LT Foods Limited (LTFOODS) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the L.T. Foods Ltd. Earnings Conference Call Q1FI27. 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 presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumanth Kumar. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and very warm welcome to LTFood 21-FY27 post-result earning call, hosted by Moti Lalo Sol Finances and Services Ltd. On the call today, we have management team being represented by Mr. Ashwini Kumar Arora. Managing Director and CEO, Mr. Sachin Gupta, CFO, and Mr. Monika Chawla Chagia, Chief Corporate Development Officer, will begin the call with the key thoughts from the management team. Thereafter, we will open the floor for Q&A session. I would now like to request the management to share their perspective on the performance of the company. Thank you, and over to you, Ashuniji.

Thank you, Suman, for the introduction.

Good evening, everyone, and thank you for joining us today on the post-Cuban Financial Year 27 Earnings Conference Call of L.T. Foods Limited. 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 results documents are available on our company's website as well as stock exchanges. A transcript of this call will also be made available on the investor section of the company's website. I am pleased to share that LTE Foods has delivered another strong quarter, achieving 26.4% year-on-year growth despite a challenging operating environment marked by geopolitical uncertainties, Supply chain disruption, and freight volatility. This performance reflects the strength of our brand, resilient business model, effectiveness of our long-term growth strategy, and disciplined execution. Before Mr. Sachin Gupta takes you through the financial highlights, let me briefly update you on the performance across our key geographies. The engine that's just getting started. We have grown profitably for the last three straight years with a CAGR of 12%, wherein the profit has grown faster than the revenue with a CAGR of more than 30%. And we believe we still have a huge scope of growth as Basmati remains majority unbranded in India as on date as well. And every year, more households shift to branded and trusted Basmati. Our financial year 30 ambition is a step change of more than doubling the revenue with expanding margins, driven by reaching consumers at every price point, building distinctive brands, expanding availability, and scaling our organizational backbone digitally. Also, by expanding our portfolio in the adjacent categories by leveraging our brand equity and distribution network. The United States. Category leadership earned the hard way. We are going faster than the category. Our US past monthly import share is now more than 60%. Royal and Golden Star continue to pull ahead as clear segment leaders on the back of consistent brand investments, innovation, and execution across every channel. Tarant Shifts created pricing volatility this year, and we are focused on converting dollar growth into the real unit growth as the pricing normalizes, while broadening our reach across every price point and format. Europe and UK, they both are in the investment phase. So, Europe and the UK are currently in investment phase, and we remain very positive about the long-term potential these geographies carry. We are continuously investing in the capacity, the cost structure, and the right-channel mix, and we expect these investments to translate into the profitability over the coming quarters in the medium term. Another geography is the Middle East, wherein we are building in roads. That's a tough and saturated market. Middle East is a saturated market, and as a relatively new entrant, it is not an easy one to crack for us. Despite regional disruption to shipping this year, our demand held firm, and our e-commerce business took the number one category position. We are approaching the market across multiple price points to build in roads, and we are encouraged by the progress so far. Rest of the world, wherein we are strengthening our share, though it's a small market in terms of the Basmati consumption, but we are enjoying leadership position in most of the countries, and we are further solidifying our position with the continuous brand investments and the distribution expansion. The other segment that we are into, which is organic, the financial year 26 brought cost pressure as we changed the business model from wholesale to the CPG, and we expanded our European capacity. We still see organic as one of our most exciting long-term bets, with wide space in the Americas and in European organic ingredients, which will help us to balance growth and margins in the medium term. India is a proven growth engine, still in its early innings, as there is a huge potential lies in front of us. The U.S. is genuinely category leader working through near-term tariff headwinds. Europe and the U.K. are in the investment phase with strong long-term potential, and the Middle East is a tough market wherein we are building inroads. Organic is a long-term bet where we are reset course, and all the geographies and business segments are moving forward with full rigor. Now, I hand over to our CFO, Mr. Sachin Gupta, for the detailed financial update. Thank you, Monica.

