Varun Beverages Ltd (NSE: VBL) Q4 2025 Earnings Call dated Apr. 30, 2025
Corporate Participants:
Anoop Poojari — Investor Relations
Ravi Kant Jaipuria — Chairman
Raj Pal Gandhi — President and Whole-Time Director
Analysts:
Aditya Soman — Analyst
Percy Panthaki — Analyst
Darshit Vora — Analyst
Jay Doshi — Analyst
Vismaya Agarwal — Analyst
Nitin Shakdher — Analyst
Mrunmayee Jogalekar — Analyst
Prashant Poddar — Analyst
Nilesh Shah — Analyst
Sheela Rathi — Analyst
Devanshu Bansal — Analyst
Devesh Advani — Analyst
Rishi Mody — Analyst
Ashish Kumar — Analyst
Rajit Aggarwal — Analyst
Ashish Agrawal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Varun Beverages Limited Earnings Conference Call. [Operator Instructions]
I now hand the conference over to Mr. Anoop Poojari from CDR India. Thank you, and over to you, sir.
Anoop Poojari — Investor Relations
Thank you. Good afternoon, everyone and thank you for joining us on Varun Beverages Q1 CY 2025 earnings conference call. We have with us Mr. Ravi Jaipuria, Chairman of the company, Mr. Varun Jaipuria, Executive Vice Chairman of the company and Mr. Raj Gandhi, President 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 — Chairman
Good afternoon, everyone and thank you for joining us on our earnings conference call. I hope all of you have had the opportunity to go through our results presentation that provides details of our operational and financial performance for the first quarter ended 31st March, 2025.
We are pleased to report a strong operational and financial performance in the first quarter of CY 2025. Consolidated sales volume grew by 30.1% Y-o-Y driven by healthy organic volume growth of 15.5% in India. The integration of the South Africa territory has progressed well with focused efforts on strengthening on ground infrastructure, streamlining operations and enhancing execution across the market. We achieved 141 million cases in South Africa over the trailing four quarters marking a growth of 13% over the same period last year. Historically, net realizations in South Africa are lower due to a higher mix of own brands. However, we are actively working to scale PepsiCo portfolio which is expected to support improvements in realization and margins going forward.
We recently commenced operations at our new Greenfield production facilities in Kangra, Himachal Pradesh and Prayagraj, Uttar Pradesh significantly enhancing capacity. Currently with the peak summer season, the implementation of other two Greenfield production facilities scheduled for 2025 season in Bihar and Meghalaya is on track and shall commence the commercial production very soon. Additionally, we have established backward integration facilities in Prayagraj and DRC further strengthening our operational backbone and supply chain efficiency.
Building on our nascent presence in the snack food segment, we have initiated the distribution and sale of PepsiCo snack products in Zimbabwe and Zambia. These markets present a significant growth opportunity within the packaged food category, supporting our focus on portfolio expansion across high potential regions.
In line with our dividend policy, the Board of Directors has approved an interim dividend of 25% of face value, i.e., INR0.50 per share, resulting in a total cash outflow of INR1,691 million. Looking ahead, we see immense headroom for growth in India’s beverage market supported by rising per capita incomes, accelerating urbanization, expanding electrification and improving cold chain infrastructure. With adequate capacities in place, a diversified product portfolio and a strengthened distribution network, we remain well positioned to capitalize on these opportunities and deliver sustainable value to all stakeholders.
I would now invite Mr. Gandhi to provide the highlights of the operational and financial performance. Thank you.
Raj Pal Gandhi — President and Whole-Time Director
Thank you, Mr. Chairman. Good afternoon and a warm welcome to everyone joining us today on the investors call. Let me provide an overview of the financial performance for the quarter ended 31st March, 2025.
Revenue from operations adjusted for excise and GST grew by 28.9% Y-o-Y to the level of INR55,669.4 million in the Q1 of CY 2025. Consolidated sales volumes increased by 30.1% to the level of 312.4 million cases as compared to 240.2 million cases of the corresponding period that is Q1 CY 2024. This growth was supported by strong organic volume growth of 15.5% in India and inorganic contributions from South Africa and DRC.
In India, realization per case improved by 1.8% while it remained stable across international markets excluding South Africa. At the consolidated level however, due to lower per case realization in South Africa, the blended consolidated net realization per case declined by 0.9%.
CSD constituted 75% of the total volumes while non-carbonated beverages and packaged drinking water contributed 7% and 18%, respectively. Aligned with our growing focus on healthier beverages, the mix of the low sugar, no sugar products increased to 59% on consolidated basis of the total sales volumes in Q1 CY 2025. Due to relatively lower margin profile of owned brands in the South African market and the higher mix of CSD in India, gross margins stood at 54.6%, a decline of 171 basis points as compared to Q1 CY 2024.
