Foods and Inns Limited (507552) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Foods and Inns Q3 FY '24 Earnings Conference Call. This conference call may contain certain forward-looking statements about the company, which are based on beliefs, opinion and expectation of the company as of the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Milan Dalal, Managing Director of Foods and Inns. Thank you, and over to you, sir.

Good afternoon, my fellow shareholders, analysts, future investors, ladies and gentlemen. As per the tradition of having started this investor call post each quarter, here we are. Along with me in my room is our CEO, Mr. Moloy Saha; and our CFO, Mr. Anand Krishnan, and we shall endeavor to reply to your queries and any understanding that you would require. Briefly, what I would want to convey is that we have seen a bit of a muted quarter. Having said that, the current quarter call offs have been good, that's the trend shown for the month of January and looking forward to a great closure of the year-end and the quarter. Two significant events, which have just happened. One was that the Ministry of Food Processing Industry, apart from our eligibility on the PLI Scheme, we had also applied for the Cold Chain Scheme and that our second installment of approximately INR 3.5 crores has been disbursed, and has been credited to our account last week. And another significant disclosure, which we already have been put up on the exchange site is that the reclassification of my erstwhile co-promoter, the Dhupelia family, has been approved by both exchanges as of yesterday. And I would leave it open to my colleagues to brief you all further and then take up your questions. Thank you.

Good afternoon, ladies and gentlemen. This is Anand Krishnan, the CFO at Foods and Inns Limited. Thank you for joining us, and I extend a very warm welcome to all the participants of our Q3 FY '24 investor conference call. Quarter 2 and 3 have been a couple of muted quarters for us. We have encountered headwinds, which are temporary, but we remain committed to our long-term vision and strategy. Also, as mentioned in the previous conference call, what one needs to understand is that the business model is such that there is a committed volume that will be taken up by the clients any time over a period of 15 to 16 months. There is no strict monthly or quarterly commitments that run through the contract. The commitment gets honored anytime during the 15-month period. Having said the same, these customers also pay us an inventory holding cost to compensate for the higher inventory holding period as and when the call off happens. As of 30 December 2023, we have applied for PLI incentives for the second year of FY '23 for approximately around INR 18 crores and are awaiting the receipt of the same. Last year we received the same in July of 2023. So timelines with respect to when it can be received is actually up to the government. Also, the company has received an amount of INR 3.37 crores under the Cold Chain Subsidy Scheme of the Government of India on 25 January 2024. This amount will not be accounted in the P&L but will be credited to the respective assets as it is in the nature of capital subsidy. I hope all of you had the opportunity to go through our published results and the investor notes shared on the stock exchanges. We have processed lower quantities of tomato and guava in the Q3 quarter as there lower crop availability in our catchment areas. We have on-boarded new clients in our spray-dried business and have grown the Kusum Masala business in domestic markets. Our own brand, Tetra Recart products are now available in Nature's Basket and a few other emerging model trade outlets. We continue to negotiate with various partners for co-packing in Tetra Recart but have not yet signed on the dotted line with any. Our Pectin project, Beyond Mango, has started test production and will commence commercial production from Q1 of FY '25. As I come to the end of my opening remarks, I would like to thank each one of you for your unwavering support and your invaluable presence on this call. Now I request the moderator to open the forum for any questions or suggestions that you all may have. Thank you.

[Operator Instructions] First question is from the line of Sudhir Bheda from Bheda family office. Please go ahead.

And my questions are like, what could be the reason of lower offtake in the last 2 quarters? Of course, we are 15 months contract, but is there any particular reason why our offtake was not the way we expected? As I understand the demand of our product is much more than the supply. That was my understanding. But what led to this kind of offtake, if you can spell out your findings or reasons?

Is that the only question? Or do you have any other further questions?

No, I have one more question.

Okay. So we'll just respond to this then and then probably take the other questions.

