Drugmaker Cipla's quarterly net profit rose a better-than-expected 17.5% percent at Rs 309 crore despite sluggish sales, helped by lower input costs and higher utilisation of a new unit that enjoys higher tax breaks.

The Mumbai-based drugmaker had posted a net of Rs 263 crore a year earlier.

Its sales grew 9.6% to Rs 1,732 crore in July-September, below the average growth rate of 13-15% for Indian pharmaceutical sector.

The drugmaker, which plans to spend Rs 500-600 crore to further expand capacities, expects the domestic business to grow 10-12% in the current fiscal, its whole-time director S Radhakrishnan, told a conference call.

Cipla's domestic sales in July September grew 12%.

Its peers Dr Reddy's Laboratories and Ranbaxy Laboratories saw domestic sales growing 9% and 6.5% respectively in July-September.

The drugmaker, which draws 55% of sales from overseas, has business interests in Libya, Syria and Algeria, where popular uprisings have led to widespread protests and violence in some cases. Africa accounts for 42% of Cipla's total exports while West Asia contributes 9%.

In August, the company had warned of a possible slowdown in certain African nations due to political instability.

Cipla is the second-largest drugmaker by sales in the Indian market after US-based Abbott Laboratories.

"We have cut the material costs by changing the product mixes and also, brought in operational efficiencies via higher utilisation at our Indore SEZ (special economic zone) facility," Radhakrishnan, said.

The company clocked Rs 150 crore of sales from the Indore facility in September quarter.

"We are yet to reach optimum capacity at Indore and it would take two to three years to reach there," he said.

Shares in Cipla, closed up 0.42% on Monday at Rs 288.10 when the benchmark Mumbai market fell 0.43%.