LT Foods (NSE:LTFOODS) Q2 2027 Earnings Call

0:00 Gentlemen, good day, and welcome to Q2 and H1 FY 'twenty seven LTFOODS Earnings Call. As a reminder, all participant lines will be in listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumant Kumar from Motilal Roosevelt. Thank you, and over to you, sir. Thank you. Good evening, everyone, and very warm welcome to LTFOODS 2Q FY 'twenty seven post results earnings call hosted by Motilalu Swalphin and Services.

0:52 On the call today, we have management team being represented by mister Ashwini Kumar Roda, MD and CEO, mister Sachin Gupta, CFO and CFO, and Monica Chavalajavia, chief corporation development officer. We'll begin the call with the key thoughts from the management team. Thereafter, we will open the floor for the q and a session. I would I would now like to request the management to share their perspective on the performance of the company. Thank you, and over to you. Thank you, Sumant, for the introduction. Along with us, we have Mr. Ritesh Sharora as well. He's the CEO of India And Far East Business. So good evening, everyone, and thank you for joining us today on the post Q2 and H1 financial year twenty seven earnings conference call of LT Foods Limited.

1:45 Before we begin, I would like to remind you that certain statements made during this call may constitute forward looking statements. These statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. The result documents are available on our company's website as well as the stock exchanges. So I'll start with a brief strategic update across our key geographies and businesses. Across markets, our priorities remain consistent, strengthen our brands, expand consumer reach, build differentiated portfolio, deepen distribution, and invest in capabilities that support sustainable and profitable growth. I'll start with India.

2:31 India continues to be a strong growth engine for LT Foods. Our strategy is centered on premiumization, portfolio expansion, deeper distribution and digitally enabled execution. During the quarter, we strengthened our portfolio with our delight, Rosanna Platinum and new formats such as biryani gravy and biryani masala. We are also seeing encouraging traction in health focused offerings, including brown, red and black rice, while our biryani kits have grown by 38% during the first half. Our brand investments are translating into measurable outcomes against category growth of approximately 1.3%. Our branded portfolio grew by nearly around nearly 8%, supporting a 140 basis point increase in market share on year to date basis.

3:21 Household reach increased from 56.2 lakhs to 67.5 lakhs over the last year. Through our project with Star, we are increasing direct distribution, feet on street capability and assortment productivity. Alongside this, investments in supply chain and sales digitalization are improving forecasting, frontline execution, and on shelf availability. With branded bath smoothies still significantly underpenetrated in India, we see a long runway to acquire consumers, minimize the category, and expand into adjacent consumption occasions. Now I'll cover The United States. United States remains our largest international market and an important growth engine supported by strong brands, category leadership and established omnichannel presence and strong distribution.

4:12 We continue to strengthen our core rice portfolio while expanding into convenience set and value added consumption occasions. During the period, we advanced our ready to heat portfolio, expanding microwaveable format formats and continued premiumization across Royal and Golden Star and Rice. We are also investing in digital commerce and consumer discovery capabilities to keep our brands visible and relevant as the path to purchase increasingly moves across digital and AI enabled platforms. Our ambition is to leverage our leadership into rise to build a broader branded foods platform in North America. If I talk about Europe, Europe continues to be an important strategic market for us. While the operating environment remains challenging, we have made meaningful progress in strengthening the underlying business and creating a more scalable platform for the future growth.

5:06 During the quarter, we further expanded our customer base and secured new mainstream private label business across Germany and the Nordic markets. We have strengthened our presence in France and are expanding our commercial coverage across Europe. Together, these initiatives are increasing our participation across both mainstream and ethnic channels and substantially broadening the opportunity available to us. At the same time, we remain sharply focused on improving the quality of the business through better product and channel mix, procurement efficiencies, automation, productivity improvement and the disciplined cost management. Our strategy from here is very clear, scale the mainstream business, deepen our presence across key European market, strengthen higher margin opportunities and continue improving the efficiency of our operating model and keep growing and further strengthening the Davos brand in ethnic market.

6:02 Overall, Europe remains in a investment and scale building phase, but the business today is on a stronger footing than it was few quarters ago. We have expanded our customer base, strengthened our commercial organization, and improved organized... Operating performance. Our focus now is on translating these deals into sustainable growth and progressively stronger profitability over the medium term. Middle East continues to be an attractive long term growth opportunity for LT Foods despite being a highly competitive and segmented market. During the period, the region delivered strong volume growth, outperforming both last year and in the growth was supported by deeper market penetration, expansion of private label partnerships, and continued strengthening of our core branded portfolio.

