Sigachi Industries Ltd (NSE: SIGACHI) Q2 2025 Earnings Call dated Nov. 13, 2024
Corporate Participants:
Priya Sen — Investor Relations – Go India Advisors
Amit Raj Sinha — Managing Director & CEO
Subbarami Reddy Oruganti — Chief Financial Officer
Analysts:
Rikin Shah — Analyst
Dipesh Sancheti — Analyst
Unidentified Participant
Ankur Savaria — Individual Investor
Munjal Shah — Individual Investor
Ashish — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Sigachi Industries Limited Q2 and H1 FY25 Earnings Conference Call hosted by Go India Advisors. 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. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Ms. Priya Sen from Go India Advisors. Thank you, and over to you, ma’am.
Priya Sen — Investor Relations – Go India Advisors
Thank you, Lizanne. Good afternoon, everybody, and welcome to Sigachi Industries Limited earnings conference call to discuss the Q2 and H1 FY25 results. We have on the call Mr. Amit Raj Sinha, Managing Director and Chief Executive Officer; Mr. O Subbarami Reddy, Chief Financial Officer; and Mr. Vivek Kumar, Company Secretary and Compliance Officer. We must remind you that the discussion on today’s call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces.
May I now request Mr. Amit Raj Sinha to take us through the company’s business outlook and the performance, subsequent to which we will open the floor to question-and-answers.
Amit Raj Sinha — Managing Director & CEO
Thank you, Priya. Welcome everyone to Sigachi Industries Limited Q2 and H1 FY25 earnings conference call. I hope you have had a chance to review the financial results and the investor presentations available on the exchange. In Q2 FY25, Sigachi has shown notable growth with our core product MCC achieving substantial increase in both volumes and value. This growth stems from strong demand and improved utilization of our 7,000 metric tonnes per annum capacity added — which is currently operating at 75% utilization of the total capacity installed.
Our asset-light O&M segment continues to expand in alignment with our strategic focus. Revenues from O&M grew by around 19.8% year-on-year in H1 FY25, underscoring our expertise and partnership with leading companies like Gujarat Alkalies, Aditya Birla Group, ONGC, Lords Chloro and Adani. I’m also pleased to share that our API unit we acquired last year has successfully integrated into our operations. We currently operate at 100 KL capacity with plans to scale-up to 250 KL. In the API segment, we are focusing on high-margin regulated markets with nine planned CEP approvals. Several additional filings underway in the EU and EDQM markets. Our target is to complete nine CEP filings this financial year and enable access to high-margin markets to drive both top-line and profitability.
A key advancement this quarter is our entry into the pharmaceutical coatings with the introduction of PureCoat and UltraMod brands. These products are specifically designed to enhance drug stability and bioavailability aligning with the regular standards of modern drug delivery. This milestone highlights Sigachi’s dedication to R&D and the stringent quality control behind creating products that match and meet top-tier standards. We are also progressing with the establishment of 1,800 metric tonnes per annum CCS facility in Dahej, scheduled for commercialization by FY26. This additional capacity will expand our offering in the excipient range and we’ll be able to serve our clients better.
In terms of expanding our reach, we operate in both domestic and international markets exporting towards 65 countries. Our presence in the Middle East is strengthened by partnerships through Sigachi MENA FZCO, Sigachi Arabia working alongside with Saudi National Projects Global Investment and iConnect to explore growth in the region and leverage our full product portfolio. Our commitment to quality, innovation and sustainable growth keeps Sigachi Industries well-positioned to continue its success. By broadening our portfolio and reinforcing our market position, we aim to deliver enduring value to all our stakeholders.
Now I’d like to invite our CFO, Mr. O.S Reddy, to present the operational and the financial highlights for the quarter. Over to you, Mr. O.S Reddy.
Subbarami Reddy Oruganti — Chief Financial Officer
Thank you, sir. Good evening, everyone. Let me first brief you on the financial performance. The company delivered a strong Q2 FY25 performance with solid growth across key metrics. Operating income rose by 25.91% year-on-year, reaching INR124.9 crores EBITDA. EBITDA also saw a significant growth, increasing by 36.91% year-on-year to INR29 crores with a margin of — with a margin of 21.38%. Net profit surged by 39.09% year-on-year to INR21 crores, resulting in a PAT margin of 16.81%. Building on last year’s momentum, revenue from MCC increased by 15.35% year-on-year from INR149.72 crores to INR172.69 crores. Revenue from the O&M segment in Q2 FY25 grew by 21.08%, reaching to INR10.51 crores. The API segment contributed INR8.25 crores to revenue in Q2 FY25. As we continue executing our strategic growth plans, we are confident in achieving economies of the scale and enhance — enhancing the operational efficiencies, laying to the groundwork and sustainable growth and long-term value creation for our stakeholders.
This concludes the presentation. We would now be pleased to address any questions. Thank you all.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. [Operator Instructions]. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rikin Shah from the Boring AMC. Please go ahead.
Rikin Shah
Hi. My question is in terms of numbers, I think the numbers, I’m seeing a very sharp gross margin contraction, both Y-on-Y and Q-on-Q. So is there any particular reason or a change in revenue mix which is leading to this?
Subbarami Reddy Oruganti
Yeah, there is a — in this quarter, there is a PLI income is there, which is recognized, anyway we are eligible up to 2028 financial year, because of that there is a sharp increase in revenues. Anyway, this PLI incentives we’ll continue to receive till 2028.
Rikin Shah
So if that is not sort of considered, then how much is it from Q1, the PLI income in Q1 is recognized to the tune of what amount?
Subbarami Reddy Oruganti
Q1 we have not recognized. And in Q2 only we got the approval and then we have recognized. In coming quarters also, there would be PLI.
Rikin Shah
But if you have not recognized, then it is an erosion in gross margin, right?
Subbarami Reddy Oruganti
Not recognized, erosion in the — why it is an erosion? That time we didn’t receive the approval, that’s why we didn’t consider in Q1. In Q2, we got the approval and then we have considered it.
Rikin Shah
Okay. But Q1 your gross margin is 57% and now it is 47%, so it is a 10% erosion, right?
Subbarami Reddy Oruganti
Gross margin?
Rikin Shah
Yeah.
Subbarami Reddy Oruganti
Please come back again. Gross margin…
Rikin Shah
Gross margin in Q1 FY25 is 57%, it’s 47% in this quarter with a 10% gross margin erosion.
Subbarami Reddy Oruganti
Not erosion. Only thing is in the second quarter, there is an enhanced capacity is there. We push our products into the market and wherein a little reduction in margins are there. But in Q3 onwards, it will continue, normal margins, because we wanted to grab the markets, that’s why we have — the increased — revenue also it has increased if you observe.
Rikin Shah
Right, but if you — obviously, those are — I’m not asking about operational expenses pertaining to expansion, but this is more a pricing-related erosion, right, in the margins?
Subbarami Reddy Oruganti
Yeah. Pricing also, when you want to penetrate into the market, you have to compromise with the pricing. See after grabbing the market after — once you penetrate and you get the market, your scale-up operations will increase and then gradually we can increase the price and then it will go on like that. First, our intention is to get our bigger pie in the market share.
Rikin Shah
So this should not continue in from Q3 onwards, we should see some — we should see some mean reversion in margins.
