Sigachi Industries Ltd (NSE: SIGACHI) Q3 2025 Earnings Call dated Jan. 18, 2025
Corporate Participants:
Amit Raj Sinha — Managing Director & Chief Executive Officer
O. Subbarami Reddy — Chief Financial Officer
Analysts:
Priya Sen — Analyst
Deepesh Sancheti — Analyst
Aryan Modi — Analyst
Madhur Rathi — Analyst
Ankur Sanwaria — Analyst
Manav Vijay — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 and Nine Months FY ’25 Earnings Conference Call of Sigachi Industries Limited 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]
I now hand the conference over to Ms. Priya Sen from Go India Advisors. Thank you, and over to you, ma’am.
Priya Sen — Analyst
Thank you, Rutuja. Good afternoon, everybody, and welcome to Sigachi Industries Limited Earnings Conference Call to discuss the Q3 and nine months FY ’25 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 performance, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.
Amit Raj Sinha — Managing Director & Chief Executive Officer
Thank you, Priya, and good afternoon, everyone. I extend a warm welcome to all of you to the earnings conference call of Sigachi Industries Limited to discuss the financial and operational results of Q3 and Nine-Month FY ’25. The financial results and investor presentations have been shared on the exchanges, and I trust you have had the opportunity to review them. Continues his journey of steady growth and strategic expansion. This quarter, our core business in pre-formulated excipients delivered robust performance with both revenue and volume increasing by 29% and 22.5% year-on-year for the Nine-Month period. These results underscore our unwavering commitment to providing high-quality products and solution to our customers. Our R&D initiatives remain a cornerstone of our operations, driving innovation and continuous improvement.
This focus enables us to expand our capabilities and deliver products that set industry benchmarks. In our O&M business, operating at as an asset-light model, we have maintained strong momentum by partnering with esteemed clients like Gujarat Alkalis, Aditya Bella Group, ONGC, Lots Chloro Alkalis and Adani. We are strengthening our footprint here. Exciting opportunities lie ahead — lie ahead, particularly in the Middle-East, where we are making strategic inroads. Our foray into the API segment last fiscal continues to gain traction with a focus on catering to domestic markets while diligently working on obtaining the required certifications for expansion into regulated markets. Of the nine CEPs targeted for filing this fiscal, we have already filed four, marking a significant step towards enhancing our access to regulated markets, which will boost our top-lines and margins. We already possessed 20 acres of SECL land in Dahej designated for our development of complex excipient and sodium.
The groundwork has already commenced and the necessary regulatory clearances are underway. This facility is expected to further strengthen our leadership in excipient manufacturing upon completion. I’m also proud to share that our facility has been audited and approved by Intertec on behalf of Global Alliance for Improved Nutrition, that is gain. This recognition reaffirms our dedication to the highest-quality standards, enabling us to supply a premium base blend brand of vitamins and minerals premixes to clients worldwide. I would like to emphasize that Sigachi’s unwavering commitment to R&D has been instrumental in broadening our product portfolio. The company delivers exceptional products across pharma, APIs, intermediates, pharma excipients, film coating and Food and nutrition segments. Our comprehensive presence across the pharmaceutical ecosystem not only diversifies our revenue stream, but also strengthens the long-standing relationship we have had with our leading formulators.
As we continue to diversify and grow our presence across 65-plus countries and two strategic joint-ventures established last fiscal with Saudi national projects and position us strongly to capitalize on emerging opportunities across products and service lines. At Sigachi, our focus remains steadfast on quality, innovation and sustainable growth. These pillars combined with our diverse portfolio ensure enduring value for our stakeholders as we build a future defined by excellence and trust.
I now invite CFO, Mr. OS Reddy, to share the financial and the operational highlights for the quarter. Over to you, Mr. Reddy.
O. Subbarami Reddy — Chief Financial Officer
Thank you, sir. And good evening, everyone. Let me take a moment to brief you on the financial performance for Q3 FY 2025. The company delivered a strong performance this quarter, showcasing robust growth across key financial metrics. Operating income increased by 25.7% year-on-year, reaching INR139.41 crores. EBITDA witnessed a significant growth rising 46.9% year-on-year to INR33.2 crores with an EBITDA margin of 23.81%. Net profit surged by 26.54% year-on-year to INR20.51 crores, translating into a PAT margin of 14.7%, building on the momentum. Revenue from the MCC segment rose by 56.72% year-on-year, increasing from INR73.53 crores in Q3 FY ’24 to INR115.24 crores in Q3 FY ’25.
