Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Varun Beverages Ltd (NSE: VBL) Q4 2026 Earnings Call dated Apr. 27, 2026
Corporate Participants:
Ravi Kant Jaipuria — Chairman
Raj Pal Gandhi — Whole-time Director
Analysts:
Abneesh Roy — Analyst
Latika Chopra — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Varun Beverages Ltd. 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. Should you need assistance during the conference call, please signal an operator by pressing Star then 0 on your Touchstone 4. Please note that this content is being recorded. I now hand the conference over to Mr. Anup Pujari from CBR India. Thank you and over to you Mr.
Pujari. Thank you. Good afternoon everyone and thank you for joining us on Butter and Beverages Q1 CY 2026 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, 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 on earlier.
I will now request Mr. Ravi Jakuria 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 you’ve had a chance to review our results presentation for the first quarter ended 31 March 2026. We are pleased to report a strong performance in the first quarter of CY 2026 supported by healthy demand, disciplined execution and continued progress across our markets. Consolidated sales Volume grew by 16.3% in Quarter 1 CY 2026 driven by volume growth of 14.4% in India and 21.4% in international territories.
Revenue increased by 18.1% year on year to Rs 65,742 million and EBITDA improved by 21% year on year to 15,289 million. In India, demand remained encouraging during the quarter supported by our wide distribution reach, strengthened execution and continued investments in manufacturing capability and chilling infrastructure. We undertook targeted initiatives to drive volumes and strengthen our domestic portfolio including PAC upsizing selective price point launches in identified markets to onboard new consumers and new launches in the energy and juice based drink segments.
The facilities commissioned over the last year have stabilized well and are expected to support growth and enhance operating efficiencies going forward. Our international business continued to make steady progress during the quarter. We consummated the acquisition of Twiza in South Africa through BevCo, strengthening our manufacturing footprint and route to market capabilities in Africa’s largest soft drink market. The acquisition is expected to generate meaningful operational and commercial synergies over time.
We have also entered into an agreement to acquire Crickly Dairy through BEVCO which will further strengthen our presence in South Africa. Subject to regulatory and other approvals across Africa, we continue to build scale in snacks and deepen our presence in high potential markets. In line with our strategy of broadening the portfolio and strengthening consumer relevance. In accordance with our dividend policy, the Board of Directors has approved an interim dividend of 25% of face value rupees 0.50 per share, resulting in a total cash outflow of approximately 1,691 million.
Looking ahead, we remain confident in the long term opportunity across our market supported by favorable demographics, rising income, growing urbanization and increasing beverage consumption. With adequate capacities, a diversified portfolio and a strong distribution network, we are all well positioned to deliver sustained growth and create long term value for all our stakeholders. I would like to invite Mr. Gandhi to share the key highlights of our operational and financial performances. Thank you very much.
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 first quarter ended 31 March 2026. Revenue from operations net of excise and GST increased by 18.1% year on year to the level of 65,741 million. In QY CY 2026, consolidated sales volume grew by 16.3% year on year to the level Of 363.4 million cases as compared to 312 cases in Q1 CY 2025. This growth was supported by strong volume growth of 44% in India and 21.4% in international territory.
At the consolidated level, net realization per case improved by 1.6% year on year supported by improved realizations in international territories primarily due to favorable currency movement. In India, realization purchase declined by marginal 1.5% primarily due to volume growth initiatives such as upsizing of bags and price point launches in targeting markets to onboard new consumers. CSG constituted 73.6% of total volumes while non carbonated beverages and packaged drinking water contributed 7.5% and 18.9% respectively.
In line with our focus on healthier offerings, the mix of low sugar and no sugar products increased to the level of 63% approximately of consolidated sales volume during the quarter, gross margins improved by 62 basis points 55.2% supported by early stocking of key raw materials. Despite an inflationary input environment. EBITDA increased by 21% year on year to the level of 15,289.3 million, with EBITDA margins improving by 55 basis points to 23.3%. In India, EBITDA margins improved by 112 basis points supported by operational efficiencies.
