Good morning, ladies and gentlemen. Welcome to the Britannia Industries Limited Q1 FY 'twenty two 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. Please note that this conference is being recorded.
I now hand the conference over to Mr. Yash Bagri from Britannia Industries Limited. Thank you, and over to you, sir.
Thanks, Luzhan. Hi, everyone. This is Yash from the Investor Relations team. First of all, apologies for a couple of minutes delayed start. I welcome you all to the Britannia earnings call to discuss the quarter 1, twenty one, twenty two financial results.
Joining us today on the earnings call is our Managing Director, Mr. Varun Bedi Executive Director and CFO, Mr. Inder Venkatraman VP Procurement, Mr. Manoj Bali VP Marketing, Mr. Avinay Subramaniam and VP Sales, Mr.
Vipin Katalia. Before I pass it on to Mr. Varun Bedi, I would like to draw your attention to the Safe Harbor statement present in the presentation. Over to Mr. Varun Dari for on the remarks on the performance.
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Good morning, everybody. Sorry for the late start. So starting with the presentation, if we get to Page 3, It's really been a tough quarter from resurgence of COVID standpoint, but we made Sure that we got all of our employees vaccinated. We've covered 92% Of our employees with 1 dose. And now that the interval between the two doses is higher, I would think that in the next couple of months, We should be 100% with all our employees.
We'd also taken term insurances and utilization insurance, which came in very, very handy during this time. It was a very, very vicious Resurgence and we are glad that we are out of that. Moving on to the next page, which Gives us the performance. Now what we try to do is we've looked at it from 3 vectors. So the year on year performance is flattish from a revenue perspective.
Sequential growth versus Q4 of last year is 10% And the 24 month growth is 25%. On the operating profit front, the year on year growth is minus 25. Sequential growth is 12% and the 24 month growth is at 44%. So I would say, yes, from a last year perspective, because we've seen the peak last year in this quarter and We had all the efficiencies working for us. We were only producing 3 brands and all our lines were full built out on those 3 brands.
There was no variety that we were producing. So from that standpoint, yes, we are down. But overall, the performance, as I would look at it, is Very good. From a market share perspective, again, our March continues. We've continued to gain share Even in this quarter, so that's a good sign.
So if you look at it, all three parameters Are fairly healthy and green. Moving on to the next slide, which really talks about what really happened during this Quarter, the COVID-nineteen second wave was very, very severe. It was we see the spike there, Which suddenly happened during this quarter. And this time, it was the rural Hinterland, which was also hit pretty badly. During this time, we also saw crude oil prices go up And the prices of fuel in India go up fairly considerably.
And the palm oil prices also went they were really, really Very, very different from what we've seen in the last year. We've seen a sudden spike in oil So in view of the pandemic and the hardship to the consumers, we were cautious in our price increases. We haven't gone Completely all out on price increases. We've started to take some price increases, which the task will get completed, but We were just a little cautious to make sure that there's no sudden impact to the consumers. But we were very aggressive on the cost efficiency, which has helped us and which has helped us not just obviously Keep the shape of our profitability, but sequentially improve it as well.
We continue to drive We continue to make sure that all our initiatives on the cost efficiency programs are continuing at A pace which is much, much more brisk than what we've done in the past. Moving on, We continue to focus on our strategic planks. We've spoken about these. So innovation, while I must say that because of the COVID-nineteen second wave, this did take a little bit of a back seat because people couldn't travel to factories and even trials were difficult, etcetera. Distribution and marketing, again, took a little bit of a tumble because we wanted our people to be safe.
So we told them not to go out and work in the market. But I think it was the right thing to do because we are coming back on all of these parameters very strongly once The pandemic has receded. Our cost focus, as I told you, was very, very sharp during this quarter. Adjacent Business was the products which were for home consumption did well. The On the Go products did suffer during this time, and we worked very hard on our sustainability agenda.
So from an innovation and renovation standpoint, the 2 big ones were the Good Day Choco Chip Relaunch where we had a surprise pack and we had some celebrities. So it created a lot of excitement and this product is doing well. The second one was the fifty-fifty Cortazzos, which is a very, very interesting product, which we've launched In the Northeast for the time being, but as we speak, we are looking at spreading it across the country. The response from the Northeast has been fairly good. And this will be supported with a 3 60 degree campaign, which includes everything that's there on that chart.