EBITDA increased by 27.8% in Q1 of 2025 to the level of INR12,639.6 million compared to INR9,887.6 million in Q1 of 2024, broadly in line with net revenue growth. EBITDA margins in India improved by 111 bps driven by operational efficiencies resulting from strong volume growth at the consolidated level for this year. At the consolidated level, margins declined marginally by 20 bps due to lower profitability in the South Africa market, where margins currently stand at 14.4%, and its higher contribution to the overall performance during the quarter.
Depreciation increased by 45.3% during the quarter, primarily due to the commissioning of three new plants last year, Supa, Gorakhpur, and Khordha, which were not part of the base quarter. The inclusion of operations from South Africa and DRC during the current period also contributed to the increase.
Post repayment of debt through QIP proceeds, finance cost in India is negligible and there is an interest income of INR108 million during the quarter. Interest cost in international markets is primarily in South Africa, which also includes the lease rentals under the Accounting Standard 116 of INR86 million as the manufacturing facilities in South Africa are on lease. PAT for Q1 CY 2025 increased by a healthy 33.5% Y-o-Y to INR7,313.6 million driven by volume growth and lower finance costs.
Lastly, we are pleased to share that CRISIL has upgraded our long-term credit rating to CRISIL AAA Stable. This reflects the strength of our balance sheet, strong governance and consistent performance across key metrics. As we enter the peak season, we remain focused on sustaining and accelerating our strong growth, our strategic investments across Greenfield and Brownfield capacities, backward integration and network expansion, strengthening our execution capabilities and operational efficiency. These efforts are reinforcing the foundation for sustained long-term growth and we remain confident in our ability to execute effectively and deliver consistent performance and value to all stakeholders.
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 very much. [Operator Instructions] The first question is from the line of Aditya Soman from CLSA. Please go ahead.
Aditya Soman
Hi, good afternoon and thanks for the opportunity. Two questions from me. Firstly, any sort of early trends from the recent launches you have made of Sting Gold or of the sort of lower price point pack of Gatorade, especially as we head into summer, we have seen that you have increased capacity. So, any sort of sense on how these new products are doing will be very useful.
And the second question, in your presentation you highlight that one of the reasons for the sort of gross margin impact has been the higher CSD share in India. Could you please elaborate on why that has impacted gross margin? And secondly, is there also an impact in this because of the water cost that has shifted, you had indicated some time back from other expenses to COGS. Thanks. Those were my questions.
Ravi Kant Jaipuria
First of all, as far as the new launch of Sting Gold and Gatorade, we think it’s still very early, it’s very nascent, it has just been launched recently. We need to wait a couple of months to see what the reaction of the market is. But it has been accepted well. As soon as maybe the next quarter we will have more answers to give you. For the margins Mr. Gandhi will answer.
Raj Pal Gandhi
Aditya, as you very rightly pointed out, yes, the water cost has shifted to the direct cost from being a part of other expenses. Secondly, the product mix has changed. We had our focus on CSD, which has helped realization per case and has also resulted in an increase in EBITDA. But at the gross margin level it’s just a shifting of expenses because the focus was more on CSD and CSDs have a lower gross margin as compared to packaged water. And thirdly, contribution from smaller packs has gone up compared to the larger packs. All these things led to a slight increase in COGS; however, resulting in higher per case realization and higher EBITDA margin.
Aditya Soman
Thank you, that’s clear. Maybe just on that, so are we alluding that CSD gross margins are slightly lower than the overall system average?
Raj Pal Gandhi
The margins are higher, realization is higher, percentage looks slightly lower because if the realization is 3x and with the same percentage wise it’s expands dramatically in case of this thing. Last we used to give an example when in a smaller pack where the blended cost is higher. That’s why which helped us increasing the revenue as well as the percentage of margin. So the margin definitely in CSD is higher.
Aditya Soman
Thank you, Mr. Gandhi. I’m sorry — I think we lost you at the first portion of your answer.
Raj Pal Gandhi
So if any particular thing you want to know, I can repeat. Okay, let me just reiterate the main thing in this. Margin in case of CSD definitely is higher because realization is around 3x in case of CSD. So margin is high. Secondly there is a bit of shifting because in the case of CSD there is a concentrate cost here there is no consent but royalty which sits below the gross margin. Is that clear Aditya?
Aditya Soman
Yes, thank you. That’s very clear. Thank you.
Raj Pal Gandhi
Thank you, Aditya.
Operator
Thank you. The next question is from the line of Vismaya Agarwal from Citigroup. Please go ahead. Mr. Vismaya, can you hear?
Raj Pal Gandhi
Maybe you can take the next question, please.
Operator
Sure sir. Thank you. The next question is from the line of Percy Panthaki from IIFL. Please go ahead.
