Pakka Limited (516030) Earnings Call Transcript & Summary

Good evening, everyone. Welcome to the investor call for the first quarter of the financial year '24-'25 for Pakka Limited. I'd like to introduce our team first, and then we'll move on to the presentation. [Operator Instructions] I'd like to introduce our leadership team, Mr. Ved Krishna, he's the Vice Chairman for the company; Mr. Jagdeep Hira, he's the Managing Director; Ms. Neetika Suryavanshi, she is the CFO; and Mr. Satish Chamyvelumani, he's the Business Head of the Compostables Division; Mr. Ramjee Subramanian, he is the Innovations Head; Mr. Sachin Srivastava, he's the Company's Secretary. I am Pranay Pasricha, the Brand Head of the company, and we'll start the presentation now. I'll just share my screen. Sorry correction, Dr. Ramjee Subramanian, he is our Innovations Head. We will start with a short company video and then we'll move on to the presentation. This is an introduction of our company and what we are doing. [Presentation]

Thank you for watching the video. I'll hand over now to Ved to go ahead with the presentation.

[Foreign Language]. First of all, apologies that I'm in a car. I had to do some travel. It's my 16-year-old daughter's birthday and when she asks you to take her shopping, then you can't refuse. So that's what happened suddenly. So anyways, I'll attend the call from the car. Yes, Pranay, we can move ahead. I'm going to start with the key international updates. And then, of course, my colleagues will take it forward again. So again, lots of movement on the international side. We've been hiring the team significantly. As you see, the project lead, community lead, sales support, all those people have been hired more than that. Pranay, next one. We have tied up for exploring institutional catering in the U.S. market. A big achievement here in 2 positions, which are absolutely critical to our leadership. Our Group CFO and also our Chief Technology Officer have come on board, which will make a big difference as we go along. Again, we've started working on the equity funding on the Kawok project and investor presentations are on way. We have done a significant amount. There's interest that is rising. And hopefully, in the next 2 months, the equity round will get closed. Again, U.S. business launch planning continues, and we are creating a road map to launch our products within this quarter. We've also started initiating paper sales, which was not part of the plan earlier, but now we are also going to take that forward. Okay? Over to you, Pranay.

Yes. Over to you, Jagdeep, sir.

Good evening, and [Foreign Language] to all. I would like to take you through the Indian business update. The key highlight for the first quarter had been on the new product development. We have commercialized high-strength paper, commercialized almost 200 tonnes during the first quarter. And 2 new designs have been produced on the molded, which also has been commercialized. On ecological front, we could further reduce on the water reduction -- water consumption by around 3%. On the export, we are going heavily. 1% on wrap and pack has been increased from the last quarter, making it to 29% of overall volume. On the financial updates, top line surpassed the last quarter results against INR 98 crores, we did INR 99.6 crores and the bottom line also surpassed the last quarter figures against INR 15.64 crores, we did INR 15.88 crores. We are working heavily and the team is on board with almost 40 team members on the project team working day in, day out on the Project Jagriti and we hope to commission this plant by end of '25. PM4, we have selected the European pioneer supplier, Allimand France. Pulp mill, again, we are shifting to ECF, which is elemental chlorine free bleaching. On the recovery side, we have gone with the OEM, which supplied our full recovery island in 2006, and had gone with the same supplier. Power boiler, again, we tied up with ISGEC. We had shook hand with the ISGEC, order to be followed. And this is the update on the Jagriti Project, hoping to commission by '25 end. So I'll request Satish to take it forward to give you a glimpse of compostable.

Thank you, Jagdeep. Good evening, everybody. We have been facing a lot of headwinds in the market. I think we discussed this even during the last call. We dropped the prices a bit to catch up with the market. And again, the competition has dropped prices further, which is resulting in a price war. We are still maintaining the pole position on the brand. So everybody continues to look at our pricing, our products and continue to follow the trend, which is not resulting in a very positive number for us. So we are continuing to face a lot of headwinds that's how I would want to put it. And that is also because of... [Technical Difficulty]

