Ladies and gentlemen, good day and welcome to Bikaji Foods International Q4 and FY 2025 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 on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Hazel Rathod. Thank you, and over to you, ma'am.
Thank you. Good afternoon, everyone. Thank you for joining us for Bikaji Foods International Q4 and FY 2025 earnings conference call. From the Management, we have with us Mr. Rishabh Jain , CFO, and Mr. Manoj Verma, COO. I now request Mr. Rishabh Jain to take us through the key opening remarks, after which we can open the floor for the question-and-answer session. Thank you, and over to you, sir.
Thank you, Hazel, and thank you all the investors for joining the Q4 and year-ending conference call. This year, FY 2025 has been a year of a lot of challenges and a lot of corrections internally. Our major focus in FY 2025 was to set a maintenance house right, be it setting up the right process on the card, bringing the right people on our bus for a growth journey, setting and improving all the manufacturing facilities, doing a lot of corrections in distribution, as well as settling sales organization in a right manner, like a proper FMCG company. Also, we did a lot of investment in technology. We started implementation of SAP and Darwinbox for a future-ready organization. Also, we did a lot of experiments with new acquisitions and adding a few additional categories.
Q3, when we discussed last time, quarter three was a quarter where there were a lot of challenges, be it inflationary pressure across all key raw materials, and especially edible oil. Western Snacks like potato crop have been dealing with prices being very high, so we stopped production last year, early Diwali. quarter three was a quarter of challenge. When we take quarter four, there were a lot of significant improvements, be it in top line as well as in bottom line. When we see gross margins, there was a significant uptick in gross margins when we see compared to quarter three. Now, quarter three gross margin on a standalone basis is close to 30.2%, where quarter three was close to 26%, and at a consolidated level. Our GM is close to 31.8% in quarter 4. At the full year, we had a consolidated gross margin of 30.7%.
This year, the company has delivered close to 10.3% volume growth and 14.8% value growth, driven by strong demand across our core product lines. From basically market length, basically overall revenue, revenue has grown 14.8% on a YoY, YoY in 14.6% year-on-year. Volume growth quarter four was close to 8.9%, and full year was 10.3%. I will hand it over to Manoj on business.
Yeah, good afternoon, everyone. The volume growth for the quarter has been 8.9%. Revenue growth for the quarter, if we look at it, is 14.8%. When we say, and this is net of PLI, when we add PLI to it, it was in last year, quarter four, we added PLI for three years. That is the reason that when we add PLI, it looks as flat. Otherwise, it is a 14.8% revenue growth for Ethnic Snacks category, our core category, has delivered a value growth of 11.4% in quarter four. Packaged Sweets on the back of a less number of wedding days because this is highly dependent on the wedding season. It is a negative growth of 1.4%. However, it would be wise to look at a full year number, which I'll talk later.
Western Snacks, after quarter three, where we witnessed a negative growth, and this is what we explained to you all, that that was a deliberate call in terms of holding up production, holding sales, not a demand issue. As we had said, numbers talk about it that in Q4, we came back at a 21.5% growth. Papad, 5% growth for the quarter, but then this is on the peak capacity. Relevant data point would be even more if we look at it on a full year basis. Full year volume growth of 10.5%, revenue growth of 12.6%, this is including PLI. Net of PLI is 14.6% growth. Ethnic Snacks has grown at 12%. Packaged Sweets overall full year is a 13.2% growth. Western Snacks, on the back of a huge negative growth in quarter three, but at a full year level, is a 17.7% growth.
Papad at close to 12% growth on a full year basis. Talking about how we look at our markets, the core markets have on a quarter basis grown at 10.1%. Focus states grown at 38.6%, other states 12.5%, and the exports growth has been 29.4% in this quarter. However, at annual level, when we talk about the core states, growth is 11.6%, focus at 26.2%, other states 15% plus, and the exports is at 22.5% growth.
We have been reading and hearing that the growth is high on the impulse pack, but for us, by investing behind our marketing plans and marketing campaign, which we also spoke in the last quarter, that was about Bikaji Khao London Jao, focused more on the large packs, helped us deliver a higher growth in the family packs, which has grown at 13.8%, whereas the impulse pack is at 9.3% growth in the quarter. At a full year level, family packs have grown at close to 16% and impulse pack at 10.5%. In terms of our reach, if we speak about, as we got into this financial year, we spoke about that we will the target what we took was to cross INR 3-lakh mark in our direct coverage. Glad to inform that we have bypassed our numbers.
