Ladies and gentlemen, good day and welcome to the Huhtamaki India Limited Q1 CY2025 earnings conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Mishra from ICICI Securities. Thank you, and good to you, sir.
Good afternoon, everyone. Thank you for joining on Huhtamaki India Limited Q1 CY2025 results conference call. We have Huhtamaki India Management on the call, represented by Mr. Dhananjay Salunkhe, Managing Director, and Mr. Jagdish Agarwal, Executive Director and CFO. I would like to invite Mr. Dhananjay to initiate with opening remarks, post which we will have a Q&A session. Thank you, and over to you, sir.
Thank you. Greetings to everyone, and thank you for attending this call. As customary, let me start with our safe harbor statement that the discussions we will have during this call do not represent any forward-looking statements, and it should not have any bearing on future financial performance, including what we are going to discuss about our strategies and operational plans. Coming to the quarter one results, as we have witnessed, very challenging and volatile market environment, along with the muted consumer sentiments and urban demand yet to pick up in India, what we have seen is that our quarter one volumes are lower than quarter one sequential quarter, as well as year-on-year. However, the margins have been improved considerably on quarter one quarter, riding on the better sales mix, which is basically the discussions what we had in previous calls.
Due to this better sales mix, in fact, that has helped us to keep our net sales overall flat as compared to previous year and slightly lower than quarter one quarter. The productivity and efficiency push has helped to deliver higher EBITDA quarter one quarter, as well as year-on-year. Overall, there is an improvement in profit before taxes, and overall earnings per share has been on an improving trend. As I talked about efficiency measures, these efficiency measures are going to help us in terms of managing the overall challenging situations what overall economy is going through. To take us through in a detailed financial review, I would request our CFO and Executive Director, Mr. Jagdish Agarwal, to take it over. Over to you, Jagdish, and thank you.
Thank you, Dhananjay. Good afternoon, everyone. It's deep appreciation for your trust and support. I'm delighted to welcome you to this quarterly investors' call. I'll take you through the financial performance of the company for the quarter ended March 2025. As regards to key financial indicators, the volumes are slightly lower on quarter-on-quarter as well as on year-on-year basis. However, the revenues are almost flat versus both the comparable period. The top line for the quarter is set at INR 593 crore, which is almost flat when we look at March 2024 quarter. However, slightly lower than December quarter by close to 1%. EBITDA for the quarter is set at INR 49.7 crore, relatively flat at INR 49.4 crore of March 2024 quarter. However, this represents an increase, significant increase of 55% compared to December 2024 quarter. December 2024, we had roughly INR 32 crore of EBITDA.
EBIT for the quarter is approximately INR 37 crore, and again, more or less very close to what we had in March 2024 quarter, that was INR 39.8 crore, a slight decrease compared to March 2024. However, comparing with the December 2024 quarter, again, it's a significant increase. December 2024, we had around INR 18.2 crore, and in this quarter, we had INR 37.1 crore, despite lower volumes and flat top line. When we look at the finance cost for the first quarter, again, relatively flat comparing to December 2024. The reason is that the underlying level of debt remains the same in both the quarters. It's surplus cash. Whatever surplus cash behavior, investing it into a secure place, either a bank deposit or mutual funds. On an average, we are earning more than 10% in that.
PBT for the quarter before exceptional items stands at INR 34 crore, which is relatively flat compared to, again, Q1 2024 of INR 35 crore. However, as against Q4 of 2024, this follows the same trajectory as EBIT, with significant incremental gains. PBT for December 2024 quarter was INR 15 crore. Net profit for the quarter stands at INR 26.1 crore. This again follows the same trend as other profitability indicators. In March 2024, we had INR 26 crore, and in December 2024, we have INR 11.7 crore. EPS for the quarter after exceptional items stands at 347% per share. Despite some external volumes compared to Q1 2024 and Q4 of 2024, we have successfully maintained both top-line performance and margins, which is a promising sign of resilience. This achievement has been driven by a strategic shift toward a more profitable portfolio mix.
