Orchid Pharma Ltd (NSE: ORCHPHARMA) Q4 2025 Earnings Call dated May. 26, 2025
Corporate Participants:
Unidentified Speaker
Manish Dhanuka — Managing Director
Mridul Dhanuka — Whole-time Director
Analysts:
Unidentified Participant
Vishal Manchanda — Analyst
Sajal Kapoor — Analyst
Viraj Parekh — Analyst
Rupesh Tatiya — Analyst
Rohan Shah — Analyst
Narendra — Analyst
Richa Chowdhary — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome TO Orchid Pharma Ltd. Q4FY25 earnings conference call hosted by Systematics Group. 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 your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Manchanda. Thank you. And over to you sir.
Vishal Manchanda — Analyst
Thank you and good evening everyone. On behalf of Systematics Institutional Equities I welcome you to the Q4FY25 earnings call of Orchid Pharma. We thank the Orchid Pharma management for giving us an opportunity to host the call. Today we have with us the senior management of the company represented by Mr. Manish Dhanuka, Managing Director, Mr. Mridul Dhanuka, Full Time Director and Mr. Sunil Kumar Gupta, Chief Financial Officer. I’ll now hand over the call to the company management for their opening remarks. Over to you sir.
Manish Dhanuka — Managing Director
Thanks Shiv. Good evening everyone and thank you for joining Orchid Pharma’s Q4 financial year 24 earnings call. I’m Manish Dhanuka, Managing Director and over the next few minutes I will walk you through our performance for the fourth quarter and full year ended 31st March 25th and the status of our key growth projects and other developments. In the fourth quarter we posted a sales of rupees 237 crores up by 9% over the same period last year and EBITDA of rupees 40 crores for the full year. Sales rose to 922 crore as against rupees 819 crore last year, an increase of 13%.
And the EBITDA was rupees 156 crore as against rupees 140 crore last year. We achieved these gains while absorbing a rupees six crore one time expense in Q3 for GMP inspections. During the last six months we were inspected by both European and US authorities and both the inspections were completed satisfactorily. Besides the 6 crore, we also incurred a 9 crore operating draft from our Antimicrobial Solution division which was started last year and is catering to the hospital sales business. The last two quarters have been especially challenging in two of our larger oral solid products and we see no meaningful improvement in current quarter either.
Against this backdrop, our focus has been on mix management and operational efficiency going forward. The pressure on demand and pricing is still there and expect this year numbers to be a little muted. Turning to the AMS division, the unit closed the year with a team of 70 members with engagements with over 500 physicians. Although still in its build out phase, the division was EBITDA negative by about 9 crores and is likely to remain a drag for roughly two more years before turning profitable. We are comfortable with that investment horizon because businesses on brand image must be built patiently and credibly.
Let me now update you on our projects 7ac project. First project construction is going on and detailed engineering is completed to the extent of 50%. We may be looking at some delay in execution of the project. Considering some challenges at the site, we could be looking at the mechanical completion date of December 26th which is an increase of six months from our earlier estimates. The first commercial product is targeted for March 2027 coming to our NCE NMET Azurbactam in India. The product is performing better than our estimates with strong early traction for orblacef, our brand and the CIPLA partnered launch at the same time.
Electrotherapeutics insolvency filing in Germany clouds near term commercialization in the United States and other international markets. We are actively evaluating legal and commercial pathways to safeguard our interests and are in dialogue with our advisors and potential partners. Development and project execution remains on schedule for this project with the first validation batches expected towards the last quarter of 2026. Commercial launch will depend on regulatory approval in India, but it is expected to be in the second quarter of calendar year 2027. Corporate structure the National Capital Law Tribunal has NCLT has cleared the merger of Dhanuka Laboratories Into Orchid Pharma Ltd.
We aim to complete the legal process within this financial year and expect the combined business to generate revenue in excess of 1500 crore and EBITDA of roughly 175 crore, offering investors a clearer, stronger platform from which to evaluate our progress. Looking to financial year 26, we anticipate a muted year given continued pricing pressure and the ramp up of CapEx on the 7 ACA facility. Nevertheless our mid teen margin expiration remains intact supported by volume growth, mix optimization and disciplined cost control. We also intend to file 2 to 3 differentiated cephalosporin ands for the US market in the next 12 to 18 months.