On the sales strategy, I'll take it over. I think the signals are weak for Satish. On the sales strategy, we are more focusing on D2C segment, which is a high potential through e-commerce. We are exploring -- again, we are going ahead on semi metros where till now we have been focused on metros. So new product, as I stated earlier, 2 products -- Satish, I'm taking over, your signals are weak. So new products have been launched. [Technical Difficulty] So we are sorry for the inconvenience. Two new products have been launched, as I said, Chaucer and Bowl, already commercialized during the quarter. We are also going ahead with exporting our products to Middle East. Partners have been selected. Partners are on board, and we look forward for increased export volume on molded products. As Satish mentioned, we got ahead on the top line and the bottom line for the first quarter and hoping to surpass last year's performance during the second quarter quarter-on-quarter basis. But as of now, the situation has been a bit dicey on the pricing and the volumes as well. So against INR 14.67 crores, we did INR 14.51 crores, but we got a hit on the low volume sale of INR 41 lakhs during the first quarter. So I'll hand over to Ramjee bhai for the innovation update.

Thank you, Jagdeep bhai. On the innovation updates in the flexible packaging, the trials, the beta trial for different product segments is in progress, and it's moving out in a significant positive way. And we are creating structures for non-metallized flexipack, in which we are looking from scaling it up from lab to pilot, and there, the barrier optimization is a significant work, and that is in progress. And we are also evaluating the various coating technologies, which will help us towards the barrier optimization. So that's where the flexible packaging innovation is in progress. Next one, please. On the delivery container side, we have -- the target is to have a leak proof and non-soggy delivery container and there we have a prototype, which is validated and it's successful, and we have done all the studies in that at lab and smaller scales and now we have to -- we are looking for pilot scale trials and scaling up is the progress, which we'll be taking up forward this quarter and completing it. And the next one is on the cutlery. There, we are looking at normal cost-efficient recipe, which is heat resistant and there the prototype is we have completed again and we have been successful in creating the prototype cost effectively. And the market evaluation and the manufacturing readiness will be completed by the end of this quarter. And the last one in terms of beverage cups, the beta trials and the preparation for launch has been completed, and we are now -- the launch is planned. And as we speak, we are into the manufacturing trials, and the first manufacturing batch is in progress and the launch will be in the quarter 2 of this year. And that's the innovation updates. Over to Neetika.

Thank you, Ramjee. Very good evening, everyone. We have the key ratios here or the key performance ratios here with an incremental denominator, the returns have been reflected here. As -- there are 3 points that I would want to mention here. For FY '24-'25, the numbers have been annualized and hence, the annualized numbers are here and estimated. Second, the source of the industry average is data from screen up, and we did not have a direct competitive -- information on the competition in the compostable food packaging division. Hence, we have taken averages from the food packaging industry. Those ratios have been marked against our ratios. And just to specify that because it is a seasonal business that we operate in and March is normally the peak of utilization of limits, the debt here has been -- includes the working capital as well. Pranay, I request you to move to the next slide. And I would like to reshare the welcoming news that we have been -- we have successfully raised the equity component for our project funding. We have issued 54 lakh preference shares and 36 lakh warrants. 75% of the warrant money shall be called upon as and when required, and this will be the new structure and the percentage holdings. I'll hand it over to Ved again for the next slide.

Yes. This is the final slide in terms of the commitments that we had made for the last quarter. The exports initiation has been taking steam, and we've, of course, got our Head of U.S. business now, and he is building momentum. The orders for metallized solutions for pilot trials again being initiated, as Ramjee talked about it. And of course, the living solution has been finalized, and we are going to start implementing the delivery solution within this quarter. The complete analysis and business roadmap building for U.S. is again underway and I think in the next month we are planning to do a more detailed analysis. And again, I talked about leadership development, and we are already underway and I think I announced a lot of different additions that have happened to the team in this last quarter. And I think now more or less, we are set for going for the targets that we had set at the beginning of the year. Next one, Pranay. So -- but looking at this quarter now, our commitments to you are to initiate sales in Americas. This is something we've been working on. We are starting to build a sales pipeline for Flexibles and of course, we will launch our delivery -- new delivery solution. We have done an analysis for complete business plan and creating a road map now for Americas. And our organization structure continues to grow and stabilize, and there is a strengthening of operating model that is happening as we scale. Lead investor finalization in Kawok is to be taking -- should take place this quarter and the ordering for the Jagriti Project will be completed, while we will also start initiating ordering for the Guatemala or Kawok project. I think that's it from us. Happy to have questions. I apologize in advance. I may have to leave in 15, 20 minutes, but I will at least stay till then. Look forward to your thoughts. Pranay, over to you.

