Patanjali Foods Limited
8,311words
75turns
6analyst exchanges
4executives
Management on call
Dhiraj Mistry
ANTIQUE STOCK BROKING LIMITED
Sanjeev Asthana
CHIEF EXECUTIVE OFFICER – PATANJALI FOODS LIMITED
Kumar Rajesh
CHIEF FINANCIAL OFFICER – PATANJALI FOODS LIMITED
Chintan Kotak
INVESTOR RELATIONS – PATANJALI FOODS LIMITED
Key numbers — 40 extracted
15%
wly launched includes Ragi Choco Cereal whose pilot launch has received good response with nearly 15% repeat order and this is in just about in last 45 days we have seen in the previous quarter when
1000 Crore
ing premium superior dried fruit product at affordable pricing. Our target is to clock revenue of 1000 Crores in the next five years for branded dried fruit category. Patanjali is a leading player in the
276 Crore
is a leading player in the biscuits industry that quarterly revenues of biscuits have grown from 276 Crores last year to 381.16 Crores this year with a 38.1% year-on-year growth. Last year in biscuits we
381.16 Crore
the biscuits industry that quarterly revenues of biscuits have grown from 276 Crores last year to 381.16 Crores this year with a 38.1% year-on-year growth. Last year in biscuits we clocked revenue of over 120
38.1%
terly revenues of biscuits have grown from 276 Crores last year to 381.16 Crores this year with a 38.1% year-on-year growth. Last year in biscuits we clocked revenue of over 1200 Crores and we aim to c
1200 Crore
ores this year with a 38.1% year-on-year growth. Last year in biscuits we clocked revenue of over 1200 Crores and we aim to cross 1500 Crores this year. Further to drive a vision for our biscuit segment for
1500 Crore
n-year growth. Last year in biscuits we clocked revenue of over 1200 Crores and we aim to cross 1500 Crores this year. Further to drive a vision for our biscuit segment forward we have launched the premiu
10
million
vantageous for the country and the farmers in the country equally. We have already planted nearly 10 million palm saplings and are planning to plant additional 10 million plant saplings in the next three ye
10 million
lly. We have already planted nearly 10 million palm saplings and are planning to plant additional 10 million plant saplings in the next three years and this is for the entire company. Currently around 40,00
4 lakh
ith Patanjali in the mission palm plantation. In the coming five years we are expecting more than 4 lakh farmers will join hands for the mission oil palm plantation business. Before we talk about comp
7%
the minimum public shareholding norms as one of our promoters Patanjali Ayurved Limited offloaded 7% of its holding through an OFS which receives an overwhelming response from the FIIs, QIBs, global
7,810.50 Crore
HNI and the retail segment. I am highlighting the Q1 numbers for everyone. Total income stood at 7,810.50 Crores with a year-on-year growth of about 5.98%, EBITDA stood at 211.99 Crores with a margin of 2.71
Guidance — 20 items
“Additionally, gaining a larger market share is vital and we aim to achieve this through a two-pronged approach of continuous innovation and effective distribution.”
“Our target is to clock revenue of 1000 Crores in the next five years for branded dried fruit category.”
“Last year in biscuits we clocked revenue of over 1200 Crores and we aim to cross 1500 Crores this year.”
“First quarter result is after taking into account also includes close to 71 Crores of expected credit loss provision on long aging debtor as per the Ind-AS, which will be reversed in the second quarter which has already happened.”
“The company is aiming to have its nutraceutical business to be closer to 2,000 Crores in the next five years that we have lot of tasks that on hand to continue maintaining the growth momentum that now had started gaining traction.”
“Two questions in the beginning, what is your near-term Palm Oil outlook and do you think we will get benefited going forward because the inventory days will get depleted very soon?”
“So our growth momentum in volume terms of nearly 30% plus that you have seen typically Indian market is going between 3% and 5% occasionally, which means that we are taking the share away from smaller players, so this will take some time, but this consolidation in the longer-term will be very helpful for company’s longer-term growth momentum.”
“Oil palm plantation currently if I were to do the numbers we get about 10% from our own oil palm plantation that we have in the edible oil segment and going forward in the fullness of time when we have the entire 0.5 million tonnes planted I am expecting that nearly 70% will come through our oil palm plantation business of the palm oil requirement.”
“So having said that, in general, I would expect that the more we have the predictable the domestically sourced palm oil it will have a significant value add for the company because will be less exposed to global uncertainty and it will assure on an integrated basis much better margin construct.”
“By FY2027 this will have actually gradual increase every year, but this should take almost 7 to 8 years before we can expect 70% of Oil Palm Plantation to start coming in, it will probably be closer to 55% in year 7 it will build up, but in year 10 onwards it will be nearly 70%.”
Risks & concerns — 3 flagged
Despite a 4% decline in edible oil income the year-on-year growth due to lowering of prices it has happened.
— Sanjeev Asthana
Our risk management systems are very robust and very strong.
— Sanjeev Asthana
Will it be fair to say that as more and more share of the palm oil business comes from our plantation, the volatility in our overall business would also reduce because you would have a certain cost ways for the Oil Palm Plantations which will not be as volatile as the Palm Oil prices are every quarter and every month?
— Akhilesh Bagri
Q&A — 6 exchanges
Q
Good morning. Thanks for the opportunity. Two questions in the beginning, what is your near-term Palm Oil outlook and do you think we will get benefited going forward because the inventory days will get depleted very soon?
