Proventus Agrocom Limited ($PROV)

Ladies and gentlemen, good day, and welcome to Proventus Agrocom Limited H2 and FY '26 Earnings Conference Call hosted by PhillipCapital Private Client Group. [Operator Instructions] I now hand the conference to [ Mr. Rutu Sawant ] from PhillipCapital Private Client Group. Thank you, and over to you, sir.

Good afternoon, everyone. On behalf of PhillipCapital Private Client Group, I welcome all of you to the H2 FY '26 Earnings Conference Call of Proventus Agrocom Limited. Today from the management, we have Mr. Durga Prasad Jhawar, Founder, MD and CEO. The management will be sharing key operating and financial highlights for the H2 and FY '26 ended 31st March 2026, followed by a question-and-answer session. Please note, this call may contain some of the forward-looking statements, which are completely based upon company's beliefs, opinions and expectations as of today. These statements are not a guarantee of the company's future performance and involve unforeseen risks and uncertainties. I now hand over the call to Mr. Durga Prasad Jhawar. Over to you, sir.

Good afternoon, everyone, and thank you for joining us today. On behalf of the management team, I extend a warm welcome to all our investors, analysts, shareholders and stakeholders. We appreciate your continued trust and support as we build ProV into a leading player in India's wholesome nutrition and healthy snaking segments. I want to start with something very simple. At the beginning of the year, we said we would deliver, and we did. Financial year 2026 has been our strongest year since we started this journey. Our consolidated revenue stood at INR 925 crores. Retail revenue crossed INR 659 crores, representing a year-on-year growth of approximately 58%. EBITDA stood at INR 19.84 crores as against INR 12.92 crores in the previous year, while profit after tax increased to INR 14.26 crores, registering a growth of approximately 93% year-on-year. Gross margin expanded by 240 basis points to 22.1%. And based on the momentum we are seeing across the businesses, we are revising our financial year 2028 revenue target upward to INR 1,100 crores from INR 1,000 crores. But honestly, numbers are only the outcomes. What is far more important is why these numbers are happening because what we are seeing on the ground today gives us a lot of confidence about where this company is headed over the next few years. When we started ProV, we were fundamentally a dry fruit company, almond and cashews a stable and dependable business. But over the time, especially after COVID, we noticed something important changing in Indian consumers. People were no longer buying dry fruits only for gifting on festival occasions. They were actively looking for healthier everyday snacking options, products that felt nutritious, convenient and importantly, tasted good. That shift made us rethink the opportunity ahead. And that is when we took a conscious call. Let us not remain just a dry fruit company, let us build a wholesome nutrition platform. Today, nearly 48% of our revenue comes from wholesome nutrition products, including Walnut, Pistachio seed, Makhana, seed mixes, trail mixes and other nutrition mix format. This business is growing materially faster than traditional dry fruit and also operate at significantly stronger margins. And that mix shift is one of the biggest reasons you are seeing margin expansion in our numbers today. In fact, let me share a few data points that reinforce why we believe this shift is still in its early stages. First, the wholesale nutrition segment is growing at 15% to 18% compared to 5% to 7% growth in core dry fruits. Second, organized branded players are growing almost 2.5x faster than the unorganized market. And third, and perhaps most importantly, while the category already represent a INR 75,000 crore opportunity, India per capita consumption is still extremely very low. India consumes roughly 600 gram per capita annually compared to around 2.5 kg China and nearly 4.7 kilogram in the U.S. So when we look at, we believe the category itself has a very long runway for growth. Now let me come especially to Makhana because this is one of the most exciting opportunities we see today. The Makhana category has grown nearly 6x in the last 5 years and continue to grow at 25% to 30% annually, far ahead of categories like almond. And the reason is simple. Makhana sits at very unique intersection. It's healthy, light, familiar and deeply Indian. Consumers already trust it. Nobody feels guilty eating it, which makes it perfectly suited for becoming an everyday snacking habit. We genuinely believe Makhana has the potential to become one of India's largest healthy snacking categories over the next 5 to 7 years. And importantly, we have now built a strong structural advantage in this category. Our Bihar facility is operational at the source of more than 90% of India's Makhana production. This gives us better sourcing economics, fresher product access, stronger quality control and far more integrated supply chain. Over the last few years, we have focused on seeding the category, refining flavors, packaging, positioning and understanding consumer behavior. That validation phase is now largely complete. We are now entering the scale-up business of our Makhana, and we expect this category to become one of our biggest growth driver through next 2 years, financial year 2027 and '28. At the same time, we are also investing aggressively in the manufacturing infrastructure to support the next phase of growth. Our Mumbai facility has a capacity of 1.5 lakh pouches per day. Bihar Phase 1 is now operational and give us backward integration into Makhana sourcing with a capacity of 2,500 metric tonnes per annum. And Surat, which is our largest investment so far, is a 2 lakh square feet state-of-the-art facility currently under construction with a planned capacity of over 4 lakh pouches per day. We expect Surat to come online by the first half of financial year 2027. Together, these facilities gives us the manufacturing backbone required not only for financial year 2028, but for the next phase of scale beyond that. A quick word on financial discipline. Even we invest aggressively for growth, we remain very disciplined on the balance sheet. Our net worth has increased to INR 144 crores. We believe entering a high-growth phase from a position of financial strength is extremely important, and this discipline remains a core part of how we operate the business. Let me close with where we are headed from here. We are revising our financial year [ 2028 ] retail revenue target upward to INR 1,100 crores from INR 1,000 crores. And importantly, this is not an aspirational number. It is a detailed execution road map. The road map is built on 4 clear pillars. First, channels, deepening our presence in quick commerce while continuing to expand general trade distribution across new geographies. Second, products, scaling Makhana aggressively while increasing the contribution of wholesome nutrition to over 58% of revenue. Third, infrastructure, bringing Surat and Bihar fully online and integrating them into our national supply chain. And fourth, people, strengthening the organization with leadership addition across sales, supply chain and marketing as we continue to scale. Every pillar has ownership, every pillar has milestones. Every pillar has defined investment plans. This is execution-driven growth. Let me end with one final thought. We are not chasing milestones. We are building capabilities. Retail revenue INR 659 crores is not the finish line. It is validation that the model is working. Healthy snacking in India is becoming a daily habit, and ProV is positioned exactly where this category is headed. And with Makhana at the center of our next phase of growth, we genuinely believe the best year of the companies are ahead of us. Before I conclude, I would like to place on record my sincere gratitude to all our shareholders, customers, employees and business associates for their continued trust and support. Their confidence and partnerships remain central to ProV journey and future growth. With this, I would like to open the forum for questions. Thank you.

