Foods and Inns Limited ($507552)

Ladies and gentlemen, good day, and welcome to Foods and Inns Limited Q4 FY '26 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. Now I hand the conference over to Mr. [indiscernible] from [indiscernible] Capital Markets Limited

[Technical Difficulty]

Good evening, ladies and gentlemen. This is Anand Krishnan here, the CFO at Foods and Inns. Thank you for joining us today. We have with us Mr. Milan Dalal, the MD of the company; and Mr. Moloy Saha, the CEO. FY '26 witnessed a challenging operating environment for Foods and Inns. During the year, our business was impacted by lower realizations, resulting from the pass-through of lower raw material costs, temporary disruptions in certain export markets and lower tomato processing volumes due to constrained availability of quality tomatoes. Despite these challenges, we continued investing in our long-term growth platforms. In Q4, sales volumes were affected by the geopolitical situation in March, particularly in the Middle East, where realizations remained lower due to inventory produced from low-cost 2025 crop season whilst realizations remained lower to inventory produced from the low cost 2025 crop season. As always, our pricing remains a direct pass-through of raw material movements. We expect demand from Middle East to normalize over time. Frozen Foods continued its strong momentum, delivering volume growth of approximately 28% during FY '26 supported by increasing demand for value-added products and growing interest from the U.S. market. Our growth initiatives are progressing well. We are expanding the [indiscernible] capacity by 120 metric tonnes per annum, continuing to build our [indiscernible] business where confirmed orders currently stand at approximately 400 metric tonnes, valued at around INR 8 crores and leveraging AI-driven automation initiatives to enhance efficiency across our operations. We have also strengthened our sustainability initiatives through additional solar installations that are [indiscernible] and [indiscernible] facilities, which will contribute to our long-term cost efficiencies. A key milestone during the quarter was the receipt and recognition of the FY '25 P&I incentive of INR 33.86 crores, reflecting the successful execution of our group investments. Overall, while FY '26 was impacted by certain external factors, we remain confident in the long-term growth opportunity across our diversified food processing platform with strong customer relationships expanding value-added businesses, improving export competitiveness and continued investments in efficiency and sustainability, we believe we are all well positioned for the years ahead. With that, I would like to now open the floor for questions. Thank you.

[Operator Instructions] The first question comes from the line of [indiscernible] with [indiscernible] Capital.

Just wanted to know the outlook on the revenue growth and the EBITDA margins for FY '27 and '28.

So with respect to the margin percentage is something that we never disclose as a company basically because it's a complete pass-through of the raw materials cost with respect to the expected tonnage growth is something that our CEO will guide us in the call.

Considering the present situation and market scenario or information, what your update you're getting from customers we're expecting around 18% volume growth for this financial year. Major growth we are expecting from Frozen segment, which is CFO, Anand already communicated to you. Last 3 years, we have grown at 30% on average and likely to grow for next few years significantly. So that is one. And another growth we are expecting in our packaging solution product that is a [indiscernible] since we [indiscernible] installed 2 years ago, we are not able to get much volume from that segment. But now we are in a very good platform. We have a lot of orders in hand and some big orders in U.S. and other European countries also likely to happen. So there's things so -- we are expecting an 18% volume growth for this FY '27.

[Operator Instructions] The next question comes from the line of Kaushal Sharma [indiscernible] Capital.

So just want to understand from your side in respect of our inventory. Could you please explain what is the mango procurement cycle? And how much is liquidated in the year in itself in the procurement? And how much is defer in the next year?

Our industry, as you rightly said, it's a seasonal industry, we produce between mid-April till August first week, which contribute more than 75% of our volume and the product dispatch starts in 2 segments. One is the export, another is domestic. Export segments start immediately after production. And more or less, uniformly, it move out the year. If we start discussing from in the month of, say, August or September till next year August, uniformly it moves. However, domestic is a different pattern. Major domestic volume moves from December till June. During this period, domestic more than 60% to 65% of the order quantity moves. So overall, if you want to understand that how much stocks carryforward approximately 45% to 50 -- 45% roughly stocks carry forward for the next years.

[indiscernible] Sir, my next question -- follow-up question on this [indiscernible] is very low in this financial year [Technical Difficulty]why our volumes have been increased drastically.

Borrowing has not increased, borrowing have been decreased. I mean, [indiscernible] the balance sheet overall volume has been deferred by 15 -- INR 16 crores, it's not increased.

Our total [indiscernible]

INR 411 crores against last year INR 427 crores.