Hi, this is Moloy Saha. The reason in the last period call also we have explained that in the month of May, 2 May 2023, in the northern region part of India experienced some unseasonal rain, which significantly affect the temperature. And [ the regional ] juice and drink industry in India is basically a summer season and all the big brands like Coca-Cola, PepsiCo, or Parley, their sales got affected. So that is the overall one of the reasons for the lower offtake. But these two quarters, that is quarter 2 and quarter 3, quarter 2, their offtake is not much low compared to what have been explained to us by this big brands as well as quarter 3. Generally, if you see the trend of this market, quarter 1 and quarter 4, these are the 2 quarters when the major offtake takes place. Accordingly, if you see our quarter 1, there is a good growth, and we are also expecting a moderate growth in Q4, that is current quarter. So there is no major setback on this, but one item on this particular thing I would like to highlight on the tomato. Last year, in the quarter 3, we have a good tomato volume produced as well as sales. But this quarter, there is an issue in the tomato production because tomato growing region in western part, that is in Nashik region, due to inadequate rain or water availability, there is a cross-fit, which has overall affected the tomato production as well as the price. That is one of the reason. Second is in December 20th onward, in our export shipment, it got also affected because due to the recent Red Sea issue, you must have got the news that most of the shipment from India and China is getting affected due to the Red Sea, which is for last 10 days in December quarter, our export shipment is almost 0, because there's no vessel availability and we could not ship anything. But that problem is now solved partially, not fully, and the shipment has started. So these are few reasons. But as my colleague Anand has explained that, and as you also told that, it's a 15-month period dispatch, so there's no major concern. It's only the spillover of the dispatch from this month to that month. That is the only thing.

And will this kind of lower offtake or maybe whatever be the reason, that will affect the next year's planning and next year's volume, which they will guarantee the offtake. Because of the lower offtake this year, we'll have a spillover effect in the next year.

Offtake wise, there will be no issue because there is a confirmed order that will be taken, but yes, all the brands are assessing the situation. It's too early to say. If it is a good summer, which we are expecting as well as, this is an election year, so there is -- I mean, what has been informed to us that there's a good volume demand, and they don't see any major setback on the next year's production. But it is too early to say, you have to give another couple of months to get an idea what will be the next year's target.

I would like to add one more thing to give you more confidence on this. Basically a lot of the brands that we deal with, as with the previous year, they actually spoke to us about three-year contracts rather than a single-year contract. Basically, because of the newer brands coming into the market, they want to protect themselves and there are lot of export customers also who have been actually talking to us about volume commitment. So we are really not worried about the volume at all because we are quite confident on growing the volumes with respect to whatever strategies and plans that we have and the vision that we actually shared with you guys in the previous year. It will definitely continue is what I want to say in short.

Understood. And lastly, competitive force has affected the lower volume, that kind of thing has happened, because some of the facilities which were closed and they restarted the facilities. So in any way, does that have a bearing on our volume?

No. Overall industry, if you see the last 2 years, it is going in a double digit. This year, as of now, the industry -- I mean, I'm talking about brands, beverage brands, they are growing at single digits, but they are expecting that in this quarter, it will reach the double digit. So overall demand is quite good. In fact, if we have to scatter such kind of demand, more capacities are required. So there is no concern whether the plans which are earlier or facilities which are earlier closed, they have started operation. That is not a concern for us. And I think overall industry is growing and we need more and more capacity. So that is what I would like to say.

Next question is from the line of Kapil Ahuja from Equinox Capital. Please go ahead.

Milan sir, Saha sir, Anand sir, and all the management. My question is, till date how much amount have we invested in Tetra Recart facility? And what will be the revenue potential of this Tetra Recart 12 months, 18 months down the line? And what will be the approximate rough estimate of EBITDA margin?

This is Anand Krishnan here. So we have invested around INR 30-odd-crores in the Tetra Recart facility. On a fully utilized capacity basis, we would actually have a return of around INR 100-odd-crores. But INR 100-odd-crores is based on the only single line that we have actually installed as of now. The infrastructure has been actually set up for four more lines, which we can actually install in the same facility as such. So without too much of a Capex related to building and infra, we can actually expand the capacities and quite quickly as well.

And EBITDA margins?

EBITDA margins should be north of around 15% to 18% as such.

And we'll get PLI benefit also on the CapEx that we have done there?

Absolutely.

And is there any delay with this Tetra Recart facility to commence operations?

Sorry, I didn't get your question.

Is there any delay? There has been delay in conceptualizing to start this operation?

No. There has been no delay with respect to conceptualizing. What has actually happened is that, a lot of the B2B customers whom we have actually approached, wanted sample sizes to be actually done for them and have a proof concept ready for them. So we have already installed the smaller testing lines now and we have actually started giving those samples to the brands that we have been speaking to. It's just that we have not signed on the dotted lines with respect to these larger brands, but we are quite hopeful to do something quite soon. So our products, we've already started launching them in the emerging modern retail trade outlets. Nature's Basket is one of the outlets where you would actually find our product.

