Q3 24/25

Jan 22, 2025

Mr. Hiral, your line has been unmuted. Please go ahead. Thank you, Steve. Good afternoon, everyone. On behalf of Manorama Industries Limited, I welcome you all to the company's Q3 and nine-month FY 2025 conference call. To discuss the performance of the company and to answer the questions, we have with us the management team comprising of Mr. Ashish Saraf, Chairman and Managing Director, Mr. Ashok Jain, CFO, Ms. Ekta Soni, AVP, Investor Relations, and Mr. Deepak Sharma, Company Secretary. Before we proceed with this call, I would like to draw your attention to the fact that today's discussion may contain forward-looking statements that are subject to various risks, uncertainties, and other factors which will be beyond management's control. We kindly request that you bear in mind that there might be uncertainties when interpreting such statements. Please note that this conference is being recorded. We would now start the session with opening remarks from the management team. Afterwards, we will open the floor for an interactive Q&A session. I would now hand over the conference over to Mr. Ashish Saraf for his opening remarks. Thank you, and over to you, sir. Thanks, Hiral. I heartily welcome everyone to Manorama Industries' Q3 and 9-month FY 2025 earnings call. We are happy to state that the company has reported its highest-ever operational performance during quarter three FY 2025, led by robust market demand for our diverse range of specialty butters and fats, coupled with higher volumes led by commercialization of our new fractionation facility. We are optimistic to achieve our FY 2024-25 guidance of INR 750 crores plus revenues with increased profitability. Manorama Industries centers its global operations by creating seven new strategic subsidiaries, including six in West Africa to secure shea and one in UAE to secure its sourcing and attract new clients from the MENA region. The overseas expansion is aligned with our commitment to deepen the relationships with our esteemed stakeholders. The company has significantly expanded its fractionation capacity from 15,000 metric tons in 2020 to 2021 to 40,000 metric tons, with the recent addition of 25,000 metric tons commissioned in July 2024. Manorama continues to innovate through its MILCOA Research & Development Center, which is certified by India's Department of Scientific and Industrial Research. Till 2019 to 2024, proceeds used were for manufacturing few value-added products where we have clear foresight of scale-up and cash flow generation. Now we believe it's an opportune time to start planning for next round of growth for five years, starting from year 2026 to 2031. Today, we stand here evaluating multiple projects. Out of this, we are considering and prioritizing the four or five projects for a timeline of next two to three years to five years perspective. To give you broad idea, two of them will fall in backward integration and three in forward integration. First with forward integration by entering the cocoa butter alternatives market. Second, the forward integration by starting production of industrial and compound chocolates. Third, the forward integration of manufacturing of palm fraction, which is used to make CBE. Third is backward integration project of solvent extraction for sal, mango, and other Indian exotic seeds in Satna, India. Fifth is backward integration by creating a 3% solvent extraction facility in the West African state of Burkina Faso. We will be updating the necessary project costs, payback period, commercialization timelines, et cetera, once we have finalized our execution plans. Manorama is on a path of sustainable growth, creating world-class, ethically sourced products for customers worldwide, and thereby creating value for their esteemed stakeholders. Now I would like to invite our company's Director and CFO, Ashok Jain, for his comments on Q3 and nine months performance. Thank you. Thank you, sir. Good afternoon, warm welcome to everyone to Manorama Industries quarter three and nine-month financial performance and earnings call. Highlighting the company's financial performance of quarter three, Manorama Industries' revenue during quarter three financial year 2024-25 grew by 112.5% year-on-year to INR 209.20 crore owing to higher demand of company's product portfolio in both the export and domestic market. The company's export business contributed 73% of total revenue and balance 27% in the domestic market. The company's EBITDA has witnessed a substantial rise of 2.5 times year-on-year, reaching INR 55.20 crore in quarter three financial year 2024/25. Additionally, Manorama Industries has seen an expansion in EBITDA margin by 1,051 basis points year-on-year growth, and the EBITDA margin stood at 26.4% in quarter three financial year 2024/25, which is attributed to efficient cost management and operating leverage. Profit after tax during quarter three financial year 2024/25 grew by considerable almost three times to INR 29.5 crore. Profit after tax margin expanded by 656 basis points year-on-year and stood at 14.1% in quarter three financial year 2024/25. Employee benefit expenses during quarter three financial year 2024/25 is INR 17.40 crore, and it includes a soft provision of INR 7.68 crore. Also our other expenses, including job processing charges, insurance, traveling, and store consumables, et cetera. Now highlighting CAGR track record of Manorama Industries during financial year 2020 to 2024. Revenue, EBITDA and PAT has registered CAGR of 25%, 14% and 15% respectively. Thank you for listening to us. Now we open the floor for the question and answer session. 