Orkla India Ltd (NSE: ORKLAINDIA) Q3 2026 Earnings Call dated Feb. 11, 2026
Corporate Participants:
Siddharth Borkar — Head M&A and Investor Relations
Sanjay Sharma — Managing Director and Chief Executive Officer
Suniana Calapa — Chief Financial Officer
Analysts:
Unidentified Participant
Ashutosh Joytiraditya — Analyst
Rajit Aggarwal — Analyst
Resha Mehta — Analyst
Nitin Shakdher — Analyst
Akshay Darji — Analyst
Presentation:
operator
Foreign. Ladies and gentlemen, good day and welcome to Orcla India Limited Q3 and FY26 earning conference call hosted by ICIC Securities Limited. As a reminder, all participant line will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation. Conclude 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. Ashutosh Jyoti Raditya from ICC securities. Thank you. And over to you sir.
Ashutosh Joytiraditya — Analyst
Thank you once. Hello and good evening everyone present on the call. I, on behalf of ICIC securities welcome. You on orkla India Limited’s Q3 FY26 earnings call. I now hand the call over to. Mr. Siddharth Porkar from Orkla India Limited for further remarks. Thank you.
Siddharth Borkar — Head M&A and Investor Relations
Thank you. Hello and welcome everyone.
operator
I’m really sorry to interrupt you sir, but your voice is not audible.
Siddharth Borkar — Head M&A and Investor Relations
Can you hear me?
operator
Yes sir. Please proceed.
Siddharth Borkar — Head M&A and Investor Relations
Okay, I’ll repeat. Thank you Ashutosh for hosting us. Hello and welcome everyone to the Q3 FY26 results for Oracle India. I am Saddar Borkar, Head of MNE and Investor Relations at Orkala India. I am joined by Mr. Sanjay Sharma, Managing Director and CEO at Otla India. Ms. Rena Kalpa, CF at Otla India. I hope you’ve gone through the investor presentation.
operator
I’m sorry to interrupt you again sir, but again your voice is okay.
Siddharth Borkar — Head M&A and Investor Relations
I hope you have gone through the investor presentation and other materials that we have uploaded. In today’s call, we’ll walk you through some of the key highlights of the quarter and then we’ll open the floor for Q and A. I want to draw your attention to the disclaimer slide as taken in our earnings presentation. With that, I hand it over to Sanjay. Good evening everyone and thank you for joining us today.
Sanjay Sharma — Managing Director and Chief Executive Officer
Thank you Siddharth for handing over the call to me. My name is Sanjay Sharma. I’m the managing director and CEO for Oracle India. This is the second time we are. Interacting as we present our quarter three FY26 results. And we truly appreciate having you with us again. A heartfelt thank you to all the institutions and individuals who continue to place their trust in us. Over the last 19 years of our presence in India, we’ve been able to build a strong value creating company. And we are confident that that we will continue on that path in the years ahead. For those joining us for the first time, I will start with a Quick introduction of the business and then Sunaina. Who joins me, who is our CFO. And I will take you through our quarterly performance and then answer any questions that you will have. Let me start with a quick introduction for Orcala India. Aukla India is a focused multi category food company built around strong heritage brands with deep consumer trust. Our portfolio includes MTR which is a 100-year-old brand with a very strong legacy, and Eastern, which has been there for 40 years of market presence in Kerala and other parts of India. Both the brands that we have hold leadership positions in in their core markets. MTR in Karnataka and Andhrabadev and Eastern in Kerala.
We operate across two primary categories. Spices, which contributes 67% of our revenue and convenience food which contributes 33% of our revenue. Together addressing a wide range of consumption occasions across the day. Our business model is built on a fundamental premise that food is local. State preferences, cuisines and consumption habits vary significantly region to region. As a result, in our category, brands with strong local relevance consistently outperform generic national level offerings. Our market leadership is supplemented by the strong distribution reach of 673,000 touch points that we have across India. But most of these touch points are in our core markets.
I would say almost 70% of these touchpoints. In parallel, we have built a meaningful international business underpinned by migration of Indians. International operations contribute approximately 21% of our consolidated revenues with our products reaching consumers across 45 countries. We have also retained our position as the largest branded spice exporter for 24 consecutive years, underscoring the scale and consistency of our execution and supply chain strength. Now let me just reflect on the macroeconomic environment that we are operating in. We see a steady improving macro environment. As per the latest economic survey, India’s growth is projected at around 7% and we believe that the outlook remains encouraging.
The government has also done a series of initiatives over the last 12 months such as lowering income tax slabs, lowering interest rates and the Most important, the GST 2.0 reductions which have been done across multiple categories, especially foods. I think all these initiatives will lead to a greater amount of money coming. Into the wallets of consumers. And with this we expect the consumption trends to improve. The GST restructuring now covers 100% of our products portfolio in the 5% bracket. A quick touch on the raw material and commodity trends which are which we operate, which we buy and are largely associated with our products. First, let me speak about spices. In Spices, I would like to reiterate the fact that we’ve had two straight years of Deflation. This unprecedented price movement of over 30% was led by Chile which reduced by 50%. This has impacted our value realization but we remain focused in driving volumes.
