LT Foods Limited ($LTFOODS)

Ladies and gentlemen, good day, and welcome to the LT Foods Q4 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded. I now hand the conference over to Mr. Meet Jain from Motilal Oswal Financial Services. Thank you, and over to you.

Thank you, Steve. Good afternoon. Thank you, everyone, and a very warm welcome to LT Foods 4Q FY '26 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. Sachin Gupta, CFO; Ms. Monika Chawla Jaggia, Chief Corporate Development Officer. We will begin the call with key thoughts from the management team. Thereafter, we will open the floor for Q&A session. I would now like to request the management to share their perspective on the performance of the company this quarter. Thank you, and over to you, ma'am.

Thank you, Meet, for the introduction. So along with other team members, we have Mr. Ritesh Arora today also on the call. He is the CEO for the India and Paris business. So good afternoon, everyone, and thank you for joining us today. On behalf of the management team, I welcome all our investors and valued shareholders to discuss the performance of LT Foods Limited for the fourth quarter and full year ended March 31, 2026. Please note that any statements made or discussed during this call, which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. A detailed disclaimer in this regard has been included in the investor presentation that has been shared on both stock exchanges, that is NSE and BSE. The results documents are available on our company's website as well as stock exchanges. A transcript of this call will also be made available on the Investors section of the company's website. Financial year '26 has been a year of strong execution, resilient growth and continued transformation into a global branded FMCG company. Despite the dynamic external environment, we have delivered solid financial performance while continuing to invest aggressively in the brand, innovation and global expansion. I'll just cover industry tailwinds and headwinds in the financial year '26. Before I dwell into our performance in detail, let me briefly touch upon the broader industry context. The global rice and the specialty food industry continues to benefit from structural tailwinds. The Indian FMCG market is expected to grow at 11% CAGR, driven by increasing consumption and improving retail penetration. The global basmati and specialty rice market is witnessing steady growth of 7% to 12% across geographies. We see rising premiumization trends along with increasing global demand for the ethnic cuisine, especially in North America and Europe. We have experienced expansion of South Asian diaspora, which is driving sustained international demand. In addition, consumer preferences are evolving towards health and organic products, convenience-led food categories such as ready-to-heat and ready-to-cook, traceability, sustainability and premium branding. These macro tailwinds strongly align with LT Foods long-term strategy, but there were a few headwinds as well, such as geopolitical issues, U.S. tariff, increased freight and increased input costs. Now I cover the financial performance of the company. Coming to our financial performance, the revenue, including other income, grew to INR 11,023 crores, which is up by 26% on a year-on-year basis. Gross profit increased to INR 3,692 crores. The normalized gross profit is around 35.3%, excluding U.S. tariff and change in the shipment terms. EBITDA rose to INR 1,236 crores. Profit after tax stood at INR 625 crores. It is important to note that the normalized revenue growth was 19% and EBITDA margin moderated to 11.8%, excluding U.S. tariff, reflecting higher brand investments and strategic spending. We continue to strengthen our financial discipline with our working capital days improved to 176 days versus 196 days last year. Net debt remains controlled with net debt EBITDA at 0.6x and net debt equity at 0.16 in financial year '26. For the fourth quarter, the revenue grew to INR 2,938 crores, EBITDA stood at INR 300 crores and PAT was around INR 136 crores. The reported margins for financial year '26 and Q4 '26 have been affected because of the U.S. tariff pass-through, brand and marketing investments, LT Foods U.K. being an investment phase and organic segment under remodeling. Our core business -- now I'll cover the segment and geography performance. So our core business continues to perform strongly with basmati and the specialty dyes contributed 88% of the revenue, delivered a 29% revenue growth in financial year '26. Normalized growth 21%, excluding the U.S. tariff with revenue in tune of INR 9,742 crores, reflecting the enduring strength of our strong brand equity and deepening consumer base in our products across the world. The segment maintained a healthy EBITDA margin of 12.3%. We observed strong growth across India, North America and Europe. We continued and gained our leadership position as #1 brand Basmati brand in North America with a strong share in the U.S. imports and Canada market. Our organic Foods and Ingredients segment grew by 9% and crossed INR 1,016 crores in the revenue in financial year '26 building on over 30 years of pioneering Indian organic exports with over 110,000 hectares of certified organic farmland, 80,000 Farming Family Association and a global partner base spanning 25 countries. This business represents both a significant commercial opportunity and a profound expression of our