Hindustan Foods Ltd (NSE: HNDFDS) Q3 2025 Earnings Call dated Feb. 10, 2025
Corporate Participants:
Sameer R. Kothari — Managing Director
Ganesh T. Argekar — Executive Director
Mayank Samdani — Group Chief Financial Officer
Vimal Solanki — Head, Emerging Businesses & Corporate Communications
Analysts:
Vishal Gupta — Analyst
Mayur Parkeria — Analyst
Priyank Chheda — Analyst
Rohit Mehra — Analyst
Nitish Rege — Analyst
Akhil Parekh — Analyst
Amit Tyagi — Analyst
Ritik Rewadiya — Analyst
Amruta Deherkar Sane — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Hindustan Foods Limited’s Q3 and Nine Months FY ’25 Earnings Conference Call.
This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. 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 Sameer Kothari, Managing Director. Thank you, and over to you, sir.
Sameer R. Kothari — Managing Director
Thank you, Michelle. Good evening, and welcome to our Q3 and Nine-Month financial year ’25 earnings conference call. I’m joined on the call by Ganesh, Executive Director; Mr Mayank Samdani, Group CFO; Mr Vimal Solanki, Head, Corporate Communications; and SGA, our Investor Relations Advisor. I hope everyone has had a chance to go through our updated earnings presentation that was uploaded on the exchange and our company website. By this time, I’m sure you’re tired about management’s talking about the persistent slowdown in the FMCG sector. So I’m going to skip that part.
As far as the effect of the union budget, we at FFL are as hopeful as everyone that this should lead to the rejuvenation of the consumption story. So instead of talking about this, I’m going to take this opportunity to explain how certain decisions taken by our company are helping us deal with the current situation. Our diversification into various different product categories like ice creams, OTC pharmaceuticals, beverages and footwear is beginning to yield promising results. While it is still early days, I do believe that in the next two to three years, the business profile of the company will be different from what it was two to three years ago, when we first saw the signs of the impending slowdown.
We are excited about the strong momentum of our ice-cream business as we prepare for the upcoming season. As a part of our growth strategy, we initiated a greenfield project in and are working on another greenfield project in the North. Furthermore, we are set to launch our backward integration strategy with the commencement of Ice Cream sticks manufacturing in April 2025. With these additions, the ice-cream business will account for as much as one-third of the gross block of the company by FY ’27.
We have accordingly taken steps to strengthen our leadership team by designating the Ice Cream division as an SBU, which will be headed by Mr Manoj Patni and of ICT Mumbai with a post-graduate degree in marketing from ISB Hyderabad. Manoj brings nearly two decades of experience to this role and we are confident about his leadership and about his ability to grow this business. A similar story is being played out in the Shoe business where the tailwinds in the industry combined with the gradual stabilization of the acquired assets gives us confidence to say that the shoe business should contribute to as much as 15% to 20% of the turnover by FY ’27.
With three factories in the beverage industry and the successful ramping-up of the Bandi facility, we are also eager to scale-up in these two segments and are actively looking for growth opportunities. These concerted efforts underscore our proactive approach to navigating market uncertainties, while positioning ourselves for sustained expansion and growth.
I will now hand over the call to Ganesh Agakar, our Executive Director to brief you on the operational highlights.
Ganesh T. Argekar — Executive Director
Thank you, Sameer, and good afternoon, everyone. I will now walk you through the operational business highlights for Q3 and nine months FY ’25. Our OTC dividend in has successfully scaled-up operations. Encouragingly, we have secured an additional customer for this facility and anticipate the commencement of production by the first-quarter of FY ’26. Furthermore, we expect to resume dispatches to Russia within the same timeframe, making a significant milestone in our international business.
Our division continues to make strides in efficiency. While challenges persist, we believe that we are on the right trajectory. Operational improvements in our northern factories and the ramp-up of our southern factories position us well for the future expansion. Moreover, the government’s recent budget announcement highlighting footwear as a priority sector further strengthens our confidence in the long-term potential of this business. The beverage division has made notable strides in fortifying its market position.
We have recently commenced the production of dry packs for an existing beverage client, enhancing our product portfolio. Moreover, the seamless integration of our newly-acquired bottled water plant in Orissa has further reinforced our capabilities in this segment. Our capex for the ice-cream factory in Nashik is progressing and we are expecting commercial production from April ’25. Additionally, we hope to start manufacturing ice-cream sticks by April ’25, which will mark our first foray into backward integration of the ice-cream supply-chain. All our factories continue to perform along expected lines. The turnover of some of its fatties was inhibited due to the commodity inflation due to our business model, the bottom-lines remain consistent.
With this, I will now hand over the call to Mayank Sandhani, our Group CFO, to take you through the financial results for the quarter and half year ended 30th September ’24. Thank you.
Mayank Samdani — Group Chief Financial Officer
Thank you, Pranesh. I will now run you through the financial performance of Q2 and nine months FY ’25. First, we will talk about the financial highlights of Q3 FY ’25. Total income increased by 21% to INR886 crores from INR730 crores in Q3 last year. EBITDA increased by 37% to INR79 crores from INR58 crores in Q3 last year. PBT increased by 35% to INR39 crores in Q3 FY ’25 from INR29 crores in Q3 FY ’24. PAT increased by 30% to INR29 crores in Q3 FY ’25 from INR42 crores in Q3 FY ’24.
