LT Foods Limited (LTFOODS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to LT Foods Limited Q4 FY '22 Earnings Conference Call hosted by Motilal Oswal Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sumant Kumar from Motilal Oswal. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and a very warm welcome to LT Foods Limited 4Q FY '22 Post Results Earnings Call, hosted by Motilal Oswal Financial Services Limited. On the call today, we have the management team being represented by Mr. Ashwani Kumar Arora, MD and CEO; Mr. Vivek Chandra, CEO of Consumer Business; Ms. Monika Jaggia, VP, Finance and Strategy; and Mr. Sachin Gupta, Group Financial Controller. We'll begin the call with the key thoughts of management team, thereafter, we will open the floor to Q&A session. I would now like to hand the call to management to share their perspective on the performance of the company. Thank you, and over to you, Ms. Monika.

Thank you, Sumant. Good evening, everyone, and thank you for joining us on our earnings conference call. I would like to highlight that certain statements made or discussed on the conference call today will be forward-looking statements, and a disclaimer to this effect has been included in the results presentation shared with you earlier. Results alternately are available on the company website and have also been uploaded on the stock exchanges. A transcript of this call would also be made available on the Investors section of the company's website. I would like to begin by taking you through the key highlights of quarter 4 financial year '22. Our consolidated revenue for quarter 4 financial year '22 was up by 31% at INR 1,537 crores from INR 1,169 crores in the Q4 financial year '21. This is on account of increased sales from all 3 business segments, that's Basmati & Other Specialty Rice, Organic Food and Ingredient business and Convenience & Health segment. The gross profit was up by 27% from INR 404 crores to INR 515 crores due to change in product mix. The company did an additional investment in brands and also there was increase in the freight cost for our key segments that led to an increase in other expenses by 40% versus last year. The EBITDA was up by 18% from INR 138 crores to INR 163 crores. The normalized EBITDA margins on account of increase in state cost was 14.1% versus 11.8% on a year-on-year basis. The finance cost reduced by 2% and the overall fund cost was constant at 5.2%. The PBT stood at INR 110 crores, up by 24%. The PAT stood at INR 75 crores, up by 26%. The earnings per share stood at INR 2.24, up by 27%. The cash profit was up by 21% from INR 91 crores to INR 110 crores. Our consolidated revenue for financial year '22 was up by 14% at INR 5,451 crores, versus INR 4,773 crores in financial year '21. This is on account of increased sales from all the 3 business segments that's Basmati & Specialty Rice, Organic Food and Ingredient business and Convenience & Health segments. The gross profit was up by 14% from INR 1,608 crores to INR 1,836 crores, and the margin to that, 33.7%. The company did an additional investment in brand up by 50 bps, and also there was an increase in the freight cost by 180 bps that led to an increase in other expenses, which were up by 139 bps versus last year. The EBITDA was up by 4% to INR 628 crores from INR 598 crores in financial year '22. The normalized EBITDA margins on account of increased freight cost was 13.6% versus 12.5% on a year-on-year basis. The company has generated significant free cash flow amounting to INR 373 crores, up by 8%, driven by the strong performance in financial year '22 that has led to decline in overall debt by INR 229 crores. The finance cost reduced by 21% and the overall fund cost was down from 5.2% to 4.8%. The PBT was up by 6% to INR 428 crores from INR 402 crores. The PAT was up by 7% to INR 309 crores from INR 289 crores. The earnings per share stood at INR 9.13 up by 7%. The cash profit was up by 9% from INR 402 crores to INR 398 crores. Now I would like to highlight the key issues of our balance sheet. The debt-equity ratio improved from 0.7x to 0.5x as the overall debt of the company has down by -- was down by INR 229 crores to INR 1,061 crores on a yearly basis. This is to reiterate that the majority of our debt is working capital debt, which is required because it's the nature of our business, and our focus is to maintain the debt-to-EBITDA ratio between 2x to 3x, which stood at 1.7x versus 2.1x. Current ratio has also improved significantly to 1.78x from 1.70x last year. The return on capital employed stood at 15.6%. The normalized return on capital employed on account of the insurance gain stood at 16.3%. Return on equity stood at 14.4%. Because of our continued focus on the working capital optimization, our net working capital has reduced by 28 days to 207 days in financial year '22 versus 235 days last year. That's also my side. Now, I would refer to Ashwani Arora to share the result update with you. Thank you.

