Annapurna Swadisht Limited (ANNAPURNA) Q1 2027 Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to the Q1FI27 earnings conference call of Annapurna Swadisht Ltd. At this moment, all participants are in listen-only mode. Later, we will conduct a question and answer session. At that time, you may click on the Q&A tab to ask a live question. Please note that this conference is being recorded. Annapurna Swadish Limited was incorporated in 2015 by Mr. Sriram Bagla and Mr. Ritesh Shaw and is one of the fastest growing FMCG company in eastern India, dedicated to making quality and affordable food products accessible across the rural heartlands of eastern and northeastern India. With state-of-the-art facilities in Asansol, Silliguri, Gurab, Doodlagad, and Indore. And support from five white-label partners, the company ensures large-scale efficient production. Let us now begin with the introduction of the management team. We have with us today, Mr. Sriram Bagla, Chairman and Managing Director of the company. Mr. Ritesh Shaw, Whole-Time Director. Mr. Pawan Jaiswal, Chief Financial Officer. And Mr. Manoj Sharma, Whole-Time Director. I would now like to request Mr. Shriram Bagla, Chairman and Managing Director, to give his opening remarks. Thank you, and over to you, Mr. Bagla.

Thank you. Good morning, everyone. To attend this investor call, we are very happy that we had a great quarter, and most of it, we have completed our migration from SME platform to main platform. So, as other companies with a good corporate governance, we are now in a process to start the journey whereby we can address the investors' queries quarter on quarter. So, I assure all the stakeholders that from now onwards, every quarter on, we will do this kind of investor call so that everybody can get a good amount of clarity on what management is doing and what your company is about to do. According to the bylaws set by the SEB. Now, I would request Mr. Ritesh to take over the chair and answer the queries of the investors. Good morning, everybody.

Am I audible now? Yes, sir. So, good morning, everybody, and welcome to the first conference call of Annapurna Swadish Limited. We are all grateful, you know, that we all have taken time out of the schedule to be here today. I would just briefly make a presentation. I would request somebody from Fortuner to put the presentation on the screen. So, a brief snapshot of the company. We are amongst the fastest going FMCG companies in Eastern India. And over the last... For six years of our operation, we've managed to consolidate our position as a leading France manufacturing company over here. With over a thousand distributors now working with us, we are selling approximately 3.3 million packets a day. So that's a huge accomplishment for us. And we are confident that going forward, you know, these numbers are only going to get better. If you see a comparison from last three years, we have increased our manufacturing facilities. Just the numbers won't justify, it's not going to be 3 to 5. It's the amount of square feet that we occupied which has almost doubled. We are having a manufacturing capacity of approximately 81 and 80 metric ton per day. Our product categories have grown from 6 to 13. We have about 180 SKUs right now with 250 stockists and 1150 distributors. We are reaching a retail touch point of 8.5 lakh retail outlets with presence across 15 states, but mostly concentrated in eastern India. 33 lakh packets have been sold every day. This year, we completed a revenue of 521 crores on a consolidated basis and achieved a pad of 30 crores. We have evolved from being just a frames company in 2020 to now having a portfolio spanning, you know, numkheen, biscuits, cakes, sweets, noodles and confectionery. So, we are basically looking to, you know, position ourselves as a Collection of brands. So one distribution network catering to, you know, the Eastern India market. Robust distribution, which basically helps us push various categories of products in the mass consumption segment. We have focused on the 5 to 20 rupee segment. And we've successfully managed to crack that business model. And after our initial success in Friams and Namkeen, we are now focused on, you know, repeating the same performance with our noodles and biscuit category, both having the potential to be a 250 croc movie annually. And, you know, if we look at the individual financial performance of the company, I would like… To introduce Pawan to the call. Pawan is our CFO, and he can just briefly explain the numbers to you. After which, I'll take you through the rest of the presentation.

Hello, everyone. This quarter, we have generated revenue of 127 crores in consolidated disease with EBITDA of 21 crores and TAT of 9.81 crores. If you see the standalone revenues, we have generated revenue of 108 crores. We have achieved a growth of 17.74% in consolidated basis in our revenue, 21% growth in our EBITDA and 50% growth in our BAT. Now, over to you, Ritheshwar. Hello, you're there, sir?

Ritesh sir, we are not able to hear you.

Hello. So now we are ready for Q&A session.

Yeah, you can hear me now. Yes, sir, we can hear you now.

