Foods & Inns Limited (FOODSIN) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Puts and Inge Limited Q1 FY27 Conference Call hosted by Ariadne Capital Markets Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchdown form. I now hand the conference over to Ms. Dipali Kumari from Arihans Capital Markets Ltd. Thank you and over to you, ma'am.

Thank you. Hello and good afternoon to everyone. On behalf of Korean Capital Markets Ltd., I thank you all for joining in to the Q1 FY27 Earnings Conference Call of Food Finance Ltd. Today from the management, we have Mr. Miran Dalal, Managing Director, and Mr. Molo Isaha, Chief Executive Officer. So, without any further delay, I would like to hand over the call to the management for their opening remarks. Over to you, sir.

Hello, good afternoon. This is Saeed Maulai Shah. Greetings to my fellow shareholders, analysts, well-wishers, and prospective shareholders. While I will be happy to elaborate further on the performance of Quarter 1 for the current financial year, with me, Mr. Milan Dalan, RMD, has also joined for this call. What I would like to mention are few significant events since last call. This quarter we have a mango production and we saw a good encouraging trend, quality of fruit was good as well as reasonable price. While our order book position is encouraging, the export dispatch has been slowed down due to vessel non-availability and significant increase in ocean freight. Though there is no order cancellation, but there is a delayed call of. Very happy moment. Our top customer, Coca-Cola, has completed 50 years of their brand called Maza. In the recent event in Delhi, they have acknowledged our company's association and support as also our firmest engagement for sustainable sourcing. Our effort on sustainability since 2014 has now showed significant recognition. For a large French customer who has associated with us two years ago, and this program now extended to another UK-based large brand, there is a quite happy moment for us. We will now open the call for questions for my team and me as required to answer.

Thank you very much. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nareen Shah from NBS Brokerage. Please go ahead.

To the managing director and the entire team of puts and ins. As you rightly pointed out, that exports are impacted, as we are hearing from other clients also, because of the non-availability or very, very extraordinary shipping freaks, which, you know, makes it totally unviable for the people who import in terms of costing. Now, in view of the perishable nature of our products, Do you think that delays in to the time when it gets delayed because of the extraneous factors, there could be a big risk of, you know, the perishable products, you know, getting, you know, impacted, and because of that, some loss could arise because of that? Is that a probability? And if yes, you can just guide us on that, Kirk. That is one. Secondly, in view of the, you know, very, I would say that very, very uncertain, this thing, you know, the atmosphere in terms of logistics management. How do you guide for the current year? Because it is very difficult to predict that what could be the, you know, I mean, our, the actual performance. So if you could guide us, how do you feel that is the balanced part of the nine months is going to span out for our company?

And they have not canceled any order. The main point is your call. There are a lot of uncertainties across the world, and we are also having a 35-40% on the export segment. We are also having a similar type of challenge. Good part is that we have a oil climate, domestic and export. Our domestic market is almost 65%. And current year, as in our opening note, we told that Mazda celebrating 50 years of their brand. So we are happy to say that we got a good order from Mazda, which is higher than last year. And the indication what have been received so far from the Indian beverage industry, they are expecting that due to the Elmino effect, that Climate condition may be favorable for juice consumption or drinks consumption in India. We are expecting that though there may be some challenges in the export sector, Don't say that for us. As of today, we are not very much audit. That can be made up, but overall scenario as of today is not.

Just to add what my colleague Mullah said, this is Milan Dalal here, about the logistics situation and call-offs, and you wanted some guidance. Generally, what can be seen, and we've gone through these crises a number of times, the latest being COVID, that... So, in fact, we should see growth, but yes, only if we can reach our goods to their shelves is very important. So, little bit of uncertain, but we should be worried at all for this balanced nine months financial year to catch up on the pending export.

My second question is that, you know, this frozen food market which you have entered has a huge, you know, opportunity. So, in terms of, again, you know, India, we find that, you know, distribution network, preservation of products, and, you know, I mean, the entire, I would say, distribution network preparation and everything is a challenge. So, how do you see that frozen food business, which is a huge opportunity, how do you feel that you are in a position to end cash for a period of this next 6 to 12 months and thereafter also? So, this is a little, I would say, medium to long term, 1, 3, 5 years, you know, how do you see the business expanding?

