Gokul Agro Resources Limited (GOKULAGRO) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Gopal Agro Resources Limited due to an H1FI27 earnings conference call. 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 this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Krishna Patel from EY. Thank you, and over to you, ma'am. Thank you, Ikhra, and good afternoon, everyone.

A warm welcome to all participants joining the Q2, FY27, and H1, FY27 earnings conference call of Gokul Agro Resources. Joining us today is Mrs. Thara Chapia, the Chief Financial Officer, who will discuss the company's operation and financial performance for the quarter and half year, and address your questions thereafter. 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 risk uncertainties that could cause actual results to differ materially from those expressed or implied. With that, I would like to hand over the call to Mrs. Zara Chapia for her opening remarks. Thank you, and over to you, ma'am.

Thank you, Krishna, and good afternoon, everyone. On behalf of Krupul Agro Resources Limited, I warmly welcome all of you to our earnings conference call to discuss the financial and operational performance for Q2 Financial Day 27 and H1 of Financial Day 27. This is an important milestone for us. As this is our first earnings conference call, we are pleased to begin a more structured and regular engagement with the investor and analyst community. Since this is our first earnings call, before discussing our quarterly performance, I would like to spend some time introducing the company, our journey from edible oil processor to an integrated agri-processing platform. The roots of our business go back over four decades in the edible oil industry. Gokul Agro Resources Limited became an independent company following the demurge of the edible oil business from Gokul Resorts and Solvent Limited and was subsequently listed on the NSE and BSE. Since then, our journey has been one of consistent expansions across capacity, geography, products, and customer segments. Over the years, we have progressively expanded our refining capacity, developed seed-crushing capabilities and served capture derivatives and specialty feds, created large liquid storage infrastructure, and built an increasingly diversified processing platform. Between financial year 22 and financial year 24, we expanded our geographic footprint by establishing a refinery near Krishnapurtham port in Andhra Pradesh and acquiring the Haldia refinery in West Bengal. In financial year 25, we acquired our Mangalorefinery, giving us a manufacturing presence on India's southwestern coast. We also initiated our oil farm plantation program under the National Mission and Edible Oil, oil farm. In Financially 26, we entered bio-level with a 300-ton per day facility at Gandhidham and increased our focus on building our branded consumer business. Today, we have evolved from a regional edible oil processor into a pan-India integrated agri-processing platform with four strategically located manufacturing facilities at Gandhidham, Krishnarsan, Haldia, and Mangalore, a diversified product basket, A nationwide distribution network and an international presence across multiple markets. To put the scale of this transformation into perspective, revenue from operations increased from approximately 8,387 crores in financial year 21 to 24,077 crores in financial year 26, representing a five-year CAGR of 23%. Over the same period, EBITDA, including other income, Our business model is built around three fundamental strengths. First, sourcing. Second, manufacturing and processing scale. And third, market access. Our integrated value chain sends sourcing, heat-crushing, refining, storage, value-added processing, packaging, branded products, domestic distribution, and exports. This integration is important because edible oil and agri-commodities operate in a dynamic environment, influenced by global commodity prices, crop availability, currency movements, freight rates, government policies, and import duties. Our sourcing capabilities, port-linked infrastructure, large storage capacities, and diversified product portfolios allow us to respond to these market dynamics and allocate our resources across products and markets. Today, our business broadly comprises edible oil, castor oil and derivatives, specialty fats, bio-diesel, and various agri-processing by its products. Edible oil is the core engine of scale. Edible oil remains by far our largest business. Our portfolio spends farm oil, soybean oil, conserved oil, mustard oil, groundnut oil, cottonseed oil, rice bran oil, farmoline, and wanaspati, among others. During H1 Financially 27, edible oils accounted for approximately 85% of consolidated volume. Importantly, we are not dependent on one edible oil category. Within our operating portfolio, palm and soybean oils are the largest categories, complemented by sunflower and several other edible oils. This provides flexibility in both sourcing and sales depending upon relative commodity economics and consumerism. Our objective in edible oils is not simply to change throughput. We want to use scale, sourcing, efficiency, our pan-India manufacturing network, stronger institutional relationships, and an increasing presence in the broad consumer segment to progressively improve the quality of our business. One of the major strengths of Kofu Agro is our multi-location manufacturing platform. Our Gandhiram plant is our largest and most diversified location with approximately 3,400 tons per day of refining capacity, 3,200 tons per day of seed crushing capacity, 300 tons per day of bio-diesel plants, and substantial storage infrastructure and value-added product capabilities. Krishna Patnam provides approximately 1,400 tons per day of refining capacity, while Haldiya provides approximately 1,360 tons per day. We also have a facility on India's west coast. The significance of these locations is critical. They provide us access to multiple ports, multiple construction centers, and different regional markets. They reduce dependence on any single manufacturing base, provide supply chain accessibility, and enable us to serve customers more efficiently across India. Another strength is that we operate across multiple channels. Historically, B2B has been our largest business, serving institutional as well as non-institutional customers. Today, however, we are deliberately building additional engines around exports and branded B2C. During H1 Financial E27, approximately 79% of external revenue came from B2B, 13% from exports, and 8% from