commitment to responsible sourcing. We are glad to share that we hold 12% share in India's export of organic food. However, this business segment is under stress, and we have strategically remodeled it for the next phase of the growth in which we have built the capacity, which will take time to get fully utilized and also entered into the CPG business. Further, the EBITDA is also currently under stress due to currency fluctuations and commodity price pressure. Our ready-to-heat and ready-to-cook segment business has grown 2.5x over the last 5 years reaching INR 187 crores in financial year '26 as consumers increasingly seek convenient and healthy meal solutions at home. Innovations like Biryani Kits, Cuppa Rice, Royal ready-to-heat range are resonating strongly with time-pressed flavor-forward consumers in India and internationally. The demand momentum across key markets remains strong. However, certain growth opportunities could not be fully serviced due to capacity constraints in RTH platform. The enhanced capacities are expected to become operational from quarter 2 of financial year '27. Our India business continued its strong trajectory, ending the year with 10% value and 12% volume growth, a testament to the resonance continues to build with Indian consumers. What is particularly encouraging is the quality of this growth. Our quick commerce and e-commerce channel grew in excess of 45%, firmly cementing our leadership on key digital platforms. The premium segment grew at 2x the pace of the overall consumer portfolio, reflecting the power of the premiumization trend that is reshaping India's food landscape space. Premiumization drove a significant increase in gross margin, which was reinvested in the further strengthening of our strong brand equity, enabling us to scale our marketing budget by 2x versus last year. Our household reach in India rose to 64.4 lakhs as per the Kantar, a 22.8% expansion over the last 15 months. Our market share in India stands at 23.7% as per the Nielsen report. Besides the new innovative offerings like Daawat and organic range, the limited edition of Daawat Saffron Basmati and Daawat Thai Green Curry Rice are gaining strong traction with our consumers. Our investment in the new facility in Raichur, Karnataka further strengthens our value chain from farm to fork as we deepen our regional rice play. Also, the North America. It remains our largest market, contributing 48% of our revenue mix in financial year '26 and delivering 53% growth. 9% is the normalized one, excluding the impact of the U.S. tariffs. Our flagship brand, Royal commands over 60% market share and Golden Star continues to be #1 Jasmine rice brand in U.S.A. Europe continued its growth journey, delivering 34% revenue growth in financial year '26 and advancing meaningfully towards our 5-year target of GBP 100 million in U.K. revenue. LT Foods Europe was conferred with the new award for its expansion to the U.K. market at the 15th Annual Department of Business and Trade Investment Awards. Separately, Extra Long Basmati recognized as the Product of the Year, Daawat Extra Long Basmati recognized as Product of the Year in U.K., an honor driven entirely by the U.K. consumers. We are building the foundation for a sustainably large European business, and we remain focused on brand building, distribution expansion and portfolio diversification across the region. In the Middle East, we continue to further strengthen our position. We would like to highlight that despite the ongoing geopolitical conflict in the Middle East, including the heightened tensions arising from the Iran situation, LT Foods has demonstrated business resilience with no material disruption to our supply chain. During the year, we expanded our presence in Southeast Asia with INR 53 crores in revenue in financial year '26 and successfully launched Maza Basmati rice in Saudi Arabia. Apart from this, we are witnessing some near-term pressure arising from U.S. import tariff related developments. While the input cost has increased, we have to see how it's going to impact us in the near future. Going ahead, premiumization, category expansion, route to market excellence will continue to be engines of our growth while brand in India, while brand investments, distribution expansion and innovation will drive our international performance. Our strategy going forward remains very clear and focused, strengthening our core business by expanding our global market share in Basmati and the specialty dyes and drive premiumization and pricing, accelerating new categories by scaling RTH, RTC and other such products. We shall remain focused on margin improvement by focusing on operational efficiencies, cost optimization and build economies of scale, improve mix towards premium and the branded offerings. Technology and digital transformation remain at the core of our capability building agenda. As we see towards our next phase of the growth, we are committed to building a smarter, more agile and future-ready organization that leverages technology as a competitive advantage. We expect -- for the future, we expect continued double-digit growth supported by global demand and new product launches, distribution expansion. Margins are expected to gradually improve as brand investments normalize, scale benefits come through. RTH, RTC and organic segments will continue to outpace overall growth. Now we would like to open the floor for question and answers, please.

