Jain Irrigation Systems Limited (JISLDVREQS) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Jain Irrigation Systems Ltd. Q1 FY27 earnings conference call. Today, we have on the call Mr. Anil Jain, CEO, NMD, and Mr. Bipin Valame, CFO. 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. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anil Jain to take us through the company's business outlook and financial highlights, after which we will open the floor for questions. Thank you, and over to you, sir.

Thank you. Good afternoon to all the listeners. And thank you for joining our call. This call is about the Q1 results for giant irrigation. And today we also had an annual general meeting followed by the board, and in the board the results were approved. So as we spoke, I think sometimes in May, it was anticipated that the first quarter will be a muted quarter. So as a company, overall our revenue has been about 2.5% less than the same period last year at about 1,500 crores. And within different segments, I think high-tech segment registered early growth, while plastic was almost similar to the last year, same period. And agro-processing registered significant growth due to additional beverage business. Some growth in our world. So, while overall revenue has remained similar, there was a reduction in EBITDA, because especially standalone India business, we had less fixed cost absorption because of lower volume due to volatility linked to raw material prices and demand postponement, and that has resulted into lower EBITDA, especially in the high-tech division. In fact, plastic division improved its EBITDA. Agro processing also had seasonality issues to register lower EBITDA and impact on the forex side was negative compared to the similar period last year. So, all in all, reduction in EBITDA temporarily in this quarter, but we believe we should be able to catch up in the second half of the current fiscal year to cover. In terms of when I look at the margins, high-tech division delivered about 14.4% margin versus similar period at 16.6. So approximately 2% reduction. And plastic, in fact, improved by about a percent or so from 10 to 11. And agro processing also came down by about 3%. So post all of these changes in the margin profile of the company. Adjusted path after adjusting the non-cash NCD interest unwinding. Adjusted path at about 3 crore versus last year's 30 crore. But company has still remained profitable. So overall when we look at this quarter, you know, the revenue we have been able to almost maintain Thank you. But mostly linked to unabsorbed fixed cost, which can be captured in the second half. And adjusted pad has remained profitable. We had in April, month of April when we were there, we felt that situation was going to be much worse. But I think May and June we did better, July continues to be remaining good. Things are definitely improving than how the year started, especially due to volatility linked into the business. Now, while this is consult result on a standalone basis, again, majority of the degrowth this quarter. While overseas consult business and business of food business company has done well. And even on a standalone basis, on an adjusted price basis, the company has remained profitable and also having good cash. If I look at cash flow statement, the EBITDA of 164 crores, almost about 78% of EBITDA we have been able to convert into cash flow. That is quite a positive sign In terms of, you know, management of the working capital, which we have done. So, I think that's a big plus. And this was possible due to further improvement in working capital cycle. If we look at and consult the entire company basis, networking capital last year this time, June 25, was about 210 days and this year it has come down to 183 days. So, that's a significant improvement during our last one year. And even on a standalone basis, it has come down from 296 days to 283 days. So that's a big improvement. If I just compare with March 26, also it was 186 days and now it is 183. So that's an improvement. Now, and this is despite all the volatilities which was out there. In terms of business potential, in terms of looking forward. In the remaining three quarters, second quarter typically also remains mute because of the rainy season, but the good news is, you know, there was a fear that a huge amount of this super rail Nino will emerge and that would have a disaster in terms of total rainfall, but we have seen good level of rains in July. That would mean, you know, the farmer got adequate moisture into their soil for the crops to sustain themselves and it is expected over the next couple of weeks some good rains will continue in the country. So, by and large, there was a big deficit in June because of the delayed onset of monsoon. That was kind of covered partly into July and we hope also into August. So, the news about the monsoon and the weather and the climate change is not as bad as it was forecasted. So, I think that's a positive thing as per as we are concerned for the rubby crop and for the next year's summer business, this will be very positive. Majority of dams in the country have, you know, water levels filled up to now two-thirds, sixty-seven. And by the end of the monsoon, if they do hit 80-85%, that means adequate water availability for irrigation the next year. So the reduction in the revenue in the June was partially caused by postman and the purchase decision by customers due to very high