Ladies and gentlemen, good day and Welcome to the Q2 FY25 Earnings Conference Call of Mrs. Bectors Food Specialities Limited. 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 the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anoop Bector from Mrs. Bectors Food Specialities Limited. Thank you and over to you, sir.
Thank you. Good afternoon, everyone. On behalf of Mrs. Bectors Food Specialities Limited, I extend a very warm welcome to all participants on Q2 FY25 financial results discussion call. Today on this call I have with me Mr. Manu Talwar, our Chief Executive Officer, Mr. Arnav Jain, Chief Financial Officer, Mr. Suvir Bector, Whole Time Director, Mr. Praveen Kumar Goel, Whole Time Director. We also have Indian Capital with us on the call, who are our investor relations advisor.
I hope everyone had a chance to review our investor deck and press release, which was uploaded on the exchanges and our company website. The company continued its growth directly in Q2 FY25, achieving a 19.7% increase in revenue and a 21.4% increase in gross profit for the quarter. This strong performance was driven by robust growth across both business verticals, resulting in highest-ever quarterly revenue and PAT for the company.
Coming to macroeconomic environment, we witnessed a rather subdued June quarter consumption pattern on account of extreme heat and Lok Sabha elections, the impact of which continued over the September quarter as well. This coupled with extreme rains and inching inflation meant the consumption scenario remained muted, especially in the urban markets. We expect inflation on the back, key duty hikes and increased commodity prices to pose significant challenges as we move forward.
During the current quarter, we successfully completed INR 400 crores capital raise, a milestone that will support federal strategic initiatives. The proceeds on this capital raise will be allocated towards key priorities, including the limit liquidation of next outstanding borrowings. INR 155 crore have already been paid. Further funds have been allocated towards investments in biscuit plants in Dhar, Madhya Pradesh, and in our subsidiary, Baked Best Foods Pvt. Ltd.
To set up a new bakery facility in Khopoli, Maharashtra. Also, I'm pleased to share recent updates on our credit ratings from CRISIL and ICRA, which reflect our strengthened financial and business profile. CRISIL has revised its outlook on our long-term bank facilities to positive from stable, reaffirming our rating at CRISIL AA. Our short-term rating with CRISIL remains strong at CRISIL A1. In parallel, ICRA has upgraded our long-term ratings to AA stable from AA positive, and we formed our short-term ratings at A1 plus.
This positive outlook underscores the continued resilience and growth potential of our company. Our focus remains on driving growth through several key areas. We are capitalizing on premiumization trend by delivering quality premium products to meet rising consumer demand. Strategic capacity and distribution expansions are enabling us to reach more consumers, building a strong presence in new markets.
Additionally, our export business continues to grow steadily, with increasing market share internationally as we bring our trusted products to global audiences. Together, these initiatives position us for sustained growth and success. In this quarter, we have repurposed and enhanced our health range of breads with Zero Maida as well as Zero Palm Oil, thus becoming one of the leading available brands to move towards cleaner ingredient products. We changed our communication with the campaign "No Means No," highlighting the no maida, no palm oil, and no added color through print and digital platforms. In Cremica Biscuits, our annual property school, Shuru Cremica Bourbon Shuru, was well received across geographies.
This included on-pack promotions supported by TVC campaign and select channels. Our frozen bakery products, like cookies, muffins, and Swiss rolls continue to do well and strengthen our presence in the new upcoming segment.
We are strategically extending our distribution reach and increasing our production capacity. We have commissioned one more biscuit line in Rajpura in Q2. Our new upcoming facilities in Dhar and Khopoli are also advancing well, with both expected to be operational by March and June, respectively. These additions enhance our ability to serve diverse regions across the country and provide us with competitive edge over other players unorganized players. Now, I will discuss financial performance, starting with biscuits. Our biscuit segment revenue reported a revenue growth of 24%, which stood at INR 320 crore in Q2 FY25 as compared to INR 259 crores in Q2 FY24. This segment has grown by 55% over Q2 FY23. On bakery segment, revenues for Q2 FY25 stood at INR 167 crores against INR 140 crores in Q2 FY24, thus registering a growth of 19% YoY basis, including retail, bakery, and institutional segments.
