Ladies and gentlemen, good day and welcome to Aarti Drugs Limited Q4 FY25 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 your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Adish Patel, COO and CFO of Aarti Drugs Limited. Thank you, and over to you, sir.
Thank you. Good morning, everyone. It is my pleasure to welcome you all to the earnings conference call of Aarti Drugs Limited. We thank you for taking the time to join us today to discuss our financial and operational performance for the fourth quarter and full year ended 31st March 2025. Joining me on this call are Mr. Harshit Savla, Joint Managing Director; Mr. Vishwa Savla, Managing Director of Pinnacle License Private Limited; and our Investor Relations Advisor, S.G. We hope that you have had the opportunity to review our financial result and investor presentation, both of which have been uploaded on the stock exchanges and on our company's website. In Q4 FY25, revenues grew by 9% to INR 679 crore, with EBITDA margins improving to 14%. During the quarter, we witnessed strong global demand for APIs, driving a 15.5% growth in volume, primarily led by exports.
Benefiting from improved operating leverage and stable input cost, we achieved around 14.5% EBITDA margins in the standalone business. This is a great improvement over the last few quarters, wherein margins have remained between 11%-12%. We expect our consolidated margins of 14% to further improve in the coming year with our new facilities up and running in FY 2026. Tax stood at INR 630,000,000, a growth of 33% year-on-year, with tax margins at 9.2%. For the full year FY 2025, it was a challenging year, beginning with muted global demand, elevated raw material costs, which impacted overall performance. Greater-than-expected market volatility, particularly to the falling input prices, led to a 5% year-on-year revenue decline. Despite the challenges, the company improved cost efficiency and operational discipline over the year, which helped maintain our EBITDA margins at 12.6% on an annual basis.
Margin performance improved significantly in the second half of FY 2025, driven by stabilization in input cost. For FY 2025, the decline in revenue from the API business of 4% is not indicative of structural weakness but rather reflected a transient correction in global pricing and inventory cycles. Despite this, the company successfully maintained operational momentum and continued to focus on strategic execution across all segments. For the full year, one of the most significant positives for the year was marked by the improvement in gross margins, which improved over 200 basis points to 35.8%. This improvement is primarily attributed to the normalization of input cost during the second half of fiscal year, following a period of inflationary pressure in raw material procurement. Looking forward, as mentioned earlier, we anticipate further improvement in gross margins driven by multiple factors.
These include an expected uptick in selling price realization as global API demand normalizes, enhanced capacity utilization, and higher-value export opportunities. Also, I would like to highlight two important strategic developments that signify our focus on regulatory compliance and sustainability. During the quarter, the company entered into a share subscription and shareholder's agreement with Prozeal Green Power Private Limited and Prozeal Green Power Nine Private Limited. Through this agreement, the company will acquire 26.25% equity shares and voting rights, along with compulsory convertible debentures in Prozeal Green Power Nine Private Limited, an SPV that will develop and operate 24.4 MWp solar power plants. This plant will partially supply the company's power needs both in the state of Maharashtra and Gujarat, reinforcing the commitment to renewable energy. The total investment committed amounts to INR 8.05 crore to be invested in a phased manner.
We are also pleased to share that the company received a letter from USFDA on 14 February 2025, which has officially removed our API manufacturing facility located at Sarigam from import alert 66-40. This development allows us to resume exports to the U.S. market from this facility. The key APIs cleared for export include ciprofloxacin hydrochloride, zolpidem tartrate, raloxifene hydrochloride, celecoxib, and niacin. This marks an important regulatory milestone for the company and is a testament to our unwavering commitment to global compliance and maintaining high-quality standards across our manufacturing operations. Now, we'll give an update on the ongoing capital investment. The CapEx incurred during the full year of FY2025 amounted to INR 177 crore.
