Note that this conference is being recorded. I now hand the conference over to Mr. Anoop Bector, Managing Director and Promoter. 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 Q1 FY25 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. Suvir Bector, Whole-Time Director, Mr. Arnav Jain, Chief Financial Officer, Mr. Parveen Kumar Goel, Whole-Time Director. We also have Orient 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 has started the first quarter of financial year 25 on a positive note, with a 17% increase in revenue from operation and a robust gross margin of 48%.
Both the business segments, biscuits and bakery, continue to exhibit strong growth trajectory. I would also like to highlight that this is our highest ever quarterly revenue. While India's consumption story remains firm, the nation underwent a long schedule of Lok Sabha elections in this quarter, followed by anticipation of results and an impending full union budget. This is on the back of extreme heat waves during this period, made for a steady but markedly cautious consumption pattern. As an organization, Mrs. Bectors journey of expanding both domestic and international business continues to progress well. Our business philosophy is driven by developing robust product portfolios, investment in building brands, and setting up state-of-the-art supply chain and manufacturing setup. We remain committed to that. Our focus continues to bring in technology-led intervention for enhancing sales and distribution through SFA and DMS implementation.
In this quarter, we piloted handheld devices for our frontline bakery sales team for real-time billing and improving turnaround time. We believe this will boost in increasing efficiency and in turn improve ROI for our channel partners. Our next step in technology adoption journey is to focus on supply chain and manufacturing over the period of next 24 months. On the export side, I'm happy to share, I'm happy to share with you that our company has reached to 70+ countries, with your preferred Cremica brand having a footprint in over 65 countries. We will continue to follow our stated strategy of calibrated expansion. In terms of brand initiatives, to mark the occasion of World Health Day, English Oven came up with a Slice of Trust campaign, highlighting the goodness of fiber in our select range of breads.
This was followed by contextual participation of Cremica biscuits in the highly visible Lok Sabha election campaign on news channels. Towards the end of the quarter, Mother's Day campaign, Maa Se Happiness, a campaign close to my heart, witnessed enthusiastic participation from mothers across the country. On new product induction, being in touch with the evolving consumer needs, we launched our English Oven Zero Maida, 100% atta, no palm oil and no artificial preservative bread on e-commerce at INR 60 for 350 grams, which has been received very well. We also introduced Cremica Non-Stop Crackers, which is baked, not fried, at INR 10 for 25 grams. Our innovative frozen bakery products, as I had mentioned in our last call, also continues to grow.
Updating on our CapEx plan, on the biscuits front, we have commissioned one more biscuit line in Rajpura in Q1, and one more line is expected to be added in Q2. Commissioning of Madhya Pradesh plant is also expected in the current financial year. On the bakery front, construction of a building for our Khopoli factory in Maharashtra will be commissioned in the current financial year. In the previous quarter, we embarked on Project Impact One, a comprehensive initiative aimed at transforming our cost structure across organization. This ongoing journey will help the company to continue its path of sustainable growth. Financial performance. Now, I will discuss the financial performance. Biscuits.
On our biscuits segment, reported a revenue growth of 23%, which stood at INR 273 crores in Q1 FY 2025, as compared to INR 223 crores in Q1 FY 2024. This segment has grown by 53% over Q1 FY 2023.
... Bakery. Our bakery segment revenue of Q1 FY25 stood at INR 154 crores against INR 135 crores in Q1 FY24, thus registering a growth of 14% year-on-year basis, including retail bakery and institutional segment. This segment has grown by 44% over Q1 FY23. The consolidated revenues for the current quarter stood at INR 439 crores versus INR 374 crores in Q1 FY24, thus registering a growth of 17% on a year-on-year basis. EBITDA stood at INR 64 crores in Q1 FY25, resulting in a growth of 10.5% from the corresponding quarter on a year-on-year basis. EBITDA margin for the quarter stood at 14.6%. PAT stood at INR 35 crores in Q1 FY25 and saw a growth of 1.7% on a year-on-year basis.
Our PAT margin for Q1 2025 was 8.1%. With this, I would request to open the floor for question and answer. Thank you so much.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press * and one on the touchtone telephone. If you wish to withdraw yourself from the question queue, you may press * and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Percy from IIFL Securities. Please go ahead.
