Good evening, ladies and gentlemen. A very warm welcome to the shareholders, investors, analysts, and other participants joining us today for Pakka Limited's investor call to discuss the financial and operational performance of first quarter ended 30th June, 2026.

Good afternoon, everyone. Sachin, if you can just keep muting everyone so that— Understand.

Yeah. [unclear]

also. Sorry.

My request to everyone would be to be on mute, and you will be requested to unmute when we get to the question and answer session. On the behalf of the entire team, I'd like to extend a very warm welcome to all our shareholders and stakeholders to the Quarter 1 investor call.

Thank you for joining us today. Before we begin, a quick introduction of our leadership team: Mr.

Ved Krishna, who is the Group Lead; Mr. Himanshu Kapoor, who is non-independent, non-executive director; Mr.

Mayank Jindal, Manufacturing Business Head; Mr. Shubham Tibrewal, Food Service Business Head; Mr.

Manoj Maurya, Finance Head; Mr. Sachin Srivastava, Company Secretary.

My name is Pranay, and I lead the brand and marketing at Pakka. I'll share the presentation now.

All right. With that, we'll start the presentation with a brief showcase of our newly launched delivery containers, something that most of you were waiting for a very long time.

With that, I hand over to Ved to showcase the key highlights from the first quarter. Over to you, Ved.

Namaskar to everyone. Thank you so much for joining.

Let's go ahead, Pranay. We are happy to report that we have now clocked the highest ever quarterly revenue.

We are continuing to work towards beating this, and also generating more and more bottom line and profitability as we go along. The funding has been completed for Project Jagriti, and Project Jagriti is back on track, and we are ensuring that we will try and commission the machine within the next couple of months, more or less in the next quarter.

There has been significant movement, and Shubham will talk you through the food services side, and we have built a very, very strong outsourcing model now. We have about five or six partners who have started producing for us, and we are slowly trying to move more and more into the outsourcing domain, and that will also result in better profitability numbers apart from the top-line growth.

As you saw when Pranay started that we have officially done a lot of trials with customers now, and now we are ordering the first facility, which needs a certain kind of coating system, etc., and that should be in place by the time we meet next. On the flexi side, again pilot trials for the base paper that would be produced on PM4 are underway, and within the next 2 months, the pilot trials will be completed, and then, of course, we start with a soft launch.

Over to Mayank sir to take us through the financial performance.

Good afternoon, everyone. As Ved also said that last quarter has been really good for us, and we have surpassed many of the records in this quarter.

If you see on the revenues, we were 42% up with respect to the Q1 of the last financial year, and 14% up on the revenue from the last quarter. Similarly, on the EBITDA also, we were 31% and 36% respectively with respect to the last year and the last quarter.

PBT also, there is a good jump, and it is 34% and 59% respectively for the same period. Coming to the wrap and carry, particularly, the revenue was 101 cr, which is 43% higher than the revenue in the same quarter the last year, and 15% higher than the last quarter.

On the PBT side, we were 45% up on the same period last year, and 16% was lower because some costs were paid in this particular quarter to the bankers, and that's the reason only the PBT has gone down, otherwise not. We have done much better.

If we see on the challenges side, we really go ahead on this. Right now, for us, the challenge is on the PM4 startup that we are expecting now by end of October or November, the machine will start, and the product adoptability, that whatever the product that we will make on the PM4, that how it will sell into the market.

The Middle East crisis, which is still going on, and which is making some dent on our exports. Of course, the last but not the least, the high cost of the finance for the Project Jagriti, which we have taken.

Looking forward that how we will overcome on these challenges. PM4 startup, the good thing is now we are already in the very final stage, and more than 85% of the erection work is already completed, machine is already in shape.

You will see in the subsequent slide the light photographs, it will give more confidence to you. That we are very, very much confident that we will be able to really start this machine by end of October, and then reel the paper in November.

Power boiler and recovery boiler, which is also part of the Project Jagriti, this is already in the very final stage. The steam trials we have already taken, and now we are expecting the startup by end of August or in the first week of September.

That is what the target dates are. Regarding PM4 particularly, so as Ved sir also said, that we are already planning the lab as well as the pilot trial in Europe, and we are hopeful that we will get the real samples from the pilot trials for the sharing with the customers as well within September.

Then we can make a real soft launch of our product. You can see the picture of our paper machine building is ready.

You can see the most of the equipments already on position now. This is regarding the boiler.

That was the real machine state. Entire building is almost complete now, except the finishing house that will still going on, but most of the equipment are already on place.

That gives us a real good confidence that we will be able to roll on this machine by end of October.

Thank you, sir. Over to you, Shubham, for the food service business performance.

Good afternoon, everyone. I will walk you through the Q1 performance for the food services division.

In terms of revenue, we have achieved 18.5 crores in Q1. This is significantly higher by 34% in comparison to what we had achieved in the same quarter last year, and 9% higher than the Q4 of the last financial year.

Of course, please bear in mind that the first quarter for food services is generally a very intrinsically low season because it's the summer, and it's probably the worst quarter we have in the year because of the seasonality. In terms of PBT, we've recorded a loss of 1.6 crores in this current quarter.

Now, this loss is slightly higher than what we had last year due to some structural changes which we are making in our manufacturing. Going forward, we're looking at bringing these losses down to zero, and making food services a profitable division.

Of course, when you compare to the last quarter, we had already covered this the last time, but there were a couple of one-off items and impacts which were booked. Looking a bit deeper into Q1, the revenue has grown 34%, from 13.7 crores to 18.4 crore 18.4 crores.

This is, of course, our strongest start to the year yet, and we are quite confident that this level of growth will continue for the rest of the year. This growth is primarily driven by the B2B side, which grew 46% in Q1, from 11.4 crores to 16.5, and it is what has driven the growth in this quarter.

We also continue to work on the B2C or retail side. We were previously present only in three platforms, which we have now increased to 12.

Our goal for the year is, of course, to be present on every major quick commerce, e-commerce, and big-box retailer in India, and we are gradually working towards that goal. Although we have onboarded 12 channels, it takes time for the revenue to get to the optimum level because the inventory needs to reach all the locations.

We are very, very confident that the B2C business will grow faster than the B2B business in the remaining quarters of the year. Our goal, of course, for the year is to reduce our losses and get to break even, which we are again very confident because as we grow our revenue, our costs will not grow in line, the gross margins get directly transferred into PBT for us.

Again, like we said, the confidence for this growth and the continued growth comes from the fact that we are making structural changes, and a lot of work has gone in at the ground level. On the B2B front, we have made CHUK available in 22 new cities and added 34 new key customers in Q1.

We have significantly deepened our distributor and reseller network pan-India, and that is what has actually contributed to the growth of the B2B segment, and this growth will be amplified during the next two quarters, which are the festive season quarters for us. The B2C side is also scaling.

It's grown three times compared to the last year, and of course with the new chains that we've added, it is only going to grow exponentially. We're now live across every single major quick-comm and e-comm platform, and the new platforms are going to be our primary growth factors in the coming months.

