Ladies and gentlemen, good day and welcome to the Mrs Bectors Food Specialities Limited Q1 FY26 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero, or a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anup Bector. Thank you, and over to you, sir.
Thank you so much. Good evening, everyone. On behalf of Mrs Bectors Food Specialities Limited, I extend a warm welcome to all participants on Q1 FY26 financial results discussion call. Today on this call, I have with me Mr. Manu Talwar, our Chief Executive Officer, Mr. Ishan Bector, Whole Time Director, Mr. Praveen Kumar Goel, Whole Time Director and Chief Financial Officer. We also have Link Intime with us on the call, who are our investor relations advisors. I hope everyone had a chance to review our investor deck and press release, which was uploaded on the exchanges and our company website. In a challenging macro environment, the company has delivered a resilient start to financial year 2025-26, recording a 7.6% year-on-year increase in revenue from operations and delivering an EBITDA margin of 12.3%. Coming to the macro environment, we are cautiously optimistic about the prospects of the urban segment.
On the back of recent interest rate cuts and the rationalization of tax plan, we are seeing early signs of recovery. On the inflation front, particularly in the raw materials, the sharp price hikes driven by geopolitical disruptions and supply chain bottlenecks appear to be behind us. Prices of key commodities like cocoa, palm oil, and maida, even though still elevated, are now stabilizing. A stable raw material price environment going forward should translate into stable end-consumer pricing and help propel demand. The sharp increase in input costs was effectively mitigated through strategic pricing actions and initiatives undertaken under Project Impact. The bakery segment delivered its highest-ever quarterly performance of INR 183 crores, a 19% growth for the quarter. This was led by English Oven, whose market-leading brand equity, superior product quality, and high consumer trust have been instrumental in driving momentum.
We continue to strengthen our position in incumbent markets and are now also aggressively pursuing geographic expansion through both distribution and brand-building initiatives. Coming to biscuit portfolio, a top-line growth of 3% underlines the challenges faced by the exports business. The exports business continues to operate in a highly volatile environment. The uncertainty of tariffs, slow passing of input price hikes on account of muted demand, and supply chain disruptions due to geopolitical tensions continue to be challenging. Business from America has been particularly impacted. However, we remain in close engagement with our customers to drive through this uncertainty. On the domestic front, all price actions have been factored in, and now end pricing has stabilized. The growth rates, even on the back of sharp price hikes, have improved consistently quarter on quarter from quarter three last year, indicating resilience and provide an optimistic outlook as broader consumption improves.
We continue to scale up and enhance business contributions from innovation. Our innovation philosophy is to upgrade and enhance consumer experience through differentiation by use of healthier ingredients, convenient formats, and rich exterior products. Products like shortbread made with 25% butter and no palm oil have performed well in the indulgence segment. In the kids' snacking category, we introduced animal-shaped crackers under the brand name Teddies, which continue to scale up well. Tapping into the demand for convenient anytime in-home indulgence and building in our bakery expertise, we entered into the ready-to-eat dessert segment with the launch of chocolate cake, muffins, and brownies. It continues to scale up well on quick commerce. In response to the growing demand for healthier alternatives, we launched our flagship coconut cookies with a zero maida offering at INR 20 for 100 grams.
Additionally, we are building a pipeline of health-first products, which should be out in the next few quarters. Furthermore, we launched Clean Label range of breads under Nature Bake, a health-first exclusive brand with no maida, no palm oil, and no added colors, and no preservatives with the proposition, "It is honest, it is clean, it is Nature Baked." Dubbed with super seed and whole wheat flour flavors, early feedback has been encouraging, and we plan to scale up this range with more exciting offerings in the future. On marketing, having recovered from the input price shock in the last quarter, we regained our committed spend to build and investing behind our brands in critical priority markets. A blend of mass media, TV, and outdoor, and BTL activities like out-of-home campaigns, wall paintings, vehicle branding, along with participation in exhibitions, mailers, helped gain significant visibility for the brand.
