Olam Group Limited (VC2) Earnings Call Transcript & Summary

Good morning to all the ladies and gentlemen, who have joined our media and analyst conference call and live webcast by Olam Food Ingredients. I'm Hung Hoeng of Olam Investor Relations. We want to thank you for taking time out of your busy schedule to join us at such short notice. As you already know, Olam Food Ingredients,, or OFI, is the new operating group formed in 2020 following the reorganization of our Olam Group. This morning, OFI announced its intention to acquire Olde Thompson, a leading U.S. private label spices and seasonings manufacturer, at an enterprise value of USD 950 million. This is another milestone development for OFI. So today, we have the top management team of OFI here to tell us more about this development. CEO of Olam Food Ingredients, A. Shekhar. He's also the Executive Director of Olam International. So of course, someone whom we are very familiar with. New to the panel is the Managing Director and CFO of OFI, Rishi Kalra. Rishi joined Olam in year 2000 and has held several senior finance roles, including being the CFO of India, West Africa; and the President and Global Head of Corporate Finance at Olam International. He has also led many group-wide initiatives, including the acquisition of ADM's Cocoa Processing business, Olam Sustainability for Finance Department and today leads the project team responsible for executing the reorganization. Rishi has over 25 years of experience in finance and accounts. He is a qualified chartered accountant and also a founding member for Accounting for Sustainability, the Singapore Circle of Practice. Rishi is very active in the finance fraternity. So I'm sure many of you are already familiar with him. Before we move on, I just want to go back to the earlier slide, on the cautionary note here on forward-looking statements that may be given during this presentation. So now I'll hand over the time to Shekhar to introduce and present this new chapter of OFI to you, and then we'll take your questions. Shekhar?