Thank you, Mr. Nanak. It's a good point you have raised. If you see our balance sheet as well as last few calls for last couple of years, we are always highlighting that frozen food segment is very, very encouraging. Last two years, we have grown at 30% caregiver. In the first quarter, also we are at the 20% growth. We see huge opportunity in export market, especially in the USA and UK as well as Canada market. And the order position for us is quite encouraging. And that is the one segment is today able to manage the higher freight costs, though other segment is a little conservative approach to absorb the higher freight costs. But this frozen segment is still continuing with high cost. So we are very, very bullish. And as a company also, we have considered that we should expand our capacity. to encourage the market demand in India as well as the export market. So, we are in process

to expanding our capacity to cater this market. So, again, just to add what Moolah is saying, there are three particular segments in the frozen foods, that's the frozen...

And by, can you just... Give us some numbers that last year, what was the, I mean, I'm talking about frozen, this thing, you know, snacks item, which you are talking about, samosas, and, you know, chachole puri, and all these things, subparatha and all. So, if you can just give us some numbers that last year what you did, current quarter what you did, and what is your thinking in terms of what is the kind of, you know, levels at which it can be expanded, you know, in terms of numbers, whether say 200 crore, 300 crore, what is the kind of numbers?

Our frozen segment last year was around 12 million US dollars. So, and this first quarter, we are having around 3 million. And we are expecting that this year, it can be with a growth of 20 plus percent. As a company, we are looking that this segment can give us in 3 years time, 30 plus million US dollars. That's the direction we are working on.

Absolutely, yes. I'm also with you. Congratulations, and all the best for the future. Thank you.

Thank you. A reminder to all the participants, anyone who wishes to ask a question may press star and 1 on their test on telephone. The next question is from Khushi Solanke as an individual investor. Please go ahead.

Hello, I'm audible. Yeah. Yeah. Yeah. So my question was, like, you reported 1,800 million tons of finished goods overdue for shipment due to the war situation. What is the projected timeline for clearing this backlog? And how has this impacted your working capital cycle?

Okay, have up today. These are all overdue, but we are having a challenge on the export side. So, we are trying. It's a slow pace. It may take 60 days. It may take 45 days. We won't be able to see. As of today, it is not in our control. On the working capital side, yes, there is a blockage. It is really paying us. And maybe for that, little bit more interest cost to bear. But this is not in our control.

Okay. And my second question is, considering the freight and container availability issues, have you explored alternative logistic routes or regional hubbing to mitigate the impact on export volume?

Alternative is the air. It's almost 30x cost than what is the ocean freight today. So that is ruled out, not workable. So we have to only... Whatever information we are getting, that in a couple of months, it should be getting normalized. Not normalized, at least much, much improved position than today. So that is our expectation. When we are discussing with shipping companies, we are all talking that within a couple of months, it should be much better than today. But there is no alternative than here. And that has been a huge cost.

Just to add up, there are minor variations of the route by choosing a port to another port and then kind of transporting, but that's very small in numbers, and it's basically, I would hate to say these words, but the shipping companies have decided to ensure that they have a run of their time and make money. Unfortunately, it's unfortunate that, you know, not unfortunate, fortunate that we don't have to bear that cost. It's the clients who have to decide, and that's where they are taking a pause that instead of the current levels of 2x or 3x.

This is the transit time.

Okay, sir. And I have one more question. Like, with the demand growing in the U.S. market for frozen food, what steps have been taken to infuriate these high-growth shipments from the current global shipment disruptions?

As I like to inform in the last, when Mr. Nanak said, I informed that. Only segment is the frozen segment who are able to absorb this significant increase of rate cost. So, from the frozen segment is growing, and there is ample demand. We are unable to fulfill the demand. Situation is like that. Moreover, I think the issue is that, as our MD told, that during COVID time also had a similar kind of situation. It's more on the food security in the sense that... So, on that point, I think frozen segment is growing and likely to grow during this uncertainty. So, we don't see any issue on this segment and it's likely to grow.

Okay, sir. Thank you so much. Thank you. Thank you. The next question is from Ano Sakhoja from Ambit. Please go ahead.

Mr. Arna. Yes. Hi, thanks for taking my question. So, you had mentioned that you're expecting 30% growth over the next two, three years in some segments. Sorry, I didn't catch which segment that was. Frozen segment. Okay. And how has been the growth in the pectin segment?

Commercial production already started as we informed. Audit also going on. And good part is that few big brands in export big brands, they also shown lot of interest. And we have also sent samples. But this particular category, this sampling approval process is very, very longer time because unless a brand do the consumer testing, they don't... Give the procurement order. So, couple of consumer testing is on the way, and we believe very soon we'll have the result. So, we expect a good opportunity in this segment as a second half of the year. So, post, I think, from October or November onwards, we see. Anytime but once a client approves, then orders is not an issue because as you know, we are producing some of our waste.

