Prataap Snacks (NSE:DIAMONDYD) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Prataap Snacks Limited Q two FY twenty seven 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 followed by 0 on your touch tone phone. Please note that this conference is being recorded. I now hand over the conference to mister Mayanko Aswani from CDR India. Thank you and over to you. Thank you, Yashashree. Good afternoon, everyone. Welcome to the Q2 and H1 FY 'twenty seven earnings call of Prataap Snacks. On the call today, we have Mr. Amit Kumar, Managing Director and CEO Mr. Sumit Sharma, Executive Director and CFO and Mr. Rajat Singh, Business Head.

0:52 Before we begin this call, I would like to point out that some of the statements made in the call may be forward looking, and a disclaimer to this effect has been included in the earnings documents that have been shared earlier. With that, I would now like to turn the call over to Mr. Amit Kumar for his opening remarks. Thank you and over to you, Amit Ji. Thank you, ma'am. Good afternoon. Good afternoon, everyone, thank you for joining us today for our Q2 election F2 twenty seven earnings conference call. I hope you had a chance to go through the earnings presentation and the financial results that we shared earlier. I'm pleased to share that Prataap Snacks has delivered another quarter of strong revenue growth with our quarterly revenue crossing the minus two of rupees 500 crores for the first time in the company's history.

1:38 Revenue from operations in Q2 twenty seven is stood at 541 crores, representing growth of 26% year on year and 10% compared to the previous quarter. This is an important milestone for us, especially as it follows the record quarterly revenue achieved in q one. For the first half of twenty seven, our revenue from operations is 2.107 crores, an increase of 23% over the corresponding period last year. What is particularly encouraging is that we have maintained the strong growth momentum of the last few quarters. We believe the various initiatives we have been working on over the past several quarters are now showing clear results. Let me share some of the key developments in our business.

2:23 Our numbering and patriotic categories have continued to perform well and have been important drivers of growth during the quarter. We're also encouraged by the consumer response to the new product and various introduced over the past few quarters. Product development continues to be one of our key focus areas. We are working on introducing new flavors, expanding our product range, and developing offerings to take to different regions and consumer preferences. Numpkin remains a particularly important opportunity for us. It is one of the largest categories in the Indian respect market, and we still have considerable scope to increase our presence. Over the years, we have demonstrated our ability to grow factories such as rims and pallets. We are now leveraging this experience to further strengthen and scale our presence in the market.

3:12 Another important driver of growth has been our continued work on distribution. We have focused not only on reaching new outlet, but also on increasing the range of our products available at existing outlet. This gives us opportunity to grow sales by making our product available to consumers through our established network. Our investment in technology are supporting these efforts, sales growth automation and other digital initiatives are giving our team better information about market coverage, product availability, and sales performance. This is helping us identify opportunities, improve productivity, and take faster decisions in the market. They're also making a steady progress in newer channels. Our food commerce business continues to develop well.

3:57 They're expanding our presence across platforms and increasing the range of products and pack sizes offered through this channel. These channels are important for reaching new consumers and developing our presence in large packs and newer product categories. As we have shared earlier, our aim is to increase the contribution of these new channels to around 5% of our revenues over the next three years. Overall, we are pleased that growth is now coming from several areas of the business rather than depending on any single product or initiative. Now turning to profitability, the operating environment remains challenging during the quarter. There has been a further increase in the prices of key inputs, particularly palm oil, potatoes and packaging material. Fuel and logistics costs have also remained elevated.

4:44 These cost increases have been significant and despite the strong growth in revenue, they have put pressure on other margins. Our gross margin for Q2 stood at 25.5% compared to 29.8% in the corresponding quarter last year. EBITDA for the quarter was twelve point nine twenty two point nine crores last year with EBITDA margin at 2.54%. For FY '27, EBITDA stood at rupees 32 crores. The pressure on operating margin also affected our bottom line. We are taking several steps to address these pressures such as Grammys rationalization adjustment in channel margins and trading schemes and continued cost reduction across our operations. These measures have helped us offset part of the increase in input cost.

