Ladies and gentlemen, good day and welcome to the Q4 FY25 earnings conference call of AWL Agri Business, 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 touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Bhuvania from ICICI Securities. Thank you, and over to you, Mr. Bhuvania.
Thank you, Michelle. Good morning, everyone. It's a pleasure at ICICI Securities to host Q4 FY25 Results Conference Call of AWL Agri Business Limited. For the management, we have Mr. Angshu Mallick, Chief Executive Officer and Managing Director; Mr. Shrikant Kanhere, Dep uty CEO and CFO; Mr. Saumin Sheth , Chief Operating Officer. I'll now hand over the call to the management for their opening remarks. Over to you, sir. Thank you.
Yeah, thank you, everyone, for joining the call. As a customary process, we will take you through a presentation to run through the quarter four performance of the company and also the full year performance. After the presentation, we'll open the floor for question and answer. We'll be happy to take over any questions from the investors.
When we look at the numbers for the quarter four, the revenue, so volume grew by 8% for the quarter, as well as for the year, it grew by 9%. Revenue grew by 38% and 24%, respectively, for the quarter four and full year. We had one of the best years for AWL Agri Business since our inception. Closed the EBITDA at plus of INR 2,700 crore and a PAT of INR 1,200 crore.
Overall, a good score in terms of all the business parameters of the company, whether it is volume growth, whether it is revenue growth, whether it is absolute EBITDA and PAT. We have been able to deliver the great set of numbers for this financial year. When we look at the return metrics for all the three segments: edible oil, food, and FMCG, and industry essential, edible oil continued to give better numbers in terms of volume, as well as return on capital employed at 23%. Industry essential delivered an ROC of 17%, and at the overall company level, we delivered an ROC of 15%, which is quite reasonably healthy.
Given the fact that our food business is still margin neutral, it's not something which is something which is by design, but since we are already into an investment and growth phase, as well as food is concerned, it will continue like this for another two years or so. Once it starts generating margins, I think this ROC of 15% will certainly look better as we go forward. On a segment basis, of course, as I said earlier, edible oil at 23% and industry essential at 17% is far, far better than what we had delivered in the last couple of years, whether FY 2022, 2023, and 2024. FY 2022, we had an overall ROC of 12%, whereas now we are sitting at 15%. Once the food starts delivering on the bottom line, this 15% should improve from here.
On a market context, this quarter also saw palm oil sitting on the top. The prices of palm remained high as compared to soya and sunflower, impacting, of course, the demand on palm. That is where also the company had some bit of issues in terms of palm volumes. This proposition, as we go forward, should change as we enter into quarter one of FY 2026. The prices have already started stabilizing, and we are hopeful that the palm prices should cool down as we go forward from here. Just to give you an industry update on the retail sales, how does it look like for the full year, and particularly for the quarter when we look at edible oil. The Q4, the edible oil was the industry did not grow, actually. Industry was flattish without any growth.
Similarly, when we look at wheat flour, which is one of the significant contributors to our food business, also had got a mixed growth where it did not grow in urban, but we did see 12% growth in rural areas. When we look at basmati rice, again, it is a significant contributor to our food basket. Full year growth was tepid at only 5.5%. The crux of this slide or this message is basically we saw a very tepid demand throughout the year, particularly in quarter four when it comes to edible oil and rice. On business update, happy to inform everyone that we got renamed from Adani Wilmar Limited to AWL Agri Business Limited. The logic of our new logo, of course, is like a river that nurtures the land and carries stories across the generation.
It's basically a river flowing from A to L, which suggests that the company is actually into from a farm to fork kind of logic, which we have tried to build into this logo. I am very hopeful that with the new name and new logo, we will flourish more than what we have been able to do for the last 25 years. On an overall company level update, Q4 volume grew by 8%. Revenue at INR 18,230 crore grew by 38%. When it comes to full year EBITDA, we clocked operational EBITDA of plus of INR 2,400 crore, which is 119% up year on year. Food and FMCG business grew by 26% year on year for the FY 2025. Now, the alternate channel is reasonably big in our overall scheme of the things, contributing close to INR 3,600 crore of revenue to our portfolio.
Within this alternate channel, we are quite happy to see that quick commerce actually increased by 113% year on year in quarter four. South, being one of the focus regions for us, and as we have said earlier, also it's also an under-indexed market for us. All the work done by us in South for the last couple of years have now started showing the results. South sales volume grew by 25% year on year. Now it is contributing plus of 10% in our overall scheme of the things as far as the branded sales is concerned. Particularly for the edible oil, Q4 we could record a volume growth of 7%, healthy volume growth, rather, I would say. Highest-ever profit in edible oil in FY 2025. We also saw high palm oil prices, which led to market share loss in value for money segment.
