Earnings Call Transcript - XNSE:TARSONS 2026-11-13

Operator

Ladies and gentlemen, good day, and welcome to Tarsen's Products Ltd. Q2 and H1 F527 on its conference call. As a reminder, all participant clients 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 and zero on your touch-tone phone. Please note that this conference is being recorded. This conference may contain certain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Aryan Sehgal, promoter and whole-time director of TarSense Products Limited. Thank you, and over to you, sir.

Speaker 8

Good afternoon, everybody, and a warm welcome to the Q2 and H1FI27 earnings call of Tarsons Products Limited. I am joined today by our CFO, Mr. Santosh Agarwal, and SGA, our investor relation partner. We have uploaded our investor presentation on our website and stock exchanges. I hope everybody had the opportunity to go through the same. We are pleased to deliver another quarter of strong performance, where our standalone revenue grew by 25% and consolidated revenue grew by 21% in Q2 F527 on a YOY basis. This marks our second consecutive quarter of over 20% revenue growth, reflecting the resilience of our business model, strong execution capabilities, Diversified product portfolio and branch length. Importantly, growth was largely driven by our existing product portfolio, with minimal contribution from new product categories. The uptick in inquiries, better customer engagement, and improvement in the demand momentum across our end-user industries, especially in the pharma and healthcare industry. Gives us the confidence that demand trajectory has the potential to sustain. Thank you. The West Asia Conflict in March 2026, crude-linked raw material prices have surged between 30% and 50%, putting considerable pressure on our gross margins. While the situation remains dynamic and difficult to predict, we have implemented calibrated price increases, whenever feasible, to offset higher input costs while protecting customer relationships. Cost margin pressure from elevated input costs, the impact at the EBITDA level was largely mitigated, with increase in volumes resulting in operating leverage. The revenue contribution is yet to ramp up meaningfully. As these facilities scale up and utilization improves, we expect higher revenues and opportunities. Thank you. Proactive approach. We have maintained a sharp focus on supply chain management to ensure the timely availability of raw material while simultaneously maintaining uninterrupted supplies and timely deliveries to our customers. This has been particularly important in an environment characterized by fluctuating prices and supply-side uncertainties. The CapEx front of Tarsans undertook one of its largest ever CapEx programs. Manufacturing capacities.

Santosh Agarwal, CFO

This is the financial highlight for the quarter. I'm sorry, delivered. 7% in H1 FY27. Thank you. Why could we have an EBITDA? 1.3% YOY.

Operator

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 the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. 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 comes from the line of Aditya from Securities Investment Management. Please go ahead.

Aditya, Analyst — Securities Investment Management

Yeah, hi, sir. Thanks for the opportunity. My first question is on our gross margins. So, we have done well to stabilize around 67%. But now with crude prices seeing some correction, should one see this gross margin now slowly expanding to 70-71% which we used to do earlier?

Speaker 8

So yes, I think as the crude pricing correcting is one thing, but the raw material prices eventually settling down to the pre-West Asia crisis levels would be key. So at this point in time, we still see raw material prices anywhere between 25 to 35 percent higher than original levels. As they settle back, we will see our margins go back to original levels of early 70s.

Aditya, Analyst — Securities Investment Management

But have you seen some corrections from Q2 levels?

Speaker 8

No, we have not. We had seen certain corrections towards the end of Q1, but then there was the last month, month and a half, we have seen further spikes. So, overall, whatever small corrections we had seen has been overdone by the spikes.

Aditya, Analyst — Securities Investment Management

Got it. Got it. Sir, secondly, on exports, this is the, you know, second consecutive quarter of 30% plus growth for us. So, if you could just help us understand, you know, what is leading to such a strong growth? Is it that our customers were sitting at lower inventory levels and now they have started re-stocking or, you know, we have badged some bigger export contracts which we are planning earlier?

Speaker 8

So, we can't speak specifically on existing contracts or customers in detail, but yes, we are growing our wallet share with certain key customers globally. Inventory levels have also lowered and customers are restocking in bigger levels. But also, I think the timing, I've spoken about this in earlier calls as well. The West Asia crisis is such that, you know, container availability and transportation, you know, has become a big issue in the last five to six months, and getting availability of containers to ship both to Europe and U.S. is a large concern, very big concern. Just sometimes, you know. We have a lot of pending shipments, and a lot of shipments move in a certain period of time when you get container availability. At this point in time, as a company, we have never seen this before where we have multiple containers waiting in the inventory, waiting in our warehouse, where the customer has paid the money or where the customer has already transacted for their business, but there is no availability of containers.