[Operator Instructions] Mr. Aman Soni, you can ask your question. Okay, I'll just move on to the next question. Mr. Mahesh Atal, you can ask your question.

So I'm fairly new to this company. Sorry -- excuse me if I'm asking some basic things. So long back, we had -- if I'm not mistaken, we had some tie-up with Zume. That product where exactly we are particularly with that tie-up? And also recently, we have done this QIP, right? So what was the entire purpose behind we're going for fundraising? Because if you are so confident about our business growing up, then I think internal accruals would have been suffice. So I just wanted to know where exactly this fundraise will go in the future.

Satish, I'll take both of them. I know you would probably be better at Zume, but I'll take it because the second one is more for my side. So Mahesh ji, we never had any tie-up with Zume. Zume did approach us a while back. But thankfully, we didn't have any tie-up and now the company has wrapped up. So anyway, it's a good idea not to have had any tie-ups with Zume. In terms of the fund raise, we are setting up a project about INR 700-odd crores in India. We would have loved to have the internal accruals that could have sufficed, but our total top line right now is about a little over INR 400 crores. That will not give us enough internal accrual and hence, we felt that it is better to raise about INR 200-odd crores and we raised a little higher, INR 250 crores, INR 244 crores to be precise, from equity and the rest from debt. This project is for building our flexible packaging capability. The IPs for compostable substrates that we have been launching, Ramjee, my colleague talked about those products and we are building a certain pipeline for that. And this will be a huge commercialization that will take place from our side in the next 1 year, 1.5 years. I hope that answers your questions.

One more question would be on the -- this fast delivery space, which is growing up like the, Blinkits, Zomatos of the world. So how are we going to -- I mean, part of that particular supply chain of theirs, or how exactly we are looking in that direction? I mean, what are we going to do or what products are in line for those -- that industry particularly?

Satish, if your signal is good, go ahead.

Yes, yes. I'm the sitting in a plant. I don't know why the signal got broken the last time. So there is a two-part answer. So the first one is quick commerce. Are we growing along with the quick commerce? The answer is yes. What used to be about 5% of our entire revenue for CHUK from D2C is growing about 15% to 20% now. And we continue to capitalize on the growth of Zepto, Blinkit and Instamart to reach customers directly, right? The second part is what are we doing with the delivery companies, Zomato and Swiggy. As Ved mentioned, we are coming up with our next set of delivery solutions, which are expected to perform very well with the current delivery conditions, and this is expected to be launched over the next 2 to 3 months.

So will this be cost competitive with the current things that they are using? And whether we have certain approvals from them?

We need to -- Pranay, we need to move to the next question. Otherwise, we won't finish this. So Mahesh ji, you can hold on for the next round. As Pranay said, 2 questions per person.

Mr. Hiren patel you can go ahead with your question.

My question is mainly on the product demand side. So in earlier meetings also, as it was rightly indicated by Ved sir that obviously, unless and until 2 aspects of this product, performance as well as the cost is not being matched up, which affect the product, it would not be able to catch the demand. So my question is, obviously, performance which will be driven by Pakka's ability to innovate the product. And so first question related to performance that we have seen that like for CHUK product, we have been, I think, in last 8 years that we are using this particular -- trying this product, but we have not been able to see any significant impact on the bottom line, maybe because of the cost part with reference to existing product. So when can we expect this performance or based on the current R&D progress, when can we expect the performance of these particular products for mold as well as the flexible packaging to catch up with the existing product? And any guideline on that part? And the second on this cost part. So the question is that once this Jagriti Project and this capacity would be built up, whether we would be able to bridge the gap with the existing product, may not be possible to exactly match, but how much percentage we would be able to match this gap? So just I would like to understand based on the current -- on the performance as well as the cost part, when the envisage, this gap would be bridged?

Satish, do you want to take the first part?

Yes. So the -- especially on the molded products, the next set of innovations that are coming out, as I mentioned earlier, we expect them to be out in the next 2 to 3 months, which is going to help us out a lot in terms of market performance. The product performance to comparable products in the market, we definitely are up there, right? If anything, we are the best performer in terms of the actual physical performance, right? Ramjee, do you want to give a time line on Flexi? I know there was a second part...