Hi, sir. Can you give us a break-up of this year's INR 350 crore CapEx in terms of locations as well as whether it is bakery or biscuit?
So, Manu this side. This year CapEx, which we will spend, is primarily, large part of that is on two specific plants, which were mentioned by the managing director in his opening speech, which is MP plant for biscuits in Indore, and second is a Khopoli plant in Maharashtra, which is close to Mumbai, and there are some other projects which are there. So largely, a large amount of investment out of this is going for two large plants which are sitting, one for biscuit in Indore and one for bakery in Mumbai.
Am I right in assuming that the total amount is INR 350 crore for this year?
Yes. The total amount is approximately INR 350 crore for this financial year.
Okay. Okay. So these two plants would account for somewhere around 270-280 out of the 350?
Yeah, approximately that much, in that range. Yes. There are other smaller investments. Some investment we are doing in our current existing bakery in Noida, and there are other few investments, which are there, which are a normal year-on-year investment. But yes, what you said, it will be more of that number.
And both these are greenfield, right?
Both are greenfield, absolutely.
Right. Right. Sorry to dwell a little deeper, but will you be able to tell me which one is the larger of the two in terms of the capital outlay, Khopoli or MP?
So, Khopoli is a larger outing, and there is a reason for that, that we are also explaining, that. You see, in a biscuit plant, we are creating a larger infrastructure because these are both greenfield plants, and we will have a space to be adding lines in the future. And, in case of Khopoli plant, bakery plant, bakery plant, because normally you have to put a line based on the capacity for next two years. So that's always the difference between biscuit and bakery. So bakery capacities are put taking horizon of five, seven years. In the case of biscuit, we are creating a larger building infrastructure, common facility, utility, and we're putting up, two lines to start with, and if there is a need, we can keep adding that.
Understood. Understood. And, with this INR 350 crore of CapEx, assuming that whenever it is fully utilized, that would be able to generate a turnover of how much?
So, as on 100% usage, when these two kind of capacities come in place and also the capacity which we already have, on 100% utilization, we can almost touch close to INR 2,800 crore-INR 2,900 crore.
Okay. But practically speaking, we would sort of start doing CapEx when we are at somewhere around 80%, right?
Yes, you're very right. In those particular territories.
Understood.
Other-
So basically, with this-
Definitely. So those particular territories, yes, but other territories, where we are growing or we have to newly start the business, we would definitely need investment.
Understood. So with this heavy CapEx done in FY 25, should we be right in estimating that FY 26 and 27 put together would be like just mainly maintenance, like INR 50 crore each or something like that? Would that be a right assumption? And then FY 28-
No.
might be another big one.
...No, no, it won't be. Actually, we are just in the process of finalizing our layout for 26 and 27, right? So probably in the next call we'll be able to talk about it. It should be separately more than that, because, you know, when we are in a growth mode, we need to have our supply chain capacity well in place, right? And as I explained to you, especially in case of bakery, we need to have those capacity well in place for next few years, because we can't keep adding capacity on a yearly basis. Normally, you add capacity for to take care of good next 4-5 years, or more than that, in that particular geographical area.
Right. Right. Understood. Understood. Coming on to the biscuit segment, you have grown 23%, but any rough idea on what would be the domestic growth out of this?
So as we briefed in the last call also, and we obviously can see the consumer trends. So biscuits growth have kind of slowed down over the last two quarters in the domestic side. But yes, we saw this quarter being better than last quarter. So that was a it-
Sorry, lost you, sir. Hello.
Said that, we in the last call also, and as you can see, all consumer businesses in even in our industry of biscuits have kind of slowed down on growth over the last two quarters. But the good news is that this quarter we saw a better, you know, movement up versus the peak.
Right. Right. That's very heartening. So, roughly like, I mean, since the average is 23% domestic and export put together, how much is the divergence? Like, is it a 1,000 basis points divergence between the two or less than that?
We, we at this stage don't share it, so separately for both the businesses, both on the bakery and biscuit side. So I think I've given you good indicator numbers-
Okay, okay.
out this quarter.
Understood. Understood. And, finally-
Sorry to interrupt, Mr. Percy, may we please request you to-
Sure.
Join the queue? Thank you. Next question is from the line of Harit Kapoor from Investec. Please go ahead.