prices. And second, it was also because the delayed onset of monsoon. So farmers were not ready to sow their, you know, crop. And of course, then they couldn't also take the irrigation systems as well as pipes. But since then, as I said, July has been better. We had registered already. Positive revenue growth in July as again, you know, April to June quarter of significant revenue growth here, and August and September also seem to be good, but especially we think with the kind of negotiations we are doing also with the institutional customers for larger diameter pipes, we see a lot more kind of surplus demand coming through. Now, subject to a little bit more stability on the geopolitical event, where oil stabilizes and the polymer prices come down a little bit more than where they are, I think that would give that trigger momentum for the growth into the business. So, reasonable quarter, but far more needs to be done in the second half of this year, and that looks good, the signs and the indicators are positive. In terms of, as I already talked about, you know, cash flow was positive this year. I mean, in terms of overall cash flow, we have been able to generate post-working capital changes has been positive. And we have been able to maintain margin except small reduction linked to an absorption of fixed cost. And that can be covered in the rest of the year. In terms of the, you know, the major issue which I think is there is on the balance sheet. This year with about 690 crores of debt of the NCDs falling due in the current fiscal, partly in September, partly in March, approximately 230 crores in September and remainder in March of that 690. So, or maybe I think 680 now approximately. We believe that, as we have said this earlier, a company will be able to take care of these obligations in the current year through its cash flows, and companies also pursuing other alternatives as a backup plan, just as a matter of prudency in terms of to ensure that, come what may, a company does and will. We will ensure that all obligations are paid on time, as we have done in last year. In terms of the rest of the capital, in terms of working capital that is being managed properly, I think we have good support from current working capital banks. They have approved additional limits, new limits. So I think that thing is going well, and I think bankers understand. What has happened due to this West Asia crisis, the impact when suddenly if your raw motor prices go up by 50%, what happens? So, they have provided necessary support to the company to come through this crisis and come out well. And so, we are very thankful to them, but at the same time, we are quite optimistic about the remainder. Overall, overseas plastic business did well with approximately significant growth of 40% or so in terms of revenue. And because of that performance, I think overall EBITDA marginal plastics have improved. In terms of... I think we are entering into a cycle post this season where every single product line of the company, whether it is about irrigation business, piping, solar pump, tissue culture, food processing, we are seeing growth opportunities. So we are quite positive there. And as I said, this first quarter was a combination of post-moment of decisions. Thank you very much. I would say that overall, you know, well, one quarter, first quarter results are muted, but we remain confident on the rest of the year. Within, when I look at the details of the business, you know, within even retail business, I think we did quite okay in our high-tech business, in like Maharashtra or in western parts of the country, even in north the business grew. The business which did not grow was linked to government subsidies. We had the opportunity to take revenue, but that would have meant a lot more impact on the cash flow and long receivers. So we chose not to do that business. Otherwise, I think this revenue negative growth, what you see, would have been actually covered because easily we could have sold 50-60 crore rupees more. So, we are looking at micro-irrigation, but that would have meant many more longer receivables. And especially this year with so much of the debt due, we are choosing to pick up businesses which is more and more cash-to-capacities, quicker turnaround and cash-to-cash cycle. So that is where it is. And in terms of overall receivables where compared to March, were down by about 25 crores. We will continue to see between September, December and March that to further go down and those extra collections will get used too. Honor the necessary debt obligations which company has. In terms of structurally speaking, while the polymer prices went up, we have been able to pass on majority of the increases to the customers. And if and when prices of polymers do come back, we think that would spur the overall demand into the business. So we are looking forward to get that done. So, this is where kind of, you know, the first quarters balance sheet, P&L, as one would call it, in terms of overall business cycle, and I think we are getting into a stronger business cycle going forward. With that, I will stop here. I will again thank you for patiently listening to this update on quarterly basis, and we look forward to taking any questions Thank you.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and then 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. Your first question comes from the line of Ramesh with SJ Investments. Please go ahead.