We celebrated Mother's Day with heartfelt YouTube film, "Maa Ke Sapno," Ka first birthday, honoring mothers and their dreams, which resonated deeply with our audience. As the next driver of growth, English Oven extended both its reach and visibility in the top 14 cities of North through a large outdoor campaign. On the technology front, we have made significant advancements aimed at strengthening our operational backbone. In manufacturing and supply chain, we have rolled out digitization initiatives across 50% of our plants. In sales and distribution, the deeper adoption of our distributor management system across 60% of our distributors is delivering enhanced visibility, real-time tracking, and improved order fulfillment. Additionally, our technology investments have enabled better management of trade spends and improved key sales force metrics, including productivity rate and territory coverage.
On our new biscuit facility in Dhar, commenced operations in May and is currently in a phased ramp-up to ensure operational stability. Full-scale commercial production is targeted for Q2. Once fully operational, the plant will not only deliver improved operational efficiency and enhanced service levels but also strengthen our manufacturing capability for the differentiated products, playing a pivotal role in driving the growth of our product portfolio. On the bakery front, we remain focused on scaling operations to capture growth opportunities. Our plant in Kolkata is going to be commissioned in quarter three, and the facility in Maharashtra is going to be commissioned towards the end of the financial year.
In line with our commitment to enhancing shareholder value and improving liquidity, the board has approved a subdivision of equity shares, whereby each fully paid equity share of ₹10 face value will be split into five fully paid equity shares of ₹2 each. This move is subject to the shareholder and regulatory approvals. Moving to our financial performance for the quarter, starting with biscuits, our biscuit segment reported a revenue growth of 3%, which stood at INR 281 crores in Q1 FY26 as compared to INR 273 crores in Q1 FY25. The segment has grown by 26% over Q1 FY24. Our bakery segment revenue for Q1 FY26 stood at INR 183 crores against INR 154 crores in Q1 FY25, thus registering a growth of 19% on year-on-year basis, including retail bakery and institutional segment. This segment has grown by 35% over Q1 FY24.
The consolidated revenues of the current year stood at INR 473 crores versus INR 439.4 crores in Q1 FY25, thus registering a growth of 7.6% on a year-on-year basis. EBITDA stood at INR 58.2 crores, while EBITDA margin for the quarter stood at 12.3%. PAT stood at INR 30.9 crores for the quarter, and PAT margin for Q1 FY26 stood at 6.5%. Thank you so much. Over to you.
Hello. Should we begin with the question and answer?
Yes, please.
Okay. Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Resha Mehta from GreenEdge Wealth. Please go ahead.
Yeah. Thank you. So the first question is on biscuits. Two-part question here. Domestic biscuits and export biscuits. So domestic biscuits, the growth has been very, very muted. Now, since we've taken all the pricing actions and the RM, the raw material costs are also largely stable, like you called out, what is the kind of growth that we are expecting for the balance nine months or from here on?
In the domestic biscuit side, what we have seen that over the last two to three quarters, there has been improvement in the revenue growth quarter on quarter, right? Even this quarter, revenue growth was better than last quarter, right? We are very hopeful that these trends will kind of build up, and especially when the festive season also kind of hit. We definitely are targeting, right, that we should be able to build up in the next two quarters and get to a run rate of a double-digit growth over the next two quarters' time. That's what we are gunning for, or that's what we are heading for, targeting to keep improving this growth rate from a high single digit and take it to a double-digit growth and build it up.
So just taking a step back, right, the headwinds that we were facing in our domestic biscuit business was essentially that demand was muted, and we had taken price hikes, which probably, in a muted consumer environment, did probably further suppress demand. And there were competitive pressures also. But now, with that, I mean, the muted demand kind of still remains, or do you see that there is an improvement in the demand sentiment in other areas?
So there is definitely, that's why I said, if I look at Q3 of last year to Q4, Q4 to Q1 of this year, it has been quarter on quarter, the growth has been improving, right? There's a clear-cut trend of sequential improvement in growth quarter on quarter. We are at a high single-digit growth in domestic biscuit business, and we're very confident that over the next two quarters, and there has been a fair amount of steep price increase in the last six months' time, which is also kind of settling in now, and commodity prices have also stabilized. So we have worked, and the festive season hitting, we should be able to move the growth sequentially up in the next two quarters also and get to a sustained double-digit growth going towards the quarter four of this year and then the next financial year.