B2C repairs. By comparison, B2C represented around 5% in Financial E26, demonstrating the direction in which we are gradually moving. Our institutional customer base includes some of India's established food and consumer companies, such as Parley Discus, ITC, Britannia, Balaji Wafers, and others. B2B gives us scale. Institutional relationships improve the quality and stability of the customer mix. Exports provide geographic diversification and additional opportunities. And B2C has the potential to improve brand strengths and the margin profile over the longer term. That combination is central to how we think about the future of VocoLagro. Building a consumer franchisee. Historically, our biggest strengths have been sourcing and manufacturing. We are now working to translate these strengths into a much stronger consumer franchisee. Our principal consumer brands include Vitalize, Mahek, Sun Premium, and Palm Jyoti, covering soya bean, sunflower, mustard, groundnut, cotton seeds, rice bran, palm, and other edible oils. Vitalize is being developed as a broader Pan-India growth brand, while Sun Premium has an established focus in Karnataka. The incremental challenge is to deepen consumer awareness, expand retail availability, and create stronger brand preference. Our overall network comprises more than 650 dealers and distributors with our products reaching 28 states and union territories. During Q2, we made further inroads into Jammu and Kashmir by appointing a CNF depot and distributors while strengthening Vitalite's presence across Jab, Haryana, Gujarat, and Karnataka. We have initiated brand visibility through modern retail formats, transcends social media and point-of-curchase communication, and launched Salesforce automation to improve secondary sales visibility, stock movement, and field-force productivity. Our objective is to build distribution first, create repeat consumption and consumer trust, and progressively improve the contribution from private sales. Exports are another important element of our strategy. We have international presence across 33 countries encompassing Asia, Europe, Middle East, and America. During H1 financial 27, export markets represented 13% of revenue. Our H1 exports were diversified across markets, including Singapore, China, Germany, UAE, USA, and several European and Asian countries. This geographic diversity is increasingly important as our portfolio moves further towards value-added products, castor derivatives, and bio-region. Castor derivatives form another differentiated part of our portfolio. We manufacture castor oil as well as several value-added derivatives, including 12-HSA, hydrogenated castor oil, retinolic acid, and other specialty products. These products serve a variety of industrial and specialty applications and provide us participation beyond conventional food oils. Our long-term objective is to progressively enhance value addition by moving further downstream from basic processing towards derivatives and specialty formulations. Our specialty set portfolio addresses bakery, confectionery, food processing, and institutional applications. Our range includes products such as Distriult, Pride, Fisco Pride, Puff Pride, and the newly introduced Rich Shares. Although specialty facts represent a smaller proportion of our current overall volumes, we will see them as strategically important because they allow us to limit our existing edible oil processing expertise for more specialized customer requirements. This is again consistent with our wider strategy of gradually improving our value-added product mix. Bio-diesel is our newest export revenue growth platform and has already begun making a meaningful contribution. We commissioned a 300 ton per day bio-diesel facility at Gandhidha which got fully operational during Q1 of Financially 27. The facility allows appropriate residues and non-edible fractions from the broader processing ecosystem to be converted into a renewable fuel product. Our biodiesel facility is ISPC certified, supporting access to eligible international markets, subject to regulatory and market requirements. During Q2 Financial A27, biodiesel generated revenue of 237 crores, while during H1, the revenue of 596 crores. We keep biodiesel as one of the newer growth pillars and that can complement our established edible oil centralizing over the medium term. Another long-term initiative is our Oil Farm Program. Under the National Oil Farm Program, approximately 550 hectares were completed during Financially 25 and 26, with another 900 hectares under development for completion during 27. Oil Farm is by its nature a long duration initiative. We therefore do not look at this program to the length of near-term quarterly financial returns. Strategically, it represents an opportunity to participate in development of a domestic raw material base, strengthen backward integration, and contribute towards India's longer-term efforts to reduce dependence on edible oils. Turning now to the financial performance during Q2 of Financially 27, revenue from operation was 7,481 crores, representing year-on-year growth of 13%. EBITDA, including other income, increased by 41% to 276 crores. The EBITDA margin increased from 2.94% to 3.68%, representing an improvement of approximately 74 business points year-on-year. FAT increased 40% to Rs.150 crores. FAT margin consequently improved from 1.61 to 2%. Earning per share increased from 3.43 to 4.95. Effective 24 September 2026, the government revised the interior duty structure on free edible oils, with the objective of reducing landed cost and improving affordability for Indian consumers. In the period leading up to the announcement, we witnessed some temporary deferment of purchases across the trade as dealers and distributors arbitred clarity on the rest of the duty structure and its impact on domestic edible oil prices. This resulted in lower off-take during September and consequently contributed to higher inventory levels at the end of the quarter. Following the announcement, the market has progressively adjusted to the revised pricing environment and channel activity has started normalizing. We therefore view the increase in inventory largely in the context of this temporary timing impact rather than an indication of structural weakness in underlying demand. Actual financial aid 27 financial performance. Revenue from operations increased by 10% year-on-year to Rs. 12,763 crores. EBITDA, including other income, grew 46% to Rs. 493 crores. EBITDA margin expanded from 2.92% to 3.86% and improvement of approximately 94 basis points.