Yeah, good evening, first I had two, three questions.
Sorry to interrupt, Mr. Kapoor, your voice is sounding low.
Is it better?
Yes, please go ahead.
Okay, the first question was on the bread side. So this quarter has been a bit slower at 14% growth. Would this largely have been on account of B2B, given that, you know, the burger players have continued to see slower rates of growth? Is that the key reason why growth rate is slow? Is B2B the key reason, is my question.
So, the bigger reason for this first quarter was, you see, as we know, Navratri sometimes falls in the quarter four, which is, March, or sometimes it falls in April. So this time, Navratri falls in April, so that was the one reason for that. And second reason was, definitely, the very extreme summer in the North India, which is largest contributor of business for us on the bakery side. So that was second big reason. Yes, definitely, last one of closer business, as we know from all published results, has been on a little slower. But yes, with the frozen range which we have introduced last year and started adding customers and the ranges with our existing customers, is getting a good fill up on the B2B business side, on the frozen side.
Understood. Understood. And, the second thing was, you know, 17.7% revenue growth overall. I remember last quarter you said, you know, volume growth is the primary driver here. There isn't much on the pricing. So would we be fair to assume that volume growth is large, it's almost entirely volume driven, it's 17.7% growth?
So yes, it's largely, let me use the word, largely volume growth. Kind of, a fair amount of growth is coming from a volume growth of this. Not exactly, a fair amount of the growth has come from the volume.
My last question was on the biscuit side. You know, there's been talks of higher promotional intensity for last couple of quarters. And I hear even smaller players, even outside yourself, have been significantly competitive, especially at the low end. Just wanted to get a sense from you about whether this is the pressure point for growth or a pressure point for gross margins, because you have delivered very good gross margin. But just wanted to get a sense about what you are seeing on the ground right now on the biscuit side, especially on the competitive intensity, promotional intensity, et cetera.
So yes, you're right. Over the last 2.5 quarters, competition intensity has increased quite significantly, especially on account of the market leaders taking an aggressive stance on consumer promotions across varieties. Thus, we also had to, you know, join to ensure that we are able to, you know, kind of retain our market share. The good news is that, you know, for us, we in this journey over the last 2 quarters, we have very well retained our market share. So with our intervention on the distribution side, our intervention to match the, you know, to play our part in the consumer promotion for the consumers, we have been able to-
... very well, retain our market share over the last two quarters, and not lose an inch of space there. And, this was, very important to do. And also, you know, it is also rescheduling our, marketing, budget towards more towards the consumer side than with the brand side. These are some of the static changes we made over the last two and a half quarters to have a fair play in the market.
Got it. I'll, I'll come back for more. Thank you.
Thank you. Next question is from the line of Amit Purohit from Elara Capital. Please go ahead.
Yes, sir. Thank you for the opportunity, and congrats on good numbers in revenue terms. So, on the export side, what would, what would be the growth drivers now? I mean, if you could give some flavor on terms of the growth is being driven by one client addition or the same I understand you will have, expansion plans in Middle East as well as in U.S., but if you could provide some more details on that.
Hi, I'll answer this. So, in the exports front, it's not coming from a single geography, but it's just our team is working towards all the territories, and we're trying to have associations with a lot of the retailers worldwide, who are liking the product quality, liking the taste, and are liking our ability to craft a product for them according to their taste and preferences. So we are building our presence in North America, South America and the Middle East, and that, those are the areas where we are seeing major growth coming up from.
Sure. And actually, last year, if I look at, you indicated that the biscuit segment grew at mid-teens. And so implied, I mean, export could have grown significantly higher. So that momentum, one should expect it to continue, or you think that there could be even further aggression in terms of the growth from here on, given the initial success that you would have got in some of the retailers?
I'll let Manu Ji take over this question.
Yes. So, we are seeing strong trends to continue in export. We don't... We are not seeing any signs of that trend, but obviously as the base keeps becoming bigger, you will not have the same rates of growth coming in, right, in sequential quarters. But yes, just on the trend basis, we see good trends to continue on the international business.
Sure. And, on the QIP that you planned, the usage of in this one is clearly, is it more to do with the debt repayment and probably funding this INR 350 crore of CapEx? And, you also indicated you have plans in 2026 and 2027 also. But those would be largely funded through internal accruals, or you or they will be also large enough for you to raise debt, or how do we think about from a balance sheet perspective, the debt level side?