Good evening, everyone, and thank you for joining us today. LT Foods delivered another strong quarter, reflecting the resilience of our business model and the strength of our brands and the effectiveness of our long-term growth strategy. During quarter 1 FI 27, the consolidated revenue On a year-on-year basis, it grew by 26%. On a normalized basis, it grew by 19%. And the revenue stood at 3161 crores, driven by strong demand across our key geographies and sustained momentum in our branded portfolio. The gross profit during this quarter increased by 19% to 1029 crores. The EBITDA grew by 20% to 363 crores. Profit after tax stood at 183 crores, registering a growth of 9%. EPS likewise stood at 5.3 per share, a growth of 9%. Profitability remained healthy. However, the EBITDA margins moderated from 11% to 11.5% as compared to 12.1% primarily due to ongoing restructuring within the organic food segment. Now, coming to quarter-on-quarter basis, the revenue grew by 8%. The gross profit margin grew by 13%, EBITDA grew by 21%, and the profit after tax on a quarter-on-quarter basis grew by 35%. Turning to the segmented performance, our core Basmati and the Specialty Rice business continue to perform exceptionally well, delivering revenue growth of 34% year-on-year basis to 2845 crores. Importantly, the volume grew by 11%, demonstrating the sustained consumer preference for a flagship brand across market. Despite the geopolitical uncertainties and trade disruption, this segment, a beta margin stood at stable 13%, highlighting the strength of a business model and operational execution. In India, the revenue grew by 23% on year-of-year basis. Supported by continued marketing share gain and deeper household penetration, our market share reached to 23.1%, while household penetration increased to 64.4 lakh household, reinforcing the growing strength of our Dawud franchise. We also continue to maintain leadership position across e-commerce, quick commerce platform, which remain strong drivers of our premiumization and consumer acquisition. International business also continued its growth momentum and contributed 71% of our consolidated revenue, with North America maintaining the leadership position with 49% growth. Normalized growth during this quarter was 27%. Middle East and the rest of the world grew by 44%. A brand continues to strengthen in these markets across all geographies. In organic food and ingredient business, witness a temporary decline in the revenue due to remodeling of the organic business. The revenue stood at $254 crores with a beta margin at 4%. However, the underlying demand fundamentals remain healthy, and we are expecting gradual normalization over the coming quarter as the business mix improves. We continue to believe strongly in the long-term opportunities within the global organic food market. The ready-to-heat and ready-to-cook portfolio delivered revenue growth of 13% on year-on-year basis. With 42% growth coming in the biryani kit, this portfolio continues to represent an important strategic growth avenue for the company. Our RTH facility in the U.S. is expected to become operational in this quarter. With that, it will accelerate the growth in this segment in the upcoming quarters. From the balance sheet perspective, we remain focused on disciplined capital allocation and efficient working capital management. We delivered meaningful improvement across key operating metrics during the quarter. On year-on-year basis, inventory days reduced from 221 days to 187 days. Receivable days improved from 30 days to 26 days. With these improvements, our overall working capital reduced from 195 days to 170 days. These improvements reflect our continued efforts towards enhancing efficiency across the value chain. Our return on capital employed remains robust at 21.1%, demonstrating our ability to generate healthy returns while continuing to invest behind the future growth opportunities. While net debt to EBITDA improved during the quarter to 0.48x, our net debt to equity also remained comfortable at 0.15x, providing adequate flexibility to support future expansion initiatives. To summarize, a quarter one. FY27 revenue has been a strong start to the year with record revenue of 3161 crores, EBITDA at 363 crores, PAT at 183 crores, and an EPS of 5.3 per share. Importantly, these results are in line with our annual estimates and we are on track for the full year across all financial parameters. With this, I now request the operator to open the floor for questions and answers.

Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone phone. 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 from the line of Pujar Sanghi from InCred Asset Management. Please go ahead.

Hello.

Yes, Pooja.

Yeah, so congratulations on a good set of numbers. I wanted to understand how much is the planned CapEx for the Australia facility?

You know, we have just opened the company, so there is no plan for the CapEx right now. But we'll see, you know, how it evolves. At the moment, you know, we have just infused the very small equity to open the company.

Right. And so, second question is, if you can give me some regional flavor on what are the key drivers that are responsible for driving revenue and profitability for each of the regions?

You know, for India, you know, I will request Ridesh to take this question.

