Varun Beverages Limited (VBL) Q2 FY23 Earnings Concall Transcript

Varun Beverages Limited (NSE:VBL) Q2 FY23 Earnings Concall dated Nov. 01, 2022

Corporate Participants:

Ravi Jaipuria — Chairman

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Analysts:

Anoop Poojari — CDR India — Analyst

Abneesh Roy — Nuvama — Analyst

Gaurav Jogani — Axis Capital — Analyst

Analyst — — Analyst

Devanshu Bansal — Emkay Global — Analyst

Jaykumar Doshi — Kotak — Analyst

Sumant Kumar — Motilal Oswal — Analyst

Sanjaya Satapathy — Ampersand — Analyst

Jenish Karia — Antique Stock Broking — Analyst

Unidentified Participant — — Analyst

Aarushi Lunia — Hem Securities — Analyst

Faisal Hawa — H.G. Hawa and Company — Analyst

Sudarshan Mall — Dhunseri Investments — Analyst

Smitesh Sheth — Raedan Securities — Analyst

Yash Dantewadia — Dante Equity — Analyst

Arpit Shah — Stallion Asset — Analyst

Dhruv Bhimrajka — Monarch Capital — Analyst

Jaykumar Doshi — Kotak Institutional Equities — Analyst

Mitul Shah — Reliance Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Varun Beverages Limited Earnings Conference Call. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]

I now hand the conference over to Mr. Anoop Poojari from CDR India. Thank you, and over to you, sir.

Anoop Poojari — CDR India — Analyst

Thank you. Good afternoon, everyone, and thank you for joining us on Varun Beverages Q3 and 9M CY 2022 earnings conference call. We have with us Mr. Ravi Jaipuria, Chairman of the Company; Mr. Varun Jaipuria, Whole-Time Director; and Mr. Raj Gandhi, Group CFO and Whole-Time Director of the company.

We will initiate the call with opening remarks from the management, following which we’ll have the forum open for a question-and-answer session. Before we begin, I would like to point out that some statements made in today’s call maybe forward-looking in nature and a disclaimer to this effect has been included in the results presentation shared with you earlier.

I would now request Mr. Ravi Jaipuria to make his opening remarks.

Ravi Jaipuria — Chairman

Good afternoon, everyone, and thank you for joining us on our earnings conference call. I hope all of you had an — had the opportunity to go through our results presentation that provides details of our operational and financial performance for the third quarter and nine months ended 30th September, 2022. We are pleased to report yet another strong quarter delivering a net revenue growth of 32% and the PAT growth of 53%. Our India business has delivered a solid organic volume growth of 22%, led by a favorable demand environment and strong performance of our energy drink, Sting. In addition healthy double-digit sales volume growth of 31% in our key international markets further assisted performance during the quarter.

Post COVID related setbacks over the last two years we are now increasingly improving our presence by expanding our distribution reach across markets. This will help us gain a larger share in the growing market. On the product portfolio front, we are pleased to share that Sting continues to perform exceedingly well across geographies. Similarly our launches in the value-added dairy segments are seeing healthy consumer response and we remain confident of improving contribution from these new launches going ahead.

Overall, the demand environment for the beverage industry has been robust and we are witnessing a healthy offtake in India as well as in our international markets. The festive season, quarter four, is expected to further aid consumption trends in this calendar year. We are confident that we can sustainably deliver healthy volume, growth across all product categories going forward and further strengthening our market position in the beverage industry.

I would now invite Mr. Gandhi to provide the highlights of the operational and fiscal performance. Thank you very much.

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Thank you, Mr. Chairman. Good afternoon and a warm welcome to the — to everyone for joining us today on our earnings conference call. Let me provide an overview of the financial performance for the third quarter and the nine months ended 30 September, 2022. Revenue from operations adjusted for excise, GST, grew up by 32.5% year-on year in Q3 2022, (0:15:28.4) that’s the level of 31,766 million. Sales volume in India grew by 22.1% in Q3 2022 to the level of 148 million cases and in international markets grew by 31.3% to the level of 42 million cases.

Consolidated sales volume registered a solid growth of 24% with the level of 119 million cases in Q3 of calendar year 2022 as compared to 153 million cases in Q3 of calendar year 2021. Realization per case, as informed by Chairman, improved by 6.8% to the level of INR167 per case in Q3 2022, primarily driven by a higher mix of smaller SKUs, which is 250 ml especially blockbuster energy drink Sting, which has a higher net realization and its mix is increasing in the sales volumes. Carbonated soft drink contributed 70%, juice is 5%, and packaged drinking water 25% of total sales volume in Q3 2022.

On the profitability front, despite the inflationary raw material environment gross margins for Q3 2022 increased by 90 basis point to the level of 53.7% from 52.8% in Q3 of 2021. This increase in input cost was more than offset by operating leverage and higher sales volume leading to an improvement in EBITDA margin to 22% during Q3 2022. This is gone up from previous year of corresponding period, 20.6%. EBITDA increased by 41.3% to the level of 6,989.9 million in Q3 2022 from the level of 4,946.6 million in Q3 of 2021. PAT increased by 53.3% to INR3,954.8 million in Q3 2022 from INR2579 million in Q3 of 2021. This is driven by high growth in revenue from operations improvement in margins, transition to lower tax rate in India at PAT levels or income tax basically.

Overall the company’s financial position continues to be solid and we look forward to delivering healthy results in years to come. On that note, I come to an end of the opening remarks and would like to now ask the moderator to open the forum for any questions or suggestions that you may have. Thank you.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen we will now begin the question-and-answer session. The first question is from the line of Abneesh Roy from Nuvama. Kindly proceed.

Abneesh Roy — Nuvama — Analyst

Yeah. Thanks and congrats on very good set of numbers. My first question is on the Morocco announcement. So, wanted to understand how big could be the investment and size of the opportunity? And, is there a possibility that Lays, Doritos and Cheetos distribution and selling, this can go beyond Morocco also, is there any purposes from Pepsi on that?

Ravi Jaipuria — Chairman

Well, I think first of all its existing business there, which is about INR150 crores, which we will take it forward from there starting from January 1st. And hopefully in the coming time we will start manufacturing also in Morocco and this involves all the brands Cheetos, Doritos and Frito-Lay. And your question of will it take us further to other countries? We can only hope so, but it would depend on PepsiCo’s choice and it’s a first, which is a big starting base. I mean this is not normally Pepsi doesn’t give distribution rights of snacks. We have given it, now we have to prove ourselves and hopefully we will get other countries.