Yeah, so good quarter for us. The first quarter happens to be one of the slowest for us, for both the companies, for Madhur as well as Landpurna. From here onwards, you know, things are only going to get better. So, speaking about our journey, you know, the company was started in 2016 as a partnership firm, and it was in manufacturing of snacks products for other brands. In 2020, we basically, you know, metamorphosed the company into being our own brand company, and the first fryer was installed in Asensore, with which we started our packaging. The Arnaputi brand was lost at the five U.P. price point, and in the first year of our operation, we achieved almost good-in-crow's revenue. Over the next two years, we expanded our distribution channel, we got into other product categories, and we commissioned our Siliguni plant in 2022. In 2022, March, in September, we did our SME IPO. We listed on the SMA Emerge. In 24, we acquired Madhu Confectionary. Completed the acquisition last year in November. And now, we have also migrated to the main platform. And this year, we acquired Anriagro, which is into the manufacturing of soya chunks, pasta, mamisele, and 3D puppet. All ready to eat kitchen items, ready to cook kitchen items. And this is a very big segment we are looking at very aggressively, you know, expanding into this. We hope to generate a revenue of about 60 to 70 crores this year and double the revenue over the next two years in Andrea Grove. So the board comprises right now of Shiram, me, and Manoj. We are the whole team directors and promoter category. Mr. Chandan Ghosh is the independent director, ex-Nestley. Mrs. Rashna Yardav is a senior HR executive. And Mr. Harish is an ex-Britannia, a senior executive. So we have a strong independent board. We also provide very insightful and meaningful context to our conversations. So if you look at our business model, we are focused on the 5 to 10 rupee price points. That is where the mass markets are and the rural distribution is completely catering to that price segment. We have a portfolio of about 188 SKUs, which gives us a very broad reach of the market. And we managed to create a distribution channel that penetrates the deep rural markets and semi-urban markets. Now, one of the strong points of the company was the Madhuruk acquisition, you know, which was initiated in 24 and completed in 26. So, in 25. So, this company was an existing unit in Dorp. They were one of the leading manufacturers of lollipops. And we acquired this company at a valuation of 180 crores, which was funded through a QIP, which was done in 2024. Now, Madhur has added a lot of synergy to the operations of the company. There is a very strong opportunity with this company to be at about 250 to 300 crores over the next two to three years. I know. We have Manoj with us right now. You know, he has been leading the effort from our end to take Madhur to the next level. And any questions that you have relating to Madhur, he'll be happy to answer during the Q&A session. So, this is a state-of-the-art facility that we have in India and now the company has diversified only from lollipops to chocolate candies as well, which is showing a lot of potential. Andriagro is the latest acquisition. It's a relatively smaller facility, but a huge potential with this company's volume. So it's one of the more recognized brands locally, manufacturing soya chunks. This company has a revenue potential of about 120 crores with a 6 crore pat. you know, that can be generated from this operation. Again, this is a product which syncs very well with our distribution base, which caters mostly to the rural markets, where soya chunks happens to be the main source of protein for, you know, a large portion of the population. We have also ventured into healthy snacking now, and we have launched a brand called Offsite, with Saurav Ganguly as the brand ambassador, and we are targeting products that are, you know, catering to the urban, more health-conscious segment, with products like banana chips, makhana, and diet chidwar. So, these are some of the products that are there, some of our leading products. At Budist, we have a Zimba brand which is doing very well in the northeastern markets. Thank you.

Ritesh, sir, sorry to interrupt you, but we are unable to hear you. Your voice is breaking. Do you think you can hear us? Nardis Evans, please stay connected.

Yeah. Yeah. So, now speaking about, you know, what the company tends to do over the next couple of years. To put it roughly, you know, in a numerical perspective, we are targeting a revenue in excess of a thousand crore and with a bad margin of roughly 8 to 9 percent. That is something which we hope to achieve over the next few years. And some of the strategies that we have taken in order to achieve this objective is that now we are targeting a segment of the market that has remained out of our ambit for a long time now. So, we are emphasizing now on the brand building exercises, and we are excited. Am I ordered?

Yes, sir, we can hear you.

So basically, you know, we are targeting pricing-led penetration in the market and the premiumization is going to give us that additional margin that we are looking for. And with the increasing raw material prices, the way forward happens to be, you know, catering to the segment that is between the 10 and 15 rupee. If we look at the financial performance of the company over the last few years, we have grown considerably from having a revenue of 160 crores to 520 crores last year. Our profits have also grown exponentially from 13 crores to 73 crores on a consolidated basis. We will be targeting an EBITDA of 100 crores for the next... Maybe, you know, next year or the year after that. And a PAT of 30 crores, which has grown from 7 crores in 2023. Profitably margin has also improved significantly from having a PAT margin of 4.5% to approximately 6%. Now, EBITDA margins have grown from 8.5% to 14% blended. Mostly due to, you know, the benefit of having Madhur with us, which is a high margin. Product category. So, if you put it in a nutshell, I mean, what are the strong points that we're looking at, we are a very strong regional brand, and we are leading manufacturers in certain categories, most in France, we are one of the leading manufacturers in Eastern India.

So, we have established a very strong foothold

and created a moat around our distribution. Our scalable and efficient production infrastructure, that is one of the key areas again, you know, where we have managed to keep ourselves very nimble despite our growing size, changing our product portfolios quickly, adjusting our production according to pricing changes in the raw material. All of that has kept us, you know, profitable, even during very difficult times. So, the confectionary portfolio is going to yield much higher margins for us going forward. And we have a clear vision, you know, targeting a 1,100 crore top line by FI 28 and a PAT in excess of 100 crores. Confectionary gives us that additional reach as well. We have still not integrated both the distribution networks. But the moment we do that, our market penetration can increase from, you know, a 400 km radius from the factory to 1100 km from the factory. So a large market expansion is achievable. And we are looking at a multi-channel growth acceleration. We will be entering modern trade, the general trade, and also export markets are going to be explored in a big way right now. Because, again, all of these benefits are only because, you know, we have a very strong portfolio of confectionery, which makes it possible for you to logistically transport goods over longer distances. And then the strategic investment which goes into brand building of the company to create that, you know. premiumization in the brand as well as the company. So next, this current year, we are targeting a consolidated revenue of about 750 crores with an EBITDA of 115 crores, which is pretty much in line with, you know, what we have done till now. And the year after that, definitely, we hope to cross the 1000 crore topmine I'm with the... hitting the 100 crore mark. So if we look at, you know, our peer group comparisons, in terms of revenue, we definitely have a lot of catching up to do with our peers. But to put it in perspective, we've been in business for only six years. And some of these companies are like, have been there for decades. So we've done reasonably well in terms of capturing a key market. And Good morning, everyone. If you look at the EBITDA level that the companies are doing, we are almost at power with Bikaji. We are much better than what Pratap Strengths does. And we've achieved higher path than Pratap. Bikaji has definitely for Bikaji and Bikaji. So maybe this shift to the main platform would help us unlock our valuation and we We hope to see more investor participation and we are also planning to engage more with, you know, the analyst and the broker community in the coming years so that our story can reach as many investors as possible. To some of marketing activities which we do regionally. So, again, thank you everyone for being patient and listening to the presentation. I think Fortuna PR team can take over from here and then we can go to the Q&A session.