So the single line will be running. It's up and running now?

Yes. Absolutely, it's running. It's a very high capacity line. So we will have to do minimum production of a very high size and that's what Anand was just explaining that we have just gotten the pilot plant come in whereby smaller quantities, but we ran with approximately 7 SKUs, 2 in soups, 4 in dals, and 1 in the mango pulp, and we've already introduced that into the market, but our real capacity utilization will happen when other brands start using our facilities.

Next question is from the line of Rajen Shah, an Individual Investor.

My question is for Milan. Milan, I saw the presentation, the press release and the opening remarks made for you and the CFO, Mr. Krishnan. Everything looks poised for a decent growth. So my question is last year we reported about INR 1,035 crores of top line and an EPS of about 10, almost 10. So can we expect at least that much for the current year or are we expecting anything, any kind of degrowth in the top line and bottom line? Because you said, January...

In our opening statement, we said that, based on what we are aware and the current fall off and all that. I don't see it as a major challenge to maintain the same levels.

Okay. So approximately what we achieved in '23, FY '23, we may close the year '24 with the same numbers, like almost. That is what you are mentioning. I wanted to know after this declassification or reclassification, I don't know, of these two promoter entities which are now public shareholders, the promoter holding is quite low at 20%. So what is the reason for such a low promoter holding, just 20%, 21% post this reclassification or declassification? I don't know.

Yes. So basically this was always the position. In fact, in this last quarter, there has been an acquisition of approximately 0.5%. So as and when opportunities are coming up and one is able to do it, one will see an increase. So doing it the fact that the co-promoters decided to reclassify themselves and in fact in the process when they requested and the process was happening, they have already sold out of their 19% level of almost 14% shares and they are just holding 5%. So yes, we are conscious about it and any opportunity that comes our way we would be ensuring to get in a better stability.

Yes. So when they sold 14%, we could have bought it, right? Or they sold it to some other entity?

It's not right to say that on a call but sometimes you have something called a NOTA, negative vote. You don't want to vote for someone so you pass on a NOTA. So if one does not want to sell, the offers were there. But anyway that's part of its foregone conclusion now. It's all over. So -- but every effort and every offer was given at the right stages, which this has been standing out for the last 12 to 15 months. And at least what we wanted was the stability and the growth of the company and no other kind of forces to bring down the morale of our staff and everything. And we have been able to achieve that including our support of our bankers and our investors, et cetera.

Yes, you're right, Milan, but you know what happens normally, I'm a long term investor. And normally when the promoter holding is high, the investors get confidence and especially when it's a family-led business...

Yes, so we have been doing it for 50 years, almost with the similar level of holding the kind of doing it. So in this 50 years barring some minor changes, in fact, there has been this addition. So surely, every endeavor would be made to get in a much, much better investor confidence.

Sir, a couple of more questions, actually. When can we see our products in DMart, Reliance, [ Forex ], Spencer and all that, because we have a better visibility and we have a huge market vis-a-vis Nature's Basket.

Yes, our teams are exploring all the opportunities, as you know, to launch any new product. It's always takes some time to conceptualize the product, the technology, the visibility. So it's taking its own time, but we are pushing and I believe that we will be coming to many stores over a period of time.

Can I ask one more question? I wanted to know your vision. I wanted to understand your vision for this company over the next 2, 3 years, like we're doing INR 1,000 crores of topline. Where do you see this company in 3 years?

So we as my colleagues did mention that there is no doubt about the consumption story growth in this segment of beverages, which is our main segment and we will continue to grow. Having said that, our other fresh initiatives, which is be it our spices, be it our Tetra Recart, we are at a very, very -- I would say that for spices, it's been a couple of years, but for us it's just been a few years, but Tetra Recart and others, the scope and the possibilities for these segments doing a quantum leap business is very much a profitability. And we are all kind of geared up to ensure that we to get better performance.

So can I understand that we can see at least 13%, 15% kind of top line growth for the next 3 years, at least, from the current levels?

It's a matter of, yes, why not, but I don't want to give it a kind of figure or putting it whereby, it becomes a kind of forward-thinking disclosure. At the same time, we'll be very happy that he has any kind of, as we've talked about my vision, I would not be happy if I grow less than 15%, that's the way I would put it up, and that's my personal thought process.

