Manorama Industries Ltd (NSE: MANORAMA) Q3 2026 Earnings Call dated Jan. 28, 2026
Corporate Participants:
Ashish Saraf — Chairman & Managing Director
Ashok Jain — Whole Time Director & Chief Financial Officer
Ekta Soni — Vice president Investor Relations
Analysts:
Hiral Keniya — Analyst
Jeevan Patwa — Analyst
Srinik Mehta — Analyst
Kumar Saumya — Analyst
Rohan Mehta — Analyst
Sanjay Manyal — Analyst
Koushik Mohan — Analyst
Ninad Sarpotdar — Analyst
Rehan Syed — Analyst
Akhil Parekh — Analyst
Aashish Upganlawar — Analyst
Jainam Doshi — Analyst
Darshan Jhaveri — Analyst
Jahnvi Shah — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Q3 and 9 months FY26 conference call of Manorama Industries. 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. Hiral Kenya from EY thank you. And over to you sir.
Hiral Keniya — Analyst
Thank you, Rudra. Good evening everyone. On behalf of Manorama Industries Ltd. I welcome you all to the company’s Q3 and 9 months FY26 conference call to discuss the performance of the company and to answer your questions. We have with us the management team comprising of Mr. Ashish Saraf, Chairman and Managing Director. Mr. Deep Saraf, Deputy Chief Executive Officer, Chief Coordinator, Dr. Krishnad Bagan, Deputy Chief Executive Officer, Business Development Vice President R D. Mr. Ashok Jain, Director and Chief Financial Officer, Mrs. Ekta Soni, AVP Investor Relations. And Mr. Deepak Sharma, Company Secretary and Compliance Officer. Before we proceed this call, I would like to draw your attention to the fact that today’s discussion may contain forward looking statements that are subject to various risk uncertainties and other factors which will be beyond management’s control.
We kindly request to bear in mind that there might be uncertainties when interpreting such statements. Please note that this conference is being recorded. We would now start the session with opening remarks from the management team. Afterwards we will open the floor for an interactive Q and A session. I would now hand over the conference call to Mr. Ashisharaf for his opening remarks. Thank you. And over to you sir.
Ashish Saraf — Chairman & Managing Director
Thank you, Hiralji. Good evening everyone and a warm welcome to the Manoroma Industries Limited earnings conference call for Q3, nine months of 26. I am accompanied today on this call by our Director, Chief Financial Officer Mr. Ashok Jain. Our Deputy CEO Mr. And Vice President Mr. Deep Saraf. Our Deputy CEO and Vice President Mr. Krish Bhagan. Our Chief Compliance Officer Mr. Deepak Sharma and our Vice President Ista Soni and other members of our senior management team. On the company’s behalf, I want to express my gratitude to all our investors, panelists and stakeholders for participating in today’s call.
We are thankful for your ongoing trust and continued faith in our long term vision for the company. I am extraordinarily pleased to share that we continue to sustain our growth momentum in the third quarter and for the first nine months of financial year 26 we have reported revenues of INR 363 crores which reflects a remarkable year on year growth of 73.3%. This strong performance can be attributed to several key factors including an enhanced mix of value added products, the optimized utilization of our newly upgraded fractionation facility and our commitment to operational excellence. Additionally, we have experienced steady demand from our key customers in the chocolate, confectionery and cosmetic industrial sectors worldwide.
In light of these positive developments, we are excited to to announce that we have properly revised our financial year 26 Revenue guidance from INR 1150 crores to INR 1300 crores. This revision underscores our confidence in our growth trajectory and the strength of our business model. Our backward integrated model, high tech R and D research and development with cutting edge technology and deep sourcing network and the confidence of our hundreds of customers create a defensible competitive mode for Manorama. As many of you know, we operate in a structurally under supplied and high growth exotic niche. Specialty Fats and Butters Market to address the increasing demand for specialty fats and butters, we have plans to boost our existing capacity by 30%.
This expansion will increase our capacity to 52,000 metric tons of fractionation per annum through debottlenecking the existing plants which we expect to complete by financial effort. Furthermore, I am pleased to report that we have acquired 19.40 acres of new land adjacent through our existing facility. And. Simultaneously we have successfully commissioned a new packing plant with the new laboratory building and other infrastructure, all funded through our internal accruals. This strategic investment will enhance our operational capabilities and support our growth initiatives. Looking ahead to facilitate the next phase of growth, we are structurally planning to enhance the company’s capacities in both India and West Africa. We are committing a capital expenditure of INR 460 crores over the next 2, 3 years for the below projects. Forward integration through setting up a manufacturing facility for cocoa butter alternatives with 75,000 metric tons per annum capacity. Setting up a new fractionation manufacturing facility for sheep, palm, mango and other Exotic seeds with 75,000 metric tons per annum capacity including ESOS Setting up of new refinery manufacturing facility with 90,000 metric tons per annum Capacity Backward integration to processing factory in Burkina Faso, West Africa with 90,000 metric tons per annum capacity.
These investments will enable us to expand our production capabilities and meet the growing demand of our markets. At Manorama Industries, we leverage our integrated value chain to ensure margin stability and foster long term customer loyalty. Our backward integration from procurement to research and development to supercritical Fractionation provides us with unparalleled control over quality, cost, supply, stability and the confidence of our worldwide customers. This strategic approach positions us as a trusted partner for our customers in the chocolate, confectionery and cosmetic industries who highly value us, regard us and honor us. We prudently planned capex. We aim to strengthen our leadership in specialty fats and butters with pricing, power, robust growth, visibility and high structural advantages all well positioned to deliver sustainable growth for our esteemed stakeholders.