5:34 However, the overall inflation has been substantial, and we will need to continue working on DBM. We are closely monitoring commodity prices, and we'll take further steps whenever required while keeping our products competitive in the market. Apart from these immediate measures, we are also working on a structural improvement that will strengthen margin over the longer term. During the initial years of our expansion, we took a decision... Conscious decision to build a pan India business rather than expand one region at a time. Accordingly, we invested significantly in building our distribution network across India, and our distribution reach today would rank higher than revenue scales in India and industry when compared to peers. This means that we are supporting new distributors, invested in sales team and get full expenses work suite on the street in prior years.

6:24 A large part of the distribution infrastructure and associated investment is already in place. As we increase volumes, add new products and categories to these such points, these are negligible additional costs involved even in the investment in earlier years. This means that as we undertake steps to improve productivity and throughput, we can generate higher sales to the existing network without a proportionate increase in distribution cost. This will deliver substantially accretive contribution and an increased margin profile as the business at each touch point is scaled further. A similar opportunity exists on the manufacturing side. Our indoor operations have grown over many years with capacity added in stages to serve the immediate requirement of the business at that point in time.

7:11 Each investment served an important purpose at that time. However, this gradual expansion has resulted in multiple standalone units operating within the same manufacturing complex, creating certain inefficiencies in production, manpower and overhead cost. We have been evaluating the right time to address these inefficiencies. We believe that the business has now reached a stage where our integrated system setup makes both operational and economic sense enabling significant reduction in conversion cost and overhead. These developments along with the benefits available under government incentive scheme for new investments have created a favorable opportunity to undertake this project. Our proposed greenfield facility near Indore will bring together existing operations under a more integrated and automated manufacturing setup.

8:01 This will help us improve production planning, optimize manpower and other operating costs, and achieve greater inefficiency. The facility will also provide additional capacity and room for further expansion. We see this project as an important step towards structurally improving our cost base and margin profile over the coming years. That brings me to an important development regarding our proposed new manufacturing facility in Hyderabad. During the quarter, we completed the acquisition of RLOP Foods, which holds the lead role rights to the land identified for this project. With this acquisition, we have accrued access to approximately 50 acres of land required for the new facility. We will soon initiate the process of merging RLOB Pudry Prataap effect, which will simplify the corporate structure.

8:51 At the same time, we are moving ahead with procurement planning for plant and machinery, particularly equipment that has a longer lead time. This will help us coordinate machinery deliveries with the the progress of civil construction. In closing, I would say that we have made a strong track to '27 and the momentum in our core category. New product distribution and alternate channels gives us confidence in delivering a strong double digit revenue growth for the full year. On the margin side, the input cost environment continues to require a full retention. We remain focused on cost control, productivity improvement, and taking appropriate measures to reduce the impact of inflation. At the same time, we are investing in the area that will strengthen our business over the longer term, including product development, distribution, technology, and manufacturing capabilities.

9:40 We are excited about our growth prospects and. With that, I conclude my opening remarks, and we can take... We can now take questions. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch tone 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, they will wait for a moment while the question queue assembles. Take our first question from the line of Mahavik Shah from Investo Capital. Please go ahead.

10:42 Yeah. Hello, sir. Good afternoon. So my first question is regarding our pricing. So we have seen, like, quarters where we get hit by, let's say, oil prices or, like, raw raw material inflation due to oil prices or put actual prices or, okay, based on prices or anything. So how do we still see this stabilizing in future? Like, or will we continue to save this volatility? Our gross margins have reduced significantly to now 25, 26%. So is, like, pricing really a power for us anymore, or how how do we tackle this now? Thank you, Rishi. Yeah. I would like to mention that the inefficiencies in the system in terms of production capability and the general margin.

11:34 So we are trying to remove those inefficiencies. Those inefficiencies can give us five to 6% extra margin, which can compensate if there is any price... Further price increase. No. But our gross margin, like, inefficiencies could be removed and maybe EBITDA could be improved. So, Harish, there are two things. One is the immediate impact on the raw material pricing, especially after the after this US Iran war. So if we compare numbers from quarter four, almost eight percentage point of negative impact that we have experienced in quarter two. So that much significant impact we have experienced.

12:21 Now we have mitigated this largely through increasing the prices. I mean, increasing the realization as well as by optimizing some of the some of the SKUs. And that's how we could able to protect our gross margin and operating profit to a large extent. So that's the immediate impact. What Amit has mentioned, that is more about the structural things what we are doing. And he also mentioned in his opening remarks that over the period, we expanded our indoor facility as per the immediate requirement. And that's the reason we have multiple smaller units in the same campus, and that is leading to relatively higher operating cost. And now we are fixing this... That inefficiency by shifting to a new location, and that will improve the overall operating profit by about one and a half to 2% in next one and a half years' time.