Excluding palm, however, our branded oil grew by 6% year on year as far as FY 2025 is concerned. Our strategy to continue and improving penetration for the under-indexed market is working well, and we will continue to work in that market with the help of our food basket. We will be investing in a flanker branch to gain market share from the retail players as we go forward from here. Edible oil quarterly sales trend is healthy, 6% growing in volume terms. We did 1.04 million tons in Q4 2025. Full year, the CAGR of 7%. We closed at little over 4 million tons for the edible oil in FY 2025. Capacity utilizations for all our edible oil capacities is decently placed, plus of 60%. We still have a lot of capacities with us to absorb any kind of growth that we will see in coming years.
When we talk about the food and FMCG as a segment, the segment revenue grew by 9% year on year in quarter 4 to INR 1,400 crore+ . For the full year, it crossed the INR 6,000 crore mark for the first time. Profitability of the food, as we are suggesting earlier, also remained at a break-even or EBITDA neutral by design. We had some issues this year in the rice because of the paddy prices, which crashed this year, leading us to a high price inventory in our hands. That also has got some impact on the food profitability that we saw this year. Wheat flour business continues very well to grow and gain market share. We are now close to 6% of market share and distant number two player in the country.
Branded basmati rice business also has got some impact other than the price movement in paddy due to the modern trade supply chain issues which we had. We have been able to fix these issues in Q4, and I think we should be able to see the result of all these pictures in quarter one and quarter two as we go forward from here. On highlights of the food and FMCG, continuing on pulses, besan as a category continued to grow strong. All our other products in food and FMCG, such like soya nuggets, sugar, poha, kept growing in double digits. Soya nuggets and poha are the two categories with a very high margin profile, with a gross margin of plus of 30% and EBITDA of plus of 15% kind of numbers which we have been able to clock.
This is one of the star products in our food segment and continues to grow. We will continue to invest more in these food products. We have also now launched a Fortune cake mix. Basically, it is more of a B2B kind of product where we would be supplying it to bakeries and even to the retail consumer as well. On soap, again, it is a very encouraging story. The soap grew by 19% year on year in FY 2025. It is now an INR 130 crore brand for us. We recently acquired GD Foods. We achieved the closing of the transaction in quarter one. We signed the definitive agreement in the last quarter. That is on 4th of March . GD Foods, manufacturer of soya sauce, pickles, condiments, jams. It is a very adjacent category for us. It is one of the kitchen essentials today in the Indian kitchen.
We have acquired this company with the intention to grow the business currently at INR 400 crore of top line with a gross margin of plus of 50%. This is one product line which will add into our food business, which is a high margin product, and also one of the kitchen essentials which we were looking at. This company was launched in 1984. Forty-year-old company has been very strong in northern India, seven states of north India, and are currently number three player in these markets after Kisan and Maggi. We acquired this company at an enterprise value of INR 603 crore, which is close to 1.5 times of their revenue. We are hopeful that based on our distribution strength, we should be able to multiply the business model of this company. There are a lot of low-hanging fruits that are there.
Besides being distribution, sourcing capability is also one thing where we will add in this company and will improve the sales as well as the margin structure of the company. On distribution front, we are aggressively growing. End of March 2025, we are now at 860,000 retail outlets where we reach directly, up by close to 20% from last year. Last year, March 2024, we were at 720,000 outlets. On a rural side, we have, as we were saying in quite a few calls earlier, that we would want to reach target 50,000 rural towns by March 2025, and we are happy to announce that we have been able to do that. Now we reach more than 50,000 towns.
These all distribution updates or a distribution improvement that we have been able to showcase should start reflecting in coming quarters, and we should see the positive impact of all these developments in Q1 and Q2. Alternate channel, quick commerce, is quite encouraging for us, growing at 113%. We are investing in this channel more on an AI side, just to understand the customer requirements and how can we ensure that we remain with 100% kind of fill rate. We are doing a lot of intervention in this channel just to ensure that the growth which we have seen in this channel continues from here onwards. Our Gohana Food Complex, which is one of the big CapEx that we spent out of IPO funding, is now more or less ready.
We are hopeful that we should be able to commission the entire food park sometime in August 2025, so that for the next full half year, half year of FY 2026, we should be able to get the business coming up from this plant and should reflect in our top line as well as bottom line. Besides Gohana, we have been able to commission a lot of IPO projects, which includes pulses, besan, and wheat flour units across all the locations. The castor derivative plant is right now ongoing and should be completed by the end of this financial year. We have been doing a lot of intervention for rural penetration by doing a lot of digital activities, by doing a lot of branding in terms of bus branding, DABA branding, or building branding.