However, gaining profitable volumes remains a priority, as it will provide a substantial boost to the bottom line and top line. With unwavering confidence in the company's vision and dedicated team, I believe we can overcome current market challenges. We have seen that consumption patterns are very, very subdued in the market, and we have seen some of the quarterly results in the last two or three days were not so encouraging. That is a testing time to also survive the opportunity, to adopt, to learn, and to emerge stronger. By capitalizing on past insights, refining our approach, and staying focused on sustainable growth, we will navigate this phase successfully and position ourselves for long-term success. Moving on to data and liquidity position, liquidity position is in good shape, with the only worry on the book being the ECB of INR 100 crore from group company.
Share equity ratio is very healthy at 0.1, in line with what we had in December 2024 quarter, and debt-equity ratio at March at 2.1 compared to 3.2 end of December quarter. Overall, liquidity remains strong, and we do have sizable credit lines unutilized, so liquidity is not a challenge. Working capital is relatively flat when we compare with Q1 2024 at an overall level, though even lagging behind when we compare with the December 2024 quarter. We are continuously evaluating and implementing measures to ensure the long-term sustainability of our business. Our focus remains on driving programs that support profitable growth initiatives like enhancing operational efficiencies. At the same time, we are committed to making our workplace safer and better for all employees, as well as associates and partners present on our side.
I'm pleased to say that we have achieved a significant improvement in our safety metrics this quarter. This progress reflects our dedication to fostering a secure work environment and reinforces our commitment to prioritizing employee well-being alongside business growth. Once again, we reaffirm our commitment to drive sustainable growth, navigating challenges responsibly, and seizing opportunities that position Huhtamaki for long-term success. The value partnership we share with our stakeholders, including our employees, our staff at factories, shareholders, customers, and business associates, is fundamental to our journey, and we truly cherish this relationship. We sincerely appreciate your continued support and investment in our company. Thank you for your participation and trust in our vision. Okay, that's all. We can go for Q&A about it now.
Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone 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. A request to all participants, please restrict yourselves to two questions. If you have any more questions, kindly rejoin the queue. The first question comes from the line of Deepan Narayanan from Trustline Holdings Private Limited. Please go ahead.
Thanks a lot for the opportunity. Good evening, everyone. Firstly, what are the key reasons for this 450 basis points kind of increase in gross margins, and do you feel these kind of margins are sustainable over the short to medium term?
Okay, I can answer that question, Mr. Narayan. One is that we have talked about that we are focusing on the right portfolio mix. If you look at March 2025 quarter, we had the portfolio mix. When we talk of portfolio mix, it can cover customers. It can talk about product. Overall, it was in the right direction. That was one. Second, we keep talking about efficiency measures. We are working to improve into all aspects of our cost side and also, it is a combination of many things: portfolio, the improvement into operational efficiencies, the cost, and all. It is a cumulative impact.
Okay, okay. What is the kind of contribution from blueloop products during this quarter, and when do we expect these premium products contributing more towards margins, EBITDA margins for our company?
When we talk about the blueloop per se, I mean, any product which comes into a sustainable category, we call that more blueloop. If you look at, we normally range between 27%-30%, 31%, 32% kind of a range. When we talk about very specifically where we had investments into Silvassa, I think we are also making progress in that. At this point, we talk about the whole basket of all sustainable products putting together.
Okay, okay. Lastly, when do we expect these benefits from?
Those were your two questions. I would request you to fall back in the queue for any further questions.
Okay.
Thank you. The next question comes from the line of Rohan from Golden Money Investments. Please go ahead.
Good evening. Good afternoon, sir.
[audio distortion]
Sir, the question from my side is, what I am seeing is there is, I think, much more demand in non-food items, non-FMCG items. Do you think about expanding heavily in non-FMCG items like stationery products and electrical equipments?