This segment has grown 33% over Q2 FY23. The consolidated revenues for the current quarter stood at INR 496 crores versus INR 415 crores in Q2 FY24, thus registering a growth of 19.7% on a year-on-year basis. EBITDA stood at INR 71 crore, resulting in a growth of 9% on a year-on-year basis and a growth of 10.1% on quarter-on-quarter basis. EBITDA margin for the quarter stood at 14.2%. PAC stood at INR 39 crores and saw a growth of 4.4% year-on-year basis and 10% on quarter-on-quarter basis. Our PAC margin for Q2 FY25 was 7.8%. Moving to H1 FY25 financial performance, the consolidated revenues for H1 FY25 stood at INR 936 crores versus INR 789 crores in H1 FY24, thus registering a growth of 18.6%. EBITDA for H1 FY25 stood at INR 135 crores versus INR 123 crores in H1 FY24, with an EBITDA margin of 14.4%.
PAT for H1 FY25 stood at INR 74 crores as compared to INR 72 crores, with PAT margin of 7.9%. With this, I would request to open the floor for questions and answers. Thank you so much.
Thank you so much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you want 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 Arun Maroti from Shubh Labh Research. Please go ahead.
Yeah. Hello, everyone.
Yes.
Yes.
Yeah. So thanks for the opportunity and congratulations for the good set of numbers, sir. My question is on the financials. We see in this quarter there are other expenses that got screwed up in a very aggressive manner. So I would like to know about that, sir.
Good afternoon. So yes, other expenses have gone up. Other expenses have primarily the largest contributor in other expenses is the freight and forwarding. The reason for this is two. One is that our export contribution, export in this quarter, is higher. And second, we all know the REG fee issue, which has been persisting, and the freight rates on account of the REG fee are higher. And so is our realization. So actually, realization on account of freight, which gets added on the top line, and the expenses come here. So expenses are higher, primarily on account of higher contribution of export business. And secondly, the REG fee issue because of the freights are much higher for the past few months.
So can we quantify the amount? And, sir, it will be great if you can guide us that the nature of these expenses will be recurring or is it one-time?
No, sir, this is very situational. This whole REG fee issue started because of the war, and this will we had a similar impact on the freight charges when in 2022 we had Ukraine war, and now, because of the current war, the situation is persisting. As this situation would normalize, these rates would normalize. At this point of time, to predict on account of this issue getting resolved, we don't have a visibility to that as of now. It's entirely on that issue getting resolved, which is finally led because of the war situation, which is persisting up close to a year's time.
Okay, sir, and one question on the gross margins, sir. Despite lower CPI in July and August, our gross margin has gone down slightly, so any specific reason for that?
Our gross margin versus last year is better. Our gross margin versus Q1 has slightly come down. And that has come down primarily on account of one single item that we have inflationary trends, which are clearly visible on the commodity side. And they have started impacting. And in the recent months, last one or two months, we have seen a further higher pressure on the commodity inflationary prices. So we see a little more challenging times ahead.
Okay, sir. Thank you, sir. Thank you.
Thanks so much. The next question is from the line of Mr. Amit Purohit from Elara. Please go ahead.
Thank you for the opportunity and congrats on strong revenue growth. So just one on the demand, you indicated that that has mutated. So this was referring more to the domestic biscuit demand, right? Otherwise, most of the other segments were doing well, right?
Yeah, so what the Managing Director, Anoop mentioned about the trend there is very much true for the entire FMCG, and which is kind of reflecting also in our domestic business. Yes. They are more reflecting in our domestic biscuit business. In case of bakery business, both on the B2B and B2C side, we continue to kind of grow fairly well on the revenue side.
Sure. And I mean, just to get a sense, because and the growth would be somewhere closer to mid- to high-single-digit is a fair estimate for the biscuit.
So on the biscuit side, what we have seen, and I think everyone is aware that there has been a slowdown over the past few quarters. But I only think the good sign was that quarter two revenue growth over the previous quarter has started showing some good signs of growth. And hopefully, that trend should keep building up. But yes, that buildup, as we see in all the reports, that urban markets have again kind of slowed down. So it will take probably a few more quarters by the time the trend on the consumption and the growth gets into the good growth bucket.
Okay. And the point you were referring to that gross margin, the input cost has gone up. So you were referring to the vegetable oil, right? That price would have gone up.
I would request Anoop to be first.