The first thing, Amit, just to, you know, put the attention that our debt-to-equity ratio is continues to be strong, right? And it is just about 0.36%, right? So that's a strong debt-to-equity ratio. We are investing for the future, and which we briefed you already, we're investing in the manufacturing facilities, right, to ensure that, you know, we have a stronger supply chain with the ability to continue producing world-class bakery and biscuits on the product line. Yeah. So the fundraise, which has been kind of planned in this financial year, it is primarily to fund this CapEx and to stay more conservative in our approach, and not to have a higher debt on our balance sheet. So it's in line with that. Yeah.
Our cash flow even now are fairly strong, with a debt equity of only 0.36. So that's not a challenge. It is just a, just a more conservative approach to do that and fund this current CapEx. I'm sure that we have enough cash flow to fund our future, you know, cap, CapExes also, which will come up in 2026, 2027.
So just one follow-up on this. I mean, we had, I think INR 225 crore odd of debt level, and which, some of the machinery we would have bought, for the CapEx, right? So post this QIP, would you look to repay it or, one should keep the debt levels the same, since you have a, fairly decent debt equity ratio, so.
So, so Amit, I, we would be able to share. So I'm saying the fundraise in this financial year, which we have kind of got passed through in the team and the board meeting, the modality and the usage of those funds will kind of follow. But yes, it will be fairly in the direction which you are talking about.
Okay. Thanks, sir.
Thank you. Next question is from the line of Yash Goenka from Auriga Capital Advisors LLP. Please go ahead.
Hi. Thank you for taking my question. What kind of demand are you seeing from the Q-commerce space for garlic bread, breaded buns, pizza base, and kulchas?
... Sorry, can you be a little closer to mic and louder?
Is it better?
No, it is not.
It is still sounding the same.
Is this better? Hello?
Yes, please go ahead.
Please start.
Hi. Is it better?
Yes, please go ahead.
Yeah, yeah. What kind of demand are you seeing from the Q-commerce space for garlic bread, burger buns and pizza base?
I'll hand it over to Ishan to kind of take up this.
So, you know, I think demand on the Q-commerce has been robust throughout. You know, on pizza bases and burger buns, we are the market leaders in these segments, so I would say that we've seen a very, very you know, positive response not only on these products, but overall as well. We have launched healthier products, as the managing director said. You know, we have on Q-commerce launched the zero maida bread. You know, for the first time, we have launched a product which is preservative-free. For the first time, we have launched a product which has no palm oil. And you know, we have seen exceptional response.
So I would say that, on the Q-com, robust growth is there throughout and, you know, we have a leadership position in these products that you are mentioning.
Can you comment on the growth rates?
You know, for us, I would say modern trade and e-com is becoming a very, very strong thing. We are growing. I would say by you know 20%+ in these segments.
Okay, thanks a lot.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please restrict your questions to two per participants. If you have any follow-up questions, you may rejoin the queue. Next question is from the line of Rajit Agarwal from Atharva Investment Managers. Please go ahead.
Good afternoon, sir. I will just refer to the discussion on QIP, and I appreciate that you have planned out the usage of those funds. My request would be just one, that while it's it might be seen as conservative to reach out for easier capital, at the same time, it leads to equity dilution, and that too, at an expensive rate. I mean, from very beginning, we have been told that equity is more expensive, and with the kind of EBITDA and the strong balance sheet you have, I'm sure you can support a lot more CapEx than what you are going to do in even in this year. So that's just an input. Any thoughts would be much appreciated.
So, I appreciate your inputs and definitely know that they are in the right direction, but this decision has fairly taken into account, you know, the growth trajectory which company has and company wants to achieve, right, in the coming years. So keeping both things into consideration, right, it's a fairly long-term kind of decision to arrive at that. No doubt what you're saying is absolutely right, that equity is the cost of capital is the highest among any other source of funding.
But it's a very thoughtful decision by the company and by the board, and will be supported by the shareholders, that looking at the growth trajectory which we want to achieve over the next few years, this is the right decision to go for.
All right, sir. Thank you. Thank you.