Another area which we are working on quite aggressively is to optimize our COGS. To do the same, we have pursued an asset-light growth model because to sustain the demand, we have started working on an outsourcing model where our capital investment remains limited, and the gross margin is therefore much higher on the new production that we will be making at these outsourced sites.

We continue to develop new products and explore new technologies to bring new solutions and unique solutions to the market to solve the challenges faced by our customers. One of them is, of course, our delivery range.

It is now developed. We continue to work on it to further optimize the costs, and we are currently in process of doing the large-scale trials with marquee customers.

Thank you so much.

Thank you, Shubham. Over to Ved to illustrate the product development plan.

Go ahead, Pranay. The big one we are focused on is the flexi base, and you see a sample look and feel of how it will look as we go ahead.

We have a few products in our hands. Basically, what it looks like is a translucent sheet of paper with much higher strength to be able to retain what is inside.

Lab trials are being completed right now in Europe. The pilot trials are slated for early September that Mayank also spoke about, that we are going to take those products and do soft launches for the distributors in October.

Then, of course, as the machine starts producing at commercial scale, we start doing a commercial launch hopefully by November, and then stabilization by next January. Also, I've been asked time and again what the initial applications are.

We are very clear that basically we'll remain focused on food packaging, but within that, there are some segments such as medical packaging, which we are also exploring with various customers, and things like seed packaging, which we are also exploring, which is a little bit beyond food, but similar. The broad segments that we are looking at is wrapping for confectionery, snack pouches, and sweet pouches like you see up above.

There are different sachet structures that we are looking at, including tea sachets. Also, we've started looking at various seed packaging, which is also an interesting area.

These are broadly the domains: release liners, dry food liners, tea pouches are broadly the domains that the initial products will be looked at, and we'll keep looking at creating better barriers as we move more and more into food packaging segments. Let's go ahead.

The other big decision that we have taken in the last quarter is to move our material science facility from Bangalore to Ayodhya just so that we are investing much deeper into this part of the business, because innovation is very much core to Pakka's future growth. We are building our innovation center or the Materials Science Center now in Ayodhya.

By the time hopefully you come to visit the site, you will also have a Materials Science Center to explore, and that'll of course be as soon as the machine starts. The broad focus areas for the Materials Science Center are the research includes the base materials, biotech, conversion systems, biodegradation, and valorization of our substrates.

In the applications, you guys are fully aware of wrap, carry, flexibles, food services, which we'll keep growing, and we'll add on rigids. There is numerous ideas that we are working on in terms of collaborations, in terms of incubation, acceleration.

We already have a lot of global R&D tie-ups, working a lot more with global customers and converters. We are also of course adapting a lot of technology, and that includes large language models building for speeding up our research, cross-pollination of ideas, utilizing biomimicry or learning from nature and the packaging there, looking at fermentation, microbial multiplication, also having our own design lab is something that will be within the Materials Science Center.

Of course, the idea is to attract the best talent in the world. It is a task that we feel will be very, very energizing for the organization.

We're already building global university tie-ups, creating an infrastructure which is second to none, and ensuring that there are numerous internships available in our facilities, and building a strong leadership. I think by the time we meet next, you'll start meeting a lot more from the innovation team as we used to in the past.

Go ahead, Pranay. What are our commitments for this quarter?

Jagriti, we plan to commission the recovery and power plant, and PM4 will get very ready for plant trials, as Mayank said. Late October, early November is when we start plant trials, and we'll build upwards from there for commercialized trials.

Like Shubham and I talked about, the delivery setup is being done for initial launch, and by the time we meet next, we should be in good shape there and starting to supply to some marquee customers who we've been doing trials with. Innovations, like I mentioned in my last slide, we're building our Materials Science Center in Ayodhya, and we hope to showcase it to you when you visit the plant next.

The flexi base pilot trials are being completed by next month, and the soft launch would have happened by the time we meet next. Of course, building on profitability, we'll continue to build our top line as well as bottom line, and you'll see significant changes as we move forward.

Back to you, Pranay.

Thank you. Thank you, Ved.

We'll move to the question and answer round. Some ground rules so that everyone gets a fair participation.

You can press the hand raise button, and then I will call out sequentially in terms of who has raised their hand first. You can unmute and ask a maximum of two questions so that everyone gets a chance to ask their questions.

We will also be answering questions on chat, you can message over chat, and we'll be answering it there as well. Let me start.

A lot of you have already raised your hands. Mr.

Koustav, you can unmute and ask your question. Mr.

Koustav?

Hi, can you hear me?

Yes, we can hear you now. Please go ahead.

Perfect. Wanted to understand on the pledge details first.

Ved, could you share what's the current pledge? If you could just explain as to exactly the contours of the pledge details, who is it pledged to, what is the process to get this back down, risks associated with it, what could go wrong?

That's the first part. The second part is on this container CHUK's product range, you had a success recently.

Could you describe the market opportunity for that?

Absolutely. Thank you for your questions.

Of course, like we discussed last time, there has been a significant shift in terms of our borrowing structure, where in order to make sure that the PM4 project goes ahead, the Jagriti project, we've switched from bankers to an AIF called Neo Asset Management, and part of that deal is that we are going to pledge our shares, the promoters' holding. Of course, this is more a short-term, kind of high-cost deal, where we are expecting to kind of go back to the banks within the next year, year and a half.

At that time, we will unpledge the shares again. It's part of the security that Neo has asked from us.

It is all against the loan that they have provided. They have also shown a lot of confidence in the company by investing 30 crores of their own money on the equity side.

I have of course also raised my stake into parts to about 48%, 49%, which will also give more confidence to the investors. That's broadly the pledge.

It should go away as soon as we retire Neo and bring back the bankers, which should happen after the machine is stabilized, the production has happened, and the overall financial system is working way better after the project has been commissioned. In terms of the containers, this is something that has been on the drawing board for a while.

Again, we've been discussing this with the investors. It's taken longer than we had assumed, but if you saw the video right in the beginning, it's a absolutely new way of thinking about deliveries and utilizing the fibers' own innate capabilities of being glueable, etc., etc.

The idea here is, like Shubham talked about, optimizing cost further, but that said, what we are doing is that we are starting with a smaller facility so that the customers who are at least ready to get on board start getting material. As soon as we are in the market, there'll be a much more understanding, and we can keep optimizing the cost.

We are currently priced a little bit, almost 40% to 50% higher than a plastic container, but that also comes with a lot of advantages, not just in terms of the packing and unpacking experience, but also in the food profile, as the chefs have been telling us who we have been doing trials with. That said, we are basically buoyant about this effort, and hopefully, as we speak next quarter, there'll be a lot more to report.

Thank you.

Thank you. Mr.

Darshil, you can ask your question, please. Hello.

Hi. Good evening, sir.

Thank you so much for taking my question. Hopefully, I'm audible, sir?

Please go ahead.

Yeah. Sir, just wanted to know we've had really great growth in Q1.