The team has done a good job in terms of a consistent improvement in our direct reach, and we have ended the year at INR 3.11 lakh outlets. When we speak about indirect reach, that is, this reflects or translates into indirect reach, which is now upwards of INR 12 lakh outlets. That is where Bikaji has been present in this year.
From a revenue perspective, we've grown at 14.8%. Revenue from operations looks flat, but other than PLI, it's 14.8%. From an EBITDA perspective, basically, quarter three was an exception. quarter four, again, we came at close to 11.2% EBITDA on a standalone basis, and consolidated is close to 10% EBITDA. From a raw material lens, what we've seen and what we explained last time is that this year, all the purchases have been in good favor. In good favor, be it all the key crops or what we purchase are at a very lowest price, which has supported us to improve our gross margin. Also, we've taken a few price increases back to back in quarter three and quarter four, which has helped us in getting a gross margin back to close to 31%. That's part of the presentation. We are happy to take all the answers, questions.
Thank you.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nuvama. Please go ahead. We seem to have lost Mr. Abneesh's line. The next question is from the line of Nitin. Please go ahead.
Yeah, thanks for the opportunity. My first question is on our reported volume growth at 8.9%. And if we take around 10% organic business growth, we get to 1% realization growth. In Q3, we had 3% volume and 8% sort of organic value growth. There is a 5% realization growth in Q3. That growth has come down to 1% in Q4. Can you help me explain this?
Can you again repeat, please?
No, I'm referring to your Q3 and Q4 performance. For the organic business, my calculation this quarter is we have done around 8.9% volume growth and around 10% organic business growth. There is a gap of 1%, which is largely a realization growth. If I compare with Q3, it was around 3% volume growth and around 8% organic value growth. There was a gap of 5%. This 5% coming down to 1%, I'm unable to sort of figure out what led to this.
Our consolidated growth is close to 14.6%, and volume growth is also on consolidated level is 8.9%, right? If you look at 14.8%, it's close to 4.5%.
I basically wanted to take away the M&A part, Ariba and the Hazelnut from the financial and wanted to analyze.
Basically, volume growth without standalone is close to 7-7.5%. Also, one thing from last year, in this quarter, we have not added that quarter three, quarter four of last year. Quarter four of last year plus quarter three was full of promo pack versus this year, there's no promo pack. Realization also changed this year, and product mix also changed. Overall, then realization improvement, so it's close to 3.5%-4.5% realization, yeah.
Okay. Thank you. This is what we had explained on the last call as well, that while it's looking at 3% growth, but if you look at revenue growth, it was in line of 8%. Now, this quarter, there's very little impact of consumer offer 10% extra, which was there in the earlier year.
Bulk of the promotion was in Q3 in the base quarter, and Q4 had the less effect of that.
Yeah, it was bleeding up.
It was bleeding up in quarter four .
Okay. Okay. Thank you. Second question is concerning gross margin ahead. With palm oil prices now below September, sort of have seen a correction of, say, like the gap from September 2024 is around 17% on a year-over-year Malaysian Ringgit, and the duty hike was 22%. We seem to be getting in a favorable zone. We have effective price hikes also. How do you see the margin outlook ahead in FY 2026, gross margin outlook?
If we talk only about edible oil and palm oil, basically, the peak of palm oil was close to INR 137-[audio distortion]. I think a lot of selection, of course, from peak, it reduced [INR 137 to INR 115], but yeah, largely it's [INR 125] . We will see that there's a little softening in coming quarters, it will be at INR 120 [per litre] , but we don't see it will go beyond this. INR 120 will be a new normal. That's what as an industry, we expect from idea from palm oil perspective. Yeah, overall, this year crop has been very supportive, and this year crop is rains, monsoon is good. What we see is that overall from gross margin and EBITDA lens, this year from FY 2025, 2026 lens, we want to get our original gross margin by quarter two. That's what we've told last quarter, and we are on track.
At least here at standalone level, we are close to 31.8% GM in quarter [two], and that's our target was 32.5%. So we are on track to achieve that.
Okay. Thank you. Lastly, can you please help me update what is the cumulative price hike we have accepted in Q3 and Q4?
In Q3 and Q4, our price hike was because it was a mix of product mix, and also there are a lot of changes in impulse pack. Overall, at the average level, the price hike is close to 2.5%. We had taken one price hike in April, so in quarter three, quarter four, it is close to 2.5%.
2.5% you are saying. This includes the price hike we have accepted, post duty increases, or it's excluding that?
This was in quarter three, right? quarter three and quarter four, sometimes combined, we had taken price hike by average of 2.5%. That's the average. In Q1.
