Varun Beverages Limited (VBL) Q1 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Varun Beverages Ltd. 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 the conference call, please signal an operator by pressing star and zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anup Bujari from CDR India. Thank you. And over to you, Mr. Bujari.

Thank you. Good afternoon, everyone, and thank you for joining us on Varun Rabidj's Q1 CY2026 earnings conference call. We have with us Mr. Ravi Jaipuria, Chairman of the Company. Mr. Varun Jaipuria, Executive Vice Chairman and Whole Time Director, and Mr. Raj Gandhi, President and Whole Time Director of the company. We will initiate the call with opening remarks from the management, following which we will have the forum open for a question and answer session. Before we begin, I would like to point out that some statements made in today's call may be forelooking in nature, and a disclaimer to this effect has been included in the results presentation shared with you all earlier. I will now request Mr. Abhijai Puriya to make his open remarks.

Good afternoon, everyone, and thank you for joining us on our earnings conference call. I hope you've had a chance to review our results presentation for the first quarter ended 31st March 2026. We are pleased to report a strong performance in the first quarter of CY 2026. Supported by healthy demand, disciplined execution, and continued progress across our markets. Consolidated sales volumes grew by 16.3% in Q1 CY 2026, driven by volume growth of 14.4% in India and 21.4% in international territories. Revenue increased by 18.1% year-on-year to Rs. 65,742 million and EBITDA improved by 21% year-on-year to 15,289 million. In India, demand remained encouraging during the quarter, supported by our wide distribution reach, strengthened execution, and continued investments in manufacturing capability and chilling infrastructure. We undertook targeted initiatives to drive volumes and strengthen our domestic portfolio, including pack upsizing, selective price point launches in Thank you. The facilities commissioned over the last year have stabilized well. Our international business continued to make steady progress. We have automated the acquisition of Tweezha in South Africa through Befco. Strengthening our manufacturing footprint and route-to-market capabilities in Africa's largest soft drink market. The acquisition is expected to generate meaningful operational and commercial synergies over time. We have also entered into an agreement to acquire Crickly Dairy. through BEVCO, which will further strengthen our presence in South Africa. And other approvals. We continue to build scale in snacks and deepen our presence in high-potential markets, in line with our strategy of broadening the portfolio and strengthening consumers' elements. In accordance with our dividend policy, the board of directors has approved an interim dividend of 25% of face value. 0.50 per share, resulting in a total cash outflow of approximately 169. We are all well positioned to deliver sustained growth and create long-term value for all our stakeholders.

Thank you, Mr. Chairman. Good afternoon, and a warm welcome to everyone joining us today. Let me provide an overview of the financial performance for the first quarter ended 31st March 2026. Revenue from operations, net of excise, and GSD. Increased by 18.1% year-on-year to the level of 65,741 million in QY-CY 2026. Consolidated sales volume grew by 16.3% year-on-year to the level of 363.4 million cases as compared to 312.4 million cases in Q1-CY 2025. Thank you. 1.6% year-on-year, supported by improved realizations in international territories, primarily due to favorable currency movement. In India, realization per case declined by marginal 1.5%, primarily due to volume growth initiatives, such as upsizing of packs and sector price points launches in targeting markets to onboard new consumers. CSG constituted 73.6% of total volumes, while non-carbonated beverages and packaged drinking water contributed 7.5% and 18.9% respectively. In line with our focus on healthier offerings, the mix of low sugar and no sugar products increased to the level of 63% approximately of consolidated sales volume during the quarter. Gross margins improved by 62 basis points and 55.2% totaled by early stocking of key raw materials despite an inflationary input environment. EBITDA increased by 21% year-on-year to the level of 15,289.3 million with EBITDA margins improving by 55 basis points. Thank you. That increased by 20.1% year-on-year to the level of 8,787 million, driven by strong volume growth across both India and international markets. Depreciation increased by 30.9% on account of commissioning of four new plants last year in Baksar, Priyadal, Damtal, and Meghalaya. Finance cost increased by 18% primarily on account of the acquisition of TWISA in South Africa, while income on surplus cash in India has been accounted for under other income. During the quarter, we completed the acquisition of TWISA in South Africa, Babco, at an enterprise value of Zahar, 2,053 million. In addition, Bebco entered into a share purchase agreement for the acquisition of Crickley Dairy Proprietary Limited at an enterprise value of approximately Thank you. Thank you. Capacity is commissioned over the past year, backward integration initiatives, and a strengthened distribution infrastructure. We are well positioned to support growth and drive profitability through improved operating leverage across markets. Despite the inflationary environment arising from the prevailing, In this geopolitical situation, we remain confident in our ability to deal with near-term challenges through focused execution and supply chain agility, while sustaining growth and profitability. On that note, I have come to an end of our opening remarks and would like to now ask the moderator to open the forum for any questions or suggestions that you may have. Thank you.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question, make a star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may make a star and two. 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 comes from the line of Vivek Maheshko with Jefferies. Please go ahead.

