Tarsons Products Limited (TARSONS) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Tarsen Products Ltd. Q1 FY27 earnings conference call. Before we begin, I would like to point out that this conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants 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 a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Arjen Sehgal, promoter and whole-time director of Tarsen Products Ltd. Thank you, and over to you, sir.

Sir, you are not audible.

I think your line is on mute.

Am I audible?

Yes, sir. You are audible now.

Good afternoon, everybody, and a warm welcome to the Q1 FY27 earnings call of TarSum's Products Limited. I am joined today along with Sandosh Agarwal, our CFO, and SGA, our investor relation partners. We have uploaded our result and investor presentation for the Q1 FY27 on our website and the stock exchange. I hope everybody had the opportunity to go through the same. Building on the momentum from the previous quarter, we delivered a healthy performance in Q1 FY27 with consolidated revenue of 110 crore, growing by almost 21% YOY. Our standalone revenue also grew by 21% YOY and came to 86 crores, marking our highest ever Q1 standalone revenue. The performance reflects the resilience of our business model and our ability to deliver growth despite a challenging operating environment. Our domestic sales grew 17% YOY, supported by the strength of our extensive distribution network. Deeper Customer Engagement and Improving Demand Conditions We have seen a meaningful revival and improvement in the demand and momentum across end-to-end industries we serve, with a notable uptick in customer inquiries during this quarter. The level of customer engagement during Q1 gives us confidence that the demand recovery is not merely transient, but has the potential to sustain and strengthen over the coming quarter. Importantly, this growth delivered in the quarter has been driven predominantly by our existing product portfolio, with negligible contribution coming from our incremental capacities and newly introduced product categories. This is particularly encouraging from a forward-looking perspective as it demonstrates the underlying strength of our core franchise while leaving significant headroom for growth as our expanded capacities and new products ramp up. We believe these positions as well to capture the improving demand environment and deliver strong growth over the medium term. We have built the foundation for the next phase of growth through our investment in incremental capacities, enhanced manufacturing capabilities, and expanded product portfolio. These investments are expected to contribute meaningfully over the coming years. Beyond the domestic market, our focus on expanding our international presence provides an additional avenue for growth. As our overseas footprint and capabilities scale, we see meaningful headroom to increase our overseas contribution and deliver sustainable, profitable growth over the medium and long term. Speaking of our overseas business, following the disruption witnessed in the previous quarters due to geopolitical tensions in West Asia and the uncertainties related to the U.S. tariffs, our export business from India saw a healthy recovery, growing 29% in the first quarter. Customer inquiries and order pipelines have recovered with healthy momentum, with increasing inquiry levels translating into healthy order conversions. While the operating environment remains dynamic, recovery is in customer activity and improving order visibility provide encouraging signs for the coming quarters. The growth in exports is also being supported by our ongoing participation in international trade fairs and exhibitions, which has further enhanced our visibility, enabled us to engage with new customers and markets. The benefit of these initiatives are now increasingly translating into inquiries, customer additions, and order rules. We are seeing encouraging opportunities in the wide labeling segment and expect this to be a key growth driver in the export business going forward. As our international footprint expands and our brand gains greater traction, we believe exports represent a meaningful... Growth opportunity and remain well-positioned to capitalize on improving market conditions. During the quarter, our German-based subsidiary delivered a resilient performance with revenue growing approximately 6% year-on-year in constant currency terms. While the operating environment remains challenging, the business and debt has demonstrated encouraging resilience. We remain confident in its long-term growth prospects, supported by strong customer acceptance of the Nervé brand. We are confident of a considerable growth runway that can be unlocked through deeper integration and synergies between Nürbay and Tarsans. Leveraging Nürbay's established network and strong customer relationships to cross-sell Tarsans manufactured products presents a meaningful opportunity for us. Speaking about our profitability, the margins moderated in Q1 FY27, primarily due to the sharp escalation in raw material prices over the recent months. Our key input costs have gone up anywhere in the range of 25 to 50%, putting pressure on gross margin. EBITDA was further impacted by the operating costs associated with the recently commissioned facilities. All these facility ramp-ups and revenue contributions scales progressively over coming years. We expect the operating leverage to support the margin expansion. To mitigate the impact of these higher input costs, we have implemented partial price increases during the quarter with full benefits expected to flow through with a one-quarter lag. Also, at the same time, we remain mindful of the competitive environment and we continue to calibrate pricing as required in line with market conditions. Profit for Q1 remains impacted by higher depreciation and interest costs, followed by the commissioning of our new capex. We expect the profit to remain relatively moderate in FY27, as these costs are absorbed ahead of the full ramp-up of the new facilities. Importantly, the underlying operating performance is expected to strengthen as the new facilities scale up, with improving capacity utilization and operating leverage supporting profitability going forward. This is reflecting the steady improvement in the cash profit, which has grown 18% year-on-year and stood at 25.6 crores on a consolidated basis. This increase in cash profit demonstrates the underlying cash-generating strength and resilience of the business model. Around four years ago, Tarzan's embarked on a large-scale capacity expansion program with a clear strategic objective to significantly strengthen our manufacturing capabilities, expand our product portfolio, and create a stronger platform for long-term growth. We are now in the final phase of this expansion journey with a substantial part of the planned CapEx already commissioned and operational. Over the past few quarters, we have progressively brought Several new product categories are online while adding capacities for existing products. Commissioning of the remaining facilities is progressing as planned, with trial runs underway across select product lines. We expect these facilities to be fully commissioned during Q2, with revenue contribution beginning from second half. A significant portion of the new capacity now operational, our focus is shifting from capacity creation to utilization and commercialization. These investments have substantially enhanced our manufacturing capabilities and product breadth, enabling us to address a wider range of customer requirements, deepen relationships with existing customers, and participate in the fast-growing segments of live science consumables market. As the production ramps up customer approvals and product adoption progress, we expect benefits of these investments to become increasingly visible from FY28 onwards, supported by better fixed cost absorption and operating leverage. This expansion marks an important inflection point, positioning Tarsons for sustainable revenue growth, greater market penetration, and improved returns on invested capital. To summarize, I would like to say that the industry has experienced a challenging demand environment over the last few years, but we are now seeing signs of recovery. Despite these challenges, Tarsons has consistently outperformed. The industry has strengthened its competitive position. With the industry outlook turning more positive, we remain optimistic about a stronger growth trajectory moving forward. During this period, we undertook the largest ever CapEx program in the company, significantly expanding our capacities, capabilities, and product portfolio, thereby creating a strong foundation for the next phase of growth. Going forward, as we deepen our presence across domestic and international markets, our ramp-up utilization of our expanded capacities, we expect stronger revenue growth, improved operating leverage, and a corresponding improvement in profitability. As all these factors unfold, we remain highly optimistic about our company's growth trajectory over the medium term. In this, I'll hand over the call to Santosh.