With that, I now hand over the call to our Chief Financial officer and director Mr. Ashok Jain to take you through the financial and operational highlights for the quarter and the first half of the year. Thank you.
Ashok Jain — Whole Time Director & Chief Financial Officer
Thank you Ashish sir. And good evening everyone. Let me through. The financial performance for the third quarter and nine months ended December 31, 2025. For nine months financial year 2526, Manoruma Industries reported revenue of INR 975 crore delivering strong 81.3% year on year growth. EBITDA for the period stood at INR 265 crore rupees with margin of 27.2% while profit after tax was INR 174 crore rupees translating into a margin of 17.8%.
This improvement in profitability reflects our commitment to optimizing our product mix, enhancing capacitance and implementing disciplined cost control measures. For the quarter third FY26 revenue stood at rupees 363 crore while EBITDA came at INR 98 crore with a margin of 27.1%. Profit after tax for the quarter was INR 68 crore reflecting a margin of 18.8%. These results highlight our ability to maintain strong operational performance despite ongoing capacity expansion and seasonal fluctuation in the business. With robust business fundamentals, expanding customer relationship and continuous operational improvements we are very confident in our ability to sustain our growth momentum and achieve our revenue guidance for the financial year 2526.
That concludes my remarks. We would now happy to take your questions.
Questions and Answers:
operator
Thank you very much. We’ll now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Jeevan P from Sahasral Capital. Please go ahead.
Jeevan Patwa
Congratulations sir. Congratulation to entire Manorama team for Wonderful set of numbers. I just want to understand one thing about the capex. So we have announced 460 crore capex. So I have seen the capacity 75,000 tons for CBA and 75000 tons capacity for fractionation. So just wanted to understand if you can just explain how how is it like current capacity is 40000 ton which is going to increase by 52000 ton by end of this March. So this fractionation capacity will be announced by further 25 000.
Ekta Soni
Yes sir. The question is with related to the capex. So the capex plan what we have announced it’s related to the vaccination capacity which is more related to our product which is called ESOS and our other exotic seeds and exotic seeds in the line. So that particular capacity of vaccination will be used for making ESOS product and also the HPMF which we going to use and blend it with our existing steering component and going forward ESOS component to make a better and value enhanced product. So that particular vaccination capacity of 75,000 tonnes is with respect to the project of ESOS which we have announced for 75,000 tons.
So those both capacities are related to each other.
Jeevan Patwa
Okay. Okay. And what is esos?
Ekta Soni
ESOS is a process where we are going to convert our soft fractions like olein and other soft oils into a hard fraction which is called ESOL Enzymatic steering Olic that will be further be used as a different application in the food sector and will be further blended with HPMS which is called hard Palmid fraction and it will become a CD component thereafter which has a wider application and usage in the food industry. So that enhanced capacity will be of around 75,000 metric tons. So overall we are going to increase our CBE output capacity with this ESOS and SF3 vaccination.
Jeevan Patwa
Okay? Okay, understood. And the pricing will be similar to CV pricing for this?
Ekta Soni
Yes. So the pricing are somewhere similar to the cocoa butter and the existing fat and butter prices of our product existing model.
Jeevan Patwa
Okay.
Ekta Soni
So only the raw material will be different. So the raw material will be. There will be the soft fractions like the existing OOLING we manufactured and some other commodities oil that we can use in the process of making the sauce.
Jeevan Patwa
Got it? Got it. Perfect. Thanks a lot. Thanks a lot.
Ekta Soni
Thank you sir.
operator
Thank you. Our next question is from the line of Srinik Mehta from Indo Alps Wealth. Please go ahead.
Srinik Mehta
Hi, just some very quick questions. So I see that you have much higher growth in the cost of goods sold which is the raw material versus the growth in sales. So that is leading to a significant shrinkage of the gross margins almost 8% down versus the previous quarter. So is this some one time kind of a cost? Are you seeing some increase in the raw material cost? What’s really happening here?
Ekta Soni
This is with respect to the GP margin. We have always been shared that that remains in the range of 45 to 20, 50% owing to the, you know, the freight cost and there are some other byproduct realization. So it happens to be in the range of 45 to 50%. So you can consider that range in the model in, in your assumptions and calculations.
Srinik Mehta
Okay. This quarter it is down to 44.3 and the last quarter it was 52.8.
Ashish Saraf
It is range bound.
Ekta Soni
It is, it is, it is a range bound. Because there are a lot of situations with respect to freight cost. And our Bipro realization, it doesn’t impact our EBITDA margin or PAT margin that way, but the gross margins are in the real bound of 45 to 50%.
Srinik Mehta
Okay, so this doesn’t trigger any changes in the price. This is just a normal raw material fluctuation in the cost,
Ekta Soni
right? Yes sir.
Srinik Mehta
Okay. And you have a major plan right now for increase in the capacities. So this capacity increase would possibly take care of the, the revolutionary growth that you’re getting for next at least two more years. Or how do you see this planning?
Ekta Soni
So this, this capital expenditure, whatever the plan we have for this capex happens to be happen in a phased manner and all our investments are going to be deployed over next to three years, which you know. Yeah. So the growth, growth we are targeting is for the next four to five years because our existing capacities, you know, will give you the growth for the next one or two and this capacity will give you a growth for next two to three years to overall we have a plan and visibility with this CAPEX for the next 24 to 5 years of growth.
