Ladies and gentlemen, good day, and welcome to Varun Beverages Limited's 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 this 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, sir. Thank you. Good afternoon, everyone, and thank you for joining us on Varun Beverages' Q2 CY 2024 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. We'll 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 request 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 detail of our operational and financial performance for the second quarter and half year ended June 30, 2024. We are pleased to report robust performance for the second quarter of CY 2024, achieving a consolidated sales volume growth of 28.1%, which includes volumes from BevCo. The impressive volume growth of 22.9% in India primarily contributed to this outstanding performance, supported by our expanded capacities, enhanced consumer distribution network, and a strong summer season. Meanwhile, our international markets remained relatively flat. Moreover, it was a seasonally weak quarter for African markets. We are excited to announce further expansion in our partnership with PepsiCo, having entered into an exclusive snack franchising appointment to manufacture, distribute, and sell Simba Munchiez in Zimbabwe by October 2025 and in Zambia by April 2026. This follows our recent announcement to manufacture and package Cheetos in Morocco by May 2025. These agreements complement our existing distribution of PepsiCo portfolio, marking another significant step forward in our strong, symbiotic partnership. Additionally, we are pleased to share that we have commenced commercial production of carbonated soft drinks and packaged drinking water at our greenfield facility in DRC. With the region representing an untapped market for PepsiCo, this expansion offers a huge growth opportunity for us. In line with our dividend policy, the board of directors has approved an interim dividend of 25% of the face value of INR 5 per share. Additionally, the board has considered and recommended the sub-division split of existing equity shares of the company from 1 equity share with a face value of INR 5, each fully paid up, into such number of equity shares having face value of INR 2 each, fully paid up. This is subject to the approval of equity shareholders of the company. This is intended for wider retail participation. With strong performance in a key quarter, we are on track to deliver healthy double-digit growth in the calendar year. India remains a high demand market with massive growth potential, driven by a growing consuming class and a young population. To capitalize on this demand, we are focused on further strengthening our infrastructure, distribution network, and product portfolio, with a focus of strategic growth and leveraging new opportunities in both India and international markets. We are confident in our ability to deliver sustainable value to all shareholders. I would now invite Mr. Gandhi to provide the highlights of the operational and financial performance. Thank you. Thank you, Mr. Chairman. Good afternoon, and a warm welcome to everyone joining us today. Let me provide an overview of the financial performance for the second quarter and half year ended 30 June 2024. Revenue from operations for net of excise GST grew by 28.3% year-on-year in Q2 of 2024 to the level of INR 71,968 million. Consolidated sales volume reported a growth of 28.1%, reaching 401.6 million cases in Q2 of 2024, which includes about 28 million cases from BevCo. Indian markets grew by 22.9%, while the international markets were almost flat, primarily on account of volumes in Zimbabwe getting affected due to portfolio transitioning to zero sugar without affecting profits. CSD constituted 76%, juice 8%, and packaged drinking water 16% of the total sales volume in Q2 2024. In the second quarter of 2024, net realization per case was steady due to the consolidation of BevCo, where realization per case for own brands is much lower than the company's average. Our gross margins improved by 222 basis points to 54.7% from 52.5%. This improvement was due to timely procurement of storage and storage of PET chips to avail pricing benefits. This was a partial trade-off between savings in the cost of goods sold and partial offset of enhanced interest costs due to higher inventory carrying costs. Further, our ongoing focus on reducing sugar content and light weighting packaging is also contributing to sustainable growth in gross margins. Notably, about 46% of our consolidated sales volume now come from the low sugar or no sugar products. As a result of higher gross margins, EBITDA increased by 31.8% to the level of INR 19,912 million, with EBITDA margins improving by 74 basis points to the level of 27.7% in Q2 of calendar year 2024. With enhanced capacity of preform manufacturing, majority of preform requirement is now being manufactured in-house, leading to shifting of conversion costs from OpEx to other expenses. Moreover, to get better operational efficiency and low production overheads, we have written off small residual values of PPE of certain lines from the acquired sub-optimal sized old plants. All the new production facilities are fully integrated and backward integrated, and the renewable solar energy generation facilities, which will further help in reducing fixed costs. Depreciation increased by 41% in Q2 of 2024 on account of the acquisition of BevCo and the