Varun Beverages Ltd (NSE: VBL) Q3 2025 Earnings Call dated Feb. 10, 2025
Corporate Participants:
Anoop Poojari — Client Manager
Ravi Kant Jaipuria — Promoter and Chairman
Raj Pal Gandhi — Whole-time Director
Analysts:
Vivek Maheshwari — Analyst
Aditya Soman — Analyst
Percy Panthaki — Analyst
Devanshu Bansal — Analyst
Onkar Ghugardare — Analyst
Latika Chopra — Analyst
Amit Purohit — Analyst
Nitesh Dutt — Analyst
Ashish Agarwal — Analyst
Ayush Sharma — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Varun Beverages Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Anoop Poojari from CDR India. Thank you and over to you, sir.
Anoop Poojari — Client Manager
Thank you. Good afternoon, everyone, and thank you for joining us on Varun Beverages Q4 and CY2024 Earnings Conference Call. We have with us Mr. Ravi Jaipuria, Chairman of the Company; Mr. Varun Jaipuria, Executive Vice Chairman and Whole-Time Director; and Mr. Raj Gandhi, Group CFO and Whole-Time Director of the Company.
We will initiate the call with opening remarks from the management, following which we will have the forum open for a question-and-answer session. Before we begin, I would like to point out that some statements made in today’s call may be forward-looking in nature and a disclaimer to this effect has been included in the results presentation shared with you earlier.
I would now request Mr. Ravi Jaipuria to make his opening remarks.
Ravi Kant Jaipuria — Promoter and Chairman
Good afternoon, everyone and thank you for joining us on our earnings conference call. I hope all of you had the opportunity to go through our results presentation that provides details of our operation and financial performance for the fourth quarter and year ended 31st December 2024. We are pleased to conclude calendar year 2024 on a strong note through adding geographical presence into new territories of South Africa along with distribution rights for Namibia, Botswana, Mozambique and Madagascar.
We also started Greenfield operations into a new country of Democratic Republic of Congo, DRC. The growth has been driven by organic volume growth and improved product mix. India volumes grew 11.4% reflecting the strength of our distribution network and operational execution. Consolidated volumes increased by 23.2% largely led by new territories resulting in consolidated revenue increase by 24.7%, EBITDA growth of 30.5% and PAT growth of 25.3% for the year.
We are progressing well in South Africa as we grew our — the sales volume by 12.5% in the first year of operations. We are consciously reducing our reliance on modern trade channel and enhancing our distribution network in general trade. As an enabler, we have placed more visi-coolers in South Africa market in a single year than what was cumulatively placed till the — till date by previous operators. We are working on plans for backward integration in the territory.
We also entered into share purchase agreement to acquire PepsiCo’s business in Tanzania and Ghana, pending regulatory and other approvals. Integration of these acquisitions along with our operations in South Africa shall strengthen our presence in key international markets. This, coupled with the commissioning of new Greenfield facilities in India and DRC shall enhance our manufacturing and distribution capabilities ensuring we are well-poised to cater to growing consumer demand.
Additionally, our foray into the snack foods business with PepsiCo in Morocco, Zimbabwe and Zambia marks an important step in enriching our portfolio and leveraging synergies with our existing infrastructure. In a significant development during the quarter, we successfully raised INR7,500 crore through a Qualified Institutional Placement, QIP. We appreciated the — we appreciate the confidence and trust placed by leading domestic and foreign institutional investors.
In our long-term strategy, business fundamentals and execution capabilities, this capital raise strengthens our financial position providing the flexibility to pursue strategic expansion opportunities, enhance our operational capabilities and reinforce our balance sheet.
Further, in line with our commitment to deliver value to shareholders, we are pleased to share that the board has recommended a final dividend of INR0.50 per equity share subject to shareholders’ approval. Looking ahead, we remain focused on sustaining healthy growth in both Indian and international markets through deeper market penetration, strategic capacity expansion and continued investments in technology and sustainability.
Our focused efforts in strengthening last-mile distribution and deploying visi-coolers in under-penetrated regions will enable us to reach a broader consumer base with a stronger fundamental — foundation in place. We are confident in our ability to drive long-term value creation for our stakeholders in the years to come. I would now invite Mr. Gandhi to provide the highlights of the operation and financial performance. Thank you.