Aditya, Analyst — Securities Investment Management

So, now, sir, then how should we, you know, understand the sustainability of this growth? So, is it more to do with logistical issues and you are getting some benefit for one or two quarters, or do you believe this kind of growth rate you will be able to sustain for the coming quarters as well?

Speaker 8

I'm not sure whether we can sustain this in the long term, late 30s, you know, because 37, 35, 37 growth. Moving forward quarter over quarter is quite an uphill task, but we do have a lot of new projects coming in, a lot of new products, and we are in active discussions with a lot of new customers, both in Europe and U.S. We are in a lot of discussion with our subsidiary company in Germany to be able to amp up production and sale to them. As well. So, we expect a very strong and healthy growth, but may not be as high as 35 to 37 percent.

Aditya, Analyst — Securities Investment Management

Got it. Got it. Yeah. And generally, what would be the contract sizes for some of these contracts? So, is it that the scaling up of, you know, three, four contracts only would help us sustain a strong double-digit kind of growth rates or these are more smaller contracts where we have to keep on wagging your and your contracts to sustain our growth rates? So, how does it work exactly?

Speaker 8

While it's not always in our hands, the size of the contracts, but generally the contract sizes are, you know, do not exceed more than a million to one to 1.5 million US dollars. We consciously try and ensure that. You know, a large portion of our business is not coming from one or two isolated customers because that puts a risk of replaceability once the contract is lost or, you know, transferred to some other suppliers. So we try and balance out our international business to the best of our ability where certain customers, you know, no customers are counting for more than 15 or 20 percent of the total business.

Aditya, Analyst — Securities Investment Management

And so these newer inquiries which we are getting, is it primarily for our existing products or we have started bargaining contracts for our bioprocessed products as well? And secondly, on the geographical side as well, so we were pretty strong in US. So are we now seeing stronger inquiries from Europe and other parts or other rest of the world as well?

Speaker 8

So we are trying to build teams to be able to look into geographies and areas where Tarzan's is not very strong. I believe that Tarzan's is reasonably strong in certain countries in Europe, certain countries in Asia and the United States, but we have a long runway of growth, even in these countries where we are strong, because the global market is very large, as well as in countries like Latin America, Middle East, and Africa, where we are relatively weak as a company. Most of our competitors do a much better job than what we do. So, international business would have a multi-strategy. You know, we try to focus on areas where we are not strong. We try to build on our stronger areas by getting even stronger. Push a lot with our subsidiary company, Nervé, as well as on the Tarsons business go-to prong, right, which is OEM as well as the branded Tarsons business. It's not one straight way of doing international business. Different geographies, different strategies, so a lot to do in the international business, and I think that's where our biggest growth will come from moving forward.

Aditya, Analyst — Securities Investment Management

No, my question was, the new enquiries which we are getting, is it primarily from our existing products and our existing geographies only, or we have been able to crack some new products?

Speaker 8

Between new and existing products, but all from existing geographies.

Aditya, Analyst — Securities Investment Management

Got it. Got it. Understood. So, secondly, in the domestic markets also, is the end market which is seeing some strong growth or there is global competition intensity from some of the smaller and unorganized players, you know, which is helping us post stronger growth in domestic markets as well?

Speaker 8

See, the market scenario is very, very tough domestically. The competition is there, and the price input costs are at an all-time high, so it becomes difficult for all the players, including us, to be able to sustain margins and move forward. Having said that, I think from the private sector, which is... You know, the CRO, the CDMO, and, you know, the pharma, biopharma space, I think the private customer base, which is related to life science and vaccine production, I think the demand is quite strong. The demand from the... The government and the semi-government side, which is a research institute, still, I think, is yet to recover and pick up, but the private sector continues to grow at a very strong pace for us as a biosupplier.

Aditya, Analyst — Securities Investment Management

Caught it. Caught it. And, sir, this cell culture facility, we were expected to commission in the second half. So where are we on that? Is it going to be commissioned in Q3, Q4?