Okay. Maybe I can take this. If you see overall our product structure, we are into essentially foods, beverage, and home healthcare and industrial product services. The product which you mentioned, that stationery or the other products, which are basically not really our core focus. Yes, in the industrial area, we keep on examining and exploring the better opportunities to service our customers. At this moment, we would be really focusing on the five core areas: foods, beverage, home healthcare, and industrial product sectors.
Sir, second one, I think in the 2025-2024 annual report, I had seen some loyalty payments to us from the parent company. Sir, I want to ask how we will keep Huhtamaki India away from the competition?
Sorry, what is your question? What are you talking about? Which comment?
Actually, in the expense section in the 2024 annual report, there was an expense related to software expense and royalty from the parent company, Huhtamaki Oyj. Sir, my question is how it will create value and keep away from the competition the rest of the market is getting?
Okay, one thing I can share, Rohan, is that whatever expense we do in our company, it goes through a different kind of evolution process. There are a lot of initiatives which are going on when we talk of digitalization, or we talk of cybersecurity, or we talk about software automation and all. All these are valued at a different level, and every transition is what we do at arm's length. When we talk about percentage of loyalty, because we are not making any loyalty payment, loyalty payment is not there in that, yes. When we talk about IT, it helps us to get great deals, and all these expenses are evaluated, and they are genuine.
Yes, sir.
Thank you. Does that answer your question, Rohan?
Yes, yes, yes. Thank you.
Okay. Thank you. The next question comes from the line of Saket Kapoor from Kapoor Company. Please go ahead.
Namaskar, sir, and thank you for the opportunity. Sir, definitely, our current results are encouraging with the improvement in margins, and I congratulate the team for the same. Sir, if you could give us some further understanding on the cost efficiency steps which we are taking, I think for the employee cost has been more than 10% of the sales on a consistent basis, even higher than that. I think some rationalization earlier we have done in terms of lowering the cost. If you could give us some color where are we in terms of the efficiency part.
Secondly, sir, if in the packaging segment, if you could give us some more understanding of the clear comparison comparables, whether we are comparable with the likes of the BOPP and BoPET manufacturer, or how differentiations are there between Huhtamaki and them, sir, if you could give some light on that.
Yeah. Maybe I will take this. You talk about we are talking about the efficiency improvement, and we are examining each and every aspect of our operations, I mean, end-to-end operations, not only employee. Overall, there is a project which is going through our, we call it world-class operations umbrella. We focus on the overall productivity across the organization. Second, of course, the cost control, whatever we do in terms of we buy our products and services from our suppliers. Of course, third, internally, the operating expenses. The efficiency improvement programs are covering all the three areas of our, all three are focus areas, I would say. There were two questions. Can you maybe repeat? I lost the last one.
The second part of firstly, sir, even for the first question, I have just a supplement to it. The employee cost as a percentage of sales, how should we take this line item? What happens in terms of automation or AI technology or the technological benefit wherein these can be margin-accretive if the percentage as a cost to sales is reduced? What steps are being taken in particular on this line item? The second question was, I was looking at the tier comparison part and also like to understand whether are we, how are these BOPP film manufacturers, BoPET film manufacturers aligned to us in terms of competition, or if you could just give some color, are they the real comparables for us?
Okay. I think I got it now. Basically, definitely, there is an eye on how do we improve the productivity so that the % of employee cost per sale shall remain better. That's definitely an objective. You rightly mentioned that the focus is definitely going to be on the digitalization, improving our IT infrastructures, and how overall we do business. That is why, if you see, Huhtamaki Oyj is investing significantly on this or embarked on this transformation. That is why, as an overall, you would see that there is a slight increase in those expenses, but they are basically going to help India, Huhtamaki India, going forward to really improve this cost, what we have discussed in the past in the first question.
Coming to the competitive or the names you mentioned, they are basically only specifically film manufacturers, whereas Huhtamaki not only manufactures our own film in certain areas, complex, and where the quality requirements are significantly higher. Actually, we are a complex organization. We are into the mixed activities of printing. It is not an apples-to-apples comparison per se.