FAT grew 54% to Rs.

274 crores. That's margin improved from 1.54% to 2.14%. Earning per share increased from 5.86% to 9.11%. The important point is that profitability grew materially faster than revenue during the first half. This reflects our continued emphasis on sourcing discipline, operating leverage, customer and product mix, and discipline management of commodity exposure. A stronger talent sheet to support growth. As our scale has increased, our balance sheet has also strengthened. Our net worth has increased from approximately 345 crores in financial aid 21 to 1,697 crores as of 30th September 2026, representing nearly 5-fold growth. Our debt-to-equity ratio, after reaching 0.77 times in financial year 24, reduced to 0.41 times at the end of financial year 26, and further to 0.36 times as of September 2026. This is especially important because this spreadsheet improvement has been achieved while we simultaneously expanded our manufacturing footprint and invested in growth. We intend to retain this financial discipline as we execute the next stage of capital expenditure. Capacity expansion, preparing for the next growth cycle. Our existing manufacturing footprint has achieved high utilization in key refining operations. This gives us confidence to invest further behind demand. We are undertaking capacity additions across our four manufacturing locations that are expected to add approximately 8 lakh tons per annum of capacity. For us, the purpose of this investment extends beyond simply increasing lane plate capacity. It should provide greater throughput, better fixed cost absorption, shorter supply chain lead time, improved geographic flexibility, the capacity to support growth in B2B and B2C, and greater ability to serve incremental market demand, renewable energy, and operating efficiency. Sustainability investments are also increasingly linked to operating economics. During Q1 Financially 27, we commissioned a 15 megawatt captive solar plant in Gujarat. We are also pursuing additional captive solar projects, including 4 megawatts in Andhra Pradesh, 4 megawatts in Karnataka, and another 10 megawatts in Gujarat. These investments are intended to reduce our dependence on conventional power, lower energy costs, and improve the sustainability profile of our operations. Going forward, we intend to maintain transparent and consistent communication with the capital market and help investors develop a deeper understanding not only of our quarterly performance, but also how the underlying business is evolving. As a starting point, we intend to conduct earnings conference calls following our half-year and full-year financial results. With that, I conclude my opening remarks. Thank you for your time and attention. We will now be happy to take your question.