Speaker 8

We've actually commissioned quite a few products of cell culture already, but the market still prefers a company to be able to provide the complete solution. Which is all the 100-plus SKUs together, what we will plan to launch. So more than 50% of the products have been successfully launched, internally tried, tested in terms of quality packaging and other things. So over the next few months, I think we should be able to complete the remaining SKUs.

Aditya, Analyst — Securities Investment Management

Got it. Got it. Sir, but is this, why is this taking so much time? Because we, this is getting delayed quarter by quarter because this was supposed to commission sometime back, but again, with your commentary, I believe it now is going to get commissioned in Q4. Sir, if you could tell us what is leading to such delay in commissioning this APEX?

Speaker 8

Stabilizing of multiple SKUs.

Aditya, Analyst — Securities Investment Management

Okay. Okay. Next, sir, question was for Kanto, sir. So, we have a deferred government grant of, you know, 3 crores in our balance sheet, and in a PNL, we recognize government grant income of, you know, 8 to 9 crores. So, how long will this continue for us?

Santosh Agarwal, CFO

This is basically related to EPCG license, right? And at the time of import of any kind of machines and mold, we take the EPCG license. And this is the NDIS treatment of, you know, of, you know, EPCG license in the, in the group reading of government grant.

Aditya, Analyst — Securities Investment Management

Okay, so this nine crores of revenue, which we had recognized last year, this would end next year or by FY29?

Santosh Agarwal, CFO

So this will depend on what kind of, you know, capex we are doing. So larger the capex we are importing, the larger will be the revenue in the P&L side. The lower the capex we do, the lower will be the APCG on the income side. But of course, the APCG related, you know, the mortgation will keep on happening on the debit side in the P&L.

Aditya, Analyst — Securities Investment Management

So, understood. And last question from my side, if you could just remind us, what kind of revenue potential is possible for our older facilities, and what kind of revenue potential is possible for our newer facilities, and if you could just bifurcate between cell culture, bio process, and our older products, that would be helpful.

Speaker 8

We don't generally declare revenues based on product groups, but older facilities, 400 crores, and newer facilities, 400 crores, with a revenue potential of close to 800 crores.

Aditya, Analyst — Securities Investment Management

Okay. Thanks for the next question. I will come back in the queue.

Operator

Thank you. A reminder for all the participants, anyone who wishes to ask a question may press star and 1 on the touchstone telephone. The next question comes from the line of Jasdeep Walia from Clockwine Capital. Please go ahead.

Jasdeep Walia, Analyst — Clockwine Capital

Hi, sir. Thanks for taking my question. So, my question is with regard to the cell culture products used in bioproduction. So, you commissioned some of the products used in this domain in, let's say, the last quarter. So, has any marquee customer approved your products for bioproduction? By marquee, I mean, all large pharma companies like Biocon or Poonawala or Bharat Biotech, etc. Or the approval process is still underway?

Speaker 8

No, none of the customers have, you know, we've not got any formal update from any customer, but even if we do, we don't announce that to any of the investors or the market.

Jasdeep Walia, Analyst — Clockwine Capital

Got it, sir. Sir, growth in Narbe has been subdued in this quarter, despite the industry environment improving significantly. So, what is the problem in that business, and when do we see Narbe start growing in constant currency terms?

Speaker 8

The market in Norbe is still a strong German-focused market, and there are a lot of concerns at this point in time in the economy in Western Europe. Most of our growth, what you see, is not coming out of Germany as a company at Tarsens. At this point in time, I think Nürnberg is doing exceptionally well to sustain itself the way it has sustained itself over the last two to three years. It was a very depressed and very tough economic situation in Germany. And we continue to, you know, invest our resources into Nürnberg and ensure that over the next few quarters, a lot of the business purchase of Nürnberg would come out of Tarsen's. But the overall top-line scaling up of Nürbe would only depend on how the situation in Germany improves or if Nürbe scales beyond Germany.

Jasdeep Walia, Analyst — Clockwine Capital

Got it, sir. So there are no growth targets for Nürbe in this year?

Speaker 8

There are targets. Again, just as for the Tarzan standalone business, we do not announce any kind of a forecast or target for the company for each financial year to the market. So internally, our sales teams and our execution teams, we have targets, and we will see how that pans out in December 31st, which is the financial year end for Nobe, and 31st March, which is our financial year end.