I didn't get you for Q1, your voice dropped.
In Q1, obviously, we had taken some price hike.
Okay. Okay. Thank you. Thanks for the update.
Thank you. The next question is from the line of Percy Panthaki from IIFL Securities. Please go ahead.
Hi sir, just some confusion on this topic. If you can just tell us on a consolidated basis, what is the organic sales growth this quarter?
At consolidated level, the organic sales growth is close to 14.8% in this quarter at consolidated level.
There is no inorganic element at all, is it? Because that is the growth that you have reported anyways.
At standalone level, our top end has grown 11.3% in this quarter, and at consolidated level, our top end has grown 14.8%.
The difference between standalone and console, what are the businesses which come between the two?
Basically, one is THF, The Hazelnut Factory, which we had taken actually in the end of last quarter, quarter three. Then another one is Ariba. And Windyabashmi.
Hazelnut Factory is an associate, right? So you would not be consolidating the sales, right?
We have a right to merge that, and we have taken a right to merge that. We have taken it according to India's need to merge into our overall financial.
Okay. So the consolidated sales does include the sales of The Hazelnut Factory?
It's very small currently. The top end of overall.
I can't hear you.
It's very small as of now. The yearly top end of hazelnut is close to INR 60 crore, INR 55 crore-INR 60 crore overall. At the yearly level, we acquired in last quarter three, last year, October-November in quarter three.
Okay. Okay. If I look at organic sales at 11.3%, it is lower than the usual 16-17% growth that we used to clock at a few quarters ago. What is the reason for this lower growth? Is it just a general sort of industry slowdown, or is there some other reason behind it?
No, I think it's a mix of both, Percy. Now, when we cut the year in two parts, say, first half and second half, first half was well on track, close to 16% growth. Quarter three was the quarter which has actually slowed down both from the external factors and the internal consumption factors as well. One was inflation, all that stuff, the overall demand. The second was that we could not supply because of this, like what I was talking about, that we witnessed almost about 15-20% negative growth on our resistance snack, which was 8% contribution to our overall business kind of stuff. Those were the factors which brought it down. If we look at the upward movement in quarter four, it's by far up, and it's on an upward movement.
To your answer, yes, the 11.5% is a little muted growth vis-à-vis the growth what we have been doing, but that also reflects the overall category growth also in that thing.
Is there any visibility on the category growth improving in the near term, or that we will have to wait for that?
See, this is a dynamic stuff, but what we really see and witness in the market, both from demand standpoint and also when talking to these people, so objectively and subjectively. We have seen that this quarter four onwards, there is a positive movement. Urban in quarter three and till first half of quarter four was pretty stressed. Urban also, when I say 33% of urban is the metro towns, which actually was flat or had degrown in terms of consumption. This is overall food industry I am talking about. Whereas Tier one and Tier two towns were doing better, but now there is an upward movement across. Going forward, what we see, looking at crop, looking at a lot of corrective action, looking at the infusion what government has done, I think this should only look up. The worst is behind us. That is how we look at it.
This upward movement, is it already visible on the ground to you right now, or it's sort of something that you are expecting will come in the near future?
No. That's what I'm saying. If we compare over quarter three, all metrics are up and far ahead of what it was in quarter three, which is an indication of that stuff. Also, see, one is that you depend only on external factors. Secondly, what we can do, so circle of influence, what we call is there's a lot of readiness and preparedness in terms of the marketing campaign, in terms of the product mix, the pricing, and all. As we take on, our end objective is to grow ahead of the category and beat these external factors as well. Both ways, from macro factors, we see that there's a positivity and should be upward movement. Internally also, how to fight against this, that readiness also gives us confidence, and that's what we're talking about.
Just a clarification on this, sir. You mentioned that Q4 you have seen better momentum versus Q3, but on organic basis, the sales growth is roughly the same, which is 12% in Q3 and 11.5% in Q4.
Twelve percent in Q3, if you see standalone basis, it was close to 6%.
Okay. Got it. Second question is on the focus states. Sorry?
It is 6%-11.5% quarter three to quarter four.
Got it. Got it. Got it. Just on the focus states, this 36% growth that we have seen, is there an inorganic component to that as well? If you can break that out if so.
Yeah. Like what Rishabh spoke about, that the THF, The Hazelnut Factory, which primarily is in this UP state. That is otherwise, it would be say upwards of 20%-22% kind of stuff.
22%. Okay. Okay, sir. That's all from me. Thanks and all the best.
Thanks.
Thank you. The next question is from the line of Anand Shah from Axis Capital. Please go ahead.