So the Q1 domestic biscuit growth was in high single digits, like you called out, correct?
Yeah. It was.
Year-on-year, right? And this is year-on-year you're talking about.
Year-on-year. Yes, absolutely.
Right. Which effectively means that there has been some kind of a degrowth or very muted growth in the export side.
Yeah, yeah, absolutely. There has been.
Can you specifically call out what exactly are the issues here and how big would our U.S. exposure be, and how can we kind of mitigate this?
So basically, what happened is uncertainty had impacted the phasing of the orders, right? And because of the phasing of order, discussion with customers, the announcements coming and changing has kind of delayed these orders. And as far as our U.S. business, which is impacted, is about 20-odd%, which is there. But while these things were settling down, our dispatches in June and quarter two had started building up, and then again, this announcement came of heavy impact of 50%, right? And then that has again kind of created uncertainty. No doubt about that. We are in touch and engaging our customers, and we are also hopeful that somewhere there would be some resolution, which Indian government and U.S. government will also work out. So very hopeful by end of August, things should be better and clear.
But yes, as of now, we are engaging with the customer to kind of make this happen.
U.S. is 20% of our export biscuit revenues, right?
Yeah, yeah, right. Approximately around 20%.
Got it. Got it. And lastly, on the margins front, so from here on, considering pricing actions have been affected and the raw material input prices are largely stable, so can we see gross margins Q2 onwards kind of improving and going back to, let's say, 47%-48% kind of levels, which effectively would perhaps lead to transmission into improved EBITDA margins?
So first thing is definitely we are looking at EBITDA margins to improve, right? Our EBITDA margin in this quarter was also further impacted by the business mix, right, with change and exports being low. But yes, in the coming quarter and the coming quarters, as we had indicated in previous call also, that from quarter two onwards, we will start getting back to our EBITDA margins of close to 14%. And we are working in that direction. We are confident of getting there.
And the last one, if I may, so the bakery business, 19% revenue growth. Can you break that up into the B2C and the QSR business?
We normally don't share.
Oh, sorry.
Excuse me. Manu just corrected that it is 20% of the export business, not the B2C.
Yeah, yeah. Sorry. It is 20% of export business. It is just about close to 5%-6% of our overall business. So not America, which is impacted as a percentage of export is 20%, but overall business should be around 5-6%. Coming to bakery side, obviously, our B2C business is growing very healthily. We don't share the numbers separately. But yes, English Oven growths are much more healthy and aggressive compared to B2B. B2B or QSR business, we are growing, right, but it continues to be on a low growth mode as compared to English Oven, which is B2C business.
So the exports part of overall U.S. revenues is just 5%-6% and largely.
Of overall revenues.
Yeah, of overall revenues. And largely, the impact, I would imagine, would have been on the U.S. business, on the export side.
Let me just correct it. What has happened is that currently, we do not face our supply to U.S. are going as normal. But what had happened was that we have a lot of carried over stocks, which we could not. Which could not be. It is in transit, right? The stocks were in transit. So otherwise, till now, I mean, our business is as normal, but there have been a lot of fluctuations. Once they started with 25%, then they started with 50%. So the shipping documents, we were waiting for our customers to respond. So at the moment, our business, we are supplying all orders as they are. We shall be continuing to do similar business in quarter two also. But the total U.S. business is 5% of the total company sale. That is what it is at the moment.
Sure. Thank you. I'll join back the queue.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question is from the line of Preeti Agarwal from SK Associates. Please go ahead.
Yeah. Thank you so much for the opportunity. My first question is that the bakery segment grew 19% year-on-year, significantly outpacing the biscuit segment. So what specific product innovation or market strategy contributed to this growth?
Ishan, you can take this question.