This is at the stand-alone level if -- I mean, I think [indiscernible]

Okay. So what is our expectation? And going forward in tomato season, like what is your expectation in our segments during the [indiscernible]

[indiscernible] year, yes, we could not produce as we targeted due to the crop [indiscernible] quality issue, [indiscernible], which is quite common for our type of industry. over, have good orders in hand, whatever stocks we are having around to roughly, all back to their order. And dispatch growing currently at a little slow, but we are expecting movement to start about a month or maybe 45 days, whatever information we get, all are even back to back product.

And what kind of revenue potential are we expecting in this year [indiscernible]

It was difficult to say, but whatever we are having stocks if we consider the stock to roughly around INR 700-plus crores against the stock. But I guess the next year sales -- I mean next year production, which will be likely to start from November onwards. As of today, [indiscernible] to comment on that, but existing stock movement fully -- we're expecting that it will be fully dispatched. So it came around INR 70 crores, INR 75 crores.

And so what is our target in EBITDA quantum level, what kind of growth are we expecting in the current year and the next year on EBITDA in absolute terms?

Before this call, we have already improved. We are expecting a volume growth, 17%. But EBITDA, we won't be able to tell you or [indiscernible] don't disclose because our model is cost plus model, where we [indiscernible].

I am asking in the quantum [indiscernible] in the per unit basis in the absolute term what is the target in the EBITDA level.

[indiscernible] product mix because each product is having a different EBITDA. Each product is have a different margin. So it is not -- we won't go to tell you that absolutely, I mean, upon that what you been likely to absolute term. But as we told [indiscernible] that our margin percentage, we are always looking to improve gross margin. That is our main objective and on the [indiscernible] volume-wise. But otherwise, as of today, we're going to tell you what is the absolute figure [indiscernible]

The next question comes from the line of [indiscernible].

[Foreign Language]

Can you just repeat your question, please? [Foreign Language]

[Foreign Language]

[Foreign Language] We are doing, that has got adapted for the last 15 days of the year. We didn't get shipped availability, [indiscernible] is not there. That affected our overall revenue for the year. But subsequently, it has gone in the current year. So there is no major effect, but overall effect for [Foreign Language] one of our facilities that is paid and powder facility. It is running under gas. So we could not produce almost 45 days due to the very negligible production we took in the month of mid-March till April due to this [indiscernible]. Now things are normalized. The cost has increased, but things are normalized.

[Foreign Language]

[Foreign Language]

We actually mentioned it has normalized basically was also mentioning about [indiscernible] of availability of gas for the [indiscernible] facilities.

[Operator Instructions] The next question comes from the line of Amish Kanani with Knowise Investment Manager.

Sir, you did mention at the start of the year that volume growth will be 10%, but we have ended up on an annual basis, at least we ended up somewhere around 3% and 6% in domestic and exports with an overall volume of 4% and sir, I was just checking the data on breakup of exports and domestic. domestic also has kind of taken a knock in the fourth quarter on a Y-o-Y basis. So one, if you can explain why should West Asia crisis affect our domestic volume, sir?

Okay. Very good question. I appreciate. Last year, we got a good volume growth in the March quarter due to the UP [indiscernible]. During the [indiscernible], especially the brand like Coca-Cola, Pepsico, special campaign and they're able to get a very good growth during this period. So that is affected for this current March quarter. So that has [indiscernible]

[indiscernible] last year is also.

That is the only reason. Otherwise, as of now, due to the temperature across the country, I should say that brands like Coca-Cola, PepsiCo or other brands [indiscernible] all are growing in a very good growth, 8% to 9% average growth now in the beverage industry, which is -- considering the volume, it's a very good scenario. So if the rain is not affected for the June -- till June end, we are expecting a good [indiscernible] during this period. It is good for the industry.

Okay. And sir, in the presentation, you mentioned that the season was bad, and -- but export is also not happening happening. So we were able to benefit about.

[indiscernible] repeat, please.

Sorry? Can you hear me?

We didn't hear you. So can you just repeat the question, please?

The question is you mentioned that we were benefiting because of the export scenario being slightly softer and table truth variety may not have been exported so we were able to procure it at a reasonable good price. So one -- and we have observed the inventory as shown in the balance sheet has jumped to INR 640 crores from, say, around INR 490 crores that I was seeing, which is actually a jump of INR 30 crores -- 30%. So one, if you can give us some sense of how is the procurement -- but the prices in the last year to [indiscernible] season, we remember you were saying prices are very low. So one, how is the procurement being showing 30% inventory gain -- inventory increase? So were we able to procure it at a reasonable price? And then the related question there is, sir, I saw the realization per tonne was stable and in the gross profit terms, which you had explained that it's normally stable at say, INR 3,000 per tonne. If you can give us some sense of should we be looking at some inflation there or it's stable and stuff line answer.

