Ladies and gentlemen, good day, and welcome to Varun Beverages Limited Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during 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. Anoop Poojari from CDR India. Thank you, and over to you. Thank you. Good afternoon, everyone, and thank you for joining us on Varun Beverages Q3 and nine months CY 2023 Earnings Conference Call. We have with us Mr. Ravi Jaipuria, Chairman of the company, Mr. Varun Jaipuria, Executive Vice Chairman and whole-time director, and Mr. Raj Gandhi, group CFO and whole-time director of the company. I will initiate the call with opening remarks from the management, following which we'll have the forum open for a question and answer session. Before we begin, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation shared with you earlier. I would now like to invite Mr. Ravi Jaipuria to make his opening remarks. Good afternoon, everyone, and thank you for joining us on our earnings conference call. I hope all of you had the opportunity to go through our results presentation that provides details of our operational and financial performance for the quarter and nine months ended 30 September 2023. We are pleased to report a robust quarter, achieving a top line growth of 22% and a PAT growth of 30% year-on-year. Demonstrating remarkable resilience, our consolidated sales volumes registered a solid growth of 15%, making a strong comeback following the unseasonal rains in quarter two, 2023 in India. Both our India and international markets contributed to this achievement with a healthy double-digit growth. We have achieved notable progress on the operational front by making significant investments to develop both greenfield and brownfield manufacturing facilities throughout India. In addition, our Greenfield facility in DRC is progressing well and is slated to be commissioned in the upcoming months. These strategic efforts are tailored to meet the rising consumption and to capture untapped market opportunities. As part of our commitment to diversifying and enhancing our portfolio, we are also enhancing our capacity for juices and value-added dairy beverages to align with evolving consumer demands. As part of our long-term vision, and in line with PepsiCo's global pep+ objectives, we remain committed to sustainable and environmental stewardship. We are making investments that emphasize using green energy as well as reuse of PET, which will be instrumental in mitigating environmental impact. These endeavors are aligned with our pledge to the environment and reflect our ambition to nurture a greener future. Given India's dynamic demographic landscape, marked by a burgeoning young population and evolving consumption patterns, we believe the Indian beverage market offers a monumental growth opportunity for the decades ahead. As we intensify our foothold in India and expand our reach in Africa, our strategic initiatives are aimed towards strengthening our position in the global beverage industry. I would now invite Mr. Gandhi to provide the highlights of the operation and financial performance. Thank you. Thank you, Mr. Chairman. Good afternoon and have a warm welcome to everyone joining us today. Let me provide an overview of the financial performance for the third quarter and the nine months ended 30th September 2023. Revenue from operations, adjusted for excise, GST, grew by 21.8% year-on-year in the Q3 of 2023, to the level of INR 38,705 million. Consolidated sales volume showcased a healthy resurgence, growing at a level of 15.4% to 220 million cases in Q3 of 2023, up from 190 million cases in the comparable quarter of the previous year. This was driven by growth in both Indian and international markets. Notably, sales volumes within India demonstrated a strong recovery after facing demand challenges due to unseasonal rains in the preceding quarter. Furthermore, the net realization per case rose by 5.6% to reach at a level of INR 176.3 a case, an upturn primarily driven by the improvement witnessed in the international markets. CSD constituted 72%, juice, 5%, and packaged drinking water at a level of 23% of total sales volume in Q3 of calendar year 2023. Our gross margins during the quarter improved by 163 basis points to the level of 55.3% from 53.7%, mainly due to the softening of PET chip prices. As a result of higher gross margins and operational efficiencies, EBITDA also saw a notable increase of 26.2% to INR 8,821.4 million, with EBITDA margin improving by 79 basis points to 22.8% in the Q3 of calendar year 2023. Depreciation increased by 11.5%, and finance costs increased by 38% in Q3 of 2023 on account of capitalization of assets and setting up of new production facilities. CapEx increased by 30% to the level of INR 5,140.6 million in Q3 of 2023, from INR 2,954.8 million in Q3 of 2022, driven by growth in revenue from operations and improvement in margins. During nine months of calendar year 2023, the net capitalization is INR 20,000 million, primarily for setting up of new greenfield production facilities in Bundi, Rajasthan and Jabalpur, MP, at a cost of INR 8,500 million, and