Mrs. Bectors Food Specialities Limited
8,221words
101turns
9analyst exchanges
3executives
Management on call
Anoop Bector
MANAGING DIRECTOR &
Manu Talwar
CHIEF EXECUTIVE OFFICER – MRS. BECTORS FOOD SPECIALITIES LIMITED
Parveen Kumar Goel
WHOLE-TIME DIRECTOR –
Key numbers — 40 extracted
12.2%
he company has been successful in mitigating them and managed to post an annual revenue growth of 12.2% in FY22. The company continues to see strong growth outlook in both biscuits and bakery segment.
Rs. 40.5 Crore
he new capex, the company has started investment on another biscuit line from the IPO proceeds of Rs. 40.5 Crores to finance the cost of the Rajpura expansion project and the commercial production for this plan
Rs. 73 Crore
sed land in Khopoli adjacent to our current factory. The total project cost is estimated to be at Rs. 73 Crores including land, out of which Rs. 25 Crores would be invested in FY23 and balance in FY24. Commer
Rs. 25 Crore
factory. The total project cost is estimated to be at Rs. 73 Crores including land, out of which Rs. 25 Crores would be invested in FY23 and balance in FY24. Commercial production is proposed to be started b
Rs. 252 Crore
ss the Q4 performance. The consolidated revenues for the quarter stood at Rs. 252 Crores versus Rs. 224 Crores in Q4 FY21 registering a growth of 12.6% on a year-on-year basis. Biscui
Rs. 224 Crore
The consolidated revenues for the quarter stood at Rs. 252 Crores versus Rs. 224 Crores in Q4 FY21 registering a growth of 12.6% on a year-on-year basis. Biscuit Our biscuit segmen
12.6%
for the quarter stood at Rs. 252 Crores versus Rs. 224 Crores in Q4 FY21 registering a growth of 12.6% on a year-on-year basis. Biscuit Our biscuit segment reported a revenue growth of 4.3% which st
4.3%
owth of 12.6% on a year-on-year basis. Biscuit Our biscuit segment reported a revenue growth of 4.3% which stood at Rs. 143 Crores in Q4 FY22 as compared to Rs. 137 Crores in Q4 FY21. This segment h
Rs. 143 Crore
ear-on-year basis. Biscuit Our biscuit segment reported a revenue growth of 4.3% which stood at Rs. 143 Crores in Q4 FY22 as compared to Rs. 137 Crores in Q4 FY21. This segment has grown by 27.2% over Q4 F
Rs. 137 Crore
segment reported a revenue growth of 4.3% which stood at Rs. 143 Crores in Q4 FY22 as compared to Rs. 137 Crores in Q4 FY21. This segment has grown by 27.2% over Q4 FY20. Our domestic biscuit segment has witne
27.2%
at Rs. 143 Crores in Q4 FY22 as compared to Rs. 137 Crores in Q4 FY21. This segment has grown by 27.2% over Q4 FY20. Our domestic biscuit segment has witnessed higher single-digit growth in Q4 FY22 as
Rs. 95 Crore
mpared to the same period last year. Bakery On the bakery front bakery segment revenue stood at Rs. 95 Crores against Rs. 75 Crores in Q4 FY21, thus registering a growth of 26.8% in Q4 FY22. Including retai
Guidance — 20 items
“During the current quarter, we continue to witness inflationary pressures on our key raw materials and our other expenses and we expect inflationary trend to continue in the next two quarters because of geopolitical concerns and supply chain disruptions.”
“Going forward, we will continue to focus on premiumization and consolidating our market share through brand awareness both digitally and in retail store through in-store branding exercises and aim to cater to wide variety of retail customers by introducing new niche products with a target to expand distribution network and increase penetration in Tier-1 and Tier-2 cities.”
“We plan to focus more on digital marketing initiatives such as social media integration, influencer marketing and content marketing.”
“40.5 Crores to finance the cost of the Rajpura expansion project and the commercial production for this plant has started in the month of May 2022.”
“The total project cost is estimated to be at Rs.”
“This is for the year, but in Q4 if you look at our last year margins were at 45.4% now they are at 44.9% so we have actually been improving on our gross margins because this will be happening due to increased prices which we have been monitoring, managing from the market.”
“If you can give some color or guidance on how this quarter on absolute basis what was the portion of investments or expenses done towards the expansion side or adding distributors or any on those sides?”
“Both sales are doing extremely well and we have already mentioned on the growth numbers future numbers for us are looking bright we are looking at around 13%, 14% growth numbers going forward and both the export side and the domestic side we have to create a fair balance where our profit margins also worked out well for us and growth stays intact.”