[Operator Instructions] First question is from the line of [ Disha ] from Sapphire Capital.

So a couple of questions from my side. So sir, for FY '26, we've seen a good increase -- so we've seen 48% of our revenue coming from Wholesome Nutrition, and that is a higher-margin business compared to the core dry foods. But if I see the overall numbers, we are at around 2% EBITDA for FY '26 without including the other income. So why is that increase not translating into EBITDA margins? And how do you see these margins going ahead?

As you see, we did a lot of investment during the year on the marketing side. And -- so we want to remain profitable and EBITDA is positive, but we continue to invest. We are continuing to invest into the marketing side. And if you will see the marketing spend almost has grown from INR 30 crores to INR 75 crores this year. And that is why EBITDA is low, but it's continuously improving.

Sir, just in your overall -- so how do you see the growth for FY '27 on a consolidated basis? And what sort of margins do we target?

So on the growth side, we are targeting on the revenue side, 30% to 35% year-on-year. So next 2 years, FY '28 plan, which we have shared we are targeting the growth into revenue is 30% to 35% and same at the EBITDA and PAT margin side.

So what sort of mix will we see for FY '27 between the branded sales and the wholesale sales -- retail and the wholesale?

So our focus is always on the retail branded sales only and where we are targeting 30% to 35%. On wholesale side, we are not targeting the growth side, though the wholesale is always important because that gives us leverage to the better efficiency on the cost side. But just to give you perspective on numbers, always 75% will be the retail revenue -- 75% to 80% will be the revenue will be from the retail side.