Srinik Mehta
Excellent. Okay. And most of this funding for the CAPEX is through internal accruals I assume.
Ekta Soni
Yeah. So we are primarily relying on our internal cash accruals which are, you know, very strong and sufficient enough to support, support our planned projects over the next two to three years. We already have begun deploying these funds. We already have spent 52 odd crores towards this CAPEX plan and we intend to continue doing so. But you know, any external kind of financing could be considered selectively if necessary. But we intend to do all through our internal accruals.
Srinik Mehta
Okay, thank you, thank you for excellent Performance from industry. Thank you. The whole team.
Ekta Soni
Thank you so much, sir.
operator
Thank you. Our next question is from the line of Kumar Soumya from Ambit Capital. Please go ahead.
Kumar Saumya
Hi sir. Good afternoon sir. I have a couple of questions. Firstly on the revenue growth side, we have seen 81% growth on the nine month year on year. If you could help me break out in terms of.
operator
Sorry to interrupt sir, but your audio is not clear.
Kumar Saumya
Is it audible now?
operator
Can you use a handset?
Kumar Saumya
I’m using the handset.
operator
It’s not clear. We are not.
Kumar Saumya
Okay, I’ll come back in with you. I’ll come back.
operator
All right. Our next question is from the line of Rohan Mehta from PCOM family office. Please go ahead.
Rohan Mehta
Hi. Am I audible?
operator
Yes, you are
Rohan Mehta
great. Thank you so much for the opportunity and congratulations on a great set of numbers. So firstly I wanted to clarify in your press release the forward integration project that you have mentioned for cocoa butter alternatives. This is essentially the fractionation capacity we are talking about. Is it so?
Ekta Soni
Yeah. So if you see the project, so there are four projects which we have mentioned. So out of four project one is which is related to Burkina Faso project which is going to come in Africa. That is a backward integration project. The rest of the three project which is related to sovereign vaccination capacity of 75,000 tonnes and also the ESOS CVA capacity of 75,000 tonnes and refinery of 90,000 tons are in a similar line of production which is related to a forward integration plan of the company.
Rohan Mehta
Okay, so in terms of the pricing for cocoa butter alternatives compared to sterile and cde, how does that compare? Is this margin dilutive? Can you give some thoughts on that?
Ekta Soni
So the products which we are going to come, of course they are not going to be a margin dilutive thing because we are looking for the same sustainable margins level what we have currently in our business. Even we are looking for a better leverage but the margins are going to be maintained with the new projects coming with those products also.
Rohan Mehta
Okay. And purely just isolating for the fractionation capacity of 75,000 tons, what would be roughly a broad range of cost that you’re looking at right now and the asset terms that you’re looking to generate from this.
Ekta Soni
So if I want to bifurcate out of our capex span of 450 crores, so approximately 300 to 330 crores would be, you know, attributed to this forward integration project which we targeting as a turnover of more than 5 with our investments.
Rohan Mehta
Okay, okay. And my final question is on Your working capital needs. So incrementally after taking into account even the backward integration projects, what sort of working capital needs will you require going forward?
Ekta Soni
Sorry, can you repeat the question?
Rohan Mehta
Yes. So my question is on working capital requirement. So after conducting the backward integration projects and once the forward integration project of cocoa butter alternatives that comes online, how much incremental working capital requirement do you foresee?
Ekta Soni
So for those projects which we are coming up, the working capitals, you know would be around one of the two months of the cycle because those for forward integration because they, those raw materials are very different which is related, which is not related to current raw material of the products. So those raw materials could be the captive consumption of a rolling and maybe some other soft oil which we can have imported from some other sources. So those working capital cycle will be a much, much lesser compared to our existing business model which is existingly which is around five to six months.
So that will be around one to three, three months of working capital which we will be required for that business. That yeah, one to two months.
Ashish Saraf
Two months.
Hiral Keniya
Okay. Thank you. Thank you so much.
Ekta Soni
Thank you.
operator
Thank you. Our next question is from the line of Sanjay Manal from Dam Capital. Please go ahead.
Sanjay Manyal
Hello sir. Congratulations on a good set of numbers. My two questions, one is 73% kind of a revenue growth. What would be the volume growth over here and what would be the pricing growth? That’s my first question.
Ekta Soni
So you are talking 73% or buy on y basis, right?
Kumar Saumya
Yeah, 73%.
Ekta Soni
So in the nine months that it’s more related the growth would be around 65 odd percent. Should be around from the approximately from the volume growth and the rest would be the inflation, you know, adding growth with respect to the pricing. So we have utilized our capacity which we have commenced last year of 25,000 tonnes. So that attributes mainly to our growth in this number.
Kumar Saumya
And also give me at what price we are doing incremental volumes. At what price? We are locking, you know, cocoa butter equivalent. At what price? We are locking a cocoa butter equivalent for the future contracts.
Ekta Soni
So that is one product which is there in the portfolio and we are locking in the same price as what we have been locking in the past.
Kumar Saumya
Okay. And one last on the employee expense front, I think the during the quarter it seems the employee expense has been down by 23%. What could be the reason for that?
Ashish Saraf
23%.
Ekta Soni
23%.
Kumar Saumya
That seems your what I could provision.