Revenue from the O&M segment grew by 12.91% year-on-year to INR9.88 crores, while the API segment continued INR8.85 crores during Q3 FY ’25. In addition, the strong operational and financial performance, we are pleased to report that the company continues to maintain a stable financial position. Care Rating Limited has reaffirmed Industries Limited credit rating for its bank facilities, maintaining a stable outlook with a rating of care A-minus for long-term facilities and care A-minus care A2 for long-term short-term facilities. As we move forward with the execution of our strategic growth plans, we remain confident in achieving greater economies of scale and improving operational efficiencies. These efforts set a strong foundation for our sustainable growth and long-term value-creation for our stakeholders.
This concludes my remarks. We would be delighted to address any questions you may have. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin 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 Deepesh Sancheti from Manya Finance. Please go-ahead.
Deepesh Sancheti
Hi, am I audible?
O. Subbarami Reddy
Yes, yes.
Operator
Yes, you are.
Deepesh Sancheti
Yeah. My first question is, when will the new MCC capacity reach full utilization?
Amit Raj Sinha
For the Q4 of FY ’25, we are looking to touch 50% capacity utilization. I believe in the next four quarters thereafter, we should be able to touch 80% to 90% capacity utilization.
Deepesh Sancheti
Sorry, could you repeat that? In Q4, you’re expecting it to be fully commercialized. That’s what it said, right?
Amit Raj Sinha
So it’s already fully commercialized. We are already at around 35% to 40% capacity utilization. In Q4, I expect us to cross 50% capacity utilization of the new added capacity, not the old capacity. Old capacity is already hovering around 90%, 95%, 98%. The new capacity, I expect it to be touching 50% in Q4.
Deepesh Sancheti
Okay. And by next year — by FY ’24…
Amit Raj Sinha
By Q4 of next financial year, I expect it to touch in the range of 80% to 90%.
Deepesh Sancheti
The new capacity?
Amit Raj Sinha
Yes, yes, right.
Deepesh Sancheti
Okay. And when will the CCS plant be expected to commercialize?
Amit Raj Sinha
So I’m expecting the environmental clearance in the next four weeks. So there has been a file movement in the last two weeks and I believe once the environmental clearance comes in, we will commence our civil works for the CCS project. Right now, we’re only doing the boundary wall and the non-CEC activities.
Deepesh Sancheti
Okay. And how much does it — I mean, how much is the new MCC capacity could contribute to the revenues?
O. Subbarami Reddy
Yeah. Here, already last year we achieved a turnover of 13,469 metric tons by March 31, 2024. Now during nine months, we achieved 12,682, which is combined. In nine months itself, almost will be reaching 13,649 last year’s whole turnover and in nine months we achieved 12,682. It is as Mr. Amit told this by end of this year, we’ll achieve more than 50% and next year, we’ll be achieving at full operational capacity, maybe 80% or so.
Deepesh Sancheti
Okay. And will there be any additional fund which will be required for future expansion?
Amit Raj Sinha
Which product do we…
Deepesh Sancheti
No, I mean, I’m trying to say overall, will there be any additional funds requirement or any capex which will be done by the company. Is there any future capex, which is in-line also?
O. Subbarami Reddy
Of course, wherever, whenever the growth demands will go for future expansion always would be there. But as and when there is a distinct form details are available, then we’ll inform.
Amit Raj Sinha
No, over and above that, on a regular basis, we always keep debottlenecking and looking for opportunities to streamline our processes and inch up our capacities by a small margin. So when it’s a drying section, then we work to see how is it that we can equipment balance the drying section and then sometimes it’s summer something else. So we keep debottlenecking and keep adding up capacities as we progress on our production capacity. So I think those small parts always keep coming in and that they are not major.
Deepesh Sancheti
Okay. Now with these approvals coming in and the capacity also increase — I mean the future capacity also increasing. How will — how will our margins improve? And how will our ROE — will our ROE be the same? We’re right now doing around 16% 16.5%. Will we reach towards the 20% mark or we expect the ROE to be the same?
O. Subbarami Reddy
Going-forward, it will definitely increase, we hope because the — once the capacity at higher maximum capacities, then its share in the per unit cost will come down and warheads will be absorbed and then later on it contributes the entire portion to the profits. Definitely, we hope it will increase if.
Deepesh Sancheti
See, is this also with the margins?
O. Subbarami Reddy
Yes, in margins also, if both margins.
Deepesh Sancheti
Because from last quarter, we saw a slight dip in the margins. So if you can tell me the reasons for that also?
O. Subbarami Reddy
Yeah. In the last quarter, you are comparing Q2 versus Q3?
Deepesh Sancheti
Yes, I’m comparing Q2. And also is it right to compare Q2 versus Q3?
O. Subbarami Reddy
Yeah, because Q2 there was PLI income is there major around INR12 crores. And when we see — see, overall when we see always Q3 income is lower than Q2 when we compare historically. Q2, Q4 is this is highest turnover would be there, highest turnover and margins. And next Q2 and then Q3 and then Q1, if I give the ranking. That is the reason Q3 always it is a little lower than Q2. Once we remove this our top-line, the PLI income, which was considered in Q2, then still there is a — this thing comparatively lower-income is there. That is the reason. In Q2 always higher than the Q3 revenue.