Percy Panthaki
Yeah. Hi sir, just wanted to ask regarding the competitive intensity with the new entrant who has come, just wanted to ask what is the thought process there on the parts of the value chain we do not control, which is the ad spend mainly, which basically rests with Pepsi. In your conversations with Pepsi, what is the thought process there? Is it that there is an irrational amount of ad spend going on and we do not want to participate in that irrationality or is it that whatever is happening we need to match that and maintain share of voice because ultimately even though you don’t control this will affect your sales and profits?
Ravi Kant Jaipuria
I think the question is we are spending what we have been spending earlier also. As the volumes are growing up, we are spending more money than what we were spending earlier. We are spending our share. Some people may decide to spend on one category, while we have decided to spend on other categories. So, they decided to spend more money on IPL which we have not chosen this year. One year we did choose IPL, it all depends on what you choose and how you go forward with it. They are just entering the market so I guess they need the people to know more about their products and we cannot argue on that. I don’t think we have any issue with that and we are spending our bit and the market is accepting it. There will be always little bit up and down with competition coming.
Percy Panthaki
Sure. Understood. And just wanted to understand how is the summer season going on thus far? I mean are we seeing the same kind of growth trajectory in April what we have seen in 1Q?
Ravi Kant Jaipuria
See we never go month on month. We have always stood by that we will grow double digits in the year and that is what we stick by. We cannot plan on month to month because each month is different, and weather patterns vary, sometimes the rains are earlier, sometimes later. We have always said that we can grow in double digit, and this is what we are expecting happening this year and we are quite comfortable with that guidance.
Percy Panthaki
Sure. And last question is on the India margins. Last year we were at about 25.5% margin. This quarter also we are close to about 25% margin. However, in the previous calls you have mentioned that for India margins we would be comfortable defending like 21% kind of a number. So how should we read this as financial analysts? Should we read it as there’s a possible 400 basis points margin compression in the future or is it that you’re being overly conservative with that number?
Ravi Kant Jaipuria
I think you can look at it how you like. I have never said that we will — 21% in soft drink industry is a very good margin. So we have stuck to that and we keep trying and making sure that we achieve better than that. As we are doing backward integration and expanding into bigger plants, we expect our margins to do better than that. But we don’t give a guideline of more than 21%.
Percy Panthaki
Got it, sir. Got it. Very helpful. Thank you and all the best.
Operator
Thank you. The next question is from the line of Darshit Vora from Asit C Mehta Investments. Please go ahead. Sorry to interrupt. Sir, I would request you to please use your handset. Your audio is not clear.
Darshit Vora
Hello, am I audible?
Operator
No, sir, are you using your handset?
Darshit Vora
Yeah, I’m using my handset.
Operator
Yes.
Ravi Kant Jaipuria
Yeah, yeah, you’re clear now.
Darshit Vora
Yeah. Okay. Thank you for the opportunity. So, I had a couple of questions. The first one would be, so from like the CY 2020 to 2022, we have been seeing India margins were lower than international margins by around 300 to 400 basis points. Now this reversed in CY23. So, in this scenario India margins improved. So, what do we see like going ahead, do we see the India margins coming back to how they were before?
Ravi Kant Jaipuria
India margins are doing well as we said in my last question also, that as we are putting new plants, bigger plants and we are going backward integrated, the India margins are improving. But as a guidance, we don’t give more than 21% guideline. On the international market, we’ve had couple of challenges, which one was that in this quarter, Ramadan was earlier. So Morocco had a little bit of hit because of that. Secondly, because of sugar tax in Zimbabwe, the volumes came down and they are now coming back. So from this quarter onwards, we expect the volumes to come back to normal.
And South Africa, we had always said that the margins are lower because 80%, 85% of the volumes were our home grown brands. And there the margins are lower. So we are slowly building those margins and increasing the sales of high margin products, which will take a little bit of time, not even six months, one year, but little longer. But margins are improving in South Africa and we are getting good growth there.
Darshit Vora
All right. But then like do we see them coming close to or surpassing the domestic margins as of now in the near future?
Ravi Kant Jaipuria
It won’t. Near future is very — we have to do completely backward integration. It’s a couple of years. Process is not going to happen overnight.
Darshit Vora
All right. Okay. But it can probably come close to the domestic margin, right?
Ravi Kant Jaipuria
It can come close to it. I mean it’s not —
Darshit Vora
Okay, thank you. That’s helpful. And secondly, now that the Tanzania and Ghana agreements have terminated, will it impact — like what kind of impact will have on your growth aspirations in the African continent? And also that do we have any update on some new geography that we might be going into an agreement for?
Ravi Kant Jaipuria
We will be always expanding and the paperwork could not be done in time for Tanzania and Ghana, so we have put it on hold. And depending how the — we are always looking for growth and there will be growth opportunities coming in lot of other countries which we are always working with PepsiCo and as they would like, we will go forward with it. So as soon as we have something concrete, we’ll let you know.
