Regaal Resources (NSE:REGAAL) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Regaal Resources Limited Q1 FY 'twenty seven Earnings Conference Call hosted by Arihant Capital Markets Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Deepali Kumari from Ariane Capital Markets Limited. Thank you, and over to you. Thank you. Hello, and good morning to everyone. On behalf of Ariane Capital Markets Limited, I thank you all for joining into the Q1 FY 'twenty seven earnings conference call of Regaal Resources Limited.

0:54 Today from the management, we have Mr. Anil Kisorpuria, Chairman and Managing Director Mr. Koren Kisorpuria, Wholesale Director and Mr. Tycho Chatterjee, Chief Financial Officer. So without any further delay, I will hand over the call to the management for their opening remarks. Over to you, Anil, sir. Thank you, Deepali, and good morning to all the participants. Before I hand over the call to Mr. Anil Kishopuria for his opening remarks, I would like to draw your attention to the safe harbor statement included in the earnings presentation. I request all the participants to kindly review the same and have a good look at it prior to the commencement of the Q and A session.

1:40 Thank you, and over to you, Mr. Kishopuriya. Thank you. Good afternoon, everyone, and thank you for joining us for the Regaal Resources earnings call for the first quarter of FY 'twenty seven. Quarter one FY 'twenty seven marks an important inflection point in Regaal's growth journey. During the quarter, we completed a major phase of capacity commissioning and have now transitioned into a phase focused on ramping up utilization, building volumes and capturing greater value from expanded manufacturing capabilities. The centerpiece of this phase was the commissioning on May 26, of a doubling of a crushing capacity from eight fifty five metric tons per day to sixteen fifty metric tons per day alongside a new equipment facility of 180 tons per day, a micro electric power facility of 50 metric tons per day, an expansion of our captive cogeneration power plant from 7.1 megawatt to 15.8 megawatt.

2:59 Together, these investments have established REGAAL as the largest facility in Eastern India. Importantly, this expansion represents far more than an increase in tonnage, It strengthens our ability to capture value across the mass processing chain, broadens our product portfolio, and allows us to serve a wider range of applications and customers. Against this, we are pleased to report a strong start to FY 'twenty seven. Operating income for the quarter stood at $20.02 crores. Value added grew 30.3% year on year to 80.53 crores, with value added margin expanded to 39.8% from 25.1% in quarter driven by decisive shift towards higher margin manufacturing led revenue.

4:02 We also continue to deepen our international footprint. Contribution from exports more than doubled to 10.4% in quarter one 'twenty seven from 4.9% in quarter one 'twenty six, reflecting growing acceptance of our products across international markets. With our expanded capacity and enlarged product, we need to enter new geographies, deepen existing relationships and build a more geographically diverse revenue base. Looking ahead, our focus is on further strengthening and diversifying our value added product portfolio. During FY 'twenty seven, we plan to enter 500 liquids, including textured and hydrous, dextrose monohydrate and hydrogel, while expanding beyond our existing dextrose edible starch range into specialized modified starches, such as ketogenic starch, carboxing, high starch, retail starch, and starch.

5:08 In parallel, we are building the supporting infrastructure for this growth with an additional 40,000 tons of storage across two new silos, a 50,000 square feet go down and a 1,600,000 megawatt lithium gas based power plant. With a major invest... Investment cycle substantially behind us, our attention is firmly on translating this enhanced capacity into higher utilization, a richer product mix, stronger and sustainable long term value for all our stakeholders. With that, I would like to hand over the floor to Mr. Sekar Chatterjee, our CFO, to take us through the financial performance for the quarter.

6:01 Thank you, Alisa, and very good morning. The Q1 FY 'twenty seven was a quarter of transition. The operating income for the quarter stood at 202.15 crores, lower by 18% year on year on account of a deliberate reduction in low margin trading activity. Contribution from trading fell to 3.3% in Q1 FY 'twenty seven from 19.5% in q one FY 'twenty six, which resulted in resulted in an improvement in our profitability with value added growing 30.3% year on year to 50.53 crores and value add margin expanding by 1,477 basis point to 39.8%.