At inventory -- if you see our balance sheet or our model. We process during the [ mango season ] a lot of satellite units because our capacity during a small period of time, we need to produce significant volumes. So our capacity is not adequate. So while we do these processing and satellite unit, we need to give a lot of advances to support the production. If you see our balance sheet last year, apart from the stock, there was -- in the advances, which was around INR 160 crores [indiscernible] in the books. So basically, that is equivalent to buy stock. So if you see my stock, inventory plus [indiscernible], inventory plus adverse to vendor has reduced to INR 29 crores. So we have taken most of the materials. So to add a protesting, there is no change. It's on the similar pattern. So that is the first [indiscernible]. So I would like to clarify that there is no increase in inventory by 30%. Yes, apparently, if you see the inventory, it looks like, but if we add advance to the vendor, it's a similar kind of things. And second is what [indiscernible] mentioned that due to the oil prices, India could not export significant volume of [indiscernible] which they used to do in GCC countries because there's a disruption in the airlines. So there are a lot of reasons. This year, [indiscernible] so in normal scenario we could not -- I mean could have been a problem on the pricing because crop failed. However, since the [indiscernible] and not move to the GCC countries. So there is no option. All products have come to the processing industry like us. And also price reduced significantly. And in the processing industry got the every foot the quality has improved. So that would like to say. That is something which is not good for the country, but is that benefit will market process.

Okay. And sir, this cash flow from operations it seems we have used for either repayment to vendors and/or intercorporate deposits. So if you can explain how have we used because borrowings have been stable, but there's a decent cash flow from operation, which we seem to have utilized for some purposes of working capital, if you can explain where we used, we'll be able to appreciate.

It's inventory really. If you see the cash flow improved because we have a good better collection. If we [indiscernible], there is a significant inflow from the realization. And everything is the working capital. We have not done any major CapEx or anything.

The next question comes from the line of Vipul Shah with RW Equities.

Am I audible?

Yes.

So my question is to Mr. Dalal. Sir, in 2024, you along with other promoters, we launched a voluntary open offer at [indiscernible]

I can hear you.

Can you hear me, sir, sir.

I can hear you.

So in '24, we launched an open offer at [ 1 47 ] per share, obviously, because of voluntary offer, we understand that, right? Secondly, sir, the book value is today, INR 77 a share. Our price is INR 57 a share. My question is as a promoter, the direction you take is very clear to all investors and stakeholders. Is there any thought process, sir, that this -- if promoters are willing to participate at INR 147 a share, this represents a very big opportunity where the share price is today is below book value. Your thoughts will be really helpful, sir, on this.

Yes. So basically, yes, you are rightly -- the open offer was voluntary because we wanted to consolidate the promoter holding over 25%. It has its own strategic value to be about 25%. We had dipped only for 2 reasons by one of our partners decided to part ways. As also, we had investors on [indiscernible], which diluted my [indiscernible]. Yes, I don't think it's a pay to have our [indiscernible] promoter looks at it for a long term, and we have invested as a family for the last 50 years and there are opportunities ahead of us. As of today is the first day in this cycle, I had a sensitive period of two 48 hours post that. But of course, what has to make enough arrangements for finance [indiscernible], but the outlook is good. And like any other investor with my or stop broking, why would I not want to average my holding. But the average is not only between 147 and today's price. If my so-called original holdings of INR 10, I've already kind of [indiscernible] you should see more action. I've done some interpromoter transactions in the last quarter. I have added a bit, but God willing, you should see more of these disclosures coming up.

Other Thought was that, one, is a promote of action. Second is this summer mean where we are in this situation. I'm sure the call-offs would be really significant, which would aid the company and obviously the cash flow. Is there any thought process for the company to buyback -- consider a buyback of equity shares wherein the stock price is actually below book value. So it makes -- as a financial investor and a finance professional makes imminent sense considering you said the long-term potential of the company. That's a great signal. I mean, otherwise, it's all talk.

Yes. So if you have seen while in the last 3 years, we have stagnated but the 3 years previous to that, we jumped from 350 to 650 to INR 1,000 crores top line and that the desire to go further is very much there, in fact, to get eligible for our PLI scheme, we still need some upside. And the more business we do and in B2B, we would require more working capital. So at this stage, even if financially, you think and rightly so that yes, we are in a good position to put it up. I think the company will need to conserve more resources, not borrow more and increase the top line should the opportunities come our way. Also with the debt on books, we -- the first intention is to actually reduce the debt given the first opportunity as it's a working capital-intensive business, right? So buyback might be the last thing in our mind.

[Operator Instructions] The next question comes from the line of Roshni, an Individual Investor.

First question is as of India represented [indiscernible] of our revenue the U.S. and U.K. follow, which international [indiscernible] do you view as the highest growth priority for [indiscernible].

regionally, which reason will contribute the among the...