Darshit Vora
All right. Thank you so much. That’s all from my side and all the best.
Operator
Thank you. The next question is from the line of Jay Doshi from Kotak. Please go ahead.
Jay Doshi
Hi. Thanks for the opportunity and congratulations on good execution in India. My question is on South Africa. Now that you’ve handled the business taken over since about a year, could you give us some overview on what are the areas where you’re tracking ahead of your expectations that you may have a year ago in terms of volumes, distribution, profitability, basically how is it shaping up versus your base case assumptions and if you could give us some color what we should expect over the next four quarters from that territory?
Ravi Kant Jaipuria
I think South Africa is shaping up well. It’s very difficult to judge first year the business. We expected growth, which it has started growing. We are making sure that non-profitable packs are being discontinued which is reducing our growth and that is why it is taking longer. And the growth actually on profitable packs is much higher than what we are showing because of our shutting down on the products which are not profitable. So it will take at least a year or two years to bring South Africa into fully — but it is a large market. The growth opportunities are huge and we are seeing very good salience and I think it will be a very interesting market for us.
Jay Doshi
Sure. One small bookkeeping question. This quarter, you’ve called out South Africa margins of 14.4%, right. But I think there is seasonality, there’s one of the stronger quarters. So the more annualized basis, where do you stand now versus maybe I think at the time you acquired it was about 11%, 11.5%. So if you could kind of — adjusted for seasonality, what kind of improvement we have seen so far?
Ravi Kant Jaipuria
No, it used to be 10-point-odd percent and we have reached 14% and we are going to try that for the year if we can maintain this 14%. But of course, as you said last quarter was one of the better seasons. But I think we’ll still be able to — because we are making corrections going forward, so I think we’ll be able to correct the margins and stick to this margin at least.
Jay Doshi
That’s very helpful. Thank you so much.
Operator
Thank you. The next question is from the line of Vismaya Agarwal from Citi. Please go ahead.
Vismaya Agarwal
Hi, good afternoon sir. So just a continuation on the previous question on South Africa. So at the time of the acquisition, the own brand salience was the larger chunk. Pepsi was just 15%. So if you could share some update on what’s the salience now of own brands versus Pepsi? And also if you could share the 13% volume growth for that business that you’ve called out; any trends in own brands versus Pepsi there as well please.
Ravi Kant Jaipuria
So our Pepsi brand sales are going up from 15%; it’s close to 20% now. And all the products are growing, even our homegrown brands are growing and PepsiCo is growing faster. And at the same time we are cutting down on some of the products which were non-profitable. So that is why the growths are looking more subdued than actually what they are.
Vismaya Agarwal
Got it, sir. Thank you. And just one more on the India business. Now in terms of the realization per case that we see here, which is up 1.8% this quarter and historically you’ve maintained that the long-term trend should be closer to 2%. But I just wanted to get your thoughts on is there some risk on this growth near term next, say, one year or so given the kind of consumer promotions that we’ve seen in the industry or do you think there are levers, mix perspective or any other levers that can help you?
Ravi Kant Jaipuria
Actually, it’s very good for the industry. All these promotions are helping industry to grow. And as you see with the new entrants also and with our growth, so our growth have still stuck to the double-digit growth which we have been saying and the new entrants are getting their fair share. So there the market is still very under penetrated and there is huge room in India to grow.
Vismaya Agarwal
Got it, sir. But on the realization, does it have an impact — the promotions have an impact on the realization or you think that’s still manageable with the mix?
Ravi Kant Jaipuria
Very difficult to say. It will depend on quarter to quarter and some effect it could have. But I don’t think it’s a major issue and I think our margins are decent enough. That’s why we always predict. We have never said we should be more than 21% margin. We are much higher than that. So if we ever need to, we have enough room to play.
Vismaya Agarwal
Got it, sir. That’s it from me. Thank you.
Operator
Thank you. The next question is from the line of Nitin Shakdher from Green Capital Single Family Office. Please go ahead.
Nitin Shakdher
Hi, this is Nitin Shakdher from Green Capital Single Family Office. Congratulations to the management on set of numbers. So my question is more as an investor.
Operator
Your audio is not clear. Are you using your handset?
Nitin Shakdher
Yes.
Operator
Much better now, sir. Please continue.
Nitin Shakdher
Hi, this is Nitin Shakdher from Green Capital Single Family Office. Can you hear me?
Ravi Kant Jaipuria
Yes, yes. Go ahead, please.
Nitin Shakdher
Okay. So congratulations to the management on an excellent set of numbers. My question is more as an investor what are you seeing in terms of a push from global PepsiCo into the India market? Is it that some volumes are moving up on sports energy drinks like Gatorade and Sting and zero sugar versions of Pepsi. What is the shift being from the Indian consumer side more onto healthier options because that’s the trend, even like newer sports in India are picking up like Pickleball. So, what’s a brand like Varun Beverages and Pepsi doing to sort of look at the new wave of drinks and nutrition?