6:50 This improvement flowed through the... To profitability. So operating EBITDA was 9626.6% year on year to 30.98 crore with EBITDA margin expanding five forty basis points to 15.3%. The profit after tax grew 47% year on year to INR 13.66 crore and PAT margin improved two ninety one basis points to 6.6%. Operationally, Mayes Kuti rose to 69,689 metric ton from 64,770 metric ton in Q1 FY 'twenty six. The capacity utilization of 71.4% for the quarter should be viewed in the context of commissioning and integration of the doubled capacity.

7:42 Integrating the expanded plant required plant shutdown days during the quarter, which temporarily lowered utilization. With the major commissioning and integration now complete, we expect utilization to improve progressively from Q2 FY 'twenty seven as incremental volumes contribute more meaningfully to revenue. Our working capital position reflects the scale and timing of our expansion. The cash conversion cycle stood at one hundred thirty days, driven largely by higher inventory levels built to support the expanded sixteen fifty metric ton per day capacity. As the incremental capacity was commissioned only towards the later part of the quarter, the corresponding revenue contribution has not yet fully flowed through, leaving inventory elevated relative to the current revenue base.

8:33 We expect inventory days to progressively normalize as utilization ramps up and the higher capacity translate into incremental volumes and revenue in the coming quarters. It is also important to note that inventory days are seasonally higher during Q1 and Q2 as we procure maze in advance for future quarter requirements. This seasonal effect is more pronounced this year given the significantly higher crushing capacity and the larger volumes that we expect to process in the coming quarters. On the balance sheet, the debt stood at 735.32 crore, reflecting the funding of our expansion program as well as seasonal procurement of raw material. Importantly, all debt raised towards the new CapEx qualifies for interest subvention under Bihar Industrial Investment Promotion Policy, meaningfully containing our effective cost of borrowing and supporting the economics of the expansion.

9:33 Of the total project outlay of approximately 664 crores, around 552 crores have had been incurred as of June 30 towards 2026 with the major phase of CapEx cycle now substantially behind us. As the expanded capacity entered their ramp up phase, we expect free cash flow generation to strengthen, enabling greater reliance on internal accruals and supporting a progressive reduction in leverage. In essence, we are now transitioning from CapEx led phase to a phase of cash generation and deleveraging, supporting our expanded capacity, stronger product mix, improving operating leverage and disciplined capital allocation.

10:22 This provide us with a strong foundation to scale the business while progressively strengthening the balance sheet. With that, I would like to open the floor for 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 one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while a question queue assembles. The first question is from the line of Shivam Gupta from Finutra Asset Managers. Please go ahead.

11:09 Hi, sir. Thank you for the opportunity. I want to know if is at 1,650 tons. What utilization are we running at right now? And by when we see us reaching a comfortable run rate on these new lines? At the moment, can't sell the because we recorded our plant started the expanded plant started only in June one, twenty May, but we started about first second of June operations. So of course, we are already seeing a better and the utilization is on the increase. And in further days, we will go quite expecting because I... Our earlier experience has been showing that we have done a very good utilization.

12:01 So I'm hopeful that within this year, we will be reaching maximum. Can you give us a specific number? Specific number, sir, we did about 265,700 ton flushing for the entire year. Year, what what... Like, realistic plan which we have done Yeah. The... Your voice is breaking. Hello? No. There is some noise which is coming. Now just talk. But, again, it started coming. I don't know why it is coming. Sir, I'll connect you Yeah. I'll connect Please do that. Yeah. Please do that. Yes, sir. I'll connect you again.

12:50 Sorry? The management line has been connected. Yes. The question was on something about the expansion... About, sorry, about the capacity. So last year, we did a a crushing for two lakh 65 odd thousand tons the entire year. This year, we're expecting that the crushing will go up above four lakh tons in the entire year. Okay, sir. On follow-up on this, like, new capacity, how much is actually going towards the value added, like liquid glucose and malpourished skin versus pain scale? Just trying to understand. Last last year, we had about 3% of our entire turnover as value added products.

13:42 This year, we're expecting it to go up to 20, 22% of our entire turnover as value added products, including liquid glucose is, as you said, investments. And like Q1 profit jumped around 47% year on year. How much it was because of raw material cost or it was due to operating leverages? It... I would I would give you... I would give this that it was majorly to... Towards operating leverages only. Operating... Relative cost is sometimes lower, sometimes higher cost. But if you compare from the last year, I would say that it is basically because of operating leverages.