Yeah. So it is also actually the edible oil prices have gone up, and the cocoa prices have gone up substantially, right? So that is one of the major things. And also, the wheat flour prices have started showing upward trend, although we have some hedging in the wheat flour side. But there is a pressure on raw material prices, which is necessary that which has come in mostly from outside duty, import duty hikes which Government of India has imposed, and also some escalation of prices internationally. So oil has taken that, and wheat, there has been an increase in prices because there was an expected release of wheat from the government, which has probably not happened yet, might happen at a later stage. So these are a few of the reasons why this impact is there.
Any price increase we've taken now, or the industry has?
No, we are already working on it. So in the biscuit side, the price increase does not come as fast as they come in our bread side because bread is very instant. But on the biscuit side, we have materials which are lying in the market, materials which are lying in our stock, there's packaging materials and things like that. But the process has already started. But however, this process takes some time, right? It will take probably two to three months' to fully gear up and get the prices back to whatever increases happened.
Okay. And on your comment that, I mean, the other expenditures were higher because of freight cost, but I mean, most of the exports would build in the freight cost, right?
So as I explained to you, Amit, that freight cost recovery comes in the top line. And the cost comes in other expenses. And that's why the cost is showing that increase because of the increase in the freight cost. And a higher contribution of export in this quarter. Both are the reasons. And just to add what Anoop was saying was that, yes, biscuit takes time in the entire journey of price increase, take two to three months' time. But on the bakery side, especially in the north, which is a larger part of the bakery English Oven business, the price increases. Already the phase one of price increase has already been executed by us in the market.
Okay. And what is the quantum of that price increase? If you could share.
I won't be able to share the quantum of that, but yes, obviously, price increase is always to commensurate with the material cost increases.
So would this cover up for the RM index increase, or how should we talk about it?
On a bakery side of the business, it should more or less cover.
Okay, and biscuit is yet to be done.
As we speak, it is in the process, but the whole stage one, stage two, stage three rollout will take about two to three months' time.
Sorry, but just on the margin outlook, you've been guiding for 14%-15%. Should we stick around that kind of margin for near-term to medium-term?
So we definitely see somewhat of a pressure on that in this coming quarter or in the running quarter, right? We will definitely have some pressure because, as explained, that price increase has its own old fluid cycle. So yes, there would be there can be and there would be some impact on that. But that would be temporary. We saw that again in the quarter one of 2022, 2023, but we were able to get over that also very fast. So I see that temporary pressure coming in this quarter, but it should be fine over the next quarter.
Sorry, the last one is on bakery side. What would be the contribution of the new product launches in the? That's the last question in our total bakery sales.
On a total bakery side, on a total bakery business, our contribution should be close to 4%-5% of NPV.
Okay. Okay. Thank you, sir.
Thanks much.
The next question is from the line of Rishi Mody from Marcellus Investment Managers. Please go ahead.
Hi, sir. Am I audible?
Yeah.
So this freight component, right, that you've said, it's a reimbursement for us, or do we inherit any risk on these cargo prices going up?
So we are able to recover these freight costs from our customers. So as of now, we don't have any kind of a major negative impact on our bottom line on account of freight cost. But you can very well understand that with the higher freight cost, it definitely has impact on the customers, right, who are sourcing from us in India. But so far, we don't have any negative impact in terms of recovery of freight costs.
Could you call out that absolute amount that you have recognized in the top line as well as in the expense on freight cost this quarter?
I won't have a ready number as of now in terms of that. But if you can specifically write to our investor relations, or we're taking note, we can get back to you.
All right. And apart from the freight cost, anything else in the other expenses, any one-offs or any seasonality impact which you want to call out?
No, they're very minor. So there's no major item on that.
Okay. On the commodity inflation piece, right, you mentioned that breads, you're going to be taking price hikes, which is understandable. Biscuits also, are you all planning to take price hikes, or are there any other levers that you all want to use to tackle the inflation?
No, no. We are okay. Okay, Manu, over to you.
So we have already worked on taking a price rise. This price rise has been very in sync. It has more affected, I mean, more from late September into October and when the government brought in increased duties and things like that. And then, I mean, we have already started working on it. We would be working on getting the increased costs over the commodities recovered probably, I think, by the next quarter. We will be fully able to recover it.
Okay. All right. And I'm looking at your balance sheet. Your receivable days have gone up by 10 days when I compare it to Q2 FY24. Anything you want to, could you explain what's driving that? I'm seeing a 70% gross increase in receivables.
