Patanjali Foods Limited (PATANJALI.NS) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Patanjali Foods Limited Q2 FY '26 Earnings Conference Call. This call may contain certain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjeev Asthana. Thank you, and over to you, sir.

Thank you and good evening to everyone. And thank you for joining us today for Patanjali Foods Limited's call to discuss the results of Q2 FY '26 and first half of FY '26. I'm joined by the company's CFO, Kumar Rajesh, along with Mr. Priyendu Jha from the Investor Relations team and our IR team partner, Strategic Growth Advisors. We have uploaded the results collateral on the stock exchanges as well as the company's website for your reference. Let me begin by giving a quick snapshot of our performance. During the course of this call, we will be referring to stand-alone financials. This is the highest-ever quarterly as well as half yearly performance for the company on revenue as well as EBITDA and PAT levels. Our strategic focus over the recent quarters revolving around deepening our market presence, promptly addressing the evolving consumer behavior patterns and brand building has translated into a healthy performance for the quarter and half year's performance. The revenue for Q2 FY '26 stood at approximately INR 9,798.84 crores, with year-on-year growth of 20.95%. The total EBITDA came at INR 603.32 crores, translating into year-on-year growth of 22.17%. The total EBITDA margin was 6.13%. The PBT margin stood at 5.13%. The Q2 FY '26, the PAT has partially increased due to the tax refund of previous years. In line with our strategic vision to position the company as a focused FMCG enterprise, we have restructured our segmental classification this quarter. The earlier Food and the other FMCG and HPC categories have been consolidated into a unified FMCG segment to better reflect the integrated nature of our portfolio, operating model and long-term growth priorities. Our half yearly revenue from operations reached INR 18,564 crores with total EBITDA at INR 937.50 crores and PAT at INR 697.09 crores. The September quarter stood out as a transitional period for the FMCG sector due to GST 2.0. At an industry level, there was a short-term slowdown in consumer demand due to the GST rate revision. Wholesalers and retailers prioritized liquidating pre-GST inventory at higher prices and consumers postponed their regulatory pantry purchases. To counter this, the FMCG veterans deployed focused trade promotions and incentive schemes, ensuring that we maintain the market presence and the momentum. While the transition posed short-term challenges, it has laid the foundation for broad-based consumption growth across categories, reinforcing our confidence in the sector's long-term trajectory. At a company level, around 55% of the FMCG portfolio had a positive impact. The GST reform is likely to spur stronger volume growth, particularly across price-sensitive categories. On the demand front, at an industry level, the rural markets continued to outperform the urban markets. However, there were some early signs of recovery in urban demand towards the end of September, which is likely to strengthen as the year progresses. On the cost basket front, the September quarter saw palm oil prices increase 35% on a year-on-year basis and 20% on Q-on-Q basis, making palm oil more expensive relative to soybean oil. As a result, the palm oil imports fell to the lowest level since May '25, while soybean oil imports reached their highest level since July '22. Going forward, pricing pressure is expected to persist due to tightening global vegetable oil supplies and other geopolitical scenarios. Also on the domestic front, the unseasonal rains have impacted the crops and price thereof. Our performance continues to be supported by various evolving consumption patterns across India. Let me provide a detailed overview of our segmental performance for Q2 FY '26. For the Edible Oil segment, let me address that first. From a GST perspective, the rate for edible oils has remained unchanged, majorly being at 5%, which continues to account for approximately 2/3 of our current business. The segmental revenue was INR 6,971 crores, a year-on-year growth of 17.17%. One of the driving factors behind the surge in sales is strong brand building and deep market penetration. At 