Yeah. Hi, Tim. Thanks for the opportunity. I mean, can you call out how much has THF and Ariba done, let's say, in the second half and for FY 2025, at least on an annualized basis, what run rate is it clocking and what is sort of the ambition for FY 2026?
THF and Ariba, so THF basically has given close to INR 11 crore-INR 12 crore in quarter four, and Ariba is close to INR 7 crore-INR 7.5 crore. That is a mix overall from THF and Ariba in quarter four. However, from outlook lens, what we see is that THF can do close to INR 90 crore of business in this FY 2026. FY 2026 and Ariba can do close to INR 50 crore. That is the target what both brands have taken in this FY 2026.
Okay. Got it. I mean, Q4, INR 18 crore came from these two brands, and okay. Got it.
Yeah.
Got it. On the margin side, would this be at similar margins to the business? How does that stack up?
From THF lens, so it's a retail lens. For retail, quarter three is the highest profitable business.
Yeah. I mean, on annualized basis, not quarterly.
Annualized is largely the same. For THF, Ariba is not making money as of now because it's running at low utilization, but it's very small.
Ariba will largely be for the back end and the frozen part, right?
Back end and frozen part, right. That's addition of category for us.
Got it. Got it. So that will eventually not be more revenue generator, but that will more feed into your QSR ambition effectively to scale.
Right.
Got it.
QSR as well as export because in export, frozen part is very big.
Yeah. Okay. Okay. Got it. On distribution expansion, I mean, you've been talking steady growth. What is the target there? I mean, for 2026, 2027, let's say, will you continue to add 20%+ outlet?
Yeah. Our expansion would be a continued initiative because today we look at we are at about 11-12% numeric distribution at a pan-India level. There is a huge room of growth, but the approach, what we are saying, is that we will do a quality distribution increase, which eventually should reflect in the Nielsen or, say, the reach stuff as well. This year, the target what we had taken last year was to cross the INR 3 lakh direct coverage mark, whereas we ended it at INR 3.11 lakh outlets. That is the final number, which it is. Our plan is to add 50,000 year-on-year outlets. That is the target for the next three years. We would be reaching around INR 4.5 lakh outlets directly in the next three years.
Got it. So 15% compounding at least on the distribution side. And most of this would be focus markets?
Primarily focus market, but yes, there is little room in the core markets as well. That would be a defense strategy as to how to uproot or how to take head-on with the local and the regional players as well. In the rural of core market is what our focus would be, whereas in the focus market, it will be primarily urban followed by rural.
Got it. Very clear. Lastly, I mean, 2-2.5% is the pricing you had taken in Q3, Q4, and you took one in April, right? I mean, what was the quantum of in April?
In quarter one?
Yes, in Q1, yeah.
Quarter one is close to 0.5%, half a percent.
Fine, one. A small one. Right now, no plans. I mean, you are largely covered with pricing.
Right now, I think we are done with all the increase in price. We are hopeful that by this, we will be and there will be a lot of product mix and cooperation costing program running on. We will be hopeful that with this, we will be back on track with our original margin and GM and EBITDA.
You are saying second half FY 2026 is broadly very good.
Yes.
Perfect. Thanks. Thank you.
Thank you.
Thank you. The next question is from the line of Darshit Vora from Asit C. Mehta Investment. Please go ahead.
Yeah. Hello. Am I audible?
Yes. Yes, you're audible.
Yeah. Thank you for giving me the opportunity. My question was on focus states. We've been seeing good growth in focus states when compared to core states. We're also seeing increase in family pack salience of about 100 basis points year-on-year. What is it that we're doing that is driving this increase in salience? Also, do you expect it to sustain going forward, especially in the focus markets?
Yeah. I'll take your last question first. Yes, we would continue to grow focus states faster than the core states for two reasons. One is that the bases are not as big as what we are in core states. That's one reason. The second thing is the kind of efforts we are making, the investments we are making, they have to give us a disproportionate result. That's the reason that these focus states would continue to grow faster. That's one. On the large pack and small pack, for us, large pack is equally important. That's what is one of our forte or the brand strength, that in-home consumption, modern trade, equity, we enjoy more. However, what we see is that the small pack is an opportunity for us.
Therefore, the focus would be on driving both these packs, the large pack and the small pack.
Yeah. So my question actually was towards understanding that despite increase in focus states higher than core states, we are seeing more salience in family packs. What kind of is driving that thing?