the balance for brownfield expansion in India and international markets. The total cash outflow on account of above capitalization of INR 20,000 million during the year was INR 8,000 million. The balance, INR 12,000 million, was paid during calendar year 2022 in advance itself. Further, we have invested INR 16,000 million during nine months of calendar year 2023 for the next year, primarily for the three greenfield plants in India at Gorakhpur, UP; Supa, Pune, Maharashtra; and Khurda, Odisha, and in DRC, Congo, Africa. Once commissioned, the combined CapEx for 2023 and 2024 taken together, will increase the peak month capacity in India at a level of 45% over 2022 capacity. In conclusion, the company maintains a robust financial position supported by our well-funded strategic CapEx plans that are set to drive growth and enhance our position in the global beverage industry. We remain confident that it will lead to sustained strong performance and will continue to generate value for all our stakeholders going forward. On that note, I come to an end of the opening remarks and would like to now ask the moderator to open the forum for any questions or suggestions that you may have. 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 handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Vivek Maheshwari from Jefferies. Please go ahead. Hi, good evening, good afternoon, team. A few questions. First is on the gross margins. You know, there is a sequential pickup. There is also a YoY, you know, expansion quite a bit. And I heard your clarification and also saw the release where you mentioned about PET chips. What is your outlook, you know, for the next few quarters on gross margins? Is, you know, adjusting for mix, is the current run rate you think, or the current number is expected to continue in the next few quarters? We feel so. We've always said that between our key ingredient is PET chips and sugar. So between one of the two keeps on going up and down, so we maintain our margins at 21%, which we've been maintaining regularly. A little bit up and down, it keeps happening, but we are quite confident that to maintain that margin going forward. Got it. Interesting. The second thing is on the, on the volume growth and, you know, last quarter was a bit soft. This quarter, again, you know, our growth is looking very strong. Mr. Jaipuria, when we, you know, look at, and maybe may not necessarily be apple to apple comparison, but you know, generally speaking, FMCG companies are complaining about slowdown, and, you know, whole host of issues. Whereas you have reported very strong growth, and it's not that the base is low. What is differentiating your category versus most other FMCG categories, you know, in your view, because of, which, you know, you are still reporting a double-digit growth, whereas most of the FMCG peers are struggling, you know, to go past, let's say, 5%? See, I think there are two reasons for it. One, I think we are expanding our go-to-market very aggressively, which maybe everybody is not doing as fast as we are doing. Secondly, I have been mentioning that with the power situation improving in the country, we have been able to penetrate much deeper into the rural, because a lot of the other FMCG companies have said that rural is not growing fast enough for them, and rural is rather stagnating for them. Which is not the case with us, because we've been able to further penetrate deeper because of better power situation, and because we've been putting much more Visi-coolers aggressively, which maybe is relevant to our industry and not relevant to everybody else's industry. I think I'll just add to that a little bit as well. This is Varun Jaipuria. I think the 12 million FMCG outlets out there in the country today, and roughly we're going to about 3.5-3.7 million outlets. So the scope to improve in terms of numeric distribution, as Mr. Jaipuria is mentioning, as electricity in the road gets better, that's one of the big reasons whether other FMCG companies are already at a higher distribution. Secondly, I think a big unlock for us has been our Price Pack Architecture also, what we've played in the market very aggressively, giving more advantage to the consumer as well, where you can come and consume more at a similar value or a slightly higher value, and the literage is more. So I think it's a very value-conscious country. If you give the right value to the consumer, the right, and with the right volume, you can really get some numbers going. So all those have really helped us propel the growth as well. Yeah. Very interesting. I have never asked you this question, you know, in the past, but this time around, given there was so much of, what should I say? So much of noise around this comment from Coke, that they have their, their market shares in India at a three-year high. Does that mean that, you know, their growth is even faster than yours? Well, I'm not gonna say that, but I think that I leave it to you guys to judge, and it's very. There are Nielsen and Kantar numbers available to, for people to check, but we don't get into that. I think they