76% of the total edible oil sales, the branded edible oil continues to be the pillar for this segment. Driven by a strong marketing trust and impactful brand endorsements, including that of MS Dhoni, our flagship brands, Ruchi Gold, Mahakosh, Sunrich delivered robust growth during the quarter. The EBITDA margin was 3.53% on the edible oil portfolio. With year-on-year growth of 21%, the revenue for first half '26 stood at INR 13,653.72 crores with EBITDA at INR 364.89 crores. For the oil palm plantation business, I'll address this now. The quarterly revenue stood at INR 599.43 crores in oil palm plantation business, and the margin was clocked at 24.16%. In the first half of '26, the segment reported a revenue of INR 1,191 crores with an EBITDA margin of 21.17%. We believe that palm oil cultivation will serve as the next major growth driver for the company. Consistent with this vision, we have strategically expanded our area under cultivation through ongoing plantation activities. As of September '25, we achieved a significant milestone by crossing 1 lakh hectares of land under cultivation. In fact, the exact number is closer to 1,04,000 hectares. During the quarter, we participated in the World Food India '25 Event in New Delhi. This served as a platform to highlight our contribution expertise in the oil palm cultivation and crop information. Coming to the reclassified FMCG segment. Following the GST changes, nearly 85% of the portfolio is now in the 5% bracket, creating opportunities for stronger consumer traction and volume growth. The revenue contribution of the reclassified FMCG segment was 29.44% in Q2 FY '26 and 27.10% in the first half of '26. Our goal is to steadily increase this contribution and increase it to 50% of revenues in the next few years. Today, nearly 60% of our EBITDA is derived from this segment. With increasing FMCG revenue share, the EBITDA contribution is poised to rise significantly. For FMCG segment now, in Q2 FY '26, the revenue was INR 2,914 crores, marking a 34.3% Q-on-Q growth. The segmental EBITDA margin stood at 12.28%. The quarterly revenue from biscuits stood at INR 499.91 crores, reflecting a growth of 16.47%, driven by healthy sales momentum for emerging channels. Doodh Biscuit now contributes nearly 72% of the business segment sales. Our performance reflects the impact of sustained marketing efforts over previous quarters. We remain optimistic about the category's potential, reiterating our 10% year-on-year growth target on an annual basis. Ghee recorded strong growth during the quarter following successful execution of revised strategy. The festive period provided a strong boost to category performance of dry fruit, spices and condiments. During the quarter, revenue of textured soya proteins amounted to INR 159.42 crores. Nutraceutical revenue booked was INR 13.45 crores during the quarter. We encountered certain supply chain issues, which now have been resolved. During the quarter, we have collaborated with various influencers to promote our products. Recently, we launched products in the renal care category. The initial traction is positive. We believe that nutraceutical represents a significant growth category for the company. Coming to the comments on the outlook. The festive season began to build momentum towards the end of the quarter, signaling a positive shift in consumer sentiment. The direct and indirect taxation, coupled with government welfare initiatives and supportive macroeconomic trends are expected to provide strong stimulus to consumption across urban and rural India. In light of the GST developments, we anticipate a 300 to 400 basis points increase in volumes over coming months, resulting in higher revenue. This creates an opportune moment for the company to accelerate its growth strategy by enhancing market penetration and expanding distribution reach. Additionally, we aim to offer a wide variety of products across both mass market and premium segments, catering to diverse consumer preferences and strengthening our position across multiple categories by leveraging these favorable market conditions. We are well positioned to drive sustained growth and capture incremental demand across the country. I sincerely thank you for your continued support and trust in Patanjali Foods. With this, I conclude my opening remarks and open the floor for Q&A session.