6:49 We also continued investing behind brand building, consumer awareness, helping strengthen brand equity and expand our consumer franchise across the region. While the overall demand in the region remains strong, the quarter was significantly impacted by the supply disruptions, which constrained inventory flow into the region and a sharp escalation in the freight cost further raised the landed cost and weighed heavily on the profitability during this period. While we have taken active steps to mitigate these pressures to alternate routing, optimizing spend, and increased pricing, the full impact of these will show up in the subsequent quarters. Though still, we continued the momentum in our ecommerce business where we maintain category leadership position and delivered strong growth despite the intermittent supply chain disruptions.

7:38 Looking ahead, our strategy remains focused on expanding distribution, improving product availability, strengthening local partnership and increasing penetration across both branded and private label opportunities. We believe these initiatives will further strengthen our position in the region over time. Rest of the world, in rest of the world markets, we continue to enjoy leadership position across several markets through focused brand investments, stock execution and continued distribution expansion. We are further strengthening our market share and consolidating our leadership position across these geographies. If I talk about Nature Biopharmaceuticals, which is undergoing an important strategic transformation from an India centric sourcing and export business into a globally integrated consumer focused organic food platform.

8:25 The first pillar is moving closer to customer through deeper direct relationship with retailer and consumer brands. This transition has created near term revenue pressure as parts of the traditional intermediary led business are replaced, but it should improve customer ownership and value chain participation over time. The second pillar is portfolio and sourcing diversification. We are expanding beyond rice and developing sourcing capabilities across different geographies like Turkey and other regions. Together with our European processing capability to strengthen supply chain flexibility and enables a broader organic portfolio. In India, we are consolidating manufacturing through a new multiparty facility with the first phase expected to commence operations in this financial year. This transition involves near term costs, but should structurally improve efficiency, resource utilization and cost competitiveness.

9:18 Our further investment in leaf also provides an entry into Benelux organic retail market, particularly in breakfast and between snack and and additional platform for downstream growth. Overall, Nature Biophoods, the organic arm of LT Foods, is moving from an original led organic ingredient model towards a globally sourced destination focused organic food platform with deeper customer relationship and greater participation in the downstream value chain. To summarize, across geographies and segments, our strategic direction remains clear, defend and deepen leadership in the core, broaden participation in convenience and value added foods, strengthen consumer brands, improve the quality and profitability of international operations and invest in digital and operational capabilities that support long term scale. India continues to deliver strong profitable growth. North America provides the platform to extend beyond rights. Europe and UK are progressing through disciplined operational improvement, and Middle East is building consumer scale, and Nature Biophoods is being repositioned for high quality growth. Together, these prioritized support...

10:27 Priorities support our evolution into a larger, more diversified, globally relevant branded food company. Now with this, I'll hand over to Sachin, CFO of the company for the detailed financial update. Over to you, Sachin, please. Thank you, Monica. Good evening, everyone, and thank you for joining us today. I'm pleased to share our financial performance for the second quarter and first half of FY 'twenty seven. The first half delivered healthy broad based growth across all key geographies, led by different segments, even as we stepped up our investments behind our brand and maintained our focus on operational efficiency and disciplined capital allocation. Now let me begin with our consolidated financial performance.

11:15 During Q2 FY twenty twenty seven, the consolidated revenue grew by 17% on year on year basis to INR $3,002.53 crores from INR 2,772 crores in quarter two FY 'twenty six, a growth of 3% over quarter one FY 'twenty seven. The gross profit increased by 12% to $10.58 crores from INR $9.48 crores. The gross margin for the quarter was 32.5% compared with 34.2% in quarter two FY twenty twenty six. The change in the gross margin was primarily due to two factors. Firstly, the change in the shipment terms with the related party from CIF to FOP basis, under which the freight cost now forms part of the cost of goods sold instead of other expenditure.

12:08 This classification is EBITDA neutral. Secondly, the higher shipment growth across the major markets. Shipping costs as a percentage to revenue rose by almost 40 basis points, which also has an impact on the EBITDA. EBITDA grew by 13% to $3.58 crores from INR $3.16 crores in quarter two FY twenty twenty six and was marginally lower than INR363 crores in quarter one FY twenty twenty seven. EBITDA margin stood at 11% compared with 11.4% in quarter two FY twenty twenty six and eleven point five percent in quarter one FY 'twenty seven. This moderation reflects the gross margin factor, which I just explained and the planned step up investment in the advertisement to support our brands and the new launches.