establishment of new production facilities. Finance costs increased by 86.2%, primarily due to new production facilities, the acquisition of BevCo and higher borrowing costs. Tax grew by 25.5% to the level of INR 12,618 million in Q2 of calendar year 2024, from the level of INR 10,054 million in Q2 of 2023. This is driven by volume growth and improved margins, partially offset by higher depreciation, finance costs and the smaller PPE values to the extent of INR 70 crore, which, the company has written off. As of 30 June 2024, our net debt stood at the level of INR 58,808 million, up from INR 47,345 million as on 31 December 2023. During H1 of 2024, we spent approximately INR 10,000 million on the CapEx of 2024, and around INR 6,000 million for the CapEx of 2025. Additionally, we acquired BevCo for INR 11,629 million. Consequently, net debt increased by about INR 11,500 million, with the remaining amount funded through internal accruals. These strategic investments have expanded our footprint and strengthened our presence across several dynamic markets, both in India and the African region. Despite these growth-led investments, our financial stability remains strong, with debt-equity and debt-EBITDA ratios standing at 0.67 and 1.37x respectively, as on 30 June 2024. In H1 of 2024, the net CapEx capitalized amounted to approximately INR 30,000 million, excluding BevCo. This expenditure was primarily for setting up of new greenfield facilities, production facilities in Supa, Maharashtra; Gorakhpur, Uttar Pradesh; Khurda, Odisha, as well as for brownfield expansion in Morocco. As of 30 June 2024, the capital work in progress and capital advances totaled around INR 10,000 million, mainly for the DRC plant and phase 2 of the Gorakhpur plant, which focuses on juice and value-added dairy lines. The net capitalization CapEx for 2024 is expected to remain at the earlier, disclosed level of INR 36,000 million only. Considering the continued robust demand for our products, as well as diversification into our newer product categories, we shall be doing a capitalization of around INR 25,000 million-INR 26,000 million for the season of 2025, primarily towards the greenfield production facilities in India and the snack foods manufacturing facilities in the African markets. Out of the planned CapEx, about INR 3,000 million has already been spent till June 2024, and we expect to spend about INR 10,000 million, more in the second half of 2024. So basically, more than 50% of the next year's CapEx by December will be incurred as it is, and some parts in 30 June balance sheet is already shown up. Our working capital days increased to approximately 33 days as of 30 June 2024, from around 21 days of 30 June 2023. This increase is attributed to the strategic purchasing of PET chips in India and the inorganic expansion into new markets, including BevCo and the DRC plant. The DRC plant, as indicated earlier, already has started commercial production on 22 July 2024, and we have a lot of good hopes out of it. To conclude, we remain committed to maintaining a strong financial position while focusing on the execution of multiple strategic initiatives that we believe will sustain our long-term growth trajectory. Our ongoing investments in expanding capacities, enhancing our network, and on ground infrastructure, and diversifying our product portfolio are expected to drive sustainable and continuous growth in the coming years. 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 the question. Ladies and gentlemen, we will wait for a moment while the questions assemble. Participants, you may press star and one to ask the question. The first question is from the line of Aditya Soman from CLSA India. Please go ahead. Hi, good afternoon. So two questions from my own. Firstly, on India growth, can you give us a sense of how growth has panned out in Q2, especially since we had a very strong, sorry, in Q3, in the first month of Q3, especially since we had a very strong calendar Q3? And a related question to that, can you give us a sense of how in this 23% volume growth that we saw in Q2, how the various segments have done, particularly energy drinks and CSDs in India? Thank you. So, our Q3 is also growing at, in double digits, and we are quite happy with our growth. Q2 growth was close to 23% in India, which is a very healthy and a very nice growth. In the breakup, I'll just give you the numbers for the group. Aditya, basically, as far as Sting is concerned, as already intimated in the first H1, it's 15 point some odd number, and rather than for the quarter, specifically, if you're interested, is around 18%. So Sting has stabilized, and we are, you know, very happy to say that we are holding up onto that in a competitive scenario and still expanding further. And, as far as the product mix is concerned, we have increased the growth in juice. We have increased in CSD, but we have deliberately kept the sale of water quite low in this quarter because that contribution from that, as indicated earlier, has been, you know, the margin is lower in case of water. Water, we increase only in Morocco, where realization is much higher as comparison to India. As the chairman said, the outlook stays healthy going forward also. Understand. Very clear. And then just maybe a second question on these new snacking opportunity. Would at a sort of margin level this would be similar to what you see for beverages, or any sort of sense on how the