From strong volume growth and improved gross margins PAT increased by 20.1% year on year to the level of 8,787 million driven by strong volume growth across both India and international markets. Depreciation increased by 30.9% on account of commissioning of four new plants last year in Baksar, Priyagarh, Damtal and Meghalaya. Finance cost increased by 18% primarily on account of the acquisition of TWISA in South Africa, while income on surplus cash in India has been accounted for under other income.
During the quarter we completed the acquisition of TWISA In South Africa, Baco at an enterprise value of ZAR2053 million. In addition, Bebco entered into a share purchase agreement for the acquisition of Crickly Dairy Proprietary Ltd. At an enterprise value of approximately ZAR to 34 trillion, including new net working capital subject to regulatory approvals. These transactions further strengthen our presence in the region and support our portfolio expansion and adjacent categories. Overall, we continue to maintain a strong financial position supported by disciplined capital allocation, efficient working capital management and a robust balance sheet.
With the capacities commissioned over the past year, backward integration initiated and a strengthened distribution infrastructure, we are well positioned to support growth and drive profitability. Profitability through improved operating leverage across markets. Despite the inflationary environment arising from the prevailing geopolitical situation, we remain confident in our ability to near term challenges through focused execution and supply chain agility while sustaining growth and profitability.
On that note, I have come to an 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. We will now begin the question and answer session. Anyone who wishes to ask a question, you press Star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and Q. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question. The first question comes from the line of Vivek Mahesh.
Abneesh Roy
Please go ahead.
Operator
Hi, good afternoon team. A few questions first on you know Mr. Gandhi, where you ended on the geopolitical bit can you just you know talk about the impact that you expect from a near term perspective especially on the packaging material and anything else that we should bear in mind across different markets because of higher oil prices?
Ravi Kant Jaipuria
Well I’ll answer this Vivek. First of all in our international markets our effect will be in the raw material practically zero to couple of points maybe because we are well stocked till even not this quarter but the next quarter also. So we normally carry six months inventory in international so our impact will be practically very low and which actually gives us an edge over our competition because I don’t think competition carries anywhere close to six months. As far as India is concerned we will have minor effect because again we were reasonably covered for this quarter but for the next quarter we will have some effect which is but we are covering that by reducing our discounts and becoming more efficient which is already starting to show and cutting our costs wherever we can and which is already showing in the first quarter results and as long as the volumes continue then I don’t think there will be any effect on the, on the bottom line.
Operator
Thank you Mr. Jeffrey. It does beyond, beyond packaging material anything else that we should be aware of any the
Ravi Kant Jaipuria
Only thing which can affect slightly which you can’t stop is you know, the transportation cost and that there will be some effect but that we’ll be more than able to absorb it and it won’t show any major issue on our PLL.
Operator
Got it. And Mr. Jaipur, if you I know you have a very strong season upcoming but do you also let’s say worry about from a consumption perspective if the higher oil prices feeds into in the form of higher inflation the does it imply some pushback from the consumers on the consumption of the products in general, not just your categories?
Ravi Kant Jaipuria
I don’t see it Vivek because consumption is very strong and we are going through a season which was terrible last year with all the rains and with this weather I don’t see any we are very happy with what is happening right now, what the sales growths are and this quarter should be rather much better than what we’ve already had. More than that I can’t answer on the rain God. So it’s looking very positive.
Operator
Sure. And one another question on the point on the response that you just gave when I look at your inventory buildup in the P and L it doesn’t look like to be very high compared to let’s say what you have had two years back for example. It is certainly higher than what it is last year. So just wanted to Be sure you know the. For India business, are you covered for most part of the season for this quarter or.
Ravi Kant Jaipuria
We are completely covered for this quarter and we are partly covered for the next quarter. Also
Operator
In India business also. Mr. Jaipur.
Ravi Kant Jaipuria
Yes.
Operator
Okay, nice. Okay, lastly, you know, on the realization bit, I know there had been a lot of, you know, concern in the last quarter. So. So I just wanted to, you know, I just wanted to speak about or discuss this point. Last quarter the realization in India was down about 4%. This time around it is 1.5%. I know the seasons are very different. The quarter context is very different. Can you just still elaborate on. Because I was just thinking in the context of like, you know, new launches that you have had done 10 rupees higher volumes.
This number has actually gotten better. So can you just elaborate a bit on this?
