Viyash Scientific Limited (NSE: SEQUENT) Q3 2026 Earnings Call dated Feb. 06, 2026
Corporate Participants:
Unidentified Speaker
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Ramakant Singani — Chief Financial Officer
Analysts:
Unidentified Participant
Sahil Sanghvi — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Q3FY26VR Scientific Limited earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on attached and phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Zarna. Thank you. And over to you ma’. Am.
Unidentified Speaker
Thank you Moderator. A very good evening to all of you and thank you for joining us today for VR Scientific Limited earnings conference call for the third quarter and nine months ended financial year 2026. Today we have with us Dr. Haribabu, Managing Director and Group CEO Mr. Aja Ram, Executive Director and CEO Animal Health and Mr. Ramakanth, CFO of the company to share the highlights of the business and financials of the quarter. I hope you have gone through our results release and the quarterly investor presentation which have been uploaded on our website as well as the stock exchange website.
The transcript of this call will be available in a week’s time on the company’s website. Please note that today’s discussion may be forward looking in nature and must be viewed in relation to risks pertaining to our business. After the end of this call, in case you have any further questions, please feel free to reach out to the investor relations team. I now hand over the call to Dr. Haribabu to make his opening remarks.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Thank you so much. Good morning and good afternoon everyone. Welcome to VR Scientific Investor Call. Thank you for taking the time to join us today. Today is an important milestone for all of us. This is the first time we are discussing quarterly results of the merged entity. Sequent and VS together as one company. More than the numbers, it’s a reflection of what we have built over the last few quarters. One integrated platform, one operating cadence and. One team working towards the same outcomes. Let me structure my opening remarks around three broad themes which I believe capture both what we have delivered and how we are thinking about the future. The number one combined growth balance sheet and this is now a well scaled company with all the right ingredients. Starting with the quota’s performance. Q3 FY26 reflects steady progress on growth and a step change in profitability and balance sheet strength. Revenue from operations for Q3FY26 was 858 crores grown up by 11% year on year. Adjusted EBITDA was 185 crores grown by 64% year over year. With an EBITDA margin of 21% and expansion of 390 basis points.
Net debt to EBITDA has reduced to less than 0.84x. A significant strengthening was just the previous year. On a nine month basis the momentum is consistent. Nine months FY26 revenue was 2,500 crores with 12% growth year on year. And adjusted EBITDA was 500 plus crores with 58% growth year on year. And most important, our margins for nine months maintained at 20 plus percentage. Of course we incurred one time exceptional items largely related to merger execution. This quarter around 41 crores which includes stamp duty as well as payment for advisors and consultants. In addition to 40 of 1 crores.
And recently government announced a tax regime change. We are trying to convert our old. Tax regime to new tax regime which impacted around 7.7 crores. Altogether it’s one time it’s gone up to 48, 49 crores. If you combine this one time is the pat what we have shown it’s. A big growth quarter and quarter this quarter. So what gives me confidence is that this performance is not narrow based. So we are seeing broad participation across segments and geographies. We are truly working as a one team. That’s most important for the group. Equally important, the balance sheet is now a strategic asset. Over the past few quarters we have consistently spoken about strengthening the financial base to create headroom for sustained investment. The business has moved beyond consolidation and force correction into a phase of accelerated growth. As we look at the merged platform today, the transformation is visible in the combined numbers and in the optionality the balance sheet gives us.
We will use a stronger balance sheet to unlock both organic investment as well as selective mergers and acquisitions. Coming to the number 2.2 now I’d like to take you through how we have improved our margins. You can see quarter on quarter improvement, margins last 8, 9/4. How we have improved with key actions in last 12 to 18 months. The formulation Animal Health Europe. As you know we have a strong foundation in Spain manufacturing as well as front end. So 18 months we have taken many steps to improve business in Europe. Few of those are expansion of markets with direct field force in Spain and few countries like Benelux, Sweden.
And also we add a few distribution agreements for other countries and other few areas. Like we initiated development and promoting companion animal business which is growing fast in Europe and geo expansion for all our products. Since our site is approved by Europe located in Spain and also the site located in Turkey is approved by Europe, we were able to extend products to Europe we started commercializing. It’s reflecting the numbers and most important establish few more partnership with other companies to distribute their products. We distribute. As you know, we distribute few products even for innovators. We distribute few products vaccines for specialty companies coming to emerging markets.
So you know Turkey and Brazil are the key market for us. Turkey turned around last couple of years and you can see the large volume growth this year. That shows our capability of expansion of Turkey. And Turkey also as you know it’s a GMP approved by Europe. We started filing and started shipping to Europe and Brazil shown strong performance this quarter. It’s continuously showing strong performance. We are trying to expand from Brazil to Mexico and other related countries where we can do with the Turkey and Brazil GMP facilities. Now we are able to focus to expand markets like Mexico, Southeast Asia and.