So, hi, Pooja. So, for India, the focus is multifold. We are obviously increasing our distribution. As we move forward, there is a robust plan in play. That we've created in the last year, which is helping us go deeper into every city. So our split expansion is one lever. Every channel is in focus, where we are largely focusing on premiumizing our product mix, as well as looking at white spaces in the market to launch new products. So these two are the key levers for growth. In revenue, as well as gross margins.

Right. Puja, just to add what Ritesh said, so broadly, you know, we have three areas where, you know, we will grow. One is in our core, you know, which is specialty rights. And second is organic. And third is RTH and RTC. So, the specialty rice is across the globe, and RTH is bigger in USA, so we have double-double capacity. Hopefully, you know, in three years' time, we are aiming to make our ready-to-eat business double.

Right, sir. Okay.

Thank you, sir. Thank you. Thank you. The next question is from the line of Avneesh Roy from Nuwama. Please go ahead.

Yeah, thank you, and congrats. My first question is on the Nino impact. So clearly, currently, sowing of the rice is happening, and of course, in many areas, there is a deficit, some areas there may be excess also. So if you could update what will be your prognosis of the sowing season, and what will be your plan of action if the feed is low, because, tell me, can impact feed, and the cost of irrigation also goes up because diesel usage is higher. So, how do you see on the margin side, given there will be inflation, and on the yield side, are you now going to source from other markets also, if there is an option?

And I, you know, unfortunately... So, the majority of the Basmati-grown area have an alternative irrigation, which is canal on the groundwater. So, historically, we have not seen much impact, but there will be little bit impact, but it's too early to project on the exact size of the crop. So, by mid of August, we will be very clear. So, if there will be a lesser crop, then there will be inflation, and we have all the plans to make sure that whatever the demands IT has is for brands, it will be met. And if inflation comes, then historically we have been able to pass on to the consumer. I am quite confident that we will be. Thank you.

Second question is on India market as a demand side. So, two things. One is, on the organic side, I see companies like Starter Consumer, which has done a brilliant acquisition in that space, ramp up gradually for the India market. I understand you feel that regulations in India are not stringent, so you are focusing in terms of organic more outside India. So, if you could update on what will be the India plans in the next one or two years on the organic side. Second is on the Basmati, India, clearly the number three player we are seeing ramp up. If you could tell us, next three years, would you expect top two players to lose market share, and will there be healthy co-existence? It becomes a slightly three-player market with third player stream much smaller than the top two, but still gaining some share. Would you be worried on that?

Ritesh, are you taking this question?

Thank you.

You know, for us, the larger focus is on market creation. So the focus is to increase the market size of Basmati as Basmati are still very underpenetrated as a category. So our focus is on improving our availability and creating market where the larger focus is to gain share from households which are consuming Basmati. But lose and shifting them to branded Basmati. So that's the larger focus on the core Basmati side. And we believe that this will lead to an increase in our market share. On the organic bit, we've also launched IAM Organic in Davut in e-commerce. So we are starting this journey of launching organic product range. And this will continue as we will launch more products in this space in the future.

Two quick follow-up, and I'll end there. One is, in terms of organic, are you charging a premium versus organic India of feta consumer? And on Basmati, any aggressive pricing by the number three player? And have the top two players lost some market share? I'm not referring to the official market share data, if you're referring to that. It gives me the real sense of the market share, because that doesn't give the true picture, generally. So, do you have grown, the top two players would have grown slower than the number three players, because number three player is already out in terms of results?

Yeah, so we have gained market share in the last quarter. I don't know about the other player, but we have gained market share in the last quarter, both in terms of all the channel mix, as you can see in our growth rate as well, that our first quarter growth has been good. And the second or the first question on organic, yes, we are charging a premium over in the space of Basmati and Sona, Missouri, to all the players that are available in the market. Sure, thank you. That's all from me.

Thank you.

Thank you. The next question is from the line of Saurav Beria from Samiksha Capital. Please go ahead.

Hi. First of all, congratulations on the great set of numbers. My first question is, I would like to just retouch upon the El Nino part. So, largely, Baswati crops remain irrigated, right, from the canal or the groundwater. So, what are the current groundwater levels in the areas where we source from? And till when do you expect it to get utilized? Because below a certain level, we cannot use that groundwater, right? So, what is the study of ours on that part?

