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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to Jain Irrigation Systems Limited Q4 and FY '23 Earnings Conference Call hosted by KRChoksey Shares and Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Ashwini Trivedi, from KRChoksey Share and Securities. Thank you, and over to you, Ms. Trivedi.
Thank you, [ Nirav]. Good afternoon, everyone, and welcome to Jain Irrigation Systems Limited's Earnings Call to discuss the quarter 4 and FY '23 results. Today, we have on call Mr. Anil Jain, CEO and Managing Director; and Mr. Bipeen Valame, the Chief Financial Officer.
We must remind you that the discussion on today's call may include certain forward-looking statements that may involve known and unknown risks, uncertainties and other factors and must be therefore viewed in conjunction with the risk that the company faces, future results, performance or achievement to differ significantly from what is expressed and implied by such forward-looking statements. Please note that results and presentations are available on the exchange and our company's website.
I now request Mr. Anil Jain Mehta to take us though the company's business outlook and financial highlights, subsequent to which, we will open the floor for Q&A. Thank you, and over to you, sir.
Thank you. I would like to welcome everybody for today's con call.
The fourth quarter and for the entire year, company has made a lot of positive progress. If we really focus quickly first on to the overseas transaction, which we completed almost on the last day of the March, we have been able to help significantly reduce the debt to the tune of almost INR 28 billion as -- because we did this transaction. It has also helped us to improve net worth by approximately INR 1,500 crores. That was the second major thing it has helped us. It has taken care of the corporate guarantees, which we have given to the overseas bondholders and other loans to the tune of $300 million, which appear as contingent liability in our books, so that is now fully relinquished.
When we had announced the transaction in June, it was subject to certain antitrust approvals around -- by various government authorities around the world. And it took some time, almost close to 9 months to get that whole process completed. And during this period, we had to pay a little bit more to bondholders, so that has resulted in less equity. So we had announced in June that we are likely to have closer to about approximately 22% plus/minus equity into the merged company. Instead, we are -- I think we have close some -- closer to [ 18.7 and half ] percentage. And that reflects the additional debt payment and small amount of reduction into the enterprise value than what was announced in June.
But that is behind us. Now, the transaction has been successfully completed. And the new MergeCo headquartered between Singapore and Israel will continue to operate and run its business with the professional management, and between Temasek and Jain as 2 shareholders, main shareholders into the company.
The company is expected to continue to grow and post that growth, maybe 3 years or so, directional thought process between shareholders is that we should make an attempt at possibly listing of that entity. But it is too early to say when, how and what, but directionally, that is where that will go. So over the next 2 to 3 years, we are expecting both as shareholders that this company will continue to grow. It could also create additional synergies between merger and improve its earnings apart from the revenue growth by using both companies' product lines.
The last part of this transaction is that we will continue to supply certain products to this entity for -- from perspective of export. This company would take our product and distribute that around the world. India business would directly only deal with India, as well as subcontinental countries like Bangladesh, Sri Lanka and so on, about 4 or 5 countries. And the company would also be able to participate directly in any government of India or Asian Bank-related irrigation projects outside India, which are usually backed by nature of credit.
So that's with the merger of our overseas irrigation business. It has been very successful, and we are very happy that we could conclude it in right time. And it has -- it would allow our management to focus more back onto [ epic ] business in India as well as the other businesses which we have.
Another important event in the March quarter for which we are reviewing on this con call was that we completed 1 year of the restructuring. The restructuring of the company with the lenders in India was signed on 25th March 2022, and 25th March 2023, we completed 1 year. And as per the RBI rules, the banks have choice and ability to upgrade the account post completion of 12 months. And in our case, a prerequisite to that is that rating agencies should also treat the company's credit as investment grade.
And I'm happy to inform that CRISIL and ICRA both upgraded the company's rating to investment-grade BBB- by end of March, and the banks thereafter have been able to also certify the account as a standard asset. What that means is that banks -- no bank has any provision against all the loans they have lent to the company, and company's accounts have standard.
Company is, currently, servicing all the debt on the due date. And overall, we feel comfortable that going forward also, we do not expect any issues in our ability to honor all the debt obligation. So there has been, I think, second biggest and most important thing which has happened in this quarter, that company's assets have become standard with the bank as well as with the rating agencies and company's account has been standard and current.
The third important part of this overall -- what happened is that the business has done very well. Our underlying revenue has grown almost about 39%. And when I'm speaking this, this is a stand-alone business in India. Hi-tech division grew about 27% and plastic division grew actually about 56% based on good orders on the Jal Jeevan Mission initiative being run by the government.
In terms of the stand-alone, but if we look at also consol performance and so stand-alone business is Hi-tech Agri division and Plastics division. When we talk about consol, that would be in addition of the 4 business which we have as well as overseas part of the Plastic business. So overall, that business has grown this quarter 27% from INR 1,372 crores to INR 1,745 crores. And individual business is Hi-tech, it's -- Hi-tech is mostly India only, so it is about 26%. Plastic is 45%, and Agro Processing grew at about 7.5% in the quarter.