Jasdeep Walia, Analyst — Clockwine Capital

Got it, sir. And, sir, margins at Nerve also appear to be lower, subdued versus last couple of quarters. So, what's the reason behind that?

Santosh Agarwal, CFO

Jasper, I think you're talking about the EBITDA margin, right?

Jasdeep Walia, Analyst — Clockwine Capital

Yes.

Santosh Agarwal, CFO

So, EBITDA margin is... Yeah, if the margin is lower because of some new employee hiring and you know the inflation cost already there in the P&M, the corresponding revenue, you know, if increase in the coming quarter, then there will be operating leverage.

Jasdeep Walia, Analyst — Clockwine Capital

Got it. Sir, do you expect to maintain EBITDA margins at Norway for this year, or because of cost inflation, the margins will go down below the normalized levels of around 10 odd percent, which were there earlier?

Speaker 8

Margins will be lower at Norway on the EBIT level, but we will be able to maintain and grow the gross margins, so the material margins at Norway.

Jasdeep Walia, Analyst — Clockwine Capital

And what about the EBITDA level, sir? Would you be able to maintain margins at the EBITDA level?

Speaker 8

So EBIT and EBITDA both, we will not be able to because there's not much of a difference in Norway in the EBIT and the EBITDA levels. Our selling prices at Germany have remained constant, and we've been able to secure increased prices as well in Germany. So from a product level, from a selling level, we are at a strong base. But Parsons is working on certain strategies for the future for Nürbe to be able to scale Nürbe up to... A significantly different level over the next three to five years, and that involves certain costs in the operations of Norway and new people hiring in the sales team and beyond Germany hiring. So, that's adding to additional employee benefit expenses, traveling expenses, and so on, and hence the EBITDA levels are subdued.

Jasdeep Walia, Analyst — Clockwine Capital

Got it, sir. And, sir, when do supplies start from Tarsan's India operations to Norway?

Speaker 8

It's already started, but we will see a significant ramp-up over the next quarters. In this year, by the end of this year, we will see a ramp-up, and by next year, we will see a significant ramp-up.

Jasdeep Walia, Analyst — Clockwine Capital

Got it, sir. Sir, considering that in the second half, you will start launching commercially your self-assertive products, should we expect further acceleration of sales growth rate in the standalone business in the second half?

Speaker 8

We should expect similar growth rates, you know, to what we have achieved in each one.

Jasdeep Walia, Analyst — Clockwine Capital

Got it, sir. Got it. Thanks a lot, sir. That's all for my sake.

Operator

Thank you. The next question comes from the line of Ruchil from PINC Wealth. Please go ahead.

Ruchil, Analyst — Pink Wealth

Yes, sir. Hi. My question is that, you know, since we have seen the increase in the inflation in the raw material prices and understand that, you know, there is a competition in the domestic market, but don't you think that, you know, if this inflation continues, then there will be a price hike or at the industry wide or also we need to also take a price hike?

Speaker 8

See, the thing is, price hikes are very, very nominal in nature in the industry and not correlated to the actual input cost increase in the company because what's happening is, from a company point of view, both for us as well as our competitors, both in India as well as internationally, the competition is as brutal internationally as it is in India. It's not just limited to the raw material. There is packaging material, and there are a lot of other input costs which are increasing. But unfortunately, the nature of the industry and the comparative intensity of the industry doesn't allow most of us to be able to pass on the entire input cost increase to the customer, because then we lose comparative intensity. Open the way up for a lot of competitors to, you know, propose their product lines and enter into accounts which we've built and, you know, maintained over years. Increases on the raw material, higher costs of the raw material are always unfavorable.

Ruchil, Analyst — Pink Wealth

And sir, like, have we seen that increase in competition over the last three to four years that, you know, earlier we used to make a, like, good margins, like around 40, then 35 EBITDA level, I'm asking. And now we are being suddenly to 25, 26, and do understand that 300, 400 bits might be due to unable to, you know, pass on the price due to increase in the input cost. But do you think that, you know, the competition has increased significantly, and that is what has hampered our margins? If I have to look, it's like three to four years' view.