Subbarami Reddy Oruganti
Yeah, there will not be any decline in margins.
Rikin Shah
No, I’m not saying decline. I’m saying will we get back to what we used to do? So in — if we compare Y-on-Y, we did 53% in Q2 of last year. And we’ve done 47% this year. So maybe we — the margins will move upwards or they will stay the same.
Subbarami Reddy Oruganti
Yeah, margin will move upward. Margins will move upward.
Rikin Shah
Okay. And your other income is showing a very big amount this time. Obviously, the explanation in the result perhaps is not sufficient. Perhaps could you expand on that why the other income is very high this quarter?
Subbarami Reddy Oruganti
Yes, yes. In other income, it is high because PLI income is added. PLI and the foreign currency fluctuations are there majorly in that.
Rikin Shah
Okay. And I can also see a proposal to raise $100 million via foreign currency convertible bonds. So could the management perhaps expand on that? And like what is — what would be the purpose for the same?
Subbarami Reddy Oruganti
Yeah, yeah. This is $100 million on this thing overall, that is up to $100 million, there is a proposal, but this is towards — yeah, this is as and when there is an opportunity, we keep on increasing — rising the funds, maybe 10 million at time and/or 15 million at time like that. But we are placing before the Board and then we have placed before the Board and then got the umbrella approval. Once we get — any specific opportunity comes, then again we’ll put it. This is towards the acquisition of industrial lands for future expansion. This is to secure strategically located industrial lands for expanding the company’s manufacturing and operational capacities, capabilities in India and outside India. And so that this will allow Sigachi to establish new production units, increase output capacity and meet the growing demand in the products, and thereby market presence also we can increase.
And also in Sigachi US also, the company proposed to set up a manufacturing facility because the transportation takes around 60 days and also the freight cost is very high when we transport our goods from — products from India to USA. And to reduce the time and the cost, we thought of — we are proposing to set up a manufacturing facility in USA so that initially we can acquire industrial lands in USA, thereby our presence in North American markets tap into the local demand in the US and also the benefits, the proximity to the customers, reducing lead times and logistical costs. And apart from this, we also expand our operations in Sigachi Arabia. Sigachi Arabia is a joint-venture company owned by Sigachi MENA, which is wholly-owned subsidiary company, which holds 75% and 25% hold by SNP national projects, Saudi national projects. And wherein we wanted to increase our presence and our business operations.
And also Sigachi Global also is there, which is a joint-venture company by Sigachi MENA, 75% and iConnect 25%. There also we wanted to increase the operations. And Sigachi MENA, which is a wholly-owned subsidiary of Sigachi Industries situated in Dubai. There also we wanted to increase the operations. And for this, we require funds whenever there is a good opportunity is there we’ll tap and then these funds will be utilized for that purpose.
Rikin Shah
All right. Okay. So — okay, and my next question is pertaining to API. So API revenues have in H1 clearly inched upwards, they are now 8% of the pie compared to 4% in last H1. So what is the plan in terms of ramping it up or maybe what kind of a share do you see API getting to in terms of the overall revenue mix, maybe one year, two years down the line?
Subbarami Reddy Oruganti
Yeah, in next two years now, anyway, last year we have entered and there is a reasonable growth is there when we compare to H1 of last year versus this year. And by end of March, there would be some incremental growth is there over last year. But next year, FY26, we can see a reasonable very good growth we can observe.
Rikin Shah
So can you give a band?
Subbarami Reddy Oruganti
Yeah. Maybe in overall revenue, maybe 20%, 25% because MCC also is going up. The total revenue it is growing up and 20% to 25% contributes from API revenue would be there.
Rikin Shah
Right.
Subbarami Reddy Oruganti
2 years to 3 years, yes.
Rikin Shah
Right, right. But sir, you’ve not given any segmental margins, but is the Trimax part making losses right now or it’s profitable?
Subbarami Reddy Oruganti
Yeah, at present it is almost — we are incurring losses there — losses there, but being initial, now we are identifying, we are going for the European licenses, European EDQM and CEP licenses. And USFDA is there for intermediates and then we want to be applying for API also. And we are concentrating now on high-yielding, high-margin products, thereby weakening [Speech Overlap].
Rikin Shah
Is the gross margin contraction more to do with API than contribution of API increasing?
Subbarami Reddy Oruganti
Yes, API also that is a — some it has contributed towards that.
Amit Raj Sinha
Mr. Shah, I would say it’s a combination — it’s a combination of grabbing more market share in the expanded capacity of MCC and a bit from the API segment because we are still trying to work out the best product portfolio, which aligns with our competencies and as much with the market demands.
Rikin Shah
All right. Got it. And sir, just last question from my end. In these other like the allied segment, do we think we have sort of lagged by any chance based on perhaps the expectation we had last year?
Amit Raj Sinha
When we say allied, what is it that we are referring to?
Rikin Shah
No, not the O&M part, sir, the allied trades part in your presentation, revenue contribution, the food and the other segments.
Amit Raj Sinha
So after — I would say after our API acquisition, we have been trying to kind of strengthen that part because that is a high-growth segment. So our focus has all been on the API growth part and that is how we have not really been looking at the other allied part. Trading part, whenever there are synergistic opportunities, we do indulge in that, and that definitely adds up to margins because we don’t have any additional fixed costs on that, but definitely API has been our focus.
Rikin Shah
All right. That’s it from my end. Thank you.
Amit Raj Sinha
Thank you, Mr. Shah.
Operator
Mr. Shah, you’re done with the question?
Rikin Shah
Yeah. I am done with my questions. Yeah.
Operator
Thank you. [Operator Instructions]. The next question is from the line of Dipesh Sancheti from Manya Finance. Please go ahead.
Dipesh Sancheti
Yeah. Am I audible?
Amit Raj Sinha
Yes. Yes, audible. Please.
Dipesh Sancheti
Yeah, when do we expect the API unit to ramp up, up to 250 KL?
Amit Raj Sinha
Sorry, we didn’t get your question. When do we expect?
Dipesh Sancheti
The API unit to ramp up to 250 KL.
Amit Raj Sinha
So in the Q4, I mean so by January ’25, we are commencing the additional 150 KL expansion, that should take us around 9 months to 12 months before we have the full capacity in place for the additional 150 KL. So I would say that by Jan ’26, we would be in a position to commence operations from the added capacity.
Dipesh Sancheti
And are we maintaining our previous revenues and EBITDA guidance?
Amit Raj Sinha
On the API?
Dipesh Sancheti
Yes.
Subbarami Reddy Oruganti
Sancheti, can you please repeat your question?
Dipesh Sancheti
Am I audible now?
Subbarami Reddy Oruganti
Yes, yes.
Dipesh Sancheti
Yeah, I’m asking that are we maintaining our previous revenue and EBITDA guidance?
Subbarami Reddy Oruganti
Yeah, anyway — yes, this year we’ll maintain, but next year definitely the better margins we are expecting from API business. Next year, and even after increasing FY26, we are expecting better — good margins.
Dipesh Sancheti
So what is the revenue guidance for FY25 and FY26 across MCC, CCS, API and O&M?
Subbarami Reddy Oruganti
We maintain this not less than this — growth is very sustainable and not less than 25% to 30% growth is there every year. We hope it will continue and then even better than.