Now when we look at this, because fourth quarter is the last quarter of the year, you also look at annual numbers. The revenue growth for standalone India business has been about 28% from INR 2,800 to INR 3,600 crores, almost addition of INR 800 crores in the overall revenue in India basis, where about 24% growth was in Hi-tech, which includes micro-irrigation tissue culture, and 36% growth is into Plastics, which is pipes, mostly pipes in India.
For consol business, we grew by 21.4% from INR 4,700 crores to about INR 5,700 crores, so let's say, we have added about INR 1,000 crores. Again, Hi-tech has grown about 24%, Plastic, 28%, and Agro Processing for the whole year grew about 12% to about INR 1,665 crores as against last year's INR 1,483.
So all in all, good secular growth across all the divisions and all the businesses. And we believe this level of growth, which we have achieved on -- while for the consol year, we grew only about 21%, but overall, we expect current year FY '24, we would be expecting to do better than last year, even though last year was also very good across the board in terms of revenue.
This revenue growth which we have got has come through a lot of new business in what we call retail, so that's in Hi-tech Agri division, we sell our products to farmers by our dealers that we -- that's what we call retail. And retail has much lower footprint in terms of working out cycle. Receivables are very nominal when we sell to the dealers because almost we are collecting in advance, maybe a few days, of credit. So that allows us to improve the cash flow, grow the business, but do not need any additional debt credit days. So that's what our focus would remain even in FY '24.
Our Plastics business, there are 2 parts. PVC is, again, with similar terms, where we almost receive advance from the dealers. But then there is a polyethylene pipe business, which will go into the JJM as well as to other people, institutional business, what we call it. And there, the receivable cycle can be up to 90 days. That's also a very important part of our overall business.
Now, our efforts going forward in FY '24. And as you will see from our investor presentation which we have shared on our website, that we are trying to significantly bring down working capital cycle. And for stand-alone India business, it had come down to about 250 days as against 314. And for consol business, the net working capital is at about approximately 197 before adjusting the accounts receivable from the MergeCo because that is expected to definitely come through in the current year. In April, we actually already received about INR 135 crores.
So again, the idea and thought process is to further improve the working capital as we will move along in the current fiscal year. While for the growth of the business, absolute amount of inventories, might go up a little bit. But receivables, because we'll be collecting more receivables from the government when as we complete the project between current FY '24 and FY '25, those receivables will keep coming down.
And that would help us that any additional working capital we need for closer to 30% revenue growth for FY '24 can already come from recovery of the old receivable, and therefore, we do not need any additional capital. And we will still, based on the cash flow generation, we are expecting good growth. We are still expecting that the debt could go down to the tune of close to about INR 600 crores approximately.
Now when we look at the debt, what is the current debt of the company, and that's a very important issue for all the stakeholders. So there is a debt in India, so stand-alone balance sheet, and then there is a debt overseas. So combined net debt now is approximately INR 3,581 million as of March '23. This debt, as I said, we are expecting the debt to go down and the actual repayment would be there to the tune of about close to INR 600 million. So let's say, we are expecting FY '24 debt would be closer to approximately INR 3,000 crores. That's where we would intend to go.
The current debt which we have, INR 3,581 crores we have, there are 2 parts to that debt. There's a working capital debt to the tune of almost INR 2,220 crores across all businesses. Now that is a normal interest-bearing debt. Then the remainder about is approximately around INR 1,500-odd crores of term date across different businesses, which is there.
Now part of this is interest bearing, which we have to. And it will fall due for repayment over the next few years, and we need to pay that off. And part of that is during the restructuring, part of unsustainable debt was converted into 0% entities. Now these entities are due actually to be repaid in FY '27 and FY '28. But under the restructuring agreed with the banks, as we collect some of the overdue receivables, they need to be used to repay these entities, so kind of prepaying those as we collect this receivables. We are expecting maybe another INR 300 crores or so of these entities would get prepaid in FY '24.
In terms of the interest outflow, actual cash outflow of the interest is expected around INR 310 crores, INR 320 crores, that is interest plus finance charges of running the business. And -- however, when you look at our FY '24 P&L, you might see that figure is higher by about INR 60 crores, and the reason for that is a noncash adjustment of the fair value. So because entities that are 0% and they are payable over a longer period of time of '27, '28, while -- under the accounting standards, when we account for those entities in the books, you put them at a lower value.