Ravi Kant Jaipuria
So hydration and energy are the fastest growing categories which we see happening and which is happening. You see our energy drink is one of the largest in India. Secondly, our hydration drink which is Nimbooz is growing at practically 100% which is a fabulous growth. Our value-added dairies are growing at close to 100%. So the new categories are doing extremely well. And at the same time, there are enough newcomers who are entering the category and those regular categories are also growing. But the faster growth is coming from these categories.
Nitin Shakdher
So do you also see within Cream Bell the zero sugar options picking up a lot more rather than the standard ice cream patterns. What’s the trend on the dairy?
Ravi Kant Jaipuria
I don’t think zero sugar India is ready for it but I think Mid-cal, which is what the Sting drink is, our energy drink is — Mid-cal is taking more popularity and that is what is going to be coming over the next year or two. Zero sugar is still a very small segment in this country.
Nitin Shakdher
Okay, thanks, sir. And all the best to the management. Thank you.
Operator
Thank you. The next question is from the line of Rishi Mody from Marcellus Investment Managers. Please go ahead. Yes sir, we can hear you. You are not clear. No sir, I would request you to please use your handset. Sir, your audio is not clear.
Ravi Kant Jaipuria
I can’t hear you clearly.
Operator
So he disconnected. Due to no response from the current participant, we will move on to the next participant. The next question is from the line of Mrunmayee Jogalekar from Asit C Mehta Investments. Please go ahead. Mr. Mrunmayee?
Mrunmayee Jogalekar
Hello. Yeah, am I audible?
Operator
Yes, ma’am.
Mrunmayee Jogalekar
Yeah, hi. Thank you for the opportunity and congratulations on a good set of numbers. Sir, my first question is to do with the DRC volumes, if you can quantify that for this quarter.
Ravi Kant Jaipuria
DRC has just started so it’s bit too early to — I mean, we are still progressing and it’s a new country, new territory so. And we’ve had some challenges there. So I think DRC is still too early. I think maybe in the next quarter or two quarter, you’ll really start seeing the country coming to life.
Mrunmayee Jogalekar
Okay. So in the previous, I think couple of quarters, we had a run rate of about 5 million to 7 million cases. Would it be similar to that or. As you mentioned there were some challenges, so it was lower —
Ravi Kant Jaipuria
I don’t think it was that large but we are doing reasonably okay. And it’s a bit early. I would say, we would be doing very close to that but there’s not much. I think it needs a little more time. I think we are still learning the country so I think we need another quarter or two quarters before we can really start giving you the numbers on that.
Mrunmayee Jogalekar
Okay. And secondly on the South Africa growth, so this year you have seen a growth of 13% which for the first year of operations is very good growth. So are you expecting to accelerate this growth and any specific internal targets you would have in terms of what kind of growth you would like to see here?
Ravi Kant Jaipuria
Internal targets, we always have but every time you can’t achieve all your internal targets. As I had said mentioned earlier, we are very happy with the growth of South Africa but the actual growth is not coming out because we are cutting down on some of the products which were non-profitable. So actual growth when it says 13 is actually much higher to what is actually showing, because if we would have not cut down on the non-profitable packs and we are very happy if we can continue this strategic trajectory.
Mrunmayee Jogalekar
Okay. And the expansion of visi coolers will continue in South Africa.
Ravi Kant Jaipuria
Yes. I mean, that’s one of the only ways to grow this market, soft drink market. Our go-to-market and visi cooler chilling equipment both have to be go hand in hand.
Mrunmayee Jogalekar
Okay sir. Thank you. All the best.
Operator
Thank you. The next question is from the line of Prashant Poddar from ADIA. Please go ahead.
Prashant Poddar
Good afternoon, everyone. Can you hear me?
Operator
Yes, sir.
Ravi Kant Jaipuria
Yes Prashant, we can hear you.
Prashant Poddar
Yes sir. Thank you very much for all the details and fantastic work in the continuing international markets. India market especially, we’ve talked a lot about the new competition. But Coca-Cola is clearly the still more relevant competition for you. Can you — you’ve not spoken about the competitive landscape much in the call. We have seen you introduce the light variants at low prices in March I think. Also Reliance has announced — Campa has announced a large plant in — I think Assam or somewhere. So can you help us understand this getting geographical proximity, for example, for Campa or Cola, participating with new bottlers now, new bottling promoters at least? Can you help us understand the overall macro in terms of competitive landscape, how this is evolving and how have market shares been for the full year if you can give us just some indications.
Ravi Kant Jaipuria
So I think the good part is competition is making all of us put more chilling equipment, more go-to-market, increasing our efforts. So I think the overall market is growing faster than it was growing over the years and there are enough new entrants which are coming at the lower price which the competition is putting, which is helping the market to grow. And I think India is so lowly penetrated that as the competition heats up, I think the growth will come much faster and there is enough room for everyone in this country.
