ADF Foods (NSE:ADFFOODS) Q1 2026 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to the ADF Foods Limited Q1 FY 'twenty seven Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. I now hand the conference over to Mr. Sumit from Thank you, and over to you, sir. Thank you, Sumit, and good afternoon, everyone. We welcome you to the Q1 FY 'twenty seven earnings conference call of ADF Foods Limited. To take us through the results and to answer your questions, we have with us today the top management of ADF Foods represented by Mr. Bimal Thakkar, the promoter, Chairman, Managing Director and CEO Mr. Sumer Thakkar, the promoter, Vice President, Sales and Strategy and Mr. Srinivas Ayagiri, the Chief Financial Officer.

0:58 We will start the call with an overview of the business and recent updates by Mr. Bimal Thakkar, and then Mr. Srinivas will give his comments on the financials. As usual, the standard Safe Harbor clause applies when we start the call. Over to you. Thank you, Sumit. Good afternoon, everyone, and thank you for joining us today. We have commenced FY 'twenty seven on a strong note, delivering our fourth consecutive quarter of strong double digit growth year on year. In Q1 of FY 'twenty seven, our consolidated revenue from operations increased by 25.9% year on year to crores. On a stand alone basis, revenue grew by 20.5% year on year to INR120.9 crores.

1:52 This performance was driven by deeper shelf space penetration, continued category diversification, traction from product listings secured over the past few quarters and strong execution across our key international markets. Importantly, we achieved this growth despite continued geopolitical uncertainties arising from the West Asia conflict, supply chain and trade route disruptions, vessel shortages and elevated fuel and increased ocean freight costs. Consumer demand for authentic, convenient and value added ethnic Indian food products continues to remain healthy across our markets.

2:37 The increasing preference for ready to eat, ready to cook, shelf stable and frozen categories continues to support our growth strategy. Our diversified product portfolio, wide geographic presence and established distribution capabilities are enabling us to address these opportunities across diaspora as well as mainstream consumer segments. Coming to our brands, Ashoka continued to deliver strong quarter on quarter growth, supported by robust demand from South Asian diaspora and deeper penetration across our core and emerging international markets. The brand has delivered a revenue CAGR of more than 20% over the last five years, reflecting the brand strength, sustained marketing investments, continuing product innovation and expansion across channels and geographies.

3:32 Going forward, our focus remains on expanding shelf space, introducing new products and strengthening engagement across retail and e commerce channels. Truly Indian has also sustained its growth momentum. The brand is now present across more than 3,000 stores in The United States through marquee mainstream clients. Our investment in product development, refresh packaging, retail engagement, sampling and digital marketing are helping us strengthen brand visibility and encourage consumer trends. The repeat orders received from several retail partners provide encouraging validation of consumer acceptance and we remain focused on building deeper penetration with existing accounts while pursuing additional listings.

4:26 Our domestic brand, SOL, continued to strengthen its presence in India. During the quarter, our focus remained on expanding the product portfolio, increasing reach across e commerce, quick commerce and modern trade channels and undertaking targeted in store and digital consumer engagement initiatives. With a refreshed team and a differentiated portfolio of better for you packaged food products, we are building this brand with a long term perspective. On manufacturing, our Surat Greenfield facility, which commenced operations in Q4 of financial year twenty twenty six, has now begun commercial deliveries and initial container shipments.

5:11 The facility expands our frozen food manufacturing capabilities and provides additional capacity to support future demand. We will continue to scale operations at Surat in a calibrated manner over the coming years, while maintaining our focus on quality, efficiency and execution. We also received an important milestone during the quarter by receiving the highest AEO T3 certification from the CBIC. This strengthens our export operations by enabling faster customs clearances, reduced inspections and improved export efficiency. For a business with significant international presence, this certification further strengthens our trade and compliance capabilities.

6:03 On profitability, consolidated EBITDA increased by 26% year on year to INR29.7 crores, with the EBITDA margin at 17.7%. This performance was supported by an improved product mix, continued momentum in frozen foods, tariff refunds, cost optimization initiatives and operational efficiencies despite elevated freight costs and ongoing investments in our brand and organizational capabilities. The operating environment remains uncertain, particularly amid evolving geopolitical developments, tariff related uncertainties, vessel shortages and ongoing disruptions in global shipping networks.

6:56 This continues to impact freight costs and transit time lines. Despite ongoing external uncertainties, we remain cautiously optimistic as we continue to expand shelf space, scale manufacturing capacity, further strengthen our brands and introduce relevant products across markets. With strong business momentum, we remain well positioned to deliver revenue upwards of crores in financial year 2027, while maintaining healthy high teen EBITDA margins. The resilience of our business reinforces our confidence in our brand, execution capability and diversified market presence, strengthening our long term growth objective.