Yeah. So on the bakery side, we have basically always been saying that our vision is to be a pan-India player. So there's two parts to it. So we have extensively increased our distribution. We have also entered into the upper north geographies of Punjab. We are also seeing where, as an early mover into the category, we have a very strong market share on the quick commerce where we are aggressively working. We are gaining market share. Our products have been well accepted. On the general trade side, despite significant movement of volume going into quick commerce, we are continuing to increase our distribution. So in both the categories, whether it is general trade or quick commerce, we are seeing positive numbers in terms of growth, right?
So like I've always said, that English Oven still has a long journey to become a national brand and to be in our line or vision of being the top three brands in India in the bakery segment. So expansion is one such thing. Secondly, we have also noticed that a lot of trend has gone towards the health segment, right? So we were, again, one of the early movers into catching this health segment. In fact, most of our breads today on the healthy side are made of no maida. They are using no palm oil. We have also now added a new brand to our portfolio, which is called Nature Bake, which by this month will be available across all the geographies where we are currently operating in, right?
This is taking the health portfolio to the next level where, on top of the no maida, no palm oil, we are also removing preservatives from our products. We are removing any kind of emulsifiers, right? I think we are focusing on the trends well and focusing on expanding distribution and maintaining, more importantly, a high market share in QCOM. We're excited about the time to come.
Understood. So better market strategy is helping us to target specific pockets of the region?
Yes, yes.
Understood. My second question is that what is the current contribution of e-commerce and modern trade channels to overall revenue, and how do you see this evolving in the next few years for the bakery as well as the biscuit segment?
So yeah. Yeah, go ahead, Ishan.
Yeah, so for the bakery, it's about 30% our contribution of modern trade and e-commerce, quick commerce. What we are seeing is that this contribution should and will go up higher as expansion of these segments. Quick commerce becomes deeper into tier two cities as well.
Understood. And lastly, on exports, how are we navigating geopolitical disruptions in the export market, especially given our presence in more than 70 countries?
So we are not facing any big concerns other than the U.S. market. So otherwise, business is as normal. But what has happened is that with a lot of U.S. disruptions going on, final deadlines, a lot of shipping, transportation has been moving in and out to other countries. So that was one disruption. Otherwise, other than U.S., we don't foresee anything coming back, anything other than U.S. Other than everything else stands normal to us.
Understood, sir. Thank you.
Thank you. The next question is from the line of Shirish Pardeshi from Motilal Oswal. Please go ahead.
Hi, team, thank you for taking my questions. Ishan, starting from the bakery business, can you break down this 19% in terms of volume and value?
So growth for us in bakery this quarter has, I would say, 65% has been volume-led and the balance being value.
Okay.
No, I specifically was sir, a large factor of this is also focused more on premiumization, right? So as the Q-Commerce mix has improved, our listings on Q-Commerce are of the premium category, which also helps increase our premiumization mix. So it's been largely volume-driven for a longer period.
So is it primarily driven by the new product in the bread segment, the growth will be significantly higher than the overall?
No. Firstly, it's not so a lot of our products have also become revamped, right? So it's not like we've introduced many, many new products. It has been re-engineering of existing products to make them healthier. I think that has worked, right? And Nature Bake, as a brand, has just been launched a month ago. We are getting a good response for it. I think it is just the start of Nature Bake. So it's largely been through existing products rather than new products, re-engineering of existing products as a better contribution to the customer.
Okay. I think.
I think Ishan explained it earlier. I just said Ishan explained it earlier. So the two things is that quick commerce, we are the kind of leaders there. So our share in quick commerce is ahead of the GT channel. And the transition of consumers from GT to e-commerce and e-commerce growing very exponentially is helping us and drives our overall growth. Our growth territory where we have been investing, which was outside MCR, which is whether it's a UP or Haryana or Rajasthan and now Punjab or Bombay, is something which continues to be growth engines for us and will only increase in terms of growth trajectory over the coming years.
Okay. Manu sir, thank you for that. It's really helpful. But just one follow-up. Nature Bake, what price premium you are charging at this time?
What?
Price premium you are charging to your other maida breads?