Raj Pal Gandhi — Whole-time Director
Thank you, Mr. Chairman. Good afternoon and a warm welcome to everyone joining us today. Let me provide an overview of the financial performance for the fourth quarter and the year-ended 31st December 2024. Revenue from operations adjusted for excise GST increased by 24.7% to the level of INR20,007 [Phonetic] crore in the calendar year 2024 in line with strong volume growth.
Consolidated sales volume grew 23.2% to a level of 1,124 million cases from the level of 912 million cases in calendar year 2023. Organic volume growth in India stood at 11.4% while the international organic growth was 6.3% restricted by the transition to a zero-sugar portfolio following the implementation of a sugar tax in Zimbabwe.
Net realization per case increased by 1.3% to the level of 177.9 in the calendar year 2024. In quarter four 2024, consolidated sales volume increased by 38.1% to the level of 215.1 percent million cases from the level of 155.7 million cases in quarter four of 2023. The growth was supported by expanded international operations with 43 million cases from South Africa and 7.8 million cases from DRC during the quarter.
For the full year, CSD contributed 74.2%, non-carbonated beverages to the level of 6.2%, packaged drinking water 19.6% to the total sales volumes. In 2024, mix of low sugar, no sugar products increased to 53% of our consolidated sales volume from 42% in calendar year 2023, reflecting our commitment to the healthier products. Our gross margin during the year expanded by 165 basis points to the level of 55.5% from 53.8% due to strategic procurement and the storage of PET chips to leverage price benefits along with efforts to reduce sugar content and increase backward integration.
Now we have 3 dedicated and 14 integrated manufacturing facilities for backward integration. Also, approximately 16% of our total energy consumption comes from renewable sources of energy, as a result, EBITDA increased by 30.5% to the level of INR47,110 million with EBITDA margin improving by 105 basis point to the level of 23.5% in calendar year 2024. This net improvement in EBITDA margins is in spite of consolidation of South African markets with low margin due to 80% mix of own brands and fixed costs associated with new CapEx, which are yet to be fully utilized.
On a standalone basis, our income stood at INR3,539 million supported by a dividend receipt of INR1,316 million from Nepal and a maiden dividend from Sri Lanka, interest on loans to subsidiaries amounting to INR967 million and a foreign currency gain of INR714 million. These items are eliminated in consolidation as they represent intercompany transactions and merely shift from international to the national basis. Depreciation increased by 39.1% and finance cost rose by 68% in 2024, substantially till the QIP proceeds credit date of 21st November 2024. This increase was due to acquisition of BevCo and the establishment of 4 new production facilities in India and DRC. As a result, PAT grew by 25.3% to the level of INR26,342 million in ’24 from a level of INR2,108 crore in 2023 driven by volume growth and improved margins.
On the balance sheet front, net CapEx stood at INR45,000 million at the end of 2024, of which INR24,000 was spent in 2023 itself, INR32,000 was allocated to four Greenfield facilities in Supa, Gorakhpur, Khorda and DRC. Additional INR8,000 crore was invested in international territories for Brownfield expansion in Nepal, Morocco and Zimbabwe, including backward integration at Morocco, Zambia and Zimbabwe. This balance CapEx comprises land capitalized for future projects and CapEx on visi-coolers, glass portals, pallets, vehicles, et cetera. In fact, some increase in CapEx is on account of land purchased for future projects as well as CapEx for South Africa which is added during the year, we have already started improving facilities there.
Investments made over the past 2 years have significantly expanded our production capacity in India with an increase of 45% during the season 2024 over the capacity of season 2022. This expansion reinforces our ability to meet growing demand and drive future growth. CapEx of calendar year 2025 season is projected at INR3,100 crore out of which as on 31st December 2024, CWIP and capital advances already paid for INR16,500 million or INR1,650 crore, out of total projected CapEx of INR20,000 million is towards Greenfield facilities at Prayagraj, Damtal, HP, Buxar and Meghalaya. The balance CapEx is for snack manufacturing facilities in international territories, Brownfield expansion in India, Sricity, rPET facilities in India and expansion in DRC.