I can tackle the Flexi. Okay. So Hiren bhai, going forward on the molded side first, we already turned into profits last year. This quarter is an aberration. So what is very interesting is that looking at us and the push that we have done, about 50 to 60 manufacturers have come in. And they are all trying to compete cost-wise, which is really interesting for us because it's very difficult to compete on cost with us, but I think people are continuing to bleed and this will be a temporary kind of lull, and we'll have to face that storm. And that's fine. We are looking at our own strategy in terms of some of the products Satish mentioned and of course, in terms of markets, where can we go where the value for the products will be there. In terms of the -- and that's the foodservice business. In terms of Flexibles, early days, but you're totally right. The first product was at a significant cost, almost double of what the buyer uses today. We've already gotten out our version 2 of the product, which is at like almost 30% to 40% lower. And now -- once we get into the company, like when we start producing, we are going to be able to get it down to another 30%, 40%. So we'll just have to wait for that. And I'm sure this is a certain trajectory that we have to go through.

Okay. And if one more question is allowed, it would...

Sorry, can you just hold on because you already asked questions. Please come back. Yes. Mr. Kushal Chauhan, you can go ahead with your question.

So my question is like, if I'm not mistaken, you are telling that you will do CapEx of around INR 2,600 crores in next 3, 4 years. And at the same time, in your investor presentation, you are telling about INR 8,000 crores revenue potential. So can you give a breakdown like how you're going to achieve these numbers?

Absolutely. So the INR 8,000 crores or INR 1 billion target is for 2030. And the plan for us now is to build the India site, which we are investing right now that comes on stream late next year or early 2026 and that will lead us to about INR 200 million to INR 250 million, about INR 1,500 crores -- a little over -- at least over INR 1,500 crores. And then we are working hard on establishing our site at Guatemala and the Americas business. That leads to about INR 500-odd million. So the gap is INR 300 million, and there are plans for further innovations and additional products through partnerships for bridging that INR 300 million gap. So these are the 2 big ticket investments that we are doing. The rest is more inorganic in nature that we are bringing out. And of course, we are investing very heavily in R&D and enabling various products to come in, which we can co-manufacture, et cetera. So there is a clear road map towards that, and we are definitely very keen to move in that direction because that's the only way we can make the difference that we are trying to make as a company and citizens of this planet.

Great. Great. I hope we can achieve that. My last question is like what is your EBITDA margin on flexible packaging products?

We are not looking at margins right now. We are looking at sales. So I would say even if it's at 0 cost kind of -- EBITDA will be there. But overall, if you look at a profit margin, it will probably be close to 0. So I would say we are not that fussed about margins right now. The key will be to introduce the product in this next couple of quarters to push hard. In fact, today also, we were in a meeting to look at strategy on how we can start pushing 2 of the products that have already been proven now in the market. So we're going to go for a harder push and the idea is application. So I don't think we are expecting to earn margins from this product this year. That said, from next year onwards, once it's more established and we have regular customers, the margins will start coming, but this year is all about establishing ourselves.

Mr. Aman Soni, you can go ahead with your question.

Given the decline in the company revenue from INR 408 crores in 2023 to INR 405 crores in 2024, could you elaborate on the primary factors contribute to this decrease? Are there specific challenges within the industry that the company is currently facing?

Neetika?

Sorry, you have to repeat the question.

Reduction in the top line. What is the reasons for that?

So reduction in the top line, if we look at this quarter has primarily been a factor as in the...

Sorry, it was for the last year, 2023 versus 2024.

Exactly. That's primarily driven by 2 things, which is NSR and volumes and almost in the same proportion. So that has been the key reason. We don't see any specific challenges, but it's more industry driven, and we are gearing up for that. In terms of EBITDA margins, you would have seen that we have actually improved. The operational efficiencies have gone up, which is primarily because of the product mix that we are operating in and also the improved COGS at certain levels and also some drop in the chemical prices. So going forward, we expect to maintain the same EBITDA levels.

Okay. And the company effective tax rate increased from 31% in 2023 to 36% in 2024. Do you anticipate this rate to be sustained or there is a possibility of further increase in the effective tax rate in the near future?

No, there will not be any -- any incremental changes to the effective tax rate, and that is primarily because of the Ind AS adjustments and certain expenses that are not allowed. We had to take some write-offs in March '24, and this is why you see the effective tax rates that high. But I would request you to just relook at the calculation. It doesn't go up beyond 32%. We've specified that in the notes, and we'll have the annual reports published as well, but you'll be able to see that. There's no further rate increase that I will see.