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 their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nitin Gosar from Bank of India Mutual Fund. Please go ahead. Hi, team. Good afternoon. Thank you for the opportunity. I had couple of questions. Can you please help us understand, you know, how do you select a CapEx program, or what are the guidelines or criteria in terms of, you know, financial parameter like ROE payback period while zeroing down to the projects for next round of CapEx? Yeah. Thank you, Nitin, for the question. As per our new projects, what we have announced in this quarter are concerned. Of course, we are going to submit the detailed financial plan to our shareholders once we get the approval from our board members and also update our capital expenditures plans to our esteemed shareholders. But as of now, you can consider that company will be high. The thing is that we while selecting the projects, we see that if you consider the last project, what we have set up the fractionation. We have always considered a payback period which gives us less than three years. Going forward, the project what we have essentially finalized or prioritized. We have considered the project which will give us a payback period of less than three years. Okay. Got it. We are almost doing something which is less than three years as a first criteria to consider as a project. Obviously, there will be parameters of, as sir had mentioned around forward integration and backward integration attached to it. Right. Second is with regard to, you know, since there are a couple of projects which we are working upon. Would there be a scenario where bunching up of this CapEx will happen, like, in a given year, there will be strain on cash flow or, you know, how do you wish to incur this CapEx? Because most programs then, if they're less than three years on payback, then you may wish to consider them, you know, upfront at one go. But that will strain our balance sheet. How do you envisage to incur this CapEx once it is approved by the board? All these projects what we have discussed now, so we are going to do over the period of next three years. The company is going to generate healthy cash flows over the period of, you know, two to three years. We think that this could be done through internal approvals, but then that is something what we will, you know, get back to you once we get the detailed financial plans approved from our board whether how we can go about it. To this project what we have announced, it is like five projects what we have announced. That will be done over the period of three to five years. Our cash flows permits us to, you know, go through all these projects over the periods of time. That decision will be taken by our board and the management team once we get our detailed financial plans approved by the board. We can then again come to you that how we are managing our cash flows. Mm-hmm. Over this project. Got it. If you can help us with certain housekeeping data, like fractionation production volumes over the last three quarters, and also the share of value-added piece over the last three quarters. If you can give for seven quarters, it would be very helpful. The volume growth, if we talk about quarter-on-quarter, it has been in the range of 5%-10%, we can assume, the volume growth, what we have done so far. All the products what we are manufacturing are all value-added products. There are 4-5 products in the process what we get. Mostly we are considering our stearin and CBE portion as the more value-added product mix. You can consider 55% of that product mix includes stearin and CBE. Got it. How was this in the second quarter? Like there's 55% value-added today. How was it in the previous quarter and the last year during the third quarter? See, stearin and CBE always has been in the range of 55% only because if you see the process, that's what we derive out of our production process, the CBE and stearin. that only we have to take and consider those two as our value-added products. Okay. Within that parameter, of course, we can increase the portion of CBE further. Mm-hmm. As in the market participants, both the product for us is a value-added product. Okay. Sorry, slightly if you can enlighten then, the source of this margin expansion is more to do with the change in the value-added piece? Any products which are helping us to shore up our margins, if you can help us understand that piece? Okay. There are a lot of factors which are attributed to our margins. Of course, there is reduced cost of production also which has helped improving our gross margin. There is operational efficiency also, and there is also a volume growth what we have done of around 5%-10% in last-to-last quarter. There are some realization benefits what we have received for our products. There are multiple factors who are contributing to our