Dipesh Sancheti
So still last three years we have been maintaining 27% — approximately 27%, 28% revenue growth. Should we expect a similar kind of revenue growth going ahead also or we should better it?
Subbarami Reddy Oruganti
We are expecting even better, but this minimum, this is guaranteed kind of thing. It is…
Amit Raj Sinha
We will — Mr. Sancheti, we will be better on this because what I believe is that we will have added capacities coming in plus the additional new product of PureCoat and UltraMod. So I believe we will be marginally better and probably touching 30% top-line growth for this particular financial year.
Dipesh Sancheti
Okay. And EBITDA will be the same or I mean, we’ll be working on a similar EBITDA margins or that will also become better?
Amit Raj Sinha
I think in the short term, we’ll work to see that we are sustaining the margins. In the long-term, we are working to see that we ramp it better because APIs turnaround and improvement in the EBITDA is going to take time because the CEP approvals take at least three quarters. I believe in the long-term, we will be able to better our margins, but in the short term, we will definitely sustain.
Dipesh Sancheti
Okay. Just one question was there. What is the difference between the lower microns and higher microns excipients? And how do formulation excipients differ from pre-formulation excipients?
Amit Raj Sinha
So no, no there is — okay, I’ll tell you first — to the first question, the lower micron and the higher micron excipients, basically depending upon the API particle size, the kind of excipients are used. Now for all of us who are aware, if we are aware of curcumin or turmeric, if there are turmeric tablets which are there, these tablets, the turmeric or the curcumin is a very fine powder. And for that tableting to be done, you need a very coarse grade of binder, which is the MCC. So you need a particle size around 180 to 200 to 250 micron, whereas if you have paracetamol pellets, which are very coarse, which are sometime even 800 micron to 1,000 micron, therein you need very fine powder of binder, so that when there is a compression, there is plastic deformation taking place and the tablet is formed. That is the prime reason that there is a range of particle size going in from 15 micron all the way to 1,000 microns. Did that answer your question?
Dipesh Sancheti
Okay. And the second question if you can answer, how do the formulation excipients differ from pre-formulation excipients?
Amit Raj Sinha
So there is nothing as such like a formulation excipients. It is pure excipients. Pure excipients are single ingredients which get used in the formulation. Now in a formulation, you always require a binder, a glidant, a lubricant, a disintegrant. What a pre-formulation excipient does is that we take in all these functional ingredients, we combine it in the best possible form so that a major chunk of the formulas are able to use the preformulated excipient. So thereby what a formulator is going to do in his facility, we are able to do it in our facility and give him bulk. So he doesn’t have to buy four, five different excipients, stock them, test them and then mix them in their plant for usage. So he just takes the preformulated excipients, puts in the API, blends it and directly compresses the tablets. So, it’s a value-add.
Dipesh Sancheti
Okay. Okay. My last question is regarding the promoter shareholding. Our promoter shareholding has been consistently declining. Any particular reason for that or is just normal promoter selling?
Subbarami Reddy Oruganti
No, there is no selling from the promoter. We recently we have issued preferential issue of share warrants wherein promoter [Speech Overlap].
Dipesh Sancheti
Okay. So it’s a adjustment.
Subbarami Reddy Oruganti
Yeah. Hello?
Dipesh Sancheti
Yeah.
Subbarami Reddy Oruganti
Yeah. Okay. This is even after — by end of this year, it will increase. In this promoters contribution — once we fully paid-up the promoter’s contribution, it will go up automatically.
Dipesh Sancheti
It will go up.
Subbarami Reddy Oruganti
There is no selling. There is no selling, there is no this thing or anything.
Dipesh Sancheti
Thank you. Thank you so much. And…
Amit Raj Sinha
There is no dilution actually.
Subbarami Reddy Oruganti
There is no dilution.
Amit Raj Sinha
Thank you Mr. Sancheti.
Dipesh Sancheti
And what about the — what about the pledge percentage, pledged shares? Are we going to release them also?
Subbarami Reddy Oruganti
Yeah. Pledge shares, we’ll release it later. Now anyway, that is yes. Anyway, the pledge funds also we are infusing into the company only. That shows the confidence on the business.
Dipesh Sancheti
Perfect. Thank you so much. Thank you. All the very best. Thank you.
Subbarami Reddy Oruganti
Thank you.
Operator
Thank you, sir. The next question is from the line of Aryan Modi from Abakkus Asset Management [Phonetic]. Please go ahead.
Unidentified Participant
Hello. Yeah. Am I audible?
Subbarami Reddy Oruganti
Yes, please. Please go-ahead.
Unidentified Participant
So first of all, I would like to congratulate the management on a great set of results, increasing both quarter-on-quarter and year-on-year. My first question would be, why is the difference in the other income figures shown in the quarterly statements and the investor’s presentation?
Subbarami Reddy Oruganti
Can you please repeat the other income increase you are asking, Mr. Aryan?
Unidentified Participant
No, no. Why is the difference in the figure of other income, which is reported by the company in the quarterly statements and the investor’s presentation. The both figures are different.
Subbarami Reddy Oruganti
Yeah, anyway, this PLI or this is nothing but the — it is linked to operations only, even that is the PLI income is there in the operations, that’s all. There is no this thing. That is anyway very much related to the operations that is on the product — based on the product portfolio and the investment, based on that, that is sanctioned. That’s why we have mentioned that.
Unidentified Participant
So why wasn’t this reported in revenue from operations in the quarterly statements?
Subbarami Reddy Oruganti
Yes. And one more thing, Mr. Aryan, this revenue will continue till 2028.
Unidentified Participant
So why aren’t we showing in the revenue from operations in the quarterly statements?
Subbarami Reddy Oruganti
Yeah, in the — yeah, we are — we thought there is a clear-cut, the other income is there, but we have mentioned that we have anyway that is from operations only. It is what is wrong in that? Anyway that is there in the total income and that is business income only and what is the problem in that?
Unidentified Participant
So why are we showing it as other income in the quarterly statements, while we are clearly referring to as the revenue from operations in the investor’s presentation?
Subbarami Reddy Oruganti
Yeah, anyway we have mentioned what is — we are giving the clarification. What is your problem in that? What is your problem [Speech Overlap].
Unidentified Participant
My problem is why aren’t we showing it as revenue from operations in the statements filed to BSE also?
Subbarami Reddy Oruganti
Yeah, we have filed this one also to the BSE, NSE. This is — see both the statements are available to all the investors.
Amit Raj Sinha
So maybe Mr. Aryan Modi, maybe the confusion is on account of statutory compliances and the investor presentation. Statutory compliances, the auditor has a need to differentiate a certain set of income coming in which directly comes in from operations and something which is as a reimbursement. So there, there is a need of a statutory compliances, whereas in the investor presentation, it is more to do with graphics and the way we want to present what we have kind of earned. And that is how the difference comes in. Otherwise, it’s all very much part of our revenue from operational income.
Subbarami Reddy Oruganti
Yes, anyway, we are completely transparent and we are explaining it also.
Unidentified Participant
Right. Right. So moving forward, my second question would be regarding the API segment. As mentioned in the previous quarters, you were expecting the — all the certifications to be done by the Q3 or Q4 of this year. What’s the current status of those certifications and what’s new timeline for those approvals?