Yeah. So as pointed out, that our export contribution in this period has gone up. And what happens is, typically, in the case of exports, the turnaround of the inventory to cash is slightly on the longer side, and that is what is impacting.
So could you just tell me how much is your export contribution for the quarter and how much is the typical payment cycle there?
Typically, we don't share the breakdown between the export and the domestic, but payment cycle ranges from 60-90 days.
Okay. All right. Got it. Yeah. Thank you. Also, just any startup costs on the Rajpura lines in this quarter?
No major impact.
Okay. All right. Thank you.
Thanks so much. The next question is from the line of Soham Samanta from Centrum Broking. Please go ahead.
Yeah. Hello, sir. So thanks for the opportunity. So just wanted to check on domestic biscuits. Is it fair to assume that this quarter we have gained mid to high single digit volume?
Can you come again? Sorry.
So for domestic volume on a biscuit side, is it fair to assume the growth is mid to high single digit?
So the growth in this quarter over the last quarter, which is Q1, Q2 or Q1 . Yes, we had decent growth in the numbers. The growth of the Q2 over the last year, same quarter, has been in low single digit in terms of volume growth.
Okay. And what is our earlier expectation for this domestic volume?
Our expectation is that trend of growth should only improve from now onwards. But as we see the trends on the growth and the pressure on the FMCG side, the inflationary trends are also not coming fully in control, as we see from the statement of the RBI governor both in September and October. So the trend in terms of improving consumption seems to be a little on a slower side as per our estimate, and will take another few quarters to get corrected.
Okay. The second question is on ANP. What is our contribution for this quarter's advertisement and promotion?
Our advertising and marketing spend in this quarter just hold on. We normally maintain our advertising and marketing spend on our B2C businesses of about 3%-3.5%, and that's what we try and maintain. There could be a bit of up and down over the quarters. So that kind of happens. But yes, our consumer and marketing spend is around 3%-3.5% for the B2C businesses.
Okay. Distribution that we have introduced DMS. So right now, all our distributors are covered in DMS system?
Oh, no. So DMS system, we have onboarded close to 550-600 of our distributors, right? And these distributors account for almost 65% of our revenue. And so we have implemented the other module there. We are now implementing the secondary sales and the claim management module. And beyond these, the distributors are small distributors where we are piloting the mini DMS, and that pilot is going on as we speak. And we should have results on mini DMS in November. And then we would start rolling on the mini DMS sometime in quarter four. So I mean, the whole effort is that we roll out the balance modules in terms of secondary tracking, inventory management, and claim management in these top 500 distributors, which accounts for almost 65% of our biscuit revenues.
Okay. And for the margin, right, we have already guided 14%-15%, but right now, as we have seen some commodity inflation and all, so are you looking at these guidance from revised guidance towards lower side, or are you still maintaining this margin guidance towards upper side of 15%?
So you see, as I said, guidance which we have given on our margins always is that on an annualized basis, we will be maintaining between 14%-15% EBITDA margin, right? And we still stand by margin. The only thing which I was explaining to Amit who asked this question was that because the commodity price is going up, and as our MD explained that, especially on the biscuit side, it takes about two to three months in the terms of finalizing on pricing and executing that in the marketplace. So you could see some bit of an impact in this coming quarter, right? But yes, in the next quarter, this should more or less stabilize.
Okay. And the last question from my side, what is the LUP contribution on biscuit?
What is that?
LUP contribution?
NPD contribution.
Oh, LUP, that small packet own contribution? Low unit packets on a biscuit.
So you're referring to INR 5 and INR 10?
Yes, yes, yes, yes.
Okay. I don't have a ready figure as of now, but I can certainly get back to you on that.
Okay. Thank you.
You can take note of this, and we can get back to you on that.
Okay. Thank you. Thank you very much.
Thanks so much. The next question is from the line of Abhishek Agarwal, an individual investor. Please go ahead.
Hi. Am I audible?
Yeah, yeah.
Hi. Thanks for the opportunity. So my first question is around last call. I remember, sir, you had said that the company would also think about entering the frozen dessert business as this would open the Horeca category for us. So where are we on that? Do we have aspirations to enter that category? And if yes, what are the kind of margins that we can enjoy there and the asset terms that we can get?