As we have said before, there are 12 million FMCG outlets and I think we are going to about 4 million only. So still there is so much room for everyone to add on outlets, go to it, put chilling equipment and the market will keep on growing. And in soft drink obviously whoever wants to compete they have to go closer to the market because transporting water is not a viable proposition.
Prashant Poddar
Yeah, yeah, fair enough. And in terms of for the full last year, any indication how you would have done versus Coca-Cola?
Ravi Kant Jaipuria
Well, I think we have both grown. So exact numbers only Nielsen and Canadian would give you. But we have both grown and both done pretty well. And as I said, we have grown double digits and which is a very healthy growth on this scale and we expect to continue doing that actually.
Prashant Poddar
Okay. And last question from my side, sir. In terms of inflation of key materials, which is packaging and sugar, etc. Any thoughts — any initial thoughts for the current year? How is it looking relative to previous year?
Ravi Kant Jaipuria
We don’t see the raw material going up. Fortunately for us, oil prices are not going up. So our packaging material pricing are quite stable or rather even slightly lower. Sugar slightly has gone up, so it balances out and we are quite comfortable with our production costs.
Prashant Poddar
Okay, thank you, sir. That’s all from my side.
Operator
Thank you. The next question is from the line of Nilesh Shah from Julius Baer. Please go ahead.
Nilesh Shah
Yes, hi sir, are you able to hear me well?
Operator
Yes, sir.
Nilesh Shah
Okay, great. Sir, we have seen that over the last few months you have launched the same sort of INR20 pack with higher volume, right. And we are able to kind of see this product in quite a few states. So could you comment on two things, sir? First on a, like-to-like basis, what would be the margin differential for you? Just asking for a rough range. And, and sort of number two point here, sir, is that is your partner, any of your brand partner helping you in any way in sort of — in making good of the margin gap, that may be the case. Thank you.
Ravi Kant Jaipuria
So if you see our margins have not come down, so clearly we are not losing margins and we keep on shifting from product to product. Last year we had some other products which was upsized. This year we have changed to some other flavors. So it’s really not that we are adding a lot of bigger packs at the same price. Overall, percentage wise, it’s not much higher than what it was last year. And our margins are not getting, and obviously our parent companies are working with us, so our margins are not getting squeezed.
Nilesh Shah
Okay. So just to sort of extend this thought a bit more now you are — of course the share is low because you have not rolled it out across all markets, which you spoke of in the last call. But if you kind of have to do that, as Campa and other brands also expand nationwide and the salience, both in terms of geography and of your volumes go up, you feel even then it would not have a sort of a significant hit on your margins per se. That’s the right reason?
Ravi Kant Jaipuria
I don’t see any major dips coming to our margins.
Nilesh Shah
Okay. Thank you. Thank you so much.
Ravi Kant Jaipuria
Thank you very much.
Operator
Thank you. The next question is from the line of Sheela Rathi from Morgan Stanley. Please go ahead.
Sheela Rathi
Thanks for taking my question. Again, my question is around the competitive landscape and also, thanks for the clarification on margins. Just want to understand that in this environment where B brands as well as the topmost competition for you all have been aggressive. Does it make sense for us to introduce more new products, take up that pipeline much faster than what we have done in the past? Not necessarily in zero sugar product, but normal products which cater to the Indian audience. And second is also how are we kind of ensuring that we remain relevant? Are we focusing more on ATL spends or BTL spends or how are we playing these two areas?
Ravi Kant Jaipuria
So I think the key way we are progressing is one, increasing our go to market which we have been doing every year. We have hastened that. We are putting more chilling equipment which we were putting last year or year before. We are adding more chilling equipment so that we become more relevant to the outlets. And these two things help us substantially. And also of course our products are doing well. We have distinctive products. As I said in energy, we are market leaders. In hydration we are market leaders. And even in value-added dairy we are doing extremely well.
These categories are growing at practically apart from energy, our value-added dairy and our hydration category is growing practically at 100% and so we are getting enough traction and of course we will keep on introducing new products, which is the right thing to do at the right time. We have introduced a new energy flavor, which is a malt-based flavor, which has just been launched in March. So it’s been still penetrated in the market and we need to see how well it does.
Sheela Rathi
Understood. And the point on ATL and BTL spend.
Ravi Kant Jaipuria
ATL and BTL spend keeps growing with the volumes and we keep on spending and we have a understanding with the parent company that X amount will be spent out of the total revenues which we continue to do.