Other few other focus markets where we can do business from there. And coming to India. India, you know, animal health formulation. We expanded field force last year up to 200 and we started presenting the numbers. We started growing and this is one of the key segment for to grow further for animal health in India. Especially farm anim. Then coming to the US formulation basically human health. Last two, three years post Covid. As I explained earlier, also initially post Covid there’s a lot of stock buildup. There’s a lot of competition coming from India. That’s initially we struggled little bit on computing the cost from US side. Last two years we tried to change our strategy moving all matured products to India and also started developing new products. With a little more complex where we can differentiate. And also most important factor to sustain US Business today is a fully vertical or backward integrated for all our key products. We are done for almost all our key products. 45% of our volume products we have. Done commercialization has just started. These are the few things showed to show the sustainable growth on ES business coming to API. As you know, API is our strongest core area for us. And we do continuous new products. And I think we are one of the fastest company to do product development. As well as launch. And most important our efficiency levels in. Operations are very good compared to market. So few things like network optimization. When we acquired few companies where there is a strategic direction, we try to shut down few companies and the continuous focus on the cost improvements with the focus team on the process as well as optimization at plant level. And since we have fully backward Internet sites which are approved by fda we are able to integrate most of the products. Backward integration, that’s where it can show substantial improvement on the margins and of course markets also we try to move. From low end markets like India, Bangladesh, Pakistan. We started focusing more on expanding developed markets and other new area. Last year, you know, initiated cdmo. It started working well. So that’s continuously to grow on that. Because all our assets, infrastructure and resources are pretty well suitable for CDMO business which can do with innovators. We have a great experience built now. And that momentum is growing up now. These initiatives worked out very well for us and contributed both improvement on the. Gross margins and EBITDA margins. And of course these are the continuous activities to sustain the margins, both Grass. Plus as well as ebita. Then third most important after reaching reasonable base with sustainable growth. So where do you want to grow? How do you want to grow? I want to touch upon what we are doing next and how we intend to compound this momentum. Our strategy is focused on two clear growth factors. One of the sector, as I explained last call, also companion animals. This is one of the most attractive long term opportunities for us supported by increasing pet ownership and also the genericization Runway in animal health. If you can read our presentation, the few slides on compan animals it clearly shows this is the fastest growing area both in developed markets as well as developing markets.
And most important today, if you see the analysis, it’s happened only 15% whereas comparatively little more on farm animals and big on human health 85, 90%. That’s where we see the opportunity next couple of years. Since the volume and markets are growing, we are pretty confident the genericization will improve. That’s where it can bring opportunity for us. And as you know, we have already signed an exclusive distribution agreement with the Boeinger Engelam which is one of the innovator company. I think it’s the number three top company in the animal health. We signed exclusive agreement with them to distribute products in India.
We are going to start distribute sometime in February. And this is one opportunity for expand to entire campaign and animal business in India. That’s one of the key focus area for us to expand companion animal business in India. Of course we are focusing other countries but India is going to one of. The key markets for us and other. Markets opening markets and we are evaluating partnerships which includes of course selective merges and acquisitions component animals. We are exploring few things while also building infrastructure in India over time. This is most important and critical part for the companion animals. We see there’s a large opportunity to grow if you have capability to India both R and D and manufacturing. That’s where we see the differentiating factor. For U.S. farm animals. We have very strong position in few countries like as I said Spain and Turkey. We want to expand as much as possible from these countries to Europe. And we have clear plan. We started filing last two years. We started commercializing. That’s a continuous focus. And we have large portfolio in farm animal business today. And we are also looking at whatever are the gaps to fill the pipeline to compete more and grow that and the third area farm animals. There are few markets important markets like Southeast Asia, Africa to expand. There’s a large opportunities.
We’re exploring those things. This is the future next five years. Target for that human health formulation. As I explained, we already started leveraging India manufacturing for mature products. Our strategy is to maintain leverage India low cost manufacturing for large volume or mature products while keeping India sides to launch new products. Since we are going little more complex products and new small high value products. And also keep open to generate government. Business as much as possible. Coming to the last one, API and cdmo. It’s a continuous focus. There is a meaningful opportunity set both API API patent clip and a growing CDMO market. You can go through our investor deck. Other CDMO business is going. Of course there’s a competition also is growing. We are going to differentiate based on our quality of the assets, quality of the resources. Our focus is to pursue CDM opportunities. We are exploring both while expanding internally. We are also looking at some MND opportunities. If we get. At the core of all of these actions in our 1R and D platform and a scale innovation engine. We are a r&d first organization to launch new products that is genuinely scaled and capable. You know, roughly we have 200 plus scientists including 20 plus doctorates and we have dedicated support team for CDMO and also CMO partners and having specialized capabilities such as cytotoxic handling and process safety infrastructure. This is consistent with what we have emphasized earlier as well. That our core strengths are anchored in R and D manufacture and intellectual property and that this is what allow us to move the portfolio to the value curve.