Just to add what Balai said, there are three parts of it. Production, we have cracked it and everything is up to date. Luckily, our consumer base would be our same primary sales, which is of the juice manufacturers, etc. Nothing stops us from doing non-client of ours, but there is enough that they could pick up.

Didn't fully catch the part where someone was asking about the guidance. So if you could reiterate if we're changing the guidance, or it's a bit too uncertain to tell whether we'll be able to meet the guidance that we had earlier mentioned of 20% volume growth.

It's not very clear, Mr. Arnav. May I request you to please...

Is that better?

Yeah, tell me.

Hello? Can you repeat the question, please?

So, my question is just, I didn't fully hear the question on the guidance that I wanted to ask before, so if you could just reiterate the guidance for FY27.

No, the guidance was primarily on the shipping, what's likely to happen. So that was the guidance that we gave to the first speaker, Mr. Nalim Shah, that assuming that we, not assuming, factually that we haven't dispatched enough in the first quarter for our exports, we should be able to catch up with optimism over the next three quarters.

I said that in the domestic segment, we are... Thank you.

So, will we be able to meet that 20% volume guidance, or is that looking difficult given the geopolitical climates that we're currently in?

As of today, on the domestic market, yes. As of today, yes, we see.

Thank you so much for answering my questions.

Thank you. The next question is from Ankur Agrawal from Massey Business House. Please go ahead, sir.

Thanks for taking my question. Your top line is stagnant from last four years, like 2023. Your top line is somewhere 1000 crore and now it's below than 1000 crore. What is the reason that we will not grow, not growing last four years?

As a company being an agricultural segment, raw material price is not in our control or in our hand. As a company, we focus on the volume growth and the margin. In the industry, we work on the cost plus model. That means our raw material price will be variable, but all other costs, including margin, more or less will be within the 5% plus minus. That's the industry norms, and that's why we're working so many last 30 years. So, if you see the last, when you talk about 23, 24, that time, one particular category of mango, I'll tell you, the price, raw material price was 25 rupees, average. The same raw material price today is 6 rupees average. So you can see the drastic reduction in the raw material price. So if there is a raw material price reduction, automatically our final realizable price has reduced by 5x time or 3x time. And that causing the lower sales creation, though our volume has grown. See, now investor note, you are mentioning that last year also we've grown in the volume, but value has reduced. And this year also, raw material price is lower than last year. So, again, we can see a slightly lower realization, though there will be a volume growth or value growth may not be there.

And in the last two quarters, your top line, not volume, amount is degrowth by 30%, 25%. That trend will continue from the next three, four quarters?

Volume, volume is not degrowth.

Value, value, value degrowth.

Value growth will be, this quarter may not be, because...

The promoter holding in the total equity is just 25%. Any chance to increase that holding if the promoter is so positive on the company?

The question comes up quite time and again. So as a promoter group, we are currently maintaining over 25%. And about two years back, I even came up with an open offer and Milan Dalal himself kind of at 150 rupees. Definitely look at...

Because if you issue some potential, then the company got some money to repair that, and the promoter holding will increase, that will benefit for minority shareholder.

Sure. Sure, we will take your suggestions, and I haven't thought about another preferential issue. Generally, in my opinion, having a historical background of being a stockbroker, I find that just to give shares to yourself and not to the others to benefit, other shareholders, is not great. But if it's making sense for the interest of the company, we'll look at that and or acquisition in the open market, whatever works out right, we'll definitely. And thank you for your suggestion.

Because it also creates some confidence on minority shareholders if promoters increase their stake in the company on that market value, and the company also gets some funds to repay their debt.

Yes. We are taking your suggestion quite positively. We will work on it.

Okay. Thank you. That's all from my side.

Thank you, sir. A reminder to all participants, anyone who wishes to ask a question may press star and one on the touchstone telephone. The next question is from Marjorie as a retail investor. Please go ahead.

Hello, sir. So, my question is on your marketing side, as of your biggest client, Coca-Cola is investing around $1 billion to expand the capacity. So, what specific percentage of this new demand is contracted to supply to its first business?

If I may just add with your opening statement that Coca-Cola is investing, planning to invest a billion dollars or whatever, the more they invest in their infrastructure, more of raw materials would be required.

My follow-up question is, like, how does other restructured brand portfolio like Madhu, Green Top, Kusum, are aligning with your goals to shift from more revenue towards high-margin B2C value-added products?