14:28 Okay. And And compare There's another point. Just hold on. If you if you compare to last year, last year, there was about a trading activity of about 19% of the turnover of the first quarter. This year, it has dropped to 3%. So the margins in trading activity, which everybody knows, is much, much more lower than the manufacturing margin. So that was one of the major reasons too. Okay. And one last, Gujaratambu and Suntar also is adding specialty start capacity. How are you thinking about pricing power over the years? Over the, like, next year? Sir, Gujarat and Gujarat is always on constant growth. And we also are there. We have also expanded our capacity from one eighty tons to eighteen twenty five tons.

15:21 We have not... Never been... We had never faced a challenge for selling that at all. And for this also, we have increased our export base, which is there in the financials from 5% to 10, and we are opening new markets all across South and West to sell our products. So that should not be a challenge. Okay, sir. That's it from my side. Thank you. Thank you. Thanks. Thank you. The next question is from the line of Devakar from Credit Equity. Please go ahead. Good morning. So my question is on the EBITDA pattern. So this quarter, our EBITDA pattern was forty four fifty. And for FY '26, we did around EBITDA pattern of four seven four two. So what is the sustainable EBITDA pattern you are looking for FY twenty seven?

16:15 Sustainable at the moment, I cannot tell you because we are in the... At at the time of transition, and that's a big, big transition from doubling our capacity, doubling our turnover, and stuff. But, of course, I I don't expect... It will it will be... And and this this basically... EBITDA per ton is basically on the economy. Comes to economy of scale also. So I will not be in a very good position to give you a guidance for Yeah. And, also, it is important to understand that this is a this is a business where the prices influence the EBITDA significantly. So I think it will be prudent to not guide on what can be the price tomorrow of the maze and the finished product and which is the combination which results in an EBITDA pattern.

17:05 So what we can definitely guide is that we are going to grow our production, and we will get operating leverage. And, obviously, our EBITDA pattern relatively will improve, assuming that the prices will be just standing today remain constant and with the addition of value added products also. That... Yeah. Because in the in the time of higher mix, let's say you you have always increased the EBITDA per ton. Like, from FY '23, we say it was around 3,100. Now it is around 47. So I hope it has increased to, you know, 5,000 something for this year. So so, again, I I want to reiterate so that the expectation is set. Right? EBITDA per turn is a function of the price prevailing in the market of the raw material and the finished product, which is not in our control. It is a function of our mix and our value added going up or going down, and it's a mix of the operating leverage. While the second and the third, we are very positively placed because our value add will increase, and our operating leverage will come because of the size. But the first part, which is the prices of the and the finished wood is not in anybody's control. Hence, we will refrain from giving a specific burden EBITDA guidance.

18:21 Okay. No problem. So next question is on the finance cost. So sir, our debt has increased substantially, but our interest cost remains around 7.9 for this quarter. So what is the normalized net interest cost for FY twenty seven you are expecting, considering all the debt? Submission interest. One thing I'd like to bring to your notice that the term loan guest debt, whichever we are taking for expansion of the capacity and setting up the factory and plant, is all subsidized by the Bihar government, the industrial policy, and we have been continuously getting the subsidies on time. So that that was one of the reasons why the percentage the the the term loan aspect, we will not be having too much...

19:08 Too substantial increase in the interest obligations. Yeah. Yeah. I know, sir. But what is the number? Can you give the number for the five twenty seven? 27, five twenty seven. For for interest cost... Net interest cost. Net interest cost will be net net of. Yeah. Yeah. Net debt will be the. The CFO's the CFO's giving you those those numbers. It should be it should be around 39 to 40 crores. For '27 course. For first First quarter, it is zero. Sorry. For '25, '20... $5.27, 40 crores amount. So if you see, it will it will remain more or less flat as compared to that of the Okay.