Thank you very much. We will now begin the question and answer session. To ask a question, please click on the Q&A tab on the panel and click on the raise on icon. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the land of Anupamayas from Aratnatura Capital. Please go ahead. Anubamma, can I request you to please unmute and proceed with your question?

Yeah, can you hear me now?

Yes, we can hear you now.

Yeah, okay. Yeah, so my question was on the revenue or topline side. Like, you had given a projection of 1,000 crore by FI28. So I just wanted to know, like, how are you thinking of your three businesses, like the standalone snacks business, and Mathur, and also on the new acquisition of SoBest, the Andri business. So, like, what is your thought process or how are you thinking of scaling them up?

So, Anupma, roughly, you know, the way we look at it is basically a France business is already at a 250 crore run rate and our Namkeen business is also doing similar numbers. So, France and Namkeen put together would be about 500 crores. 250 crore would be coming in from Madhur. And the balance 250 is going to be a combination of, you know, our other categories which are in the growth phase. So, Noodles, Biscuits, and Andri Agro together should contribute the balance 250 cross. So, Andri would be reaching 120 cross top line, Noodles would do about 80, and then we have Biscuits, which we should do for 40 roundabout.

Right, but confectionery, the Madhur business is around 100 crores, right? Like, if I look into your...

When we acquired the company, it was 100 crores. This year, we're...

Yeah, so this year, how much we're closing at?

FY26? FY26, we did 108 crores.

108, yeah.

Yeah, so this was our first... Not even the first year because November 25, we took over the management. So we had only about 5-6 months of operations with us. And this year, we are at a comfortable pace to reach a number close to 150 crores. 150 this year, 150.

Can I just like push on that? Like, you know, how are we looking at it? Because if I look at historical numbers of Madhur also, like last four or five years, they have been at this 90 to 100 range. Like, so how are we looking to scale up this confectionery business like as new management?

In fact, you know, there are a lot of initiatives that have been taken. We have, for one, you know, immediately added chocolate confectioneries to the product mix. Chocolate was not existing before, and that is going to add a substantial amount of volume. Even the production, you know, shifts that we were utilizing initially was about eight hours, which has now been increased. And we have a target of doing two shifts of eight hours now,

and

a number of other things, you know, maybe Manoj can explain in more details if we have the time, but if we want other questions to be answered, then...

I mean, yeah, if Manoj sir is available, we can hear from him also.

Manoj, if you can just, you know, give a brief idea about how we're planning to grow the Madhul business.

That is Rose that we have has immense potential and it has not been, you know, utilized till date. So we have changed the pack size where, you know, our realization or, you know, sale price has increased. So we foresee that, you know, we did approximately 36 crores of business from Rose last year, which should be around 50 crores. Because, you know, we used to sell, like, you know, in one carton, there is, you know, a box of 24 pieces. We have made it 30 pieces. So, number, even if, you know, the number of cartons doesn't increase, the volume increases significantly, 25%. So, apart from that, we have been able to increase, you know, price by, you know, around 1.5% to 2%. So, that would give us increase of around 27%. Then, we have launched rows in, you know, gift packs, for which we are getting very good feedback. So, that is also going to, you know, contribute significantly in our business. So, we see rows at around 50 crores. And then, you know, we have launched a number of chocolates. We have added capacities in chocolates, molding chocolates, which was not there. And those are giving good results. So, we plan to have another, you know, 15 odd crores from business of chocolates. So, that adds, you know, 30 crores of business to the total business. Apart from that, we have, you know, increased the, we have become more competitive in candy with changes, you know, few changes that we have made. So that is also giving us good business. So overall, we plan to reach around, you know, 145 to 150 crores by end of this financial year.

Right, right. That's super helpful. Also on this, on the chocolate capacity that you have added the molds, are we doing any capex for this year or is it already done? Like the mold chocolates that we have done. Um, is my question clear or, uh?

Manosha?

I think Manoj is out of network area. So just to add to this, we would require a little bit of capex to scale up the chocolate facility which we have recently introduced. But that would all be done through internal accrual. So we are not looking for any kind of debt raise for an additional capacity for chocolate production.

How much would that be like the capex, like number?

Not more than 5-7 crores.

Okay, okay.

And, uh, yeah, sorry, we have ample amount of space to put all the new machineries, which we would require to scale up the production. So that way only few machines, which we need to get from China, that is the only capex, which is required for the scaling up.

Right, right. Right. So yeah, since you mentioned debt, like the debt on the balance sheet right now is around 200 crores. So are we looking to reduce this sometime in the future?