Keeping Orchid at the forefront of complex anti infectives for the coming future to close. I would like to thank our employees for their dedication, our partners for their collaboration and you, our shareholders for your confidence. The journey from rescue to reinvention is rarely linear, but with backward integration, branded stewardship and focused global filings firmly in place, we believe ORCID is well positioned to create sustainable value while advancing its mission. Thank you for your attention. We are now happy to take your questions.
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 SHAR and one on the touchdown telephone. If you wish to remove yourself from the question queue, you may press CHAR and two participants are requested to use answers 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 Sajal Kapoor from Anti Fragile Thinking. Please go ahead.
Sajal Kapoor
Yeah, thanks for the opportunity, Manish. We discovered that these business development activities in the US faced a significant setback because few customers could utilize Orchids products due to the site limitations. Right. As you called out, is this limitation or limitations? Are they related to facility design and the GMP considerations or something less serious?
Manish Dhanuka
Limitation is not pertaining to our facility. Actually two of our customers, one in the US and one in India who was exporting the finished formulation to the U.S. they faced the U.S. fDA setback. So as a customer they could not buy the product from us. It was not in our facility, it was in their facility.
Sajal Kapoor
Okay. Right. So. And we are exclusively dependent on those customers to initiate our business development into the US market. Right?
Manish Dhanuka
Yeah. As of now, yes. I mean we only had the API facility, but the new project that we are setting up in collaboration with Shinogi, like under licensing from Shinogi in which we shall be manufacturing Sepidro 4. So we have the opportunity to file NDS from here. And also we are trying to work through a CMO which is USFD approved to file our ANDA’s from their site. So we are progressing in development of our own andas so that we are not dependent on just the customers for the consumption of our raw material.
Sajal Kapoor
Okay, no, that’s helpful. And then looking at the balance sheet and cash flows this time around, obviously sudden surge in receivables and inventories is causing a lot of, you know, cash to be tied up there. And can you shed some light on this? I mean, are we trying to push some sales into the channel inventory and that’s why this sudden surge in receivables or are these the sales that only went out in the month of, you know, Feb and March? And obviously, you know, we’ll have to face. Because the operating cash flows are down significantly by.
Manish Dhanuka
Yeah, it’s largely the latter. Only the sales happened in the last two months. So those receivables should be realized in the next two months. I mean, would have been probably realized by now. And the inventory was a little higher because of the pricing pressure. We did not give in to selling at lower prices. So. And you know, as we had ramped up our capacities, so in expectation of generating higher sales, we had created some inventory which will be liquidated over the next few months.
Sajal Kapoor
Sure. And in terms of this pricing pressure, Manish, I mean, clearly we would have seen that coming given, you know, the standard operating procedure from China the moment they figure out that there are capacities getting up and running. So Benji Orobindo as an example, they play this by the book really by squeezing the raw material pricing. So all this should have been part and parcel of our original or initial planning, Right? Or did this come as a complete surprise?
Manish Dhanuka
See, my experience, I have seen the B2B business is generally cyclical. You know, it runs over few years. As the demand grows, everybody feels comfortable and then people ramp up their capacities. So for a certain phase of, say six to eight months, the supply position becomes a little over the demand and it will stabilize over the next few months. So I’ve seen these cycles of every two, three years over last 20 years. We are expecting maybe just like we ramped up capacity, you know, having phased two, three good years in the last three years, last few years, maybe competitors also ramped up their capacity.
Sajal Kapoor
No. Okay. And then finally on this AMS division, what is the targeted steady state RO C? Assuming we break even sometime around F28 and then we build from there. I mean, what is the back of the envelope aspirational rock from this venture?