margins for the snacks will be in both Morocco and then Zimbabwe and Zambia? So each country, the margins are different, but, you know, overall, we are running at a very healthy margin of 27%-28% of EBITDA. This is very healthy. This is for the season. And Aditya, your question is about the snack foods or on the beverages for those territories? On snack foods. So beverages, obviously, we get the overall average, right? So on snack foods, would it be very different from the beverages average or broadly the same? No, it would be actually better than the beverages. So snack food is quite healthy margins and it's a good business. That's why if you look at it, mostly it's kept by Pepsi themselves. They have not, I mean, they have not. They don't give it for franchising mostly. Understand. Very clear. And then would you look at this as like a stepping stone to hopefully getting more of these in other territories? Well, we are hoping. We are open to taking as many countries they are willing to give us, but it would be in the African region only. It won't be... They are not interested in giving it to us in India. But each country is a large market. If the three countries we have taken alone are $800 million worth of market for snacks. And Aditya, if you remember, you know, two quarters before, when we said it's a step in the door, when we had started the first co-packaging from our Kosi plant, and after that, I think we are regularly coming out with updates. So, in a short time, I think that progress we feel by any standard is a good progress. No, absolutely. No, thank you. Thank you for the update. Thank you. Next question is from the line of Gautam Trivedi from Nepean Capital. Please go ahead. Yeah, hi. First of all, congratulations on yet another bumper quarter, so, we're happy shareholders. With respect to the fact that you are now at 4 million outlets, and the fact that as you just mentioned, so my question was related to expanding the snack portfolio outside of Kurkure, specifically for India. But, looks like you're saying that PepsiCo per se is not necessarily expanding that portfolio with us. Is there any chance that the way we've launched Cream Bell can be launched around, Gautam, sorry, you are not clear. Okay, I'll just get off my AirPods. Give me one second, please. Thank you. I hope this is better. Is it better? Yes, sir. Thank you. Okay. So I guess my question is that, as you just mentioned, Mr. Jaipuria, that, the PepsiCo is not expanding the portfolio for snacks outside of Kurkure for India as of today, if I understood that right. Would that be correct? Well, they are keeping the complete snack portfolio for themselves. Right in India. We are only co-packing for them, in India. Understood. That's also the Cheetos brand. Got it. So I guess my question is that, the way we—since we already have an outreach to 10 million outlets, the way we've launched Cream Bell, milk products, should we or is there merit in getting into the snack food business ourselves with our own brands? There is... Well, that would be, we would not like to do that, and that would not make our parent company happy, so I don't think we would be doing that. Understood. Because we are getting full support, and especially in the African countries, they are quite happy to give it to us, so I think there's enough room for us to grow. Why go into competition with them? Which is fair. No, that's it from my side. Thank you so much, and all the best. You know, we're happy shareholders, and well done. Thank you very much, Gautam. Thank you. I request all the participants, kindly speak through the handset. Next question is from the line of Avneesh Roy from Nomura. Please go ahead. Yeah, thanks. My first question is on the water business. So what we have seen in this quarter, so June quarter, the market leader in juice business, they saw an impact because of out-of-home travel being less. So they were expecting, and maybe Street was also expecting, good double digits, but it will be lower than that. Similarly, another listed player, which is in water business, they were also expecting very strong double digits, but it will be lower than that. So wanted to understand in your business also, when I see this quarter versus last year same quarter, around 100 basis points lower, water contribution is there. So do you have also seen some impact of less out-of-home travel? Well, there is, because it's 45, 48 degrees, then there is less traffic in the market, which you also saw. So there is a definite effect, and we are also not going out of our way to push water anywhere. One follow-up question on the coming quarter. So I see your base in India is now 15% and 18%, and this quarter, the high rains, of course, is not conducive because the temperature will be lower. And December quarter, the La Niña impact, generally, the winter is harsher. So would you be still confident that for the entire second half, FY, you will be confident of double digits? These are early days, I understand, but given the base and given this seasonality, would you still expect double-digit growth in India? Yeah, consolidated, we see no reason why we should not be doing double digits. India, we had been- India also. India also. Yeah, we had- There's no reason why we would not. Double digits. You know, the factors, you know, on the extent of what we are saying is, one, with the west and south coming in, their seasonality is more or less flat, so those will