Hence, in the quarter three of FY26, deflationary trends in spices continue to weigh on the revenues. However, we are seeing inflation in key raw materials and we expect top line benefits to phase in as the inventory turns on. Convenience Food Portfolio Wheat and SMP are the crucial raw materials that we buy. The inflation here has been manageable. Let me come back to Spices. We do extensive fieldwork on tracking the development of spices crops in India. The new season for chili has started from December onward and it will go on till March. For other spices, the fresh season crop will start coming into the market.
So from March onwards till July, based on our crop surveys done by our procurement team, we have seen a reduction in the cropping areas as farmers, because of the extreme low prices have moved away to more profitable crops. We are seeing the effect of this in the price development of raw materials. Early indicators are suggesting that there will be an inflationary trend in spices in the coming year. With this, let me come on to our business performance. Let me walk through our business performance for the quarter we have delivered a steady revenue growth of 4.1% supported by a healthy underlying volume increase by 5.4%.
Partly the growth has been impacted due to festivals timing effects. You will recall that in 2024 the festival season was in the end of November, early end of October and early November. The effects of this is largely seen on the convenience food portfolio where we see a very bump up as far as the sweets platform is concerned. Our spices portfolio continues to deliver a fantastic volume growth of 10.1%. However, the revenue growth remains modest because of deflation in key raw materials. Our convenience food portfolio posted a 6% revenue increase. We usually see the effects in sweets portfolio during festival season as I was mentioning earlier, so the results are muted due to the early festival season sales which came into last quarter.
Digital commerce is one of the fastest growing channels has expanded by 43.4% supported by multiple initiatives across social media and digital commerce platforms. EBITDA grew by 17.7% translating into a healthy EBITDA margin of 16.1%. Now let me go into our two categories. Let me start with spices in spices. Our sustained efforts to drive per capita sales through driving of penetration range, frequency and value has resulted in a strong 10.1% volume growth across the spices category. This has been executed through two key initiatives that we have taken. First is building consumer engagement through our advertising campaign and second is driving distribution by increasing availability, range, presence and visibility of our core range.
These programs have continued in this quarter in the last quarter as well, our advertising campaign have a strong cultural connect and symbolisms. MTR ran its Purlieugh campaign in Karnataka and Sambar campaign in AP and Telangana. For Eastern which has a focus in Kerala, we ran a major campaign that was launched just shy of Christmas season. Chicken Masala is one of our largest selling products. A 360 degree campaign was launched in TV and digital Eastern’s Chicken Song which is what we launched as an advertisement. Eastern’s Chicken Song adopted a cultural storytelling approach aimed at resonating across age groups.
The brand plays triple to Kerala’s enduring relationship with chicken curry and an everyday comfort favorite food of Kerala and a centerpiece of celebrations across homes and communities. In a very short period of time this campaign was able to generate over 1 million views on digital. Besides this, Eastern continues its focus on building itself as a non vegetarian masala in Karnataka, driving its distribution and advertising through innovation of chicken kebab. On the distribution excellence front, MTR added 22,000 outlets in quarter four across Karnataka and Andhra Pradesh, materially expanding numeric reach and availability at point of purchase on.
Ground visibility drives were executed across 25,000. Outlets in quarter four with a sharp focus on five rupees and ten rupees pack as range penetration drivers packed across core masalas of Sambar, Puliogre, Rasam and Garam masala. These are our top four selling masalas on Eastern. Our efforts continue to focus on driving availability and visibility of our core products in an endeavor to drive consumption in 2022, MTR learned from Eastern how to play the pure Spices category. Since then, over the last three years we have more than doubled our volumes and driven penetration for MTR from 20.3% in 2022 to 30.6% in 2025 in Karnataka and from 4.3% in 2022 to 13% in 2025 in Andhra Pradesh.
Rural markets have also continued to develop to deliver a strong double digit growth. Rural infrastructure was further strengthened with an addition of 53 new rural distributors, taking a total rural distribution network to 765 across Karnataka, Andhra Pradesh and Telangana, helping Us reach over 5,000 new villages above 3,000 population in our core markets. Coming to Convenience Foods Our strategy here is to transform our offerings in line with the developing consumer need for higher convenience. Our convenience food categories are built largely on three key platforms Sweets, breakfast and meals in the current quarter we saw both breakfast and meals deliver a solid double digit growth on breakfast.
Our South Indian breakfast remains the core pillar of MTR’s portfolio led by its flagship products of Rava, Idli, Dosa Mix and Upmanics. In quarter four, MTR delivered an impressive growth in South Indian breakfast across all the regions, particularly north and west regions where the value growth was 17%. This performance was underpinned by a strong traction on quick commerce platforms. With digital commerce in breakfast growing 45% in quarter four, MTR maintained a high share of voice along with rendering visibility and consideration in key metros such as Delhi and Mumbai. MTR’s fresh idlibosa batter business which we launched two three years ago has continued to develop positively.