Speaker 8

But I would look at the competition perspective from the material margin, not from the EBITDA margin, because the EBITDA margin has nothing to do with external competition. It's to do with internal cost structures of the company. Material margin, 10 years ago, we were around... This point in time, we are at early 70s till last year, and now because of the West Asia crisis, we are back to, you know, the late 60s, which we were originally as a company 10 years ago, in 2017 or 18. So, we've circled between 68 and 79, 78, 79% material margin over the last decade, depending on the situation and depending on, you know, the crisis, like what we have today. As a company, our price realization has been robust, you know, through the last 10 years, and that's a better predictor or indicator of what the comparative intensity and how we are positioned in the competition in the market. EBITDA levels are because the company structurally has changed drastically over the last 3-4 years. We never imagined. That we would have such large overhead costs without having revenue and have the potential to be able to sustain that. I believe that there is a huge significant revenue potential which could be realized without increasing costs, very, very significantly costs, which have already been ingrained into the system. So, hence, I'm not too bothered about the lower EBITDA margins. Thank you. For us to scale up over the next two to three years, I am more concerned about the material margin.

Ruchil, Analyst — Pink Wealth

And, sir, how do we see the demand going forward? And, like, since we have entered into a new cell culture and then we have been, you know, doing that continuously following, then what gives you confidence that, you know, we'll do very well over the next two to three years again? And how is the demand environment?

Speaker 8

If I didn't have the confidence of doing very well, I would have not put in so much money as a promoter in the company. You know, there were a lot of other avenues to use that money rather than put it into these facilities and these product lines. There's a tremendous belief that there's a large market for these consumables, and being the first indigenous player in India, I think we stand to gain a lot from our brand equity as well as first mover advantage in India. And having built very strong sustainable relationships internationally, I think we'll use these large facilities and capacities to our advantage. Demand environment, I believe as our facilities are, you know, coming to life, I think we are at a very strong inflection point in the industry where we've gone through three or four years of big demand post-COVID. And I think that the industry is about to flip and demand is about to get back to stronger levels. And we are, you know, right in the... Right time with these facilities, you know, to be able to take advantage of, you know, the recovery in demand in the industry in India as well as internationally.

Ruchil, Analyst — Pink Wealth

So, basically, we can say that, you know, at the right time, our facility has got an operational, since we have seen the same attraction and the demand.

Speaker 8

I would say, you know, of course, we have facility delays, you know, these facilities were supposed to be up and ready a year ago, and there's been delays. So... Delay is always expensive for the company operationally as well as in terms of cost. So it's not ideal if you had done this 12 months or 14 months earlier. It would have been better for the company financially. But having done this, completing these facility readiness now is going to place us in a very strong position for the future over the next three to four years.

Ruchil, Analyst — Pink Wealth

Got it, sir. Thank you, sir, for answering our question.

Operator

Thank you. The next question comes from the line of Madhu Agrawal from Agrawal Family Office. Please go ahead.

Madhu Agrawal, Analyst — Agrawal Family Office

Hi. So, one thing I'm trying to understand is, you know, 60% of the business comes from consumables. Is there any way in which we track whether the same customer is ordering a larger total volume of these consumables on a quarterly or an annual basis?

Speaker 8

I'm not sure. I didn't understand your question, Maida. If you could repeat it, please.

Madhu Agrawal, Analyst — Agrawal Family Office

So I'm thinking about the part of the revenue, 60% odd is coming in from products which are consumed, which means they'll be repeatedly ordered by the customer. And do we track whether the same customer, if they ordered 1,000 units last year, is perhaps ordering 1,200 units or 1,500 units in subsequent years? Like, are we tracking whether the same customer is ordering larger volumes? Of the products which should be consumed frequently and therefore are repeat orders for the same product. Am I clear in my question?

Speaker 8

Yeah, I think consumers is the heart of our business, so it's tracked very, very closely, both at the end customer and the distributor level, Thank you. That's what defines the growth of the business. The reusables and the benchtop equipment still continue to be a support system in the business, which are very important revenue drivers, but it's the consumables which define the growth trajectory and also the pulse of the market. So, it's tracked very, very closely.

Madhu Agrawal, Analyst — Agrawal Family Office

And would you be comfortable sharing what the numbers are telling us in terms of exactly that, right, growth trajectory, and in the market are we seeing that there is generally more structural demand in the market, perhaps, if the same customer is ordering more volume?