Thank you very much, ma'am. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone 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. A reminder to all the participants, if you wish to ask a question, please press star and 1. The first question is from the line of Shania Chain, an individual investor. Please go ahead. Hello.

Hi, sir.

Congratulations on a good set of numbers. I just have had a few questions. First, revenue increased by 13% year-on-year in Q2 FY27 and 10% in H1 FY27. So, how much of this growth came from volume, commodity price realization, and new business, such as biodiesel?

Yeah, thank you for your question.

The revenue growth of 13% in Q2 and 10% by the H1 ended, 30th September 2026, is broadly driven by the price realization, better price realization. We have already attained full optimum capacity, so the volume growth, we are not expecting volume growth in this year. We are already bringing up new capex to expand the capacities for the demand which we have.

Yeah. Sure. Also, one more question. Like Q2 FY27 revenue was 7,481 crore compared with Q1 FY27. So, what caused the 42% substantial

increase and how much was seasonal versus structural? 42%? Can you again repeat your question? Shania, may I request you to please repeat your question? Shania, can you hear us?

Ladies and gentlemen, due to no response, we will go ahead. A reminder to all the participants, anyone who wishes to ask a question may press star and one. We will take the next question from the line of Keshavkar from Counter-Cyclical PMS. Please go ahead.

First of all, I want to congratulate the management for the consistently excellent performance that the company is posting, And I believe that the performance of Gokul Agro is way better than any other edible oil company which is listed. So many congratulations for that. Now, sir, the concern is that this quarter we posted possibly all-time high margins of 3.5%. I believe in Q1, the margins were 3.9%, but before that, the margins were like 2.5% or so. So, is this a sustainable margin, 3.5%? Can it sustain or is there some element of inventory gain or forex gain and so on?

Thank you for your question. Thank you, Keshawji. So, these margins are sustainable. We have been gradually, the margins have been expanding gradually. These margins expansions are a reflection of what we have done. We have done a lot of in-branding and value-added portfolio. We have better capacity utilization, sourcing procurement has been smarter, and even the cost control measures have been highly sustainable. So we expand, and also the B2C segment is what we are widening the distribution reach. This all together has given us a margin expansion, and we expect the same to be sustainable.

Understood, madam. So, and madam, now, the concern is that, madam, there have been many companies like KS Oil, Ruchi Soya, and many others in the past that, I mean, ultimately, they face huge inventory loss, and basically, they become bankrupt. So, I mean, madam, what are we doing to insulate ourselves from the volatility in the edible oil prices and on the forex side? And I hope that one fine day we will not see, like, a huge loss due to the volatility on these accounts.

I appreciate your question, sir. So, we are not into speculation, sir. These companies which you have referred have been the reason for them was different for being bankrupt or making huge losses. Our inventory is protected by back-to-back selling. So, we are mowed into a B2B segment where my inventory is mostly sold and hedged. So, either it is sold in the physical forward market or we hedge it on the export exchanges available for the farm and soya. So, the prices are protected as volatility and commodity prices are protected largely because we are hedging our inventories. Secondly, for the forex prices front also, same, we hedge all the payments, import payments through a simple forward hedging policy only. There are no derivatives which we use. So hedging mechanism is very strong in our system, which will always protect us from any unlikely movement of commodity or the ULTI in our movement.

Understood, madam. Now, madam, another thing is that, madam, since the price of these edible oils are highly volatile, so, madam, like you mentioned that 3.5% or so is a sustainable EBITDA margin number. So, madam, my question is that whether operating margin is a better way to look at the business or EBITDA per ton? Because if edible oil prices come down, then even if the margin remains the same, which is 3.5%, but due to the realization decline, the absolute EBITDA will fall, even though the margin remains stable. So, madam, is that the right way to look at it, or is EBITDA per turn the right way to look at our business?

So, sir, I would prefer that going with the EBITDA portal is a better way of looking it into the price realizations. But, largely, we hedge. We have a proper hedging mechanism where my all purchases are sold by physical forward hedging. So, that protects us the realization part and all the measures which we have been taking over the years and still progressing with the new CAPEX also. So, I think EBITDA, but these are sustainable.