The good news is that the business model with its margin has reached a position where we can now look for expansion of the same to other metro towns. On meals. A broad based growth was driven by the minute portfolio and the cooking ingredients portfolio. Task here is to continue to innovate and build a new portfolio of offerings on sweets. As mentioned earlier, the overall business declined due to advancement of the festival season. However, our ready to eat sweets which we recently launched a couple of years ago products like Mysore park. The segment has delivered a strong growth of 47 and a half percent during the full festive season which is quarter two plus quarter three combined.
The new range is now distributed across 50,000 outlets in convenience food, our innovations grew at 41.6 indicating a good traction for all the new concepts that we have launched. The third pivot of our business is the international business. Our business in GCC countries continues to grow at 16.4% in the past quarter. Our strategy is anchored strongly on the flagship brand Eastern and its two pronged and has a two pronged approach. 1. For our core Malayali consumers base, we are transforming our offerings from a pure spices and masala play to a total food play covering platforms like breakfast meals and sweets.
At the second level, we are accelerating our penetration with a launch of Arabic Masalas to appeal to the local Arabic population. With respect to the Malayali consumer base, our plan is to grow our range to a total food brand. Recently we have launched the 5 Minute Breakfast range which we had launched in Eastern domestic business in gcc, we also plan to we will also continue to drive strong consumer activation to grow the core spices range in the Middle East. In uae, Eastern is now the number one Indian spice brand in household reach across all households.
Not just Indian households but all households. Our Arabic range also continues to grow Eastern Arabic range now contributes to one third of brand Eastern household penetration in Saudi Arabia. Coming to Digital we continue to capitalize on the rapid expansion of digital commerce with revenues in this channel which are growing at 43.4%. Internally, we have continued to drive improvement. In ways of working by improving the. Quality of listing the quality of content, driving influencer marketing, using real time analytics to improve performance, marketing and campaign effectiveness. These initiatives have continued to drive sales development in line with the industry. Today we get 9.5% of our sales from digital. Digital commerce has also helped us in targeting a new consumer segment in a sharper way. This is the affluent young consumer who is seeking the very best global standard product in every category. To serve this emerging need. We have recently launched MTR Prakriti, MTR’s first ever digital first brand with its own dedicated B2C site and the only DCOM led business targeting all India.
Led by Metros, MTR Prakshitri is leveraging our deep knowledge in the spices domain. MTR’s foray into premium spice space is with four key products. One is Biazgi chili, second is Guntur chili the third is Araku turmeric the fourth is Kumbaraj double Parrot Coriander. All of these are single origin hand picked produced in small batch spices promising a distinctly superior experience aimed at the discerning consumer seeking absolutely the very best as far as spices are concerned. With this, MTR is targeting all Metros and any Indian consumer seeking only the best in spices. This quarter we have also got a few notable awards.
First is the great places to work. Two of the most critical assets of our business is our people and our culture. Post the merger of MTR Eastern with. MTR Foods and the creation of Orcala India. This was the first engagement survey the that we conducted. We are now certified as a great place to work which justifies our strong employee value proposition of being a home to grow as well as our good work culture. This is also a testament to the way that we have managed the integration of two diverse companies and two diverse cultures. Our advertising and marketing campaigns have also been recognized by the industry. Our campaigns are built by positioning our offerings and resonating a strong cultural integration. Some of these innovative local campaigns did see recognition from Economic times and Business world awards.
Our Pulio Gharay campaign and annual food festival Karunadu Swada have been recognized for their uniqueness and effectiveness. Now I will hand it over to Sunaina to help take you through the details on the financials.
Suniana Calapa — Chief Financial Officer
Thank you Sanjay and good evening Everyone, let me begin with the Financial Highlights for Quarter 3 FY 2026 kindly take a look at slide 18. Orcla India delivered revenue from operations of 636 crore, recording a year on year growth of 3 supported by a healthy volume growth of 5.4% during the quarter. EBITDA for quarter 3 stood at 102 crores reflecting a strong double digit growth of 17.7% and a healthy EBITDA margin of 16.1%. Profit after tax before exceptional items was 68 crores representing a year on year growth of 3.8%. Moving to slide 19 let’s take a look at our category performance.
First spices delivered strong volume growth of 10.1% year on year reflecting sustained consumer demand and brand strength. Overall spices revenue growth was moderate at 3.1%. This was primarily due to continued deflation in spices, especially in Chile. To remain competitive, the company partly passed on decline in raw material costs, particularly in pure spices, resulting in lower price realization of approximately 7%. Convenience foods in the quarter grew by 6% driven by strong double digit growth in the breakfast and meals categories reinforcing the strength of our value added portfolio. Sweets during the quarter saw a temporary decline attributable to the shift in festive season.
From a geographic perspective, domestic revenues grew by 2.9% led by strong double digit volume growth in spices, partly offset by decline in price growth in convenience food, particularly sweets was relatively softer due to the festive shift. International revenues grew by a healthy 8.7% in the quarter with GCC markets leading the performance driven by strong growth in convenience foods mainly in breakfast and in meals. Moving on to slide 20, EBITDA growth remained robust at 17.7% in quarter three with EBITDA margins holding strong at 16.1%. This performance was driven by volume led revenue growth, lower advertising spend in the quarter due to the festive season shift and sustained focus on operational efficiencies.
