Ganesh Consumer Products Limited (GANESHCP) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Ganesh Consumer Products Q1 FY27 Earnings Conference Call. As a reminder, all participant clients will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjay Manial from DAM Capital. Thank you. And over to you, sir.

Good afternoon, everyone. We are pleased to host Q1FI27 earnings call of Ganesh Consumer Product Limited. From the company, we have with us Mr. Manish Mamani, Managing Director, Mr. Amit Tapadia, CFO, Mr. Narendra Mishra, Company Second Chain Compliance Officer, and Mr. Sanjeev Sanjati, Investor Relations Advisor. I hand over the call to Mr. Sanjeev Sanjati. Thanks and over to you, sir.

Thank you, Sanjay. Good afternoon to all the participants. Before I hand over the call to Mr. Manish Mimani for the opening remark, I would like to draw your attention to the safe harbor statement in the investor presentation. I request each one of you to go through the presentation and the safe harbor statement before the Q&A starts so that you are well aware of the same. Thank you, and over to you, Mr. Mimani.

Thank you, Mr. Sanjeev, and a very good afternoon, everyone. On behalf of Ganesh Consumer Products, I warmly welcome you to our Q1 Financial Year 27 earnings call, and thank you for taking the time to join us today. The first quarter of Financial Year 27 presented a challenging operating environment for the category. Revenue from operations stood at $1,885 million, a decline of 7.1% year-on-year, driven primarily by an extended heat wave, constrained LPG availability, benign wheat prices, and disruptions surrounding the assembly elections, all of which weighed on category demand across eastern India. Within this, our consumer-facing B2C business held up relatively well, declining 4.1% year-on-year, while B2B declined 17.9% year-on-year. Given the close linkage between the two businesses, softer V2C volumes during the quarter flow through. To B2B with the residual decline attributable to lower realizations and a conscious decision on our part to reduce exposure to lower margin B2B volumes. Despite these headwinds, we continued to strengthen our competitive position during the quarter. Our overall market share increased by 1% in the package with disc carry. 2.1% is also reflecting the growing reach and availability of our food. In a challenging environment, underscores the resilience of our business model and the continued trust consumers place in the Ganesh brand. The strength of our execution was also reflected in our profitability. EBITDA margin expanded to 11.2%, the highest in the company's history, an improvement of 66 basis points year-on-year. 313 basis points sequentially. This margin expansion was given by disciplined procurement during a favorable commodity cycle, an enhanced product mix, and focused cost optimization initiatives. Importantly, these margins were delivered even as we stepped up our advertisement investment to 3.1% of revenue. In Q1 FY27 from 1.9% only in FY26, supporting the long-term strength to our brand. Our evolving product mix remains an important contributor to this performance with value-added and emerging products now accounting for 68% of our B2C revenue. This reflects the continued shift towards differentiated higher margin categories, a strategy reinforced by the healthy improvement in gross margins within our spices segment this quarter on account of better realizations and favorable product mix. Alongside the expansion of our distribution network, This transition is also helping us build a more diversified and resilient consumer business. Beyond our core business, we continue to build the foundation of our next phase of growth. Following an encouraging response to the soft launch of our ethnic snacks range, we are preparing for a wider rollout later this fiscal year. The entire ethnic snacks portfolio along with our new packaged sweets category will be manufactured at our AMTA unit with both categories expected to be launched during the third quarter, extending our presence in the adjacent food segments while leveraging existing manufacturing capabilities. Separately, we commence distribution of soya chunks also, extending our value-added portfolio into everyday protein-led kitchen staples. Our priorities remain clear to strengthen our core categories, scale our value-added portfolio, and deepen our presence across both existing and emerging markets. I remain deeply grateful to our shareholders, partners, employees, and the entire Ganesh family for their continued trust and support. With that, I will hand over to Amit to take you through the financials in greater detail. Amit, over to you.