Abneesh Roy — Nuvama — Analyst

Right. Thanks. My second question is on the impact of Sting. So, last quarter it was around 7.2% of the sales, so has that moved meaningfully? And in terms of the realization growth and gross margin expansion, which was a positive surprise. How much would have been the impact of String in the overall scheme of things? It is around, say, 7%, 8%, does it really move the needle too much?

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

The cost difference in Sting, yes, it moves the difference and nine months average 8.5% mix and for the quarter was more than 12% and it’s moved about I think the mix change about INR8 in 167. So, it’s a substantial (0:10:07.0) for us, actually, yes.

Abneesh Roy — Nuvama — Analyst

Sir, last question more of bookkeeping. So, current outlet reach in India and if you could give some details on Sting and Tropicana also in terms of the outlet reach? And in terms of capex guidance overall CY ’22 and ’23, how do you see that?

Ravi Jaipuria — Chairman

Well, I think the Sting reach is reaching pretty well close to our highest penetration of any of our products. So, Sting is reaching practically everywhere, which is more than 2 million outlets we are going to already. So, Sting is pretty well everywhere. The exact count we will have at the end of the year. But when we see the growth, I mean, it is clearly looking that is reaching everywhere.

Abneesh Roy — Nuvama — Analyst

Right. And similarly for Tropicana and capex?

Ravi Jaipuria — Chairman

Tropicana is also doing extremely well and the only constraint was we had one large facility which we had opened in Pathankot. So, because of that, and distribution has gone to about 15% of the outlets, so, it’s still not gone to all the outlets because of constraints of production and hopefully this will get better next year.

Abneesh Roy — Nuvama — Analyst

Thanks. That’s all from my side. Thank you.

Ravi Jaipuria — Chairman

Thank you.

Operator

Thank you. The next question is from the line of Gaurav Jogani from Axis Capital. Kindly proceed.

Gaurav Jogani — Axis Capital — Analyst

Thank you for the opportunity, sir, and congrats on a great set of numbers. Sir, my first question is with regards to the Sting. So, if you can help us out what would be the realization difference between Sting per se, and probably other company paid us together. The reason I’m asking, you guys gave sharp 20% odd jump in the realization in the domestic business, so any color on this would helpful?

Ravi Jaipuria — Chairman

The large difference, I would say, it’s more than 25% to 30% difference. Okay, our realization is actually more than — more by 65% actually, sorry in Sting.

Gaurav Jogani — Axis Capital — Analyst

Thank you. Okay. So, and sir, you mentioned the contribution for this particular quarter was around 11%, 12% for Sting in the overall product mix in India.

Ravi Jaipuria — Chairman

That’s what it has been in the last quarter.

Gaurav Jogani — Axis Capital — Analyst

Okay. Between 11% to 12%, right?

Ravi Jaipuria — Chairman

That’s right.

Gaurav Jogani — Axis Capital — Analyst

And for the nine months, it was 8.5%?

Ravi Jaipuria — Chairman

8.5% is for the cumulative nine months.

Gaurav Jogani — Axis Capital — Analyst

Nine months, sure. That is helpful, sir. Sir, my other question is also with regards to — because the realization is so high in Sting, does it also translates to the gross margin and the EBITDA margin levels as well or the cost there is a bit higher leading to a same realization, (0:13:15.9) sorry the same EBITDA per case?

Ravi Jaipuria — Chairman

No. It definitely adds to the margin and that’s why you’re seeing margins which are better than the volumes growth. So, if you even after higher resin and sugar prices, we have been able to do — our EBITDA margin have been better than (0:13:37.1) or before. So, even much better than our guidance which we have given. So it’s — Sting has definitely helped in the process.

Gaurav Jogani — Axis Capital — Analyst

Okay, okay. Got it. Sir, my other — [Speaker Overlap]

Ravi Jaipuria — Chairman

Yeah, please go ahead.

Gaurav Jogani — Axis Capital — Analyst

Yeah. Sir, other, the related question with this was actually because if you see the realization per case on a company-level basis has increased to around INR167 per case. So, given the strong contribution from Sting and the number (0:14:13.7) first thing. So would it be right to assume that your — the realization per case could sustain around the current levels of about 169-odd levels?

Ravi Jaipuria — Chairman

Well, we hope so, but if everything is seasonal based or partly seasonal based, so the String is definitely contributing to the higher realization. And Sting, they should be somewhere close to what it is today, so we should be able to maintain it, but give or take 1 or 2 points up or down.

Gaurav Jogani — Axis Capital — Analyst

Okay. Got it. And sir just last — one last question from my end. In the international business, while we have seen the overall volumes have grown by 30% plus. However, the revenue growth has actually declined by 1%, I mean we did consol minus standalone, so that actually declined by 1-odd percent. And while margins — EBITDA margins also have seen sharp expansion of 29% — to 29% actually. So, how should we read this particular thing?

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Basically our growths have come, major growths have come from Morocco, there our growths are not that much in CSD, but in water where the realization is lower, but overall the margins are good and we are growing much faster in water there that’s why you’ve seen lesser realization.

Gaurav Jogani — Axis Capital — Analyst

Okay, okay. And sir this is expected to continue ahead? I mean this is sustainable, what we are seeing in terms of the growth?

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

[Speaker Overlap] sustainable. So, we are growing in CSD as well as water, but we did not have enough capacity of water before. So, as we added capacity our water growth has been faster.

Gaurav Jogani — Axis Capital — Analyst

Okay. Sir, I’ll come back in the queue for more questions. Thank you.

Operator

Thank you. The next question is from the line of [Indecipherable]. Kindly proceed.

Analyst — — Analyst

Hello. Congratulations on a great set of numbers. I just wanted to know what is the capacity utilization numbers, if you have any.

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

I mean we were reasonably fully utilize this year and so we are adding new capacity and we should have good capacities for next year.

Analyst — — Analyst

Also, is this the seasonally weakest quarter, or is it the next quarter?

Ravi Jaipuria — Chairman

The next quarter is the weakest quarter. October to December is the weakest quarter.

Analyst — — Analyst

And could you please talk and elaborate more on your capex plans. I’m a fairly new investors, so I’d really like to know.

Ravi Jaipuria — Chairman

Well, we are looking at about INR1,200 crores to INR1,300 crores for this year.

Analyst — — Analyst

Greenfield and brownfield, could you give me the —

Ravi Jaipuria — Chairman

Both inclusive.

Analyst — — Analyst

Yeah. So, how much is greenfield and how much is brownfield?