Hi, good afternoon, team. A few questions. First on, you know, Mr. Gandhi, where you ended on the geopolitical bid, can you just, you know, talk about the impact that you expect from a near-end perspective, especially on the packaging material, and anything else that we should bear in mind across different markets because of, you know, higher oil prices?

Well, I'll answer this, Vivek. First of all, in our international markets, our effect will be, in the raw material, practically zero to a couple of points, maybe, because we are well stocked till even not this quarter, but the next quarter also. So, we normally carry six months inventory in international. will be practically very low and which actually gives us an edge over our competition because I don't think competition carries anywhere close to six months. As far as India is concerned, we will have minor effect because again we were reasonably covered for this quarter, but for the next quarter we will have some effect which is Covering that by reducing our discounts and becoming more efficient, which is already starting to show and cutting our costs wherever we can, and which is already showing in the first quarter results. And as long as the volumes continue, then I don't think there will be any effect on the bottom line.

Thank you, Mr. Jeffrey. It does. Beyond packaging material, anything else that we should be aware of?

The only thing which can affect slightly, which you can't stock is, you know, the transportation cost, and that there will be some effect, but that we'll be more than able to absorb it, and it won't show any major.

And Mr. Jappuria, if you, you know, I know you have a very, you know, strong season upcoming, but do you also, let's say, worry about from a consumption perspective if the higher oil prices feeds into, in the form of higher inflation, does it imply some, you know, pushback from the consumers on the consumption of the products in general, not just your category?

I don't see it, Vivek, because consumption is very strong, and we are... Going through a season which was terrible last year with all the rains and with this weather, I don't see any. We are very happy with what it is.

Another question on the point on the response that you just gave, when I look at your inventory buildup in the P&L, it doesn't look like to be very high compared to, let's say, what you have had two years back, for example. It is certainly higher than what it is last year. So just wanted to be sure, you know, for India business, are you covered? For most part of the season, for this quarter, or there will be...

We are completely covered for this quarter, and we are partly covered for the next quarter also.

In India business also, Mr. Jaipurin?

Yes.

Okay, nice. Okay. Lastly, on the realization bit, I know there has been a lot of concern in the last quarter, so I just wanted to speak about or discuss this point. Last quarter, the realization in India was down about 4%. This time around, it is 1.5%. I know the seasons are very different. The quarter context is very different. Can you just still elaborate on, because I was just thinking in the context of, like, you know, new launches that you have had done, 10 rupees, higher volumes, this number has actually gotten better. So can you just elaborate a bit on this?

Well, 10 rupees is a very small part. We only use it where we feel it is necessary. So, it will be less than 5% of our total volume, or maybe even less than 2%. So, practically would not show. We are using it only to make sure our distributors remain with us, and where there is a huge stress, then only we use it. So, we are not really using 10 rupees. We have the products ready. If ever we need it, we can use it, but we are not using it. Ten rupees is not going to affect us. And also, as I said to you, once the season is reasonable, we have consolidated and cut some costs and all our new plants have also come into effect, which further cuts our cost as all the new plants which are coming up are much more cost effective and large plants where our production levels are much higher.

That's interesting, sir, because I always thought that you were already very efficient, so new plant angle I get, but my point is that will still not show up on the realization side, right? Realization last quarter minus 4, this quarter minus 1.5. So, in fact, there were worries that, you know, this number could actually be worse than what it was in the December quarter. What explains this delta then?