[Operator Instructions] The first question is from the line of Sucrit Patil from Eyesight Fintrade Private limited.

My question to Mr. Asthana is, I have a forward-looking question. As FMCG and Food space gets more competitive, what is Patanjali doing to build a strong edge, not just through brand recall, but through something deeper that competitors can't easily copy?

Sure. I think it's a great question. Can I answer that? Hello, am I audible?

Yes, sir, go ahead.

Yes. So no, there are 2 sides. One is the question is a very good one. Look, we have always maintained that Patanjali stands for certain values, which is around the natural, which is around healthy, organic, towards wellness, ayurveda and everything that Indian stands for. We have 2 macro trends, which are supporting us, and then I'll come to the specifics of what Patanjali, why we believe that not only will we sustain ourselves, but we'll be able to grow and look beyond. So one is that this entire campaign as you're seeing from the Prime Minister of Atmanirbharta, of Swadeshi, and there is a big momentum that is gradually building up that we are witnessing has been very supportive of the overall -- the platform that Patanjali has. So if there was one company which could lay a claim to say that this is as an Indian company, as the entire sort of policy-driven initiative, we are right up there. The second is as a right to win to all the 5 elements that I spoke about health and organic and ayurveda and wellness, et cetera, again, Patanjali stands pretty much on top of that chain in terms of the right to win, it's pretty much there. Specifically, what we have been doing is that, a, in terms of the time to market, in terms of delivering on product innovation, the research and development that we have, the growth opportunity that we see in the spaces that we operate in is humongous one. Yes, there is a competition. Yes, we have seen that certain players, both the start-up mode as well as the organized players, they have been very competitively pushing it. But our belief is that 2 stated intents that we have declared. One is between 8% and 10% growth in the Food business that we intend to not only maintain but consolidate and grow. And second is about 15% growth rate in the HPC businesses because the availability of the tailwinds for us, the headroom for growth is enormous in front of Patanjali. So we feel not only pretty confident and we are also quite upbeat that we should be able to maintain the same trajectory as we go forward. And we'll continue to innovate. We continue to nimbleness of bringing the product to the market, which typically the start-ups tend to do better compared to larger companies. But we have proven through our back end, through the research, through supply chain, through the distribution capacity that we can compete effectively, we can drive that growth, and we feel pretty confident about it. So I hope I've answered your question in terms of what you are seeking.

And my final question is to Mr. Rajesh. It's on margins and cost. As input cost and demand patterns keeps on shifting, how are you planning to protect the margins? And which cost levers do you think will remain strong over the next few quarters? Just trying to understand how you are going to balance short-term volatility with long-term margin stability?

No. So I'll just address the one part of it in terms of protecting the short-term part. So we have 2 sort of the cost structures, which are always an impact. The commodity prices have a huge impact on our portfolio. So if you recall, in the first quarter, we had this challenge where in the series of products like -- especially the butter that we used to make our ghee, the veg oil prices I was explaining in terms of the palm oil versus the spread of sunflower oil and certain commodity elements like the rice, et cetera, where the government was pretty heavy on interventions and pulses and rice and range of other areas. So that has one clearcut impact in terms of how the margins turn out for us. Now towards that, we have followed multiple derisking strategy for ourselves. One is in terms of how do we -- how much do we buy, how do we hedge, how do we maintain the inventory levels to a certain level that we are able to maintain the price points. So some products, we are able to pass on the price increase to the consumer. In veg oil, for example, barring a 1-week lag, we typically are able to pass it on to the consumer, a drop in price as well as an increase in price. But in certain core FMCG product area, that is not very straightforward. So it takes its own time. So that is always one part which is there. On the cost efficiency front, in terms of the operating costs, in terms of technology, there is massive investment that we are doing. So for example, we are now getting the latest version of SAP or SAP HANA getting implemented the project now. We have implemented execution plan in terms of usage of AI and ML to manage the inventory movement to make it a lot more efficient. Inventory buildup, et cetera, we go through that series of exercises in terms of making it more efficient on the cost side. We are using renewable energy to cut down on the cost front. So both the operating and the manufacturing cost, the distribution cost as well as the raw material cost, there is a serious amount of effort that we are able to directionally move in towards a double-digit EBITDA and the cost optimization effort towards a double-digit EBITDA where we are able to bring it to a level where we are able to address this particular part of meeting the cost as well as this driver. So where we -- company will continue to keep investing resources and manpower in terms of making sure that we have the right focus in maintaining our margins, we have the right focus in being -- having the cost leadership and towards the premiumization side that we are able to address the consumers' requirement in an appropriate manner in that direction.