7:45 I will now hand over to Srini, our CFO, who will take you through the financial performance in greater detail. Thank you. Over to you, Srini. Thank you, Bimal, and good afternoon, everyone. I will begin with the consolidated financial performance for Q1 FY 'twenty seven. Consolidated revenue from operations for the quarter stood at INR167.3 crores, representing strong growth of 25.9% year on year. This marks the fourth consecutive quarter of double digit year on year revenue growth. Consolidated EBITDA increased 26% year on year to INR29.7 crores with an EBITDA margin of 17.7%.

8:30 The performance was supported by a favorable product mix, a higher contribution from frozen foods, cost optimization initiatives, operational efficiencies and tariff refunds while continuing to absorb elevated freight costs and ongoing investments. Consolidated profit after tax stood at 17.3, up 13.4% year on year with a PAT margin of 10.3%. Moving to the stand alone performance. Stand alone revenue from operations increased 20.5% year on year to INR120.9 crores, supported by a strong order book, continued brand traction and deeper market penetration. Stand alone EBITDA increased 22.6% year on year to INR27.5 crores with the EBITDA margin improving 40 basis points to 22.8%.

9:23 The improvement was driven by a favorable product mix, strong momentum in our frozen brands, operational efficiencies and disciplined cost management despite elevated freight costs. Stand alone profit after tax increased 7.6% year on year to INR 18.3 with a PAT margin of 15.1%. From a segment perspective, Processed Foods revenue increased 28.5% year on year to 144 crores with segment EBITDA at 31.2 crores and a margin of 21.6%. Revenue from Distribution segment stood at 23.2 crores with a margin of 11.5%. During the quarter, our wholly owned subsidiary, U. S. Subsidiary received a tariff refund of USD 2,080,000 amounting to 19.69 crores from the U. S. Government. The refund has been accounted for consistently with the original accounting treatment with a portion of it in the P and L and the balance portion in the balance sheet for June quarter.

10:29 We further continue to monitor developments relating to The U. S. Import tariffs. Looking ahead, our focus remains on disciplined cost management, productivity improvement and delivering operating leverage as our brands, distribution network and manufacturing capacities continue to scale. We will also continue to invest selectively in brand building, product innovation and priority markets. While we remain watchful of geopolitical developments, vessel availability and freight costs, we are confident that our diversified geographic reach, strong order book and operational discipline position us well to deliver sustainable long term growth. With that, I will hand the call back to Sumit to open the floor for questions.

11:20 Thank you very much. We will now begin the question and answer session. If you wish to remove your assist from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Prehan Syed from TriNet Asset Managers. Please go ahead. Hello. Good afternoon to the team, and thanks for giving me the opportunity. So, sir, I have just two questions. First is on the two website. We have this two. So, sir, is the current utilization level is going on? And when do you expect the facility to reach an optimal utilization level capable of delivering the target to INR75 crores revenue per annum?

12:20 Sorry, you were not very clear, but whatever I could understand, I'll try and answer. One is, as you know, we the production trial production commenced end of March of the last fiscal year. We have made shipments of about 15 odd containers in the first quarter of this month. And for the plant to reach its full capacity, it's going to be anywhere between two to three years. Sir, my second question is around like you are presenting U. S. Market. So sir, truly, India is now presently in our U.

13:11 S. Stores. So could you share any KPIs around same store sales growth, which is for either repeat percentage, repeat purchase trend or sales force will indicate the brand is exceeding the all distribution of cars in this market? So I mean, it's we are present in many chains. The so I can't really give too much detail about the data for each of the chains. But the encouraging thing is that they are adding on new products. We are getting repeat orders consistently, which is showing in the growth of the business. We are getting new listings because of the performance of our products in other stores. So these are all encouraging signs, and we are very optimistic on the growth of this brand and feel fairly confident that this product the brand will do very well in the mainstream.

14:11 Okay. Okay, I understand. Just one more last one question, if you can allow. Concern So of this company continues to maintain EBITDA margin in the high teens despite the disruption. So as logistic costs normalizes, would the utilization improve? So what is substantial sustainable EBITDA margin range we should have to think in our mind? So I think the high teens is a good indication, and we will continue to be around that. And just now, even with there are a lot of uncertainties, as you know. So but we are still trying to make sure that we keep the high teens level. And in fact, from this quarter onwards, we have started passing on the freight increase to the customers as well.