Recently, through our long-term strategy of deepening backward integration and enhancing cost competitiveness, the company has made substantial progress on its greenfield project at Saykha, Gujarat, dedicated to backward integration of our anti-diabetic product along with a few more intermediates, as well as trial production, which is expected to stabilize soon within the current quarter. This is anticipated to contribute meaningfully to the company's profitability over a long period of time. This development is expected to meaningfully reduce our reliance on external raw materials, improve supply chain reliability, and drive incremental margin expansion through internal sourcing of key inputs. The Tarapur greenfield project had certain initial operational challenges, which have now been largely resolved.
The company remains focused on a gradual production scale-up targeting over 700 tons per month by the month of June 2025 and aiming to reach a cumulative capacity of approximately 1,600 tons per month by the end of FY26. These initiatives are expected to reduce the cost along with the margin expansion in the profit margins and the top-line growth. The broader operating environment continues to present some geopolitical challenges, and the company remains focused on improving profitability through disciplined cost control, efficient supply chain management. These initiatives are expected to collectively strengthen the business's operational resilience and position it for sustainable long-term growth. With this, we can now begin the Q&A session. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of A. M. Lodha from Sanmati Consultant. Please proceed.
Hello. Good morning, Mr. Patel. Am I audible?
Yes, yes, please.
Sir, I have two questions. One is relating to export, and second is relating to expansion. Now, I am coming, Sir, to the first question, export. As per your letter dated February 14, 2025, the USFDA has removed the alert of 66-40. And from your presentation, I could guess that you have 11% export to USA, North America. So just I wanted to know, North America, 11% export to North America. Just I wanted to know, after removal of this import alert, can the company improve the export performance from your Tarapur plant?
Yes.
Another question relating to the export, Sir. From presentation, I could guess that you are in the top 10 countries, and Pakistan also includes. Recently, the government of India has prohibited the export to Pakistan directly and indirectly. So what is the percentage of export to Pakistan? These are the two questions relating to export, Sir.
Okay. Yeah. Their first question was, yes, our North American exports are around 11%, but that includes three countries, Canada, U.S., as well as Mexico. Now, with the clearance of USFDA, the API sales to U.S. should ideally increase. However, it will have some gestation period of, say, 12-24 months because all the projects have been reinitiated. There are a couple of clients who are already active, and they will also launch their product using our API. Another thing is this clears out the stigma amongst the European buyers. You have a very big potential for selling our APIs to the European market, which was detailed because of this import alert issue. Definitely, clearance of USFDA import alert will give us a lot of impetus in improving our regulated sales. How much is that? It will take some gestation period, but it will improve for sure.
It will be a high-margin business as compared to our current ROW export sales. Regarding the question of Pakistan, that is a very relevant question of today. Our exports to Pakistan is a little less than around 2.9% or so. Definitely, we are keeping a close watch on the progress of the trade ties between India and Pakistan that will impact this 2.9% of the sales, which we'll try to route to some other countries because, as we see, the market is quite big, and sometimes we fall short of production capacity. We will be able to divert that material to some other countries.
Sir, second question, Sir, relating to expansion.
I'm going to interrupt, Mr.
Madam, these are the first questions only relating to export. Now, I am asking about the second question related to expansion. Thereafter, I will join back you. No problem. Sir, the second question, you invested in Saykha plant. How much money has been invested in Saykha plant? On full capacity utilization, how much that plant can generate the sales? Similarly, you invested in Tarapur greenfield plant. How much money has been invested, and how much sales can be generated over a period of two, three years on full capacity utilization? Out of that INR 600 million capex which you have undertaken in 2022, how much money is still to be spent? That is the second question, Sir.
Okay. So both Saykha as well as the Tarapur greenfield projects, both the projects are ranging between INR 180 crore-INR 200 crore each. However, having said that, currently, both these projects are only in their phase one. When I say phase one, we are utilizing only two-thirds of the land parcel. One-third of the land parcel will still remain empty for future expansion, for future production lines. Initial CapEx, greenfield CapEx, always takes more money because we have to do plot development, all the ancillary activities like ETPs, utilities. All these things, warehouses. All these common investments have been done already in the greenfield phase. The second round of expansion which will come in this area, in these locations, will have much higher asset term.