margins. Okay. Would it be fair to believe these multiple factors which we're highlighting, those have got exhausted or the runway of them to continue to contribute still exist? I mean, they continue to contribute to a margin expansion, if I have to put it in, sorry, plain language. Yeah. Right. What guidance we have given earlier was of course 20%-22% on our previous conference calls and everything. Now we are more confident of graduating more towards 23%-25% of EBITDA margin on EBITDA level. There are key moats where we differentiate ourselves, and there are multiple levers which we have still not exhausted. Okay. We see our margin to be on a good trajectory from here on. Got it. One last bit. I just noticed there are subsidiaries which are opened in Brazil. Is it for business or sourcing purpose, if you can help us understand, and were we doing any kind of business with Brazil earlier? Yes, that market has recently opened for us. We have had our customers from Brazil earlier, but as you know, Brazil, Latin America, is a very huge market for the product. Now we are there in that country where we can connect very well to our existing clients. It's totally for our business purpose to create more and more clients from that Latin America region. It's a big market for us. Okay. Ideally, Europe, U.S. is always considered to be a big market or a better market. That is already there with us. Latin America is a new market that we have entered, and the local presence there was necessary going forward. We have established one company there that will cater to further demands from the local companies also from there. Got it. Just one last on this. Doing business or incremental business coming in from Brazil, does it enhances our profitability or does it pulls it down? It enhances our profitability. Okay. Got it. Perfect. Thank you. Thank you, sir. Thank you. The next question is from the line of Akash Pawar from Sasar Capital. Please go ahead. Yeah, hi. Good afternoon, team, and congratulations on the good set of numbers. I had a couple of questions. First one was, since we are through with the majority of the CapEx that we did, and we are venturing into the new geographies like MENA and Latin America. How is the competitive landscape there? And how much time do you think will it take for us to onboard the new clients? We already had our clients there. The incorporation of company was mostly to cater to local clients of Latin America and Brazil there. We see a very good business in the country of Brazil and also the countries which are surrounding to Brazil and other Latin America continent. Have we developed specific products with them or is it to start from now on? The voice is a little low. Can you speak again, please? Hello. Is it better now? Yeah. Hello. Have we developed specific products over there or is it just beginning right now? No, because there are the same product line which we are selling to this customer. There is stearin what we are selling to them, the CBE is there, and there are different fats requirements. If we are talking CBE, then there are different specification which is involved to stearin or say CBE. Every customer will have a different product or fat requirement as per their recipes of the chocolate, confectionery, and foods. The foods, the products is the same. We are going to sell them CBE only. That can happen with a different specification of the fats, tweaking of the fats, and maybe a better pricing also there. Okay. The next question would be, if you could just give a brief about the new market that we are venturing into, that is alternative CBE. How is this different from CBE that we manufacture? Right. Manorama is very strong on R&D. We back ourselves in technology, so adding more technological solution to our exotic products. It is a forward integration project where we are fortifying our moat further. It will be an in-house technology, because now that we have stabilized two mega projects of fractionation, adding a highly intensive plant. Through this futuristic technology, which will help us convert our low value-added product like olein to more enhanced product like stearin. It's a proven technology in lab scale and also in pilot scale, and now we are planning to take up this to a commercial scale. Okay. That's it for me. Thank you. Thank you. The next question is on the line of Rohan Mehta from Freecom Family Office. Please go ahead. Hi, am I audible? Yes, you are. Right. Thank you so much for taking my question. I wanted to know what is the current capacity utilization of your plant, and where you estimate it to be around by, let's say, March 2025? The current capacity utilization for our existing plant of 15,000 tons is 100%, and that new capacity utilization for our new plant is around 50%. Sorry, could you repeat that? For new it is? Sorry? Could you repeat that? Yeah. The utilization from our existing plant of 15,000 tons is 100%, and the new plant is giving us 50% capacity utilization as of now. We expect it should be around 60%-65% by the end of financial year 2025, which is very well linked to our guidance, what we have given to our shareholders. Got it. In terms of the current prices for cocoa butter equivalents, what is it on a per kg basis compared to last