Thank you, Monika. Good evening, and thank you for joining us on the call today. In financial year '22, the company continued to deliver on all its strategic pillars, that's growth, margin expansion and further strengthening the balance sheet. There is 14% growth in revenue, gross profit growth of 14% and PAT grew at 7% and significant strength in the balance sheet. Satisfying growth has come from all the businesses. Basmati & Other Specialty Rice with a growth of 9%; Organic Food and Ingredient business with a growth of 19%; and Convenience & Health segment with a growth of 62%, which is 2% of our revenue and have crossed a milestone of INR 100 crores and has reached to INR 121 crores. This is the first year of the big new product initiative going in the market, and the initial sign of consumer sentiments are very positive. And we are continuing our progress to achieving 10% of our revenue over the next 5 years from the new product lines. We will continue to maximize shareholder return by keeping our focus on profitable growth. Digitization, agile transformation and ESG that will act as enablers for the next level of growth. The company has adopted a structured approach for ESG, that is environment, social and governance initiatives. The company has always delivered its growth and expansion metrics in an environmentally-responsible and socially-conscious manner, which has given the company already functioning program to dovetail into the structure of the ESG initiative. Programs like LT-financed sustainable rice production, order ship management, production of village for livelihood and clean drinking water are already impacting at a large level and are now being scaled up. We will share more insight on ESG, HR and digital transformation projects in the due course. Thank you. Now we open the session for question and answer.

[Operator Instructions] Our first question is from the line of Arpit Shah from Stallion Asset.

I just wanted to understand what is our road map to, let's say, reach an ROC of 23%? Because if I see the last decade or so, we have been hovering around 14%, 15%. So what are the levers we have in the company, where we can take the ROC to 20% plus? Is it going to come to operating margins? Or is it going to come to a reduction in working capital? So what would be your road map over there?

Thank you, asking this question. And the road map is as we have defined to improve the product mix and on the scale, these are the two things. And third is optimizing the working capital. I think all these three initiative will take us to the ROCE of 20%, which we are working towards -- 23%.

So the included time line is we used to the 2 measures, how long is the time line?

Historically, we have improved on our gross margins. We have taken the advantage of scale. But for the last 2 years, because of this COVID, this inflationary pressure has impacted. So in the coming year, we will see the improvement on the ROCE.

Got it. Okay. So currently -- it is just one more question. Currently, LT Foods is generating [ INR 500 crores ] of cash flow from operations revenue. So other than the minimal CapEx of INR 100 crores to INR 150 crores, our cash flow requirements are not very, very large. Do you believe that buyback is an opportunity to deploy capital, given the valuation that you say that, let's say, the enterprise valuation of the company is around INR 3,500 crores and actually it is closer to INR 2,400 crores. So would it make sense to go for a buyback? Would that make sense?

Yes, that makes sense. But as we said, we are evaluating all these metrics. And surely, that we are evaluating often.

Okay. Okay. And I also wanted your perspective on the industry growth for the next -- let's say the next 5 years, what would the industry growth look like? And what kind of market share we have in all the countries we're operating, be it in Europe, U.S., India, Middle East? What is the market share that you are holding in the market?

Okay. So on the category growth, I will speak, and then I will pass on to Mr. Vivek for the, I'll say your next part of the question. As far as category is concerned, if you take India, India as a category is growing in double digits and so on in America and Europe. Middle East is only the territory which is not growing. But all these 3 categories are growing and where we have a strong presence. On the market share, you know...

So double-digit numbers would be, let's say, close to 16%? Or is it much lower than that?

What is that? What is the question?

They are going to this question to growth. India. [Foreign Language]

For us?

No, for the category.

So in the beginning, I told you that for the America and India and Europe, we are growing in the range of double digits.