And then every year, as you go closer to the time period when they're going to be settled, you keep adding that much cost at the interest level into P&L. That's how accounting standards work. So there would be that amount, which will come as part of the finance cost, but that's not a real cash outflow. That's merely a book entry which is there. And we will be putting up precise calculation and details of this also on our website so that there is a full [ clip of ] investors in terms of what exactly that means on impact it has on actual cash flow, because no particular cash outflow is linked to that higher interest costs.
As a company, then -- if I move a little bit more beyond this now. As a company, the main businesses, which we are -- what we have tried to do over the last couple of years, is to rejuvenate our dealer network, strengthen them, work with them more closely, because that's the one where working capital cycle, as I said, is far better. And also, company can improve its earnings by selling more.
So we -- and that's where a lot of growth has come through last year. So current year also, we will remain focused on that. We'll remain focused on opening more dealers in areas where we are not there. Traditionally, we have been more in Western and Southern India, and now, we are improving more in Northern, Northeast.
In terms of the -- that's for -- mostly for irrigation. Same thing applies to our PVC business where we sell pipes to the farmers. Some of the pipes they said, which go into drinking water applications and other applications, that's the institutional business, and that we do already across India. Overall, order book is at INR 2,300 crores across all business segments.
Earlier, when we used to have the government projects, the order book used to be much larger. But we have stopped taking new government projects, that's why you see the order book size has come down. But a lot of our business comes from the dealers, and they do not typically provide orders for the 6 months or a year. Those are monthly order type. You receive orders, you supply, you consume and so on.
So the mere number of INR 2,300 crores does not directly signify the company's ability to do the business. Business is coming on a continuous basis in that major part of the business segment going forward. But overall, we feel fairly comfortable to say that about 30% revenue growth we should achieve for the business, we are continuing, excluding the business, which has been taken out.
So I think maybe I can stop there in overall [ epic ]. And for the next year, I think we as a company, while we are looking to bring down debt by INR 600 crores, company would have approximately about INR 175 crores of CapEx. I think about INR 75 crores of that is pure CapEx related to maintenance, and about INR 100 crores would be the growth CapEx. The growth CapEx where we are investing would come mostly for 2 specific parts of the business. In the piping side, we are investing more into fittings, which would allow us to sell pipes also into urban areas and into building construction, residential buildings and so on. And the remainder of our INR 50 crores would be invested to build additional capacity in our tissue culture business.
Our tissue culture business, while a little small today, but we are seeing a lot more demand coming from farmers, and we are also adding a little bit more capacity for additional products. So traditionally, in tissue culture, we have done mostly banana then pomegranate, strawberry, these 3 or 4 crops. But we have, over the last few years through R&D, we have added potatoes, we have added sweet orange, papaya, we are doing mango, and there are some more products in the pipeline.
So we need to make some investments into that business. Banana also, our existing product line. We are planning to double our capacity because we are seeing sustained demand from the farmers in that business. And payback on these investments on tissue culture should be about 2.5 years. In plastic piping, maybe it is closer to 3 years. So those would help us to sustain high double-digit growth going forward.
In terms of overall capacity utilization, our remaining business is normal business of drip irrigation or the pipes. I think currently, we are at about closer to 60%. And we think between FY '24 and FY '25, with the kind of growth I'm talking about, we might be able to get closer to about 85%. That's our thought process as we speak. So companies do not have 2 big plants in terms of the new CapEx.
One thing I would like to urge all stakeholders that our company's business sometimes can become very seasonal. It partly depends on monsoon, partly depends on the rain or whatever else, and it is usually backloaded, so a large amount of business and earnings come from the second half rather than first half of the year. That is just the nature of the business. So it is very difficult for a company to say each quarter, we will do so much and so much. Or if you are tracking based on quarter, you cannot just multiply it by 4x to arrive at the annual results. That may then [ render ] a wrong conclusion or a wrong picture overall.
So if you look at risks to this plan, which I'm talking about, there are always about polymer prices, which is one of our main raw materials. And there, we see that the environment may remain benign in terms of the availability of materials. So there's some new production capacities coming up in India on the polyethylene side. On PVC side, with China slowing down, Europe and U.S.A. are slowing down, there could be enough availability. And so by all experts whom we talk to or we see the market trend, it is expected that between now and December, things will remain subdued. Of course, this is barring any unforeseen geopolitical events which we do not know of today.
I think that is where we are right now. and I would now like to open the floor for questions to me or all of you may have. Thank you.
[Operator Instructions] The first question is from the line of Avinash Nahata from Parami Financial Services.
Anil, we would want you to spend 1 minute more on the kind of supply arrangement we have with the merged Rivulis with the stand-alone Jain, what is the size of the new entity? And what kind of business, if you can -- even if it is a range, can we expect from the new entity? Once you answer this, I have 2 more questions.
Sure. So the size of the MergeCo is approximately, I think, about $700 million, $750 million on day 1. And we are anticipating in the first year, approximately they would buy from us maybe about $30 million of that from us. Of course, they will add their margin and sell, so -- but we are expecting in terms of exports of $30 million.