Thank you. Next question is from the line of Sohan Samanta from Centrum Broking. Please go ahead.
Yeah. Hello, sir, thank you for giving the opportunity. So, two questions from my side. One is the gross margin. Like, this quarter, we have almost the highest gross margin in last 14 quarters. So can you expect, for this year, for 25, margin expansion of 100 or 180 basis points margin expansion, can you expect for this year?
Just go a little slow on the second part of the question.
So basically, last year, we had a gross margin of 46.7%. But this quarter, we have seen that last 14 quarters, we have achieved the highest gross margin, right? So do we expect any gross margin expansion for fiscal 2025?
Further, you are asking, do you expect any further gross margin expansion?
Yeah, yeah, compared to fiscal 2024, yeah.
No. So, see, this gross margin expansion has happened because of, first is improvement in the premiumization realization. Second thing, it has happened on account of, more favorable business mix towards the export side. And third, it's also. Third also happened because of, you know, this revenue also includes the freight recovery from our core customers, and because of the Red Sea too, those freights are little on a higher side. So these are the three reasons why it has happened. And the corresponding, if you look at in the other expense line, there's a marginal increase also sitting there, about I think 0.5. So, if you kind of set out that, that's the right way it will be. Yeah, that will be the right way to look at it.
Okay. Okay, thank you. So the last question, like, currently you have a direct reach of, I think, 3.2 lakhs and indirectly it's more than 7 lakhs. So what, what is
Directly-
What is it?
It's on the side, and our overall reach are supported by uncertain itself, so it's over 700,000 outlets.
What kind of target we are looking for next couple of years?
As we mentioned the last call also, that over the next few years, our next target to achieve on an overall reach is to hit a milestone of 1 million outlet target from 700,000. So that's the target, which will take another few years, but that's our next goal to reach there.
Got it. Thank you. Thank you, sir. That's all.
Thank you. Before we move to the next question, a reminder to the participant, to ask a question, you may press star and one. Next question is from the line of Mr. Percy from IIFL Securities. Please go ahead, sir.
Sir, I'm sorry if this question was answered. I was away for a while. If so, I will read the transcript. But if not, can you give some idea on your EBITDA margin, what do you see going ahead, this quarter, whatever you have done, is that a stable state kind of margin for us to take ahead?
So yes, Percy, that we have been maintaining that over the next few quarters, we will be maintaining our EBITDA within the range of 14%-15%. Right? And that slot, and then we will start our next level of journey of, moving, you know, upward side. So at least for next few quarters, we see, some maintaining EBITDA in this range.
Understood. Understood. And, on domestic biscuits, while I know you're not giving the growth separately, could you tell us if, in your estimation, you have gained market share? And also, which are the geographies in which the growth is significantly ahead of the company average growth? Company average, as in for domestic biscuits.
So, on a market share, as I said, our market share on overall basis, we have over the last few quarters maintained our market share, right? And, if I remember right, over the last year, since we have a marginal over the last full year, so full year versus full year, there was some marginal gain. But yes, in this highly competitive, actions and, very aggressive play by the market leaders, we have been able to, very well retain our market share and our, our space in the market.
Got it, sir. And finally, on exports. The growth in exports is coming from sort of which geography and what type of clients? So is it like supermarket clients, or is it sort of contract manufacturing for some smaller brands there? Or is it that you are selling in your own brands in the export? I'm sure it's a mix of all three, but where is the growth largely coming from?
So hi, Percy, this Sabeer Hussain. So the growth we're experiencing is from South and North America. South America, predominantly is where we're supplying our own Cremica branded products, which are going into the market, where we have distributors in a lot of the markets which are trading there, right? So we're experiencing a lot of growth from those territories. The second is North America. When you said clients, some of the clients which we are associated with are Walmart, Walgreens, CVS, Dollar General. So we are, you know, supplying to these clients under their label. And with some of these retailers, we are also supplying them with Cremica label products. So it is a mix of a white branding, like a private label and also a Cremica branded approach.
These two are the territories where we are experiencing majority of our growth. The third one is the Middle East, where our target market is the six GCC countries, where we have two employees who are based out of Dubai as well. They are instrumental in going to the market, building our brand, finding distributors, and also making our products available in the local retail chains. That is how we are trying to get the most out of our growth.