13:03 Advertisement investment increased by 25 crores over quarter one or 2.5% of the revenue as against 1.8% in quarter one, a jump of almost 70 basis points. We also continue to invest in building our health and convenience portfolio, ahead of the commissioning of RTH facility in The U. S, which weighed on our quarterly margins. Meanwhile, the organic food segment improved sequentially with EBITDA of INR22 crores against INR10 crores in quarter one of this year. Depreciation increased with the capitalization of new assets, while the finance cost was higher on the year on year basis on higher supplier funding arrangements undertaken to optimize the working capital cycle.

13:53 PAT increased by 10% on year on year basis to INR180 crores from INR164 crores. For FY for first half FY twenty twenty seven, the consolidated revenue grew by 22% to INR26414 crores from INR5273 crores in last year's FY 'twenty six on normalized basis after adjusting the Golden Star, which was not fully consolidated in quarter one FY 'twenty six, the revenue grew by 18%. The gross profit increased by 15% to INR 2,087 crores. EBITDA grew by 17% to INR $7.21 crores and the PAT grew by 9% to INR $3.64 crores from INR $3.32 crores in H1 FY twenty twenty six. EBITDA margin in this half year stood at 11.2% compared to 11.7% in last year, primarily reflecting higher shipment costs and increased brand investments.

15:01 Brand investment in this half rose by almost 29% to INR 139 crores. Even as we continue to invest in our brands and future growth platforms, we remain focused on driving operating leverage and efficiencies across the value chain. Now turning on our segment performance. Our Baqsmati and the specialty rice business continued to lead our growth. In first half of this year, the revenue increased by 27% to INR 5,760 crores from INR 4,550 crores with volume increase of 11% on year on year basis. The segment contributed 90% of the consolidated revenue. The gross margin in this segment was at 33%, while the EBITDA margin was at 12%.

15:51 The EBITDA margin in the matured market like India, U. S. And the rest of the world stood at 15%. On the geographical front, India grew by 24% on a year on year basis, with volumes increasing by 10. And this India and India accounted for 29% of the revenue. On the international business continues to provide significant scale and diversification. North America, which contributed 50% of our revenue, grew by 21% on a year on year basis or 13% on normalized basis after adjusting Golden Star. Middle East and the rest of the world grew by 25% and contributed 9% of the revenue. Europe contributed 12% of the consolidated revenue during the period.

16:45 The operating environment in Europe remained challenging, particularly due to the raw material and the freight cost pressure. Even so, the European business reduced the debt by EUR 1,800,000 and the improved working capital during the first half. In The UK, performance was impacted by the lower than planned mainstream and industrial volume and elevated operating cost. Price recovery initiatives are expected to help offsetting freight and logistic inflation, and the business remains focused on improving volumes, inventory management and operating efficiencies. Now coming to the organic and the ingredient business. The revenue in this segment was INR $5.20 crores in H1 FY 'twenty seven compared to INR $5.83 crores in the last half year, reflecting the ongoing remodeling of the business.

17:45 The gross margin held at 34% and EBITDA margin was at 6%. In CarriageLink, the segment improved sequentially in quarter two, and we continue to work on improving the business mix and operating performance. On health and convenience portfolio comprising of ready to heat, ready to eat and ready to cook products, these segment contributed INR102 crores in this half year, up by 8% from INR95 crores last year. Even before the enhanced RTS capacity has become operational, ready to eat grew by 17% on a year on year basis. Ready to cook grew by 28%. And the ready to eat grew by 7% in the rupee terms.

18:34 We continue to invest in the category with the long term perspective. Now coming to the balance sheet and capital efficiencies, where we have made a meaningful progress. Inventory days reduced to one hundred fifty nine days from one hundred eighty seven days in the last half year, with the trade payable days reduced to twenty six days from twenty nine days. As a result of the working capital days improvement significantly to one hundred forty three days from one hundred seventy four days in the last year. We ended this half year with a net cash position of INR $2.47 crores in our balance sheet. Our return on capital employed improved to 22.4% from 22% in the last year.

19:23 Return on equity was at 15.7% and the interest coverage stood at comfortable 13.8 times, improving working capital and capital efficiency remains priority as we continue to invest in the brand capacity distribution and new growth opportunities. Now coming to the stand alone performance. For this half year, the revenue in the stand alone basis grew by 14% to INR2417 crores from INR2119 crores. EBITDA increased by 34% to INR223 crores with EBITDA margin improving by to 9.2% from 7.9 and the PBT also grew by 28% to INR 173 crores.