[Operator Instructions] The next question is from the line of Parth Vasani from KK Advisors.

Wanted to understand, for last few quarters, the share of edible oil has been upward of 70%. So I just wanted to understand that by when do you think we will be able to achieve 50-50 share between edible oil and FMCG business? So if you can give a more definitive time line around that? And also of the FMCG share, how much are you expecting that HPC category to contribute?

So let me answer the first question first that this is a stated intent that within 4 years' time, we'll be 50-50. And the direction of that is, as I mentioned in my call just now, I think the edible oil part I missed out. We will continue to grow between 2% and 4% in edible oil category. And we'll grow at 8% to 10% in the Foods business and about 15% in the HPC business. So basis these growth numbers, we should be able to move there. Now one part, which you have rightly mentioned that last few quarters, we started -- we took over the HPC business on 1st of November last year. And we've done 3 quarters of the run, where the veg oil prices had spiked and because of which the percentage margin, for example, this quarter, if I were to do the math and say that, okay, the prices should have been same -- would have remained same of the edible oil and our FMCG business in the numbers that we've been able to achieve in the second quarter this year was there, we should have been closer to 32% and edible oil share should have been 68%. But what happened was that our edible oil volume grew a little and the prices were also on an uptick with the result that it's about still 70-point-some percent, and this is 29.77%. But directionally, we are reasonably certain that we are headed in that direction because the simple math on the current basis were to look at, we should be pretty close to that number of 50-50 in 4 years' time. That is one. Second is, as I stated in my opening remarks also that today, 60% of our profits, EBITDA we are deriving from FMCG segment and about 40% is coming from the Veg Oil segment. So the idea is that at 50-50 revenue, nearly 75% revenues or the profits will come from the FMCG, which is lot more predictable. The quality of margin is consistent and is pretty much there. And about 25% margins will accrue from the Veg Oil segment and gradually, that should go. Some quarters, you will find that, yes, this is because of the price spike or otherwise, it is not met. But I believe that steadily, you will see that our share of FMCG will continue to increase higher and better compared to the veg oil as we go forward. So that's pretty much there. In 4 years time, we should be pretty much at 50-50 level. I'm sorry, there was a second question that you had. So close to -- in terms of the HPC business, 7% was the contribution in the overall revenues of the company. And otherwise, the HPC business overall, if I were to look at in terms of the growth and otherwise perspective, we are pretty much on course for the business. So that is pretty much there. So for example, this quarter, we did a revenue of -- in the HPC of INR 659 crores. And the previous quarter, it was INR 560 crores. So we are making a steady progress on the HPC front. So for example, in the first half this year, we have done about INR 1,200 crores of revenue in the HPC, which is almost nearly 25% of the 24 percentage. And I think it will continue to steadily rise and will continue to grow in that.

Okay. So yes, that is good to hear, sir, and it was really helpful. Lastly, sir, if you could just help me understand the trends which were emerged during the festive season?

Sorry, what is that?

The trends which you saw, which emerged during the festive season?

Yes. So festive season was positive overall. I mean, we had a good -- reasonably good uptick in the volume growth was about 5% we witnessed in the Edible Oil segment. So that was a good growth we saw. We had an uptick in the Food part of it. There was some uptick we saw, which was there. But I've always maintained that this growth in Food overall and even the FMCG -- I mean, non-food as well will take a bit of time before this will start reflecting in the sales. So give it a couple of quarters, we have said that guidance is between 300 to 400 basis points exclusively reflecting the change in the GST rates, I think, will accrue to the company so that we are pretty positive about. And that should be accretive to the overall growth numbers of 8% to 10%, that's what we have said, we should be able to reach that number. So I'll just correct one quick number, which you said as a percent -- HPC percentage. So total was a little north of 25%. We did INR 659 crores out of the total FMCG business of INR 29 crores, INR 14 crores. So we had a total of more to about 26% plus is what we did as the HPC share in the overall FMCG portfolio.