So, madam, the thing is that if, let's say, edible oil prices fall by, let's say, 20%, hypothetically, then, madam, what will be the impact on our EBITDA? Will we be able to hold on to our current EBITDA or our EBITDA will fall by 20%?

So, sir, that is what I am explaining, that my hedging policy, we don't have open inventory levels. We don't keep more than 10 to 15% as an open inventory level. Even the prices fall, if I have sold the inventory in the market, the contracts start to be eddy. So any adverse movements of decline of maybe 20% also, which you assume, may not impact largely because the open inventory is very less. And also, we have been hedging on the exchange front. So even the prices movement is negative, then we can hedge it on the exchanges of Sibot and Malaysia for protecting our margins.

No, madam, I understood that point that we are hedged and we are not speculating and there is back-to-back inventory booking. So, there is no inventory loss risk. I understood that, madam. My question is, madam, that the last 12 months, our revenue is 25,000 crores. So, madam, let's say if edible oil prices fall by 20%, so our revenue will decline by going forward from 25,000 to 20,000 crores because the volume is the same. So, madam, now the 3.5% margin on 25,000 crore is upwards of 800 crore, and 3.5% margin on 20,000 crore revenue will be obviously lesser. So, Madam May, the question is whether if assuming edible oil prices correcting by 20% price-wise, will our EBITDA margin increase to set off the fall in the absolute EBITDA level?

Right. So, EBITDA margin remaining constant, the absolute EBITDA may change, but when the prices fall, we expect higher volumes. So, I don't look into declining sales revenue numbers. When the prices decline, in fact, the volume growth should be more, so the revenue should be more sustainable also.

So, madam, our volumes are already... I am so sorry to interrupt, Keshire.

You may please rejoin the Keshire for more questions. Thank you. A reminder to all the participants, anyone who wishes to ask a question, make the stars and one. We will take the next question from S.B. Bhaya. Please go ahead.

Ma'am, congratulations to you for a very nice initiative which you have taken. I think I've been associated with this company for the last, during the course of your growth page, right from 2021 to 2026. So this is one thing which we're missing, interaction with the investors' community. So we have started that and promised to do it once in six months. So it is a very, very, very welcome step. Actually, coming back to the question, so, right, you have just said in reply to the first question that your capacities are fully utilized as of now, and you are planning further growth by way of putting some additional capacities in your existing plants. So, ma'am, if you can share with us actually what sort of growth in volumes you are planning for the next at least three years, actually sequentially, that is, first year, second year, and third year, by putting additional capacity and what sort of additional revenues you may be able to generate due to that. Thank you.

Thank you, sir. The capacities which we are adding will be operational only by October 2027, sir. So, gradually, the capacity at Eastland locations will be added. Considering the present prices, commodity prices across India, we expect volume growth of 10% in the next year and continuously year-on-year also 10% to 15% henceforth.

Okay, and that should result into what sort of growth in EBITDA margins or absolute EBITDA?

Right, so EBITDA margins, we expect this to remain at a level of 3.5% to 4%, and same will be reflected in the absolute numbers of EBITDA.

And one more question, actually, your focus on growth, will it be on edible oils or consumer tracing business, or will it be in biodiesel? If you can elaborate on that, please.

So, the growth remains the P2C segment and the value-added business which we want to add. Saying that, the volume growth always comes from edible oil being a largely populated economy. So, the growth in the population will also lead to the volume growth in the edible oil business.

Okay. Thank you, man. Thank you.

Thank you. A reminder to all the participants. To ask a question, please press star and one. We will take the next question from the line of Guneet Singh from Counter-Cyclical PMS. Please go ahead.

Hello, I am an audible.

Yes, he is your audible.

So, can you please give us the average realizations per metric ton and EBITDA per metric ton for our key products like soybean oil, palm oil, gastro oil, speciality fats, and biodiesel?

So, we won't be able to specifically give it. We are into equity processing, and these are all under the same segment. So, average sales realizations for product-wise are not possible to provide.