20:12 PAT grew by INR 24 crores to INR 134 crores from INR 108 crores. The quarter two stand alone revenue grew by 17% on a year on year basis to 1 to 1 to $4.01 crores and the EBITDA rose by rose to $10.03 crores from $10.01 crores in quarter two with the margin moderating to 8.3% due to higher other expenditure, including the planned investments. The stand alone balance sheet remains net cash positive as on September 26. Now to summarize, the first half of FY 'twenty seven reflected the continued scale up of our businesses. More importantly, we have delivered this growth alongside a meaningful improvement in the working capital and a higher return on capital employed.

21:07 Going forward, our financial priorities remain clear, sustaining profitable growth in our core basmati and the specialty rice business, improving profitability in the organic food business, scaling up our convenience food portfolio, driving efficiencies across the value chain and maintaining discipline across the working capital and capital allocation. These priorities are anchored in our strategies of strengthening the core, expanding distribution and our product portfolio, driving premiumization and building efficiencies across the value chain. With this, I request the operator to open the floor for questions. Thank you very much. We will now begin the question and answer session.

21:57 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 from CarePMS. Please go ahead. Good evening, team. Hope I'm audible. So my first question is related to the inventory. What is the current inventory level of a basmati rice that is company's holding? And what is the average cost on that inventory?

22:52 And in q two, our inventory is quite low. So what is our strategy for our upcoming season where the prices are expected to be higher? So I will take the first part. So so our inventory level, as on September 26, the patty inventory was at 82,000 tons at an average rate of 43, whereas rice inventory was at two lakh 60,000 tons at an average rate of 60. And and second question, you said, you know, the low. So whatever the inventory we are carrying is to our business plan and is sufficient for whatever the business plan we have. Have. So whereas on So what is our...

23:40 Okay. Yeah. Yeah. Carry on. So, like, it is expected that the current Friday arrival is around 20 to 25% on a higher side. So, like, what is the trend you are expecting and how the procurement will be there? No. You you heard it right. This year, crop '26, the prices are higher by 22 to 25% average. Depends on variety to variety. But as far as our business model, for crop 25, we are sufficiently covered to deliver our plan. And... Yeah. Is it Okay.

24:26 So, like... And the second question is related to the. So if I look at our right segment, so our volume growth is around 11% in h one f y twenty seven, while the revenue growth is about 22% on a y o y basis. But if I look at on a sequential basis, revenue appears to be grew modestly in all our geographies. So, like, if anything happens in our q on q performance. And just to specify, what is our volume growth in Q2 FY 'twenty seven? So coming to your question regarding the growth in the Q2. On a year on year basis, the quantitative growth in the Q2 is 11% with the value growing by 21% from the last year same quarter.

25:18 So as far as the sequential goes, so our growth in the from the last immediate preceding quarter is 6% in the size in the volume terms, whereas in the value terms, it is 5%. Okay. Got it. And the last question is related to our RTC segment. So if I look at our gross profit margins and the EBITDA margins of our RTC segment have declined sharply in this quarter. So, like, any reason for it? Like, is it raw material inflation that companies facing that we are not able to pass on to our consumer or anything like that? So no. It is just... Well, we are on the strategy. So certain promotions and that was running in the RTH and RTC segment in this half year. So it is as per the plan itself, yes, this has to be used because the sampling is net of in our GP and other things. So it has increased our overall the PAT or the PBT numbers by INR 2 crores in this half year.

26:31 Okay. So there were impact of INR 2 crores on our revenue and profitability, right? Correct. Correct. That's it from my side. Thank you. Thank you. Thank you. The next question is from Saurav Begger from Samikshay Capital. Please go ahead. Yes. Thanks for the opportunity. So my question was around the Bharat Mati right segment. So if we see the PPT reports 11.4% growth excluding tariffs and even the volume growth is 11%. So wasn't there any price increase is what I mean. So basically, parity prices had increased if we see the parity prices of last year versus the kind even our procurement cost was higher last year.

27:23 So wasn't there any price increase in the so that is the broader question, if you can give us some color on this. Our total in the value in the past in this rice segment, bathmuthi segment, bathmuthi and specialty, the value has increased by 26%, whereas the volume has increased by 11.5%. So there is a value increase. There is a per ton increase. The rupee the rating is almost a 13% increase. So there is a price increase. Okay. But if we exclude the tariff impact, the organic growth was 11%, right? Organic okay.