The next question is from the line of Kunal Shah from Jefferies.

So my first question is on edible oil. Can you give us a sense of how branded volumes have been done this quarter?

Kunal, can speak a little louder, please. I'm just not able to hear you.

Can you hear me now?

Now much better, yes.

Yes. So my first question is on Edible Oil. Can you give us a sense of how branded volumes have done this quarter on a Y-o-Y basis or let's say in absolute terms?

So much better than the previous quarter. So the volume -- the growth in the Edible Oil segment is that compared to the previous quarter, we did 4.59 lakh tonnes in the previous quarter. This quarter, we did 4.82 lakh tonnes. We grew about 5% on the growth side. 76% of everything that we sold was in the branded form. So pretty positive because we had dull -- Q1 was pretty dull. The demand was sluggish and the Q4 of the previous year was also dull. But broadly, we have seen that the preparation for the festive season started to give some momentum. The demand was in an uptick. So it is -- volumes are improving now.

Okay. So this 5% is on a Y-o-Y basis, right?

It's on a sequential basis on quarter-on-quarter basis, it has grown up.

Okay. Understood.

And if I were to look at -- Y-on-Y, if I were to look at, it is actually negative 7% that there's some degrowth, as I was mentioning, because of the spike in edible oil prices, overall edible oil demand in -- the overall imports in the country have gone down by 3%. So that is reflecting back in the sales of every single company. So that is there. But now I'm seeing that sequentially on Q-on-Q basis, we'll continue to see an uptick on the growth.

Understood. Understood. Very clear. Second question is on the palm side. So this sharp jump, which you have seen in first half, possible to give a split on, let's say, how much is increased production as your plantations mature and how much is higher prices? If you can give some sort of split on those 2 things?

Yes. So as I was mentioning on the oil palm plantation side, so total revenue is about INR 600 crores. Part of that is -- so our volume spike is continuous what we are seeing right now and it continues to grow. So for example, in this quarter, Q2 FY '26, the volume is about 2.74 lakh tonnes is what we did compared to 2.42 lakh tonnes in Q1 which is a 13% increase. Last year, at the same time, the volumes were higher, but because of the harvesting sort of period change was there. Otherwise, our business overall is undergoing a very significant growth momentum in the oil palm plantation as what we planted 4 years back continues to get into the fruiting stage. The second part for this business is that the first half of the year is, in general, nearly 70% of the year in terms of the -- both revenue as well as the profitability or 65% to 70% typically is the range. Now we are getting into the leaner months, in the balance part of the year. So overall, the growth momentum trajectory is very positive. But as you do know that some bit of harvesting, et cetera, depending on the weather conditions tends to get -- part of that may spill over into the Q3 versus Q2 and et cetera, occasionally happens. But typically, it's a very positive sign in the way it has grown in this quarter, and we expect part of that to reflect back again in the Q3, and we should end the year pretty robust overall basis on the oil palm.

Understood. Understood. And moving to oil margins. So given this strong performance in the palm side of it, overall margins still look a bit lower versus what they were, let's say, last year? So fair to say there's room for that to improve, let's say, in second half?

No, no, you're absolutely right. And it's correct because the oil palm was a major contributor to the profits. And on the edible oil side, as I was mentioning earlier, the palm oil actually volumes dropped substantially in the previous quarter because of the price spike that we witnessed. Palm oil prices had gone up nearly 25% on a half yearly basis. So that had a big impact in terms of palm oil imports coming down substantially. That's one. Second is because of the Sunflower supply chain -- I mean, soybean oil demand sort of spiked, but soybean in India was off-season entirely. The harvesting is happening right now. So it has happened, which has had some dampening effect in terms of both the crush was off-season entirely and our edible oil refining business and the branded business also was pretty much off because of these price changes. But I'm anticipating that this quarter it should change, and we should get back to better performance on the edible oil, both for the next 2 quarters. So the prices are looking to pick up our first one month, what we've seen today, we've done with the first month of this quarter is looking pretty decent. So I think we should be able to recover a substantial part of our -- part of that what we did not make as much, we should be able to recover in these 2 quarters. In any case, in the edible oil, more than 60%, 65% business gets done in the last 2 quarters. So there's a bit of seasonality there because driven by festive season and winters and high demand, et cetera. So more than 2/3 of the business gets done in this period. So we should be able to fairly recover on that front.