Ashish Saraf
So we have complete our. We have granted the shop to the employee and now it is not required to make the provision for the shop.
Kumar Saumya
Okay fine. That’s all, that’s all from it. Thanks.
operator
Thank you. Our next question is from the line of Kaushik Mohan from Ashika group. Please go ahead.
Koushik Mohan
I just wanted to understand like for 460 crores of capacity that we are putting up right in that how much currently from 5th year balance sheet that we can do an internal accrual.
Ekta Soni
So we have plans, we already have invested around 50 odd crores toward capex buying the lands and you know upgrading packing and other supporting infrastructure. We plan to invest approximately 70, 80 crores in this financial year to best capex. And in the next financial year we are planning to spend around 100150 crores rupees towards our CAPEX span of the project.
Koushik Mohan
Okay so with this capex. Ma’, am, in the previous call you told that in the previous question you told us we can do five times on asset terms. So can we assume safely with 2000 crores on the top line can be added with this capex over next three years?
Ekta Soni
Yes sir. So what in terms of you know the asset turn we expect it to be more than 5x. So if the calculation comes exactly what you have have said right now.
Koushik Mohan
Okay and currently what is our capacity utilization for 40,000 metric tons that we.
Ekta Soni
Have it is around 85% capacity utilization for our planet combined.
Koushik Mohan
Okay so one year more growth is left out in terms are we also considering the recent 12500 metric tons addition that is 52000 metric tons, 52,000 for next year.
Ekta Soni
We are already increasing our throughput, you know approximately by 30% through the bottlenecking. So that will cater to the growth for the next next odd years and the next two years. You can see we have you know good room for the growth for the next two years. And with the capex coming in we see a very good growth overall for the next four to five years.
Koushik Mohan
Okay, a lot of people in the industry like will be saying that cocoa prices are going down from the last two. So how are we differentiating ourselves from the cocoa prices? Like can you just explain that because our margins are maintained, our numbers are maintained and we are on the growth phase and we are doing fantastic numbers. So can I just give that bifurcation that why are we not related to cocoa prices?
Ekta Soni
So sir, our performance should answer that as you have rightly said that we are doing good performance despite cocoa butter prices solidity. But I can explain you the technicality and how our product is not related to cocoa butter per se, recycling, moving and everything. Our CB is these fats and you know butters are developed through specialized fat blending and vaccination. It you know if there has advanced formulation and R D expertise which is there to make you know functional fats based on our customer application. So hence our prices are not directly related to any commodity cycles.
So we are a manufacturers of cocoa butter equivalent which is a more technology and formulation driven business not a commodity business. And hence you know we are like more solution oriented rather than a commodity linked business and our customer relations are more application specific and technical. So once we have you know developed the product with our clients for their formulation so we are there happens to be there for a longer term. So overnight changes in any of the commodity cycle will not you know hamper our demand or pricing model for our business because our raw material base is very different than cocoa butter raw material.
Base. So that will be volatile because that is a commodity and our, our raw material prices are you know sustained because we are not a commodity business. We are doing a very niche manufacturing a very niche technical product for our customers.
Koushik Mohan
What is the average volume prices that we are selling now? Is it around the range of 550 or something? Wrong is my right.
Ekta Soni
So it is in the same range what we have been selling our customers. So we are doing cost plus margin basis business model to our product prices are similar.
operator
Thank you. Our next question is from the line of Ninaj Sarpotar from Aditya Birlamani. Please go ahead.
Ninad Sarpotdar
Hello. Hello. Am I audible?
operator
Yes sir, you are.
Ninad Sarpotdar
Yeah. Congratulations on a good set of numbers. Just two, three questions. First that did we do any volumes from the upgraded facility and how and any volumes from the decal group in these quarters.
Ekta Soni
So you. Sorry, you need a volume numbers for what?
Ninad Sarpotdar
I’m. I. I mean I just wanted to understand that has the new upgraded facility of 12,000 metric tons and JV from with the decal group has any contributions to the top line in current quarter.
Ekta Soni
So that upgraded 12,000 will be. It’s, you know it’s currently in the process. So that facility expanded capacity will be available from the Q1 onwards to the company and yet we have also started our batches with decal and we are in the process of doing that.
Ninad Sarpotdar
So during current quarter no contribution from that as such, right?
Ashish Saraf
Yes, we are doing. We are charted the revenue from.
Ekta Soni
We have minor contributions which is there from the ticket as we have just started our ramp up with them.
Ninad Sarpotdar
Okay, okay, okay. And my second question is so you have planned a lot of new capex and backward integration projects so on the margins front you have been guiding on a very conservative basis of around 25 percentage. But can we see these margins stabilizing or becoming the new normal or any more accretion from new product lines that you are launching? Maybe the Cocoa orbiter alternatives and the PMF backward integration and the bulking of FASO projects?
Ekta Soni
See sir, we believe that the current margin which is, you know, around 25 to 27% which we always share and guide in the range happens to be on a sustainable mode. But of course we are in the trajectory to improve over the medium term and in a longer term because there are multi level strategy, we are coming up with projects which is related to forward and backwards that should really help in improving the margins and we are working for that. But you can take the current margins for example as a more substantial level business. And we are working.
So we are.
Ninad Sarpotdar
Yeah, yeah. Just one last.
Ekta Soni
We are doing everything for that.