19:57 So I I would like to understand more on this assumption. So you receive 100% subsidy of up to 20 crore of interest. Right? In enrollment, we can get up to 20 crore, not higher than that. So, sir, you must have exhausted this 20 crore, right, in the in the past also. So... Yeah. Yes. So, sir, please please go ahead, sir. Please. Yeah. So you get 20. So my question is, are we growing multiple loans for multiple capacity? Let's say, for let's say, for... One second. Yes. Say for the for... Yeah. For processing of one six five zero tons that we did, we we are drawing a a different loan. And for the value added of liquid glucose, we get a different loan. So, you know, our subsidy increase, let's say, forty, fifty, fifty crores. Am I right, sir? Because that's the only way you can get the subsidies.

20:50 Yeah. You are bang on you are bang on in this that we are deriving different different loans for different different projects and different capacities. But now this 20 crore rupees has been amended to 40 crores. But we will not be able to... In five years, we have a speak for five years, so we will not be able to, you know, use the entire 20 crores or 22 crores maximum. So the 40 crores at the moment is not meaningful for us. But When did this happen, sir? This 40 crores, when did this happen? This is It happened last year. Happened last year. Sometimes in... Last year means 2525... FY '25 only. Sometimes in December... November or December, that policy had... Amended policy had come, and we're still awaiting for the final policy from the Bihar government.

21:40 Okay. So, sir, it's really good. You know, if as soon as this happen, can update your presentation and, you know, put out a a text release also. Like, this has happened. Yes. Because And, yeah, my last question. Yeah. Yes. And Our our old our of 825¢, liquid to close MDP was registered under the old regime. It was done in '24. So we took it as the... As 25... As 20 crores only. But now when it has started, now the big... The government has said, no. We will go up to 40 crores also in the repair company. The projects approved earlier also whose production had not started. So we are waiting, but that is not yet cleared. So we have not mentioned that in our presentation because it is not cleared by the government yet. That... We so... Okay.

22:29 One last question, sir. So you said you expect to do around four lakh metric ton. So we will utilize most of the capacity this year, right? So what is the trigger for FY 'twenty eight? I mean, you are team at with ministers some ministering Karnataka for some capacity, right? So are you planning to some... Do capacity expansion in Southern states, or what is the plan, sir, for FY '28 and going forward? Yeah. It's too early for us to talk about another next expansion. You're just stabilizing this one, so we'll hold that on at this point. Thank you for that also, ma'am. Please let's stick to your questions to two, please. Thank you. Ladies and gentlemen, in order to ensure the management is able to address questions from all participants in the conference, please limit your questions to two per participant.

23:31 Should you have a follow-up question, we would request you to rejoin the queue. The next question is from the line of Rohit Senha from Credit Securities. Please go ahead. Yeah. Thank you for taking my question. Just one clarification on the volume side. We did close to 5,000 additional volume in this quarter. So what was the exact volume for the previous plant this quarter? And how much additional volume we did in this quarter? And I'm just trying to understand whether the last year volume was remaining intact or there was some Sure.

24:16 Low. This quarter one, we have increased by about five and a half thousand tons. Five and a half thousand. Eight... Five and a half thousand tons, 8%. It was 64, and we have gone up to 65,000, 70,000 tons in quarter one. In quarter two, if all the things go well and there are no... Again, you know, stabilize... We don't have any issues in stabilizing and integration and everything, So we will go at a... We will go at about hundred hundred hundred ten thousand times in quarter two. And if and if you're talking about in that quarter year, we have taken a very very, very, I would say, restrictive approach of about... Not more than about 4 lakh plus, but that's it. That should be the minimum which we should be having a 4 lakh which we hope to achieve achieve.

25:07 Yeah. Understood. Understood. And, sir, this additional 5,500 roughly, as we we were planning that that the new capacity would be largely focused on the value added side. So can we consider that this all new 5,500 was for the or site production? Or Yes. Yes. Yes, sir. This was basically... The entire capacity was used in liquid glucose and placed small part of methodextrin powder. Okay. Okay. Got it. And, sir, in in terms of pricing for the start side, could you help us to understand the trend from, you know, from q four FY twenty six to q one and how right now it's trading?