Now marketing activities during this quarter were definitely Much more aggressive than what we've seen in the previous year Q1. So most of our big brands were back on air. We had the Milk Picky South, which is Our very strong bastion. We also launched the rest of India Milk Bikis, which is Being promoted by Pankaj Tripathi, it's got a very strong proposition of Dooz Roti, which is something which is doing very well in the in the Hinterland. We also had Good Day Cashew and all of these brands.
I'm not going to go through all of this here. But we were fairly back on And with our brands on biscuits as well as on our adjacency products like cake and This was the report card for the last quarter. So if you were to look at direct reach, In March, we were at 23.7 pack outlets. We did take a tumble in June. But as we speak, we are Getting back to our base.
Our rural distribution continued, no big progress here, but at least we kept it stable. The focus states that the growth kept outpacing the country's average. And the channel growth, which has been tepid for the last couple of years, Well, back in this quarter. So we are hoping that the modern trade, the e commerce as well as All of the adjacent all of the other channels will start to produce results for us Last year was quite bad on that front. We also continued our march on creating and sustaining System of efficiencies, and we've spoken about this in the last quarter's call as well.
So from a process improvement standpoint, we had the S4 HANA, which has been implemented, our Tria, which is our distribution system And dealer management system for distributors and Ariba, which is the procurement and the data system, These are very well stabilized. We are looking at making sure that this starts to support our entire business. We've also got the continuous replenishment system working now and our sales for the month are fairly stable. We used to have a surge towards the end of the month earlier, but now we are trying to make sure that it's linear throughout the month. We had a better inventory management system whereby we were able to reduce inventories at the distributors by almost 25%, which helps them in times like this.
And from a financial efficiency standpoint, We continued to do what we've done in the past, which was waste case reduction, market returns As well as from the factory, whatever waste cases are there, we kept reducing those. And supply chain efficiencies, while they were not Exactly the same as last year, same quarter because last year was just With 3 brands, etcetera, but it continued to be very, very good in the factories as well as in the depots. The adjacent business, we had international, we had export container availability issue, But we managed we did see a little bit of a setback because of that. Sailings were delayed for our products. We have done a complete distribution system revamp in Middle East, which is going to have a long term positive impact on our business.
Nepal continued to grow in double digits, and Nepal has been a very good story for us. We continue to gain share as well as we continue to serve as far as revenues and profits are concerned. On in the home consumption category, as I said, we fared very well. While on the go was impacted, We launched flat wafers and the Rolls plant, which is going to get commercialized very soon. It's in our Tamil Nadu factory.
So we will start producing from that factory in the next couple of months. And our milk collection is about 50,000 a day now as we gear up for the back end for dairy. On a sustainability front, we worked on the 4 factors, which is people, growth, Governance and Resources. And our EAC agenda is pretty much on stream. We will be publishing our report, EAC report in August this year.
And Our people, our team has been working very hard to make sure that we work on this to provide very, very clear Insight into whatever Britannia is doing on this front. So I won't train this chart, but the details are all there for you to see And you will soon see the ESG report as well. Now coming to the financials. This is our revenue chart. So if you were to look at this, Our revenues for Q1 were at INR 3,352 crores, which was About 1% lower than what they were in Q1 of the last year, Right.
But sequentially, we were better than what we've been in the last two quarters, Q3 and Q4. So while we were flat on growth versus last year, the 24 month growth was 25%. On the cost and profitability front, we so flower was fairly in control. In fact, there was a little bit of a deflation as well as flour pricing was concerned. Sugar was flattish.
Milk, there was inflation in all milk products during this quarter, but The biggest inflation came on Fats, where we saw almost a 50% inflation during this quarter. And that did take the overall basket of commodities towards inflationary trend, which we haven't seen for some time. Next slide. On operating profits, we did sequentially, we did better than what we did in Q4. So from 14.9%, we went up to 15.1% this quarter.
And even if you were to compare it with Q4 of 'nineteen, 'twenty, we were sequentially better. Obviously, the All towers that you see in Q1 and Q2 were because of the growth that we saw in our top line as well as The efficiencies that we got during these quarters because all of the stuff that we were doing by Prioritizing our brands, etcetera. But if you look at it from a 24 month growth perspective, again, a very solid 44% growth on operating profit as well. So these are the key financial This is a consolidated report. So net sales, there are these three numbers that I've been talking about sequential growth, Year on year growth and 24 month growth, they're all there for you to see.