I would like to say one line. We have different categories of products or facilities. So we have now structured in such a way that each category there's a team who are exploring independently all opportunities to grow in the market, to grab the market because few sectors are really exceptionally doing well, and we could not miss the bus. So all efforts are on from all sectors and we are quite hopefully, as a team, as a company, as a board level, we are all in alignment, and we hope to see a good year ahead.

And sir, is there any equity conversion pending -- warrant pending to be converted into equity...

Yes. There's quite a very substantial amount of conversion. The due date is by June of 2024. So we should because it was 18 months from the issue date. And currently, approximately only 30% of the allottees have converted then into 100% share. Balance 70% are yet to exercise their right to convert it into equity.

Once that is done, assuming that everybody converts, what will be the equity and what will the promoter holding post that? Can I get some idea?

So the equity holding would go up by, it's a INR 1 share. So it would go up, the capital would go up to approximately INR 7.20 crores. Having said that, we have done some ESOPs and all. So it will be slightly northwards of that INR 7.20 crores, but they take effect in multiple years. And yes, the endeavor is to maintain at a minimum level of 25% to 26%.

Next question is from the line of Rusmik Oza from 9 Rays EquiResearch.

My question was on volumes for, last quarter we have seen volume degrowth of 10% and for the 9 months around 13%. And if I'm looking at the FY '23 minus 9 months FY '23 last year, we've done almost 29,000 tonnes of volumes in Q4 of FY '23. So will we see a number higher than 29,600 tonnes in Q4 or will it be lower than that, just to get a feel of the full year volume?

Rusmik, your entire question was not very clearly audible because your voice broke in between. So if you can just repeat it, it will be helpful.

Yes. I'm saying we have seen a 10% volume degrowth in Q3, and for 9 months it was 13% down. And last year Q4, we had around 29,600 tonnes of volume. So will we do a number better than 30,000 tonnes in terms of volume to show volume growth in Q3 or will there be a degrowth in Q4 also?

As things stand today, we are [indiscernible] better numbers than what we did in the last quarter of FY '23.

And my second question is on realization, because in the first half we had almost a 29% jump in realization based on the figures which you have given in the presentation. And in Q3, it is down 19%. I wanted to understand, is it because of the lower process units for tomato and guava or something more than that?

No, no. So how it actually takes place is that Q1 of FY '24 would have had inventory of something that would have spilled over from FY' 23 as in the production year of FY '22 and it would have spilled on to FY '24 as such. So likewise what you actually see in Q3 is the actual realization of the inventory of this particular season as such. So it is a 15-month contract. So it's always a spill over that actually happens. I hope I have made you understand that.

Okay. Because the realizations keep changing a lot every quarter, I think so.

Realization not only change for a particular -- I mean, one of the reasons why the realization is changing also is the product mix. Because we have multiple products like mango, tomato, guava, then vegetables, and soy powder, so it depends on the product mix also. And the realization range, lower minimum level is INR 30, maximum can go up to INR 450. If these are different, different product mix, definitely going to the realization will be going to be changed. So for apples to apples compare or something, each product you have to go, then only better comparison can be done. But overall realization, yes, it depends on which product was more, what is the range of that product range, and all these things.

And is there a seasonality in Q4 because if I look at last year's numbers, for example, in the 9 months of FY '23, the realization was 87,658, whereas in Q4 last year, it short up to 1,10,000, which was like 26% higher. Similar thing will play out in Q4 of this year also?

See the inventory of this year is at a much lower price. Basically it's a pass on that we actually have with respect to the raw material price. So when the raw material price is lower, the realizations are lower. And last year the Q4 bumped up basically because it was the entire last year inventory, which actually came in Q4. So it would be with respect to the raw material price, which is actually lower this year.

And my second and last question is on the pectin project. Once you commercialize in Q1 of FY '25, since it's a very small pilot kind of a project, what kind of revenues we can expect in FY '25 from this pectin project? And what kind of margins can we look in?

So the whole company of Beyond Mango will generate around INR 15 crores of revenue is what are estimated. And 50% of that revenue is ours. And out of which the gross margin can be anywhere -- I mean, gross margins are extremely high basically because there is no cost of raw material. There is only a transfer pricing rule that we will actually have to apply for the waste that is actually transferred from Foods and Inns to Beyond Mango. But apart from this, the EBITDA margin should be north of 60%-odd as such. So you can do the math then.

Okay. And once this is properly commercialized, then what kind of ramp up are you looking at thereafter? Maybe because we'll have some capacities or probably space to increase capacity going forward?