Swarabh, you know, I may not have the exact data on the water levels, but broadly, you know, our grounds survey is telling us that, you know, and historically we have also seen. So, till date, you know, there is no head alert on that, that, you know, it will impact. Some districts, you know, we have an issue, but majority district is not a challenge, but say in 20% of the area where it is grown, there is an issue, but I think we will have an exact thing on by end of August, but more or less, you know. We don't see the crop to be more than last year, as we were expecting as, you know, farmer has got a good price last year. So, the prices will remain firm in the coming crop also.

Okay. Still, on an average, what percentage of the basmati crops gets supplied via the irrigation, and what percentage via the ongoing rainfall?

80-85% is, you know, is by, you know, alternative sources also, which is canal and the groundwater.

And 15, 14, 15 percent is where, you know, is dependent on the rain.

Okay, and the second question, so if we look at the standalone numbers, so if I talk of the subsidiaries, can you give me a bifurcation of what are the gross margins and the EBITDA margins separately for the standalone and for the subsidiaries? Because what I see is for the subsidiaries, this quarter, the margins. And both the gross and the EBITDA level margins have fallen on a YOY basis. So what is your read on that?

So the major reason for the call in the gross margin is two factors. Firstly, the change in the payment or the shipment terms that we have changed from the CIF to C&I basis. And secondly, there has been a drop in the margins in the organic segment. The organic segment initially last year had a gross margin of 35%. This year, the margins are at 33%. So this had an effect. Otherwise, on the overall basis, our margins have improved, gross margins have improved, and this is reflecting in our EBITDA margins as well. The EBITDA margins, if you look at on the last quarter itself to this quarter, our EBITDA margins have improved.

Perfect.

Okay. And on the sourcing cost part, so what is the current level of inventories we hold? And what was the, you know, if you can share an average price? And going forward, what is the level till we don't have to source for the inventory? Because as price rises, given there is an adverse effect of Alino, we will have impact on the margins on a lag basis, say for 4Q of FY27 or 4Q of FY28. So what is your read on that?

So, as far as the inventory level goes, the inventory as on June 26th, our rice inventory is 3,46,000 tons at an average rate of 56 rupees, and paddy inventory is 1,64,000 tons at an average rate of 38 rupees. So this inventory, whatever the inventory we have, we have sufficient inventory to service the next year, whatever the branded demand or the sales that is. Yes, the new crop or the season, what it comes out, that we are still waiting for situation, as Shunji told.

Yeah, so sort of just to add on the last ask that, you know, if the inflation comes and if there is a price rise last year. Thank you. We are confident that we will be able to pass on to the consumer, so there will be no issue on the demand side. Demand. On the margin side also.

Perfect. Just one last question.

Would you like to add something?

Yeah, I suppose the margin can be historically what we are seeing is that Basmati is around 13-14% of beta margin. So there can be a plus-minus 1% if

things happen.

Perfect. Just one last question. The standing 10% rate got expired on 24th of July. So, what is the current rate? I assume it is 10% again. And what percentage do we pass it on to the consumers?

No, we have reset, you know, however, whatever the reduction has been reduced. So, that has been the prices has been reset.

So, the current rate is 10%. The previous rate, 10%, it has continued for after that expiry as well. Correct.

And we are passing on the entire tariff to the end consumer, right? Yes. Okay. Perfect. That helps. Thank you.

Thank you. The next question is from the line of Pooja Sanghi from Incred Asset Management. It's a follow-up question.

Hello. Yes. I just wanted to ask on the geopolitical crisis and how they would have impacted our transport and logistics and how did we cope with the same?

Yeah, so Puja, you know, it has impacted, you know, two geographies in a big way. One is the Middle East and Europe, UK. And that has impacted our margin. That's why, you know, in this quarter also, the geography has been negative because of this logistic cost. So hopefully, you know, in the coming quarters, we will be able to partly pass on to the consumer. But, you know, there is impact. On the business in Europe, UK and Middle East of this disruption. In Middle East, you know, the freight rate has gone from $200 to $4,000. And that market was difficult to as competitive landscape has not allowed us to.

from the line of Praveen Kumar from Akvitas Capital Advisors. Please go ahead.