Thank you, Manish, sir. And thank you, Sanjeev, sir. And good afternoon, everyone. As our MD has already taken you through our revenue and EBITDA performance, I'll focus on the remaining elements of our financial performance. Profit after tax for the quarter stood at 125 million of 31.4% year-on-year and 31.3% sequentially. Our fat margin for the quarter expanded to 6.6% and improvement of 191 basis points year-on-year, reflecting the EBITDA margin expansion and a materially lower finance cost. Our balance sheet remains strong with a net cash position of 172 million. Return ratios remain healthy with an annualized ROCE of 18% and ROE of 13.3% for the quarter. Our cash conversion cycles stood at 43 days for the quarter compared to 23 days in FY26. And 61 days in Q1 FY26, reflecting an inventory build-up from set-up procurement during a favorable commodity cycle. Inventory days as of June 30, 2026 to that 53, compared to 77 days as of June 30, 2025. We continue to operate under a cash-and-carry model in general trade, structurally limiting our receivable exposure, with receivable days at just 6 for the quarter. Updating on the deployment of our IPO proceeds, the commissioning of our sub-through and recent manufacturing facilities continues to progress, albeit behind the timeline originally envisaged at the time of our IPO for the reasons like global supply chain disruption. and geopolitical headwinds, as outlined on our previous earnings call, the plant design is currently in process, and we now expect to commission the facility towards the end of financial year 27-28. The strategic rationale for this investment, which is to expand our high-margin green-based portfolio, remains fully intact, and we will continue to keep investors apprised of progress on this front. We remain focused on translating this operating performance into consistent cashback profitability while maintaining the discipline that has characterized our balance sheet since listening. With that, we are happy to open the call for questions. Moderator, over to you. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself 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 in line of Rajesh Jain from RK Capital. Please proceed.

Thanks for the opportunity. I wanted to know how much revenue do you expect from outside East India in the next two to three years?

Hi, Rajesh. So, our prime focus is to expand in the eastern India market, right? So, we want to expand the geographies of Bihar, Bhadgan, Turista, and North East. So, in the next two years, the prime focus is to expand our distribution in the eastern region.

Okay, so within the SM region, what is the target you have set for yourself for revenue apart from West Bengal?

So, currently, if you see the overall mix of revenue from states other than West Bengal, it is close to 7 to 8 percent. And in the next 2 to 3 years, we expect it to go up till around 18 to 20 percent.

Okay, so in line with that target, like how many new distributors you plan to appoint in the new geographies, and how many new distributors have you appointed in the quarter which has just gone by?

So, in the quarters, again, if you see the overall number of the addition to the distributor, it is more than 50, right? Over the next two to three years, right? So, the distribution, the distributor's addition will be on multiple categories. One will be in new geographies like Bihar, Radkant, Ulissa, and Nordi. And the second will be for new product portfolios. As we highlighted, that we plan to enter the categories like ethnic snacks and packet sweets. For that, we may evaluate and onboard distributors who specifically will be dealing in those new age categories only. So, over the next two to three years, we plan to onboard at least 300 to 400 distributors.

Okay.

Like, in the last call, you had mentioned that you want to focus on the, on masala powders, right? And you mentioned that they are margin-accretive, they are getting higher margin. So, over the next two to three years, what will be the, what is the revenue percentage we can expect from this masala category?

So, currently, if you see, for the quarterly masala category contributes close to 6-7% of the revenue, and going forward, in the next three years, the target is to achieve a revenue of close to, the revenue mix of close to 11-12%.

Okay. And the margin profile for the newer item that you are venturing into, that is the package, sweet, and the snack, right? So what is the margin profile?

I would like to answer this. So, thank you, Mr. Rajesh. So, I think we will, as of now, we will not like to comment on the EBITDA margins or the gross margins on the packaged sweets and snacks category. It will be early. But then, with the advantage of back-end, And front-end. When I say back-end, because all the raw materials will be with us, that is the flour and gram flour, which is used as a raw material in snacks. And spices are also with us, which are used in ethnic snacks and sweets both. And again, the front-end, which is a good brand name, and the leverage of the distribution network also. We think we will be ahead of the industry margins.

Last two questions. So I think in the last call, I recall that you mentioned that you will be using one of the plans mainly for B2B contracting, right? Yeah, so can you give some updates on that? What is the progress on that? And have you secured any long-term contracts on that?