Okay. And sir, this Surat facility, what sort of CapEx are we doing for this? And what is the revenue potential of this facility at optimum utilization?

So this facility is 2 lakh square feet facility. And in the first phase, we are targeting 4 lakh pouch per day. And just to give you a perspective, today, we are at 1.5 lakh pouch per day. We are producing 1.5 lakhs pouch per day. But easily, this facility can go to 10 lakh pouch per day when you will be fully commissioned everything.

Yes, when all the phases come online?

Yes. So we are targeting in 3 phases right now. So first phase, we are targeting in FY '27 first half.

Okay. So what will be the potential for this from the first phase, sir? Revenue potential?

So we are targeting revenue at 30% to 35%. So 4 lakh pouch easily, it can go to like INR 1,000 crores in next 2 years. But the revenue we are targeting 30% to 35%, but the capacity will be in the first phase, 4 lakh pouches. And generally, pouches does not translate directly into the revenue because now we are more targeting snacks category, which is lower [ grammage ] products. So earlier, the grammage per pouch was higher. Now like you are -- when you are targeting snack side, the pouch gram is 30 to 100 gram pouches or more. So it will not directly translate into the revenue as this one. But on revenues, that is why I said revenue we are targeting 30% to 35% year-on-year.

Okay. And sir, just a final question on the impact of the war. How has that affected our sourcing? And what sort of impact are you seeing in our business because of the war?

Sorry, I missed your.

My question was on the Iran war, Middle East war. What sort of impact are you seeing on our sourcing and in general on our business and how protected are our margins?

So this war has impacted on 2, 3 fronts. One is on the supply side. So one means a large part of dry fruits also comes to India from Afghanistan and Iran. So that supply got affected. But India is sufficient at least for the current season till -- and current season is like till Diwali. So India is sufficient because war has started post winter. And in winter, most of the dry fruits comes into India. So India is sufficient till Diwali. If this situation continues post Diwali or around Diwali, then the things will get affected or India may look for other channels to get material into the country. As far as like freight cost, currency, ForEx, all these are -- has affected. But large part of the things we have transferred or translated to the revenue side. So margin is largely not affected. But prices has gone up.

So we'll be able to protect our margins going ahead?

Yes. Yes.

Next question is from the line of [ Mahavir Jain ] from [indiscernible] Advisors.

Congratulations on the very good set of numbers. I had a couple of questions. First of all, how important is quick commerce for ProV? I wanted to know what is the current contribution of quick commerce for the FY '28 numbers, how much can quick commerce contribute as a percentage of revenue?

So right now, the quick commerce channel is very important, and it's expanding continuously. And last 1 year, we are focusing this channel as well. Right now, we are at around 5% to 7% revenues coming from this channel. And we are targeting this -- by this year-end, we will not be lesser than 10% of overall revenue from this channel.

So are the margins in quick commerce similar to the margins we make at a gross level?

Yes, yes. I mean a little bit here and there, but margins are almost same.

All right. And another question which I had was now that we are completing 3 years of listing at the SME platform, do we have any plans to migrate to the main board?

I will just hand over to this question to my CFO, Ankush Jain.

Yes. Yes. On June 2023, we did listed on [ NSE SME ] segment. At the end of the 3 years, we are eligible. We are in the process of doing the same. So by this financial year-end, we should be -- we are targeting to get listed on the main board.

Next question is from the line of [ Sejal Kapoor ] from Antifragile Thinking.

Great set of numbers for sure. I have 3 questions. First, would you agree that the real stress test is not whether revenues can grow 30% this year and next year. It is whether multiple things kind of play out simultaneously. So things like wholesome nutrition mix keeps improving, right? That's one. Second, marketing efficiency improves despite scaling because we have been spending a lot in the marketing over the years. And third is, of course, Surat plus Bihar capacity ramps up on time without working capital stress. And then fourth one is that Diwali war situation ending by Diwali that you just mentioned. So how do you assess the probability of us struggling with one or more of these areas because it's kind of a cascading effect or a sequence of all these 4 events playing out simultaneously, which kind of increases the bar as far as the internal execution is concerned, plus we also are dependent on some of the external factors like war, et cetera. But majority of these factors are internal.