Thank you.

Thank you and a very warm welcome to everyone on Q1FI27 earning conference call. Let me take you through the financial highlights for the quarter. Revenue for Q1FI27 stood at 86.1 crore compared to 71.3 crore in Q1FI26, registering a growth of almost 21% on a year-on-year basis. Domestic business delivered a strong growth of 17%. Exports have rebounded strongly this quarter, growing by almost 29% on a worthwhile basis. Gross margin for the standalone business in Q1 FY27 stood at 67.1%, impacted by higher We have a metal cord rising from the spike in polymer prices. EBITDA called Q1FI27 stood at 24.2 crore EBITDA margin was impacted by the lower gross margin and the higher commissioning and operational expenses related to the new facilities. We expect this cost to stabilize and margin to improve as utilization ramp up over the coming year. Profitability continues to be impacted by higher depreciation and interest expenses associated with the new campaign. Cash profitability for the quarter stood at 25.2 crore, showing a healthy growth of 18% on a YOY basis. Speaking about the consolidated performance, consolidated revenue for Q1 FY27 stood at 110.2 crore, registering a strong growth of 20.7 YOY basis. Consolidated EBITDA in Q1-Apply-27 stood at 26 crore with the EBITDA margin at 23.6%. Cash profitability for Q1-Apply-27 stood at 25.6 crore, reflecting a growth of around 18% on a YY basis. With this, we would like to open the floor for questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchrope telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Roshyab Shah from Beogalrog PMS. Please go ahead.

Yeah, hi. Thanks for the opportunity. My question is on exports. In the last few years, we have always, in our commentary, mentioned that we need to focus more on exports. And it will give us significant growth. I thought it would give us more significant growth.

Thank you.

Could it be a strategy?