If I may add, sir, in that case, are our margins comparable to the BOPP film segment? Basically, for this packaging, we are using both BoPET and BOPP film, or if you could just drill a bit and are our margins comparable to these players or not? They should be then higher since you are mentioning that we are into a complex part of the supply chain.
Absolutely. We use BOPP. We use BOPP, and in fact, we also use a significant part of our product portfolio also includes PE also. Then, of course, additionally, we use aluminum foils. That is where we end up having a complex structure. As compared to the only pure-play film manufacturer, definitely our margins will be slightly better.
Okay. Sir, as I joined the queue for my two more questions, and I hope Mohit Mishra will provide me an opportunity.
Thank you, sir.
Okay, may I ask something?
Yeah. Thank you, sir. Yeah.
Yes, you may rejoin the queue. Thank you. The next question comes from the line of Prithvi Ghag from Oaktree Capital. Please go ahead.
Hello. Hi. Sir, this was in relation to the portfolio mix. Is there any way you could give us some guidance on what's the mix between premium versus non-premium, and are there any disclosures which you plan to do for this going forward? What is the gross margin difference between the two segments? You can highlight anything on these points.
Okay. I can take this question in a minute. Prithvi, when you talk about a portfolio mix, it's not about we are talking about a premium versus non-premium. Portfolio mix is like you have multiple product categories. You have multiple customers and also, I mean, just making sure that what kind of mix you are cashing into that, and is it good for a company?
Here we are not differentiating between premium and non-premium, but we are looking at the right product mix and right customer partnership.
Got it, got it. It basically just helps you just on a sequential basis, you would try to get the right portfolio mix which gives a better margin or basically sustainability, a better margin sustainability.
Yes. That's it.
Okay, okay. Thank you. That was my only question. Thanks.
Thank you. Next question comes from the line of Sukhbir Singh from SMIFS Institutional Equities. Please go ahead.
Good evening, sir, and thank you for the opportunity. My first question is on the export side. Can you please give some light to how the export market is, the export sales is evolving, and we export to more than 70 countries. Can you please provide some guidance regarding it?
Okay. Sugbir, when we look at the general list between our domestic sales and export sales, typically we are in the range of 70-30, or kind of 1-30-30 kind of a sales ratio we have. We do not see any risk, or we do not see any challenge, and we feel that we continue to maintain our ratios in that range, 70-30, or 1-30-30 kind of that. Anything specific you had to ask?
No, sir. Nothing specific. Just a general thing. My second question is relating to the capacity utilization. What would be the capacity utilization overall for Q1?
I think we do have capacity, Sugbir, and there is a room that we can do more. We are continuously working on that. It is very difficult to comment exactly on what percentage because it depends on product mix as well, what kind of products we are going to have, which products are going to work on which of the machines and all. There are a lot many factors. If I have to summarize my answer, we do have a capacity. We can do a little bit more from the same capacity.
Okay, sir. [audio distortion] .
Sukhbir, you're done with your two questions. I would request you to fall back into the queue. Thank you.
Yeah, sure. Thank you.
The next question comes from the line of Vipul Kumar Shah from Sumangal Investment. Please go ahead.
Thanks for the opportunity. My question is regarding margins. Four, five years back, we had much higher margin. Since the last four, five years, our turnover has also stagnated. We have introduced new technology products like the blueloop line. Still, we are not seeing any benefits of this. Are we losing any market share? What is your comment, sir?
Okay. Vipul, I can take that question. When you talk about five years back or seven years back, a lot has changed in the last five years, seven years, eight years. When you look at the competitive landscape, there is a big change in that. When you talk about companies, there are a lot of competitors in the market and all. It is very difficult. We can compare what was the situation five years back or seven years back. When we look at our situation so far in the last one or two years, we are trying to do things which will help us to be sustainable in the long term. We are doing things which are going to help us to remain more relevant, more reliable, and more of a sustainable packaging solution partner with our customers. That is what we are looking into.