Having said that, the current phase one, the phase one, Saykha, we expect somewhere around INR 2,000,000,000, but then I would say around 50% of it would be our captive consumption. So that will improve our gross margin rather than improving the sales. Whereas the Tarapur one, that has a full-scale potential of around INR 2,500,000,000-INR 3,000,000,000, depending upon the prices of the API, which changes dynamically. So that ranges around INR 2,500,000,000-INR 3,000,000,000 per annum.
What about the CapEx of the INR 600 million announced in 2022? How much is still to be pending?
Yeah. Most of it is done. However, the one anti-diabetic expansion line, which we are planning at 600, that CapEx was deferred, and we might pick up that maybe probably next in a couple of years.
Okay, Sir. Thank you. I will rejoin back you, Sir.
Thank you.
Thank you. The next question is from the line of Rashmmi Shetty from Dolat Capital. Please proceed.
Yeah. So Adhish, one line anti-diabetic is deferred. What will be the CapEx guidance for FY 2026, and then how should we look at it in FY 2027?
Yeah. This year, we were able to complete around INR 177 crore of CapEx. What we are foreseeing going forward on a consolidated basis, we are also looking to invest into registration of oncology products in the formulation division. We are also planning for another block production line expansion, which will cater to the export market in formulation. Apart from that, for standalone companies also, we have visibility of roughly around INR 200 crore of CapEx. Not everything will be taken up in 2026 itself. I would say roughly around INR 150-200 crore would be the range of CapEx which we might do in FY2026. Then again, similar kind of amount probably in FY2027 when more newer products are identified.
Okay. How much would be dedicated for this anti-diabetic line out of this 150-200?
Yeah. So anti-diabetic line, that project, if we include in this, it should be roughly around INR 1,000,000,000. Exactly, we don't have the estimate now, but roughly around INR 1,000,000,000 or so.
Okay. Okay. If you can also say, in FY 2025 as a whole, what was the rate variance versus FY 2024? What was the volume growth on an annualized basis in FY 2025 versus FY 2024 in the API segment?
Okay. The volume, the entire annual volume, I do not have it right now, but as far as the quarter is concerned, means year-on-year March quarter, what we saw, the volume growth in the domestic market was relatively stable. It was not that much. However, we had a very high, almost to the tune of late 20s % growth, volume growth in the export market. That is what led the entire volume growth of around 15% in this quarter.
Okay. And what about the?
The first half of this financial year, FY 2025, we saw that the export demand was very weak as we had pointed out due to the elections. The tenders were less. In general, our export API demand was very weak in the first half of FY 2025.
Correct. What about the rate variance?
Rate variance, we have seen around -4% to -5% year-on-year for the quarter.
For the quarter. Okay. Quarter-on-quarter, it is stable?
Quarter-on-quarter, it's almost stabilized, hardly a percent or two.
Okay. API segment, basically, we have seen some sort of decline in FY 2025. In FY 2026, with the capacity utilization picking up and also with the demand revival, what kind of growth can we anticipate for the entire year?
Going forward, we are definitely aiming for double-digit growth. We are hoping that almost central everything should come from the volume growth, not the rate growth. Mainly, it will be on account of the new expansion of the new product line, the new capacities we have put up. That should drive the growth.
Okay. The rate variance is more or less likely to be stable, or it is likely to be in a declining stage only versus FY2025?
With respect to FY25, probably only the first two quarters, that is the first half, I would say, we might see roughly around, it's a rough estimate, around 3-4% negative rate variance. The second half should not see any negative rate variance.
Okay. Got it.
It all depends. If the raw material prices again start going up, if there is a movement in crude, then that negative rate variance won't come.