Speaker 8

So if you see, all I can tell you is if you see our quarter-over-quarter growth or if you see our annualized growth from Q2 of this year versus Q2 of last year, if our growth is a particular number, it's 20%, 21%, consumables always leads the way. It will always match or exceed that growth levels with the reusables and benchtop being slightly, you know, lower.

Madhu Agrawal, Analyst — Agrawal Family Office

Okay, lovely. So we can sort of take that as a proxy for demand uplift in the market.

Speaker 8

So, it would be slightly higher only because the reusables would not grow at that level, so then the growth would be balanced out, yeah.

Madhu Agrawal, Analyst — Agrawal Family Office

Understood. And my only other question is, would you be comfortable sharing what's our margin profile for exports versus the domestic business?

Speaker 8

I wouldn't know that at the back of my head, to be honest, but it should be very similar on a material margin level. But we don't have any metrics at this point in time to track on an EBITDA level. Understood.

Madhu Agrawal, Analyst — Agrawal Family Office

Okay, thank you.

Operator

Thanks. Thank you. The next question comes from the line of Rajiv Shah from Ascent Capital. Please go ahead.

Rajiv Shah, Analyst — Ascenda Capital

Yeah, a couple of questions. Sir, despite the sharp rise in raw material prices, working capital has been well managed. So, we would normally expect inventory to go up in this kind of volatile environment. So, are you deliberately buying only as much as raw material you need right now? And how is material availability at present? And do you see any risk of losing business because supply is short?

Santosh Agarwal, CFO

See, we are placing the orders on the basis of order forecast from our customers. That's number one. And number two is that because of this global crisis, we also, you know, give advance ordering also. So that, you know, because of the delay in the transit time, we should not face any kind of issue. Currently, if you talk about our inventory, we are maintaining an amount of, you know, about 47 to 48 corp. And we are maintaining a minimum inventory of about 25 corp. So, overall, our inventory days are in the range of, you know, 100 to 105 days. And data are about to be 82 days. So, overall, working capital cycle is at, you know, 171 days.

Rajiv Shah, Analyst — Ascenda Capital

Okay. Also, sir, another question is, how do you see gross borrowing moving in the next one to two years? I mean, is there any capex planned or one should expect the debt to come down? Can I repeat your question, please, sir?

Santosh Agarwal, CFO

Yeah.

Rajiv Shah, Analyst — Ascenda Capital

How do you see gross borrowing moving in the next one to two years? Is there any capex planned or one should expect the debt to come down?

Santosh Agarwal, CFO

See, currently, our total debt is about to be, you know, 370 to 390 quadrups, right? And we believe that the debt should be in the range of, you know, 370 to 390 quadrups. And we believe that, you know, going forward, we will be, we are going to do not more than 30 to 40 quadrups of CAPEX. That includes some commercial CAPEX and some mentoring CAPEX.

Rajiv Shah, Analyst — Ascenda Capital

Okay, okay. Thank you. Thank you, sir.

Operator

Thank you. The next question comes from the line of Dayzud, Substantia Capital. Please go ahead.

Dheeraj, Analyst — Substantia Capital

Good afternoon, sir. Sir, it has been another good quarter in terms of growth. You have mentioned that demand has been picking up well. However, at the same time, there are uncertainties due to geopolitical situations in Europe and USA. Firstly, how much of the growth in Q2 or even H1 has been driven by volumes? And Structure is now wanted to get your thoughts on the whole operating environment. Do you feel post-COVID slowdown is now behind us and we are headed for a sustained period of, say, mid to high teens kind of growth for the next two to three years at least? And is the double-digit kind of volume growth realistic in your view?

Speaker 8

Yes, I think the post-COVID demand slump, I believe, is behind us. And I think we are poised for, you know, strong growth over the next two to three years. I won't be able to put a number on whether it would be high teams, low teams, double digits or not, but I think there could be very, very strong and sustainable growth moving forward over the next two to three years at least.

Dheeraj, Analyst — Substantia Capital

And sir, with the back-to-back quarters of good growth, is that the Tarsons has gained market share or the entire industry has grown at a similar rate?

Speaker 8

I won't know exactly on a quarter-by-quarter basis whether the industry is growing at these levels, but I believe it's more of an industry phenomenon. We could be slightly better than the industry, but I think the entire industry should have grown. Most of our competitors are private in nature, and getting a real feel of the numbers is only on an annualized basis. But I personally believe that the industry has benefited, and Tarsus may be a slightly better beneficiary than their competitors, but I believe all competitors would have also grown.