So, the revenue of the company, you know, currently is comfortable and we are, you know, We are easily servicing the debt that we have on our books, and going forward, we would be using some of our internal records to repay the debt also. So, the fast growth of the company has come back by liquidity. The company has grown exponentially from 13 crores to 520 crores in 6 years time. So most of the growth that has happened It was fueled intensively by capital, so debt and equity both helped us reach where we are right now, but having said that, you know, we are in a position now to comfortably start repaying some of our debts because the internal accruals are available, and if we do not have any further capexes happening in the company, you know, some of this... Liquidity can be utilized for the debt reduction.

That's all from my side. Thank you so much.

Thank you.

Thank you. Next question is from Lanofshikar Mundra from Vivoke Commercial. Please go ahead. Kindly accept the prompt. Yeah. Hello, I'm Artipi. Yes, go ahead.

So what are the short-term loans and advances of 48 crore and these long-term loans and advances of 15 crore as on ending balance sheet 31st March?

Baban, you can answer that.

Pavanza can you hear us?

You are referring to the balance sheet on March, the last balance sheet.

So, on the asset side, we have a short term boost and advances of 48.

I think mostly it probably refers to that there are certain advances which we have made for land acquisition. So, the company is planning an integrated facility in Siliguri, which is our three-year project. Over the next three years, we plan to have a large Balaji-type facility in Siliguri, which would have completely backward integration, starting from flour mill to basin mill, and even our own lamination unit are going to be there. So, we are putting the entire setup back-to-back integrated in starting from, you know, milling section to extrusion to frying, packing, and lamination all together in one setup. The process has already started and we started making advances to landowners and land aggregators. So, I think the numbers you're referring to... We are looking at acquiring about 30 acres in Siliguri.

And what would the cost of the land be for 30 acres?

It should work out to something close to about 60-65 crores.

60-65 crores. So, the entire amount we have paid because the short-term loans and advances are 48 crores and long-term are 15 crores. Together they add up to 63 crores. So, we have paid the entire amount of land upfront?

Not an entire amount, for sure. I think there are because when once we complete the entire payment and all the people work is sorted out, we would go for registration of the land. So that is still pending.

Somehow for the cost of the project, we can hear you.

Some of our advances also include the total cost of the project. Advances for the sets, we have taken on rent.

No, no. What is the cost of your project? Do you plan to buy a land worth 66 crores? What is the total cost of the project?

The land is 60 crores. The project cost would be roughly...

Yeah. Please go ahead. I want to know what is the cost of the project.

Yeah. So the land and site development would cost us roughly around 70 crores and the project cost would be in the range of 450 to 500 crores.

Have you taken the shareholders approval for such a large expansion?

No, we will be placing the proposal with the coming ATM. The TEFR report is being prepared by SBI CAPS. And, you know, once that is done, this ATM, we are presenting to the, I mean, at the ATM, we are looking for the approval to come in.

No, whether your company can... Absorb these kind of investments because your track record doesn't, does not substantiate to do that kind of investment. You have bought a Madhur, still you are doing, you are still not making 180 crore acquisition, I think, and you are doing about 15 crore pad or something.

15 crore is what we are projecting. What are we projecting? Current pad in Madhur Concentures?

Yeah.

Sir, what would be the current PAT in Madhur confections? Because we have done an acquisition of 180 crores a cup. It's been more than a year, right? So how do we justify this? Because what is the current PAT? Because still now we are projecting it to be 15 crores two years down the line. So for the 108 crores we did in Madhur this year, what was the PAT we did? It's about 10 crores PAT.

How do you justify your investment for an investment of 180 crore? Yeah.

So when we had acquired Madhur, we had acquired the company at an EBITDA multiple of 10 times, which was a very fair valuation. And one of the objectives at which time, you know, our company was basically trading at a multiple of 20 times the EBITDA. So it was a very, you know, reasonable acquisition, which we had done. But I think the problem happened post acquisition when the QIP which we had done, when those shares came to the market for selling, being in the SMA platform, there wasn't enough liquidity to absorb that kind of selling, and generally the market started.

We are not discussing about your share price, sir. You want to know your thesis of doing business. You paid how much? What is the enterprise value you paid for your Madhur? So that's what I'm trying to explain, you know.

10 times multiple of EBITDA was... What is that amount?

What is that amount, sir?

Madhur was doing about 18 crores EBITDA when we had acquired it. And it was acquired at 10 times the EBITDA multiple, 180 crores.

And how much was, did you, entire was equity?

No, 140 crores was equity, the value of 40 crores was debt.

And now you are planning to do a pat of 15 crore after 2 years? 15 crore pat after 2 years?

No. We are looking at a pat of roughly 25 crore after 2 years.

FY28, I think you said 16 crore pat in Madhur we are projecting, right? As per the PPT?

250, 10% of that 25 crore.

Yes, so this year we are, FY20C and we are planning to do 150 crores in Madhur. Right, and 25 crores every time in Madhur. Okay, and next year we feel that 150 can become 250?

Right, yes.

I mean, right now we are doing 108. So we are expecting our scale to become two and half times. So that's a very big stretch. I mean, how do we plan to do this?