28:10 So you are talking about the normalized one last year. Is it the tariff also, it also had an sequential effect. The 25% or the 50% was being imposed in the month of September or August. That had a sequential impact on the last year numbers. So the normal rate of tariff for the last year was 10%, was majorly for the full half year, it was majorly at 10%, which is currently also at 10%. Okay. Perfect. And also, can you explain me some unit economics on the part of of of sales when we procure and subsequently Can I do a question? Your voice is getting echoed if I don't know what kind of... So Yeah. From this thing. Am I audible now?

29:04 No. You're audible, but the voice is getting echoed. No problem. Carry on. Yeah. Yeah. Please go ahead. So I wanted to understand some unit economics on the part of per se when we proclaimed PADI and in subsequent quarters or in subsequent years when the PADI costs are higher. So how do we pass on the cost? Is there any inventory gain that we mark in our books? So what so from an accounting point of view, how do we deal with the increase in parity cost? So normally, whatever, you know, when the crop change and we pass on to the the consumer and the whole industry, you know, works like this.

29:52 So as far as inventory gain or loss, Sachin, you can add, we don't do any accounting in the books. So there is no... That we don't recognize any gain or... Yes. If if the loss is there, if the cost of it is on the basis of cost or market price, whichever is lower. So if the market price happens to be lower, then only the recording of the loss takes place, but any gain is not recorded. Okay. So that ultimately gets reflected in our OCF, right? If we look at even the first half OCF, so there was a higher inventory release just because our procurement cost was lower and selling price was higher in the first half. Is that the case?

30:39 What OCF? So we reported a strong OCF in the first half, right, as compared to the last year. And also have high inventory release. So that is basically because of the other factors, operating cash flow as such, because of in the first quarter, as you know, the parity season happens to be in the December. So we generally enjoy have a surplus cash. As I've told you, we have a net cash position of INR $2.47 crores that is sitting in as on September 30. So there is an operating cash leverage that happens during this period. So my question was on part of inventory.

31:25 Inventory, this was higher, right, in the current half as when we compare it with the previous half of the FY 'twenty six. Okay. So you meant to say about inventory days you're asking about? So inventory days, you talk about the inventory days, last year, was one hundred eighty seven days for the half year. Now it is 160. So our inventory days have in fact improved. So we are Almost same, you know, per se. Yeah. Yes. So your question is now... So inventory days are similar as compared to last year in the same H1. Okay. I'll get back to you on this in person.

32:14 And secondly, was on the part of EBITDA margin. So I guess we are on a lower note than what the earlier guided margin was. So earlier, we were aiming at 11.5% to 12% for this year. And since in the current quarter, we are on a slightly lower end. Is there any revision in the full year guidance and the sustainable numbers? As Sachin just explained, this has resulted for two reasons, the lesser margin. One is the freight costs are higher by 40 bps. And the second is by 20 bps, you have invested more in brand. And I hope that Yes.

33:02 Yeah. But is there any revision in the full year guidance or do we expect? So we we are we are very confident on our business model and and the fundamentals. So as explained by Monica and Sachin by region by region, so some are, you know, markets are in the investment mode. And in the matured market, Sachin has just explained that, you know, we are getting more than 15% EBITDA. So once, you know, all these market, you are a Middle East and organic, they will come to the scale. So the... We are we are very optimistic the margin profile will change.

33:50 And in the mature state, what EBITDA margin do we target for the organic and RTC RTCRTS segment? So when I say matured market for Basmati like U. S, India and some other parts. Yes. I get that. But once the organic and RTCRTS are in place, in the mature state, what EBITDA margin do we specifically target for those segments? No. No. Organic is a different. They played mainly in Europe. So where the margin will when that scale up, the margin will improve in organic business in Europe and in Basmati, Europe and UK and and the The Middle East.

34:39 So, like, if I reframe what I've meant is in the organic SCC, what So margin target time guideline, but as I said, you know, our fundamentals are strong. Our levers are working. So timeline, we don't, you know, give. So target number So we are confident on the margin target. So whatever the targets we initially given, so Ashwini ji was explaining, we we are tying that target, the 14... 13 to... 13.5 to 14% of the EBITDA margin on a consolidated basis. It is just investing certain portion of the money in Europe, UK that are diluting our overall EBITDA margin. In the matured markets like U. S, Europe, U.

35:31 S, India, we have an EBITDA margin of 15% plus. So once this every market goes to their goes up, so our overall EBITDA margin, which is currently at 11% will increase to almost 13%, 13.5%. And just I'll just just to add, because you were specifically asking for the organic and RTH business, organic business, the way it is in the remodeling phase. In the coming two years, we are eyeing this business to also deliver 10% to 11% EBITDA margin. That's I think that was the question that you were asking. Yes. Perfect. That answers the Yes. Thank you. Thank you. Thanks, Sandeep. Goodbye, Anishya.