26:03 Sir, q four, f y twenty six to q four, f y twenty seven, the the conversion... This... The net conversion date between May is that... What you call value addition between maize to starch has become better compared to that. It has become better. Oh, but but in terms of starch pricing, how how has been the trend for that? I mean, any any percentage we can indicate that how much percentage of price increase was there or how much we have seen in Q1? I have to I have to calculate that, sir. I have not from this last batch to this batch. That we will let you know about it. In due course, I'll tell my IR team to let you know about it. What is the percentage jump, but...

26:57 Between the conversion. Mister Rohit, I would request you to rejoin the queue for a follow-up question. Ladies and gentlemen, I request you to limit your questions to two per participant. The next question is from the line of, an individual investor. Please go ahead. Hello. Am I audible? Yes, sir. You're audible. Yes. Yes. Yeah. My first question is regarding what is the revenue mix going to be between domestic and export market going forward, and do we have any targets? So at the moment, the revenue mix is 10%, which was 5% in the last quarter. And, of course, we are working on a lot of other opportunities of new markets like sports, which we are working, which we are doing. My team has already visited.

27:46 And, again, we are attending fairs now, which is scheduled to happen September. I am also going personally to all those fairs. So I am very, very hopeful that it will increase, But a target and guidance will be difficult for for me at this time, but I don't know what... How how much will it 55 plus. Doubling has happened, so it will... It should be more than that. But how much more to the time I don't get the orders? And I'm not able to supply. I will not be knowing about it. Okay. My next question is regarding, does management have any plans to turn co products into higher margin products going up the value chain? Sir, co products co... There is... With co products... Turning co products into high value added products, there is a very small pause...

28:33 Small... Thin possibility in which you can just go for a feed plant. But at this moment, this is completely different line for us into getting into animal feed. So we have really not explored, k, what is the situation, what is the margin, what is the value addition that you will be getting. Okay. Thanks. Please stay on the line. The next question is from the line of Madhu Rathi from Counter Cyclical Investments. Please go ahead. So thank you for the opportunity, sir. Firstly, I wanted to understand on our inventory. So so as we are in a single crop or single harvest season, do we after the job.

29:22 Hello? Yes. Yes. Hello? Please please. Yeah. Yeah. So so I'll be out in a single crop region versus two crops for some other geographies. So so do we carry higher inventory, do we procure maize from some other states during Khari season, if you would help us understand. And, sir, this two hundred and eight day inventory that we have on our books, sir, is it sufficient to operate at the 75, 80% utilization that we are expecting for the sixteen fifty metric ton over the next three quarters? So we... As as a company policy, we... Till till 2526, we were basically procuring maximum of the... Maximum about 90% or 95% inventory we took... Procure during the Ravi season of April, May, June, July.

30:20 And this year, also, we have procured at about, I would say, to... About 80% of our inventory we have procured during the season of Ravi during April, May, June, July. And this time, we... A very small, about 10, 15%, we have kept to procure it from other states of Maharashtra and Pyongyang, Karnataka, where maze is abundantly available. And we now... Bihar had also... Bihar also grows Ravi Kuhari's crop in certain pockets. So... Which we had which we had never explored the past six, seven years. Now we're exploring to buy those ruby... Hari crop crop. Though it's not a big crop, it's about six lakh odd tons crop.

31:06 So we are exploring that. Some parts, say about 10% of that or 5% of that, we will start exploring from the Hari districts also. It. Sir, also, if you would help us understand what... Is there any low cost advantage that we have versus industry leader? And, sir, you mentioned that the leads to start conversion rate is much better in f y twenty seven versus f y twenty six. So why is that? Is BR's block superior to any other region? Or if you would help us understand on that, sir. No, sir. Bihar crop is the best crop in the country. Bihar and Karnataka. Because the... It is...

31:52 The con... The recovery of the the finished products from that maze is very high because basically that are very large. It's about 290,280 grams. These numbers per $100, whereas of different states states, which I mentioned, 350,400 grams. So recovery is much, much better. Quality is much better. And what what I what I told you about, we we are, as a model, we procure a lot of major major quantity of our requirement from... Directly from farmers, which is of low logistics cost. These these material come to our doorstep, FOR, including including freight.