Across all of this, our actions and capital allocation approach remains clear. Prioritize synergy capture and integration discipline over the next 12 months. Maintain balance sheet strength which is very important of course. Invest in growth opportunities that fit into our strategic direction and return thresholds. This is consistent with what we have said previously. A stronger balance sheet provides the headroom to invest in portfolio expansion especially compens animals while continuing improving the returns. Now I’ll take you through the integration status where we are. So as you know, all legal procedural things we completed now except working with the clients to work with the regulatory external regulatory bodies.
So that may take couple of months. But other than that all India legal statutory actions completed. We are able to integrate fully now even though we are not done official. As I explained the last call also. Last 12 months when we announced we. Started working as one team. Like few things. R and D already R D fully integrated as one R&D Both animal health and human health of course. And a couple of new products already developed in animal health. We validated last 12 months 4 new products for animal health. And validated and couple of projects cost improvements have taken and it’s working well. It’s pre filed regulatory. Some of those things started getting approved next few months. But as I explained last call also. Takes 12 to 18 months. We are in fully on track on that manufacturing. Again we really looked at network optimization. How can we utilize efficiently complete infrastructure. Whatever products we are trying to we are getting from outside companies. We move to internal. That’s basically to improve the capacity utilization. Also to provide more comfort to the clients. Actually for the supply reliability. Six of the intervents already we completed. And one was the most important area. We completed one of the new production line to accommodate. This is basically Albendazole product. You know Albendazole goes for human health as well as animal health. Everything. Till today we were manufacturing at one site. We are trying to segregate into two sites. So we segregated human health and built a new site at vs. It’s validated and we filed regulatory. Fortunately one of the approval Europe which is very important for the product. We received approval in 30 days. That shows our strength of regulatory. Other approvals we are waiting. But most of the market goes from Europe. Now we are working with the customers. How can we commercialize quickly on that? Of course few markets where we are able to do immediately we started doing. And incidentally we are seeing the huge. Volume growth of Alvanzo. We can see the good growth this year. And one of the things I would like to highlight. Guys, you must have seen Sequent API. Business last maybe 5, 6 years. I think this is the first year after 2022 we are crossing 400 crores. Okay. It’s a great teamwork. Both Vash and CQL contributed. I think it’s so quick doing this 100 crores per quarter. We were struggling last 2, 3 years. Now it streamlined established 800 crores minimum base. And you can see FY27 first year after long term it’s going to grow double digit and with the good profitability with all our actions and sales, as I said, it’s cross selling both. We started interacting last 12 months. Few things are getting materialized but the products, you know, the regulatory scenario takes its own time, 18 months, 24 months.
But we see the positive momentum on that. And coming to the corporate functions, all shared service, whatever we have fully integrated. We have a clear plan who is going to do what, which function is going to move here or there. But all are established. It’s working as one team. We see that. And also one of the things we mentioned one of the site we are going to diverse. That said Mangalore, we completed the transaction. That’s a basically testing site for the internal as well as external clients. We are able to close on December 31, moved all activities internal. That’s where we are going to save at least a million dollar in next year. That’s one of the strategic initiatives. With this to close. Q3. FY26 is a milestone quarter not only because it’s the first reported quarter of the major entity, but because it demonstrates that the last several quarters of execution are translating into sustained performance, steady growth, structurally higher margins and much stronger balance sheet. We have our strategy and actions well defined and with the strong foundation we have built, we have no doubts we will achieve great outcomes for the stakeholders. With that now, I will now hand over to Ramakanth, our CFO to take you through the detailed financials after that which we’ll be happy to open the.
Floor for any questions and answers. Thank you. I landed over to Ramakam.
Ramakant Singani — Chief Financial Officer
Thank you doctor. Good evening everyone and thanks for joining us. Pleasure to share insights on our strong Q3 and 9 month FY26 financial performance starting with Q3. I’m sorry to interrupt, sir. I just request you to speak little louder please. Okay, I’m changing the mic. I guess it’s better now.
operator
Yes, sir, go ahead.
Ramakant Singani — Chief Financial Officer
I’ll start from the beginning. Good evening everyone and thanks for joining us. Pleasure to share insights on our strong Q3 and 9 month FY26 financial performance. Starting with Q3 FY26 financial highlights. Total revenue reached 8.5 billion up 10.9%. Year on year formulations revenue grew 20% to 4.8 billion while API revenue rose 2.9% to 3.6 billion. Gross margins improved 316 basis points to 54.5% from 51.3%. Adjusted EBITDA surged 64.4% to 1.8 billion and margins expanded 700 basis points to 21.6% Profit before tax for the quarter is at 731 million and this is after accounting for one time merger related expenses of 413 million.