That activities continue, and we will continue to do all these interventions to see that the brand goes to all the consumers quite aggressively. In the Kumbh, also, we did a lot of intervention by doing some promotional activity inside the Kumbh Mela. On ESG front, I'll not spend much time, but it's a very important aspect for us. We continue to do all the interventions required for ESG, whether it is a resource within the tree plantation or the solar implementation. Now we have close to 10 megawatts of solar capacity available, which is around 10% of our total requirement. We continue to work in the areas of rainwater harvesting and zero liquid discharge plants at our various locations.
On logistic front, we continue to work on the multimodal concept where we are trying to dispatch more and more of our product through rail, which is a green energy. We have been recognized by a lot of appreciation from Indian Railways as well as inclusion of AWL in FTSE 4 Goods Index Series. On CSR front, we continue to work on the Fortune Sufficient. This is it from my side as far as the presentation is concerned, just to give you a quick update on Q4 and FY 2025 numbers and performance. Now I would request the moderator to open the floor for questions and answers, and Mr. Mallick and myself are here to address any questions.
Thank you very much, sir. We will now begin with the question and answer. Has been confirmed. Please wait while you are. Thank you, assembles.
You may please press star and one to ask questions. First question is from the line of Abnesh Roy from Nuvama. Please go ahead.
Yeah, thanks. I have two questions. My first question is on the recent edible oil industry demand that import duty on the refined palm oil has to be increased. What is your view on the likelihood of this, and how does this impact your overall margins? Because margins this quarter was disappointing. Do you see that this could impact margins if this happens?
See, on differential duty, what we call it between crude palm oil and refined palm olein, the differential duty is only 7.5%. Now, it is cheaper to import olein and sell rather than to buy CPO process and sell. Now, the industry has put in a lot of CapEx, and most of the players are running at around 40-45% capacity utilization.
Now, we have been requesting the government that making India is something that is being talked about, but it needs a differential duty of at least 15%. In that case, only we can import more CPO and process and make olein in India. The government has accepted it as a positive sign, and I think things will happen sooner or later because the government has understood that helping the Indonesian industry is of no use, and I hope it happens fast. On margin front, let me answer that. Possibly, we had the best year in the last 25 years in terms of EBITDA. Margins in edible oil have been good and have been steady. We have delivered what has been said in the last 12 quarters, if you see, quarter on quarter, if you see.
Edible oil has done well except for last year when we had a different issue. Otherwise, margins are stable. Outlook is also stable. Going forward, I think edible oil will continue to deliver what it has been promising.
Sir, one follow-up on the margins. It was a good year, but it was a good year first. Nine months was good with almost 4%, 4% plus margins in most of the quarters. This quarter, was there any inventory loss? Because quarter on quarter, margin has become almost half, EBITDA margin. How do you see Q1 and Q2? Any sense you have on coming back to a decent margin of 4%?
Yeah, sorry. Yeah, Abnesh, I'll take this question.
I just want to clarify one thing that whether we agree, whether we like it or not like it, I think one thing we must accept that at the back of the overall scheme of the things which we are working on, there is a commodity. Now, commodity not necessarily will behave quarter on quarter because commodity cycle behaves in its own way. A lot many times what happens is that a cycle which you are running may some ends of the cycle may get completed in one quarter, and the remaining ends may get completed in the next quarter. Therefore, there is always an overlap between one quarter and two quarters. Therefore, when we try to look at numbers only for the quarter, it may not be the right thing.
Therefore, I always say that look at the number at least for a half, or if not a half, at least for a full year because that's where it is a sizably reasonably good period where the cycle gets completed. When I say cycle gets completed, because when you are operating in a commodity world, you always try to operate in a hedge mechanism where one leg of hedge gets completed in one quarter, another hedge leg gets completed in another quarter. That's where it's better to look at half, number one. Number two, let's not look at margin for us in terms of the percentage. I think we should be looking at margin in terms of the quarter. This year, we have been saying in our previous calls also that we had a favorable cycle.
We had favorable inventory gains also in this particular year, which may not necessarily be in the next year. However, having said that, as you asked, what is the outlook for the next full year, I think we should be able to deliver the margin structure in per ton terms, which we have been delivering earlier, except for the last year. I think last year we have to take out because it was an exceptional year. Just to spell out very clearly, INR 3,500-INR 3,600 a ton of EBITDA for edible oil should be, on an overall basis, we should be able to deliver.