Manish Dhanuka
So we do expect to break even in next two years because we just launched in the month of October. So I would say last six months were kind of learning for us. And fortunately we had our own molecule to piggyback on, which gave us a very good head start and a good recognition with most of the large hospital chains. And with this learning, we are developing our sales and marketing model which is differentiated from the traditional one. And we hope in this year we should get a, I would say a good growth and next year probably we should be able to break even.
And the major objective is to market Sepidro coal because this product will come come for commercial sales in 2027. So we wish to be present in almost all big hospitals so that we can launch Cefidrocol successfully which will be a very critical molecule for you can say last resort antibiotic for the hospitals. And if we can launch it exclusively, that will be a big boost to our business.
Sajal Kapoor
Understood? Understood. Thank you for responding all my questions.
Manish Dhanuka
Thank you.
operator
Thank you. Participants who wish to ask question may press star and one at this time. The next question is from the line of Viraj Parekh from Carnelian Asset Management. Please go ahead.
Viraj Parekh
Good evening Manish. Good evening Mridal. Most of my questions were asked by the previous participants. Just a few bookkeeping questions. So as we grew in like you know, 12 and a half, 13% in value this year, could you quantify the volume growth? And second would be, I’m seeing a little bit, you know, slightly more increase in our employee, employee expenses, other expenses. I’m assuming there would be some kind of one off cost but if you could just you know, give me some kind of a breakup of the increase in employee expenses for this year.
Mridul Dhanuka
Yeah. Thanks Viraj. So in terms of volume, roughly 18 to 20% growth is there yoyo. And to answer your second question on the employee, you know largely the it is a drag due to the AMS where we have hired the team and the sales have just started. So roughly, practically you can assume the entire thing of the 9 crore DAG is kind of the people cost of AMS division.
Viraj Parekh
Right. Second question would be we’ve given like you know the NCLB approval for the merger and we are expecting a company at a 1500 crore top line, 175 crore average. Is this considering the current pricing pressure or is this an optimistic scenario which we are looking in FY26 as company as a whole?
Mridul Dhanuka
This is the merged numbers. Viraj. This is not Orchid individually. This is the merged entity numbers.
Viraj Parekh
Right. So I’m asking from the merged entity point of view. So do we see these numbers improving or are these like steady state numbers as on FY25 given the guidance we are giving muted for next year, how should we look at merged entity level?
Manish Dhanuka
So we have not considered the benefits of the synergies in this. We have just kind of added, you know, mathematical addition of what happened this year. But the savings from synergies as we, you know, merge. To merge two businesses would be an additional margin. Sure.
Viraj Parekh
Just last quick question before I get in line. You highlighted in your initial remarks that N. Metazobactam India is performing better than your expectations. So can you just elaborate more on the numbers of, you know, where we are penetrating and some kind of a margin profile, you know, for this product in the Indian market. Secondly, unfortunately as Allegra has, you know, declared insolvency, you highlighted that you are talking strategies with your legal team. If we can understand what options are available to us at this point in time and.
Mridul Dhanuka
Yeah, thanks Viraj. Unfortunately this is a public call so I will not be able to share with you the options once we have them. Legally we have to figure out our strategy. So it’s a little too early because the announcement has just come. We are evaluating all the agreements in place. So right now we don’t even have any access to documents from them. So it’s going to be a long process. The idea is how do we maximize our return. And on your second question, I cannot share any margin profile for Hermetazobactum in India. I can definitely tell you it is better than our blended gross margins as they appear right now.
And in terms of numbers of expectations, roughly about 10,000 patient worth we have done. While our estimate for full year was 10,000. We have been managed to do that in half year of last year.
Viraj Parekh
Understood, Understood. Thank you so much. I’ll get back in queue.
operator
Thank you. The next question is from the line of Rupesh Tateya from Sri Rama Managers pms. Please go ahead.
Rupesh Tatiya
Hello sir. Thank you for the opportunity. I have several questions. So first starting with Electra. So we, I mean some idea if you can give about. We had some royalty due, right for last two, three quarters. Have we received that? And I mean in terms of classification we stand where we are secured creditor, unsecured creditor, receivable. I mean you know, receivable party. How. Where do we stand in terms of classification of Orchid Pharma?
