Gopal Snacks Limited ($GOPAL)

Ladies and gentlemen, good day, and welcome to Gopal Snacks Limited Q4 FY '26 Earnings Conference Call hosted by Emkay Global Financial Services Limited. [Operator Instructions] I now hand the conference over to Mr. [ Rajesh Kumar ] from Emkay Global Financial Services Limited. Thank you, and over to you, sir.

Good afternoon, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Naveen Gupta, Chief Business Officer; and Mr. Rigan Raithatha, Chief Financial Officer. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.

Thank you, Rajesh. Good afternoon, and thank you for joining us for the earnings call. We hope you all had a chance to go through our investor presentation uploaded on the stock exchange. We'll share our key operating and financial highlights for the quarter and full year ended March 31, 2026. As we reflect on Q4 and full year FY '26, it has been a year of steady recovery, operational stabilization and consistent execution for Gopal Snacks. Despite the challenges encountered earlier in this year, we have made meaningful progress in strengthening our manufacturing footprint, improving supply chain resilience and expanding our market presence. During the quarter, we reported revenue from operations of INR 409.6 crore, reflecting 29% growth on a Y-o-Y basis. For the full year, FY '26 revenue was at INR 1,508.2 crores reflecting the growth of 2.7% as compared to FY '25. The performance during the period was supported by improved product availability, steady demand across key categories and continued expansion in our distribution network. During the quarter, we witnessed stable demand across our 4 categories supported by improved product availability and continued traction in key segments like Gathiya, Namkeen and Snack Pellets. Our focus on strengthening core categories along with increased expansion into newer markets has supported overall growth. A key milestone during the year has been the successful ramp-up and stabilization of our Modasa facility, which is now fully integrated into our manufacturing network. Alongside our Nagpur plant, these facilities have played a critical role in improving production efficiency and ensuring consistent product availability across regions. During the quarter, the industry witnessed challenges related to gas supply restrictions. However, we would like to highlight that our proactive approach towards adopting alternate fuel sources, including the use of bio coal at our Modasa and Nagpur facilities ensure that our operations continued without any disruption. This not only highlights our operational resilience, but also supports our long-term focus on cost efficiency and sustainability. On the distribution front, we continued to expand our reach through deeper penetration in existing markets as well as entry into underserved regions. Our focus on our SSD model and addition of 125 micro distributors has enabled us to improve accessibility and strengthen our presence across geographies. In terms of branding and marketing, we maintain momentum through targeted campaigns, strategic partnerships and enhanced on-ground visibility. Gopal Snacks has undertaken targeted marketing initiatives, including bus stop branding, branded bus stickers, out-of-home advertising and campaign across premium digital platforms such as JioHotstar, Sony LIV and Spotify. These initiatives have supported brand recall and consumer engagement across key markets. We also continued to strengthen our backend capabilities through improvement in our distribution management system and ERP integration which has helped us in enhancing supply chain efficiency, improve inventory visibility and support better decision making. With this improvement we continued to strengthen our distribution network which now includes over 953 distributors which was 884 at end of quarter 3. Looking ahead, our focus remains on driving sustainable growth through continued investment in capacity, strengthening distribution and enhancing brand visibility. With a more efficient manufacturing network, improved operational efficiency and a disciplined approach to execution, we believe Gopal Snacks is well positioned to build on its growth momentum in coming years. I would now like to invite our Chief Financial Officer Mr. Rigan Raithatha to share his perspective on the financial performance during the quarter.