continue to contribute, one. Secondly, Africa, for which second quarter of the year is a low season quarters, so now with BevCo coming in and the peak month for them is the fourth quarter, and the same thing will be for Zimbabwe and- And DRC. DRC. DRC is just started. What we are seeing in my thirtieth June results is all the costs are setting up of these. We should be mindful in Africa, we have in this calendar year doubled our capacity, and the results of that has not come. Only the costs we are seeing. We are seeing the depreciation, we are seeing the interest for that which we have participated, and some bit of structuring, wherein we have taken advantage in COGS of the PET costs by stocking, and the interest cost of which is getting reflected in the interest costs. Cost of interest was the highest at its peak, and in the next few months, when these costs will be coming down, we, the model stays, all these things I'm saying, model stays the same. And the double digits I changed in the next change with these two, for whom the season is going to be the fourth quarter, and with South and West, which are is flat seasonality, there's no doubt why it should not be double digits. Sure. Last question, so on, back on Africa. So on Africa, if I see, another HTC company has sold some parts of Africa because of maybe the potential not being to the desired expectations. And if I see per capita income of Africa also last calendar, it is well below initial expectation. So my specific question here is, if Pepsi is happy in some geographies of Africa to give you, what are the pros and cons, and how will you also meet because the currency fluctuation issue, lack of democracy or per capita income not at all meeting the expectation, what is initial expectation, what will be your proactive steps to overcome these? See, if you look at it, the per capita consumption in Africa is 5x-6x of that of India. So the consumption is very high. Secondly, the population growth in Africa is close to 3%. So every year there is 3%- close to 3% people being added. So there is a huge potential, and also Pepsi is very under-penetrated in Africa. Like DRC, it was a greenfield. In South Africa, we are 2% or 2.5% market share. So there's nothing to go down, it is only upside in everywhere, which we have shown in the markets. We have seen every year we have gained share or increased our margins and gone, done better. So we don't see any reason out there we would be struggling or, I mean, it might take little longer sometime because each country is a different animal. But we have been very successful, and I don't see any reason why it should be not be the same going forward. You ask, question one is the per cap income is low, but as chairman explained, the per cap consumption is high, which compensates much. Soft drink is food in Africa, which is very... It's not a luxury, it's a food. Every individual has a soft drink in the afternoon. On the currency, I think the currency, the worst part is in Zimbabwe, and it's before you how well we have managed in last few years. It's a debt-free company and really growing. The sugar tax which came couple of quarters before, even the volume for in the interim in the transition came down, but the margins were not affected, and now volumes also have started coming up. So everything is, you know, the way, of course we have learned it in Africa, so to manage those. So I mean, Africa, but if you can manage it, Africa is a great business, and going forward, it looking very positive for us. Sir, I understood on the positive. Just one question on your comment on why Pepsi is willing to give some parts of Africa but not willing to give India? That will be essentially against so many countries and lack of democracy. They have already given. What are you talking about? Snacks, or what are you talking about? Snacks, snacks. Oh, snacks, they don't give, they don't give snacks anywhere in the world. This is the first time they've started giving snacks. So they will give it in the smaller territories. Snacks worldwide, they don't give franchise. Okay. We are one of the lucky ones who have got it initially. Yeah, that's also nice. Yeah. Thank you. Next question is from the line of Percy from IIFL. Please, go ahead. Hi, sir. Congrats on a good set of numbers. My question is also on the foods business. So, there is some idea on what is happening there in terms of the company willing to give you franchisee, et cetera, as investors, if you can give some better guidance on how to estimate what kind of sales this business could generate in the next couple of years so that we can accordingly model it. Well, I think, the three countries we are looking at right now, in the next couple of years, we can definitely look at close to $100 million volume, and depending on which other countries we expand and what happens. But it's a growing market, and it's a very lucrative and a, positive market in snacks because the CapEx are much lower and the turnovers are much higher. Percy, just see the data points which we have already shared. One is the CapEx, second is the date by, from when the plants will be installed, third is the market size. As of now, only these things should be sufficient because we have only these data points. So once this starts, and the size of the market, and the Pepsi presence wherever they are there, rest of the things are to be projected, but from the date by when the plants will be