Mridul Dhanuka
Yeah, thanks. So on this question Allegra is right, not appointed a preliminary administrator. So we only have a notice of the process starting. So because they are Germany based we don’t even know as of now the rules of that system. So I will not be able to tell you where we stand in that. And in terms of the royalty, the first quarter number we had received Q2 payments were not received. Q2, no sorry, Q2, Q4 of calendar year. Last year we received the sales numbers but we did not receive the royalty amount. And for Q1 of this calendar year, which is Jan to March, we have not even received the sales number.
So we don’t know any more details of how much royalty would have been there for that quarter.
Rupesh Tatiya
Okay, okay. And then I mean in terms of licensing agreement with Electra, when her orchid did, were there some clauses in if Electra was, you know, became insolvent? I mean, or that was like, you know, completely. No clauses were there. And now we have to find a way.
Mridul Dhanuka
It’s a very good question, Rupesh. Unfortunately, we are still evaluating that those options because those agreements are more than 10, 12 years old. So we are evaluating all our options.
Rupesh Tatiya
Okay, okay. And then the second question is.
Manish Dhanuka
Sorry, it’s too preliminary for those things. We would like to, you know, first understand from the lawyers and then maybe make a statement.
Rupesh Tatiya
Okay, okay, okay. We will wait for that. And then second question is Danuka Laboratories, can you give annual numbers, annual sales, EBITDA and tap?
Manish Dhanuka
Yeah. So the sales was 506 crore and EBITDA was around 35 crores.
Rupesh Tatiya
Okay. Okay. Actually I’m looking at the merger notification you sent to exchanges. Nine months. EBITDA itself was 3940 crore. Right. So with the in Q4 there was a bit of loss.
Manish Dhanuka
Maybe, maybe I stand corrected. You know. 48 crore.
Rupesh Tatiya
Okay, okay, okay. And. And in terms of the injectable innovator production OGI product, I. I am confused whether the timelines are calendar year or financial year. So you said Q4 of 2026 is when the construction will complete. That is December 26th or March 26th.
Manish Dhanuka
No, December 20th. So that was calendar year. So the validation batch sometime around end of calendar year 26. And then it will depend on how long it takes for registration in India. But I am being a bit optimistic considering the, the, you know, doctors are already importing the product although it is 10 times more expensive and using it for patients. So I am hoping that DCGI will give us a faster clearance and we can start selling in say, September of 2027.
Rupesh Tatiya
Okay, okay, that’s, that’s very clear. And, and India market maybe. I mean are you planning to share at least annual annual numbers? At least either, either I don’t know, revenue sales or I don’t know, number of descriptions or something.
Mridul Dhanuka
Yeah. So Rupesh, actually because our license agreement is in public domain, it is a cost plus model and right now we are not sure of the price which GARP will allow us to sell in India. So without that it was Very difficult to tell the numbers and what is the price elasticity. So in terms of potential.
Rupesh Tatiya
Sorry, let me interrupt you there. I am asking about NMET as a button.
Mridul Dhanuka
Okay, you are talking about NMET as a vector
Rupesh Tatiya
in India. In India. I’m asking in India.
Mridul Dhanuka
10,000. 10,000 patients was our plan for the full year. We have managed to reach that in half year.
Rupesh Tatiya
So that is you alone or that is you and Fikla combined?
Mridul Dhanuka
Combined.
Rupesh Tatiya
Okay. Okay. And. And you don’t see any, any, you know, slowdown in growth or anything for let’s say two, three years.
Mridul Dhanuka
It’s difficult to say what is going to be the increase in the sales going forward. But definitely since it’s doing better than our potential and it’s just launched, we do hope for the next two, three years it’s going to be very fast growing molecule for us.
Manish Dhanuka
Yeah, I can say that the product, you know, whatever the microbiological tests the hospitals have done, they found the results of the product very good and it is able to solve lot of issues. A lot of patients were cured which were not being cured through the first line of antibiotics. So the potential seems to be good and that’s where we are investing in our sales and marketing team. And I’m very positive that if we can market the product properly to its potential, we see a significant growth in the next two years.