are doing a great job, and we are trying to do a better job. Right. Right. And lastly, Mr. Jaipuria I request you to join back the queue, please, as we have other participants waiting. Sure. Thank you. Thank you. All the best, team. Ladies and gentlemen, in order to ensure that the management is able to answer queries from all participants, please restrict your questions to two at a time. You may join back the queue for follow-up questions. We'll take our next question from the line of Percy Panthaki from IIFL. Please go ahead. Hi. Congrats, team, on good set of numbers. Couple of questions from my side. Firstly, I see that you have formed a subsidiary in Mozambique. Now, Mozambique is a geography which we were in earlier and exited, I think, in 2016 or 2017. So what is the thought process here in terms of trying to get into a geography which we had earlier thought it is better to get out of? That's my first question, sir. See, I think what we are doing in Mozambique is the markets have changed in the last six, seven years, and the markets have substantially grown in some of these African region territories. We have some surplus capacity in Zambia, and this is bordering Zambia. And there is no duty. The borders are open, there's no duty between them. So what we are going to do is part of Mozambique, which falls near the borders of Zambia, we are going to open only a distribution system, which is what we are starting, and use the additional capacity of Zambia, which we have. So, and we have some can capacity excess in Zimbabwe. So we are going to combine both of them and use this and get advantage of the volumes, basically. Understood, sir. Understood. My second question is on juices. Our three drivers for growth, which you had sort of articulated one or two quarters back, going ahead, would be Gatorade, juices, and dairy beverages. If I look at juices, which is an important pillar in your future growth strategy, the volumes here on a YoY basis are flat. What is the reason for that performance right now? Is it something macro, or and how do you think that this situation will improve and you will drive better growth going ahead? See, this situation has already started improving in the last quarter. But our biggest issue, juice, the second quarter, which is April to June, is a very big category. Unfortunately, we had unseasonal rains, and that whole quarter was a washout for us, and that affects the juice category comparatively. And if you see Nimbooz, we have grown practically at 100%, even though we had a bad season this year. And Gatorade is also growing at 70%-80%. So if you look at our category, dairy, we didn't have excess capacity, so we couldn't grow. And hopefully, in January, when we'll have our other two plants ready, that's when the dairy's real growth will start coming. Sir, for juices, the question, my question was pertaining to this quarter alone, not the April to June. I understand there was a seasonality there, and therefore, the growth did not come. But this quarter you have done very well in carbonated soft drinks, but not so in juices. So just wanted to understand the reason for the difference in performance. The major sales of juices come in March to June, actually. That's the biggest portion of the percentage of sales is not skewed throughout the year equally. So the I think is very heavy in those four months, which four months was a real washout for us, this year. And we- I think so. Pardon me? No, I was just saying, to answer your question, this is Varun. Yeah. I think juices have seen a softer growth, quarter on quarter. So here is the question, right? Q3 on, Q3 on Q3 is your question Correct. Not Q2 and what happened before. So my understanding, Marco, when I've gone is that juices has been softer at industry level, also the retail level also, whereas teas are growing much faster. Now, why that's happening as a phenomenon, I'm not very sure, but, you know, I think it could be an event where people start drinking juices much more in Q2 and they prolong to drink in Q3. It could be sort of a trend line, and since Q2 we did not have, Q3 never picked up any within juices because it went out of the retailer's mind, the people's mind, everybody's mind, because Q2 is the mango season. Once Q2 becomes big, then retailers start stocking up as well as you go forward. They never stocked up this time only because the season didn't pick up. So that Q2 could have an effect on Q3, according to me. Right. Right. Understood. That's all from me. Thanks, and all the best. Thanks. Thank you. We have our next question from the line of Nehal Mahesh Jain from Nuvama. Please go ahead. Yes, thank you so much, and congratulations to the management. So my first question was that in the international operations, we're seeing an improvement in realizations, whereas domestic, I think because maybe the share of Sting is flat, is maybe not still ongoing. So what is driving the improvement in the realization in the international business? Is there a product mix change that is happening there also? Well, there is slight product mix change, but basically our