So, basically, you know, B2C was a new initiative. One important brand that you have forgotten in our table is Kusum in the spices segment, and we have seen some good, better performance in the Q1. We have a lot of hopes, expectations, and a lot of plans to, you know, expand into. Under that brand into various other things, other than spices also in condiments and other things, where the parent company definitely has the capabilities of doing the formulation. Madhu, we aren't operating as much right now, but Greentop is very much there in multiple countries around the world, as also in India. So those efforts of high margin... We'll definitely do. And we, in fact, so slightly as a variance to your specific query about high-margin consumer products, whether it would be under this brand and or a SPV, we have got a couple of opportunities very soon to be announced for brands. To be jointly held in certain geographies, and most of these, rather two of them in particular, they have thoroughly impressed with our manufacturing capabilities, and we should see a joint venture sign up into these geographies and expand our brand. But we will take.

Okay, sir, one last question. To improve the asset utilization during the mango oxygen, which are the Fulpi products are showing the highest margin potential and capacity update?

If I am currently understood, you are trying to know that during non-mango season period, what is the maximum capacity utilization for which product?

Yes, yes.

Tomato is a measure, non-mango, and if you see non-mango, there are two other segments which are working throughout the year. One is the frozen segment, that is, there is no mango, non-mango, as well as our spray-drying division and spice division. These are 24 hours, 365 days production cycle, but on the pulping segment, tomato is the second largest.

Thank you, sir. Thank you so much. And that's also my side. Thank you. Thank you. Participants, anyone who wishes to ask a question, press star and one on the test on telephone. We have follow-up question from Khushi Solanki. As an individual investor, please go ahead.

Hello. Yes, sir. Hello. Yes, please go ahead. So, I wanted to ask the average realization decline by 18.5% year-on-year. What is the management outlook on price recovery of the mango segment, given the lower food prices in the current procurement season?

Yes. In fact, some of the category is lower than last year, also slightly lower than last year. So we don't see any major drop in the realization, but slightly it may reduce this year. From the latter part of the year, and next year, first half.

Okay. So, another question was, Kusum Spice is grew by 14.7% year-on-year. What is your strategy to increase market share in the branded Spice market segment, where large retail brands are currently active in acquisitions?

We are working on it. We have started, though in a slow pace, on the retail segment. But we are focusing on the Horeca segment, especially for the larger pie of the business, because that segment we are continuing for many years. Business is growing, that segment, especially in the export market also, we are having some good opportunity in the Oman market, though due to this, what ongoing, what situation slightly uncertain, but there is a good demand. So, I'll see you next time. We are progressing on the retail brand, but it's not.

Thank you very much.

Okay, sir. Thank you so much. Thank you. Thank you. The next question is from Amit Ghori. As an individual investor, please go ahead.

Okay. Sir, the JV which you mentioned just now, can you please guide on what kind of products will be manufacturing for the JV?

You know, our core competence is in Palpe. Obviously, you only need big juice manufacturers for that, and nobody is going to offer us any JV. So, come the next segment, which is the frozen food. So that's the most promising one which is there. And the next one that we can do, so frozen could be either in the pulse part of it, or it could be the snacks part of it, or a total range. Both of them, the possibilities are very, very strong and kind of developing very well. There is a separate segment of value addition for our kusums part.

Any reason why these B2C products are not available online on online market portals? As I see just before this call, I cross-check on ClickBart, Amazon, BigBasket, Mentra. Our products are not available on any of these websites. Any reason?

I may stand corrected, but to the best of my knowledge, whether we have got any order, but we are into Zepto and Blinkit for sure.

Zepto and Big Basket, in some geography, we have already, our product is available. We are just expanding across India, and we are in talk about Swiggy. It may take a little more time, and Blinkit. So, I think in the next couple of months, we will be in these four segments.

Thank you. Okay, okay. Now also, Anand Krishnan just got resigned, right? His last day is over?

Yes, last day was on the day for yesterday, 11th. Anand Krishnan has resigned about, I think, 60 days ago, which he already informed, and then he continued till our board meeting.

Any appointment? New appointment? Any new appointment on his behalf? Yes, I understand.

Yeah, yeah, it's statutorily also required, but more than statutorily, it makes tremendous corporate sense to have the CFO in place quickly, so the process is on, and very soon we should be able to announce. We have shortlisted a few candidates, so the minute we find the right candidate, we would appoint him or her and announce.

Okay, sure. That's all for my time. Thank you.

Thank you. Participants, anyone who wishes to ask a question may press star and 1 on the desktop telephone.

Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Ladies and gentlemen, as there are no further questions, I now hand the conference over to management for closing comments. Over to you, sir.

And to all the participants... And have always been supporting us, and would...

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