I think generally what we believe with the West Asia conflict and the percentage when you look, a, because our base is quite low compared to the last couple of years for the West Asia. And as we have seen post-OCCOVID, there is a lot of pent-up demand. So countries like Saudi, UAE, all the Gulf region, we do expect a lot of growth potential.

So business-wise, if you actually see, I think as you already mentioned that the frozen segment is actually growing well and it's been growing at around 25% plus in the last couple of years. So U.S. is a region where there is a lot of growth in demand for the Fusion business as much. So that would add on. But I mean, with respect to the other regions, I think the mix -- I mean, other businesses, the mix might be very similar is what I think.

My second question is, as you mentioned that the rural electrification is helping on the penetration of soft drinks. So how is this macro trend specifically influencing your B2B sales forecast for future [indiscernible]?

I think you already mentioned that he is expecting around 18% growth in the coming financial year in terms of volume, right? So a large part of it is also aided by the growth in volumes that the Lager brand has committed based on which we could give you this forecast. So with rural electrification, a lot more cooler they're actually being able to put up in the rural villages because of which there is a lot more demand for the beverage brands, which are actually there. Also, as you already mentioned in the call, that with delayed or soon and higher heat, there is higher consumption of soft beverages as such, [indiscernible].

And. I just would like to add one point that since last 18 months, when the Reliance launched the [indiscernible] brand, the freezer supply to [indiscernible] has increased by 300%. That's the data I got from the big brands. So now the growth story for the river industry is really looking very bullish because the more freezer you are supplying to the shops, the stock's likely to be stored there and they'll be cinsumption. So that's the story all the vet vendors are doing. So they are more interesting on the [indiscernible]

Okay. Got it. And sir my last question is your 5 year [indiscernible] revenue was 19%, but FY '26 [indiscernible] what [indiscernible] or management is tracking to on the double-digit growth trajectory?

I think we have already communicated that our business model is pass-through model means, all costs we pass through the customers and the margin percentage pre return. So we focus 2 things as a company is the volume growth because being agricultural products, we do not have any control on the raw material price. Sometimes half sometimes down, we will be parted to the customer. Secondly, we like to ensure that every year, our particular area margin against any particular product, we should give you an inflation factor, so that should increase. So that is our 2 major but -- so already, we communicated that we are starting this year with 18% volume growth, which we have already come a sorry, 17% volume worth, which [indiscernible] sorry, 18% volume growth, which you have already commented. So that's the way we are working on it based on the information and updates from our various customers.

The next question comes from the line of Aditya, an individual investor.

So my first question is that the company is investing INR 2.5 crores to expand [indiscernible] capacity by [indiscernible]. What is the projected time line for this facility to reach full utilization?

Commercial run targeted December and we are trying to see if we can people made 20, 25 days as the target working but December month, definitely functional products were likely to start. So this year, we may get a 3 months benefit to an up to 3 months benefit we can get this year. So that's the things.

Okay. And my another question to you is that [indiscernible] grew by 28% year-over-year. strong demand on the U.S. Do you have any specific targets for market share or new product launches like the [indiscernible] top brand in North American market?

We are predominantly in the B2B segment, our private level so on our whole brand [indiscernible], we launched in India and some in a small way [indiscernible] so we are not much focusing on our own brand [indiscernible], but major focus in the private label. U.S. is the biggest market for frozen foods like -- big houses like Costco, Walmart. So we are working back to work with all these customers to penetrate this market and expand our business horizon. So we are expecting a good growth from the [indiscernible] vicinity. Apart from that, we are also trying to get something in the West Asia also, we feel there is some opportunities expected. Especially 1 thing I'd like to highlight, post-COVID, we have seen a -- I mean, experienced a significant demand in the frozen segment. Now during this work, we are again experiencing similar kind of demand in that frozen food sector because safety across the world. So most of the brands are trying to ensure that they should have the product in their store at least for 6 months. Our product is having a 2-year shelf life. So that's the way to mitigate the risk of shipment, and of this thing, they are all working with a 6-month storage at their places. So that is helping us to increase our demand for the frozen segment.

Okay. Great. And my another question is to me that the company has confirmed orders for [indiscernible] currently stand at 400 NP, which is valued at INR 8 crores. What is the total installed capacity for this line? And what is your target for repeat business in FY '27?

This year, FY '27, we are expecting around INR 20 crores business approximately, the way discussion is going on. So what is conformed order in hand that we have mentioned. And overall capacity for the facility INR 80-plus crores in the today's value -- product value. So we have a lot of scopes are there to expand that business, and we are working on that, and we are getting a very good traction in this category of product in the export market.