Ravi Kant Jaipuria
10 rupees is a very small part. We only use it where we feel it is necessary. So it will be less than 5% of our total volume or maybe even less than 2%. So practically would not show. We are using it only to make sure our distributors remain with us. And where there was huge stress, then only we use it. So we are not really using 10 rupees. We have the product ready. If ever we need it, we can use it, but we are not using it. So 10 rupees is not going to affect us. And also, as I said to you, once the season is reasonable, we have consolidated and cut some costs and all our new plants have also come into effect which further cuts our cost as all the new plants which are coming up are much more cost effective and large plants where our production levels are much higher.
Operator
That’s interesting, sir, because I always thought that you were already very efficient. So new plant angle I get. But my point is that will still not show up on the realization side. Right? Realization last quarter -4, this quarter -1 and half. So in fact there were worries that, you know, this number could actually be worse than what it was in the December quarter. What explains this delta then?
Raj Pal Gandhi
Vivek? In fact we have premiumized a lot of products, you know, or growth of something like 60% in our dairy realization is 3x than the normal. So focus is everywhere to compensate from the system itself for major part. Secondly, you know, the tax cut in 22 September on the GST also is going to help us. And although we had reduced the prices, but with the cost going up, you know, it will not be felt by the consumers. So I don’t think end of the day they will be that much affected by this
Ravi Kant Jaipuria
And also as I said we are running it more efficiently and making sure discounting is reduced little bit.
Operator
Got it. Thank you and wishing you all the very best.
Ravi Kant Jaipuria
Thank you.
Operator
Thank you. Next question comes from the line of Avnish Roy with Nuama.
Abneesh Roy
Please go ahead.
Operator
Congrats on very good set of numbers. My first question is on aluminum cans. So you have tied up your inventory for PET and most of the packaging quite well and I do understand that your salience to aluminum cans is much lower than the other large national player. If you could tell us how is there any shortage which you are facing and here what will be your salience in terms of percentage aluminum can?
Ravi Kant Jaipuria
Well, I think first of all our aluminium can sales is less than 2% for us so it’s very, very small. Secondly, we have tied up a reasonable quantity to more than cover our 2% volumes and maybe little higher so we will be able to get cans they are slightly more expensive. But that again as I said wherever we are finding a large cost up, we are cutting discounts and giving less discounts in the market because there is shortage for everyone and the costs are going up for everyone. So if the demand is there then we are making sure that overall our bottom line is not getting affected
Operator
And customers must be shifting. Right. If there is a can shortage, there is a section of customers who will not sacrifice their consumption. They will switch to. Absolutely,
Ravi Kant Jaipuria
Absolutely, absolutely. So if you can’t get a can then you go and go for PET or you go for glass. Mostly pet.
Operator
Right. My second question is on water. So if I see the Reliance presentation which has come up, they are saying that they are now India’s third largest branded water player. If you could comment in terms of your standing within the top players, you have always been there so wanted to understand is the market share changing. Second is the volume growth initiatives in carbonated have done quite well which is visible in last two quarters. Double date volume growth in water at some stage would you need volume growth initiative there also?
Ravi Kant Jaipuria
No, we don’t over push water. We try and make sure our basic margins remain and we want to make sure our monopoly customers and our visicoolers which is close to a million plus in the market on those outlets we make sure our water is serviced properly. But water is like a commodity, you can increase your sales as much as you want, you just have to give discount which we are not in the game of and that’s why we can sustain our margins.
Operator
So last question. So in terms of energy drink portfolio, how Has Sting done? And you had also mentioned in the previous quarter in terms of expansion of that portfolio including the scaling up of mid price address, if you could tell us how has Sting cans done, how has Sting overall portfolio done and how has Address done?
Ravi Kant Jaipuria
So Ad Rush has done phenomenally well. Ad Rush, we are feeling some pinch of get the shortage of cans because we had not expected Ad Rush to do as well as it is doing. So there is slight pain there. And also we have got energy drink Sting in cans with our new classic Sting, what we call which has been launched and is doing extremely well. And again the demand is much higher than what cans we can get. But it’s much better than what we had planned. So we’ll be doing better than what we had planned but still there will be some crunch on that.
But we have put the Sting Classic in pet bottles also which is doing extremely well. But it has gone only in this in April, only in the market. So you will see a big response of that in this quarter.