quarter? Okay. Are you asking the realization part? Yes. Can you repeat your question, please? What is basically the current price for cocoa butter equivalent on a per kg basis compared to last quarter? Currently, it is moving around, we expect to be around $6-$7 per kg. Right. There is no change from last quarter? As such, there is no change, but then, going forward, we expect to increase it further. Because the contract what we sign is usually for 9 months and 12 months, so where the pricing and the volumes are fixed. We cannot expect price realization changes in every quarter. It happens contract-to-contract basis. If we get any change in the price, we may update you at a later stage. Sure. Just to follow up on CBE, I believe the contribution for value-added products as of today you mentioned is about 55%. Where do you see this going ahead? The 55% will be the total product mix. Within that, we can say that a portion of CBE can be increased to maybe 20%. What we have guided earlier, it was around 30% that we will be doing the CBE portion for this current financial year. We are in line with what we have guided. Just to clarify, CBE, in terms of the contribution to overall revenue, you're saying by March that will be 30%? Yes. The volume share of CBE. Right. Currently, only CBE, how much is it? It is around 15%-20%. Roughly. Roughly. Right. Got it. One final question from my side. I was seeing in the news that European cocoa grindings, they are down by about 6% in Q4 of 2024, and apparently this was the lowest since 2020. I just wanted to understand how you see this potential fall in chocolate demand that can happen, and subsequently it can affect cocoa butter equivalent demand in the near term, considering cocoa grindings are near to the COVID lows. Cocoa butter, the world is addicted to cocoa. These grindings and this all depends on various other factors. Every human on Earth, especially in Latin America, Russia, they're addicted to cocoa since childhood. We don't anticipate any fall if people will stop eating cocoa, chocolates or cocoa. Understood. These grindings and all these have got nothing to do with the demand. They are related more to the other factors. As far as CB is concerned, we are not directly linked to cocoa butter prices due to their functional interchangeability. In reality, CB pricing dynamics differ significantly and remain sustainable irrespective of CB price fluctuations, cocoa butter price fluctuations. While the market perceives cocoa butter equivalent, cocoa butter as loosely, the reality is that CB enjoys relative pricing stability due to its diversified raw material base, contractual pricing models, consistent demand from chocolate manufacturers. Our CB business remains resilient, ensuring sustainable margins and revenue visibility independent of cocoa butter price fluctuations, because cocoa butter equivalent brings stability, and it is a must for the big chocolate manufacturers. Sure. Thank you so much. That's all from my side. Thank you. Participants who wish to ask a question may press star and one. The next question is from the line of Alisha Mahawala from Envision Capital. Please go ahead. Hi, sir. Good afternoon. Just wanted to understand on QOQ basis, which is Q3 of this year versus Q2, our revenue is up 7%. No, it is not audible, ma'am. It's not clear, rather. You can- Am I audible now? Yeah. Hello? Yeah. Please go a little slow when asking the questions. Sure. On QOQ basis, Q3 of 2025 versus Q2 of 2025, our revenue is up 7%. We also had in the opening commentary that we've enjoyed slightly better realization and better mix because now our utilization capacity has come. On QOQ basis, has volume grown or volume is flat? Kiran, can you please convey the question to us, because then we are not able to understand what exactly the question has been asked. Chorus team? Hello? Hello. Am I audible now? Is it better now? Yeah, this is much better. Yes. I was asking that on QOQ basis, Q3 FY 2025 and Q2 FY 2025, our revenue has grown at 7%. In our opening commentary, we mentioned that we've enjoyed slightly better realization, and our mixes also improved because of early commercialization of our fractionation capacity. My question is, has volume grown on QOQ basis? QOQ basis, we will be seeing that we'll be driven by 15%-20% every quarter in terms of both quantity as well as the price. Brilliant. I'm asking, in Q3, has volume grown versus Q2? Yeah. We mentioned that in the call earlier also that there is a volume growth also of around 5% QOQ. In the new capacity, has it stabilized, and now will we start seeing better utilization? Because only 5% volume growth when last year the last quarter capacity came in the middle of the quarter. The volume should have been slightly stronger. Are we facing any challenges in commercializing the new capacity? Yeah, we got your question. There are no as such challenges in stabilizing the plant. This plant are highly technical plant, so it takes its own time in getting the utilization done for the capacity. Earlier also, we had mentioned that the year FY 2025 utilization will be around 60%-70% for our new plant. We are very well in line what we have guided, because these projects are not something you have started, and you can do the production. This