Ravi Jaipuria — Chairman

I would say about half-and-half.

Analyst — — Analyst

Half-and-half. And by when will we see this capex coming getting commissioned.

Ravi Jaipuria — Chairman

We are hoping that this happens before the season, which is before February.

Analyst — — Analyst

Also could you give me the energy drink market share of Sting percentage if you have it.

Ravi Jaipuria — Chairman

At the moment I think we are the only one practically. So our competition is just launch their energy drink. So, very difficult to, I mean, we were practically the only energy drink players except Red Bull and all which was very small.

Analyst — — Analyst

So, you don’t — do you have the market share numbers by any chance?

Ravi Jaipuria — Chairman

I don’t have the exact numbers, because Coke has just launched their energy drink and sold. It’s too new.

Analyst — — Analyst

Okay. Also, could you be able to give a margin guidance going forward? I think this quarter your OPMs were somewhere around 22.

Ravi Jaipuria — Chairman

We have always given a guidance. The difficult reach around 21, we are very happy, and we still want to give the same guidance, I mean, we’ve had a good year and even though we’ve been able to absorb all the higher cost and — but, I think the guidance that’s what we look at 2022.

Analyst — — Analyst

Are you seeing raw material prices coming down? Commodities has cooled off right?

Ravi Jaipuria — Chairman

Partly. Sugar has not cooled down, but resin prices have started cooling down.

Analyst — — Analyst

Okay. Also, what is the debt on your books, net debt?

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Around INR2,300 crore.

Analyst — — Analyst

INR2,300 crores. Okay, thank you so much.

Operator

Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Kindly proceed.

Devanshu Bansal — Emkay Global — Analyst

Yes, sir. Congrats on great set of numbers, and thanks for the opportunity. I wanted to check by when do you expect the capex in Rajasthan and Madhya Pradesh to get commissioned? Do we expect it to get commissioned before start of next season?

Ravi Jaipuria — Chairman

That’s what we are trying. I hope we are able to do it.

Devanshu Bansal — Emkay Global — Analyst

Okay. And secondly, sir, wanted to check on emission traction in Democratic Republic of Congo where we, I guess, have started distribution. So how is the traction in that continent — in that country, sorry?

Ravi Jaipuria — Chairman

Still bit early. I think it will take little bit more time. So, I think we will start seeing some traction in 2023.

Devanshu Bansal — Emkay Global — Analyst

Okay. And any sense that you can provide on the opportunity that Africa continent sort of offers to — because my analysis suggest that PepsiCo’s penetration relative to the Coca-Cola companies much, much lower. So, does that sort of present a good long-term growth opportunity for Varun Beverages in that continent?

Ravi Jaipuria — Chairman

Absolutely it does, and that’s why we are going one-by-one country, and once we stabilize one country then we looked at the second country. There are lot of countries where Pepsi is still not existed. So there is huge opportunities available.

Devanshu Bansal — Emkay Global — Analyst

Sir, my good was to get a sense as in which part of the continent would we be targeting, because I guess there are other 2k bottlers that PepsiCo is engaged with in Africa.

Ravi Jaipuria — Chairman

Well, they are engaged but they are not expanding the other big bottlers whoever is. They are rather in the process of selling, not adding new territories.

Devanshu Bansal — Emkay Global — Analyst

Okay, that’s it.

Ravi Jaipuria — Chairman

It depends how fast we can grow and what we can do.

Devanshu Bansal — Emkay Global — Analyst

Okay, that’s encouraging to know sir. Thank you. Thanks, that’s it from my side.

Operator

Thank you. The next question is from the line of Jaykumar Doshi from Kotak. Kindly proceed.

Jaykumar Doshi — Kotak — Analyst

Hi, thanks for the opportunity and congratulations on a very good quarter. My question is in the past couple of quarters your growth on CAGR basis is much stronger than what we have seen in other staple semi-discretionary category. Even if I leave aside the upside from Sting where we were like a category creator is constant, even for the rest of the portfolio double-digit three-year volume CAGR looks very impressive versus what we are seeing elsewhere. So, can you give us some color on what is the industry volume growth? And what is your outperformance versus industry?

And second is are you surprised by (0:22:36.9) demand that you’ve seen during the course of the year or is it something that you anyway sort of expecting or in line with your expectations?

Ravi Jaipuria — Chairman

So, I think if you’ve been on the calls, in the earlier calls, we took over the territory rest of the country in 2019. And as soon as we took over the rest of the country, the next year where we wanted to expand the distribution, COVID came in for two years. So we could not all the import, all the expansion of the go-to-market we had done, we could not get any results. This is the first year we have really good results out of whatever expansion and go-to-market we had done. And that is what is giving us the fruits. And going forward also as — it looks as long as we keep on growing the market and keep on adding our go-to-market there is enough room for us to grow the market and PepsiCo had a much smaller share in most of the markets which we have taken. So the room is enough there.

Jaykumar Doshi — Kotak — Analyst

Sir, reasonable to expect that this year even if we leave aside Sting in the rest of the portfolio also you have gained market share versus the [Technical Issues] —

Ravi Jaipuria — Chairman

Well, I don’t want to say we have gained market share, but we have grown substantially and we have done quite well.

Jaykumar Doshi — Kotak — Analyst

Sure. And my second question [Technical Issues] two years back when we asked this question on and with the potential for Sting, your response was that some of the markets [Technical Issues] it tends to be in 12% to 15% range. Having seen the success you have seen so far, where do you think Sting can be in terms of its overall performance next year?

Ravi Jaipuria — Chairman

Well, I can’t answer you exactly, but what we have seen, the sky seems to be the limit, it’s just a question of how much we can distribute and produce and if we get the same liking of people which we have got, it should be a good mix for us going forward.

Jaykumar Doshi — Kotak — Analyst

Understood. And elsewhere in the world, has Coca-Cola — does Coca-Cola had offering that competes midstream. In India they have [Indecipherable], so just wondering if they are in other markets, how are they competing.

Ravi Jaipuria — Chairman

So, they have both the companies have energy drinks all over the world, mostly different, different energy brings, different pricing, different model. I mean Sting has done extremely well in this part of the world. It’s doing extremely well in Pakistan, in Thailand, in Vietnam. So, Sting has done very well in this part of the world.

Jaykumar Doshi — Kotak — Analyst

Understood. Thank you so much and [Technical Issues].

Operator

Thank you. The next question is from the line of Sandesh Agarwal from [Indecipherable]. Kindly proceed.