Got it. And the average sales realizations in Q2 versus Q1 and Q2 last year, if you can give average, not product-wise?

So, I would say with sales realization, the realization of selling price is linked to the market prices only, and the market prices for all the commodities have increased by 15 to 20%.

Got it. So, this increase in EBITDA margins or EBITDA per ton is attributable to higher commodity prices, right? Right.

Better realizations of the goods.

Got it. So, when we talk about the B2C segment, so if you can share the margins in the B2C segment and what kind of revenue share are we targeting for the current financial year and for FY28? I want to understand how will that improve our margins.

The B2C segment, we are very new at a company who has joined the B2C. Saying that the B2C segment in the medium term, if you look, we have, we being a new entrant, we would be expensive in terms of marketing and branding, advertisements. So, in the medium term, we don't expect a much higher margin expansion through B2C, but gradually, with the growth in the turnover and with the visibility in the market, we expect a better segment volume increase and margin expansions also in the B2C segment. So, you can see the growth from 6% of which was covered by B2C last year has already in the H1 has about been 8% in the B2C segment, which we expect to expand gradually.

Got it. And currently, the margins are similar to the consolidated, even 5% for B2C.

Yeah, those are more or less in the line.

Got it. And what kind of marketing spends are we targeting for the B2C segments, if you can quantify annual marketing spends?

So, we have year marked about, say, less than 25,000, mostly for the B2C segments, but we'll be making expenses only gradually, looking at how the market is responding and which market is better to have a growth in B2C.

Got it. And how much was in FY26?

That number would be quite specific, sir. We can discuss that maybe after the year completion.

Got it. And let me talk about this stock and trade. So, purchase of traded goods has increased from 491 crores in Q1 to 2000 crores in Q2. So, can you explain, I mean, what is this related to?

Right, sir. So, we are mostly import dependent. About 80% is my imported raw material procurement. Saying that, we have four plant locations, and being import commodities, the vessels are to be available at a very larger quantity. Then the requirement may be at the plant level, individual plant level. We sell off some of the quantities outrightly, not to manage our inventories at the plant locations. And that's the reason why there is a trade. Saying that, the stock in trade, the trade sales are largely in the range of 10 to 20%. They do not go beyond 20%. And the number may be looking larger. The sales is hardly less than 15% also in the H1N. It's comparable to the last H1N also.

So, it is. And finally, we are doing some backward integration, palm oil plantation you mentioned in the PPT. So, I mean, what is the current scale of this and how do we scale it up, palm oil plantation, and how will this impact our margins of procurement or inventory levels?

So, sir, in palm plantations, once the seeds are sown, it takes about four to five years for the first fruit bunches to come up. So, this has been only the second year wherein we are expanding. So, it will still take time. It will still take and we have only, we are slowly and gradually want to increase the spend of the assets available for us. So, that is where we are focusing. Currently, those locations are in Bangladesh, but any benefits would be only available after, say, a span of three to four years. So, today, it is a very new entrance, but at a longer tenure, this will be beneficial to the company.

Got it. So, in three to four years, if we say what percentage of, I mean, imports will be substituted by this, It

would all depend on how much hectares are allotted by the government to us. As of today, if I would say how many hectares I have developed, basis on that, it is hardly 1,000 metric tons per annum, which is very nominal, not even 1% of my requirement, but this is a strategy which the government is promoting, And we also, being an Indian company, we want to promote the government and it would slowly and gradually reduce the import dependency and the USD outlaw of the USD also from the country. If this is being promoted, well. So, that is where the initiative goes.

Got it. So, thank you very much for answering my questions and I wish you all the best.

Thank you, sir. Thank you. Ladies and gentlemen, to ask a question, please press star and one. Next question is from the line of Bharat Mehta. Please go ahead.

Hi, I had a couple of questions. The first one being, what is the company's market share in the pre-regional market?

Sorry, sir, which segment you are mentioning?

I'm mentioning about the eduvalo.

The market share of the company stands about 8%

in the edible oil market. Around 8%? Right. Okay. And also, I wanted to check what the edible oil volume growth industry and the company over the next year coming this year. Just wanted to see the overall picture of the market and how we are...