15:06 So that will also help in improving the EBITDA margins. That's it for my time. Good luck to upcoming quarter. Thank you. Thank you. The next question is from the line of Saurabh from Samiksha Capital. Please go ahead. Hello. Am I audible? Yes. Yes, you are. Yes. Just wanted to know on the part that since if we adjust the tariff difference which we had, so the EBITDA margins are 38.4% on a consolidated if I'm not wrong. So what was the magnitude of pre if I talk as a percentage of the revenue that the EBITDA falls to the 30.4 levels.

15:53 And if you can share a number regarding what could be the going forward sustainable number of the margins that would be done? And another one was, so we have this remaining tariff being locked in the balance sheet right now. So what could be the going forward treatment policy? And the third one is in the PPT, you guys have you mentioned the FY 'nineteen revenue of INR900 crores. So would it be near the 1,000 range or below the $9.50 range? So guidance on that. So thanks, Saurabh, for your question. I'll take the first two On the freight part, so if you look at our numbers, we had an impact due to freight because of the ongoing container issues as well as the elevated fuel costs.

16:52 So on consolidated level, our number is roughly around 3%, which is getting impacted on because of freight. In terms of tariff, as you would have seen in our accounting note, we had received a $2,080,000 of tariff refund. The balance is basically in our balance sheet, which will be further evaluated based on certain customer arrangements and commercial arrangements with the customers. So that will reflect in the few quarters going forward. In terms of the revenue upwards of 900, that's our goal for FY 2027 and we remain cautiously optimistic with this geopolitical situations if they coming if they as per if they ease out rather, we'll be able to achieve this INR900 million upwards target.

17:54 On the margins part, you got muted for a while. Can you just repeat on the margins part? What was the fleet impact and the sustainable number? Yes. Freight impact was nearly 3%. Guidance. Yes. But as we as Bimal has just rightly pointed out, we have now started to pass on the entire freights to our customers from this quarter and we are evaluating with every passing day on the shipping with the shipping lines and getting better rates for our customers as well. So are we planning to pass on the entire fleet or the part of it? No. So it depends market to market, but our major markets like The U.

18:45 S, we are passing on close to 75 of the rate increase onto the customers. In some markets, strategically, we are not passing on any increase. But more or less, I would say upwards of 65% or 70% of our business, we are passing on the freight increase. That is it. Also, sir, just one last question. So currently, for this quarter, adjusted margins were 13.4%. If I remove the freight impact, it was 16.4%. So going forward, as this solar plant ramps up and we get a kick off the operating leverage, can I expect 17% to 18% margin being achievable Yes, starting in SG that is what the goal is?

19:41 But as I mentioned, the Surat plant to get to full scale is going to be at least anywhere between two to three years. It's just started operations. And the product needs to get into the market, people need to try it, and then we get repeat orders. So there is a cycle which is there. All of the new products which we've launched have just got into the markets a few weeks ago. So we are now starting to and the acceptance has been fairly encouraging. So we've started getting repeat orders. So it's a process. It takes time. So this year, you will we'll probably see the plant at about 30 odd percent capacity utilization.

20:27 And then as the second year and third year onwards, we'll see the ramp up happening. Okay. Thanks. So that is that is from my side. Thanks. Thank you. Reminder, anyone who wishes to ask a question may press star and one on the touch tone telephone. Ladies and gentlemen, anyone who wishes to ask a question, may press star and one on the touchtone telephone. The next question is from the line of Ravi from Investment Private Limited. Please go ahead. Thank you to give me opportunity. Sir, my short question, 900 top line, we anticipate for financial year '27. So what percentage of margin we attend this?

21:15 So Mr. Ravi, we are hoping to keep this high teens is what our goal is in terms of the EBITDA margins. Okay. And second, this INR 19 crore refund, which we received from U. S. Government, how much you entered in quarter one? So I'll take this up, Mr. Ravi. In quarter one, we have basically booked a 770,000. Dollars. Dollars, sorry. 0.77 means roughly about roughly INR7 crores, upwards of roughly INR7 crores. And in spite of INR7 crore income we added, our margin is INR 17 crore only.

22:05 It's not so you so as I just stated to you that we had an effect of the freight cost elevated freight cost, which ate away 3% of our margins. Okay. So including this INR 7 crore, our top line is INR 17 crore, right? Correct. Yes. EBITDA margin is 17.7%. Okay. Thank you. Thank you. The next question is from the line of from Desvaldo Research. Please go ahead.

23:03 Hello,. Please go ahead. Hi. And thanks for the. So I need to ask about that to certification and the benefits also about that. So, like, could you elaborate on, like, where we can expect the business operational benefits to enroll and, like, what time frame we can expect for the benefits to become visible? Yeah, so I'll take this up. So, received this AEO D3, which is a milestone for all the exporters. So, this is the best in class in terms of the customs giving us the certification. See this helps us basically for faster customs processing, reduced examination requirements and expedited cargo shipments clearances.