Sorry to interrupt. Mr. Shah, your voice is breaking.

Can you speak a little louder as well, please?

Yeah.

It's still breaking.

Yes, please go ahead.

So my question, my question was that in the last few years, we have always mentioned in our commentary that we need to focus more on exports, which will give us significant growth opportunities. So what is wanted to know what would be our strategy to fight against these global fears, since they have more stronger balance sheets and more number of SKUs as compared to Tarsons.

So, I think the business segments are quite different. Most of the larger global peers in the U.S. and in Europe are branded players with established markets, established distribution networks, and established customer bases. But as the world is moving more towards, you know, a better priced alternative with maintaining the same quality levels, I think... The way our operations are positioned, you know, we are a lead company being able to produce at very respectably high quality products at reasonable prices. We have, you know, a market which we can penetrate, which the global peers, you know, find it difficult or, you know, do not pay much attention to. I think the bigger factor for us to look at at this point in time is the global environment, you know, with the war, the conflicts, the rising escalation costs, tariff threats looming, you know, coming in and out every year. I think these are bigger problems than, you know, global competition. Global competition was always there, pre-COVID era as well, and will continue to be there even today. And we are well positioned to be able to

Second question was, how does each player differentiate itself in the market? Like players like Tarsans, Abdos, or Acumax. Can you give an idea about on the industry? How does one player differentiate itself? Is it only the product quality or the enterprise or something else also?

So, I think it's product quality seems to be one of the most important points, followed closely by price, but I think the ability to deliver a large portfolio of products consistently to the customer over a considerable period of time is what differentiates various companies in the market.

Okay, and my last question is since we are looking to grow our business outside US and Europe, although we have majority of revenue coming from there, but have we added any of marketing people in those countries where we need to get validation from our customers like outside US and Europe? Have we taken steps to increase our business out there?

We have taken steps. We do not have people directly positioned in those countries as of now. We have people working out of India, looking after those territories, but we are in the process of even having more direct local presence as our revenues scale up and adding more distribution channels because most of the business which happens outside U.S. and Europe happens on a branded basis, not on an OEM basis.

Okay. Thank you so much, sir.

Thank you.

Next question is from the line of Jasteep Walia from Clockwine Capital. Please go ahead.

Hi, sir. Thanks for taking my question. So why has Panchala commercial commissioning has been delayed? Now, in the beginning of FI26, you know, you had guided for full commissioning at the commercial level by the start of FI27. Now it's gone and shifted to second half of FI27. So what are the reasons which are driving this delay?

It's just the sheer scale and size and the number of projects coming in at Pachla. So as I mentioned in my opening remarks that a large portion of the products have been commissioned, but there are still a few select lines which continue being commissioned in this quarter. So, we are dependent on a lot of external factors, a lot of engineering teams from across the world, which are, you know. So, there are a lot of variables involved in this, and, you know, different suppliers come up with different kinds of challenges and, you know, different operational issues which you have to resolve for, which is a very standard and normal part. It's just the sheer volume of the number of machines and the number of lines, which is leading to, you know, a delay of, you know, a few months on the remaining lines to be commissioned.

Got it, sir. And, sir, what has been the contribution of Pashla to revenues in this quarter?

So, we don't have an exact number in line, but most of the revenue contributors from Pashla in quarter one are for existing products or capacity expansions which have moved into Pashla.

Okay. So, first quarter doesn't have contribution from cell culture products?

No, not from the self-consumables, but it has got contributions on the bioprocess containers and so on, which are the media bottles and the media bottles.

Those were launched last year, right?

Yes, yes, absolutely. And they are fully commercialized and selling in the market.

Got it. And in the recent past, have you seen any reduction in competition from Chinese companies, given the fact that Chinese government has withdrawn a significant amount of export incentives in the current year?

So, see, in India, most of the competition from Chinese companies came in segments we could not ever compete in or which we did not have a market line for, you know, which is a very, very low-end segment, and in the sell culture segment because that was dominated mainly by MNCs and some Chinese players had a small share. What we do directly today as a business in India, we don't have much direct Chinese competition. We do face intense Chinese competition internationally from Chinese players in different parts of the world, in Europe and US, and that intensity has not reduced.

Got it, sir. And, sir, what's the gross in net debt as of now and interest expense and depreciation expense? Have they peaked in this quarter and we'll see reduction going forward or what could be the trend?