ready. Because now, as the new guidelines, we have to any new plant diversification, we have to inform. So we have informed. So we are now, we start working on those things, except Morocco, where we had the selling and distribution agreement and the sales started ahead of time. Understood. Understood, sir. Second question is on the CapEx. If I look at your cash flow statement, in addition to the acquisition, there is INR 2,000 crore of CapEx as per the cash flow. If I look at the balance sheet, there is about INR 3,000 crore of capitalization. So if you can just help me for the remaining half of the year, how much we should see CapEx in the cash flow and how much more in terms of capitalization? Yeah. Percy, you remember on the 31st December, we had said out of this year's 2,400, approximately, we had amount sitting in CWIP. And we capitalize the year when we put to use. So we link it up, capitalization, to the season for which it's made, and putting in CWIP as and when the cash flow happens. So out of those 3,000, 2,400 plus 500, 3,000 is capitalized. Balance 600 roughly is under, that will be capitalized later. And the major part of that was DRC, which got capitalized on 22nd of July, INR 400 plus, and 200 roughly is in Gorakhpur, which is still work in progress. So coming back to 3,600, as indicated in December, will be the capitalization in this year as of now. And for the next year, about 2,100 or 2,200, for another new plants coming up in the areas where we are waiting for freight and near the market and, to take the competition, you know, more effectively. So out of that, we may be incurring about INR 1,000 crore. 200 out of-- And additionally, about 200 we have already incurred, which is sitting out of our cash flow for the season of 2025. So approximately, 1,200 to 1,300 for season 2025 will be incurred cash flow-wise, not capitalized. Our capitalization next year, as of now, if you ask me, may be about INR 2,500-INR 2,600 crore, which will be INR 1,000-INR 1,100 crore lower than the capitalization of the current year. Understood. So basically, next six months, the cash outflow you are saying will be about INR 1,200 crore for next six months? INR 1,000 crore, roughly. Okay. Okay. Yeah. INR 200 is already incurred. Okay, okay. Got it. Thank you very much. That's all for me. Thank you. Next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. Sir, hi. Congratulations on a very good performance, and thanks for the opportunity. Sir, this 23% growth, when we compare it to about 40%-45% expansion in our capacity, I guess some of it is due to delay in opening of some of the plants, which happened during the quarter. The question is to check, I think, even for a short period of time, did we touch the peak capacity in the June quarter? Well, very short period before the, you know, some of our new plants started, because some of the plants got delayed slightly because of the freight issues, because of this war between and the containers got delayed. Moreover, 45% was for CSD, for India. So, I think if we do the math right, we are very well near to that. Got it, sir. Got it. Second question is on margin front. Our standalone EBITDA margin improved largely in line with the gross margin improvement that we're seeing. However, in the consolidated level, there is some mismatch between gross margin gains and EBITDA margin gains. What is the reason for that, sir? So, South Africa, one second, please, gross margin. Don't show by... Yeah, this is South Africa, basically which has come up with own brands and their, the, these ratios are different, which have slightly, you know, we will become tuned to this because this was the first quarter. South Africa ratios are slightly different. One, it was the first quarter. Second, it was the winter quarter, which is the worst quarter for the African region and especially South Africa. So I think given another quarter, we'll be pretty used to South African systems and market, and we are just correcting all the weaknesses of the older bottler, so to be prepared for the next season, which is coming up in the fourth quarter of our year. So you will see major changes coming in South Africa. You know, these two quarters, basically, one, we were setting right in South Africa, and secondly, we were installing the DRC, which is now operational and start contributing from this quarter. It's expensive. It takes a lot of things and started coming in much before. Got it, Mr. Gandhi. A couple of bookkeeping questions. The working capital days have inched up to 31. Can we expect normalization back to 20-odd days, at CY 2024 end? In fact, in a couple of weeks you'll see the difference. As already explained, about INR 250 crore money, you know, excess PET chips were purchased to take advantage of the pricing, which has helped us in a substantial increase in the gross margins, but partially offset. Very clearly, we have come out, is by way of increase in inventory and increase in the interest cost, in inventory carrying cost. Clearly, it was making sense. It was bringing in savings, so we decided in increase. So, that will be in the normal course, if we stop purchases, it will be liquidated in, you know, next couple of weeks itself. Couple of months. Couple of months. Got it. Sir, you mentioned about margins in the snacking business better, being better than the overall beverages business. Can you throw some light on asset turns for this business? Are these also better