Oh, Ishan.
So yeah, definitely, the whole wheat category, the multigrain category, are priced more expensive, also have higher gross margins for us than white bread. And we are very conscious of the fact that, in fact, a very big KPI for us in our organization is also premiumization as a percentage of sales. And we continue to track that too and how we can improve it. As far as premiumization in the market as compared to competitors, we don't really, we are very well benchmarked to competition in terms of price.
Yeah. But towards our portfolio, is it at least 10% premium?
As compared to competition?
Our portfolio.
So Ishan, what he's asking, let me respond. Yes. So our realization of our mix on a per-piece basis is much ahead of our competition, right? So yeah, the question which you're asking, yes, our premiumization percentage compared to our competition is much ahead.
Okay. My last follow-up on the bakery. What is the distribution you have for the retail coverage for bakery?
In terms of number of outlets?
Yes, and what is the plan to grow over the next one year? I mean, are you trying to look at any new markets?
See, we are definitely looking at new markets. For us, even Punjab is a new market. I mean, at the present in Punjab, our distribution is quite limited. Even let's say the top 14 cities, right, we are seeing month-on-month improvement in all geographies. For us, Mumbai as a new plant comes up is going to be a priority market where we are going to see our quality significantly ramp up. In fact, the newest plant, which is a fully automatic plant, which is going to be coming in, is also going to help in Nature Bake as a category. As we are moving more towards preservative-free breads, automation is going to definitely help us. And I think it's an investment in the right direction. Kolkata is going to be coming up, which primarily we will first be looking at as a new market.
So that will be our entry into the east, which we look forward to this year. And yeah, so this is what we are going to be doing. We are also going to be looking at adding at least one metropolitan city this year through a co-packing arrangement.
Okay. My second and last question. We acquired the Cremica facility and even brand. Is there any progress you can say, or is there any update you have at this time?
Manu?
Yeah. So yes, Cremica brand, which we had acquired, and we will be starting our journey with adopting that Cremica brand in this particular quarter, the quarter we are in, and then we will build up, right? So we obviously have the first step in terms of using our Cremica brand, which will be executed in this quarter, and then build it up from there onwards.
So in terms of using Cremica on bakery or not on bakery side, it's something what we are into now over the next four to six months is we are going to be investing in terms of research on our brands, where do our brands fit, what are our ways forward on brands, right? And it's supposed that we would be more clear in terms of how do we take our brands forward, where do we fit in the Cremica brand which we acquired. But in terms of start using the brand in one of the segments is something which we'll be executing in this quarter.
Yeah. I understand that, Manu sir, but I was just trying to, I'm more curious because having seen the Cremica brand, very strong presence in the Punjab and Haryana market, are you going to start it with the bread segment?
So that's why I said whether to use this brand on the bread side or not, something we are investing in the research on the brand and the brand way forward, which will take about four to five months' time. And while we take a decision, because these are very serious long-term decisions, right? And so as we are institutionally this investment in study and consulting is only post that after four, five months, we'll take a call in terms of way forward. But yes, in terms of using Cremica brand in one of the categories where we are not using it yet, we will be initiating that in this quarter.
Okay. All right. And thank you and all the best.
Thank you. The next question is from the line of Pratik Prajapati from Ambit Capital. Please go ahead.
Hi, sir. Good evening. My question is on the market share side. So, as you understand the domestic biscuit market, what is our current market share? And is it maintaining in the last one year because we are seeing the competition in the market?
Mr. Prajapati, can you please be a little louder? We can't hear you properly.
It is better now?
Yes, sir. Please continue.
Hi, sir. I want to understand the domestic biscuit market shares. Are we able to maintain the market in the last one year? And what is our current market share? And the second question is on the distribution network side. What is our current distribution network on the biscuit side? And are we able to add any distribution network in the current quarter?