Sheela Rathi
Sorry, just one follow-up, sir. Is there any change here in terms of the trend given the conversations around competition being aggressive? Have we required to make any changes in certain —
Ravi Kant Jaipuria
We are aggressive. It’s a different way. Somebody wants to be aggressive in some way you have to be aggressive. That’s why I said we have put much more chilling equipment this year which we used to put. We have increased our go to market much more strongly. So everyone will take their own call what is right for them. And we are expanding our distribution. India has got 12 million outlets; we are going to 4 million. So there is so much room to expand for everyone.
Sheela Rathi
Understood. Thank you very much, sir.
Operator
Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Devanshu Bansal
Yes sir. Hi, thanks for the opportunity. Congrats on strong execution in last quarter sir. Again building on the marketing perspective, the competition is quite aggressive in terms of advertisement during major sporting events as well as large congregations like Kumbh Mela. You mentioned that obviously BTL, we are quite aggressive in terms of equipment as well as the banners that are there at the shops. But from a mass marketing perspective which I guess is the brand’s responsibility. So what is the strategy there from PepsiCo side? So we are relatively — this is my perception but relatively as of now the word of mouth is relatively lower. So what’s the strategy there?
Ravi Kant Jaipuria
Well, I think you are basing it because of two events which have happened. One is the Kumbh and the other is the IPL. So parent companies take certain call which where they want to spend more money, what they want to do. So I think our spends have not come down, they are going up only. So I mean if the competition wants to spend more, I can’t control that. And this is a call where they want to put their money.
Devanshu Bansal
Understood sir. If the spends have are remaining stable then maybe we’ll see during the season. Sir, second question is on the international front. So Zimbabwe saw some moderation due to sugar tax last year. Now that it is in the base, you also indicated that from this quarter things should improve. Just if you could help us understand what kind of a growth that we can expect on a low base in that particular geography.
Ravi Kant Jaipuria
I don’t think we have a low base there. We are already more than 70% market share. So I mean for a country population of 16 million, 17 million, our volumes are very high. We are doing extremely well there and it’s a very good market for us. And the problem which happened because we had to raise prices suddenly because of the sugar tax that is getting absorbed now and I think from this quarter we expect it to come back to our normal — but huge growth we are not expecting there.
Devanshu Bansal
Understood. And last bookkeeping question, the Bihar and Meghalaya plants, when are they expected to sort of get commission? Is this like during current season or it will be after that?
Ravi Kant Jaipuria
Well, Bihar is getting started tomorrow actually. And so May 1st it’s getting started and Meghalaya will be by the end of this month — end of May.
Devanshu Bansal
Fair enough. Sir, thanks for taking the question.
Operator
Thank you. The Next question is from the line of Devesh Advani from Reliance General Insurance. Please go ahead.
Devesh Advani
Hello sir. Congratulations on good set of numbers. Actually I wanted to ask how do you see the demand trends before peak summer season as in the month of April and how do you see the top line and bottom line spanning going forward?
Ravi Kant Jaipuria
As I said, we still believe that double-digit growths are very doable in this country with the expansion. And I think there’s enough room for everyone to get a share of this market. This market is growing at a much faster pace as more competition is coming in. More money is being spent, more chilling equipment are being put. I think the growth will be much faster in the category and it’s I think doing much better than the other FMCG categories. So I think overall it’s looking good. The rest depends partly on weather gods. These quarters — each quarter can be little different too. So it’s very difficult to say. But overall for the year, we believe double digit growths are very doable.
Devesh Advani
Okay. All right. Thank you.
Operator
Thank you. The next question is from the line of Rishi Mody from Marcellus Investment Managers. Please go ahead.
Rishi Mody
Yeah, hi folks, can you hear me now?
Operator
Yes, sir.
Ravi Kant Jaipuria
Yes.
Rishi Mody
Yeah, so I heard you saying that Coca-Cola has also grown healthily in Q1 CY25. And it’s been almost, I think six years since we acquired the South and West business — little more than six years if I’m not wrong. So just wanted to understand how is our growth in the South and West India? Are we gaining market share or are we still at the same market share levels that we were at the time of acquisition?
Ravi Kant Jaipuria
Very difficult to say on that. But we are growing the market overall and we’ve had growth in both the markets. So that’s what I can say. We are growing healthily in South as well as West. The rest, Coke is — I don’t know their exact numbers. So my feedback is they’re also doing well. I think the overall market is growing, as I said, in the country.
Rishi Mody
All right. Second, I wanted to understand it’s been almost little over a year since Campa launched in Tamil Nadu, which is a dominant market for Pepsi — 10% market share in the region that they have started operations. So just wanted to get your view on what’s happening.
Ravi Kant Jaipuria
Tamil Nadu, you are saying is a dominant market for Pepsi.
Rishi Mody
Yeah, if I’m not wrong.
Ravi Kant Jaipuria
That’s what your question was? Sorry.
Rishi Mody
No, my question is how is Campa doing in Tamil Nadu which is a dominant market for you guys?