Vivek, in fact, we have primimized a lot of products. Our growth of something like 60% in our daily, realization is 3x than the normal. So, focus is everywhere to compensate from the system itself, a major part. Secondly, you know, the checks cut in the 22nd September on the GST also is going to help us. Although we had to reduce the prices, but with the costs going up, you know, it will not be failed by the consumers. So I don't think end of the day they will be that much affected by this.

As I said, we are running it more efficiently and making sure this counting is reduced a little bit.

Thank you, and wishing you all the very best.

Thank you.

Thank you. Next question comes from the line of Avni Shibhai with Nuwama. Please go ahead.

Yeah, congrats on a very good set of numbers. My first question is on aluminum cans. So, you have tied up your inventory for PET and most of the packaging quite well, and I do understand that your salience to aluminum cans is much lower than the other large national player. If you could tell us, is there any shortage which you are facing, and here, what will be your salience in terms of percentage, aluminum cans?

Well, I think first of all, our aluminium can sales is less than 2% for us. So it's very, very small. Secondly, we have tied up a reasonable quantity to more than cover our 2% volumes, and maybe a little higher. So we will be able to get cans. They are slightly more expensive, but that again, as I said, wherever we are finding a large cost up, we are cutting discounts and giving less. Shortage for everyone, and the costs are going up for everyone. So if the demand is there, then we are making sure that.

And customers must be shifting, right? If there is a can shortage, there is a section of customers who will not sacrifice their consumption, right? They will switch to...

No, no, absolutely, absolutely. Absolutely. So if you can't get a can, then you go and go for PET or you go for glass.

Second question is on water. So if I see the Reliance presentation, which has come up, they are saying that they are now India's third largest branded water player. So if you could comment in terms of your standing within the top players, you have always been there. So wanted to understand, is the market share changing? Second is the volume growth initiatives in carbonated have done quite well, which is visible in last two quarters, double rate volume growth. In water at some stage, would you need volume growth initiatives there also?

No, we don't over-push water. We try and make sure our basic margins remain, and we want to make sure our monopoly customers and our vesiculars, which is close to a million plus in the market, On those outlets, we make sure our water is serviced properly. But water is like a commodity. You can increase your sales as much as you want, you just have to give discount, which we are not in the game of. And that's why we can sustain our margins.

So, last question. So, in terms of energy drink portfolio, how has Sting done? And you had also mentioned in the previous quarter, in terms of expansion of that portfolio, including the scaling up of mid-price Adrush. This could tell us how has Sting cans done, how has Sting overall portfolio done, and how has Adrush done? Thanks.

So, Adrush has done phenomenally well. Adrush, we are feeling some pinch of a shortage of cans because we had not expected Adrush to do as well as it is doing. So there is slight pain there. And also we've got energy drink sting in cans with our new... The classic Sting, what we call, which has been launched and is doing extremely well. And again, the demand is much higher than what cans we can get, but it's much better than what we had planned. So we'll be doing better than what we had planned, but still there will be some crunch on that. But we have put the Sting Classic in PET bottles also, which is doing extremely well, but it has gone only in this... In April only in the market, so you will see a big response of that in this quarter.

It's a one last follow-up. Essentially, if I see this quarter results, all the SMCG results have been ahead of expectation. Obviously, yours, Nestle, Bajaj consumer, and then BST industry. So, overall consumption, at least March quarter, are you picking up that overall trends are accelerated? Of course, now we have to take quarter to quarter. But based on your understanding and what you have seen in the results, would you say that there is an uptick?

There is definitely an uptake. I mean, unless until the market is growing, because there is Kampa in the market, and they are very aggressive, and they are growing the volumes in the market, and even Coke is growing. So, there is, overall, industry is growing. I don't know if we are growing faster, but Kampa is definitely, as they are adding capacity, they are... So, definitely, market is growing at a huge pace, and I think as there is enough competition, everybody is more in the market, putting more chilling equipments, more outlets are being opened. So, I am very bullish on the Indian market, and I believe this should continue in double digits for the next 5-10 years at least.

Sure, thanks, sir. That's all from my side. Thank you.

Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Aditya Soman with CLSA. Please go ahead.