Margins are many times the outcome of many things happening to the market competitiveness and all. Yes, whatever efficiency measures which we talked in the previous questions and all, we will continuously focus, and we are driving to ensure that we remain competitive in the market. When we look at the overall consumption growth, at least the last two quarters were not so great. We have seen that rural is doing significantly better than the urban demand and all, but overall, consumption scenario is not great. We have seen some results came in the last two or three days. We are talking about the volume growth of 1% or 2%, not so great. We believe that the situation probably should improve. The urban demand should come back, and it might take some time, but I think the expectation is that consumption should come back.
With the introduction of these innovative technology products, can we expect the margin to reach up another 100-200 basis points in the near future, or is it a little far-fetched?
I think it's still too early to talk about that kind of a number. Sometimes it depends on what percentage of the sales and all. Our aim is not that we are just trying to maximize the profit with that. Our aim is that how we do partner with our customers to be a sustainable solution provider. We are working. Our aim is that how we can push more and more sustainable product for the consumers, and that is good for the overall sustainability point of view. Just putting a number where it is going to improve by 100 basis points and all is too early to comment on that.
Okay. Thank you, sir.
Thank you. The next question comes from the line of Rohan from Golden Money Investments. Please go ahead.
Yes. Sir, as you know, our company's target till 2030 is to be 100% sales from the blueloop , okay? Sir, government is also taking very tough initiative for plastic recycling and reusing. Sir, do you think that odds are in our favor and we are going to be basically winning this long race?
I think, sorry, can you please take that question?
Maybe. Yeah, I can take that, Jagdish. N o problem. Yeah, I think your observation is really correct that the blueloop is actually the project which is focusing on sustainable products in all four areas. Apparently, government, not only in India but elsewhere also across the globe, are taking measures to make the products recyclable and specifically packaging. That definitely shall give us great, I would say, benefits going forward. At the same time, some previous questions also were around blueloop, whereas we are really having great products. We are first to the market, and the overall ecosystem is still evolving. That is the reason where we are having seen some slower adaptation by our ecosystem to these products. Once that gets going, I think we will be clearly negotiate.
Yes, sir. I want the last question. With 100% blueloop product sale, we will be adopting with higher margins or the margins will be the same as today? Basically, we will be together with the margins like 10%, 11%.
Sorry, what was the question in terms of margins?
Yes, yes.
No, I mean, as Jagdish has already explained in the previous question, that it's too early to talk about what would be the differential.
Sir, we are the first mover, and we have invested a lot in this business. Do you think that we have a high probability of chance to be the best in the business?
Yeah, that's right.
Yes. Thank you, sir.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Saket Kapoor from Kapoor Company. Please go ahead.
Yeah. Thank you, sir, once again for the opportunity. Sir, when we look at the commentary from these film manufacturers, especially the BoPET part, they have been experiencing the margins expansion post last June quarter. They have been emphasizing on the confidence of the demand-supply narrowing from excess to a balanced state. Whereas when we are hearing your commentary or your comments, correct me there, you are not sounding confident in terms of the margins being maintained. If you could just drill through the factors of the reasons why are we not confident to post or to stay the course in terms of these margins on a sustainable basis. Second point, Dhananjay sir, you are almost two and a half years to this organization, and I hope that some targets you might have set over a period of time in terms of efficiencies or the profitability metrics.
Where are you in terms of if you could just elaborate? Because when we invested, look at our investment in the listed space of Huhtamaki India, the performance has been very languished in terms of if we look at the stock price performance. The reasons are explained, but what is there for you stored for your investors, sir? Because the investors are reposing their faith and investing in the mixed space and the equity space, and having this conversation is the medium through which we can express our thoughts and get your view. If you could just dwell on these two facts, that why is the market not giving us the right valuations, and why are our investments not profitable in terms of where is the lacking or the disconnect that is not translating into a sustainable set of profitable numbers for the organization?