So, the frozen, just let me build on this. We started, so Ishan who leads the business, if not on the call, he would have elaborated better, but let me do it for you. Frozen products as a category, we started developing and started building that almost two years back. We started offering it to our B2B customers about a year, year and a half back, and they are really moving very, very well. The frozen products in terms of contribution out of our B2B kind of business has really grown well and now is contributing almost over 18%-20% of our B2B business. So our frozen, you see, just to also make it a point, all of us know that the entire QSR business has been on a slow growth trajectory for the last few quarters.
But the whole NPD initiative taken by Ishan two years back in terms of building the frozen range and taking it forward has really helped to bridge, and our B2B business has been growing very healthy thanks to the frozen business and the contribution of frozen business growing. Now, so we have been adding new product lines in the frozen, and the frozen side are in the B2B business side, our NPD contribution is almost touched 8%-9% in this financial year. So that's going well. The next step, obviously, will be to start introducing also on the B2C segment and build it there. But the journey is moving very well for us.
Got it, sir. So in general, the margins that we enjoy on the frozen products, the gross margins, are they higher than the biscuits category?
So it's in line with the bakery business margins. Let me put it that way.
Got it. Got it. So sir, the other question that I have is, on the biscuit side, the production that we have, is it all 100% of it, is it in-house, or do we also outsource some of the manufacturing to contract manufacturers?
No, on the biscuit side, we are manufacturing everything ourselves at this point of time. So there's nothing outsourced. But yes, as we briefed you over the previous many quarters, the new category of rusks, which we started about a year and a half back or almost close to two years back now, is something which is outsourced, and we get it manufactured from a contract side.
Got it, sir. Those were my questions. Thank you so much and all the best.
Thank you so much. Ladies and gentlemen, to ask a question, please press star and one on the touchscreen phone. The next question is from the line of Krishi Modi from Marcellus Investment Managers. Please go ahead.
Hi, sir. Thank you for giving me the chance again. I just wanted an update on the Project Impact 1.0. I think in Q4, you've listed down six priorities. If you could just give us an update on where are we in each of those priorities and what impact can we expect over the next two, three years on those?
Project Impact 1.0 was to drive efficiencies and the cost efficiencies within the company. That project is kind of moving very, very well. We have projects identified in the different work areas, whether it's manufacturing efficiencies, whether it's logistics costs, or whether it's efficiency on the human resource side, or whether it's efficiencies on the revenue management side. These are all the four buckets we are kind of focusing on, which is obviously also added in the presentation. The whole project is kind of moving very well in direction and kind of adding in terms of bringing our cost down. This project, I would say, because this project is kind of moving well, and we are also being helped by this project by A.T. Kearney.
So the full impact of this project will be visible on a 12-month basis in the next financial year in terms of cost optimization. And then, very importantly, what this is going to do is that we have also built our internal capability of taking up this project and executing this project. So this will also enable the company in the coming quarters to make this as a way of life to identify the projects in each work area and then working with each function of the business side to implement. And that will become a way of life in the coming years. That's how it is progressing.
So it's good to hear that it's going well. If you could just share any instances of where any particular bottlenecks you identified and how you're solving for it?
So if I was to give you kind of some example that on our logistics side in terms of doing the network optimization, increasing the vehicle utilization, right, bringing efficiency in the rates, similarly on the manufacturing side, identifying in terms of faster changeover, right, in terms of reducing the wastages, in terms of line manning efficiency improvement. So there are multiple number of projects which are in each of the work areas which I mentioned, which I spoke about. And this will remain a continuous endeavor and process in our company, right? We will kind of identify also the projects for the next year, then we will implement.
This whole Project 1.0 is kind of not only bringing us efficiency, but also has been able to build a capability within the organization to make that as a way of life and execute year after year and keep improving the excellence in this execution.
All right, sir. Thank you. That's all from my side.
Thank you so much. The next question is from the line of Varun Gandhi from Friday Asset Management. Please go ahead.
Thank you. Mr. Bector, I'd just like to seek your commentary on the traction you're receiving on quick commerce. And I ask this because your larger FMCG manufacturers, they've recently started talking about how competitive quick commerce is getting in comparison with regular distribution channels. Just like to seek your commentary there.
Sorry, can you just be a little louder?
Mr. Bector, I'd like to seek your commentary on quick commerce traction because your larger FMCG manufacturers are now talking about how inventory buildup is happening on the regular distribution channels.