So, for the edible oil growth, we expect a volume growth of at least 10% in the coming year, And the growth should remain constant by 10 to 15% every year we can add on. So, the population of India already we have a co-capital consumption of 18 to 19 years. So, that will keep on adding the demand requirement of the energy oil.

So, on the biodiesel business, what would be the sustaining liquid?

So, for the biodiesel, the margins are marginally better than the existing product mix, but, yeah.

And approximately, how much delta would it have from the red?

How much, sorry, can you pardon?

Delta would there be, in terms of percentage terms, how much delta would it be from the red?

So, biodiesel is covering about, say, the sales revenue contributing 5% to the top by H1 September 26th.

And assumption that biodiesel business would be, as compared to edible oil, will that assumption be right?

So, the biodiesel we are exporting. So, it's not about working capital requirement, but this is being exported under bulk consignment. So, for a particular time, it may be, since the bulk consignment has to go as an export, so maybe at a particular time could be a better, higher inventory of biodiesel. That means the flowing orders would be there.

Understood. So, it will go after that time. And, so, if the Gandhidam facility reaches optimum utilization, can we find the biodiesel?

The Kandiram plant has retained the capacity, optimum capacity, and then what about biodiesel?

So, would we try to expand that biodiesel capacity?

Sir, we have started the capacity only, full-fledged operations have started only in the Q1 of this initial year. So, funding the capacity today or maybe not, it's not the correct type of capacity. We still need to require and explore some of the other communities and the broader market demand. That is, currently, we are not looking into it.

We may explore some.

Understood. Okay. Thank you so much. That's it for my time.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two only. Should you have a follow-up question, please rejoin the queue. We will take the next question from the line of Dheeraj Sachdev from Ormul Kapitam. Please go ahead.

Yeah, hi. See, in terms of domestic sourcing like oilseeds, caster, mustard seeds, groundnut or sea salmon, and even rice bran, which are sourced domestically, and you may be obviously procuring it for American-stranded markets like APMC, across Gujarat, Rajasthan. So, will the lesser acreage this time or lack of monsoon impact our sourcing cost?

So, for castor, we have seed crushing plants for castor, mustard, and soya. Castor is a product which is grown largely in Gujarat. 80% of the India production is in Gujarat. So, sourcing for castor has been around the year. Saying that mustard and soya seeds, those depends on the price parity, the seasonal impact on the prices, and how the end market of the products would fetch good, better margins. If we don't understand that the margins of the parity is available in the market, we may not go ahead during the season for seed crushing facilities. And we may, because soya is available through imports also through soya, then there is no point in running the operating plant for the seed-crushing facilities of soya. But that all depends on yearly basis depending on the seasonality of the product, time, prices of the product.

So, my question is, this time the lower deficit monsoon will not impact the cost of sourcing going forward?

The cost of sourcing going forward, it would impact because the prices of the soya has already been quite higher in the markets because of the lower rainfalls. So, then we may only assume not to go ahead with seed crushing facilities for soya, maybe this year, but it would all depend on the prices. In fact, again, in the November month, how the prices are moved, then we may decide on whether how to function the manufacturing facility for the seed crushing.

Okay. So, you are confident that despite whatever the monsoon, we have fungibility in terms of seed and according to the… We have full fungibility.

Yes, sir. We are into refining of…we have oils in refining, audible oils also, different oils depending on the cases and the price parity. We look forward to where to deploy the resources in the seed-catching facilities, in the refining oil, which oil, which seed. That is all dependent on the price parity functions only. There are no compulsions in terms of we have to produce this much. So, we move as per the market demand and the market prices.

And in terms of the imported raw material, the duty reduction, is there any impact?

That is a positive impact, the duty. So, the Indian prices, the government has supported, the duty reduction is there to support Indian hand-users, customers, and that's a positive impact on the company and the industry at large.

And how much is imported, Romitil, for us now?

We are closely importing 75% to 80% of my Romitil requirement.

And, Rupi, also you are able to hedge it? I am so sorry to interrupt, Dheeraj.

You will please take on the follow-up question.

Sure, sure. Thank you so much.

Thank you. Next question is from the line of Keshavgarh from Counter-Cyclical PMS. Please go ahead.