What levers are still left to be changed that would lead us to a profitable growth path on a sustainable basis? That was my question.
Yeah. Sir, thank you. I think your questions, sir, are very large. I will try to pick up a couple from them, and maybe we can clarify something out. One, of course, you drilled upon this BoPET margins or suppliers or film manufacturers. I think if you see the business model itself, it is completely different, right? We have been, as I said, we are a complex organization servicing multiple product ranges and so on. Whereas BoPET is specifically only on a specific focus area, I think comparison is clearly not fair. That is what my comment would be on that.
Coming to my two and a half years or close to three years with Huhtamaki and how we want to set ourselves forward. As we have seen this last three years, I think we are able to provide stability to the organization in terms of leadership, in terms of strategic direction. We have shown the execution excellence for the last two to three years in spite of having really challenging and volatile market conditions. We want to continue on the path where we have taken the steps forward. Be it where to play and how do we play in specifically accurate spaces, how do we get our global company or global reach, which helps Huhtamaki India, and advantages in terms of export market, and then continue to seek help in terms of larger transformation, what we are talking about in digital and IT.
These three areas definitely are going to help us continue the path. There are certain areas where it will help us to differentiate further. I think blueloop is one of the very important levers we are using. All in all, if you see the last four years, yes, four to five years, various external and internal challenges, the sales have remained flat, and there is a slight margin erosion. That is essentially emanated out of the changing competitive landscape, and the differentiation has now reached. That is where our effort is, that how do we keep Huhtamaki's differentiation, which was there earlier, and take that back to the previous level. That is exactly what we are working on in the last couple of years. It is a long journey, and we are confident that we will be succeeding in that.
Right. For the value creation for your minority shareholders, the wait is long, and neither the market nor there are definitely a disconnect that the investors are not getting the right value or the market is not recognizing. That is because of the unpredictable nature of the earnings, which you yourself articulate during the call. This is the only reason why the investing has not been profitable for your minority shareholders?
That's a collective effort we are trying to get back and give a consistency. That's what I think I covered.
Okay. Lastly, sir, if you could give us some understanding of how the markets are currently shaping up in terms of the competition intensity which you spoke. I think you had mentioned earlier in the annual report also and during other calls that the main customer for us being the MNC, I think Unilever, has been putting cost controls on all the inputs for them. How is the landscape currently in terms of our servicing the MNC players and the margin profiles which they attribute to us?
I think I have only one word to answer your this is exactly what the challenge it is extremely challenging at this moment because, as you yourself articulated, that our end customers are also having challenges in their own business areas, and that puts pressure on cost at every level. That is a challenge, no doubt.
Thank you, sir, and all the best to the team. That's all from my side.
Yeah. Thank you.
The next question comes from the line of Faruk, an individual investor. Please go ahead.
Hello, sir. Can you hear me?
Yes.
Yeah. My question is about the annual general meeting. What was the reason for it to be done through video conferencing and not in person?
One of the key reasons is that we would like that more and more investors can participate. I think we have seen in the last couple of years is a big split where we see that more and more investors have opportunity. It may not be from the same locations or different cities and all. That is the only conclusion that we would like to have this one through a digital mode.
Are you saying that the participation when the meeting was held physically versus after COVID, the participation has increased in absolute numbers? Are you saying that?
Yes, we have seen that the people who are coming from different cities also. It's not only that the investors are attending from different.
I'm going further. This will be the mode that will be preferred?
Sorry?
Going forward in further years, this will be the mode, this will be the preferred mode in that case?
No, no. I think that regulations are allowed only till this year. If anything comes separately or new regulations come back, those are different things. As for regulations, I think this is the last year so far for digital mode.