I didn't want the range. What will just the range for your model will be...

I would say 12% to 15% -- 10% to 15%, I would say.

So in terms of market share, our brands have grown at a faster rate than the market and we've picked up market share. So in India, we picked up almost 1.5% share. And especially in the channels where the growth is coming, so in e-comm, we have a leadership share in modern trade as well in stores, like accounts like Reliance and DMart. We are market leaders in e-comm channels like Amazon, we are market leaders. So that is -- as far as India goes, in North America, we run close to a 50% share I'd say, close to it about 49%. Europe is up 20% market share. Far East in the markets where we are operating, we are in the 21% overall share. So that's really the share position that we have across with, as we say, 8 core markets where we are the absolute market leaders with numbers like 49% in America. I hope that answers the question.

Got it. So one last bit on ROCE again. I'm just splitting out pressure on that. So do you see the ROCE, like where it would come, 20% end to end in relation to various improvements the product mix? Because if I see your premium portfolio and if I see your Basmati portfolio, the Basmati is probably between 20% to 35%. And even if I see your Organic portfolio, it also not that very high. So your product mix was -- where would you like margins to be trading from?

If your question is around that, are we sure about that, we are -- yes, we are sure about that. And I told you how we will achieve that.

[Foreign Language] the new products will be requiring lesser of my working capital, the working capital cycle in the new products are comparatively less. It requires a working capital cycle of 90 to 100 days. Once that 10% of my total revenue comes from the new product, I will have a working capital reduced and my overall margins, what I'm projecting an overall increase in the margins in the Basmati segment, that is an increase of 1.5% over for the next 5 years. This will -- both will be contributing in an ROCE of more than 22%.

And what is the share of new products in your revenue right now?

It is currently, it is 2% of my total revenue.

And you expect this to go to 20% in the next 5?

Yes. Yes. That's right.

And that should drive 1.5% increase in your operating?

Yes.

[Operator Instructions] We'll take the next question from the line of [ Priti Sun from NVS Research ].

My first question is regarding Golden Star acquisition. So if you can give a little more color, like was it funded internally or through borrowing? And what is the EBITDA margin for Golden Star?

This is little -- we are in the phase of completion. This is little confidential. But maybe in the next call, we will explain more on that.

Okay. All right. Understood. My next question is that paddy prices are higher about 20%, 30%. And we are yet to increase our prices in a meaningful manner. So how do we plan to mitigate the rising input costs? And how does strategy evolve in terms of procuring paddies?

Paddy procurement has already been done. And as far as price increase is concerned, partly we have passed on to the consumer, and this is well accepted. The only thing is like we have got a price increase in the freight, which is just roughly 3x of what we have paid last year. That, we are in the phase of passing.

Okay. All right. And if I may ask one more question. There has been a slight degrowth in the Organic segment as compared to the previous quarter. Can you please let us know the reason for the shrink? And what is your percentage of Organic business, India versus international? What is the percentage?

Sure. [ Priti ], so if you see on an annualized basis, the Organic business has grown 19% year-on-year. And the last quarter is mostly B2B business and sometimes shipment stagger to the quarter to quarter. But if you see on a yearly basis, we have grown by 19%, which is extremely very strong numbers.

Okay. And what percentage of your Organic business would be India versus international?

It's mostly exposed business to the Europe and America.

Our next question is from the line of Aman Madrecha from Augmenta.

I was asking, as you mentioned that the growth in the Middle Eastern market is in single digit. So could you just highlight on the reason, like, why is it so? Is it because of saturation or some other factor driving the growth over? Because, as you know, Middle East is the largest consumer of Basmati rice.

Your voice is echoing.

The question is what is causing the Middle East to not grow.

Okay. So there are -- okay, Aman, so good question. But reason is last year, I think because of this COVID situation, they have stocked up their inventories, and that has an impact on this year's sales. So as far as consumption is concerned, Middle East is a very mature market. So growth is very minimal, kind of thing and because of the political situations also, Iran is kind of plus/minus 3, plus/minus.

Okay. [ Sales are coming ] can you give the breakup of the current inventory on books, breaking down in terms of adding rice?