The last quick follow-up, essentially, if I see your broader numbers, you have taken around 37% price hike, but I also see that your Q4 edible oil volumes are higher than Q3, but profits are lower. Have you gone for market share expansion?
That's why you sacrificed on the margin side, but you would have gained some volumes. Is that correct?
Yeah, there is some kind of aggression which we had to do because, as Mr. Mallick said earlier also, palm prices remain very high. This is also a very important segment for us. Some bit of aggression we had to do because we do not want to lose too much of market share or too much of volume on the palm. That is also one reason. As I said earlier also, the cycle completion not necessarily happening in this quarter may be one of the reasons why you are looking at the margins a little lower than otherwise.
Any last thoughts on palm oil? What is your understanding of the outlook?
Because conflicting news flow seems that crop seems okay, but then the local government of Malaysia, Indonesia might also be looking at mixing palm oil in the rest of the fuel needs. Any thoughts you see for how you see India prices in FY 2026? What will be your initial thoughts?
See, one thing is there, Abnesh, that it has come up from the top. That we can see, and going forward, April, May, June, the prices will soften a little bit further. One doesn't know about any policy that Indonesia or Malaysia will bring on B40. These are some things where things always remain uncertain. Going ahead, we feel that palm oil will not be as pricey as it used to be in the past, at least last six months, and it's going to be reasonable.
Overall, overall stability in prices seems to be there.
Thanks. That's all from my side. Thank you.
Thank you. We'll take the next question from the line of Anuj Poddar from Futures First. Please go ahead.
Hello. Hi there. Thank you for giving me the opportunity. My question to you is, I mean, I'm an investor in AWL since the last three years, and we have seen the performance in the last three years, and there's no sign of improving. My question to management is, does management have any concern for the shareholder? I mean, what steps you are taking for the prices to settle down?
Thanks, Anuj, for your question. I think, see, prices is something which is not in our hand. What we can do is just to improve the business, and that I think we are doing it.
I think the numbers of FY 2025 is there. We had one of the best year since inception with a profit of INR 1,200 crore of PAT. Now, price is very dynamic, which is something which is a market-driven discovery on which, unfortunately, management does not have any control. What we can do, we are doing it by ensuring that we keep on adding good businesses in the overall scheme of the things, like we did the GD Foods acquisition. We do Cohinoor acquisition. As we go forward, we are quite optimistic that we should be able to repeat the similar performance as we go forward in next FY 2026 and let the market then discover the price.
Okay. Thank you.
Thank you. The next question is from the line of Sanjay Shah from KSA Securities Private Limited. Please go ahead.
Yeah. Good morning, gentlemen.
Thanks for the opportunity. My question was, as you well explained about our acquisition of CapEx Zenith Haryana, acquisition of GD Foods. Now, taking forward from here, how much revenue do we expect from food and FMCG business in the next two years? Any color on margin? What all the investments are planned through the organic and inorganic? Any new investment plan for organic and inorganic growth from here on?
Okay. As far as the food and FMCG is concerned, as we have been saying earlier also, it is a focused area for us. This year, we clocked a volume of 1.2 million tons out of total 6.5 million, which is close to 18-19% of overall things. This basket is growing at decent growth with a 20% kind of growth, which we have been able to clock year after year.
With a INR 6,000 crore+ of revenue this year, I think we have taken an internal target that by end of FY 2027, that is, after two years, we should be able to clock INR 10,000 crore of revenue for the food. On margin fronts, I think we have been saying this for quite some time that food will remain into an investment phase or a growth phase for the next two to three years, and will continue to operate at an EBITDA neutral. That is where we will reach to a level where we have a decent market share and decent market penetration for all the products, and from where you should start looking at the margins reflecting on the bottom line.
As far as organic and inorganic growth is concerned, of course, we will now, given the fact that now Gohana has been delivered to us, from here, we should see our organic growth only. We are not wary to the fact that any M&A opportunity coming in our way, we will certainly explore and try to grab it because that helps you to have a quick growth on the basket. We will continue to explore and take it forward.
Great. Sir, any comment on promoter support? Now, Wilmar is on the front foot, and after rebranding, how do you see the global expansion, sourcing advantage, and promoter support from here on?
Yeah. Promoter support will always be there. In fact, Wilmar is quite bullish on India.
If you look at the business in which Wilmar today is, it's more or less similar to what we are today in AWL Agri Business in India. We have all the support from Wilmar, Singapore. We do expect that from here, given the fact that Wilmar would be at a driving seat as far as the overall business operations are concerned, we do look at exploring the opportunity of going even operations out of India. That's something which is at a very initial phase. Right now, I can't be able to comment anything on that. Yes, the promoter support will always be there. In fact, it will be with more force now, given the fact that Wilmar has got a more say in their operations in India now. Right. My last question was regarding this interview.