Now we’ll talk about the consolidated financial highlights for nine months FY ’25. The total income increased by 30% to INR202,643 crores from INR2,027 crores in nine months FY ’24. EBITDA has increased by 38% to INR227 crores from INR165 crores in Nine-Month FY ’24. PBT increased by 20% to INR17 crores from INR90 crores in Nine-Month FY ’24. PAT increased by 19% to INR79 crores in Nine-Month FY ’25 from INR70 crores in nine months FY ’24. The revenue for Q3 FY ’25 remained stable sequentially but registered growth compared to the same-period last year, driven by the contribution from the Badi facility and the shoe business with — which were not part of FY ’24 financials.
Notably, profitability saw a significant improvement both quarter-on-quarter and year-on-year as the Factory has now begun making a positive impact and the integration of the shoe facility is progressing in-line with expectations. On the capital front, the company successfully converted warrants amounting to INR120 crores by and by the end-of-the December, which we plan to strategically deploy into new projects over the coming quarters. Subject to the weather conditions, we expect our seasonal businesses to perform well in next few months and with the shoe business approaching profitability and multiple new initiatives gaining momentum, we remain confident in our ability to drive sustained growth and enhance profitability moving forward.
With this, I would like to open the floor for the questions.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin with a question-and-answer session. Anyone who wishes to ask questions may press star and one on their touchstone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are request you to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press star and one to ask questions the first question is from the line of Vishal Gupta from HDFC Securities. Please go-ahead.
Vishal Gupta
Yeah. Hi, team. Hi, Sameera and team. Congratulation on excellent set of numbers. Ganesh, one thing you mentioned with regards to backward integration for ice-cream. So what exactly did you highlight? You have been planning to cones, what are you trying to do? Can you please just throw some light on that?
Ganesh T. Argekar
Yeah hi,. Sorry. Abishal, hi. So backward integration primarily is into ice-cream sticks. Okay, let me explain to you what we intend to do. Right now, presently the ICMCs which are used for production are all imported. It is made-up of birch wood and we plan to have a manufacturing line next to our factory. This is what we intend to do with the ice-cream Saturday is coming up in a couple of the locations that I have mentioned.
Vishal Gupta
And what is the capex involved for this? It is a meaningful capex or not a very relevant number?
Ganesh T. Argekar
I would say, not a relevant number as such. This is a trial project that we are intend to do. And if it is successful, we’ll put our factories across different locations because the cost of freight is very-high as compared to what we manufacture in-house.
Vishal Gupta
Got it, got it. And another question, Sameer, to you, given that recently government has announced lot of incentive for the — in the budget for the footwear sector, if you can just broadly highlight how it should benefit to you and the recent investment planning to make in Karnataka, what kind of revenue we should see? Because I think North and I think Tamil Nadu one more plant. This is another state we are planning to enter. Can you just broadly highlight strategy, there’s going to be more distributed manufacturing for footwear? How is going to happen?
Sameer R. Kothari
Yeah. Sure. So Vishal, before I talk about that, let me just circle back to what Ganesh was trying to say and elaborate on that. For us, this is a test balloon in terms of being able to get into the backward integration of ice creams. I want to take a minute just to explain the overall scenario as far as the industry is concerned, we continue to see momentum in the ice-cream sector. And what we are trying to do is we’re trying to see if we can get a better or a bigger wallet share as far as that entire value chain is concerned. While the capex of the ice-cream 6 is very low, from a particular perspective of the fact that we will be manufacturing a huge quantity of ice-cream across these three factories, we believe that can end-up becoming an interesting way for us to get into backward integration.
Coming to shoes, you’re right, the government has — has promised to announce incentives for the footwear industry. I am not sure that there are any specific proposals which have been announced as yet. On the other hand, the government has also announced a reduction in the import duty as far as footwear is concerned. So from that perspective, we do believe that, yes, manufacturing of shoes will definitely grow in India for all the tailwinds that we’ve been talking about for the past few years and it should gather steam in the coming years.
As far as our decision to venture into Karnataka, that’s got to do with you’re absolutely right. We are looking at trying to decentralize our manufacturing. We do have facilities up in the north. We’ve set-up a new facility in the South. We started work on that facility somewhere in September of last year. And like we mentioned in our opening remarks, I think that facility has now started ramping-up and we expect that by March, that facility should be able to ramp-up to its full capacity.
To begin with, the Karnataka factory will be the same size in terms of the capacity as our Chennai facility. And as time progresses and as we go up the learning curve, we will try and expand that. You have to bear in mind that in case of shoe, it’s not the capex which drives the ramping-up, it’s the training of the people and the hiring of the people. That’s why even in the South, it has taken us nearly six months-to reach the capacity utilization that we wanted in-spite of having the demand and in-spite of having hired the people nearly six months ago. So in case of Karnataka, we do expect a similar kind of a learning curve, but fundamentally, we are quite bullish about it.
Vishal Gupta
Got it. Just last question from my side. OTV Pharma, I think now I think Russia also you’re planning to supply from 1Q ’26 and I think you’ve got one more customer out there. So what is the long-term plan for OTV Pharma? Any more plans to set-up more plants and-or any plan to acquire in case they are available.
Sameer R. Kothari
So we did mention that we continue to look for growth opportunities in this sector as well, has taken us longer than it should have in terms of settling down. I think there was some learning curve for us that dealing with regulated products and dealing with regulated markets is — requires us to build-in a slightly larger or a longer time horizon in terms of integrating the facility. We will definitely take lessons from that. And we continue to look at any kind of acquisitions or any kind of greenfield projects. I think Mayansh mentioned in his opening remarks that we’ve been able to sign-up one more customer in. I think maybe Ganesh mentioned it. And we continue to try and see if we can do something in this space.
Vishal Gupta
Okay. Thank you. Wishing you all the best and team for future quarters.
Sameer R. Kothari
Thank you, Vishal.