So this B2B contract, we will have to check, means currently one of our plant, we are doing a job work for an FNPG player, but I don't, means, I don't remember the saying that we are hunting for any B2B player or B2B job work for any of the plant.

Even I don't recall, we never said we are hunting for any B2B new player. We are already in continuance of our Hyderabad plan, which we are doing it for B2B player for a third-party packaging. And we have never committed. We are in a search for a new B2B player.

No, that's okay, because I'm just recalling from memory, so I could be wrong, so that's fine. So, my last question is, like, some of your products' quality is quite good. I have personally used them and tested them. But I wanted to know whether they are contributing very negligible percentage to your overall revenue. For example, the ready-to-mix dhokla, the quality is quite good. But is it contributing a very negligible percentage or is it a substantial percentage, a meaningful percentage of your revenue?

So, Khaman Dokla is one of the hero SKU, you can say, considering being an instant mix, right, if you see the overall market of such category of instant mixes, it is very niche, right, and that too in the eastern part, and particularly West Bengal, you see it will be very niche, and considering that. See, the Khaman-Dogla SKU, particularly the Khaman-Dogla SKU does pretty well for us, and going forward, we are working on product development front, wherein we are exploring products which can add value or add convenience to the consumers and are in line with such institutes.

Okay, sir. Understood. So, those are my questions. I'll join back. Thank you.

Thank you. The next question is on the line of Nikhil from Ranga Investments. Please proceed.

Good evening, everyone. Thanks for giving this opportunity. I just want to highlight one thing. In the B2C product mix, the F8126 data is around 35%, and in Q1, it dropped down to 32%. I just want to know, is it because any whole wheat data has degrown or the value added has degrown?

Oh, so, hi, hi, Nikhil. First B, third, often B. The overall mix of the ATA category, so it is because the value-added segment has done well for us, so Satu, particularly Satu as a category has done well in this quarter, which resulted in the increase in the value-added and emerging share in the overall B2C revenue, so that is the reason.

Okay, can you tell us like out of the 59% what will be the portion of sub 2 in that and what is the goalie which we add?

So again, we don't plan to disclose the product level revenue share, but overall if you see the value added segment, it is close to 59%. The reserve is 56% in the previous financial year.

Okay. Just one last question. Did we take any pricing action in the current quarter, considering the Gulf-U.S. crisis impact and all?

Yeah, so there was a significant increase in the LPG prices, and LPG is primarily consumed for the satshu manufacturing. But considering the grant pool we have, and we have gotten some operational efficiency at the plant end, and hence we have not... If we pass on the increase, the overall increase to the consumer, we have tried to absorb that increase in the LBG prices.

Okay, and just one last question. Okay, currently our Atomix is around 30%, 32%. Like, what are we looking at in the upcoming quarters? Like, is it going to drop or it will improve further?

So, in the coming quarters, it will be, obviously, the prime focus is to promote the value-added segment and the emerging segment, right? But we feel that it will be in the range of 32 to 34 percent only. It will not shoot up significantly from here. As our value-added segment, we feel that the value-added segment and the emerging segment will deliver the coming quarters.

Okay, got it. That's it. Thank you.

Thank you. The next question is from the line of Devi Ghosar from Shipkaam Ventures. Please proceed.

Hi, sir. Thank you for the opportunity. Sir, firstly, I wanted to ask that our gross margin has improved-

Mr. Ghosar, can you please speak a little loudly? We can't hear you properly.

Just a second. Am I audible now?

Yes, must be.

Yeah. So, first question is around the gross margin. So, our gross margin has improved drastically. So, can you give us a split between what is the improvement because of the product mix and because of the softness in RM prices?

Again, because of the softness in the RM prices, it contributes a very small portion of the overall increase in the gross margin. Primarily, it is because EVP. We try to maintain better realization across our product category, and specifically, as the value-added segment have delivered better as compared to whole wheat segment, the gross margin is, we have delivered a better gross margin. Now, if you ask me about the exact number, the exact percentage of the contribution because of the… Value-added segment, it will be close to 0.7 to 0.8.

Got it. So what should we consider cross margin going ahead for this year and for the next year?