It's not something which is, you know, unachievable or something that we have not done before. We have grown from, you know, 13 cross to 500 cross over the next five, six years. So if that's possible, whether going from 150 to 250 is definitely, you know, something that is achievable. And in terms of capacity, it is already there. The machineries are there, the market is there. It's just that, you know, that effort for marketing has to be put in, which we are doing. We have now a dedicated team looking after the marketing of Madhut products. And it's a huge market. I mean, the market is like completely humongous. I mean, we are catering to a very, very small segment. So, you know, one vehicle is... of Madhur confectionary is about 15 lakh rupees. So if you look at, you know, the market that we are catering to, we are very fragmented and there's this huge opportunity across the country. You can send it wherever you want because logistics is not a problem as far as confectionaries are concerned. So this can, in fact, be a 500 crore business over the next three to four years time. And that is what, you know, we internally target. But for the sake of propriety, it's better, you know, to be conservator. So 250-300 crores in Madhur should not be a problem at all.

No, we are just concerned about your such a big ambitious plan of doing 500 crore investment in this company with your, today your total market cap is less than about 200 crore, or I don't know, 320 crore, and you want to do 500 crore expansion with,

And also, I mean, what kind of revenue scale will be doing it? So 500 crore, I mean, we might be aiming for at least 1500 crores of revenue. How will we generate this kind of demand?

By that time we start moving to that point where we are shifting production to the new facility, we would have already been in the range of doing 1000 crore top line. So, there will be challenges, you know, which we will have to face once we start scaling up. So, if we are not prepared for those challenges now...

So, you bought this private land or is it a land from some authorities?

No, we are acquiring... In West Bengal, basically, there is no support from the government, you know. From the previous government, there was no support. Now, with the new government, maybe we will get support in the land acquisition process as well. And we are in discussions with the MSME Ministry over here. So, they are also identifying some ways of helping us. All of that is in process. So, as in, you know, what development takes place, we will keep updating.

I was wondering, where did you buy some industrial estate where they could have allotted you the land and the transaction could have been smooth? But there are no industrial estates like that in West Bengal.

But sir, this loans and advances is as on 31st March. So this decision of putting up this huge project of $500 was taken long back, let's say, 7-8 months ago.

It's been in the pipeline for, you know, in the thought process for a long time now. I mean, this is something that we have to constantly work on because we don't want to get to a point where, you know, We are caught on the wrong foot because our productions are not matching up to the demand. I mean, we face that a lot of times. This is a very volumetric product. I mean, your production takes a lot of space. Because mostly what we are packing is air. And you know, your pack sizes are... And if you're dealing in millions and millions of packets every day, the amount of space you require is huge. So, if you do not have the right facility and the infrastructure, going forward as you scale up production, it would be a big bottleneck. So, before we reach that point, you know, if we are not taking steps today, two years, three years down the line, we'll be at a point where growth would not happen anymore. So, we have to start the process now so that by the time we reach 100 crore revenue every month, we should have the right facilities with us.

So, this is going to be in Siliguri?

This will be in Siliguri. Siliguri, in terms of location, is very convenient. It caters to some of our key markets. North Bengal, Northeast, and North Bihar. All three are some of our largest markets. You think we can utilize this investment in the next three years? Yes, it's next to three years and it will keep on happening. I mean, it's not something that's going to, you know, we'll be able to put a hard stop to it. It will probably spill over four to five years. So the idea is that, you know, we keep expanding the facility and shifting our existing production to the new location. But without disrupting any of our existing supply chains.

So, you will discuss this proposal in your AGM now? Absolutely. Okay. Thank you, sir.

Yeah.

Thanks so much. Yeah.

Thank you. Next question is from the line of Aditya Shah from Happy2Invest. Please accept the prompt and proceed with your question.

Yeah, hi, sir. Am I audible?

Yes. Yeah, sure.

Thank you so much, sir. Sir, if I understand the business model correctly, you guys are in earlier, way back in 2023-2024, mainly in a packet-sized ships like 5 rupees or 10 rupees, and over the years, you guys are acquiring Madhur and Angry. So, more on a shifting like FMCG side, if I understand being correct, and we are competing some of the businesses like with ITC kind of businesses.

Yes, to an extent, right. I mean, we are migrating from being a pure snacking company to more of a miniature version of an ITC or a similar company. Because what we are basically trying to, you know, do is create a very robust distribution base. And using that distribution network to populate all kinds of, you know, categories in the FMCG segment that relate to ready-to-eat and ready-to-cook market. So it's going to be, you know, basically the way we look at it is that if you can bifurcate. Your market into six to seven segments. And every segment has about 250 crores annually. Then you have a clear target of reaching out 1500 to 2000 crores top line with a very comfortable EBITDA margin. And in the process, what you've created is a singular company with a very strong distribution reach in Eastern Indian markets, having a product portfolio which caters to Good morning, everyone. All the segments in the RTE and RTC segments.

Sir, I just don't understand, is it sustainable that business model, like competing with the ITC-like business and competing with, like, Nestle-like business?

It's not competing with ITC. ITC is a completely different scale. I mean, what we're trying to basically do is disrupt the local manufacturers. It's not that we're trying to compete with ITC or, you know, BKJ or anybody right now. Because the numbers that we're talking about, if you put it in perspective, so we're becoming a very, very small version of an ITC. For that matter, you know. Even a local brand like Anmol or Bispharm does 2,000 crore annual business in biscuits. We are trying, okay, we'll do only 250 crore in biscuits. We'll do 250 crore in primes, 250 crore in numkin, 250 crore in noodles. So, if you put everything together, then you're looking at 2,000 crore revenue. But individually, if you look at all of these segments, again, you're looking at, you know, something which is... Easily achievable. And the only disruption that you're causing is in the local markets. So the local manufacturers get shifted out because you're giving better quality at more reasonable price to the distributors. And your distribution is making more cash flows dealing with you rather than the local manufacturers.