Thank you, Naveen Bhai. Good afternoon to everyone. Let me take you through the key financial highlights for the quarter and the full year ended 31st March '26, starting first with the quarterly performance. During Q4 FY '26, we achieved revenue from operations of INR 409.6 crores, reflecting a growth of 29% Y-o-Y basis and 2.2% quarter-on-quarter basis supported by stable demand and improved product availability across market. Gross profit for the quarter was at INR 113 crores translating into gross margin of 27.7% with a growth of 76.9% on Y-o-Y basis. Margins during the quarter were supported by improved operational efficiency and stable input cost environment. EBITDA for the quarter was INR 31.5 crores with an EBITDA margin of 7.7%. During the quarter, company also spent around 1.2% on the advertisement cost. The improvement was driven by the operating leverage, better capacity utilization and continued cost cut. Profit before tax before exceptional item was INR 22.4 crores, while profit after tax was INR 29.9 crores, resulting into PAT margin of 7.3%. Now moving on to the full year performance. For FY '26 revenue from operations was at INR 1,508 crores, reflecting 2.7% growth over the previous year. EBITDA for the full year is INR 101 crores with a margin of 6.7%, supported by gradual improvement in operations and normalization of supply chain during the year. Profit before tax before exceptional item was INR 60 crores and profit after tax is INR 73.7 crores with a margin of 4.9%. With regard to insurance during the quarter, we received INR 17.5 crores as an additional insurance proceeds as a part of our ongoing claim process, taking the total receipts during the financial year to approximately INR 37.5 crores. The process of asset restatement is in progress and we remain confident of recovering the balance gain in due course of time. Recently, we have updated to the stock exchange regarding the Rajkot manufacturing production facility commissioning. With this the installed capacity of Rajkot plant is 1,05,000 metric ton. And with this, we also complete our restatement of the Rajkot manufacturing facility as far as production facilities is concerned. This plant will have a manufacturing diverse portfolio of Gathiya, Namkeen and Snack Pellets. With the initiation of Rajkot plant, company will discontinue the Gondal facility. Commissioning of this plant will lead to improvement in operational efficiency and will also improve supply chain for sales in Saurashtra and Kutch. As we move on into FY '27, our focus remains on expanding our market presence, improving operational efficiency and driving growth across our key product categories. With the strengthened operational deals and disciplined capital allocation, we remain confident of sustaining the growth momentum. We are confident that Gopal Snacks' strategic initiatives backed with a strong financial and operational performance will continue to deliver long-term value for our stakeholders. Thank you and over to you, Rajesh Bhai.

The first question is from the line of [ Nitin ] from HDFC Securities.

First, congratulations on getting the Rajkot facility back to operations. My first question is with respect to top line. So with 100% supply resumption, so FY '27 will be a catch-up journey. So how do you see the top line shaping up? And could you break down the key growth drivers ahead?

[ Nitin ] Bhi, thank you for your question.

Sir, sorry to interrupt you. Can I request you to come a little closer towards the speaker and talk?

Yes. Sure. So [ Nitin ] Bhai, you want a breakdown from product perspective or I mean from geography perspective?

No, no. So like given the current demand setting, how do you see FY '27 shaping up? And broadly qualitatively, if you can highlight like what are the sort of strategy steps we are taking to sort of drive growth or whatever the target we have for FY '27? Not product specific in general, like how you are going to go for the growth ahead because your supply chain issues are now in the base. So with 100% supply, you should do better. So just wanted to sense like what is your aspiration for FY '27 and how the growth drivers will be.

Okay, both attributors we are talking about, right? So in our core market, we have taken an aim of growing to generate a delta of around INR 170 crores to INR 180 crores on annualized basis. And main growth attributor in Gujarat will be, as I earlier stated, that split coverage, line wise coverage. We had covered 24% of our bids by quarter 3 end on double coverage, I mean, twice in a week. By end of Q4, we already have touched 29% of our bids -- our own double service module. And by end of quarter 1, we have aimed to bring 40% of our bids on twice in a week service in Gujarat. Now coming to the focus state, there will be growth from 2 attributors. One is footprint expansion. So we can see that we added roughly 65, 70 dealers in Q4 versus Q3. So that momentum will continue. And then there will be organic growth. So we are aiming INR 125 crores to INR 130 crores of growth from focus state. And from the other states plus e-commerce, railway, modern trade, et cetera, we'll be clocking around INR 35 crores delta on an annualized basis. So from current year, we are aspiring and aiming a delta of roughly INR 330 crores to INR 350 crores.

Next question will be pertaining to the inflation. So on current inflation, how are you placed with Q1? And what actions have you taken to pass on the effect to consumer? Additionally, like from a long-term perspective, after GST and now with this inflation, just wanted to have a sense on like how sector formulation you see. So 2 parts to this question. First is on the near-term inflation and how we are countering it. And second is on long-term sector play.

[ Nitin ], Rigan this side. So as far as first part is concerned, there has been an increase in the raw material prices, which ranges in palm oil to packaging, which ranges from 15% to 20% as far as our product basket is concerned. So which -- if we look from the impact perspective till now, it is around 4.5%. So out of which majority we have been negating through reduction in grammage and increase in prices and also through some -- our internal BOM correction. So majority of this has been negated. We are also reviewing the situation on a weekly and fortnightly basis. As and when required, we will further take the necessary steps to stabilize the margins. As far as Q1 is concerned.