Sanjeev Asthana
In terms of the outlook the markets have tended to be more aligned now and it is gaining traction in the domestic market. We are heading into the festival season in normal times in both the demand there is an uptick as well as the demand side tends to sort of give support to the prices, so I am expecting that the prices would tend to benefit and in the Palm Oil segment we are already witnessing a surge in industrial uses because the Diwali demand typically the festival season demand tends to be advanced by nearly 45 days, so we are expecting the market to improve and so that is one part. The s
Q
Thanks for the opportunity. Initially I would like to congratulate you and the team for a very healthy performance on the Foods business, but unfortunately this edible oil business seems to extend a lot of volatility in our numbers, so I wanted to get your thoughts on what synergies exist between the edible oil business and our foods business and whether these businesses could be separated going ahead because every now and then in some quarter or the other this business may take away the attention from the performance of the Foods business?
Sanjeev Asthana
That is a great question and I just want to highlight that edible oils as a business is a good business and because of the reporting the sort of timelines that the companies have to follow every quarter end, which I sort of spoke during the call also, so many times there is a lag between how the markets response and where the markets are headed. So for example that the prices are rising, the domestic and there are three elements to the way prices operate. One is the domestic Indian market prices that we have, second is the international market the physical market from where almost 70% of count
Q
Sir, continuing from the previous question strategically how do we say long-term the construct of the edible oil business, what kind of likely growth rate margins in a more normalized basis that should prevent, I understand that last year is being a particularly unusual period, second quarter of the last year and through that period even till last quarter the picture is being somewhat volatile, but on a more normalized basis how do we see the long-term construct of the business, what kind of margins, what kind of growth rate for the industry and what kind of the growth rate for us, and therefo
Sanjeev Asthana
I will start with the last question first in terms of return on capital employed. It is a good business because they are nearly 6 to 7 tonnes we can take on the working capital deployment and the business at 3% with 7% is nearly 21% return on capital employed, but I would say that let us take it at even 3% and 6%, it is about 18% return on capital, which is a good business to be in, and that is what I repeatedly sort of said before also that edible oil business in a particular quarter on absolute terms may give a shock once in a while and may not be consistent because of the way the reporting
Q
Just regarding this credit loss, recovering that number it will part of other income or any other line item?
Kumar Rajesh
This is right now included in the other expenses and while reversing it will include in the operational income not in the part of other income. Second part can you please provide the breakup of FMCG business sales and margin in the major subcategoriesin Q1 FY2024? In terms of breakup of the FMCG business in terms of the Nutrela which is soya proteins it is 155 Crores, there is a growth of 3%. In the foods division we did 1,354 Crores. Last year, of course this business was not with us, so it is against that backdrop. The biscuits did revenue of 381 Crores this is against 276 Crores last year i
Q
Thank you for the followup. Sir one suggestion if you could include this category wise revenue and EBITDA margin on the food business in your result release itself that would be more helpful for everyone for comparison sake and my question is this 71 Crores credit loss which you mentioned, which will get reversed, was it for the oil segment or it is for the foods business?
Sanjeev Asthana
This was for the food business, but Rajesh Ji you can elaborate a little more. Majority is from the food business. Prior to say that the EBITDA then for this quarter for the foods business would have been higher by almost 50 – 60 Crores actually? Yes. So actually our EBITDA margins would be even higher than what we have reported currently on the foods business? Basically you cannot say like that because this is a penal clause, which requires the treatment of expected credit loss. So operationally, if it would not be there this has been shown into the other expenses so EBITDA margin could be hi
Q
Thank you very much for patiently listening to our sort of result for the investors. We continue to work towards stabilizing the sort of margins in the edible oil business with the focus and target is on managing the risks to ensuring that we maintain our steady pace of the commitments that we are making. The company continues to strive and work towards the FMCG businesses and we are quite pleased with the progress. There are slew of launches that we have lined up we will continue to work on those and the suggestions that we give in terms of reporting and giving out better quality reporting we
Opening remarks
Dhiraj Mistry
Hi! Good morning all. On behalf of Antique Stock Broking, I would like to welcome all participants and thank management of Patanjali Foods Limited. We have with us Mr. Sanjeev Asthana – CEO of the company, Kumar Rajesh – CFO, and Chintan Kotak – IR. Without further ado I would like to hand over call to the management. Over to you Sir!
Sanjeev Asthana
Thank you Dhiraj and ladies and gentlemen good morning. Thank you for joining us today for Patanjali Foods Earning Call for Q1 FY2024. I am joined by the company’s CFO, Mr. Kumar Rajesh, internal IR Mr. Chintan Kotak and Investor Relations Advisor, Strategic Growth Advisor, SGA. We have uploaded results and press release on the stock exchanges as well as on our company’s website. I hope everyone got an opportunity to go through it. We would like to touch upon a few key developments on the company and the industry post which we will have question and answer session. I will start with the commentary. Despite the negative macroeconomic environment in Q1 FY2024 Patanjali Foods Limited demonstrated a sustained performance across all the financial matrices. Performance of FMCG segment has been particularly impressive. Our business is going through a tactical shift by focusing on the high margin FMCG segment. After the stellar performance in the last quarter in FY2023 we are on way to continu