This is very easy to actually replicate this and expand the capacity, but we would want to first be successful in the first project and then probably take the call off the next expansion. But once this is all set, I think the demand is there and the machineries are all set, the technology is all set. It's just a question of executing it and building our confidence and the investor confidence and taking the next step. That is where we are as the company.

And Anand, my last question is on the debt side. What is the outstanding debt right now? Because our quarterly interest now has the last three quarters has been at a run rate of close to INR 10 crores. So what is the debt and how will the debt be positioned next year?

So there were a couple of reasons that we have actually enlisted in our investor presentation with respect to why the interest rates have actually -- I mean, the interests actually gone up. One is that -- one of it is basically because our CapEx, which was actually happening has now been commercialized. So whatever used to hit the assets, they have now started coming to the P&L. That's number one. Second is with respect to the interest rate itself actually going up. Third is because, since we are actually availing the PLI, there is this interest subvention scheme which used to be there by the government, which is no longer applicable for us and as we are actually taking benefits under the PLI. So these are the three major reasons. The fourth other reason why the interest rates are up is also because of the higher inventory, which is actually -- pretty higher inventory which is there with us this year. The higher inventory is actually causing us the additional working capital load, which is there. But having said that, whenever the call-offs happen, the call-offs would also have an element for this inventory holding cost, which would be compensated to us in the form of sales.

I would like to highlight one point here. I think we are all looking only debt, but we should look at the total liability of the company. Last year debt was in the lower side but current liability, that is creditors, was quite higher side. So if you add both debt and current liability other than the creditors, and if you compare the similar position of currency as debt plus creditors, we are at the same level. It is not increased. So yes, debt has increased but creditors has reduced to that extent. So this is the reason. So yes one of the reasons, as Anand told, that last year -- I mean, last mango season, we have done 40% higher production based on the customer's order, but unfortunately the call-out delayed, which causes the larger holding period interest cost. That is one of the reasons.

Next question is from the line of Shyam Garg from Ladderup.

My first question is with respect to the revenue potential. What is our revenue potential when we will be working at 100% capacity on all our plants? And what's the breakup in case of each plant that revenue will be generating? And what is the capacity utilization in the last quarter as well as this quarter?

Shyam, so basically, our business model is such that we don't rely only on our capacities. We also take up satellite capacities, which are actually available for lease and we actually put our people and take care of the production during the production time. And we wouldn't like to comment as to what the potential could be basically because we have already given you a guidance with respect to whatever the three, four-year forward guidance could be, which is around INR 1,800-odd-crores is what we can actually do. So apart from that, we wouldn't like to break it up with respect to our plants or with respect to each and every facility of ours as such.

And what is the capacity utilization in Q3?

The average utilization is something that -- so Q3, the capacity utilization generally is very low, basically because it's a non-season time for us. Maximum production for us actually happens in Q1 and Q2 as such. So Q3 is generally a low-lying period for us. But having said that, we do produce a lot of fruits and vegetables during the Q3 season. But this particular Q3, we have had lower production for tomatoes and guavas.

What is the number of capital utilization? Any percentages, any numbers on capital utilization? What was the capital utilization?

Shyam so this is exactly what I said initially. That for us it's the capacity that we have in-house as well as what we actually outsource as such. So if you just see the in-house capacity, we'll never give you the right picture. We utilize satellite capacities to increase our production, that's how we have actually grown our sales in the last 2,3 years.

And what is the order book as of now that you have?

Yes, we have an order book of 40% plus, which we actually did produce, I mean, to cater to that increased order book as of the beginning of the year.

I mean, if I can know the order book at the beginning of the year?

So 40% more than what we did last year is what we are saying. So our production was approximately around 1,30,000 tonnes.

Any specific guidance with respect to the [indiscernible] that we will be targeting in the next two to three quarters? Any guidance regarding the pulping business? We are largely mostly into mango pulping and we are trying to -- or I would say trying to tomato and guava. So if you can give guidance regarding the next 2, 3 quarters.

There is no specific guidance that we can actually give with respect to each and every product. So we have already given you the guidance with respect to what our order books are as of the beginning of the year. It will definitely get called off over the 15-month window is all that we can actually say. But production of tomato and guava were lower because of the sales of that will be lower going forward.

But one thing we would like to highlight that being a seasonal industry, whenever the specific variety of fruits available, we run from day one till the end. We do not wait for customers' order because being in this industry for the last 50 years we have a clear idea on the customer requirements. So our challenge is that how to maximize the production during raw material availability. That is the whole focus of the company.