And if you were to look at the bottom table, profit from operations at 15.1%, profit before tax at 15.8% And profit after tax at 11.6%. And so that really is our report card For the quarter, very happy to answer any questions that you may have.
Thank you. Ladies and gentlemen, we will now begin with a question and answer session. You may press star. If time permits, you can come back in the question queue for a follow-up question. The first question is from the line of Amnesh Roy from EDWise.
Please go ahead.
Yes. Thanks and congrats on very good sales performance. My first question is on that only. So I wanted to understand how much was the impact of SAV4 HANA restocking. Q4 had suffered because of that.
There is hardly any panic buying factory loading. So what led to 10% growth, which is happening for the past two quarters on a 24 month basis, that jumping to 20 5%. So partly also saw very good July. So I wanted to understand, has your July month also been fairly similar kind of performance upstaging, of sales? So, Avnish, yes, we did see a little bit of a resurgence as far as Sales were concerned.
So it's not like what it was last year, but I think also the parameters that we operate with the distribution and that helped us because I think what really happens is that people migrate towards trusted brands, and that's why we saw Resurgence and similarly maybe pilots or similar kind of insurance. So people do tend to lean on They're most trusted brand. And luckily for us, most of the brands which did well The premium brands, Parley obviously gets their resurgence in their Parley G, which is the most trusted brand from their portfolio. Now I think it's something which We had seen if you remember last year, we had seen a very resurgent 1st quarter, a reasonably resurgent 2nd quarter, and then we've seen a little bit of a cool off that had happened. The cool off had happened because the economy, etcetera, was it was a little bit of a Sad kind of a situation with COVID happening and some businesses shutting down, etcetera.
But I think This time, the government hopefully is going to do all that's necessary to keep this going. The rural economy, because it suffered this time, because of the COVID situation, I think government's measures will make a huge difference to how this pans out in the coming months and coming quarters. Sure. That question I had asked on July. Are you able to sustain the loan performance?
We never give Future looking forecast, Amish. But yes, we are reasonably stable, I would say. My last question is on Milk Dickies' atta. So last quarter, you This will be the heaviest advertising any FMCG brand has ever seen. I understand the wave to a pandemic would have Postponed it.
So I want to understand 2 things. 1 is now is the advertising going to actually happen? And second, how has the initial whatever the steps you had Because your focus rates have done well, 1.33x of the average. So has Milpikis also played a big role there? You said it has done well.
But want to understand, Has it been a big growth or is it just the initial? No, it's done very well, Abhneesh, but I'll let Vinay I'll let him comment on it. Vinay, please. I have Nick here. Vinay here.
So first of all, we didn't cut back on any advertising on Melbookies in Rest of India. This is one brand that has been advertised very, very regularly Since we launched this in the month of April, so we've already done 2 bursts. And you're right, We've seen very good sequential growth happening in the BP. I can't disclose exact numbers, but it's been far higher than the Britannia growth that we have seen for this brand as such. We are very, very bullish on this.
And even now in July, we have started our 3rd round of advertising as well. So just last follow-up, where is it taking share from? Is it the initial publicity related burst, the inventory which gets put in? Or is it a share gain which is happening from the company? So, Agnesh, When you see a resurgence like this, it's obviously share gain that's happening.
So you got to remember, the base of the pyramid Is the entire sea of glucose that is sold. From that perspective, it will be a very small shift. But Overall, yes, it's upgrading consumers from the value products to a product which has a very strong proposition for the Hindi belt. And the objective really is not to grow 60%, 70%, but at some stage Take this to 150%, 200% kind of growth in these states. So that really is what we are looking at.
Thank you. The next question is from the line of Aditya Sohman from Goldman Sachs. Please go ahead.
Hi, good morning, Varun and team. So first question, in terms of your operations, are all your salespeople back on the beat? And even the rest of the operations, any sort of interruption that you're still seeing? And the second question was on new launches. So you talked about First, but can you just give us what else is in the pipeline, let's say, over the like 6 to 12 months?
Right. So yes, our operations are fully on stream. This resurgence Did not see any disruption to our supply chain. That was the good part. So we our supply chain, our factories, etcetera, Continued to perform the way they were performing.
