PATANJALINSEQ4 FY 2023June 05, 2023

Patanjali Foods Limited

11,118words
81turns
7analyst exchanges
4executives
Management on call
Sanjeev Asthana
CHIEF EXECUTIVE OFFICER
Kumar Rajesh
CHIEF FINANCIAL OFFICER – PATANJALI FOODS LIMITED
Chintan Kotak
INVESTOR RELATIONS – PATANJALI FOODS LIMITED
Dhiraj Mistry
ANTIQUE STOCK BROKING
Key numbers — 40 extracted
INR31,525 crore
bers across all the financial metrics in the financial year. The revenue from operations stood at INR31,525 crores. The EBITDA stands at INR1,577 crores. As an organization, we are focused on strategic areas for
INR1,577 crore
the financial year. The revenue from operations stood at INR31,525 crores. The EBITDA stands at INR1,577 crores. As an organization, we are focused on strategic areas for growth and allow me to run you throug
rs,
bought a series of products across categories in our fold. As industry pioneers, we maintain our leadership position in texturized soya products, which is a well-known brand of Nu
INR1,200 crore
immense popularity among our customers. This year on an annual basis, our ghee sales have crossed INR1,200 crores-plus. We are seeing a double-digit growth in the positive category, particularly in biscuits and
INR1,300 crore
sitive category, particularly in biscuits and ghee categories. In biscuits, we've grown to almost INR1,300 crores on the annualized basis, growing at 20% year-on-year. And our chawanprash and honey continue to
20%
ategories. In biscuits, we've grown to almost INR1,300 crores on the annualized basis, growing at 20% year-on-year. And our chawanprash and honey continue to have a steady demand. Our initiatives a
50%
sales to the business. Our e-commerce sales of food, token update, was a notable uptick of nearly 50%. The oil sales to the platform have grown by about 60%, though the base was small, but we continu
60%
ken update, was a notable uptick of nearly 50%. The oil sales to the platform have grown by about 60%, though the base was small, but we continue to grow. Our B2C website and app are growth enabler
1 million
ontinue to grow. Our B2C website and app are growth enablers here. Our app has almost touched a 1 million downloads now and registered users. With technology, we are driving a lot of technology from th
INR500 crore
ed across the country as we continue that. In addition to this, we have almost exported more than INR500 crores to 31 countries, our products. The company, as I mentioned last time, we have worked very seri
INR1,300 crore
and other products. Similarly, on the biscuit side, which is business growing at 13, has grown to INR1,300 crores. We have come out with three new variants on the healthy side, which is the seven grain, which i
85 megawatt
loying techniques like crop rotation and avoiding deforestation. Further, we are producing almost 85 megawatts of energy, of which 16 megawatts is for captive use itself. And we have pulled up promise to pro
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Guidance — 20 items
Sanjeev Asthana
opening
“The Patanjali brand commands a strong recall and loyalty, and we intend to capitalize this by capturing a more sizable portion.”
Sanjeev Asthana
opening
“Going forward, this side of the business is expected to grow at a much faster rate, albeit at comparatively smaller pace.”
Sanjeev Asthana
opening
“Our presence across omni-channel retailers and e-commerce stores is enhancing our visibility among the target customers.”
Sanjeev Asthana
opening
“With technology, we are driving a lot of technology from the B-PoS and B-Force and maximization of source, the target is there.”
Sanjeev Asthana
opening
“The company, as I mentioned last time, we have worked very seriously on the premiumization and the launch will be happening in three distinct business segments.”
Sanjeev Asthana
opening
“We are taking the dates for the launch and they will be done.”
Sanjeev Asthana
opening
“Our requirement of minimum public shareholding will be met and we'll be closed and done with that.”
Sanjeev Asthana
opening
“The new launches and innovation, especially in the ready-to-cook and ready-to-eat space, we expect a surge in demand.”
Sanjeev Asthana
opening
“We have come in the fiscal year on a favourable trajectory and expect to sustain the momentum.”
Sanjeev Asthana
opening
“So, the idea being that overall in terms of the company, the way it is progressing on the food side, the way the edible oil volumes have grown and we are trying to sort out to work in terms of the premium variance of the edible oil segment, we are very confident of the year as it goes forward and we believe that the company will continue to drive its growth and will maintain the growth momentum as we go forward.”
Risks & concerns — 15 flagged
As we at a macro level, we've been treating the inflationary pressure to start in ‘24, they're easing.
— Sanjeev Asthana
So that continues to be one challenge that we face.
