Madhusudan Masala outsources production after years of claiming in-house manufacturing
Q1 revenue rose 34.5% to ₹98.3 cr, but the company disclosed a shift to outsourcing without explaining the change, while a prior blended-spices target was quietly dropped.
What's new
- Q1 FY27 revenue ₹98.3 cr (+34.5% YoY), EBITDA ~₹11.1 cr (+47%), PAT ₹6.5 cr (+56%).
- Branded sales exceeded 72% of revenue; blended spices remained at 5%.
- Distribution network expanded to 48,000+ retailers and 415+ distributors across 11 states.
- Sonasara Phase 1 (6,000 MT capacity) targeted operational by September 2026.
Themes from the call
Demand
Volume grew 29.7% YoY to 8,134 MT, driven by branded mix and distribution expansion.
Margins
EBITDA margin was ~11.3% (unreconciled with later 11.9% reference), with improvement attributed to better product mix and cost discipline.
Capital allocation
Sonasara capex of ₹16 cr is 65% debt-funded; working capital driven by 140-day inventory due to regional taste requirements.
Guidance watch
- FY27 consolidated revenue above ₹400 cr and EBITDA margin at 11.5% reaffirmed despite Q2 seasonality.
- Sonasara Phase 1 capacity (6,000 MT) to be operational around September 2026, with 100% utilization targeted by mid-Q3.
- FY27 year-end distribution target of more than 75,000 retailers and 500 distributors.
- Long-term aspiration of ₹3,000 cr revenue and 1% market share within five years.
Risk flags
- Manufacturing model contradiction: management previously claimed all in-house production, now discloses significant outsourcing without explaining the change or its impact on margins and quality.
- Blended spices target missed: targeted 10% of sales in two years (by around 2026), but remains at 5% and management has abandoned the goal.
- Inventory days at ~140, with no fixed deadline to reduce to target of 90 days.
- Commodity volatility and inability to fully pass through ground-spice inflation pressure gross margins.
- Unreconciled EBITDA figures: headline 11.3% vs. later reference of 11.9%.
Key quotes
-
"We will definitely achieve more than Rs 400 crore in revenue for FY27. There is no doubt reaching Rs 400 crore or more is achievable."
— Rishit Kotecha, Chairman and Managing Director -
"We are currently outsourcing a significant amount of production. After the expansion, outsourcing will decrease, but even after Phase 1, we will not be entirely in-house."
— Madhusudan Masala management, July 2026
The brief
Madhusudan Masala delivered a strong Q1, with revenue up 34.5% to ₹98.3 crore and EBITDA rising 47%. Branded sales crossed 72% of revenue, distribution hit 48,000 retailers, and the company reiterated its FY27 revenue target of ₹400 crore-plus. But two contradictions from the call raise credibility questions. For years, management told investors that all production was in-house. In July, it disclosed that a significant portion is outsourced and will remain so even after the Sonasara expansion. No explanation was given for the change or its impact on margins and quality control. Separately, a target to reach 10% blended-spices share by now was quietly abandoned; blended spices still sit at 5%, and management said moving from 5% to 20% is not a priority. The numbers are good, but the strategy shifts — unexplained — make it harder to underwrite management's forward guidance.
Madhusudan's Q1 was strong, but the manufacturing pivot and abandoned target call management's word into question.