So that is -- you meant to say inventory?

Yes, in inventory. What amount of tariff we have on this and what amount of price we have on this?

So you can write an e-mail, we will share the information with you.

Our next question is from the line of Subhankar Ojha from SKS Capital.

A couple of them I have. What's your further debt deduction planned for FY '23? I mean you've done a great job by approximately INR 30 crores of debt reduction. What's your plan for FY '23? That's one. And secondly, what's your ad spend as a percentage of sales for FY '22? And what is your plan for '23? And as in terms of the trade cost pass on, how much of that you are able to pass on for '22? And where are you in terms of negotiating with your clients in terms of passing on this freight cost hike? Because your competitor has said clearly that they were able to pass on the freight cost almost entirely to customers. So where are we in doing that?

Okay. So I will answer your question on line by line. So on the debt, the free cash flow will be, as per our policy, which go in 3 parts: in dividend and growth and the reduction of the borrowing, but we are not now very keen in -- and so in the reducing borrowing, we already -- so we will look for an opportunity where we can use this capital in a productive manner. And on the freight cost, it depends on market to market. So -- and competitive landscape, we will evaluate how much to be passed on from X to X. That's a very strategic call. It depends on market to market. On the ad spend. Yes. So ad spend is 2.3%, we spend.

Will that go up a bit because you launched new products which doing, I think, really well? Do you have any plan to spend more on that?

No, we have, at the moment, enough portfolio to grow it. We have ready to eat, we have ready to cook in our portfolio. And as I said, we are getting very good interest of the consumer. And the categories are large enough to give us a volume of that. Vivek, you wanted to add on this?

Yes. And as we take each of these, we will be increasing the ad spend, but we also will have a synergistic impact because all of them are under the top of family brands. Overall, the ad spend will go up to close to 3% next year from the 2.3% this year. But ad spending is something that you take a call on quarter-to-quarter basis once you see what's happening in the market and with the business. But the philosophy is to spend behind these initiatives.

[Operator Instructions] Our next question is from [ Sanjay Awatramani ] from Envision Capital.

Sir, can you highlight the realization value for rice, which is Basmati and non-Basmati for exports and for domestic markets?

Yes, [ Sanjay ], we can take that.

So the realization in the domestic market is INR 51 and in the export, it is INR 110.

Okay. Sir, this 3% you mentioned for ad spend, this will be for FY '23, right?

No. We are giving that as an indicative figure. And of course, when we say ad spend phase is the totality of what we're spending on electronic, indoor, print, et cetera. But yes, indicatively, we will be building this from 2.3%. I mean if you were to take that as a percentage of the branded sales, it's already at about 3% -- close to 4%, just under 4%.

Okay. Okay. Sir, any revenue or margin guidance for FY '23, if you can help us with that?

So we will keep the momentum. Next year, you're asking, no?

Yes, FY '23, I was asking.

Yes. So we are positive we will keep the momentum, growth momentum.

Okay. Okay. And any major issues or risk you are facing on supply side or container side challenges? If you can highlight some of those?

So this is, as I explained, we have to pass on the price increase to customer as only this -- on the service level on supply chain, we don't foresee in the short term any risks on that.

Okay. Okay. And sir, can you tell me the major competitors? I mean, who are the exact competitors for us?

So in a different geography, different competition is there. In India, there have been other competitors in the consumer space. So again, very different market, different competition.

Our next question is from the line of [ Romit Navdal ], an individual investor.

I wanted your view on the recent Adani Wilmar, Kohinoor acquisition in terms of whether you think it's going to put pressure on margins to grow market share in India? Or you're seeing something positive to come out from this?

So [ Romit ], Kohinoorwas present in the marquee for a long time. We don't see any [ significant ] impact of that.

Okay. The other thing I wanted to ask you regarding your entry into ready-to-use sauces, which you are now present in. Is this something which -- what is the size of the market you see here? And is it fairly fragmented or competitive? Or is this part of a larger plan to becoming a complete food business player?