plant takes its own time to stabilize. It will take its own time. That is how we have guided around 60% utilization for our new plant. Of course, gradually it will improve. We are expecting our utilization to be around 60% for this financial year. For the new plant and the existing one is already running on 100% utilization. Understood. For FY 2026, can we assume that because we will be starting with 60% utilization, we should be able to hit our peak utilization of 80%, 85% by FY 2026? Yes. We expect our utilization to be around 75%-80% in FY 2026. Understood. My last question is, the new projects that we're evaluating, the forward and the backward integration, how should one understand the lead time for this? Will it take 2-3 years for each project to commercialize? Or will we be able to? Because we have yet to put it up to the board. Yes. The projects that we have set up last year also, it usually takes 12-15 months. One project post that we have got the approval from our board and we have started the execution. That, of course, in the past that we have executed, you can consider that as a timeline for each of the projects. Of course, we can further update you once we have got the approval from our board. Generally, you can take that timeline only for consideration as of now. Are we expecting to crystallize a plan in this financial year? Sorry? Are we expecting to crystallize our plans for the forward and backward integration projects in this financial year only, as in get the approval from the board in this financial year of FY 2025? See, this financial year hardly, we are in January, so by March this financial year will end. Maybe we can have further deep dive in, because yesterday only we have got the approval from our board, you know, to further evaluate on the things. Let us do some exercise internally with our team and maybe then we can get back to you that by when we can announce the detailed financial plan to our shareholders. Okay, great. Thank you. Thank you. The next question is from the line of Koushik Mohan from Ashika Institutional Equities. Please go ahead. Hi team. Thanks for giving me an opportunity. I just wanted to understand on the number front. I can see our finance cost has increased from INR 8 crore to INR 11 crore. Can I get the clarity on what was the reason? Sir, our current season of procurement of sal is going on. Therefore we have taken the working capital from banks. This is our seasonal model of business, so we have to procure the raw material in the quarter three. Therefore, we have increased working capital. Therefore, the interest cost has increased. Right. Okay. What is our inventory currently, sir? What is our inventory book size on the balance sheet? Inventory currently, as on the total value is around INR 580 crore, including raw materials that we have procured and as well as the finished goods and semi-finished goods. Sir, is this INR 500 crore you're talking about? Yes, INR 580 crore total inventory book as on. INR 580 crore. Okay. Another- 580. 508. Okay. Another one is on the employee cost. This time I think we have slightly, it's more than the double. If I see, that's more, the 8% is contributing to the revenue. On the revenue part, if we look at employee cost has increased. What's this for? Have we expanded our team? The employee cost remains the same, sir. The reason was that we have taken the provision of ESOP, employee stock option plan as per the Indian Accounting Standards. We have made the provision of around INR 7.68 crore this quarter financials. This was the reason to increase this employee cost. Otherwise, the employee cost remains the same as what was in the quarter two. Got it. Sir, I just also wanted to understand that is this the cost will be repetitive in our Q4? No, it is depending on the provisions as per the accounting standard, but the cost will remain same. There is no repetitive provision. At the current juncture, what is our utilizations of our plant? Sir, the utilization of our plant, new fractionation plant is around 50% for this quarter. 50%-60%. Existing one is doing 100% capacity utilization. Okay. The old one is doing 100% capacity and the current one is doing at 50%. Got it. I also wanted to understand how are we standing with the full year guidance that we gave in the past concall? We are comfortably above the guidance of INR 750 crores as per our current order book. We are very confident of achieving and surpassing that this financial year. Okay. Now currently I see that Sharatsagar also mentioned that we have around $6-$7 on the cocoa butter equivalent prices. Do we have any opportunity over here to increase the prices going further? Sir, this is what I said, $6-$7 is what we expect going forward. I think the market sets the prices will keep increasing based on the market situation worldwide, is what we anticipate. Okay. Sir, that means that currently with these numbers, we are looking at an ROC of 13.5%. That means that when we close our entire full year books. We have the asset which has been started putting up the P&L numbers and they are putting up the PAT numbers. That means that our ROCE numbers will double from here. Is my understanding right? Because the balance sheet is staying the same way. We see, definitely