Okay. My second question is on these specialty chemicals. There also, we have done brownfield expansion and all. Earlier, we anticipated that the sales potential to reach is around more than INR 2.0 billion-INR 2.5 billion in two years. Where are we now? We have done around INR 1.3 billion for this year. In the next two years, will that number be achievable, or do you feel there are some challenges over there?
We should be able to achieve that. Now, what happened in FY 2025 is in the middle of the year, we took a call. We were manufacturing one particular fluorosulfonation product in batch manufacturing mode. We had shifted to a newer process. Even though the quality parameters were matching, in the performance test, what you call the user test, there were some issues in the final application of the product. That is why we reverted back to the batch manufacturing process. In fact, we were making a lot of losses in the new process, which were reverted in the middle of FY 2025. That also led to the increase of the margin in the second half of FY 2025. Now, we have gone in the batch manufacturing. We have already scaled up to 100.
By June quarter, we will be scaling up to 200 plants per month. It is on track. We will be improving on the spectrum segment going forward. What we feel is that in the view of ongoing tariff war between the U.S. and China, it is a spectrum line probably where we might have some, we might get some benefit as far as exports to the U.S. are concerned. We would like to explore that area as well.
Okay. Got it. Lastly, on the margins, any guidance? We have already reached now 13.8% in this quarter. For FY 2026, will we be able to sustain this 13.8-14%, and thereafter expansion in FY 2027? Or do you feel that this quarter is more like an aberration benefiting with the multiple factors, and we would probably be in the range of 12-13% in FY 2026?
We did not observe any such specific outliers in this particular quarter. It was purely based on good demand, volume growth on the API side. In the API side, in the standalone, the API plus spectrum and plus intermediates, we were able to clock 14.5% EBITDA margins. We are hoping that in the standalone company, we will be maintaining that at least around 14-15%. We will try to maintain. With the scale-up of our salicylic acid plant and reducing the losses over there, it should be relatively, I would say, easy to maintain an EBITDA margin of 14-15% at standalone level. For the formulation level, I will be sure I will throw some more light on that. Vishwa, can you explain the margins in the formulation front?
Yeah, sure. So on the formulation side and the tenacious side also, in FY 2025, we had a dip in sales because of lower production volumes available since we were doing some brownfield expansions and also ramping up the regulatory audits. In the current financial year, as we are expecting higher volumes and an increase of sales of about mid-20% levels, with that, our EBITDA levels should also be in the range of 14-15% in clinical as well.
On control level, we can assume 14% sort of in FY 2026 for consolidating both the segments?
Yeah. We'll try to achieve that.
Okay. Like you mentioned, in formulation, you're saying that you are targeting around 20% growth. Is it correct, what I heard?
Yeah. Yeah. So we are targeting about between 20-25% of revenue growth in formulation.
Okay. Okay. I have more questions. I'll join back in a bit. Thank you.
Thank you. The next question is from the line of Mitesh Dutt from Varman Capital. Please proceed.
Hi. Thanks for the opportunity. I have a question on the ongoing trade war between the U.S. and China. Just wanted to understand what kind of benefit can it bring for us in terms of increasing volume and both better realization for APIs? Have we already started seeing some of these trends in terms of increasing prices that you can pass to the customer?
Yes. It is, frankly, still very uncertain because even the U.S. administration is changing the policies by making newer and newer deals. As of now, it is very uncertain to pinpoint where it will be headed towards. Our general sense is that if Chinese products have relatively more tariffs than India, let's just say even 10%, that gives us clearly a 10% advantage for the pricing of our products. We become more competitive at 10%, which is quite a big margin, frankly speaking, for Indian manufacturers. Having said that, what trend we have observed is that for most of the old-age molecules, the API is being sold to the U.S. FDA formulation facilities which are outside the U.S.A. It is not the API which will face the tariff, but the formulations which will face the tariff.