I'm sorry to interrupt you, Mr. Shah.
I would request you to kindly rejoin the Q&A follow-up questions, please. Thank you. We'll take the next question from the line of Harit Kapoor from Investec . Please go ahead.
Yeah. Hi, good morning. Just had a couple of questions. Firstly, on market share, you mentioned there was a little bit of a dip in palm oil, and you mentioned in the presentation as well. Just wanted to understand what's happened there. Is it that regional players have gotten more competitive? What are some of the things that we are doing, what are the actions that we've taken to mitigate this? When do we see an improvement as far as shares are concerned? That's my first question.
Okay. As you are aware that the palm oil prices being high, in fact, higher than sunflower oil, consumption shifted from oline to soybean in north and east and to sunflower in west and south. We lost almost 1.3% market share in palm oil. We are number two player. Obviously, we have a big share in oline, and that we dropped because the high prices, obviously, consumption dropped. We got incremental 10 basis points in soybean oil. Sunflower oil grew by 20 basis points, and mustard oil grew by 30 basis points. Overall, our market share dropped by 30 basis points only because of oline. That is the story so far. Now, going forward, two, three things that we are doing. One, palm has now started coming back into the pricing game, and it is today, if you ask me, it is cheaper than soybean oil.
Obviously, cheaper than sunflower oil. Traction has started coming, and summer, generally, palm oil is consumed more than winter. We have started seeing the growth in palm oil, the consumption. It is possible that we may recover our lost market share. One. Two is that rural market still consumes lower quantity, and we see great opportunity if we have a better reach. Last year, we increased our retail reach. This year also, we will increase this 50,000 tons to possibly 60,000 tons. That direct coverage gives us the advantage of being present in smaller towns. Third is that we have flanker brands, Kings and Aadhaar, which we are going to promote aggressively. Already, new advertising has been done, and we are going to shoot them both in digital as well as in television. Some of the work has already started.
We are sure we will catch the price-conscious consumers there. Put together A, B, and C. I see we will regain our market share. Maybe we grow by 20-30 basis points over last year. We will surely regain the lost market share. Thank you.
Thanks for that, Mr. Mallick. The second thing was on the food and FMCG side. How do we look at the segment going into next year? I know you have a target of INR 10,000 crore with less than 25% CAGR in revenue. Just into next year, should we assume that first half growth should be a little lower given the high base, given the fact that you had some additional exports of rice last year as well in the first half, and a pickup in the second half of the year to get to that 20-25% growth number?
Is that the way to think about the trajectory of growth through the year? Okay. To start with, the biggest segment of brand in staples is wheat flour. Wheat flour actually was historically growing at 18-20% as per Nielsen. We were also doing very well. It's only last year when the wheat prices went up abnormally high, consumers shifted to loose Aadhaar or buying wheat and making Aadhaar themselves. So branded share came down, and in fact, negative, minus 2% was the overall growth in terms of branded wheat as per Nielsen. We did grow, but not that much. This year, I think the wheat prices are much lower, already INR 4, INR 5 cheaper than last year. I think consumption story will be back, number one. Number two, rice prices are very low.
It is possibly the lowest in the last three, four years, Basmati rice and non-Basmati rice. We are seeing good traction, and I'm sure Basmati rice and non-Basmati both will grow this year. Besan prices are low, and we have added two factories, one in Ahmedabad, Kadee, which is a new plant come up in March. That will add volume, as well as our Gohana plant will also start making wheat flour, maida from August. That will add volume. Overall, overall, capacity increase will help us. Lower prices, lower inflation will help us. Third, overall government incentive in income tax relief and their investments in CapEx will add to the consumption. I think overall, food basket should do better.
Got it. Got it. Last question is on the modern trade side. You did mention some issues there.
If you could just talk about what were the problems and what have you done to kind of solve it?
See, modern trade between alternate channel, modern trade and e-commerce. E-commerce is growing faster. There is no doubt about it, and almost 100% quarter on quarter growth. Annual growth will be more than 60%. Now, modern trade is left with two big players, Reliance and D-Mart, and their rationalization of outlet or their reduction of inventory and all that has been slowing down the growth the way we were growing earlier. Private labels have also come in in these things. These are some of the challenges. Strong brand, obviously, we have an edge over others. Growth-wise, e-commerce is any time growing much faster. These are the things in alternate channel.
Got it. I'll come back to more. Thank you. Thank you.
We'll take the next question from the line of Aditya P from JPMorgan. Please go ahead.