go-to-market is improving. And, you know, a lot of these markets which we have entered were very low share markets. And as we are capturing these markets with our go-to-market, it is all helping out and with our share improving, our realization is also improving, and the mix is slightly improving in some of the categories. Got that. The second question was that we had obviously given a guidance on the CapEx part of it, that the second half of the year, our cash CapEx will be around INR 500 crore for the remaining part of FY 2023. Just wanted to confirm that is that where the expected outlook is or there is a revision to that? No, there is no additional CapEx. It was around 100 or less than 100 in the second part of the year. However, for the year 2024, we have expedited implementation of our projects. Out of 2,500 CapEx projected for 2024, out of that, we have already spent INR 1,600 crore during this year to be ready ahead of time, because now it's not a seasonality from March into June, we have to be prepared. With South and West coming to us and with the product mix changing and with bigger territory to be remaining prepared throughout the year, we had to start ahead of time. Therefore, we are just expediting that. Otherwise, for the year 2023, the guidance will stay the same. Got that. Raj, I just had one question, if I could take it, that while you're mentioning about depreciation being higher on a YoY level, despite us capitalizing CapEx in Q2, I see that the depreciation on a QonQ basis has not changed. So any certain assets which got written off and not adding to the depreciation figure? Just to clarify. The CapEx, it's marginally up, yes, and there was one plant of Jabalpur which was implemented in the, I mean, a part of the last quarter. So that's why it's slightly from last quarter, it's slightly higher, maybe marginally. But if you compare it to 2022, from INR 110 to INR 127, so with the two more plants implemented, it's absolutely in line. Understood. That's it from my side. I wish you all a very happy Diwali. Thank you so much. Thank you. Thank you. We have our next question from the line of Aditya Soman from CLSA. Please go ahead. Yeah, hi. Good afternoon. So just one question on seasonality. We've seen a very pronounced seasonality in the business with Q2 being very strong and the other quarters being somewhat lower. And now I understand Q2 being summer is likely to remain as, like, the most important quarter. But do we expect a meaningful pickup in the other quarters as we see South India become more relevant? And can you just guide us through the timeframe of how that will play out over the next few years? If you see the numbers, you, you know, your Q3 and Q1 is becoming more significant than just being Q2, when it used to be only north. So that is why even this year, when it was very bad with rains and very bad rainy season in the summer within the north, which is our peak territory, our big territory, we were still not negative. So the seasonality curve has already started showing, and if you see quarter three, it's coming closer to quarter two seasonality, even though we had a bad season quarter two. So going forward, even quarter four now, if you'll see, the percentage of every quarter is going to keep changing and as South and West become more and more important to us. Understand. So is it fair for us to then model that the other three quarters continue to grow sequentially much faster than the second quarter? Just mathematically as you sort of gain on Mathematically, yes. Mathematically, yes, but next year might be different because we've had a bad summer this year. Weak base, yes. Yeah, I understand for next year, but over the medium term, that would be a fair assumption. Yeah, yeah. Absolutely. Very clear. Thank you. Mr. Soman? Yeah, no, that was all. I had just one question. Thank you. We have our next question from the line of Sumant Kumar from Motilal Oswal. Please go ahead. Yeah, hi. Can you talk about the new product launches, growth contribution in this quarter? Sumanji, your voice is coming very low. If you can please, Can you use your handset mode, please, Mr. Kumar? Can you talk about the how is the growth momentum of new product launches in past one year, and how is the contribution in this quarter? No, I mean, our new launches, our Sting is reasonably new. Our Gatorade is new, where I said we are growing at 70%-80%. Our Nimbooz is, we have only started pushing it from this year, and we are doing quite well. So, dairy, as I said to you, our capacity was a constraint, so we couldn't grow faster than what we should have grown, as the demand is there. So but you will see a major change coming in the dairy business next year. So I think all our new innovations, we launched the Sting Blue, which has done phenomenally well for us. So all the new innovations have done well. And we've got a lot of innovation in the pipeline, which is a no-sugar portfolio. That has done extremely well for us, because Pepsi's goal is obviously to move towards a more healthier portfolio. We're pushing a lot of products with mid-calorie, pushing a lot