And any sense on like this inflation, how is the impact on the unorganized players? So do you see that the shift is happening and plus INR 5 SKU salience going down and shifting towards INR 10? Any thought you can offer there?

See, [ Nitin ] Bhai, definitely, whenever this cyclical thing takes place in our industry, so the unorganized sector players come under pressure. So there are 2 elements of this situation. One, we have not so far witnessed any action from regional or local players. However, we can sense that they'll be coming under pressure. And we expect that the industry will ultimately -- will have to take a call how to and when and how much transition will take place from INR 5 price point to higher price point products. We have not so far witnessed any action from smaller players on this.

Okay. And lastly, like if you can sort of -- given the current inflation setting, if you can guide for the margin we are attempting to do in this FY '27? And also like last year, we had a supply chain issue. So our logistic cost must have gone up. So if you can quantify what was the margin impact from the logistic cost?

Yes. So next year for the margin front, as we have been guiding, we still stick to the same guidance that is 8% to 9%. The drivers for this margin growth, obviously, from the operational point of view, since our Rajkot facility has stabilized, so we will get the full year as far as Rajkot facility is concerned. So that will definitely give us an impact -- a positive impact as far as operational cost is concerned. Secondly, transportation cost, as we have been guiding earlier, post our Modasa commissioning facility, that will start flowing into the P&L. So in the current quarter also around 0.4% to 0.5% benefit has flowed to our P&L, and that shall continue in the next financial year also. So owing to all these benefits and all the operational leverage since our sales target is 20%, 25% higher, so that should also give us the benefit. So owing to that, we are quite confident that we will be able to achieve the margins between 8% to 9%.

Next question is from the line of Abneesh Roy from Nuvama Wealth.

Congrats. My first question is, if I see your focus state in Q4 has grown slightly slower than core states. If you could tell us in detail more reasons behind this? And in terms of outlook, would you expect focus states to come back faster than core state in Q1 and Q2?

Typically, our Q4 historically have been lower than Q3. If you see 4 out of 5 years, Q4 has been lower than Q3. So growth percentage in focus state, if you compare with our core states, so core state was more impacted because of this fire incident. So base became depleted. So focus states are stable. And with footprint expansion, most of the footprint expansion will come in core states only -- in focus states only. So we will definitely get back on track in focus states as well.

So near term, your core state can still grow faster than focus market, your core market can grow faster near term?

Near term, definitely we can say that focus market and core market growth percentage will be at par. But on an annualized basis focus market growth will be higher than core market.

Understood. Second question is in biscuit we saw odd pricing of INR 4.5 and INR 9. In your markets, did we see this in your business also that some players were selling at INR 4.5 and INR 9? And have they come back in case they had cut to this odd pricing?

No, we didn't see this odd pricing in our industry anywhere. And I'll fail to comment on how they will revise the pricing in near future. I'm sure that they will come to the normal pricing regime very soon because inflation pressure will start biting them as well.

Understood. Sir, last question, last 2 months, of course, India has seen the GLP that weight reduction drugs, medicines, fast -- sharp reduction in prices. Long term, would you be concerned on this? I know India is such a large market, mass market, and these are still reasonably expensive for most Indians. But from a conceptual thought process point of view, obviously, in developed markets this is a concern for all junk and these kind of categories. Would you be concerned that medium, long term as India -- a lot of the middle class, especially this could become a concern? And then I'm sure you will say that you will go for all the healthy snacks et cetera. But if you can address this from a conceptual stage?