Operator
Thank you. Participants, you may please press star and want to ask questions. Thank you. The next question is from the line of Mayur from Wealth Managers India Private Limited. Please go-ahead.
Mayur Parkeria
Good evening and thank you for taking my questions. Actually, I had a little long-range question in terms of more financial, but from a strategic standpoint. After our capex of is done and when we reach FY ’27, not exactly one year, but maybe FY ’27, ’28, somewhere, 1.5. What kind of three things I’m looking for in terms of what do you think would be our reasonable capital turns at that point in time, given that ice creams are lower relative to our past, so that is one thing. Second is, what kind of ROCs do we think we will reach? Will we reach back to 17% kind of percent, which we had historically 18% also at some point in time, 17%, 18% kind of percent from the current 14.5% kind of range which we have? And thirdly, do we believe that after FY ’20 — from FY ’27 onwards, will we kind of — will we turn free-cash flow positive in terms of our capex being slight — being lower than our operating cash flows? Do we see these three scenarios playing out post around FY ’27 once the current strong capex is done with.
Mayank Samdani
Hi,. This is Mayan. Yes. Mayur, as regards, you are correct that our — this current capex round is mostly greenfield is taking us time to build the factory. Once it is done, we will be — as you correctly said, we will be around more than INR1,800 crores capex, right. And as you have correctly mentioned that we have different business verticals which have different asset tons — asset tons. So we are confident that we will be around three or around three asset tons in-going forward when our — all these capex will start delivering at the — and ramp-up fully, right?
The second question as regards the — we have already told in one of our investor call that we expect that long-term ROE expectation of between 18% to 20% post it, we are still maintaining that once our capex is done and investment is over and then we ramped-up the factory, we will be able to post these kind of 18% to 20% ROEs numbers. Numbers and…
Mayur Parkeria
Free-cash flows.
Mayank Samdani
So free-cash flows are — so as you are aware that we are very, very active in either putting up the capex or doing some M&As, right. So if our growth rate of the capex is, is 15% 20%, we will manage in our free-cash flow going-forward also. But our — but if the growth rate is more than, 15% 20%, we have to — we have to look out for the money outside, you know.
Mayur Parkeria
Okay. So just to follow-up to clarify this number, we are talking of capital returns of three and not fixed asset because fixed asset turn would be higher than the capital turn.
Mayank Samdani
So we are talking about the capital turn because different ice-cream has the capital turn which is much lower than shoes is, right? And are that the asset turns are lower in ice-cream and iron. So we are talking about the average fixed asset ton.
Mayur Parkeria
Average fixed asset turns and not average capital turns.
Mayank Samdani
Yeah.
Mayur Parkeria
Okay.
Sameer R. Kothari
And I think between you and Mayank, you guys are splitting hair as far as capital versus fixed asset turns. We’ve maintained that it would be not right to evaluate or look at our company using turnover matrices. We kind of insist that you try and look at us from an ROE, ROCE perspective. And the number of three that Mayan talked about is not written in stone. He’s talking about fixed asset turnover, if I’m not mistaken, I think you’re talking about capital where you’re including working capital
Mayur Parkeria
And understanding as long as — is that conceptually our fixed asset turns are higher than the capital turn. So I just wanted to clarify which number we should look at as S3 as that’s it.
Sameer R. Kothari
Yeah. Correct.
Mayur Parkeria
And ROE closer to which is currently 12%, 13%, you are assuming it will go back to our 18% kind of levels over the next three years. Broadly, it will go back to FY ’27 by that time to those levels.
Sameer R. Kothari
Right. So we have raised some money. As in my opening remarks, we have told that INR120 crores has just come in December end, right, which is yet to be deployed. Right. That is pulling down the ROEs. But we expect and we have committed also that it will be around, 18% 20% going-forward when all the investment is done and the factories ramped-up to the capacities.
Mayur Parkeria
Okay. From questions point, that is all we had. And one small suggestion, again, I’ll repeat in the previous quarters also have repeated and requested, if possible, to provide some segmentation color, the segmentation requirements, whether it is in terms of 10% thresholds of the various risk and reward segments or whether the — how the top management reviews the various businesses of the company. It is — it will be helpful for investors also to give — to understand some segmentation colors as a part of the disclosure, if it comes, it will be — it will go a long way in understanding the business a little more clarity and reduce also the question flows, which are very obvious ones because now we have a lot of segmentation and product segments which are there and clearly the risk-reward for, let’s say, an ice-cream will be much different than FMCGs, which is much different than beverages. So whichever way you all feel right to group them, we understand it’s not possible product-wise, but whichever way segmentation product-wise will be helpful as we go-ahead. That’s it from my side. Thank you.
Sameer R. Kothari
Sure. Thank you, Mayor. We will try to do this. Thank you for the.
Operator
Thank you. The next question is from the line of Priyank from Capital. Please go-ahead.
Priyank Chheda
Yeah, hi, team. So our gross block has moved from 1238 last quarter to INR1330. So we have somewhere capitalized around INR75 crores of assets. Could you help me which broader assets, which are these assets which we have capitalized
Sameer R. Kothari
So this will be mainly in the CWIP of Nashik which we are doing and we expect to start production in April, right? This is which we told you the investment agnostic is the ice-cream factory which we are building, right? Mainly this quarter the major capex has gone in there.
Priyank Chheda
Perfect. So Nashik was somewhere around INR185 crores of total capex, of which broadly INR70 crores INR75 crores would be towards the capitalization.
Sameer R. Kothari
So this quarter also some more will come and yeah.
