Gross margin stood at 40.5% in Q3FY23 compared with 46.5% in Q3FY22 while EBITDA margin was at 13.2% in Q3FY23, lower than 25.6% in Q3FY22. The margin contraction was attributed to lower realisations for key enterprise products while input costs were largely unaffected. Nonetheless, Gross margin in Q3FY23 has sequentially improved by about 200 bps as compared to Q2FY23.

Q3 topline performance was impacted due to lower demand for key products on account of high inventories with customers and reduced realisations from last year's high base. Both exports and domestic markets faced volume headwinds and pricing corrections in the enterprise business, which declined by 56% year-on-year in Q3FY23.

Growth in contract manufacturing organization (CMO) sales, however, was robust at 2.8x year-on-year in Q3FY23, contributing 42% to the total revenues in Q3FY23 as compared to 10% in Q3FY22. Exports, accounting for 76% of the revenues, declined by 19% year-on-year in Q3FY23. Domestic sales also declined by 55% year-on-year as lower liquidations and higher channel inventories led to sluggish demand in the domestic market.

The work on the new R&D center remains on track and is expected to be completed in Q4 FY23.

N B Godrej, chairman, Astec LifeSciences, said: "Q3FY23 was a challenging quarter for Astec's enterprise business as our key products witnessed sluggish demand and lower realization in most of the markets. However, CMO sales grew by 2.8x year-on-year partly offsetting the decline in volumes from enterprise business."

Meanwhile, the company's board approved raising Rs 50 crore through issue of non-convertible debentures. The company said it will utilise the proceeds for expansion and development of business operations and meeting the short term and long-term financial requirements, including expenditure proposed to be incurred for improving the facilities being provided in its set-up and/or meeting the working capital requirements.

Astec LifeSciences (Astec) is engaged in the manufacturing of agrochemical active ingredients (technical), bulk, formulations and intermediate products. Astec has a healthy sales mix of both exports and domestic sales. Our exports are to over 25 countries including the United States and countries across Europe, West Asia, South East Asia and Latin America and Africa.