Yeah. So I'll come to that. First, I would like to clarify that we don't have any inventory buildup with our distributors on the biscuit side, and bakery anyway is a daily business, so there's no inventory buildup at all there. So we kind of brought in the fiscal discipline both on the number of days of stock and the outstanding, especially on the biscuit side. And we continue to maintain that fiscal discipline, just wanted to first mention that. Coming to the e-com side, e-com has been a very high focus for us as a company, right, for us as a company over the last almost two years. And bakery segment, which is a very high salience on our e-commerce, modern trade e-commerce side, we have really positioned ourselves very well, and we are almost one of the leading players on the e-commerce side.
Our contribution also, if you look at our commentary over the past many quarters, has been kind of going up as a company, and now, between MT, e-com put together, it is almost kind of 18% of our revenue, and bakery, which has a very high salience, has been going extremely well and moving very high, where the contribution has kind of jumped over 25% in that kind of category, so moving very well. Even in the biscuit now, we have a very, very aggressive plan of moving very fast on the e-commerce bucket, and in the next three to four quarters, we will continue our aggressive journey on the bakery side and further build up a very strong position also on the biscuit side.
Thank you for the clarification.
Thanks so much. The next question is from the line of Esha Mahajan from Envision Capital. Please go ahead.
Hi, sir. This is Alisha. Sir, while you've been calling out that we're witnessing a little bit of sluggishness in demand in the domestic market, especially in biscuits, biscuits revenue has grown very strongly, both QoQ and YoY. While I understand this will largely be driven because of exports, has the domestic biscuits business declined for us, or has it still managed to grow in, say, single digit?
The export business, as I said earlier also, that on a quarter two or quarter one has shown some better trends of growth than previous quarters, right? And quarter two over the last year has grown in single digit in volumes. So yes, so growth is still under pressure, as I would say, but trends are looking better. That's how we'll look at it. But yes, does it the kind of trends we're looking at overall on FMCG and food consumption trends? I won't say that they are very robust kind of trends which we are looking at. They are still very low growth kind of trends which we are observing and the industry is observing. So it'll take about a few more quarters by the time we see some good growth in this business.
I understand, but has this business declined for us in Q2?
Declined?
The domestic biscuits business has it declined for us in Q2?
Domestic business in the quarter two over the quarter one has grown, and even the quarter two over the last year in volume, it has grown.
Understood. And current demands in the one, one and a half months that have gone by in Q3, in the exports, are they continuing to be encouraging?
Pardon?
The export demand for biscuits, is that strong even in the one and a half, two months of Q3, or is that also now witnessing a little bit of rapid growth?
Our trends on the exports continue to be in the good trend, right? They continue to be as per our expectations, which we have understood, right? In terms of our volume trends, they stay good.
Okay. And last question. In the last quarter, Q1, you were calling out that because of competition, we upped our marketing spend and promotion spend. So what is the status of the competitive intensity in light of the weak demand? And is that going to maybe make us also spend a little bit more and could further hurt our margins in the near term?
The competition intensity has been extremely high since the October-December quarter of 2023, so it all started from November-December of 2023, and the intensity of the competition in terms of Cremica pricing continues to be at the same level. It has not mellowed down much so far, but we do expect now in this and the next quarter, definitely, there should be some correction coming in, especially also in light of the commodity prices going up for everyone, so we definitely expect some bit of correction coming in there in the industry.
Okay. Understood. Great. Thank you.
Thank you so much. Ladies and gentlemen, you may press star and one on your touchscreen phone to ask a question. The next question is from the line of Sakshi Trivedi from Vijay Associates. Please go ahead.
Hi, sir. Good afternoon. Thank you for the opportunity. I have a couple of questions. First would be can you share some highlights on the biscuit segment? How was the demand in the domestic market? And can we expect similar momentum to continue in the export market?
Yes. I just answered both the questions to Esha, right, that domestic biscuit demand is different, and it has been like that for a few quarters, but quarter on quarter, trends look better. I expect the trends to be on our improvement side, but I would say the demand continues and should for the next few quarters remain a little different and take a little more quarters to expect. Export has been trending well for us, and it is in line with our expectation. We have grown extremely well over the past few quarters in export, and so trend in terms of demand should continue in the same direction on the export side.