Rupesh Tatiya
So you have indicated that it will remain a significant driver of profitability in FY26 so that no change on that.
Manish Dhanuka
So in that sense, you know, the Ms. Division will also have a drag because we have already hired a large team of 70 people. So I cannot say that it will be the driver of profit. But our purpose is to become a significant player in the Indian hospital segment so that when Sepidro Coal comes, we can convince Shinogi and Garpi to give us the exclusive license for marketing. Well, as. As well. And that is our end goal because the federal coal will be become the driver of profit after that.
Rupesh Tatiya
Okay, okay. And then another question is on penicillin. So how, how. I mean is there like a further price compression, further dumping by Chinese players in quarter four and then two months of this, this FY26 and do end product prices are still, you know, tracking to that penicillin crisis or. And I mean you, you said in the opening commentary you, you see any respite, but then can we see respite in second half?
Manish Dhanuka
Yeah. So there is a reduction in Pangi price which is leading to the price reduction. But you know, only one product that is Cefixil depends on Pangi out of our product range. But we are actually, you know, I would not like to comment directly because it will depend on how Aurobindo reacts and how the Chinese react to his price reduction. So we are not, you know, directly. We don’t have a direct visibility of how the prices are moving because we only buy the intermediate from the users of nsng, which is a true curve.
Rupesh Tatiya
Let me ask you other way. Next, next year, FY26. I mean this year, EBITDA margins and gross margins on, on the base business. Non, non, you know, Mitazobactam, non, other, other AMS division, those margins, when will they bottom out or have they already bottomed out and when will we start seeing improvement?
Manish Dhanuka
I would expect that the margins have bottomed out because I think margin pressure is there on all competitors. So I would not say that margins will go any further down.
Rupesh Tatiya
And then on the base business, you’ve been saying 15, 20%, 20% to 25% whatever our capacity supports that kind of growth and we’ll continue growing the base business at 20% for two. That’s still fair, right? Okay. Okay. Yeah.
Mridul Dhanuka
I want to correct you. The base business will not continue to grow at 20% from here. That would include all the other things. So whatever were capacity utilizations, capex, which was done in the past, all of those have become operational. Okay. So
Rupesh Tatiya
yes, I am, I am asking not, I mean non 7 ACA. 7 ACA will come when it will come, the vactum will grow. The way I am asking, outside of all this, this oral, all of that.
Mridul Dhanuka
Then, then there is no possibility of growing at 20% for the next three years.
Rupesh Tatiya
Okay. Is that because of capacity or is that because of we, we have our market share now is kind of significant.
Mridul Dhanuka
So yeah, you know, to fight more than that, we will have to compromise on margins which we don’t intend to.
Rupesh Tatiya
So then from here on base business will grow. As for the industry.
Mridul Dhanuka
Slightly better, but. Definitely not what we were doing earlier where there were lots of gaps and inefficiencies where we could have identified.
Rupesh Tatiya
Okay. Okay. Yeah. Thank you. Thank you for answering my questions.
operator
Thank you. The next question is from the line of Rohan Shah from Stern Gaps to. Please go ahead.
Rohan Shah
Hello. Am I audible?
Mridul Dhanuka
Yeah,
Rohan Shah
yeah. So I have a couple of questions like firstly, how insulated will our API call structure be from this Chinese price volatility after this 7 ACA is fully ramped up.
Mridul Dhanuka
So when we have 7 ACA fully ramped up. So with respect to 7 ACA we should be insulated from China. But that’s always going to be on an arm’s length basis. The pricing, unlike Pengi where the price multiplied by 2 or 3x you know, in the last few years 7ac prices have been largely stable over the past 12, 15 years. So we don’t see much change in that.
Rohan Shah
Okay. And another question like in the last quarter as well, you mentioned that the price correction in the top three products has impacted our revenue despite volume growth. So why has there been no diversification from this heavy reliance on a few molecules like after so many quarters of volatility.