Analyst — — Analyst

Thank you so much, sir, for giving the opportunity. My question is what is the market size of Lays, Doritos, and Cheetos in Morocco?

Ravi Jaipuria — Chairman

Well, I just said that they have existing business of about INR150 crores and we have to take it forward from that.

Analyst — — Analyst

Okay. Okay. And see, we are only distributing and selling these products, right?

Ravi Jaipuria — Chairman

For the time being that’s what we’re doing.

Analyst — — Analyst

Okay. Okay. And sir what is the margin for this distribution and selling?

Ravi Jaipuria — Chairman

That we can’t disclose it.

Analyst — — Analyst

Okay, okay, sir. Thank you so much, sir. That’s it.

Ravi Jaipuria — Chairman

Thank you.

Operator

Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal. Kindly proceed.

Sumant Kumar — Motilal Oswal — Analyst

Yes, sir, can you talk about the 22% growth in India which geography has a higher growth contribution in the current quarter?

Ravi Jaipuria — Chairman

Lot of — it’s very difficult to say. Wherever we were very weak which are the new territories which we have taken from PepsiCo and some of the bottlers where Pepsi was very, very weak that’s where we have had higher growth, and because our share was so low in the market. So that’s where we have enhanced our go-to-market and that is started giving us results. And that is what is added to our growth.

Sumant Kumar — Motilal Oswal — Analyst

So, as per my understanding, Northeast driving growth, say for, Bihar and Eastern UP, and the central UP also. So, can you talk about the kind of growth we are seeing in these two areas, South is also doing a similar kind of growth. Organic growth I’m talking about.

Ravi Jaipuria — Chairman

Well I don’t know if I want to give the exact numbers, but Bihar and MP have been seeing growth of over 50% so.

Sumant Kumar — Motilal Oswal — Analyst

Okay. So these two geographies outpacing other markets?

Ravi Jaipuria — Chairman

Well, lot of markets we’re actually outpacing. You asked for these new markets and I’ve given you the answer.

Sumant Kumar — Motilal Oswal — Analyst

Okay. Thank you so much, sir.

Ravi Jaipuria — Chairman

Thank you.

Operator

Thank you. The next question is from the line of Sanjaya Satapathy from Ampersand. Kindly proceed.

Sanjaya Satapathy — Ampersand — Analyst

Yes. Sir, thanks a lot for the opportunity. My question is that in Sting you’re starting to see competition, how do you really plan to counter this?

Ravi Jaipuria — Chairman

Well, they are countering us right now. So I think energy drink is a large market and there is enough for both of us to play and we will always have a first-mover advantage, which we are seeing and our product is very good and it has been like by the market. So we just have to keep on expanding our distribution and I’m sure we’ll get growth, and I am sure competition will do well also.

Sanjaya Satapathy — Ampersand — Analyst

Understood. And sir, so can you just tell us how much is the overall beverage industry growth during this quarter year-on-year basis? I mean the same question I can ask in another way that while in South and many other places where you are growing much faster, in your established market is your growth far lower than this 20%, 22% that you have reported?

Ravi Jaipuria — Chairman

Well, there are definitely some territories which are growing slower than 22%, because if we are growing 50% in some of the territories. But overall, it’s been a healthy growth all across. Some territories, obviously, it’s — this quarter was a rainy quarter also, so wherever it has rained little bit more, it has — the growth has been little less. So overall we’ve grown at close to 48% in the first nine months. So it’s been a more than healthy growth. So it’s actually in one territory we have grown.

Sanjaya Satapathy — Ampersand — Analyst

And sir, earlier you used to give guidance that your sustainable volume growth was some 13%, 14%. Considering the success that you are seeing in new territory as well as the success of Sting and your dairy product, where you were fairly optimistic about, will you look forward to a much higher growth rate to sustain going forward?

Ravi Jaipuria — Chairman

Well, we don’t like to comment. But we are definitely trying and we’ve had good success this year. So, we hope we can do well next year also. The only thing we can say, we are expanding our distribution and that is what helps, and we are adding more chilling equipment which are — which is what is adding and hopefully, we should have a good year next year.

Sanjaya Satapathy — Ampersand — Analyst

If I can just ask the last question that can you just give us the details about your expansion plan, both in Tropicana and in the dairy product?

Ravi Jaipuria — Chairman

So, Tropicana and dairy are both done from the same plant. So, we are expanding — or we are adding one more plant next year. So, that will double our capacity in dairy, as well as Tropicana.

Sanjaya Satapathy — Ampersand — Analyst

By when, sir?

Ravi Jaipuria — Chairman

I think by June or July it should be ready.

Sanjaya Satapathy — Ampersand — Analyst

Okay. And whereas the other soft drink factories will be ready by January of [Speech Overlap].

Ravi Jaipuria — Chairman

We are trying to get it ready before the season.

Sanjaya Satapathy — Ampersand — Analyst

Understood. Thanks a lot sir.

Ravi Jaipuria — Chairman

Thank you.

Operator

Thank you. The next question is from the line of Jenish Karia from Antique Stock Broking. Kindly proceed.

Jenish Karia — Antique Stock Broking — Analyst

Thank you for the opportunity. So, first question is with regards to dairy products. So how has been the distribution and performance of the dairy product segment during the quarter and how do you see it for the next — first half of CY 2024, considering the new capacity will come in the second half? So, first question is with regard to that.

Ravi Jaipuria — Chairman

So, fundamentally, in the season, we could not supply because we ran out of capacity. And hopefully, as I said, even next year, we are going to be constrained because our capacities are only coming after the season. But we’ve had a good quarter and the growths have been quite healthy. And going forward, there will be healthy growth but in the peak season, we wouldn’t have the capacity.

Jenish Karia — Antique Stock Broking — Analyst

Okay. So, it’s majorly restricted towards the North region, if my understanding is correct, currently?

Ravi Jaipuria — Chairman

That’s right. That’s right.

Jenish Karia — Antique Stock Broking — Analyst

Okay. And sir, second question is with regards to the joint venture investment that we have done. We have increased our stake in the joint venture with IDVl — IDVB to 50%. So any color on what future investments we will be doing with regards to capex, because setting up a recycling power plant under a JV system will require some capex in the next two to three years. So, any color on that front?

Ravi Jaipuria — Chairman

See, we have really not invested anything as of yet. It’s in the process, we are waiting for the government policies. So, we have agreed on an understanding between IDVB still that we will have a 50-50 joint venture when the recycling plant will come. But we are still waiting for all the approvals and some policy changes in the government.