Yes. And my one more question is -- the question of price sales were impacted in March by -- so service price sales were impacted in March buy the more which are going on. So are there any plans to diversify the export destinations for the spice segment to mitigate regional geopolitical risk?

Very good point you have raised. Yes, we are all working on that line only because our major export business in the Gulf countries, Oman, is one of the major destinations for us. And we are working for some European countries and some Southeast. The negotiation and sample process all things going on. So as of today, it's a very preliminary stage. We may not be able to give any guidance. But yes, we are working in the manner that we can diversify some of the export business to other regions.

[Operator Instructions] The next question comes from the line of Ramesh with SJ Investments.

So I wanted to understand [indiscernible] process to a project right now. We have been planning to commercialize it for a while now. I just wanted to understand where are we at today?

We have commercially production started about 7, 8 days ago. I mean earlier, we started already, and then we had some issues on the production process because as you know, these are the first time in India, this facility. So we need to have some seeding problem we face. So we rectified everything. Now full flat commercial run started now, which is earlier started, but now we can see the production there is no interest on the production process [indiscernible] that if we can use the waste and successfully, we are 2-day processing [indiscernible] also, so that during the [indiscernible], we can use the wet field and nonmembers we can use the type. So that's the advantage we are getting. And we are -- it's a long process to get approval from big brands, I mean specialty products. But we are quite hopeful that this year, there will be a significant -- I mean at least 50% of the capacity can be fully utilized for the current year.

So since all the valuation concern over do you decide the final customer also?

Pardon?

So you had to do [indiscernible] then to be used. I was wondering is it going to be domestically used or is going to get to the [indiscernible]

Basically, our consumers are the same juice manufacturers or the ketchup manufacturers. So the potentials are the Coke, Pepsis, Unilevers, [indiscernible] et cetera. We need not restrict ourselves itself. Maybe it's the prison manufacturer like Mala and [indiscernible], whatever. So multiple of this. Once we have these products, and it just matches the specification, it will be a no brainer import substitution and sales is not going to be an issue.

We are also working with export customers also. As we are yet that option also site is open, and we are now doing the sampling process with the export customers.

Sir, when you [indiscernible] the 50% CapEx [indiscernible] is it like INR 7 crores, INR 8 crores in terms of [indiscernible] revenue for the year for the year?

Yes.

Sir. And in the previous comment, you mentioned extremely high margins for [indiscernible]. Has there been any change in terms of margin structure?

No, it's similar because raw materially from [indiscernible] so margins are similar. There's not really major changes.

So where do you think it will end up during the year at 50% utilization?

[indiscernible] INR 7 crores, INR 8 crores of revenue is what we can actually expect 50% utilization and the gross margins are approximately around 70-odd percent of that.

And in terms of expanding our capacity revenue plan right now right for the [indiscernible]?

As of [indiscernible] definitely because if we can run the -- I think another 2 years, if we can run successfully and able to get a market and a big opportunity for India also because India import I don't have the [indiscernible]

350 metric tonnes.

350 metric tonnes India imports from -- mainly from China. And our capacity is 150 metric tonnes. So there's a there's a scope to grow in this segment, and we'll work on that [indiscernible]

Got it, sir. And the segment, we've been growing well. That's a great job we were doing that. I wanted to understand [indiscernible] understands [indiscernible] market. But do you see opportunities in Europe? You already, I think, alluded to the I wanted to understand the opportunity in Europe and Europe but do we also have any plans to expand B2B segment in India also and other neighboring countries?

Europe is definitely pulp is a good business. Tomato, we have started exporting to Europe, and that's also exploding now.

Ready to eat segment.

I think private label, yes, Europe, we are also exploring because we have a constant on the capacity because present capacity is almost saturated. We are doing a lot of -- I mean trying to manage the demand. But unless we expand that capacity, we cannot go in a big way. This is the frozen [indiscernible] segments, we ready-to-cook basically. So that segment, we are working with some satellite units also temporarily if we can manage the demand. So yes, we are exploring Europe market also. In Europe market -- in U.K., we are already supplying since 1993. So U.K. is a big market for us on the Frozen segment, apart from the U.S. Other part of the Europe market were we are trying to [indiscernible] small win. We have just started with some distributors, and we believe that it can be a big market.

So sir, what kind of CapEx do you have in plan for the segment? Like could you give a breakup of the CapEx overall spend what you're planning? And what would be [indiscernible]

We are working with some cluster development program with the government of India supported national horticulture board of where we have to tie up with the farmers and the farmers to output in our facility of [indiscernible] there is some scheme on the subsidy of the thing we are working on it. We have already got [indiscernible] approval for this cluster development program. And I think by another 1 month time, we have a more clarity on this, that what kind of CapEx you would like to do and how the [indiscernible]. So give us some time, we'll come back to you very soon on this because we believe that this segment today is INR 100 crores. Our target is next 3 to 4 years' time, this segment to become 300 to 400, that much opportunity we can see [indiscernible]

Sir, in terms of gross margins how is the [indiscernible] driven from our pulping business in terms of gross margin?