Yes. So I would address that this -- the whole focus since last 2 years was on the margin side and cold dry fruits are always low-margin business. And so last 2 years, we started focusing on the other part of the -- either on the snack side or other dry fruit side. And the 2 reason was, one is the margin is on higher side and definitely growth on these items are higher compared to the cold dry fruits. So last 2 years, we were focusing and expanded channel accordingly, our marketing efforts accordingly also. So which started giving us. And last 2 years, we were also saying on that we are targeting every year 5% shift from the cold dry fruits to the wholesome nutrition side. And this year, like we have reached -- last year, we were at 57%. And this year, we are at 52% on the cold dry fruit side. And year-on-year, we are targeting 5% shift from cold dry fruits to the wholesome nutrition side. So that is like a long journey, and we are continuously focusing on that, and that finally turned out into the higher profitability and which we are able to see this year on the number -- PAT side or EBITDA side also. [ Infra ] definitely gives us the sustainable growth and also reduce the -- or improve the efficiency. And that is why we have built this year Bihar facility because we are focusing now more and more Makhana. Like one input I want to give, we believe in next -- today, like almond, which is one of the large item on the dry fruit side and India market is around INR 15,000 crores to INR 17,000 crores. I'm talking only on the almond side. And today, Makhana sits at around INR 6,000 crores. And we believe Makhana will grow 25%, 30% as a category, but almond is growing around 5% to 7%. And we believe in the next 5 to 7 years, Makhana can close the almond market overall size. So that is why we invested directly at the source. And probably we are the -- like first 1, 2 units in there where we invested there. That is giving advantage on the cost side also and the quality side also. So -- and same with the Surat, we are building up large facility. So we have taken this 2 lakh square feet space already and building infra over there. So that will give like next 5, 7 years growth from that place. So we have invested a lot on that. At same time, we are investing a lot on the marketing side. So probably we will be the one of -- you can say, one of the -- or maybe the #1 company on this space and continue to deliver. As far as war and this one, Diwali, so because we are having direct sourcing, and we are able to plan better on the inventory side, on the visibility on the prices side also and visibility on the demand and supply side also. So because we have relationship direct to the grower. And that is helping us. So even if war situation is there, we are continuously -- we don't have any stress on the inventory side.

Understood. Understood. Helpful. And DP, what percentage of the next 2-year growth is expected to come from higher throughput per outlet, the existing outlet versus simply adding more outlets and distributors? I mean, how is the mix there? Because then it kind of joins with the marketing spend because we have taken our marketing spend significantly up in the last 3 years. EBITDA definitely has improved. We are back in operating cash flow. I mean that's one thing that I really liked in these numbers because we have kept the discipline of working capital in check. Otherwise, a growing company, see, we are not a slow grower. We are a small company. We are growing pretty aggressively. And if you can grow and still report positive operating cash flow, I think not many start-ups do that. So that is really excellent execution. But coming to my question, over the next 2 years, do you have confidence that the same store growth, whether it's GT or modern trade, can also give us higher volumes? Or do we have to add more distributors and stores to grow?

Yes. So like coming 2 years, we are focusing around 30%, 32% growth and approximately 10% is coming from the existing outlet or existing channels and 20% from expansion of channels or I would say that more outlets and or the new stores will come from the 20% from them. 10%, I'm saying because -- from this one, this will also add that we are continuously adding the few new product also NPD, and that is also giving the extra revenue from the existing channel.

Sure, sure. Okay. And then going forward, we expect to stay in positive operating cash flow because as far as I'm concerned, this is the highlight. I have not seen many start-ups report positive operating cash flows so early in their journey. How confident is the management team that, yes, this is not a one-off flash in the pan, and we can continue to stay vigilant and disciplined in working capital management and continue to report positive operating cash flow even going ahead?

