next goal after INR3,000 to a next milestone of INR4,000 crore and then go on to INR5,000 crores.
Unidentified Participant
Yeah, and how does new lines of offerings come into your larger term goals and a little bit light on the API goals that you had set yourselves?
Mark Saldanha
The API — API goal will play — the API integration will be — will be a part of our strategy like we’ve always said. It was not going to be — we are not an API company to believe that is going to make our foundation on — or create a foundation on, but it will just help us to basically leverage during — during uncertain times.
Obviously, nobody expects to go through a core phase again and we hope that we’re going to see those days. But — but you know we just want to be — we just want to cross our Ts and our eyes where that is concerned. But in terms of our growth strategy, our growth strategy is pretty much crystal-clear. Obviously, US, you know, like we no longer talk of 200 million.
Now we talk of 300 odd million. We are working towards 300 million and then we will obviously revise our goal before we reach. So the same way for UK, we have a business module to double our revenue may take five years, seven years. So if you try to put all this pieces in, from where we are today, obviously, we are looking at a different number if everything unfolds the way we want it to unfold.
Unidentified Participant
Okay. Thank you. Thank you very much and great job.
Mark Saldanha
Thank you.
Operator
Thank you. The next question is from the line of Dhruv Maheshwari from Ventures LLP. Please go-ahead.
Dhruv Maheshwari
Hi, thank you for the opportunity. I just had a small question. What was the freight cost for the quarter?
Jitendra Sharma
Well for the quarter freight cost will be in the range of approximately INR40 odd crores.
Dhruv Maheshwari
Okay, thank you.
Jitendra Sharma
Thanks.
Operator
Thank you. The next question is from the line of Dave from CAO Capital. Please go-ahead.
Agastya Dave
Thank you very much for allowing me the follow-up. Sir, there has also been a lot of volatility in FX. So how are you handling the cross-currency moves which are happening? And have you changed your hedging policy in any way or are you running everything open? Because as of now, net-net, we should be a net beneficiary of it. But I’m not sure. I just wanted to know your comments, your views also on it.
Jitendra Sharma
So our major revenues are coming in US dollar and in GBP. So in terms of — so we have seen a lot of volatility in ForEx rates of late. So as a policy, we definitely do some forward selling of our revenue in foreign currency. But as a percentage, for US dollar, we keep it very small because we see rupee will have a depreciating trend. So by and large, our US dollar exposure, we keep it open. And the GBP, definitely we see more volatility and that’s where we have a bit higher like forward sales on GBP. So broadly, we follow this policy.
Agastya Dave
Okay. So final question. So excluding the possibility of tariffs and the currency fluctuation, how are the realizations moving? What kind of drop have you seen Y-o-Y in this quarter for — for your product basket. Is it still mid to slightly high-single-digits or has it changed?
Jitendra Sharma
So we haven’t seen any drop as such. No, there is no drop-in our realizations.
Agastya Dave
So absolutely nothing. You — on a like-to-like basis, it would be at zero?
Jitendra Sharma
So I couldn’t understand your question. Can you repeat that?
Agastya Dave
So your product basket, the prices of your products have this fallen Y-o-Y for this quarter?
Jitendra Sharma
No, no. There is no change in our pricing. There is usual — see, there is a usual pricing pressure on RX, which we keep getting on our RX basket of product. But as such, there is no reduction or drop-in prices on account of tariffs. As such, there is no movement.
Agastya Dave
Including any tariffs or excluding any ForEx volatility, have you seen any?
Jitendra Sharma
No, no, no, no. It is business-as-usual for us, though there is volatility in ForEx market, but our overseas business pricing, there is no impact on that.
Agastya Dave
Perfect, sir. Thank you very much for giving me the opportunity. All the best, sir.
Jitendra Sharma
Thank you.
Operator
Thank you. A reminder to all participants, you may press star and want to ask questions. The next question is from the line of Rohan from Capital. Please go-ahead.
Unidentified Participant
Yeah. Thank you for the opportunity. Sir, my first question is that we have an other income of around INR28 crores this quarter, which seems much higher-than-normal. So what does it include?
Jitendra Sharma
So other income has two broad components. One is interest and other is the foreign-exchange gains. So during the quarter, we definitely had a better foreign-exchange gain. And of course, we have a good amount of interest income also.
Unidentified Participant
Sir, could you quantify the foreign-exchange gains this?
Jitendra Sharma
Foreign-exchange gain during the quarter was in the range of INR9 crore to INR10 crores.
Unidentified Participant
Understood. And sir, in your presentation, when you have explained the gross profit margin sequentially, you said that margin declined primarily due to product mix. So what is it in the product mix this quarter that caused the decline is more US slightly margin-dilutive? Is there any more color on the product mix?
Jitendra Sharma
So in the quarter two, we had a bit high gross margin, which was at the — which was at 59%. And like you know, I think at that time itself, we were very clear. We have given a guidance that these margins are not sustainable. So I think those margins are now becoming more of a — now at a level which will be more sustainable.