Amit Raj Sinha
So, Mr Modi, I would say at this moment, we have filed four CEPs with the European Directorate of Quality and Medicine. And we are — for the first one, we are expecting the whole thing to be completed in the next six months. So for Propafenone Hydrochloride, we are looking at completions or getting their final CEP approval by March 2025. And for the other ones, it will probably be another 3 months to 4 months beyond that. And in the whole current cycle, we are looking at a total of nine CEP filings happening. The usual CEP filings take us around three quarters before the approval comes in. Sometimes on account of additional queries, it might stretch to the fourth quarter also. But at this moment, we are looking at nine CEP filings.
Unidentified Participant
Right. So what would be the exact — exactly from which quarter of next year can we — can the 100 KL capacity will be used in the revenue?
Amit Raj Sinha
So the first one, the Propafenone Hydrochloride, that will come into effect from Q1 of FY26, that is April 2025, we will be able to use the capacities primarily for the products which have CEP filing.
Unidentified Participant
Right. So till what — what would be the exact utilization out of the 100 kilo litres till April 2025 in the first quarter of next year.
Amit Raj Sinha
That’s a very difficult question, Mr Modi, because it’s a combination of various products, demand of those products at that moment, our customer requirements, stocks available in the market, the pricing. So it’s very difficult to kind of give you an indication of how much quantity of that product we will make it out of the 100 KL. But one thing is there, whatever is the approved product portfolio Sigachi has at that moment, we will work to see that we have a best combination to align with what the customer needs, and of course, better our margins.
Unidentified Participant
Can you give me a rough estimate of the figure? The main reason for me to ask the question was because the management was planning to expand the 100 kilo litre capacity from January itself. So there might be a usage, there might be projection till next year the existing capacity would be fully utilized so till next Jan or if according to you, nine months would be taken to expand it to 250 kilo litres. So till nine months of next year with the existing 100 kilo litres we use or the capacity would be expanded and it would be unutilized for the next year.
Amit Raj Sinha
No, no, no, the capacity — see the new additional 150 KL — additional 150 KL capacity, by the time it comes into effect and it gets commissioned, it will be Jan 2026. By then we would have already got at least six to seven CEP approvals. We would have already been having our other product wherein we are engaging with our earlier customers who were there with our subsidiary company, Trimax, even before we acquired them. We have Emcure, Laurus with us, MSN Labs with us. So they continue to give us the base. It is just that we are kind of moving beyond the intermediates to the APIs and then subsequently to the CEP-approved APIs. Basically the transition is happening to get better at our EBITDA margins than what we were historically in APIs.
Unidentified Participant
Right. So exactly. So I’m not getting a clear answer. So we’ll be able to use the 100 kilo litre capacity fully till the next year end?
Amit Raj Sinha
Next year end would mean by FY26 end?
Unidentified Participant
Correct.
Amit Raj Sinha
Yeah, yeah, yeah. FY26 is very far away. FY26 is — it is very far away. We will in fact, I believe that by the mid of FY26, we would have already been touching 95%, 100% of our capacity. In fact, it will be much earlier, it is just that we want to have the best combination of products which kind of aligns with customer requirements and improves our margins.
Unidentified Participant
Right. So in the last quarter, there was a guidance regarding the revenue — overall revenue mix going forward in the overall company’s revenue structure and APIs would — according to the management guidance, it would cover almost 50% to 55% of the total revenues. So where are we on track to reach that revenue share in coming years forward?
Amit Raj Sinha
So I’m not sure if it was 50%, 55%, Mr Modi, because 55% would have been a very big figure. I think maybe there is some miscommunication somewhere. But definitely, we are ramping up our capacity utilization of our Trimax to be able to get better at our percentage of the total revenue of Sigachi. We are looking at nearly 30% of our total revenue at Sigachi for the current financial year.
Unidentified Participant
Right. And I would just clarify the figures, okay, till then I’ll move on to my next question. What is the — when are we planning to start the project work on the CCS plant? And we have been talking about it since a long time since the year forward, but there has been no progress regarding the plant project start.
Amit Raj Sinha
Yes.
Unidentified Participant
When is it starting and…
Amit Raj Sinha
Absolutely. I very much agree with you. Unfortunately, the Pollution Control Board are having certain issues and we have had elections in between, and I mean so many things which have come in way, we were supposed to get the approval in October prior to Diwali. Unfortunately, the approval has not yet come in. We are in discussion with the concerned authorities to see that we get the approval ASAP. In fact, internally, I’m working on seeing that I get the approval by December — December 2024.
Unidentified Participant
So the project would start approx how much time after we get the approval?
Amit Raj Sinha
So my estimate is we would be having 18 months in hand to completely commission the plant.
Unidentified Participant
Right, right. Okay. Also, my next question would be regarding the margins. So what would be approximately the margins, which we are expecting in the API segment? And what would be the difference, especially in the starting when we are trying to expand it and later once we have gained a sufficient market share, what — how would the margins differentiate from the start when you’re trying to gain more market share for getting a bigger piece of the pie?
Amit Raj Sinha
So in terms of margins at this moment, I would say, they’re not as healthy. But once we have our CEP approvals in place, I’m quite confident that we should be positive of the 20% EBIT margins. Our product portfolio is not — is only having intermediates and it doesn’t include any of the CEP — approved CEPs list of APIs. Once we start exporting this to the regulated markets, I’m very confident of having 20% EBIT positive.
Unidentified Participant
Right. Yeah, so my last question would be regarding MCC itself. Basically MCC overall globally is growing approx 10% and we are growing approx 15% to 20% on the MCC part. So what is — where are we gaining the market share? Are we able to get the growth rate or are we able to occupy the market share of the existing competitors because of better pricing globally?
Amit Raj Sinha
So it’s a combination of both of your answers. It’s a combination of grabbing the new market. Also, it’s a combination of grabbing the world number one and the world number two player’s market share into our fold on account of better service on account of flexibility in terms of minimum order quantity and the grades. Just to tell you, Sigachi is the only company in the world which has more than 60 different grades of MCC to cater to any formulation needs of our customers.
Unidentified Participant
Right. That is great. Thank you. Thank you so much for answering. And once again, congrats on great results.
Amit Raj Sinha
Thank you.
Operator
Thank you. The next question is from the line of Ankur Savaria [Phonetic], an Individual Investor. Please go ahead.
Ankur Savaria
Good afternoon to you, sir, and congratulations on a very good set of numbers again. Sir, my first question is our capex for the MCC is over right, completely?
Amit Raj Sinha
Yes, very much.
Ankur Savaria
And what is the utilization that we’ve had this quarter, sir?
Subbarami Reddy Oruganti
This quarter there is an increase of additional 20%, in the next coming quarter and then — by end of this year, we’ll utilize almost — when we see in terms of the numbers, it is almost by end of this quarter, we have utilized 8,153, almost 50% we have utilized. And when we compare to previous — corresponding previous year, there is an increase of 20%. And coming quarters, it will increase further. Total the capacities will acquire — will occupy by end of next year, we’ll completely fulfill or maybe in next quarter three, quarter four and first quarter of next financial year, we’ll occupy the complete capacity.
Ankur Savaria
Right now we are running at 50% utilization. Is that correct?
Subbarami Reddy Oruganti
Yeah, yeah, 50% because in the second quarter only the majority of this thing — expanded capacities have come into place. Then once we compare previous year versus this year, there is a 20% increase is there in the capacities.