we will get back to you on. Yes, whatever is the best possible, sir, we are looking at it should happen good. Of course, that will be further improved, definitely. Let the numbers come on the Q4, and then we can of course calculate and update you on our press release and presentation, what exactly. Definitely there will be improvement on ROCEs going forward. Because if you see the last quarters, we have been continuously posting good ROCEs and ROCE improvements. Yes. That's making an interesting thing. Also one statement in yesterday's announcement, that I see that we are doing some CapEx. Can I understand this forward integration and backward integration? Can you explain the entire value chain that what we are going to do? For backward integration, it is basically we are using some outsourced facilities for the solvent extraction in India. We are losing money because of that, so we will save big amounts of money in that. That is one of the plants we are doing. In Burkina Faso, also it is the same. We are going to crush the shea nuts there and bring the butter instead of the seed. For cocoa butter alternative is a related project to our cocoa butter equivalent, so it is going to give us huge benefits, is what we anticipate and plan. Same is for palm fraction, we anticipate that because we have to use palm fraction for making CBE. Currently we are using outsourced facilities which we want to do in-house. These all will immensely boost our profitability and our opportunities for the Manorama. Got it. Sir, and at a conservative level, what can be our operating margins, like EBITDA margins by doing this backward integration? Because currently we are doing around 26%. What can we look at? That we will update you, sir, later going forward. Okay. Thanks, sir. That's my question. Thanks. Thank you. The next question is from the line of Dikshit Jain from InvestSavvy. Please go ahead. Hello. Yes, hi. Hi. Great numbers. Congratulations. We have a few questions regarding the capacity utilization and the revenue also. Last quarter, in quarter two, how much was the capacity utilization for the new plant? Hello? The last quarter, we mentioned that the growth was around 5%. You can take that only as the utilization level for last quarter. It must be around 40%-45%. Okay. Because I think around 30% was mentioned last quarter. Okay. Yes. Now the question which we have is, if volumes have grown 5%, and earlier quarters you had said that most of the cocoa butter contracts were expiring around September to December quarters, around September onwards until December. Given that the payments are linked to dollars, are we seeing some of the contracts would have got done in September, especially for the new capacity. A lot of the contracts were not done earlier, so they were done post-March, which were at a higher rate. If 5% is the quarter-over-quarter volume growth, then for the new plant, the realizations, aren't they higher? See, you have to take, firstly, we have guided earlier that the contracts are usually for 9-12 months, and it was the. Because if you see, we started our capacity only in July 2024. How can we take orders earlier in the March? We have to link. You cannot say that quarter-on-quarter 5%, it has been there. It's an improvement on growth there, because that's already what we had envisaged earlier when we started our plant, and how that turnover because there are shipment schedules which needs to be done. We started our plant in July 2024, and accordingly, we gave you the guidance of INR 750+ crores initially. As per our guidance only, and we know how the utilization will be and how the shipment will be, we have guided you. What we have seen or what we have reported, we are very well in line with our guidance and capacity utilization, what we have guided you earlier. The contracts are revising every nine months and 12 months, so we cannot expect that quarter-on-quarter thing, it will be applicable for every- Ma'am, what we gathered was that for the old plant, all the contracts were long-term, which we understood. For the new plant in your previous quarters, what we gathered was that since capacity rollout was not entirely fixed by March, and the fact was that prices of cocoa butter and cocoa butter equivalent went up after March. Our reading was that in the Q2 and Q3, the contracts for the new capacity would have been struck at a higher price. The yield of the incremental capacity which is coming in, which you said is 50% or 45%, possibly whatever, 40% for the last quarter, and this quarter, I think you're expecting now 60% or 65% utilization in this quarter. Won't this be coming in at higher rates? Because you won't have previous contracts for this capacity before March. The prices in cocoa butter went up when? I thought they went up around March, right? In Q4 of last year. December, March last year. Yeah. That's what we are saying to you. See, contracts are there, but there are agreements which are long-term and there are contracts which are for 9 months and 12 months. Once we have, for example, I sign the contract now with a company, with my client. That shipment period will be throughout 12 months. It's not that we have signed the contract and we have shipped off our higher CBE prices at one go to