23:49 So we received this in the month of May and over a period time, we our new shipments, which are going from the month of June, they will basically benefited from reduced time in terms of clearances and also there will be lesser examinations, which will help in basically not getting stuck up at the airports. So basically, this basically helps us in inventory turns faster inventory turns and cash conversions. But to put a number as of now is very premature, But this is a very good step which the company has got in terms of a certification for smoother international trade. Okay. And about the Touring Indian brand, So you mentioned like over the last quarter, the brand expanded from around 2,000 stores to nearly 3,000.

24:44 So like could you share whether the growth is now going to be by the repeat customer purchases or a strong like and stronger off book or is it some incremental store addition? No. So the growth, it's a combination of both. There has been growth within the same stores, which were there and also because of the new brand I mean, new introductions as well, new store additions. So it's a combination of both. And in terms of percentage, it'll probably be 60% old store growth and 40% towards the new listings. Okay. Just a last question. Am I audible now?

25:48 Yeah. Yeah. Like about the solar facility, the commercial deliveries have now come in. So, like, the assumptions which are on the financial year twenty seven revenue contribution of around crores to INR50 crores. So are they broadly intact right now? Yes, we should be able to get to that number by the end of this fiscal year. Okay. Thank you so much. Thank you. Thank you. The next question is from the line of Ankur Gulati from Genuity Capital. Please go ahead. Hi. Sam, I'm audible. Yes. Perfect. A quick question. The margin guidance that you guys are giving, that includes the tariff refund or that's excluding tariff refund?

26:40 No, the high teens is mean, is going to be without the tariff refund. But we've been impacted in the first quarter because of freight increase. So that's why after adjustment, it said about a little under 14%. But now that we've passed, we started passing on the freight increase from this quarter from this month onwards, we will start seeing that improvement coming in on the EBITDA as well. So, let's say, nine months using broadly 2016, 2017, what the trajectory was earlier? Correct, correct. Perfect. Any labor shortages that you guys are facing?

27:26 Because when we did some challenges with some of the private peers, there was a bit of a labor shortage due to West Bengal elections and so on and so forth. So any challenges on that side? Nothing significant. But so you have some shortages if there is typically, maybe during the selection time or wedding season, there is some amount of shortage, but it's a seasonal thing which happens. But otherwise, no, there's no real major problem. And any color on there were some discussions happening with some of bigger clients for large white labeling engagements or any progress on that side?

28:13 Well, we continue to expand our see, as a company, our focus is our own brands, right? And the sales split is about 75% is our own brands, 25 is B2B and private label business. We continue to grow the private label or B2B business and but the focus always will continue to remain on our own brands. So yes, we are in discussions with new clients. There are some new accounts which we've got. So that's an ongoing process. Fair enough. One question on depreciation, the INR66 crores, this is now the study said that with the new plant coming in or is there more upside to it?

29:08 So this is based on the Phase one of our Surat facility. Phase two is expected to happen quarter three. So there will be some more depreciation, which will come in, in Q3 or Q4. But Ankur, just to add to what Pimul said, it will be mostly for the lines because the major part of the depreciation in terms of the building and all has been The bill is done. Okay. All the new machine did. Fair enough. Last thing, I think sometime next year, your PLI benefits are dropping, which will be roughly 16 CR. So any plans to recoup, let's say, 1.5% margin debt, which may play out? I mean, you think? So while we will continue to invest in our brands, as the years go by and the amount of investment also reduces as the brands start getting more well known. So we hope to strike a proper balance. Certain brands which are growth brands like Truly Indian will continue to require investment.

30:17 Seoul will require investment. Ashoka, of course, will require investment. But as a percentage to sales, that will reduce. So we'll try and balance it out that way. And we are hopeful that the government continues the PLI scheme. We were there was a meeting which happened recently where they are thinking of extending it, especially for Category three, which is where we got our PLI. So we hope that this continues from the government side as well. Thank Thank you. You. The next question is from the line of Bharat from Quest Investment Managers Private Limited. Please go ahead.

31:06 Hi. Good afternoon, and congratulations. Thank you. I mean I mean, it... For doing a performance in very challenging time. So Thank you. I have one, yeah, one question, particularly saying Truly Indian as well as we have launched a Soulful again relaunch ing domestic market and for which we continue to do keep on my soft expenses. So how much... When do we expect that that will really start and coming to end and kind of a opportunity that we have that we can, I mean? Or otherwise, so our top line growth or will... With the gross margin, taking care of all those investments. So our EBIT move trajectory move positively.