Now over a period of time, it would be our intention that they will -- they should buy more from us. I think there is an understanding between us and them that they would also like to buy more from India because as long as India can be cost competitive. And -- but this is a new merged company, right? So there were parts of Jain who are part of that company who were also earlier buying, and that is easier. The new part which has come into the merger, the original Rivulis part, those people need to become comfortable with this new product line, the cost. And usually, the different brands, different -- all of those things. So that will take some time to work that out. But I think starting point is at least to look at $30 million in year 1.
So you're saying -- so when you're expecting a growth of 30%, so you are basically, from this merged entity, we are just taking $30 million into account, correct?
Yes, yes. So most of the growth we are assuming is actually coming from the business in India.
Okay. And is there a finite arrangement in the terms that -- is this a 10-year supply arrangement or something like that?
No. This is a long-term supply agreement. I think 10 years or more, that's not an issue. But these numbers, we would look at on a yearly basis.
Okay. My second question is on receivables. Although you have said that you would sell more on the retail channel. So what is that we used to do 4, 5 years back and we will not do retail, and -- which increases our ability to do retail as of now, which will release more cash into the system? If you can spend some time on this.
Sure. So I'll answer that question. But on your earlier question, see, last year, our sales grew of irrigation items of our subsidiaries was approximately INR 200 crores. $30 million means about INR 250 crores, so that would show about 25% of growth in the export number to the subsidiaries. So that is just 1 clarity.
In terms of we -- okay, let me try and explain the type of businesses which we do. So there are 3 parts of the businesses, and when I talk of irrigation. One, when we sell to our dealers, dealer sales to the farmers, and dealer pays us, right? And it is not connected with anything government or subsidy, et cetera. Now earlier, 3 or 4 years ago, we used to provide to dealers as well under this model up to 90 days, sometimes 150 days range of the credit. Post difficulty and post-COVID period, we have changed that business model, and we are asking our dealers to actually pay upfront or as soon as the delivery takes place, that kind of term, so that is improving the cash flow for the company. This is 1 part.
Now there, the dealers whom we have -- we have dealers for a long time, right, 20, 30, 35 years. But we are opening up new geographies where we are also appointing dealers. So for example, 4 years ago, we had almost no business in Northeast area. Right now, it's about INR 40 crores or INR 50 crores. The other states where we had very limited sales like UP, we expect this year to have again INR 40 crores sales in U.K. and so on. So it is a combination of rejuvenating or strengthening existing dealers and also adding more business into the new areas.
The second part of the business which we did, what we call government business, there are 2 parts to it. One is the project where we took EPC projects. Now this EPC project was to get water from a given area, bring it to a group of farms. And I'm talking of 10,000, 20,000, 30,000 farmers -- 30,000 hectares, that kind of thing.
And then also put drip or sprinkler onto their farms. It was a combination of projects where water supply and then efficient water distribution on the farm. These projects which we took from the government, and at one time, I think total projects we have taken were INR 4,000 crores, INR 5,000 crores is the size, they got delayed in implementation. We were not getting paid in time. So many things happened, and we decided that we do not wish to continue to take financial and political risk of these type of projects.
And whatever projects we have taken in hand, slowly but surely, we are completing those, closing those and moving forward. And we expect all of the existing pending projects should get completed over next maybe maximum 18 to 24 months, but most of them in the next 18 months. And those long receivables used to be there, won't be there now because as we complete the project, we'll recover everything what is outstanding and we are not doing that type of business.
Other part of the drip irrigation business which is what we call government is that in some states, we do not have a choice but to place order through the government. That is how the government programs are run related to irrigation. And while government places their order on behalf of the farmer with the company, and that's how the program runs. And there, typically on an average, one should assume at least 180 days.
During last 2, 3 years, we had significant delays from states like Andhra Pradesh. Last year, there was a delay one from Gujarat. But most of the Andhra recoveries have been done, and now we are almost current in terms of new business within that time period of less than 180 days it is happening. So there also improvement has taken place in that so-called government business, but it would have a longer working capital cycle.
So this is what I mean when I talk about the retail. And we think there are enough states going forward over the next few years, which will continue to evolve, understand and appreciate usage of drip irrigation. It's not about just water saving, it's about productivity improvement. It does add value to the farmer's income. It can help them reduce the consumption of fertilizer and so on. That's what our focus is.
Okay. One question relating to your receivables. [Foreign Language] as on date, which is the third channel you were talking about this government tender. Is any of these receivables disputed?
No, no. None of them are disputed. We don't -- we -- I mean, I think I would qualify that statement. We have 1 state where about INR 100 crores odd that might go into arbitration. But as of now, that discussion is still going on. But I would say, 96%, 97% of receivables are good receivables.