This shows a multifold improvement compared to 245 million in Q3 FY25 profit after tax for the quarter of 485 million. This is again after accounting for one time merger expenses of 413 million and a one time charge on account of mad credit reversal of 77 million. Profit after tax in Q3 FY25 was 420 million which actually included a tax benefit accounted for certain accumulated losses in erstwhile VR subsidies. Consistent performance in the last few quarters demonstrates strength and stability of our revenues as well as earnings. Now I move on to the nine month FY26 performance.
Total revenue climbed 11.9% to 25 billion formulations revenue expanded 14.5% to 13.6 billion and API revenue grew 9.6% to 11 billion. Gross margins rose 350 basis points to 54% from 50.5 in the previous year. Adjusted EBITDA jumped 58% to 5 billion. Margins up 580 basis points to 20.1%. Profit before tax clocked 3.5 times increase from 498 million to 2.2 billion. On account of strong operational performance. Profit after tax more than tripled to 1.5 billion from 480 million in the previous year. Same period. Our focus on product and service mix, expanding geographically and enhancing operational efficiency has driven higher margins and a stronger financial performance. The merged entity financial position provides solid stability with low debt levels and improved efficiency in leveraging assets for stronger returns. Looking ahead, we continue to prioritize realizing merger synergies, maintaining steady profitability, further reducing debt and maximizing cash flow generation. With this, I end my opening remarks. Thank you for your attention. I now request the moderator to open the forum for Q and A session.
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask question May Press Star N1 on the Touchstone telephone. If you wish to remove yourself from question queue, you May press star N2. PI spins on are requested to use. Hence it’s for asking a question. Ladies and gentlemen will wait for a moment while the question queue assembles. First question is from the line of Krisha, an individual investor. Please go ahead. Hi.
Unidentified Participant
So congratulations for a good set of results. Now that this is a merged result, have the synergies been fully captured or is there much more to come? Is this ebitda margin of 20% sustainable? Secondly this quarter there seems to be some exceptional items. Are these one time or could you please explain a bit more on these. And thirdly the ESOP cost, are these going to continue? How should we look at it for the future?
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Okay, thanks for your questions. I think Trisha first one is this 20% margins are going to sustain. Yes, it’s going to 100% sustain. Because now you see we have four segments. So even if there is small issue in one segment other segment is able to absorb those things. We are very confident to sustain these things. Earlier we indicated of course FY27 we are going to achieve close to 20%. But because of our initiatives last 3, 4 quarters we are able to achieve now and we are very confident to maintain that 20%. And also you mentioned that synergies. Synergies are not factored much at this level.
Okay, see as I said take synergies mostly takes 18, 24 months. Whether the operational synergies which requires regulatory approvals. There are few things like when I. Say we shut down one analytical site which is going to give synergies around 7 crores that’s going to reflect slightly this quarter but mostly from next quarter onwards. So most of these energies are not. At all factored but it’s going to come in 27. Then the one time cost. There are three one time cost. One is this merger related asset transfer stamp duty. That’s a purely one time. There’s no change on that the 29 crores. Then the second one is advisors or success fee consultant. Was the purely merger related the 1011 crores that’s a purely 110. The third thing is the tax. Tax returns of 7.7 crores. Matt Credit whatever we written. So recently government has issued during the. Budget they come up with something that’s. Also purely one time. But we may have positive next quarter. If they change the government policy next quarter it may end up positive on that. So purely all these are one time. There’s no chance of coming to that coming to ESOP. There are two ESOPs thing. One existing ESOPs you must have seen come down this quarter. It’s going to continue next few quarters. And yesterday board approved new ESOP scheme for old bias scheme convert into new scheme that we are working out the numbers but that’s going to continue next 12 years. On that other than these things we don’t see any one time expenses. Hope I clarified all three questions what you asked.
Unidentified Participant
Yes sir. Thanks a lot for your detailed answer.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Thank you.
operator
Thank you. A reminder to all the participants you may press star and one to ask question. The next question is from the line of Ishika individual investor. Please go ahead.
Unidentified Participant
Yeah, hi. Hope I’m audible. First of all, congratulations on the great numbers. I have a couple of questions going ahead. What are the shifts that the company will do to keep the growth going? Could you please share a bit on the future priorities?