— Sanjeev Asthana
The challenge this particular year has happened on two folds.
— Sanjeev Asthana
The challenge, what we had in terms of the regulatory ad hoc actions from Indonesia on the palm oil exports and then suddenly, removing them.
— Sanjeev Asthana
So to your point of saying that, the business is fraught with risk and I don't have to take the names, you can look up the balance sheets of across the sector in India and globally, the impact, the edible oil prices have had on all the major global players as well as the companies in India, which has had an impact.
— Sanjeev Asthana
The challenge is, when the market goes through the volatile times and that, we have continued to work on.
— Sanjeev Asthana
For example, after the drop, we continue to hedge our risk on the global exchanges like BMB and Chicago.
— Sanjeev Asthana
So the challenge that, we face always is that if you've got an inventory, which is priced at INR100 and the prices drop to INR90, that the domestic consumers will tend to buy because the competition continues to sell at INR90 plus, the processing cost plus the margin.
— Sanjeev Asthana
But in general, we tend to do our operations more on the hedge basis, to de-risk ourselves and manage it accordingly.
— Sanjeev Asthana
I'm expecting that the edible oil, there should be a marginal decline if the price trend remains soft.
— Sanjeev Asthana
And now because of the continuous drop in the prices of the edible oils, it has been a challenge.
— Sanjeev Asthana
All these are food-based plants with the most efficient one, almost fully depreciated, so there is no challenge on that front.
— Sanjeev Asthana
Fourth quarter again the inventory, sorry, the price drops and all that have continued to pose the challenge to the whole industry.
— Bharat Shah
And in the months when the challenge is there, we should be able to do 2%.
— Sanjeev Asthana
No, I think it has been an enormously difficult period for the edible industry, supply chain, price buttons.
— Bharat Shah
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Q&A — 7 exchanges
Q
Hello, Asthana ji Very good morning. I wanted to understand the edible oil business in detail. Actually, is it good to be in this business because always volatility will be there and we will incur inventory losses here. Could you explain the past history, how prices have been trending, how strategically it makes sense to be in this business now in India? And how are we dealing because we want to generate superior ROC, then we have to sell more. But when I see the capacity utilization, it's always trending between 40% to 50%. And what is the internal metric you look in edible oil business that
Sanjeev Asthana
Yes. So thank you for this question. You're absolutely right that, edible oil business on account of the volatility typically is less predictable. However, what we are trying to do is that we have looked at the business from three filters. Number one is that there's a large asset base we have, there's a turnover that we have, and giving that up does not make any sense. So we've continued focusing on selling more of branded business. So for example, our business branded side, our business would be almost 80%, that we sell. Now these brands are commoditized brands. So, the premium that you can e
Q
Hello. Thank you for the opportunity, sir. Sir, I have a couple of questions, specifically on the food side. That in press release, you said that we are going into dry fruit segment. And what is your opinion? What will be your strategy? Because every player is also eyeing for the pie of this INR35,000 crores, INR40,000 crores market, which is growing quite fast. So what is your opinion on that?
Sanjeev Asthana
So the dry fruits business is one of the strong stays that we have. We do almost, business upwards of INR100 crores plus, in the dry fruits category. And Patanjali is a recognized sort of brand in that space. The opportunity that, we're seeing is right now that, market is nearly INR50,000 crores. It is growing at 10% to 15%. Globally, India has moved almost centre stage in the dry fruit segment from the demand perspective. As economies struggle in Europe and China tends to stagnate, we have a great possibility of building up a very solid band around dry fruits. Now to give the specifics of how
Q
Sir, a couple of questions. One is this other income of INR90 crores whether it's having any one- off, like, what it comprises of?
Sanjeev Asthana
So I will ask Kumar Rajesh ji to answer that question as CFO. Yes. Good morning. This comprises of about INR60 crores, INR61 crores of interest charged from the customers on delayed payments and some of near about INR15 crores as compensation and other interest on FD, etc. Okay. And, sir, in the edible oil segment, the margin was 1.9%. Is it more to do with -- any high cost inventory being consumed or a mark-to-mark rate in this particular project? You can say some portion of inventory and some portion of mark-to-market. Okay. If we think about either edible oil segment or a food segment, what
Q
Good morning team. Thanks for the opportunity. Sir, my first question is that in the INR1,800 crores quarter sales for FMCG, you have provided 60% is coming from the biscuits, Doodh Biscuit. Can you provide the breakup of INR6,218 crores for the full year, similar breakup?