Priyank Chheda
Perfect. Now, again, respressing the bridge from the current gross block to the target INR1,800 crores, of which ice-cream will have a major share somewhere around INR400 crores and balance would be across beverages, color cosmetics and bottling plants. Is that the right understanding or some numbers would have changed after the ice-cream backward integration somewhere process from previous quarter to current quarter.
Sameer R. Kothari
So Priyank, the bridge that we had mentioned, the glide path in terms of getting from 1,200 1,300 to INR1,800 remains the same. As-is the nature of our business, those contracts have been signed. As a result that capex has been committed. We don’t expect that to change from quarter-to-quarter. So our glide path from now to FY ’27 in terms of the announcements which have already been made are contracted and will not change.
Priyank Chheda
Yeah, perfect. And within the shoe that we had done total INR100 crores of capex and we have added another visibility of INR50 crores. Is that the right understanding or INR50 includes the INR100 crores of total investment plan?
Sameer R. Kothari
No, so the INR50 crores is a new project that we are doing. I mean, there are multiple projects going on in shoes. One was the investment that we are doing in terms of debottlenecking and improving the efficiencies in the asset that was acquired. The second set of investments were being done in South where we said that we are gradually reaching a situation where we will perform at the proper capacity utilization from March. And the third set of investments is a fresh set of investments that we are announcing for a new set of factories coming up in Karnataka. This is slightly longer-term, the INR50 crores investment will take time.
I spent some time in explaining in the earlier questions that as far as the shoe industry is concerned, the gestation period is much longer than some of our other projects because it requires training the people and ensuring that they are skilled enough to start manufacturing for our customers. So this INR50 crore number is what we expect to invest in the next couple of years. We do not expect that investment will happen at one-go. Having said that, that’s the breakup of your investments in the shoe business.
Priyank Chheda
Yeah. So just recalibrating my numbers, INR100 crores is what we have done till now and the INR50 crores is the fresh one that we will do in couple of years. So — and would it be possible to call-out given the lot of dynamics that are changing within footwear, what are the kind of asset turns that we are looking out versus the capex that we have already done, maybe you can exclude whatever we will be investing now.
Sameer R. Kothari
So difficult to answer that because some of the capex that we are doing is actually going into debottlenecking and improving the efficiencies. Let me give you some of some clarity, which might be a little bit technical for some of the people, but we are investing a decent sum of money in terms of the compounding and in terms of sole manufacturing, which may actually not lead to some major increase in terms of asset — in terms of turnovers, but will lead to hopefully a better profitability and better margins because we will then be able to do some amount of backward integration as far as-is concerned.
So from that perspective, very difficult to do a one-to-one correlation between our investments and the expected asset turns. But as a thumb-rule, if you look at shoes and we’ve mentioned this before, shoes are far more labor-intensive and asset turns in case of shoes should be between 5 and 7 times as opposed to, let’s say, an ice-cream where it is maybe one and a half to two times.
Priyank Chheda
Perfect, perfect. Thank you.
Sameer R. Kothari
Thank you, Priyak.
Operator
Thank you. A reminder to all the participants that you may please press star and want to ask questions at this time. We’ll take the next question from the line of Rohit Mehra from SK Securities. Please go-ahead.
Rohit Mehra
Yeah, thank you for the opportunity. Sir, my first question is what is the outlook in the footwear business and what is the scale and size the company wishes to achieve in this segment?
Sameer R. Kothari
Rohit, we are extremely bullish about the footwear segment as some of the questions asked earlier and as what we’ve mentioned, we see a lot of tailwinds in this industry. We see a lot of import substitution, we see a lot of Make in India story. And so from that perspective, the outlook seems to be bright. Of course, this has to be caveatted with the fact that we — it’s got to do with the consumption story. And like we mentioned in our opening remarks, as long as the consumption story is robust, we do believe that the shoe industry should do as well — should do well as well.
As per — sorry, what was your second question?
Rohit Mehra
So the second question is related to the margins only that what margins are we looking in the shoe business and what will be the ROCE?
Sameer R. Kothari
Yeah. No, now I remember you asked me first about what the expected number is
Rohit Mehra
Yeah.
Sameer R. Kothari
Yeah. So what again in my opening remarks, I mentioned the fact that we believe that Show business should become significant for the company. It should account for maybe 15% to 20% of the turnover by FY ’27. And I think we stand-by that. In terms of margins, it’s a little premature to talk about it, especially since we’ve been actually making losses in this business for the last 3/4 now. We are — the losses have reduced in the last quarter, as Mayank mentioned in his opening remarks. But — I would hesitate to give out any kind of a guidance in terms of margins until we are able to stabilize the operation. So hopefully by Q4 or latest by Q1 of the next financial year.
Rohit Mehra
Understood, sir. That answers my question. Thank you.
Sameer R. Kothari
Thank you, Rohit.
Operator
Thank you. All participants, you may please press star and one to ask questions. We’ll take the next question from the line of Nitesh Reghe from Cris Capital. Please go-ahead.
Nitish Rege
Hi, thank you for the opportunity. So my first question is, so the loss which we’re making in new business, you said, so just doing the consol minus standalone, is the loss only related to the shoe business?
Mayank Samdani
The consol minus will be — will be a loss for the show business and the seasonal loss of ice-cream business also.
Nitish Rege
Okay. So second question, so assuming you assuming we do a INR600 crore top-line in FY ’26 for the shoe business. And just shoes having ideally a better margin of say around 5%, is it fair to say that shoes can do around — can contribute INR30 crores to the PAT for FY ’24 versus a loss this year.
Sameer R. Kothari
So Nitesh, like I said in reply to the earlier question, a little hesitant to give out any kind of margin guidance as far as the shoe business is concerned. So give us a quarter, let’s at least start delivering some performance, I mean, positive performance as far as the shoe is concerned before we actually start talking about what we’ll be able to deliver in FY ’26.