Two, three things. One is that when we say today, also if you look at in focus states, our market share when we look at just for the large pack is by far high. In the stores where we are selling, it is more so the distribution is an area of improvement, whereas the store where we are selling large packs, what they are selling is doing good. Therefore, there is a same-store growth also happening, which is bases the large pack. That's one. Second is modern trade and new age. New age is the Qcom growth is on the back of large pack. That's the factor which is doing good. Lastly, the promotional campaign what we do, and mostly what you can really address is on the large pack. Like last year, four months, we did a mega campaign, which is Bikaji Khao London Jao .
This was all on the large pack itself. Those are the factors which is helping these large pack grow in focus states and overall also. Like other states, if you look at, the major contribution is the large pack. It's less of distribution. It is more on leveraging the modern trade stores across states.
All right. All right. Okay. That's great.
Going forward, you will see that as we get distribution high, small pack will also be growing faster. We are not taking eyes off from the small pack. They have a role to play.
All right. We expect the overall breakup to remain largely the way it is right now with both growing equally?
Yeah. Going forward, you will see that the small pack will grow a little faster. That is what the strategies and the initiatives which are rolling out are, the ones because that is how we will gain new outlets. Indirect reach will not be on account of large pack. It will be small packs will be playing the role.
All right. Okay. Because of that, would it bring some kind of volatility in terms of volume growth that we see or in margins as well?
Not really.
Not really.
No, no, not really. Yeah.
All right. All right. Thanks. That's great. Secondly, we've been seeing slight decline in packet sweets. You alluded to the fact that there was weakness in the wedding season the last quarter and before that. Apart from this, any other reason that is playing into this declining packet sweets growth?
No, no, no. I think the right way to look at it is at a foliar number. That's one right number to look at. Secondly, see, sweets, if you look at, is a key about say 75% of our business happens between Rakhi to Diwali. That is four months contribute to about 70-75% of sweets business, which is really, really big. That's where if you look at our capacity utilization is upwards of 100% kind of on the sweets stuff, right? Quarter four and the rest, so quarter one and quarter four are the weak quarters on that stuff. They are highly dependent on the sweets season. Sorry, the wedding season because that's when we sell bulk sweets as well.
Now, if we look at the number of salas or what we say the wedding days, this year were by far less than what it was in the last year, quarter four. That is the reason that this quarter four looks good or looks small, but a small business to our overall pie. Hence, I do not think that that is a cause of concern.
All right. All right. Thank you so much. All the best for the future.
Thank you.
Thank you. Before we take the next question, we would like to remind the participants to press star and one to ask a question. The next question is from the line of Abneesh Roy from Nuvama. Please go ahead.
Yeah. Thanks. Am I audible this time?
Yes, yes. You're audible.
Thanks. You had a plan for house of brand strategy over a longer time frame. Could you update us on what the thought process there is? Are you going a bit slow on that so that we can first understand on these activations, what is the way forward? On your own restaurant foray, if you could update FY 2026, what is the expansion plan there? Are you happy with the FY 2025 performance of the restaurant business?
Restaurant business, Abneesh, as we spoke about, that we will get into that stuff. Yes, we opened one store in Rajasthan. That is the so-called QSR stuff in Sikar. Last quarter, we did one. This year, also, we will add about four to five outlets. This is what we had called out. Therefore, in our growth plans, QSR is not really adding up, or we are not taking any large numbers on that account. Certainly, for next year, hereafter, is what we will call out on our QSR strategy. That is how the plans are. Other than this, on the house of brand, if you look at, THF, yes, it is doing good, which is a retail brand. The aggressive plans, they have fallen well in place. That is where it is.
Bhujialalji, which was a small acquisition, and that was clearly to play on the modern trade and on the e-com platforms as a brand B strategy, that has also now is falling in place. Going forward, what our plans are that we will not add, we'll try and build even a larger brand. That's the strategy.
Sure. My second question is on the demand side. Most FMCG companies in Q4 call have said strong outlook, better outlook in FY 2026 versus FY 2025. You have delivered around 10% kind of volume growth in FY 2025. Of course, there is an aid of the 10% extra grammage, which you are giving, especially in the first half. If you marry the extra grammage, which you are giving, which is there in the base, and softer food inflation and some of the other macro good monsoon, lower interest rates, then how do you see your volume growth? Would you target a high single-digit kind of volume growth in FY 2026?
No. What we are looking at is 12-13% kind of a volume growth in 2026. I think our strong plans are in place, so what we say should happen. I mean, that's how we look at it.