Ninad Sarpotdar
Okay, okay, got it, got it. Just one last question. Just needed some clarity on my understanding that the new 70,000 MTPA of CBA facility is the new product that you were talking about with a lower working cycle, working capital cycle and the 75,000 MTP of solvent fractionation is in line with the existing 52,000. I mean the similar technology and similar kind of output facility. Right.
Ekta Soni
So that 75,000 is related to the new product of CBA which is ESO and the other products what we have mentioned mentioned in the project details. So both the capacities, each other, it’s not related to the existing project.
Ninad Sarpotdar
Okay.
Ekta Soni
Yeah. So those will be the new products coming out of both sf, the new servant vaccination capacity and the source one. So those both the projects are related to each other in terms of capacity.
Ninad Sarpotdar
So. So just to get clarity, it’s not fungible. It’s a completely different line. Right. I mean.
Ekta Soni
Oh, it is fungible. Of course we can run any exotic seed in the, you know, in that dedicated in these, in that new solvent vaccination capacity. But that will be more used for the new 75000 CBA capacity which we have announced.
Ninad Sarpotdar
Okay, okay. Okay, got it. Yeah, thanks. Thank you.
operator
Thank you. Our next question is from the line of Rehan Sayyat from Trinetra Asset managers. Please go ahead.
Rehan Syed
Yeah, good evening 13 and thank you for giving me the opportunity. So like my first question is around like I want to be understanding regarding your significant portion of the new capex is dedicated towards.
operator
Sorry to interrupt, but you’re not.
Rehan Syed
Okay, can I repeat my question again?
operator
Yeah, but I request you to Be a little more clear.
Rehan Syed
Okay. So like I want to get understanding regarding your CVA personality that you have put it now. So you have done forward integration through 75000 million alternative facility. So how does the margin profile in competitive life scope for CPA for some. And do you intend to target the same fortune find a client base with this product?
Ekta Soni
Yes, the clients, you know, the clients and the markets for CBA product are also same. It is also going. It is only going to be used in the cooked sectors. It could be in chocolate, it could be in confectionery, it could be, you know, in other hureika kind of a market. So the applications for both the products are similar only into the food sector. And we will have good margins in that product line also as we are doing in the current business model.
Rehan Syed
Okay, and my second question is around your decade partnership in reveal that you have done your first commercial production batch. Has the partnership in gazette was the completion in Quarter 3 FY 2016. So could you provide a roadmap for the expected revenue contribution from this partnership? 527. And what are the logistical advantages of manufacturing in Bazal versus exporting from your IPO plant?
Ekta Soni
So the advantage is more related that we will have a, you know, geographical presence in that region. Because Latam being the huge market and is the biggest consumption for these facts. So advantage is more for being the local presence there and cater to the all customers not just the, you know, top five, top six customers in the world. So the idea is that to be there and it will, you know, help in, you know, lot of facilities and triggers everything. Also the idea of getting into the projects like CBA or Sovereign Vaccination 3 is to increase the the output product of steering or the heart which we already make.
So overall, if you see the capacity or the project which we are coming up with is related to the hard fat only. So we are going to have a very diversified raw material based in those projects. We can also use our Oolin as a captive consumption to make this theory in and the cocoa butter equivalent. So the overall idea to have that project is to make more and more production of the steering base fats and more cocoa butter equivalent which has a wider application and different usage in the industry as well. So that is going to increase the output of our production capacity of steering and cb.
Rehan Syed
Oh, okay. Okay, Fair enough.
operator
Thank you. Our next question is from the line of Akhil Parikh from BNK Securities. Please go ahead.
Akhil Parekh
Yeah, thanks for the opportunity and many congratulations on a good set of Numbers. My first question is just a clarity right on the margins front, the gross profit per kg is the right metric for margin is the right metric to evaluate our business. I believe that in one of the questions when you replied you said we work on a cost per basis model. So GP per kg would be the right number to look at, right? Rather than gross margin.
Ekta Soni
EBITA level.
Akhil Parekh
EBITA per kilogram.
Ashish Saraf
Yeah. We see the overall as a whole business ebitda. So you can take the EBITDA which is sustainable margin.
Akhil Parekh
That I got it. But is it a per kg which is the number which we should look at? The margins may fluctuate, right? I believe because we are in a processing business and because of the fluctuation in the raw material the GP margins can puncture and EBITDA margins can accordingly fluctuate and hence per kg is the right metric. That that’s my understanding.
Ekta Soni
At EBITDA level we have actually maintained our margin so that fluctuation is not on the beta part. So you can take EBITDA margin per 10 basis.
Akhil Parekh
Okay. Okay. Yeah. So so per turn wise we how it is vary on a YY basis EBITDA per ton.
Ekta Soni
So because we deal with the different raw materials and there are different yield and parity of individual seeds. So you means there is no that calculation. We see because we see on a blended level basis. For you to take that on assumption will not get you on the right calculation because there are different raw material materials we deal with and there are different yields and different products and different parity also for all those fees we do so on a blending level. You can see that particular margin on the business level.
Akhil Parekh
Second question on the capex front or 460 crore of which almost everything will be on internal accrual basis or where we’ve been kind of raised will need to raise some capital.
Ekta Soni
Sir, there are no immediate plans, you know to look for capital external financing, be debt or be it equity. We are more relying on internal recruits because we have good cash accruals and we are going to be have one. So but the options we will look when the you know time is going to be right. But as of now there are no immediate plans for external fundings.