Thank you for the offer.

I can't hear you.

Just give me one moment, sir. Sorry. Just one moment.

Sir, I was trying to understand in terms of government receivables, did we get any during this month and how many more projects are left to go in terms of completion? These two questions.

Last quarter, we received approximately 60 crores from the government. And I think month of July, another 25-30 crores have come through from the government. So we see that as the rest of the year goes, it will continue. In terms of the project to be completed, I think hardly now, as you saw, the total billing on the project was maybe 24 crores or so for the quarter. I think second quarter could be maybe even less. There is one active large project which is in Pune for water supply, where we still need to do, I think, triple digit billing going forward, the remainder part. But most of other projects, like 98-99% done, very small amount of sales.

So, how much more scope of work is left?

You know, apart from the one project in Pune, I think total billing left is about approximately closer to 40-50 crores only.

And in terms of the working capital we need to spend on it, is there more to go?

No, I think we don't have to spend any working capital. It's mostly the last mile connectivity, etc. Material supply, the component supply, all of that has already happened. It's mostly service-related remainder of the work, which is co-dependent on something else, you know, the awardee has to do, the tward board or the irrigation board, they need to provide certain things for us to do the last connectivity, but no working cable is required to come. of the number of projects we did.

So how many of them had an owner confident and is there an owner confident with these projects? Yes, sir. I was asking if there's an O&M component to these EPC projects and will there be some remaining work we need to do over the next few years out of the overall project values we've probably recognized over the last few years.

I think about 10 to 12 projects have O&M over the next two to three years. But on that O&M, if we need to spend money on O&M, we are also going to build that, right, in that given year. And this is the O&M total, our experience on the remainder of projects over the last seven, eight years, the total spend on O&M is quite light. So, it's not going to impact either my working capital or cash flows, materially.

Understood, sir. And one last question with regards to, so, over the last few years, I think we had additions because of increasing costs of completing the project. Were these clauses actually built into the initial contract or were these afterwards negotiated?

When you start the project, it's a tender bidding process, so you do based on the scope of the work, and then what happens when you actually go and do the project, because in one project we are doing 100,000 hectares, so you always find certain things which were different than what were presented in the tender document. In that case, then you go and And seek, you know, cost plus from the tender authority or your customer. Saying that there are changes than the original scope and therefore we need to do more billing and then they do give the additional, you know, escalation as it is called. So, some places there is a cost escalation, some places there is a change of the scope. But in, I think, if I go back in terms of totality of the question, by and large what we originally anticipated and billed, Thank you. We have been able to get and whatever extra we needed to spend because change of scope or delays, for that we received escalation or cost increases. So that has worked out fairly, I think, even in terms of the profitability coming from this project. What has really hurt or impacted company is the delayed cash flow and delayed cost of interest on, you know, if you are not received money in time. But the scope, you know, the total billing which we did, is in line with or with the changes have been paid for by the customers.

Understood, sir. Sir, but Mavan...

Sorry to interrupt, Ramesh. We request you to return to the queue for any follow-up. Yes, sir. We take our next question. Before we take our next question, I would like to request all the participants to limit themselves to two questions each and rejoin the queue for any further follow-ups. We take our next question coming from the line of Sumit Kumar with Mavet Securities. Please go ahead. Good afternoon, sir. Am I audible?

The company still has to repay yet 74 crores in rest, nine months of this financial year. By seeing the present state of affairs, it seems very difficult to repay or fulfill these debt obligations.

So what are the options available with the company?

Is the company thinking for some asset monetization or taking

new loan to repay this debt obligation?

You know, in fact, if you see over the last three and a half, four years, three and a half years rather, a company has repaid to the banking system approximately 1300 crores. And with now having completed the project this year to pay whatever is due, the incentives which are falling due, we feel fairly confident of doing so. In terms of options available to the company, one, the first and most important option. Second option is collection of the older legacy receivables. Third option is the part amount can be some level of asset monetization such as surplus land. The fourth option would be refinancing. So there are multiple options available to the company and as a prudent In consultation with the lenders. We are working on all of these options at the same time, and we feel very confident that there won't be an issue.