them. No, I agree, ma'am. What I'm saying is, those agreements were. Prices went up, let's say, for this term, by January to March 2024. The prices went up for cocoa butter. What exactly do you want to know? What is the confusion? You can just let us know. Sorry. What we are trying to gather is that, in terms of the agreements and contracts, given the significant jump in cocoa butter prices, equivalent prices, when does that increment start coming in for you guys? Sir, it will happen, it will come in a gradual phase. We cannot say that quarter two will have better margin realization benefits of quarter three or quarter four. It will have a gradual effect on the revenues and profitability over the quarters. We understand what you want to understand from us, but this is the model of the business and you have to perceive things like this only. Okay. It's a contract thing. When do contracts get renewed, every quarter for a year? Is it an ongoing process or is there a period where you do it for the next 12 months altogether? Do you do it, let's say, for a full financial year, you do them at the beginning of the financial year, or it's like you do it on a running basis? Okay. Yeah. It's an ongoing process for every client. Some clients will have much different, and the other maybe clients will have a different bunch of contract getting expired. Once it gets expired with one particular customer, it gets renewed again. That's how it works. It's a continuous, ongoing process. It's not that we are only going to do in maybe March or January or something like that. It's not that. When it expires, we get the contract renewed with our clients. I understand. Sir, you're saying that even with the new capacity, some benefit should have started coming in. The other thing is, if we compare to last year, the employee costs are up almost four times. From INR 4 crore to about INR 16 crore. Now, I understand some INR 7.68 crore is being taken in as ESOP value, but the rest, doubling of employee costs, is it that the new capacity is now more or less fully staffed and that part will be stable? Are you still ramping up employees and that cost will continue to go up because the full employment for the capacity has not yet been done? No, if you are comparing YOY, then 9 months ESOP provision with debt is around INR 11.50 crores. INR 7.68, as mentioned, was for the quarter. ESOP provision with debt of around INR 11.50 crores for 9 months. Okay. Yes. That way, you see there is not much variation in our employee costs, even if you compare YOY or QOQ. I haven't gone deep into it. Sir, if it is required and it is part of the business, we are of course going to update you, and of course, we are going to hire new employees. That variation, what you are talking about, is mostly for ESOP provision of INR 11.50 crores. It's not that we have recruited employees of that amount. Basically the jump from, say, 4.5% odd to 8% this quarter or earlier is more on account of ESOPs, et cetera, and not on account of the other bit. Great. In terms of employees required to run the additional capacity, will that be having a significant impact on the cost? Those are technical positions which are routine positions, which we already have people, maybe we can keep on adding more. It is nothing more impactful. The major employments which we anticipate are in other sectors of the business. Okay, great. Another question that we have is, first, the Africa CBE. Sorry to interrupt, ma'am. Could you please come back in the question queue for further? Yeah, no problem. Thank you so much. The next question is from the line of Arpit Shah from Stallion Asset. Please go ahead. Hello? Hello? Oh, yes, sir. Please go ahead. Yeah, just wanted to understand what kind of revenue you're targeting for FY 2026? Sir, your voice is not clear. Can you please repeat the question a little bit? Just wanted to understand what kind of revenues you are targeting for FY 2026. FY 2025, the guidance is about INR 70 crore. Probably going to exceed that and we do have capacity available in the second unit in the new plant. What kind of revenue guidance are we targeting for FY 2026? Revenue guidance in INR, we can better give you on fourth quarter, once we have the numbers for March quarter as well. From the utilization point of view, we can guide you that the capacity utilization will be somewhere around 75%-80% in the financial year FY 2026. Got it. I just missed the opening number. Was it 508 or 580? 580. 580. Okay. For the expansion, are you all looking out for a capital raise or is it going to be through internal accruals, debt? How is it going to look like? We mentioned that we will submit the detailed financial plan. Of course, company is going to have healthy cash flows. We might see at that time the need of the capital, whether any type dilution is required or not, so that we can update you at a later stage only once we get the things approved from our board. Of course, we are also going to generate healthy cash flows internally. Got it. If I see the current margins, EBITDA margins, they are about 30%. If I exclude the ESOP costs and everything. Yes. The EBITDA margins are about 30%. Given the backward integration or forward integration that you want to add, you think the margins can