36:18 Thank you. We have next question from Vikram Kumar from Sumangar Investment. Please go ahead. Hi, thanks for the opportunity. So my question is a substantial amount of working capital has been released in this quarter. So is there any one off or is it a seasonal phenomenon? So it happens. Yes. Hello. So it happens. And during this because this is a non peak season for the procurement purpose. So the working capital is released.

37:04 So as I have told you, we have a net cash position during this period. Yes, it will be getting utilized in the coming quarters with the procurement coming up. So it will be... It is there. It is seasonal procurement. Okay. So... And previously, we used to share volumes by geography of each major market like India, US, and... But that... This time, it is not part of the presentation. So can you give the volume and value figures for each market, please? So, you know, we have stopped that volumes, but we are giving how much we have grown by value and how much we have grown by volume.

37:55 So for, you know, competitive reason, we don't give the absolute volume. And... But we are giving the volume growth and value growth both. So would you repeat it, sir, if you don't mind? I said we are giving guidance on value growth and No. No. No. What was the volume growth and value growth this quarter? That is what I'm asking, sir. Can you So as per our presentation itself, the revenue mix of the India is 29%, whereas the year on year growth in the India business is 24%. The North America, revenue mix is 50%, whereas the value growth was 21%. If you normalize the golden star, it is 13%.

38:42 The Europe group, the revenue was 12% and The Middle East was at 9% with a growth of 25%. Okay. So and last question, point 5% to 14% EBITDA. So from 11% to that journey, how much time it will take? Sorry. You know, we've missed that. You know, to your specific volume growth is 11%, and value growth is 13%. 13%. Yeah. So volume growth is 11%. It is mentioned in the presentation. As well. Yeah. So you're asking another question? No. No. I was asking about your EBITDA, medium term EBITDA guidance of 13 and a half to 14%, if I remember correctly.

39:34 So right now, we are at 11%. So how much... Or what time frame we we should reach that EBITDA, desired range range of EBITDA. So we we we are not... As a policy, we are not giving any timeline. As I said, you know, we are very positive, optimistic that, you know, in our matured market, I'm repeating the EBITDA margin is already 15% above in Basmati. And once, you know, these three, four sectors will come to the scale, the margin profile will change. And so lastly, what is your experience in a rising trading market?

40:22 Our margins generally shoot up or they come down from past cycles? What is your experience? If you see historically, whenever the the price increase and food cost increase, we normally pass on to the to the consumer. And the margin profile, you know, exceptional 1% gain or minus 1% sometimes. So it is in the range of that when the prices goes up or would come down. Okay. Thank you, sir, and all the best. Thank you, sir. Thank you so much. Thank you.

41:08 The next question is from Mr. Yash Mehta from Aart Ventures. Please go ahead. Thank you for the opportunity. So the advertisement and brand building costs are elevated by about 40 bps this quarter. So just wanted to know, are they going to be at this level for the rest of this year? So our ads, if you... At the ad spend, we only on the ad spend, we are... We'll... We will be making an investment of 2.3% of our as a percentage of revenue. In our this quarter itself, our spend got increased to almost 2.5, 2.6%. So on a year on on a yearly basis, it will remain at 2.3%.

41:56 So which is is which is elevated against the last year number. So last year number was 2.1%. Okay. Okay. And are we trying to pass the increase increase in the freight cost to the customers? In some market, yes. In some market, it takes like Middle East just taking time. And Europe, it is not. But in some markets we pass on. That's how the consolidated impact is 0.4%. Okay. Thank you very much. Thank you, sir.

42:41 The next question is from from Value Vision. Please go ahead. Hi, sir. Am I audible? Yes. You are audible. Congratulations on the strong set of results in a tough operating circumstance. I just wanted to understand what is the expectation of our margin for the next two quarters? Do we expect the tightness to continue if the situation escalates in the coming quarters as well? So in VAR, you know you know, it's more main impact is on Middle East and in LT Foods. Middle East is contributing is nine to 10%. So we don't see any impact on the margin in the coming quarters. So it will...

43:29 It should be, you know, going like this only. So there will no big tightness. We don't see. Okay. But it is my assumption that with the free trade being high, even our exports to US and Europe would be affected with the current shipping rate problems in there? Yes. But, you know, somewhere we are able to pass on and some we are absorbing that's how the consolidated 0.40 is getting impacted. Okay. Okay. And the thing which was about that UK investment since the FDA has been signed, is there any benefit and when is that facility coming up and what do we expect it to contribute in the next coming few years?