32:41 And because Bihar doesn't have a large... Very large inherent consumption of maize, plants I all this mail is is sent outside Bihar to other states, other companies, and other states. So we get at a much, much, much cheaper rate. Got it. Sir, just a final question from my end. Sir, considering the value added product mix increase in this year, sir, what kind of EBITDA margin can we expect? And, sir, this 80% inventory that we have procured, sir, what is the pricing for DG that we have procured this year? Sir, the pricing of the inventory which we have procured, we have kept it in mind that when the hurry crop comes during during the November, December, January season, we will be competitive with our competitors, basically. We will com... Compete them with... Well with them. And regarding the EBITDA margin between the... Course, the EBITDA margin, sir, will, of course, improve. That is a lot understood.

33:51 They improve over. But but what what will happen? What will be modified starch of or of or of the accommodation, the low wage buying in? This is still we're exploring. So because this is... A lot of these are also seasonal sometimes, like liquid glucose is seasonal from September to March is the major time which we are able to sell. So that will only come out once we do the entire exact experience that we have of one year, then we'll be able to tell you better. Mister Madhur, I would request you to rejoin the queue for a follow-up question. Ladies and gentlemen, I request you to limit your questions to two per participant.

34:36 The next question is from the line of Harsh Saraswat from Sujan Alpha Capital. Please go ahead. Hello. Hi. Good morning, sir. Am I audible? Yes, sir. Yeah. Sir, I wanted to ask on the crushing volumes you would do for the FY '27. I think you mentioned it in the call. I missed it. Yeah. We... It's it's... It should be it should be about 4 lakh, sir. 4 lakh, sir. Okay. And, sir, on the maize prices, I wanted to ask the last time when we had a con call, the prices of maize were around 20 rupees. Now it has, I think, jumps to 24, and it is almost, you know, near the peak of $26.27, which was last year during the same period. So what kind of impact those prices can have on us?

35:30 I remember industry was struggling at those prices. Sir, if the maze prices, which you are seeing 24 rupees, I'm still getting maze at my doorstep delivered at 22.5 or 23 at the most. So very, very good quality of maze, meat quality at 23, first of all. And so, yeah, this maize prices, there's always have seen a trend in in behalf that the maize prices have no... Is the reason, but the maize prices goes up from September... In September, which again starts softening down in October. So this is... This was last year also, and this is happening this year also. And this has happened at earlier occasion, at earlier years also. So I don't see I don't see at all the latest prices going up very, very high. Though we are holding a a substantial good stock for the entire year, we are holding very, very good stock. So if it goes high also, we we don't come into question. It's nothing... It's not a concern for us. So if it goes high, of course, the prices will start to go higher. So we will be at a better better situation for this year at least.

36:43 And, sir, how are maize prices in India versus the world? Are exports still viable, or is there any change in that scenario? So the maize prices... If you compare the maize price to maize price in the world, the maize prices are quite low compared to the Ukraine price to a... To The USA price and all. And the exports of starch worldwide is still very, very competitive. As per our calculation, this, the association's calculation, 24 rupees, 25 rupees, the company is still the Indian exports will be very, very competitive. Got it. Got it. So then in this year, what will be the peak date for the company? And will it come in h one balance sheet or it will be in h two?

37:30 Yes. It is already it is already peaking, and I think it will be in the h one balance sheet and h two two, it was not. Yeah. I think due to the inventory build. We we are set... We... Our working capital requirement is highest in the h one. So that's why the period Yeah. Yeah. That is speaking. And, definitely, it is going to come down when the when the h two comes. So it is... It will go down by that. Basically, our our old example has shown that our working capital requirement comes down to about 40%. Say say, for example, we are 100 crore rupees working capital debt, that comes down to 40 crore rupees by quarter four... In quarter four. Got it, sir. Sir, any CapEx plans for FY '27? Sir, at the moment, we are... We want to stabilize because this is a very, very big expansion, which we have done. So we want to consolidate and stabilize this, come to our our experience of 90, 95% capacity utilization, come to those figures, get into the entire value added basket, market them at good prices, improve our results, decrease our debt, and then start thinking of, you know... Of course, plans are there, but they'll start thinking to be happen. But so so.