Thank you, Hung Hoeng. And delighted to be here with you again, and thanks a lot for joining us at this short notice. We are really pleased to consummate a long-standing customer relationship with Olde Thompson into what we think now is a very exciting partnership for times to come. We have been suppliers, and we are the largest supplier to Olde Thompson for the last 15 years of a variety of spices, including dried onion, garlic, tropical seeds and spices from our Vietnam, India and China plants. And this opportunity to combine together to create an end-to-end unique spice offering, which can provide a whole range of sustainable, natural, traceable, value-added spice -- retail spice solution to the largest U.S. retailers is really what brings us all together today. So let me give you a quick transaction overview. As you would have seen from the materials that we announced today morning, we are acquiring Olde Thompson, which is the leading private label dry spices and seasonings manufacturer in the U.S. for an enterprise value of $950 million. And what is really powerful about this combination is that it is right heart and center of OFI's strategy to become a value-added solutions provider to the food and beverage industry. And in this, it is transformative not only for one of our core categories, which is spices, as you know. But it also expands and creates a substantial platform for private label, which is one of the important areas of channel expansion that we had signaled way back in 2018 and have been building on for all other OFI products, including nuts, coffee, et cetera. So what this combination will do will not only create that end-to-end unique offering in spices in the U.S., but also create a substantive platform for our private label expansion across the entire OFI portfolio as well. And this transaction is valued, and we will talk a little bit more about it later on, is valued at Olde Thompson, or OT's, historical 2020 EBITDA of roughly $80 million. And on that historical EBITDA basis, this is valued at 11.5x EBITDA multiple. And that, as you all are aware, is a fair and reasonable price for a leading market player like this in the U.S. market today. But what's more critical and what has been instrumental in our going ahead with this transaction is the value in our hands and in the capabilities that we have to extract synergies out of the combination and looking at just their historical numbers and the synergies that we can add on a conservative basis, the transaction value is at 8.5x multiple, which is an attractive transaction for a combination of this kind. And obviously, it's a fairly substantive business currently with significant growth prospects on a stand-alone basis, apart from the synergies that I highlighted. So this will be earnings and margins accretive to the OFI portfolio as a whole and moves the needle for the OFI portfolio as a whole, both in terms of earnings from year 1 onwards as well as creating a margin uplift because the margins in this business are superior to the larger OFI portfolio margins as it stands today. And we expect this transaction to complete in Q2 by the end of June, and it will be obviously subject to customary closing conditions. So that is a brief overview of the transaction. And let me move to giving you a brief view on what is Olde Thompson. And this slide gives you a small glimpse at the kind of offerings that Olde Thompson delivers to the major U.S. retailers. And those of you who are either dialing in from the U.S. or have been to the U.S., you'll find this in the shelves, both in the Olde Thompson brand as well as more likely in the private label brands of the major retailers. And they do a host of dry spice seasonings, blends, single spices, blended spices across not just the formats that are shown here, which is in plastic jars or bottles, but also in pouches and sashes. So it has a capacity to offer retailers the choice in any form and format doing more than 2,500 SKUs of spices or supplying 2,500 SKUs of spices across the major retailers across the U.S. So Olde Thompson is a very old established family-owned business since 1944 and also acquired another large spice business called Gel Spice, which is, again, a family owned business, well-known in this in the industry. And Olde Thompson started and had business in California in terms of manufacturing setup. And Gel Spice was out of -- just outside New Jersey. And with the combination that Olde Thompson of buying Gel Spice, what we are now buying is what they call as OT West and OT East, which is a combined business that we are buying, which today is a leading player in the U.S. private label spice and seasonings segment with almost 1/3 of the U.S. peer private label market. And so therefore, it's a market-leading participant in this business on a combined basis. And like I mentioned, it's a full solutions provider. They source, formulate, pack and deliver to the exacting standards of the retailers with the kind of service levels that the retailers demand across the U.S., and they have also got relationships across many of the U.S. major U.S. retailers, which is because of the bicoastal footprint and their capability to provide a full solution across all spices. And that platform of the combination of Olde Thompson East and Olde Thompson West, the size and market position that they have, the capabilities that they have as well as the kind of customers that they service today is really the platform that we are buying and adding to OFI with this combination. So with that, I've almost talked about the whole investment rationale, which would be -- which is fairly straightforward and obvious here. But again, like I mentioned, I want to stress that this is right in the center of a core category for OFI, which is spices. It's in the right in the center of a channel that we want to expand in, which is private label. In the U.S. and all this is right heart and center of evolving consumer trends. And if you look at the consumer trends that this business is focused on and what our spice business is really building upon is the rising consumer demand for bold, authentic, natural, traceable taste and flavor in all their food. And all of us individually can relate to this, whether we cook at home, whether we go out to a fine dining restaurant, we go out to a fast food restaurant or buy from a grocery store or buy from an e-commerce platform. We are all looking to spice up our food choices, trying out new ethnic flavors, taste and flavors. And so this business enables us deliver those retail solutions across a whole range of spices that OFI was already dealing with but now can do so at a far more integrated manner, providing a full transparency across the chain to the retail customers. And that's really the key investment rationale making us a very unique, differentiated end-to-end spice solution provider to the U.S. retailers. It also, like I mentioned, creates a huge platform for us that we can leverage using their customer access, using our existing customer access, using our capabilities across the rest of the OFI portfolio to combine together, not just in spices, but in providing category solutions to all the retailers. So that is heart and center of evolving consumer trends on the basis of which we have created the refreshed OFI strategy. And this transaction enables us to accelerate that at a tremendous pace. So obviously, it's an opportunity, which is very rare to come by. The timing is opportune in the fact that the private equity owner of this business is looking to exit as most of the private equity players do. And the fact that this business is a business that we know for the last 15 years being suppliers to them, being the largest supplier of spices, it was just a perfect logical combination that we decided to participate in. And it has huge cost and revenue synergies, very obviously, in the raw material procurement side. We do roughly about 40% of the raw material procurement supply today and that can be expanded, obviously, right off the bat. There's a lot of logistics, manufacturing footprint, optimization we can do between their plants, in the U.S. between our spice plants in the U.S. as well as what we can do in terms of our supply business in India, Vietnam and China and Egypt. And so there is a significant amount of logistics and manufacturing optimization we can also do. So there's a lot of off the bat synergies that we can extract on the cost side and then the revenue synergies in spices and across the rest of the OFI portfolio that we expect to add to this business. And so all this put together, the complementarity of the 2 businesses and the kind of synergies that we can extract and the value that we can deliver to customers, we expect to drive significant earnings and margin growth through OFI. So off the bat, this is a very substantial business already, roughly $80 million in EBITDA compared to $700 million or $770 million EBITDA for OFI as a whole. So it's already a very substantive business in its current right, but it is expected to drive more growth both in earnings as well as margin uplift for OFI