Understood. Very clear, very clear. Moving to the Foods bit, so it looks like a good performance after many quarters. My question was, is there any GST destocking impact both, let's say, in here and HPC, which we should remember, I mean, negative impact of, let's say, destocking due to GST?

Partially, it's a bit of -- initially, we had bit of a challenge in terms of the destocking process. I was talking I think somewhere else just today itself that we saw a bit of stoppage where the inventory drawdown was happening by the retailers and distributors in terms of selling off everything before they were -- so they were delaying all the orders and the de-clogging of the channel was happening. Now that has started sorting itself out. So we've seen very robust orders which are coming in. So I think that is now a thing of the past. I think we should start to get an uptick in the demand also. And the pipeline fill up of the inventory is also happening pretty decently. So we should be on a good wicket now.

Understood. So fair to say that the Foods should now grow Y-o-Y?

Yes. So we're pretty much there. And that's what we're projecting is we're pretty much on course. In fact, across the board, Kunal, we had very good growth in the ghee, very good growth in honey. And also sequentially, if I were to look at certain of the product categories, which are large ones for us, in mustard, we had a very good pickup, beverages side, dry fruit, Chyawanprash, et cetera, those are smaller categories. But across the board, for example, we've had a fairly good pickup. So if I were to give you some specific numbers, just for a flavor, like ghee, we picked up pretty well from INR 257 crores in the previous quarter this year, Q1 of '26 to INR 448 crores and nearly an uptick of INR 191 crores, like if I were to compare with the same quarter last year, Q-on-Q, it's almost up INR 93 crores. Honey similarly is up INR 78 crores. So there's a heavy push which happened. The demand lag which was there in the system, which was there, beverages came down because more on account of the weather change, et cetera, where the demand typically tends to take a lower this month. Dry fruits, we had a pretty good run, INR 33 crores plus. Chyawanprash, we had a INR 10 crore uptick. So broadly, across the board -- biscuits, we had a good pickup in demand of maybe 16% versus the previous quarter, Q1 of this year, 8% versus the last year. Likewise, on the TSP side, Nutrela, we had 21% pickup. So yes, it's across the board pickup. And I think the momentum in the second half should continue. So we should pretty much be able to recover what we lost out in Q1 last year. It should get picked up in the remaining 2 quarters.

Understood. That's very clear. My last couple of questions. So one is, you have typically disclosed the EBITDA split across different segments, staples, biscuits, Indian ethnic, would it be possible to do it or -- since you are clubbed now?

So on this -- they're clubbed now. So I think -- I mean, I can give you at a broader category level overall. So I think right now in terms of the numbers availability right now in front of me, so we can talk about that Foods, we have done about 6.4%. In the biscuits, we have done 9.8%. In Nutrela, I mean, the soy protein business, we've done 18.81%. And so broadly, that is how the split is. In the non-food, we have done about 27.7%. So INR 659 crores of revenue. And based on this on an overall basis holistically, it's coming to about 12.3%.

Sorry, I missed the non-food number.

Non-food was FMC is 27.7%, INR 182 crores EBITDA on a INR 659 crores revenue.

Okay. So that seems quite high versus what that used to be.

No, it's not high. So I've spoken before also. We've done like last quarter Q1, this year, we did about 21.3%. And this time, we had some gains on the uptick in the orders and otherwise. So we should be pretty much going back to the regular course of 18% to 20%. That is the remaining part. But from the initial cost structures that we had and basis that there was a change. But I think this may not get repeated, this level of gaining.