Deepesh Sancheti
Okay. And the PLI income, which you said that it is realized in Q2, do we expect any PLI — further PLI income coming in any of that next quarters, maybe in Q4 or Q1?
O. Subbarami Reddy
Yeah. Every quarter, just I think this year we hope we’ll expect around INR9 crores to INR10 crores of PLI income. Once it is approval is received, then we’ll recognize maybe in next year, first-quarter or second-quarter it may be.
Deepesh Sancheti
Next year first or second-quarter.
O. Subbarami Reddy
Yes.
Deepesh Sancheti
Okay. Okay. Now how has been the funds which have been raised by IPOR and preferential been used in this entire expansion? Could you give us a breakdown?
O. Subbarami Reddy
Yeah. In the IPO we have raised INR125 crores.
Deepesh Sancheti
Yes. And you did a preferential also, right?
O. Subbarami Reddy
Yeah, we did a differential. In preferential INR286.45 crores we have rise. So-far we have received till last call — till quarter-ending 31st, we have received INR122 crores. And in that we have spent towards the acquisition of our Trimax unit, API units. That total API unit cost is INR125 crores and 80% it is already acquired for INR100 crores and the balance 20% we’ll be going to acquire within a period of three years and there is a purchase’s call option, we can exercise it. That is INR122 and there is some funds are INR16.75 crores are in deposits. And the balance amount we are at to receive around INR166 crores. Now we have received around INR16 crores, another INR140 crore INR150 — around INR150 crores we are at to receive.
Deepesh Sancheti
Okay. So even for future expansions, I’m sure this INR166 crores will be — which will suffice, right?
O. Subbarami Reddy
Yes.
Deepesh Sancheti
We don’t need to go for additional — I mean, maybe a preferential route or a higher — what is the debt right now?
O. Subbarami Reddy
Debt as of now long-term debt is the net adjusted debt is zero, we can say because there are FDs are there and that is — debt is mainly towards working capital is there.
Deepesh Sancheti
Okay, mainly the working capital is INR130 crores.
O. Subbarami Reddy
Yes, maybe INR100 crores, INR90 crores is there, that is revolving. It comes as of now, we see, yeah, it is around INR90 crores.
Deepesh Sancheti
Okay. My last question would be, what is the revenue split across pharma, neutra and food and cosmetics after receiving the gain certificate and how is this expected to change?
O. Subbarami Reddy
Yeah. After receiving gain certificate, the Food and Utah share will go up. Now as of now, the MCC is 80% is there. Within MCC, the major — it goes towards 65%, almost it goes to this pharma. And, 20% 25% goes for food and balance is for cosmetics and paints. And overall revenue, if you see MCC is 80% and it is 8%. Last year it was 9%. This year it is 8% because the other income has gone up. It’s — as a percentage, its share has come down, though the absolute figures it has increased O&M and APA is around 7% and other income is 4%.
Deepesh Sancheti
You have also mentioned in your commentary that you have filed for four new APIs. When will — when should we see any significant revenue coming from KPIs. And for going ahead in FY ’27, what is the mix which you see from APIs from MCC?
O. Subbarami Reddy
In this thing, now we are constellating — we are in the process of filing regulatory licenses. Once we get the regulatory licenses, API export will come — export income will increase, wherein we get decent margins. In domestic, hardly the margins are very lower side, and yeah, that is the case. And your next question, I — can you please repeat? The percentage you’re asking.
Deepesh Sancheti
Yeah, I’m talking about how much — going ahead in FY ’27, what is the company? What is the — I mean, expectation from the company that this is a percentage of revenues which we need from MCC and this is a percentage — I mean a higher share from API.
O. Subbarami Reddy
Yeah, yeah. We definitely this API share will increase and we hope these modules are sustainable and then even we can do better also with the contribution of API. The FY ’27, the API contribution will be more and the — definitely we hope this growth will continue, 25%, 30% growth it will continue.
Deepesh Sancheti
So can we expect about 15% coming in from APIs?
O. Subbarami Reddy
Yeah, yeah. Yes, we hope…
Amit Raj Sinha
Pprobably more than that actually.
O. Subbarami Reddy
It is more than that, yes. Far, far more than that we are expecting.
Deepesh Sancheti
’25, ’30, I mean that’s the reason I wanted the figure from the…
O. Subbarami Reddy
Yes.
Deepesh Sancheti
Okay. Fine. I’ll send for the next questions. Thank you.
O. Subbarami Reddy
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Aryan Modi from Abakkus. Please go-ahead.