Whatever receivables we felt where it could be dispute, where there are issues, there could be legal issues or whatever, we have already made adequate provisions in the book so we do not anticipate, in normal course, any new provision against the receivables. What the net receivable you see on the books are all good receivables, which should be fully recovered.
So you're saying at some point of time in future, whether 3 months or 6 months, that this should flow into the company?
Yes, yes. Especially the project related over the next 2 years as we complete the project, they should flow back.
Okay. So one question. When you said INR 600 crores, is what is the ballpark number you are looking forward to repay as far as FY '24 is concerned? And you also mentioned that there could be a INR 300 crores of entity which can get prepone due to some -- is this entity linked to some of the receivables? Is it mapped to some of the receivables [Foreign Language]?
[Foreign Language].
So this is INR 600 crores plus INR 300 crores correct?
No. See, on net basis, that -- those entity is also a debt on the books that will go down. And then other debt which is there, which should be maybe another -- about INR 300-odd crores, that would also get repaid.
Okay. This INR 600 crores, when you were talking about INR 600 crores, this has like entity INR 300 crores component?
Yes, that includes that INR 285 crores.
Yes. So understood. And one last question. If you can talk about the food processing business, your traditional mango pulping concentrate business, [ DI ] irrigation business. So you have spoken about only INR 100 crores of growth capital and INR 20 crores of -- INR 75 crores of maintenance capital. With a new Jain coming back into the market with bank facilities, what kind of growth we can see in the food processing business? That would be all from my side.
Okay. So just quickly, I want to correct myself. When I talked about INR 175 crores, that was a standalone. There would be additional about INR 50 crore into consol numbers, so -- because there is a maintenance CapEx in the food as well, which is there. So overall, it should be about INR 225 crores in CapEx. Second question, what was the question on the food business? In terms of growth?
Yes, yes. So with -- I mean, with new resources around the entire company, what is the kind of growth we can look forward to in the next 3 years in the food processing business?
So food business, if you break the food business, it's about INR 650 crores out of India, export and domestic sales, and about INR 1,000 crores with the overseas subsidiaries in the food business. So that's about INR 1,650 crores we did this year.
We think because during last 2, 3 years, again, with the kind of difficulties we are facing, our capacity utilization was low. We did not have adequate working capital. We are seeing a good order flow from some of our B2B customers on the juice beverage side or even as an ingredient on the onion or garlic side. So we are confident of maintaining a growth rate for the overall business, about 20% plus. The India could be growing higher than 20%, but global basis, it will be growing also 20% plus.
So you are saying that this capacity was underutilized? So because of working capital, you were not able to process as much or players like Coca-Cola, et cetera?
Last 2, 3 years. That's correct.
Next question is from the line of Suraj Nawandhar from Sampada Investments.
Sir, what would be the sustainable EBITDA margins for the business?
So there are -- again, there are different, different divisions. Traditionally, drip irrigation, which is what it's partly Hi-Tech. Our margins are around about 17%. The piping, which is comparatively low-margin business but also requires less amount of capital, we have been able to hit closer to double digit, about 10% -- 8% to 10% over the last few years.
Idea is we improve the CapEx utilization going forward with better fixed cost absorption. And also, as we use more capacity, we are buying a larger quantity of raw materials where we could get some volume. Our idea would be that about piping or plastic business, we could take to 12% going forward, combined basis. So when you will combine these -- and food is at about 12.5%, 13%.
So when you combine all of the businesses put together, in a good year, you might be between 14% and 15%. In a bad year, you might still be around 12%. So currently, our internal target be closer to 14%. And as we are coming out through a difficult time where we are gaining back market share on a substantial basis, but at the same time also improving the cash flow, so we are trying all the 3 things, right?
So I think revenue growth is back. Margins are more sustainable now, and cash flow is also happening. So all this 3 is what we are looking to combine.
So the operating level is going to be a major driver for the margin expansion going ahead?
Yes.
Okay. And sir, do you expect any further improvement in your working capital cycle?
So there are -- working capital cycle will definitely improve, as I explained, as these government projects close and some of those old legacy receivables, we get fully paid only after the closure of the project. That would bring down the overall receivable levels, and that should definitely improve working capital cycle. Also, as a company, I said that we are now BBB-, et cetera, could mean that we could get better supply credit, which would also help shorten the working capital cycle or our net contribution into working capital would be less.
In terms of inventory, while inventory might slightly go up in absolute amount, but let's say, inventory goes up 10% but revenue is growing 30%. So in terms of days outstanding against sales, working capital cycle would shrink.
So overall, I think at least this year, March '24 and March '25. In both years, I believe you will see a variable reduction and improvement into overall working capital side.
Okay. And sir, considering the elections that we have in this year, around 4 to 5 state elections we have, so do you expect any halt in tendering process or any changes over there?