In addition, excluding the impact of production linked incentives, EBITDA growth for the quarter would have been even stronger at 23.2% while EBITDA growth was strong. PAT before exceptional items grew at a measured pace of 3.8% primarily due to lower other income following the dividend payout of 600 crores in FY 2025. During quarter three, the company recorded exceptional items of 15.8 crores relating to gratuity expenses following the implementation of the new labor code. Consequently, PAT after exceptional items was negative 14%. The company remains firmly focused on driving volume led growth, accelerating the expansion of its value added portfolio and continuing to.
Strengthen its operating efficiencies. Moving on to slide 21, let’s take a look at our year to date performance. The Company has delivered a strong rebound in volume with year to date December volume growth of 7.1% supported by solid performance across both spices and convenient foods. Revenue from operations grew by 4.7% reflecting the company’s decision to pass on price benefits to consumers, particularly in spices in response to lower raw material costs. Year to date EBITDA grew by 7% driven by volume led growth and continued operational improvements. EBITDA margin expanded to 17.2%, an improvement of 40 basis points year on year led by sustained operational efficiency initiatives.
In addition, excluding the impact of production linked incentives, the EBITDA growth for year to date FY26 would have been at 11.9% profit after tax before exceptional items grew by 1.6% with growth moderated by lower other incomes. Now back to you Sanjay for your concluding remarks.
Sanjay Sharma — Managing Director and Chief Executive Officer
Thank you Sunaina. Let me just sum up the performance this quarter. Business development continues to be in the right direction with focus on volume growth in spices, digital channels and rural both. Have been doing well for us overall. Strategies to drive depth in local geographies. Are moving in the right direction. We have been able to drive penetration. Over the three year period that we. Are tracking penetration on and we have a strong margin development path as we continue to reap the benefits of operating beverage. With expected improvement in overall consumption prices, deflation now behind us and inflation coming up ahead, we hope to see some good quarters ahead of us. Before I conclude a few remarks regarding how do we see development going ahead? Our efforts will continue to build spices through a strong local focus. We will continue to drive consumption in our core geographies. Our efforts over a three year horizon have helped us improve penetration in our. Core geographies and we’ll continue to do more of that. We have a strong conviction of an improved top line performance supported by an improved environment for consumption, a strong volume development and a deflationary cycle turning around on convenience food. All three platforms have shown promise and successful innovation development. Our business models are stabilizing and are resilient. We are also strengthening our digital commerce. Capability in the organization. Furthermore, we are systematically expanding our footprint focus to play across major metros. Our demand flow has been developing very well on the international business that has been developing well in the Middle East. We now see an improving global environment and bilateral FTA are expected to support less volatile environment for business in the future I believe this should be good for exports from India. And from a profitability point of view. We have delivered a strong EBITDA growth and profile. And we expect to maintain the same. Thank you very much for your attention. And we’ll be happy to take any. Questions that you may have.
Questions and Answers:
operator
Thank you, sir. Ladies and gentlemen, we’ll begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchdown telephone. If you wish to remove yourself from the question queue, you may press star and two participants are request to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue is on. The. Our first question comes from the line of Rajit Agarwal from Nilgiri Investment Managers. Please go ahead.
Rajit Aggarwal
Good evening, sir. I have a few questions related to the sequential movement in revenue and EBITDA margins. Is it possible to share the volume growth or the volume decline from Q2 to Q3? And then I’ll have a follow up question on that.
Sanjay Sharma
So I’ll give this to Sunaina. I think Sunaina will be best suited to answer this.
Suniana Calapa
Yeah. So Rajat, the volume growth in quarter two, which was also Diwali quarter was at about 7.7%. And you’ve seen the numbers for this quarter at the 5.4%.
Rajit Aggarwal
Right? Ma’, am, I wanted to know the Volume movement from Q2 to Q3.
Suniana Calapa
From Q2 to Q3. The absolute volume growth.
Rajit Aggarwal
Yes.
Suniana Calapa
Yeah. In metric terms. In metric terms. Okay. So it is slightly down. RAJAT. It is versus sequential quarter on quarter. The growth is minus 4%. Okay. Right. So most of the degrowth in top line is explained by the volume degree growth. Sorry. I’m saying most of the degrowth sequential decline in top line would be explained by the volume degrowth. And there could be some upside on the revenue or the realization. Right. Since the sequential Decline is just -2%. I think you need to also take. Into account the festival season effects that are there out here. Given the fact that Core has had a festival season quite late in the year. Last year which was. When I say Last year it’s 24. It was somewhere in the first week of November. So a large portion of the festival season sales was captured in October and November.
Rajit Aggarwal
Right, Sir. And given that the Q tool had sudden impact due to GFC transition and we had. I mean there were some comments in the last call saying that 25% of the sweets portfolio was impacted and then seven to 10 days of billing could not take place. The sales could have been much higher in Q2 and subsequent and hence the decline could have been slow in Q3. Is that understanding correct on the top line?