The first question comes from Abhishek Mathur with Systematics.

Just wanted to check what -- for FY '26, what was our volume growth in the U.S. and also for -- in the U.S. geography and also for the Basmati and specialty rice segment volume growth for FY '26? And what do you think was the extent of impact on this due to the U.S. tariffs? That's my first question.

Yes. So, the volume grew-- also the volume in the overall Basmati and the specialty segment in this year-on-year basis grew by almost 19% this year. And as regarding the -- in the U.S. as such, the U.S. volume increased by -- that too also increased. If we include the Golden Star revenue, that is also increased by 30% -- 35%.

And sir, what do you think was the impact on this volume growth, if any, from the U.S. tariffs?

So this was an opportunity for us being the company which has on-ground operations. And with a better service level, we have been able to acquire more consumer, more customer by giving them the service level. So the idea was to -- in this whole disruption, which was a big disruption for us, the idea was to keep the service level robust, and that has really helped us to grow our customer and consumer base. although it has impacted on our margin because partly we have consumed and partly we have passed on. But broadly, acquiring consumers, acquiring customer was a big achievement for us.

Right, sir. And secondly, you have indicated a higher stepped-up investment in your U.K. business where we have a 5-year target of scaling up. So just wanted to check today, how much is U.K. salience for Europe as a percentage of revenue? And related -- on the domestic side, just wanted to check what is our distribution reach now? I believe it was about 170,000 in December, but what is that number now?

Sachin can add into this. This year, U.K. is roughly GBP 45 million revenue.

Correct.

And the goal is by 2030, we will scale it to GBP 100 million. So India distribution is flat at GBP 172 million. So flattish, hasn't grown much in the last quarter, but we've seen an improvement in our market share compared to last year same quarter.

And lastly, just a bookkeeping question, if I may. When I look at our revenue growth for FY '26 for India and U.K., which are -- sorry, India and U.S., which are together about 80% of the business, it's at 10% for India and about 8% to 9% for the U.S. But our FY '26 revenue growth for the Basmati rice segment, which is about 90% of the business is at 21%, both normalized. These don't seem to be adding up. Is there something I'm missing here?

So you need to -- there are 2 kind of accounting treatment that we did this year. So one was -- if you normalize that, one was the tariff, the custom tariff and the second was the Golden Star because last year, the Golden Star, we had a JV -- this year, we have acquired that 49%. Now it is a fully owned subsidiary. So both the numbers, if you tie it up because there in the U.S. one, we had normalized the Golden Star as well as the tariff, whereas in the Basmati segment, the tariff was there. So once you do both the things, it will tie up.

The next question comes from Saurabh Bheria with [indiscernible] Capital.

Congratulations for a great set of numbers. I wanted to just have guidance on the margin part. So going forward in FY '27, what are the gross margins should we expect considering the input cost and the...

So if you talk about the gross margins, the gross margins will be more or less in the lines what we have done in the '25, '26 because the gross margins, this movement of CI to C&I, that will remain in this year as well. So that will be there. Yes, somewhat the tariff and other things because now the tariff has normalized from 50%, it has gone to 10%. So we expect the gross margins to be within the range of what was there in the last year.

But when I check your FY '26 gross margins remains different from FY '25. So on an absolute basis, if you can give me a number of the range that would be more helpful.

So if you look at my gross margins in '24, '25, it was almost 2.6% it reduced on the 100 basis points. And this reduction in the 100 basis points was mainly because of the U.S. tariff and the movement from to C&I. So this margin range of 33.5% or 33% will remain in the next financial year as well.

Okay, perfect. Okay. And the EBIDTA margins?

EBITDA margins because this year, we were -- there were certain -- the tariff was there and there were certain passing of the timing and other things were there, the tariff had an effect on EBITDA margins. Likewise, there was the organic range, one of the organic, the inventory buildup and the other -- the spends were there. So if these things because there are certain kind of dynamic environment and dynamic situations that might -- these situations relatively are not there and things remain such, we will surely improve on the EBITDA margins by almost on that level. We were at 12% in the previous year. So we are eyeing that level.