of products with no sugar. And no-sugar portfolio, as well as dairy, outperformed for us in the last three to six months also. How is the performance of Sting? The Sting has been extremely good. We are growing at a very healthy pace, and even the new Sting has done extremely well, so which has added to the growth. Okay. Thank you so much. Thank you. We have our next question from the line of Jay Doshi from Kotak. Please go ahead. Hi. Thanks for the opportunity. I just want to clarify one data point that you shared, in the opening remarks. Did I hear it correctly that you are going to expand India capacity by about 45% versus CY 2022 end by next year? That's right. That is right. This will be up and commissioned by before the summer of CY 2024, or during the course of Before commissioning of CY 2024. I mean, before the season of 2024. That's why we have pre-spent this year in 2023. Understood. And, could you share a similar number for international business as well? You know, especially, you know, the expansion you're doing in Congo. How does, you know Congo is a, is a new plant, so there's a greenfield plant. It will be ready only for next April, May, production. So it's the first plant we are putting in Congo. It's a greenfield plant, so there's no expansion or anything. It was. It says, Correct. There's no Pepsi in Congo. Correct. No, I meant to ask, you know, what would be your capacity in CY 2024 for international business versus CY 2022 end? So, so we have expanded. Wherever we needed capacity, we have expanded enough, so we will not be short of capacities for CY 2024. And we have done enough expansion in Morocco as well as Zimbabwe. In Zambia, we have enough capacity. Nepal, we have enough capacity. We expanded this year already. In Sri Lanka, we have enough capacity. Right. Just one final: Could you give us some color on the opportunity that you see in Congo? How does it compare versus, let's say, Zimbabwe, where you've seen phenomenal success and INR 1,000 crore+ top line last year? How big is the market opportunity in terms of the current capacity you are setting up? And, I'm assuming Pepsi's market share in the market would be negligible today. So what, what are the dynamics, in terms of market share? I think it's too early, and Congo is a very, geographically very different country. It's like three countries into one. You can only service with one plant, one part of the country, which is about 55-60% of Congo. The other two parts are completely cut off, which is about 2,500 kilometers away from that. So about 60% of Congo is what we are going to be serving in the first part of, our, first Greenfield plant. If we want to serve the other part of Congo, we'll have to put up another plant. And, it's a large market. It's more than 100 million population. Zimbabwe is only 16 million people, so it's a much more warmer climate. It's on near the equator. So I think the market is much larger, much, much larger than Zimbabwe, but it is. Zimbabwe has been seven years. This is the first year, so we have to see, test our waters. We are not there. Pepsi has not been there in that market ever. One final one, if I may, and if you can share. Could you let us know the capacity, that greenfield plant capacity that you're setting up in Congo, how big in terms of million cases? It can do about between 35-40 million cases. Understood. Thank you so much. That's it from my side. Thank you. Thank you. We have our next question from the line of Onkar Ghugardare from Shree Investments. Please go ahead. Yeah, good afternoon. My question was regarding the volume growth. If you look at the Q3 2021 growth to Q3 2022 growth, it was around 24%. And this year, the Q3 2022 to 2023, it's around 15%. So is it largely because of the base effect, or, the markets haven't recovered fully, because of the unseasonal rains? So, you see, in Q3 July was a reasonably bad washout for us, because July, the rains started much earlier actually than it normally starts, and it was much heavier rains than normally is. So it never recouped from quarter to July. So it was only in August and September that the real recoupment started, and we were able to come back to a 15% growth. Also, we were lapping over a high growth in 2022. We had a much larger growth in 2022. So I think both the things put together, but I think if we had a decent July, July, we would have had a much better and a much more healthier growth. That's the combination of both you are saying? Both the things, yes. Oh, sorry, you were saying something. No, no. That's why I said it's a combination of both. The weather, in July, as well as, lapping over a high growth quarter. Okay. The second question is on the production. You just mentioned that before season you will be ready. So if you look at all the plants which you are setting up currently, may I know when they will be commencing the production? We said before next year, which our season is actually March, so we expect all our plants to be in production before March. So whatever CapEx you are doing for those particular plants, all the plants will be ready before season. That's