I said, how much revenue contribution from the earlier products, like 5 rupees, 10 rupees products, what is the total?

So that is still, 5 rupees, 10 rupees happens to be a major stay even now. I mean, about 90-95% of our portfolio comes from there. Madhur has a different SKU composition, so it has a different, you know, revenue profile. But in Nappurna, we still have 5 rupees as the major contributor of our top line. But we'll add, like in noodles, we are adding 10 rupees, 20, 40, all of those segments are getting added. So going forward, you know, we'll have, we'll have verticals in the other price points as well. But as of now, 5 rupees still is the major contributor.

I got it, sir. And sir, my second question is like, over the years, like four to five years, we are still on a cash flow side is still negative, right? So any kind of cash flow side we are still negative over the last four to five years.

So that is primarily, you know, the growth that has happened in the company has been like, even before I was talking about, you know, it takes a lot of capital for you to grow your businesses aggressively. So we have chosen to have a very deep penetration of big market share. And for that, we have incentivized our distributors by giving them credit over 90 days. Now we have reached a point where we can dictate the credit terms, we can bring it down, we can start reducing the number of days of credit that we're giving to our distributors. So, that process is still on and the number of, I mean, the credit days is going to come down from 90 days to about 30 days over the next two years. So, you know, that would also release a lot of cash back into the system. So all the negative cash flows which were accumulated over the years can get released back into the system. Once the distributor outstanding goes below. And also because we have all these, you know, manufacturing facilities across locations. So our SQ, you know, our raw material requirement also goes up considerably. We have to, you know, stop the same raw material, the same lamination in all our factories. So that also is not a very... Prudent way of managing your raw material stock. So again, that facility that I was talking about earlier, once we have that kind of facility, the working capital cycle is also going to improve considerably. So we'll see both the things happening. So the distributor outstanding is going to go down as well as the raw material. Stock that we hold, that is also going to go down. So there will be substantial amount of funds getting released back into the system, which will be utilized for further KPIX or for debt repayment.

So, Kasper said it might be Vosity from, uh, I think FHRD, right? On the- So, yeah. And, sir, I have some many questions, but I will connect with you guys offline. That will be very helpful.

Thanks.

Yeah, you can do that. Yeah, thank you, sir. Thank you. Next question is from the line of Varun Singh from Alpha Accurate Advisors. Please go ahead.

Am I audible? Yeah, so a couple of questions. First is on, I think you pointed out about choosing, you know, aggressive growth by deploying capital. So, and also I think during the call you made some, you know, market cap relevant commentary comparing. Our company with, you know, other peers like Pratap Snacks, Gopal Snacks, etc. And in that context, I was just looking at all the companies and I could see, you know, at the scale of 400, 500 perot of top line, which is revenue, Pratap Snacks never had data days of more than, you know, 8 to 10 days. But when I look our case, I think we, our data days have been constantly at a very, very higher level. Yeah, 50 days, 60 days, 70 days. So, please help me understand the point that I am missing, given that both the companies operate at the popular price point, which is 5-10 rupees per act. And what explains this, you know, this use differential in the data days itself? That's my first question.

So, we are, you know, relatively new to the market. I mean, we were... Unknown entity before 2020, and it took us a couple of years to even have our foot on the ground. So, by the time, you know, all of these established players are already there in the market. The distribution is there in the market, especially Pratap and the others. They have a very strong Eastern India presence as well. So, when we are competing with them, the challenge is how do you create your own market? Because all the good distributors are already working with some company or the other, so the only way you can manage to incentivize them and have them working with you is by giving them some kind of credit and comfort in terms of payment. Because even a new entrant, they don't know how the market is going to react to your product, whether they like it, what kind of rejections are going to be there, how the company is going to behave with the distributors. So all of that takes time. So the first, you know, couple of years, we were kind of, you know, being very conservative. And then later on, we started giving out more credit. We saw that, you know, that strategy worked and we managed to wean away a lot of good distributors from established companies like Akash and Prithap and a lot of other companies, distributors also started working with us. And that growth in penetration and sales happened. So it was a strategy that we had taken deliberately and with an intent to first create a presence in the market. And once the products are established, and the market demand has been generated, then we can slowly start working on, you know, giving terms which are more favorable to us.

So, I mean, if you look at from FY23 to FY26, yeah, so our data data has doubled. So, are we saying that we need to give even more credit to acquire even more business and if the credit becomes the account, yeah.

What has happened is now we have reached critical mass. So, once you have reached critical mass, then that requirement is not there anymore. And last couple of years was, you know, Launches of all our categories happening simultaneously. So we were launching Namkeem, we were launching noodles, we were launching cupcakes, we launched biscuits. So all of that was happening over the last couple of years. So now that phase is done, now it's the consolidation phase. All of these products established, our market presence established, the company's brand pull is already there. So, going forward.

So, that's fine. That's fine. So, I mean, in a steady state, how many days you think data days should look like at the end of FY27?

It should be in the range of 60 days by the end of 2017.