31:56 So, Mr. Bharat, building a brand takes time and it does require investment. Right? Correct. Truly Indian, as you see, as a brand has already started showing good growth momentum. We are seeing more listings happening. But it's still at that growth stage, so it will still need that support. As a And company, we want to I mean, the Ashoka brand continues to remain our flagship brand, but we want to target the mainstream market where there's going to be a lot more growth going forward. So we have to make that investment right now to reap the benefits later on. So that investment on Truly Indian brand over the last two years, if you see, I mean, are already seeing signs of growth happening, well acceptance, more listings coming up.

32:54 On the SOL brand, yes, it's been a little slow. It's not happened the way Truly Indian has grown. But we are doing we've made certain changes in our strategy and hope that this brand will also this year start showing the same kind of positive results like how Truly Indian has shown. Correct. So meanwhile, what I understand that for truly Indian, our team is much larger than the that we have. So what's your experience from three to five years perspective? Say, like, was around 300 crores. So when do you think Asoka can be in the next five years as well as truly Indian, your experience and not, I mean, any binding thing, but the kind of, I mean, opportunity you are seeing?

33:45 So, you know, rather than putting numbers to it, I'll just give you what the opportunity is. The Ashoka brand caters to the Indian diaspora or the South Asian diaspora Correct. All. Right? So you take America, Truly Indian is in America right now and in Germany, right? Now the population of The United States is about 300,000,000 people. Ashoka is only servicing the 5,000,000 or 6,000,000 South Asians, which are there in The U. S. So if you see the opportunity on the truly Indian side, I mean, there is upwards of hundreds of million people, especially who like to try out different kinds of international cuisines.

34:35 So that's where the opportunity is. So we feel, I mean, truly Indian over the long term can be a much bigger brand than Ashoka going. So it's just we need to make sure we are introducing the right products, doing making the investments and all the things which is required. Having said that, Ashoka also has a lot of opportunity to grow and we'll continue to do that. So both the brands have a very strong and Ashoka has been growing upwards of 25% over the last five years. This last quarter, it's grown upwards of 30%. We feel fairly confident. I mean, Truly Indian has grown and it's at a low base, but it has grown like 3x, 4x already.

35:26 So there is we just have to be patient. These are building a brand takes time and investment, but we are going on the right path. Great. Will, by the way, taking to that question, see, we have also presence in Germany and now as well as in UK. So how do we think expanding within a European... Total European market or kind of I mean, our SPD is important to say? So if you you must have read that we've set up we are setting up a step down subsidiary in Ireland, which is to basically address the European market. And in the so we want to put in more investments in I mean, put in more focus and investment in U.

36:19 K. And Europe because we see huge growth opportunities there as well. So we will be and you will see over the next few quarters and going forward that region also growing at a high double digit for us. Okay. And last question, because I was like, what kind of impact we saw on because of West Asia, which was roughly around 15% kind of total size of the business. So is that break on still, I mean, we are struggling to reach to that 15% of the total size? So by the way, the good news is, I mean, was a really bad month where we couldn't make any shipments. In this quarter, we started off shipments from end April onwards, and we have caught up quite a bit and are more or less coming back to that same kind of levels of 15%.

37:21 The freight rates are high, but we've passed on we've been passing on, like I mentioned, from this month onwards, we'll be passing on the freight increase as well to the customers. Great. And thanks, and all the best. Thank you. Thank you. The next question is from the line of Danan Jay from Algami. Please go ahead. Hello. Yes. Hi, sir. Just question, maybe I missed it. When these tariffs were hold on to us, were customers sharing the tariffs with us, I mean, the increase in tariffs with us or were they absorbing most of it just for understanding perspective? Yes. So from a tariff perspective, most of our customers, especially in the mainstream business, we had actually absorbed those tariffs. So it's basically that's why you see that we have counted all those things.

38:18 The rest of the tariffs were actually shared throughout the chain basically. So here that is what is the situation for the tariffs, which happened during September to March. Okay. But if that was the case, there would have been a bigger hit on the margins, Because we've done quite well actually in terms of keeping margins at such a strong rate even with the tariff increase. So year on year margins are actually stronger than it was, so just trying to understand that part. So basically we have lot of structured programs in our manufacturing and supply chain operations. This actually gives us a lot of capability and automation and digitalization projects, which we have done basically help us in getting those efficiencies into the system and which basically pass on to the gross margin.

39:15 We also have a very strong procurement program, which actually works very well and buys raw materials and packing materials when the rates are quite low, and we hedge all those basically prices. So that's how you see the efficiencies which are impacting positively in the gross margin even though there were tariff challenges. Understood sir, kudos to you. And sir, now going ahead, now with the rollback in tariff, would we look to keep prices at what level would you want to rollback prices or rollback margins or keep it both and then we should expect a significant increase in margins going ahead? Danajar, depending on the product category, we are strategic about where we want to pass back the benefits to the trade or to the consumer.