We are pleased to share that during the current quarter, the Company became net debt-free following the prepayment of loans using proceeds from QIP issue. While our financial position has strengthened, we have continued to optimize operations and drive efficiencies despite inorganic expansion into new markets including South Africa and DRC. Our working capital days improved to 31 days as on 31st December 2024 as compared to 34 days in the previous year.
As we close 2024, we are proud of the progress we have made at VBL. Our investments in Greenfield and Brownfield expansions coupled with the expanding global footprint have strengthened our foundation for long-term growth and positioned us to deliver long-term value for all stakeholders. On that note, I have come — I come to the end of our 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 very much. We will now begin the question-and-answer session. [Operator Instructions] Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Vivek Maheshwari from Jefferies. Please go ahead.
Vivek Maheshwari
Hi, good afternoon, sir, a few questions. First on the India business, the second half volume growth is, let’s say about, you know, about mid-single digits and with exit also at about 4%. Do you think this is mainly due to the seasonality bit and you still think about industry growth at double-digit in the foreseeable future?
Ravi Kant Jaipuria
Well Vivek, we have always guided, we cannot take growth based on one quarter. Sometimes it’s colder, sometimes it’s rainier. But we have always said that our annual growth would be in double digits which we feek we’ve already delivered and we see no reason why we will not deliver that going forward also.
Vivek Maheshwari
Got it — got it, sir. And the other bit is given and you have explained in detail in the last quarter also, but the noise has picked up on the competition side from Campa, anything more you want to add upcoming season? Any low-priced pack from your side?
Ravi Kant Jaipuria
We are — see, there is — there have been the brands to the level of about 20% in India in any case which were lower price. So, there is a market for lower-price products and will always remain. Our products are not competing exactly against that and we feel there is enough room for everybody to grow in this market. We are only going to about 4 million outlets out of the 12 million FMCG outlets. Our business is to be how we can grow this market and ultimately reach to that 8- to 10-million outlets going forward. And we are adding about 10% to 12% additional outlets which is 400,000 to 500,000 outlets, which is making our business grow. And I think after a point, people get — will get into the habit of drinking and this is going to enhance the market actually. So, with — the more players, it is the better. There will be more competition, there will be more players in the market. The Indian market is still very huge, and it’s not even being tapped. So, we don’t feel there is any threat to our growth in the market.
Vivek Maheshwari
That’s quite interesting. But sir, what we have observed is the end consumer price points are lower, the retail margins are far higher, and we have seen instances and again I admit that these are more anecdotes but there have been instances where retailers are actually pushing Campa given that their margins are far higher. Do you think there needs to be, so B brand logic I understand, but do you see any risk or you basically having to retaliate with some product which is lower priced than what your current portfolio is?
Ravi Kant Jaipuria
Well, I don’t think at the moment, we need to because the only thing, half of this quarter is also gone and we are not seeing any drop in our growth, rather we are seeing enhanced growth. So, I am very happy with it. If we can grow at this level, I don’t want to do anything actually and excess — expand the market and go — increase our go-to-market.
Vivek Maheshwari
Got it. That’s really reassuring. And on your comment on South Africa, what you mentioned about enhancing distribution via general trade. So, would the dynamics be somewhat similar? And when you move from modern trade to general trade, the working capital cycle would be something like India. Can you just talk about the nuances of focusing on general trade in South Africa?
Ravi Kant Jaipuria
Let me explain you, South Africa is a very large modern trade market. It’s not like India. India is less than 10% modern trade whereas South Africa is close to 40% to 45% modern trade market. And that is where your margins are diluted and some of the large retailers really squeeze your margins. So — and the go-to-market is always difficult. It’s much easier to go and sell to one customer. So that is where we are expanding our volume, which is 60%-65% of the market which is a general trade, where the margins are better and we will not be dependent on 1 or 2 customers. And that is what is going to give us much better growth and much better margins going forward.