Yeah, hello. Thanks for the opportunity. I had a couple of questions. One was that you have been referring to restructuring this organic business and the impact from the same. So I just wanted to understand when would we have completed this restructuring and when can we see the margin improvement from in this part of the business.

So, in terms of changing our, you know, route to market, as you know, earlier we were selling to the wholesaler, now we are directly selling to the wholesaler. Good morning, everyone. The capex. So now, I think in the coming quarters, we are expecting that in one and a half year, every quarter it will improve.

Okay, do you have a sense of what it could be by the end of this year, the margins from this segment?

Yeah, so we are expecting that end of the year, for example, this organic business will be around 70 to 80 crore of a bit.

Understood. Thank you. I had a second question on your experience in the Saudi and the Middle East markets. I understand that the current geopolitical crisis would have, you know, has given some setbacks, but adjusted for that, I mean, except for that, what have been your early learnings from, you know, entering this stuff completely to markets? And, yeah, if you could throw some light on that.

So, you mean to, you know, about Middle East? Yeah, Middle East particularly is a Saudi market? You know, Saudi and Middle East is almost same, you know, very matured market, very, you know, tough entry barrier. But as a strategy, we have opted to, you know, we are in this market for the last 15 years. But we are going slow and steady. Every year, you know, the business is growing. And we are choosing the either channel or, you know, the product where we have a better right to win. We are quite confident in, you know, in the coming time, we will make our, you know, positions, respectable position in that kind of market, you know, because in middle extent, mostly, you know, it's a very commoditized. End of the market and we have chosen our playground where we will be growing and making margin also.

Thanks for the response.

Thank you. The next question is from the line of Abhishek Mathur from Systematics Group. Please go ahead.

Yeah, hi, sir. Thank you for the opportunity. Just again, on the Middle East market, it's clearly a sizable market, and I think we have, as you mentioned, we have been here for 15 years, but I think we would just have reached maybe 1,000-odd crores in terms of annual revenues here from the disclosures that you have given. So just wanted to, wanted some, if you can give some more color on what is our strategy now to maybe crack this market further, we would probably have scratched just about 2 to 3% of this market. So what is our strategy in the next maybe 5 to 10 years to further make inroads here? If you can give any color in terms of country-wise or product launch-wise or distribution-wise, how are we planning to sort of make further inroads? Or at some point, is there a thought to maybe exiting, abandoning, because we have not made further inroads even after 15 years?

So as far as exit is concerned, that's our core business, and we will remain in the market. As far as the strategy is concerned, a very clear strategy that we will mostly play where the gross margins are good, and maybe in the premium and mid-segment, not in the lower side. And as far as route to market is concerned, So, you know, in some of the market, we will have our distributor in place, and in some of the market, we will have our direct distribution. So, this is the broadly, you know, the strategy on the product side, and as far as, you know, go-to-market step. The growth will be in the range of 15% as the base is small, but we will keep growing in the Middle East.

Got it, sir. And just a second question, a bookkeeping one. The other income for the quarter seems to have been quite low. Any one-offs or call-outs here? Because in general, the other income for the past two, three quarters has been a bit irregular. So, any comment here?

In the previous quarter, what happened, there was a certain revaluation of the investments that happened. And that created an income. So, there was a one-off income that was there. So, now it has normalized everything and this income will remain as such.

All right. So, thanks and all the best. Thank you.

Thank you. The next question is from the line of Bhavi Chauhan from CarePMS. Please go ahead.

Congratulations on the good side of numbers, and thanks for the opportunity. So, my first question is related to the company has shifted the shipment from TIF to TI. So, the trade costs have been reduced. I think the sales cost should be reduced. But if I look at the other expenses, the absolute numbers, it has been increased from 419 crores to 486 crores. Would you please provide the break-up of this?