Akhil Parekh
Sure. And let’s last two more questions. One is on the other income part, right. There is a sharp jump in other income in 3Q. Any specific reason for that?
Ashish Saraf
This was the loss on the import side which we have imported the Sheenut and other butters in the last quarter and we we mentioned these are Difference of the what we have paid and what we have. Good. When reached India. So there is a forest gain loss. On the import side,
Akhil Parekh
it’s more of a inventory gains. Is that understanding?
Ashish Saraf
Yeah, you can say it is a part of forex. It is not what we have paid and what we have booked for as a purchase. There is difference of the Prof.
Akhil Parekh
On the forex side. Sorry, I lost. Sorry, I lost.
Ashish Saraf
Yes, foreign.
Akhil Parekh
Okay. And lastly on the value added product contribution, if you can give that number for the third quarter.
Ekta Soni
Value added question to sales is around 75% which is like includes our value added products like this theory and the cocoa butter equivalents 75, 75% to sales approximately.
Hiral Keniya
That’s all from my side and best wishes for coming quarters.
Ekta Soni
Thank you sir.
operator
Thank you. Our next question is from the line of Kumar Soumya from Ambit Capital. Please go ahead.
Kumar Saumya
Yeah, hi sir. Am I audible?
operator
Yes, you are.
Kumar Saumya
Yes. So my first question is on the capacity expansion side. When you say key refinery capacity for expansion of 90,000 tons, does it mean the existing 45,000 tons of refinery goes up by 90,000 tons?
Ekta Soni
No, that will be the additional 90,000 capacity, Kumar. So beyond 55,000 capacity we are going to add 300 metric tons per day capacity which we link to our new capacity expansion of 75,000 tons of vaccination.
Kumar Saumya
Okay, got it. So this refinery used to feed the 75000 expansion that you have.
Ekta Soni
Yeah. Another specialty products. So that will help you.
Kumar Saumya
And should one look at the 75, 75 separately or is it fungible? Like if I’m looking at 52,000 fractionation today or by the end of this year, so that will add another 75,000 ton over it or 150,000.
Ekta Soni
You need to understand that 75,000 of both CBE and SF3 is, is a one plant if you can see. So that the capacity and the production of steering of course is going to improve, you know, increase accordingly. So it will be beyond 52,000 tons. We are adding 75,000 capacity. So that will only help improve the production of this theory and the CBEs accordingly. This production is for the same product through different process.
Kumar Saumya
Okay. So we should look at it as a way like 75000 additional is coming. Either you can make CBA or CB.
Ekta Soni
That is right. That is right. The way to save input.
Kumar Saumya
Yes, same either if you make CBA or cb, the yield will be same.
Ekta Soni
Yeah, it would be slightly better in this, in that process.
Kumar Saumya
Got it, got it. And your initial question, you said 81% growth in the nine month is driven by 65% growth in volume and 1516 on value. Did I get it right?
Ekta Soni
No sir. I guess the 73% is the YoY growth. If I am not strong.
Kumar Saumya
Okay. No, I was looking from a nine month perspective.
Ashish Saraf
73% out of this 73% 90% is the volume growth. Rest is the inflation and other 70.
Kumar Saumya
Okay, got got answer. On the working capital side, where are we currently?
Ashish Saraf
Currently working capital cycle is 120 days.
Kumar Saumya
120 days on sales or cops. Okay. And this was compared to H1 levels of roughly 200 days. Right.
Ashish Saraf
H1 was around 150. 160 days. 20 days.
Ekta Soni
Working capital date was 97.
Ashish Saraf
And the currently working capital cycle is 120 days. The H1 was the 90 days.
Kumar Saumya
H1 was 90 days. Got it. And lastly sir, on the Mexico plant, what would be the volume that you’re looking for this year?
Ashish Saraf
More than 2000 ton. We hope that this year will be. Delivered approximate
Kumar Saumya
more than 2000 tons from there. And so lastly on the nine month number what would be the CBE cost contribution?
Ekta Soni
PB contribution to sales is around 30%.
Kumar Saumya
30%. Got it. Thank you. Very helpful.
Ashish Saraf
Around approximate 75% value. Approx. Approx.
Kumar Saumya
75 is value added. CV is 30%.
Ashish Saraf
CV. CV is good.
Kumar Saumya
Good. Thank you sir. Thank you. Thank you sir. Thank you.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit the questions to two per participant. Our next question is from the line of ashish Ugalanwar from InvestQ PMS. Please go ahead.
Aashish Upganlawar
Yeah, thank you so much for this opportunity. Ma’, am, I’m looking at your company for the first time in so much detail. Just wanted to understand from you on the working capital side because in the last year published I could see that cash conversion cycle of the core operating core working capital which is debtors inventory and payable it was around 500 odd days of sales. So the diff. What is the other part which you’re saying has come down to 125 days on the working capital net basis now so that is what I wanted to.
Ekta Soni
Understand which is balance sheet or financial year.
Aashish Upganlawar
This is March 25th on Screener. I could see that.
Ashish Saraf
As on balance we did but you should take as an average in 90 days because we talked about the raw material for 20 days for the whole year. So. And at the end of the balance it seems high but the average is around150.150 days 920 days because once we bought the inventory it is gradually monthly reduce the inventory level. So we keep around 150 days inventory as a means you can take it.
Aashish Upganlawar
Okay. On a regular basis you are saying 150 days of inventory is there. Okay. Okay. And so on, on net basis it comes to about 125 days.