Operator
One last follow up essentially if I see this quarter results, all the SMCG results have been ahead of expectation. Obviously yours, Nestle Bajaj Consumer and then GST Industries. So overall consumption at least March quarter. Are you picking up that overall trends are accelerated? Of course now we have to take quarter to quarter. But based on your understanding and what you have seen in the results, would you say that there is an uptick?
Ravi Kant Jaipuria
There is definitely an uptick. I mean unless until the market is growing because there is Kampa in the market and they are very aggressive and they are growing the volumes in the market and even Coke is growing. So there is overall industry is growing. I don’t know if we are growing faster but Kampa is definitely as they are adding capacity, they are growing in the market. So definitely market is growing at a huge pace. And I think as there is enough competition, everybody is more in the market putting more chilling equipments, more outlets are being opened.
So I am very bullish on the Indian market and I believe this should continue in double digits for the next five, ten years at least.
Operator
Thanks. That’s all from my side. Thank you. Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Aditya Soman with clsa. Please go Vaida.
Ravi Kant Jaipuria
Yeah. Hi, good afternoon and thanks for the opportunity. So two
Operator
Questions. Firstly in terms of new products, can you give us a sense of what new launches, how the new launches are done, particularly around Nimbus. You mentioned that fruit things have done well as well. As the milk based beverages. If you can give us some sense of what the contribution is and how the growth has been. And secondly, in terms of summer now you’ve indicated that obviously we’ve had a strong start. Is there any sort of risk to this in terms of unseasonal weather at any specific part of the country or do you expect summer this year to be very strong?
Thanks.
Ravi Kant Jaipuria
What we are hearing summer looks to be very good. Now it’s a fear of rain coming. I can’t answer you but if the weather gods are not as with us, which they were not last year, but overall it’s already a month has passed so the trends are looking very good. If the weather remains like this, there’s no reason why we shouldn’t do extremely well. And our products are doing extremely well. Our dairy is growing at 60 to 70%, Nimbus is growing at 50, 60%. Tropicana PET is growing at I think more than 100%.
So all the new energy drink which we launched at mid price which is at 60 rupees, adrenaline rush is doing extremely well. Even our energy drink in the cans is doing extremely well. And the new launch of Sting Classic which is the Gold and black is started only about few weeks back. But the initial response is fabulous and we feel it will become another sting hopefully and at the moment it’s looking very positive. Anything else? Thank you. We have lost the line of
Abneesh Roy
The participant. We’ll promote the next in line. That is Devanshu Pansal from MK Global. Please go ahead.
Operator
Yes, sir. Hi. Many congratulations on a strong set of numbers. Sir, first question I wanted to check in the base quarter. The rain disruption was across all the three months last year or it was more towards the second half of the quarter. If you could provide some color.
Ravi Kant Jaipuria
Well, it was mainly end of April to end of June for sure and even continuing to the third quarter. But for this quarter I think it was mainly May and June was really disaster and April end was not great.
Operator
Got it. Fundamentally
Ravi Kant Jaipuria
May and June.
Operator
Okay, okay. And there are some supply chain issues. Right. So which might have impacted opening of new plants for competition on the other side. We have sufficient capacities. So wanted to check can we benefit from this or the competitive intensity that you were anticipating is on those lines itself.
Ravi Kant Jaipuria
I think competition is there but I think there is enough market for everybody to take as I have said that every time and as I said we are adding about close to half a million and maybe more chilling equipment which is between Campfire Polk and ourselves and plus the individual outlets are buying 400,000, 500,000. So there’s a million chilling equipment, refrigerators going in the market on a year to year basis. That is expanding the market drastically. And I think it’s only going to be whoever does good go to market and whoever can expand his distribution will win the game.
We are trying to do that. We are expanding at about 3 to 400,000 outlets every year and we are doing the same. Hopefully this year we might expand half a million outlets and I think that’s what is giving us the growth.
Operator
You mean half a million visi coolers or about 0.25 new
Ravi Kant Jaipuria
Outlets? We don’t give.
Operator
Okay, understood sir. Last couple of bookkeeping questions for Tweeza and Critique Dairy. What is the revenue and margin run rate that can be baked in for CY26 if you could provide some color? And second one, what is the expected capex?