Hi. Thanks for the opportunity. My first question is on the edible oil business. If you look at FY 2026, under the normalized operating scenario, what is the kind of volume growth that you will be aspiring for? As an extension to your point on palm oil prices having corrected significantly over the last month, will there be any transient impact on your margin as a result of this, or are there any hedging-related impacts that could come which we should be aware of?
See, on growth front, edible oil consumption, we are hopeful of anything between 7%-8% growth, although the country consumption is growing by only 3%. We expect to do better than average industry, and we will continue to do. One.
Two, palm oil prices coming down will help us because we are a big player in palm oil. Possibly, we are the largest importers of crude palm oil and refined palm oil. We have a very good network of distribution of branded palm oil. Plus, we have a lot of institutional sales where we score over others in terms of supply chain management. Palm coming down will help us to improve our volumes, reduce our plant cost, and improve efficiency. Overall, it is a benefit for AWL.
Thanks. My second question is on CapEx. What will be the outlay that we can focus maybe for the next couple of years?
On CapEx, I think we have done the IPO CapEx just finished. We have enough capacity now available, whether it is food or oil.
We are already building one. We are already running one CapEx of INR 1,000 crore, which includes the oleo complex in Krishnapatnam down south and a couple of small facilities for the castle. Besides that, I do not see a big CapEx as such coming up for the next couple of years, except for the fact that we may end up running some maintenance CapEx of close to INR 100, 120, 150 crore, plus any plant where we need to do a de-bottlenecking or anything. Maybe for the purpose of taking any number, I think for the next couple of years, I do not think we would be spending more than INR 500-600 crore of CapEx for a year.
Thanks. Just if I can squeeze in one more question, can you just give us a bit more color on what will your margin profile look like across the different channels?
Say quick commerce, modern trade, and general trade. Will one of the channels be significantly more margin-affected versus the rest? It would be great if you could give us some color.
See, margin-wise, normally modern trade and e-commerce gives us a little better margin than general trade. You also need to spend more in modern trade and e-commerce to keep the products, particularly some of the slow-moving products or your focus products coming up the screen for buying purpose. See, wheat flour, we have to promote more than competition. In Basmati rice, we have to promote more than competition. Here, you have to spend money to do that. On one side, there is improved margin because salespeople's cost reduces or something. You have to do more promotion within the channel to push your volumes. Overall, overall, volume-wise, that is how we have to play.
Thank you. Thanks for the opportunity.
Thank you. The next question is on the line of Kunal Shah from Jefferies. Please go ahead.
Hi. Thank you for the opportunity. My first question is regarding your guidance of the 3,500-3,600 EBITDA program. Just to confirm, this is on an overall basis, and does this include other income also, or is it excluding other income?
Sorry, your voice was breaking. Can you just come back with the full question again?
Mr. Shah, I would request you to use your handset, please.
Hello. Is it now better?
Yes, sir.
Yeah, yeah, yeah.
Yeah, yeah, yeah. My question is regarding this EBITDA guidance of INR 3,500-INR 3,600 per ton. Is this on an overall basis for the full business, and does this include other income, or is it excluding that piece?
Yeah, yeah. This 3,500-3,600, which we are saying is for the full business, which includes all edible oil, food, and FMCG, industrial essential, and it does include the other income also because for us, other income is also very much part of the business only because it's not something which you can't separate it with the business otherwise.
Understood, understood. In that case, it's fair to say that this year was a one-off from a profitability standpoint. For the full year as well, despite a lower FOQ. YOY will see some dip in profitability next year. That would be a fair understanding, right?
Yeah, yeah. Absolutely fair understanding.
That is what we have been saying for the quarter two, quarter three, we did see a favorable commodity cycle gain, one-off kind of cycle gain, which actually resulted into a better number for us in Q4, in Q3 particularly, and to some extent Q1 and Q2 also. Therefore, when you look at the next year, the numbers would look not exactly the way we have been able to deliver this year. It would be a little less than that. I mean, to some extent, this will get compensated by the kind of volume growth that we will be able to get next year, but not the full commodity cycle, one-off kind of gain which we have seen this year will be there next year.
Understood, understood.
On the volume growth front, if I recollect, there were some unbranded sales, bunched up unbranded sales, even in edible oil in the first half of this year. This 7%-8% volume growth guidance which you have just shared takes into account that, right? It will be on despite that, I mean, on that base, you should be able to grow 7%-8% this year is the thought process as of today.
Yeah, yeah. Absolutely. When we say edible oil, it takes into account everything, everything which we have in edible oil, whether it is institutional or whether it is branded. When we say we are targeting 7%-8%, it includes everything, all kind of sales.