Because of that, for API manufacturers, it won't make much of a difference, frankly speaking. However, the chemical line of business, the spectrum products, maybe some intermediates, which are going from China to the U.S. directly, there we can have some benefit in terms of competency, and we can get more market share.
Are you referring to intermediates, KSMs, etc.? And in that case, these might also get supplied to, let's say, API manufacturers outside the U.S. who will in turn supply to formulation manufacturing units outside the U.S.?
I'm talking about customers within the U.S. itself.
Okay. Okay. Got it. Thanks. That was my only question.
Okay. Thank you.
Thank you. The next question is from the line of Dhwanil Desai from Turtle Capital. Please proceed.
Hello?
Yes.
Am I audible?
Yes. Yes. You are.
Yeah. Hi. So my question, Adish, is that I think in the last call and previous calls, we have guided a 15% plus volume growth in FY2026 and 4-5% of negative rate variance in the first half because of the higher base in the first half in FY2025. The question here is that this quarter, we have done 15% volume growth, and we are scaling up both in Saykha and Tarapur going forward. Should we assume that we will continue to grow on a Q4 base from the next quarter onwards throughout FY2026? Is that the right way to look at it?
Yes. Ideally speaking, we should be able to. Q2 would be even easier for us because by that time, both the facilities should ideally be going full speed. Q2 will be easier. Q1, also, frankly speaking, should benefit from it because though half of the Q1 is gone today, we are on the 7th of May. Definitely, the second half of Q1 will have the benefit of that expanded production from the greenfield products.
Okay. So my question is, should we consider Q4 as a base in terms of API sales and then continue to grow from here quarter after quarter as we ramp up?
Yeah. The first target would be to maintain such volumes as far as our normal API markets are concerned. The addition of new production lines, the new products itself, that will give a further impetus in overall growth of the company.
Got it. Got it. Second question is on the gross margin. Our gross margins have actually not expanded or even maybe it's slightly lower quarter over quarter. It's around 35-odd %. How do we see the gross margin trajectory going into FY 2026 with all the backward integration and better product mix coming in?
As far as the standalone is concerned, yeah, definitely, we saw some dip Q- of- Q on the gross margin front. That was mainly because we get annual discounts from a few of the vendors that were accounted in December quarter. If I remove that, the gross margins are more or less maintained. Definitely, there is a difference of around 0.5 or so. That also depends on product mix and all. More or less, it has stabilized is what we have seen. The further way of increasing gross margin would be twofold. One is on the sales side, that is by increasing more regulated sales. On the input side, it would be the backward integration which is happening now. Both these factors will also help us to improve the gross margins further.
One thing, Adhish, I'm not able to kind of add up is that we are thinking that next year, our gross margin will improve, and the sales volume will kind of, again, capacity utilization will improve, volume will go up, so operating leverage will flow through. Ideally, FY 2026, our margin should be better than what we ended FY 2025, Q4 FY 2025 with. Isn't that the right way to look at it?
Mr. Druki, the annual number, what we have actually in terms of margin or just the Q4?
No. No. Q4 also, I'm saying.
As far as the annual number is concerned, that is 12% or something. That will definitely improve by a couple of percent is what we anticipate. So we are targeting around 14%-15%. That will be our internal target for EBITDA margins on a consolidated basis.
Got it. Got it. Yeah. Thanks. That's it from my side.
Okay.
Thank you. The next question is from the line of Aamin Goyal from Aartiz Capital Securities. Please proceed.
Good morning, sir. Congratulations for getting such a number. My first question is related to the revenue guidance. Can you guide the revenue for FY2026 and FY2027?
Yeah. So frankly speaking, we just, taking into account that there might be some 3-4% negative rate variance in the first half of FY2026, we still are optimistic of achieving a double-digit growth as far as revenues are concerned on a CAGR basis for the next two years at least. I think our initial target would be to cross INR 3,000 crore on an immediate basis. From there, we will try to reach INR 3,500 crore. That is purely based on volumes, and we are not considering any rate improvements in that.