The frozen food segment actually has around 50% gross margins.

Got it, sir. So you mentioned the INR 300 crores target, right? So do you see in terms of EBITDA also contributing at a much higher level and with the gross being so high?

But there are costs for full orange, which needs to be incorporated at the below gross margin level -- the supply chain cost in southern segment is quite high, almost 10x compared to any pane product. So that has still factored.

Got it. So [indiscernible], when do we expect to reach? And what kind of CapEx do we need to do to reach that?

As I told you, we need to say about a month or so as we are [indiscernible] and after that, we can have to tell even business.

But the in terms of the target of INR 800 crores, it would the next 4 years ago.

Yes, that's the target.

Got it. And one more question is regarding [indiscernible] I understand different topics have been diced. So can we also [indiscernible] this plant? Or will we need to only do et cetera

We can't have the initial problems. Now we are seeing order book position slowly steadily increasing. Yes, it's not a [indiscernible] size that if we don't succeed in [indiscernible], obviously, it can be scrapped, but that's not the idea. So if the market requires, this is the perfect mix for a B2C segment, e-com, et cetera. But as we are into the HoReCa segment and other things, we will add on additional technologies, which are not going to be very costly. All the packing facilities already in place, but we would consider other not too costly kind of solutions and add up to our product.

Got it, sir. So out of the CapEx, we end up end up going through a [indiscernible]. So what was it on [indiscernible] versus [indiscernible]

So approximately INR 30-odd crores of total CapEx, out of which INR 24-odd crores was for the machine and INR [indiscernible] crores for the building as such. But the building has been built in such a that I can put 3 more machines in.

Got it. it. And in terms of, let's say, packaging, you also mentioned that there could be also the opportunities. So why don't you start with it already instead of waiting for [indiscernible] you get to begin because it has already got delayed by quite a bit just understand why don't we just enter into other segments also simultaneously.

So we have been trying to explode that. But unfortunately, the larger brands have not yet signed on the dotted line because of which we have not been able to get it out in the market.

But what was exactly the issue, sir? When you mentioned that that we had some issues with [indiscernible]. What was the exact issue? And how is it exactly changing right now.

I'll give a little bit on the technical side. [indiscernible] is a [indiscernible] technology. In India, you must have seen the [indiscernible] pouches available with ITC or any other big brands [indiscernible] the [indiscernible] is packaging cost is quite cheaper than [indiscernible]. But quality-wise, [indiscernible] is a different technology with an alternate solution of can packaging, which is a very well established in export market. India is taking time to establish maybe for the cost factor, but we are continuously exploring with big brands, but we see that exploring the export market is much easier since it's already accepted as the area since few years. And we hope that 1 day, we've been able to crack this India market also we are talking to the brands a few brands also in this regard.

Export markets, would it be just the Russian market? Or would it be other markets also that we're [indiscernible]

[indiscernible] Germany, U.S. is a big at products on [indiscernible]

Got it, sir. So basically, we thought we could explore this technology in India, but it has not been working out. So we are focusing on the capacity for [indiscernible]

Let us see, very, very frank. This is an example I keep coming a very close friend of my mother, enjoyed the products when she was given this gift. But she called me [indiscernible], you're guaranteeing a preservative-free product, and it is impossible to do one. Now that's the challenge, and we need to come up with [indiscernible] at the right time, we shall do so that we actually don't use any preservatives and this is the technology that helps the shelf life of 2 years. So another question came up in the marketing thing. Why don't you keep a shorter date shelf life though you are eligible for 2 years, why don't you write 6 months and sell the product, they will feel more safe and secure. But the minute you do that and should the product not have moved 100% in that fifth month, we would have had to take back those materials. So all these are intricacies. It's the first in the country. It takes time. We need to have some patience. Yes, my patience is also running out by investors patience is running out. But I'm sure a little bit of wait and watch, and there should be success in this technology.

Understood, sir. [indiscernible]. So Middle East was a primary market I wanted to understand how can we explore that business into other geographies whether it be India and other places. Is there any opportunity because Europe is also a huge opportunity [indiscernible], right? I'm trying to understand what's happening there.

I'll say that before this passing, we have just responded that we are also exploring with the other regions, Europe, U.S. as well as some Southeast Asia, but each country has a different [indiscernible] compliance requirements for which you need to have a contract [indiscernible]. So it's a long process, but we have initiated the process. And we hope that we'll be able to cash for this supply of Europe and other countries. We are working on it.