immediately post close and thereafter. And the last, but a very important part of the rationale is we are acquiring along with the assets and customer franchise a very experienced and expert and motivated management team, which will add to the talent pool of OFI and enable us, and we will be able to provide them a larger resource base, a larger canvas to expand not only their current business, but also expand OFI's larger business. And this put together is a compelling rationale, which has made us conclude this transaction today. So again, we have talked about the rationale of OFI bringing together the 5 business groups, which include cocoa, coffee, nuts, dairy and spices, and which are all in the -- right in the center of these evolving consumer trends, which is about sustainable, traceable, right for me, right for the planet, right for the producer. A lot about the health and wellness that is driving each of our choices in food, the taste and flavors, which is driving our charges in food and the kind of consumption occasions, whether at home or out-of-home that we all engage in. So Olam Food Ingredients was anyway dead center of these trends and Olde Thompson and the combination will only enhance our capacity to deliver on these trends. And so just, again, I did talk to you about OFI's refresh strategy when we met at the -- for our results presentation a couple of months ago. But just to kind of put in perspective, this transaction within the larger OFI's growth strategy. So the strategy for OFI simply put on the pages, we have 5 global leading business platforms, which have a set of common -- what brings them together as a set of common customers, common category and end-use applications that they service, common channels that they used to service these customers and common capabilities that we can expand at scale across this portfolio. And they're all sitting in the center of the consumer trends that I talked about. So that's what brings this portfolio together, brings it to life. And we are servicing some very large end user applications as a portfolio of products, which includes bakery, confectionery, snacking, beverage and culinary applications. And we are doing this across customers, whether they are the large global brands or the regional brands or the new and upcoming insurgent brands, whether they are the large retailers and private label space or they are the quick-service restaurants or foodservice outlets, the portfolio has the capacity and the capability to service consumer needs for each one of these customers. And we do that through differentiated sustainability and traceability solutions. We do that through supply chain and risk management solutions. We do that by combining plant science and product development capability and delivering innovative category solutions to these customers and then, of course, channel-specific solutions of like private label and foodservice. So in that strategy, the Olde Thompson acquisition obviously hits the spices space and provide support for expansion across the rest of the portfolio. Obviously, it's very strong in center in the culinary category and in the private label category, and the combination is really what makes it come alive. So this is right at the center of the consumer trends as well as accelerates OFI strategy. And this page typifies the link between this transaction and the larger OFI journey and direction of travel. So quick look at the overall why U.S. and what is attractive about the U.S. So U.S. spices market is a large market at roughly about $5.5 billion, which is growing at 4% to 5%, and this was even before COVID. So we have been very specific about pointing out these numbers on a '15 to '19 basis to show because COVID gave it a big tailwind. So we are looking at -- but even prior to the COVID tailwind, this was a large business, a large market, growing at an attractive pace at 4% to 5% within which private label segment was growing at 15%, which is very -- and even with that growth rate over the last 4, 5 years, it is still only at a 26% penetration rate compared to, let's say, Europe, where private label and spices are almost at 40% in all the major developed Western European markets. So therefore, it's a market which is attractive in terms of size, growth rates for private label and with enough headroom in terms of penetration. And because of the trends that I already mentioned, this is -- enables significant growth and we see this as something that is going to continue over time. And the other unique characteristics of the spice business and what the retailers are looking for is that the consumers, for them, it's a very nondiscretionary purchase. And people -- there is relative price inelasticity because whether it's a bowl of salad or stake that we want, none of us will really scrimp on the spices and the taste that we bring to that. So therefore, it is relatively price inelastic, it is a fragmented supply chain. So retailers are really looking for solutions in a market where the consumer demand is growing every year. So in that market, obviously, the OFI spice business is already, which we have talked to you in the past, has the back end strengths across the globe, across a diverse range of more than 20 product lines, onion, garlic, chilli, pepper, green chillies that we added on through the Mizkan acquisition earlier this year. And we are sourcing from 12 origins with manufacturing facilities across 5 places with more than 5 manufacturing facilities in the U.S. itself. So we have a global scale and reach. And to that, we are adding Olde Thompson's front-end capacity and capabilities with major retailers. And this is the complementary product portfolio with a strong history of partnering together over the last 15 years. And all this really gives us the kind of synergies that I mentioned in the past. So obviously, there is a raw material synergy across the product range that we can -- we expect to now supply through OFI's existing footprint. There's a lot of optimization that we'll do on packaging, on logistics, on warehousing, across the supply chain, right from the farm to the manufacturing plants and to the customers. And then there is the capacity to provide now fully sustainable, traceable offerings to the retailer, which is what their consumers are demanding and then being able to offer other alternative processing blends that we can now put together as an overall as OFI, which will provide additional seasoning solutions to the retailers as well. And that's a revenue synergy that we'll be working towards. And then there is cross-sell across other OFI categories as well. So we believe that there is, in quick succession after this -- after close, in the next few years, we will be able to extract potential EBITDA synergies of roughly $25 million to $30 million, primarily driven by cost synergies, and that's a very exciting part of the value that this can bring us to an already substantive OT business, which has substantive growth in the stand-alone -- on a stand-alone basis also. And so just summarizing the financial impact. OFI's current base is roughly -- this is on the basis of 2020 number that we have announced is about $770 million in EBITDA. And to which OT will bring in their current EBITDA, which is around $80 million in 2020. And on top of that, we'll layer on the synergies, that I mentioned on the previous slide, of roughly $30 million. And then there is continued growth, not just in the -- in OT's current stand-alone business and the kind of revenue synergies that the combined OT/OFI business will also unearth, not just in spices, but across other categories. So this is going to have a significant earnings and margin accretion for OFI's current business immediately upon acquisition, but also over the next few years, as we build and develop and deliver the larger OFI strategy. So what I'd like to leave you with before we move on to questions is very excited with this transaction of being able to combine and create a new partnership, which accelerates, which is right at the heart and center of our strategy and accelerates our growth capacity. It significantly improves our competitive position in a core category and in a channel that we are investing behind. It's obviously a company that we know and a market-leading participant, which will combine and create a better position for OFI and certainly offer a very unique and differentiated capacity to all our customers. It's got tremendous synergy potential and expect it to be really moving the needle for OFI immediately upon acquisition, upon closing, but also in the coming years. And then, of course, all this will be delivered by a management team, which is motivated to join OFI and expand their canvas, expand their resource support and not only deliver what they have built, but deliver on a much bigger canvas going forward. So that is the power of what we believe OFI and OT can bring. And we are very excited to answer, excited with this opportunity. And look forward to answering any questions you might have, in which I will request Rishi to join me. Over to you, Hung Hoeng for the Q&A.