Dheeraj, Analyst — Substantia Capital

Thank you, sir.

Operator

Thank you. The next question comes from the line of Saket, Saurabh, from Sagari Capital. Please go ahead.

Saket Saurabh, Analyst — Sagari Capital

Am I audible? Yes. Yeah. So, sir, putting to the deck that you have shared, so you have talked about the end user industries, right? Academic institutions, pharma, then CROs, and then diagnostic industry. So, these seem to be the domestic side of the equation. So, how does the revenue breakup typically look like for these four segments? Just a broad one.

Speaker 8

I think the private sector, which is pharma, biopharma, and CROs, CDMOs would be about 60 odd percent, you know, of the industry, and diagnostics and healthcare and the rest would be about 20 percent, and then the government business would be about 15 to 20 percent.

Saket Saurabh, Analyst — Sagari Capital

Okay. And, sir, within diagnostic industries, we see most of the chains being here. So, do we also cater to, say, non-chains or, say, standalone diagnostic centers or the larger than the national chains or, say, the regional chains would account for, say, bulk of our purchases?

Speaker 8

Yes, we cater to, you know, all kinds of healthcare and diagnostic customers which find Value in the products that we offer. Diagnostics is a very, very cost-comparative business, and a lot of times the smaller diagnostic chains would look at unorganized players or lower-cost alternatives.

Saket Saurabh, Analyst — Sagari Capital

Okay. And, sir, as far as our use case for our products, especially for the labware products, so these would primarily be used at, say, centers that have, say, lab testing facilities or even collection centers would have use cases for our offerings?

Speaker 8

Mostly where products are, you know, where blood is collected and then tested to, you know. Be able to diagnose whether the patient has got the particular problem or not, I think that's where the majority of the product will be used.

Saket Saurabh, Analyst — Sagari Capital

Okay. And, sir, keeping in view the new products that we are launching in the cell culture space, so based on your market estimation that you might have done outside, the go-to market part, so how will the, say, target segment would be? Would it be same 60-20-20, like 60% biopharma and pharma and 20% diagnostics, 21% research, or it would be a tad different for, say, the cell culture offerings.

Speaker 8

It would be similar. Research would play probably a good role in that because cell culture is also worth a lot of production as well as research. So maybe not so much in the diagnostic and the healthcare segment, but a lot in the private as well as the government research segment.

Saket Saurabh, Analyst — Sagari Capital

Okay. And, sir, gross margin for these new offerings would be at par? I'm talking about stable state. I understand that currently, again, these are maybe at par. And do we also intend to, say, target export market for these self-culture products as well?

Speaker 8

Well, we need to. If we need to be able to sell to capacity, we need the international overseas business to play a large, you know, contribution to this revenue.

Saket Saurabh, Analyst — Sagari Capital

Okay. And I think maybe if I heard you correctly, you talked about, you know, 400 crore revenue potential. So is it from the new segment or new plus underutilized existing segment combined, the 400 crore number that we use?

Speaker 8

At current capex levels and at current levels of the company, we expect to be able to generate 800 crores of revenue.

Saket Saurabh, Analyst — Sagari Capital

Okay, 800 incremental or?

Speaker 8

As a company, as a company, as a company totally. So, whatever we've done, not over and above 800 over this, total as a company 800 on a standalone basis, not on a consolidated basis.

Saket Saurabh, Analyst — Sagari Capital

Okay, and when you talk about console, then only that German entity would be over and above that. So, standalone include only the domestic sales or exports also included because that's almost one third now.

Speaker 8

Concludes Tarsim standalone.

Saket Saurabh, Analyst — Sagari Capital

Okay, okay, okay, okay. Thanks for the opportunity and best of luck for the coming quarters.

Operator

Thank you. The next question comes from the line of Ghanshra, Mina, from Moonshot Ventures. Please go ahead.

Ghanashyam Meena, Analyst — Moonshot Ventures

I have a couple of questions. First question is regarding the impact of impeding cost of raw materials, because when I see the inventory days are very high in our business, because we have to keep the huge amount of inventory because of the number of SQs, etc. But when we see on the cost of goods basis, I think we have the inventory poorer around nine months or almost one year, if we compare on the raw metal side only. So, the increase in raw material, which has increased in the last two quarters. So, how much of the raw material has been secured in the last one quarter or two quarters? Because of that, our gross margins are impacted around 500 basis points.