The next question comes from the line of [indiscernible]

So the first question is that in Q4, you mentioned that [indiscernible]

Could you please use your headset?

So my first question is that you had mentioned that the average realization declined by 25% year-on-year because of the inventory manufactured during INR 225 crores, which was a lower raw material cost. So my question with regards to this is that the inventory that we have currently how much of it is the lower raw material costs in it, which will have to sell at lower realization. So when can we see the revaluation start improving because I think the advertising [indiscernible] has start improving. So that's my first question.

Based on the current scenario, this year also, the raw material ligating single like last year, if not lower, because as we mentioned, due to the what situation demand has rise significantly. So the price range where the inventory is there. So currently are likely to be the similar end. So next full year, we have this lower realization self only. And subsequently, also we are looking similar because if the price is lower this year, FY '28 also will be likely the whole realization product. So this is something [indiscernible] product we can't help it. That's objective I repeatedly saying can [indiscernible] I've tried to say that our objective is to grow consented on volume, there's some time to.

Okay. Sure. So my next question is what impact are you expecting on our performance given the situation?

It's very early to say. We are hearing -- we are reading a definitely an effect being agriculture or is definitely going to affect it is so bad as we are reading them. But I mean, last 2 years, we have experienced [indiscernible]. And in processing industry, I have seen whether it's a mango or [indiscernible] other vegetables getting the raw material is not a big challenge. Challenge is the funds. When there is a mismatch in the demand supply the price moves, I mean, either direction in a very bad way. So that may be the challenge. But otherwise, the long year ago consumer was 75% in our turnover. I don't see any challenges on getting the members, but a veritable to some extent, may be a challenge. But too early to say, let's see how the things go. We also working cases is current year raw material prices at site, we are exploring if we can produce and keep some stuff considering next year, maybe an effect on amino asset over the landlords, but not yet decided. We are just evaluating and exploring and talking to the brands if they are interested to cover long term.

The next question comes from the line of [indiscernible] with [indiscernible] Managers.

[indiscernible] the 18% growth, is it include volume growth as well? Or is the Mango [indiscernible]?

Over all product portfolio. As a whole basket, we are talking.

Okay. And sir, our pricing strategy -- in terms of gross profit margin part -- is it a fixed or it's inflation adjustment, just to understand because our overheads are [indiscernible]

When you're talking about the fixed cost, yes, or I mean April year when we fixed the pricing in certain factor or as considered.

The next question comes from the line of [indiscernible] We will go to the next question, it's from the line of [indiscernible]

So I wanted to get back to -- so most of -- the largest part of our business is pulping we also want to go ready to keep segment, right? So in the next 3 to 4 years, where do you expect the split to be in terms of pulping versus the rest of the segments?

so internal strategy right, 4, 5 years ago, we were actually at 92% from the product mango the [indiscernible] other businesses as such. So the internal strategy over a period of time to actually make the other businesses contribute 40% of the total revenue without degrowing the mango. So that's the internal target.

Got it. So right now, at the branded level where you're expecting 40%, 60%, where do you think the gross margins can [indiscernible]

So the other businesses have a slightly better gross margin. But having said that, when I say other businesses, I mean I don't mean the pulp businesses, but the other business or the closing businesses have better gross margins. But with respect to the EBITDA margin percentage, the product business consumes something as a cost for the storage costs as such. So that comes with the EBITDA part.

Got it, sir. But I'm just trying to understand the blended level, what could be the potential margin margins[indiscernible]

I think that we level guided basically because it's -- it's always a pass-through for us, right, as is the raw material cost is a pass-through for us. So we never kind of the percentage, but it's definitely about to increase basically because of the mix.

Sir, do you have any absolute number in mind in the next 4 years or you already want EBITDA to be at I mean that is something that we have internally.

We are not very comfortable in guiding that as of for. But not of what is currently the effect is that grows very lit guidance, but I think I understand. But going forward, let's say, most of our -- do we have any idea of how do we expand our operating cash flow to EBITDA conversion -- so what are the plans do we have there? So yes, we do have idea to improve our free cash flow as such I mean there is some CapEx that we might need to do as you mentioned about the NHB partnerships that we are actually getting into as a company. But once that is true, I don't think there will be any CapEx in the company, and we should be improving our free cash flow over a period of time. So I mean we're very confident on that. All these existing businesses and all the investments are not 100% capacity utilized as of today and we are working towards increasing capital capacity utilization so that we think to get absorbed by the existing capacity. So that will, in large actually contribute to a better other as well as better EBITDA margins.

Got it, sir. So one question regarding the cash flow. So we at most of the tendencies. So bill discounting is likely to be very easy, but is it a very expensive measure for us to improve cash flow or what is the idea behind it?