Okay, okay. Got it. Thank you very much. That's all for me.
Thank you. Next question is from the line of Priyank Chheda from Vallum Capital. Please go ahead.
Yeah. Hi, sir. So, one observation, and would like to know your thoughts on it. So-
... The recent launches we've had to track, so your whole of the portfolio with what I see has been in the price range of, say, INR 20-INR 30 or INR 40 per 100 gram. Now, the new launches which we have seen in the last quarter, which is around, again, the cashew cookie, has been around, say, INR 13-INR 14 per 100 grams. Just to go back to the slide number 19, which is new launch of Butter Double Delight, is, has been around, say, INR 13-INR 14 per 100 gram. So, do you find consumer getting downgraded and you also pivoting towards that end?
Or do you find a problem in the premium side of the portfolio, which is, which might be under stress and, and then, and the competitive intensity picking, picking, and getting intensive over there. What has been the strategy on the new launches, which we see the price point going downwards?
Okay. So let me first brief you that the company has a very clear-cut focus strategy on the premiumization. And if you look at our trends on premiumization over the past two years, you would have seen a very aggressive movement in our premiumization over the last two financial years and even now. So if I go back to premiumization two years back, when our premiumization was on in a high twenties, right, it was 27%-28% kind of stuff, where last year we came up to 37% of premiumization, and now we stand in the last two quarters, we stand at 39% premiumization on the biscuit side. Similarly, on the bakery side, we are sitting on a very healthy premiumization and we kind of moving in.
Our premiumization on value terms, in volume terms, we're sitting at a premiumization of almost 56%, and value terms it translates into 62% contribution of the premium kind of product. So first is that, yes, the premiumization is the way which the company is progressing and has progressed well over the last two years. Coming to one or two examples which you have given, they were, as we particularly know, that, competition, the hyper competition drawn in by the aggressive consumer promotions and other things being done by the market leaders, we have to come and participate to protect our ground. And the Butter Delight is, is a step of this on the butter, right? It's, it's not that, we have downgraded that entire range, which is fairly big in, some of our territories.
So we are only up and give a consumer a superior product at a superior pricing to kind of, maintain our lead in this particular product line. So premiumization is the way forward. And Ishan also had just recently briefed you on the kind of product on the health side, with no palm oil, and we have launched, and that's also all in that direction. Similarly, on the bakery side, on the B2B side, the amount of frozen products which we have launched over the last 9-12 months time and build our business on the frozen category side, that again, is on a premiumization journey though.
So that premiumization is the way, company has been living our life, and growing that very well, as I said, gave you the numbers over the last two years, and that's the way it will continue. And the same is in the export side also, and we're very well seeing that premiumization of journey on exports is also continuing and moving in the right direction.
Perfect. Perfect. And sir, would it be possible to share which are the top-selling biscuits or maybe you can share the top-selling SKUs or maybe a top five biscuits for us in terms of the revenue scale? It would be great.
So Percy, Percy, can somebody get back to you separately on this? Because let's give some other people also some chance to, you know, ask questions. I definitely understand, so-
Thank you. Thank you.
Somebody will get back to you on that.
Thank you. Next question is from the line of Harit Kapoor from Investec. Please go ahead.
Yeah, I just had a follow-up. You know, this quarter, you've been between continued competitive intensity. You know, there were some one-off challenges on the heatwaves and out-of-home as well. And we all know how TSR businesses are operating currently. Would it be safe to assume that, you know, the growth has come in spite of all this, and if you do see improvements at a macro, you know, growth can accelerate even from here? Is that the right way to think about how this year should pan out?
So Harit, as I was briefing earlier also, that, you know, the... Let Ishan, I think he'll be able to explain it better, that how he built up the whole frozen range of new product development and are helping us in the revenue growth management. Ishan, would you take up that?
Yeah. So, Harit, you know, our biggest part of our portfolio on the B2B side is burger buns, right? And
... I'm sure you know from, you know, the market trends, I don't think it's been growing very well. Though I, you know, we strongly feel and we are very bullish that market trends will improve, new store additions will happen because there is also a lot of competition intensity on the QSR front, right? So, yes, I feel that, as you know, stronger growth rates come up, that will definitely support the growth of the B2B business. You know, other than that, what we have been also focusing on is getting into non-bun businesses, right, to reduce our dependency on one product category. And I think that story has played out very well.