Nitish Rege
Okay. And any targets on how the consol PAT margins for next year, whatever target in nine months is around 3% PAT margins, anything on FY ’26 internal targets or something you can highlight?
Sameer R. Kothari
So we can’t have target set for the entire company, right, like we — somebody else, I think Mayur was saying that we’ve got so many different SPUs now that targets are being set at individual factory levels. And from that perspective, it’s a little difficult to say what’s the target for the company as a whole. Also, when you’re talking about the fact that as far as shoes is concerned, especially in this year, the shoes contributed negatively for the entire year. Was what Buddhi took its own sweet time. And lastly, I mean, when you look at target and when you look at margin as a — as a percentage of sales, we come back to the same problem that in our case, any kind of commodity inflation or deflation ends up distorting our revenue numbers.
What we have done is from — for each of the factories, we have EBITDA targets and that’s the way we evaluate the performance of each of these factories. Having said that, you also have to note that in this particular year, we have had a higher tax bracket in terms of the overall performance, which we think will end-up getting regularized next year and that should lead to some amount of change in terms of the percentage anyways.
Nitish Rege
So by when do we target to reach the 18% to 20% ROE band?
Mayank Samdani
So in one of my earlier answer, I told that when we have running capex, right, when that is why our ROEs are not at that line, which will be there. Once these capex start delivering to the expected ramp-up, we believe that we will come back to 18% ROE in that number.
Nitish Rege
So any timeline for that?
Mayank Samdani
FY ’27 when we are hopeful that all the capex is done and we start ramping-up all the factory.
Nitish Rege
Okay, great. Thank you so much.
Operator
Thank you. Before we take the next question, a reminder to all the participants that you may please press star and want to ask questions at this time. The next question is from the line of Akhil Parik from B&K Securities. Please go-ahead.
Akhil Parekh
Thank you. Hi, thanks for the opportunity and congratulations to the entire team for Superb execution. Sameer, just to be on same page, you mentioned that Sports who can become a 15% 20% of the business by ’27 and with the current — I mean there is an expected gross lock of INR1,800 crore and three times asset turn, 3 to 3.5 times asset turn. So the ballpark, we can do around INR5,500 crore to INR6,000 crore of the topline by ’27. So is it fair to assume like that — I mean the math is right, right INR800 crore to INR100 crores is what we are looking at the spokes to business basically by.
Sameer R. Kothari
Akhil, you don’t need me to check your math yard.
Akhil Parekh
No, but because the capacity we have right now, I believe is enough for us to clock around INR500 crores to INR600 crores of top-line, right? So it’s almost 50% to 100% over and above that. So are we anticipating more capacity additions in thisport show apart from what we have
Sameer R. Kothari
Already announced the capacity addition in Karnataka and we’ve already announced the earlier capacity addition, which was happening in Chennai, etc. Those facilities have still not ramped-up to their peak performance. So from that perspective, yes, there will be capacity additions, there will be some more capex, et-cetera, which is going-in and that should take us close to the number that your calculator and mine surprisingly showed the same numbers.
Akhil Parekh
Sure. So do we have enough land space at the existing manufacturing units in North and South to reach this kind of number?
Sameer R. Kothari
So in case of North, it’s got to do more with debottlenecking rather than expansion in terms of lines, etc. And from that perspective, we do not foresee a situation where we’ll be expanding further in the north. In the South, we do have space, which should allow us to set-up capacities maybe at least double of what we are currently manufacturing there. And in case of Karnataka, it’s a greenfield project anyways, so we’ll see how that works out.
Akhil Parekh
Sure. So South will be 20% to 30% of the capacity by end of March as compared to what we have.
Ganesh T. Argekar
I don’t think we’ve given out numbers in terms of the numbers of, etc. that we are manufacturing there, Akhil.
Akhil Parekh
So and a second question on the unit, I mean, would you like to share some number like what kind of sales run-rate we are doing over there? And in Q3, fair to assume that it’s PAT positive at this point in time.
Sameer R. Kothari
Okay. So again, no point in breaking down numbers from a factory perspective or from a division perspective. But yes, one of the key reasons why you see a big delta in terms of the numbers is because Badi has started contributing positively. I’ve mentioned this before in our investor calls as well that Baddi and the shoe business kind of depressed our performance for the last two quarters in this Q3, is positive. You’re absolutely right. The shoe business still has some way to go, but we are at least we are in the right direction even with the shoe business. So from that perspective, we expect that starting from this quarter and the next, the shoe business should also start becoming positive.
Akhil Parekh
Okay. And for shoe, we are at a bit positive or is that fair assumption?
Sameer R. Kothari
Yes, we’ve discussed that earlier as well that the shoe business has always been a bit positive. It’s not been a problem. We’re not making cash losses in the shoe business for a couple of reasons. One is that the demand position is very good. So in-spite of all the screw-ups that we are doing, our customers continue to support us. And from that perspective, our EBITDA was always positive. That was never even a question. But we’ve always been talking about PBT figures from a perspective of profitability. I mean, it does not make sense looking at EBITDA now
Akhil Parekh
Okay. So just few bookkeeping questions. One is the debt position at end of 3rd-quarter. Operating cash-flow number, if mine can provide that? And in 3rd-quarter did we face any price deflation? Three booking questions.
Sameer R. Kothari
Okay, can you just repeat the question?