All right. My second question is, I heard in your commentary that you are looking for profitable growth now. While after COVID, I believe we were into the mode of even letting market share go. Over the past four and a half years, the margin had reduced. The management thinking, I think, was to gain market share. Now I heard in your commentary that you're focused on profitable growth. I want to understand the change in strategy and what really is the strategy. Is it to gain market share? Is it to seed market share to gain profit? I mean, it's not clear what that is. Is the strategy going to be just dynamic? What was the strategy really? Is it going to be one strategy, or is it going to be changing with the times?
Sir, I don't know about which sense you are talking about. When we talk about, we always maintain one very clear sense that our strategy is to grow the profitable growth. We'll continue to look for opportunities which make sense for us, which will help us to improve both top line and bottom line. I think that's a clear sense we had across so many quarters, and we'll continue to work on that.
All right. Thank you.
Thank you. The next question comes from the line of Madhur Rathi from Counter Cyclical Investments. Please go ahead.
Oh, sir, thank you so much for the opportunity. Sir, I wanted to understand, you mentioned that.
Madhur, I would request you to be a little louder. Thank you.
Is my audio better right now?
No.
Not quite.
Hello?
Yes, please go ahead.
Yeah, sir, I wanted to understand, sir. When I look at the past five years, you mentioned that competitive landscape has changed as well as the product mix has changed. That's why our margins have declined. Sir, I'm still not clear why, sir, five years ago, we used to be 11% margin, sir. Although there might be some issues with FMCG in the past two years. The past four or five years, sir, I think the packaging industry has grown to a certain extent, and we haven't, as well as our margins have declined. Sir, I wanted to understand why and what will it take for us to reach the 10-11% margin going forward?
I'll take this. I think instead of discussing specifics, I think the key to go back to that margins is basically drive the innovative and differentiated products. I think we spoke about blueloop, which is a sustainable product portfolio. At this moment, the adaptation is slow because, as I said, the ecosystem is developing, government regulations are still getting kind of established, and then overall development in terms of trialing at the customer and their abuse cycles, which are basically self-life studies and all. It's specifically going in the slower. I think that's the. How do we really create a differentiated product portfolio which will be accurate going forward? Instead of really brooding over what happened in the past five years, I think our focus is basically to go towards that. The second aspect will be clearly the competitive.
How do we drive our operations as a world-class competitive place where we get the productivity and efficiency benefits? One side, we drive the higher accurate product portfolio. Other side, we become more and more competitive. That is the overall plan.
Sir, can you give me an understanding about how much products would currently come from these margin accretive products? With this EPR implementation under blueloop taking traction over the next three to five years, sir, where do we see the percentage of our product coming from these innovative and differentiated products to take our margins to 10-11%?
I'm not sure. I mean, this is like a too specific number. So Jagdish, do you have any response on that?
When you talk about EPR guidelines and all, these are really evolving and all. There are no specific targets that will go for 100% sustainability kind of regime and all. A lot of things are evolving. I do not catch what was the exact, you talked about EPR, right?
Yes, sir. This blueloop and the innovative product that will take our margins to 10-11%. Sir, I wanted to understand what would be their percentage in our revenue currently and how much we need to scale it up to take our margins to these earlier levels?
I would really talk about sustainable product sales. We always maintain that in the last few quarters, we are using a range of 10%, 20%, 30%, 31%. That is their quarterly or weekly. Whether it is going to drive for a higher margin, what percentage, what basis points and all, I mean, we have answered in previous questions. It's very difficult. It's very difficult to put a number at this point of time. Again, each product is a different. Each customer is a different. Each application is a different and all. Things are evolving, and definitely, we'll get more clarity and we'll share more in the times to come.
Got it. Sir, this 30% product, that 30% revenue share that is coming from these products, what would be the margin in this product? Would it be a double-digit kind of a margin?
It doesn't mean that sustainable products are going to have a higher margin. I'm saying sustainable products. We have not said that sustainable products are going to have a higher margin than the normal products. There are exclusive applications and all, so there are a lot of things which are exclusive categories and all. Just putting a higher margin for a sustainable problem is not a right-hand thing.