You know, on the frozen side, I think we've done a very good job. We are still very, very nascent on frozen desserts as a category, which we see has a big potential because whether it is our existing customers or opening new customers, this kind of product portfolio will definitely, you know, strengthen our position. So, yes, you know, we feel that good growth should lie ahead.
Great! Thanks. Thanks, Sushant, for this. That was my follow-up. Thank you.
Thank you. Next question is from the line of Amit Purohit from Elara Capital. Please go ahead.
Yeah, thank you for the follow-up, Sir. Sir, on the biscuits again, you had highlighted last year that mid-teens kind of growth. So in the context that we are in, where there is competitive intensity and overall slowdown in consumption generally, would you and would you maintain that kind of a domestic growth outlook could continue this year as well, or you think there could be some challenges here?
So, Amit, as I briefed you earlier that the consumer offtake slowdown for the industry, competition intensity, both, both the, have, you know, the competition intensity has increased, and we very well know that consumer offtake, for the industry, it has been, has slowed down post-Diwali over the last 2.5-3 quarters, right? Our first motto was to ensure that we hold our ground in this competition intensity and don't lose an inch of our space and maintain our market share. So I just want to confirm that we've done over the last few quarters of overall maintaining our market share and participating in this highly competitive market to hold our ground and maintain our market share.
Second thing I said was that this quarter, compared to the previous quarter, the preceding quarter, it was, it has shown some forward movement. And coming Diwali season, we are very, very hopeful that it, it will be a start of a turnaround for the industry itself, right? Because we are a smaller part of this industry, and we're very hopeful that, you know, with our continuous focus on distribution and marketing and duly supported by the festival season this time, it should, it should move in the right direction.
Sure. So second half should, one should start building in a better outlook, and Q2 would still be some challenges in that?
Yes, if I say that, Q1 was a better than Q4 of last financial year, and definitely we expect Q2 also to be better than the previous quarter, and then coming next quarter, which is the festival quarter, it should definitely start a further, you know, improvement, and it should keep scaling up every quarter. That's what we, you know, as of now, foresee.
Sure. Thanks a lot.
Thank you. Participants, to ask a question, you may press star and one. Next question is from the line of Gurmeet Singh, who is an individual investor. Please go ahead.
Good evening, everyone. Our net profit growth for the quarter is less than 10% compared to 17% revenue growth, even after premiumization and benefit of scale. What can be the reason?
Yeah. So, yeah, absolutely, you're, you're right, that our EBITDA growth is 10% versus our revenue growth of 17%. It is on account of two, three reasons. One is that our export contribution is higher, and with our export contribution being higher, we have a higher logistics cost kind of coming in, so the ocean freight has kind of gone up there. Second is that we, because of hyper competition, we have invested more in the marketing promotion part. Third is, you know, for financial, that our employee cost is higher than previous year, and that's higher largely, one, because of the reason that we added new lines in Rajpura. Last year, we added new line, one line. In this year, we added a new plant in Bhiwadi in bakery.
So, we need to, you know, put the organization people in place and the utilization keeps improves quarter on quarter for these lines. So that's also impacting the cost, employee cost. And plus, some bit of last layer of strengthening of the leadership that required, which we have done. This is random, that normalize over the next few quarters. So these are the few reasons why you see that this is the reason. And like I said, you will see over the next 3-4 quarters, that will get normalized.
Okay. Thank you. Thanks.
Thank you. Next question is from the line of Chirag Lodaya from ValueQuest. Please go ahead.
Thank you for the opportunity. Sir, if you can talk more about the frozen dessert category, you know, how big is the opportunity here, and, you know, what to expect over the next 3-4 years?
You see, we are, you know, we are very new in this category. But, you know, what this also does is open up, the HORECA channel for us, right? It's not only the QSR channel, it also opens up the HORECA channel, where, it's actually, if you ask me, a new line of business, for us, right? I think, it also adds, as you know, we are seeing, whether it is McDonald's or Burger King or, you know, Rebel Foods. Today, you know, they are introducing cafe models. You know, Rebel Foods also has its own brand of, frozen, sorry, of desserts, right? So, you know, what I see is the industry is definitely gravitating towards this.