We're going to maintain this across both the segments, right? Like Q3 Q2, Q3 will be I think usually the higher quarters.

How would you see the FY27 playing out in terms of revenue, sir?

Darshil, it's difficult to give an exact number, but like both Mayank and Shubham talked about, the idea is to keep growing both the top line and bottom line, and our effort will remain to end up with a much stronger year than what we have had. We had had a bit of a slippage last year with some shutdowns getting delayed, etc., but that said, we are more or less out of that situation.

What we can assure you is that as a team, we will continue to work towards growing the top line further from Quarter 1 and definitely the bottom line as well. We are not yet happy enough with what we've achieved, but that said, at least the growth is in the right direction.

Fair enough. Q-o-Q, we can see some growth, right?

That would be a fair assumption. I'm not asking for a range, but if we can see we'll have positive momentum continuing, right?

That will definitely be our absolute effort.

That's really helpful, sir.

Significant changes will of course come at least even this year in the top line once PM4 is commercially producing, because that of course means another significant quantity coming into place. At least in the top line this year, and then next year we would stabilize and also come in with better bottom line.

Fair enough, sir. Sir, for PM4, what is the cost of the project?

How much is expanding our capacity by, right? Assuming this is coming towards the end of the year, next year will be the full year of operationalization, right?

The total cost of project is 753 crores right now, and it expands the capacity by a little over 30,000 tonnes a year, a little over that. I don't think it's to do with the capacity itself, it's the quality of materials that we are going to produce.

The idea is to get more and more into flexible packaging, and produce the best possible substrate for that product. The effort that the team has been making is to create something which is again similar to CHUK, that has not been seen and envisaged by the world yet.

We are of course hoping to present you with a product that will delight our investors as well as our customers.

Sir. That's really helpful.

I have a few more questions. Can I ask them or should I join back the queue?

Darshil, if you can circle back and join back the queue, we'll come to

you.

All right. Mr.

Raghav, you can unmute and ask your question.

Hi, good evening. Thank you for taking my question.

I hope I'm audible.

Yes, please go ahead.

I had two questions. My first question is regarding the flexi base paper.

What I understand is, Ved, that we're going to produce the base paper at PM4, and then we'll give it to converters to convert it into the final product to start with. I just wanted to understand when we say that we're doing lab trials and pilot in August and September, how are we exactly doing them?

Is it through a third-party manufacturer? Then the eventual scale-up of it, is it contingent on PM4 starting?

If yes, what are the timelines? Because I think if commissioning is in November, it would take some time to stabilize and then scale it up.

If you could just help me understand our strategy here.

Absolutely. Great questions, and delight to hear the detail that you're going into.

Yes, the initial idea is to produce the flexi base. Basically, what we are doing is to produce an extremely translucent paper, just to put it very, very simply.

A very translucent paper that you can see through. It is extremely low-porosity, so that it doesn't consume much chemicals in coating.

It is also got a decent strength so that it runs on any converter's machine that has been running poly. Basically, that's the broad structure of the flexible that has been envisaged and is being worked on.

You're absolutely right, the pilot trials are being done in Europe. We went through numerous machines across the world, and we chose one that mimics the final machine that we have put, which is difficult because we designed the entire machine from scratch as well with the concept that we wanted to create something that is unique.

Our machine is literally like no other in the world, the PM4 that is coming up. Basically, that pilot machine mimics the final machine, the trials that are going to be done in August, September are on a similar machine that will produce a few reels of the paper that looks similar to the one that we'll produce in PM4.

Why we do that is one, that we are right in our proof of concept, it gives us confidence, but the second bigger part is that we are able to introduce a similar grade to the distributors and the customers to do smaller trials before the production kicks in. That's the idea why we are doing the pilot trials in Europe.

The PM4, you're right, it is going to start doing trials in November, which means, yes, it takes a month or two to stabilize. You're looking at a commercial production early next year, say January, to stabilize and to start providing the market with the material that we are looking to produce.

I hope that I've answered all your questions.

Yes, just one follow-up to this, Ved. Great to hear the strategy makes a lot of sense.

I just wanted to understand two things. Firstly, because the paper quality would be dependent on the substrate which you are using, which is sugarcane bagasse in our case, are we shipping the same raw material out to Europe and getting the same output with the same input?

Secondly, I might be wrong here, but I feel that maybe a two, three-month window seems too short for a pilot and a successful outcome of a pilot. Are there some certain defined parameters or timelines or performance benchmarks which you have aligned to with our initial pilot trial customers to ensure it gets done in time?

Essentially, what I want to get to is what is the risk of this timeline being extended by a few months or so, and what are we doing to mitigate the same?

Absolutely. Again, great questions.

Yes, absolutely. The substrate is exactly what we are going to use in our facility.

We have shipped pulp from India. It is exactly the same, not just the bagasse, but we also do a lot of trials with the long fiber, which is basically softwood.

We zero in that this is the kind of softwood that we need. Although the facility can easily buy softwood in Europe, we haven't done that.

We've shipped the softwood from here to know the exact ratios that we're going to follow. The bagasse pulp as well as the softwood has been shipped from there.

Not just that, the chemicals. It's not just to do with the pulp, it is also to do with the chemistry that we will follow, especially in terms of what we call surface sizing or closing the surface more.

Those are things that are basically being mimicked. You're absolutely right, but the trial itself will happen in September, but the whole effort has been ongoing for the last 6 months, or maybe even more.

There is a certain process that you follow, there's a design of experiments that you create based on certain lab studies that you do, etc., etc., over time. That's been coming for a while.

We've been on it from even before we conceptualized this machine, actually. This trial organization where we are doing it, this is only about 6 months of effort right now.

You're right, sometimes the stabilization will take time. The way we are mitigating that risk is that ultimately we will be able to produce certain grades that we already dabble in.

Say if we were to produce a release paper, or we were to produce a greaseproof paper, or a parchment paper, those are market grades. Those can anyways be produced on the same machine and introduced.

That said, the effort is to keep it very, very narrow and to keep it very focused. You're right, sometimes things take longer than we had envisaged.

The fallback will be to produce grades which are already sold in the market by us and by others.

Understood. Just one last—

Raghav, you can join back the queue, and we'll get back to the questions. Mr.

Randhir, you can go ahead and ask your question, please.

Hello?

Yes, please go ahead. You are audible.

Can you hear my voice?

Yes, we can.

Thank you, sir. Thank you for taking my question.

Sir, mera ek question volume ke regarding, sir, ki jo volume growth hoga, further yahan se yeh improve kar sakta hai?

Volume growth matlab ki

machine ka jo volume hai? Nahin, FY27 as a consolidated level pe, sir.

Revenue growth ki volume of material growth?

Volume of material growth.

Haan ji, bilkul. To obviously jo ham logon ne bola ki hamari jo chauthi machine hai, woh bhi commission ho jayegi last quarter mein, uska bhi farak padega, plus ham log kafi outsourcing business kafi badha rahe hain, to uska bhi farak padega volumes pe.

Dono, revenue and volume dono pe hi padega.