So, firstly, I want to state one thing. This change in the shipment terms has happened with a related RTI, one of the subsidiaries that is in the US. So, we have changed that terms. So, it is just the movement from the other expenditure that has come to the GP margins. Hello. Thank you, Chris. Bye. So, as regarding the other expenditure, yes, the other expenditure has increased in this quarter from, if you're comparing the immediate year-on-year basis from 419 crores to 486 crores, this is mainly because of the increased operations, if you look at, because now the Golden Star, one of our factories, that has got consolidated. In the last year, it was not getting consolidated. There was no consolidation of the revenue or the expenditure. So this has resulted in an increase in the revenue size as well as the expense size.

Okay, and the second question is related to the U.S. So, U.S. revenue has been grew by 49% and normalized basis on the 29%. So, which and company have like talking about some discounts. So, is this grow is after discount or it is the discount is yet to be passed on and it will be coming in next quarter?

So, it is, the sales are recorded at net basis. So, there is no discounting or other things that happen. So, it is the net sales that are being recorded, the promotions, and these are always, and as for the accounting itself, this is to be net off. So, they have been netted off.

Okay, and another last one is on the supplier financing side.

You know, in the last quarter, The golden star was not consolidated. In this quarter, it is consolidated. So that is the normalization, not the discounting.

So, the last question is related to the supplier financing. So, supplier financing has increased our interest cost, but like our working capital have been reduced because of our reduction in the inventory phase and the data phase. So, how much working capital optimizations have been realized due to this and like how much it can be reduced further?

So, we hope we are at the optimum level of the supplier funding of these kinds. So, yes, some legroom profile days might be there, but not a major one from this current level.

Okay, that's it.

Thank you.

Thank you. The next question is from the line of Rehan Sayed from Trinitra Asset Management. Please go ahead.

We have good afternoon, Vatini. I have one last question.

I just wanted to understand. Looking at your medium-term aspiration of becoming a like doable food and energy company, if you exclude the traditional basmati business, so which vertical do you expect to contribute the largest share of incremental habits over the next three to five years?

Your voice was, let me understand the question, just a minute.

He's saying, you have a growth aspiration, so just out of these three business segments, which segment you feel would be able to grow faster?

Okay, sir, good question. So, you know, I think...

Okay, thanks.

Ladies and gentlemen, reminder for all participants, please press star and 1 to ask a question. Participants who wish to ask a question, please press star and 1. The next question is from the line of Pipil Kumar Shah from Sumangal Investments. Please go ahead.

Thanks for the opportunity, and congratulations, Ashwiniji, for a very good performance. Thank you. Yeah, so my first question is, can you give the volume and revenue for each of our more, all four major geographies, India, U.S., Europe, and Maina region?

So, as regarding the quantitative one, the India revenue in this quarter itself, it was 1,9,000 tons of that was there, and internationally, there was 1,17,000 tons of sales that happened in this quarter itself. 1,9,000 India, and US? Yes, so that...

So, I think we can give the break-up later on.

Okay, and sir, second question is regarding why the margin has reduced so sharply. Margin and volume contribution of organic business has contributed so sharply in organic food business.

So, we have restructured the business model of organic. Earlier, you know, we were selling to the wholesaler. So, now we have opened up, you know, our stock and sell distribution in Europe. So, we have set up the plant there and we have created an... Full-fledged organizations is organization there. That's why, you know, the margin, beta margins are lower, but in terms of gross margins, so we are there, you know. So hopefully, you know, with the ads, I just told that, you know, when the business is scaling up, by the end of the year, we are expecting the organic business beta to be. In the range of, which is right now 4%, will be in the range of 7% to 8%. And going forward, you know, it will come back to the, you know, double digit a bit.

But we sell, we have sales in the U.S. also from organic division, right, sir?

Yes, yes. So, two are our main market. Good morning, everyone, and welcome to the call. Europe, which is the biggest, and followed by America.

So, what is the tariff rate we are paying on organic food at U.S. right now? Same, same, 10%. 10%? Yes. So, that appeal where our tariff was reduced from more than 300% to 75%, so right now we are not paying 75% on organic food.

You are confusing with the, you know, the Soya case CBD. Which is a soya thing. That is, you know, we are not now exporting soya to USA. So, you know, mainly rice and oil seeds go there where, you know, we have a 10% duty. And that case is, you know, we have got a reduction already. And whatever the balance is left, you know, we are in the court.