Madam, I wanted to understand that even though it seems we are net debt-free, but still there is a huge interest cost that we are paying. So, Madam, can you clarify on that account?

So, we are largely an import dependent for edible oil as a country, and in our company also, we are largely importing goods. These interest obligations, interest expenses are meant towards the LPs, import LPs which we open, and the negotiations of those LPs. So, it is not about the long-term debt. This is my routine working capital requirement to support my operations.

Understood. And Madam, now I wanted to understand that basically I understand we have 20 lakh MPPA of refining capacity and we are expanding it by 8 lakh MPPA. Is that understanding correct?

Right, sir.

So, madam, when will this 8 lakh ton come on stream? And since you mentioned that we are already operating at full capacity, so no volume growth is possible in this financial year. So, madam, is it safe to say that we refined and sold 5 lakh ton per annum, 5 lakh ton in Q2?

New operational capacities will be available only from the next year onwards and that also in a staggered manner from April to maybe say October end of 2027. And running at a full optimum capacity means running all the plants at more than 80% capacity levels because some of the other, like my two of the plants are quite old, so those require a turnaround and downtime also. So, saying that about more than 80% capacity across all plant locations, we are running.

Okay, madam, one request kindly gives the volume, sales volume number and the overall realization per ton number in your investor presentation in the future so that it will increase our understanding of the company.

About your volume numbers, we will think over it and maybe come back to you at a later stage.

Thank you, ma'am.

Thank you. Next question is from the line of Prashant. Please go ahead.

Hello, is my voice audible?

Yes, you are audible.

Yeah, thanks for the opportunity. My first question was in terms of our non-retail customers, do we have any fixed price contracts of extended duration?

Sir, there are no normally extended durations, but all the contracts are on the fixed price only. Majorly, the contracts are at a fixed price contract.

Look, fixed price is fine, but are there, I mean, like a duration in the sense that we, with a fixed price contract, we are exposed to price volatility. So, for those fixed price contracts, how do we hedge? Are these back-to-back hedged for the same tenure?

So, in the fixed price contract, those are like a forward-looking contract. These are based on my purchases and then the sales are executed, the sales contract. So, actually, the fixed price will remove any validity in the market. If the prices decline or on the upward trend also, we are largely protected because we have already contracted at a fixed price. And those covers my cost and my operational cost, my profit margins, everything.

Okay, so both the tenure and the price and every way in the middle of the company is covered.

Right, sir.

Okay, and you just mentioned that coming to the previous question about the interest cost, that the interest cost is largely working capital related cost. For the first half, I think the interest cost is 44 plus 6,610 crores, whereas the borrowing is roughly average borrowing, 31st March and 30th September is around 600 crores. So, what would be the average? So, to pass to this, what would be our average borrowing cost in rate percentage rate terms? And how much of this 110 crores is India's 116, if any?

Hello? So, right, sir.

In terms of exit numbers, I won't be able to share with you. But largely, it is the 600 crores which you are mentioning. Those are my long-term debts plus my export fund-based credits available from the bank. We also have LC businesses. So, the LCs are shown under the trade creditors, which reflects under the creditors. And the finance cost for negotiating the import LCs to make the payments to the import suppliers, those costs are reflected under the finance cost.

So what would be your blended borrowing rate, if you can give a range, I mean, not the exact number?

That would be approximately 8.5%.

Okay. That's all from my side, and wish you all the best. Thank you.

Thank you.

Thank you. Ladies and gentlemen, that concludes our question and answer session. I now hand the conference back to management for closing comments.

On behalf of the entire management team, I would like to thank our employees, customers, suppliers, distributors, business partners, bankers, and shareholders for their continued support and trust. As this is our first earnings conference call, we particularly appreciate the opportunity to engage directly with our shareholders, analysts, and investors. For any other questions or follow-ups, please feel free to reach out to me or our investor-relationship partner, he and wife. The team will be happy to connect with you offline and assist with any additional information you may require. Thank you.

Thank you very much, ma'am. On behalf of Gurkul Agro Resources Limited, let's conclude this conference. Thank you all for joining us today. Anywhere now, please connect your lines.