“If you can just give a color on price hikes that we have done in this quarter and what kind of price hikes do we expect in all our segments in coming quarters?”
“Yes, you are absolutely right exports were flattish because there were logistic issues on the shipping front and so export for Q4 has been flattish, but as an information for the whole year they grew by 17% which is a good figure and so export continues to do well for the company and we are seeing considerably gains coming in going forward.”
Risks & concerns — 8 flagged
The company continues to witness cost pressures in prices of raw materials as a result, both gross margins and EBITDA margins saw a decline of 50 bps and 300 bps respectively and stood at 44.9% and 10.1% respectively.
— Anoop Bector
As an individual it is very difficult to bring in on a quarter-by-quarter basis, but like I mentioned earlier to Nidhi’s question also my gross margin which is the raw material to my sale price in FY21 was 47.6% and in this year it was 44.2% so there was a drop of 3.35%, but in Q4 this drop was only 0.47% because in Q4 FY21 it was 45.4 and we have this year brought in 44.9% so effectively the drop has been reduced drastically and has been brought down to 0.47%.
— Anoop Bector
How does this work well because we fix the price for the whole year and with this uncertain situation what is the pricing strategy you are adopting this time because earlier year it was fine…
— Digant Haria
It will be difficult to quantify exactly, if we look at the annual figure of 13.9 to 14.5 in fact last year it was 14.4 where the whole year costcome down to 13.9 and in the last quarter it was 13.9 now at 14.5 so you can expect around 0.6% to 0.7% numbers which have come in as a hit in the last quarter.
— Anoop Bector
Just wanted to understand that in this quarter we have done about 10% kind of EBITDA margins and you did mention that considering inflation and geopolitical issues, etc., and some price hikes still remaining do we expect the pressure on margins to continue in H1 and do we expect the 10% to be the low or can margins go lower in the near-term?
— Alisha Mahawla
I just want to ask that what is the possibility of our institutional customers not taking the contract ahead with us do we face any kind of risk there, competition risk or any other risk there?
— Gaurav Gandhi
What is the risk we face or the possibility of our institutional customer not taking the contract ahead say next year or is there any kind of competition risk we face there?
— Gaurav Gandhi
We are very confident to grow this business into a very, very strong consumer company, so if you look at all our parameters we are extremely strong, our fund generation is good, our challenges the challenge what the company has faced in this year in the last year how the company has been able to come out of these challenges, has invested on IT system, on sale digitalization during the challenging time and also shown the right result.
— Anoop Bector
Q&A — 9 exchanges
Q
Hi Sir, thank you for taking my question. I wanted to ask that in this quarter our gross margins were pretty decent while our EBITDA margins have gone down significantly even on Q-on-Q basis so is this because of some expansion cost which we had incurred, which is leading to reduction in EBITDA margins?
Anoop Bector
Our gross margins as you rightly said vis-à-vis FY21 which was 47.6% in FY22 it was 44.2%. This is for the year, but in Q4 if you look at our last year margins were at 45.4% now they are at 44.9% so we have actually been improving on our gross margins because this will be happening due to increased prices which we have been monitoring, managing from the market. However we have seen some cost increases especially there have been cost increases which have come in other expenses which have come in due to increased fuel prices, increased transportation cost on logistic costs, so that has been one
Q
Hi Sir, just a couple of questions from me. You mentioned about biscuits growing 4% and in the presentation it was mentioned that domestic biscuits grew by mid single digit so I was just wondering if biscuit exports were flattish this quarter and if yes then what is the reason for it, is it the price hikes which you have taken?
Anoop Bector
Yes, you are absolutely right exports were flattish because there were logistic issues on the shipping front and so export for Q4 has been flattish, but as an information for the whole year they grew by 17% which is a good figure and so export continues to do well for the company and we are seeing considerably gains coming in going forward. Yes, so on a full year basis if it has grown 17% next year on this high base do you expect exports to maintain that 13%, 14% growth is what my question is? Yes, definitely the company’s export team has worked very well on this and we are looking at a 14% gr
Q
Hi Sir, your overall biscuit growth for the full year is 3% and you mentioned that exports grew for the full year 17% so the domestic biscuits declined by about 5% to 7% for the full year is my calculation correct?