Yeah. Sounds good. My second question would be, how do we roll out new products into the market? And do we generally start rolling out newer products where we have strong presence?
We have new products rolled out in all four business segments of ours, which is B2C and B2B part. We have in Cremica biscuits, we have in English Oven, and we have also on the B2B bakery side and the export side, right? In B2B side, where the export segment is primarily customer-led, and so we develop products for customers, and they kind of give us order, and the journey starts. In the bakery B2C side where we have again series of new products being launched, which was shared in the speech. We choose a market where to launch, and we primarily launch in our Delhi, MT and North Market first because that's a stronger market for us. Then immediately replicate that in the other markets, right, which is Mumbai, Pune, Bengaluru kind of markets. That's how we go.
On the biscuit side, again, if we have any new kind of products, we choose to do a pilot in one or two cities and then kind of replicate and take it forward to the entire market.
Okay, sir. Thanks for the detailed answer. Thank you so much.
Pleasure.
Thank you so much. The next question is from the line of Varun Gandhi from Friday Asset Management. Please go ahead.
Thank you again for the opportunity. My next question would be to Mr. Arnav Jain, and this would be on the balance sheet. I see that the QIP, a big proportion of it was used to pay off debt. Wanted to understand what was the understanding behind this and what's the outlook for raising debt capital, henceforth? Do you see that as an opportunity to improve on ROE, or does the debt capital structure more or less be in the same line?
It's a very good question. It goes to lighten the balance sheet in terms of retiring all the debts that we are carrying. Since we had the funds available at the time, even from going forward perspective, there will be some selective debt raising that could be required for the initial two facilities that will be coming in. Primarily, the QIP funds will help us in terms of funding all the large projects which are coming up right now, which were highlighted earlier along with the QIP communications as well. That will be primarily for the two large plants that are coming up in Khopoli and in Indore.
I see. Thank you.
Thank you so much. The next question is from the line of Karan Bhuwania from ICICI Securities. Please go ahead.
Hi, good evening, sir. I had a couple of questions. Firstly, on domestic biscuits business, right? I remember we were trying to enter new geographies in North India and the states of UP, Bihar, Uttarakhand, etc. Just wanted to understand how has been the performance in these markets and what is the status of distribution expansion in these markets?
So just to update you, the new geographies for us were primarily in the south and the west region. North region, we were always present for years, and we were always strengthening our distribution plug in the lower part of north. So we, two years back, started a journey with Mumbai, Pune, Bangalore, and then added a few more cities in this in the last financial year. And that journey has been kind of going fine. With the Indore plant coming up and getting commissioned in the quarter four of this financial year, we will be able to further strengthen our play in the central western and some part of the south region because we will be able to improve our supply chain for it to be logistically closer to these newer territories. So these new territories, yes, the journey so far has been fairly good.
We've entered close to 15 odd cities, and we will strengthen it further, both for central, western, and some part of the southern cities as our Indore plants get commissioned in the quarter four of this financial year.
I just wanted to understand also the expansion, how has it been in the lower north markets, right? As you mentioned, you were trying to strengthen it.
Yes. As we have briefed earlier also, and let me just take you through, so we took a very aggressive drive from April 2022 to March 2024 in terms of expanding our direct reach outlets, and these are all those direct reach outlets which were built at least INR 200 in that particular month, right? That's how we take build outlet, not overall, so our direct build outlets, we were very expeditiously almost from 160,000 to over 300,000 now, so now in this quarter also, we are over 310,000 outlets where we are directly reaching and expanding. A similar reflection of these outlets on overall reach on India basis has also shown some great progress, and as per AC Nielsen now, we are present and reaching out to more than 700,000 outlets, so journey has been going, and we continue to kind of build on that journey.
So while we were improving our overall kind of presence over the last two and a half years, we enhanced our focus on the Cremica preferred outlets. These are large outlets, aisle stores, where our entire range and well-merchandised range is present. And that has definitely shown extremely good results for us. And now we have almost close to 5,000 Cremica sorry, over 5,000, over 5,500 Cremica preferred outlets now. And we are growing them at a very high speed. And the contribution of this Cremica preferred outlet also to our overall volumes is also growing very, very well. So overall distribution, reach of over 300,000 outlets, direct reach, overall reach as per AC Nielsen is crossing 700,000.