Sanjay Sharma
Yes, I think because the GST impact came in into the sweets portfolio where the GST reduced, I think from 12 or 18% to 5% and we had to manage that transition, so we would have lost some skills in quarter two. We could have certainly done better out there and therefore there would be an impact in terms of volume out there.
Rajit Aggarwal
And you think the sweets portfolio or the convenience foods portfolio will be able to buck the trend in the next or the subsequent quarters?
Sanjay Sharma
Most certainly. I think, as we said, I mean, if you look at the overall performance for convenience food on a YTD basis, we are at about 12.1% growth. So overall portfolio is still. While we see quarter by quarter growth variations, the overall development is very good. We are starting to see the breakfast portfolio doing nearly a double digit growth, the sweets portfolio doing a double digit growth, and the meals portfolio also doing a very strong double digit growth. So overall, the convenience food portfolio on a YTD basis is still running a 12% growth.
Rajit Aggarwal
Right, thank you, sir.
Suniana Calapa
If I could just add, you know, we should also break up the business between spices and convenience foods. So while overall there was a decline of 4% in volume spices, which is about 67% of our business, the volume growth was about 3.4% sequentially.
Rajit Aggarwal
Right, ma’. Am. Right.
Rajit Aggarwal
That’s helpful on the EBITDA margins as well. Again, in Q2 we had an impact due to the GST transition. There were additional advertising expenses and labor costs involved which probably are not there in this quarter. And despite that, the Q3 EBITDA margins are lower than the Q2 EBITDA margins. Any reasons for that?
Suniana Calapa
Yeah. So that is also primarily led by gross margins. We’ve seen softening of gross margins primarily related to mix effects. Convenience foods comes at significantly better gross margins. So we’ve seen some softening in the gross margins and that’s led to the EBITDA margins being slightly softer versus the previous quarter.
Rajit Aggarwal
Right. And if I can just squeeze in one more question. Related to the expenses sequentially, again, the employee expenses have reduced by about 6 crores and other expenses have also reduced by a similar amount. Any one offs. I mean, is this related to the GST transition only because of which the Q2 expenses are higher?
Suniana Calapa
Q2 was slightly higher because we had. Some one off expenses related to the IPO, et cetera, sitting in September. Plus we’ve also done some off rolling of manpower in some of our locations. And that also led to reduction and therefore that’s, you know, permanent in nature.
Rajit Aggarwal
Okay. And. Okay, thank you. That’s very helpful. Thank you.
Suniana Calapa
Thank you.
operator
Thank you. Our next question comes from the line of Dishon Jain from Kausar Capital. Please go ahead.
Unidentified Participant
Hello. Am I audible?
operator
Yes, you are.
Unidentified Participant
Yeah. Thanks for the opportunity. So can you provide some more details on the international markets other than the GCC countries? Like how are we going, growing there or doing there?
Sanjay Sharma
So I think 70% of our sales comes out of the GCC market. And you’ve seen the growth coming out of there on the rest of the markets. I think on US Markets and the North American markets, we are, I think flat in terms of there’s a decline in our growth out there largely on account of the fact that last year we changed our distribution network and there’s been a little bit. And also the Red Sea crisis was there last year. So there was a lot of stock buildup that had happened. As far as the US Markets are concerned, we still don’t have any concerns in United States on account of consumer offtakes, largely on account of the fact that because of the tariffs.
So we still believe that tariffs have not impacted consumer optics. It’s really the high stock buildup that had happened in the United States over this year. We’ve seen that the Red Sea crisis has reduced substantially and the delivery time into the US have improved, in fact reduced a lot. So we’ve been able to cut the stock levels to. We are working to cut the stock levels to normalized levels by the first quarter of this year. Okay.
Unidentified Participant
And since in domestic we have a local state kind of a business, so are we planning on some organic acquisitions of in different states?
Sanjay Sharma
Yeah. So as far as M and A is concerned, I think it’s an important strategy for our growth to go beyond our local agenda. But we don’t make any comments about M and A. As you know, the nature of the beast by itself is quite fickle. And we are, I can assure you that that has now become a major priority for us and we are working quite aggressively with a few opportunities that we are looking at.
Unidentified Participant
Sure. And lastly, can we would be able to provide OCF number for nine months, operating cash flow number?
Suniana Calapa
No, Nishant, we will not be able to provide the OCF number.
Unidentified Participant
Okay. No issues. Thank you. Thanks for the opportunity.
operator
Thank you. Our next question comes from the line of Risha Mehta from Green Edge Wealth. Please go ahead.
Resha Mehta
Thank you for the opportunity. So the first Question is, you know, on this trend, inflationary trend that you know, we are seeing and on the spices side, so have we already started seeing that inflation creeping into our procurement? And hence do we see that we would be able to, you know, pass on the prices to consumers by taking price hikes anytime soon or have we already taken price hike?