There is some tools here, so I am giving the answer for this. The gross depth for the company is about to be, you know, 380 quadrups, and the net depth is about to be, you know, 330, 340 quadrups, something like that. And regarding your question on depreciation, this year, our depreciation is on standalone basis is 24.5 Kodupich that includes a depreciation of 14 Kodupich from Panchala and 4 Kodupich from Bamta. And still we have 160 Kodupich of, you know, the capital working problem, which we think that, you know, that will be capitalized and move to main capital asset segment in the subsequent quarter. Right. So, we believe that in the full year, the depreciation will be in the range of approximately 105 to 110 qubit. That will be the peak year for our depreciation.

Got it, sir. And, sir, what's the debt reduction target for this year?

Debt reduction target is about to be, we are paying about 70 crore rupees of loan repayment, and some LCs are also there which gets converted into term loans. So, effectively, we believe that 40 to 50 crore rupees of debt should be reduced year on year basis.

Sir, so, net debt will reduce by 40 to 50 crore by the end of this year?

Now, what it would be we can assume?

Got it, sir. And, sir, what are the CAPEX plans for this year?

There is new CAPEX plan, as we already said that some maintenance CAPEX and some, you know, required CAPEX will only be undertaken. Otherwise, there will not be any major CAPEX.

Got it, sir. So, thanks a lot. That's all for my time.

Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star and 1. Next question is from the line of Aditya from Securities Investment Management. Please go ahead.

Yeah, hi, sir. Thanks for the opportunity. Sir, just wanted to understand how are the raw material prices trending currently? Have they come down from peak which we saw in March, April? And what kind of price size we have taken in both the domestic and export markets?

So, we have not been able to take much of a price hike in the international markets. It's close to zero, and we are relying more on the depreciation of the currency in those markets because the rupee has significantly depreciated over the years, and most of the other global pairs in the U.S. and Europe, you know, which dominate these markets have not taken a price increase. And in India, we have taken a marginal price increase, you know, although the price increase was larger, but if you take the entire business into equation, you know, it's been a very marginal price increase, which has not been able to cover the entire extent of all the input costs going up. The input costs were at its peak maybe six weeks ago, and then started dipping down with, you know, a peace agreement and other things in place. There was a sharp decline over the next 10 days, but over the last two weeks, again, we have started seeing input costs move up sharply. So, to be honest, it's a very volatile situation, and, you know, it's supposed to be tracked week-on-week basis. There is not much stability at this point of time in raw material prices.

So, are we, how should then one look at gross margins going forward? So, is this the bottom end of the gross margins, or do you feel that the pressure on gross margins would continue going forward as well? And secondly, sir, any reason why we are more aggressive in taking price size in domestic markets, seeing the demand conditions improving?

The thing is, as I mentioned in one of my remarks, we have to calibrate pricing based on the competitive environment. What's happening is prices are moving up and prices are moving down. There are a lot of inventories which are there in the system. Companies that have older inventories could sell at lower pricing and so on. So, a lot of international companies are also not wanting to increase prices very, very sharply. Regarding the bottom of our gross margin level, it's difficult to say because today what's happening is most of the margin erosion, what is happening, is happening because of an external environment factor, right? It's nothing related to. Our internal operation metrics within the company, the pure reason for gross margin going down is higher input costs and higher purchase price of raw materials and inability to pass on the entire price increase to customers. So at this point in time, as we would like to scale up our revenues, we have to be very cautious about where the industry stands, both domestically and internationally.

Understood. And so how do you see the domestic market going forward in terms of demand? So we are coming out of a low base where there was a huge de-stocking and there was some competitive pressure. But now going forward, how do you see the domestic market evolving for us both in terms of demand and competitive intensity?

So, we look at the domestic market in a multitude of ways. One is, we have a very strong base, and we look to leverage strongly into this base and increase our market share and wallet share with customers for our existing products. We look to get very deep into the sell culture market over the next two to three years and hold a meaningful share in India in the sell culture space. And, you know, you must have seen in the government budgets, you know, in February this year that the government is focusing very strongly on the biopharma, with the biopharma Shakti scheme and so on, and putting a lot of emphasis on biopharma. So, what we do today, we cater a lot of our products to the pharmaceutical and the biopharmaceutical needs, and we would also look at a strong pivot into specialized biopharmaceutical products over the next. Two or three years to be able to gain a meaningful share in that market as well, and once we are done with all this, I think our benchtop equipment space, which accounts for a very low volume of our business, we would look to ramp that up as well, which is not a very, very large capex compared to plastics, but with our distribution network and our strength across the country, we should be able to leverage and gain a lot on the lab equipment and the benchtop space. That's how we look to counter these four reasons, which I believe we would be able to have a very robust growth, you know, in the domestic market and be able to strengthen our market share further.