Okay. So sir, basically, this growth will be majorly coming from the API, right?
It will come from API as well as it will come from formulations as well.
Okay, sir. And the EBITDA margin guidance, if you could, 14-15%, right?
14-15% is the stable guidance what we are giving, yes.
Okay, sir. Thank you. Thank you. That's all from my side.
Thank you.
Thank you. The next question is from the line of Ankit Gupta from Bamboo Capital. Please proceed.
Yeah. Thanks for the opportunity. Congratulations on the bootleg of candles. My first question was on, Adish, you said that the INR 622 crore kind of rate that we have on the standalone basis for the next few quarters, we will try to grow on that because normally Q4 is our best quarter if we see historically as a relatively high base.
Right. So yeah.
So this.
Yeah. The thing is Q4 is definitely one of the best, and Q2 is also quite decent. Our first target would be to maintain this base going forward. Maybe for the existing products and existing lines, there might be a slight dip here or there, but then the new products will be added, which should also give a lot of growth on the overall basis.
Sure. Okay. I was just reconciling the numbers. If you see, next year, we are expecting a good double-digit volume growth in our existing business. Our new plants will start, and hopefully, specialty chemicals will also ramp up. Formulations, we are seeing 20%-25% growth. On a consolidated level, do you think we can target at least 20% kind of revenue growth next year?
No. Actually, the formulation as of today is roughly around 10-12%. So it will mainly be on the 10-15% kind of growth, 10-15% on the overall basis.
On an overall basis, we are expecting 10-15% kind of growth despite new products also coming in as well as the expansions also coming in.
Yes. Yes. Yes.
Okay. Okay. The second question was on the margin front. We are saying hopefully, we should start seeing some improvement in gross margins also with volume growth and revenue growth coming in. Do you think there can be some benefit of operating leverage which can flow through next year and our margins can be higher than 14-15%?
Yeah. So gross contribution, we do not see much of a movement from here on, except there are two factors like regulated sales and the backward integration, which both will happen in due course of time. That will, but that is a little longer. Backward integration will happen much quicker in two quarters itself. The regulated sales, that is a little longer proposition. As far as the manufacturing, the other expenses are concerned, which play a big role in EBITDA, there in power and fuel, we envisage that we might be able to gain around 0.5% benefit in EBITDA margins because of improvement in power and fuel because we will be going in for renewable electrical units from a solar power plant. That will drastically reduce our power cost. Plus, we are also going in, we have already gone for disclosing boilers.
Wherein we will be producing some amount of electricity, which will be captively consumed. All put together, on an overall, on a full year basis, the potential is somewhere between INR 250 million-INR 300 million of saving in power and fuel. However, for FY2026, we feel around INR 100 million-INR 150 million of benefit might come in this year itself. From next year onwards, it should be around INR 250 million-INR 300 million.
Okay. Okay. Okay. The last question was on, you said that on an immediate basis, we want to reach INR 3,000 crore kind of revenue. FY2027 is the year that we can safely assume that at least we should.
At least we will target to, yeah, reach that point, yes.
FY2026 seems a bit difficult to achieve with what you were saying, INR 3,000 crore of revenue.
FY27, yes.
Okay. Okay. Thank you, Mr.
Thank you. The next question is from the line of Bhumika Jain from Desolado Advisory. Please proceed.
Am I audible here?
Yes.
My question was that you were mentioning that product under development, under the product under pipeline. Can you explain which products are you planning to launch in FY 2026 or in the first quarter of FY 2026?
Yeah. The major products where we see that our new volumes will come from, one is anti-consult products, coconut oil. We foresee volume growth in metformin as well because they increased production. Plus, we see volume expansion in metronidazole because we have increased the production from around 245 to 330 tons per month. The new products which we are launching, salicylic acid, which we launched last year, but the meaningful contribution will come only in this year. There are two other products in methylamides, monomethylamide and DMA, which we will be selling outside. DMA would be captively consuming. I mean, formulations, Vishwa, can you highlight some of the oncology products?