what you are saying, right? That's what we are hoping and expecting, yes. Okay, just a small question. What is the current, current penetration level, if you can see or tell in your all three categories? I know it is very small as compared to other FMCG kind of products, but still, if you can give a number to that. I'm not getting your question. Penetration for what? Penetration for juices or penetration for sports drink or, or dairy products. That's what I'm asking. I don't have the exact number with me right now, but you have Nani? In fact, as Varun mentioned, our reach today is up to 3.5 million dealers out of the base of 12 million. Also, to increase the penetration, every year, we are increasing the base. That's the starting point to reach to the outlets and make them agreeable to sell our products, carry it. We got a good big runway after the Sting, and 400,000 then distributors were added, dealers were added, and they are now. They were never purchasing the goods from us earlier, and now not only they carry Sting, they have also started carrying our other products. This number is increasing 200,000-300,000 year after year, and which is helping us in increasing our share. A long way to go, but the efforts are continuing. We have already reached, if you have seen our presentation, 925,000 visits base already, and we are doubling our efforts to put the visits in coming years. Okay, one clarification which I heard is that last time you mentioned that if you are doing around INR 2,900 crore of CapEx, then you will be doing around 1.8-1.9 times asset turn, that will be. So that's what we are expecting, right? 2,500, and yes, once the plants are fully matured and they are at with capacity, they do a turn of 1.8, 1.9 to have a total capacity utilization. That's right. That will be only possible in summer of 2025, right? I request you to join back the queue, please, as we have other participants waiting. Yeah. Okay, thanks. Thank you. We have our next question from the line of Sanjaya Satapathy from Ampersand Capital Investment Advisors LLP. Please go ahead. Yes, sir. Thanks a lot, and congratulations once again. Two questions. One is that, even though you are pushing this, Sting and Gatorade, there is not much of improvement in your ASP, after several quarters on a year-on-year basis. What could be the reason? Is it because your mix is no longer changing? Can you repeat the question? I couldn't get your question. No, so my question is that, your India business, the average selling price of has not really grown like the way it used to, like, it used to go up like 5%-7%. So I'll explain to you, I'll explain to you why that's happening, is because over the last three months, like I was mentioning earlier, we have dropped a lot of pricing, and that pricing that we've dropped for a lot of our major packs in terms of net revenue, has translated into a huge growth number. That's why our revenue growth, if you're seeing, is in a high double digits. That's where the revenue per case hasn't gone up, but the growth has gone up at a overall basis, which has made it profitability go up. So we've done a lot of pricing correction in quarter three with a lot of major packs. That's why you're not seeing a huge growth in the net realization per case compared to what it was last year. Understood. And is it something which is just a tactical and you will go back to a different pricing once business has been improved? See, you know, the market is very competitive, right? So hopefully we believe it will keep on changing, depending on the scope is doing, what the competition is doing right now. So it is a very agile and very fast-moving market. We hope obviously this will improve going forward and we will correct our pricing. But, you know, our main focus is how much growth can we drive in the market at a profitable level, and that's what we've been able to do in quarter three. And as long as we are able to deliver, deliver these results, these, and these growth and profitability, we'll be pretty happy, I think. Understood. The last question is that you are getting into this, I mean, you are expanding this dairy and other business in a big way for next season. So will that have a positive bearing on your margin and ASP? Well, as we have said earlier, dairy, our dairy and juice margins are similar to our CSD margins. So it will expand our total portfolio and expand our growth. And the margins are not going to change, but the margins are not going to come down either. ASP, will that improve or? Pardon me? ASP, the average selling price, will that improve because of change in mix towards dairy? No, but dairy is still too small to make a complete change in the overall category. I mean, dairy will be still very small category for us, but growth-wise it will be huge, but overall category will be much smaller, so it won't affect the overall. Understood. Sir, if I can just ask the last thing, is there any progress on your South Africa side? If you can just give us some update. Well, we are always looking forward to new territory, but we are hoping we have tried to put a company there, and