40:15 And certain products, we will continue to keep it that way because we've also been impacted by the freight increase, other input costs. So we are trying to balance it out and be strategic about certain products where we want to increase more market share, where we want to grow faster, those products we would probably pass on some of the tariff benefits. Surely. So superb sir. You've done a very good job in this tough environment. Thank you so much. Thank you. Thank you. The next question is from the line of Saurabh from Samiksha Capital. Please go ahead. Thank you. I would like to just read a share from the margin part. So the sales food margin stood 21 odd here in this quarter and Y o Y was 24.

41:11 Like assuming the tariff impact affects processed foods more, so we had revenue growth there, but EBITDA was almost flat. Even if we remove the pre impact margins, it's declining. So what is it a structural decline or what was the reason behind? No. So when you look at the Processed Foods, it's as per what was there last year. You have to also include basically the so basically there is the capability building which has come in, but that is not impacting anything in terms of the margins. The major impact as I had said earlier was on the freight part, which has eaten away our margins for Q1.

41:58 What we will see going forward is the operating leverage to kick in, especially on the Processed Foods segment, which will have our margins come to back toward the high teens level, which from an EBITDA perspective, which Vimal was describing in his call previously. And just to add to this, Saurabh, because of the container shortages, the supply chain disruption, I mean, our Q1 could have ended up with a much higher top line. We had a lot of goods ready with us, but we were unable to ship them because of non availability of ships and containers. Our order book has been the strongest it has been in the company's history for June, July, even August is a very strong order book.

42:55 So we've been producing the goods and the problem has been of shipping out. So even in the month of June, we could not ship up 30% of our goods which were ready due to non availability of ships and containers. Mean, are doing our best to get and because we are one of the largest exporters in this category, we have some cloud with the shipping companies, but they also have their limitations in terms of a lot of vessels are skipping the Indian ports. So that's where the whole shortage is happening for them as well.

43:44 True. And on the distribution side, like what is reflected in the PPT that we had 11.5% margin and while in my business it was 17.4%. So I might have missed out on something. Is it some reason due to which it is down so much? No. So, Saurabh, you have to look at the overall margins on an annual basis. Quarterly, there are certain impacts which come in because of the seasonal costs. So you will have to really take the full year margins. So as we have said, our margins will be fairly in line with what we have been delivering, high teens EBITDA and even between the segments like Process and Distribution, it will remain in those ranges of what has been in historically.

44:37 Okay. And last on the tariff part, 10% U. I guess it expired on July 24. So what is the rate getting applied right now? And what could be a possible scenario going forward? So I think it's still continuing at 10% for at the moment. How it goes future is anyone's guess sort of it's we really don't know and we hope it doesn't fluctuate too much and it remains at the same levels. We passed on the entire tariff right now, right, to the ex consumers? We did last time. And as I said earlier, we are now passing back the benefits in certain product categories from a strategic point. So, yes, some categories, are keeping that price increase with us as well.

45:37 Perfect. Thank you. You. The next question is from the line of Raghu, an individual investor. Please go ahead. Hello. Am I audible? Yeah. Sir, firstly, I have three questions. Firstly, sir, we have been clocking around one ninety crores of revenue, and suddenly, there's a dip. So is it seasonality, or are we expecting some bump up in next few quarters to achieve our target? Secondly, sir... May I ask all the questions or should I wait? No. No. No. Please please ask all your questions. Okay, sir. Secondly, sir, we our bottom line has been impacted this quarter.

46:25 So, like, taking into account present conditions, and we have also passed on certain rates. So how do you see the impact now? Given that we are also getting to... Going to get some benefit from those tariff refunds. So will now the impact be balanced or will still be impacted by it? And thirdly, sir, these new FTAs that we are having with New Zealand, Australia, EU, Britain. So any strategies to, like, utilize them for our benefits? These are my questions. Okay. I'll take the first question. Sriniv take the second one and third one also I can take. So the first question, Mr.

47:12 Raghu, is Q1 for us as a company historically, if you've seen, has been the weakest quarter for us. And this year, I mean, to last year first quarter, we've actually grown much better than the last year first quarter despite all the problems we've had on getting containers, getting shipments, all of that. As I mentioned, we could have done much better in the month of June in terms of top line. Our order book has been very strong. But because of the problems on containers, we were not able to make more shipments. But yet, we are upwards of 20% when you compare it to last year first quarter. Seeni, you want to take the Yes. On the margins, as I said, you have to look at it from a whole year perspective.