Whatever the disruption has come, we have counted for till time said, we are confident that we will be in the range of 12%. But as we are living in a very disrupting, so we are confident that we will be in this range.

Okay, that helps. And another question around the growth guidance. If you can guide a number different geography and overall Basmati segment. And also market share for, say, going forward, if the Basmati grows by, say, cent total geography, what percentage of market share does LT sees of closing...

That we have tried to put all the information on the presentation. So if you go through the presentation, you will find these numbers.

And the guidance for the growth that we maintain that the guidance for the growth. So we are eying at 10% to 12% of growth on a long-term basis that we are and we remain to that growth levels. Organically, we should grow in that levels.

[Operator Instructions] The next question comes from Pooja Sanghvi with Incred.

Congratulations on a good set of results. I want to ask that, what is current with the inventory by age, and how much of your inventory today is aged like twelve months or more versus the relatively fresh one?

Inventory aging, it depends upon the different products which we sell. And all my premium products, if you talk about premium and certain other range that we have. So my average inventory levels, if you talk about the average inventory is around 190 days to 20 days of inventory, which we hold. So there are certain premium where we age more than 18 months and 2 years of inventory aging that is required. So there are -- on these -- on the various products we age accordingly.

Right. So I just wanted some clarity on how much of your volume is aging beyond two years, if you can tell me that.

Pooja, can you be specific on your question? So may not be we have the answer right now, but you can mail it to the Investor Relations.

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

My question is on payable days. I'm seeing from FY '21, we had trade payable days at 45 days. Now it is almost around 100 days. I wanted to know what's the reason for it? And is the 100 trade payable days now the normal payable days for the future? Or is it going to reduce like it reduced to 101 in FY '26?

So the payable days of 100 days, which is there in the financial numbers, so these will remain as such. So we have made certain arrangements because our practice of buying is 60% to 70% we buy in the season and 30% to 40% we buy apart from the other seasons. So the payment date when we buy 30% to 40% in the other part of the season, that defers. So having said so, this payable days of 100 days will remain in the future as well.

The next question comes from Amit Doshi with Care PMS.

Vis-a-vis ready-to-eat health and convenience segment, so while, of course, Daawat [indiscernible] discontinuation has impacted the sales growth, but overall, looking at the number, the size, our growth number, do you think it's fairly low or, or what is our internal target? That's one. And second, on the same RTH and RTC segment, our gross margins are in the line of 32%, 33%, which is similar to Basmati and specialty rice. So considering that it's a convenient segment should it have a higher gross margin or if you -- if there's anything on that, if you can add.

So basically RTH segment is led by our U.S. geography, which is very big in this category. The rest of -- like India is very small for ready-to-heat and bigger in ready-to-cook where we are putting all our efforts, which is Daawat Briyani and so that's -- we are getting good response. So as far as RTH is concerned, our plant got delayed, and that's the growth is a little disruptive, but we are confident that by July, the production will start. We will be back on the track of growth. And as far as margins are concerned, you're right, we are in the range of 35%.

That too is basically on basis of accounting treatment because initial period, you do the more of sampling and sales promotion. There is more spend on that, and that needs to be netted off and you need to have the net sales. If you remove that, our overall GP margins in this segment on the basis of what we are making the sales, it is almost 40% plus in this segment if you remove the sales promotion and other sampling expenditure.

The filter is, whichever RTH or RTC segment we should get into. The filter is, it depends on the size of opportunity. It will be in the range of 30% to 40%.

Okay. Okay. And what's our internal growth target of this segment? And when do we have a breakeven target...

So as far as the internal aspiration we have set for this business, so RTH is very big in U.S.A. And this year, we have done 15 million. So another plant has been set up, which is late. So in the next 2 years, we will be 30 million, which is INR 300 crores. And on the ready-to-cook, which is India, that on the size of what we are expecting by 2030, we have set up INR 100 crores. Ritesh, can you add?

INR 120 crores of revenue by 2030. So in India, we are already the category leaders when it comes to Biryani kit. We have more than 60% to 65% market share on different platforms. And so over here, the investments are going on for category creation. So we are, therefore, very bullish on building this category up.