Ashish Saraf
Right now. 120 because of the inventory which is at the end of balance date comes to revenue next year.
Aashish Upganlawar
Okay. And you mentioned something that the working capital cycle could further improve because of the new product.
Ashish Saraf
Yes, yes.
Aashish Upganlawar
So how, how is it likely to move maybe over the next couple of years.
Ashish Saraf
So means you can take 90 to 100 days working capital cycle days. Going forward after this new capacity it will be reduced around 10, 20 days more. Two to three months requirement.
Aashish Upganlawar
Okay.
Ashish Saraf
Approximate.
Aashish Upganlawar
Okay. And lastly it’s a brief call. Your margins here, I mean if I look at history it’s gone from 25, 28%. Again it came down to 14 and now it’s again, I mean over years it’s come down to again 25, 27%. So is there a cycle like that or. Because you mentioned that these margins are sustainable. So what is the change that has happened in all these years?
Ekta Soni
So because we have come up with our new six lines in the last year, 20, 24 July and the utilization has come up from the plant and that’s why we can see the better margins. Also we have improved the product mix, we have improved the share of, you know, value added product and because of the operational excellences and you know, the economic leverage, we can report a very good margin, good margins which was related to a couple of years back, which is around 16, 17%. So that was on a low utilization basis which was there and we were coming up with a new project.
So the margins which we are reporting now are sustainable on that level of 25 to 27%.
Aashish Upganlawar
Thank you so much. I’ll take it in detail maybe one on one meeting, maybe sometime. Thank you so much.
Ekta Soni
Thank you sir.
operator
Thank you. Our next question is from the line of Jainam Doshi from Chris pms. Please go ahead.
Jainam Doshi
And congratulations on an excellent set of numbers. I just wanted to understand like the price of cocoa corrected by 60% in a year. And I’m aware that we are like not directly related to the commodity but if the price of cocoa has come down, is it necessary for the price of cocoa butter itself as a commodity for per se to come down in the same proportion or does the matrix work other ways?
Ekta Soni
So you’re asking for Cocoa butter or cocoa butter equivalent for the cocoa butter we. So that is a commodity that is linked to cocoa beans and it will act accordingly. We can tell you for cocoa butter equivalent.
Jainam Doshi
So if you could throw some light on the cocoa butter equivalents also then that would be helpful.
Ekta Soni
Yeah. Though we are maintaining our prices because it was raised it gone to you know, 25, $30,000 of cocoa butter price at one time during the last two years. But our prices were still sustainable because we were doing a cost plus margin basis model. And today also it is the same. We are doing that particular model only for our products and also for cocoa butter equivalent. So there is that way no impact on our pricing model whether the commodity prices are getting, you know, increasing or reducing.
Jainam Doshi
Okay, okay, got it. So next would be like the EU deforestation rules that have been like postponed till the December 2026. So like does it have any impact on our sourcing of raw materials or is it only pertaining to the cocoa?
Ekta Soni
So that is only related to I guess cocoa because that regulation applies for cocoa beans. I guess. So there is nothing which is there for our material based. We have like buying from the forest. It is not a farm product or a crop product which we are buying so and we are not, you know, cutting trees and buying our seeds. It’s a forest wasted products. What we are buying from the deepest forest of India and West Africa. So hence there is no impact of that regulation in our business.
Jainam Doshi
Right, right, got it. So the current mix of value added products as you mentioned is around 75%. So how do we see this mix inching up like in next one or two years going ahead?
Ekta Soni
So we intend to do approximately 85, 90% of our sales with respect to value added going forward. Our co product, you know the fog fats which is Olin are also going to be converted into a value added product. So the idea and intent Approximately to do 90, 95% of the business towards value added product.
Jainam Doshi
Okay. And with the total capacities coming on stream in next three, four years do we see like clocking a revenue of around 4,500 5,000 crore based on the capex guide and capex and the terms which we have mentioned.
Ekta Soni
So the asset turn, what we have said is right for the project which we have announced forward related configuration project and we can see a very good growth going forward for the next five years. So this CAPEX will, you know, suffice our growth for the next five years. So you can have that calculation accordingly.
Jainam Doshi
Okay, got it. Thank you. Thanks a lot.
Ekta Soni
Thank you sir.
operator
Thank you. Our next question is from the line of Darshan Javeri from Crown Capital. Please go ahead.
Darshan Jhaveri
Hello, good evening. Thank you so much for taking my question. Firstly, congratulations on a great set of results. Hopefully I’m audible. Hello. Yeah, yeah, hi sir. So just wanted to ask in regards to like our Capex or Capex is going to come in phase manner online. So will it come like in FY28 or how will it come online? Yeah, because the first phase.
Ekta Soni
Yes. So there are four projects which will be, you know, commencing in a phase manner. So we intend to commence all our production capacity approximately by the financial year 28. So over the next two or three or three years. So the all the capacity will be commenced. And as and when the capacity, you know starts getting commercialized, we are going to update on that particular capacity.
Darshan Jhaveri
Okay. Okay. So. Man in so FY27, that is the next year, whatever revenue growth we can have is from the debottlenecking. Right. So any kind of guidance that you know, we can give for how what FY27 can be in terms of revenue. Because there’ll be a 30% increase in capacity. Right. So can we assume a commensurate increase in revenue?