Aryan Modi
Am I audible?
O. Subbarami Reddy
Yes, sir. You’re audible. Please go-ahead.
Aryan Modi
Okay. So sir, I would start-off with the question. Margins are a big concern for the company now considering how we are growing considering different sectors are growing. Last quarter we faced a heavy decline in margins and we weren’t sure of the reasons exactly about the last quarter. So my first question would be last quarter why was the major decline and it’s continuing. If we see year-on-year for Q3, the margins have been declined and investors are not able to get the returns, which they were expecting before considering the revenue growth considering the expansion plans.
Secondly, when the API approvals have started coming in, when we have — when we are starting the API, the production, the margins, the with lower capacity, are the margins going to hit more? And overall is the company for the next two, three years margins would be a major concern or are we — is there some ways we are trying to improve that from the year coming?
O. Subbarami Reddy
Yeah, yes, Mr. Modi. This — coming to your first question, the margins declined in Q2 and Q3 as we informed in our previous call also, we are just penetrating — we are penetrating our products because the expanded capacities are comes into operational, then we are — to penetrate into the market some price reductions we have done. And then after once that is settled down slowly, gradually will increase and then our margins will also go up. First, we are concentrating on-market shares. That is one of the reasons it is. And going-forward, it will go up.
And coming to your EPA, this thing, CEP regulations are underway. Once — anyway, once we go into a regulatory market, the margins also will increase. As of now, the overrates are not a meeting. That’s why in the API, we are not getting any margins. Presently, once we go into CEP filings, once we get the CEP filings and once we enter into a regulator markets then the margins are higher side and then we’ll scale-up the operations also, then we hope our profits also will increase in API business also. And overall, now this is because we just expanded the capacities to grab the market-share we are adopting this strategy. That is the reason in Q2 and as well as Q3 also, margins are declined little.
Aryan Modi
So the overall objective of the company currently is giving preference to expansion, capturing market-share to — for from the competitors is more important than delivering value to the investors by giving better returns. So there is a clear, I guess, preference of the company. Is that correct?
O. Subbarami Reddy
But there is one thing, sir. Here there is long-term at the objective and short-term margin. In short-term, we may think our margins will come down little, but in long-term, we are looking for long-term to so that in long-run, we’ll get — we’ll secure our market and then we’ll get a decent margins. That is our strategy we are moving.
Aryan Modi
So in the coming next few years also, if we are expecting the MCC capacity to be utilized, 80%, 90%, then we were planning in the previous quarter to further expanding the MCC capacity. So in this growth expansion phase, we according to my calculations, the next three, four years margins would be a major issue for the company to capture market-share.
O. Subbarami Reddy
See, next two, four, two, three years, three, four years, it’s not. See, by next year, we’ll be reaching our operational capacity maximum 80%, 85% will reach. And then even now also, we are just planning how to — once we are securing the customers, once we are known for supplying the quality to material and then once the comfort comes, then slowly, gradually we’ll increase the price. Yes, we have different strategies, our marketing team, they are going ahead with that and let us see. But the margins, we hope with a strategy to increase the margins only we are moving ahead.
Aryan Modi
Right. Also coming to finance costs, quarter-on-quarter finance cost has risen by 100%. So what was the basis for that?
O. Subbarami Reddy
Yeah. The major reason is the company is growing and the lot of this thing amount towards working capital, it is fair because of DSOs also — there is an increase in DSOs and now we are trying to reduce the DSO — that are. And also the inventory also, it is in the higher side, it’s there because it’s an anticipation to increase the prices of wood pulp, we have kept it and use inventory because that is also one of the reason and slowly it comes down. Now we have taken addition not to increase any listing stock and also receivables also, we have put a target to the sales team to reduce it to 90 days so that finance cost also it comes down.
Aryan Modi
Also in the last quarter, we had discussed there were losses with the company who are facing from the Middle-East unit and I guess the revenues were still not coming from the Middle-East unit and it was becoming a cost center for the company. So what are the updates currently of?
O. Subbarami Reddy
Yeah, it’s in Middle-East, the volume should go up to get the margins. Right now, the volumes, we are just in the process of increasing the margin — these volumes due to top-line. Once our top-line increases, it absorbs the overrates and then slowly it will turn into the profits. And also the activities, our Arabia this thing working activities, we are going to start — once we start that activities, the revenue comes from there. And going-forward, maybe in another two quarters we’ll see we hope we’ll see a positive margin positive figures there.
Aryan Modi
So for the next two quarters also, we are going to face losses from Sigachi Arabia.
O. Subbarami Reddy
Yeah, that is — the thing is there the operational expenses only, there are no — this thing we don’t have any setup, but only to meet the operational expenses, the — this revenue should go up. Volume should go up. But next two years, that is a very small this thing, but even loss is also very small. But going-forward in another next two quarters, it will turn into a pause through we are expecting.