Ravi Kant Jaipuria
Well, I think what we have told the Capex, what we have bought it at, which is what we have bought at 800 crores. And we have paid 1140 crores.
Operator
Sorry, I was checking for the consolidated capex for the company, sir. And the revenue and margin run rate for Tweeza and fitly in CY20. Well,
Ravi Kant Jaipuria
Our CapEx is not going to be very large this year because we have enough capacity. We are most probably going to only have one plant and which will be less than what is. So our capex will be less than 5, 600 crores this year. It will be very low this year we have enough capacity except the new plant which we have bought. Does that answer the question,
Operator
Sir? Just the revenue and margins and rate also for Tweezer and quickly daily.
Ravi Kant Jaipuria
Well, revenue was 800 crores for Tweezer.
Operator
Okay.
Ravi Kant Jaipuria
And about 160 crores for critically. So about consolidated maybe of close to a thousand crores between the two.
Abneesh Roy
Okay. And margin, I think
Ravi Kant Jaipuria
It’s a bit too early. Let us take it over properly. It’s been 10, 15 days only so we are going to correct the margins. I mean obviously he was doing all right. But with the consolidation of both Bevco and Tweeza we have enough room and they have got enough production capability which we were struggling in Bevco so which will help us give growth going forward without putting too much capex.
Operator
Thank you so much for answering your questions and all the best to that.
Ravi Kant Jaipuria
Thank you.
Abneesh Roy
Thank you. Next question comes from the line of Anand Shah with Access capital. Please go ahead.
Operator
Yeah, hi sir, Congratulations on. Those are the numbers. Just a few questions. So firstly Kenya, we have some Granular details on how the international has grown. I mean you’ve grown almost 21% which is quite strong. So it means your South Africa business would have driven bulk of this growth. But if you can give some granular color there.
Ravi Kant Jaipuria
No, it’s. It’s not only South Africa actually all our international businesses have grown. So
Operator
Your Zimbabwe and all which were related, I mean Excel. South Africa was growing in let’s say mid single digit to high single legit. Is that also now come back to double digit and all?
Ravi Kant Jaipuria
No, no, absolutely. South Africa is growing at close to average. Is 21% international. South Africa is very close to what the international market is growing.
Abneesh Roy
Okay.
Operator
And X of South Africa also, would it be double digit?
Ravi Kant Jaipuria
Yeah, all international market. Otherwise we wouldn’t be able to average 21.4%. I think was the only one which was weak last quarter and that was because of Ramzan being preponed.
Operator
Okay,
Ravi Kant Jaipuria
Okay,
Operator
Got it, Got it. And sir, on our food distribution, if I do the math between Consol and standalone, it seems Branded has moved from. I mean Q1 last year was of course just a start. So it moved from 4050 crores to 120 crores. I mean last year you highlighted 350 odd crores for CY25 for food distribution in Africa. So how do you see that scaling up this year?
Raj Pal Gandhi
Anand, the first snack foods in the first quarter this year is 112 crores which was last year. 52 crores in the first quarter.
Operator
Okay. Okay. So you will consistently see further ramp up as well. Right? I mean in this in terms of the run date as well.
Ravi Kant Jaipuria
Absolutely. Because Zimbabwe plant has just come up last year, end of last year there is consolidation and growth coming.
Operator
Got it, Got it.
Abneesh Roy
Okay,
Operator
Thanks a lot sir. Those, those are the two questions.
Abneesh Roy
Thank you.
Ravi Kant Jaipuria
Thank you.
Abneesh Roy
Thank you.
Operator
Next
Abneesh Roy
Question comes from the line of. Please go ahead.
Operator
Most of my questions answered. Just. Just wanted to get your sense on market shares on a very high base. You’ve done an exceptionally good number also given the availability issues which you are able to tide upon. Just wanted to get your sense about do you see opportunities in the market where maybe some of the other players have not been able to do as well as you in the current situation and that could play out in terms of at least near term market share gains. How do you see the situation on ground right now?
Ravi Kant Jaipuria
I can’t answer for other people. The only thing I can say we are fully prepared and we have enough capacity that even if we get a 50% growth we can comfortably do it. Without adding any capacity. So we are fully prepared. We have the raw material, we have the back end covered. So we only hope to God to give us the good weather and then we should get a good set of results.