Understood. Understood. Very clear. Last question is on the balance sheet. So I can see a very large increase in gross debt and a commensurate increase in gross cash. So any specific reason why this has happened?

Can you repeat that question again, Kunal? Rajesh will answer that.

Yes. So my question is on the balance sheet. So there seems to be a very large increase in gross borrowings and also a similar increase in gross cash, I mean, or cash on books?

Yes. Kunal, basically, that is a withdrawal of working capital limits, LC. That is majorly on account of withdrawal of LC. So LC and working capital demand grown, we have used this fund into the business and drawn from the banks. So that's why borrowing is increased.

[Operator Instructions] The next question is from the line of Shirish Pardeshi from Motilal Oswal.

I have a few questions. I did find the press release. So can you provide the breakup of INR 2,914 crores? So I could pick up biscuit is about INR 500 crores, ghee is about INR 448 crores, soy is INR 159 crores. And you mentioned HPC is about INR 659 crores. So what is the balance?

Foods business, INR 1,583 crores.

Yes. Okay. And you gave the HPC number at INR 659 crores and Q-o-Q growth against INR 560 crores. What is the number last year?

Last year, we did not have this business. So we may not be able to exactly -- I don't have that number right now. I would have happily done that. It was -- the business who was sitting with the parent at that time. So this is the available number right now. So last year's comparison is not available for Q2.

Okay. And when you say you are at a 12.3% overall margin, can you break -- I mean, because I've been following, so I know fairly what is the biscuit, but how has the margin moved, specifically operating margins for HPC in quarter 1 and quarter 2 and gross margin if you can provide?

So I told you that in the Q1 in the HPC business, we did 21.3%, INR 120 crores of EBITDA over INR 560 crores of revenue. And in the second quarter, we have done INR 659 crores revenue and INR 182 crores of EBITDA. So on that basis, it has moved up and some bit of lower-priced raw materials, some bit of price benefit that we got in terms of price uptick that we took based on the advertisements and otherwise that we did. So based on that, that is a movement over the last 2 quarters.

Okay. And in terms of biscuits, when we say that, we have a sales of INR 360 crores for Doodh biscuits, which you are saying that you are targeting INR 1,000 crores. So once we reach to INR 1,000 crores revenue or volume, what would be the margin change? Because I would assume that you have a better margin in that business.

In the biscuits -- so biscuits typically, I'll tell you just operates on...

Typically Doodh biscuits.

Specifically Doodh biscuits. So Doodh has -- part is dependent partially. So Doodh, as you know, I mean, it's a fairly low-priced price point product, which is extremely popular and is very critically dependent on the pricing that we witnessed typically on palm oil, sugar and flour, and so -- and the packing material. So those 4 are big drivers of the final margin. But we have got a threshold level beyond which if typically we exceed that level, then the margins will continue to improve. Now last year, we had almost 12% margin in the biscuits on EBITDA basis. This year, the margin construct is overall -- I'm saying on the annualized basis. But if I were to compare the first half of last year in H1 of FY '25, our margin in biscuits were sitting at nearly 14.6%. And so beyond a certain threshold level and if the price is attractive on the raw material side, we typically would be able to pretty much make margins upwards of between 10% and 12% and could be higher as well. Now Doodh biscuit automatically tends to limit our margin construct at sub 10% to 12% number because of the very nature of the product what we have. So there's a lot of work which is happening on the premiumization side, the launch of the products that we are doing, there's the premium cookies and rusks and cream crackers and others are getting sort of -- there's a manufacturing plant that's coming up at Noida, which is our own facility. We're working on launching newer products at a high-end premium level. So the idea being that if we can get an uptick upwards of 15% to 18% growth category, which cannot come based purely on Doodh, but will have to have a very large proportion of the premium biscuits and cookies, which will drive that growth. So that is the work which is going on right now by us.