Anoop Bector
Yes, you are right. What would be the reason for this? In fact in the last quarter we have taken a dip. In the year 2021 it was a COVID year where sales were aggressively higher we all know about it and we should try to remember where pantry loading was extremely high so that is one of the biggest reason for the growth to come down and 5% what you are seeing is because of the pantry loading which happened in 2021, but like I mentioned we have had great growth going forward in the two years numbers, growth over FY20 Q4 is 27% of our total business, if I see what is my growth over FY20 to FY22 i
Q
Sir first question is after the appointment of Mr. Talwar how will be the responsibilities or split between you, Mr. Talwar and Ishaan, in general like I am just trying to understand that how will this new appointment help us scale better and focus on more things?
Anoop Bector
Mr. Talwar brings to the company a lot of experience and a very large experience from Coca- Cola to telecommunication to a family-run company and then finally a fresh startup which has been one of the most dynamic experiences. Our company has to have a changeover and has already started its process since last year working on digitalization not only digitalization in the sales side complete automation on the production side, so I think he is going to be leading the operations with Ishaan on the bakery side and so we are on the exports side the reporting directly to him and Manu reports into me
Q
Thanks and I just have a couple of questions. The first one on the inflation side for biscuits what has been the raw material inflation over the last 12 months and what has been your price hike could you quantify both the number?
Anoop Bector
Actually like I said earlier it is very difficult for us to quantify the numbers because inflation it is dynamic it just keeps changing and along with the inflation our price rises are changing, now what is important to see is when you are talking about raw material like I mentioned in FY21 our gross margin was at 47.6 in this year it is at 44.2 so there was a 3.35% drop so the raw material prices increased the company could not manage the complete price rise in the full year, but as time passed in the Q4 from 45.4% we have brought it up to 44.9% so effectively the difference now is only 0.4%
Q
Hi Sir good evening thank you for taking my question. Just wanted to understand that in this quarter we have done about 10% kind of EBITDA margins and you did mention that considering inflation and geopolitical issues, etc., and some price hikes still remaining do we expect the pressure on margins to continue in H1 and do we expect the 10% to be the low or can margins go lower in the near-term?
Anoop Bector
I do not think so 10% is the right number the numbers are going to be better than this and so effectively like I mentioned we are looking EBITDA margins at approximately around 14% on the full year basis and we do not look at any challenges in that regard because most of the raw material prices have gone up we are looking at now prices to actually going forward in the next after two quarters to settle down and we could look at certain benefits coming in, but we are quite hopeful that anywhere between 13.5% to 14% we should be able to manage on the EBITDA side. This aspiration of 13.5% to 14% a
Q
Thanks for the opportunity Sir. I just want to ask that what is the possibility of our institutional customers not taking the contract ahead with us do we face any kind of risk there, competition risk or any other risk there?
Anoop Bector
Can I get your question again please I am so sorry. What is the risk we face or the possibility of our institutional customer not taking the contract ahead say next year or is there any kind of competition risk we face there? Currently we have been working with our partners who are important to us for the last 25 years and we have never had experience anything like that and very, very ethical ways of working our partners have and so do we have and everything is discussed at the highest level and this is a strategy a plan what is their costgoing to be, how are they going to take their price inc
Q
We have been talking about this yes we come to know about on the cost effect and this will need to be passed on to the customer and that is okay so there are no challenges we have already taken this in our EOP plan so we are okay with that. Abhishek Maheshwari: So there has been no lag in taking price hike because we have passed on the entire inflation?
Anoop Bector
Price rises will happen as per competition so wheat prices are going to be the same for me or for my competitors so it is not going to be very different and so all the impacts come at the similar time for somebody it comes one month earlier somebody comes two months later but the prices of all raw materials tend to be same for us and the competition so the necessary price rises will happen. Abhishek Maheshwari: Thank you. So you are still planning to take some hikes or you have taken what you could do… We have taken some price hikes in the last quarter which are going to be happening now, beyo
Q
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 the Orient Capital, our Investor Relationship Partner. Thank you so much. Thank you for joining us in our call.
Opening remarks
Anoop Bector
Good afternoon everyone. I am Anoop Bector - Managing Director of Mrs. Bectors Food Specialities Limited. I hope that all of you and your families are safe and healthy. On behalf of Mrs. Bectors Food Specialities Limited I extend a very warm welcome to all participants on Q4 and FY22 Financial Results Discussion Call. Today on this call I have with me Mr. Manu Talwar - Chief Executive Officer; Mr Ishaan Bector - Whole Time Director; Mr. Parveen Kumar Goel - Whole-Time Director; and Orient Capital, our Investor Relations Consultant. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on exchanges and on the company’s website. Before discussing our Q4 and FY22 results, let me use this opportunity to introduce our new CEO, Mr. Manu Talwar. Mr. Talwar has over 30 years of proven business leadership exposure in profitable business expansion, operations and general management primarily in consumer facing industry. He is a Chartered Accou