Meanwhile we will have to deep dive into more data, let me tell you, in India, per capita consumption of snacking from organized sector is still far lesser than developed countries, right? So typically, price point as well as snacking industry in India will continue to grow. Coming to this healthier snack kind of thing. This phenomena is largely confined to quick commerce and -- quick commerce as of now because consumer -- the TG there and in GT are totally different. Historically, if I name a few bigger brands like -- whether listed or unlisted, they have attempted multiple times to introduce [ baked cakes ] and healthier snacks and all those. Still their contribution is below 2% on the national average. So in terms of percentage, we may see a 40% growth, healthier snacks 50% growth. But base remains very, very low. So we don't see any threat to our industry. However, as we earlier stated -- as we stated earlier in our commentaries as well, that gradually, we are trying to reduce our dependence on palm oil-based products, but not at cost of our core products. Like we -- in the recent times, we introduced kaju biscuits, wafer biscuits, popcorn, noodles, rusk, wafer rolls. All these products are non-palm oil-based products. And very recently, in last 15 days, we have introduced cupcake, we have introduced INR 10 price point drinks, et cetera. So we are consciously doing that, but not at cost of our core product. And we don't foresee a decline in any consumption pattern on snacks category.

And sir, one last follow-up. This time, El Niño is there and so deficit in rains, 7%, 8% is possible. How does this impact your rural consumption in H2 of FY '27? And in terms of inflation, can pulses also see inflation because of all this? So your RM and demand both could get impacted in H2?

See, as far as raw material is concerned, our basic raw material, which is chana and potato, so for the next 6 to 8 months, we have the sufficient stock, which is -- as per our requirement, we have stocked till -- almost till the end of November. So any increase in the prices of the pulses will not impact our profitability.

Second half?

So second half, probably around November, December, yes, we need to buy from the market. So at that time, we'll go across. But then option is also there like in the FY '25, '26, imported option was also available as far as chana is concerned. So we took the price benefit over there also. Similar options, we'll explore in the Q4 as and when our requireability is there.

And demand side?

We don't see any downside in demand. We don't find any major reason for any downside in demand.

Next question is from the line of Resha Mehta from GreenEdge Wealth.

So the first one is on the fire -- the loss related to fire that we had booked was around INR 47 crores, and I think we have received around INR 37 crores. So how likely we can expect the balance INR 10 crores claim to also kind of go through?

Resha, it would not be balance INR 10 crores. It will be a higher amount than that. The reason being that we have gone for the restatement and whatever we have written off in books of accounts was based on [ WDB ] usage. So our restatement cost is obviously much higher. So that we can expect by probably quarter 2 for that money to be coming into our business.

And so how much is that incremental amount that we are expecting, assuming they give us the full benefit of the restatement?

It would be somewhere in the range of INR 35 crores to INR 40 crores.

Okay. Okay. And so with all this fire incident and the supply chain issues, we had lost market share, right? So since the Modasa plant started somewhere around in November of 2025 and the supply chain issues majorly got resolved, so since then have we seen that recovery of market share or regaining whatever shelf space that we would have lost? How is the traction been there in terms of regaining the market share? And maybe if you could split that in terms of your core market, Gujarat and the Rajasthan, I believe, was also impacted. So if you could comment on these markets.

Thank you for your question. We are witnessing improved trajectory from March onwards to be very specific. And right now as well our current run rate is an indicator that we are on recovery path in terms of our lost market share.

And this is across all markets, right, core focus?

Yes. Now we can see the per day run rate is across markets. In fact, even Uttar Pradesh in H2 has been more than 26% over H1.

Right. And just coming to your raw materials, right, so if you could call out what is the RM basket? Like chana and potato are the major ones, but would they be like what, 40%, 50% of the total RM basket? And also if the other major ones like palm oil and laminates, if you could comment?

Yes. So as far as our purchase basket is concerned, so major are palm oil, chana, laminate and last is the potato. If I talk about palm oil, it is around 26% to 27%. Chana is around 21% to 22%. Laminate, that is packing material, it is around 18% to 19%. And potato is around...

Sorry I missed that. What is 18% to 19%?

Packing. Packing material.

Right, right, right. Okay.

And potato is around 6%. This I'm referring from the purchase basket percent.

Potato is 6%, right? Okay. And considering that to regain market share, of course, we would have had to spend more on trade spends and also, we are seeing an inflationary trend. But there, you all seem to be reasonably confident of passing on whatever inflation you all are seeing, right? So with that and the fact that now with the Rajkot plant coming in and we are seeing some logistics cost benefit and labor costs and power cost benefits, wouldn't you see -- and the fact that we've already started regaining market share, then in that light, would it your guidance of 8%, 9% EBITDA margin for the next financial year -- sorry, for the current financial year FY '27, doesn't that seem to be on the conservative side? Because if gross margins can be protected and your operational costs will be going down and assuming you're regaining market share, then your trade spend should also kind of be pared down. So just your thoughts there.