As I said, we are not actually doing a lot of new government business, right? We are not going for government tenders and so on, so there is no direct impact. But it is true that whenever elections are there in that given state or area, usually 6 weeks before, there are these guidelines or whatever, and that slows down the bureaucratic process or any process of farmers getting funds in their hand, whatever may happen in the marketplace.
But we have enough business now across India. So in some states, things slow down, you can push your product somewhere else. That is one. And I think general elections are next year, sometime in May. So overall, I'm talking still as of now what we are planning to do current fiscal of '25, '24, we don't anticipate anything significant in terms of headwinds.
Okay. And just the last question, can you throw some more bit light on the food processing business? I'm new to the company, so if you can just explain your business model in the food processing business?
So food processing business, it's -- we are -- we buy a large amount of -- for example, we buy a large amount of mangoes. We make pulp out of those mangoes and we supply to customers like Coca-Cola and other large global beverage companies in India and outside, where they will make the juice out of it and sell. Other product lines are like onion or garlic, for that matter, which we'll buy from farmers again, process those, create dry onion or garlic, which can go as ingredients into, for example, Nestle is our customer, it can go into their product in ketchup or Maggi, or in export markets as well. So that's the business model.
Typically, that has usually less receivables. It has more inventory because based on the season of the individual crops, like in mango season now as we speak, we have started processing mangoes. So in next 60 days, we should process all the mangoes and then sell the mango for, overall, 12-month period, so it has an elongated inventory holding cycle against the order. So we already get before the season kind of orders from our customers that, okay, over next 1 year, please supply me such amount of x quantity. And then monthly basis, there is offtake. So that's how the business works.
While primarily, we are in mango and onion, but slowly but surely, we are adding other products now. We are now in banana, guava, papaya, tomato, pomegranate, garlic, so many other product lines which have started working and delivering revenue. But as of, I think for FY '24, majority of revenue will still come from mango and onion.
So when we do these contracts, do we also get in contract with them over the rates? Or is it only the quantity that is -- we get in contract with?
So we get the indicative contract, right, in terms of quantity because you process the quantity as per the need of the customer. So customers are, do they want to evacuate the entire quantity? In most of the customers, these contracts are a kind of middle of the season by -- when you already know the raw material price, so you don't take risk on it. With some customers, large customers, we have raw material plus contracts. So whatever is the raw material price, it could go up or down. It is passed on to the customers.
So by and large, I would say, 80% or more quantities we sell, 80% or even 90%, I would say, we do not take any raw material commodity, price volatility risk. Maybe this 5%, 10% product which gets sold on spot where you might have some risk. But by and large, nature of the business is as it has evolved. Earlier, we used to, and sometimes, it really hit us badly. But I think over the last few years, it is more and more -- the entire industry is moving towards this kind of model because nobody can take that kind of a significant commodity volatility.
Next question is from the line of [Pavan Yadav], an individual investor.
So I will have 2 or 3 questions. Very quick question. Question number 1 is that you have while your revenue grew by just some 25% at a stand-alone basis, your other expenses have gone up significantly, almost doubled. So can you explain what these other expenses essentially entails wherein -- I mean, those expenses have come by, impacting the bottom line?
I think, first of all, revenue at stand-alone was about 28%, so from INR 2,800 crores to INR 3,600 crores. Consol is 21% from INR 4,700 crores to INR 5,700 crores. Most of the expenses which we have are actually linked to underlying business performance, so there is no significant change.
The other expenses could also -- I think other expenses would include some provisioning which have been done based on what you call -- we have this ECL model. And if I really look at quickly at the other expenses numbers, April to March for a stand-alone business. In '21, '22, it was INR 646 crores, now, it's INR 776 crores. So earlier, it was 22.5%, now, it is 20.5%. So actually, percentage-wise, you will see...
I was looking at the Q1, Q number. The December quarter and then the March quarter number.
Okay. So I don't have comparison purely, that would change. I have the fourth quarter numbers. If you look at other expenses, again, INR 216 crores was the same period last year and now, it's INR 308 crores. But if you look at percentage to revenue, earlier period was 24.3%, and now, it is 21.9%. So actually, they have gone down.
Sir, one more point that at the consol level, if you remove all the exceptional items, including the revenue or the losses or anything, what -- where exactly are we at the operating level in terms of profitability if we remove all the -- this gain from the Rivulis stake sale and all? If we adjust at the consol level, consol level, where were we in terms of security?
So at consol level, when in terms of numbers, right? So if I remove all this onetime -- because this year, this big transaction happened, right? So there are lots of these onetime issues related to accounting standards, so we have some corporate guarantees and that. So we have canceled those, so there are some gain related to that and so on.