So the second question is regarding

the old receivingables. These were something around 800 to 900 crores. So out of those old receivingables, how much the company is expecting? I think our target this year was about 422 crores to be received. 60 crores we already received in the first quarter. And so remainder of nine months minimum, and this I'm talking minimum, target is 380 crores will come from that.

Thank you, sir.

Thank you. Your next question comes from the line of Ravi Kumar with Vodava Investment. Please go ahead.

Yeah, hi. Thanks for the opportunity. My question is... Slightly more strategic. Well, we've done an excellent job in terms of reducing the DSOs and... Why are we, you know, generation looks like a very asset-heavy but cash-like company. And for historical reasons, I've been an investor right from the time it was 125, the share price, and went through 3 rupees, and now whatever it is today. So I've gone through the whole cycle. Why are we not... The same kind of a campaign, what we've done for the pivoting our business model from a project business to a retail model, and also from running a very tight shift in terms of the way working capital is. Why are we not identifying non-core assets, which doesn't impact revenue, which does not impact profitability, and go on a little aggressive monetization model? Even the Tamil Nadu land, which we thought will be over by May, we haven't heard anything from it. That's my first question. The second question is, with respect to... A group of C. This is a new business, which was not there in last quarter. So if we remove that line, or if you can just give us a revenue, what was the revenue, that would be great.

We have a few questions there. So, in terms of monetization, I think, you know, as I said, with whatever we have done, we have repaid to banking system 1,300 crores through changing of the business, pivoting business, and we did generate significant amount of free cash flow during this period of time to be able to take care of the debt, and that process continues in the current year, and I think from next year, you start seeing the dividends which will come from Positive cash flow, which go into the growth of the company. In terms of the monetization, right, we have gone through two cycles of monetization. I think first monetization we did in 2022-23 period. At that time, the date was 7,000. Today, it is a little bit less than 4,000. And we did do monetization of, you know, significant amount of our overseas business, etc. Right now, you know, because of the restructuring which was done along with the banking system, there were limitations of what you can do and you cannot do because of the, you know, the framework of the restructuring which existed. And I think from next year, value-based monetization, Thank you very much. Again, we are working with lenders, and I think that should get hopefully delivered in the current quarter. So, we are on to it, right? The whole idea is that once you pay off these NCDs from next year, you know, stand-alone India business, there is no debt to pay. Except the normal continued working capital, which is renewed every year. And then the date is still left in the food business. And as you know, last, I think, one year we have taken decisions to take food business to the next level by introducing, you know, the new beverage business and so on. The beverage, your question was that we did approximately 60 crore into the food business in April to June quarter into that business. In terms of the receivables which are, you know, above a certain period of time, mostly the government-related receivables are above 180 days. They are either linked to this, what you call, the project EPC business and or linked to what we call where state governments place order on the company on behalf of the farmers. And sometimes their receivers take time to come through. And this is industry-wide. It is not just a Jain irrigation. That's the way business is conducted for all the irrigation companies in those particular states. So, that. That amount is approximately, I would say, total outstanding related to this farmers being placed order on us on behalf of the government is approximately 500 crores. Out of that, I would say about 300 crores would be about above 180 days. And there is 800 to 900 crores rupees we talked about of the government receivables, which is also above 180 days. So about 1100 crores is above. So, if you look at overall net receivables for June 1975, out of that, you know, almost 55% are linked to these issues and the remainder would be the normal domestic receivables or export receivables.

Thank you. Just a small follow-up, sir. Sorry to interrupt. That'll be sad.

I do understand, sir, but there are several other participants waiting for their turn. Really sorry to interrupt, sir.

Just wanted this to be included in the investor presentation as a follow-up so that we don't have to ask this question, at least for this year, but that's okay.