So as far as trade spend is concerned, we would be obviously looking on that front, but that our reduction on the trade spend would be in a very gradual phase-wise manner. So on an immediate, let's say, in '26, '27, it is not -- we would not be looking on a major cut as far as trade spend is concerned. Yes, our advertisement spend that will continue to have like in current financial year, we have spent around 1.7%. So next year, we are projecting another 2.2% to 2.3%. So that's where we continue to spend. And secondly, when we say the guidance of 8% to 9%, it is purely based on current volatility of the raw material prices. And we are quite confident that our exit run rate would be near to double digit, although average annualized EBITDA margin will continue to remain 8% to 9%.

[Operator Instructions] Next question is from the line of Soham from Motilal Oswal.

Sir, I just wanted to check, Naveen Ji, as you guided this INR 330 crores to INR 350 crores data for FY '27, on product-wise, how do you look? So basically, we have products like Gathiya, Namkeen, Pellets and Wafers, these are the 4 category majorly we have. On product-wise, how do you look for next year on growth-wise?

Yes, Soham Bhai, before I answer specifically to your question, let me give a clear statement that improving market share -- protecting market share is to be paramount for us. So Resha Ji was talking about this trade spend thing. We are on a very good business model in terms of our very least dependence on super stockists. So 97% of our business comes through direct distributors. So we will start reaping benefit of distribution automation on full scale from H2 onwards. Then we'll definitely look into cutting down some of our trade spend. Now coming to your question, Soham Bhai, Gathiya we have a base of roughly INR 410 crores. So we are aiming 18% to 20% growth from Gathiya segment. Namkeen, we have a base of INR 350 crores. We are aiming 15% growth in this financial year. Fryums, we have a base of INR 250 crores. So we are aiming 15% growth there. Wafer, we have a base of INR 155 crores. We are aiming 40% growth there. And all other products put together, be it papad, retail packs of besan, spices or bakery products or noodles or rusk et cetera, we are aiming growth of 30%. So that is a split of -- category-wise.

Okay. And if we look at these 3 categories like Gathiya, Namkeen and pellets, if you can give how this industry has been growing in Gujarat because majority of our growth state is still on Gujarat. So I just wanted to check in last year, last financial year, how this product-wise -- Gathiya. Namkeen, how this category has been growing in the Gujarat market?

Our assessment is that Gathiya has a growth of 15% to 20% in Gujarat. And Namkeen industry growth itself is 14%, 15%. And fryms -- fryms growth must be in line with the industry growth only, that 15% kind of.

Okay. And what kind of CapEx we are doing for next couple of years? I believe it's only maintenance CapEx, right?

Yes. So our majority of expansion CapEx has been done. For the next financial year, what we are looking at INR 40 crores to INR 45 crores kind of a CapEx, which would include some of our corporate office building at Rajkot. So that CapEx will happen in this financial year and rest would be maintenance.

Soham, may I request you to come back for a follow-up question, please? [Operator Instructions] Next question is from the line of Shrinarayan Mishra from Baroda BNP Paribas.

So my first question is on capacity utilization on Slide 11. Are the numbers for 4Q or full year?

That is for full year basis.

Full year. So on 4Q basis, would you have the capacity utilization?

It would be almost near to that number.

Okay. Okay. So why I'm asking this is that when you are saying your EBITDA margins would be at a double-digit exit rate in FY '27, what kind of capacity utilization you expect from the INR 300 crores, INR 350 crores incremental sales that you would be doing in FY '27?

So capacity utilization would be roughly around 43% to 45%.

Shrinarayan kindly come back for the next question. Next question is from the line of Pallavi from Sameeksha.

I wanted to understand on this rusk and cupcake, this other category, what would be their share? Is it more in the -- from the core markets we're getting these revenues or it's also focus markets?

Pallavi Ji, we do pilot of any new product first in core states and that too in selective parts of core states. Then we roll out to the other states. So for example, we did pilot of kaju biscuit as well as popcorn first in Gujarat, that too in limited parts of Gujarat, then we rolled in entire Gujarat, then we went ahead with the full -- all the geographies. So right now, we released this cupcake a couple of days back only in Gujarat only. Drink, the same treatment, we released 15 days back in Gujarat only. We will see the response. And if response is good, then only we'll roll out in rest of the geographies.

