Sigachi Industries held a conference call on 11 August 2023 to discuss the results for the quarter ended June 2023 and way forward. Mr. Amit Raj Sinha – Managing Director & CEO, Mr. O. Subbarami Reddy – Chief Financial Officer and Ms. Shreya Mitra – Company Secretary & Compliance Officer of the company addressed the call.

Highlights of the Concall

• Revenue growth was driven by 10% growth in realizations on MCC business and 3% growth in volumes of manufacturing products on a YOY basis.

• The company is constantly thriving to improve upon its R&D capabilities and cost-effective manufacturing processes and thereby remain as a manufacturer of choice with highest quality standards.

• The company focus is on high margin yielding product mix and cost-effective manufacturing processes, effective management of inventory to improve EBITDA and Profitability

• CAPEX at Gujarat facilities for MCC to the extent of around 7,000 MTPA will be added by the end of Q3-FY24 which would contribute to revenue in the coming quarters.

• The company is raising about Rs 287 crore and out of which Rs 160 crore is allocated for acquisition Trimax bioscience plus expansion. Currently the Trimax Biosciences is having a capacity of 92 KL and there is a possibility for expansion up to 540 KL in future and gradually it will increase the capacities but immediately it has to pump in Rs 60 crore for the expansion. It has allocated Rs 50 crore for Dahej and Jhagadia upgradation. Also it is increasing capacities at hyderabad for which allocation is Rs 22.1 crore. Another Rs 30 crore is allocated for working capital and Rs 25 crore general corporate expenses.

• Trimax bioscience is located in Raichur and has got 8.4 acres of land with capacities of 92 kl and scope for enhancements is up to 540 KL. The API unit is equipped with cutting-edge technology and is in compliance with the stringent international quality standards of USFDA, EMEA and WHO. Additionally, It is approved by USFDA for advanced and critical intermediates which can be upgraded for API.

• The company expects sales of Rs 60 crore from Trimax bioscience at current capacities in FY24.

• The company expects Ebitda margin of about 20% for first year of Trimax bioscience and once it get into the regulated markets it should touch 25% Ebitda margin.

• The company expects revenues to come in from Gujarat facilities by Q4FY24. It expects 25% capacity utilization in Q4FY24 for new Gujarat facilities.

• Global MCC industry is expected to grow at about CAGR of 7% for next 4-5 years.

• Global API industry is expected to grow at about CAGR of 5% for next 3-4 years

• The company expects 15-17% growth in FY24 for the excipients aided by API revenues for in Q4 with capacity utilization of 25%.

• The company expects Ebitda margin of plus 20% in FY24 and gradually increase it to about 25% going forward.