We did see a huge upset on our front end Because people couldn't go to the market and being a very, very intense distribution house With supervision, with our distributors, salesman, etcetera, being a very important part of what we do, It did upset that part of the business, but now that's coming back reasonably strongly. Now we hear that there's some amount of resurgence again in a few states. So we are going to be very careful. We are not going to let Employees come in harm's way as far as the COVID infection is concerned. But I would say we are 90% there as far as the front end is concerned now.
So Now the thing is that during this time, there were trials, etcetera. There were lots of products that we planned to launch. There were lots of health and wellness products that we plan to launch. And we were not able to take trials, Because our people couldn't travel to the factories, and it was becoming difficult to get the product to the team without our people being there. Remotely, it was becoming a little difficult.
But this quarter, we've told you, This is one product which is a very interesting product. We are now looking at VFS 6, Which will be launched soon. We've also got Milk Bikki Classics, which is Going back to what Melbiki used to look like, and Vinay, that's already in the market, isn't it? That's going into market now. And we've got some other NutriChoice products, which are also coming up in a few months.
Thanks, Varun. And in terms of price points, again, this will be spread across all your price points? Or are you targeting the specific Fair point. With milk, the key I'm assuming it's probably towards the more affordable side. But overall?
See, affordable price points can always be created. It's just how much glamour are you And in a market like India, you'll always need INR 10 or INR 20 price point even for your premium products. So we will continue to do that, but these products mostly are in the premium range. Even this biggie classic is a reasonably premium product.
Thank you. The next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead.
Hi. Good morning, Varun and team. Two questions. First on the margin. So when I look at your gross margins, these are like multi quarter low.
And if I look at your operating EBITDA margins, let's say FY 'eighteen, 'nineteen, 'twenty, you did about 15% to 16% at operating EBITDA margin level. Now this quarter is going back to historic levels. So How do you think about margins in the medium term given that you are planning to take up product price hikes, but I'm guessing that A and P staff cost will also move up. So should we be looking at about 15%, 16% what you have historically done? See, you got to remember one thing that when inflation hits you suddenly, it's just There's a little bit of a lag between how you react to it because in normal times, we would have reacted Aggressively to inflationary trend and taken our prices up almost immediately.
But because of the situation that existed on the ground, there was obviously a little bit of turmoil with consumers as well. So we thought that it will be the right thing to take pricing gradually. And that's what we are doing. And I would think that, yes, we would get back to our Margins as they stood and beyond in the coming time because price increase is something that We'll have to. And we planned it and it's all getting rolled out as we speak.
Sure. Sure. The second thing is, Varun, about your ambition of being Total Foods company, I'm Guessing that you lost a lot of ground in the last few quarters, starting with 1st wave and then 2nd wave. Can you just elaborate on how What are the goalposts that you have? How are you going to get to a total food company ambition?
I'm guessing given the uncertainty or concern around 3rd wave, you would still go slow, the cross on launches and all that. Can you just elaborate You know that part? Thank you. So that's a great question. You're right.
So what really has happened really is that A lot of oil, if you look at the adjacency products, a lot of these adjacency products are on the go. And this was not the time to really go helter skelter after the on the go products There was no one on the go, right? It was all home consumption. And that did disrupt us, Not just from a sales and marketing perspective, but even from trials, etcetera. So it's very difficult to explain The elaborate process that we follow to make sure that our Whatever products we launch, especially the new categories, that will get them to a T.
So for example, Let me take the example of Croissant, right. We put Croissant in test market about 1.5 years back, right. And we still haven't been able to get it to Exactly what the Indian consumer needs, right? So feedback from the market is that today the product is A downside better appreciated a lot more by the Indian consumer than when we launched it. And that feedback is coming not just from consumers in our research, but even from friends and family.
The issue is that we are still not happy with it. We still have to do some more trials. And when we do trials, we've got trials that we do in factories in Greece, which is where our partner is. And we also do some trials in India and we finally research them through consumers. So the cycle of this, especially for new products, is very elaborate.
So this probably will culminate in the next 6 months where we'll have the final product and we'll roll it out. And that's what's happened because Of disruption, not just in India, but in Greece and everywhere else and even raw materials, Cocoa, the specific Cocoa that we wanted, we couldn't get because of the supply chain issues coming into India, etcetera. So all that has disrupted it. But I would say that it's just a disruption. We will get back to speed And we will make sure and there are some very, very exciting thoughts that we have, which If they were to come through, it could be a very exciting journey for Britannia, Not just in the existing products that you've heard of, but it could mean that We could get into certain categories, which could be even more exciting than what we've been talking about.