And the high-weighted outlet, which we call Cremica preferred outlet, also we have been able to drive the growth, a very high growth in that. And there's a lot of focus on CPOs now.
Thank you. That's very helpful. Secondly, on the domestic bakery side, on the B2C side, I remember we were trying to expand in Mumbai, Pune, Bangalore, right? But majority of our domestic came from Delhi, NCR. Just wanted to understand how has been the diversification generally and how much of the revenues of the domestic B2C bakery now comes from these markets?
So first, let me just step back and take you back. We were primarily in NCR in North India, and NCR was a very big market. It was about two years back we started expanding into the upcountry of north and many other cities of north. And that journey has extremely gone well for us. And now north upcountry, which I call it, other than the NCR concept, was very, very, very well to the business. And that growth business over two years grew very well. We also started journey a few months back in another big bakery market in North India, which is Punjab. And our next year focus will remain in North India a lot on building up our Punjab business over the next few years' time.
But that happens to be a very big bakery market, which we must kind of make our product available and expand there. Coming to Mumbai side, Mumbai market has been going very well for us, but we have been constrained on capacity. And that's the reason we are putting a state-of-the-art plant, bakery plant, both for the English Oven as well as on the buns side, on the bread and buns side. And that plant should come in place in the 2025, 2026 financial year. And that would really help us in expanding further in the Mumbai, Mumbai upcountry, Pune, and other cities, right? So that will provide a very aggressive growth engine to us because we can clearly see that Mumbai consumers really like English Oven and Pune customers really like English Oven.
But we need now, with expanding capacity, we should be able to expand and make it presence all-pervasive and be able to grow that very, very well. Bengaluru is a very high contributor e-commerce market, and we'll be doing very well on the e-commerce side in the Bengaluru along with retail, General Trade. And yes, we do definitely have a plan to expand further. As you're aware that we are building up a small bakery in Kolkata where we'll be able to start our business not only for QSR, but also for the English Oven in the Kolkata market and then expand from there. And this also probably will happen quarter one in the next financial year where they will start rolling out. And then beyond this, we have some plans to expand some more key cities, right, where we want to build our business.
But we will be in a position to share with you probably in the next quarter investor conference that what are these cities and what the plans look like.
Got it, sir. Very helpful. Just a quick follow-up in this. We bought the Cremica brand for the breads business as well, right? So how is the thought process in terms of which brand you'll be deploying in which particular market for the bakery side? Just wanted to get a clarity on that. Yeah.
So in this, actually, we've already launched our rusk in English Oven. And our immediate reaction is we want to be launching the Cremica rusk also for our customers. Like Manu mentioned, that we are already covering 700,000 outlets as per AC Nielsen, and people are aware about Cremica brand. So we feel that the rusk business will really have a longer shelf life. We will be able to spread it out much further. And so we'll start using it in the case of bread. English Oven has been a very well-expected brand, but we will keep Cremica will be within the purview. But no immediate decisions have been taken for what we should be doing. But yes, Cremica rusk, we will roll out immediately.
Got it, sir. Thank you so much. Very helpful.
Yeah. Thank you.
Thank you so much. Our last question will be from the line of Manav and Mr. Rachel. So please go ahead.
Hello. Am I audible?
Yeah.
Sir, I just wanted to know that you are facing competition now. So what will be the revenue growth guidance? It will remain intact around 15% or any decrease in that?
Our guidance, we have clearly maintained that on an annualized basis. We will be endeavoring to grow around mid to high teens kind of range, right? And for annualized basis, our guidance remains the same on revenue. That on an annualized financial year basis, we will be achieving mid teens to high teens kind of growth.
Okay, sir. And on the PAT margins, any kind of improvement that operating leverage will play out in near term or anything like that?
In terms of EBITDA margin, as I said earlier, that our annualized EBITDA margin guidance was always 14%-15%, somewhere in between. As I said, that commodity price pressure has been extremely high over the last 30 to 50 days, and that's kind of reflecting. There could be some minor correction, but on an annualized basis, we will have an endeavor to remain between 14%-15% range. There could be some temporary correction, but overall, we will continue in that.
Okay, sir. Thank you so much.
Thank you so much. As there are no further questions, I would now like to hand the conference over to Mr. Anoop Bector for closing comments. Please go ahead.
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 Orient Capital, our investor relations partner. Thank you so much.
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.