That's my follow-up. So, I believe the domestic market used to grow at around 8-9%. So, are we back to that growth phase after?

I believe we are almost there to the late single digits where, you know, the domestic market traditionally grew at pre-COVID levels.

Got it. Understood. So now coming to your export.

Sorry to interrupt, Aditya. Maybe please request you to rejoin the queue for the follow-up questions. Thank you. Next question is from the line of Rahul Jain from Credence Wealth. Please go ahead.

Yeah, thanks for the opportunity. So, first question is with regard to the Capex. So, till date, how much Capex has been completed? And further, what is the amount of Capex which is to be done to complete our entire Capex, the huge Capex plans?

So, I will give you a perspective. Currently, in our balance sheet, total capital advances is lying around, you know, 20 corp. And CWIP is around, you know, 160 corp. Right. So, our major objective is to, you know, complete this, this whole pending cataract. Apart from that, some maintenance cataracts will only fall in place. No, so, typically, so, the amount of KPEX from the large KPEX, which is pending, Is it further 150-160 crores that gets completed by the end of quarter 2? Not by quarter 2. It will be completed within quarter 2 or quarter 3. And this is not a new capax. This is the advance related to and CWS related to the existing capax. Okay. And so with regards to once this capax is completed, say by quarter 3, And whatever we have done till date. So firstly, whatever we have done till date, what kind of sales is possible at peak utilization for the KPEX which gets completed by quarter three, including the one which is done till date?

So on a fixed asset basis, we should be able to turn in at around 0.8 times. So we are looking at somewhere around... 400 crores of incremental revenue over and above, you know, what we have in our facilities existing through the entire four-year CPEX plan.

Roughly about 800 to 800, 5900 crores is a peak sales possible. Is that correct?

I would say more like 750, what I discussed in our calls earlier, 750 to 800, not 900, yeah.

Okay. And with regard to one previous participant asked the questions about interest. So, the interest rate, which is roughly about 25 crores for the year, including the capage, which is supposed to get completed in the next two quarters, can we say this 25 crores is the peak interest cost on a yearly basis? Our current run rate is about to be 24 weeks per year, and we believe that the same rate will continue in FI 27 also, but in FI 28, it will go down. It will go down. Sure. Last question, sir. In terms of this entire K-Apex, so how do you see the ramp-up in FI 27, FI 28, and FI 29?

I believe that the industry position looks much stronger than, you know, it looks the strongest ever in the last four to five years is what I believe. And if you see our numbers pre-2021, which is pre-COVID, We have grown at a sustainable level of 15% and above every year. So, moving forward, I believe that our growth level should be at least that or more because now we have larger facilities, a stronger company, you know, a much larger product line and a lot of new products to offer as well. Okay.

So, can you look somewhere between…

Sorry, Mr. Jain, please request you to reach me. Thank you, sir. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the question queue, please limit yourself to two questions only. Should you have a follow-up question, please rejoin the queue. Next question is from the line of Jasteep Walia from Clockwide Capital. Please go ahead.

Sir, thanks for taking my question. Sir, given that Tarsan is entering a new product segment this year, and also the company aims to grow exports significantly, so how have you beefed up your sales team, particularly at the senior level? Can you highlight some key hirings that you have done and their profile?

So, the key hiring, what we have done for sales in a senior level position, in an SMB position that was already, you know, communicated to the markets. You know, he would be involved in, you know, a lot of revenue and strategy and growth for the company, and a lot of teams are being built below him domestically as well as in certain key geographies. Internationally, for now, the teams would be based out of India looking into international markets, but as we scaled up further, we'd look at some local heading in certain key geographies.

Got it, sir. Except the hiring that you have disclosed to the exchanges, any other senior level hire that you have done?

No, otherwise you would have disclosed it. You would have been an FMP. So, we have a lot of mid to senior level hirings happening alongside, but all below the gentleman. So, all reporting to the gentleman.