Aryan Modi
Also for the API segment, what capacity utilization are we going to reach in the Q1 of FY ’25?
Amit Raj Sinha
Okay. So, Mr. Modi, we are not really looking at capacity utilization at this moment. Our focus is to see that we balance out our cost by selling into the domestic and in the meanwhile, have our regulatory filing pipeline strengthen.
Aryan Modi
So we have — we have received approvals and I guess approvals were supposed to start coming in from Q4. So we are not looking to capture any regulated markets. We are not…
Amit Raj Sinha
So the regulated market capture is — it’s not really a — it’s a long activity. We have filed CEP applications. We have had certain queries and discussions to take it forward. So that process is on, but we still haven’t received any CEP approval from our subsidiary.
Aryan Modi
Okay. So right now, we are only planning to sell it to the domestic markets and from which quarter are we really planning to scale-up the API segment and potentially start exporting to regulated markets.
Amit Raj Sinha
So possibly from Q2, we should be looking at having our — in the Q2, we should be looking at having our CP approvals and possibly from Q2, if not from Q3, we should be having sales into the regulated markets as well.
Aryan Modi
So the major growth which the company, which the revenues will be coming from is NCC itself till Q3 of next year.
O. Subbarami Reddy
Yes. This is…
Amit Raj Sinha
MCC and of course, a combination of food and nutrition because right now we have the gain approval in-place and that should give us an upper hand in terms of getting additional orders from the Global Alliance of Improved Nutrition, the World Food Program body.
Aryan Modi
So strategically, the acquisition of Equinox, was that a correct move made by the company considering the amount of capital which has been you know, has been deployed there and no returns have been generating from the last one, two years and the coming one year two.
Amit Raj Sinha
So it — we believe it was the most appropriate decision for the pricing that was. It was a USFDA approved facility for advanced intermediates and we had an update — ready-made updated facility wherein we could transition that to APIs. And we are in the process of doing that. I’m sure you believe that the pharma industry is not very easy to breakthrough, not very easy to come out. It takes time and that is what is the process which is on.
Aryan Modi
If MCC is such a cash cop for the company delivering such good margins, such good returns, why is the company not focusing quickly on expanding the MCC, getting more market-share and going into so many different segments.
Amit Raj Sinha
So we are not going into so many different segments, Mr. Modi. They’re all complementary. Yes, they are synergistic. When you’re giving — when you’re giving excipients, it’s but natural that you would want to give your customers APIs as well.
Aryan Modi
Sure, sure. Thank you. That is all from my side.
Amit Raj Sinha
Thank you, Mr. Modi.
O. Subbarami Reddy
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Madhur Rathi from Counter Cyclical Investments. Please go-ahead. Madhur Rathi please go-ahead with your question. Your line is unmuted.
Madhur Rathi
Yeah, I’m speaking. Am I audible?
Operator
Yes, you are. Please go-ahead.
Madhur Rathi
Yeah. Sir, I’m trying to understand our cash-flow statement. Our inventory days have increased from 60 — around 60 days in 2019 to around 100 days in 2024. So why is that?
O. Subbarami Reddy
This is we have maintained higher inventory this thing because with there is an indication in the market that the prices will go up.
Madhur Rathi
I’m sorry, sir. I was speaking about receivable days. I’m so sorry, receivable days, sir, our receivable days have increased. So why is that?
O. Subbarami Reddy
Yeah, receivables, now we have given little leverage to the customers. Now recently, we have given instructions to our sales team to bring it down to 90 days. Now it is there around 107 days is there, these DSO days. And now we have advised to reduce it to 90 days. Gradually we’ll bring it down. Initially, there was a problem in certain countries that even though the customers are rich and then they wanted to pay it, but their local regulations and the foreign currency issues, they couldn’t pay. Now we are getting it. And also we are taking a corrective action also going-forward, if there is any such kind of issues are there, we are asking for LPs are advance.
Madhur Rathi
So because of issues with regulations in export country, we couldn’t get our money back.
O. Subbarami Reddy
So almost in that also more than 50% we have received, the balance also we are receiving it.
Madhur Rathi
Okay. And sir, so sir, I couldn’t understand that like proper reserve because India — so due to export regulations in our customer country, our debtors have increased.
O. Subbarami Reddy
Yeah, the — that is one of the factor. See, they have — they wanted to remit, but because of the currency non-availability or some issues in their bankers, then they couldn’t remit. Now those things are resolved and then we are getting the amounts. More than 50% we have received and the balance around less than 50%, we are going to get it. And also we have informed our sales team not to give much great so that if there is any outstanding is there, then in pushing them to collect collections.