Ravi Kant Jaipuria
I don’t know. But Tamil Nadu has always been a large B brand marke, as large as Pepsi and Coke. So that’s been a huge other brands market. That’s the biggest market actually for the other brands. It’s very difficult to say. I mean even if another brand comes in it, it will mix into that. Very difficult to say. But overall, the markets are growing so there’s no issue.
Rishi Mody
All right. And finally just wanted to get your — get an understanding on Sting. We haven’t yet launched it in Africa if I’m not wrong.
Ravi Kant Jaipuria
Already available in the countries; it’s already launched.
Rishi Mody
But is it as big contributor in Africa? Are you still scaling it up?
Ravi Kant Jaipuria
No, I mean, some countries is doing extremely well. Some countries because of the pricing is not doing well because depends on the local competition. And in South Africa we have still not launched it.
Rishi Mody
Okay. All right. Okay. Thank you.
Operator
Thank you. The next question is from the line of Ashish Kumar from Ampersand Capital. Please go ahead.
Ashish Kumar
Yeah, hi. Thanks for the opportunity. I just wanted to know what would be the capex spend for this year and what how it would be split between India and like South Africa rest of the world.
Raj Pal Gandhi
We have given the guidance of INR3,100 crores for this year and we are on track and maybe 900 out of which is yet to be spent.
Ashish Kumar
Okay. And like so in terms of geographical split.
Raj Pal Gandhi
Country wise we have the breakup. We will provide you offline.
Ashish Kumar
Thank you. That’s all from my side.
Ravi Kant Jaipuria
Thank you.
Operator
Thank you. The next question is from the line of Rajit Aggarwal from Nilgiri Investments Manager. Please go ahead.
Rajit Aggarwal
Good afternoon, sir. See I’m sorry if this question is wrong or not supposed to be asked or has already been asked. But I was just wondering, I mean any impact of the follow of the deal with Domino’s? Any comments from your side?
Ravi Kant Jaipuria
No, no. I mean of course any account you lose is not good but that was — that had to happen and I mean we get other accounts so it’s — any one account like that cannot make any overall difference to the whole. But obviously we would always like to have more and more, right?
Rajit Aggarwal
No, when you say that growth will be consistent for this calendar year as well. So that expectation or that growth doesn’t get tempered by any one.
Ravi Kant Jaipuria
Fast food cannot have any indication. I mean, it’s very small for the overall growth of the brand.
Rajit Aggarwal
I would assume, it’s low-single digits.
Ravi Kant Jaipuria
What is low-single digit?
Rajit Aggarwal
The volume from Domino’s.
Ravi Kant Jaipuria
It was less than low-single digits. I mean much lower.
Rajit Aggarwal
Okay. All right. Thank you, sir. Thank you.
Operator
Thank you. The next question is from the line of Ashish Agrawal, who is an individual investor. Please go ahead.
Ashish Agrawal
Yeah. Am I audible?
Operator
Yes, sir.
Ravi Kant Jaipuria
Yes, you are.
Ashish Agrawal
Okay. So yeah, my question is regarding Ghana and Tanzania. So we have kind of. I just saw the presentation and we have kind of taken that out. So do we have any clarity of when we can — it’s the deal is on hold. That is what you told. But do we have any clarity when we are going to have them on us or there are some other complications that are there.
Ravi Kant Jaipuria
There is no competition. It’s just that we have not got the clearances what we were supposed to get. And in the African countries still we get full clarity. Being a listed company, we are not going to take control of the company. So in case they are able to get it, then we look forward to it. In case they are not able to get it, we will not get into it.
Ashish Agrawal
Okay. And how about the new energy drink that we were about to launch in before this season as well as the new variety of basically the Jeera drink and the new energy drink that we were launching. Any updates on that?
Ravi Kant Jaipuria
Energy drink, we’ve launched in March. We launched a variant of Sting, which is a malt-based energy drink. It’s just been put in the market and I think we have to give it a month or two months before we get really the reaction. But initially the reaction is good.
Ashish Agrawal
That is Sting gold, right?
Ravi Kant Jaipuria
Yes, please.
Ashish Agrawal
Yeah. But there was another new drink that you were talking about in the last two quarters. Has there been any progress with that or we’re not looking at for this year?
Ravi Kant Jaipuria
We will be launching — every quarter we look at something new or the other. So we will be launching new products but not immediately, at least for the high summer.
Ashish Agrawal
Okay. And Jeera drink —
Ravi Kant Jaipuria
We’re still in the process of it and I’m sure by next quarter we’ll launch it.
Ashish Agrawal
Okay, thank you. That’s it from my side. All the best.
Operator
Thank you. Ladies and gentlemen. That was the last question for today. I now hand the conference over to the management for closing comments.
Raj Pal Gandhi
Thank you. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would 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 for taking time out to join us on this call. Look forward to interacting with you soon. Thank you very much.
Operator
[Operator Closing Remarks]