Sanjeev Asthana
Yes, I can give you that. Yes. So the breakup that we have on the -- for the full year out of INR6,218 crores, our Nutrela business did INR566 crores. Our foods business has done INR3,791 crores. Our biscuits business has done INR1,352 crores and our Nutraceutical business has done INR509 crores. Yes. Wonderful. In that INR1,352 crores, what would be the Doodh Biscuit? Doodh Biscuit is about INR800 crores. Okay. Yes. That's fairly helpful. The other question I had is this acquired 21 brands, which we have consolidated, what would be the FY '23 revenue for these brands and how it has grown over
Q
Thank you for the opportunity, and congratulations to the management for the good set of numbers as far as the food business is concerned. Sir, I particularly had a question as far as the edible oil business is concerned, since you already have now two listed edible oils. What is the broad volume as far as the edible oil business is concerned and how much portion of it is branded? And my second question is, do you have a benchmark in terms of the normalized levels of margins on a per ton basis as far as gross margin and EBITDA margin is concerned?
Sanjeev Asthana
Yes. So our volume this year to be specific is 1.91 million tons that we've done. So the second question is that in terms of the share of how much of we sell to the branded route, we do about almost 80% of that is sold as a brand. Now the brand gets sold as right from pouch to jars to tins to pet bottles to different ways it sells. The inherent margin on an EBITDA basis, I was mentioning earlier, typically it has been given 2% to 4% margin that we have. In a good year it has exceeded that, but in general that is a trend that we have between 2% and 4%. And it would tend to -- so this benefit, h
Q
Yes. Asthana ji, for the current year on the edible oil business, are we normalized? Because last year we saw the second quarter was really the root shock for the entire industry all over the world. Third quarter there was a reasonable recovery. Fourth quarter again the inventory, sorry, the price drops and all that have continued to pose the challenge to the whole industry. Because we've seen the numbers for the other players also and they all have been similarly impacted. Can we say, more or less, the situation from now on is heading towards normalization? And, therefore, for the current yea
Sanjeev Asthana
Bharat bhai, good morning. And so there are my very specific answer to your query. The third, the last quarter, which we currently see, the markets have dropped substantially again. There's a glut of supply side in the global markets. There is a big overhang on account of the large drop on the mustard that we had and the last soy crop that we had. And the prices have not been supportive at all. The market continues to slide. Even as I speak today, the markets have further fallen. Last night at Chicago and at the Palm. But I can give an opinion. I can talk this is a technical chart. I can talk
Q
So thank you for everyone who attended the call and asked a very insightful question. The only thing that we wish to say in the summary that last year on the oil side, we have faced challenges, but there have been a lot of positives which have happened to the company. So the positive number one is that we acquired an extremely profitable business from Patanjali on the food side. We've had three quarters of good run that we had, and we continue to wish to grow that momentum. The second positive news that we have of last year that in terms of the oil palm plantation, it started to gather momentu
Management
Speaking time
Sanjeev Asthana
35
Shirish Pardeshi
13
Moderator
9
Kuldeep Gangwar
6
Bharat Shah
6
Aditya Jhawar
4
Vikas Mistry
4
Kumar Rajesh
2
Dhiraj Mistry
1
Jigar Upadhyay
1
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Opening remarks
Dhiraj Mistry
Hi, good morning all. On behalf of Antique Stock Broking, I would like to thank management of Patanjali Foods Limited. I would like to introduce Mr. Sanjeev Asthana, who is the CEO of the company, Kumar Rajesh, CFO and Chintan Kotak, IR. I would hand over the call to the management for their opening remarks. Over to you, sir. Thank you.
Sanjeev Asthana
Thank you, Dhiraj. Good morning, everyone. Welcome to the Patanjali Foods Limited's call to discuss the results for Q4 and annual FY ‘23. I'm joined today by the company CFO, Mr. Kumar Rajesh. Mr. Apoorva Kumar, who is the head of Nutraceuticals business, is also here with me. We also have our Investor Relations consultant, Strategic Growth Advisor - SGA, on the call. I'm pleased to update that we have achieved record numbers across all the financial metrics in the financial year. The revenue from operations stood at INR31,525 crores. The EBITDA stands at INR1,577 crores. As an organization, we are focused on strategic areas for growth and allow me to run you through some of these. On the oil side, we continue to be the leaders with very strong brands like Ruchi Gold, Mahakosh and Sunrich. Our focus remains on expanding the segment and improving margins, particularly through a model that aligns with the Atmanirbhar Bharat campaign of National Mission on Edible Oil Oil Palm. We are taki
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