In South Africa, we have not even started doing our backward integration. So, as we have said, it takes about a year to understand the market in a new country and another year to consolidate and go forward. And we are — in the first year, we are still looking at double-digit growth. We have consolidated part of our business; our margins are getting better and I see no reason why South Africa will not become something close to India. I would not say exactly, but it’s a huge market and if we can keep growing at the right pace, that will become a very interesting market for us.
Vivek Maheshwari
Got it. And just a follow-up, sir, when you talk about general trade, that includes own brands as well as PepsiCo brands or you’re primarily focusing on the PepsiCo brands?
Ravi Kant Jaipuria
All the brands.
Vivek Maheshwari
All the brands. Okay. Got it — got it. Thank you and wish you all the best.
Ravi Kant Jaipuria
Thank you.
Operator
Thank you. Next question is from Aditya Soman from CLSA. Please go ahead.
Aditya Soman
Hi, good afternoon. Sir, two questions. Firstly, on the capacity increase that we are building in the four plants in 2025. Can you give us a sense of how much the capacity will go up? Like you’ve shown 45% over 2022. So how much would it go up over 2024?
And secondly in terms of volumes, can you give us a sense of how much of the volumes are now in India are non-core, so non-Pepsi, Mirinda, 7UP. and do we see competition?
Ravi Kant Jaipuria
You say non-core, what do you mean? I mean most of our portfolio is PepsiCo related. Except our dairy products, everything is PepsiCo products.
Aditya Soman
No, no, no, I meant just a pure Pepsi, Cola, Mirinda and 7UP. So outside of that, so energy drinks, Mountain Dew, all of that, how much do they contribute now?
Ravi Kant Jaipuria
See, Aditya, the first part, so let me explain you CSD what you mean is about 57% which includes Mountain Dew also and Sting is about 15% of our market volumes, Juice is about 7.5% and water is about 18%, that’s what the mix contains [Phonetic]. In comparison, we have already increased in the two years about 45% and last year increase was — about 25% would have been last year. [Indecipherable]. Yeah. Is that — does that clarify, or you need this–
Aditya Soman
Yes, my question was actually capacity for 2025 that will go up because we are sort of adding–
Ravi Kant Jaipuria
It will go up by about 25%.
Aditya Soman
25%. All right. That’s clear, Ravi. Thank you.
Ravi Kant Jaipuria
What we have expanded already and what we are already expanding for the new plants–
Aditya Soman
Very clear.
Ravi Kant Jaipuria
…which will be in production by March. Hello?
Aditya Soman
Yeah. No, no. That was it.
Ravi Kant Jaipuria
Thank you.
Operator
Okay. Thank you. Next question is from Percy Panthaki from IIFL Securities. Please go ahead.
Percy Panthaki
Hi, sir. Many consumer companies across different sub-segments of consumption have been talking about urban slowdown. Are you seeing any kind of slowdown in soft drinks market in urban India?
Ravi Kant Jaipuria
No, Percy, that’s what I said as we are expanding, because lot of the FMCG companies may be not expanding the market as we are expanding because the first thing I said is we are only reaching 4 million outlets against the 12 million outlets. So, we are trying to add as much as 10% more outlets every year. That itself gives us growth potential plus our organic growth which are coming, so that’s why we are comfortable when we say we’ll give you comfortably double-digit growth. And we see no challenge in that at least for the next few years. More than that I don’t know, but at the moment, we don’t see any challenge even this quarter, half of the quarter is already over and we are seeing very healthy growth.
Percy Panthaki
Yeah, understood. Sir, my question was more on the industry overall rather than Varun beverages or Pepsi.
Ravi Kant Jaipuria
That’s what I am saying. Industry-wise, soft drink industry, I think we are all expanding. So, I think soft drink industry is growing much faster than the other FMCG categories.
Percy Panthaki
Got it. Got it. Also in South Africa, given that your market shares are extremely low for Pepsi and even including the other brands, the market share is just about, I think, close to double digits. What should we expect in terms of the growth over the next 3 years here, if we look at something like a Zimbabwe, Zambia, you’ve grown like significantly like 30% plus over 5-7 years. So, is that the same kind of ambition that you have for South Africa or there are some other nuances that we should be aware of?