Hopefully, we will get a, you know, win there. And lastly, sir, sorry, sir.

Sorry to interrupt. Sorry to interrupt. Mr. Vipul Kumar, you may rejoin the queue for a follow-up question. The next question is from the line of Anubhav Mukherjee from Precent Capital. Please go ahead.

Hello, am I audible?

Yes, yes.

Thank you.

I understand there is a 10% tariff also in the US, but overall, can you reach the graph in terms of like, what is driven by higher realisation? Can you give some colour?

You know, if I have understood, because your voice was echoing, so you said your top line has grown, then the volume grows. So it is the impact of two. One is inflation in the commodity, which we have passed on. And second is duty, which was in USA, you know, in the, if you see.

The next question is from the line of none from Marcellus Investment Managers. Please go ahead.

Hello. Thank you so much for the opportunity, and congratulations on an excellent set of numbers. So my question is twofold. The first question that I had was on the market share. So I've been looking at your market share since the last two years in India, and it has consistently gone down from 30% to now 23%. In fact, FY26 is 23.7%, and it's now 23.1%. So any reason why this is going down? Is it because of the competitive intensity, I think, because of that third player coming in that someone had mentioned before on the call? Or is it something else? So that's the first question. Secondly, in the U.S., Vice Chief said that Fastity in the U.S. is a far faster-growing business, but because it's a smaller market, it's growing at a faster level. Jasmine Rice is a larger market, growing at a smaller pace. Has that changed, or is it the same thing, same dynamic going on in the US?

So, thank you. So, first of all, you know, as far as India business is concerned, you know, we are consistently growing double-digit, you know, around 18% CAGR growth in India for the last, you know, three years. As far as market share is concerned, you know, this quarter we have improved. And, you know, two, three years back, Nielsen has reset there, you know. The way of doing the things, but we are consistently, you know, very strong player in all our strong market, which is Maharashtra, Gujarat, and number one. And in some market, you know, the e-commerce, we are focusing on e-commerce as in urban market. A lot of sales has gone to e-commerce where we command around 40 plus market share in all platform. As far as household penetration is concerned, you know, we have also increased 20 lakh household in the last year.

Fernand, does that answer your question?

Yes, it does. So that's the first question.

The category, the category is growing in USA, so And there is no impact of the duty and all these things. And that's how, you know, our U.S. business is, of course, you know, growing better than the category, but category is also growing.

Okay, so no change there?

No, no. All right.

Yeah, that was useful. Thank you so much.

Thank you.

Thank you. The next question is from the line of Unni from GeoJet Investments Limited. Please go ahead.

Hi, first of all, thank you for the opportunity. I have two questions. First is regarding the organic segment, like what is the expected revenue growth once the restructuring is done? And second is regarding RTH and RTC. Even though there is revenue growth, why EBITDA margin is declining? Is there any change in the target period for the breakeven to happen?

So, in organic business, the guidance we have given is that, you know, we will grow in double digits. And once, you know, this quarter, you know, it has improved than the last quarter. Last quarter was negative. So going forward, every quarter we are expecting, and we are confident that it will come back to the double-digit margin and double-digit growth. As far as RTH is concerned, the breakeven, what we have given the guidance that is now.

So it is the breakeven that will be coming at a revenue size of 400 crores. 400 crores at that and we are on track on achieving that. It will take two to three years time for achieving that number. So we are on track on achieving. It is just RTL, it's the US that has somewhat effected what that has done, but we are not back.

Okay, so in the case of organic segment, whether it's lower double digit or lower double digit?

No, in terms of growth or in margin? In terms of both growth and revenue and margin. That's what I just told that, you know. We are confident that, you know, the organic business, both in terms of growth and margin, will be double digit in the coming quarters. When I say coming quarters, so we are saying one and a half year. By year 27-28,

it will be fully back. Okay. Okay. Thank you, sir.

Thank you. The next question is from the line of KB Sankara Rao, an individual investor. Please go ahead.

Yes.

Your mic has been unmuted. Please go ahead. Mr. Rao?

Are you able to hear me?

Yes.

Okay. My question is regarding the invalidation of duties, but happening with my ears. Anji. Any update on whether we are eligible and if you are eligible, how much?