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Okay, thank you. Thank you. Future. Of course I explained few segments where. We are going to focus on companion animal is the big segment to grow. And other things CDMO and also integrated. Play for major entity. These are the things we are looking for. Both organic as well as inorganic growth. Since our balance sheet is very strong now, we can leverage the balance sheet. We are working on a few areas to grow on that.
Unidentified Participant
Okay, understood. That was really helpful. Also you had indicated CDMO opportunities. Is it for human or animal health as well? And when will we see these materializing?
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
It’s a both in fact, you know, animal health 80%. We do business with innovators. It’s a kind of CDMO. Even though we didn’t define that. But we are accelerating that growth in. Animal health based on last six, eight months our performance with them. Now we are getting new inquiries, new RFQs for the new products. And we see the momentum growing animal health future. That’s where we see the good opportunity. That’s one of the reason I also mentioned this year after four, five years animal health API is going to grow. CDMO focus is that. And second human health. We focused last one year and it’s. We done reasonable health. Well, of course it’s a material and. It’S going to continue. So both animal health as well as. Human API is going to continue CDMO. And we can see it’s a reasonable number even today also if I put all together. But it’s going to grow maybe after two, three years. Big number.
Unidentified Participant
Okay, understood. Just one last one. You had given a guidance of 4000 crore and 20% EBITDA in 20 would you still be achieving these targets?
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
So if you see our current rent. Rate, so you know the answer. So when we say 185 crores this quarter, 187 crores last quarter and also the top line is going to close to 900,860 crores or even if you take 15% growth, we are pretty comfortable to reach that level in FY27. Not. Not even 28, 27, that one, whatever. Of course this pre er for all those things. But we are comfortable to achieve that. We are very, we are very confident. To maintain the 20 plus EBITDA levels now.
Unidentified Participant
Understood. Thank you so much. I’ll just rejoin the queue for the next questions.
operator
Thank you. The next question is from the line of Sahil Sanghv from Monad Net Worth Capital. Please go ahead.
Sahil Sanghvi — Analyst
Am I audible, sir?
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Yes.
Sahil Sanghvi — Analyst
Yeah. Good evening and congratulations for a good set of numbers. Sir. First question is. First and foremost sir, a very good presentation. It was really quite in detail to understand what has been achieved and what. What is the focus going ahead. Second sir, I would like to understand this quarter the growth on the API side has been low single digit. So is there anything to read over here or is it just a one off quarter kind of thing?
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Thank you for your comments and question. Apa. One of the reason is a little bit timing issue. Last quarter we had few CDM contracts. Okay. That’s pushed to next quarter. This quarter it was less. But it’s a simple timing issue. But we are growing constantly on that. We don’t see anything. It’s only quarter small timing issue.
Unidentified Participant
Okay. Right. Secondly sir, on the CDMO like the previous participant also said, is it. Is it possible to give a number as to what percentage would be of total revenue?
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
So maybe I can give a rough math. This year whatever we initiate. Because there’s the three segments in CDM. One is animal health. What we are doing out of 400 crores, 80% crores to innovator we can consider CDM more innovative business. Purely what we initiated via CDM more last 12 months. This year we’ll end up doing 70 to 90 crores from CDMO. It is either CDM or CMO for big players. This year it’s going to grow 70, 90 crores and few projects. Whatever we supplied validation with innovators, it’s going to start commercialized next year. These are the life cycle management products. With innovators few products we are working. Those products are going to start commercialization next year. This year whatever we supplied, these are. The launches is coming to mostly 2030 onwards. So that’s the today 70, 90 crores. And we see growing continuously from next year onwards.
Sahil Sanghvi — Analyst
Okay. Okay. So should we expect this part of the business as in the CDMO side to be growing much more faster than the overall growth in the business. But that will go much faster after three years. I can say so these will take three, four years. One is once you supply validation.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Innovator generally whatever product, even life cycle. Management, it takes three to four years to get it commercialized. One of the products we initiated one and a half year back the first commercial supply is going to start after two and a half three years. Full commercialization will come from fourth year. So since we initiated 12 months. But if you are lucky we can get something next one, two years substantial. But most of the growth will come. From maybe after two, three years. Till that time, next two years, our existing business growth will continue. And most important year you should note. Animal health APAs are going to grow very fast next year. Whatever we set up infrastructure, what we did, process improvements and create improved credibility to the current clients. It’s going to improve drastically. Okay, you can see the very good growth next year.
Sahil Sanghvi — Analyst
Thank you sir. And I’ll come back in the queue if I have more questions.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Thank you.
operator
Thank you. The next question is from the line of Sajul Kapoor from antifragal thinking. Please go ahead.
Unidentified Participant
Yeah, thank you for the opportunity and good to see sustaining healthy gross margins. Dr. Haribabu, that’s a very welcome sign. I’ve got few questions. In an increasingly crowded CDMO market, what are the two, three capabilities you believe are genuinely hard to replicate by others? And which CDMO segments or technologies you have explicitly chosen not to pursue?