Ravi Kant Jaipuria
Our ambitions are even greater, but ambition like this, all ambitions can come true, but we have definitely in South Africa also looking at better than double-digit growth. So, we are looking at very healthy growth. I feel, what you’re saying, 30% in three years, definitely we are looking at better numbers of that.
Percy Panthaki
Right, sir. And in Ghana and Tanzania, what is going to be the strategy? Like you said in South Africa, the strategy is to expand in general trade. In Ghana, Tanzania is it the same strategy or there are some other priorities, which will give a bigger bang for the buck you think?
Ravi Kant Jaipuria
In Tanzania, we are — Pepsi is already market leader, so we just need to enhance our go-to-market and put some more capacity. Tanzania is doing extremely well. In Ghana, we have to redevelop the whole market as the PepsiCo portfolio is very small and it’s like getting into a new territory.
Percy Panthaki
Understood. So, Ghana plus Tanzania put together, I think we should be more modest in our growth expectations versus South Africa. Would that be a right way of looking at it?
Ravi Kant Jaipuria
No, I think most of the African countries looking at double-digit growth is reasonably realistic.
Percy Panthaki
Okay, okay, sir. yeah, that’s all from me. Thanks and all the best.
Operator
The next question is from Devanshu Bansal from Emkay Global. Please go ahead.
Devanshu Bansal
Yes, sir. Hi, thanks for taking my questions. Sir, you mentioned that trends are pretty strong. So just wanted to check if you can quantify what is the kind of trends that we are seeing in the domestic geography so far in the current–
Ravi Kant Jaipuria
Couldn’t hear you properly.
Devanshu Bansal
Sir, is it better now? Extremely sorry, is it better now?
Ravi Kant Jaipuria
Yes. Yes, please go ahead.
Devanshu Bansal
Yes, sir. So you mentioned that the trends are really interesting so far in the current quarter. I wanted to check if you can quantify either quantitatively or qualitatively, what are the kind of trends that we are seeing in the current quarter?
Ravi Kant Jaipuria
Well, I’ve always said we’ll grow double-digits and which is what we are seeing and we feel that is realistic and we’ll continue to do that.
Devanshu Bansal
Understood, sir. Sir, second question is on low sugar and no sugar mix, right? So that has been continuously increasing for us. This year, it is about 53-odd percent. What all is included in this? Is this only Pepsi Black and Sting or can you highlight as in what all–
Ravi Kant Jaipuria
We are doing 7UP, we are doing Mirinda. So every product will slowly start getting into mid-cal and no sugar.
Devanshu Bansal
So currently have — we have no sugar or low sugar products across our brands or majority of these 53?
Ravi Kant Jaipuria
We have for 7UP and Pepsi, no sugar and we have mid-cal for Mirinda and of course, mid-cal first thing.
Devanshu Bansal
Understood. And sir, I just want to check the traction Pepsi Black. So if you could just highlight how has the product been from a consumer reception perspective, how big has this–
Ravi Kant Jaipuria
Consumers have accepted well and we are doing extremely well. I think we are about Coke’s level of zero sugar, so I think I don’t have the exact number but we are doing quite well with Pepsi Black and 7UP, zero.
Devanshu Bansal
Understood. Last question from my end sir. There is distributed opening of food plants in CY25 for foods business. What is the scale of business that we can do in ’25 and over next 2-3 years if you just highlight that?
Ravi Kant Jaipuria
In Morocco, we have already started and we are expecting this year to do close between $25 million to $30 million and maybe little more with — but till we start the plant, very difficult to say because the plant will be commissioned only by — in June, so it will give us only six months of that. Till then, we are importing and seeling. And in Zimbabwe and Zambia, we just started importing the goods from South Africa and we have started only in February, so it’s just few days. And the plant will come up in the third quarter of this year, so the growth will enhance at that point.
Devanshu Bansal
So, is it fair to assume, sir, in current year, we will be doing revenue but margins may not be very good because we are importing and selling, so is this a fair assumption?
Ravi Kant Jaipuria
Margins are reasonably good because we have agreed with Pepsi for reasonable margins and they’ve been kind enough to give us reasonable margins, so we don’t dilute ourselves and we can enhance our market.