Ankur Savaria
Absolutely. So is there any danger that if in case we further bring up our utilization, the margin might come down. Is that possible?
Subbarami Reddy Oruganti
Yeah, slightly to the — to grab the market, to penetrate into the market, there may be a slight compromise, but not much.
Amit Raj Sinha
I would just like to add here. Even though the it would look as if the margins are coming down, that’s only to penetrate and grab the market share, but eventually with the increase in revenue and the costs remaining fixed, our margins will only get better.
Ankur Savaria
What you are trying to say is that maybe in percentage terms, the margin may look down, but in absolute terms, the profit will increase, right?
Amit Raj Sinha
Even in the percentage terms, it will increase. See, when I have to — assuming — let’s just take an example, I’m trying to sell my product at INR250 a kilo and the competition is selling at INR240 a kilo, and I need to get into that customer, so at this moment to give an incentive to the customer to have an eventual change, I would probably give him a 10% discount, and I would eventually get in, build up my rapport, show my service, show my quality and then as time goes by, I’ll ramp up the capacity, I’ll ramp up the pricing to be able to get better than what I was charging to him when I entered.
Subbarami Reddy Oruganti
And also [Speech Overlap]
Ankur Savaria
Are we decreasing the price for our existing customers also or only for the new customers?
Amit Raj Sinha
No, only for the new customer, why would I decrease the pricing for the existing customers? My value proposition is so strong that I’m commanding a price which is better than the others in the market. Why — there would be no reason for me to drop my prices.
Ankur Savaria
You’re hopeful that you will decrease the price by 10%, but later on the same customer will be willing to pay us more than what he was paying before to the other seller. Is that correct?
Amit Raj Sinha
Absolutely. Yes, absolutely, sir. This is how you bring forward your value proposition. Till the time they don’t experience you, they don’t value you. The moment they experience you, they value your products, they use your products, then they can’t let you go. This is what is bringing forward a value proposition with respect to your competition.
Ankur Savaria
Absolutely. Sir, as far as the other income is concerned, is it safe to assume that the amount of the other income that we are getting will approximately remain the same till 2028 or is it a factor of the volume of revenue that we do?
Subbarami Reddy Oruganti
Yeah, it is a factor of volume of revenue. Any additional [Speech Overlap] on incremental sales, we are eligible for PLI and then that will continue to…
Amit Raj Sinha
Continue actually. It will only get better, I would say.
Ankur Savaria
Right, because in case our revenue, as you say will increase 30% year-on-year, so PLI will increase. Am I correct?
Subbarami Reddy Oruganti
Yes, only for particular MCC only, not overall 30% in — not in APIs, not in O&M, only this is on MCC products.
Ankur Savaria
Right. And sir, since you have guided somewhere about 30% increase in the top line, so last year we did INR400 crores and approximately 30% would be about INR520 crores top-line this year. Out of which we have done INR220 crores in the first quarter — first half of the year. So the remaining would be INR300 crores for next six months. So we are hopeful that we’ll be able to achieve INR300 crores in next six months, sir.
Subbarami Reddy Oruganti
Yeah, we are hopeful [Speech Overlap] we are hopeful. The expanded capacities have come and third-quarter and fourth-quarter also we do.
Amit Raj Sinha
So very right, very right CFO. We are very hopeful because the expanded capacities will come into play, our APIs will strengthen up and our new product portfolio of UltraMod and PureCoat will add up. So it will come back as additional revenues and we are quite confident of touching our 30% growth for this current year.
Ankur Savaria
Very good, sir. And one thing regarding the O&M and service, do we have any new partners that we have introduced in the — in this quarter, sir?
Amit Raj Sinha
No, nothing at this moment, sir, nothing at this moment. In fact, as and when we have a new partner being introduced, we will declare it to the stock exchange. This is a very slow process and once it comes in, it’s usually a 5-year or a 10-year contract. So it’s a slow process.
Ankur Savaria
Right. I was hoping that in the MENA region you were saying that there are a lot of people who are taking these services and hopefully we’ll get the contract.
Amit Raj Sinha
Yes, yes, Mr Ankur, you’re absolutely right. MENA has been our focus and because we have local partners present there, the penetration is as much easy. We are just trying to align opportunities with the risks there so that effectively we stand to gain and the growth is sustainable.
Ankur Savaria
Okay. Sir, my last question or let’s say, second last question if in case there is no one waiting, what will be the approximate promoter percentage once we have fully paid up our preferential share?
Subbarami Reddy Oruganti
Around 48% will come — 46% to 48%.
Ankur Savaria
46% to 48%. And one final question that I had is, sir, that since as a company, what I see is that we are trying to grow in each and every segment that we have, let it be MCC, API, CCS, O&M and you time and again, I think you are — you require funds to grow as well. And that might be the reason that you are looking forward to increasing — raising funds again. So don’t you think that once we — if in case we — what would be the structure of — can you explain the structure as to when we raise funds through unsecured or foreign currency convertible bonds, will we also liquidate our — will we issue new shares to them or how will it take place, sir?
Subbarami Reddy Oruganti
Yeah, initially…
Amit Raj Sinha
Ankur, I’ll — CFO, I’ll just put in my bit, then you can add in. Ankur, here it is such that we are not really trying to expand across everything. MCC has been our cash cow, and we continue to be number one in India and among the top five in the world. So naturally, I would like to continue to grab more market share and grow my presence. That’s number one. CCS is very complementary. It’s also a form of cellulose. And anybody who buys MCC has to buy CCS. So it comes in very complementary. We have the chemistry with us. So that is how we are expanding.
Now the third part which comes is the APIs. Now when I’m giving most of my formulator customers the preformulated excipients, I am giving them the binder, I am giving them the CCS, it is but natural that I want a bigger share of his wallet and I offer him the APIs. So this is how the APIs are coming. So all these are very complementary in nature that we are kind of expanding our facilities and aligning with the regulatory licenses to be able to grab more market. So this is the overall scene of things.
Now in terms of getting FCCBs in place, at this moment, we’re only taking an umbrella approval because it’s a big process, RBI approval comes in, SEBI approval comes in, shareholder approval comes in, as and when we need these funds to be able to take it into the company for growth, we will look at it. It is just that it’s an umbrella approval at this moment. And I mean, it’s a long process and you have a merchant banker and all this is being looked at, it’s nothing else.
Ankur Savaria
So I’m not saying that [Speech Overlap]. Yeah, yeah, okay. Sir, go ahead, sir.
Amit Raj Sinha
CFO, you might to add anything which I’ve missed.
Subbarami Reddy Oruganti
Yes sir, that is fine, all fine. Anything, you want any clarification Mr. Ankur?
Ankur Savaria
Yeah, what I’m saying is, sir, I’m not against the kind of growth that we are targeting. And I’m sure that whatever decisions you are taking, you are in a much better position than an outsider to take best decision possible for the company. What I’m asking is that the funds we are raising, right, time and again when we try to raise funds, the share price always comes under pressure. So the umbrella that you are trying to build, is it when we issue unsecured or convertible bonds or something, do we also issue them a share or it is like a loan that we get from banks? What — I’m not clear about that.
Subbarami Reddy Oruganti
Even right now, anyway whatever the best opportunity comes and then whatever is the best way, we’ll take it, we’ll adopt and then we’ll take it forward. As of now, [Speech Overlap].