38:50 Got it, sir. Got it. Thank you so much, and all the best. Thank you. Thanks. Thank you. The next question is from the line of Surya Narayan from Sunidia Securities. Please go ahead. Hello? Am I audible? Yes, sir. Yeah. Hi. So thanks for opportunity and congrats for a good set of numbers. Just to understand from your side that what kind of production loss happened in the Q1, that is number one. Number two is that now what kind of the value added products that has been introduced in the second of the capacity expansion, whether those capacities have been stabilized.

39:36 If yes, then obviously, then what is the kind of capacity utilization run rate currently going on in the Q2? And certainly, as we understand that now globally, the food prices are set to rise in '27 I mean CY twenty seven to FY '28. So shall we understand that from the current high EBITDA margin, what the in... The market proceeds is here to stay? Sir, for the... First first of all, for the shutdown days, why... For the integration, we have lost at about nine days for the integration of both the plants during April and May. So if we think about han...

40:21 800 tons of round off thing, the nine days into eight hundred days, 7,200 tons we have lost in this. Talking about the value added products, liquid glucose, one product, which is... Which we are doing pretty pretty... We have started now doing it about 70 odd percent we have reached of the entire capacity, and this is, again, on the increased only. Microdexin powder, it is yet to... Because, you know, microdiction powder, all these samples and everything has to go to a lot of places and the MNCs and all. So what customers we had, we are doing... We are catering to them, which we which we own customers. New customers are yet to... We are developing it. Well, they've already developed. Few orders have come, but market should take about two to three months more to come to our our target level.

41:12 That is one thing. And and what you spoke about is the prices of... Sir, this is basically... I always tell everyone, this trade, this manufacturing, and this trade of starch is not a trade which you will see percentage wise. This is a trade of a whole number trade. Because if May's prices go up, stock prices will go up. If that comes down, stock price come down. But your profit and your EBITDA, if everything goes okay, stays where it is. The percentage basis we are buying it. So the next year, if the... For example, this task has go up to 40 rupees, that doesn't mean your your EBITDA will go up to 6.5 or 7,000 rupees. That's not English. So regarding the value added products, which among the products are the most, you know, margin accretive, be it textures 100 or textures 100 or hydrolyl?

42:07 Which of the product has, you know, bigger potential so far as margin is concerned? Sir, margin is concerned. The stores... Our the stores will... We will see the light of the day by fourth quarter, but within... Before March. In the fourth quarter, basically. The production power, of course, is a higher margin. Higher margin as as well as higher value addition also, but the quantity is less, whereas liquid glucose is giving 180 or 200 tons, maltodexin powder will be 50 tons. So then at the flurry of the the flurry of entire basket of modified starch, which we have started... Which we have already started trials and which will be completely online within September, so those products are very, very high. But, again, and product requirement total quite a bit. But 100% value 35, 40% we are making at a small scale.

43:11 So currently, looking at the current capacity utilizations levels and forcing the fourth quarter addition, so at what level you see the value addition products standing in FY 'twenty eight? I believe FY 'twenty seven will be difficult for you to go. But FY 'twenty eight, what kind of percentage you are envisaging? Sir, our our capacity our capacity and everything which we have built up for value added and stuff is... Capacity shows at about fifty fifty. Starts 50% starts 50% value addition. But from a guidance point of view, I think you can take a 35% kind of a Hey. Capacity. So automatic 35%.

43:57 35... So turnover automatic 30, 35%. Total turnover. Yes. Yes. Yes. So this year this year, it will be stand... You wanna standing somewhere around 20%? Sir, I will... Let let me not give you a complete figure or a guidance, but, of course, from 3%, we have already con... Committed us to. It's it's likely, sir. Like, it should be it should be, sir. It's likely it should be. Okay. Thank you, sir. Thank you. You. The next question is from the line of Navin, an individual investor. Please go ahead. Yeah. Thank you for the opportunity. So little bit that you can just increase the volume.

44:47 Is it better now? Yeah. It's better now. Yeah. So my question is our share of value added products is gonna increase from three, and previously, we had guided to 25 this year. And what is the go to market strategy for the same? And what kind of investments will it involve? So go to market strategy is we are making those products immediately at the moment. September to complete value added add ons is the the same circle. Most of them, I will not say 100%, about 80, 90% of them, 80% of them are going into the current channel only. The dealers and the institutions, if they're making a tiny starch, we have p s... We have... We'll make a tiny starch for all the paper mills, which we supply native starch to or oxidized starch, again, to those customers, which we supply to to to our same customers' paper mills.