Akhil Parekh
Our debt position, operating cash flows, if possible by end of 3rd-quarter? And if we face any price deflation
Mayank Samdani
And calculating sure. Net-debt is around INR650 crores as on Q3. Regarding the operating cash-flow, because we have not — we have not prepared a full balance sheet. I am hesitant to give the net cash-flow position to you. And third question was, Raken
Akhil Parekh
Price deflation because we sort of to
Sameer R. Kothari
So for this, I will ask to give you answer
Ganesh T. Argekar
Sure. Yeah price inflation there was — you’re asking about deflation or inflation.
Akhil Parekh
No, price deflation, I’m asking, was there a price deflation or inflation because our EBITDA growth was 30% plus or a ballpark 30%, well, 21.2%.
Sameer R. Kothari
So Akhil, frankly, prices have not deflated. Prices have actually remained elevated. The reason why the EBITDA numbers have changed disproportionately to sales is because of the bigger issue that we always had in terms of the shoes. As we have mentioned before, shoes, we were manufacturing, but we’ve been manufacturing them inefficiently and that’s been the problem. So now that we are beginning to manufacture them efficiently, you will see a disproportionate amount of effect coming into the EBITDA and then hopefully into the PBT.
Akhil Parekh
Excellent. Excellent. Thanks a lot and best wishes for.
Sameer R. Kothari
Thank you,.
Operator
Thank you. Participants, you may please press star and want to ask questions now. The next question is from the line of Amit Yaghi, an Individual Investor. Please go-ahead.
Amit Tyagi
Thank you for the opportunity and my best wishes to the Hindustan Foods Limited management and the team. My only question is regarding this, as we are in expansion mode, so I see that there is an increase in your working capital requirements in totality, basically this inventory as well as the receivable things. So is it like with this expansion or with this takeover of the shoe business, our receivables and inventory-related requirements have gone up and going-forward, this remain at the similar level and how we are going to do the further financing as we have recently got the warrant converted. So will this — those money may be used for this inventory management to fund this working capital management going-forward, how the things will be like?
Mayank Samdani
Hi, Amit. So you are correct in saying that working capital requirement is predominantly increase because the show business as the receivable days are much more in a show business as well as the working capital requirement of inventory because we have to — to make sure it requires a month — a three to four weeks time to credit and then we have to have the inventory in-place for the RM and. So the working capital requirement in shoe as regard to our other businesses is very huge. And as far as we are funding it, we are taking the debt also and we are using some part of the equity. So we will maintain a — as we are told that we will maintain one is to one debt-equity ratio to all these things. So that is what we are working on.
Amit Tyagi
So it will be — like it is fair to accept that like, okay, the kind of inventory levels or the kind of receivables, they will be maintained at the similar structure going ahead with the expansion and going ahead with the ramp-up of the facilities.
Sameer R. Kothari
So Amit, that’s a question which Ganesh can answer. And of course, his objective is to try and reduce the working capital, which has been invested in the business. And just to elaborate on what Mayank was saying, we obviously have not raised the money to invest it in working capital. We have raised the money with a very clear idea of investing this in capital assets. We do believe that investing in working capital is unproductive. From that perspective, Mayank, Danish’s main job is to ensure that our working capital is as low as possible.
Amit Tyagi
Yeah. Fair enough. Fair enough, sir. As this requirement of funding in working capital is impacting our ROCE. So I thought like, okay, going-forward, how the numbers will be, though you have already given the clarity during this interaction just now. So thanks a lot, sir. My best wishes as a shareholder, sir.
Sameer R. Kothari
Thank you, Amit. Thank you.
Operator
Thank you. Thank you. We’ll take the next question from the line of Ritik Virwaji of an Individual Investor. Please go-ahead.
Ritik Rewadiya
Am I audible?
Sameer R. Kothari
Yes. Go-ahead, please.
Ritik Rewadiya
Thank you for the opportunity, sir. My question is, could you please provide with the revenue split by segment? Also, it will be very helpful if you can provide a segmental revenue growth percentage as well.
Mayank Samdani
So one — in one of the earlier answers, Sameer told you that it is very hard to give the segmented revenue right now because we don’t look at the — is as the parameters is not — we are not looking at these parameters. As Sameer told you that we are looking the factories at the factulal, right? So we will try just like somebody suggested that you will try to have some segmental thing and we’ll try to do that.
In the opening remarks, Sameer told you that it’s something about ice-cream and shoes already that 15% to 20% of our FY ’27 sales will come from shoes and our one-third of the gross block will be invested in ice creams. So we’ll see how we can better the segment thing because for us, it is the only segment as a contract manufacturer. So we’ll see how we can develop the reports to give you over here.
Ritik Rewadiya
Okay, sir. All right. That’s my only question. Thank you for the opportunity.
Operator
Thank you. The next question is from the line of Priyang from Wellum Capital. Please go-ahead.
Priyank Chheda
Yeah. Would it be possible to call-out what would be the ballpark margins and working capital in ice-cream? I understand it’s asset turnover between 2.5. What would be margins and working capital in this segment?
Sameer R. Kothari
Okay, Priyan, Kriptik and Mayur, I’m just going to go back to all the three of you, I’m assuming that you guys are still on the call. We try not to give the segmental individual breakup for numbers for a particular reason and maybe I should spend 30 seconds on trying to explain that reason. The ice-cream business that we — that we’ve entered into is a very capital-intensive business. All the three contracts that we’ve entered into our take or pay contract, which basically means that irrespective of the turnover of the company, we have very clear visibility of what we will make by way of ROE or ROCE. That’s one of the reason why in our opening remarks, we talked about the amount of fixed assets or the amount of capex that will go into the ice-cream business.