Got it, sir. Thanks a lot, sir. That's all from my face.

Thank you. Next question is from the line of Kiran from Tabletree Capitals. Please go ahead.

Thank you for the opportunity. I have two questions, sir. First question is, I mean, not a quarter question, but generally in FI26, we did about 335 crore India sales and about 90 crore Germany in urban sales. So, when you're talking of a 15% growth, 15% plus growth, I'm assuming this is more India growth, and Germany will be around these levels, 80, 90, 100 crore levels. Is that a fair reading of the situation?

A fair reading of the situation would be that India, you know, we are more aligned at this point in time with our standalone revenues. We could expect a strong growth moving forward year over year for all our revenues in India, either export or domestic. The sales in Germany, as we said earlier, it's more of a strategic buyout for us, and it would not be as consistent. There would be larger years where the growth would grow beyond those numbers, but it would not be as consistent as the same levels of consistent growth year over year. As we launch more products and expand our base in Germany, we would see some strong, significant growth coming from our consolidated revenues as well.

Got it, sir. Got it. That's the first question. Second question, sir, is what does it take for us to grow beyond the 15% growth number? Is it the success of the cell culture line? Because there are many, many existing international players in cell culture line. It's a very intense market and a very highly motored market, and we are trying to enter that. Is it fair to say that if you have to do a 20-25% growth, which is 15% growth in our existing products plus 5-7% growth in cell culture lines, that's the idea behind if you have to reach the 20-25% growth?

Yeah, I think cell culture is a very sensitive line of products with a lot of established players, and hence, you know, we are trying to, you know, find a strong space for us in that market. We have the product, we have the quality, and, you know, now we try and leverage our network and our marketing and sales to be able to deliver that. And I believe that we are more concerned about growth, which is sustainable. We would like to grow very, very aggressively, but not over-aggressively, because sometimes, you know, growth, which beyond a certain point, sometimes is not very, very sustainable as well. So, while 20-22% looks doable and, you know, a very strong growth number, there will be a lot of factors involved with how successfully our new products can be launched, you know, for these numbers.

Got it. Got it, sir. So, we are saying 15% growth is what we can possibly achieve, given the overall market rate growth, and we obviously grow faster than the market. And then, the delta beyond 15% depends a lot on the new products and the structure of our new products.

And on the external international environment, because we would need a huge support from the overseas market to be able to achieve those numbers.

Got it, sir. Just on the 15% growth, are we considering a lot of white labeling and contract manufacturing to the export markets? That's part of the 15% growth is what we're saying.

Yes, yes, yes, yes, absolutely.

Got it. Got it. Thank you so much. Enjoyed. Thank you.

Thank you. Next question is from the line of Nishita from Sapphire Capital. Please go ahead.

Um, yes. Am I audible?

Yes.

Yes, so we just wanted to understand this 15% growth. Can we achieve this in FY27?

For now, it looks like we could with quarter one having exceeded 15% growth, and it looks like the demand is recovering well, and we are growing strongly.

And on the margin front, like, because of the input cost, you mentioned that our margins have taken a hit. So, how do you see the margins behaving for the full yield of FI27? What can we see the exit EBITDA margin in FI27?

For now, it looks similar to what we have achieved in Q1. But if input costs, because it's a direct hit of about 4.5%, 500 basis points almost on the gross margin or the material margin. So, again, we still have seven months, approximately seven, seven and a half months left for this entire financial year. So, the external environment is very, very volatile. For now, if you ask me, it looks similar to what we've done in Q1, but if these input costs change drastically, positively or negatively in the seven months, it could make a big difference to our margins.

Okay, okay, understood. And from the new facility, the Panchla facility and the Alta facility, when can we expect the facilities to contribute to the revenue from FI 28 or can we expect some revenue to come in FI 27 as well?

The revenues are coming even today. In Q1 revenue also, we have revenue coming in from Parchla and Alta, but we expect that ramp-up to keep continuing in these quarters. Over FI27, we keep getting stronger in FI28 as well.

Okay, okay. So, what sort of revenue can we expect from these facilities in FI28? What sort of growth can we expect from these facilities?

We would ideally expect Parashla and Amta to at least contribute to 20% to 25% of our standalone revenues in FI28.

Okay, okay. That is it for me. Thank you so much.

Thank you. Next question is from the line of Bhavya Doshi. From Chris, please go ahead.