Okay. Okay. So any breakeven target that you would want to add?

It will be in next 2 years. So as Ash told in the whole of the category, our breakeven target, that remains the same, achieving a INR 400 crores in the segment will make us breakeven in this segment. So that's our target. Yes, 1 year because of the capacity constraint, our target has moved. But otherwise, we are on line with achieving that target.

Okay. Okay. And overall, our inventory days are down. So have we purchased less this year as far as our inventory is concerned?

Not really, not really. We have not reduced our inventory. Yes, as we compare with the inventory days, it has reduced by 28 days. So somewhat this represents the tariff as well because the tariff impact and other things were there. But overall, the inventory we have maintained that inventory levels of almost 250 days of inventory, which I'm sitting at as of March 31.

Okay. Okay. And any general comment on El Nino and outlook of Basmati rice production for the upcoming season, anything on that paddy prices for next year, any comment on that would be helpful.

Yes. So as far as farmers' economics point of view, last year, the paddy prices were very high. So we expect that the farmers will grow more. As far as the impact of El Nino, that we are watching. But historically, Basmati is mainly grown in the region where there is other way of irrigation also. So in the last 40, 50 years, we have not seen any impact of the rainfall shortage on the Basmati rather farmer prefer than go Basmati because it consumes lesser water. And so we are positive that the production of Basmati will grow this year. But I think we will be more clearer in 1.5 months.

Okay. Okay. And on the Middle East front, while, of course, Saudi has contributed to around INR 50 crores revenue this year, new market. Other than that, our Middle East is not growing. Is that correct understanding?

That's correct. That's a very tough market, very strong entry barriers. And we have chosen our route to market where we should not lose money. We will -- or I will say not invest money much on that. But we are finding other ways of growing Middle East. Hopefully, that should work.

[Operator Instructions] The next question comes from the line of [indiscernible] with Geojit Investment Limited.

I would like to know about what is the revenue contribution of Golden Star specifically and their margins?

So as regarding the revenue contribution, it is almost contributing 10% of the overall revenue in this segment. So currently, we are not tracking its EBITDA margins as such because it has been merged with the financials. But the margins of this this year is as we compare relatively 1% or 2% lower than that of the last year.

Okay. So like in Q4, what will be the revenue for Golden Star?

Proportionately divided. So $25 million, which is INR 250 crores.

Okay. Okay. One more question, sir. Like what will be -- what is the current situation of raw material prices?

So for the coming crop?

Yes, yes, yes.

So it's very early because in 1.5 months, we will be clear what is the kind of production being forecasted and what will be the impact on this this disruption which is happening in the Middle East. So I think 1.5 months, we will be more clear. But broadly, if you ask me, the prices will not come down much.

Okay. So for Q4, what was the situation?

In terms of prices?

Yes, yes, yes.

The prices have gone up very high. From the base level, if I talk about whatever was the opening price, roughly 25% to 30% prices have gone up.

The next question comes from the line of Damodaran with Acuitas Capital.

Just one question from my side. On CapEx, I see that you have spent around INR 30 crores, INR 60 crores. So can you just give me a breakup of this CapEx? That's from my side.

The CapEx spend in the last year is almost INR 350 crores. And in that, the major CapEx that has spent is basically in the lines of the U.S. We have purchased the land and we have invested in the RTH facility, so in the U.S. That's the major CapEx that has went up in the last year.

Land, we are building a big warehouse in Houston.

Okay. So the INR 360 crores is entirely for that?

Major one is in that. Rest is in the U.K. one, the packaging facility because we are in the growth phase and we are installing that additional packaging facility in that. And rest are certainly in India. India, we have purchased certain portion of land and to build new warehouses in the Indian region. So that has gone in that CapEx.

Mix of all territory, but major is which is such as explained on the Houston land purchase and RTH.

Sure. Got it. And what's the outlook for FY '27 or the CapEx spend that's going to come through?

Will be in the similar lines. we are investing to create certain more capacity in India. And then the land has been purchased and warehousing and some asset we are building in Europe on packaging and all this. But major is in India and U.S.

Sure. Okay. And just one question on that green acquisition, which kind of fell through, will we be looking at it now considering the changes of circumstances?

As a strategy, we always look for opportunity, which has a strategic in nature as far as LT Foods framework is concerned. So we keep on looking that kind of opportunity.