Understood, understood. My second bit was on this GD Foods acquisition.
Any thought process on the type of sales growth or scale-up that you're looking at in this business, let's say in the next one, two years, and what other kind of margins that you're looking at, any synergies that you can gain out of it? If you can share some thoughts over there.
Yeah, there is quite a significant improvement that we should be able to do in this business. Typically, there are low-hanging fruits like we can just leverage our distribution. We are very strong in north, and this company is also more or less predominantly present in northern markets. Leveraging our distribution itself can deliver into saving in the cost and improving the volumes of the business, number one. Number two, there is a lot of sourcing synergy that we can bring in because this company also requires sugar. This company requires oil.
This company requires atta and maida and RFM, which we already have. We can leverage on that as well. Besides that, there are a lot of channels where we will add in terms of distribution. This company is not quite significantly active on e-comm and modern format store where we are. We can just bring in that also aspect into this business. We have absolutely no doubt that why we should not be able to take this company higher than what is it today. I mean, we are hopeful that in the next couple of years itself, we can make the top line 2X of what it is today.
Understood, understood, understood. My last bit is on can you just let us know what's the branded share of business for both foods and edible oil for the year?
What should be the tax rate next year? Just these two things.
Branded share in food is quite high. Food is, in fact, more than 75% is branded because food is more of a consumer business. Edible oil, we do have a good chunk of institutional clients also. In edible oil, it's close to plus of 60% is brand. In food, it is more than 70%-75%. When you look at the overall scheme of the things, we have a good 70% of business coming from the brand.
Understood. The tax rate that we should build for the next year, any changes that we should expect?
Tax rate?
Yeah, tax rate. Yeah.
Today, the effective tax rate of the company is 25.8%. I think you can continue to assume 25% tax rate effectively.
Understood, understood. That's all from my side.
Thank you. Thank you. The next question is from the line of Harit Kapoor from Investec . Please go ahead.
Yeah, sorry. Just a follow-up on the OpEx side. We've seen the sharp increase in people cost over the last two quarters. I just wanted to understand what's driving it. Is it also the CapEx, Gohana, etc.? We've seen two quarters of pretty high people cost growth. Just some outlook on that. Employee cost.
Yeah, absolutely fair observation, Harish. On people cost, there are two reasons. One reason you already mentioned that quite a few new projects which have got delivered to us will require new manpower to run these plants, number one. Number two, business as such is also growing. Therefore, with the growth of the business, you also have to add the manpower. This is the one.
The second aspect, of course, given the fact that we had a superlative year in terms of the performance of the business. We do have provided some kind of additional incentive in the people cost in the quarter four number. That is why the quarter four number is looking a little more than the last quarters. Also, for the full year, the cost is looking more. It is a one-time kind of number. Otherwise, our people cost usually grow in the range of 10-11%.
Great. Thank you.
Thank you. We will take the next question from the line of Karan Bhuvania from ICICI Securities. Please go ahead.
Yeah, just one question. If you look at the growth of FMCG, right, it has decelerated over the last three, four quarters, right, from growing somewhere around 20%-25%. We have come to like 9%-10%.
Can you just help us understand what are the different growth rates within the subsegments? For example, wheat, rice, such as we are missing within that. Given that we have a target of INR 10,000 crore revenue by FY 2027, how should we look at this trajectory going forward, right? We really asked it for the CAGR would be somewhere around 20% to achieve that number, right? The last question on that would be you also mentioned some supply chain issues regarding impacting your growth, right? If you can explain what that issue was and what's the current update on that. Yeah. Thank you.
Okay. Let's start with wheat flour. Wheat flour business is almost 500,000 ton business for us and has been growing steadily for 25% over the last three, four years.
This year, it has slowed down for one big reason is that the wheat prices went up from almost INR 26-INR27 in April, May, June to INR 32-33-34 in Delhi and maybe INR 40 in down south. Now, what has happened is that the wheat prices going up so much impacted our branded consumption, and the consumption story dropped drastically because one, prices went up and consumption became more from loose than packed. We lost volume on that. Everybody in the industry lost volume on that. One reason is that. Second is that when the commodity prices go up, players like us get impacted immediately because the local players can manage with even lesser quality wheat and maida they can make, and they manage the situation. We cannot because we have very strict quality control norms that we have to manage.
Otherwise, we can't pack it in our brand. That is one. Now, when it comes to supply chain, we have said rice is our second business, which is almost 400,000 tons per annum. Here, our Gohana plant was supposed to get operational by October when the paddy arrives, and we were almost getting ready. What happened was that new norm of getting pollution control came up for units located in NCR. Our Gohana unit is located in NCR, so one, it has to work on biofuel. That is not an issue. The issue was that the government said that as per the law, the unit can only start after the Central Pollution Control Board gives us clearance certificate.