Good morning.

Yes, please go ahead.

Yeah. So, just wanted to understand what kind of turnover we are expecting from the cell culture products for FY28. And also, if you can quantify the annual maintenance KPEX for this year and FY28 as well.

So, for now, in this year, in the first four, four and a half months, we've had very limited annual maintenance capex, and moving forward, the problem is we can't really budget an annual maintenance capex because that's always on existing lines, machine breakdowns, some mold repairs, mold maintenance, adding newer molds for molds which have run its life and so on. We don't expect to exceed that over, you know, more than 20-odd growths, you know, per year. Maybe in some tough years, it could be 25 growths, yeah.

Okay, okay. And so, the revenue that you might be expecting from the sell culture products for next year, 28?

So, yeah, so we could expect from our entire portfolio of new products approximately 65 to 70 crores, you know, in the next year is what we expect from our entire new portfolio that could include sell culture. Got it, got it.

So, for this year, are we planning to take any price hike across our product portfolio, some percentage, in order to tackle the RM cost?

We have taken certain price hikes, but it's a small size of the total cost impact in the domestic market only.

Okay. Okay. Okay. Perfect. Can you quantify, like, what percentage would be?

We won't have it identically because our entire revenue for the quarter is built across thousands of invoices to various customers. So it's not one for all kind of a thing.

I'm sorry, if you can just speak, throw some light on the cannibalization from glass to plastics in the industry, like, you know, in domestic as well as in export market, like, you know, what percentage would be? Like, you know, from the product portfolio, it's moving from glass to our industry, our categories.

Unlike consumer industries, I personally believe that the life science industry has got a clear market for both glass and plastics. And I don't believe that glass is overlapping into plastic usage and plastic is overlapping into glass usage. There's clear, demarketed end-user industries and usage based on both kinds of material. Okay.

Thank you. That's it from SIPL.

Thank you. Next question is from the line of Nikhil Upadhyay from SIMPL. Please go ahead.

Yeah. Hi. Good afternoon. I hope I am audible.

Hello. Yes, you are audible. Please go ahead.

I have two questions on the export side. See, if I look at, read your commentary in last quarter on exports, there were many challenges which we had seen and even for poll of FY26. So, this quarter, what growth which we have seen, is there some benefit of some shipments also or is it a normal sale which you are looking at even on a sequential basis?

No, there's a huge benefit of shipments as well, because what happens is, shipments are beyond our control. When we define the revenue for a quarter, we need to close shipments on a particular date before the quarter ends, and many of our shipments are nominated by our buyers, and not in our control. So, with the West Asia crisis, the availability of vessels and ships is also not at the best situation. We could have a bad quarter for exports in the next quarter, the quarter after that, or any of the quarters in the future, and that could mean nothing to our business performance in that quarter.

Okay. So, okay, got it. And second question was on Narbe. You mentioned that in your initial call you mentioned, now we would be looking at more integration of products between India and Narbe. Can you just talk about what is the total size of market and what percentage of market Narbe was existingly like meeting the demand? And based on our manufacturing facilities, today we can like completely track the whole market segment. And is Narbe only strong in Germany or do they have a good enough presence in whole of Europe? So, Nerve is a very similar company to Tarsons.

If you take Tarsons as 65% of business in India and 35% of business outside India, let us consider Germany as the domestic market and outside Germany as an international market. Nerve would probably be 70% in Germany and 30% outside Germany. And out of that 30%, 95% would be in EU. So, they would do very little sales outside the European Union. So, the majority business comes out of Germany. They have a very strong network of distributors and direct sales teams in Germany, and they're a very focused supplier on select niche products in the German market to German customers. So, there lies tremendous growth opportunities for Norway to expand their geographical presence outside Germany Similar levels to what there is in Germany, as well as expand their entire product portfolio from Tarsons offering to products beyond what they have sold, and also a lot of backward manufacturing for Tarsons.

Okay, and my question, in last one and a half years, how does the stage came at another phase?

You're just breaking up, sorry.

I, I, I, I, I, I, I, I, I, I, Nikhil, your audio is breaking. You are not audible. Your voice is real.

Hello, is it audible now? Yes, please proceed. Yeah, my question was in Narbe, how has the sales team increased in last one and a half years?