Amit Raj Sinha
And for this FCCB also, there’ll be a coupon rate, there will be a coupon rate which we have to service. So it is — and it is not that we are raising all of this immediately today. Like I said, it’s just an umbrella approval and we look at it as and when we have needs to be able to strengthen and capitalize on what we want to do further in the business.
Ankur Savaria
Okay, sir. That’s all from my side. Thanks a lot for answering my questions and all the best in future, sir.
Subbarami Reddy Oruganti
Thank you.
Amit Raj Sinha
Thank you.
Operator
Thank you. The next question is from the line of Hardik from Alpha Plus Capital Associates [Phonetic]. Please go ahead.
Unidentified Participant
Hi, and thank you for the opportunity. What are the current pricing trends and future outlook for MCC and wood pulp markets?
Subbarami Reddy Oruganti
Hardik, you are asking pricing trends?
Unidentified Participant
Yes, yes, yes. In wood pulp and MCC markets, yes.
Subbarami Reddy Oruganti
Yeah, both are incremental this thing. There is a chance to rise both sides. But whenever there is an increase in wood pulp price, we can pass it on to the customers easily. And moreover, we have a very good plan in the procurement of the wood pulp. 70% of our annual requirement, we will place it this AMC kind of thing. Annual contracts we’ll enter into and 30% we will go for opportunity purchases. Whenever there is a drop or there are drops in prices of wood pulp, we will procure from outside also. If there is an increase in prices, then we’ll take it from our annually agreed quantities at agreed prices. And even though if we acquire at competitive prices or pre-agreed prices, any increase we will pass it on to the customers. The trend is always, it is increasing trend on the — because of inflation or because of the market strategy or trend. It is an increasing trend only.
Unidentified Participant
Okay. Okay, and are there any new capex plans anticipated over next two, three years?
Subbarami Reddy Oruganti
Under capex plans, one is API expansion is there and CCS expansion is there. And as and when there is a need, definitely we’ll go for — we’ll go for additional capex. We’ll see the cost-benefit analysis, if it is at the best interest of the company, really it is going to help us, then we’ll tap that opportunity by incurring capex.
Amit Raj Sinha
So Mr. Hardik, here, I’d like to just add, see considering that we are looking at 50% of our new capacities being utilized in MCC by the end of March 2025 and the fact that we need 18 months for turning around a new capex of MCC, I believe that very soon we should be at the drawing board to look at an additional capacity for MCC because our consumption of the new capacity is going on track and going at a good speed. So probably if you have a horizon of 2 years to 3 years, beyond doubt, we will be looking at adding more capacities of MCC. And for that there will be a reasonable amount of capex.
Unidentified Participant
All right. That’s helpful. And lastly, can you highlight some of the key products in our API segment?
Amit Raj Sinha
Key products in the API?
Unidentified Participant
Yes, yes.
Amit Raj Sinha
So we have propafenone as one of our main products. Propafenone continues to be one of our main products. Pregabalin also is one of our main products. Other than that, we have a reasonable level of advanced intermediates, which are being supplied to the regulated customers for their regulated markets. When we acquired the API facility, it was primarily a USFDA-approved facility for advanced intermediates. So those set of customers and those transaction continues, but we are gradually moving the product portfolio from intermediates to APIs.
Unidentified Participant
Okay. Thank you. And that’s all from my side.
Amit Raj Sinha
Thank you.
Subbarami Reddy Oruganti
Thank you, Hardik.
Operator
Thank you. The next question is from the line of Munjal Shah [Phonetic], an Individual Investor. Please go ahead.
Munjal Shah
Hello? Am I audible?
Operator
Please proceed.
Subbarami Reddy Oruganti
Yes, yes.
Munjal Shah
Yes. Thank you for the opportunity. Mr. Sinha, I would expect your advice actually, there is — when we mentioned that the contribution of API will increase, so right now the contribution of API is at 7% of the overall revenues, and MCC contribution is 81%. Like considering the contribution from the respective segments, the sales growth has been really good. The problem is that the margins, so basically, I just wanted clarity on this thing specifically. So if we don’t include INR14 crores of the other income, which has come from PLI, so if we take out that portion, the margins have drastically reduced by 10%. So can you, sir, explain what has been the major reason? So you mentioned that for entering into the new market and to grab market share, we had decreased prices or made our prices more competitive, but then 10% reduction can we — we will be — will we be able to regain this margin again going forward?
Amit Raj Sinha
So, Mr. Munjal, it is just that not — first and foremost, the PLI is not for INR14 crores. So maybe we should just discount out that. The second thing is the 10% discount has not been given, it’s a combination of a lot of consolidated balance sheet wherein we have of course given discounts to be able to enter new markets for our expanded capacity. The second thing is on our API front facility, there are losses which we are adjusting. So there also the margin drops. Over and above that, we have three what we call entities in the Middle East, the Sigachi MENA, the new joint venture at Saudi and another one at Abu Dhabi, the Sigachi Global. So all these there, the revenue stream is still not started kicking in. So these are all costs which are adding up and reducing our effective margins.
Munjal Shah
So sir, this will be on the operating level, right? I am talking about the gross level. So basically, when we reduce like raw-material and traded goods from sales. So I’m talking about the gross margin right now.
Subbarami Reddy Oruganti
Yes, Mr. Munjal Shah, see the gross margin, even API also affects the gross margin and our Dubai entities also because it is newly incorporated entities where initially it’s not making profits, which affects gross margins only, both even any gross margin is material cost in there — is there in API. And once it increases this — when there is a thin line between the sales and the cost, then obviously the profits — there we are incurring losses at present. That is the reason there is gross margin have come only 47%.
Munjal Shah
Okay.
Subbarami Reddy Oruganti
Yeah.
Munjal Shah
Okay. And sir, then — the next question is that sir, our employee expenses and the other expenses have substantially increased. So like the employee expenses have gone from INR14.5 crores to INR18.5 crores, that is I’m talking about year-on-year and the other expenditure has moved from close to INR17 crores to INR23 crores. So this is like considering 30%, 40% increase in this cost. So sir, if you can just help me understand the increase and throw some light on the same.
Subbarami Reddy Oruganti
Yes, yes. The employee benefit expenses as a percentage, if you see, it is almost around 14% is there on top line, both even last year when it was 14% or now it is 18%. And in other expenses, the major part goes for freight expenses. When there is an increase in freight expenses, obviously that expenditure is going up. That’s why we wanted to set up our plant in, this manufacturing plant in USA to reduce this cost to — the cost and the logistics cost and even the time gaps also.
And wherein — wherever there is an increase in the expenditure that can — that we will pass it on to the customers in freight expenses or, okay, employee benefit expenses, anyway we are setting up all the systems in place and the expansions, the API and then this Sigachi MENA region also. That’s why over a period of time, it will increase and then later on, it will — it will — as a percentage of total revenue that is well within the limits. And also the O&M is basically on manpower base. The O&M operation — O&M revenue increases, the manpower expenses also increases. In O&M, only the manpower is the expense, otherwise we don’t have any other expenditure other than manpower.
Munjal Shah
Because sir, in this quarter, the O&M contribution has also reduced from 11% in Q1 to 8% in Q2. So like are we developing team before working on the contracts or if you can just help me understand that?