still expand from 30% to higher levels or 30% is something which is out of the ordinary? See, we already told you that there are multiple levers which are still unexhausted. We are trying our best to keep on improving on the same. We given our earlier guidance of 20%-22%, now of course, we are graduating more towards 23%-25% on a whole financial year basis, not just quarter on quarter. As things improve, we are going to update you further. Got it. You think this margin is sustainable, right? There are no risks to these margins. No, sir. No. We expect our margins to be sustainable. Got it. No other kind of competition is also coming up in your office? No. No, as of now, we don't see any competition from our knowledge. Got it. Thank you so much. Thank you. The next question is from the line of Bharat Shah from ASK Investment Managers. Please go ahead. Yeah. Hi. With the expanded capacity, given our superior capital asset turn, what is the optimal output you think we can achieve? About INR 1,050 crore-INR 1,300 crore turnover? Sir, in INR terms, we can better give you the guidance on 100% utilization maybe in the coming quarters. We will give you the guidance for utilization of 80-odd% for the financial year 2026. We just want to wait for one more quarter to have the March numbers with us and then we can further guide you on INR level basis also, that on 100% utilization, what could be our turnover. Of course, there will be a significant jump on our revenue front here onwards for FY 2026 and 2027 also. No, I'm saying, assuming this new capacity were to get deployed sooner rather than later, and given the current realization trends, what is the optimal likely possible turnover from the expanded capacity? Are we in a position to We are actually not in a position as of now to guide you 100% utilization turnover basis as of now. Maybe further, sometime later also, we can connect and guide you how the overall performance numbers will look like on 100% capacity utilization. As of now, we are not going to give that guidance. Thank you. In the current year, you said INR 750+. Therefore, the next year clearly will reflect the strength of the current trend and therefore, four-digit kind of a turnover we should be seeing in the next year. Yes. That probably we can consider that, but we will update you better on fourth quarter only. Of course that's what you have taken. Okay. Consider and it should be better only. Okay, thank you. The next question is from the line of Abhishek Sengupta from AB Capital. Please go ahead. Hello. Am I audible? Yes, sir. You're audible. Just wanted to ask, will we get operating leverage going forward next year, just like this year? We are getting that leverage benefit as of now also, and quarter-on-quarter, we will see the improvements and we are going to get that leverage benefit in the coming financial year also. As we utilize our capacity much better way, that leverage factor will always come into picture. Okay. Can you guide us to broadly what will be the ROE trajectory going forward? Will it creep up gradually going forward next year? Yes, sir. Of course, it will be further improved only, because what we expect our performance are going to be on improving more only from here on. Of course, we expect better ROE and ROCs going forward. Can you give me a number as to what will you target ROE going forward? As of now, we are not going to give any guidance on ROCs or ROEs. Maybe once we have finalized our numbers for March, and then we will update you through our presentations and press releases, the ROCs and ROEs what we have reported. At a broad level, do you anticipate significant competition coming to your business, like in the near future? Do you see any green shoots, like too many competitors coming in your field? Of course not. As per our knowledge, we are not seeing or are anticipating any such events for us. We don't see that landscape anticipating for us. Thank you. Thank you. Ladies and gentlemen, due to time constraint, this was the last question for today's conference call. I now hand the conference over to the management for their closing comments. Dear friends and my respected shareholders, I would like to extend my gratitude to all the participants for dedicating their time to join us for the Manorama Industries Q3 and nine months FY 2025 earnings conference call. The company continues to solidify its reputation as a dependable and most trusted and leading provider dedicated to fulfilling the increasing needs for sustainable cocoa butter equivalents, specialty fats, butters, and other value-added products for the confectionery and food industries of India and the world. With our deep focus on research and development, we maintain our status as the most preferred supplier of specialty, super specialty niche fats and butters to both our global and domestic suppliers and all the other parts of the world. I request you, if you have any additional questions, kindly feel free to reach out to us via email or contact Ernst & Young, our investor relations advisors. I sincerely thank you all for participating today and giving your valuable time, and I wish you to have a wonderful day. Thank you. On behalf of Manorama Industries Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.