Right, sir. I mean we have shown 26% growth in core markets. So how much of that would have been contributed by these new products?

Just give me a moment. From the new products, I mean, you wish to ask whatever new products we introduced during the financial year?

Yes, 1 year.

Yes. So this -- you are...

Popcorn and kaju biscuits, yes.

How much was the contribution from the products?

Correct. Or roughly you can say if it's been a big driver for this core market growth or -- just a broad sense if you can give us.

Yes. [Foreign Language] INR 35 crores -- it has gone to INR 63 crores in full financial year. So this delta -- out of this delta of INR 38 crores, roughly [indiscernible] has come from core states.

Right. Okay. And sir, my second question would be what -- the other margins for these new products, would they be lower than the existing products? Popcorn, I believe, should be higher.

Yes, yes, yes. Popcorn is higher. Even wafer biscuits are more or less in the same line of margins as of our existing products. Just to update you, we have been doing another exercise. We have been rationalizing our product basket by eliminating low-margin, low contributing SKUs and even products. And we have been trying to promote the high margin, high contribution products.

Pallavi, I'll request to come back for a follow-up question, please. Next question is from the line of Shirish Pardeshi from Motilal Oswal.

Naveen Bhai, congratulations for Rajkot plant reinstatement. On Slide 27, we have given the breakup of SKU price point. I see that large pack has gone up by 300 basis point and INR 5 has come down by 300 basis point. So I just wanted to understand and assess your thoughts in terms of margin, how it moves because INR 5 obviously will have a lower grammage and also higher packing cost and even distribution cost. So if this number is changing by 200, 300 basis point in FY '27, how delta for the margin you will see?

Shirish Bhai, historically our INR 5 price point SKU have been giving us similar or better margin versus our larger packs. However, since dynamics are changing very fast, so when we rationalize the grammage in smaller packs, simultaneously, we are taking a price hike in bigger SKU as well. So this 3% -- 300 basis point reduction from INR 5 price point is largely attributed to introduction of newer products like we introduced this wafer biscuit. So wafer biscuit, although remains INR 5, but however, when we compute in our SAP, so there are 40 pieces in a jar. So for us in our system, that MRP is INR 200. Got my point?

Yes, go it.

So margin in our case, we work in an industry like this whenever there is a pressure in INR 5 price point margins, so we reduce grammage proportionately.

Okay. Got it. My second question, now in terms of capacity, I mean, last year, we have done some contract also arrangement. Now what we understand now Modasa is fully occupied and there is a capacity utilization, which will happen, but Rajkot has also started. So just wanted to understand if you give an overview what we are producing in Rajkot, what we are producing in Modasa and what will happen to Gondal. So maybe in terms of manufacturing all facilities, how and where we are happening? And maybe we somewhere said that in UP also, we will do only top 3 SKUs and try and exploit the market, not giving all the products. So given this all, is the growth number is sacrosanct.

Yes. So Shirish Bhai, as far as Gondal facility is concerned, that will discontinue as we have started manufacturing from Rajkot. And Rajkot facility will have Gathiya, Namkeen, Snack Pellets, Extruded. Modasa facility will continue to have all kinds of Namkeen as well as Wafers. Nagpur facility will have Gathiya, Namkeen, Snack Pellets and Wafers. So this is in line with our earlier guidance that all the 3 plants will produce almost all kinds of products, except wafers. And as far as third party is concerned, so third party wherever we had communicated earlier that for the UP as well as Chhattisgarh and for the South, those third-party arrangement has been done predominantly to improve the supply chain and to enter into those markets, which will help us to have our footmarks in those markets wherein current our transportation cost was much higher. So we thought to pass on this additional transportation cost to the consumer through third-party arrangement.

And follow-up on this -- yes, I got that Rigan Bhai. So I'm just trying out the focus market growth on a Q-o-Q basis is only 1.5%. The Y-o-Y is a function of capacity utilization and scale up, which has shown 25%. I'm more interested, this growth which is in the focus market, we have this contract third-party manufacturing element to streamline the supply. So what -- I mean, on the back side, I also give credit to Naveen that there is a distribution scale up also which has happened. But is this growth is too small or too large can come in FY '27?