Thank you. Your next question comes from the line of Vinay Chaudhary with Invexa Capital LLP. Please go ahead.

Hello. Hi. So, my question relates to the high-tech division. So, we have seen a significant, you know, degrowth this quarter in high-tech, and we, of course, are facing, you know, we are consciously reducing the... The project division within this, however, having said that the non-project part of the high-tech is also implied to be not growing significantly to offset the degrowth in the conscious strategy of reducing the project. So, where are we and Y's, you know, we are having a significant, almost 22% YOY degrowth, and of course, on an EBITDA level contribution, it's about more than 30% degrowth. So, can you throw some light on this, please?

Yeah, that's a good question, in fact. So, if I look at the high tech division, right, there are three parts to the division in terms of product line. One is micro-irrigation or trip irrigation, tissue culture and the solar pump business and the projects which are there. So, if I break up that 22 percent reduction in revenue, the retail business which would cover the MIS, the tissue culture, solar, etc., that degrowth by about 17 percent and the project which is by design is going to go down, degrowth by 63 percent. So, let's focus on the retail business, which grew by 17%, you know, between the three product lines. So, MIS, which is the drip irrigation business, it grew by 16%, from 438 cross to 368 cross. And the reason it grew, as I said, because of the delayed onset of monsoon, you know, the normal sales, which were going to happen in June, did not happen. And they have been postponed to the current quarter. And that will be covered in the current quarter. And the second part, which I said that the polymer prices went up 50%, so we had to pass on the price increases. So some of the customers decided to postpone the decision until the time prices come down. So we think this is one of, in fact, if I look at 25 to 26, you know, microirrigation and, you know, this high-tech division grew for the whole year more than 20%. Thank you. Also, we are planning that the business would grow, and this quarter was an anomaly. And similar thing, tissue culture business grew by 10%. Again, the farmer could not sow the plant because there was no irrigation or water available, and that's why it was a 10% reduction. Solar goes by order to order, right? So last year, we grew solar business by 300%, solar firm business. And this year, so, and the March quarter was a big quarter for us. So we have focused on the first quarter and even July, August to recover all the funds after those, you know, from the solar pump business. And then, so you will see significant growth coming from. So, partly what you've seen is linked to the volatility in polymer prices, partly post-point of purchase decision, and partly the solo business seasonality which will be picked up for September. All in all, I think we feel, because this is the most important business in terms of profitability, that this would be a business which would maintain more than Double-digit growth. For a 527, and in terms of, you mentioned profitability, the high-tech margin, right, went from 16.6% to 14.4%. So about 2.2% reduction. That was due to, you know, the volume growth being not there. And so our guidance for the whole year is that the margins, what we typically make, would be maintained.

So, on full year basis, you are saying that despite this fall or 2, 2.5% on a company level degrowth, we are maintaining a full year revenue as well as margin of 20% revenue growth and margin of 12.5-13%.

I think we have said double-digit revenue growth because the situation is still not that stable, but in terms of overall margins, right, the console margins, last year in this quarter we had 13, but we came out at 11. I think this reduction will definitely be covered. And in terms of overall margins for FI27, we should do, despite with all the changes and volatility, we remain fairly confident to maintaining, you know, at about, I think, 14% on standalone and approximately 12 and a half 13% on console basis.

Sorry to interrupt, Vinay sir, we request you to return to the queue for follow-ups, please. Your next question comes from the line of Parag Kare with PK Investments. Please go ahead. Yeah, good evening, sir. Thank you for the opportunity.

Am I audible?

Good evening. Yeah, yeah, you're audible.

Okay. Just a question on these old receivables. I know, you know, you talked about how much is receivable, how many projects are doing. Do we have any doubtful project where we may have to write off certain amount? I know, I mean, historically, we haven't written off any significant amount as of now, but do we see any negative surprise somewhere going down the line, probably next nine months from now, which may have a slightly, you know, negative surprise for us?