Madhur Rathi
Okay. And sir, second question…
O. Subbarami Reddy
It will come into…
Operator
Mr. Rathi, but there is some disturbance which we are getting from your line, sir. Even the management is speaking, please self-mute yourself.
Madhur Rathi
Sure, I’ll do that.
Operator
Thank you. Please go-ahead.
Madhur Rathi
Yeah. So if I look at our asset deal has increased from around INR15 crores to around INR270 crores, I’m just talking about the property, plant and equipment. So it has gone up by 5x. So when can we expect some kind of — so first question was, sir, what kind of feedback period was expected before we made any kind of investments? Sir, what is — second part would be, sir, what is the incremental top-line as well as margins can we expect from this investments that we have there? And sir, another thing is, sir, what is the INR55 crore of goodwill that has been created in our books? Sir, these are my questions regarding…
O. Subbarami Reddy
Goodwill is on account of the acquisition when we acquire the — then the consideration paid minus the value of the book-value of the assets that normally it will be kept as a good deal. That is the acquisition of Trimax.
Madhur Rathi
This is for API plant, right?
O. Subbarami Reddy
Yeah, yeah, that is API plant, yes. The book-value, it was see the land and building and it was procured much earlier and then the prices at the time were lower side and the — we have taken the valuation of the plan existing total plant and that the valuation and it is a USFDA approved facility and it takes two to three years to build-up this facility and then again from there to get USFDA facility, it takes another two to three years. All these things we have considered and then the valuation we have taken. The difference between the purchase consideration and the book-value that goes to the goodwill — that is the purchase goodwill.
Your first two questions, sir, can you please repeat your audio also is not clear, I couldn’t catch.
Madhur Rathi
So we were regarding has increased from around INR15 crores to INR270 crores as of September end. So I wanted to understand when — what was your — what could be the incremental revenue and margins were expected from this? And similarly, what kind of feedback period was expected when we make this margins and when can we achieve utilization of this facility.
O. Subbarami Reddy
Yeah. As we informed this growth it will continue. Now till last year, we don’t have any additional capacities to supply into the market. And now we have expanded our capacities from — it was 14,000 to 21,000. In this increase, we are now in this year when we’ll be touching around 50% and next year we’ll be touching around 80% 85% and thereon we will get full capacities and then our rates also will come down and margins will increase. That is one part. And the existing growth rate will continue. Means every year-around we hope 25% to 30% growth, it will continue. And going-forward, we expect that the margins will increase. Once the occupancy of the plant increases, the margins also will increase.
Madhur Rathi
So, regarding the payback period for Josh investment that we have done?
O. Subbarami Reddy
Yeah, yeah. What is the payback period, it would be around three years.
Madhur Rathi
So by FY ’27, we can expect to get all these investments either return from an PBT perspective.
O. Subbarami Reddy
Yeah, yeah, in our business, it is around three years only the payback period.
Madhur Rathi
Okay, three years. Okay, thank you so much. I will get back in the queue.
O. Subbarami Reddy
Thank you.
Operator
Thank you. The next question is from the line of Ankur Sanwaria, an Individual Investor. Please go-ahead.
Ankur Sanwaria
My first question is, sir, on a standalone basis, is the volume of MCC has increased by 15%, how come the revenue has decreased by 13% on standalone basis?
O. Subbarami Reddy
Yeah. Here, the volume which you are showing is that is consolidated volume. You are talking about the 5,400, which is there. But in standalone, the volume in Q2 was 4,618 metric tons. And in Q3, it is 4,424 metric tons. There is a decline in the volume 4.2% because in historically if you see Q2 always higher than Q3. And again Q4 is much higher than Q3, it is like that. And the revenue also in Q2 INR95.2 crores and Q3 it is INR92.51 crores. That is — there is a little decline historically if you see also. And because of that, there is around INR4 crores decline is there when we compare to Q2 versus Q3.
Ankur Sanwaria
So since we are saying that there is an indication of increase in the price of raw-material, so hasn’t there been any increase in the raw-material prices from last quarter?
O. Subbarami Reddy
Raw material prices is never a constraint, but we are getting at most competitive prices and we are sourcing at the right time and it’s not an issue. Even whatever the increase is there further that can be passed on to the customers.
Ankur Sanwaria
Okay. So my next question is regarding — in your balance sheet, you have mentioned that you have granted the warrants on 30th August 2024, but according to me, it should be ’23.
O. Subbarami Reddy
Yes, 20 — 18 months, it coming 18 months will be up to February ’25. February ’25 minus 18.
Ankur Sanwaria
But in the balance sheet you have mentioned it was allotted on August ’24, I think it should be ’23.
O. Subbarami Reddy
Yeah, yes. You’re right.
Ankur Sanwaria
Now it is only 10 days left for this period to be over.