13:16 Though there may not be impact... Direct impact on the gross margin, but that will positively impact the bottom line and the operating profit. Now the second reason for having some space in the gross margin is the ad investment in building the distribution network. Now we have one of the strongest reach in terms of national presence if you compare with some of our peers. We are available at more than 2,500,000 outlet, and building this kind of distribution network requires lot of front loading in terms of investment and through profit and loss count. So I think that's a tough part for any of the FMCG company, which we have done over the period. Now it's time to get the result out of this, and now we are leveraging the existing distribution network.

14:05 As you can see in our presentation and in a meeting opening up as well, now we are driving the reach of all the product categories. Today, as we speak, the highest reach we have for the next. Now we are increasing our reach for particular fees as well as lump sum. And the incremental revenue will come with a very minimal incremental cost, and that will positively impact the gross margin. So that's how the gross margin will improve over the period, and that improvement will be structural improvement, which will not have any relation with the raw material pricing and all. But in short term, there was a negative impact because of its sudden increase in the price, specifically the power and the packaging limited, which we have largely mitigated through the taking price hike, improving our realization as well as rationalizing the damages for certain MCUs.

14:56 Right, sir. So the the indoor facilities, I think we have around seven one... Seven indoor facilities. So we will close those facilities gradually and we will move to a bigger one. Right? Or it will be the same type of like, how is the new plant going to be? Like, what capacity and what kind? And what could be the energy potential from there? So currently, lower facility is the largest facility, which contributes about 4045% of the overall revenue. So that's another plan that we have. And here, within the same campus, we have seven smaller facilities. Now we have taken a bigger piece of land on... It's a legal... Government legal land. Currently, we are operating in about 14 acres area. The new land is of about 50 acres.

15:44 So the concern what we have in Indore is is in two terms. One is in the cost terms, like, the relative production cost is higher, as I mentioned earlier. The second telling, what we have here is we can't expand our capacity because there is no space available to even set up a new line. So the new facility will let us hold the thing. The new capacity the new facility is a 5,800, and initially, are replicating the existing plant. All same lines, are going to set up in the new facility. And where we will help further... Head over the further expansion. So we can double the capacity in the new facility from here without having any significant investment in the in the basic infrastructure, like, lane and building. The second thing, the overall capacity of the new plant would be roughly about 65,000 to 70,000 metric tons.

16:38 Once the new plant is ready, we are planning to monetize the existing land because now the existing land has a significant commercial value. So for the new facility, we are planning for a download initially and which will be prepaid to realization or monetization of the existing rent. Now the machinery, what we have in the existing facility, we are planning to shift a different location. And in phase two, we may consolidate some other facilities, some other operations, specifically in Northern and Eastern region. So these machineries will be shifted in those facilities. So, sir, what will be the CapEx of the new plant including machinery? And how much can we get get from, say, realization of the land? So the project cost is roughly about $421.22 crore.

17:30 This will be funded by internal approvals and term loan. They are planning to raise a date of about 250 odd crores. This will be funded by the internal approvals. We estimate the commercial value of our existing lend roughly about 250 to 300 odd crores. So the entire proceed will get utilized for a prepaying. Right? That's what we are planning for the new project. Understood. And, sir, what would be a mix, say, of now in h one or q two? And how do we see this improving, say, going ahead? And is this new plan being more focused more on, say, larger package of or how is it going to be? So new plant doesn't have any restriction with regard to the the package size because the same machine is...

18:19 Are used for any any MRT product. So there is no constraint. We can produce it for our requirement and the market demand. The thing is is a focus area, and as we did mention it in opening remarks, number is a is a big category. For industry, number is about 45 to 50%. However, we were under indexed, and our contribution from number was about 20%, which is increased over the period. We are trying to see the contribution from the team of about 15, 16%, which was increased to 20% last year. And as we speak, the contribution is roughly about 25% to the total revenue. So the team is is leading the growth. Though the growth is broad based, almost all the categories are growing. But, yeah, is leading the growth because is playing now. Currently, the centralized Singapore manufacturing, centralized in indoor and Rajkot, and that's another reason for having a relatively high freight cost because we are transporting lumping across the country from these two facilities. So in the near term, we are planning to expand our manufacturing footprint for lumping in some of other existing plants. That will also positively impact the transportation cost, and the transportation cost will reduce over time. So that's another lever to reduce the cost in improving the bottom line.