Mridul Dhanuka
So you know, the largest products, I can take a larger market share. Orchid has the most diverse range of cephalosporins in the entire world. We make more than 30 products while our closest competitors make 15. So in terms of diversity, any cephalosporin in the world, Orchid probably makes that. So I don’t think there is any room for diversification with respect to penetration. If there is a market potential of thousand of a product I need to take more share over there rather than a product which has only 20 market potential. Right?
Rohan Shah
Yeah, definitely. But just the heavy concentration has impacted like any reduction in prices can, you know, hamper our sales which we have gone through. So it was just a question regarding that.
Mridul Dhanuka
Yeah. This will continue to happen. The top three products will continue to remain the top three products over the foreseeable future.
Rohan Shah
Okay, thanks a lot.
Mridul Dhanuka
Yeah.
operator
Thank you. Ladies and gentlemen, before we take the next question we would like to remind that you may press charan1 to ask a question. Participants who wish to ask questions may please press charan 1 at this time. The next question is from the line of Aditya from Elara Capital. Please go ahead.
Unidentified Participant
Hi, good afternoon. Thanks for the opportunity. Correct me if I’m wrong. There’s a plant capex of rupees 600 crores for the Jammu plant. Out of its only 40 crores have been utilized. I don’t think the plant would be finished by the FY27.
Mridul Dhanuka
So. I don’t know. What’s the question? Aditya, you’ve made a statement.
Unidentified Participant
Do you think the plant would be finished by FY27?
Mridul Dhanuka
Yes, that’s what we have said.
Unidentified Participant
But given the utility, given the utilized capex of 40 crores out of 600. I don’t see that the it’s on track yet and also not been yet acquired.
Mridul Dhanuka
What is the number that.
Manish Dhanuka
So you see the major, major expenses happen at the end of. I mean there’s still one and a half years. I mean December 26th is still one and a half years away. Right. And major expense happens at the end of. I mean right now what you would do is you will just pay 10% advance. So 45 crores means almost all advances have been paid. The machinery’s delivery will only happen after six months. Right?
Unidentified Participant
One more thing. 45 crore figure is not correct. Actually we have spent around 120 crore.
Manish Dhanuka
Okay,
Mridul Dhanuka
Aditya, maybe some some clarification in terms of numbers is needed.
operator
Sorry to interrupt, sir. Mr. Aditya has disconnected.
Mridul Dhanuka
Okay. So just like our CFO clarified it’s 120 crores investment has gone in, not 40 crores.
Manish Dhanuka
Yes. Okay.
operator
Before we take the next question we would like to remind participants that you may press char n1 to ask a question. Participants who wish to ask questions may please press star and one at this time. The next question is from the line of Narendra from White House Capital. Please go ahead.
Narendra
Hello, sir. Hello, sir. Can you hear me?
Manish Dhanuka
Yes, sir.
Narendra
Can you share some data from the post marketing surveillance of invitation? If it is ready something it will be available.
Manish Dhanuka
That is that is going on. I think we. I think we have to share it with the DCGA first. Before share it. We share it with the public as it’s a new product.
Narendra
Okay.
Manish Dhanuka
So.
Narendra
Okay, that’s fine. Sir, are you witnessing increased prescription repeatedly from the same doctor or are you witnessing more demand from the hospital area supplied it already?
Manish Dhanuka
Yeah. We are finding doctors to prescribe this quite frequently. We have seen the growth month on month of the product.
Narendra
The other question is on reaching the hospitals, have you reached all the hospitals in the metro cities, in major hospitals where it is being used or is there some more hospitals to be covered?
Manish Dhanuka
So we have started in north, south and west, not yet started in the east. But I think most of the large corporate hospitals our product has been entered in the formulary.
Narendra
Okay. The other thing which I want to ask is because you have been marketing nmetazobactam as a carbapenum scaring agent. Right? But if you compare the antimicrobial spectrum, it is not as broad spectrum as meropenum which is commonly used. But the price point of nmetazobactam is higher than meropenem. How does doctors perceive this? Are they okay with the pricing?