versus the beverage business? What is it? Asset turn. It should be equal to this. The only advantage is that we don't have to run that business three shifts, and we... That's not that complicated. We, because here in this business, we have to do adjustment in the off-season, reduce the staff and single shift and- The seasonality curve is much better in snacks. ... So it's reasonably flat. I mean, not 100% flat, but it's reasonably flat, so you get a much better return on your capital. Got it, sir. Thank you so much. Thanks for taking my questions. Thank you. Thank you. Next question is from the line of Nitesh Dhoot from Burman Capital Management. Please go ahead. Hi, thank you for the opportunity. My question is regarding the usage of recycled PET chips. So if my interpretation is correct, you'll have to use 30% recycled content, I think from first of April 2025. So, given I believe there are capacity constraints in the market, and Indorama joint venture potentially is not active yet, so how, how are you planning to comply with the regulations from first of April? No, our plant will be operational next year. The joint venture will be operational next year, and which will be sufficient to give us close to 30% of our requirement between what we are buying and what the plant will be able to produce. So we don't see any challenge. As I tried Pepsi Black, already we have started with the recycled plastic- Yeah. - last quarter. Got it. By buying the recycled plastic from outside. Got it. And, sir, what will be the impact of, of this on, on your, cost of, PET chips? Will it be gross margin dilutive? Also, do you expect any kind of, relaxations in this, from the government, or, or regulators? Well, I don't know if the relaxation part, but it's not very negative. It's very close to the PET chips, original PET chips, so I don't think it's much of a margin issue. All right. Thank you. Thank you. Next question is from the line of Sheela Rathi from Morgan Stanley. Please go ahead. Thanks for taking my question. My first question was, sir, if you could give some flavor on the market share which we have in Africa for the beverages business. We understand South Africa, it's low single digit, but if you, if you could remind us, what is our market share across the markets we are present in? Well, each country has a different market share, so it's, you know, it, it'll become very complicated to start. Sheila, as Deepak has already informed you, that we have different share in different markets. South Africa, we just discussed, and in Zimbabwe last year we finished at 71% on full year basis, and we finished about 35% in Zambia, and including water, we did 30% in Morocco. Okay. Just to follow up on the question asked earlier on working capital days. So you mentioned that this will be resolved in the next couple of months. Does that also mean for the consolidated changes also, which we are seeing because of BevCo? Because, you know, inventory days are higher, debtor days are higher, as well as, you know, the receivable days are higher. So just want to understand if whether all this will, you know, improve in the coming months. Well, as far as the effect of BevCo is concerned, it will take a time. It will start showing from next quarter, but it will take a lot of time because there are a lot of fundamental things that are to be corrected. Their go-to-market has to be different, where we can dictate the terms. Presently, the most of their volume sales are to the large trading house, modern trade sectors, where it's very difficult to dictate any terms and rather they dictate the terms for the number of days. So that in the near future will not happen in a couple of days, but a couple of months it will. But in a couple of months, years, it will definitely be taken care of, only to that effect. As far as India is concerned, it's well in shape. Because India, let's not forget, we are into this business for 50 years, and there, it's just 4 months since we have gone there. And we at least firstly are making assessment, what are the things to be done. Second, on the margin front, the realization is much lower, about 30% lower than the normal Pepsi in that country itself. The mix, which used to be 15%, has already gone to 18.5%, and gradually it, Pepsi sales mix, will start going up. That is going to help. Then we have to create our own larger facilities with economies of scale, like in India, integrated, as we mentioned, all our 3 plants started in this year are with the solar electricity. I mean, we have to pay just 10%-20% of the power bill. Rest go through the solar cells. We generate our own power. We do 100% backward integration in-house. In last year, you know, we were still a small portion of the, you know, when we had purchased territories from PepsiCo. We were getting co-packaged some of the PET from outside, where 30% of the PET price was going as conversion charges. So this time on, everything is, you know, produced, converted into the preforms in-house. So that new plants are, you know, to be integrated, zero freight, zero carrying cost, zero packaging cost. The preforms are manufactured there, simultaneously within few days gets consumed also in the production. So all changes in India we are aware, and the same are to be replicated. It will take time... But the other side, we should not, forget, I mean, at so cheap for such a country with five working plants, getting it for INR 1,200 crore, it was a