let's see what happens in the future. Thanks, sir. All the best. Thank you. We have our next question from the line of Devanshu Bansal from Emkay Global. Please go ahead. Yes, sir. Hi, thanks for the opportunity. Sir, we have seen that our Bihar capacity also sort of ran out in the first year itself. And you have talked about this 45% growth in capacity ahead of next year's summer season. So wanted to check, what is your expectation on full utilization of this capacity? As in, can it be like we should be running out of this capacity by CY 2025? I wish I could really answer you properly. It depends on our rain gods, partly because our peak season rain gods play a quite an important role for us. So we want to be prepared for the right season. And of course, some effect happens because of the weather. So if we get a normal season, we should be utilizing a reasonable portion of our capacity. Got it, sir. And, sir, for India business, gross margins have improved quite significantly. So I wanted to check, is it entirely due to lower PET prices, or there is some component of mix change in this also? Because juice, et cetera, the mix is lower in this quarter. So is there a benefit coming from that front as well? Well, there is slight difference, but mainly, partly, Sting has gone up, so Sting, Sting is a little more profitable for us. And, Sting, yeah. Can I repeat the question? Yeah, Varun. Go ahead. Yeah. So Sting is obviously a big contributor. It's growing very well, but I think our push is always towards more profitable product portfolio, so we're pushing CAV much more in the market. And apart from that, I think we've done a better job at managing discounts in the market as well. So that discount control has come in much better, which has obviously given us a better profitability. And there's been enough initiatives we've taken over the last three months to reduce or improve efficiency at plant level, which has given us some results as well. So I think it's a culmination of all three, four things which happened, which has resulted in the PET prices as well, which has given us better margins. Great, Varun. That, that's really encouraging. Actually, it seems more structural than. Also on the international front, the margin performance, though revenue growth has been quite impressive, but from margin perspective, things have been a bit on the volatile side. So wanted to check the reason for this and also what are the steps that we are taking for a sustainable margin performance in international operations as well? Actually, the margin contraction or what you have seen is basically Zambia, because of the currency devaluation. Otherwise, other places we have done well. All the other places we have done well. It's basically one country where the currency has got devalued, where the issue is seeing a big gap. So this is part of the Africa region, you know, it keeps happening, unfortunately. And that's why, you know, you go slow in Africa. But overall, the growth and the demand is. That's where the growth segment is coming after India. Got it. Till when this is expected to continue, sir? As in, you, do you have some idea on this? I wish, I wish I can tell you. Sure, sir. I think- Sure, sure. That's it from my end, yeah. Thank you. We have our next question from the line of Deepak Singh from Hexaware. Please go ahead. Mr. Deepak Singh? Yeah, hello. Thank you. Thank you for taking my question. I want to know, like, you have acquisition, Lunarmech Technologies. So it is basically into computers, so what is the purpose of acquiring that company? No, that company is making caps for us. It's a backward integration where we already held 55% shares, and one of the shareholders we've been able to acquire who had 5% equity. So our equity has become 60% now. It's a backward integration to our own system. Okay. Okay. Thank you. Thank you. That's it. Thank you. We have our next question from the line of Chintan Katare, an individual investor. Please go ahead. Hello, sir. My only question is, please help me understand the trend of impact on your business from the likes of new entrants, like Reliance's carbonated drinks, be it Campa Cola or any other soft drink brand that they are introducing, how do you see the trend of the impact? Well, I think every new person coming in has a chance to grow the market. Reliance is a formidable competition. We believe they will take some share, but the market is growing at a pace which is so high that there is enough room for all the players to come in, and they will put more investments, more visi-coolers. I think overall, the market will grow, and so they will get their share, and we will grow and at our pace. And they have to set up their backward, they don't have the backward equipment yet, so it will take time. But I'm sure being Reliance, they will do a good job and But we are not so concerned because I think the market is so large in India, and market will be growing. More investments will make the market grow much faster. All right, fair enough, sir. Thank you. Thank you. We have a follow-up question from the line of Onkar Ghugardare