Next question is from the line of Purvesh Tibrewala from Finavenue Growth Fund.

I wanted to ask some more questions on the pectin business. So you told at optimum capacity we will be trying to make around INR 15 crores of revenue. So this entirely INR 15 crores is from the pectin main product or you have mentioned that oils and butter also. So are you also going to make that simultaneously and we are making INR 15 crores out of that I wanted to know that. And are these products similar to what Manorama Industries is making? So can you highlight more on that?

So the INR 15 crores that we are actually talking about is only the pectin. We are not talking about the other products that we can actually get from it. All those products will be in stage 2 after we actually start manufacturing pectin as such. So that is with respect to the first question of yours. Second, the product is not similar to what we actually -- what the Manorama Industries does. But the stage 2 products that we would actually generate, that's out of cocoa, butter or the CPE equivalent, will be very similar to what Manorama Industries does.

And at the Stage 2?

Correct.

And other question was that this plant of pectin we have established at Chittoor, but we have other pulping units at Maharashtra and Gujarat also. So is it like that we are going to transport the waste, mango waste from there to Chittoor? Or like in the future, we are going to establish pectin plants there also? Like what's the plan, sir? Like what will happen? And this is a feedstock for the pectin business. So like I wanted to know some clarity on that also?

So Chittoor is the largest mango pulping belt in India as such. So the current pectin plant has been put out outside one of our factories in Chittoor. We have our own three factories in Chittoor but we have put the factory only outside one factory. So this particular factory has more than enough peels to actually give to this particular pectin unit. Having said the same, once we actually stabilize on this particular unit, we will expand in Chittoor and then probably actually expand into our other regions wherever we are present.

But currently we will be collecting the waste from the western region and after the drying process, we will take it to our Chittoor unit where the facility is there.

So we will be transporting after drying the peels.

Yes.

And my other question was on the Green Top business. So can you highlight on what's going on there? How is the growth? And like what are we making? What's the future prospects of that? Can you highlight something more on that?

Green Top is basically our brand which we started in domestic market in the frozen category initially. I think 8, 9 months ago, maybe 1 year ago. And currently we are mainly focusing in general trade and produce the market and able to scaling up the operation and the current sale is not much, maybe around INR 25 lakhs per month as per in the consumer side. And we are only in small store, so far Maharashtra in Mumbai, Pune and Nashik, 3 regions we are selling as of now. Now we have expanded to Goa and we have now tied up in northern part of India also. We are very soon we are establishing our office there, satellite office as well as the distribution network there. So we are expanding this consumer division brand Green Top in a slow step but steady. And after analyzing each, every market and what is the acceptability based on that we are moving a slow step. That is the frozen category. Second category is the Tetra Recart, that is also Green Top brand where we have launched 7 products so far. And 1 is the pulp category mango, other 6 in the ready-to-eat. And that also I think a lot of corrective action may have to take based on the taste profile of the consumer. So that is also going in a slow pace. But we are quite hopeful that within a year or maybe 18 months period, we will have a much better visibility on the Green Top brands in frozen as well as in Tetra Recart. Sorry I forgot, recently we have also launched our product in Gulf markets, first in Dubai in Green Top vegetables. Very soon it will be available in Dubai market also. And let's see, I think we are quite hopeful that we will be able to, because we are manufacturing in frozen since 1993 on private level. So we quite well understand the customer taste profile everything in each province and accordingly we are taking every step.

So what is the other joint venture partner doing in this business and so we have only 50% I guess or 49%. So what are they contributing and who are they?

No, nobody is in Green Top.

No, you are talking about the pectin project beyond mango. There are no partners in Green Top, it's 100% brand of Foods and Inns.

And other associates, I'm sorry, we have our 2 associate companies, I guess. The one which was Tri Global Food which we incorporated and then the name was changed, I guess?

Tri Global, we have initiated our consumer division brand that is under Triveni brand just before pre-COVID time and then it's not very successful. So we discontinued this Triveni brand and we have relaunched our Green Top brand. So now Green Top is 100% ours.

Okay, I thought -- Sorry. So all the frozen food, we are manufacturing contract -- whatever we are selling?

No, no, factory. In our own factory.

Next question is from the line of Rohit Ohri from Progressive Shares.