Again, so it will be as in line with the previous year, right, there will be goodness as we are working towards better realization across the category and we are also trying to maintain or plan the raw material accordingly. From the levels of the previous financial year, you can expect. A better, betterness in the gross margin, but as of now, we are not, will not comment on the gross margin percentage, exact percentage for the coming process.

Okay. In the new segment, sweets and your ethnic snacks, can you tell us about how much is the market size in the eastern part of India where you operate, and would it be through the same distributors? Can you explain a bit about the business model?

Yeah, so again, so as I, as I highlighted, it will be, first I'll take up the distribution piece, right, it will be, obviously since we enjoy a, a, a, a, muscle power in terms of the overall distribution, we will use, we will have a mixed model wherein we will use. The existing set of distribution network and we will onboard new distributors, right, who can work with us, right, to expand those portfolio products in an enthusiastic way, right. So, this is on the distribution front. Obviously, we will, since those categories sells well on the modern trade channel, we will be very bullish on the modern trade channel as well. Coming to the overall market share, yeah, content. It is a big market. Again, we don't have that exact number handy with us. Yeah, but we can present to you over for hours. We can discuss it one-on-one and then give you the overall number of the overall time.

Please. Okay. Thank you so much.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and one on their touchtone telephone. The next question is from the line of Rajesh Jain from RK Capital. Please proceed.

Sir, just a clarification. You mentioned that you do job work for a specific client, right? So, is it only one client or more than one client, and can you disclose the name of the client? It is for one client only, and...

We did not like to disclose the name because that is a big player in itself and we have that clause that we cannot disclose it.

Okay, but can you tell me, can you tell something about the profile of the client, like, they are present? They are FMCG, FMCG players. And are they present only in certain regions, or they are a Pan-India player?

So, again, that data, we have to take it from them, but, yeah, they are present in the region where we are doing the job work from them, for them.

Okay. And for this full financial year, FY27, can you provide some guidance on the revenue growth and the consolidated margin for the full year?

Yeah, so... As we had highlighted in our previous forum, we are chasing a volume growth of 7-8%. The entire team is working towards the same goal. But again, we will be able to comment on the exact percentage of the, or not exact percentage, but a better view will be able to tell you after Q2, which is by end of the first half of this. And on the margin front, yeah, there'll be improvement. So EBITDA was close to 9.8% last year. We plan to deliver the range of 9.8 to 10% in the current time.

Okay. And in the previous call, you had mentioned that you expected the Horeca segment to get impacted because of the unavailability of LPG, right? So how is the situation now? And now going forward, do you see any further impact in the Horeca segment?

So, yeah, the horeca segment was impacted, right, and it is a common use because of the LPG branch, right. Things have improved over the last few months. Things are better now, and going forward, we presume that towards the end of this quarter, it will be back to normal.

Okay. Thank you.

Thank you. The next question is from the line of Arab from the Money Mart. Please proceed.

Hello. Yeah. Hi. You mentioned something about Sorya Changs at the start of the call. How much percent of revenue can we expect Sorya Changs to contribute as well as if you could comment on the margins we have in that segment, if possible? So, on the margin profile, it is in line with the gross margin. So, the industry, if I talk about the industry first, right, it will be in line with the gross margin, what we are delivering for our core products, right, but currently, since we have launched soya chunks in the market, we are rising it a bit aggressively now, right, over the period of, let's say, one and a half. For two years, we feel that we'll be able to reach the industrial benchmark in terms of the cross margin. Now, talking about the revenue, we feel that, and Soya Chanks is, firstly, Soya Chanks is widely consumed in this geography, and we feel that for a period of next two to three years, we should be able to contribute at least two to three percent of the total revenue of the country. Could you repeat on the margin? So, over the next 2-3 years, we see that Soya Chunk can contribute 2-3% of the overall revenue of the company.

Okay.

Yeah, that would be it from me. Yeah, that would be it from my side. Thank you.

Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Over to you, sir.

Thank you. Thank you, everyone, for joining this call. Thank you for your continued trust. We look forward to attend you again in the investors' call for the Q2 of financial year 2020. Thank you.

Thank you. On behalf of Land Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

Thank you.