Subbarami Reddy Oruganti
Yeah, it is a simultaneous thing and then sometimes we after getting the contract, we’ll go in or sometimes — yeah, it is a combination because that operation will continue and then manpower are the assets there in O&M.
Munjal Shah
Okay. And sir, the increase in the freight cost is passed in the same quarter, or it comes with a lag?
Subbarami Reddy Oruganti
Yeah, in the — it is a combination. Throughout the quarter it comes that is there uniformly whenever the freight expenses increases that in international condition situations also, it matters.
Munjal Shah
So most of our exports are on CIF basis?
Subbarami Reddy Oruganti
Yeah, CIF. Yes.
Munjal Shah
Okay. So sir, currently, have we taken the hit on our margins and do we intend to pass on the cost in the next quarter to our clients or we will take the hit of the increase in freight costs?
Subbarami Reddy Oruganti
Mostly in the same, but sometimes for some customers, next quarter it will come. It is a combination because we export almost — our presence is there more than 60 plus countries, and different customers, more than around 300 customers are there.
Munjal Shah
Okay. Sir, my next question is, when we mentioned that we are planning for nine CEP filings by FY25, right, and we have a capacity of 100 KL. So when are we envisaging to use this capacity completely? By what time? And what can be the estimated turnover basis the use of 100 KL at average pricing?
Subbarami Reddy Oruganti
Yeah, average more or less around once we achieve, it depends upon the product, but roughly we can INR90 crores to INR100 crores, we can achieve.
Munjal Shah
And by what time we are [Speech Overlap].
Operator
Sorry to interrupt Mr. Munjal. Sir, may we request that you return to the question queue. There are participants waiting for their turn.
Munjal Shah
Sure, I’ll do that. Thank you.
Operator
Thank you. [Operator Instructions]. The next question is from the line of Damodar Baliga from DB Investments [Phonetic]. Please go ahead.
Unidentified Participant
Good evening, sir. Thanks for the opportunity. Congratulations on a good set of figures. Sir, my question is to Mr. Amit-ji. Sir, you had already alluded regarding increasing the capacity of CCS, maybe within next 12 months to 18 months. So just wanted to know, do we have space at the existing plots or do we have to look for alternate site?
Amit Raj Sinha
Sir, Damodar sir, it is just that in the same SEZ premises in Dahej in Gujarat, we have taken an additional plot of 18 acres piece of land, and it is for that particular site that we are getting the environmental clearance in place. So once this 18-acre site has the environmental clearance, we will comfortably be able to have a reasonable level of production blocks and we will not have any challenges of a greenfield project troubling us in terms of delay.
Unidentified Participant
So this greenfield — the Pollution Board approval that you have applied and waiting for, that includes both for CCS as well as for MCC. That is what you’re trying to say. Correct, sir?
Amit Raj Sinha
Sir, right now, it is only for CCS, sir. MCC, there is nothing specific, because MCC the capacity has already come into force and we are selling a reasonable percentage of the new installed capacity. Right now, the environmental clearance is only for CCS.
Unidentified Participant
So that means you will have to reapply for the Pollution Board approval for MCC if you want to come up at Dahej SEZ place?
Amit Raj Sinha
Yes, that’s right. But once the EC is granted, sir, adding products is not really a challenge. It is usually that when it is a greenfield project and the local area, the local water streams, the air conditions are not available, there are — there is a long queue in the list for at Central Pollution Control Board and the local Pollution Control Board that ends up in a delay.
Unidentified Participant
Okay. Fair enough. Got it, sir. Sir, second is regarding your CCS. As and when you said it takes 12 months to 18 months to complete the project. And since it is a new project — new product from a new plant, you will have to get the approval from the pharmaceutical customers for this product also.
Amit Raj Sinha
Very much sir, that’s right.
Unidentified Participant
So that means that would take subsequent to that another 3 months to 6 months to get the approval from all the customers.
Amit Raj Sinha
Yes, three months at least is a fair quantity.
Unidentified Participant
Okay, fair enough. Okay. That is very clear. Sir, third is about your Gulf operations. When can we expect some reasonable contribution to the revenues from the — our subsidiaries there?
Operator
Sorry to interrupt Mr. Baliga.
Unidentified Participant
Yeah.
Operator
Sir, may we request that you return to the question queue, there are participants waiting for their turn.
Unidentified Participant
Okay madam. Thank you.
Operator
Thank you. The next question is from the line of Devanshu, an Individual Investor. Please go ahead. Devanshu, your line is unmuted. Please go ahead. As there is no response from the current participant, we’ll move on to the next. That is from the line of Ashish from Northbridge Capital. Please go ahead.
Ashish
Yeah. Good evening to the management. Am I audible?
Operator
Yes, sir. Please proceed.
Amit Raj Sinha
Yes Mr. Ashish, please.
Ashish
Yeah. My question had to do with the PureCoat and UltraMod. I was a bit late to the call. Could you just reiterate what the plan was for these two products? And what is the capex, if so, and what is — yes, please, please.
Amit Raj Sinha
Yes, the capex, Ashish, the capex is all in place. We have commenced operations and we are sampling at this moment and giving it to our same customer base who are taking our MCC excipient for taking trials on their tablet coating.
Ashish
Okay. So just to understand — sorry, this is my second question, but is the product similar to a cellulose base or how — when was the capacity really put in place?
Amit Raj Sinha
So the product is not similar to a cellulose base. Our primary product or the cash cow is MCC, which is microcrystalline cellulose, which is technically called a binder. Now what we are doing is when we were selling MCC earlier, we were selling the core of the tablet, the main body of the tablet. Now we are selling the coating of the tablet. That is how the difference is.
Ashish
No, but when was the capex for this put in place?
Amit Raj Sinha
So this capex was put into place along with the expanded capacity of our Dahej plant in MCC.
Ashish
Okay. So the 7,200 MTPA expansion at the same time, this was also funded.
Amit Raj Sinha
Yeah, yeah. In the same block, we’ve set up a separate block for the expanded capacity of MCC, and in that we had segregated a different floor for the coating section.
Ashish
Okay, got it. So as of now, the main two expected capex is the CCS 1,800, MTPA and the 150 kilo litre APIs, right?
Amit Raj Sinha
Absolutely, Ashish, you’re right. You’re right.
Ashish
Okay. So one question, sorry, sorry to extend, mainly — so as per my understanding, you had more of a push strategy to gain market share this quarter. So what was the realization for MCC this quarter?
Subbarami Reddy Oruganti
This quarter, the realizations are around INR212 per kg.
Ashish
Okay. Got it. Thank you. Thank you for taking my questions. Have a good evening.
Subbarami Reddy Oruganti
Thank you.
Amit Raj Sinha
Thank you, Mr. Ashish.
Operator
The next question is from the line Purushottam from Volkswagen ITS [Phonetic]. Please go ahead.
Unidentified Participant
Hello. Am I audible, sir?
Operator
Yes, sir. Please proceed.
Unidentified Participant
Hello? Hello?
Subbarami Reddy Oruganti
You are audible, please.
Unidentified Participant
Yeah, yeah. Good evening, sir. Good evening to CFO and Amit sir. So first of all, congrats on posting such robust performance in this tough Q2 times. So first of all, my question to Mr Raj-ji. After the quarter one, the company had given a document on the exchange regarding the $180 million revenue visibility from the Saudi JV. So where are we on that? Because I might have [Speech Overlap].