Manish Dhanuka
So the pricing has been kept. You know, considering the optimum level between meropenem and other expensive antibiotics like ceftazidime, avibactam. And you know, the purpose of the product is to spare carbapenem for future generations and the doctors don’t want carbapenems like Meropenem to develop resistance as fast as it was developing. That is the whole purpose of the molecules to be introduced which can actually replace the resistance of ceftriaxones and piperacilin, tannins of atoms. That is the purpose. And the price point that we have kept here is not actually detrimental that, you know, the hospital cannot afford or the patient cannot afford.
That’s why we’ve optimized the price in such a way that it is affordable. Yes, it is more than Meropenem, but Meropenem has more than 200 brands. So it faces that kind of a competition. And obviously every molecule has its own costing. That’s why we discussed, consulted with Cipla and kept a price point which is very much affordable.
Narendra
Sir, can you name what are all the antibiotics you have introduced under your amsd?
Manish Dhanuka
So we, we have a large range, all first generation antibiotics, then all MDR molecules like ceftazidime, ivebactam, tgcycline, tecoplanin, and we have a large range of antifungals also.
Narendra
Okay, thanks.
operator
Thank you. The next question is from the line of Rohan Shah from Stern Capital. Please go ahead.
Rohan Shah
Thanks again for the opportunity. I just wanted to go back to a previous participant who asked about the land acquisition. I guess he said it was 40 crore and you corrected him by saying it’s 120. So I just wanted to know, like on the balance sheet, the current capital work in progress is about 65 crores. So maybe there’s some sort of balance sheet anomaly. Maybe. I’m guessing.
Mridul Dhanuka
Guptaji, can you answer that? How much of that is advanced which will not be in cwip?
Manish Dhanuka
Possibly. Actually that CWIP will not come in OPL balance sheet. Now it is in subsidiary balance sheet.
Rohan Shah
Oh, okay, got it. So I, I guess it’s capitalizing the subsidiary.
Manish Dhanuka
Yeah, yeah, yeah. If you see our subsidiary balance sheet of OBPL has been made and if you see the investment in there, there just now I checked it, it is more than 120 crore. 124.
Rohan Shah
Okay. So maybe because I was saying it’s a, the subsidy that we have, it’s a wholly, wholly owned subsidiary.
Manish Dhanuka
So I thought that is the correction.
Mridul Dhanuka
Yes, yes, yes.
Rohan Shah
Yeah, yeah. So maybe I thought along that line it was because of that. But thank you, thank you for the rectification.
Manish Dhanuka
Okay. Okay.
operator
Thank you. The next question is from the line of Richard Chaudhary from Electrum pms. Please go ahead.
Richa Chowdhary
Hi sir. Thank you for the Opportunity. Now that we see that the 7 ACA project has been delayed more, have we got any communication from the government side? Like how do we see it as a risk?
Mridul Dhanuka
So Richard, like I’ve highlighted earlier, we have been in constant communication with the government. We update them on quarterly basis. What is the status of the project? And we also have an application with them to extend the date of the letter that they’ve provided us. And like I valued on the earlier calls, they have always given us a comfort that don’t worry, we are there with you. But unfortunately they have not given anything in writing. And my understanding is they have not given this in writing to us or to Aurobindo who was also two years late or any other PLI player.
But they are launching new schemes and they are in full support and which is also evidenced by their actions in constant support to us writing to Jammu government to help us in faster execution of the project.
Richa Chowdhary
Okay, thank you.
Mridul Dhanuka
Yeah.
operator
Thank you. The next question is from the line of Vishal Manchanda. Please go ahead.
Vishal Manchanda
Yeah, thank you. Sir. Just a clarification on this delayed timeline. So we’ll start commercial production in December 25th, is that right?
Manish Dhanuka
Mechanical completion maybe production? I said March or April of 27.
Vishal Manchanda
Okay. So around that time we’ll start commercial production first quarter of FY27.
Mridul Dhanuka
March 27th would be FY28 20. Yeah, last quarter of March.