Operator
Got it. The second question is on distribution. So you do mention a certain number that you would like to do every year in terms of growth. So this year, calendar year, you know, you know that 8 to 10% type of, you know, addition number is, you know, is the year panning out consistent with that?
Ravi Kant Jaipuria
Yeah, that’s what I have just said that practically this year we have added more than 10% outlets. So that’s why we are hoping to add close to half a million outlets with a base of about 4 million, Aggressively increasing our go to market. And that is what is actually giving us the results.
Operator
Thank you. Next question comes from the line of Latika Chopra with JP Morgan. Please go ahead.
Latika Chopra
Yeah, hi. Two follow up questions to your earlier comments. One was on availability of raw material, particularly pet. You know, you mentioned you have reduced sales of packing materials. So we’re just wondering, have you started to see any visible signs of challenge for the smaller unorganized players in the market? And the second bit was in your assessment with this kind of inflation which is going to come up not necessarily for you but for the industry, do you see potential scope for price increases ahead as the broader industry tries to offset the inflation impact?
Ravi Kant Jaipuria
Well, I see the B brands and other players selling water, they are already, they have not increased the price but they have reduced the discounts that we are already seeing in the market because the costs are going up. And I feel that will further happen once I think the gasoline prices go up. So I mean there will be some pain, but I think we are hopefully reasonably covered. I can’t say fully covered because I don’t know what the prices will be. But at the moment for this quarter we are, you know, covered with our raw material.
Now gasoline price, I don’t know. So that is the only vulnerable part and that is not such a large part in our scheme of the whole thing. If it happens it is higher, then we will further reduce our discounting to some level and make sure manager. And if our volumes are good and we are mainly concerned about our volumes, if the weather remains like this and we can grow at the same pace or better than this, then I’m not worried about few rupees.
Latika Chopra
Understood. And you know, initially you had explained the difference of realization for India business at 1.5% decline from 4% in the prior quarter. This was an account of product mix and also lowering of discount sequentially, you know, assuming, you know, status quo and other things. But is one and a half percent more like what we should build for rest of the year? Assuming the current levels of discounts are maintained or because of seasonality, you know, this number could fluctuate.
Ravi Kant Jaipuria
It might even become lower because it depends how strong the season is. Or it could remain that, but that gets more than covered. As I said, if the numbers start happening, our costs start reducing drastically, our efficiencies go up. So this 1 or 2% we can cover easily if the numbers are right and we feel the numbers are going to be good this quarter.
Latika Chopra
Understood. Thank you so much.
Ravi Kant Jaipuria
You’re welcome.
Operator
Thank you. Next question comes from the line of Percy Pantaki with IIFL Securities. Please go ahead. Hi team. Good afternoon and congrats on a great set of numbers. I’m looking at the standalone P and L and you’ve done 11% sales growth here on a fairly high base of close to 18% in the same quarter last year which is like a 14% 2 year CAGR growth. Now if I look at the 2 year CAGR growth for the previous quarter it was 8%. Even for the last 4 quarter average the 2 year CAGRTH was 8%. I’m using 2 year CAGR so as to sort of offset any sort of high base, low base in seasonality and so on and get the underlying growth trends.
So what do you think is the reason that the two year CAGR has accelerated so sharply from about 6 to 8% to a 14% this quarter? Is it just the summer season being better? Is that the main part of it? Or do you think that the rate of market share gained by the new incumbent has probably slowed down and that is why the growth is more visible now? Or is there a third reason I am not getting?
Ravi Kant Jaipuria
Well, I think we have never had 6 to 8% growth except last year when the weather was really bad in India did not grow. We have been average growing at a Kazar of 23%. So I don’t know where you are getting 6 to 8% growth
Operator
Sir. Like, for example Q4 CY25 was a 6% on a base of 9%. So that gives me a two year CAGR of about 8%.
Ravi Kant Jaipuria
Last year was one exceptional year. That’s what I’m trying to say. Otherwise on an average we’ve been always growing in double digits and with some new acquisitions we have grown at more than 20%. But double digit growth have Been there. If you look at last five years, 10 years, it’s only last year. India, because of the weather, our growth was lower. That’s the only reason. So we still believe in, we would say we definitely would grow in double digits going forward for the next five, 10 years. I don’t see any challenges.