What has changed? Because I remember in Q3, most of the FMCG companies, including you, were saying the overall demand situation is quite challenging. The Q3 call was having a lot of questions on the real volume growth, X of the 10% grammage, and all that kind of question. Now, within one quarter, you have seen a good performance improvement, Q4, 11% like-to-like standalone growth versus 6.5% previous. It is a good performance. Now you're talking about 12-13% volume growth. One, how confident are you? Second, is this more of a sector change, or is this something you have really cracked as a market share, which is giving you the confidence a bit?
Abneesh, two things. Like as you started off with quarter three, let me answer that. Quarter three, we witnessed about 20% negative growth on Western Snacks. Volume growth I'm talking about, right? Now, Western Snacks contribute to 8% to our business with a 20% negative growth. We called it out that that's not a demand issue. That's purely a supply issue and a conscious call, which we took, right? This quarter, again, we have bounced back with upwards of 20% growth in the Western category. That in itself, that's one. Second is that last quarter, the denominator or the earlier, the 10% extra scheme was also impacting our volume growth, which we tried and clarified that net of, if we look at revenue volume growth, it's upwards of 8.5% kind of a stuff. That's one on, I mean, quarter four over quarter three.
Going forward, what we are saying is that this overnight, these growths will not come up the kind of the positive momentum what we are seeing the way the company's Nielsen is projecting kind of a growth. This would be an upward trajectory quarter one, quarter two, and thereafter. That is what it is. At a holistic level, we are optimistic on a 12-13% volume growth.
Last quick question on capacity expansion. You did say Popper growth was slightly constrained because of capacity being full. In FY 2026, any plans to add capacity in any of your verticals, either through third party or in-house?
In proper, we do not need a major CapEx. It is largely a fully manual process. Yeah, there is a small plan to increase the CapEx, but it will not involve a major investment. Yeah, in proper, we have also taken a growth of close to 10-11% in this year.
Other verticals, anything you want to call out on CapEx?
On CapEx perspective, we are investing in one big warehouse in Bikaner. That investment will be close to INR 65 crore and it will be part of CWIP, what we have filed in March, the numbers of March 2025. This mega big warehouse will come up in the next three and a half, four months. This will solve logistical issues. Currently, we do not have space to keep stock more than two, two and a half days. That is a lot of production issue coming, keeping up. That will solve this production issue, and it will help in improving our field rate and sales. These are big investments coming up in this year. There is no any other major CapEx addition. It will be regular maintenance CapEx that will be coming up in this year.
Thanks. That's all from my side. Thank you.
Thank you.
Thank you. The next question is from the line of Amit from HG Hawa. Please go ahead.
Good afternoon, sir. Thank you for the opportunity. Am I audible, sir?
Yeah.
Yeah. Thank you for the opportunity. Sir, my question was with respect to what is the ad spend as a percentage of revenue, and how do you evaluate the ROI across campaigns?
Yeah. Our ad spend, as we call, is well within budget. What we say, it's close to 2% is our ad budget. This is what we park aside for the year to come as well. That's the kind of number we are budgeting or maybe a little ahead of that. The moot point is that yes, we believe in marketing investment and would continue to do that. ROI, when we speak about, it's not as easy because there are lots of overall umbrella branding, umbrella activity, what we do to help our entire business growth. In the name of Bikaji, not brand specific. Yes, whatever we do, say, for example, if the mega campaign what we did was on the Bikaji, which is Bikaji Kaho London Jao . We saw a huge upward increase in this large pack.
That is what has helped large packs grow by far ahead of what the industry or the category growth or other players have seen. That is one. Second is that our gifting, so which is season, which is gift packs and also the sweets. This is a huge number. Now, while selling it is one part, you also have to ensure that offtakes happen or complement the selling part. To support that, there is again a huge media investment what we do across communication vehicles. This is where we spend. The proof of putting is that, and how we look at it is that if we could generate offtakes, so there is least of leftover or nil leftover at our retail outlets, speaks about the success of the marketing investment. This is how we look at it.
The second question was, if you could take the modern trade and e-commerce, what share of our revenue comes from these channels? Do you plan to expand them further?
Certainly, yes. If you look at the last three, four years, modern trade has been, or both these channels have been growing by far than the overall business or general trade to compare with. We would continue to invest in both these platforms and would be growing. Modern trade is almost 2.5x , 2x of the overall company growth. This e-comm channel is even higher. This is at about, it has grown at almost about 50% last year. That is the kind of growth. We see this continued momentum.
Can you give a number, what percentage of revenue comes from these channels?
About 8% comes from our modern trade channel, contributes about 8%, and 2% is this Qcom e-comm business.
Any plans to enter any existing FMCG category like beverages or something like frozen snacks?