Couple of questions. First one related to the debt part of the counter net of the entire business, which Anand also alluded. I understand that some part will auto-correct, but do you think we should be looking at some rise issue or maybe refinancing the debt or refinancing the -- rebalancing the entire debt portion?

Rohit, so basically the debt is only based on the working capital as we see as of now. The long-term debt is basically very limited to the quantum of CapEx that we have done, but we are also getting incentives from the government for that. So the working capital debt is something that you see because the business has actually grown, right? And in this particular year, the inventories have actually had slower call-offs because of which there is the working capital debt that has built up. But having said that, the other part of the equity, which the warrants actually get in once it gets converted should easily suffice us with respect to the capital that we need. So we are not bothered about the debt at all.

Anand, on the freight cost, the Red Sea issue of course everybody knows about that. But what are the kind of contracts that we have? Do we have FOB, CIF, or CFR, or DDP?

Most of our contracts are on FOB basis only.

I mean, not most. I think 99%-plus is FOB. There may be a couple of contracts on CIF or CFR basis, but now this is the force majeure clause. So we have approached to all the customers whoever having the CIF contracts and everybody has agreed to revise the price. So there is no impact on us on the recent Red Sea issue.

We have around 61% domestic and around 39% for the export. So is it a big difference in the realization that we get in the dominant domestic and the export markets?

Realization depends on which product. Because in export market, we sell -- I mean, major sale is the Alphonso, which is a premium variant. So that's having a better realization. In domestic market, we sell a product called Totapuri, which is a per kg realization or per metric realization is lower. So it depends on the product we've got. See, apples to apples on the product wise, yes, in a particular category of what we are selling in domestic market is having better realization than export market.

So that's why you are comfortable with this 60-40 domestic versus the export kind of a range?

Yes, growth stories in India, as far as you know, I mean, which is the population, there's a huge opportunity in India and brands, whether it's Coke, Pepsi or Parley, since COVID period, they have already increased the capacity by 30 odd percent. And they would like to invest further 20%, 25% to increase the capacity. So I think we will go with this flow, which is a huge opportunity in India market. Though we are not neglecting at all export market, all time we're looking wherever we are not in present currently or focusing in that market more in exports.

Sir in the domestic market we do see a lot of opportunities in other parts like chili, garlic, ginger. So do you think FoodZone will be interested in that business also going forward, maybe in the next 2, 3 years?

We are already in this business in a few years. We supply to brands like Ching's quite a lot of products. We also supply to other brands. And we have recently restructured or renovated our chili, garlic, ginger capacity in B2B. So I think that's a good opportunity as rightly said. But unfortunately in our realization price per metric ton is very lower. So even if you sell a higher volume, it's not much impact on the overall sales value. So there is a good space and we would like to grow in that space also.

And on the spices masala side, what sort of developments are there currently to increase the capacity that we have? Because I understand it's quite restricted and we do have some satellite players as well. But in terms of the high margin business that we can fetch some more profitability, if you'd like to share something on that.

So basically the capacity for manufacturing Kusum is very well provided for. We shifted it since our takeover to our Nashik facilities. And we do not foresee any challenges to take it to an easy level of 3x to 4x plus from the current level. As far as the markets are concerned, we are into domestic hardly into the western zone. And we see the western covering up Maharashtra, Gujarat, Goa, et cetera, as it is already enough opportunities and we are making inroads into that. As far as the export is concerned, we are very well established in the Oman market. There is a certain change of regulations that have happened in the previous year up there. And we are now making sure that we would be able to comply to that requirement.

So my last question is, do you think you'd be able to double the turnover from last year being the base by '29 or something?

FY '29 you said? No, sorry. Can you just come again? We missed out the context.

Yes, sir. Taking the base as last year and doubling the turnover by FY '29 or so.

Sorry, I don't think we have understood your question well because there was some disturbance in the line. Can you just repeat?

Can we reach the INR 2,000 crores kind of a top line by '29?

Why not? That's what this team is meant to...

That's what we're paid for, boss.

[Operator Instructions] I hand the conference over to the management for the closing comments.

All right. Thank you, Yusuf. I want to express my gratitude to all our investors and shareholders for their continued support. Your trust in our company is invaluable and we take it seriously. We have already laid a strong foundation for consistency and sustainability and are confident in our ability to navigate [indiscernible] and emerge stronger. Should you need any further clarification or would you like to know more about the company, please feel free to write to us. Thank you once again.

Thank you. On behalf of Foods and Inns, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.