Sanjay Sharma
Yeah. So, you know, based on our Monday buying, you know, we participate in the Monday 52 weeks in a year. So we are starting to see that the rates are starting to go up. We are participating in the Monday at this point of time and the materials are coming in. We are also sitting on covers for raw materials in our business. And therefore, based on how the trends are moving, as far as the Mondays are concerned, we are looking, we are continuously adjusting our prices and we have two parts of our business. One. One is the pure spices business where we track the Monday rates on a weekly basis. We track the wholesale rates in Karnataka and Kerala and we keep adjusting the prices based on what the wholesale. Landed. Wholesale rates are in the two respective states. So on pure spices, these adjustments continue to happen as part of a regular process. The other part of our business is the blended spices business. And on the blended spices, it’s a more recipe based, it’s more based on heritage and culture and our brand equity here we are able to certainly pass on all the price increases. However, masala out here is a composite of multiple pure spices. So if you were to take sambar, it consists not just of chilli, but it also consists of coriander. It also consists of turmeric.
So the effects out there are not really substantial. And we will be observing the development of prices as we make changes in prices as we go ahead. Basically safe to assume that no price hikes have been taken at a blended portfolio. It’s too early because the season starts only in December. So by the time the price effects, it takes us time to execute price effects. Also by the time the effects will come, it will be mostly in the first quarter onwards or late first quarter onwards. Okay. Okay.
Resha Mehta
So maybe Q2 onwards is when we start seeing, you know, some inflation benefit. Also from a revenue growth standpoint, would that understanding be right?
Sanjay Sharma
You will see some effects in Q1, sorry, in Q4 and in Q1 of next year.
Resha Mehta
But the deflation will completely go out of the base by Q1 or Q2.
Sanjay Sharma
Our pricing strategy is based on how the Monday pricing is done, is developing. It is not based on our covers. It is more based on our Monday pricing. So given the Mandi prices movements will start happening for Chile in December and January and February as we are starting to see. And some of the other crops will start coming from March and April. We will start to see the full effects coming in, some effects coming in quarter four of this year and major effects coming in. In quarter one of next year.
Resha Mehta
So the reason I’m asking this question is because, you know, there’s been a very wide volume revenue growth gap. Right. And that is majorly attributed to the deflationary cycle. So just trying to understand, you know, when is it that we see the anniversarization of this deflationary cycle and start seeing the benefits of inflation in our revenue growth very constructively. Yeah.
Sanjay Sharma
So I think it’ll still remain what I just answered to.
Resha Mehta
Got it. And what was the spices volume growth for Q1 and Q2? I think Q3 all have called out. It is 10% for Q1 and Q2. What was the spices volume growth?
Sanjay Sharma
Give us a second, we’ll just tell you.
Suniana Calapa
Yeah, so spices volume growth in Q2 was 5.9% and was 8.7% in quarter one.
Resha Mehta
And you know, I think you were referring to some cross learning from the Eastern acquisition for the pure spices portfolio of ntr. If you could just kind of elaborate on that.
Sanjay Sharma
So, you know, when we before MTR, before we acquired Eastern, 90% of our sales in the spice and masala category used to be largely out of blended spices, and only 10% of our sales used to come out of pure spices. And we never used to play pure spices as a category very seriously because it was a very commodity category and it used to have a very strong price sensitivity. After we acquired Eastern, we got to. Understand. How to deal with the market when we deal with pure spices. And Eastern had a very good system by which they did. Part of it was how we bought. In the market and how the buying and the selling supply chain was linked and what was the basis of doing pricing and being active in the market. The other underlying thing that we also understood out of that was the fact that still a large portion of the market was unbranded. 60% of the market is still unbranded, and 40% of the market is branded in pure spices. So there is a very strong linkage between how the unorganized market works and the branded market. So we can only play within a band of 10 to 15% price premium out there.
I think some of these learnings, when. We understood and we aligned our pricing models and the cost of our formulations and other things from the learnings that we got out of Eastern, we were then able to effectively play in Karnataka and be effective against the smaller local brands that were dominating the the local market of Karnataka. Even though we were very expensive as. A pure spice brand, we were still. The number one brand in pure spices. But we saw here an opportunity where. We felt that the only distribution gap that we had in this category was largely linked to the fact that they were outlets that used to carry pure spices and did not carry blended spices. So we found that being present in pure spices was actually a very important strategic initiative that will actually help us increase our distribution and thereby increase the presence of the brand in terms of penetration and household. So we decided therefore to use the learnings out of Eastern and get into the market. We made the shift in 2022 and. Over the last three years we’ve actually. More than doubled the volumes of NCR. In Karnataka and in Andhra Pradesh. And that has led to the increase. In penetration from 20.3% to 30.6 as far as Karnataka is concerned and from 4.3 in 2022 to 13% in 2025. In Andhra Pradesh and which in turn. Has led to revenue of pure spices increase for MTR from 10% to how much? Now. The salience of pure spices. I don’t have the number at the back of my hand. Maybe we can have that sent to you at a later date.
Resha Mehta
Sure. Thank you so much.
Sanjay Sharma
Yeah.
operator
Thank you. Next question comes from the line of Nitin Shakdir from Green Capital Single family office. Please go ahead.