So I think it's just a disruption, and we'll come back to speed very quickly. Completely understand. Wish you all the best, Varun and team. Thanks. Thank you.
Thank you. The next question is from the line of Alok from Ambit Capital. Please go ahead.
Yes. Hi. Congratulations on the good performance. My question was also on the addition category. So firstly, I wanted to check, would you be at some point in time looking to disclose the revenue proportion coming from adjacent categories?
And can we get a ballpark number at present? So one would be biscuits, adjacent categories and dairy. So dairy below 5% but the difference would be what The adjacent categories would be at about 2,000 500 approximately, including all of our Products which are outside of biscuits. And yes, about dairy is about 5% of the total mix. Got it.
Got it. Yes. Got it. And the $2,500,000 of course covers the daily bit also, right? So we'll back calculate accordingly?
Yes, yes, yes. Okay, okay. The second question was on the Ren Zheng Dao plan. So I believe that a lot of efforts over the last 2, 3 years have been put into the Ren Zheng Dao operationalization. So what percentage of the plant would be operational currently?
And by when can we see 100% operationalization for the same? So it's been a process of continuous expansion. So currently, How many lines do we have operating? 8 lines doing roughly 10% of total production spending. 8, including the croissant and everything.
So we've got 8 lines which are fully operational in Ranjindom, and we are putting up some more. So for example, Right now, we are putting up we are thinking of putting up a RASK line there as well. We probably are going to put up a few more biscuit lines, But it gives us 10% of our total production from 1 factory. We are also in the process of putting up our dairy Facility which should be ready by next year. So I would say, Q2 next year.
Our dairy facility should be ready and that's going to be a facility to really See, the building is coming up as we speak. We would actually welcome you guys once the COVID The scenario gets over. We would like to welcome you and show you our plant. It's we are very proud of what we've been able to create. That will be really great.
Just a follow-up That because you say Rajendra would also have DD line, I'm assuming the effect on overall would be not more than possibly 4 to 5 times In that plant? Venkat, I said 10 for 4 to 5 times. No, they ask very difficult questions. Basically, what I was trying to get at is that once the Rajvindra is Opposite wise, what percent of revenues in the adjacent categories will come from Rajendra versus the AOB ticket? Yes.
No, just some category we will still have to work out. We have not thought about it on those lines currently. As we speak today, like Varun mentioned, the factory, the investment that we have done so far is about INR 650 crores And it's currently generating a revenue of about INR 100 crores. Okay. And some of the lines are not Fully utilized currently.
We have put up few lines very recently. There's a little hatch line that we have put up, which is yet to be fully used, etcetera. And some of the cake lines are also not being fully utilized correctly. So possibly once these get fully utilized, You will have at an order of about INR 15,000,000,000 to INR 16,000,000,000 crores on the current business. Okay, okay.
That is correct. The other thing to remember is that the Maharashtra government has been kind enough to give us 110% Incentive. So 110% of our investment in that plant is coming back to us in terms of All tax benefits. Right, right. Thank you very much and look forward to reviewing the plans for the situation online.
Thank you and good luck.
Thank you. The next question is from the line of Shpatbasi from Centum Capital, please go ahead.
Hi, Varun. Hi, Venkat. Good morning and thanks for the opportunity. Indeed, I was very amazed that you have beaten my estimates. So to ask the question on Slide 15, we have shown the growth quarter 1, 26%, quarter 3, 11%, quarter 3, 6%, Quarter 48% and now we're at minus 1%.
Can you talk about something how do you see going forward? And maybe If you can spend a minute on how the category is behaving, whether the premiumization or the lower end of the pyramid is going faster Or can you find money still ruling the market? So, Suresh, in today's time, nobody can forecast what's Could happen tomorrow. Really, it's impossible. We do our plans.
We Redo our plans, we do strategic plans, but everything is dependent on how Things pan out as we operate. So very difficult to say, but Just to answer your question on the premiumization versus value, etcetera. See, we don't have much value in our portfolio, right? We don't sell value products. So Even if there is a resurgence, it's a very small percentage of our portfolio.
All our resurgence is coming in products which are Premium Products, right. I would think that on an overall market construct basis, There is a little bit of a resurgence in value. Luckily for us, we are very small in that category. And hence, our resurgence is in our premium products only. And actually, the belly of the market, which is The Maris and all of that, Milk Bikki, Marie, that's where we are seeing that result.