So Pratik Prajapati, first thing is yes, we have been able to retain our market share over the last one, one and a half years when it has been highly intensely competitive. And our market share in North India where we are primarily present is over 4%, right? It is through our distribution, through our execution in the marketplace and supported by marketing. We have been able to kind of retain our market share, right, in Northern India, in our domestic biscuit business, right? And in terms of your second question, which was on distribution, there's a lot of disturbance coming in. Somebody look into that. Yeah. In terms of yeah, in terms of distribution side, I clarify one thing that what we are so yeah, we continue to have build outlet over INR 200 a month, over 3 lakh outlets every month. So that continues.
Our direct reach is over 5 lakh outlets. And as per AC Nielsen, we are available in over 7 lakh outlets there. What we are following is to give more weightage to our weighted outlets, right? And these weighted outlets are Cremica Preferred Outlets, which are more premium and more kind of growth, which they are delivering us higher growth. Second thing which we are focusing on domestic biscuit is to bring a success like we brought on English Oven on the e-com side. So quick commerce side is something which we are investing and driving because the whole objective of distribution is to reach more consumers. And today, e-commerce, as we have seen in English Oven, is helping reach more consumers and customers, right, through that route. So there's a lot of effort which is going on a quick commerce side.
The quarter one, we had a very good growth on quick commerce side. We're very confident that over the next four to six quarters, we should be able to move quick commerce contribution, which was just about 1% to almost 4%-5%, right, as a percentage of domestic business revenue. It's moving in that direction. This is how I would define that, how we are driving distribution, right, in terms of consumer reach for domestic biscuit business.
So just to follow up on this, just want to understand. So you are more focusing on the e-commerce and quick commerce rather than more focusing on the GT and the MT side?
Okay. I'll again clarify to you. What we are focusing is that our consumer reach goes up. And today, consumers are more shifting from GT to quick commerce. That's a clear trend we have seen in English Oven. And that strategy of ours has played us very, very well in English Oven. So we are investing more on quick commerce and high-weighted outlets of GT channel, which we call Cremica Preferred Outlets. These Cremica Preferred Outlets contribute more than 15% of our revenue of the GT channel.
And they are growing much higher, and they have much higher premiumization in these outlets, right? And beyond that, we are focusing more in terms of driving growth in the top 25 towns or cities, right? So this is a triangular strategy in terms of reaching more consumers, more premium consumers, as well as driving the growth. You see, what I would like to add along with this and.
Thank you.
Yeah.
A reminder to all participants, you may press star and one to ask a question. I repeat, a reminder to all participants, you may press star and one to ask a question. The next question is from the line of Vivek Gupta from Star Investments. Please go ahead.
Yeah. Hi. Am I audible?
Yes, sir. Please continue.
So my first question was regarding the input cost, and they have remained elevated. So what steps are being taken to optimize procurement or rather improve operational efficiency?
So overall, we saw last year as a year where inflationary trends in commodities, especially wheat, palm oil, or oils and cocoa had gone up substantially. And then there has been a relief where government has cut down on duties, which has given the much-needed relief. So on our strategy, we look at especially on the wheat front where we do long-term hedging. And palm oil is looking more subdued than last year. And cocoa prices, we are seeing going forward, the futures are looking better than last year. So that is where we are on the three commodity side. Yeah.
Okay. So my second question is regarding on the advertising side strategy, are we looking to onboard or re-sign our current brand ambassadors again? Also, are we focusing more on influencer engagement side, or how is it?
As far as the brand ambassador, we are in the process of evaluating that, our way forward on that. We continue to invest behind our brands, right? Even in this quarter, we have upped our investment on brands versus previous quarter, both English Oven and Cremica, right? Our journey to invest behind brands, which we strengthened over the last two, three years, it continues to kind of move in that direction. That we have also upped our investment in this quarter versus last quarter behind our English Oven and Cremica.
Okay. Thank you. That was from my side.
Thank you. The next question is from the line of Akhil Parekh from B&K Securities. Please go ahead.
Yeah. Thanks for the opportunity. So my first question is on the EBITDA margins. You highlighted that we'll go back to 14% by second quarter. Would it be largely driven by improvement in gross margins?