Okay. And just one question on the consumption side, specifically on U.S., are you seeing any impact in terms of consumption at the retail level of the war and inflation, anything like that?

As far as demand side is concerned, we have not seen any impact. And historically also because being the food and U.S., whatever the income is, that's the last thing to get impacted.

The next question comes from the line of [indiscernible], an individual investor.

Congratulations for the good set of numbers. So my question is that in respect to the top line growth, the top line growth for this year in U.S.A. as well as the sales growth for this year?

Sorry, can you repeat your question, please?

I just wanted to understand the sales growth in U.S.A. for this year, financial year '26 as well as the volume growth in the U.S.

Otherwise, it is stated in my investor deck uploaded one. The U.S.A. in the value terms has grown by almost 53%, but that includes the tariff as well as the Golden Star index. And in the volume terms, as I stated, it is a 38% growth in the U.S. that was there in the volume. And if I reduce the Golden Star, there is a growth of volume 7% to 8%.

Okay. So there's a discrepancy in the volume and the sales growth. So does the sales growth also include the ForEx gains as we have seen that the dollar appreciated a lot in the last 1 year. So does the sales include that also or the contract used to take place at the very initiation of the year? How do you to take this?

No, no. So yes, it has a dollar impact, dollar depreciating because we are reporting in the Indian rupees and Indian rupee has almost depreciated last year. So it has in the rupee terms, currency.

Okay. So you're importing in the U.S. -- in the INR, not in the U.S.

Yes. So we are reporting in the rupee terms in India. So it is a listed...

No, the contract which will take place in the U.S., right, in the U.S. dollar, whatever you're selling in the U.S.

We do a yearly transfer pricing with the U.S.A. And as a policy, we hedge ourselves by 50% to 60% every time. So there is a little bit gain, which was unhedged and we have the gain of ForEx.

Okay. Just the follow-up question, if that appreciation of dollar hasn't been happened that much, so what could be the impact in the sales volume growth as well as sales the sales value?

So normally, what happened as a strategy, international strategy, we cover the raw material also roughly 70%, 80%. So what we have seen if rupee depreciates, then the local cost also goes up. So inflation also covers that. So more or less, if you see -- if your question is around that if this rupee has not depreciated, then the profit remains the same. So the answer is then inflation in the commodity also has not come.

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

So I was trying to find a mention about the freight cost, the recent impact in the last quarter. So my question specifically is by how much percentage has the price increased for the freight from Q4 FY '25 to Q4 FY '26? Has there been any disruptions in shipping through the conflicted zone?

So mainly the disruption, Sachin, you can add into. The Europe has been the most disrupted. The prices have gone up. In U.S., another market, at the moment, there's not much disruption in freight as compared to last year. But Middle East, which is not our big business, the prices have gone by 10, 15x.

10, 15x.

Yes. Like Dubai was $200, now $2,200. Jeddah was $700, $800, now $2,600. So it depends. And there is a big disruption in the delivery also in the Middle East.

Understood, sir. Another question, if I may, please. Yes, in percentage terms, how much is the change in the realization per kilogram of our main brand, Dabur in India and then the Royal brand separately in the U.S. I'm asking this in context of pricing power.

Ritesh can tell that what is the quantitative growth and what is the value growth.

So in last year, both the quantitative and the value growth is almost at par, but we've seen an improvement in our product mix. Our premium -- our most premium SKU saw a 2x growth compared to the whole consumer bag business. So from that perspective, we are working on improving our product mix, which drives better gross margins.

[Operator Instructions] The next question comes from the line of Anubhav Mukherjee with Precision Capital.

Sorry, I was slightly late in joining the call, and this might have been discussed. So, sir, can you share what is the trend of pricing realization in the international markets? Like is there a price increase we are seeing for Parvati?

So as far as domestic price are concerned, that has gone high from season 20% to 25%. But as far as the international price is concerned, that the deal is all are done 85% in the season only. So whatever the 10%, 15% left trading is left, that has seen 15% to 20% higher prices than the season price. I hope that answers your question.

Yes, sir. And sir, the domestic price, like you mentioned, has been a significant increase will only suffice to take the hit from maybe higher procurement side this year? Or will we be able to improve our gross margin because of that?