Thank you, Shekhar, for the comprehensive presentation. We'll now open up the line and the time for question-and-answers. We have participants on the conference line. Would the operator please open up the conference line for questions to come in, please?

[Operator Instructions] We do have a new question comes from the line of Daniel.

How will the acquisition be funded?

Rishi, would you like to take that?

So we expect that closing the acquisition to be funded by a combination of internal accruals and external borrowings.

Can we have the second question, operator?

[Operator Instructions] Moderator, there are no questions from phone line. Please continue. Sorry, there's new questions just came in, [ Phil Magic ] from WestPac.

So the question is in relation to the re-offsets concurrently being planned. So with acquisitions might be, what would be the impact, if any, to the reorg plans that are still ongoing?

Right. If anything, this acquisition signals our intent and capacity to execute on the refreshed OFI strategy, so as you're aware that OFI was created in January 2020, putting together the 5 businesses that I talked about earlier. And that reorganization, running as one operating entity started and has been -- has started 15 months ago. And so the reorganization into an operating entity has happened. What is underway is really the process of separation and carve-out, which is in all of Olam activity, not just for OFI, but which will separate and carve-out independently OFI, OGA and OIL. And that's an activity that's progressing right now, which will complete by the end of the year, by end of December. And so we don't expect this transaction to impede that process. So this transaction is really to reiterate heart and center of OFI's refreshed strategy. OFI is already reorganized into a separate operating group and is running that business in that form. And this will only accelerate our ability to deliver on that strategy going forward.