Yes, sure. We are -- we define ourselves as a consumer food offering, given specialty food in terms of specialty rights and rights value adds. So all the adjacencies where there is a consumer need, which we can, with our core competence, satisfy, we are into. When we talk of the sauces, there are 2 clients that we have in market, we just had a very good initial, very well accepted launch of the Biryani kit, which is giving sauces for making Biryani. And we have rights of these sauces. Some of these are emerging needs and those markets will be pioneered by us. Some of these are in the market where we will be taking share. But our philosophy is sort of driven more around the fact that we are meeting consumer needs in terms of all the consumption meal locations in the day and where we can come in, either we pioneer or we'll pick up share. So I think that would depend case to case. In the case of rice sauces; sauces, we are pioneering. So the size of the market we take more from other cooking sauces like pasta sauces, et cetera, and that will be in the region of about INR 400 crores to INR 500 crores.

So would it be fair to say that you are trying to build on your core competence of rice and look at something adjacent into that rather than just being all over?

Absolutely. We are building on what Daawat as a brand stands for and where it extends. So certainly, we're not going to be all over, as you've rightly said.

And we are not seeing only the India market. India is one market, and we have a global footprint where need of these products are very well established.

Our next question is from the line of [ Riya ] from LKP Securities.

Yes, just a continuation with the previous participant. So are we looking at any strategic acquisitions of the cohort or some sort?

Yes. Our growth strategy is to grow organically and inorganically. And on that strategy, we have done that exposition in U.S. sales, a very strong brand of jet fuel and we are open and we keep evaluating. Yes.

Okay. All right. And also, another question. Sir, is there a chance of the government going ahead and imposing restrictions on say, export of rice as well? And if so, how well are we prepared for this?

So as far as government has clarified their position. And we, as a company, is in the specialty Basmati if you see historically, government has not done that. So -- but on non-Basmati also, the government has clarified on all the rumors.

Okay. Okay. So if I could just squeeze in one more. So any CapEx plans for the next 3 years?

It's a very normal -- we will be in the range of INR 100 crores, INR 80 crores to INR 100 crores.

Our next question is from the line of Arpit Shah from Stallion Asset.

Yes, yes. I was just thinking, let's say, we have seen now from very long period of time and we have scaled up, let's say, from INR 1,000 crores revenue to INR 5,000 crores trend. And we have grown very consistent with very consistent margins in ROCE, which are very much pleasing. I'm just trying to get my head around why we trade at such valuations? What is it -- why are we trading around 7, 8x maybe 5x our cash flow from operation?

Thank you for all the compliment, actually when we started LT Foods, the revenue was INR 3 crores. And we are very proud of as an LT Foods. And on the valuation front, I think you people are the better people to guide us or address on that. But for sure, we understand as far as competitive landscape, and as a consumer food company, we as a company that is very influential.

So let's say, we have INR 400 crores free cash flow coming in, almost every year. The ROIC investing in the stock is likely to be a lot better than the industrial business, right? Is just my valuation or, let's say, INR 2,500 crores to INR 3,500 crores valuation and I'm getting a INR 400 crores to INR 500 crores cash flow every year to buy back the stock, your ROCE will be significantly higher than what you're getting in the business.

We are evaluating this option.

Okay. So there -- okay, okay. So I just wanted to understand one more piece on the business. Let's say, when you support our farmer in terms of, let's say, seeds or in terms of nutrients for farming. So when it comes to, let's say, buying those crops, buying the paddy, so do we have to be in the bidding place again? Or you can directly buy from the farmer? Or you have to come to the [ mundane ] and how does that work?

All the models are available in some states like Punjab and Parana as per government regulation, we have to buy through [ Mandi ]. But in Madhya Pradesh and UP, you can buy directly from the farmers.

So Punjab and Parana will be through [ Mandi ] and MP, UP would be through directly to the farmers. So over year whenever we're making, let's say, payments to farmer, so that -- those payments are channeled through cash or the channel through banking channels? How does that work?

It's completely through banking.

Completely through banking. And that is true for the whole industry? For all the food, therefore...

Well I can tell you about LT Foods, I cannot tell of the industry. But as an LT Foods, we paid the farmers through banks.