Vishal Manchanda
Sorry, sorry, sorry. Yeah. Okay, so a significant delay and so are we kind of, kind of trying to kind of hedge this by doing scale up alongside and maybe like so that we don’t waste time. So once we start commercial production we’ll also face challenging challenges in scale up. So are we kind of trying to do something alongside that the scale up challenge is reduced.
Mridul Dhanuka
So some of the actions that we are taking is besides our pilot plant in Chennai which was at a very small scale of 10 liters, we are scaling up there to the extent of 1000 liters. So hundred times scale up from where we are today before we commercialize in Jammu. So that should help us mitigate those risks. But like I’ve said in the earlier calls, you know, learning from the experience of other fermentation PLI players, it takes long time and Aurobindo has unlimited resources. We are very small compared to them. So they have not managed to stabilize in 15 months.
So there, there could be delays on commercialization to pull the capacity.
Vishal Manchanda
Right.
Manish Dhanuka
I believe a fermentation unit of this size is probably this will be this the second after Aurobindo’s Penicillin G plant. I don’t think we have seen a fermentation unit of this size in India as of now. So I mean, we, I mean, we have faced challenges, but there are learnings and we feel, you know, it’s a complicated engineering. It’s better to do things right and then, you know, rather hurry up and, you know, end up in trouble at the time of commercialization. So there have been some learnings and we are trying to correct those and do the things right.
First time. That’s what I was.
Vishal Manchanda
And just on are we kind of. So we are facing pricing pressures, but can we deliver volume growth, say mid teens volume growth next year? Do we have the capacity to deliver that?
Mridul Dhanuka
Yes, we have the capacity to deliver that. But like I’ve said earlier, we don’t want to be price leaders. So we will not strive for higher volume growth at the expense of our profit and pricing. But of course we will have to compete in the market. So it’s balancing act. Maybe we’ll know in a couple of quarters how things are
Vishal Manchanda
okay.
Manish Dhanuka
To make a statement. And obviously every businessman tries to optimize between price and volume. And obviously we try to find newer revenues, newer markets where we can get a better margin and then try and optimize between how much to sell at what price. But, you know, you can’t always predict how the competitor will react. But yeah, we do have capacity and we are trying to diversify our mix so that we neither compromise on the, on the volume of sales nor on the bottom line.
Vishal Manchanda
Like when it comes to the US Market, I think none of the Indian players are currently supplying sterile cephalosporins to the US Market. And so just wanted to understand, as of as we stand today, is there a differential tariff? Like is China facing a tariff for their products in India for sterile cephalosporins? And does this give Orchid an opportunity?
Manish Dhanuka
So I think that mostly it’s the finished formulations of generic products that’s going into the US and if my understanding is correct, as of now there’s nothing in pharmaceuticals and I think there is no differentiation between duties from India because pharmaceutical is still on hold, I think.
Vishal Manchanda
Okay, so are we seeing any opportunities for Orchid to supply to the US in the near term, One or two years. So are there any efforts in place and whether this can be monetized? Maybe in the next one or two years?
Manish Dhanuka
I don’t think in next two years it would be possible because I mean, either we will start from our formulation unit that we are setting up or through a third party cmo. And that takes two to two and half years at least for the registration.
Vishal Manchanda
Process as an API supplier, if not as a formulation player.
Mridul Dhanuka
So there is no Vishal. There are no API buyers actually.
Manish Dhanuka
So there is a possibility that some development work is going on, but we would be not in a position to commit because it will depend how fast they move their registration. But there are two customers who are registering our product who are now once again taken the API and they are registering.
Vishal Manchanda
These are innovators or these are generic players.
Manish Dhanuka
Generic. Generic.
Vishal Manchanda
Generic. Okay. And so we have not recognized any royalties from Elektra this quarter because we don’t have the numbers correct.
Manish Dhanuka
No, we don’t.
Vishal Manchanda
Okay. I think that’s all from my side. Thank you very much.
operator
Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Manish Dhanuka
Dear investors, I thank you very much for your time. We always, as I always say, we take pleasure and we take a lot of learning from your questions. And if there are any further questions, we’ll be happy to answer on the email. Thank you once again for joining this investor call.
operator
Thank you on behalf of systematics groups. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.