Nitin Shakdher
Hi, good afternoon. To the management of Aukna. This is Nitin Shaktar from the Green Capital Single Family office. My question is more as an investor, just wanted to understand the export market initiatives that Oklahoma is taking into the European market with some of the packaged foods and just wanted to get the sense of. Of the increase in the distributed network and some areas and territories that you’re targeting because there is a demand for Indian food not only from the Indian diaspora, but also from people who wanted to have global food and convenience food. So it seems like a good market to tap into now and increase exposure there.
Just want to have comments on that, please. Thank you.
Sanjay Sharma
Sure. So let me give you the genesis of the international business that we had. I think we believe that food is local and therefore the only way food migrates from one place to another place is when people migrate. It’s valid as far as India is also concerned because let’s say a North Indian will not have puliyuguray in Bisi Belay Bath And a South Indian will not have a need every day. So only way Bisibelle, Bath and Puliyagura will migrate to north of India is if a person from Karnataka migrates into Delhi. Right? And that’s been typically the reason how food is migrated. Similarly, when you look at international business, Eastern migrated out of Kerala, from Kerala to Middle east because we all know that a large amount of Malayalis have actually migrated into the Middle east. And of course they will continue to consume local food which they have grown up on. And therefore the brand, their favorite local brand in Kerala was Eastern. And therefore Eastern had the opportunity to. Go into GCC and build itself. Similarly is the story of mtr. MTR also migrated from Karnataka into United States and other in Europe and other countries largely on account of the migrations of Karnataka and the largest South Indian community that Goa went out there was who wanted their familiar food and therefore continued to buy our brand. So this is the reason why our food migrated. When we did the Eastern acquisition, we had a strong synergy between MTR and Eastern. It is the basis on which we built the international business. Now we have now merged both these businesses. We have now created one entity which now contributes roughly 21% of our total sales.
And you can see that there are very complementary footprints because Eastern a major portion of its business actually came. Almost 90% of its business came out of GCC, whereas 10% from few other scattered countries. Whereas MTR was very strong in the. Rest of the world and had a. Very strong footprint of around 40 odd. 35 to 38 countries when we merged. Both the businesses, both the brands have. Been now taken to over 45 countries across the world. And that’s the business. So MTR is strong in North America, Canada, Europe, Australia, New Zealand, Japan, Singapore, Malaysia and all these. Whereas Eastern largely dominance was in the gcc. That’s the way we have constructed our business. Our business continues to grow at the back of immigration. And I think despite the headwinds on immigration which are there either in the US or Europe and Australia and all around the world people are still migrating and we do still get, we still get a lot of demand from different parts of the region. The international business we run on three key business models. The first is focus countries where we have our own organization. We these are fairly large. Countries where. We have actually set up a country team that runs the entire business. The second is medium sized businesses which is. The first is largely bcc. The second is US Canada where we have reached a certain scale and we are now starting to build and customize our business for the region out there and try and launch products that are. Meaningful for the international market. Where we are now starting to put feet on street. And the major portion of the countries. That we cover are mostly opportunistic markets. Where we have distributors, where we ship products to, we get demand from there, where we are shipping products to. When we monitor the sales and marketing activities at a very broad level, it’s largely left to the distributor and our people visit these areas to ensure that we do some level of market development that happens in countries. So this is the way our international business is structured.
Nitin Shakdher
Okay, great. Thanks a lot for that. Great background. My question was like also in connection to, let’s say what we’re seeing initially on import duty and free trade agreements being signed between Europe and India. Is that an opportunity for a company like Aukla to develop the European market a lot more? Obviously, as you rightly said, it’s a factor of immigration and where like minded people have like minded food. But that’s nothing to say that there is a market for spices in East Europe. There is a market for fusion food as well. It’s not only that the Indian malyali consumer will consume that.
Yes, there will be a preponderance of that. But is there a potential to develop the market in areas in Europe which you think might have lower volume right now, but maybe in the long run the volumes might pick up?
Sanjay Sharma
Yeah, I think, you know. We have. A very, very different business philosophy and the philosophy largely governs the way we do business across, across India and across the world. We do believe that food is local. And it’s important for us to reflect the local culture in a very, very strong way. And that is what helps you differentiate, helps you deliver taste and flavor to consumers as long as it resonates with the local culture. We do not believe in a generic. Approach of taking a commodity and trying to sell a single type of commodity. To the rest of the world. And we believe that that is undifferentiated and a very commodity like approach which will not generate margins and effectiveness in the market. And therefore we don’t pursue such strategies. Therefore, we are very, very strongly linked. To the culture of, to the migration. Of relevant target groups and serving them. With the kind of food that they have consumed in India. So of course, theoretically such a market exists everywhere in the world. Everyone uses spices. But you have to understand that, you know, the spice that I sell in India may not be the right spice that I may go and sell in. Let’s Say a Poland or a Germany or or Norway as a matter of fact, because their taste palates and their acceptance of the spice levels are very, very different. We see that kind of a nuance. As far as India is also concerned. So the spice concerned spice that we. Sell in Karnataka is very different from. The spice that we sell in Andhra Pradesh. In Andhra Pradesh we sell gunpool chilli, which has a much higher heat index. Than the spice that we sell in. Karnataka which is largely chilli, which has a much lower heat index and a much higher color index. So there are these technicalities which are. Related to very basic fundamental principles of how food and cuisines are developed, which is largely by Talking about the 300 kilometer radius of availability of ingredients that. Have a very strong influence on the. Kind of cuisine that you have. So unless you don’t understand the cuisine. Of different portions of India or abroad world, I’m afraid you will be only taking a very generic and unprofitable approach. To building your business. And therefore we don’t pursue it like that.