No, I think, you know, when we looked at and reviewed all the projects, and this goes back to 21-22, that period. And historically, these projects were built and so on. So at that time, we took a conscious call, we reviewed all the projects, and at that time, we had made necessary provisions in the books. As these receivables which are standing, so, you know, the net receivables, good receivables standing in the books at the end of June of 1975, we do not anticipate... You know, there is always few crores here and there, but we do not really anticipate any material or any significant write-offs at all from project. All the project receivables which are there, which are there today in the books, what we are looking for, what is not already been provided, are good to go and they would be received. Now, it has been... Partially time, the delay in getting project completed, the restructuring of businesses, all that happened, partly because state governments have been prioritizing a lot of freebies, so they do not pay EPC contractors, etc. And this is not just our case, I think. If you've been reading news in the past about Karnataka or Maharashtra, like 80,000 crores not paid or 100,000 crores not paid and so on. But we have seen movements, right? As I said, just last quarter we received 60 crores and we are, you know, hoping at least minimum 380 crores in the remaining nine months, which we are now quite confident of because things have really progressed fast. So, just to summarize, no hits on the project receivers and a significant amount of collection this year.

Okay, and the second question is on the working capital lines. I mean, I'm talking about the standalone working capital. The four years, it has its own cycle. It has its separate working capital lines. But if we see standalone business, our working capital, like 1,500 crores, 1,600 crores, if we compare to some of our competitors domestically, our working capital requirements seems to be slightly on the higher side. Do you want to... Any specific reason why we are on the higher side in terms of working capital requirements with respect to our competitors?

Yeah, so when, you know, the non, I think, listed competitors are mostly in piping business. And their working capital cycles on piping side, on the plastic piping side are much lower. And if I really dissect my working capital also on the similar basis, you would find that also we are actually in line, or in fact we did some internal comparison. In some cases we are even better compared to listed other organizations, where we have We have a higher amount, right? You mentioned 1,500, 1,600 crores. It mostly comes from the legacy receivables of the projects, you know, where there are long-term receivables. Also, I talked about where state government give order on behalf of the farmers and we get paid between six months to one year. That is where our working capital is higher. And on irrigation company business, there are very few, I would say, listed entities and of the size and scale what we have. That's the main reason. When we, you know, maybe sometime next year, we talk about FY28, once the project receivables are off, you would see that while overall we have improved from where we were, it would substantially further improve, especially the receivables cycle.

All right, sir. Thank you for the opportunity, and good luck for Q2.

The next question comes from Ashwin Reddy with Samatwa Investments. Please go ahead.

Yeah, hi, sir. Good evening. Thank you for the opportunity. So my first question is, so given that so far the refinancing of debt has not happened, I'm sure there would be reason for that or some pushback from the bank. I'm curious, what is the pushback that you've been getting so far? And also linked to this, so what will change now that gives us the confidence that the refinancing will happen?

Because the payments are only due in September, right, end of September. So the first payment and the next payment is due in March. So we are definitely within the timelines to get this done. Not only that we have negotiated, we already have a couple of term sheets in hand and discussions are ongoing. And as I said, regardless of refinancing, I think the company will have adequate internal cash flow to honor the obligation.

Okay, got it. The efforts to, say, for the land monetization, you already explained, but even the IPO efforts have not factified in a year and a half or so. So what is the delay there? What is the reason for the long delay? And does the P partner not have a timeline by when he has to exit and all? What is the thing there? And what is the reason for the delay in the IPO? It's been a very long delay.