44:18 No. UK definitely is a part of our strategy as a, you know, company. Europe is a... UK is a big market. And as far as when it will become profitable, you know, as the scale will come and we will be in the next year, we we are looking it to be profitable. Okay. Okay. And what is the growth in of revenue and guidance for the year? That's it. You. I'm sorry, Sandeep. What is the growth guidance for the year and the coming two quarters, revenue impact?

45:07 In the coming quarters, as I said, you know, as h one one h one, h two will be very similar. So we will be maintaining the momentum, basically, the the kind of the things in the first half that we are seeing against the last half full year. So we are quite positive on maintaining that. Thank you. Best of luck. Thank The you, next question is from Mr. Rajesh Agrawal from Manure. Please go ahead. So my question is the accounting on tariff, any tariff refund of your accounting is about? So we are also reading in the newspaper, we are positive if you're asking about the tariff in USA?

45:56 No. I'm asking for the old refund for tariff refund we have not accounted for. No. We have not. Okay. Is the status on that? So partly, we have got the refund, and we are talking to our customer for that, you know, whatever their understanding is. So how much time it will take for the accounting? I think by year end, the things will be clear. Yeah. Okay. Thank you, sir. And, sir, the... You're you're bullish on the outlook outlook for the company or the? No. We we we are very bullish as, you know, category is a is a category growing five to 7%. If you see our result, India is growing double digits, fresh is growing. All the markets are growing. So we are very positive on all our businesses, which is specialty rice, organic, and ready to eat. And... Yeah.

46:59 So the group, when would you go through the profit... Profitability because the margins are also for some reason or the other to freight and all. It is under pressure. When will the revenue growth and the volume growth You know, as far as the ROCE is concerned, you know, we are improving on ROCE, you know, this h one. It's around 23%, and in the consumer space in the category, we are driving very well. As far as further margin improvement is concerned, as I said that, you know, in the matured market, I'm repeating 15% EBITDA in the investing market. Once that will scale up, the Okay.

47:51 EBITDA margin percentage profile will change and further improve the ROCE part. So... And and there there was any working capital improvement from here also? No. No. No. Okay. Thank you. Thank you, sir. Thank you. We have a follow-up question from Mr. Saurabhediya from Samikshay Capital. So I wanted to ask on how particularly are we able to reduce our inventory days because what I believe is spasmodically requires a particular number of days of aging, right?

48:39 And so as to maintain the premiumness of it. So how do we particularly are able to reduce our inventory days? And secondly, can you share the inventory cost as of March 26 and current so the procurement cost which we had incurred? Yeah. That's it. So, you know, our business model is a mix of basmati, other specialty rice, which is jasmine and organic food. So as far as basmati is concerned, you know, whatever the aging is required brand wise, we do that. There's no shortcut on that, and that is sufficiently covered.

49:29 Okay. And secondly, on the part of the higher procurement cost of March 31, February 6 and currently what is the cost of current inventory? So as I told you, the current inventory, the parity rate is almost INR 43 per kg, whereas rice is INR 60. As on March, March twenty six, this was the parity rate was at 36, whereas the parity the rice rate was at 54. Okay. So do we plan of any near term price increase because since realizations or say price growth has not been in line with the increase in our input costs.

50:19 So are we not passing on completely? And secondly, on part of what is the how do you see the sensitivity in The U. S. And the Indian markets post price increase? Is there usually any impact on the demand side? So I will answer your last question first. So as far as you know, the sensitivity on the demand demand by increasing price, we have not seen. We are in this business the last more than fifty years, and we have seen the real test case when this duty came and majority has been passed on, and we have not seen any impact on the demand.

51:05 If you see, you know, bass... Basmati is roughly globally, the market size of rice is 500,000,000 ton, and Basmati is just approximately, you know, 10,000,000, which is roughly 2% of the total market. So normally in the specialty rice, we don't see any impact on the price increase on the demand. Even in Middle East, what we are seeing is the freight cost has gone up. I will say it was $20.50 dollar, $40 now is more than $200.

51:57 So there is no impact on that. And my first question regarding any near term price increase because I believe the increase in current party cost has not been completely. Right? Oh, yeah. The crop the crop has just started coming in the in the first week of September. And as the the... This crops use will come, the price increase will be passed on. Like, in India, some crop we sell the new crop already already price increase has been given and very well accepted. Perfect. So... But we will pass on this increased cost next year, right, when we sell off the Yeah.