Can we have the next question from the conference line?

[Operator Instructions]

While waiting for the questions to come, those who are on the webcast, you can also put in your question on to the webcast then we take that question as well. If there are no questions on the conference line, I'd like to move on to the questions that have been posted on the webcast. There's also a question related to funding. Recently, Olam has raised SGD 150 million from perpetuals. Are any of those proceeds going to fund Olde Thompson? Should we expect Olam to be levered by more than 1.7x post the completion of this deal? Rishi?

Any funding that we raise is not specific to a transaction. That is for the normal course of business. And like I said before that this acquisition is expected to be funded at closing with a combination of internal accruals and external borrowings. Coming to the aspect of gearing, so assuming that this transition was completed at the end of 2020, we would have had a pro forma gearing off of 1.91x, which is also within our stated ceiling of 2x.

Thank you, Rishi. Also another question for you as you are also involved in the reorganization efforts last year and this year. Has the treasury and financing department is set up at the OFI level?

As you're aware, we are in the process of the reorganization. And as we move forward, right now, we still operate as one treasury and an organization, while operating groups are independent. As we move forward with the reorganization and the potential demerger that was announced early on, we'll have separate teams operating in the operating groups.

Thanks, Rishi.

Probably, I'll just add on that as we expect the carve-out and separation to complete by December, as I mentioned, so subsequent to that, each of the operating groups will have separate functions driving them. We'll be looking at shared services for some specific areas like IT, which will be shared. But apart from that, the operating groups will be -- are being set up to run independently. And certainly, post demerger, that will be what would be expected of the companies. So by the end of this year, treasury and all other functions will all be set up to run independently within the operating groups.

There's a question for you, Shekhar, with regards to the expectation that the first year's earnings will be margins accretive to Olam. So does this factor in any synergies? Or is it just purely the $80 million stand-alone from Olde Thompson?

Yes. So the great news is that just their historical numbers, would be accretive to both earnings and margin and create a margin uplift because it's a higher-margin business compared to the rest of the OFI portfolio. But we also expect synergies to kick in and some synergies will kick in. And then there will be the normal stand-alone business of OT, which will also grow. So we, therefore, expect the year 1. And of course, this year, we will not get the full value of the business that we might get 5 or 6 months of earnings and margin accretion only. But on the -- if you take a first 12 months post closing, we would expect it to be accretive, even on a stand-alone basis historical -- historical stand-alone basis as well as with the additional growth and synergies that we expect from the business to start accruing from first year onwards.

The next question is on the financial performance of Olde Thompson. Are we able to -- are you able to provide the revenues and net profit for 2020? Rishi?

This is -- as you are aware, Olde Thompson is not a privately -- publicly listed company. The numbers that we have quoted on, that they had a 2020 EBITDA of $80 million, which is what we have shared as part of the announcement.

Thank you. There are no more questions on the webcast. Can we take some questions from the conference line, operator?

[Operator Instructions] There are no more questions from the phone line. Please continue.

Okay. We just got a question that comes through the webcast. We understand that the demerger is subject to the successful IPO and will be concurrent to the IPO. Is the understanding correct?

Yes. The demerger and the IPO is expected to happen concurrently. And as we have indicated in February, we expect that post separation and carve-out by the end of the year, we expect to be ready for a listing in the first half, most likely Q2 of '22. The exact timing of a potential IPO is -- obviously remains uncertain and subject to market conditions at that point of time. But we will be ready internally that -- and therefore, the demerger and the listing is likely to happen concurrently sometime in the first half of '22.

There's a question on, what's the future plans for OFI? After this acquisition, are you planning for more acquisitions? Or are you going to take a pause and then consolidate?