O. Subbarami Reddy
No, no, no. It’s not like that. See, not 10 days. 10th of the August, we have allotted now the deadline is fifth — we are holding — mostly we’ll receive the amount by 5th or 6th of February.
Ankur Sanwaria
5th or 6th of February, right. So during this quarter, have you already received some amount or you still we have started receiving the amount.
O. Subbarami Reddy
Today we have received around INR16 crores and the people are keep on paying because from here 18th to maybe first week of February 5th if they have already communicated to the investors also all the people they have started paying.
Ankur Sanwaria
So you are hopeful that you will receive the entire money within next 10, 15 days.
O. Subbarami Reddy
Only one thing, Mr Ankur, if we — if the investor doesn’t pay the amount whatever they have paid 25%, that would be for fight.
Ankur Sanwaria
Right.
O. Subbarami Reddy
That is an income to the company, direct.
Ankur Sanwaria
Right. And sir, one thing regarding the treatment of the PLI scheme that you’re doing. Since as I understand that the PLI is directly proportional to the revenue of, let’s say, the export that you’re doing for MCC, if I’m not wrong and export.
O. Subbarami Reddy
No, that is nothing to do with the export, sir. That is incremental. On incremental revenue, we are entered till the year 2028.
Ankur Sanwaria
Okay. So since last-time you said you should showed us an other income at INR17 crores, but this time you haven’t shown any other income. So is it that —
O. Subbarami Reddy
Yeah, yeah. That PLI income, whatever we have shown in Q2, that is that pertains to previous year, ’23 ’24. This year, we’ll be getting — we hope that will be cleared by first — first-quarter or second-quarter of next year.
Ankur Sanwaria
So my question is that…
O. Subbarami Reddy
Once that is approved, then we are recognizing.
Ankur Sanwaria
Yeah. But don’t you think that it should be recognized as and when the increment sale has been made. The approval can come later, but what happens is, sir, we are never sure of the effect that will show on the balance sheet.
O. Subbarami Reddy
Yeah, on a conservative basis, see, once unless the approval is there, approval is not there, we can see all the central government schemes, MEACs where we have seen. And on approval basis, it is most conservative this way we can recognize. Once the approval is there, we can recognize. That is the, that is the process we are following. See, unnecessary recognizing and then tomorrow if it is not approved or we don’t want to go for this. There is no question of approval also of course, but we wanted to be most conservative in recognizing the revenues.
Ankur Sanwaria
So the approval is made generally in Q1 and Q3. Is that correct?
O. Subbarami Reddy
This year we got it in Q2 and next year also we are expecting the same thing.
Ankur Sanwaria
So is this a yearly phenomenon or it happens quarter-on-quarter, sir?
O. Subbarami Reddy
Normally it is a quarterly, quarterly will submit, but yearly they will play it.
Ankur Sanwaria
Okay. I got it.
O. Subbarami Reddy
Okay, going-forward, they may change it also. But as of now, that is the thing that’s going on.
Ankur Sanwaria
Okay. Okay. Sir, one thing more, you had targeted about 25% to 30% revenue growth year-on-year, but I think this time you will surpass 30% growth as well. Am I correct? After Q4 basis.
O. Subbarami Reddy
Yes, you are right, sir. You are right. Sometimes it will even for even better than that also. But on an average, that is in the most conservative basis, we hope we’ll get that. Our growth is sustainable and then we will get — we’ll achieve that growth.
Ankur Sanwaria
One thing I’m really surprised by is that for last three, four years, we have consistently shown compounded sales growth, profit growth, but the share price does not reflect the way you’re performing. I’m sure you cannot comment on it, but we as investors are very disheartened by the share price movement that the company is showing.
O. Subbarami Reddy
Yeah, of course, but anyway, our role is very little on that, but we can concentrate on the performance of the company and then we can perform.
Ankur Sanwaria
Right, sir. I think the performance has been great since the time I have been investing in the company and I really hope that you continue your good work, sir. Thanks a lot for answering my questions.
O. Subbarami Reddy
Yeah. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Manav Vijay from NV Investments. Please go-ahead.
Manav Vijay
Yes, thank you very much, sir. Am I audible?
O. Subbarami Reddy
Yeah, yeah. Thank you, Manav. Thank you.
Manav Vijay
Thank you, sir. Sir, first of all, if you could just help us to understand the CCS Mahi project, we have been positive about getting the approval for last many quarters, but what I was assume or the other delay keeps in happening. This time, are we certainly positive that in next one month, one or two months plus maybe in this quarter we will get the approval?
Amit Raj Sinha
Yes, yes, Manav. This time we are definitely confident.
Manav Vijay
Okay. Fair. That’s helpful, sir. Sir, my second question, sir, if you can just help us to understand the MCC volumes, so I believe that in this quarter we had around 5,400 last quarter two we had 4,676 because I believe that you shared a number of 12,682 for the nine months. If you can just help us quarter-by-quarter as to how much volume was sold-in every quarter, sir?
