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Aarti Drugs Ltd. reported a contraction in EBITDA margin by nearly 200 basis points as higher costs dented the company's operating performance.

EBITDA margin declined to 10.8 percent from 12.7 percent in the year-ago period. Chief Financial Officer Adhish Patil attributed the margin drop to higher power and fuel costs along with one-time arrears paid to the company's employees and labour contractors. Finance costs too increased from last year due to higher working capital requirements and rising interest rates.

The company's consolidated revenue increased 19 percent from last year, led by its API business, which is also its biggest business segment.

The company also saw the highest-ever realisations for most of the API products. Realisations are when revenue is actually generated for the company once the buyer takes control of the product. Patil said that there is scope for further moderation in input costs, which will aid the recovery in margins going forward.

44 percent of the company's quarterly revenue came from exports.

On the CAPEX front, the company is expecting to spend Rs 200 crore to Rs 300 crore during the current financial year. The brownfield capacity expansion will start contributing to the company's topline from the current quarter. The CAPEX will be funded through a mix of debt and internal accruals.

Shares of Aarti Drugs are trading little changed at Rs 461.30 as of 12:30 PM. The stock is down 15 percent this year.

(Edited by : Rukmani Krishna)