Yes. So as I said, we are targeting 30%, 35% on revenue side and the same or maybe the higher number because now if you will see the last year, operating leverage also started giving extra margins and that we are expecting the same. So higher to 30% to 35% will be the growth in EBITDA, growth in PAT and definitely on the operating cash flows.

The next question is from the line of Rishab Joshi from Top Ventures.

I just had a query on a relative market share. So today, in this wholesome nutrition space, what is sort of our relative market share I have to ask you to assess compared to some of our other privately funded competitors?

Okay. I would say total number today is around like INR 14,000 crores, INR 15,000 crores on the retail space is -- organized retail space is around INR 14,000 crores, INR 15,000 crores. And we did around INR 659 crores or INR 660 crores last year. So we are around 4% market share. But definitely, our market share on the wholesome nutrition side is better than the competition. So where we are around 7%, 8%, and this one is around 3%, and we are continuously focusing on that.

Got it. So just to add to like even the previous question that [ Mr. Sejal ] said, is that as we continue scaling, our competitors in the wholesome nutrition space are well-funded private companies who are -- who seem to be actually operating at negative EBITDA and negative cash flows, I'm guessing for gaining faster wallet share or faster revenue growth. So how confident are we to sort of continue our growth path or our glide path without this marketing intensity having to proportionately increase purely because our competition is also spending aggressively?

See, so I would -- as I said earlier, the wholesome nutrition part is growing 15% to 18% and cold dry fruits are growing 5% to 7%, and our focus since last 2 years is on that side. And it's not only the sales side focus, the marketing efforts are towards that also on the infrastructure side efforts towards that only. So I believe we have invested lots since last 2 years and efforts will be continued on that side. And it's not only on the only one side, as I said, marketing, sales, infrastructure, even the value chain side. So we are every -- we have built every place on that side. So we are relatively ahead of other competition. And we believe we will be -- all these will materialize our fruitful finally on the profitability side.

Got it. And sir, last question, over the next 2 years, do you think from a strategy perspective, there is a case for probably segregating the wholesale business from the retail operation because just generally speaking, private companies are getting far higher multiples on the wholesale nutrition side of the business as compared to our wholesale business to some extent at the overall level is masking our true strength of the quality of our business that we are building, especially on the Wholesale Nutrition side. So do you think there could be a case to sort of spin off 1 of the 2 in the future? Or would you like to keep this as one company itself?

So for us, actually, the wholesale business is giving advantage towards the quality because we import directly ourselves. We have the grower relationship. And wholesale business, we are not focusing, but still essential for us because wherever the quality -- when we import and quality does not fit for our retail business, we just sell into the wholesale market. So that is why wholesale business is important for us, though it is not giving much or finally not converting a large part of EBITDA or PAT. So that is why we don't see right now to spin off. So it will go together. Yes.

No, I'm asking mainly from a perception standpoint, right? Because what's happening is our inherent wholesale Nutrition business is so strong. We are growing operating cash flow positive and we are delivering 30%, 35% growth. But because the volume is coming from the wholesale segment, the overall margin will look a little suppressed of course, because they're also investing in growth on the retail side. But the multiples that we are kind of commanding less than 1x [indiscernible] sales today, is there a case do you think for a perception rerating in the years to come if we are able to build a stronger narrative on the Wholesome Nutrition side and show our capital strength also on that side of the business because that will be a much higher gross margin business, right?

Yes, I understand your point. And this market cap always is important. But our focus always on the building the -- in right manner, the whole business, which is like growth on the all 3 numbers, EBITDA, revenue and PAT side. And that is why we are transparent to give our numbers also what is total revenue and what is the retail branded revenue. So we more focus on the execution, improvement in the financial performance, governance standards and long-term value creation. We believe over the time, market will reflect.

Perfect, sir. Definitely, sir. Great job so far. And last thing before signing off is, sir, over the medium term or even maybe a slightly longer time horizon, what do you think this retail to wholesale shift mix will be -- will sort of look like? I know you're guiding to about a 5% switch on a Y-o-Y basis. But is there some sort of a plateau that this would hit or this will eventually over a longer term, largely be driven by the retail operation?