O. Subbarami Reddy
Yeah, every quarter even — okay, this quarter and Q2, Q3, I can give and Q1, okay, Q3 in the 5,400, first of all, that is a consolidated basis. Consolidated basis. And in Q3, there is an little — when we compare to Q2 period, Q3 is almost similar or little lower than this, but Q1 is lower. Q2 is higher because, okay, I need to check-up these figures and then we’ll do Q4 it will increase further. Just as we mentioned that in Q2, we have pushed our volumes because new capacities came into the operations and then we have pushed our listing sales and we have even we have offered some discounts, we have this thing we have compromised the margins also. And Q2, there is an increase, much increase and then Q3 it is a little lower than Q2 and Q4 it will be a good quarter.
Manav Vijay
Sir, if I’m correct, Q2, you had shared a number of 4,676 and in this quarter…
O. Subbarami Reddy
That is on standalone basis.
Manav Vijay
So what is the difference between standalone and consol because I believe that…
O. Subbarami Reddy
Consolidated there is subsidiaries are there foreign subsidiaries, IMC and there the sales happens independently. That’s why there is always there is a difference between the consolidated and then even MENA also they are free-to procure from anywhere from in the world and then they can sell it in that regime.
Manav Vijay
So sir, in that case my request to you would be, let’s say sorry, sir, whatever that you disclose on a quarterly basis, if you can just maintain, let’s say, if you’re disclosing standalone, please disclose standalone because very fact…
O. Subbarami Reddy
Mr. Manav, one thing, just there was a question on standalone financials. That’s why I quoted those figures. See, otherwise we are mentioning the consolidated only. See, there was a question in the standalone basis, that’s why I give that standalone figures.
Manav Vijay
Sir, my point to you is that we have a — that we have a capacity of 21,700 tonnes and so whatever that we will — so let’s say whatever that we will produce from those plants, we will sell that. Okay. So you might have some income from trading in MCC. So that will go in the consolidated, correct, sir? Whatever manufacturing income comes, it comes in the standalone and whatever trading income from MCC that comes in the consol sir, is that the way it should be?
O. Subbarami Reddy
Yeah. Trading will not be there. Only thing is if at all it is there any specialized grade which requires by the — our wholly-owned subsidiaries, then one process we do and then we’ll sell it. Any further process, further process we do and then we’ll sell it.
Manav Vijay
Okay. Fair enough. Fair enough. My second question would be, sir, on quarter-on-quarter basis, our depreciation has moved up from — from INR3.2 crores to INR4.7 crores. Sir, whatever expansion that we had to do in MCC that got over, I believe sometime in-quarter one, API, we are not expanding at all as of now. O&M anyways is an asset-less — asset-less business. So if you can help us to understand this 50% 60% increase in depreciation on a quarter-on-quarter basis, is any asset became operational or you have changed some policy due to which this depreciation has moved up?
O. Subbarami Reddy
No, no, no. There is no change in policy. Only thing is there was a certain amount is there. In Q2, that was capitalized. Now there is no further much — maybe small, small amounts be there, but also that there will not be any major capitalization. Whatever it was where in the receivable IP, it was capitalized on 30th September 2024. Because of that, there is an increase in depreciation also in Q3. Otherwise, even the major portion already is done. Now this fully — the capacities also have come into operational and then it’s going.
Manav Vijay
Okay. My last question to you. So if you can help us understand what will be the tax-rate for the year?
O. Subbarami Reddy
Tax-rate?
Manav Vijay
Yeah, correct income tax-rate.
O. Subbarami Reddy
Tax-rate — tax-rate, it would be around 25% 26% because in Dahej we have this tax benefit is there, SEZ benefit because of that there is otherwise it is under 30% bracket.
Manav Vijay
Okay and sir next year so this similar tax-rate should also be applicable of 25%, 26%.
O. Subbarami Reddy
Next to two years — two to three years, we’ll get that benefit.
Manav Vijay
Sure. Thank you and all the best, sir. Thank you.
O. Subbarami Reddy
Thank you, sir. Thank you.
Operator
Thank you. [Operator Instructions] As there are no further questions from the participants, with that, we conclude today’s conference call.
I now hand the conference over to Mr. Amit Raj Sinha for closing comments.
Amit Raj Sinha
Thank you for joining our earnings con-call. We hope we address your questions effectively and provided valuable insights into our business and growth prospects. For any additional queries or further information about the company, please feel free to contact our Investor Relations Managers at Go India Advisors. Wishing you a pleasant evening. Thank you.
O. Subbarami Reddy
Thank you all.
Operator
[Operator Closing Remarks]