I don't think we start with a plan for acquisitions. So I think what we have is a clear plan within each business, within each category, within each region on what kind of growth options that we want to back. Some of them are greenfield and organic and some of them might be inorganic on which timing is always uncertain and not in our hands. So as part of the 5-year plan for OFI, we have a clear view. We see significant growth opportunities, and we have been very deliberately and in a very disciplined form seeking to invest behind these opportunities. So over the last 6 months, we have announced some specific greenfield opportunities that we are backing organically, which is a soluble coffee plant in Brazil and a New Zealand dairy processing plant. Those are investment that we are making on an organic basis. And some parts of the acquisition opportunities that came our way was the chili pepper business of Mizkan and now this business. And if we get attractive opportunities, we would have the appetite to do that, which are in -- but the important thing for us would be that it has to be on strategy and this has to support OFI's capability-building agenda and growth agenda going forward.

Operator, do we have any questions outstanding on the conference line?

There are no more questions for the time. Please continue.

The next question is on changes post the carve-out. Should we expect to see some new minority investors at OFI level by end 2021 after the carve-out? And will we see more investors coming through during the first half of 2020?

We can't speculate on that, and it will be left to the investors to decide when and how, at what point of time they want to invest. But what we hope is that based on the plans of OFI and the demonstrated track record of OFI that we have now got for the last 4 years and what we expect to deliver on in 2021, we would expect all investors, minority or otherwise, who are currently invested, to stay invested and hope to attract new investors, again, pre and post listing in OFI. So we think we have a very exciting business, which is a market-leading position already. But the kind of opportunities that we have opened up by combining these businesses together within the OFI banner throws up even more exciting opportunities, which we think will be interesting and valuable for all investors now and going forward.

Right. There's a question for you, Shekhar. The question is on how does -- how do the private label channels operate? Do they approach Olde Thompson for specific products and specifications and subsequently distribute on behalf of the private labels or do the private label do the distribution themselves? Can you talk about how the relationship between the private labels and suppliers like Olam for the ingredients work?

Probably useful to define private label. So it's been not a very recent phenomena. But across categories, large retail chains have chosen to constantly look for specific categories and specific SKUs on which they want to put their own label. So as you know, when you walk into a grocery store, we have many branded food items on the shelf. But we also see items which are in the brand of the retailers, so NTUC FairPrice or Great Value kind of label. And that's what is loosely called as a private label or a store label in, let's say, within the industry. So retailers decide which categories they want to put under their own store brand. And then they reach out to suppliers depending on who are the cost competitive suppliers, who are suppliers who can offer that kind of a range of products, on a -- with assurance and quality and food safety, sustainability, traceability, whatever be the requirement, specifically. And then they pick -- the suppliers deliver it and consumer packs and the retailers display it on their shelf. It could be brick-and-mortar shelf or now most retailers also have online platforms. And they will then put them in their own store brands and then market them and distribute them. So as a private label supplier, what you're effectively doing is packing these solutions and this could be the spice jars that you saw, this could be we pack roasted cashew nuts or mixed nuts or instant coffee into various packs, bottles, jars, tins, pouches. And we deliver it to the retailers and the retailers then distribute across their stores or their online platforms. That's how it works.

Two more questions. So the first question relates to the shareholding structure of Olde Thompson. Can you talk about that? And the second question is, do you intend to sell Olde Thompson's products outside the U.S.? And if so, which markets will you target?

So to answer the first question, so Olde Thompson, like I mentioned, is a very old family-owned company, which was run by the Shumway family. And Jeff Shumway, who was the Executive Chairman and CEO and ran this business for the last 30 years, had brought in private equity 3, 4 years ago, which was a private equity fund in North America called Kainos Capital. So at this point in time or before this acquisition, Kainos Capital owns 75% of Olde Thompson with Jeff and his family owning 25% of Olde Thompson. Olde Thompson had also acquired post PE capital coming in, the company Gel Spice, which is now fully integrated within the Olde Thompson fold and, therefore, called Olde Thompson West and Olde Thompson East. And so we are combining, we are buying the combined Olde Thompson and Gel's business from Kainos Capital, which owns 75% of the combined business and the Shumway family, which owns 25% of the business. But we are buying 100% of the business and taking on the management team, which is a professional management team, which ran this combined business together. So that was point number one. The second is, as far as the products are concerned outside of the U.S., we certainly think there's possibilities for that, both in terms of exporting out of the current facilities in the U.S. because there are many of these retailers that today Olde Thompson services and many others than OFI services who are global retailers, and they have operations outside North America, South Central America, Europe and Asia also. So we would certainly like to offer these solutions. But that might mean additional manufacturing investments are reorienting our manufacturing footprint to other parts of the OFI footprint in Europe and Asia from where we could deliver similar products to retailers in this part of the world or in Europe. So we certainly expect that to the private label business to grow, and we are investing behind that in Asia, in Europe and North America. But whether future exports happen out of these facilities that we are acquiring or they happen from any of the larger Olam or OFI network, that remains to be seen and will depend on the cost economics of that.