So 5%, I said it's wholesome nutrition compared to the core dry fruit business. On wholesale business versus retail branded business, we continue to keep like 75%, 80% will be the retail branded business will be continued.

Next question is from the line of [ Chirag Fialoke ] from MS Capital.

Just 2 questions. One, could you help us just bridge that gap between when you report 22.1% gross margins and the gross profit that we report, which is INR 92-odd crores. the delta between that, I believe, is one kind of marketing cost. Could you just help us understand what that is? And is that something that you control? Is it in the nature of just being discounts and hence can't be rolled back? Or is it something that in a year if you choose, you can completely withdraw and that would fall to the bottom line? That's the first question. The difference between the reported branded 22.1%, which I believe comes out to be INR 145-odd crores of gross profit as opposed to the reported INR 92 crores of gross profit.

Yes. Chirag, as it is specified by the DP also, the consolidated revenue is INR 925-odd crores and out of which 73%, 74% is the branded retail business. The branded retail business commands a far more higher gross margins than the wholesale gross margins. So overall, if you see the branded business commands 22% gross margins. And with some of the items, I would say, marketing expenses items, which we have already discussed multiple times, due to the accounting things, it comes under the COGS. But actually, during the representation point of view, actually, the purpose of such expenses comes below the COGS itself. So the reported gross margins, I would say, is 22%, while you calculate on accounting standard-wise for the representation purpose, it comes to around, say, 14% to 15%.

Understood Ankush, very clear. I was trying to understand then that INR 50 crores, INR 55 crores that is the delta that -- what is the nature of that expenses that if you want -- maybe DP, you can help us understand this better. If you want, you can shut those expenses down without having an impact on at least current sales. Is that the right understanding? Or if you don't do those expenses, even current sales is not sustainable is the question that I was trying to get to?

I would say the increase in the expense is largely in line with our long-term brand building strategies. And since we are targeting higher nutrition, I would say, wholesome nutrition mix itself, which leads to a higher margin products, automatically such expenses would be there going forward also. But at the same time, we are too cognizant about improving the efficiency, improving the margins itself and the bottom line also. So creating, I would say such spend is a strategic investment for future growth rather than we treat as a short-term expenses.

Yes. But as you are asking, if today we will stop these expenses, whether this will affect my current revenue, I don't think so that will affect current revenue because we are not spending continuously only one product. It's a diversification of product and wherever we want to focus, we are spending more. And as we build the category, it reaches a particular size, we reduce the expenses and start expanding or investing on the other new products. So I don't think so that will affect the current revenue, if we will stop completely. But at the same time, we want to target like -- because market is going towards that. So 30% to 35% sales or revenue growth we want to achieve and calibratively, we are spending on that side.

Understood, DP. Very clear. So largely, these spends are for categories which are in -- as per your presentation, balance in the seeding phase, right? That's where you are spending this kind of largely. Is that fair?

Yes...

Yes, it's right.

Perfect. Second question, I just wanted to understand continuing on the question of a previous participant. Obviously, the working capital control and the cash flow generation has been phenomenal for such growth. One of the reasons why that has happened is because sort of receivables as a number of days, either on branded sales or on total sales has come down from last year, and it's now in the 15, 20 days kind of range. Is that something that you think you can continue to do with quick commerce increasing and with sort of GT probably increasing? Is that something which is sustainable? Just second question.

So overall, working capital, always we are targeting less than 60 days, and we are around 60 days only. And we think at this number, we will be able to continue to grow. As I said, like quick commerce targeting 10% of overall revenue. I believe we will be able to achieve that. So we are generally very disciplined on the working capital side and always focus on that side. So I think we will achieve what -- including all the revenue channel mix, we will be able to achieve that.

Next question is from the line of Vedant from [ Early Age Advisors].

Could you share the contribution of top customers? How diversified is the revenue base?

Yes. So I would not be able to share the individual customer-wise revenue. But from channel-wise, we are like well diversified on the revenue mix side. And this is one of the key focus items where we don't want to -- we should not have concentration risk. But yes, as you see, suppose I talk about modern retail in India and where like 3 players are there. If we talk about quick commerce, 3 players, top players are there. When you speak about e-commerce, only 2 players have the only large -- or large shares with the 2 players. So that way, yes, but we don't have very high concentration on 1 customer.