52:51 Yeah. Yeah. Yeah. We are confident. And historically, these kind of years has come, and we have been able to pass on successfully. Okay. Thanks. That helps. Thank you. The next question is from Mr. Premasha. Please go ahead. Yes. Hi. Am I audible? Yes, sir. Yes. Good afternoon. Basic question is what's the latest crop outlook update looking at this weather impact in the current year for batch one, you said? So as far as the crop is concerned, it's more or less like like last year crop.

53:41 But last year crop, there is no carryover, and demand has grown by on an average four to 5% India and export together. So we... This year, the prices has opened as on an average 25% against last year. Initial variety is 35%, but in some variety, you know... So average, we are eyeing that, you know, roughly 25% the prices will be high against last year. Okay. And would the finished product pricing also increase to the same range, 20, 25% or higher? The the material cost is roughly...

54:31 It depends 70%. Proportionately, you know, the the pricing will reset. Yeah. And so what are the current local finished product prices like just now? Because they were, I guess, about between 87 to 95, I think, in the first quarter of this calendar year. So when would they be hovering just now? So you mean to say the impact of the cost has been passing No. No. What I mean to say... No. No. No. No. No. So what I mean to say is your finished product, like, is selling their rice or whatever is there in the open market. So is... Price range about $110,115 per kg compared to what it was in the first quarter at about $85.90 rupees? That's what I'm trying to ask. If you ask me, open market means retail, you know, in the retail Yeah. That's right. That's right. Yeah. Yeah. Our our... Ritesh can add, you know, so our most premium product now sells $2.50 rupees a kg, which is our Our which last year same time used to be around 220 rupees price to consumer.

55:47 Yeah. We're not we're not about 15% increase. It has already been taken. Yeah. So I need to say what is your average realization currently, say, in the month of October, approximate average realization per kg? It's Putting all the putting all the different grades and brands together,? Around 80 rupees. Around 80 rupees. Okay. And then compared to the first quarter of this year? So almost a 10% improvement over Q1. Correct.

56:33 Eight. Sorry. How much? 8%. Improvement over q one of this year. Yeah. But how much? 8%. 8%. Okay. Eight. 8%. Yeah. Got it. Got it. Thank you. Thank you. Thank you very much. Thank you, sir. We have next question from mister Saurabhirio from Capital. Please go ahead. Okay. Just a large question from my end. So do we even benefit from the falling rupee if we compare rupee last year versus the current year? Do we hedge that exposure? Or any impact is seen in the top lines? So as far as the ForEx policy is concerned, Sachin can add it to. So we are following for the last ten years fifty-fifty.

57:23 50% we hedge and 50% we keep open. And as you said, if the rupee depreciate, definitely we get benefit. So we are benefiting, Saurabh. As an exporter rupee depreciating is always a benefit. Yes, it has been because we have a policy of purchase as well. So purchase in the season outside the season. So somewhat it gets offset with the purchasing trend as well. So as far as the rupee is concerned, rupee depreciation benefits us. So if you can quantify like for the current normalized growth of 22%, which Baasmaty segment had, Baasmaty and Specialty Rice, how much was the ForEx impact, if you can quantify on that part?

58:14 So almost if you talk about the ForEx on a constant dollar basis, it should be almost 4%, 5% of the dollar value impacting. Okay. And like so on our top line, like if you can give a percentage of the total top line, how much impact was that of the ForEx? 4%, 5%, what I told you. 45% is the impact. Okay. Perfect. So but still, if I do the math, company reports 22% growth in first half of FY 'twenty seven in the last month in specialty rice, 11% was the volume growth.

59:01 Around 12% you said was the realization growth. So that realization, according to you includes the ForEx impact because the math doesn't go there? Correct, correct. It includes the value terms because we report in the rupee terms. So it includes the ForEx impact. Okay. Perfect. Okay. Thanks. Thank you. Ladies and gentlemen, I now hand the conference over to LTFOODS management for closing comments. Over to you. So on behalf of the management of LTFOODS Limited, we sincerely appreciate your participation in our post earnings call today. We hope we have been able to address most of your queries and provide clarity on our performance and outlook.

59:57 For any further questions or follow ups, feel free to reach out to me or our investor relations partner,, and the team will be happy to connect with you offline and assist with any additional information you may require. So moderator, now we can close the call, please. Thank you. Thank you. On behalf of Motilah Roosevelt, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.