19:40 Right. Right. Then the bank, can you speak to bank to to start new fund? First January 28. So then it's sixty... Fifteen months, but, yeah, the internal target is for January. Yeah. Right. So as we have mentioned, we have identified certain levers to structurally improve the margin, and we believe that we can get about five to 6% kind of margin expansion through multiple levers, and that includes the manufacturing operations, specifically the new units, the new plant which we are planning in May, in work, that should improve margin by around 1.5 to two percentage points.

20:37 In addition to this, there is also headroom available in the distribution cost because earlier we were following a previous distribution model. So we eliminated super stock is somewhere in 2022 and '23, And that's how we reduce our overall general margin from 40% to about 10.5%. But before that, we were getting eight percent margin to the distributors. We still have to available for about two two and a half percent in the channel to optimize it. Collectively, we are doing this. We don't want to disrupt the sales. So selectively and gradually, we are putting out the margin and getting some out of it. So we expect about one and a half percent to 2% we can get from the general margin, including the the distributor margin as well as some trade schemes, discounts, all put together.

21:26 We have also identified some opportunities in the supply chain. As I mentioned, our freight cost is relatively higher as we speak because of a relatively longer table of our products at different locations. Now we are optimizing our manufacturing footprint so we can manufacture most of the items at multiple locations, and that's how we can optimize the overall logistic cost. So we expect to get somewhere around 11.5% from the supply chain. Altogether, we are targeting about five to 6% kind of benefit from these different levers, and we initiated the process. Some will start getting in a couple of quarters. Some may take some time, specifically the new plan. Medium term, I need to say, two to three years' time, we should be able to see the entire benefit growing in the in the bottom line, and that will improve the margin structurally.

22:20 And that gives confidence to reach to about 19% kind of margin on a sustainable basis. As you you see the current pricing is at peak. So whether it's a palm oil, whether it's packaging lemonade or other commodities, the prices will peak. And we are considering the... Even though the price remains at this kind of elevated level, how can we get to this nine to 10% kind of EBITDA? So all these levers which I mentioned will certainly help us to reach to that level for a sustainable business. Understood. So is it fair to say Bhavik, I request you to rejoin the queue, please, as we have participants waiting for data. Thank you. Next question is from the line of from Motilalotra. Please go ahead. Hi, Amit and Sumit. Thank you for the opportunity.

23:08 I think the the momentum is picking up. I have few questions, sir. Starting with the stocks, what we are going to issue, 12. Who are the people who will get benefit and maybe you can give little more testing and price? Sorry. Sorry. Yeah. I... Like, there is no significant drop given by the management in last board meeting. Okay. So it's just the resolution what you're planning. No. There is no resolution.

23:54 There are two things. One is the fresh grant, and the second was allotment of share through the inquiry. We'll exercise that these options. Those were given to them earlier. I think you're talking about the shares allotted to the inquiry who have exercised their. Yeah. That's exactly I'm saying that. So what is the balance? But that's not significant. I think we allotted about 2,300 shares in the last board meeting. So the employees, they have exercised their restart. And the cost is anyway part of our bottom line because it's for the accounting, we need to systematically take the charge on the p and l, basically, the collection module. Cost of those is also part of the cost of employment. Okay.

24:42 Second, on slide 26, you have given the outlook. I think one modernization of plant and relocations is one thing. But given whatever inputs we have given, what is the confidence level that we will be able to deliver a double digit growth? Is it that revenue growth you're talking about? Or maybe if you can buy, like, what is the volume growth you are looking in second? Because you did mention that distribution expansion and other thing which will come with. I think in our case, and value based are almost same. So the number of packet was probably what we sell have increased considerably. The growth is broad based and that's why,, so there has been certain challenges during last year, especially after COVID and so, actually, product was declining due to category shrinking, or we could able to manage by driving growth in category, which grew at of 12% over last five, six years.