The discounting is [indiscernible] most of the Mentis are working discounting. So once we invert to get the realization is not a big issue because credit file is not much in the MNCs. But the problem is in all industries that we produce and hold the stock on behalf of them. So that's the challenges and that blocks the working capital as well as fuel interest costs. Otherwise, [indiscernible] funds is not a big challenge for [indiscernible]

Got it, sir. And so in terms of working capital pulping business, is there any further scope of improvement or are we at the best week in be in [indiscernible]

No, definitely improvement is [indiscernible] are talking to the customers for extending some advances which are also working. We're already giving some advances. We are trying to scaling up if the as much just can portion can be much more what we are getting today. we are working on that, how to reduce. And that's how you see CR interest put has reduced to INR 10 crores compared to last year. So this is some exercise, which will be continuing -- got it, sir. And last question regarding our overall do we have any surplus land or any other assets that we can sell to ground that? Or what is the plan to pay down that -- as of today, there's only 1 asset is there, but we don't have any plan to liquidate any assets as of today. We look because land cost as on day by day increasing. So we look for any future expansion if at all required, we may look. Otherwise, as of today, with martinis hard to liquidate any asset. So the debt repayment, how do we exactly plan to achieve it in terms of our cash profit and everything whatever long-term debt we are having around I think INR 71 crores to INR 72 crores is the thing. Our annual commitment is around INR 20 crores. So we'll we're comfortable to pay for our internal not an issue.

Got it, sir. And 1 last question regarding the PLI scheme. So how much more do we -- how much have you received so far? And how much more do we expect to receive.

We've received around INR 83-odd crores. The total that we can actually get under the scheme is around INR 145 crores. So INR 70-odd crores remain. So this PLI scheme, what was did it cover our entire CapEx cycle over the last few years what percentage at covered over. It was a onetime commitment and payback was 6 years with a minimum 10% CAGR growth up to maximum 15% in that year. for 10 years. So it is mostly -- it was completely paid for like it if we achieve all of the conditions and the PLA scheme would pay for most of the CapEx more than 2x is. We have more than double of our CapEx. And we've already covered our CapEx as of date. And with the balance 2 years, there would be a kind of net accrual.

Got it, sir. And in terms of food processing, I understand pulping is a big thing, and we are also doing [indiscernible] are there any other more good technologies and processing that we can enter into because since we already have a connect with the farmers and have all these customers already. So is there any other segments that we can enter.

We are exploring multiple options. And have to start with the year prices, we can easily get into fundamentals. If you know the beta range of products or equipment or we could take into catch-ups. We could get into -- we are already processing for capital Foods, which is our data company, which is [indiscernible] so all the technology and all that is everything available within us and nothing stops us from expanding within the -- but why haven't -- is there any process of it's like analyzing anything everything. Can I do -- I'm sorry, I'm sounding a little bit, but do I have the own technology? Why can't I do drones, why can't I do aircraft, I can do that. So it takes its time closing steadily. We are #1 in the bank of processing. And we need to maintain ourselves. There are the plus and minuses of doing it. slowly steadily. It's not been an easy journey that in 3 years, we became #1. It took a long number of years. And we are painly getting into multiple segments. Tata bother capital foot as a $1 billion valuation. That's not a small amount. [indiscernible] their 50th year under book. It's now valued over 1 billion. So it takes its state the more we'll be able to send more we'll be able to open up segments. We are here to ensure that the kind of cater to all the [indiscernible] we -- one segment in India is growing since a few years is a hotel restaurant catering business, which is called the [indiscernible] segment. That segment is going in a phenomenal pace and we are now focusing also on that segment for a B2B supply. And we started supplying 2 years back, today we are getting a good demand from that segment. So I think there are ways we are trying to expand our business.

The next question comes from the line of[indiscernible]

My question was related to solar capacity addition in [indiscernible] can you please in which months both of them has been added and what is the savings or both of them to the solar capacity has been added in the month of May as such. And I mean, we started using the facilities only in the coming months. So it's not capitalized as on 31st of March. The rate is in projects. capacity around.

Sorry I didn't give you a [indiscernible] KWP is the capacity of the solar plant at both of the brands. Right. What will be the payback Less than 3 years.

Ladies and gentlemen, that does the last question for today. I now hand the conference over to the management for closing comments.

Thank you. As a closing remark, I would like to reiterate that the food processing industry is inherently cyclical, and performance can also be influenced by factors beyond our control, including crop conditions, geopolitical developments and commodity prices. Our focus remains on building a stronger and more diversified food seen that can create sustainable value across cycles. We remain excited about the opportunities ahead and look forward to updating you on our progress in the coming quarters. Thank you once again.

Thank you. On behalf of Orient Capital Markets Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.