Just got the last question that we have just received is about the business outlook for OFI and in your sector. What is your expectations for the rest of the year and into the early part of next year, considering the global economics and also the lingering COVID-19 impact?

Right. So that's a lot of questions. So probably we'll break it up. Maybe the last 15 months, ever since OFI came into being, have been tough not just for OFI, but for the entire world. And so the first 6 months, there was a lot of handling -- understanding and handling the impact of COVID, ensuring employee safety first and then employing the -- ensuring that the supply chains remained intact, ensuring that we could take care of our customers' requirement, et cetera. The first 6 months of last year was tough. But you would have all seen when we announced the results for OFI and the larger Olam Group last year that we saw good trajectory in the second half for OFI with almost a 40% increase in earnings year-on-year in H2. So that trajectory was, of course, very pronounced because we are coming off a big fall in the first half that we saw. But we are -- based on the trends that we have seen in the first 3 months, we believe that food consumption has not got hit. There are pockets of demand destruction and with changing landscape of lockdowns and shutdowns in different parts of the world. Obviously, consumption -- there are consumption is getting hit in different parts of the world. But on an overall basis, demand has been still robust. It might have moved between -- from out-of-home to in home. But overall demand for most of our products remains quite strong, except some pockets that I talked about. And then -- so that's good news for us. And we are, therefore, seeing a lot of business coming our way from existing customers. We're also seeing a lot of flight to quality at the consumer level where they're going to -- everybody is going back to brands that they know and recognize and the trust over long periods of time. And that's true for customers also in terms of the suppliers that they're going back to. So that's also bringing business our way. There are obviously lots of supply disruptions and the conventional supply disruptions of weather, et cetera, still remain. But there's also COVID-linked supply disruptions, whether it's, again, in areas where there's lockdowns, farming seasons are getting disrupted because of lack of availability of labor, inland logistics has got stuck because of lack of availability of drivers for trucks. And then in the last 6 months, as most of you would have seen, there's a lot of problems on the shipping logistics side, especially in containerized traffic, which has got disrupted because of displacement of misplacement of containers where there is no demand and shortage of containers where there's a lot of demand across the globe. And so there are some very active supply chain, supply-related and supply chain-related challenges that we are having to contend with some COVID linked and some otherwise, which are causing some disruption in different parts of the world or certainly causing some delays in different parts of the world. But notwithstanding these uncertainties on COVID, which still remain, and as you know, unfortunately, while there's a lot of positive optimism about vaccinations and the speed of vaccination in various places, there are also second and third and fourth waves in different parts of the world. And so that is something that we're watching carefully. And in all cases, we are -- we stay committed to first ensuring the safety of our employees, the safety of the communities where we operate in, supporting the supply chain and supply chain partners that we work with and ensuring that we manage this crisis, delivering continuing to stay in business and continuing to deliver value to all our customers. So that is really what we have. But I'm hopeful personally that this will pass, and there'll be an uptick in demand because there is certainly a fatigue setting with all consumers who want to go out and eat and who want to go out and spend. And we think that there will be, as things open up, as we get over this pandemic, we will see a boost in demand, which will be hopefully very useful to our business. So we are quite friendly and optimistic about the prospects for the business in this year and going forward.

Thank you, Shekhar. Operator, are there questions on the line now?

No questions at this time, please continue.

There are no more questions from the conference line, and that was the last question also from the webcast. If there are no closing comments, I would like to bring this session to a close.

Thank you so much for joining us at this short notice. I hope we have been able to convey our excitement and the opportunity that this partnership offers to the combined OFI and OT teams. And please stay tuned for further news on this front and for the news on OFI's exciting new journey forward. Thank you again.

Thank you.

Thank you.