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Cdmo. You know, as explained last call. Also there are few areas. One is few companies to do for innovators for the new products, NCE products. That’s where they start developing for at phase one or phase three level. Once the innovative product approach they continue commercialization at this company. Second thing is a lot of innovative companies. If you see next, even next three. Years many blockbuster products are coming out. Of patents from innovators. So last three, four years innovators started looking at alternate low cost area to. Improve their life cycle management. That’s the second one. That’s where we are focusing. We are doing good both animal health and also human health. Whatever. We started targeting life cycle management. But this requires two areas very strong. One is EHS sustainability and the second is quality credibility. And we believe since we focus from. Beginning of the establishment, always stop focus on EHS and quality. And also most important it’s tested by various innovators. We have proven we are much capable to do business with them. All ethical things, sustainability all. It’s pretty established with innovators. That’s where we see and most important we are very efficient and speed is very fast compared to whoever is actually large CDMO players. One of the innovator company we are working with additional site recently for Alban Azore. Normally they take two, three years even to initiate and do that. And when they see our new site and capability EHA status.
They want to do more than what we anticipated. We thought it takes 18, 24 months. They are going to close in four months. So lifecycle management. We see the good growth opportunity for. Us next two, three years. The first thing we are not. That’s where we are building new products. Next two, three years. That’s what I said. Building separate CDMO infrastructure and also people. The third thing is where companies are looking at. There are large number of specialty companies, especially in Europe. And also there are big generic companies. They are able to develop new products, complex products. But they are not able to scale up internally. That’s where they are looking at the. Quality manufacturers which sustain the compliance. And we see the large number of opportunities. You see last 12, 18 months, whatever. We generated 70, 80 crores revenue. That’s cross come from many complex new products. Especially Onco facility. You know Onco very few quality facilities are available in India. That’s we are the first choice. It looks like many products are coming every month. It comes out. These are the most of the products are first to file. Where day one launch happens. Either they get exclusive even if they get 10, 20% exclusivity. That’s good. And most important is locking with the. Customer when they work with us Tech transfer and content manufacturing with some optimization. So they locked with us. They cannot go with others. So we see these three opportunities. Second and third we are very active and with our speed quality EHS we are able to differentiate first one where. The new products like Larisa Divis they do NCA products. We are gearing up for future. It’s all differentiation is basically speed quality. Ehs those are the differentiating factors. And oddly for my experience, oddly we. Can see very few companies capable to do that. Of course everybody climbs CDMO cmo even solvent recovery guys. But we see very few companies are able to do that.
Unidentified Participant
Absolutely very. Thank you for detailing all of that. Just one clarification. So we are not today we are not ignoring NCE or all patent protected cdmo. But we look we’ll go after that space maybe more aggressively in another two, three years. Because at the moment the life cycle management our relationship with the innovators is giving us a lot to chew already. Is that correct?
Ramakant Singani — Chief Financial Officer
Yes, yes.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
We are building what is required, what is to differentiate. Now we are starting this year. This year. If you ask me to focus FY27 the top focus is companion animals. As every entire world is looking at. So we surprised few data points. When I started looking at US civil surprise. There are nine 9.4 crores of dogs. And 9.2 crores cats. And when I visited Italy last month, when I was looking at the data, they say when I was talking how it can possible dogs and cats. It’s a completely different world. You can see Italy cats. At least one is to one of the people. So that kind of market we are talking and most important that market is. Started genericizing because once the growth starts. Volume grows up growth. Everybody looks for cost efficient things. That’s a great opportunity. We see. These are the two top focus areas for us. Yes, yes. And the generic penetration in animal, companion animal that is is only about 15, 16% today versus human. Yeah. Yeah. That gives us a lot of. Yeah, gives us a lot of headroom to grow the animal, companion animal, the cats and dogs. That’s where we are going to invest. Both R and D. And also one of the manufacturing infrastructure either acquisition or organic in India. And expanding front end with products where. The markets are strong like Europe. There are 4,5 markets like Italy, Germany, France and UK other than Spain. Spain, we have very strong presence. These are the markets we are exploring. How fast we can penetrate either through organic. Are looking for some acquisitions. And India, it’s a fast growing market. Since middle class is moving to above middle class. Everybody started liking pet. This also the highest focus area through bi. This is where we had opportunity to. Build very strong presence in India. And companion animals. If you ask me today API we. Are the largest portfolio company and companion animal API. Okay. We have almost 60% of the total portfolio. And we started developing products. Even the patent expiry for 20, 32, 34 things. That’s exactly similar to how we used to do for human. These are the things we see we.