48:03 Certain investments which happened during the quarters for our brand building plus the elevated cost of freight which have happened in the first quarter basically have muted our margins for this quarter. But when you look at for a full year period, you will see our margins at the high teens. So our approach is simple. We work on building our brand, putting our investments where our markets are growing and get that operating leverage to flow it into the EBITDA levels. And as far as the FDAs go, yes, these are going to benefit us and especially UK and when the Europe FDA comes into when it's finalized. I mean, we are as I mentioned, we are looking at investing more in these markets to grow our business there.

48:57 So yes, this will definitely be a positive it will have a positive impact for our company. Yes. And to add to different point on the FDA, especially in The EU, as we see just reiterated that we are planning to we are opening up a subsidiary in Ireland, basically to get those operational efficiencies and be very closer to the market. Now we have teams there in UK and Europe who can really help us basically in getting new stores, new distributors and new channels. Okay, sir. Sir, just one follow-up. Since we could not ship some of our assignments, so are we expecting some bumpers in Q2 and subsequent quarters?

49:46 So, Raghu, of course, that will be a carryforward, which will come in Q2. But the availability of containers and the supply chain issues still continues to be a challenge. So what could happen is your Q2 could get again further carried forward to Q3. So it all depends on how soon this crisis gets over, and we are able to make all our shipments. As I mentioned, the order book is a very has been the strongest it's ever been for the company. But now the challenges of getting it shipped out, which we are doing our best. I mean, our entire team is working around the clock to make sure that we get our containers.

50:36 We're able to make the shipments out. And because we are a large shipper, we are able to get some leverage put some pressure on the shipping companies, but it's still challenging times. Okay, sir. So the 900 plus top line is still achievable or if these disruptions continue, then we might have to So Again? Yeah. Rahul, we are are working to make sure that we achieve that. But, you know, there are certain things which are beyond our control. But we feel like I mentioned, we are cautiously optimistic and feel confident. From an order book point of view and from a market demand point of view, we'll definitely be able to achieve it. It's just the supply chain, which could create a problem for us if it continues like this.

51:37 Okay, sir. Thank you so much and best wishes. Thank you. Thank you. Thank you. The next question is from the line of Bharat from Quest Investment Managers Private Limited. Please go ahead. Thanks for the opportunity for second time. We must have question if you can give some color competitive landscape for truly Indian, whether it is from the existing, I mean, Indian player. Also, there are all some other player are there. And, of course, in this year, we can see this quarter, there is a step bump up in a consolidated staff course. So how much new, I mean, people are we adding and where do we expect, I mean, further addition of the people? So the competition on the Truly Indian brand is not really from any of the Indian players at the moment.

52:31 Mainly local companies from America who are producing the Indian type of foods, okay? We are competing with them mainly. And we have added on more people in the team. And I think at the moment, we are now fully staffed as far as the truly Indian team goes. So we won't be seeing any more additions on the team team size out there in The US. Okay. Great. Second, I mean, question for our CFO. So mister, see, you said that there is a 3% additional cost on logistics. So that is on consolidated number or standalone number?

53:17 It's on the overall margin. Overall sales. Overall sales. Okay. And same thing, the increase in depreciation because of capitalization, so do we assume that this will be maintained also it may increase further? So as I said, Surat, the plant started in the month of March. The majority of the plant was done in terms of building and some fuel machineries as well as the ETPs as well as the utility facilities, which got capitalized in the month of March. There will be a few lines which will be coming in as mister Bimal said. The phase two will be there. So that will be an add on, but those will be only for the plant and machinery. Okay. Thank you. And we can say roughly around INR 25 crore, correct? Yes. INR 20 crore, that's the range which we have given basically.

54:09 Okay. Thank you and all the best. Thank you. The next question is from the line of Ravi Naredi from Naredi Investments Limited. Please go ahead. Sir, my one point again, any more such more U. S. Customs department refund we may get in coming nine months? No, Mr. Ravi. At the moment, nothing. Whatever was there, we got. We as you are aware, we did win one case in The U. S. Where we've been awarded $2,800,000 close to $2,800,000 So now the only thing that we I mean, we are now trying to get that money from the person who we won the case from.

55:05 So that would be any no more tariff refunds, but this is another thing which could come into our books this year. $2,800,000 we receive in nine months, next nine months? Well, are trying to we are now in discussions, our lawyers are in discussions with the party because to see how we can recover this from that. And one more, PLI benefit from Government of India, anything we have to receive in next nine months? Yes. So, yes, we have this is the last year of our PLI, where we are basically enrolled for the category brand marketing and promotion expenses, which gets reimbursed.