Still at 60 days because none of the other snacks companies operate at such a high data days here. Everyone else is just 8 days, 9 days, 10 days. That's why we need to give so much high credit.

But we cannot change the business model overnight. See, we've been giving distributors a certain amount of credit. It's not going to be possible for them to pay up and start doing cash business day one. It's like telling them if you want. So, there can be a reduction. A 30-day reduction over the next year or so is a very good reduction in terms of payment terms. And, you know, you can slowly break it down to 30 days over another year or so. And once you're in the 30 to 15 days range, I think that's comfortable enough for any company.

Sir, my second question is on the high degree of promoter pledge. So, I mean, what is the objective? What are the timelines for reduction of the pledge? How should we look at this from allocation point?

We have already brought down the pledge from a peak of 86% to now 70%. And the unpledging process would take another couple of months. So, hopefully, by the half-year ending, we should have zero place in Annapurna. That is a process which is also working simultaneously in the background. Understood. Understood.

Sure, sure. And my last question is regarding the need for such heavy investments. I think a previous participant has asked you for, you know, what is the need of that 500 crore capex ambition plan, etc. And you pointing out that we don't want to run out of production capacity compared to the demand situation which is out there. Yeah, so, I mean, how should we, as an investor, as a shareholder, how should we look at the company from the point of view of return on capital that we are generating on the existing business, and plus incrementally whatever the new business that we want to build. So, please help us understand on the return on capital guidelines, guardrails, how are you thinking about it?

Sure. So, what we have to understand is that this CAPEX is not happening in like one shot. It is happening over number of years. It will be spread over four, five years. But the facility will start operating, say, in two years' time. It's not that everything has to happen, you know, in one shot. But definitely the CAPEX is required because we are very closely following what, you know, Balaji has done in Western India. So if you have a facility which basically integrates your entire production chain and your production and your supply chain, then you are looking at production costs which are a fraction of what any of the other companies achieve. And then that can be passed on to your consumers. You make products that are unbeatable in the market and you make higher margins in the process as well. So, you know, this is something that we would love to be like a Malaji of Eastern India. So, this is something that is playing at the back of our mind. And we want to replicate that business model because we think it's something, you know, which is a very strong business model. And it gives you, you know, a defensive strategy against any kind of competition. So, In terms of revenue, we are looking at a 2,000 crore revenue from that integrated facility generating about 15% EBITDA. And, you know, if we can achieve those numbers, it is that your entire CAPEX can be recovered over one and a half, two years' time. Having said that, it's not that, you know, the entire Kpex is required in one shot again, and that numbers are also not going to come in one shot. It is a process of growth. It will take about three to five years' time, but that is something that we start to need working on right now if we want those numbers to come, you know, in the next five years' time.

Thank you. Varun, I'll request to come back for a follow up. Next question is from the line of Josh Burjee from Josh Burjee Investments. Kindly accept the prompt and go ahead with your question.

Hello. Hello, Rathir, sir.

Hi, Josh.

Yes, hi. Sir, my question is on the auditors. Are we going to be changing our auditors for ongoing?

Yeah, now that we have migrated to the main board, we are in discussions with some of the larger audit firms. Maybe, you know, by the time of the ATM, we would have zeroed in on somebody and the announcement would be made at the ATM.

Understood. Who will it be? Are we zero to know anyone?

We have a couple of names here. We have S.J. Krishan, we have Senghi and Company. We are also talking to Grant Thornton, but one of these larger audit firms will take over.

And on the capex that we announced on the phone call, how will it be funded?

So, we'll start with internal accruals for now. And some of, you know, some, maybe, you know, going forward, we, if required, we would probably do a... We can consider doing a dementia issue or we can look at other modes of financing the CAPEX through a QIP placement in future. But right now, I mean, it is something which is still at a very, very initial stage. We have still not defined the timeline of the CAPEX requirement. We just have started doing the groundwork. To have the project ready, but all of that is going to depend on a lot of other factors, you know, on the company's operation sides as well.

Okay, and the payback period you expect will be?

Payback period would be pretty quick. It's not going to take, because with that integrated facility, you know, like I said, the numbers are going to be completely different from what we are looking at currently. So, we'll have numbers which would reflect, you know, similar to a Balaji or a Haldira type numbers with their integrated facilities.

So, the land cost you mentioned is about 65 crore, right, 38 crore? Right, yeah. And the machine cost?

See, this, again, I mean, these are numbers. There will be a detailed report coming in,

depending

on what all modules we are putting, what modules we don't want to do right now. We want to do it after two years, three years. So it's not something that's kind of happening now. So immediately next two years, we are just consolidating our manufacturing facilities, our existing ones. Madhur is getting ramped up. All of that is happening. This is something which has now taken precedence over others in the conference call, but it is not something which is, you know, top of our mind.

Sure, and the brand is an endorsement that we have paid for Saurav Ganguly.

Right, yes.

It is what it is. How is that going currently?

It is going very well. So, one of the things that we have managed to do successfully with Swarov Ganguly's endorsement is that a lot of other local manufacturers who were copying our products, we've managed to stop a lot of counterfeiting that was happening locally by having Swarov on the packets. We have also created a clear brand identity for our company. And, you know, the market is resonating very well with Ritaradi Shudaf.

How much have we paid Saruganguri in his team?

Specific numbers? I think, you know. Rough ballpark? It's a very reasonable number. It's like not even a percentage of anything.

Okay. And the revenue that we generated from the Offside brand?