But of course business is partly seasonal so in case there’s some abnormal rains or something happens that I can’t answer you, but overall Kadar will definitely be more than that.
Operator
Understood, sir. I was not talking only of last year, I was looking at two year Kegar. But anyways I’ll take this offline and similarly just wanted to ask on international business also this quarter there has been a significant acceleration in growth versus what we have seen in the past few quarters. Just wanted to understand the reason for that as well.
Ravi Kant Jaipuria
Again, everywhere we are, you know, when we take a new territory it takes us a little bit of time to stabilize that territory. Last year actually we had just taken South Africa and DRC had just started for us.
Operator
So
Ravi Kant Jaipuria
Some challenges. And then you know, with the Gaza war we had some other challenges. So all those things put together last year was a tough year for us. But if we don’t have external issues, growth we would still believe should not be less than double digits comfortably outside or in the country.
Operator
Understood, sir. And my last question is on the input cost. While it has been discussed in detail and we know you have covers for one or two quarters, but if crude remains at 100 for several more quarters at some point of time you will either have to increase your prices or reduce your discounts or take the hit on the P and L. So my question was a little bit longer term, a few quarters down the line. If the input cost scenario remains where it is, do you think you would be able to hold your margins or it is a fair assumption to say that maybe margins might take a hit a few quarters down the line.
Ravi Kant Jaipuria
You know it’s very difficult to answer but only thing I can tell you, we might be the only company which is holding six months inventory. So I think other people will blink before I blink. So I think we have to wait and see. Either everybody will take the prices slightly up to cover the cost or take a hit. I can’t answer you that, but I don’t see us taking a hit because I think other people have a much bigger issue than I have.
Operator
Got it sir. Very helpful. Thanks and all the best. That’s it from me. Thank you. Next question comes from the line of Jay Doshi got up Please go ahead.
Raj Pal Gandhi
Yeah, hi. Congratulations and good and thanks for the opportunity. My question is, you know, with upsizing of hikes
Operator
From 250ml to 400ml Are you seeing more consumption and maybe hence you do you expect industry volumes to be, you know, growing faster by a few percent points versus the earlier growth rate or are you seeing, you know, the consumers who are earlier buying, you know, larger pack 40 rupee 35, 40 rupee packs are now buying two Yena tough, you know, 20 rupee SKUs. Is consumption going up in liters, you know, versus you know, because of this upcycling of tax for yourself and industry. So that’s question number one.
Ravi Kant Jaipuria
Well, the consumption is going up in liters as well as in numbers both ways. Just if it goes up in liters is not good enough for us, we need the numbers to go up also and liters to go up also. So both are happening and that is why we are seeing such large growth coming.
Operator
By any chance as a one off, would you be able to give us some color in terms of what’s the broad growth at a unit level in terms of number of tea bottles or whatever versus 15% volume growth which is in liters.
Ravi Kant Jaipuria
So we are giving an 8 ounce and that’s what we quote. Otherwise each size we have to start measuring some are much smaller, some are much larger. So it becomes very difficult. That’s why we give an eight arms which is the best way to
Operator
Second is which, you know, second question is with you know, you know, upsizing of 250 milliliters to 400 milliliters across the country across portfolio. Do you expect any more sort of changes in your pet price architecture? I heard you comment earlier that there is no need for you to actually, you know, step up, focus on 1050 price point. But is there any pet price architecture change that is left in your view?
Ravi Kant Jaipuria
Well, I don’t want to say something but only thing is we will see what the market requires and we will play with that. And I really, if I had something in mind I would not be able to to diverge it anyway because that’s not good for us.
Operator
Understood. And last thing on profitability, you know, should we expect that, you know, PT inflation aside, you know, for the crude LED inflationary thing aside, should we expect that you broadly be able to maintain your margins in India business? You know, so that 50-400 ML upsizing is actually not really had any meaningful or any impact at all on your India margins? That is what we see in March quarter. But is that, is this something that we can extrapolate for at a full year level pet inflation?