25:38 Now since last couple of years, we have been working on our new strategy formulated both for contact and geography, which has started yielding results. But the reason of technology is also helping us to create extent with regards to identify the gap in the market and managing the productivity at the field staff level. So, mister, you mentioned that the number is now at 20% contribution. So maybe if you can give what is the range and balance at this time? So Namjin, she's about 25% as we see. It was 20 last year. Ring is about 10%. And exclude all put together, it would be about 1,019.

26:26 10%. Is about 19, 20%. Ring is about 10%. And all put together, the accurate category is about 39%. Okay. This I'm trying to link with the inflation. You mentioned that the weighted inflation is about eight, 9%. Right. You also mentioned that we have taken the damage cuts and pricing. So there are two parts. What is the contribution with five and ten at this time? And what kind of price increases or maybe damage reduction in your partner? So if the rate inflation is about 8%, what percentage of that is covered now? As of q two, our current mix for MRT five has reduced from 85% last year to to 82%.

27:16 So three percentage point has dropped for MRT five, and we have actively tried to push larger packs... Larger price packs. So MRT at 10 to 20 packs have increased their contribution to 14 and a half percent, and the remaining is coming from BigCommerce, which is now around three and a half percent. So BigCommerce more than trade and other areas for larger pack. Okay. Okay. So I think what I'm trying to read is that in your slide, you have also mentioned about farm and laminate prices are higher. So this is... Assume that this is remain elevated because nobody can get to what they have to do. So is this price increase in the sufficient to maintain the gross margin, like, to a 25, 26%? And you mentioned that there are significantly worse. So how we should look at second half margin?

28:16 So you are right, actually. Actually, after q two, there is further elevation in the in the prices of packaging material. So they can prove cash pressure still. So we are taking another round of price leverage rationalization and price hike. We are also critically reviewing all the trade schemes and discounts which are being offered to the trade partners. And then trying to maintain the margin at a similar level or slightly higher from the existing level. Okay. Okay. Got it. Just last question. On the relocation of Indore plant, 58 Line we have bought it or we have taken on lease and maybe some more qualitative assessment of when do you think likely this production... Combustion production will start?

29:10 So the 50 acre land you've taken on a long term lease from the state government, the same as till then. And we just got the position last month. We started working on the land, and we are targeting to set up the entire project and start with the commercial solution somewhere around fifteen months time. We are giving a timeline of fifteen months to eighteen months, but trying to get as early as possible and targeting internally fifteen months time. Okay. Alright. Thank you, doctor Hari and Arun. Arun, we Thank are really you. Thank you. Thank you, Shish. I think that you were asking about the ESAP granted to some of the employees. The quantum was about five, six... 50,000 number of ESAPs.

29:58 Right? And when you come to about five to six prover. So we are taking charge on the P and L, which is the Blackshaw model, and which which estimates the potential gain on the entire life of the ESAT. Generally, when we give ESAT, it is listed over the period of four years. So we have considered the cost appropriate for the model in the quarter two financial statement. Okay. Got it. So I I got the number because we need to understand. I feel this in the. Anyway, thank you, and all the best, and and most wishes for everybody. Thank you,. Thank you. Thank you. Next question is from the line of from Systematics.

30:45 Please go ahead. Yeah. Hi, sir. Good afternoon, and thank you for the opportunity. So just wanted to check what was the volume growth for the quarter in case I missed the number. Also, was not able to maybe understand your response to the previous question on the extent of Grammys cuts or price hikes that you have taken, if you can specify those also for the 2Q and for the 1H? And also, what is the extent of the further hike that you're planning to meet the the fresh... Inflation beyond the 8% that you indicated? Yeah. So in terms of growth, it's about 17%, which is a transaction growth. That's how we trade the transaction in the two phase number of package. So 17, 18% transaction growth in our case, and the pricing growth was about eight, nine percentage.

31:35 That is for the quarter two. Oh, got it, sir. And what is the further high that you're planning beyond the second quarter that you indicated? So, again, we are selectively reviewing the... All the categories and packages of position and all. We are planning to specialize in SEO of various categories. So the idea is to maintain the similar kind of gross margin. So whatever is required, we are passing the impact of inflation to the consumer. Understood, sir. Secondly, sir, just wanted to check, you know, when you're faced with such inflationary times, do you generally see in terms of the industry structure? Do you see any kind of a shift of volume to the the lose of the... Or the local players, or is there a reverse shift of volume towards players such as yourself?