Sir, abhi jaise chat box mein sir bata rahe hain ki FY27 ke liye EBITDA margin 19% ka expect kar rahe hain. To abhi first quarter mein, sir, 13% aaya hai, to bache hue jo teen quarter hain, usme EBITDA margin yeh 19% se above aa payega, sir?

Himanshu?

I think, first of all, the EBITDA margins for the first quarter is not 13%. It is about 14.5%, and definitely with the revised increased production coming into place, the EBITDA margin should go up.

We were consistently working at an EBITDA in excess of 23%, 24% all across 2023, 2024, 2025. As Shubham has said, that if CHUK for the first time after so many 8, 9 years of operation turns profitable, definitely there is no doubt that the EBITDA margin should be about 18% or 19% on the total sales which comes for FY27.

Okay.

Sir, gross margin hamara improve kar sakta hai kya?

Sir, EBITDA tabhi improve karega jab gross margin ya contribution kahin na kahin improve karega. Uske bina koi magic nahin hai.

Yeh koi borrowing cost badh chuki hai, to PAT to nahin ho sakta hai woh ho, but woh tabhi improve karega jab aapke gross margins improve hon ya aap cost cut karke apna contribution better karein, basically variable cost cut. Because fixed cost to wahi hai, to definitely woh improve hoga.

Okay. Thank you, sir.

Thank you. Mr.

Kenil, you can go ahead and ask your question.

Hello, yeah. Am I audible?

Yes, please go ahead.

Yeah. My question is regarding the factory which we are going to put at the US.

That we had postponed. Can you please update as to what are we looking at, when are we looking to start with that?

Because that is one of the main thing which everybody is looking at. Secondly, the debt which we have given it to the third party, what are we looking to do about that?

Because for that also we are additionally paying 2 percentage of additional interest cost. Basically, I have the two questions.

I'll answer the first, and maybe Himanshu can take the second one. Kenil, ultimately, the idea is to go back into a global expansion mode.

That's the effort. What we did realize last year was that we were spreading ourselves very, very thin.

We were trying to raise money in US while we were trying to set up a unit in India, stabilizing that. The markets had taken a bit of a beating, the world geopolitics wasn't helping either.

With that in mind, we've kind of tried to close the taps wherever we felt there was expenditures being done without returns. All those projects are in the standby mode.

We continue to engage not just in Guatemala, but other Latin American countries because we had already initiated a lot of relationships. The effort from our side remains that we want to make sure that regenerative packaging solutions scale way beyond our capacity to scale, to say.

In the sense that we have to grow beyond our own means. That'll remain the effort, but of course, ultimately sustainability of the current business is most important.

With that, all our energy is being focused right now on Project Jagriti. This comes on stream this year, and as soon as this is stable, we will reinitiate those conversations.

That said, our growth in US continues in terms of we are looking at exports, we are looking at providing some materials from India, but in terms of setting up manufacturing in Central America, we'll hold it for another 6 months or so with softer conversations that are happening, and our people who remain engaged on that side. The ultimate aim is to get back to that.

Himanshu, maybe you can talk about the debt.

I didn't understand what debt at what 2%. I didn't understand the question properly.

Can you please repeat or clarify?

We have given the debt altogether to somebody and we are paying a charge for it, right?

No, we've not given debt to anybody. Where is that impression coming from?

No, we are taking debt at an additional cost than the market is bearing. Correct me if I'm wrong, because this is what I had understood.

Himanshu, he's talking about the Neo transaction, I think.

Correct. Absolutely correct, yeah.

I was not getting the name. Correct, yeah.

No, Neo transaction is a very different transaction. As Ved has already explained, and I think last time in the call when the Neo transaction was there, I was specifically there to answer the queries.

The reason was that the Jagriti project was not getting commissioned basically because there was an increase in project cost, and there was a shortfall in terms of our contribution. Had we gone the normal route of contribution, it would have taken roughly about 15 to 18 months to actually commence the entire transaction, because the internal accruals could have only been loaded to the thing.

What the promoter has done in this case is he's taken the burden on himself by taking some equity by borrowing that money in a structured transaction, and completing the transaction. Thereby the borrowing had to go from the current rate of 11% to roughly about 17%, and this transaction is specifically only for roughly about 18 to 20 months, within which time the company thinks that we will be able to stabilize the entire thing, and then they'll be able to refinance this debt basically.

In net net, what I had said last time also, that the total outflow which was perceived between 1st April 2026 and 31st March 2028, and that is how the transaction has been structured, was roughly including the bank interest as per the bank loan roughly coming to about 150, 155-odd crores, and in this transaction which we have done, in spite of an increased rate of interest, it comes to about 120, 122-odd crores. Still on a cash flow basis on a profit and loss basis, definitely there is a dent at the end of the day, but on a cash flow basis, definitely it improves, and it gives time for the company to come out of whatever problems have been gauged through the rise in cost of the project and the internal accruals that were to put in, to give them a breather for about next 18 months and then come back on track.

I hope I could have answered your query.

To sum it up, about 18 to 24 months is a timeframe we're looking at. After that, that debt might reduce it to the original 11% to 13% from 17%.

We can do that earlier also, but that has a bigger MOIC in terms of the repayment structure. I think what you can take is between if the debt is to be retired, it will take about 16 to 18 months.

Net net outflow in terms of what is getting charged is still lesser than what the company would have expended had we gone with the banks basically.

Understood. Thank you for the time.

Thank you. Mr.

Ravi, you can ask your question now.

Thank you. Am I audible?

Yes, please.

Yeah. Congratulations on a good set of numbers.

I think for the past 3 years, I have been following closely, and this is probably the first quarter where we have shown real growth. My first question is to Mr.

Ved. Ved, what is your assessment of the trials so far in terms of the new substrate that we are planning on PM4, right?

I think we spoke about a lot of substrates last time, and looks like I think you have finalized on something. What is your initial assessment based on the lab trials and the trials that are going so far?

This new substrate, what will be the realization? I think last time when you spoke, we were probably talking about something like ₹150 to ₹200 a kg for this new substrate on PM4.

Just wanted to get your feedback.

Thanks, Ravi. The see, ultimately, let me kind of put it more in perspective.

Ultimately, as Pakka, there are three segments that we tackled. How do we transform the wrap and carry segment?

How do we do better with the food service disposables? Of course, now the effort in the last couple of years has been how do you transform the flexible packaging segment?

The whole effort in terms of the PM4 has been to tackle that flexible segment. What we have realized is that the barrier coatings are still a relative challenge in terms of not just efficacy, but more in terms of acceptability in terms of cost by the customer.

We are taking smaller steps there. What we are doing is we are starting with the flexible base paper, and there it goes back to what, somebody asked before, I think it was Raghav who mentioned the idea that the substrates that we are using.

In terms of bagasse, we have to get back to what is Every fiber has its own pluses and minuses. In terms of bagasse, it's a much shorter fiber.

If you can imagine it, it fills the sheet more. It is a less porous paper that it creates.