55:53 So we are accruing the same amount of last year basically in terms of our PII benefits for this year. And what is that amount? It's about INR 16 crores for the full year. Okay. Okay. Okay. Thank you. The next question is from the line of Saurabh from Samiksha Capital. Just one last question. I would like to touch upon the PLI part. So can you just quote me what percentage of EBITDA was supported by the PLI in FY 'twenty six? And since this is the last year post that, we would have an impact on that as well. Right? We won't be accruing further PII benefits. So can you just throw a light upon that?

56:46 Yes. So our PII for the last year was INR16 crores and this was on a revenue of INR683 crores, okay. So the percentage roughly would be INR16. So it's roughly around 2% in terms of our margin. But as Bimal said in his speech that see, you have to look at PLLI. PLLI is a brand building activity and we have been building the brand for the last three, four years. As a percentage to sales, this number will come down because as the brand becomes big, basically, it spends only on the absolute amount and not as a percentage to sales.

57:37 We'll keep on investing in our truly Indian brand, but from an Ashoka perspective, that number will start to come down as a percentage to sales, which will help us basically maintaining our EBITDA margins. And we are hopeful that the government is still consistent with this PLI, especially for category three, which is for brand building. I think my question was strongly communicated. What I meant was, so in the previous years, we had the benefit of P and I in terms of our EBITDA margins. So in the coming years, when the government is not giving the P and I benefit, so that incremental margin would be depleted, right? So even our margins would get below the current levels. So that is what I wanted to know that what percentage of EBITDA margins can be depleted.

58:32 So that was my question. I think we answered the same. Maybe you didn't understand that, but I'll again reiterate. See, when you invest in brands, you invest it as a percentage when you are at the start of building a brand. As the brand gets stronger, this number will be absolute. So it will be balanced out in the few in the next years, so that it doesn't impact our brand building exercises also and doesn't even deplete our EBITDA margins. So the Ashoka brand, for example, the investment going forward as a percentage to sales will keep coming down. Perfect. That makes sense. Okay. Thank you. The next question is from the line of Pritesh Chadda from Lucky. Please go ahead.

59:25 Sir, can you comment the depreciation figure post this expansion? No, I didn't get your What will be the depreciation figure post the capitalization of the ongoing expansion? See, currently you see the depreciation figure for quarter one, which includes all our Surat plus brownfield activities, which have got capitalized in the month of March and some in the month of in the first quarter of this year basically. What you now will see is roughly around INR 20 crores to 25 crores of CapEx, which will be a residue CapEx of whatever the new machinery comes up in Surat and some small routine CapExes, which will happen throughout the year. So that will be the incremental depreciation which will hit your books at the end of this year once all the projects go live.

1:00:19 And the total capacity now on ground and the post expansion which you lined up, what kind of revenue can it support the manufacturing revenue? Not the... Obviously, not the agency. Exo agency, what it can support? So the Surat factory, as we've mentioned, at full capacity, it will be a little under INR300 crores in terms of top line. Then... Utilization. So last year you were... Sorry. Yeah. Go ahead, sir. Go ahead. No. No. Please. You you may ask, we... I'll I'll control. So let's say last year you had six eighty in which 100 was agent. So you're five eighty x of agency.

1:01:08 To that five eighty, post expansion, how much can you scale this five eighty two? So from an expansion perspective, once... As we said, Surat gets ramped up with all the phases, we will have upwards of INR $12.50 crores of revenue, basically catering with all these investments. And we won't need much of an investment, just the routine investments, which will take care of our new product innovations or line changes. So with the greenfield and the brownfield, all that put together at full capacity, we could be about 12 we can go up to twelve fifty. Ex of agency, right? Yes. Yes. Ex of agency. Okay. Just one clarification.

1:01:55 So now some total on PLI incentives, let's say, not being there, the elevated freight cost that you are seeing, our current depreciation, which is a which is a favorable number, and the new capacity, which has come up, which is a better automated capacity. So if... What kind of margins... So you had a peak of about 20 margin, then some years you had about 17% also. So some total, what kind of margin reflection one should look at? So I think our guidance has been high teens, and we continue to be at that. That's how we would look at it. Because we are still going to be investing in some of our the growth brands, right, like Truly Indian, Soul, those investments will continue.

1:02:52 So I say in the high teens, we stand by that guidance. Okay. And the last question is, you will fully utilize your capacity in FY 'twenty nine or in FY 'thirty? I think '30 would be realistic year where we'll see full utilization. Okay, sir. Thank you very much. Thank you. Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments. Thank you, everyone, for your participation, and look forward to catching up with you all in the next quarter.

1:03:40 All the best. Thanks. On behalf of ADF Foods Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.