Yes, Shirish Bhai [Foreign Language] right now, we are manufacturing third party through wafers only. And in Kashipur, we are producing only 4 SKUs, which contribute to 76%, 77% of the Uttar Pradesh sales. Now coming to this Q4 focus markets growth percentage being lesser than expected. So my answer remains the same. Historically, our Q4 has been lower than Q3 to the tune of 6% to 7%. But this time, we have reversed the trend. Q4 has been better than Q3. And now with the supply chain being stable, if you see our distribution footprint numbers, so for the first time now, we have started this growth number again that we have declined in our number of distributors in Q1, Q2. Now since we have started adding those numbers as well, so growth will definitely come from focus markets as well.

Shirish, I'll request you to come back for a follow-up. [Operator Instructions] Next question is from the line of Bhumin Shah from Equirus Securities. Bhumin, may I request to unmute your line and proceed with your question? The line for the participant dropped. The next question is from the line of Shreya Chatterjee from Ageless Capital.

On the top line side, could you just indicate what would be the number of dealers or the dealer expansion you're planning to do and the revenue per dealer in the core and focus market as well as if you plan to take any more grammage reduction or price hikes in your various products like Gathiya, Namkeen, Wafer?

Yes, Shreya, in Q4, we added 69 new distributors. And in entire calendar year, we have -- we took an aim to add 250 distributors. So we are on right track, number one. Coming to this grammage reduction, we already took roughly 4% grammage reduction in mid of April itself. And now we keep observing and we keep tracking competition activity. We will take another call based on how industry reacts. Definitely, there will be internal factors that how much inflation impacts come on us. But definitely, we will see how industry also reacts.

Got it. And like on that follow-up question, what would be the revenue per dealer like for the mature markets, core markets and the focus markets when the dealers mature?

See in core markets, right now our run rate is close to INR 85 crores, INR 90 crores, and we have a base of 300 distributors. So run rate will be close to INR 30 lakhs per month per dealer. And in focus markets, typically, we do INR 400 crores on annualized basis. So that converts into roughly INR 35 crores on a monthly basis on a base of 600 distributors. So range of size of scale of business of a dealer varies. To start with, we start dealer with a top line of around INR 1 lakh to INR 2 lakhs only. Then gradually, it goes up. So we have very different range. Like in Chhattisgarh, we have a dealer of 1 lakh as well and we have a dealer of INR 70 lakhs as well. In Rajasthan, we have a dealer of 1 lakh as well and we have a dealer of INR 65 lakhs as well. The range will differ from state to state and depends how -- what is the age of that dealer.

Got it. So on the margin front, like the EBITDA margin front, while your gross margin has improved because of the restoration of Rajkot facility, but your other expenses has been generally elevated versus your previous years, like you used to do much lower SG&A to sell previously compared to FY '26. So do we see that trend going forward? Also, your receivable and inventory days have also increased on FY '26. So what do you see it to be going forward?

As far as receivable days is concerned, it has increased. And if you look at number of days, it is 9 days. But we are also able to negotiate our trade payable days. So as far as overall working capital cycle is concerned, still it remains in our comfortable. Secondly, if we look at -- you are referring to full year margin credit, correct?

I'm referring to the other expenses part.

Other expenses part, so that includes the transportation cost, advertisement cost and all other pertaining to operation cost, which is contractual manpower. So as we say, for the next financial year, definitely, we would have a margin benefit front since our operational leverage on the additional sales. So we expect on an overall basis, it would increase. But if you look from the margin perspective, it should give us a benefit of around 1%.

Shreya, I request you to come back for a follow-up question. Next question is from the line of Ashok Shah from Eklavya Invesco.

Naveen Bhai, can you just give me some guidance? What is the size of the order from the retail counter on a quarter-on-quarter-wise we are getting? Whether it has increased? And do we offer them a better bidding or booking system to retail counter in a village area because today don't have what...

You are asking about retail counter.

Yes. Yes.

So nationally, we are catering to 3.9 lakh dealers through our DMS system. And as far as indirect distribution are concerned through wholesale channel and other channels, estimated presence is at roughly 1 lakh more outlets. So we at national level are present at 5 lakh outlets.

So do we give them any [indiscernible] booking comes directly through our manufacturing plant and we have got the control over our products and everything. Because one of the other industries has done the purchase system and they have lots of sales on the self system and distribution system. As our distribution first goes to the -- our distributor, our product goes to distributor. Then it is kept there for 2, 3 days and then it is distributed. So product inventory and everything doesn't go directly to the consumer. It goes to the number of channels.