32:34 Do we manage to hold market share in these times? And where are we currently on the on the price index versus the local or the loose players? So during these times of high inflationary costs, we are seeing a reverse shift. So we still are shifting towards package because local players are unable to manage their palm oil and laminate supply. So we are seeing a market share gain for us. In terms of price index against the local players, we are still pricing higher than the local players. So if the local player is selling it at $3.75, our pricing would be 4 rupees $15.05 for the similar 5 rupee product.

33:21 Very clear, sir. Lastly, just a bookkeeping on this this two fifty crore order term loan that we are going to take. I think $1.25 crore is already in the books. But what is the interest rate for this? No. There is no paid... Significant paid. I think it's it's only... Which is about 25 odd crores, which is in the books. So far, we have not drawn anything with regards to the new project. Interesting. We will draw down the money element it is required because we just started working on the project and the the issue of purchase order. So I think the major draw down will be there in next year only. Some amount we will talk during current year. Interest rate is less than 8%, so there is an impact of the last week of the recorded.

34:13 But, yeah, if we speak, it's less than 8%. Got it. Just wanted to check this. So there's a $1.25 crores spike in the short term borrowing, sir. What is that? Just wanted to check that. 25 crores. It's not really any price. It's a 25 crores, but 4 crores is the short term. 4 crores is the installment due for the existing loan of our Jammu plant, and that 25 rupees is only we have taken. So if you refer our borrowing in the current liability, short term borrowings, you'll see the 2,900. Alright. So maybe I'll take it offline. Thanks and all the best. Okay. Thank you. Thank you. We'll take our next question from the line of Deepali Kumari from Aryan Capital Markets. Please go ahead.

35:04 Thank you so much for the opportunity. Deepali, sorry to interrupt. Can you use your handset mode, please? Okay. Am I audible? Not very clear. Can you just try speaking, please? Okay. So am I audible now? A little better. Go ahead, please. Okay. So, I'm just asking what is the current distribution network and what is your target for upcoming FY '27 and '28? Also on the ecommerce side or modern side, what is the target for three to five years? Also, is it a margin aggregate?

35:54 So I'll break it down to three parts. So first first question is regarding the distribution network. So in terms of reach, like, mentioned, we are currently available in almost 2,500,000 outlets. Our direct reach from the company or our primary party is close to 2,200 distributors. We also have a second layer of sub distributors who are served by these distributors, which is around 3,000 odd sub distributors. So total distribution needs to be close to 5,500, which we are aiming to grow in areas where we are under index. So for example, distribution expansion is targeted in areas such as UP, Gujarat, Rajasthan, Giyadh.

36:41 Second question is regarding emerging channels and quick commerce. So quick commerce is currently around 1.2 to 1.5% of our overall sales, and the target is to take it to almost 5% of revenue in the next three years. Yeah. Got it. Okay. So that's from my perspective. Thank you. Ladies and gentlemen, to ask a question, please press star and 1 on your phone. Next question is from the line of Goran Prataap from Dollar Capital. Please go ahead. Yeah. Hi, Amit and Sumit. So firstly, congratulations on strong top line growth for the quarter and first half.

37:27 So, see, I just wanted to broadly understand this a bit better. Given that, largely if you look at the numbers for peers or some of the other companies, we are not seeing such kind of, say, acceleration versus what we were doing in the last year. And even if you look at largely the macro or our consumer set of SEC, the outlet, I mean, there is pressure in terms of inflation, income, etcetera. So largely, just wanted to understand this a bit better as to how are we able to like see such acceleration. Even on a q o q basis, like, largely the growth rate on a similar basis improved from 20% to 29%. So if you can just get some further inputs in terms of the the growth rate.

38:18 Hi, Bharat. I think there are two things basically. First is distribution and second is the product led growth. If you see, basically, system have expanded considerably. Just from 20% contribution last quarter increased to 25%. Few products have done extremely well, and we have increased our capacity in other brands also other than indoor. Secondly, are working on distribution for a longer time, and that has started yielding results. This combination of distribution and product led growth, which has given us more than 20% growth from last two quarters. Okay. And see, in terms of this... I understand the product led growth and given that number of chips has picked up for us and even we were under indexed in Numkeen versus where the industry was. But, largely, in terms of distribution, we have been doing this 2,500,000 outlets for some time. Right? Or is there some further addition in terms of distribution also that we've seen in the last six, twelve months?