So hopefully, we'll keep it that way because we don't plan to make a very big pitch for The value portfolio because the margins there with the current inflation are single digit. And I don't know I don't want to be You're growing 30%, 40% in a category which doesn't give me the kind of margins that I'm looking for. So, Varun, just follow-up on that. When we say that minus 1% decline on the revenue, Would you be able to help me with the volume, what we are seeing? Is it higher than 1% minus 1% or positive?
Yes, it is. It's positive 1%. The volume is positive 1%. And the reason for that really is that last year we were only selling 3 brands which And no value at all because we didn't have capacity for value. This year, we've got a mix which also has a bit of value.
Hence, while the volumes are positive, revenues are actually going up reasonably flattish. Okay. My second question, if you can spend a minute or 2, you did mention in the beginning that at least you have done the Thank you, Grant. What exactly do you have done? And if you can spend a minute on metal, how it is shaping?
And what is the number in terms of revenue volume, Something you can give quite a bit of detail on Netal Business? Sorry? You're talking about Nepal? I'm talking about international. You mentioned that you have done some revamp in the Middle East in terms of distribution.
Okay. So exactly we are done. And about Netant? Yes. So on the distributor front, we have changed our distributor.
We did a full pitch for our business there. It's a very, very solid business. And we were not getting the kind of traction on distribution and in terms of execution with our with the Earlier partner. So we did a pitch. We got a new partner who is very solid, very good on execution.
And that changeover has happened. Obviously, there are some disruptions which happened when there is a changeover Because you have to take stock from the old distributor, etcetera. So all that was in process during this quarter. But As we go forward, this is going to be a very, very positive move for our Middle East business. As far as Nepal is concerned, it's as I told you, we've become market leaders, but that's not Our only ambition.
Our ambition really is to make it into a fairly large and a dominant business. We were So we are seeing a 26% increase in our revenues there, despite lockdowns and all of that. So We are hoping that whatever we'd envisioned for Nepal will come true as we go forward. Does that answer your question? Thank you very much and all the best to you.
Thank you.
Thank you. The next question is from the line of Avi Mehta from Macquarie Group. Please go ahead.
Hi, Varun and team. Thanks a lot I just wanted to understand the medium term margin better. Now this year, we have moved I I mean, last year, we moved almost to 19%, 20% odd levels. This year, obviously, near term, I understood the price In fact, which will you kind of take calibrated price increase. But medium term guidance, should we look at And 'nineteen, 'twenty as the new level that we will seek to achieve or is 'sixteen, 'twenty that you have historically seen the level that Is the right thing to look at because there is one off that happened in that 93%?
Thank you. So we are in the process of continuous Improvement, but not continuous improvement over last year's margins because those were exceptional margins because of All the efficiencies, etcetera. But yes, continuous improvement over historical margins is What we would look to achieve. Perfect, sir. Perfect.
And so the second bit was from a pricing element. You have Lesser Interventions in this quarter, has that in any sense reduced the gap between us and these other players? Or was that gap maintained? GAAP in what sense? Are you saying that other than that, we haven't?
Yes, sir.
Is there a mix of price? No, no. We as the market leaders, we are always the first to take price increases. It's the market leader always has to initiate that. We are not Ones who believe in price wars and taking advantage of a situation like this, we believe You're taking the price at the right time and that's what's got the entire industry through a situation where the entire industry is today making A lot more margin than what we've ever made in the past, right?
The industry has gotten used to it. We've never taken advantage If anyone else's situation, we always initiate price increases and we will continue to do so. Perfect. And bookkeeping, if I may, sir, the last, the scanton options, would that in any way change the employee cost outlook? Or is this more a restatement for the existing ESA plan?
That's all I got. Thanks. That's all for me. Yes. So EFA scheme is being replaced by stock appreciation scheme.
And the terms are going to be similar. So before at the moment, as we speak, On the options that are vesting and are likely to be exercised in this year, we don't see any implications on the PMD. Okay, sir. Thank you very much, sir.
Thank you. The next question is from the line of Amnesh Agarwal from Prabhudas, Sriragath. Please go ahead.
Yes. Hi, sir. Thanks for the opportunity. A couple of questions from my side. First being that, as you said that the inflation number has been pretty high.