Devanshu Bansal
Sir, last question, you mentioned that–
Ravi Kant Jaipuria
…which we are going to be producing, so there will be some differentiation.
Devanshu Bansal
Understood, sir. Sir, last question you mentioned that we are working on a Jeera drink for the upcoming season, any update you can provide on that? This is my last question. Thank you, sir.
Ravi Kant Jaipuria
Well, we are working on it and I hope PepsiCo could provide us the product very soon and I hope we can come with — come up with the product this season. But we don’t have it yet.
Devanshu Bansal
Got it, sir. Thank you for taking my questions.
Ravi Kant Jaipuria
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from Onkar Ghugardare from Shree Investments. Please go ahead.
Onkar Ghugardare
Sir, if you could briefly elaborate on what has been your learnings in the last 1 year, understanding the South African markets?
Ravi Kant Jaipuria
Well, we can only tell you we are still learning. And what we found was we were skewed very heavily towards modern trade, where the margins are very low and we were not going to — directly to the market which is the most important thing and that’s where your margins and revenues are and that’s why we have started doing that, but it’s a bit too early, it’s only been about 6 months we have started. It will take us a year to start gearing up ourselves and hopefully this year we will start seeing the results of that coming. And even when we have started, we have seen double-digit growth. So, hopefully, this year we should do better.
Onkar Ghugardare
In terms of margin levels so far, what you have seen, the margins are similar to the Indian levels or like how they are?
Ravi Kant Jaipuria
No, no. Margins are not as per Indian level, South Africa margins are lower. But once we go into backward integration, which will take us a year, our margins will significantly improve and once we go to the general trade, which is go-to-market instead of focusing on modern trade, our margins will improve and year-on-year you’ll see major improvements coming.
Onkar Ghugardare
So, how much time it will take for you to like significantly skew towards the general trade?
Ravi Kant Jaipuria
It will take us at least another year and hopefully some movement will happen this year and the balance will start coming from next year.
Onkar Ghugardare
Okay. The second question is on the capacity expansion you talked about, 25% increase as compared to the current year, the ’24 calendar year. But like all the capacity which you have mentioned will be commissioned from the last quarter March level to this level?
Ravi Kant Jaipuria
It will be commissioned before the season.
Onkar Ghugardare
Okay. All the capacity you mean, right, whatever you have planned?
Ravi Kant Jaipuria
Yeah.
Onkar Ghugardare
Okay. Just a small thing like this year you have kept the dividend levels same as last year, any reason for that in spite of growing profitability?
Ravi Kant Jaipuria
Well, for the moment we have kept it at that. Maybe, if the season is good, we’ll improve it and do better.
Onkar Ghugardare
Okay. Thanks, sir.
Ravi Kant Jaipuria
Thanks.
Operator
Thank you. Next question is from Latika Chopra from JP Morgan. Please go ahead.
Latika Chopra
Hi. Thanks for the opportunity. My first question was on margin front. You know, clearly CY2024 was pretty good in terms of operating margins for you, both on standalone and consolidated basis. And there were a variety of factors which drove this. I wanted to check with you, what is the comfort that you have for sustaining the domestic India margins even at the current levels and similarly for the international pickup to happen, given the backward integration investments that you’re planning, any thoughts on that?
Ravi Kant Jaipuria
Well, for India we’ve already — always said that we can comfortably remain at 21%. We have never given guidance beyond that and fortunately, we’ve been able to perform better than that, but we have never given guidance beyond that.
There’s no reason why we should not be able to sustain these margins going forward. And internationally, our margins will only improve because we are getting into newer territories and recently, we’ve got into a large territory. Once we consolidate and do backward integration and as I said that once we go — start going to the general trade instead of just going to the modern trade, our margins will improve. And we see margins improving this year and will significantly enhance next year after we are backward integrated.
Latika Chopra
Sure. You know, I heard your comments to the earlier question on competition. But clearly, we have seen the new entrant kind of putting out a number of 10% market share in select states. Just wanted to check, are you sensing any geographic variances in terms of need for higher promotions, et cetera in any of the key states that you operate in?