Jenish Karia — Antique Stock Broking — Analyst

Can we see it materializing [Technical Issues].

Ravi Jaipuria — Chairman

INR50,000 more, to be honest. So, has no meaning.

Jenish Karia — Antique Stock Broking — Analyst

Okay. But in CY 2024, no capex yet committed on that front, right?

Ravi Jaipuria — Chairman

We can’t because it’s waiting for certain government policies. So I can’t decide [Speech Overlap].

Jenish Karia — Antique Stock Broking — Analyst

Got it, sir. No problem. Sir, just one last bookkeeping question. So we have shifted to the new tax regime from the second quarter of this year. So, what would be the average tax rate that we can assume for CY 2023 and going forward what would be the tax rate, if you can [Technical Issues] that?

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

This is going to be 25% for India blended with International countries 22.5% or 23%. In a nutshell, it will bring an advantage of 3% in the overall tax rates for the company going forward.

Jenish Karia — Antique Stock Broking — Analyst

Okay. Great. Thank you. Thank you so much, sir. And all the best for the future.

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Thank you.

Operator

Thank you. The next question is from the line of Prateek Rathi from Salt Caps [Phonetic]. Kindly proceed.

Unidentified Participant — — Analyst

Congratulations on a great set of results and a big thank you to the management for consistently delivering that from past six, eight months. I have been now a shareholder of this company from past six, eight months and the management has consistently delivered. So I just have a few questions. One is, I mean, assuming that capex comes off before the peak period next year, what kind of revenue guidance we have for the next calendar year?

Ravi Jaipuria — Chairman

Well, we first want to make sure, because of the equipment supply, there is a huge challenge getting the supplies in time. So, we are trying and hoping, and once we get a complete assurance that we will be — then we are expecting a reasonably good growth, because even this year we ran short of product in the peak season. So, hopefully, we can make up for that and get reasonable growth, but it’s still touch and go and we are not 100% sure we will be able to get all our lines operating before the season.

Unidentified Participant — — Analyst

Okay. Okay. Okay, fine. And I just wanted to understand, like we got the rights of the Puffcorn business in Feb or March this year. So what kind of revenue have we seen in this quarter from that business and how do you see this going ahead?

Ravi Jaipuria — Chairman

This is still very small, it’s something we wanted to learn and understand. So it’s a small investment from our side. And it will not be large revenue. So — but it will give us the proper learning and we’ll understand what is going on and hopefully, once we are — we understand this like in Morocco, we have got the distribution also. And then going forward, we want to take it in a much bigger space.

Unidentified Participant — — Analyst

So this paves the way of, say, future snacking business [Speech Overlap].

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

We need to understand — any new business you need to understand. For us, this was more for a learning curve than anything else.

Unidentified Participant — — Analyst

Okay. And one more question is, recently Reliance acquired this Campa Cola business and so they are interested in starting into beverage industry. So any comments or any competition that you see from Reliance or the industry?

Ravi Jaipuria — Chairman

I think Reliance knows better what they’re doing, it’s a large company, they understand and [Speech Overlap].

Unidentified Participant — — Analyst

Just from a competition perspective, do you feel it would be a threat?

Ravi Jaipuria — Chairman

There is enough room for everybody to compete. The business is large, it’s growing and I’m sure they’ll do a good job.

Unidentified Participant — — Analyst

Okay. And just one last question, if you allow me. So I just wanted to — I just saw that one of the Whole-Time Director has resigned with immediate effect. So is there any reason, or specific reasons for [Speech Overlap].

Ravi Jaipuria — Chairman

He was the CEO and he has retired from — so after retiring, he was the Board member because being the CEO. Now as his age has passed, that means retired on a normal course.

Unidentified Participant — — Analyst

Okay, great. I think that’s it from my end. Thank you so much.

Operator

Thank you. The next question is from the line of Aarushi Lunia from Hem Securities. Kindly proceed.

Aarushi Lunia — Hem Securities — Analyst

Hi, congratulations on a good set of numbers. I just wanted to get an idea on the Zimbabwe plant that you recently set up, and you had mentioned in the latest con call that the peak season in Zimbabwe is August. So has it reaped some benefits of the peak season?

Ravi Jaipuria — Chairman

No, Zimbabwe is doing extremely well for us. And, I mean, their peak season is actually October to December, their peak season is going to come now. Starting August, the sales increased but peak season is October to December. This quarter is the peak season.

Aarushi Lunia — Hem Securities — Analyst

Okay, sir. That’s it. Thank you.

Operator

Thank you. The next question is from the line of Faisal Hawa from H.G. Hawa and Company. Kindly proceed.

Faisal Hawa — H.G. Hawa and Company — Analyst

So, sir, a lot of distribution is being now disrupted by Reliance and B2B models like Udaan. So — or even DMart, so are we in touch with any of these for even doing some kind of third-party contracting or some private labels for them? And do you see even this as a very big revenue stream going forward? That’s one. And secondly, sir, is there any way that we could expand our distribution model to more FMCG brands also for more African countries or to — for Indian foods or even frozen foods, etc., because then you will be just leveraging the same platform, or the same setup for more products to be distributed.

Ravi Jaipuria — Chairman

Now, that is true, but as it is we are expanding so many new products every day, like, we had in the value-added dairy, we added Tropicana, we added energy drink. So, there is enough in our pallet. And then we are now looking at somehow to start snacks with Pepsi, which they have given us the first opportunity in Morocco. So, there is enough for us to expand and there is enough room for us to expand in the categories which we have. And I think that itself is going to take us a long time before we can saturate the market. And the Indian market is growing at such a huge pace, the number of outlets which are being added, if we can meet that also itself we will see double-digit growth.

Faisal Hawa — H.G. Hawa and Company — Analyst

And sir, if you could have some comments on the private labels contracting opportunities?

Ravi Jaipuria — Chairman

So we don’t do private label. I mean we only do our own brands. So, we don’t do any private label. We sell through Udaan and Reliance, but we don’t do any private label currently.

Faisal Hawa — H.G. Hawa and Company — Analyst

But we are not open to do that kind of business also going forward?

Ravi Jaipuria — Chairman

No, we are not looking for private label.

Faisal Hawa — H.G. Hawa and Company — Analyst

Okay. And sir, any improvements in manufacturing or processes that we could really get into and which could improve our margins going forward ever?

Ravi Jaipuria — Chairman

Well, I think we have one of the highest margins in the world. I don’t know what else I can do. I am trying our best to get whatever best we can do.