So yes, it will be driven by both improvement in gross margin as well as the efficiencies in the cost below that. It would be both, right? And that's how it will happen. And also the scale, right, revenue growth. So three things. Revenue growth, bringing a scale which will give a more better leverage of fixed costs, the improvement in value of gross margin. And third is bringing more efficiency in cost as a percentage to it.
It's ideally because two more plants are yet to be commissioned, right, in Q3 and Q4. So there will be a lot of upfront costs, and the sales will come through probably in FY 27 and 28 as they ramp up. So isn't it a fair assumption that even though we may see improvement in margins led by gross at gross level, but probably the other expenses and employee costs also will remain at elevated level till the time the other two plants ramp up next year?
Yeah. So there will be some stabilization cost in terms of fixed cost of manpower and other expenses while these plants stabilize. Dhar plant came up in May, so it's getting stabilized in this quarter. It will get stabilized. Yes. Kolkata is a very, very small plant. But yes, in terms of that plant start delivering better revenues, it will take a few months. So we will have some amount of fixed cost to bear for the first few months by the time we start building the revenues, which primarily will happen in the next financial year. As far as Mumbai plant is concerned, it will come up in two phases. The first phase will come up in quarter three of this financial year, and second phase will come towards the end of the quarter four, right? Yes.
There would be some stabilization cost which would be there, which will be able to leverage better in the next financial year.
Sure. But despite that, you're saying we should be able to reach 14% in Q2, and hopefully, it will improve from there on in FY 2027 as well.
Yes. That's what I'm talking about.
Okay. And sir, the second and last question is on the biscuit segment. If you can just provide channel-wise sales mix in the biscuit segment.
On domestic biscuit?
Yes.
So there are two large channels, and there are other channels. In the two large channels, our general trade kind of contributes over 70%, then modern trade e-com combined contributes around 9-10%. So that's broadly I can share at this point of time. And then there are other channels, right, which are there. Hello?
So he has left the queue. A reminder to all participants, you may press star and one to ask a question. I repeat, a reminder to all participants, you may press star and one to ask a question. The next question is from the line of Sunithi Joshi from KP Capital. Please go ahead.
Am I audible?
Yes, ma'am. Please continue.
I just wanted to understand the key reasons behind this margin compression and how you plan to address it going forward?
You wanted to understand the reason of margin dilution, right?
Yeah, yeah. Compression. Yeah, yeah, yeah.
Okay. So you see, margin dilution primarily happened because of the steep increase in commodity prices December onwards. But we gradually started taking the price increase. On the domestic biscuit side, we are through with price increases, and the full impact of that is being visible in the quarter two. As far as exports is concerned, right, where we have spoken to customers and worked on cost optimization, but yet we have not been able to pass on the entire part of the cost because our customers already under pressure because of logistic costs and the local benchmark products available. How will we improve the margin now onwards? Is that, as I told you, that on a domestic side of biscuit business, we have taken now all the price increases. The full impact of that is being visible in this. The revenue leverage or revenue growth would help.
Quarter one, also the one reason of margin getting impacted was our business mix, and the business mix of exports being impacted more in the quarter one, which is being corrected in quarter two, will also help us to move towards a targeted 14% EBITDA margin, so these are the two things, and third is that we're running a cost improvement program, which is called IMPACT, and that's helped us leveraging on the cost side and impact positively on the EBITDA margins.
Understood. And are there any new product launches or brand extensions planned for the upcoming quarters that you see could drive incremental growth?
Yes. First, as Ishan was briefing you, we just launched Nature Bake on the bakery side, where we are investing behind that brand, and we want to kind of make it Clean Label, health-related brand. In terms of biscuits, we have clearly decided on a domestic biscuit side that we would create differentiated products. So we are clearly taking a route of differentiated products to be launched. And so what we launched was short dough shortbread, which kind of has been launched on the quick commerce and has seen very good customer response, right? And then we have launched for the kids, which is on the cracker side, right? And we have the mini crackers, which is again, we are building it up. And we have again launched on the coconut, which is one of our leading categories or leading varieties.