It's also a much lighter fiber than a in terms of density from a wood fiber. What happens is there's a certain see-through property that is created.

Those are inherent properties of bagasse, and that's what we are playing with. What bagasse doesn't offer is a very, very high tear strength.

How we compensate is it that is with a ratio of blending in about 20% to 25% certain kinds of softwoods that provide the additional tear strength that is needed. Based on that, the whole trials, the whole product has been conceptualized.

Ultimately, we are of course extremely kind of buoyant about what we are going to produce. Of course, for us, it's all about, how do we create something that has not been created before, and that's the effort when we go to trials in the pilot machines.

Those are the trials that we have been taking in the past. Of course, as soon as the machine comes, the machine is way more sophisticated than literally any global machine today.

In terms of we haven't left any stones unturned when it comes to achieving those properties of porosity, translucency, strength, and smoothness. Those are the four big properties that any coating substrate needs, it'll be good for coating for any kind of structure.

What we look at when we look at the financials is not what the NSR is going to be, but what the contribution is going to be. The effort is continuously to work towards a better contribution than we have ever achieved with any of our products, and that's the target.

I cannot spell it out just from a perspective of, just just straight kind of understanding, but let me assure you this, that the team is continuously working, and we are pretty confident of achieving a contribution level that is higher than any of the grades that we've ever produced. Of course, it does result in a better revenue number also, but that's not the one we focus on.

We focus a lot more on the ultimately the contribution that any grade is going to make. Internally, we go on to focusing on contribution per hour that any machine produces, not even contribution per tonne.

That's the key figure for us. If any of us you ask who are in operations, we will always know any machine's contribution per hour and how it's doing today.

Okay. Thank you, Ved.

My second question is to Mr. Shubham.

Last August, specific to food services, I think we had mentioned that we will probably reach 10x of what we are today by 2028. I think we spoke about 680 crores of revenue for food services.

I think last quarter also you mentioned that we are on track. One specific question there is, again correct me if I'm wrong, today I think food services is around 3,000 tonnes.

For us to go to 10x, I think it will be 30,000 tonnes, right? All of this I'm assuming we are probably going to get through outsourcing, is that the plan?

If so, what about the pulp? Because additional capacity that we have here probably will go to PM4.

Basically, just wanted to understand the plan from a execution point of view. Right.

Indeed, the additional incremental volume growth that we are looking at for the business is going to come through outsourcing sites. Of course, at our mother plant also, we may consider in the future to do something, but primarily for this financial year, we are focusing on building capacity through outsourcing partners.

On the pulp side, while PM4 reaches optimal capacity, at least until then we are quite confident that we will have the pulp that we need. That being said, there are multiple other avenues for procuring pulp domestically and through foreign parties.

That should not be an issue. Of course, we would prefer if that pulp was coming through our own plant, but yeah, that will be covered.

All right. Thank you.

Thank you. Mr.

Darshan, you can go ahead and ask your question.

Hi, sir. Hope I'm audible.

Yes, you're audible. Sir,

my first question is currently what are the margins in the existing products, and what are the margins we're expecting in the new products? My reason for asking this question is how we are so comfortable and how we are giving the guidance of 19% EBITDA margins on FY27?

Broadly, what we focus on, Darshan, is three markets, all three are related with food. The primary business has been wrapping and carrying of food, things like the QSR bags, wrappers.

That's the primary focus on our wrap and carry division. The second one that we've been talking about and growing is the food services disposables.

There the again the effort is to grow that division by creating better substrates for food service. The third one that we are now looking at is food packaging, which is more on the flexible side right now, and eventually we'll also go to rigids.

That's the broad differentiation in market. We have operated at 23% to 25% EBITDA, as Himanshu mentioned before.

It's like 19% is not something that bothers us. We have been stabilizing some of our expansions, which is kind of given us a little bit of a hit, but that said, we see things stabilizing.

I don't think 19% I would even go ahead and say that 19% is also a low bar for us. We will have to go towards bettering 25% and above in the future.

We will continue to work as a team towards that. Don't get too flustered with 19%, our targets are higher than that.

Thanks for your answer, sir. Secondly, what is the current utilization level on the existing plant, and how are we seeing the ramp-up of the new plant coming, which is live in December?

Sorry, what was your first part of your question?

What is the current utilization levels on the existing plant?

Existing plant is all over 100%. We normally consider the first few months to be around 40% to 50%, the next year to be about 60% to 70%, and then the plant stabilizes at about 80% to 90% by 2028.

That's the typical, at least in our financial projections, that's the ramp-up that we take. Okay.

Sir,

my one question on the chat box has been unanswered. What is the current working capital days and inventory days, and what are the plans to improving it?

Manoj or Himanshu? Manoj, aap loge?

Current inventory days hamara 15 days ka hai FG ka, aur new product ka bhi ham log stabilization period mein 15 to 30 days ka consider karke chal rahe hain.

Okay. Overall working capital days?

Actually, seasonal raw material hai hamara yeh, to days ke hisab se dekhna thoda sa isko justified nahin rahega, kyunki hamara main raw material jo bhi hai bagasse hai and paddy husk hai, jo mainly 3 months ka procurement hota hai, jo March end mein hum peak working capital utilize karte hain.

Okay. Is there any way to improve—

Sorry to interrupt. I think lot of questions, you can maybe come back in the queue and—

I will come back.

Yeah. Thank you.

Mr. Manan, you can go ahead and ask your question.

Hi. Thanks for the opportunity.

My first question is regarding the churn in the top management. There has been continuous churn over the last year in the top management, and recently CFO has resigned.

How do we see it going forward, since the company is already going through so many operational changes? How should we look at it going ahead, the top management changes?

It's a great question, Manan, and this responsibility completely lies on me, and I'm trying to learn. We have a good and a solid team.

We, of course, need to make sure that long-termism is important for the organization. We'll continue to work at it.

That said, certain challenges if they come up, we have to face it head-on, and sometimes we have to take bitter calls, and not ideal, but that's something that goes along with business. No guarantees in the end, because ultimately, there are so many things that happen in life that lead to changes.

It could be personal, it could be professional, it could be performance, it could be various things. As a team, we are very, very closely bonded, and we work as friends with each other.

As you might realize when you talk to all of us, and this is of course just a sliver of the team that you see even now, but across the organization, it's a extremely flat organization, and also very, very driven with a very strong sense of ownership. That's broadly how we function.

Yes, we have make changes to both the wrap and carry CEO and CFO for various kind of reasons, and we hope to remain stable in the coming times. That said, again, repeating, no guarantees there, but that's the effort that we continue to make.

Thanks, Ved, for that. Just a follow-up on that.

Are we also working on creating inner capabilities for future leadership? My second question is relating to the manufacturing outsourcing for the delivery containers that we will be doing.

How are we planning to protect the know-how of the product and other people not mimicking and undercutting our prices, as it has happened in the past?

Superb. Yes, absolutely.