So there have not been a lot of increases in the sales team because Nuremberg's business has also been very, very stable over the last two or three years. But of course, there have been a lot of upgrades in the sales team. They have changed a lot of people and brought in more experienced people from the industry, and they're looking at ways to strengthen the team. That strength is coming more from the quality of the people, not necessarily from the number of people.

Sure. Thanks. I'll come back in with you.

Thank you. Ladies and gentlemen, in the interest of time, we will take the last question from the line of Aditya from Securities Investment Management. Please go ahead.

Hi, sir. Thanks for the follow-up. So, you mentioned that growth in exports is improving, but I wanted to understand more on the export side. So, this quarter we have seen strong growth. Some part of it would be majorly because of forex gains, and some part would be because of bunching up of orders. But on a longer-term basis, on a 9-month to 12-month basis, do you see the environment and export markets improving? Because last quarter, we mentioned that some of the U.S. suppliers were at an advantageous position because they had lower raw material costs. So how do you see the export markets, particularly in U.S., going for us this year?

It's challenging the environment and market is challenging specifically because of rumors of tariffs moving again on India as well as input costs. We are finding ways of countering that by maintaining prices and using the advantage of the weaker rupee for better realizations or to maintain the costs which are offset with the higher input costs, partial offsets. We are as flexible and as aggressive as possible in international markets. Our own endeavor at this point is to increase and build our base internationally. And then, you know, at a more opportune time when the market is more stable, we could find ways on how we can operationally leverage ourselves to, you know, improve our margins. But at this point in time, our entire focus is to be able to grow our base and market share in international markets.

Understood. And so now with Tarish now coming to 10%, have you seen more inquiries and an increase in order book, particular firm advice?

Yes, the number of inquiries are there, and the business looks, you know, looks very, very promising and strong. As long as the environment remains, you know, conducive to do business at this point in time, logistics, transportation, and input costs are the major hurdle, not so much the tariffs.

Got it. Got it. Understood. And now, sir, in the domestic market of 1,200 to 1,300 crores, so how much of that demand is generated, you know, from government institutions? And secondly, if you could help us understand the impact of, you know, GEM marketplace on our business. So have we seen our share in government business going down in the last five to seven years?

Yes, I think our share in government business has gone down. The GEM portal, although works well, and we do a lot of business through the GEM portal, but that has significantly brought down business volumes in the international market. And in the domestic market, especially because of these research institutes where we had rate contracts in the past, a lot of these research institutes have abolished rate contracts, and now they must move through a GEM bid, you know, every time they want to procure materials. So on the 1,300-clore market, I believe the government market would account for about 15, at best 20% of that market.

Understood. Got it. Got it. Any government grants or incentives which we are expected to receive for the CAPEX we have incurred in Pansla and Amta?

No, no. We have not engaged with the government for any of our capacity expansion of new facilities.

Got it, got it. And so, just last one, Vishen. So, you know, we had launched a bioprocessed product that 10G and Roller Bottles last year. So, how has the acceptability been for these products and are we happy with the scale-up in these products? And any learnings, you know, which we can take from this towards scaling up of our cell culture products?

No, I think it's a sensitive product line. While we've done well, we expect to do much better in the coming quarters and the coming years. The good part is that the product that we made is a very robust product, highly reliable, and very well accepted by customers. But to be able to get into customer SOPs and to be able to, you know, be an alternate, you know, there's a process of being an alternate or a secondary supplier to the primary supplier who's been there for years or decades and then move up the ladder and increase your volumes, that is a time-taking process. But the hard part of it, to be able to build a world-class product in the roller bottles and the bioprocessed pharma containers, our manufacturing and R&D team have done a wonderful job there, and we've been able to build a very, very successful product there.

But do you think a similar time to scale-up would be required in cell culture products, or do you think the scale-up of cell culture can be minimized?

See, cell culture is divided into R&D and research and the production and the biopharma side. So whenever anything that you're building for R&D and quality control and research, the scale-up is faster, and anything that you're building for production and bioproduction is slower.

Got it. Got it. Sure. Thanks for answering the question.

Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for the closing comments.

Thank you, everybody, for joining us today. I hope we have been able to address all your questions. We remain committed to keeping the investment community informed with regular updates on our developments. For any further information or queries regarding Tarsens, please feel free to reach out to us or SGA. Once again, thank you for your time and your support.

Thank you very much, sir. On behalf of Tarsens Products Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.