Unidentified Participant
Can grow long term, reasonably good. Thank you. Thank you for that. And we have good. Yeah. Just one last. If I can squeeze on the distribution side. We are very active on the distribution not only in India, but even outside India. Right. So we have got active presence in Brazil and other economies even in Europe. That should also help us scale up faster in companion animal. Right?
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Yes. We are very strong distribution chain. In few countries like Spain, we are very strong. We distribute many other companies, innovators, even for others also. Okay. Benelux, we have our own distribution channel now. Turkey, we have very strong field force. Brazil, we started building few other countries thing. Italy, we started building field force for component animals and also more than compound animals. Since we have production animals approved by Europe. We are extending those distribution chains also for other countries. So we have experience of distributing Even. Innovator parts like India we do distribute with Joy Test long term. Now with BA and Spain we do. So we have a very strong distribution chain on that. That can accelerate the business. Yeah. Thank you.
Unidentified Participant
Sure. Sure. Thank you, doctor. Thank you.
operator
Thank you. The next question is from the line of Costa from VMSPL Capital. Please go ahead.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Yeah. Hi. Thanks for taking my question. So correct me if I’m wrong but before the merger the animal health business did not have sequent which was did not have any exposure on the formulation. Site to North America. So now post this merger, is there. A case for sequin Sequins business? The animal health business growing its formulation. Business in North America. Since that’s a big market. Yeah. Again thanks for the question. We are exploring. We are going step by step. First midterm where we want to grow. Like emerging markets and Europe. Since we have established distribution, we have full understanding on the products we want to target. First phase to grow these markets. The next phase is definitely. Yes, yes. Also we are exploring. We are exploring two options whether organic or inorganic. You know. Yes.
Ramakant Singani — Chief Financial Officer
One important thing required still.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Supply chain. Okay. Maturing supply chain.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
It may take some time. We are studying the supply chain, how it works compared to human health and Europe markets. We know very well. Supply chain, animal health. Your US is still. We are studying the two things are required. Supply chain strength and also the basket of products which take some time to develop or approve. So parallelly we are looking at alternative. Is there any M and A available for that? So we are open that. But the first top priority is how. Fast we can go for emerging markets which includes India and Europe for these things. Yes. We are going to explore and we will be there only timing still we are not decided.
Unidentified Participant
Okay, great. Thank you so much.
operator
Thank you. The next question is from the line of Bharat Seed from Quiz Investment Advisors Private Limited. Please go ahead.
Unidentified Participant
Hi Hari Babu and Rajanamji. Thank you very much for. I mean excellent number and opportunity to with our company. Hello.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Yeah, yeah. Please go ahead.
Unidentified Participant
Yeah sir, I have just. I mean since I understand that our say CDMO liver will start playing out bigger way after two, three years. But meanwhile we are expanding the way geographically as well as product basket. Either our own or distribution as well as API. So how do we. And now that will also require good amount of investment. So if I have to build, I mean how do we really want to play growth in sustaining the margin? Is there other, I mean room for improving some margin? Say 4000 crore is taken. I mean FY27. Beyond that how do we think about it and what is our aspiration?
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Okay, thank you. So it’s a detailed question. Let me try what our best. So you know our actions last two, three years. First action is how to build a sustainable company. The balance sheet should be strong. Whatever our actions few years we reached to that. We never focused on the only top line. Top line we could have grown top. Line much more than that. But we never thought of that. Most important is right balance sheet, right. Margin sustainable so that where you can take it to next level. So after 23 years both companies had. Most important last 12 months understanding both companies each other. Now you reach to the scale at sustainable level. You can see the jump from 120 odd crores to 180 crores base EBITDA base. Now we are focusing on 3, 2, 3 things areas. So you ask the question actually how. We are going to support these expansions of that you see that our debt has come down drastically and of course. I mean growing at a better speed than the whatever you have done. We are going to generate good free cash flow next year. Looking at Our current day 200 odd. Crores is nothing actually for this company. Then even if you look at 800. Crores EBIT there’s a lot of free cash generates. We don’t need much capex other for existing business whatever API. So that can take care of some extent. And also you know there will be something comes up warrants. It’s going to come. I put a money 25% remaining. I’m going to to 12 months. So all these going is going to come. It’s a reasonable size to do entire. Organic and lab and also some acquisitions. And most important when you reach to 4000 crores 800 crores or cross EBITDA however you can leverage actually data also. To do is there any good acquisition. So all things whether to leverage debt somewhere some extent if required. Or we can do something share swap whatever it is. But it’s all purely based on the long term sustainable. We don’t do just to show top line numbers. So we are very comfortable with this current debt position. Free cash whatever we are looking cash generation like 12, 18 months. We can do a lot. That’s what we are. Everything overnight. That’s the thing. It’s not the case.