We have launched a coconut with zero maida, which has again shown a very positive response in the market, right? And so animal cracker for kids, shortbread, which is again a no palm oil product, and the coconut. These are the three products which we have kind of launched in the previous quarter. Yes, there are some more launches which have been lined up in this quarter and next quarter. I would not like to share this. I would also like to highlight as our Dhar plant has been commissioned, and Dhar plant comes with a manufacturing capability of rolling out some of the very differentiated products. We won't be kind of sharing this on this call being confidential, but yes, in the coming months, you would be able to see some of those exciting differentiated products being further launched.
So yes, a very robust journey which has been planned on our new product side, which some of them have been launched and which will be built up. And there are some of them being planned in the quarter two and quarter three of this financial year.
Sure. Thank you and all the best.
Thank you. The next question is from the line of Raunak Shah from Equirus Securities. Please go ahead.
Yes, sir. Thanks for the opportunity. My first question is regarding the competitive intensity. So how you are seeing the competition both from the legacy players as well as the unorganized small regional players?
The competition intensity continues to be high. It has not reduced the last 18 months. Rather, if you would have heard the investor call just about 10 days back of the largest player in the industry, their MDF clearly reflected on the high intensity, the regional intensity which is there. So intensity continues to be probably, I would say, at the same level. Our confidence continues to come through our distribution, execution, e-commerce focus, and launching differentiated products so that we can build it over a period of time, right? And expanding through new products. So these are the few actions which we are building and strengthening in terms of build our business, right? And that approach also remains on the English Oven side as much as on the Cremica biscuit side.
And, sir, just add on to that. So as we increase our ATL, BTL spends or how we are competing in terms of to each other?
So as far as we see BTL spends are concerned, we are able to get efficiency. So what we have done over the last nine, 10 months, we have been able to launch, we had an SFA, which was helping us in terms of tracking, driving productivity, efficiency. But now we have rolled out DMS, the robust DMS with almost 600 of our distributors. And here we are able to do a better secondary management, better scheme management, and claim management. And we will also have a visibility of the inventory and the stockouts. So through the DMS, we are able to build, and we have started to build efficiency on the BTL side. On our ATL side, on the marketing side, we continue to invest behind our brands. Digital continues to remain as a large platform to drive consumer connects alongside outdoor and a bit of a television media.
Okay, sir. And now, sir, the second question is regarding the margin. So as you highlighted that the two capacities which are going to ramp up, and it will take some time to stabilize that. So how you are seeing the margin profile in next one and a half to two years?
So you see, as I said, the first step for us after this commodity price impacted our margin was to get back to our margins and then continue to maintain those margins on a consistent basis. But yes, the long-term endeavor is very clear that we are a company which is equally focused on the revenue growth and margin growth. And that's what we have demonstrated over the past few years. So endeavor will be to also keep strengthening and growing our EBITDA margins alongside growing our revenues.
Okay, so sir, can we expect around 15%-16% kind of range in FY 2027, 2028 with all these initiatives and the efforts?
I won't quote the number on that because we also need to invest behind our growth. But yes, we will continue to build our margins in the next financial year.
Okay. Thanks a lot, sir.
Thank you.
Thank you.
The next question is from the line of Resha Mehta from GreenEdge Wealth. Please go ahead.
Yeah. Thanks for the follow-up. Just one question. So since you called out that one reason for the impact on margins was also the lower revenues from biscuit export. So can you just spell out what is the difference in margins between domestic biscuit business and the export business, the overall domestic business and the export business?
So we don't share margins separately, but the only thing I can tell you, domestic biscuit business margin is below our average EBITDA margin, and export is about that.
Any differential that you want to call out? I mean, not.
No. As of now, we don't call out that.
Fair. Fair. All right. Thank you so much.
Thank you. Due to time constraints, we will take that as the last question for today. I now hand the conference over to Mr. Anup Bector for closing comments.
Thank you, everyone, for joining us. I hope we have been able to answer all your queries. In case you require any further details, you may please contact us or MUFG, Link Intime, our investor relation partner. Thank you so much.
On behalf of Mrs Bectors Food Specialities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.