steal. So we had to now encash on that. We have taken a leap step, but, as its results started coming in, no, this will take time. Understood. Thank you. Thank you. Thank you. Next question is from the line of Sanjay from Ampersand. Please go ahead. Yes, sir, thanks for the opportunity, and congratulations once again for delivering superb numbers. So, you have already explained, but still, need bit of clarification that your staff cost and other expenses as well as finance costs have expanded both for the standalone as well as consolidated entity. So, if you can just explain, like, why, why such a big jump in staff cost, particularly? You know, nine plants are added, you know, in this quarter over the last year. So, five in South Africa, and three in India, and one DRC. So, you know, you had to... And the results of that has yet to come in. So this is what I was saying, that it will take some time, the things will stabilize. Expense side has already is coming. The revenue will start building up. At South Africa, we are giving example. So South Africa, it was a test season, like, something like, if you calculate the interest cost and depreciation in India for November, December, January. So it was those three months, winter months in South Africa. You will see in the season, two quarters as it is, this will improve and effectively, the steps which you are taking, they will also bring in the advantage. And the third, economies of scale, backward integration. Today, they have to buy everything from outside, not like India. We manufacture everything in-house, except, concentrate sugar, we do everything in-house. Here, they do concentrate, you know, themselves, 81.5% is their own brands sales, but they do, they don't have ability to upcharge in the market. They are treated as B brands, where the realization per case is 30% lower than if we manufacture on the same equipment with the same sugar, Pepsi brands, which is a much premium, well-accepted, recognized brand is there. And on the availability side, as I mentioned, we had to do a lot. Presently, they are dependent too much on the modern trade. Yeah. Understood. And, so thanks a lot, that this clarified. Last thing I just wanted to check is that, you will continue to be on an investment phase, for quite some time to come, which is, in a way, a good thing, because you have that kind of a growth opportunity for you, ahead of you. And, but is there, any way to articulate, that what kind of minimum, return on capital employed or, any other risk parameter like net debt to equity or something, which you, you are closely monitoring while you're driving your growth trajectory? Yes. In fact, thank you, Sanjay. You have answered all my questions. Firstly, the debt-equity, debt-EBITDA, we are very cognizant of that, and we are monitoring, and based upon the same, we pick up any capital expenditure. And there was only one occasion in 2019 when we said we are acquiring South and West, and we immediately came out with the QIP. But, presently, you know, all these ratios are well under control and in a very happy situation. So, I mean, so there's nothing to worry, all these things are taken care. Yes. Understood. Thanks a lot, sir. Thank you. Thank you. Next question is from the line of Amit Purohit from Elara Capital. Please go ahead. Yes, sir, congratulations, and thank you for the opportunity. So just on the comment that you made on international volumes, which are flat ex of BevCo, and that you ascribe it to shift towards zero or low sugar. So one while you indicated 46% of the volumes is low sugar, with much of, I mean, majority of that would be in the international market, right? Just one clarification. That's right. Yeah. That's right. Yeah. This shift has been happening for quite some time, right? Why, why, has the impact been seen probably in this quarter, and how long, how do we think about it, going forward, this transition, how long is it? No, the impact was temporary, which was mainly in Zimbabwe. This was the main large international market for us- Yeah. -before South Africa and DRC starts. So there was a special tax on sugar, so there was a complete change in the portfolio, and that's why this quarter, the margin and the prices had to go up. So that's why there was an effect for this quarter, which has already changed, and the market is growing back into normal, and we are growing in that territory again. So this quarter you will see all. Will not see any slack or no growth- Okay. in international markets. Rather, you'll see healthy growth in the market. Sure. Okay. Thanks, sir. Thanks a lot, sir. Thank you. Thank you. Thank you. Next question is from the line of Kaustubh Pawaskar from BNP Paribas. Please go ahead. Yeah, good afternoon, sir. Thanks for the opportunity. So my question is on the realization front. So in this quarter, our realization stood flat, and, ... We have stated that, because of the consolidation of the BevCo business, where the margins are quite lower, the realization stood flat. So considering the fact that, you know, in the second half of the year, when season for Africa business is quite good, should we expect realization to be lower in the second half of the year, on year-on-year basis? So here, there are two things to be, you know, two engines. One is South Africa. Yes, it will bring it down. Another is DRC, maybe that takes it up. Let's wait till then, and, you know, we are just analyzing this ourselves