Not for now.
Thank you, sir, and I'll be there for the future.
Thank you very much.
Thank you. The next question comes from the line of Manish Poddar from Invesco Asset Management. Please go ahead.
Yeah. Hi, thanks for doing the call. I hope things are good at Bikaji and Bikaner in the given scheme of things. Just two questions. One is, in this pricing which you have taken, how would we stack against competition, let's say both unorganized and organized? Would they have followed a similar pattern? Just if you could give us some sense on that.
See, if we compare against organized players, we are no, this is one when we say four key stuff, pricing is one of it. We cannot be very over-indexed or under-indexed. This is almost hand in hand. Of course, when we speak about the local, regional, or the unorganized small players, we never look at it, and they are always cheaper. They are at about, what, 0.85 index to what we are. That is the kind of differential. We are very mindful. When we take any price increase, it is not a random call, or it is not in isolation. We do quite a study in terms of brand-wise, company-wise, geography-wise, and that is how we take price increases.
Would it be right that the, let's say, you're saying about the price index, but let's say the unorganized players would have also taken a price increase alongside or the company would have taken a similar increase with the quantum which you all take in that ratio?
With the commodity price increase, like if palm oil has moved up from INR 85 to, say, INR 140 or INR 125, they also cannot survive. They have also taken price increase. I'm saying the differential would continue.
Okay. Amir, if you can call out, let's say, the second one is, what is the growth in Rajasthan portfolio, if you can help me with that?
Rajasthan portfolio is about 12%, close to 12% is the Rajasthan portfolio.
In volume terms?
Volume terms would be, it's about 8.5% kind of volume growth. 8 or 8.5% kind of. I can get back to you on this stuff, but yes.
Okay. No worries. Thank you so much.
Thank you. The next question comes from the line of Sunil Shah from SRE PMS. Please go ahead.
Yeah. Thanks for the opportunity. Sir, my question is slightly on the long-term basis. Say if we want to have a thought process for the next three to five years. And as a company, if we intend to grow at a 15% CAGR kind of a number, sir, A, the driver would be that we are increasing our distribution network. That INR 3.11 lakh will scale up to about 4.5 lakh over the next three years or so, INR 0.5 lakh every year. That is one thing that we are increasing the presence. The second is, once our presence is established, then we can keep on introducing new products over there. At the same time, we can increase the same store sales.
How are we looking at this situation over a long-term point of view in terms of distribution, in terms of new products, in terms of same per store, specifically in the context of competition, which is really there for us, and also the ability to have price rise in a scenario of increased raw material prices? If you could give us some indication strategically from a three-year point of view or a slightly longer period is also good. Thanks, sir.
Sure. Sure. See, when we say 15% growth kind of a number, the assumption is that about a high single-digit number would be the category growth. That would be organic growth. We will have to hold to that. We have to do a differential growth so as to gain market share. As we speak, we are less than 9% or, say, 8.5% market share. There is a huge headroom where we do not aspire to be, say, healthy rams. Clearly, if we say that our aspiration is in the next three to five years' time, we should be at about 11.5%-12% market share. That is the ambition. This we can achieve if we differentially grow to the category growth. Now, the growth drivers would, of course, be the distribution. That is reach.
The second is the throughput increase. In the core states where our market shares or our penetration is already high, the task is to grow same store growth, throughputs. If you look at, let's say, if core states or Rajasthan has grown by 12%, the same store growth is 8% and 4% is the new store growth kind of a number. When we get into focus states, this is reverse. It is more led by new store growth and not as much as the throughput growth. To complement our distribution or the route to market initiatives is the role of marketing so as to create brand awareness, which is what will help generating offtake, same store growth, and all. That's the strategic call.
In terms of new product introduction, new categories, that's what we are keeping out of scope when we speak about these growth plans going ahead.
Right. Okay. So in FY 2025, it's not been a year which has been really great that we can boast about it. Anything which was structurally important for us, which will kind of deviate us from the three-year thought process?
Sorry, I missed on one of your earlier questions wherein you spoke about the pricing part as well, that, no, so what happened? What happens is that, of course, last year, this was the second half wherein the inflation challenges came in. This quarter three was a derailer, right? This hit not only us, the overall FMCG industry or overall industry per se kind of was down. I think the resilience what we as an organization showed is that still did best in the worst and bounced back in quarter four. We, going forward, however, this category is highly dependent on the commodity prices.