On the other hand, the shoe business is on a shared manufacturing basis where it is not capital-intensive. There is a huge component of labor. And given the fact that it’s a shared manufacturing business and the costing model is not a take or. There some of the questions in terms of margin profiles, etc., are relevant. In terms of shoes, we do not say that the questions about margin profiles are irrelevant. What we said is that we do not have the visibility right now because we’ve taken it over in March. The first two — for 3/4, we’ve actually made losses though on a decreasing trend. We could give us some time, maybe another quarter or so, and we’ll start talking about the margin profiles about the shoe business. But to equate margin profiles across a business like ice creams or a shoes, we’ll just end-up distorting that at a company-level.
So what we said is at the company-level, we will not be able to give you any margin guidances or any kind of discussions about margin profiles, etc. However, at individual levels, we’ll be more than happy in giving some more information. We’ve made a start this time as we’ve talked about the total amount of investments that’s going into ice-cream. We’ve also made a start in terms of giving some kind of a guidance in terms of the shoe business, we will definitely come back with the margin profile of the shoe business, hopefully in the next quarter or so.
Priyank Chheda
No problem. I understand your business model. Just wanted to reconfirm is ice-cream is also with that 18% 20% kind of ROE fixed model tied-up when it comes to the anchor tenant model, which we are running. So I mean I broadly get the idea. Yeah.
Sameer R. Kothari
Absolutely. I think you’re bang on that.
Priyank Chheda
Yeah, got it. The other question is, Baddi, when we are investing INR20 crores, shall we fully cover-up the space and capacity or would there be further space to add new clients around it?
Sameer R. Kothari
There is some capacity which is available in case of Badi, we have different product lines. We manufacture liquids, we manufacture tablets, we manufacture lozenges and we manufacture personal care products as well, which is in the form of tubes. So from that perspective, we have capacities on some lines and we don’t have capacities in others. So again, unfortunately, I can’t give you a straight answer. The answer is that, yes, there is still some scope for expansion as far as Paddi revenues is concerned even after doing this investment of INR20 crores.
Priyank Chheda
Perfect. And anyone this INR20 crores goes as a dedicated manufacturing block, which is perfectly take or pay, right? I mean the whole aspect around it is we’re not getting more anywhere into shared manufacturing when it comes to outside shoes.
Sameer R. Kothari
So Badi, no wait. So Badi specific is an anchor tenant model where we acquired the facility from. Reckit has contracted and undertaken or committed a certain part of the capacity, we are free-to go-ahead and parcel out the remaining capacity to other customers. What we have announced is a specific investment which is being done for another customer in the same-site, which is also dedicated. However, that may not be the case all-the-time. There will be some other customers who will come in without capex and in that case, they will be coming in without any kind of commitment.
Priyank Chheda
Sorry. Understood, understood. Go-ahead.
Sameer R. Kothari
Good. Yeah. As far as your question about whether the shared manufacturing model is applicable only to the shoes and the answer is no. We are not restricting it to any kind of products. If you if you’ve been a shareholder for some time, you would know that when we acquired the beverage unit in Maysuru, it was a shared manufacturing facility. Over a period of time, it has evolved to a facility where we have anchor tenants where certain customers of ours have guaranteed some amount of capacity. But we are happy to evaluate the model-based on what our customer requires us to.
Priyank Chheda
Okay. And I just require a few timelines with respect to the few projects. So there is a beverage is INR15 crores project timeline around that color Cosmetics 40 and bottling plant 35 and as well as Batti, would it be within next one and a half year or would be beyond that?
Sameer R. Kothari
So Badi, again, regulated, we are hoping — I don’t think 1.5 years. I don’t think we’ve mentioned 1.5 years in case of Badi anywhere. We are hoping that Badi should be far sooner than that. And hopefully in another six months, we should be able to commercialize that INR20 crore investment. In case of beverages, we talked about the fact that we had announced an acquisition in Orissa. This was a going concern that we’ve acquired. And as a result, we expect it to start contributing towards the turnover immediately.
Having said that and before this question comes in, this is a facility which is working on a job work, which means conversion cost model. So as a result, it may not make any large difference at the top-line level. However, we have a take or pay with the customer and as a result, we have a guaranteed ROE on the investment that we’ve made at that site. And the third one was
Priyank Chheda
Color cosmetics and bottling timelines.
Sameer R. Kothari
Okay, so the color cosmetics one was also — which was announced I think the last quarter we’ve actually finalized that. We’ve already gone ahead and acquired it. This was a facility where manufacturing was already going on. We acquired this company, I think nearly two years ago, the building that was acquired as a part of this acquisition was on rent. We have gone ahead and now I bought the building. And as a result, we expect that money anyways the ROE will start accruing immediately because the rent has been stopped.
Priyank Chheda
Okay. Okay. Thank you.
Sameer R. Kothari
Yeah, yeah.
Operator
Thank you. The next question is from the line of Vishal Gupta from HDFC Securities. Please go-ahead.
Vishal Gupta
Yeah. I have just one bookkeeping question with regards to other income is short of disproportionately. Can you just please highlight the reason, what was the reason that other income short up to disproportionately?
Sameer R. Kothari
In fact, Vishal, we just discussed this a minute ago. A couple of things that have happened. One, of course, is we’ve raised money and as a result, some of that money is lying in the FT. And the second thing is we’ve acquired the asset, which was earlier on rent and that led to some amount of increase as far as other income is concerned.
Vishal Gupta
Got it. Got it. Thank you.
Operator
Thank you. The next question is from the line of Ambruta Sane from Wealth Managers India Private Limited. Please go-ahead.