Amit Raj Sinha
Yeah.
Unidentified Participant
Yes, sir. Actually, I joined the call a little bit, so I might have missed some part. That’s why I am asking.
Amit Raj Sinha
No, issues, no issues. We’re very happy to answer your questions. So unfortunately, our joint venture partners and we are still trying to grab markets, which has got a reasonable mix of being sustainable and a reasonable level of risk. I mean, there are opportunities there in Saudi, but we are just trying to work out and have a fair mix of opportunities, which remain sustainable and are risk balanced. So on account of that, we have let go certain opportunities and we didn’t really look at them because we didn’t feel that we were in a position to be able to execute those orders, standards, products in line with those stipulated norms. But we are working to see that we gradually strengthen this, build this up and get better at taking further risks to be able to generate revenue there.
Unidentified Participant
Okay. So can we expect the — some amount of revenue from next year — next financial year?
Amit Raj Sinha
Absolutely, sir. You are asking me and I think I’ve been pushing my team in the Middle East, the Sigachi Arabia as much for commencing operations because we are incurring costs. There are opportunities lying in front of us. We just have to balance out and strike a cord and just commence. There can never be a perfect moment.
Unidentified Participant
Okay, sir. Yeah, I can understand. My next question is, I could ask quickly. So in the US market, the government is trying to establish a BIOSECURE Act, which will be, as per the analyst, which will be beneficial to the mostly to the Indian pharma segment. So can we get — since we are working in pharma also, so can we get some advantage of this BIOSECURE Act? Any comment on this, Amit sir?
Amit Raj Sinha
Yes, you’re right, sir. We are expecting a better, I mean, support in terms of our pricing and absorption of volumes in the US market on account of this.
Unidentified Participant
Okay. Thank you. Sir, my next question I will ask to CFO quickly. So in the — after I think after quarter two, you said that at the end of this financial year, we will be a debt-free company. So are we on the track of debt-free or any comment on this, sir?
Subbarami Reddy Oruganti
Yes. We are on the track. Yes.
Unidentified Participant
Okay. My next question is like what — since we are giving the sample regarding our — the new tablet coating, so when shall we expect revenue from this — from this year or maybe from the next year? Amit sir?
Amit Raj Sinha
So Mr. Purushottam we expect certain level of revenues to come in from the Nutraceuticals segment in this financial year itself, but any segment would at least take in at least three months of stability data before the customers come back to us. So I’m expecting that by — probably by Jan or Feb, we should have some trial orders coming in on reasonable quantities from the nutraceuticals customers.
Unidentified Participant
Okay, sir. Thank you, sir. My second last question is related to the margin front, so you have given the revenue guidance of 30% for this whole year. So what will be the overall EBITDA margin? Can you give some comment on this?
Subbarami Reddy Oruganti
Yeah. We hope we will maintain. We’ll maintain the EBITDA margins.
Unidentified Participant
So what will be the percentage, approximate percentage?
Subbarami Reddy Oruganti
Yeah, that is around 21%, 22%.
Unidentified Participant
Okay. Okay. Thanks a lot, sir for giving me the opportunity. I’m actually a retail investor of this company. And I’m a really admirer of Mr. Amit Raj’s team and his personality and his achievement. And I’m a great follower of him on LinkedIn also. So all the best to you and the Sigachi team also. Thank you.
Amit Raj Sinha
Thank you very much, Mr. Purushottam. I wish you good luck. Keep working hard and keep rising.
Unidentified Participant
Yes. Thank you, sir.
Operator
Thank you. The next question is from the line of Damodar Baliga from DB Investments [Phonetic]. Please go ahead.
Unidentified Participant
Sir my last question, since you have already answered regarding the Gulf operation, so we could expect some revenues in the next financial year. So my question is regarding the Trimax investment. So when it was acquired, we were given a target that we will do around INR40 crores in FY24. And then in FY25, it was expected to do around INR80 crores. But if you see as on H1 of this financial year, we have done only INR18 crores. So at the most we can reach INR40 crores or INR50 crores during the current financial year. So my question is, I know there are a lot of delays and hindrances in getting the approval from the regulatory authorities. So what gives you confidence to go ahead and increase the capacity from 100 KL to 250 KL when the current capacity which can, I think as CFO had said INR90 crores or so. So you’re not even utilizing hardly 50% of that capacity.
Amit Raj Sinha
Mr, Damodar, you are absolutely right. But the cash point is that at this moment, there are uncertainties, but our horizon is so large and so big that if you don’t look at an additional capacity and when we have nine CP approvals coming in by the mid or end of the next financial year, we will be high and dry and we will have approvals in place, but we will not have capacities to cater to the regulated market for those CEP approvals. So it is in very fair this thing rather than doing it at the nth moment and building up capacity, it’s good to have couple of quarters before and build up the capacity so that when auditors come to inspect and audit, the audit passing the percentage also is 100 out of 100. There is nothing else behind this. It is just giving us the confidence that, yes, our API vertical is very much on track and we are on track to be able to complete all the expansion and the approval simultaneously.
Unidentified Participant
Sir in case if we get the approval by this year end as you had mentioned, the customers will take some more time to approve our facility as well as our product, right?
Amit Raj Sinha
So it is not that customers are going to come at it again. Once the CEP approval comes in, most chunk of our regulated customers would immediately go in for sampling and stability of their formulation. And once the stability is done, they would — maybe meanwhile, they would come for a customer comfort audit and subsequently start trials.
Unidentified Participant
So that would minimum take 3 months to 6 months, know sir.
Amit Raj Sinha
No, sir, I would say it is not as much. Once the CEP approval comes in, it is far, far, far quicker, sir.
Unidentified Participant
Why I am asking so many questions in that [Speech Overlap].
Amit Raj Sinha
No, no, no, you’re most welcome sir. Don’t worry about it.
Unidentified Participant
The reason is somehow your projections for this Trimax have not been met. I don’t know whatever you know the delays and something you are not accounting. So worry is since it is in fact pulling down the consolidated revenue, I mean the profitability, so just wanted and eager to know how fast you turn it around. So when you start doing the additional capex to increase the capacity, then the depreciation and interest will also add, whereas we may not be utilizing the capacities. So that is the worry. So are you confident at least before you have the new capacity, the existing 100 KL capacity would be running at full utilization?
Amit Raj Sinha
Very much, sir. I’m very confident of this statement. There are no second thoughts about it.
Unidentified Participant
And as and when you are running at 100 KL, you should be doing EBITDA of 10% plus, right?
Amit Raj Sinha
10% plus, if the moment I have the regulatory approvals of CEP in place, I’m confident of achieving a 20% EBIT margins on these.
Unidentified Participant
Okay. Okay, sir. Thank you very much for the opportunity and wish you all the best.
Amit Raj Sinha
Thank you, Mr. Damodar. My best wishes to you too.
Operator
Thank you, sir. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Amit Raj Sinha for his closing comments.
Amit Raj Sinha
Thank you. Thank you all for participating in this earnings con call. I hope we were able to answer your questions satisfactorily and at the same time offer insights into our business and the Group. If you have any further questions or would like to know more about the company, please reach out to our Investment Relations Managers at Go India Advisors. Thank you and have a wonderful evening.
Operator
[Operator Closing Remarks].