Santosh Agarwal, CFO

We are purchasing about to be 80 to 90% of raw material in a year. Right. And regarding your question on inventory days, you are calculating the inventory days on the raw material consumption. But in our kind of industry, where the gross margins are quite high, we should calculate the inventory days on the sales. That is coming about to be 104 days.

Ghanashyam Meena, Analyst — Moonshot Ventures

104 days. If we buy around 80 to 90 crores in a year, so how much of the raw material was precoved in the last two quarters, only if we see in the last quarter, because in the last quarter, gross margins are impacted by around 500 basis points.

Santosh Agarwal, CFO

We don't have the number quarter wise, but on a yearly basis, what we can say that 80 to 90 crores of raw material is getting purchased.

Speaker 8

The raw material margin has been impacted based on the purchase cost.

Ghanashyam Meena, Analyst — Moonshot Ventures

Okay, my next question is regarding the, we have done recently, huge amount of capex, and in the near future, where we are, will be, get benefits on the consumable sides or reusable sides? Both. On both? Equally or will we get some different proportions?

Speaker 8

The ratio should remain similar.

Ghanashyam Meena, Analyst — Moonshot Ventures

Okay, okay. Which is doing currently? Oh, okay, thanks.

Operator

Thank you. The next follow-up question is from the line of Aditya from Securities Investment Management. Please go ahead.

Aditya, Analyst — Securities Investment Management

Yeah, thanks for the follow-up. Sir, in export markets, so does increased government funding of research institutes So, you know, increased biotech funding help in demand growth. For the end user, you know, demand is pretty diversified and one or two factors does not impact demand. So, where I was coming from was that, are there any positive factors playing out in the export markets currently, which is also helping us post-home growth?

Speaker 8

No, I have not heard of any increased government funding in any of the countries. In the last 6 to 12 months, in fact, I've heard of a lot of reduced biotech and government funding in the US over the last 12 months.

Aditya, Analyst — Securities Investment Management

And in spite of that, the industry is seeing a strong growth.

Speaker 8

See, the thing is, for us and the international business, growing at these levels does not pose much of a problem because of our very, very low market share compared to the entire industry size. That doesn't work in India because in India, being a major player, any small movement in the industry starts affecting us.

Aditya, Analyst — Securities Investment Management

Got it. Understood, sir. And lastly, sir, any benefit which we are expected to get from commercialization of AMTA sterilization facility, or this would happen post-commissioning of cell culture facility only?

Speaker 8

Benefit in terms of, we have cost benefits because we have our own sterilization facility. Thank you. That's about it. I think as we scale up our facilities, you know, a lot of these fixed costs come into play, and then, you know, the fixed costs remain the same, revenues grow, and then, you know, EBITDA margins start getting better and better.

Aditya, Analyst — Securities Investment Management

Yeah, so where I was coming from, have we started realizing benefits from this sterilization facility?

Speaker 8

Yes, yes, sterilization facility has been running well for the last one year.

Aditya, Analyst — Securities Investment Management

Got it. And what kind of margin benefit does it give us?

Speaker 8

We can't disclose that because, again, we don't disclose that to the market, but it's outsourcing to in-house, so would at least be a cost saving of about 20 to 25% from our sterilization costs last year.

Aditya, Analyst — Securities Investment Management

Oh, okay.

Speaker 8

Of course, you have to see it light for light because the volume of sterilization has also drastically grown from last year to this year.

Aditya, Analyst — Securities Investment Management

Hello.

Aditya, Analyst — Securities Investment Management

And then you take it. Thank you.

Operator

Thank you. Ladies and gentlemen, we will take this as the last question for today. I now hand over to the management for closing comments. Over to you, sir.

Speaker 8

Thank you, everyone, for taking the time to join us today. I hope we have been able to address your questions and provide necessary insights into our business and performance. We remain committed to maintaining regular and transparent communication with the investor community and will continue to keep you updated on our key developments and progress. Should you require any further information or have additional queries regarding Tarsons, please feel free to reach out to us or our investor relation partner, SGA. Once again, thank you for your time, continued interest, and support.

Operator

Thank you. On behalf of Tarsim's Products Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.