So Offside was just launched, you know, four months back. We have already started generating a revenue of 2 crores per month from off-site products itself. This is going to go up to about, you know, in the range of anywhere between 5 to 10 crores we should be doing over the next year or so. And these are all 10 rupee plus banks that we are talking about.

Perfect.

In the off-site brand. But with Sourav Ganguly, we have Sourav Ganguly, even on Annapunda packs. Even the 5-Ruby packs carry Sourav Ganguly's image.

All right. Perfect. All the best, sir.

Thank you. Thank you, Josh.

Thank you. Next question is from the line of Dr. Purvin Randeria, individual investor. Kindly accept the prompt and go ahead with your question.

Hello. Can you hear me?

Yes.

Actually, I've won the retail investment for the last 2-3 years, and you see the market capital of the company now mostly around 200-300 approximately, and trades at around 10-11 PE. What does management say about it? I'm talking about as a pure investor, I'm invested for the last 2-3 years, right? As an investor, we're looking for a long-term bond with the company, right, for three years, five years, seven years, four years down the line. And now I already heard what going on for next two, three years, right. But just wanted to know how management thinking about the market capital of the company was something which revenue around 500 crore, a company trades at 300 crores. Right, so what you are looking at means, any H&I investor or mutual fund or something, that your story going to unleash to the, you know, other investors as well. Company doing currently very good, 30% growing, everything looks good on the paper, but market not realizing it. Something what we are as an investor missing on it, that it states that 11 P is quite ridiculous, sorry for my words, but it's very low P, right?

So, doctor, basically, you know, this initiative that we have taken today, this conference call, this is the first time for us. I mean, this is something that we should have done earlier. Even when we were on the SME platform, we should have done this. But, you know, now we have realized that having more interaction with the investor, investing community and answering their, you know, queries because being an SME company, you know, a lot of people do not discover you. But now that we have migrated to the main board, we want to be discovered, we want our story to be heard, we want people to come up with their queries and, you know, address them. So, the process has now been started. We will be talking to a lot of other investors also, a lot of, you know, senior investors in the Chennai family offices. So, we will now directly reach out to them, you know, with what we are doing, explain to them the opportunity and everything. So, hopefully, you know, all these initiatives will result in some kind of positivity for the market and for the market cap.

What individual do you think about the exit? I mean, 30-40% actually kind of growth you are showing in the company, 30% plus growing. I mean, PEG ratio is very low. So, what do you expect from market to see?

The reasonable key for any company should be in the range of 30 to 40. A company which is growing at 30%, 40% should have that kind of, you know, a multiplier. Yes. Definitely, I mean, the market has its own, you know, mind. So, at NLS, we can address all the queries of the market and, you know, the thought processes can align.

Thank you. We will take next questions. First text question is from Rampande from A3 Capital Services Ltd. What is debt as on today? Why presentation not uploaded in exchange which you are presenting? Promoter holdings 87.4% pledge when it will un-pledge. As the company make brand ambassador, Saurav Ganguri, To do company doing advertisements in TV or digital media, plan visit if possible, arrange for investors.

Okay, so investors plan visit will organize. I mean, we had done that before. We can plan that again, you know, sometimes next month. And Swarov Ganguly's digital media presence is already there. TV advertisement we are not too keen on because that is a high cost, low impact segment as of now. The promoter's pledge has already been reduced from 87% to 70%. It is a plan to bring it down to zero by end of September this year. And there was one more thing. In the query.

So, promoter holdings to 87.4% pledge.

You got to admit that pledge is getting reduced to zero. Before that, there was one more point.

What is debt as on today and why the presentation was not uploaded on the exchange?

The presentation, I think, is uploaded on the platform. I'll just check back with the company secretary, if that was done or not. And the current debt in the company stands at about 180 dollars.

Thank you. We take the next question from the line of Gurusidak Singh from Prudent Equity. What is the current capacity utilization for all of the facilities of the company?

So, on a shift basis, most of our facilities are 100% occupied on a single shift basis. Asensore and Siliguri are occupied 100% on a double shift basis. We are going to start their third shift operations. So, a detailed capacity, if you look at from a pure numerical point of view, we are about 45% capacity utilization. And we have the potential to, with the same facilities itself, we can potentially do twice the revenue that we are doing right now. But then there are other factors which need to be considered. Storage space is an important consideration for both raw material and finished goods. So it doesn't work, you know, in pure mathematical ways. Thank you very much. Just to answer the question, we are at about 45% capacity utilization.

Thank you. Next question is from Akshay Gupta from Gupta Investments. Just one question regarding the operating cash flow. I understand that we are growing aggressively, but if we want the market to recognize our true value, we have to generate positive cash flow. By when can we expect to generate positive cash flow from operations, not talking about free cash flow?

This financial year, we should have a positive operating cash flow for sure, given the steps that we have taken in order to address that.

Thank you very much. We'll take that as the last question. I now hand the conference over to Mr. Sriram Bhagala, Chairman and Managing Director for closing.

Hi, thank you everybody for giving us the opportunity to address all the investor queries, whatever we could do best for the company we have done so far. And over the period, we would also like to deliver and address all the queries as being discussed in this call. Thank you very much.

Thanks, everyone.

Thank you very much. Ladies and gentlemen, on behalf of Anandapurna Swadishti Limited, that concludes today's session. Thank you for your participation. You may click on the exit meeting to disconnect. Thank you.