Next question is from the line of [indiscernible] from Capital One.

I had 2 questions. One on the channel mix, sir. Could you be able to specify as to what is the channel mix currently from GT, MT and quick com and also from your website sales?

Yes. So we are -- on the channel side, like we have 4 channel, I would say, which is GT, then modern retail, then e-commerce and then quick commerce. These are the channels are between 25% to 14% -- 40% is the individual channels. And as far as our direct website business, which is very low, we don't have much sales on the direct website side, maybe around 1% kind of number.

So GT, MT and quick commerce around 25% to 40% between all 3 of them?

Yes. No. So I will repeat like as I said earlier, quick com is around 5% to 7%. But rest of 3 channels, which is e-commerce, modern retail and GT, these are between 25% to 40%.

Okay. And sir, could you give us any guidance as to what would be the marketing spend for the upcoming year?

Yes, Ankush?

Yes. The total marketing spend for the coming year would be closer to around, say, INR 85 crores to INR 95 crores going ahead.

INR 85 crores to INR 90 crores...

Because last year, FY '26, we did total spend of INR 75 crores. It can increase to INR 95 crores for consistent, I would say, the brand building investments would continue to be there.

Okay, sir. And sir, going back to the mix question, sir, is there any possibility to give a geographical mix as well? And as far as we are concerned, sir, I think the main reason for expanding to Surat was trying to capture the North market. So is there any plans? Or is there any guidance on that, sir?

No. So we are not focusing on the geography side. We are -- like if we talk about modern retail, we are across the country. We talk about e-commerce side, we are across the country. Only on the GT side, we are -- most of the business is from the South of India, we are continuing to focus on that market. So our strategy is go deeper rather than wider on the GT side. And Surat facility is not to tap the North market. This is like -- this facility will supply across the country.

Next question is from Deepak, an individual investor.

My question is more of a -- in the longest term, like where do you see -- like how do you see the net-net operating margins expand? Because a lot of players in this space, traditionally and even for the new start-ups, the problem has been that it's a very low single -- it has stuck to a low single-digit margins rather than going towards high single digits or even mid-teens. So how do you see that happening for you in the long term?

Yes. As I said, we built this model where our focus or where we started more focusing on the supply chain. So today, we have relationship till farmer level. And that is giving 2 advantage largely. One is consistently delivering the quality. And then definitely, there is a little advantage on the pricing side. And that is giving us like compared to other people, more advantage. As far as margin, because we are focusing more and more on the wholesome nutrition side rather than only on the core dry fruit side. I'm not saying that. So as I said earlier, right now, we are at 52% core dry fruits. And year-on-year, we are targeting 5% improvement on that side. So like next 2 years, we will be around 42% on that side. And that part is giving us extra margins on the gross margin side and which is where we are targeting like 2% to 3% year-on-year improvement. And finally, it is turning out to -- finally going into the bottom line.

Next question is from the line of Disha from Sapphire Capital.

Given the 30%, 35% sort of revenue growth that we're targeting and with 75% to 80% being retail, so FY '28, our actually retail turnover could be much higher than INR 1,100 crores. So is it fair to assume that INR 1,100 crores is also a bit conservative given this trajectory that you've mentioned?

Yes. So like we are targeting like 30%, 31% of approximately, I think it will come that number only. I think it will come INR 1,100 crores. But yes, it is like INR 50 crores here and there, but we will reach there only.

If I take 30% growth, so next year, we're around INR 1,200 crores and then next after that, we're around INR 1,600 crores sort of number?

No, 30%, 32%, I said from the retail revenue point of view. So which we did this year like INR 660 crores.

Correct, correct...

So it will come...

On an overall basis, I was asking about the consolidated revenue growth, sir?

Yes. So the 30%, 32% growth, I said for retail revenue side, which is where we are focusing. And overall revenue, like 75%, 80% will be retail revenue and balance will be the wholesale revenue. It will go overall revenue, if you precisely on that side, around INR 1,300 crores, INR 1,400 crores type of number will come by [ 2028]. Overall, INR 1,400 crores, out of which INR 1,100 crores would be the branded business.