Unidentified Participant
No, no. I do understand what are the aspirations for? I mean improving further liver. Some of the points we. You said that looks like that will also help us in going Beyond I mean 20% EBITDA margin.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Yeah. First my aspiration is we want to. Become one of the leading animal company animal health company. So you can understand if I want. To be top 10 animal generic. I’ll not compare innovator I that self is the thing and a reasonable size. Of course aspiration I feel practically guys 5 years, 15, 20% CAGR is one thing but when you see the spike it can go one year. Actually you may like you have seen. Our EBITDA growth 50% 60% this quarter at nine months. We cannot expect 50, 60% EBITDA growth. Every year like that. We can see that spikes while doing. Acquisition when there is opportunity. But we are confident and we are targeting minimum of 15, 20% EBITDA growth. That’s what we look at.
Unidentified Participant
Okay, great. And wish you all the best, sir. Thank you.
Ramakant Singani — Chief Financial Officer
Thank you. Thank you. By the way.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Thank you.
operator
Thank you. The next question is from the line of addictive from Swallow investment managers. Please go ahead.
Unidentified Participant
Thank you so much for the opportunity. I had a couple of questions. One is now that you know the merger is completed, so what kind of KPIs do you. I mean internally also would you be tracking to you know, see whether you know the synergies that you are expecting from this merger, whether you are able to achieve that and what kind of capability you want to commit for this merged entity?
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
So few things. We defined integration activities of course R and D synergies. It may not reflect directly but there’s. A lot of improvement on the business expansion and improvement. Okay, that quantification will take a couple. Of years on that. When it comes to network synergies, that’s. One of the key things. We also explained 50, 60 crores it takes for 18 months. It’s tracking very well that 50, 60 crores 18 months start from maybe now 3 months over another 15 months. We are well tracked on that 5060 crore synergies and network operations which includes of course corporate functions restructure. So our intention is not to reduce people. Our intention is more improve the business. And third thing is since the debt is going to go down drastically in. Addition to 5060 crores we can see the improvement on interest payment. Already we started repaying little bit high debt loans. But definitely you can see good improvement. On the interest burden. The other thing is since we are. Very strong R and D so this. The differentiating animal health, new products that’s. Going to the great improvement next three, four years. So coming to the state point, 50, 60 odd crores, 15, 18 months it’s going to happen. So that’s first phase, second phase is. Going to Be the long term synergies. That can show the good growth in the both top line and bottom line on that.
Unidentified Participant
Understood. And then like if you look at a three to five years kind of a timeline. So what kind of target revenue mix you will be seeing between say animal health and API cdm or like what kind of ideally where you would want, how would you want your business to look like?
Ramakant Singani — Chief Financial Officer
Today we see our mix close to 55 formulation and 45 around API. I’m just telling you guys prospectus. Okay. But going forward we see we’ll maintain. Same ratio because we have intention aspiration to grow a lot in the animal health formulation business. Formulation also complex thing we see going forward including CDM it will maintain the same ratio. Okay. API, you know, regular APIs after reaching to certain level grow from there. It’s not easy like formulation. But since that is going to compensate. By cdmo we can expect the similar growth from both areas. Got it. And this final question, there’s a small clarification. Like last year in around September, there was this news item that especially in India that there was some kind of ban on antibiotics and antiprotozoans for treatment of livestock. I just want to understand, would that have any impact on us? Raja, can you answer this? Yeah. So there was a. It’s not a general ban across all antibiotics and protocols. There were one or two products very specifically which were identified by the government and those are products which almost everybody had. But for us it was a very small amount and it doesn’t sort of impact us. I think the other thing for us is that the antibiotics more and more internationally are being delivered in the injectable format. And that is one thing which we have because for veterinarian prescriptions, injectables are required. And we have a fast growing injectable operation in most of the animal health product which we make out of Turkey.
So to that extent I think, you know, we are well covered of that. But having said that, you know there are continuously new products which are getting launched and those are available to our. They’re getting genericized and we are sort of launching them as well.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Thank you so much.
operator
Thank you ladies and gentlemen. Due to the time constraint, as that was the last question, I would hand the conference over to the management for closing comments. Over to you sir.
Hari Babu Bodepud — Wholetime Director and Chief Executive Officer
Thank you guys. First of all, thank you everyone supporting. Us for this measure. Okay, so we will do what our best, but we are very transparent and. We are very open. Whoever want to understand better, you can reach out to the people mentioned in the investor presentation and if anybody want to have a different discussions with me also, I’m always available. So we run very transparent, very compliant way. Thank you so much for your support. Thank you.
operator
Thank you on behalf of VR Scientific limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you. Great computer.