Unidentified Participant
Okay. So the Q3 margins of around 56%, we should be in the ballpark of this number going-forward?
Jitendra Sharma
Yes.
Unidentified Participant
Okay. Got it, sir. Thank you and all the best.
Jitendra Sharma
Thank you.
Operator
Thank you. The next question is from the line of Hardeep, an Individual investor. Please go-ahead.
Unidentified Participant
Sir, can you hear me, sir? Yes, we can. Yeah. Sir, I have a very basic question. I have heard a lot of these analysts on the business channels mentioning that CDMO is a big opportunity for Indian pharma companies. So now I wanted to know that where does our company fall into? Are we into this — would we classify ourselves as CDMO players, sir.
Mark Saldanha
No I, I don’t. I don’t think we are classified as a.
Unidentified Participant
Right, right, thank you.
Operator
Thank you. A reminder to all participants you may press char and one to ask questions the next question is from the line of Niralish Shah from Ashika Institutional Equities. Please go-ahead.
Nirali Shah
Hi, just one question on new products that we are planning to launch. What kind of therapy are we looking at in that? And if we are not giving any breakup on therapy wise for quarter-on-quarter basis. So it would be really helpful if I could get that, which therapy are we targeting?
Mark Saldanha
So it is into pain, it is into digestive therapies. So we have a bit of a cop and cold analogy. So it’s pretty broad-based. It is not one therapy that we are focusing on, but it is more diversified into the areas that we already are into. So we don’t give a breakup of therapy wise, there’s so much of data we’ve already given. So but maybe annual annually we basically give up the segments that contribute the maximum to us.
Nirali Shah
So the new products are into the top three therapies that we are targeting the pain, the cough and cold and the Jessic all the new products are targeting top three of these therapies.
Mark Saldanha
Yes.
Nirali Shah
Okay.
Operator
Thank you. The next question is from the line of Dipesh from Manya Finance. Please go-ahead.
Unidentified Participant
Yeah, just a quick question. I think we have around INR630 crore INR660 crores in our — as a cash balance. What are we going to do to deploy this to get the same ROE which our business is getting? And secondly, I think you mentioned something that you’re going to look at a new project or new company once a manufacturing facility once to increase your targets to INR4,000 crores. Are we looking anything and say?
Mark Saldanha
Yeah. Go for my next question later. Yeah. So the answer to your question, are we looking at targets? We’re always looking at targets and we are in dialogue and we are exploring that’s where cash reserves are needed because when we find something interesting we need to you know we need to have the capability of closing that possibility. These are always a capital-intensive assets that we look at. So technically you know you need to have a bit deep pockets where that is concerned.
So definitely we are looking at increasing capacity by the end of next financial year that may be organically or inorganically, most likely we would love to do organically and M&As is another thing that we are also exploring. So all put together, I think that’s where the capital reserves — that’s where reserves need to be intact.
Unidentified Participant
So will we be building a watches by raising fresh capital in terms of a QIP or a preferential to you know for the next foreseen expansions for acquisitions?
Mark Saldanha
No, I don’t think so. I think we have the reserves — we’ve kept reserves for that, cash reserves for that and I don’t think we need it right now.
Unidentified Participant
That will suffice for the next acquisition.
Mark Saldanha
We are hoping we don’t — we don’t do some crazy acquisition. Our history will say that we’ve never gone into some raw big-ticket deals we are not with it, but we we try to avoid we try to avoid any risk or we could say we do a risk mitigation to see that there is no devaluation on what we acquire. So we approach M&A as a bit different than most of the Indian companies do.
Unidentified Participant
Okay. And the promoter holding is around 43%. Do you think that I mean you are comfortable with that or you want to increase this promoter holding?
Mark Saldanha
I didn’t get you. Do I want to?
Unidentified Participant
Increase this. I mean, you hold around 43.8%, right? So are you planning to increase this stake in the near-future?
Mark Saldanha
Not I’m not getting much thought honestly on that and I’ll explore it at a different time. But right now, I’m not getting much thought to that.
Unidentified Participant
Because there have been some open-market transactions from Sandra, but I mean in that way, if I just wanted to know whether the promoter wants to increase his spin in the game or you know.
Mark Saldanha
First of all, like I said, I’m not giving some thought and Sandra, I mean she’s free-to buy from the market if she really wants to buy. So it’s not — it’s not a strategic buying, like you know. So technically, when we do give it a thought, we will go and acquire some market.
Unidentified Participant
Great, great. Thank you so much, Mark. All the very best.
Mark Saldanha
Thank you.
Operator
Thank you. A reminder to all participants, you may press char in one to ask question as there are no further questions from the participants, I now hand the conference over to the management for closing comments. Over to you, sir.
Mark Saldanha
I thank you all for taking the time and interest in our company and totally appreciate all the support and the good wishes for the company. Have a great evening and be safe. Take care. Cheers.
Operator
Thank you. On behalf of Elala Securities India Private Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you