Next question is from the line of Rishab Tripati, an individual investor.

Sir, I would like to start with I started ordering the products of ProV. It was a comparison, I find it -- the quality is really good comparable to Tata Sampann and much better than Natraj and all those other brands which are offering. So great work there. I think the part where you were discussing about being backward integrated, having relationship with farmers, I think that is really helping in maintaining the quality, even if like we have to consolidly run those business. So congratulations on that. So one question that I have is we know we are spending aggressively on marketing, and that's the requirement. But do we have like certain numbers like a threshold number where like at a particular point of revenue, maybe INR 1,500 crores or INR 2,000 crores where we start that proportionally additional incremental spend requirement of marketing will be lower, and we will start seeing that flowing into the EBITDA margin and consequently in the lower PAT margins as well -- sorry, higher PAT margins as well. So that's the question number one. I will ask my other question after this.

Yes. On the marketing spend, just as we've discussed already, we are expanding our distribution footprint and strengthening consumer presence across different channels, and digital outreach, channel activation. So it's also becoming important day by day. So we always consider this spend as a long-term spend rather than a short-term spend. And with regard to your questions on the numbers front, we can see it till FY '28, the spend would be, I would say, in line with the, say, currently. But post FY '28, once the brands get established and we also falls into thousands plus category, such spend as a percentage of sales will definitely come down. And on the margin front, as it can be highlighted since last 2 to 3 years, our gross margin is consistently improving, not only the gross margin but also the EBITDA front. So by -- I would say on the EBITDA front, we can expect 150 bps to 200 bps improvement over the next 2 to 3 years.

Sir, the other thing is whenever I'm ordering the products of ProV, particularly I'm able to get it in Amazon primarily and Flipkart sometime. Again, the search, which I do, since I'm trying to buy it, I can search it, but at the position which it appears is a bit lower. And secondly, specifically in North Indian side, I'm from Uttrakhand. So I'm not able to find these products primarily on Blinkit, which is like very widely used. So I just wanted to understand like in terms of different channels we have, like e-commerce, quick commerce, GT, are there like different set of margin profile for each of those channels where these quick commerce are more working capital incentive, so that's why we are not aggressively expanding on it. So I just wanted to understand rationale being aggressive on one front and not on the other front and that search engine optimization is the other thing. That would be my second question.

Okay. On -- see, that is why since beginning, we are focusing all channels, whether it is general market, modern retail and e-commerce side. And when sometimes a few people are aggressively spending on the e-commerce side, we want to spend calibrated. So we are always there, but it means like we will not go out, but we don't want to burn all the spend aggressively on that side. So because of that, sometimes we may look from outside like my product is coming on the fifth number, sixth number kind of nowadays. But like this year, we have large focus on the quick commerce, and that is why beginning, I said we will be 10%. So we have taken calibrated approach and where we are negotiating or negotiated our whole -- like channel margin, our freight cost or advertisement cost, all these things we have negotiated properly. And even during that journey, if somebody is spending our competition is spending on the higher side, we just want to remain like a little quiet on that side. We don't want to go overboard on that side. So then we take the approach to spend product to product rather than everywhere and then push the growth calibratedly. But we are quite confident between all these channels, we will be able to achieve 30% to 32% growth and same with the EBITDA and PAT side.

Due to time constraints, that was the last question of the day. I now hand the conference over to management for closing comments.

On conclusion front, I would say the journey has just started for the ProV as we are at the inflection point to grow consistently over the next, I would say, 5 to 10 years. So the journey has just started. So I would like to place on record my sincere gratitude to all our shareholders, customers, employees and business associates for their continued trust and support. Their confidence and partnership always remains central to ProV's long-term journey and long-term future growth. So with this, I would say, great thanks to all the, I would say, investors and individual institutions who have come to join our call, sincere thanks to all of you.

Thank you so much.

Thank you. On behalf of the Proventus Agrocom Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.