Yeah, hi. Good afternoon, and thanks for the opportunity. So, two questions. Firstly, in terms of new products, can you give us a sense of what new launches, how the new launches are done, particularly around Neembo's? You mentioned that things have done well, as well as the military beverages, if you can give us some sense of what the contribution is and how the growth has been. And secondly, in terms of summer, now you've indicated that obviously we've had a strong start. And is there any sort of risk to this in terms of unseasonal weather at any specific part of the country, or do you expect summer this year to be very strong? Thanks.

Well, what we are hearing is summer looks to be very good. Now, the fear of rain coming, I can't answer you, but... The weather gods are not with us, which they were not last year, but overall it's already a month has passed, so the trends are looking very good. If the weather remains like this, there's no reason why we shouldn't do extremely well, and our products are doing extremely well, our dairy is growing. Nimbus is growing at 50-60%. Tropicana PET is growing at, I think, more than 100%. So all the new energy drink, which we launched at mid-price, which is at 60 rupees.

The line of participants will promote the next in line, that is Tevanshu Pansal from MK Global. Please go.

Yes, sir. Hi. Many congratulations on a strong set of numbers. Sir, first question, I wanted to check in the base quarter, the rain disruption was across all the three months last year, or it was more towards the second half of the quarter, if you could provide some time.

Well, it was mainly end of April to end of June, for sure, and even continuing to the third quarter. But for this quarter, I think it was mainly May and June were really disaster, and April end was not great.

Got it.

Fundamentally May and June.

Okay. And there are some supply chain issues, right, so which might have impacted the opening of new plants for competition. On the other side, we have sufficient capacities. So, wanted to check, can we benefit from this or the competitive intensity that you were anticipating is on those lines itself?

I think competition is there, but I think there is enough market. For everybody to take, as I have said that every time. And as I said, we are adding about close to half a million and maybe more chilling equipment, which is between Campa, Coke and ourselves. And plus the individual outlets are buying four or five hundred thousand. So there's a million chilling equipment, refrigerators going in the market. On a year-to-year basis, that is expanding the market drastically. And I think it's only going to be whoever does good go-to market and whoever can expand its distribution will win the game. We are expanding at about 300,000 to 400,000 outlets every year, and we are doing the same. Hopefully, this year, we might expand half a million outlets. And I think that's what is giving us the growth.

You mean half a million vehiculars or about 1 to 5?

Half a million new outlets. We don't use vehiculars to everyone.

Okay. Understood. Understood. Sir, last couple of bookkeeping questions. For Twiza and Crickly Dairy, what is the revenue and margin run rate that can be baked in for CY26, if you could provide some color? And second one, what is the expected CAPEX?

Well, I think we have told the CAPEX what we have bought it at, which is what, Rani? Twiza, 800. Twiza, we have bought at 800 crores.

Sorry, I was checking for the consolidated CAPEX for the company, sir, and the revenue and margin run rate for FISA and KITLY in CY20.

Well, our CAPEX is not going to be very large this year because we have enough capacity. We are most probably going to only have one plant and which will be less than what is our... CapEx will be less than 500-600 crores this year. It will be very low this year. We have enough capacity, except the new plant which we have bought. Can I answer the question?

Yes, sir, just the revenue and margins and rate also for Twiza and KKD.

Well, revenue was 800 crores for Twiza. Okay. And about 160 crores for KKD. We have close to a thousand crores between the two.

Okay.

And margins, I think it's a bit too early. Let us take it over properly. It's been 10-15 days only per month. So we are going to correct the margins. I mean, obviously he was doing all right, but with the... And, uh... We've got enough production capability, which we were struggling in Bevco.

Thank you so much for answering your questions, and all the best to them. Thank you.

Thank you. Next question comes from the line of Anand Shah with Access Capital. Please go by.

Yeah, hi, sir. Congratulations on the numbers. Just a few questions. So firstly, can you give some granular details on how the international has grown? I mean, you've grown almost 21%, which is quite strong. So it seems your South Africa business would have driven bulk of this growth, but if you can give some granular color there.

No, it's not only South Africa. Actually, all our international businesses have grown.

So, your Zimbabwe and all, which were relatively, I mean, ex-South Africa was growing in, let's say, mid-single-legit to high-single, is that also now come back to double-legit?