Now, earlier, the clearance certificate was very simple to get, but with some high court order, I think they said there has to be a meeting, there has to be a presentation, and it took one and a half months, and then it got extended, and then the permission came only end of December, January. Our three months we lost on that processing of rice when paddy is processed and that. Supply chain became a little tight. Otherwise, rice would have done even better than what it has done. These two are major players. Then came our pulses and all that, where we don't think we have lost on anything except that the growth subsided because mutter was imported a lot, and mutter, as you know, yellow peas, was priced half of Channa.
People shifted to lower-cost mutter basin, what they call, and we have in Channa basins. Obviously, that sales impacted. All these things put together reduced our growth 10%. Otherwise, 20%-22% growth has been a steady performance. Coming forward, going forward, this quarter onward, wheat prices have come off. We have reduced the prices, and markets are getting back into action. Rice is steady. Gohana plant has started producing. Things are much better than normal. I think going forward, we should continue to deliver 18%-20% growth in food.
Thank you, sir. That's the fact.
Thank you. Ladies and gentlemen, we'll take the last question for today, which is from the line of Shirish Pardheshi from Motilal Oswal. Please go ahead.
Yeah. Thanks for the opportunity and good afternoon. I have three questions, Mr. Mallick.
Starting with Gohana plant, which is operational, and you say that about 95% it is operational. I was more curious, in FY 2026, what kind of internal sourcing for rice and wheat milling will happen from this plant to our overall sales contribution?
See, this plant can process roughly around 150,000 tons of paddy annually and roughly around over 150,000-200,000 tons of rice. That part is ready for use and going on. Mustard oil crushing is 600 tons per day, so that has also started. Only solvent extraction we are putting up this month, possibly. Solvent extraction will start. There is a refinery attached to it and packing. All these things will get ready by maybe May, June, early. Only project that will come by August is the wheat flour project, which is a good big project, and that we will get only six months' thing.
That is around 15,000 tons per month capacity. That we'll get for six months. 100,000, maybe maximum 100,000 tons we can process wheat. All put together, this should be the Gohana's contribution to this year. How Gohana to the overall our sourcing capacity will add? That is what I said, around 150,000 tons of paddy we can source and process. 100,000 or a little more rice we can process from the market we can buy and process in the plant, which is rice-to-rice units that we have. Wheat, we have already started buying for Gohana, but we can use only from August onwards. Yeah. Can you spell out what is the wheat capacity we are looking with the milling? It is 15,000 tons per month. 180,000 tons on the lower side, higher side to 100,000 tons.
Okay. Okay. Got it.
My second and last question on the GD Foods. Is this integration will take some time or you're already done? Just tell us next 12 months' plan because you have focused more on the integration and the synergies in terms of distribution and getting the leverage. I'm more curious because this company also has some biscuits part. At this point of time, biscuits also looks very, very competitive, though they have very good full scale of pantry items and other things. I'm more curious how next six months we should be monitoring the progress of GD Foods acquisition.
You rightly said. I think GD Foods, we have already started interventions in distribution and on the sourcing side. As far as our understanding is concerned, this company is not into the biscuits.
They do have a long tail of products in terms of cake mix, in terms of ready-to-cook kind of ready-to-eat kind of products, but not exactly into the biscuit and wheat. To be very frank with you, we have no intention to get into this field also. On intervention side, yes, we are very aggressive. We have already started intervention. In fact, it's only 20-25 days since we actually achieved the closing. Our team is already there sitting in the GD Foods trying to work out different models on distribution, how we can leverage our C&F, how we can leverage our distributors. More or less, the general trade segment is more or less similar to what we are today addressing. One is that. Second, of course, sourcing.
We have already started intervention because a lot of their raw material, which is already there in our scheme of the things, whether sugar or oil or maida or anything or a besan. That has already started. We would be doing a lot of other interventions also in terms of putting more money for the working capital, putting more money for the expansion wherever is required. That will continue to, I mean, do. I think in every quarterly call, we do certainly give update to investors that what we have done in this company and where we are today.
Okay. All right. Thank you and all the best.
Thank you. As that was the last question for today, I would now like to hand the conference over to the management for closing comments. Thank you and over to you, sir. Yeah.
Thank you, everyone, for attending our call to track our company and attend our future calls also to understand the business. Thank you again and good luck. Thanks. Thank you so much to everyone.
Thank you, members of the management. On behalf of ICICI Securities, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.