from Shree Investments. Please go ahead. Yeah, can you help me out with the growth in the market, the number which you just mentioned, industry growth? See, industry growth, we are not saying that anybody is losing share or gaining share, so we are growing at a healthy double digits, and the market, I'm sure, is growing at a similar percentage. The percentage, they don't have. Mr. Guggare? Yeah, yeah. Thank you. Thank you. We have our next question from the line of Mohit Arora from SOIC LLP. Please go ahead. Sir, thank you for taking my question. Just when it comes to our portfolio of energy drinks, do we have any plans of launching any new products like Rockstar or any new variants of Sting? Yes, there is a possibility. We are working with Pepsi, and maybe next year we will launch another energy drink. I'm not sure it will be Rockstar or what, but we are looking to launch one more energy drink next year. These products will be, like, in higher pricing range, or will be the pricing range similar to Sting? I am sorry, I can't disclose that at the moment, but, as I said, we will be launching another energy drink. Okay. Thank you for taking my question, sir, and all the best for the coming quarters. Thank you. Thank you. We have our next question from the line of Sumit Joshi, an individual investor. Please go ahead. Hello, sir and everyone, good afternoon, first of all, and, congratulations for the great set of number. I have just one follow-on question: like, we see Pepsi is growing very heavily in the U.S. from a healthy energy drink perspective with, Celsius. So do we have any plans going forward to launch a similar thing for India and other markets? I couldn't get the question. It's not clear what you're He's trying to ask that since energy has become very big for us in other markets, African markets, are we planning to launch energy as well as a category or not, if I understood your question properly. Yes, can you answer it? Because I didn't get it properly, Varun. No, so energy is going to be a big play for us in our portfolio going forward. Are you talking about other markets outside India? Yeah. Yeah, yeah. We have already launched it, actually. We are already in most of the countries with our energy drink, and it's doing well. Yeah. Actually, sir, what I was trying to ask you is, Yeah. Like, Pepsi is working with Celsius brand, like, that is in U.S. energy drink market, right? And they are doing very well there. So do we have any plans going forward to launch in India and other markets also? Varun, I am not getting the question properly. No, no. So I think that we have a lot of energy brands across the world, right? Whether they've acquired or created them. So I think Mr. Jaipuria, and the earlier question which was asked was, are you going to be launching more brands of Pepsi under energy? We do have plans to launch. Which brand we will launch, at what pricing we will launch, we are not sure. We're still working through it, but we will be launching in India and other markets also. Okay. Thank you, thank you. Thank you so much. Welcome. Okay. Fair enough, yeah. Thank you. We have our next question from the line of Jenish Karia from Antique Stock Broking. Please go ahead. Yes, thank you for the opportunity. One clarification: you mentioned that out of the INR 2,500 crore CapEx for the greenfield expansion in next year, INR 1,600 crore is already spent in FY 2023. So we expect that around INR 900 crore will be spent in fourth quarter FY 2023, or how should we look at that, CapEx also for next year? That is my first question. It might be split between quarter four and first quarter of next year. Okay. The second question is with regards to energy drinks. So we launched our energy drink at a competitive price point. Now, we hear that Tata Consumer Products is launching it at a 50% discount to our MRP. So do we see any competition or market share loss in terms of volume for the energy drink? Well, we don't see volume loss, but I can't say exactly what Tata are going to do and how their product is going to be. Very difficult to say till we see the product and what it does in the market. Okay. And sir, lastly, we are using sustainable recycled PET chips going forward. So will that affect any of our gross margin? Will it be gross margin accretive, neutral, any color on that? Still, still reasonably small, so I don't see it. And we are ourselves getting into recycled PET, so by the time the reasonable portion of recycled PET will be going in, we'll be manufacturing it ourselves. We have a joint venture signed with Indorama, which is going to be in production by 2025. Okay, understood. Thank you. That's all from my end. All the best for it. Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir. Thank you. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free to contact our investor relations team. Thank you once again for your interest and support and for taking the time to join us on this call. Look forward to interacting with you all soon. Thank you. Thank you, sir. On behalf of Varun Beverages Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.