So based on the operating performance, right, and when we look at the consol level EBITDA for '23, it -- our EBITDA is about INR 730 crores. The actual finance cost for the last year was about INR 340 crores. This is end up in cash outflow. You will see additionally INR 70 crores, which was INR 70 crores plus INR 40 crores, which was amortization of these entities, but actual cash of around INR 342 crores from INR 732 crores. So that is -- and depreciation was about INR 236 crores. [indiscernible] profit that way is about INR 150 crores.
Understood. Just one last question, sir. Most of the question is answered by you about Jain Farm Fresh. Now initially, you are planning for IP for the Farm Fresh. Are there any plans, as Part A of the question?
And part B, during the last 2 or 3 years of struggle, there could be some of your institutional clients who may not have been working with you or maybe cutting down on the business with you. Are there any improvement on debt side that you now have compared to the higher number of institutional buyers, and maybe the higher sort of quantum of the business that you're doing with them? And plus, are there any plans for the IP as we move ahead? Or any kind of sort of stake sale in Jain Farm Fresh to anybody to cut down on the debt that you did with the international business?
So I think overall, we as a company and management, are clear that as we move forward, that business grows, it comes back to the growth, that it should not be debt fuel growth, right? That we're very clear. And actual debt wherever it is today, should keep coming down. That's another clear charter for us from our Board.
In terms of another value monetization event, let's say, for the food business, as you asked, as you know, we have also an overseas private equity investor into food. Maybe down the lane, we need to go for IPO because that could possibly provide them the exit. But the timing related to IPO is partly linked to the market, market situation. Partly also linked to the underlying performance, whether it is robust enough to attract good level of valuation, et cetera.
And I think at least in the current year, we are not there. I think food had lost INR 100 crores 2 years ago. It is back to profit now. So I think this year, current year, it's profitable. So we have covered that deficit. And now it is, I think, in a much stronger trajectory going forward.
So as the business improves in its market conditions and -- are there, and the Board of the company then decides including along with the input from our investor, private equity investor in that company, then I think we will go for IPO. If we do, then of course, it could be -- it could further help us to reduce, not only consolidate, but reducing the debt in food. But it might allow us to also give an opportunity for offer for sale and reduce the debt at the parent. So that possibility exists. The question is -- but I cannot be certain, and I do not want to unnecessarily create some kind of speculation around the timing of that or the size of that.
In terms of underlying business, it is true that we could not process enough quantities for last few years. And at that time, some of our customers reduce the quantities they were giving orders to us. But we have a long relationship with most of these customers, it's almost more than 20 years now. All the global food 50 companies, one way or the other, we have a relationship. And they understand that this was a temporary difficult period we went through, apart from the COVID, our own issue. And that company has come back strong, the parent company is doing very well now. So we are seeing actually times where some of our customers are now this year, for FY '24, are giving us the orders which were same as before '19, which we used to enjoy with them. So I think we are back there now.
But again, we wanted to wait for 1 year to really start getting, seeing, to use cliche, fruits of all these work which we have done.
Next question is from the line of Sanjay Kohli from Goldstone Capital.
Yes. Mr. Jain, congratulations on achieving all these fantastic improvements on most parameters. Many, many thumbs up to you. So I have -- yes. And great going, and we hope that you keep consolidating.
Just a couple of questions. One, on your PVC, on the Plastics business. Now, resin prices have been very benign, and you have mentioned that you have some visibility in them being benign. So can we expect that going forward, along with a lot of emphasis on the top line in this business so pretty decent revenue expectations, that the margins will be maintained at this double digits, at this 10%, 11%?
Answer is unequivocally, yes. And we hope that with better capacity utilization and business growth, we might be able to even improve. But I think our medium-term goal this year, next year is be closer to 12% on the Plastics business.
And as I said, traditionally, in the past, we have been 8% to 10%. And there was a period, right, we earn 10% or 15% or 11%, but it was not on a sustained basis. Now where we are, we think on a sustained basis, we should have double-digit margins going forward.
Fantastic. And we've been talking to dealers here in the north, and you had mentioned UP as an additional geography to your business. See, the feedback from the market is that your product line is completely blow out. It's just fantastic. But in the past, you haven't been deploying working capital towards the dealer network on the retail side, which is a great business, as you've explained.
So can we expect -- because in the commentary, it said that your business grew from South and Western states significantly. Are we going to be emphasizing on the North as well, you mentioned Northeast, to add to this dealer network? And what would be the mix between projects and retail going forward?
So right now, the pending orders we are on the projects of the drip irrigation business and piping business put together, I think it's about INR 900 crore, INR 1,000 crores is still left to be done, and that will get executed over the next 2 years. The retail business is one which is growing overall, let's say FY '24, almost INR 3,000 crores of this business will be retail business for us.
Now coming back to a question on Western and Southern states, those have been traditionally states with a little bit less water, right, availability. And therefore, it has been easier to push through the sale of the concept that with less water, you can do better agriculture. In North, it was difficult, but we are definitely seeing. We are doing very good business in Haryana, for example, in North. We have very solid plans in the current year in Rajasthan. UP, for the first time for us as a state, would cross INR 50 crores.