Correctly. Prices of paddy has gone up. That's the

The cost has gone up, so there will be further improvement in the gross margins in the coming years.

In absolute terms, the gross margin will be low.

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

I re-queued myself to ask another question, which I forgot earlier. Regarding the insurance case that was going on, in simple terms because I'm an individual investor, I don't understand the nuances of the legal terms. But in simple terms, if INR 100 was expected to be received, including the interest over the years for the Bopal case, how much is it already on the books and how much more is expected and likely when?

Okay. I will tell you. So the lower court as well as High Court and Supreme Court has asked insurance company to give us money against bank guarantee. So that we have got -- we have given the bank guarantee. But in accounting, no accounting has been done whatever the gain is like our books, INR 136 crores is outstanding with the insurance company, we have got 50, but we can't do the accounting till the final verdict will happen, which is in the June. I hope that answers.

Yes, sir. It greatly does answer my question. So you mean to say that, sir, is the amount in an escrow account?

So it is -- in fact, not in an escrow account, we have that money. So it is the court that has asked for the bank guarantee against that amount. So we have that amount because the bank guarantee was to be given, we have deposited an FD amount equivalent to the bank guarantee amount. So that is basically the FD account. So that is it.

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

I just wanted some guidance on the CapEx. So if you can guide me net asset figure or CapEx as a percentage of sales figure because as we keep on growing at a rate of, say, 14%, 15% so we'll have to have more CapEx, right? So going forward, can you give me a CapEx guidance?

Yes. So this year, we have spent INR 330-odd crores. And the next year also will be in the same range. So this is the broader guidance on the CapEx. So we don't calculate on the percentage of the revenue. We calculate on the production tonnage.

If you can guide me net asset gross asset number?

So basically, what we are telling this year or the coming forward year because there was certain one-off buildup of the spend. So on a year-on-year basis, you can't tie up with that number because CapEx for this year might service for the next 2, 3 years. So that way, it goes like that. On a conservative basis, you can tie up the amount of depreciation, what we have, that will be invested in the CapEx. So almost on a long-term trajectory itself, INR 250 crores of CapEx each year that will be done. So this year or the previous year, we invested because we are building a capacity for the next 3, 4 years. So that will be there.

[Foreign Language] 60 tonnes, there is a formula that [Foreign Language]

What did you say? [indiscernible] please.

Every year, we grow 50,000 to 60,000 tonnes of rice. So if we build that rice capacity, so the thumb rule is [Foreign Language]

Okay. And currently, what is the total capacity ton-wise which we have?

Okay. So we have in terms of millings, paddy to rice, we have [Foreign Language]

The next question comes from Abhishek Mathur with Systematix.

Just wanted to check in the domestic market, this regional rice is an opportunity that we have talked about in the past. Can you give an update on that? What is now the sales level that we have from this segment? How is it growing? That would be helpful.

So it continues to grow in the last financial year at a higher double-digit growth. So it's approximately now around INR 170-odd crores in revenue, which comes out of our regional rice portfolio. And it will continue to remain our focus, and we will continue to grow this in the future as well.

Right. And lastly, just a clarification. The normalized margins that you have presented for the full year, they have -- they don't incorporate the impact of your higher spending on A&P, brand building or the higher level of U.K. investments, right? They are only adjusting for the U.S. tariffs and the accounting adjustment. Is that correct?

Correct. You are absolutely right. That accounts for only for the tariff and -- the tariffs.

So sir, therefore, the slight 40 basis point reduction in the operating margin that we see from FY '25 to FY '26, that would be on account of the higher A&P and the U.K. investment?

Partly because of the tariff. The tariff if I talk about the passing of tariff to the end consumer and building up of the inventory and organic. That is the reasons for lower margins, reduced or 40 basis change in the margins.

As there are no further questions, I would now like to hand the conference over to the management for closing comments.

On behalf of the management of MT Foods Limited, we sincerely appreciate your participation in our post earnings call. We hope we have been able to address your queries and provide clarity on the performance and outlook. For any further questions or follow-ups, please feel free to reach out to me or our Investor Relations partner, Ernst & Young. The team will be happy to connect with you offline and assist with you any additional information you may require. So now we may please close the call.

Thank you.

Thank you.

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