Okay. My second question on the edible oil. You mentioned that the price increases in the import prices has gone up. So to what extent we have passed on and do we have any benefit on the existing inventory?

So we -- as I mentioned, that the second quarter was, in general, the price is at -- there is not much that you can hold on to. You can do that -- you can work it out in such a way that typically the price benefit you cannot hold for long. So there's just typically not more than a 3, 4, 5, 6 days of lag that you can get the benefit. So unless there's an event-based benefit that you gain on the inventory that is a onetime gain. That structural change, something happens, government sort of regulates the imported of refined oil vis-a-vis the crude palm oil -- so that crude oil. So that is one impact which we see. And the second is that if you -- suddenly there's a spike in prices, that's a gain. So typically, we get. So I don't think that those are the events which happened in the second quarter, in the Q2 this year -- this quarter. But on an overall basis, I'm seeing some bit of demand uptick as well as the price increase. So -- and almost nearly 65%, 2/3 of the business gets done in the demand -- peak demand period now, which is unfolding in front of us Q3 and Q4. So we should be able to -- part of that, we should be able to recover back in the margin construct of the business.

Okay. No, I was just trying to look for some reason because we have reported a growth of 17%, and you said about 65% -- 76% business is branded. So is this growth will continue and then there is a price change, which will also happen or it will not?

No, it will not. It will not. Our volume growth will be pretty much, as I mentioned, will not be exceeding 3% to 4%. And even right now also compared to last year, as I mentioned, the demand contraction has happened in the India. So we are 7% lesser compared to the Q2 of last year versus this year. So it's a lower volume. And this demand contraction is a very structural contraction, which has happened on account of the compression in the imports. And I think that is going to be a bigger driver in how this is going to change. So I think we will not see exponential increase in -- so if at all, the revenues happen much larger, it will happen a lot more driven by the price increase, our volumes will not be an uptick at that level.

And last 2 questions. Sir, on the GST front, what percentage of our portfolio is impacted because of change in excise?

I mentioned that. So about 55% portfolio is at 5% right now of the FMCG overall. And edible oils, veg oils were already at 5% prior to that. So right now, almost 85% of our portfolio is at 5% level and basically 85% on an overall basis and about 55% of the FMCG segment, which is at 5% levels now.

And to what extent we have executed -- I mean, the reason why I'm asking, when do you think the normalized behavior from the retail trade will happen? Will it take substantial time because I don't have a number what is the inventory lying in the system?

No, it will take time. And so it's not that straightforward that reduced GST is instantly leading to an uptick. Our estimation is that we should be between 300 to 400 basis points is what we should have a demand uptick, but that may take several months before it takes ground. And especially in consumer products, which are very low price points, I'm not anticipating any immediate uptick on that count. But yes, fundamentally, we see that demand uptick is going to be there, and we should benefit from that.

The next question is from the line of Sumit Mathur from Yashwi Securities.

Am I audible?

Yes, you are.

Yes, sir.

Yes. So my question is on the balance sheet side, we noted that there is an increase in borrowing. So can you explain me some of this?

Can you repeat?

My question is on the balance sheet side. So there is an increase in -- significant increase in borrowing from INR 780 crores to INR [indiscernible] crores. So can you explain?

Yes, yes. This is primarily due to working capital loan and development of credit facility from the banks.

Can I further explain this? Can I further explain this, sir?

See, this is increased by INR 2,108 crores compared to March '25, primarily on working -- availing of working capital loan of INR 1,376 crores, buyers' credit from SBI Jan-Dhan of INR 367 crores and unsecured working capital loan of INR 360 crores. These all are basically borrowing from the banks for the working capital facilities, fund based and non-fund based.

Okay.

This is clear?

Yes.

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Sanjeev Asthana for closing comments.

So thank you very much and for all the questions and this call. And we look forward to hearing from you. We are available as a management. You have all the coordinates and we look forward to meeting you all in the next quarterly results. Thank you very much.

Thank you very much. On behalf of Patanjali Foods Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.