Okay. Okay. And the royalties that you have in U.S., where you have 50% market share, so what would be the market share, let's say, the #3 player or what would be the #2 player there?

#2 player, if I can guess is 5% to 6%, less than double digit.

Okay. And that will be changing then in this year's parameter?

The Basmati is Indian, but brand can be owned by the American company or other company also.

Got it. Good. Got it, got it. On the Kohinoor, which was is acquired by Adani Wilmar. So what would be the scale of that business? And do you see any large aggression from that group on ground currently?

That, I think anyone will know. But as far as the Kohinoor brand is in the market for the last 30 years and has its own strength as a last time, when they were in the range of 3% to 4% market share.

3% to 4% market share. Perfect. And over the last. We have seen KRBL get up, let's say well within that range. We have seen some other company like [ Shrilalmahal and Arasur ] come and scale up well in the Middle East. But somehow we have seen a single digit or typical double-digit kind of revenue share coming up from the Middle East. So where -- why is not revenue strategy to go in the Middle East and take on them?

Yes. Good question. Every company has its own strategy and play from their own strength. And we've chosen to play from India, Europe and Americas. Middle East is a little mature market and as a strategic call we're starting on -- let's focus on the other market first, and this we can take later on.

So currently, let's say, in India or in the U.S., our biggest advantage is the distribution that we have, let's say, modern trade e-commerce or is there another change we've seen. The distribution advantage is very large in India or even in the U.S. You tend to bring up some smaller products to penetrate those distribution, be it like chips, be it some other options because the Organic food, we have other opportunity to have some other grains. So is there a way where we can use our distribution to scale up some of these organic plans? Is that the possibility to do that?

Vivek, You want to take?

Yes, sure. Firstly, I'd like to say that in addition to the distribution strength and that's certainly the strength in these markets build over many, many years, the other big strength that we have in these markets is our brands. Our brands are recognized in these markets for premium and consistent quality. They have very good imagery. So these 2 become very strong leveraging point for us, coupled with our back-end strength that we are able to supply from India. We are certainly using this distribution network and the brand. We've launched the RTH, Royal RTH in the U.S., which is doing very well this year. We've launched Cuppa Rice in India, in the Middle East, in markets like Australia. We've launched [ sauces ] sauces and Biryani kits. These are all riding on our distribution network, which therefore do take the Daawat brand across consumption occasions and formats and further strengthen the brand and the distribution helps us to get it there far more quickly than somebody else would be able to and also provides us the efficiency and scale to our distributors.

Got it. Because the kind of distribution we have in India or even in U.S., we could easily launch another, let's say Daawat or corresponding Daawat Mumbai or Daawat coming from something ready to eat or ready to cook. So your kind of innovation that you think, of course, go for all our brands, even in non-Basmati, without using Daawat brand, we can just launch a new brand in the non-Basmati segment that's in our brand business, right?

Yes. I mean it's a good point that you make. And certainly, we can do that Daawat and Royal. Sona Masoori, for example, are non-Basmati that are doing well. Kari Curry is a snack that we've come in, which is again doing well and is, again, riding this network. Other products that you mentioned, we're always looking for ideas and thank you for those suggestions. We'll put them to the NPD team, and they will evaluate that through our stage gate process.

Got it. So is there a way where we can actually break out some -- the growth rate that we are to let's say 12%, 13%? And you can possibly move to let's say, 20% growth rate in the next [ 2 years ] while we continue to launch innovation to the out brand also some other brands where you can just leverage your distribution, scale up your business because our business channel esters, our business model is set in terms of margin, in terms of ROCE, we have to just value distribution, right?

Certainly, I think whether it's 20%, when you see a number, you see a composite number. There are markets which are growing in that region of about 20%. But I mean, as Mr. Ashwani has always explained, our levers are 3, profitable growth is one of them and the other in terms of capital deployed in terms of efficiency. So it is the totality of the business rather than just using that to get scale because I think our scale is today increasing at a good enough pace to deliver to us the strengthening of the balance sheet metrics that we have given ourselves 5 years ago, and we are very happy and proud that we are on that journey year-on-year.