Your voice is a little bit, you know, cracking. So, can you repeat your question, please?

This is regarding the invalidation of duties in the US.

Yes.

By the court.

Yes.

So, are we eligible for the reference and how much we are eligible?

No, we are eligible for the refund, and partly it has come in the first quarter, and yes, but we have not booked an income yet. We are in talk with our customers.

Oh, my second question is regarding convenience food. Currently, we are growing around 13% in the last quarter. And it better reach, we better. Level of 25 to 30% level, is it possible?

Yeah, that's what, you know, we said that, you know, the new capacity is going to start in the coming time. So, in three years time, we wanted to double the revenue of RTH. That's the goal we are following. Oh, okay. Thank you. Thank you, sir.

Thank you. The next question is from the line of Saurabh Beria from Sameeksha Capital. Please go ahead. It is a follow-up question.

Yeah, thank you. I would like to just retouch upon the margins. So, on a Q&Q basis, our gross and EBITDA margins have improved. So, you know, despite the elevated feed cost, we are showing an improvement in the gross margins. So, what has been the major driver? And can you just quantify that what as a percentage of sales the feed cost got elevated? I have a follow-up question on this too. So, this was my first question.

So, Saurabh, what happened in the last quarter, the tariff that was in the US, that was at 50%. This has got reduced to 10%. So, as you know, we can't be earning margins on the tariff itself. So, that was the main reason for the improvement and the decrease, if you call it a decrease in the last quarter. So, we are on the basis of that. We have increased the GP margins this year, this quarter.

My question was on the free part.

Like, what was, as a percentage of sales, how much free got elevated? And despite the elevated free cost, in the 1Q on a Q-on-Q basis, our margins are higher. So what is driving that was?

My central question. Hattu, so last, in the last quarter, what happened, there was certain one of exceptional events that happened. In our last presentation itself, there was a damage, detentions, and the other things that happened in the last quarter. That has phased out in this quarter. And as far as the logistic cost as a percentage to revenue, it was almost, it is 4.7% of my revenue cost as the logistic cost. This has normalized. The last quarter, there were certain exceptional events that affected my margins.

Perfect. Secondly, on the jasmine rice versus basmati, so at what rate the both are going in the North America segment? What is the industry size of the both? And on the pricing front, I believe jasmine price is higher than the normal basmati rice. So are we possessing a higher margin on that part, or what is the scenario? Any comment on this?

So, sort of, you know, two are different. So, jasmine is three times bigger than the basmati rice market, and, you know, they are a different consumer for, you know, basmati and jasmine rice. So there is no cannibalization on this. On the prices side, you know, sometimes jasmine is more expensive. Sometimes basmati is more expensive. And that's how, you know, the pricing is done. Hope that answers your question.

Just to follow up on this, so can you just provide a rate, growth rate at which the basmati and jasmine are separately growing in the...

So, more or less, you know, both the categories are growing in the range

of, you know, 5% to 10%, but

Jasmine is growing a little faster than the Basmati growth.

And on the margin side, what is the margins that the Golden Star JV possesses?

Now, Golden Star is 100%, it's not now JV. Yeah, but both business has a good return on capital employed, because in Jasmine business, we have a working capital cycle, which is roughly 120 days, whereas in Basmati, we have a bigger working capital cycle, and therefore gross margins are higher. But in terms of return on capital employed, both businesses are healthy.

So, I believe Basmati has a higher EBITDA margin, but Jasmine has a higher TOIQ, correct? Yeah, yeah, yeah, yeah, yeah.

Okay, that helps. Thank you. Thank you.

Thank you. That was the last question for today. I now hand the conference over to the management for closing remarks. Over to you.

On behalf of the management of Healthy Foods, we sincerely appreciate your participation in our post earnings call today. We remain excited that there is a growth journey that we are eyeing at. So, we hope we have been able to address most of your queries and provide clarity on our performance and outlook. For any further questions or follow-ups, please feel free to reach out to me or our investor relation partner, Aung San Yal. The team will be happy to connect with you offline and assist you with any additional information that you may require. Now, you may please close a call. Thank you once again, and we look forward to staying engaged with all of you. Thank you.

On behalf of Motilal Oswald, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.