I think this has not just been a learning for us in terms of the changes in leadership, but also it has been a great learning, Manan, in terms of when we expanded internationally. One of the learnings is that we have to have stronger internal teams developed that we can grow in numerous parts of the world.

What we did last year was that we picked out six of our leaders, and they actually have a cohort right now. The idea is that in the next 2 years maximum, we'll have a set of at least six people who are ready to take on any global responsibility.

They've been trained and mentored by numerous industry leaders, actually, right now. There's one part of it, that six cohort.

We also have very strong succession built into the organization. Each one of us has to identify at least two people who we are working with to develop our succession.

That's something that is pretty much structured in the organization. We do want to grow globally, and we know that it has to be internal capacity building, also because as a organization, our culture and the ethos is very, very different.

We find it's very difficult for us to find lateral talent from outside the industry without disturbing our culture. That's something that we are very, very wary of, and we are kind of continuing to build that.

The second is again a superb question. We are not actually outsourcing delivery.

Shubham has been very clear that the delivery containers are going to be made internally, the entire facility is going to be internal. Maybe Shubham can add some more to it, but the idea is, yes, there is a lot of IP that goes into the barrier coating, etc.

Maybe Shubham can add that.

Absolutely. These are our proprietary technologies, and one decision that we make strategically is that every time we come up with an innovation and innovative technology, we will ensure that that is manufactured in our own facility, we are not outsourcing that.

Therefore, we are able to keep that secured.

I thought we have already taken all the molded products outsourcing.

No, it's not. Sorry, the additional capacity that we're building, we're building it externally, but we of course run our plant, we have machines, we have the option of moving products in and out.

We can swap in products that we make in-house to outhouse to free up some capacity for the delivery products, so that's what we do.

Okay. Just one feedback I have, if I can just slip in.

Maybe 6 months back, 6 or 8 months back, I happened to got some delivery, basically room service at Club Mahindra. I got delivery of dal khichdi in paper container, so, as usual, I checked whether it is of Pakka.

There was no branding on the top of it, but I started eating, and then at the bottom I found the branding. Again, the paper got soggy.

I thought it's better they didn't give their name on the top. The experience was not very good, and it hit the reputation of the product in my mind.

Yeah. That is one thing.

Thanks for the feedback. Yeah.

Yeah. Sorry, go ahead, Shubham.

Oh, that's it. I was just saying thank you, we'll look into it.

Yes.

We'll

definitely try to address and improve on it and investigate the issue. Okay.

Mr. Jeet, you can go ahead with your question, please.

Thank you, Pranay. My first question is on delivery containers.

I just wanted to understand what has really changed today as compared to what we spoke in the last quarter? How has the product development really shaped up in the last 3 months?

How has the readiness to launch these products have progressed is what we wanted to understand, because in our mind, I just wanted to understand how have we progressed in the last 3 months, because in the last quarter also I think we were 50% premium to plastic containers, and even today we stand at 40% to 50%. Like you said, probably in the next quarter, we'll be launching our first facility.

If you can provide some numbers around the kind of CapEx we plan to do with this first facility. That is my first question.

Shubham, should I go ahead, or you want to tackle it?

You can, I can complete

it. Supplement.

Okay. I think, Jeet, mostly Shubham and us have been fighting for the last quarter, no, actually a few quarters, right?

The because Shubham of course pushes hard on the cost structure, and I lead the product development, so so we kind of butt heads. Significant improvements in the last quarter, which we've managed to convince Shubham to actually launch it, thanks to that.

The biggest one that happened, interestingly, was not of our making. We were working very closely with a very, very large food provider, and they were doing extensive trials.

We were actually amazed at their quality of trial, our teams have been in and out of their facilities, working with their chefs, etc. The what convinced Shubham in the end was when they said that their food profile is very different when they package in our container versus a plastic container that they were using before, which was very surprising for us.

We had not factored that that in. That's the reason they are going to be ready to absorb that 40% to 50% price differential.

You're absolutely right, there is no We haven't had any kind of breakthrough in terms of a significant cost reduction, and we know that there is a certain amount of risk that we'd want to take because of the quality we want to provide. We are looking at a cheaper option, and that is again being pushed by Shubham, through heat sealing.

What we are trying to do is that our current structure is cold-sealed, which makes it very easy for the user, and they don't need any machinery, etc. We will launch that, but for the larger consumers who are more cost-sensitive, we're also looking at reorienting, redesigning the product so it can also take in a heat seal, which of course takes on the cost of lidding overall, but there is another challenge that the user faces in having a heat sealing kind of machine.

That is broadly what has happened in the last 3 months. Shubham was extremely clear that he will not launch the product till we've done extensive customer trials.

Even with all my optimism, he did not let us go to the market, and he said, 'Show me results, show me results.' In the end, I think he's seems convinced, at least he's given us the green signal, because it's his call in the end whether we launch or not.

The facility, initial facility is not actually going to be It's going to be less than 2 crores of investment initially, and that'll more or less yeah, it's it's it's more or less in in the pipeline. It's mostly the coating machines and the gluing machines, which are completely automated, but we are using some of our older machines for the molding itself.

It's not going to be that costly. Over to Shubham if you want to add anything.

Absolutely. The main idea is that the Pakka promises of excellence, which we have done through all our products, we are very, very wary of not launching a half-baked product into the market.

That is a very important criteria for us. Of course, the market is very price-sensitive.

They see the value, but they also want the price. We work to balance these two items out as well as we can.

Perfect. This was helpful.

My second question is I wanted to understand the NSRs of our paper segment. I think in the last eight to 10 quarters, we've stopped showing tonnage of paper that we sell, the quantities.

I think in the present quarter, we've started some trading activity, and the chat I could figure out the quantum is around 6 to 8 crore of trading activity. If you can just split that particular thing.

What is the paper manufacturing volumes, manufacturing sales, and from that we are able to understand the NSRs. From that sir, we just wanted to understand how are the NSRs peaking for our commodity segment, the paper segment?

How have they shaped in the last two two quarters, and probably your view on that for the next couple of quarters?"

Mayank?

You're on mute, Mayank sir.

Yeah. Sorry, can you repeat, please?

I'm sorry.

The paper segment, I think we did 117 crores of sales, right? What I assume is there is some bit of trading activity which is involved, and which is to the tune of 6 to 8 crore, as it is reflected in the chat box.

If we are able to provide volume data, the tonnage that we sold or we produced for that particular quarter. We are able to just divide sales figure with the tonnage, so that we get to the NSR, which is, say, ₹80 a kg or ₹85 a kg.

How has that NSR trend been like for the last many quarters, and your view for the next two quarters, if you have any view on that?

See, as far as trading is concerned, because it's still growing in, and we we are entering and adding on few more traders into this on the outsourcing. Last quarter, we we we have added, this particular In this quarter itself, we have we have added a few more few more outsourcing facility.

Our plan is that from our current around 300 tonnes of the outsourcing trading facility, we will go for 800 to 900 tonnes a month on the other trading in in next quarter. Hope this answers you?

Yeah. Sir, what is the NSR we have?