No, no, absolutely. South Africa is growing at close to... The average is 21% international. South Africa is very close to what the international market is growing. Okay.

And edge of South Africa also, would it be double degree?

Yeah, yeah. All international markets. Otherwise, we wouldn't be able to average 21.4%. I think Morocco was the only one which was weak last quarter, and that was because of Ramzan being pre-poned.

Got it, got it. And then on our food distribution, if I do the math between console and standalone, it seems the run rate has moved from, I mean, Q1 last year was, of course, the start, so it moved from 450 crores to 120 crores. I mean, last year you highlighted 350 on crores for CY25 for food distribution in Africa. So how do you see that scaling up this year?

Anand, the food in the first, snack foods in the first quarter, this year is 112 crores, which was last year 52 crores in the first quarter.

Okay, okay. So, you will consistently see further ramp up as well, right? I mean, in this interview, I'm ready to go.

Absolutely, because Zimbabwe plant has just come up last year, end of last year. So, there is consolidation and growth coming.

Got it. Got it. Okay. Well, thanks a lot, sir. Those were the two questions.

Thank you. Next question comes from the line of Khalid Kapoor with Investec. Please go ahead.

Good afternoon. Most of my questions answered. Just wanted to get your sense on market shares. So, you know, on a very high base, you know, you've done an exceptionally good number. Also, given the availability issues which you are able to tide upon, just wanted to get your sense about do you see opportunities in the market where maybe some of the other players have not been able to do as well as you in the current situation and that could play out in terms of at least near term market share gains. How do you see the situation on the ground right now?

I can't answer for other people. The only thing I can say, we are fully prepared and we have enough capacity that even if we get a 50% growth, we can comfortably do it without adding any capacity. So we are fully prepared, we have the raw material, we have the back end covered. So we only hope to God to give us the good weather and then we should get a good set of results.

Got it. And the second question is on distribution. So, you do mention a certain number that you would like to do every year in terms of growth. So, this year, calendar year, you know, that 8 to 10% type of, you know, addition number is, you know, is the year, we are planning out consistent with that?

Yeah, that's what I have just said. Practically this year, we have added more than 10% outlets. So, that's why. I'm hoping to add close to half a million outlets.

Great, I'll do my two questions.

And that is what is actually giving us the results.

Thank you. Next question comes from the line of Latika Chopra with J.P. Morgan. Please go ahead.

Yeah, hi. You know, two follow-up questions to your earlier comments. One was on, you know, availability of raw material, particularly PET. You know, you mentioned you have reduced sales of packing materials. So, we're just wondering, you know, have you started to see any visible signs of challenge for the smaller, unorganized players in the market? And the second bit was, you know, in your assessment with this kind of inflation, which is going to come up, not necessarily for you, but for the industry, do you see potential scope for price increases ahead as the broader industry tries to offset the inflation impact?

Well, I see the B-brands and the other players selling water. They have not increased the price, but they have reduced the discounts. So that we are already seeing in the market because the costs are going up. And I feel that will further happen once I think the gasoline prices go up. So, I mean, there will be some pain. Hopefully, reasonably covered. I can't say fully covered because I don't know what the prices will be. But at the moment, for this quarter, we are, you know, covered with our raw materials. Now, gasoline price, I don't know. So that is the only vulnerable part, and that is not such a large part in our scheme of the whole thing. And if it happens, it is higher, then we will further reduce our discounting to some level and make sure, manage our, and if our volumes are good. We are mainly concerned about our volumes. If the weather remains like this, then we can grow at the same pace or better than this.

Understood. And, you know, initially, you had explained the difference of realization for India business at 1.5% decline from 4% in the prior quarter. This was an account of product mix and also loading of discounts sequentially. You know, assuming, you know, status quo and other things, but is 1.5% more like what we should build for the rest of the year, assuming the current levels of discounts are maintained? Or because of seasonality, you know, this number could fluctuate.

It might even become lower, because it depends how strong the season is, or it could remain that. But that gets more than covered, as I said. If the numbers start happening, our costs start reducing drastically, our efficiencies go up. So, this 1 or 2 percent, we can cover easily, if the numbers are right. And we feel the numbers are going to be good this quarter.