Faisal Hawa — H.G. Hawa and Company — Analyst

But shop floor improvement and cost efficiencies from shop floor is always an infinite task.

Ravi Jaipuria — Chairman

Now, if you look at it, our margins have been the highest, and the only reason they have been highest is we have been doing some of the right things, some right decisions, and some of the best practices which are possible.

Faisal Hawa — H.G. Hawa and Company — Analyst

Thanks a lot, sir.

Ravi Jaipuria — Chairman

[Speech Overlap] we are the best, but we’re trying to do whatever best is possible.

Faisal Hawa — H.G. Hawa and Company — Analyst

So, basically we are always trying to better our margins each year as it goes by.

Ravi Jaipuria — Chairman

No, of course, we are trying. I mean it’s not easy when you are at 20%, 21%, 22%. I mean there is a limit to how far you can go. If we can maintain this, we’d be very happy actually.

Faisal Hawa — H.G. Hawa and Company — Analyst

Thanks a lot, sir.

Operator

Thank you. The next question is from the line of Sudarshan Mall from Dhunseri Investments. Kindly proceed.

Sudarshan Mall — Dhunseri Investments — Analyst

Hi. Thank you, team, for an opportunity and congratulations on great set of numbers. Sir, my question is the plant capacity which we have, which is — which we are trying to get before season, if that fructifies, by what percentage will our existing capacity grow?

Ravi Jaipuria — Chairman

See, I can’t answer you exactly, because I’m not sure if we will be able to get everything going before the season, but we are adding reasonable quantity that we can grow more than double digits.

Sudarshan Mall — Dhunseri Investments — Analyst

Okay. That’s it from me.

Operator

Thank you. The next question is from the line of Smitesh Sheth from Raedan Securities. Kindly proceed.

Smitesh Sheth — Raedan Securities — Analyst

Hello?

Operator

Yes, Mr. Sheth, you may proceed.

Smitesh Sheth — Raedan Securities — Analyst

Sir, congratulations for one of the finest performance. And just to — can you quantify some data points with regard to whatever we expect to grow in terms of number of the data points or in terms of the distributor reach or filling machines what we intend to install, just some data points as for the next year CY 2023 sir?

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Yes, as you know, filling equipment, we are adding 40,000 to 50,000 every year, which we will be doing. And you also know, two years back we had reached to about 2 million dealers, which has gone to 3 million, and which every year is going up by 5% to 10% as far as our dealers reach is concerned. And the carrying size also with these people is going up, another 5%, 7%. So, that’s some statistics on distribution side.

Smitesh Sheth — Raedan Securities — Analyst

Okay. Sir, what can be the — I mean what’s the total India dealer reach what we can have, like what is the maximum saturation point or near-logical distribution outlets what we can cater to over next two, three years, sir?

Ravi Jaipuria — Chairman

Well, as per our information, there are 11 million outlets in India. Now, question is, I think we are reaching close to 3 million now, and to add more — we are looking to add between 10% to 12% every year, and that is what we’ll be able to practically reach. I mean you might be able to some year reach little bit more, but that’s the maximum you can actually target.

Smitesh Sheth — Raedan Securities — Analyst

Right, sir. Yes, sir. All right, sir and good luck for the future.

Ravi Jaipuria — Chairman

Thank you.

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Thank you.

Operator

Thank you. The next question is from the line of Yash Dantewadia from Dante Equity. Kindly proceed.

Yash Dantewadia — Dante Equity — Analyst

Hi, Ravi, sir. Sir, have we taken any price hikes and do we plan to take any price hikes in the coming quarters? Could you talk about that?

Ravi Jaipuria — Chairman

Well, we have taken some price increases during this year. We have not decided on any price increase at the moment, and we hope we don’t have to take any price increase.

Yash Dantewadia — Dante Equity — Analyst

Also, sir, one more question back to the capex. We are planning an approximate capex of INR1,200 crores to INR1,300 crores, out of which 50 is brownfield and 50 is greenfield. Could you please tell me what percentage of capacity does this give us to our existing capacity?

Ravi Jaipuria — Chairman

That’s what I have said that we are not sure how much of it will realistically come before the season. So…

Yash Dantewadia — Dante Equity — Analyst

No, I’m not asking regarding the time, sir. I am asking by how much is our capacity going up, by what percentage point is our capacity going up?

Ravi Jaipuria — Chairman

It’s very difficult to say because our overall capacity is based on PET cans and glass, and now the capacity mostly which we are adding is all PET. So on what context do I add the capacity, that makes it very difficult. So [Speech Overlap]

Yash Dantewadia — Dante Equity — Analyst

On the total existing capacity, sir?

Ravi Jaipuria — Chairman

Pardon me?

Yash Dantewadia — Dante Equity — Analyst

On the total existing capacity, combined of everything, PET and cans.

Ravi Jaipuria — Chairman

Maybe about 20%.

Yash Dantewadia — Dante Equity — Analyst

And we are — so basically our capacity is going to go up by 20% in the next one year, right?

Ravi Jaipuria — Chairman

That’s what we’re trying to do it before the season.

Yash Dantewadia — Dante Equity — Analyst

And in this, could you give me a breakdown of what is coming in Sting, what is coming in milk-based products and what is coming in the other products?

Ravi Jaipuria — Chairman

As I said, our dairy line will not be ready before season. So it will be coming only after season. The rest all the lines are interchangeable to Sting or to any other product.

Yash Dantewadia — Dante Equity — Analyst

Are you seeing any change in demand trends after COVID?

Ravi Jaipuria — Chairman

In what way?

Yash Dantewadia — Dante Equity — Analyst

I mean this is the first — this is the first year where everything is functioning normally after COVID. So pre-COVID to post-COVID, have you seen any demand trends change in…

Ravi Jaipuria — Chairman

The biggest change has been the go-to-market has opened up, so single service started selling, which was not selling, because it was mostly home consumption. And, of course, you have seen the big jump in the energy drink, which was not there. So these are the two major changes which have happened.

Yash Dantewadia — Dante Equity — Analyst

Thank you so much for your time, sir. Have a good day.

Ravi Jaipuria — Chairman

You’re welcome.

Operator

Thank you. The next question is from the line of Arpit Shah from Stallion Asset. Kindly proceed.

Arpit Shah — Stallion Asset — Analyst

Hello?

Operator

Yes Mr. Shah, kindly proceed.