Mayank, his question is different. Anyways, I'll take it up just for time sake.

Jeet, that's a good point. I think, Sachin, if we can just add that.

Let's start providing the volume. That makes it very easy to ascertain the NSR.

Jeet, NSR has been stretched. It's been under stress, and that's primarily because of a lot of geopolitical tensions.

Of course a lot of our containers got stuck, which are higher NSR when we export. A lot of our containers got stuck because one of our bigger markets is Iran.

That's slowly stabilizing, and still challenges, but we are at least going in for the other countries and other applications. I would also go ahead and say that the application development for specialized usages has not been as speedy as again we usually are, which also means that You're right, it is more commoditized grades that we are selling.

Both those we have to kind of focus and develop, but I think it's a good point that we'll just add the volume back to the slides, you'll know what the overall average NSR is. There's a huge range of products, and what we said before, more than NSR, what we continue to focus as a team is contribution.

Contribution and then down to contribution per hour, which is where we kind of really push hard between us. That said, you're absolutely right, NSR is also a very good indicator on where we are headed.

It's a good point. It'll also keep us on our toes, thank you again for pointing that out.

Thank you so much. Thanks.

Thank you. Mr.

Adwait, you can ask your question.

Sir, can you throw some light on the cost of the compostable flexible which we will be manufacturing, we are in the final stages, versus the conventional flexible packaging? It's readily available in the market.

Can you throw some weight on the cost difference between the two?

Absolutely. That's a great question, and a very important one as well.

There is no absolute cost. Again, everything varies application to application.

If you look at a simple sachet, and you as a consumer, you'll look at different sachets, they'll have different thickness levels, and from a technical standpoint, different barrier levels, etc. Each of them have a different cost parameter.

When we look at the benchmarking that we have created, we get down to square meterage. Ultimately, the customer may not say it, but ultimately what they will calculate is the number of chocolates that got packed, or the number of tea bags that got created.

What we find in the targeted segment is that a petroleum-based substrate is anywhere in between ₹16 to ₹18 a square meter. What we have now targeted is about 24.

There is a significant gap, and that's part of the reason we are not yet launching a barrier-coated substrate. We are still kind of looking at finding ways to launch the base, and then continue to work on the chemistry.

The reason for the cost is not the base paper, but the high cost of barrier chemicals, which are bio-based right now. Those are very, very expensive.

We're also looking at a lot of strategic alliances where we start getting it manufactured in India. Some of it we are even discussing people setting up their facilities in our facility, because that will then significantly reduce the cost.

The idea is that how do you go down to 18, the same price as a petroleum polymer? Because then the discussion of price shifts entirely to performance, which we feel is more important.

What we see is that, again, similar to the delivery containers, how do you add value in terms of performance vis-a-vis what they're using today? That's something that the team continuously ponders on.

I hope that answers your question.

In the future, in the long run, sir, from next year we'll be manufacturing at a larger scale, will it affect our margins that much initially in the primary phase?

Margins have to be maintained whether it's a base flexi base or coated flexi, both cases. Of course, as soon as you go to coating, you're adding another CapEx also, you're adding another coater, the margins have to improve to also be able to address that investment.

Basically any business ultimately you have to protect margins, we will continue to do that. That's why when I presented my slide on applications, there are numerous applications that you tackle from a standpoint of sales so that you protect the margins again.

You have to have alternates for that. I don't know if there's an easy answer for it, but the fundamental idea is, yes, the margins will have to be protected.

That means we'll go from base categories to specialized categories over a period of time?

Everything we go for is specialized, but more and more specialized is what I mean.

Yeah. Thank you.

Thank you. Mr.

Darshil, you can ask your question.

Hello. Thank you for letting me ask the question again.

Just wanted to confirm, I think in the chat we were saying our target for this year is around 500 crores of revenue, right? You want to reconfirm that with you, sir.

The tax rate is quite fluctuating. Could you just help us because I think '25 was 22%, '26 I think there was an aberration, and before that was 30%.

Could you just reconfirm the revenue guidance that we are planning for this year and the tax rate?

I think the first quarter we've done 120, whatever has been supplemented on the chat box, 500 seems to be a good revenue guidance basically, in terms of tandem of the way Shubham specified about CHUK growing and balance PM4 coming into place. As far as the tax rate goes, see, that's not a simple calculation, because we earn profits more than 10 crores, it's not 22%.

It's 22% with a surcharge of 12% and then 4%. Effectively it goes to about 25.69%, but it changes because there are certain adjustments, allowances and disallowances that happen at the time of computation.

The tax rate effectively is about 26% 26% basically, and it varies between 26% and 28% depending upon the adjustments of taxation, whatever happens in terms of the depreciation rate changes in terms of some payments of interest which have not been made. That is how it differs.

Technically, we are in a 22% tax regime, but it is not 22 because if you have a profit of more than 10 crores, then there's a surcharge of 12% and 4% education cess on top of that.

Fair enough, sir. Just wanted to know, sir, our products, do they qualify for some kind of environmental help?

If you're saying sometimes exports we are doing, and they want more eco-friendly products and non-plastic products, is that something that helps us market it better abroad? Just want to ask in terms of debt also, right, for products or companies like us, is there lower-cost debt available abroad?

Have we explored that option?

You're absolutely right, and we were working anyway on the US side, and there was a lot of pick and talk on the lower-cost debt that comes into place with these climate funds coming into place. Again, the process of getting all those kinds of lower-cost debt is about 1 year or so basically at the end of the day.

Now today I think lower-cost debt when it goes for a replacement from this structure, definitely all these things would be considered at that point of time. At this point of time, I think for the next about 14, 16 months, we have to only focus on performance basically.

No, I was meaning when we go for refi, and that can substantially reduce our cost of debt, right, whenever we go for the next

When you go for climate funds, there is also an FX cost, Darshil. Today with FX cost and hedging, practically it comes at the same rate.

Your point is well noted. I think the finance team will take care of that.

Manoj can take a note of that, and we'll take care of that in the refinance option.

That's really helpful, sir. That's it from my side.

Thank you so much, sir.

Thank you. Mr.

Raghav, you can go ahead and ask your question.

Thank you for the patience and the eagerness to answer our questions. Just want to understand a little bit more on the food services piece.

I'm not able to map out what exactly are we manufacturing in-house, what are we outsourcing, and since you want to grow 10x in volumes, what is the plan for what would be in-house manufactured, what would be outsourced? Essentially, we were also talking about geographical diversification of manufacturing in order to reduce the logistics and overhead costs.

If you could present an overall picture on currently what is the total volume we are doing, how much of that we are manufacturing and what we're outsourcing, and how do you plan to scale it up as you go to 10x the volumes?

Sure.

Currently, the range of products we manufacture in-house and outhouse is primarily determined by our mold availability and demand requirement. What product is needed in what part of the country.

Our facility is obviously located in the north, we try to manufacture products which are needed for the north and east Indian market at our own plant. Of course, any new technologies will also get manufactured at our plant.