So what has been the absolute inflation number during the quarter? And do you believe that this number has We have almost gone through the peak of the same. And the second is, can you guide us through that due to this pandemic now, any change in the CapEx number, which has happened. And thirdly, what is the total amount of ICDs, which are currently present in the 2 good companies? So the inflation is north of 6%, 7% as we stand versus last year.
And if you were to take the fuel prices, etcetera, which hits our supply chain, That will be another 1% or 2%. So it's a very high inflation number that we are currently sitting on. And I think in a situation like this, it just Necessitates cost efficiencies can never take care of this kind of inflation. 2%, 3%, we Usually, can take care of, but this necessitates price increases and that's why we Move forward with that. What was your second question, sorry?
Yes. Second question was on CapEx and then on the ICDs. So CapEx, we know the projects that we are working on. So we've got New plants, we've got the expansion of our Khorda plant. Thereafter, we've got A new plant in Tamil Nadu because we are running short on capacity in Tamil Nadu.
And in the North, we've With the resurgence that we have in the Hindi belt, it necessitates a plant in UP. So we've already bought the land in UP, which is in Barabanki, about 30 kilometers from Lucknow. And we will start to execute on that plant as well. We've got a very good incentive from the UP government. So we will start so those are the projects and of course our Ranjan Dhar expansion, which includes the dairy plant.
So approximately INR 100 and 30 crores INR 140 crores is our CapEx for this year, right, Yes. So at this point in time, we've got about INR 130 crores of CapEx. But with all these projects coming It depends on how quickly we want to execute this and how the demand situation necessitates expansion. So that's where we are at. On ICD, we are much below what we've been in the past.
So we stand at about INR 4.70 crores currently. Okay. So this is RUB70 million due to group companies or overall? This is 2 group companies. Okay.
And any change since 31st March? Yes. It's substantially below. So as of March, it was 7.90 and as of 30th June, it is at 4.60. Okay, sir.
Thanks a lot. Yes.
Thank you. The next question is from the line of Chantal Khandelwal from Aditya Birla Capital. Please go ahead.
Hi. Good morning, everyone. Thanks for joining us, SVP. Firstly, congrats on good set of numbers on a related basis. Secondly, one One question on the management bandwidth.
As you are looking to scale the organization in large 6 months, we have seen couple of guys meet the team. The good part is again different company and CEO who shows that management capability, but what are you doing to retain the company when you're When you're on the path to have a greater food company and have a greater food ambition. So if you can touch upon this? Yes. So, see, if there's someone leaving to be the CEO of a large public company, It's always a privilege to have that to happen.
But yes, we miss Such people. But I would say that we probably have a fairly good talent pool. And even if you were to look at the people who we have currently, so Vinay Subramaniam, who is sitting in front of me, who is The VP Marketing and Gupin Kataria, who is here as well, who is our sales head, who replaced Gunjan, who used to be sales rep till about a year back, fairly good. And I think we've got a pipeline of talent, which can rise to the occasion. Having said that, the objective is to make sure that we create Environment where people want to stay for a long haul.
And one thing that I must tell you that there's something magical about Britannia. The number of Returnees that we have to this company. I don't think in my career, I've seen so many people coming back And joining the company that they worked in the past. We continue to get people coming back to us After having moved out and then coming back to us. So there's some hiding to that.
However, yes, you're right. We will we are looking at how we can make this more sticky And make sure that we can offer more opportunities to our people to expand the pool even further. Sure. Thanks, Arun. And the second question is on the B2C is the new buzzword in your town.
People are talking about Online platform, launching media's brands in the online platform. Any thoughts on those lines? And I heard when you said that you may look to enter a new category, which So if you can touch upon both these, because you have bigger, right, too, in my thoughts, in the online platform and the food platform, both? So online platform, having our own online platform is certainly an idea. But I do think that the objective really should be to work with partners.
We There are a lot of e commerce players and we are trying to so if you look at our e commerce trajectory, it's been really good. We used to be 0.4%, 0.5% of total sales coming out of e commerce and that's moved north of 2%. However, it's only 2%, right? With our kind of products, I think that should be at least in the range of 5%. And we are looking at All measures to see how we can take that up further.
I think That day is the trick. It's the best thing to do is to work with people who are experts at that and creating a joint business which It's worthwhile for them and us as well. This is not saying that we will not look at our own B2C at some Of course, we will evaluate that. But at this point in time, I think we need to perfect it with our partners, and that's what we are looking forward to.
