Freshara Agro

Freshara Agro reported a strong FY26, achieving a consolidated total income of ₹353 crores, with EBITDA at ₹61 crores and PAT at ₹37.51 crores. The second half of FY26 alone contributed ₹212 crores in revenue, ₹36.7 crores in EBITDA, and ₹22.6 crores in PAT, indicating sustained momentum. The standalone Indian unit delivered ₹325 crores in revenue, with an EBITDA of ₹58 crores (18.5% margin) and PAT of ₹36 crores (11.55% margin). The flagship Gherkins business was a key driver, exporting over 43,600 metric tonnes and generating ₹268 crores in revenue, while the company also diversified into baby corn, chilies, and jalapenos.

A significant milestone in FY26 was the acquisition of Spanish operations, including Conservas Selectas Espanolas S.L. and Gandin Invest S.L., operating under the Sarasa brand. This acquisition represents Freshara's entry into the global specialty foods industry, transforming it from a pickle exporter to an integrated international food platform. Sarasa, a brand established in 1968, provides immediate access to premium Spanish olive sourcing, established processing, European manufacturing infrastructure, and a portfolio of heritage brands. The acquisition was structured to take over brands and assets for approximately ₹7.5 crores, along with a mortgage liability, and was funded by 25% internal accruals, ₹9.5 crores from warrants, and bank funding for working capital.

The Sarasa acquisition is expected to create significant operational synergies. By combining India's cost-efficient production capabilities with Sarasa's established European brands and distribution channels, Freshara anticipates margin enhancement through sourcing efficiencies and supply chain optimization. The company plans to substitute 30% of Sarasa's production with Indian-sourced products, aiming for 12-14% EBITDA and 8-10% PAT margins for the Spanish operations, up from the current 4-5%. This integration will also enable cross-selling, with Freshara's gherkins accessing Sarasa's Spanish distribution network and olive products being introduced to Freshara's existing global customer base across 40+ countries.

Freshara aims to evolve into a multi-category global specialty food platform. While the Indian operations primarily serve the B2B market (71% industrial packaging), the Sarasa acquisition provides direct access to European supermarket chains, enhancing the B2C presence. Management expects the B2C and B2B revenue shares to eventually equalize as the higher-value olive products scale faster. The strategy involves leveraging Sarasa's established brands and market credibility to penetrate new European markets, replicating Freshara's successful distribution model. The company will focus on producing gherkins in India for cost efficiency, while Sarasa concentrates on expanding its olive production.

The company's working capital saw increased inventory levels at the end of FY26, primarily due to the seasonal nature of crop arrivals (Jan-March) from its 4,000+ contract farmers. This strategic build-up was also a proactive measure against anticipated El Nino effects and potential geopolitical supply chain disruptions, allowing the company to secure raw materials and packaging at favorable prices. Management noted that this strategy led to 15-20% savings on raw material costs and provides a 'breathing space' of 4-5 months for contract negotiations. While this causes temporary cash negative periods, the company is typically cash positive for 7-8 months of the year.

Freshara is highly anticipating the EU Free Trade Agreement (FTA), expected in early 2027, which will significantly reduce duties on products exported from India to Europe (from 7-14% to less than 5%). This reduction is expected to provide a direct cost benefit, enhance margins, and improve the reach of Indian products in European markets. The FTA will also benefit the Spanish operations by making Indian-sourced gherkins more competitive. The company believes this will help sustain the 40% growth seen in the Indian Gherkin market over the last two years.