Understood. Thank you so much.

Thank you. Next question comes from the line of Percy Pantaki with IIFL Securities. Please vote.

Hi, team. Good afternoon, and congrats on a great set of numbers. I'm looking at the standalone P&L, and you've done an 11% sales growth here on a fairly high base of close to 18% in the same quarter last year, which is like a 14% two-year CAGR growth. Now, if I look at the two-year CAGR growth for the previous quarter, it was 8%. Even for the last four-quarter average, the two-year CAGR growth was 8%. I'm using two-year CAGR so as to sort of offset any sort of high base, low base in seasonality and so on and get the underlying growth trends. So what do you think is the reason that the two-year CAGR has accelerated so sharply from about a 6% to 8% to a 14% this quarter? Is it just the summer season being better? Is that the main part of it? Or do you think that the rate of market share gained by the new incumbent has probably slowed down, And that is why the growth is more visible now. Or is there a third reason I'm not getting?

We have never had 6-8% growth except last year when the weather was really bad and India did not grow. We have been average growing at a cazar of 23%. So I don't know where you are getting 6-8% growth.

Sir, like for example, Q4, CY25 was a 6% on a base of 9%. So that gives me a two-year case of about 8%.

Last year was the one exceptional year. That's what I'm trying to say. Otherwise, on an average, we've been always growing in double digits. And with some new acquisitions, we have grown at more than 20%. Growth have been there. If you look at last five years, ten years, it's only last year, India, because of the weather, our growth was lower. That's the only reason. So we still believe and still, we would say we definitely would grow in double digits going forward. For the next five, ten years, I don't see any challenges. Our business is partly seasonal, so in case there's some abnormal rains or something happens, that I can't answer you. But overall, kagar will definitely be more than that.

Understood, sir. I was not talking only of last year. I was looking at two-year Kegar, but anyways, I'll take this offline. And similarly, just wanted to ask on international business also. This quarter, there has been a significant acceleration in growth versus what we have seen in the past few quarters. Just wanted to understand the reason for that as well.

Again, everywhere we are, you know, when we take a new territory, it takes us a little bit of time to... Stabilize their territory. Last year, actually, we had just taken South Africa and DRC had just started for us. So, some challenges and then, you know, with the Gaza war, we had some other challenges. So, all those things put together, last year was a tough year for us. But if we don't have external issues, Listen...

And my last question is on the input cost. While it has been discussed in detail, and we know you have covers for one or two quarters, but if crude remains at 100 for several more quarters, at some point of time, you will either have to increase your prices or reduce your discounts or take the hit on the P&L. So my question was a little bit longer term, a few quarters down the line. If the input cost scenario remains where it is, do you think you would be able to hold your margins or it is a fair assumption to say that maybe margins might take a hit a few quarters down the line?

You know, it's very difficult to answer, but only thing I can tell you, we might be the only company which is holding six months inventory. People will blink before I blink, so I think we have to wait and see. Either everybody will take the prices slightly up to cover the cost, or take a hit. I can't answer you that, but I don't see us taking a hit, because I think other people have much bigger issues than I have.

Got it, sir. Very helpful. Thanks and all the best.

That's it from me.

Thank you. Next question comes on the line of Jai Doshi. Kotak, please go ahead.

Yeah. Hi. Congratulations on good customer service, and thanks for the opportunity. My question is, you know, with upsizing of packs from 250 ml to 400 ml, are you seeing more consumption, and maybe, hence, do you expect industry volumes to be, you know, growing faster by a few percent points versus the earlier growth rate? Or are you seeing, you know, the consumers who are earlier buying, you know, larger packs, 40 rupee, 35, 40 rupee packs, are now buying two units of, you know, 20 rupee SKUs. Particularly, is consumption going up in liters, you know, versus, you know, because of this upsizing of packs for yourself and industry? So that's question number one.

It's going up in litre.

By any chance as a one-off, would you be able to give us some color in terms of what the broad growth at a unit level in terms of number of PET bottles or whatever versus 15% volume growth, which is, you know, in liters?

We are giving in 8 oz, and that's what we coat. Otherwise, each size we have to start measuring. Some are much smaller, some are much larger, so it becomes very difficult. That's why we give in 8 oz, which is the best way to.