Ekta Soni
So we of course are having good growth with respect to. And we will be. We have ample of room, 30% in the new capacity, 15% still available in the existing capacity. So almost 40, 45, 40, 50% growth is still there to be done in the next one or two years. So we are looking forward again a good numbers for the coming year as well. For a good.
Darshan Jhaveri
Can we quantify it like in a percentage range term also that would also.
Ekta Soni
Be okay, so you can take approximately range on a number of 30% that should come.
Darshan Jhaveri
Okay, okay, okay, fair enough, fair enough, ma’. Am. And the Capex would like as you said, FY28. So that will be first phase, second phase or like how would it be like full might be get completed by FY28 29. Right. Like that would be. If we could have some more detail in that like, you know, how much would phase one be? Kind of like.
Ekta Soni
The phase one manner would be, you know, we have started doing our projects in West Africa and we have a Portland here in India. We have identified land in Burkina Faso and we are already in the verge of, you know, ordering all the equipments and related things for all the capacities. So all will go simultaneously parallel each other. So we can have this capacities, you know, coming and rolling. Maybe next one, one and a half year we can have one Two capacities ready and maybe in the next two or three years we can have all capacity.
Darshan Jhaveri
Okay, okay, fair enough. Fair enough. Thank you so much. And that’s it. From my side. All the best.
operator
Thank you. Our next question is from the line of Janvi Shah from Share India. Please go ahead.
Jahnvi Shah
Hello. By the way, congratulations on the good set of numbers. I had a bit of technical questions on the capex that you announced. I didn’t understand as to exactly where does this solvent vaccination plant sit. And same with this CBA one it helpful for the existing plant. I understand this is entirely a new product that we are launching and for that we need this. So is either of these useful in the already CB and the sterile plant that we already have.
Ekta Soni
Which is a total new capacity. We actually have sufficient capacity for existing facility of 40, 52,000 tons. So the new capacities or the projects which we have announced is for the new product and production of our steering fats and specialty fats and butter. So that kind of production.
Jahnvi Shah
Thank you. Now is CVA different from CVE first and second for these two plants the our raw materials are going to be different. You mentioned that. How are they different? Like we are converting soft fat to hard fat. So we use the olene that we’re already producing. Maybe we’ll get some more from elsewhere but at the same time.
Ekta Soni
Yeah, that is right. So we are going to do a captive consumption of our olin product as well. As well as along with our olin product we can also have some soft fraction being imported through other sources. So the idea of that CV is to have a diversified raw material base and the products which can be offered to all our clients because it has got the same applications and acceptability of the product in the food market and it has also got a huge demand. So that is why we have the opportunity diversified our raw material based and the working capital also will be reduced significantly in that particular business because we are going to use the captive consumption of our olin and as well as some of the soft fractions through some other sources.
Jahnvi Shah
Okay. So for this we wouldn’t need the refinery or the first two, three stages, would we just require the solent vaccination. We’ll get the oing, we’ll put that in, we’ll get the hard part out.
Ekta Soni
Yeah. So we will need the CBA facility, we will need the fractionation and we will need the refinery. So we will not be needing the expelling and the extraction facility in this.
Jahnvi Shah
And that’s why the cycle is the is lower.
Ekta Soni
Yes.
Jahnvi Shah
Okay. And so like right now we are at a capacity of 52,000. At the end of the year we are looking at the capacity for CB at 75,000 which will come online I think in next two to three years. Do we have that demand from the market?
Ekta Soni
Yes, of course we have that demand visibility for the products because there is a huge demand supply gap in the current industry for the products which we are manufacturing because all these products are very niche and you know the applications are very formulated and solution based on the customer applications. So of course like we have been expanding, you know, more than 10 times. We have expanded in the past and because of the demand only and because of the visibility only, we have been expanding and this project we have taken skipping back in the sense also that will help us in your diversify the raw material based and have a better product portfolio in the basket of malaria.
Jahnvi Shah
Thank you so much and sorry, just one last question. Any of these projects will have like a margin implications for us? It will improve our margins.
Ekta Soni
Yeah, of course that is the reason we are, you know, taking all these steps towards, you know, increasing.
Jahnvi Shah
Any guidance for the same.
Ekta Soni
You should take current as a sustainable margin. So any improvement we are going to, you know, guide you further. So we’ll be there every quarter. So we’ll be communicating to you. Quarter.
Jahnvi Shah
Okay. Okay. Thank you so much. Thank you so much.
Ekta Soni
Thank you.
operator
Thank you. Ladies and gentlemen, due to time constraint, we take that as a last question. I would now like to hand the conference over to the management for closing comments.
Ashish Saraf
I sincerely thank all the participants for joining us for The Manoroma Industries Q3 and 9 months financial 2016 earnings conference call. Our company is strengthening its reputation as a trustworthy and leading provider dedicated to addressing the increasing demand for sustainable cocoa butter equivalence cocoa butter alternative speciality fat cheering and butters in this, in the whole. For the whole world. Business is business. Business always has risks and we are trying with a sustainable way to overcome all the challenges being thrown at us. We strive to be the preferred supplier of specialty fats and butters for both our global and domestic customers by focusing on research and development, cutting edge technology and expanding our international presence and national presence.
But enhancing our capacity backed by a strong balance sheet. I thank all our stakeholders and everybody for imposing their faith on us and giving us their trust and considering us for their presence. Thank you. Thank you very much.
operator
Thank you on behalf of Manorama Industries Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your lines.