45:49 For example, pre gel starch. Pre gel starch, we are... Food industry, we're supplying, so we will supply to food industry. But, again, the... This pre gel starch is also in the commercial starch industry. For one exact... One usage is batteries, but that will be new for us, those things. So maximum of them, 70, 80% is your... Are the old channel. Now if if we have 70% in our hand, developing another 20, 30% will not be very difficult. For carboxymethyl starch, it's oil drilling. So that is only 20, 30% of... 20, 30 tons of a thousand tons of 1,100 tons of starch, which we'll be making in full capacity. So it is it is it is pretty good, which we have. Or, I mean, or,, you have a new new customers also from the.

46:35 I just don't want to throw the names of the thing, but we have acquired big, big customers, big MNC, in this... Biggest MNC's whom now we are supplying directly. We are billing them to to them directly. We are not at all worried about that. And so it won't involve any additional investments. So whatever the cost is, it won't increase from here. The cost is the costing of the customer I'm not interested. Cost base towards manpower or marketing team. We have few additions. So this entire capitalization happened together as as one project. If you want the breakup, I will let my IR team know, and they will be... They will give you the breakup value added with it now wires, capacitance.

47:23 And we were talking about some white labeling white labeling of some products. Is that one? Yes. Yes, sir. We are... It's just completely on white labeling rather than white labeling base has increased. Few more customers have come in. The the... Again, the India wide brand has come in, and the customers which we are doing earlier, they have increased their products. Both things have happened. So there is cross selling from existing customer and new customers are also getting added. Okay. Understood, sir. Thank you for the opportunity. Thanks. Thank you. The next question is from the line of Prem Soni, an individual investor. Please go ahead. Hello?

48:12 Yes, sir. You're audible. Please go ahead. Hi. Thanks for the opportunity. Sir, my question is on the EBITDA margins. Like, everyone has already questioned the same, but, like, after expansion of value added segment from 3% to 22% or or loss, so what would be the blended EBITDA margin considering... Because in quarter f one, f one twenty six, that was a 9.9%. And f twenty seven, quarter one, that is 15.3%. So what would be the blended margin... EBITDA margin would be... We can expect? I will take that, Sanjeev here. See, as we explained at length, the margins are some... Is a culmination of three variables, which we must remember.

49:00 The first variable is the the market prices of the maze as well as the finished product, which is not in our control. The second is the extent of value addition that we do on our products. So as the percentages increase of value add, our margins are obviously bound to increase. And the third is the scale. As we scale up our production, we will get operating leverage. Now while the second and the third is happening and we've already guided, you know, that our... This year, we will do about four lakh tons, and then we will do about 20% or whatever this year as far as the value add is concerned. The first is not in our control, hence, to give a firm guidance on the percent EBITDA or on the percentage of EBITDA margin is actually trying to, you know, get into something which is not fully in our control. Having said that, if you compare apple to apple from same price, same price level to the same price level, obviously, we'll do better than this because of the operating leverage and the value add.

50:11 This is the best that I can explain you as as far as the margins are concerned. Alright, sir. Alright. Sir, can you give me the recap on your marketing teams and sales team? Since your employee count is 719, can you help me with the rate of marketing or sales team? So that's a detailed thing which you're asking. We don't have this at the moment already with us, but it will be available with you with the IR team. So they will provide it. If you wanted, they'll provide it with you with entire numbers. Thank you. Due to time constraints, we take that as the last question. I would now like to hand the conference over to the management for the closing comments.

51:05 Please make comments. That is. Ma'am. Thanks a lot, everybody, for joining in early in the morning. I really appreciate. Thank you so much. Thanks a lot. Thanks a lot for your support. And thank you, Arun Kapil, for hosting the call for us. Really appreciate that. And for taking the time to join the call. And we sincerely appreciate your participation and continued interest in the company. Should you have any further questions or require any additional information, please feel free to get in touch with us. Thank you once again. Thank you. On behalf of Arihant Capital Markets Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.