Second is with, you know, got it. Second question is with, you know, you know, upsizing of 250 ml to 400 ml across the country across. Do you expect any more sort of changes in your pet price architecture? I heard you comment earlier that there is no need for you to actually, you know, step up, focus on 10-2-P price point. But is there any pet price architecture change that is left in your view?

Good morning, everyone.

And last thing on profitability, you know, should we expect that, you know, PT inflation aside, you know, sort of crude lead inflationary thing aside, should we expect that you broadly be able to maintain your margins in India business? You know, so 50 to 400 and an upsizing has actually not really had any meaningful or any impact at all on your India business margins. That is what we see in March quarter. But is that, is this something that we can extrapolate at a full year level? PT inflation, I can understand that we can.

Water, we had the upsizing, so whatever effect had to come has already come.

So the costs have been absorbed by the...

Yeah, so our volumes and our efficiencies have absorbed all that. And as I said, our larger plants are much more cost-efficient, and our cost of production is considerably half of what we were doing in our smaller plants. And which is what is playing with us. So we are able to consume some... which we can easily absorb.

Thank you very much. Perfect, sir.

Thank you. Next question comes from the line of Robert Marshall-Lee with Kusana Capital. Please go ahead.

Hello. Just a couple of simple questions. Firstly, just in terms of the impact of the new plants, is there any kind of material impact from utilization rates? Where are you running the new plants? And do you have any fixed cost leverage there? And secondly, just in terms of global sugar prices have been falling, is there any impact on the Indian market at all?

There is some. Sugar prices are reasonably consistent here. Fortunately, they have not gone up, which is the positive side of the international prices. And in the international market, definitely we've had a gain of sugar costs. So wherever we are, international prices have come down. But in India, it's been reasonably constant. Fortunately, it's not gone up.

And in terms of utilization of new plants, is there any kind of material in fact there?

Utilization is definitely helping as our volumes are going up. The plants are getting more utilized and the bigger plants that we are using more and we have shut down a couple of our real high cost plants which were very small and which were very old. So overall efficiencies are helping, cost cutting is helping. And looking at the costs which are going to go up, we have tried to curtail our costs and make sure run it a bit more efficiently than we would have, I guess.

Thank you. Next question comes from the line of Arjav Jain with Systematics Group PeacefulWare. Hello.

Yes, so I just have a question on the sales thing of the new product as well as the...

Mr. Chan, there's a lot of disturbance in the background. Can you come to a place with it less background-wise? Thank you.

I was asking the sales mix currently as well as the sales mix which is expected in a few years down the line, especially with the traditional Coke and the new alternative tasting or Gatorade.

You know, this keeps changing on a year-to-year basis. Energy is definitely becoming a big part of the portfolio. And dairy is becoming a big part. Hydration is becoming a big part. But this will keep changing year on year. Very difficult to say. The new Gen Z keeps on asking for something new all the time. And we have everything to support. So, it's the same machines who produce it. So, it's just changing the flavors or changing the packaging.

And also, you said that you are opening new plants and they are much more efficient than the previous ones. So, what is the expected payback period for these?

I mean, we need capacity, so one is a different, I mean, we have to open plants, otherwise I can't keep on increasing my sales. If my sales are going up, they have to be backed up by, the only thing we are saying is now we are not opening smaller plants, and our plant efficiency being larger plants is much better than what it used to be in the older plants. Just to give you an example, if we had a 200 bottles per minute line, now we have got a 1000 bottles per minute line, and the manpower is the same. So it's five times more production, but using the same manpower.

I was asking for the pay-back period.

It depends on, you know, it's very difficult to answer for each plant. Normally we work on a 3-4 year pay-back. 30% of it.

Mr. Jain, are you done with the question?

Yes.

Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. I now hand the conference over to the management for closing comments.

Thank you. I hope we have been able to answer all your questions respectfully. Should you need any further clarifications or would like to know more about our company, please feel free to contact our investor relations team. Thank you once again for your interest and support and for taking the time out to join us on this call. Look forward to interacting with you soon. Thank you very much.

On behalf of Barun Beverages Limited, that concludes this conference. Thank you for joining us. You may now be concerned.