Nitin Shakdher
Okay, thank you. That’s a great fair point and all the best for the future.
Suniana Calapa
Thank you.
Sanjay Sharma
Thank you.
operator
Thank you. Our next question comes from the line of Akshay Darjee from Self Shen Industries. Please go ahead.
Akshay Darji
Hello sir, I am audible.
operator
Yes, you are. Yeah.
Akshay Darji
My question is within the south India core market, are you seeing any change. In consumer demand compared to quarter two?
Sanjay Sharma
I think that’s an excellent question. As we said that certainly the consumption environment is improving and therefore we are seeing an uptick as far as consumption is concerned. It is slow and we do feel that the markets are warming up to a better environment.
Unidentified Participant
Okay. And my next question is like what is the growth plan for the next two years to expand the business?
Sanjay Sharma
I think our growth strategies are very clearly articulated. I think first is we have two brands which is MTR and Eastern. We still believe that there is a strong potential to grow as far as both these brands are concerned in its cor market. As you know that MTR is the number one brand in Karnataka and is the number two brand in Andhra Pradesh. Eastern is the number one brand in Kerala. Now just to. Our entire business model is about focusing in the local geographies as far as prices are concerned and driving the growth through driving penetration by driving range, by driving price and by driving consumption of our products.
Give me a second. Yeah, by driving range, by driving penetration, range, frequency and value of the. Of the products. So we will continue to do that. Let me. And. And you know one of the major perspective that we get from investors as far as our business is concerned, that because we are a local business, we may have a limited potential to grow. And that is completely not true. It may have been true at some point of time where India was not developed. Today, if you look at India, and especially when you look at South, 30% of the GDP actually comes out of the southern part of India. The per capita incomes across the southern Indian states is about 1.2 to 1.9 index to the average per capita income across India.
We also have the highest annual per capita spend as far as the packaged foods is concerned, and we also have the highest spice consumption as far as India is concerned. So southern India is a very, very rich market. The second aspect that I would like you to consider is the fact that we did a quick tactical back of the envelope calculation on per capita sales of NPR brand in Karnataka. And we realized that today we get roughly 110 rupees per consumer out of Karnataka in terms of per capita sales, which means that we are largely selling 120 grams of sambar, which is our largest product, which we sell for 75 rupees for 100 grams.
We are largely at 110 rupees. We are largely selling 120 grams of sambar per person. And sambar is consumed five times in a week. And to make sambhar, you need to use at least 10 to 12 grams, which means that we are largely covering 10 to 12 consumption occasions out of 265 consumption occasions available as far as sambar is concerned. So we believe that there is still a long Runway to growth that is available for us as far as south of India is concerned. So as far as spices is concerned, where it is very, very important for us to be locally focused and reflect the culture, we will continue to focus on the south.
The second portion is convenience food. Here we are now, you know, a large portion of our sales largely we’ve been. It’s not that we are not distributed across India, but despite being distributed across India, we have a large portion of our sales coming out of the southern part. But we are now slowly starting to realize, and I said that in my narrative in my presentation also, that we’re. Starting to see that because of E. Commerce, we are now able to sell some of the products in convenience foods across other towns in India also. I think that is something that we are experimenting with. And we are also looking at launching. Specific products that could actually go across the country. So with convenience food, we are now starting to see our ability to get A better bang for the buck. As far as building our sales, only in the metro towns of India is concerned. So that is another small experiment that we are doing and we may in a calibrated manner build ourselves. As far as digital commerce is concerned. The third thing that we are doing in terms of growth is our international business. Our large focus is going to be in the GCC countries where you are seeing that we’ve got a very, very good growth pattern developing and the US market.
These are the two key markets that. We will continue to invest in and build. We’ve got a dedicated team out here. We have dedicated people. We’ve got people who we’ve got feet on street that will help us build and control the entire distribution of our business. And we will continue to actively participate as far as digital commerce development both in India as well as in the international market is concerned. So these are broadly the four, three, four pillars of growth that we will be pursuing. Okay? Yeah.
Akshay Darji
Thank you.
operator
Thank you. Ladies and gentlemen, due to the time constraint that was the last question for today. I would like to hand the conference over to Mr. Siddharth Burkar for the closing comments. Thank you. And over to you sir. Sorry Mrs. Siddharth, but your voice is breaking.
Siddharth Borkar
Thank you.
operator
I’m sorry, but still it’s breaking.
Siddharth Borkar
Is it better now?
operator
Yes. Yes.
Siddharth Borkar
Thank you all for attending this call. Please do get in touch with us in case of any further questions and we look forward to interacting with you in the future. Thank you.