Yeah. So in formulation, we are expecting a few approvals on the diabetic and cardiac products in Q1 and Q2 of FY2026. On the diabetic and DPP-4 inhibitors, as well as some of the anticoagulant drugs, we would be launching. In the later half of the financial year, we would be getting approvals for at least two oncology drugs. We would also plan to launch those by the end of the financial year in regulated markets.
Thank you. Thank you, sir.
Thank you. The next question is from the line of Rashmi Shetty from Dollop Capital. Please proceed.
Yeah. Thanks for the opportunity again. On the working capital, it can be seen that there is an increase in your receivables days and inventory days and creditor days. If you can explain on that and whether it will remain at the same level for the next two years.
Okay. Inventory days actually have improved that way. Data definitely looks inflated. The main reason is the increase in the sale in the last quarter. Our data cycle is typically around 90 days. If we sell more in the latest quarter, then if you take the first four quarters revenue, then on that number, it looks higher. If we multiply the Q4 into 4 and take that as an annualized sale, then it will look in line.
Okay. It would remain more or less at these levels only if you want to model in for next year also?
If we are able to maintain this level of sale, means like the standalone sale of INR 624 million and the consolidated sale of INR 678 million per quarter, if we continue that, then it will remain the same.
Okay. One question on the Gliptins. What is the update on that? Earlier, we were focusing on Vildagliptin exports and generic Gliptin, more India-centric. What is happening over there, whether we are able to pick up the sales or not?
No. We are not completely able to pick up the sales of Gliptins yet. Whatever anti-diabetic growth, what we are showing in our number, is accounted because of metformin and pioglitazone. Generic Gliptin, we are selling into local markets. Vildagliptin, we are in the process of making DMF. We are further improving the process of the Vildagliptin because if we have improved process, then we should be able to quickly grab the market of Vildagliptin in export market because the pricing has corrected quite a bit in those products. We have to be very much cost-competitive to capture the market.
Okay. Lastly, on the metformin, currently, I think we are just selling in the other emerging markets and India. In that particular molecule, are we going to target regulated markets, that is U.S.? What is the update on European markets also?
Yes. Yes. In metformin, we do have European approval. We have CEP for the product. However, the European sales have not picked up much. There are a few other geographies in the world, which are semi-regulated. There, we just have got into those markets, and the sale is improving on quantity basis for metformin for us in those markets. The next target is Europe because we already have the approval at the plant level. The second target would be making our plant USFDA approved. Our first target was to clear our import alert of Tarapur facility, which we have this year. That gives us a lot of confidence to file for USFDA. We are already in the process of making USFDA MIP.
Very soon, we'll be filing the USFDA MIP and trying to, and we will try to trigger the USFDA audit for the metformin facility.
Okay. Okay. Got it. Thank you. That's it from my side.
Thank you. The next question is from the line of Sanika from Sophia Capital. Please proceed.
Hi, Sir. Can you hear me?
Yes.
Hello? Yeah. In one of our interviews, we had said that we are targeting INR 4,000 crore of revenue by FY 2027. Are we still on track for that?
No. Actually, yeah. We had a target of INR 4,000 crore. The only thing is, because of the price variation, we have revised on that target. Right now, on a pessimistic level, we are hoping that we will first reach INR 3,000 crore plus by FY2027. From there on, we will try to achieve more and then try to reach INR 3,500 crore.
Okay. Thank you, sir.
No problem.
Thank you. As there are no further questions, I would now like to hand the conference over to management for closing comments.
Thank you, everyone, for joining us today on this earnings call. We appreciate your interest in Aarti Drugs Limited. If you have any further queries, please contact SJ, our investor relations advisor, or us directly. Thank you.
Thank you. Good too.
On behalf of Aarti Drugs Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.