I, you know, I feel that, you know, a lot of new customer acquisition, you know, will be in the pipeline. I really cannot put a, a figure to the size of the industry. But for us, it is a, it is a natural extension, as, you know, we aspire not to be only a bread company, right? We aspire to be a bakery. And, you know, it is part of that broader vision where, you know, we have an entire portfolio of products for a customer, you know, whether it be desserts or whether it be, savory products or whether it be, you know, a burger bun or a pizza base. So, yeah, for, for us, it's, you know, a very positive, outlook.
We are going to be looking at scaling this in both the north market and the west market.
Any specific product you would like to highlight, you know, which is doing well? Or, you know, so some sense on, you know, what kind of products we are doing and what kind of investments you would have done so far?
See, investments are not very large in this. These are, like I said, a natural extension of our bakery. These are smaller investments, but what we are using to our advantage, you know, is we are creating a frozen chain between all our factories, right? So whether it is Delhi or whether it is Mumbai or whether it is Bangalore, all these factories. Because you see, at the end of the day, on the frozen side, logistic cost is an extremely important cost. Our, you know, multi-locational facilities and having the ability to create frozen products out of multiple facilities will give us definitely a competitive advantage, right?
Mm-hmm.
So, you know, that is the thought process behind it. And each bakery would be an independent bakery with multiple products, different product lines.
Some sense of products, currently, what kind of products you would be doing?
So, you know, it could be on the desserts side, muffins, cookies, cakes, you know, products like specialty products like Skillet Cookies. You know, on the bread side, it could be frozen Paninis, you know, foot-long breads, you know, center-filled tops. So, these are all the kind of products that we are looking at. You know, cheesecakes.
Right. No, no, I got the idea. That's right. And just lastly, if you can call out A&P for the quarter, and YOY.
The what?
Advertisement spends for the quarter and YOY.
So consumer spends and investment spend for the B2C business, they are ranging between 3%-3.5%, so we're consistently maintaining that investment. So it can be more promotion, marketing, brand, product, promotion that's on B2C business around 3.5%.
YOY, as a percentage of sales on B2C, it is more or less flat. That is what you're saying, right?
Yes. So, so yes, it's around 3%-3.5%. I will have to check last year same quarter what it was, so we can check and get back to you on that, but yes.
Sure. Thank you, and all the best.
Thank you. Next follow-up question is from the line of Sohan Samanta from Centrum Broking. Please go ahead.
... Yeah. Thank you, sir, for the follow-up. Sir, last quarter, we have launched this cake in, so how is the performance? If you can give an update on that.
Sorry, which cake are you talking about? So in last, yeah, in last call-
No, we have. Last call, you mentioned some INR 10 cakes you have also launched, so-
Yeah, yeah, yeah.
Not frozen.
So, you know, that, see, that product is, you know, to support distribution, right?
Okay.
For us, you know, our focus will always be on, premiumization, right? I mean, we have launched the zero maida bread, right? I would be more excited to talk of a product which is, let's say, you know, INR 60 for 350 grams rather than a INR 10 cake. That is more of a, you know, tactical call for, you know, improving efficiencies of distributors and all of these things. But as a, as a premiumization journey goes, you know, we would focus more on healthier products, you know, as the industry is shifting gravitate towards the shift, rather than, you know, de-premiumize.
Got it. And then last thing, like, last quarter you acquired this Cremica Bakery brand. So what is the update right now? Any fixed plan or something on that?
Pardon? Can you just repeat, please?
The Cremica Bakery brand you have acquired.
So we still in the process. The process is not completed. It's completely okay.
Okay.
I'll take this one.
Thank you so much.
I'll take this one. Yeah, the Cremica brand deal, you know, is in the pipeline, so we are clearing, you know, we've given it to the legal. So once it is, you know, we get the response from legal, it'll be done. But otherwise, you know, I think it's a process of another 2-3 months, but it will happen.
Okay. Okay. Thank you, sir.
Okay.
Thank you. Ladies and gentlemen, in the interest of time, this would be our last question for the day. I would now like to hand the conference over to Mr. Anoop Bector for the closing comments.
Yeah. 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.
Thank you very much. On behalf of Mrs. Bectors Food Specialities Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.