Thank you.
We'll look into the product structures and all.
Thank you. Sir, I'm still not clear, sir, when you say that as the innovative and sustainable differentiated product, whatever we want to call it, as these scale increases, our margin will increase. We are saying that the margin is similar to what a normal product would be. Sir, how come that.
Idea. That's our idea, and that's the intent. That's basically we would like to do something for good which is going to help us improve our margins. And not only on our product side, in fact, we talk about a lot of efficiency which we are driving. From all sides, wherever we think that it's the same for companies to have better margins, better value creation and all. It's a combination of sustainable product is one element and there are other elements also. We are working parallelly. In fact, the result is seen in the March 2024 quarter. It reflects the effort put into that direction and all. If you compare that with the December 2024 quarter, there will be improvement in that. Our aim is that continuously working towards to sustain and improve.
Thank you, sir. Sir, thank you so much and all the best.
Yeah. Thank you.
A reminder to all participants, you may press star and one to ask a question. Participants, please press star and one to ask a question. The next question comes from the line of Amit Kumar from Determined Investment. Please go ahead.
Yeah, thank you so much for the opportunity, sir. I'm sorry I must have missed this. I'm traveling out. I must have missed this during the call. What is the share of blueloop/sustainable packaging in your sales mix in this last quarter and what it would have been in fourth quarter of fiscal 2024, if you can just help me?
The contribution, I mean, Amit, yes, we spoke a couple of times in the earlier conversations. It is in the range of 27%-30% and more or less similar, the same range we had in December versus more or less very close to what we have in March.
Broadly, I mean, it has not sort of made progress during the year. Could you sort of attribute to the macro challenges within the FMCG industry for this lack of progress?
I mean, Dhananjay spoke in the previous questions that adoption is a little slow, and I think it's taking time. I believe we are on the right trajectory. We are on the right path, and it is going to fall in place. Even the regulators are also driving towards users of more and more sustainable products. Still, it is a matter of time, but it is going to improve on that.
Understood. That's it from my end. Thank you.
Just wanted to ask a quick question.
Thank you. The next question comes from the line of Prabhu Teli from ICICI Bank. Please go ahead.
Yeah. Good evening, everyone. My question on the sales side. In calendar year 2022, the sales was around INR 3,000 crore, which decreased to INR 2,500 crore in calendar year 2023, which are stable for the last two years. What are the factors which are responsible for the detention in sales to a stable? What are the plan of the company in future to increase the sales volume and sales revenue?
Prabhu, maybe I just give you a quick view on that. 2022 was a year of super inflation. The commodity prices were skyrocketing and all. When we talk about the impact that inflation had on our selling prices, normally, if any inflation comes, we do pass it on to our customers. Our general, there will be a lagging impact. In 2022, one of the reasons that we have very high revenue was that we have a super inflation in 2022. That was one of the reasons. Definitely, like we have said in the earlier conversation, we are focusing to go for a profitable, sustainable growth. That's our aim, and that's our strategy. Specifically, 2022 was one of the key reasons of the super inflation.
Yes, sir. The last two years, the sales also stabilized at INR 2,500 crore. There is no increment.
Right. If you look at the last one or two years also, there were a lot of challenges on a congestion pattern. Second is that we are focusing to have a right portfolio mix. Two regions are also having some impact on that.
Okay. Understood.
Does that answer your question, Prabhu?
Yes, yes.
Thank you. A reminder to all participants, please press star and one to ask a question. Participants, you may press star and one to ask a question. As there are no further questions, I would now like to hand the conference over to Dhananjay, sir, for the closing comments.
Yeah. Thank you, team, for organizing this call. Thank you, my finance team and project leaders, to prepare for this and really thanks for taking all the questions. We continue to do these calls as we have started before last six to eight quarters. Looking forward to keep engaging with the investor communities and all the stakeholders. Appreciate your time and interest in the market.
Thank you, sir. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference. You may now disconnect your lines.