So we have states, right, over like Maharashtra this year alone, as a single step, we will be crossing 4 figures at more than INR 1,000 crores, INR 1,300 crores, INR 1,400 crores, somewhere in that region, for pipe and drip put together, just retail sales. We have states like Andhra or Karnataka or Tamil Nadu, where like INR 200 crores in that state with drip and pipe together. In Northern states, there are a lot of states, we are like INR 0 crores to INR 50 crores, not less than INR 50 crores. Most of them, INR 10 crores, INR 15 crores, like that, so comparatively like that. But UP this year would be the first time we would be crossing INR 50 crores.
So our idea is that each of state, which is in INR 0 crores to INR 50 crores, should move towards that INR 50 crores to INR 200 crores criteria. And what is in INR 200 crores should move to INR 200 crores to INR 500 crores, and so on. So we are deploying within the organization a lot more resources to develop the dealer base in North, Northeast and East areas where we have comparatively weak presentation.
Our product line, and I do not want to boast. But if our products are available, most of the farmers would just like to buy Jain because there is nobody else who has that level of breadth and depth and the quality and consistency in terms of product. But at the same time, we -- with the new business model, we do not wish to give open credit to dealers, et cetera, because then you are again subjecting to yourself to the same kind of situation we got in 2, 3 years ago. We don't want to do it.
But we are getting now good dealers who are willing to invest, right? Are willing to carry inventory, who are willing to pay upfront and take the product as they see more and more the profitability they can make. Most of the agri input products like fertilizers or pesticides, the distributors hardly make 3%, 4% margin. In drip irrigation, they have ability to make 10% margin. So it is also attractive for them, but as long as they're willing to invest.
So some of these efforts is going to be a 2 to 3-year effort where you will see significant changes in terms of different zones in which we sell. But the push for North is definitely out there.
Okay. Great. Mr. Jain, just 2 short questions which have short answers. One is on the overhead portion. The last 2 years, you've gone through a major restructuring, and so it would have cost you a lot of money to hire all these foreign consultants, lawyers, et cetera. Over the 2-year period, I'm assuming about an amount of about close to INR 100 crores per year. This is not going to be there going forward?
And very quickly, I'll put the second question also. The overseas food business has done really well. How much of the revenue is attributable to the raging price inflation going on in Europe, which seems to be very sticky and how much to volume growth? And I'm done here.
Okay. Those exceptional expenses will not be there. They were treated as exceptional expenses related to restructuring. And they were, indeed -- right, you are correct. There were about INR 200 crores, INR 250 crores, including for the bondholders globally, et cetera, the amount of dollars we have to spend between the lawyers and the courts and all of that. And those will not be there going forward from the current year.
In terms of second question, food inflation is there but actually, we had used downtime, right, to cut down our costs, change the product mix around the world in each of the division. We're very focused on seeing that this should never happen again what happened. So there is a significant improvement in underlying operating performance apart from the inflation, which is there. And that's where you are seeing good results. So currently, based on all the inputs we have from the overseas subsidiaries and the CEOs there, they are expecting also another strong year in FY '24.
Next question is from the line of Rajendra Shah from Fidelity Investments. [Operator Instructions]
So with all the runway for growth and consolidation improvements, sir any projections when you'll be back on the dividend list?
I think it's too early to say. It's partly also linked to what the lenders talk about, right? When they did the restructuring, they usually put some caveat, right, company cannot issue dividend without our consent. The fact -- but the good part is that lenders now, we -- as a part of the restructuring, reissued an equity. So they own 10% of the equity, right? So they might become more amenable going forward because they themselves will get it as they are also important shareholders into the company.
But I think if I'm talking now as a management, keeping the issue of the lender's side, I think at least for the FY '24, the focus in whatever internal accruals we do, it's focus is on reducing the debt. And that way, I think, significantly add to the shareholder value rather than focus on the dividend, right now.
Thank you very much. I now hand the conference over to the management for closing comments.
No, I think those were good questions and everybody involved. As I said, we are very keen to keep growing but not at the cost of debt. We will grow, but we will be continuing to remain very focused on working capital cycle and reduce that cycle, bring down the debt, bring up the margins in the Plastic business, as I said, with better capacity utilization and better buying opportunity, and stay focused in terms of where we are going.
And we would like to thank all shareholders, all other stakeholders who have supported the company in very difficult times over the last 3, 4 years. There was threat to existence of the company, but I think we have come out well, and we would like to thank everybody for helping this happen. And I think we are strong and positive about the opportunity ahead, and where we never have to repeat or go through the same thing what we went through earlier. Thank you.
Thank you very much. On behalf of KRChoksey Shares and Securities Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.
Thank you.