Ravi Kant Jaipuria
The promotions are always good and we are always looking for more promotions and we keep pushing our parent company. But the question is India market is so large which has not been tapped properly and the opportunity is so huge that there is enough room for enough players and enough — as many players will come in, the market will only grow. We are not seeing any dent on our growth. And that is the key what I wanted to say, we are not saying the other people will not sell or not grow or not compete, but I think the market will grow and there’s enough room for everybody.
Latika Chopra
Understood. Any comments on market shares for you?
Ravi Kant Jaipuria
We are doing extremely well right now, so I don’t — balance I think is available with [Indecipherable]. We never comment on market share.
Latika Chopra
All right. Thank you so much.
Ravi Kant Jaipuria
Thank you.
Operator
Thank you. Next question is from Amit Purohit from Elara. Please go ahead.
Amit Purohit
Yeah, sir. Thank you for the opportunity, sir. Just wanted to understand in light of a scenario where competitive intensity rises. And in that context, I just wanted to get your perspective of how does the process happen? I mean tomorrow if there is margin increase by the competition increases, and then who would take the decision and if there is any pricing, how does that would play out? Just wanted to have your thoughts on that.
Ravi Kant Jaipuria
Amit, fundamentally, we take the decision and we may have to make the market cause, of course, we discuss with our parent company, but the question is that the market is large enough. So, as I said, there were already enough people who were selling at the lower prices. So, I think with the lower prices, the market will expand in a huge way and there wil be room for our pricing and their pricing, so I don’t see any reason, why anybody has to really — because and I think the market itelf will grow, people will upgrade themselves.
Amit Purohit
Sure. Okay. And just — can you just highlight the couple of launches, which probably we could see this year, sir, one is you and any other margin effect?
Ravi Kant Jaipuria
We are looking at adding another flavor in our energy drink, which is going to be Sting Gold, which we are hoping to launch very soon. And we are looking at some other products which hopefully will be there ready before the season.
Amit Purohit
Sure. Okay. Thanks a lot, sir.
Ravi Kant Jaipuria
Thank you.
Operator
Thank you. Next question is from Nitesh Dutt from Burman Capital. Please go ahead.
Nitesh Dutt
Thank you for the opportunity. I had a question on our Indorama JV that we had announced a few quarters ago for fulfilling our recycled PET requirements. Just wanted to understand if that is on track and whether we’ll be able to meet 100% of our requirements for FY26 in-house?
Ravi Kant Jaipuria
Yes, we should be very close to it. The project is on track and the production will start this year and we feel that we should not be short of our recycled products.
Nitesh Dutt
Got it. Sir, when do you expect the production to start? And also–
Ravi Kant Jaipuria
We are looking at starting early third quarter.
Nitesh Dutt
Early third quarter. Understood. Any details on what kind of investments and whether they will have any financial implication on our numbers once the..?
Ravi Kant Jaipuria
No, I don’t think so. It’s not a large investment and it’s not — so I don’t think it will have any effect actually.
Nitesh Dutt
All right. Sure, thank you.
Operator
Thank you. Next question is from Ashish Agarwal, who is an individual investor. Please go ahead.
Ashish Agarwal
Yeah, so my question is that given that we are expanding very aggressively in the African countries, especially in South Africa, which is kind of 10% of our revenue at the moment. So, what is our strategy for risk mitigation of currency volatility? And I am not talking for diversification in multiple countries, if you look only at South Africa, what is our strategy for protecting ourselves from this volatility of currency?
Ravi Kant Jaipuria
Well, we think if you look at the currency devaluation, it is less than India right now. So, I don’t think we have to worry too much and slight — if there is a higher devaluation in any country, then we pass it to the consumer. So, it doesn’t affect overall, slight variations obviously happen in different parts of the world, but the market is so large that it will give us so much room to play and enhance our volumes that if there is a minor currency variation it won’t make a difference.
Ashish Agarwal
I was talking more from the long-term perspective and especially from South Africa, we said–
Ravi Kant Jaipuria
In the long term all of Africa is like that, but as we have seen — we’ve been in African market for more than 10-12 years now. And we pass on — there is a major fluctuation in currency, then we pass it on to the consumer and the consumer accepts it. We have not found any — unless some country has a major devaluation, that’s a different story. So then you have fifth challenge for maybe 6 months or a year.