Mr. Paras, you can go ahead with your question.

Yes. I have just 2 questions. One is on Project Jagriti, as I understand, the project would probably come online somewhere around FY '26 early on. So it will have potential turnover of INR 1,500 crores for FY '27 is what I understand. Until that time, would it be safe to assume that the turnover would range around about INR 400 crores odd since we do not have any capacity probably to cater to the market. That is question number one. And secondly, on -- is my understanding correct that this loss on -- segmental loss on molded products is just an aberration for the quarter because last year we were profitable. Will we turn around on that one in the next quarter or so? So these are 2 questions that I have.

Yes, I would hope differently on the first one. We have numerous plans that we are working on. There can be -- it doesn't need to be organic growth all the time. So we have an amazing team. We are working on numerous possibilities of outsourced production, of co-manufacturing, of parallel kind of lines and newer products like you -- we talked about flexible packaging, at least that will give some top line. Satish was talking about co-manufacturing certain products. So I'm definitely hoping that there will be -- yes, there will be significant difference in this year as well. But of course, difficult to specify right now about that. And yes, I would also consider the molded fiber an aberration or the foodservices division. That's a sudden influx of material creating a disbalance. But in the end, it's our responsibility, and we feel that we need to do more when it comes to customer stickiness. We need to do more in terms of focused marketing. All those things are being tackled. Satish and his team are very, very actively looking at it, and we are definitely hoping for a quick change to that as well.

Mr. Vignesh, you can go ahead with your question.

On our expansion that we have planned in India, just to get an idea, is there any soft commitment from any existing client or any other client that we have tied up with for this facility? Or how are we planning to -- sorry. So is there any soft commitment coming from any existing client or any new client assets for this new facility because the facility that is coming on the size is quite big, like almost 4x of what currently, so the revenue will be post full utilization. So just want to get an idea.

You mean in terms of offtakes, in terms of product offtakes?

Yes, yes. I mean in volume commitment or something like that.

Yes, yes. So there are numerous trials on right now with significant players and the idea is that by -- maybe by the end of this year, we see these things in time. So for example, if you think about a flexible packaging, which is used for all kinds of confectionery and snack products, there's a certain methodology to how customers try it. So there's things like shelf life. Now for shelf life, the customer has to keep it on the shelf for 6 months and then check. So there are numerous stages to the trials. So those have been taking place. And yes, we are -- the plan is to have very, very strong, not just commitments. We are already outsourcing and providing the product. I would say even sales before we actually start producing ourselves. So both will be there. Yes, the capacity is actually, Vignesh, not that large. We are going to be producing a little over 30,000 tonnes. That's very little. Unilever's small shampoo sachet that they sell for INR 2, INR 3 is 16,000 tonnes alone, just that one sachet. So it's nothing. The key is to be able to crack that market because once we do, then the capacity will be extremely small. But to your question, again, the work is on. And yes, the idea is that by early next year, we'll have sales and not just commitments, so beyond commitments.

So when you say early next year, you're talking about the fiscal year, right?

I was talking about calendar, but you can consider the fiscal, it's a 3-month difference.

Right. So what will the general ramp-up when it comes to this plant? I mean, how early once it gets commissioned, can you ramp it up the capacity?

Jagdeep?

Sorry, I'm on mobile and my network...

I'll take it. Don't worry. Okay. Go ahead.

So normally, what we emphasize is once we start the plant, it takes some time to stabilize. But first year, we take it around 75% of efficiency coming in and the next year would be above 90% next year. So there's a ramp-up time for stabilizing the machine and the coating.

Okay. Just one small question before I get back in the queue. What would be the cost of fund that -- for the debt we are taking for this capacity?

Neetika, do you want to comment?

Yes. So we would be targeting as low as we can. And specifically, we would be looking at something sub 9 and that's what we are targeting at.

Mr. Harsh you can go ahead with your question.

I am from Gujarat. [Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] share price is a result end of that. That is not our focus.

I'll ask Mr. Kushal to ask his question.

Yes. I just wanted to know like what are the current financials of Guatemala plant? And like where can you find these numbers?