I think the departure what we have already made is that we are not solely dependent on the commodity prices, the ability to react, and ability to make predictions of what is coming our way is what I think we are much better prepared than what we were before. That is the structural change what we have done and built in the organization. However, these are dynamic numbers that sometimes these commodity prices are by far beyond expectation, and that impacts us. I think that is the way this will move.
Sure. Fair enough, sir. Thank you so much and all the best for the future. Thanks.
Thank you. Participants may press star and one at this time to ask a question. Participants who wish to ask a question may press star and one now. The next question is from the line of Niril Parekh from Awriga Capital Advisors. Please go ahead.
[audio distorted]
Your voice is not clear.
Am I audible now?
Yeah. Yeah.
Okay. After the PLI income goes away and the manufacturing plants ramp up completely, from a buyer perspective, what are the steady-state margins that we should [audio distorted]
You are talking of after five years, right?
Five years, yeah.
Basically, we got
Hello sir, are you there?
Yes, yes.
Sorry. Yeah. We got PLI till FY 2027. Currently, we invested in all the plant where we are giving minimum guarantee. There are big costs running plant at lower capacity. All the outside new plant are running at lower capacity. Of course, PLI will phase in next two years. Our capacity utilization will increase significantly in the next three-four years. This will offset PLI income. What we think is that our steady EBITDA after four-five years should be around 15%.
Okay.
Of course, it will be driven by multiple things, be it investing in branding. It will help in commanding price from consumer number one. Number two, of course, product mix is an important thing because we are already focusing on a few products which are high in gross margin, currently contributing close to 15-16%. Target is to take this to 18-19% in the next two to three years. Investing in cost-saving program within the organization at each level, be it production, logistics, or building strong trade scheme systems. Getting proper ROI of each investment, what we do, be it in sales or everywhere. There are multiple things going on as an organization which will help us in driving this 15% target.
Got it. Thanks a lot, sir. Thanks for my time.
Thank you. Thank you.
Thank you. The next question is from the line of Nitin from MK Global. Please go ahead.
Yeah. Thanks for the follow-up opportunity. I just wanted to check, the Rajasthan market has grown 12%. How has been the growth in other core markets like Bihar and Assam?
Hello?
Hello?
Yes, sir.
Yes, sir. Go ahead.
Am I audible?
Yes, sir. You're audible. Please go ahead.
Yeah. It is Rajasthan followed by Assam and then Bihar. That is how the growth is.
Okay. Thank you. Second question is with respect to at the start of the call, Rishabh has highlighted lots of correction internally. Can you please help us with the key initiatives we have taken internally? Apart from he has deliberated on SAP implementation and Darwinbox and all and M&As.
I would rephrase that correction. I mean, I think the right way to put it is that keep the improvement. It would be a consistent improvement or improving over what we're doing. For example, ERP. We were at Microsoft 365 as the ERP which we have been using. What we felt and studied is that having SAP would help increase our efficiencies, link all functions better and all. That is an improvement or an investment we decided to do. That is one. Right now, the distributor, this would always be a dynamic thing, how do you upgrade the distributors. As you grow business, there are certain distributors you find that now their ability to invest in business, financial, or maybe in terms of their bandwidth of the increased business.
Then you have to take certain tough calls and say that now we'll have to part ways with a few of them. Those are the kind of improvement in our distribution network. Talking about people, right? Doing P by P, so performance to potential metrics. There's always a tail which you'll have to cut and see that how do you improve overall capability standards in that stuff? Those are the stuff. Now talking on HR, and you also touched upon that Darwinbox, right, got deployed. Earlier, the PMS, what we were using, we felt that now this would be as the size of our organization is growing, as the people number is growing, we need to have it even a better version of it. That's where the investment on Darwinbox. That's how the improvements over years is what's happening.
Thank you. The last bookkeeping question on this employee cost increase for this quarter. Any specific reason for this?
If you see at a standalone level, there was some grouping of which was passed last year in other expense, which has been in employee cost. It was selected. It was done in this year. Overall, the employee cost, if we exclude this, is close to 16% increase in employee cost.
Okay. Thanks. Thanks for answering all the questions. Just last sort of a suggestion or sort of a help we need in terms of going ahead with the M&As in the business. It is getting a bit complicated. If you can sort of help us provide a disclosure separating the organic business and the M&As, that would be really helpful. Thank you.
Sure. Thanks for the suggestion. Thank you.
Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the Management for closing comments.
Thank you once again for being on the call. Hopefully, we could answer your questions. We would appreciate to take any question which is left out. One of you or any of you can reach out to Prateek for these questions, and we'll get back to you on that. Thanks. Thanks once again.
Thank you. On behalf of Bikaji Foods International, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.