Ashish Agarwal
Okay, thank you. That’s it from my side.
Ravi Kant Jaipuria
Thank you.
Operator
Thank you. Next question is from Devanshu Bansal from Emkay Global. Please go ahead.
Devanshu Bansal
Yes sir. Hi, thanks for the follow-up opportunity. Sir, you mentioned this expected launch of Sting Gold, so wanted to check does this launch add to some new consumption occasions versus the earlier flavor that is there for Sting. So, what’s the strategic thought behind that?
Ravi Kant Jaipuria
Well, I think it gives more opportunity for people who — for different tastes, different products, and it will expand the market. And energy market is a huge market. If you look at in the surrounding countries or developing countries, energy market is 15% to 20% of the mix and India is still 5% to 6% of the mix, so we have a lot of room so we have to keep on enhancing this market with different flavors. People like different flavors and different products.
Devanshu Bansal
So, does this also improve our portfolio of [Indecipherable], sir, from a market in terms of whether mixture or something like that?
Ravi Kant Jaipuria
Not understanding your question, sorry.
Devanshu Bansal
I’m asking, sir, does this also improve this drink in terms of mixing with–
Ravi Kant Jaipuria
Consumers have to make that pair of [Phonetic]. We suggest they can have it directly but if they want to mix it with anything that’s their call but it’s a great product and we feel it will do extremely well.
Devanshu Bansal
Understood sir. And last couple of seasons were impacted due to rains or extreme summers. But this time around there are reports of an early summer, sir, so what is your sense on capacity utilization for the upcoming season, so assuming that if the summer season has no interruptions what was the level of capacity utilization that we can see for the upcoming season?
Ravi Kant Jaipuria
See we have enough capacity; we have expanded enough capacity and we are seeing healthy growth. We can never be 100% sure with exact capacity utilization. But we are not going to be short of capacity this year for sure and we are seeing very healthy growth and very happy with what is happening.
Devanshu Bansal
Understood, sir. Just a small follow-up. So if things go well — I am just asking to get the maximum potential. So, if things go well, can we also reach 100% or that’s not the case that can happen?
Ravi Kant Jaipuria
100% growth?
Devanshu Bansal
No, no, no. Not 100% growth, utilization.
Ravi Kant Jaipuria
I wish we could. I will be very happy if we are able to.
Devanshu Bansal
Sure, sir.
Ravi Kant Jaipuria
We have enhanced our capacity quite a bit, so and think — and especially with the new Greenfield plants coming up this year, I think we’ll have enough capacity. I would be very happy if we are anywhere close to 90% to 95% also I’ll be very happy, but that’s not realistic.
Devanshu Bansal
Understood, sir. Thanks for taking my questions.
Operator
Thank you. Next question is from Ayush Sharma, who is an individual investor. Please go ahead.
Ayush Sharma
Hi, sir. Previously, we have seen the launch of Sting Blue and nowadays we don’t see it much. So, any reason why we have sort of left that product?
Ravi Kant Jaipuria
Well sometimes we launch certain products for in and out and that’s just to give a taste and that was what Sting Blue was. But this is a long-term product like the Sting red color, which we have so that was basically the — it was a year of the cricket for — so it put a blue drink which was for the Indian cricket team, so it was basically just a flavor and just the in and out product.
Ayush Sharma
Okay, okay. And will this Sting Gold be the kind of similar product or this will be a permanent?
Ravi Kant Jaipuria
Sting Gold is going to stay and it’s a long term–
Ayush Sharma
Okay. Thank you so much, sir.
Ravi Kant Jaipuria
Thank you.
Operator
Thank you very much. That was the last question in queue. I would now like to hand the conference back to the management team for closing comments.
Raj Pal Gandhi
Thank you very much. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarification or would like to know more about our company, please feel free to contact our Investor Relations team. Thank you once again for your interest and support and taking time out to join us on our call. Look forward to interacting with you soon. Thank you very much.
Operator
[Operator Closing Remarks]