Okay, so this is about the food business. So, I think, you know, the total expected issue or IPO on the food business was comparatively of a smaller size. You know, in terms of the exit of the existing PE player plus additional front wing days, let's say, primary for the company, the total expected figure was around, let's say, 1,000 crores. And what the merchant bankers advise that, you know, the market... Maybe last couple of months things have slightly improved. But compared to expected valuation, last four quarters market had really gone down. I mean, so I think let's say end of December, this is, no, a year ago, 15 months ago, merchant bankers had given us some indications of likely valuation of the food business, which was in fact higher than even the valuation of the main company. Based on the comparables and whatnot. But since then, that valuation went down considerably, generally in the market, because, you know, whatever the market scenario was. I think there were pending few hundred, more than few hundred DHRP filed, but people were not bringing IPO. You know, all that statistics, you guys know. So, their advice was to actually to wait and watch. And meanwhile, some of our new business was, you know, taking place, like beverage business, etc. So, we stayed focused on that. And I think, you know, as As we go along, as we move forward post-September, If the market improves, that something would be seriously looked at. And I think, you know, I'm thankful that our P.E. investor there is patient because they're looking for good value. And underlying business, I think, again, as a unique business of a certain scale size, including global, you know, opportunities within that business, we think, you know, eventually it should get a good solution.

Thank you.

The next question comes from the line of Ankit Bansal with AB India Limited. Please go ahead.

Sir, my first question is, sir, why there is a loss of fact when the revenues are not down, sir? How much more quarters we have to, sir, this unsustainable investor we have to follow, sir? Aren't we, as an investor, we want sustainability as a company shareholder in giant irrigation. Sir, please, can you explain, sir, this?

This particular quarter, as I explained, was a much higher cost of raw material and lower business out of the India segment, which is traditionally more profitable. And as I explained earlier in the call, that that's a temporary phenomenon, but for the whole year, we should recover. So for whole year, right, we should do better than the last year in terms of profitability at fat level. And on an adjusted pack, we are still positive if we take off the notional, you know, NCD interest costs. So, you know, I am with you, right, with all the effort which we are making. The idea is that companies should not only generate the good free cash flow, but generate at the pack level, you know, EPS. You know, that's where we are going. So I think what we have not been able to do in the first quarter, and I think second quarter is always mute, but you should see improvement in the second half of the year.

Okay, sir, the memorandum that you've done for the coffee business, has the revenue started flowing? What is the new biochar plant that you've started? What kind of business is that, sir? Can you explain, sir, this?

So, that revenue has started. In terms of the biochar plant, you know, as you know, we deal from farmers, we buy from them foods, vegetables, etc., apart from selling them irrigation. So, biochar means that we are buying from farmers the waste, agriculture waste, corn cob or the cotton stock or mango stones, etc. Adding value, you know, going through a digester, where you create biochar, which would be used again, partly as a media in our tissue culture business only, and partly given back to the farmers for the soil conditioning and so on, which will generate, again, higher productivity for the farmers. It gives, so it is a business where, you know, you're creating wealth from the West. And on the top of that, you will get the carbon credit. The whole process of getting carbon credit takes about six to nine months. But once it starts, it keeps moving. So it's a value-added business. I think opportunity is very large because, you know, India is one of the largest arable area in the world in terms of agriculture. A lot of waste is being generated, and that waste, you know, you read it, right, in Delhi and other places, all this stuff being burned and that creates all the pollution. And this way, if you can take all that waste and convert that into biochar, you know, it's a win-win situation for everybody. So that's the business. We are starting with, as I said, mango stone. Corncog and cotton stock, and then we will look at other waste agriculture materials. So, it's a very exciting project. You will start seeing, you know, because project has recently started any impact on numbers from the next fiscal. And, you know, that further cements our relationship with the farming community and helps us to, you know, create more value.

Okay, sir, aren't you think you're soon?

Sorry to interrupt. We will be able to take that as the last question for today. And with that, I will now like to hand the conference over to the management for closing remarks. Over to you, team.

Yeah, again, I would like to thank, you know, all the, all the, to all the participants, and especially for all the questions. And I'm sorry, you know, one or two questioners couldn't complete them and you can separately reach out to us too with their question and we will be very happy to answer. Overall, I think we are very confident for the rest of the year. This first quarter was things were a bit beyond our control and we are very confident on, you know, honoring the debt obligation. We don't see that as an issue. Second half, I think we will be having really strong numbers. We thank you again.

Thank you, members of the management. Ladies and gentlemen, on behalf of JN Irrigation Systems Limited, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines. Thank you.