Thank you. The next question is from the line of Kunal Vohra from BNP Paribas. Please go ahead.
Yes. Thanks for the opportunity, Bhagavath. Can you help us understand the price hikes So what is the quantum of prices you think can I'm looking to take? And would it be left to offset the 78% inflation which you talked about? Yes.
Obviously, over a period of time, we would want to offset the entire inflation That we are seeing today. Whatever price hikes were taken earlier have already been negated by Inflation. So as I told you, Bali had taken a price hike. We had taken a price hike in the value segment, But our gross margins are back to single digit again because of what inflation that we've seen in the marketplace. So
It's 2
points here. One is, hike is necessitated and Go through in the next 3 months or so from our standpoint. 2nd is, There is no substitute for price hike when the inflation is okay. And we will have to look at it. Okay.
And secondly, last question, Any thoughts on the PLA benefits on food processing? And what kind of benefits you would expect from it for the next few years? Also, if you can talk about the international expansion beyond Middle East and Nepal. Yes. So, PLI, We have applied for the incentive under the category of ready to eat, ready to cook category.
The incentive that companies are eligible for is about 10% of the incremental sale. This, however, is capped by the total outlay that the government is going to have for this category year on year It's subject to the overall claims that are going to come in this category. So it is difficult to make an estimate at this point in time, but We have applied for that. And what was your second question? International Yes.
So as far as international expansion is concerned, I I think I spoke in the last meeting as well. So we've commercialized a partner in Egypt We're starting to produce product for us. And just yesterday, actually, we've got the clearance for a partner producing in Uganda as well. So these are 2 markets in Africa, which can give us access to a lot more countries, and we are looking forward to that. We are looking at 1 or 2 other opportunities.
And hopefully, in the next quarter or so, we We'll be able to frame those up as well. Okay. That's it for my question. Thank you, sir. Yes.
Thanks.
Thank you. Ladies and gentlemen, we'll be taking the last question that is from the line of Mr. Vishal Puneya from Nirmal Bank Institutional Equities. Please go ahead.
Yes. Thank you, Dheem, for the opportunity. Just one question. In terms of Excuse me, Nick. So how should things pan out going forward?
We have seen large techs being sold in a bigger way If you could just compare the current time with FY 2020, how should the mix pan out, Especially in the general trade channel where lower SKUs were of a bigger mix compared to the modern trade channel. So how should that mix Sign out over the next few years?
So this quarter has not been very different from what we've seen historically. Last year, we've seen that trend where we've seen large packs being consumed a lot more because people were sitting at home. But this quarter was more on historical trends. So Every segment, whether it's Family Pack or LUPs, etcetera, have been at the same rate of growth. So let's see how it goes.
I do think that evolving times, we've got to watch out very carefully and Modify our behavior according to what the consumer wants.
With normalcy or modern drug, do you expect this to improve at least in the next 2 or 3 quarters?
Yes. So if you just see what I have presented in the presentation as well, we are Seeing Modern Trade get back. So the alternate channels, Modern Trade, ecom, etcetera, we clubbed it together And we were showing a 4% downside last year, which has now come to a 12% upside versus standard. So hopefully, this should come back to normal. So not just modern trade, but Also, transit clusters, institutions, as companies start to open, as Railways start to start the trains normally, etcetera, airports, etcetera.
I think All those will come back, and we are hoping that we'll get some upsides from there.
Sure. Thanks. Just last one question. In terms of the new product that you Product that you have launched, POTA RULES, it's a second bridge product that you have introduced into your portfolio after deals. What do you see in terms of pricing, in terms of distribution expansion?
Currently, there is obviously a huge problem in terms of The other 2 players in the market are where their distribution is also limited to ease. So can we basically from Britannia's perspective Scale that product to other markets in a much faster
way? No, absolutely. So there is some Technology which is required to produce this product and we've got that going only in our Northeast plant, but we are getting This is ready in another three plants across the country, and it should be ready in the next couple of months. So hopefully, In the next 3 or 4 months, we should be able to make this product Pan India. And I do think that it's an exceptional product, which can create a lot of excitement with consumers.
So we are looking forward to that.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Yap Zagri For his closing comments?
I thank everyone for spending time with us today. We look forward to interacting with you again.
Thank you. Ladies and gentlemen, on behalf of Britannia Industries Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.