I can understand that. You can,
Ravi Kant Jaipuria
No. But that full quarter we had the upsizing. So whatever effect had to come has already come. So those costs have been
Operator
Absorbed by the
Ravi Kant Jaipuria
Our volumes and our efficiencies have absorbed all that. And as I said, our larger plants are much more cost efficient and our cost of production is considerably half of what we were doing in our smaller plant.
Abneesh Roy
So
Ravi Kant Jaipuria
Scale is what is giving us the strength and cost reduction and which is what is playing with us. So we are able to consume some minor cost upsides which we can easily absorb.
Operator
Thank you very much. Perfect sir. Thanks all. Thank you. Next question comes on the line of Robert Marshall Lee with Kusana Capital. Please go ahead.
Abneesh Roy
Just a couple of simple questions. Firstly, just in terms of the impact of the new plants, is there any kind of material impact from utilisation rates? Where are you running the new plants and do you have any fixed cost leverage there? And secondly, just in terms of global sugar prices being falling, is there any impact on the Indian market at all?
Ravi Kant Jaipuria
There is some sugar prices are reasonably consistent here. Fortunately they have not gone up which is the positive side of the international prices. And in the international market definitely we’ve had a gain of sugar costs. So wherever we are, international prices have come down significantly but in India it’s been reasonably constant. Fortunately it’s not gone up.
Abneesh Roy
Thank you. And in terms of utilization of new plants, is there any kind of material impact? Utilization
Ravi Kant Jaipuria
Is definitely helping. As our volumes are going up, the plants are getting more utilized and the bigger plants we are using more and we have shut down couple of our real high cost plants which were very small and which were very old. So overall efficiencies are helping, cost cutting is helping and looking at the situation, looking at the costs which are going to go up, we have tried to curtail our costs and make sure run it a bit more efficiently than we would have, I guess.
Abneesh Roy
Thank you.
Ravi Kant Jaipuria
Thank you.
Operator
Thank you. Next question comes from the line of Arjun with Systematics Group speaks for.
Raj Pal Gandhi
Hello.
Ravi Kant Jaipuria
Yes.
Raj Pal Gandhi
Yeah, so I just have a quick question on the sales mix of the new product as well as.
Operator
Mr. Ch, there’s a lot of disturbance in the background. Can you come to a place where there’s less background noise? Thank you.
Raj Pal Gandhi
I was just asking the sales mix
Operator
Currently as well as the sales mix which is like expected in a few years down the line, especially with the traditional coke and new alternative suggesting or gatorade
Ravi Kant Jaipuria
I’m not getting your question properly. I mean a mix is, you know this keeps changing on a year to year basis. Energy is definitely becoming a big part of the portfolio and dairy is becoming a big of part. Part hydration is becoming a big part but this will keep changing year on year. Very difficult to say. The new Gen Z keeps on asking for something new all the time and we have everything to support whatever is required. So because it’s the same machines who produce it so it’s just changing the flavors or changing the packaging.
Operator
And also like you said that you are opening new plants and they are much more efficient than the previous one. So like what is the expected payback period for these?
Ravi Kant Jaipuria
Payback period for what
Operator
Of these plants?
Ravi Kant Jaipuria
I mean we need capacity. So one is a different. I mean we have to open plants. Otherwise I can’t keep on increasing my sales. If my sales are going up, they have to be backed up by. The only thing we are saying is now we are not opening smaller plants and our plant efficiency being larger plants is much better than what it used to be in the older plants. Just to give you an example, if we had a 200 bottles per minute line, now we have got a thousand bottles per minute line and the manpower is the same so it’s five times more production but using the same manpower.
So those are the efficiencies I’m talking about.
Operator
I was asking for the payback period
Ravi Kant Jaipuria
Depends on, you know, it’s very difficult to answer for each plant.
Operator
Normally
Ravi Kant Jaipuria
We work on a three to four year payback.
Operator
Mr. Jain, are you done with the question? Thank you ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. 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 our company, please feel free to contact our invested relations team. Thank you once again for your interest and support and for taking the time out to join us on this call. Look forward to interacting with you soon. Thank you very much.
Operator
Thank you. On behalf of Varun Beverages Ltd. That concludes this conference. Thank you for joining us. You may now disconcert.