[Operator Instructions] The next question is from the line of [ Harish Shah from HS Investments ].

I have two questions. If you can just highlight what is the freight amount for this quarter as well as the last financial year as compared to the respective quarter and financial year? That is my number one question. And my second question is if you can share the contribution of HoReCa, how much we have grown from this segment overall and on a specific focus on U.S. and Europe?

So our logistic cost during this year is INR 426 crores as against INR 287 crores last year. And in this quarter itself, our logistic cost is INR 140 crores. Last year same quarter, it was INR 65 crores.

About the HoReCa contribution?

HoReCa roughly contributes to our portfolio, if you talk about India, it's 20%. But globally, it is in the range of 15%.

And in your key markets out of the U.S., Europe?

So that's what I said, globally, if you take an average, 15% sales come from HoReCa.

Our next question is from the line of [ Aditya Mehta from Dynamic Invest ].

Yes. First of all, I had a couple of questions. So my first question would be could you please tell us about the upcoming product launches, if any? And what sort of investment in the brands will be you be imposing on in FY '23?

Do you want to take that?

Yes. [ Aditya ], what we just launched a few products in Biryani Kit and [ Biryani Gravy ] is being one of them. That, we will be scaling up. We also have launched Cuppa Rice, which is doing well, and there is, therefore, again, we are scaling that up. So if you see the next sort of 3 to 6 months, we just got 2 of these big initiatives in the market, which needs to be taken across both India and internationally. And they are doing very well internationally as well. I think that really is going to be in terms of if you see new products, we also have RTH in the U.S. and Daawat Sehat in India. So Royal RTH and Daawat Sehat, which are really big contributors at this point in time to our revenue, but the potential for both of them is much higher. We certainly are going to be -- to your second question, we're certainly going to be putting investment, brand investment against all these 4 initiatives. I mean exact details of that, we cannot disclose right now, but there would be significant amount of marketing and promotion spend on all of these.

Okay. Okay, sir. I understood. And my other question would be, let's say, after 6 months [ exports to be ] and when will the...

Your voice got -- [ Aditya ], can you just say your question again, please? We missed some part of it.

Yes, sir, so let's after 6 months if the exports are back in a big way, and when the container prices reduces, or we are trying to export to other parts of the world. So will we be able to meet the demand?

Sir, your question, can you reframe your question, please? So after 6 months, would you say?

After 6 months, if the exports are back in a big way, and if the container price reduces, will it be suitable to say that we'll be able to meet the demand?

Already, we are meeting the demand as far as -- but as the demand of the market, we are also -- it's only the freight rate, which is impacting the P&L. But if freight rate will come down, this will always be advantages to LT Foods.

Okay. Okay, sir. And my last question would be, if I could squeeze in one. So what is the differential in terms of gross margin of exports versus the gross margin of domestic?

Just a minute.

It is taken in the range of 1.5%. 1.5% to 2%, which is the difference between the two.

Our next question is from [ Harish Shah from HS Investments ].

I just have two questions. How will Jasmine rice help in expanding our portfolio? Like what's the market share of Golden share -- Golden Star I'm sorry? And if you are exporting to China and Iran now, what would be the contribution from Middle East?

So [ Harish ], look, answering to your first question Jasmine rice has the direct synergy to our distribution in U.S.A. And as far as brand is concerned, that has market share around 10% in that market.

And how about my second question with regards to like if we are exporting to China and Iran, that status and the contribution from that?

There is non-Basmati rice and is not a very -- it's a very tactical thing. It's not very strategic. Iran, we don't do business.

On the contribution from Middle East?

For us, roughly contribution is 8%.

It is around 8%.

8% are from Middle East.

Ladies and gentlemen, that was the last question. I now hand the floor back to the management for closing comments.

Thank you, everyone, for your continuous support. Hope we were able to address all your queries. Should you have any further questions, please feel free to contact our investor relationship team. Thank you, and we look forward to connecting with you. Thank you and stay safe. Thank you.

On behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.