No, we are not generating -- the Guatemala plant, we are trying to raise capital right now. So the total outlay of capital is $340 million, out of which $140 million is equity, $10 million is something that we are investing as Pakka Limited, the rest is coming from external investors. So those conversations are on right now. The plant only comes to stream late 2026, a year after Project Jagriti. So the results will only be available there. That said, we are looking at -- like in India, we are looking at introducing numerous products through co-manufacturing in North America. That work is on. And I think by next year, you'll start seeing some turnover happening.

Mr. Jeet Gala, your questions.

First thing, I just wanted to understand if the coating machine, which we are going to place at our Project Jagriti, is it going to be fully fungible between different applications like metallized, non-metallized? Or do we have to be very clear at the beginning, while the time of ordering that we are going to use that coating machine for a particular kind of an application because we are going to seed the market with a metallized grade of paper right now because that is what we've developed and we've reached a stage of doing some work and start seeding the market. And then with respect to cost reduction, like Ved sir already mentioned that we've already brought the cost down by 30%, 40% and still that sweet spot is another 30%, 40% away. So is that largely only a function of economies of scale and everything around the lab work is done and dusted or still a lot of work still needs to be done even on the R&D front? So that is my first question. And second question, if you can just give us a breakup of INR 675 crores for Project Jagriti split into how much is going to be funded interest, how much amount is going towards pulping, chemical recovery plant, power plant, base paper machine, coater machine? And finally, I think in a recent TV interview, you mentioned about some money going towards R&D. So if you can highlight towards that also.

So this will be -- the recipe is under development. As we said, we came up with formulation 2 and then the formulation 3 is also being worked up simultaneously. The coating machine will be on a single recipe. So there, you can fine-tune, but it will be non-metallized recipe. As of now, we have developed our formulation 1 on metallization, further invented the formulation 2. The formulation 3 is already in the progress, which we have got -- the innovation team has got around 70% of achievement, one. Secondly, the whole of the machine will be off-line coating on a single recipe, which will be non-metallized coating.

Okay. And sir, we'll be seeding the market right now with the metallized or the non-metallized?

We would be seeding with metallized till we come up with non-metallized solution. And the cost is going to be -- go down, going away from metallized coating.

All right. And sir, we just give away our invention towards metallized. I mean, I mean, what do we do with the metallized finding then?

It's again, because if you see, as you rightly said and Ved indicated, we are still on the higher side of the cost. If we remain with those formulation, the cost is going to cut in with new formulation coming in, but not to the expectation of the customer. In case that has to go away, we have to come up with a solution, which is more feasible and practically possible with the coating technology suppliers.

Understood. And sir, breakup for Project Jagriti.

Jeet, there's a long list. I think we can connect offline to give you a glimpse of it.

It will also be there in our annual report coming out soon.

Mr. Sanyam, your question?

Sorry, I just -- we forgot to address one of your questions in terms of R&D. Yes, significant boost has been received because of this investment, and we will look to [Technical Difficulty] by investing a significant amount. We haven't listed amounts yet, but the idea is that we invest a lot towards R&D.

Mr. Sanyam, your question please.

So my question is to Mr. Ved. First of all, congratulations for raising the new funding round, and I hope this will -- this amount will go for the long-term planning. My question is a bit long term, just for an idea that by FY '30 -- '29-'30, if the things go south and like if you are not able to execute the Guatemala Project or the Jagriti Project, not in the way which we are thinking, then what could be the expected revenue? And if the things go north, like we have planned, everything goes by the planning, then what is the expected revenue we have targeted FY '30, like when all our investments are done, we are active. So the worst and the best case about FY '30, just a revenue idea, not for the profitability.

You're asking the wrong person. I don't ever have plan Bs. I only have a plan A, which has already been stated. Plan B will come if the plan A fails. But if I have a plan B, plan A will definitely fail. So there are no plan Bs. There is a singular plan that we have to head towards it. We are driven by a singular factor, which is to scale regenerative packaging to leave the planet cleaner. The only way we can do it is by scaling. And if we cannot raise Guatemala, for example, then we will look at other ways to inorganically grow to the level that we want to grow in order to have the impact that we want to impact. Like we are so blessed with an amazing set of people that there is absolutely no way that we are stopping. So that's not something that is happening with Pakka. So we are all a bunch of people who are, I would call them mercenaries that we are all on this mission. And with that, there is no stopping. We'll -- as our Chairman says, the only other option is to die trying. So that is what we are going to do.

So just an idea about the revenue of FY '30. What are you targeting if things go right, FY '30 revenue, what are we targeting?