Arpit Shah — Stallion Asset — Analyst

Yeah. Just wanted to understand, we have acquired a lot of territories from Pepsi and other bottlers in the last couple of years. So what kind of distribution you would say you need to — that you need to build or there have been lot of gaps, which have been there in the market, and what kind of scope that you can build in the next couple of years which would add to your growth, because right now your growth is largely led by volumes. And at some point of time that volumes would actually saturate. So what kind of headroom you have to grow in terms of distribution in some of the states that you have acquired?

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Yeah, as we had been saying in the past calls, first is the distributor network we had to strengthen, enroll more distributors, make it reach, go to market strengthened. And it starts with the distribution network, then adding more dealers in those territories, then ensuring the product availability at the point of sales on regular basis, no stockout situations. And adding retailers by adding more chilling equipment and adding more vehicles in the market, so that the product reaches the market. And matching this in the season month 24/7, like the phrase is 24/7 but in our trade, it gets modified 24/90, three months, it’s 24-hour basis like. And all these things if we follow definitely helps us in improving the distribution network, market share and the sales growth. I think we are trying to fire all these engines from all sides continuously.

Arpit Shah — Stallion Asset — Analyst

Got it. So what would be that number? Let’s say you started at X number when you acquire a territory from Pepsi or some other bottler. So what would that number be today, X going to 1.3x, 1.4x in the last couple of months?

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Well, this is a journey. Actually it’s not something based off a number or one day it is done. And this is what Chairman said that during COVID, two years, although the results immediately were not coming, but we never stopped putting [Speech Overlap].

Ravi Jaipuria — Chairman

We have to keep on expanding distribution. Distribution was very weak there. It’s a long process, it’s not an overnight process as Mr. Gandhi is saying. So, we will keep doing, it will take us a few years before we can reach the distribution to the level we would like.

Arpit Shah — Stallion Asset — Analyst

Got it. And the dairy products which we have launched, those are products not by PepsiCo, right, those are our — those are Varun Beverages products right?

Ravi Jaipuria — Chairman

That’s right.

Arpit Shah — Stallion Asset — Analyst

Okay. And what will be the share of those products in the revenue right now, or that will be very small?

Ravi Jaipuria — Chairman

It is very small because there is only one plant which can produce it. So, we are adding — doubling our capacity for next year. Once we have that, then it will be — because we are only practically distributing in the North only.

Arpit Shah — Stallion Asset — Analyst

So, are we looking to add more products in the Varun Beverages portfolio where it’s [Technical Issues] non-PepsiCo [Speech Overlap]?

Ravi Jaipuria — Chairman

Right now, we are not even able to supply what products we have. So once we have additional capacity of production and once we — then we will add more flavors. But right now, not at the moment.

Arpit Shah — Stallion Asset — Analyst

No, other category of product. Right now you have started with dairy, you wanted to start with, let’s say, some other kind of products.

Ravi Jaipuria — Chairman

We have already — the dairy already — we do Tropicana in that. So that will automatically get added. The same lines does dairy as well as the juices. and we’ve added — we have started energy drink in a big way. And then — so that itself is taking enough room right now. And once we can get these established properly, then we’ll look at some other products if need be.

Arpit Shah — Stallion Asset — Analyst

Got it. And given the current territories that we have and the current headroom that we have, do you believe that 15% to 17% volume growth is sufficient for us in the next, let’s say, three, four or five years?

Ravi Jaipuria — Chairman

Well, I don’t want to give exact numbers, but we definitely believe double-digit growths are possible.

Arpit Shah — Stallion Asset — Analyst

Got it. Thank you so much.

Operator

Thank you. The next question is from the line of Dhruv Bhimrajka from Monarch. Kindly proceed.

Dhruv Bhimrajka — Monarch Capital — Analyst

Yeah, good afternoon, sir. I wanted to know the debt reduction that you have done in these nine months sir.

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Yeah. As we mentioned, we are at INR2,300 crore and we were INR3,000 crore-plus last year on 31st [Technical Issues].

Dhruv Bhimrajka — Monarch Capital — Analyst

Okay. So basically in the nine months, we have reduced debt by INR700 crores.

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

That’s right.

Dhruv Bhimrajka — Monarch Capital — Analyst

Okay. And sir, what was our capex in this quarter, for the third quarter?

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Third quarter capex is very less, but very little capital work in progress or some plots for future, which we might have purchased and paid for, some installments for those. And capex normally happens in the H1 of the year — major portion happens in H1.

Dhruv Bhimrajka — Monarch Capital — Analyst

Right, yeah, because as Ravi sir, mentioned that INR1,200 crores to INR1,300 crores capex you have planned from Jan 2022 up to Feb 2023. So wanted to know that in the nine months — so in the nine months, how much capex we have done sir?

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

On these nine months, about 9,381, this is million.

Ravi Jaipuria — Chairman

About 950 million — INR950 crores.

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Yeah, this is cumulative in current financial year, which — that’s for three quarters.

Ravi Jaipuria — Chairman

So it would be about 300, 400 every quarter, that’s what is happening. So, it’s cumulative. So, [Speech Overlap].

Dhruv Bhimrajka — Monarch Capital — Analyst

INR300 crores to INR400 crores every quarter, crores, capex. Okay?

Ravi Jaipuria — Chairman

That’s what happens, but sometimes a little more, sometimes a little less.

Dhruv Bhimrajka — Monarch Capital — Analyst

Right. Completely understand. Sure. Thank you, sir. Thank you so much.

Ravi Jaipuria — Chairman

Thank you.

Operator

Thank you. The next question is from the line of Jaykumar Doshi from Kotak. Kindly proceed.

Jaykumar Doshi — Kotak Institutional Equities — Analyst

Hi, thanks for the opportunity again. My question is, sir, you talked about shortage or delays in equipment supplies. And I believe you have placed orders well in advance. Should you expect some kind of competitive advantage versus rest of the industry going into next year, the kind of advantage you had this year because of procurement of PET inventories well in advance setup?

Ravi Jaipuria — Chairman

Well, I don’t know if we had advantage, and I’m sure going forward also I think our competition has also place orders. So it all depends who is their supplier and who is our supplier. So whoever is able to get the equipments in time will have an edge.

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Beyond this I think it will only be speculation, let’s try what we can.

Ravi Jaipuria — Chairman

We are trying our best to be in time. Let’s see what happens. It’s still not 100% clear, but we will have enough lines operative.

Jaykumar Doshi — Kotak Institutional Equities — Analyst

Thank you so much. That’s it from my side.

Ravi Jaipuria — Chairman

Thank you.