39:19 So, Guran, we are hitting our reach. However, we are not tracking it closely because we don't have the updated needs and data, but we believe there is a definite expansion in the overall reach. So 2,500,000 is the overall reach, but if you dissect the average across categories, it's very different. As XBED is our biggest category, XBED has the highest reach, and which is available to about 2,000,000 of it. However, in terms of potato chips and, there is a significant gain in terms of reach. So for example, would be available at about, say, 25% of the overall reach of what we have across the country. Similarly, the chips would be available at about 30, 35% of the overall reach what we have across the country. So huge headroom even within the existing reach to expand the reach for a particular product category, and that is what we are driving.

40:14 So earlier, it was very difficult because you were not using technology, and it was very difficult to understand the gap and drive for expand the reach. Now we are using SFA using technology, getting all kind of data on a daily basis. Team is able to review, analyze, and make the... A very specific strategy to drive the growth, to increase the reach of a particular category. And team is also able to monitor the the performance of the sales team. So all these things are helping us to drive the reach of very specific product at a at a at a regional outlet level even. So that's how we are we are driving. The whole focus is to expand the reach of the category which are...

41:01 Which has a significant platform available to grow even within the existing distribution network. And that is what we are doing for potato chips and. Got it. And you mentioned that, say, and potato chips is currently at, say, twenty five and thirty, 35% of their total reach. So where can this number be in the next, say, two, three years? And what is the target in terms of how many outlets can further and potato chips add to the distribution? I think if you talk about longer than in three to four years time, but your digital monthly should be around 75% of our outlets where we are already there. Okay. Got it. Got it. And this will be, like, on a quarterly basis, I mean, linear addition that you will see for this category?

41:51 Yes. Definitely. Got it. And secondly, I mean, just on the margin front, so you mentioned the initiatives that you've taken in terms of mitigating the inflation that is there currently. So what is, say, last quarter Q2 average your RM bucket, where is currently the RM bucket currently, say, the month of October or start of November? Is there further inflation? And largely, what are the commodities which are seeing inflationary trend and where you are seeing this deflationary trend? That will be my final question. So, Anurag, if you compare with the with the last year, I think most of the commodity, you know, experience even inflation, like a power oil, like a packaging film, even the boxes corrugated boxes and other regular commodities.

42:45 But if you compare this September to October, November as we speak, still the prices have elevated specifically for packaging laminates. Some additional impact on the corrugated boxes. So these are the items which have seen further inflation over due to as we speak. Oil has softened a bit as compared to the September quarter. We don't know how the prices will sustain or move. But if you compare with quarter four, the pre war time versus the current level, as I also mentioned in my previous comment, there's a significant spike, eight percentage point kind of negative effect on the margin. Suffered with the increase in the energy cost because the gas prices have also showed up and the logistic cost. So another negative impact of about 1.5%.

43:39 All put together, 9.5 percentage point to 10 percentage point negative impact. However, the negative impact in the operating profit, you could see of about, say, two and a half percent. So remaining seven and a half percent, we would able to manage through various measures, what I have mentioned earlier, mainly from rate reduction and general margin reduction. Got it. And based on the current raw material scenario and the steps that you've taken in terms of the damage reduction and the channel reduction, you think that second half margins will be similar to what has been the first half margins at around three odd percent levels? Yes. Correct. That is what we are targeting.

44:26 Got it. Thank you so much, and all the best. Thank you, madam. Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone. As there are no further questions, I now hand over the call to management for closing comments. Over to you, sir. Yeah. Thank you, for your questions and for taking the time to join us today. As we move into the second half of the year, we remain confident of sustaining our revenue growth momentum and delivering a strong double digit growth for '27. At the same time, our focus will remain on managing input cost pressure, improving operational efficiencies and strengthening profitability.

45:18 With the festive season approaching, I would like to wish all of you and your family a very happy and prosper Diwali. Thank you once again for your continued interest and support of Prataap Snacks. We look forward to interacting with you again on our next earnings call. Thank you, and have a good day. Thank you. Thank you, members of the management team. On behalf of Prataap Snacks Limited, that concludes this conference call. Thank you all for joining us today. You may now disconnect your lines.