We've already mentioned that a significant amount of time also in the video that we started with. The effort is to go towards $1 billion.

Aman Soni, your question.

Are we expect to maintain the current EBITDA margin for the next 2 years or any further changes?

We wish so too. It will be a forward-looking thing. We are working towards building in efficiencies, and that's what we've been doing in the past. Jagdeep, sir, if you want to add anything?

So I don't think so we would be happy sustaining those EBITDA margins.

Any specific number, do you want...

So let's move forward and we'll see those numbers coming up.

Ms. Manali, your question please.

So my question is like when you say that HUL requires 16,000 tonnes. So say, suppose a giant does not come in for a tie-up with us. So how many such small companies, like say, any premium company, say a Lindt or a Mars, how many such companies would be required to exhaust the sales, exhaust the quantity that we have or we are upcoming?

Great question, Manali. That's a discussion we were having today itself on how do we make sure that we really penetrate the market. And we are looking at it a little differently. The way we look at it is what is the substrate that we have created and where all can the customers succeed. So we've chosen about 4 to 5 segments that we are going to target with this product that we have currently now. And that's going to be a big push in the next 6 months. With that in mind, once we have scaled products. So right now, what is happening is that we are producing 1, 2, 3 kind of tonnes. It's a very low kind of number and that has to significantly change because the challenges also are different when you're making 20 tonnes and then when you're making 200 tonnes, there are different challenges. So that's what we are doing. The segments are huge. So for example, one of the current trials is with a big tea company. That's a much easier product. You can imagine a tea cover, tea bag cover. So that's a much easier product that we are targeting. But that's also significant in size. It's not small. When we look at chocolates and stuff like that, we are -- we have now begun discussions with huge chocolate conglomerates. We were not -- it was a very funny incident, Ramjee and I were together last week and a huge customer, again, had taken our product, and we are not even realizing this, but had tried it for ice creams. It's very interesting because they said, oh, this is your product after a month of being in the freezer. And they were very impressed. They were like there's only -- there was a little bit of watermark on top, but they said, we can work with this. It will be interesting. So there are numerous ideas that are opening up, but too nascent to say. Yes, I agree with you. If there is no large customer, and large customers, as we also realize, take a long time for their qualification. It's a lot of their reputation on the line. We do look at various numerous small -- not just small customers, but a variety of applications. So it will be a learning curve for us, but we are definitely hoping that this financial year will give us enough insight that we can give a more targeted clearer answer to you by next year beginning.

Fair enough. And also, I mean, I already asked that on the chat box, but so what I was asking was, so the produce of Guatemala, the bagasse itself and that of India would be different in terms of properties. So I mean, if there is, I do not know. I'm asking if there is. So how is -- I mean, are we working on both these products separately also to make the -- like going ahead with our formulation that we are trying to make? And if there is -- I mean, how much of a difference is it bringing on the product itself, I mean, in terms of what we are trying to achieve?

Super incisive question, and it shows your depth in the amount of work that you guys do. But yes, we have, of course, been testing Guatemala's bagasse. And to our degree or satisfaction, we find that the bagasse in Guatemala is much better than what we get in India, which has been a great thing for us. Again, Jagdeep and the team have done numerous studies for that right from the beginning. Even before we did the bagasse tie-up, we actually -- our Chairman was insistent, don't finalize this before you try the bagasse. So we had to get sacks of bagasse and take trials in India and get that right. What really happens is not in terms of the product efficacy. It happens -- it basically changes the cost configuration because we normally have to blend the bagasse with certain fibers. So if we are using 20% of certain kind of softwood in India, you end up using a little lesser in Guatemala, say, 15%. Or you end up the other way, you start making a stronger product on that side. So that depends on what is, again, the product that we are going to eventually make and what is the need of the market for that. So -- but yes, overall, the bagasse has been found stronger. The varieties of cane are different. They have significant -- we have very small kind of farm holdings. There, it's 2,000 hectares, one farmer. So the quality is much more homogeneous as well.

Right. So the reason why I was asking like in India, right now, while we were looking at other sugar companies, all of them have also started facing a cane issue where the seed variant itself had become a little fraudulent in terms of -- that's the reason we have had a lower cane crushing, et cetera, with all the companies. So does that change for us too? I mean, when they come up with a new product, new seed coming up, again, new properties, same, in India itself, and then there's a lower cane availability, how much of that impact comes to us?