Amruta Deherkar Sane
Hello. Thank you for this opportunity. I just want to clarify some of the region-specific operations. As in, so we earlier had this DMU for soup and meal maker. And now we have added a facility for the ice-cream. So now we have two units to working
Sameer R. Kothari
So Amita, you’re absolutely right. The — the facility which was manufacturing soups and other powders was owned by a company called Avalon Cosmetics. We announced the merger of that facility into SFL, I think two quarters ago and the process, the legal process for that merger is continuing. In the meantime, we have started the investment for setting up the ice-cream facility, which we believe should start commercial production from April. Once the merger process is done, both the powder manufacturing facility as well as the ice-cream facility will get consolidated and integrated into HFL.
Amruta Deherkar Sane
And my — like the second question was regarding — sorry if I skipped the details, but you mentioned that you will be adding a ice-cream facility in the north. So have you given the details in where exactly are you planning to add this facility?
Sameer R. Kothari
We are in the process of shortlisting the land, we haven’t given out the details of where it is going to be. It’s basically going to be the NCR in the larger NCR area, but we’ll come back to you with the details hopefully by the next quarter.
Amruta Deherkar Sane
Thank you.
Operator
Thank you. The next question is from the line of Mayur Parkeria from Wealth Managers India Private Limited. Please go-ahead.
Mayur Parkeria
Thank you management for taking my questions again. So in the next 12 months-to 15 months horizon, not a very long-term horizon I’m asking. Nowadays, 12, 15 months is long, but still near-term 12 to 15 months, are there any new product segments on the consumption side, which is on the table or drawing board for us to look into and venture into. We have been adding new product segments over these years and that has helped us to continue to maintain growth rate, but it has also become a very wide portfolio. So how do we look at in the next 12 to — I know it’s a rolling basis and over the next three, four years, many can get added, but let’s say, over the next 12 to 15 months, What’s-ON the drawing board for the management to look at in terms of newer product segments or categories which are there on the consumption side?
Sameer R. Kothari
So, we keep looking at various product categories. I mean, I think I spent some part of my opening remarks talking about the fact that we were a little ahead of time in terms of identifying some of the segments like ice creams or beverages, et-cetera. We as a team believe that pet foods could be one category, which we think could continue to grow.
As far as specifics is concerned, obviously, we don’t have anything specific to talk about or we will obviously make a public announcement as and when we sign-up any contracts, et-cetera. But we’ve been agnostic as far as product category is concerned. We continue to look at growth wherever we can find it, whether it is in ice creams, beverages, OTC pharma, pet food or even if it growth comes back to our traditional sectors, which is home care and personal care, we’ll be happy to grow in any of those categories.
Mayur Parkeria
Okay. And in-home care and personal care, especially these two categories or are you seeing any kind of trend as far as know in the post-COVID, we saw a lot of companies from the D2C segments and other segments are trying to give — good challenge to the original incumbents and the large ones. But now the things are getting settled down. Do we have any kind of exposures or how do we see that? What are your initial readings around that? And how does that impact our business model, if any?
Sameer R. Kothari
So we try to hedge our customer-base by working with all kinds of customers, whether they are large players or small players, whether they are D2C players or they are the brands working across various channels of distribution. So from that perspective, we believe that we have been able to hedge our bets across various product categories.
From a perspective of trends, I think the overriding trend has been the fact that there is a definite slowdown as far as consumption is concerned. I think that has hit all brands irrespective of their preferred way of distribution. So whether it’s B2C brands or whether it’s traditional brands, I think all of them have been hit as far as the slowdown is concerned. I think that’s the overriding trend. This debate about whether B2C brands will be more successful than the traditional brands, et, is currently at least on the on the back-burner. I think what’s more important is how does the consumption story come back.
Mayur Parkeria
But it will be safe to say that we will — we would — currently, there is nothing in our exposures to any of the clients where there is a risk of client or small or mid going under where we have made investments, will it be fair to say that?
Sameer R. Kothari
No, that’s never fair to say that, right? I mean, we obviously are exposed to a bunch of customers, while we try all our ability to mitigate that risk, the fact remains that we are making upfront investments on behalf of our customers, whether it is for larger customers or for smaller customers, any kind of changes in business plans, any kind of changes in consumer behaviors can affect us. We take a lot of steps, whether it’s contractual or whether it is practical, by way of reducing our working capital exposure or by way of Mayank insisting on security deposits, etc. But the fact remains that we’ll always be exposed to what is called as a counterparty risk okay.
Mayur Parkeria
Okay. I’ll come back later sometime on these questions later. Thank you.
Sameer R. Kothari
Thank you.
Operator
Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to Mr Vimal Solangi, Head, Emerging Businesses and Corporate Communications for closing comments. Over to you, sir.
Vimal Solanki
Thank you. Thanks, Michelle. So while we are actively working through integration challenges. However, with a strong growth potential in ice-cream, the footwear and OTC pharma sectors, we remain confident in our ability to deliver strong results. Moreover, our recent expansions in the beverage segments have further bolstered our confidence in expanding our market presence. And as we encounter new opportunities, we will focus on those that are sustainable in the medium to long-term and align with the broader market’s growth trajectory. We maintain a positive outlook on our growth path backed by those strategic initiatives and our streadfast commitment to progress.
I would like to express my gratitude to everyone for joining today’s call. We trust we’ve addressed all your questions. But if you need further information, please do not hesitate to reach-out to us or connect with our Investor Relations partners, which is SGA Strategic Growth Advisors. And here is wishing you all a wonderful Valentine’s Day in advance and thank you for your ongoing support.
Operator
Thank you, members of the management. Ladies and gentlemen, on behalf of Hindustan Foods Limited, that concludes this conference. We thank you for joining us and you may now disconnect your lines. Thank you.