actually, and maybe both compensate, and still we may be back to the same, revenue growth, also per case, sales growth also. And moreover, in South Africa, by then, the mix will also be changing. Like from 15, I disclosed earlier, 18.5 Pepsi in South Africa, without adding even a single bottle capacity, without doing backward integration, if we could increase that. So already, and the top line also has already grown as from the level where it was, and hopefully we will be happy if we are keeping able to keep the trend in the same data where it is coming. Right. Right, right. So it, so second, maybe quarter three, quarter four might give us a better understanding how the realization would pan out. That's right. Yeah, and just from the understanding point of view, we are seeing the contribution of no sugar or low sugar products going up. Are margins in this, sorry, realization and margins in this product much better than your, you know, the conventional, you know, Pepsi products? That's right. Our margins are better with low sugar and no sugar. Once the contribution, you know, pick up, I think that should also add to your profitability going ahead? Yeah, it will depend which country, where, but it will definitely help. Okay. Thank you. Thanks for the answer. Thank you. Thank you. Next question is from the line of Onkar from Shree Investments. Please go ahead. Yeah. Is it possible to give the volume growth, volume growth or how much, how many million cases you sold? I mean, not you, BevCo in the last season, which is the fourth quarter. Quarter-wise, I don't remember. I think in the year they perhaps sold 112 million last year. The entire financial year, you are saying? That's right. Last calendar year. Okay, last calendar year. This quarter it was 28 million cases, right? Yes. Only for the current quarter, you are saying? Yes. That's right. If you, you know, you are mixing... We need to do some math. So, 1/4 of 112 is 28, and this is the weakest quarter. Okay, so this is the weakest quarter and the... Yeah. Yeah, please go ahead. Yes. Yeah, no, no, I mean, this tells the total story. Correct. Yeah. So what you are saying is, earlier you mentioned that you will be seeing quite a lot of changes in BevCo in the upcoming season. So, I mean, yeah, so I mean, can you just shed some light on what kind of changes we are expecting there? No, no changes means our go-to-market, our backward integration. I mean, it will take time, but we are going to correct, and that's why we have taken the market with such a low share. It will take x amount of time, but if you look at it, what the total year volume was, we are achieving that practically in the lowest quarter, which is the poorest quarter of that year. Okay, now that you have understood the market little bit better when you acquired the company, can you throw a little bit more light on what kind of approach? You know, give us a... It's a new country. It's only 2-3 months we have taken. I've given you enough that the worst winter we are doing the same numbers, what we should do. Now, you have to... I can't give you the complete exact details. I wish. Give me a couple of quarters to really understand the country. Okay, one more thing is that you had mentioned that DRC will be a big opportunity. Can you just throw more light on that? It's an opportunity because there is 100, more than 100 million population, and it's practically on the equator, so it's summer all the time. The seasonality is very low there. I mean, there's no change in seasonality throughout the year, so it's a good market, and it'll be a constant throughout the year market, so. Right now, how much, like, what's the presence of Varun Beverages over there or through PepsiCo? It's, we just started eight days. Eight days. Okay. So, okay, so can you say that, I mean, apart from India and South Africa, this can be a biggest market for you? No, I won't say it's the biggest market, but it will be a decent market for us. Okay. India, of course, is much bigger, and it will always- Yeah. be the biggest market. What about the consumption-wise, per capita consumption there? We are- Africa per capita consumptions are all high everywhere, South Africa being the highest. I don't have the exact number, but it would be at least three to four times of India. Okay. Thank you, sir. Thank you. Thank you. Thank you. Next question is from the line of Shravan Rajpurohit from Nakshatra. Please go ahead. Hello, sir. Hello. Congratulations for good success numbers. Thank you. So far, my question is: What is your guidance for next year? How much% we can grow next year? We can't give you exact guidance. We have said double digit looks feasible, and that's what we can tell you. Okay, sir. One more question. What kind of growth we can expect in next two quarters? Uh, Next two quarters. Well, again, the same thing. We are saying we should grow double digits. That's the guidance we are giving, and that's what is, what is feasible. Okay, sir. Okay. Thank you so much. Thank you. Thank you. Thank you. Ladies and gentlemen, we'll take that as the last question. I'll now hand the conference over to the management for closing comments. Yeah, thank you. Thank you very much. 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 out to join us on this call. Look forward to interacting with you all soon. Thank you very much. Thank you very much. On behalf of Varun Beverages Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.