Currently, we are doing around 350 tonnes of products per month, out of which around 180 to 200 comes from our own plant, and the balance comes from outsource sites. In the coming two quarters, we will be adding approximately 400 tonnes of outsource capacity.

This capacity is pan-India, there will be some additional capacity in the north, some in the west, some in the south, and some in the center. That is how actually we will optimize our freight costs.

Then the product allocation again of course depends on the demand. All export and west requirements will be manufactured in the west, south in the south, north in the north.

What we manufacture where is primarily driven by where it is needed, we try to manufacture it closest to the place of demand.

What is the plan for the manufacturing as we scale up to 10x the volumes? What part of it will be in-house, what part will be outsourced?

The majority of it will be outsourced. I would say as we grow, probably 20% in the long run will be in-house, and the remaining 80% will be outsourced.

Then

how do we protect our IP if majority of the volumes are outsourced?

The IP is only to do with very specific technologies that we're using, for example, on the delivery containers. That is what we'll continue to manufacture in-house.

The rest of our range, effectively we use custom molds, custom designs, and all our manufacturers work on exclusive contracts. We are not doing outsourcing for 10% or 20% capacity of the outsource manufacturer's capacity, we buy out the entire plant, and it is done on a relatively long-term lease.

It's a 3-year renewable contract. That's how we kind of protect ourselves.

Are we saying that if you're outsourcing 80% of the manufacturing in the long run, the IP will be protected due to these stronger agreements which we have with them, or are we saying that the volume mix would be 80% largely products without much IP and 20% products with IP which would be in-house manufactured? Which of the two are we pointing to?

It's a combination of both. Both statements are true.

It's not either/or, it's both.

I hope we get more clarity as the business progresses. This is the second question from my side to you, Ved, was a follow-up to my last line of questioning on the pilots for the flexi base paper.

If you could just whatever you can share some light on the kind of customers we are doing the pilots with and what are the evaluation parameters and volume for those trials which we are doing?

The initial pilots that we are doing for the base paper is focused on segments which already use similar base paper. You can think of the paper as anything that is to be coated.

It could be coated with a siliconization, it could be coated with a barrier structure, it could be coated even with a poly-based structure. Anything that is to be coated can be coated on flexibles and you'll consume less chemical.

That's the simple kind of idea. We're focusing a lot on say release application or labeling applications.

We are focusing a lot on kind of the bag application that needs heat sealability. Say today you see a sugar bag.

Just a good example is today when you go to a coffee shop, you take a sugar bag, and it is a white or a brown paper depending on the sugar inside, but you don't see anything inside. In the case as soon as Pakka launches its grade, you'll be able to see the sugar inside.

Of course, the idea is that let's tempt people to create a bag or pouch where there's a see-through property. Just a simple idea like that.

Now it's not in our control whether the converter will put a polyethylene on it or not. Our structure will remain compostable, but initially we will not be choosers.

We'll provide a structure that is great, and you will consume much lesser whatever you're using for barrier, and you'll get a product that experience for the customer or the consumer will be way superior. That's the basic bottom line.

We'll be a market grade that will be sold through distributors in any application where you need coating. That's the starting point, and then we keep evolving the product from there to ideally switch completely towards more and more flexible packaging applications.

Understood. What is the scale of these pilots, Ved?

Just last to sum it up. The scale of these pilots which we are running.

The plant is slated anywhere between 30 to 40,000 tonnes, depending on the grade.

Sorry, the scale of the pilots which you are doing in August and September.

Oh, that's only, Mayank ji, how much? 4 tonnes or something is what we've sent?

Yes, around that. 4 to 5 tonnes.

4 to 5 tonnes of pulp

that

we sent.

A lot of it goes into waste, but you end up with about 2 tonnes of material that you can distribute. That's just a very small trial.

Understood.

Thank you. Thank you, Mr.

Raghav. We'll take the last question now from Neelu Singh.

You can go ahead and ask your question.

Thank you. I have one question to ask on the bank charges for the one-off, anything in this quarter, which we paid while repaying to the banks?

Yes, Neelu ji, you're right. Actually, what happens as a result of Ind AS adjustment, any prepayment penalty or any processing fees that is paid as a part of the original loan process gets written off over the tenure of the loan.

Since the bank loans and all were repaid, that is why there was a total amount of roughly about 1.53 crores and about 1.8 crores, which is coming as a part of finance charges, which has been debited to the profit and loss account in account of accounting standards basically.

Yeah. In the chat box, it was declared that for this year we are estimating the interest cost to be 55 crores, and depreciation to be 28 crores.

If you add this, it becomes around 83 crores, out of which for this quarter we have done approximately 9 crores. That leaves about 74 crores of depreciation and interest for the 9-month period now.

No, that is different. On the chat box, I think the question that I was also reading the answers given by the team, it is talking about interest.

Interest outflow will not come to the profit and loss account till the PM4 commences basically. They had asked what will be the interest outflow.

What they've written is the interest outflow for this particular year. What will get charged to the profit and loss account will only be once the PM4 commissions basically.

Balance will be capitalized as a part of the project cost. The charge to the profit and loss account may roughly be about 1.25 crores of working capital a month, 15 crores, and maybe 50 The charge to the profit and loss should be close to be about 30 to 34 crores basically.

Okay. Then if I go to FY28, in that year probably will charge it to the P&L.

Yes. As of

That would be about 70 crores of interest and 50 crores of depreciation, that's 120 crores, and if we take that as 20% EBITDA, very optimistically I don't know, so that would mean we'll touch at least 600 crore of sales for FY28 just to break even?

See, what will happen is 20% of EBITDA I think at this point of time, the investor feels it's optimistic, but you go to financial year '21, '22, '23, '24, even in the COVID year, the EBITDA was close to about 20%. When the team has done that in the past, I don't understand why the team cannot repeat that particular kind of performance.

If you say 600 crores, I think with the today's run rate, 120 crores, in this quarter, 500 crores is a modest target which the team is taking. Next year, when PM4 is complete, I think even it at 60%, 70% of the capacity, it should deliver an additional turnover of between 175 to 200-odd crores.

If this plant goes on to say about 450-odd crores, then we are looking at a top line of roughly about 700 crores minimum in FY28, and 700 crores in FY28 on 20%, it will not be neck-to-neck basically.

Okay. This year, how much was the exports for the Quarter 1?

In terms of value or Volume percentage.

27%. 27%.

27%. That's it from my side.

Thank you. Best of luck.

Thank you, and we have run out of time also. Thank you for all your questions.

Ved, any closing comments from your side? No,

thank you once again for having confidence in us. What you would have noticed, the team is working really hard to keep working towards the idea of regenerative solutions and leaving the planet cleaner.

We'll continue our efforts in terms of volume growth, in terms of maximizing our profitability, and ultimately to create shareholder value. Thank you for your trust in us.

We'll continue to work hard to deliver on our promises. Thank you all so much.

Thank you, everyone.

Thank you, everyone. If you have any questions remain unanswered, you can send me over email.

Thank you so much.