Operator

Thank you. The next question is from the line of Gaurav Jogani from Axis Capital. Kindly proceed.

Gaurav Jogani — Axis Capital — Analyst

Thank you for the opportunity again, sir. Sir, just one last question on — in terms of margins. Sir said that we are trying for meeting EBITDA margins around 21%-odd. And given that we are steadily increasing the mix of Sting in the overall mix, which is again margin accretive, so are we really being conservative here in terms of the margin guidance, around 21%-odd?

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Well, as I said before, I think our margins are more than healthy. If we can sustain this, we will be very happy. And we’ve seen a slight growth in our margins this year because of the mix of Sting. I think our guideline has always been 20%, 21%, that is a very healthy margin actually, the highest in the world. So, I don’t think we should guide or suggest anything beyond that.

Gaurav Jogani — Axis Capital — Analyst

Okay. Okay. Got it, sir. Thank you.

Operator

Thank you. The next question is from the line of Mitul Shah from Reliance Securities. Kindly proceed.

Mitul Shah — Reliance Securities — Analyst

Yeah, good evening, sir, and thank you for taking my question. Sir, I have a question on your recycling of PET investment. Can you give more details that how it’s going to shape up going forward and the granules after recycling, are we using it directly or what is the process there? And secondly, a follow-up on that is that it will be only for the VBL PETs or we are going to expand it for non-captive also?

Ravi Jaipuria — Chairman

Now, we are looking for our own selves. But I think it’s still very early, we haven’t even started the project. We are still waiting for government clearances and understanding what it will be used for, because still it is approved for food grade we are not going to be getting into it.

Mitul Shah — Reliance Securities — Analyst

By when do you expect it to be operational?

Ravi Jaipuria — Chairman

I wish I could answer you. I think you have to ask your boss, maybe he knows better.

Mitul Shah — Reliance Securities — Analyst

Okay. Yes, thanks sir.

Operator

Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Kindly proceed.

Devanshu Bansal — Emkay Global — Analyst

Yes, sir, thanks for the follow-up opportunity. Sir, you touched upon the realization part, but I still want to understand it better. So realizations for India has improved from about INR145-odd to about INR165-odd so far in this calendar year. You indicated that INR8 to INR9 benefit has come from Sting. So wanted to check what is the — what is contributing to the rest 5%, 6% improvement that we’ve seen in the realizations.

Ravi Jaipuria — Chairman

Well, I think it is the mix in — you know the water mix has come down slightly, which has helped. And overall mix, as I said, single service selling more which is — which gives us better value. so minor changes that is going to — dairy is — our dairy sales have improved, our juice sales have improved, which are little slightly higher value.

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

And general price increases whatever we have taken.

Ravi Jaipuria — Chairman

And some price increases, which we have taken.

Devanshu Bansal — Emkay Global — Analyst

Okay. And the small SKU mix, is this a trend that you expect to continue, or that can sort of see some reversal towards larger packs as well?

Ravi Jaipuria — Chairman

Well, I think, both the markets will grow. So it’s very difficult to say, but I think the smaller single-serve will continue to grow faster than the multi-serve the way it looks right now.

Devanshu Bansal — Emkay Global — Analyst

Got it. Sir, lastly, for international also, we were sort of closer to INR190 to INR200. But now we are in the range of INR170. You indicated it is because of higher water sort of share in Morocco. Wanted to check if Sri Lanka depreciation also impacting the realizations, and once that economy sort of recovers, we can see an improvement there?

Ravi Jaipuria — Chairman

Absolutely. Absolutely.

Devanshu Bansal — Emkay Global — Analyst

Can you sort of quantify as in what sort of an impact — positive impact it can have?

Ravi Jaipuria — Chairman

No, Sri Lanka is not a large business for us. But the main difference in the realization is because of water. The mix of water has gone up in Morocco to a large extent. And Morocco is a large territory for us.

Devanshu Bansal — Emkay Global — Analyst

Okay. Is it a quarterly thing or for annual basis also that [Speech Overlap].

Ravi Jaipuria — Chairman

Annually water is selling throughout the year. So water, because we didn’t have capacity last year. So that’s why you’re seeing the big change. Now we have the capacity. So we are seeing growth at much higher pace.

Devanshu Bansal — Emkay Global — Analyst

Okay. So this 170-odd is sort of sustainable you are saying?

Ravi Jaipuria — Chairman

Yes, that’s right.

Devanshu Bansal — Emkay Global — Analyst

Got it, sir, got it. Thank you.

Operator

Thank you. The next question is from the line of Arpit Shah from Stallion Asset. Kindly proceed.

Arpit Shah — Stallion Asset — Analyst

Hello. Am I audible?

Operator

Yes, sir, you are audible.

Arpit Shah — Stallion Asset — Analyst

Thank you for the opportunity again. I just wanted to understand, this year we will be broadly generating, let’s say, cash flows of more than INR2,000 crores, INR2,200 crores by December 2022. So what kind of reinvestments are we looking at other than the capex, because our capex will be around INR1,200 crores, INR1,300 crores, and we will still have another INR600 crores, INR700 crores to be reinvested somewhere. So, what kind of reinvestments we are looking at? Are we looking at some higher dividend payouts, or are we looking at some other kind of inorganic investments, or where you can acquire more global territories from PepsiCo? What kind of reinvestment we’re looking at?

Ravi Jaipuria — Chairman

We are looking at — always looking at new territories, like DRC is going to be one of them, which we have already said. So, we will be putting up a plant there next year. So, there will be capexes going, and as the growths are happening at a higher pace here, the capex will increase slightly here also.

Arpit Shah — Stallion Asset — Analyst

So that would happen in the Continent of Africa largely?

Ravi Jaipuria — Chairman

Not Africa alone, DRC would be the investment in Africa, whereas in India, as the growths are higher than planned, so our capacities will have to increase here. So, there’ll be more capex here going forward next year.

Arpit Shah — Stallion Asset — Analyst

Do you see increased dividend payouts?

Ravi Jaipuria — Chairman

We have not decided yet. So I don’t want to say anything.

Arpit Shah — Stallion Asset — Analyst

Got it. Thank you so much.

Operator

Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.

Raj Gandhi — Group Chief Financial Officer & Whole-Time Director

Thank you very much. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications, or would you like to know more about the company, please feel free to contact our Investor Relations team. Thank you once again for your interest and support and for taking the time to join us on this call. Look forward to interacting with you soon. Thank you very much once again.

Operator

[Operator Closing Remarks]