Yes. So since your voice is not clear, but whatever question I could get, let me explain you how our DMS functions. At 90% of our dealers, our fully integrated DMS is operational. So it is mandatory for them to book the order through that interface only. So that booking is visible to us on real-time basis, live basis. So we track secondary sales -- we can track secondary sales on a daily basis on hourly basis. Basis that secondary trend, we have yet to introduce auto replenishment system to our distributor. That work is in pipeline, that is work in progress. As of now distributor place order to the company so 6 p.m. is the cutoff. Basis that order, we supply those stocks within 48 hours. This is how we function as of now.

Next question is from the line of [ Anuj Kashyap from A3 Capital Private Limited ].

Am I audible?

Yes, sir.

Yes, [ Anuj ].

Sir, just wanted to know how much amount of money do you spend on the innovation? Because I see a lot of money is changing this sector. The New York City built Balaji Wafers have got a good amount of money from the private equity fund. [Foreign Language]

If you are asking about product innovation that's a very simple methodology, [ Anuj ] Bhai. Our marketing team they do market work, they do research on the basis of what is scalable and which are the growing categories. So basis that, they come with product sample and then they give their recommendation. Then we assess whether those products are manufacturable and are profitable to us. And then we assess if those products have synergy with our existing product basket. If they fit to our existing distribution network or not. So in terms of product research, we do not spend any heavy money. So everything is in-house. As far as other research reports are concerned, so last financial year, we had hired Kantar and we got a research report from them that was based on Gathiya specific. So we paid INR 30 lakh amount to them.

And, sir, last time, I remember in one conference [Foreign Language]. What is your take on it?

After stabilizing of the supply chain thing, we have resumed our exports to selective countries to our older customers. Right now, we are in discussion with a company who is 100% EOU company and has a good consumer base over 66 countries. So we intend to do a third-party tie-up instead of bringing scale through our internal efforts because those are time consuming and costlier ways.

Yes, that will be margin [ accretive then ].

Next follow-up question is from the line of Shrinarayan Mishra from BNP Paribas.

My question is on debt level and working capital levels. This seems to be a bit elevated. Is it in the wake of rising cost inflation that you have piled up inventories? And because of that, should we expect higher finance costs next year?

See working capital has increased primarily on account of we have stored more amount of chana as compared to last year since we are expecting prices to increase in '26, '27. So definitely, the bank borrowings has gone up purely on account of increase in our inventory levels. Secondly, as we would be expecting insurance proceeds to also give us some amount into our P&L. So we are expecting that should reasonably maintain our finance cost for next financial year.

So you are guiding similar finance cost next year or higher than last year?

It would be slightly higher than the current financial year. So if you look at overall our finance cost for the current financial year, it is around INR 7 crores. So we are expecting roughly to close around INR 10 crores.

Okay. Okay. And sir, last quarter, you had highlighted in UP that we are doing INR 6 crore monthly sales from top 2 SKUs. So what's the update there in 4Q? Has it increased or -- I mean, what's the update for UP?

Our total per month sale is INR 6 crores in UP. And out of that 72% sales come from 2 SKUs alone. So H2 has been very promising. H2, there has been turnaround in UP, and we have grown by 26% in H2 over H1 in Uttar Pradesh.

So what's the run rate now, monthly run rate?

Currently, monthly run rate is INR 6.5 crores, INR 6 crores.

Okay. Okay. So basically, that can grow by FY '27 end to INR 7 crores, INR 8 crores or INR 9 crores?

We expect since UP is among our focus market, and we are targeting a growth of 35% from focus market. We had started this Kashipur thing somewhere in October, November. So one of the attributors to growth in UP has been the third-party operations from that Kashipur plant. So we expect that momentum to continue, and we expect that exit should be around INR 8.5 crores to INR 9 crores.

Ladies and gentlemen, we'll take that as the last question. I now hand the conference over to the management for closing comments.

I would like to thank everyone for joining [Audio Gap] call, and I hope we have been able to respond to all your queries satisfactorily and adequately. If you feel further any information is required, please get in touch with us and with our Investor Relations team. Stay safe, stay healthy, and thank you once again for joining with us. Thank you.

Thank you very much. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.