Jagdeep is better at this.

So 2 things -- 2 questions, Manali, you have asked in a single question. One is availability. We are secured for 5 years, and this is a rotational contractual contract with sugar industries for the raw material. Secondly, yes, with the change in the seed, there are properties changes, but our technology is suited to get the maximum benefit, which is called cellulose to get out of the bagasse. So you may get a bit of a dealt in certain seed quality of the cane on the economy, but quality can be maintained as per the requirement.

Ved, can we take the last question?

Yes, I had planned to drop out, but it's too interesting to drop out.

Mr. Paras, your question.

I have just 3 questions. One is that you mentioned in the next interim until Project Jagriti comes in, some sort of co-manufacturing or outsourced manufacturing is possible. What kind of extra revenue potential and margins can we expect on that? That's number one. Secondly, all these projects, Project Jagriti and the Guatemala Project are multiple times of the current revenue that we are doing. What kind of risk or principal one or two risks that you see in these projects on a sustainable basis you expect or what kind of risk could be there in these projects? And third is, what is the ultimate equity stake that we want to retain in the Guatemala project eventually after getting investors in on board for Guatemala to kickstart and -- what is the equity that Pakka will likely hold eventually after all the dilution happens over there? So these are the 3 questions.

What was the first one? Sorry, I lost track of the first one.

Yes, the first one was in the interim that Project Jagriti comes in...

Yes. I remember. So again, as a team, we are driven by the goal for impact. So what we keep trying to do is that even if we are not growing organically, we keep trying to see ways to grow inorganically. And that's where the ideas around co-manufacturing, around outsourcing, around -- even our R&D is coming out with amazing products. So very, very interesting products, Ramjee talked about the new cutlery, I'm really excited about that. It's a very small product. In terms of turnover it won't be that high, but just the quality that we are trying to make is exceptional. So I feel that, that will continue. Exactly how much it will be, it's tough. We have our internal targets for sure. But I have one of the Board members sitting here in this call, and he's going to shoot me while I'm on the call. So I will not risk my life.

Any range possible, to mention here.

I won't risk it. I know I will be shot for giving any forward-looking statements. So I'll not risk that. What I can tell you is that we will try our best to do our best. In terms of risk, of course, there are risks, but what is life without risk. So that is what makes life exciting and interesting. I can give you 100 risk factors in terms of trying to...

Any risk which can take the whole company down. Broadly, these...

How many risks do you want -- how many risks do you want that can take the company down? I can give you 100 risks that can -- right from bagasse, like Manali said, there could be a disease in sugarcane, through to an earthquake, through fire and through to the market shifting entirely back to plastic, it could be 10,000. So -- but we are here to do our work, and we believe in the journey rather than the end result. So every day, are we doing our best work is the big question that we are going to ask ourselves. And of course, we mitigate risk. Like in Guatemala, we have a 10-year tie-up for raw material. We have a tie-up for operations with local manufacturer. We have a tie-up -- offtake tie-up with 3, 4 people now in Guatemala. So we cover those, but those are -- in terms of risk, there are no guarantees.

What is the coverage so far that you've got on the offtake of the capacity?

100%. 100% has been promised. So that's...

So contract sort of spoken. It's just operational execution is required.

Nobody will give you a contractual guarantee because the product is not out yet. It's a promissory note that they give. So sorry, what was your last question in your...

And the last question is on the ultimate equity stake that we want to retain in Guatemala.

So the effort is to not -- effort is to make sure that we remain management control. So basically, upwards of 50% is the target. I mean just now the target for us is 30% dilution and retaining 70%. But in the end, that all comes to who the investor is, what is the value they are bringing, how is it that the negotiations take place. It's a complex world that we are exploring, and it's on our competence and the way we are able to pitch and the way we are able to position the project. But all I can say is that we are going to keep trying our very best.

So the effort will be to control over there.

That's the only way we will work. We won't even take it forward if we don't have management control.

Thank you. Thank you, everyone, for your questions. Ved, a closing note from your side.

No, [Foreign Language], it's always a joy. I had said in the beginning that I'll last about half an hour as I am committed to my daughter today, but it was so interesting that I'm going to get a shouting from my daughter, but no matter that. But it was great to speak to you again. Thank you again for your belief in us, for your support and all your kindness. Thank you so much. [Foreign Language].

Thank you for joining this call.