Mrs. Bectors Food Specialities Limited (BECTORFOOD) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Mrs. Pecter's Food Specialties Limited Q1 F527 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 Mr. Anoop Pector, Managing Director and Promoter. Thank you and over to you, sir.

Thank you so much, and good evening, everyone. On behalf of Mrs. Vector Food Specialties Limited, I extend a very warm welcome to all participants on our quarter one financial year 2027 earnings call. Joining me on the call today are Mr. Manu Talwar, our Chief Executive Officer, Mr. Ishaan Bechter, Whole-Time Director, Mr. Savir Bechter, Whole-Time Director, and Mr. Praveen Kumar Goral, Whole-Time Director. I would also like to take a moment to welcome Mr. Anshun Rastogi, who joins us as our Chief Financial Officer. He brings with him extensive experience in finance leadership roles at multinational consumer companies. We also have with us our investor relations advisors from MUFG InTime. I hope everyone has had an opportunity to review our investor deck and press release, which have been uploaded on the stock exchanges as well as on our company website. FY26 was the year in which we crossed the 2,000 crore revenue mark. Quarter 1 of the financial year 2027 is, in many ways, the first test of whether the foundations we've built over the last few years can carry us at a faster pace. And we are pleased with how the quarter has turned out. The company reported revenue from operations of Rs. 548.7 crores, a growth of 16% year-on-year, and 12.9% over the preceding quarter. Importantly, the growth was accompanied by margin expansion, EBITDA at Rs. 72.1 crores, grew 23.8% year-on-year, with EBITDA margin at 13.1% and improvement of 80 basis points over Q1 of financial year 2026. On a 24-month view, revenue is up 25%. Delivering both growth and margin in a quarter that carried the full weight of inflation and the West Asia disruption is, we believe, the more meaningful takeaway of this performance. On the demand side, consumption trends have held up better than we had feared at the time of our last call. Domestic demand remained healthy across both retail and institutional channels, and our export order book strengthened materially despite vessel availability yet to normalize fully after the disruption in this quarter. Barring a further escalation in the West Asia conflict or a sharper turn in food inflation, we remain optimistic on both businesses. Underpinned by stable consumption, a continued focus on premiumization, and a sustained investment in brand building. Our biscuit business reported a revenue of Rs. 325 crores, registering a growth of 15.7% year-on-year and 19% growth compared to Q1 FY25. Our bakery business continued its strong growth momentum, delivering revenues of rupees 215 crores. Up 17.5% year-on-year, and 40% higher than Q1 FY25. The launch of NatureBaked reflects our commitment to addressing emerging consumer trends around healthy and clean label proposition. With our focused efforts, NatureBaked has crossed a monthly revenue rate of Rs. 1 crore. Our innovation pipeline continues to strengthen the portfolio with premium, value-added offerings that enhance consumer engagement, improve mix, and support long-term profitable growth. On the marketing front, we stepped up our brand investments in a deliberate way, and this will continue to be an area of committed investment as we build long-term brand equity for Crimica and EnglishOvent. QuickCommerce continues to be of strategic significance for us and grew 58% year-on-year. Our Kolkata Bakery Unit, commissioned in Q4 of financial year 2026, is now servicing East Market, and the market has responded encouragingly. Kapoli plant in Maharashtra was commissioned in March 2026, and facility is stabilizing well, and is expected to scale towards full capacities over coming quarters. Strengthening our best footprint, Mumbai remains a high-focus market for English hour, where we intend to lead with a high-quality premium product offering. On the international business, quarter one marked a decisive recovery even as the shipping environment remained difficult. Vessel availability has not yet normalized, and freight and logistic costs have risen further. Despite this, our sport business delivered healthy high double-digit growth. Importantly, the U.S. market is back on a growth trajectory for us. And we have backed this recovery with new product launches, including peanut butter. We are confident of a strong ramp-up in the quarters ahead. The company has steadily strengthened its international business through disciplined calibrated expansion in the last few years, with a focused approach on markets that offers structural profitability and high growth potential, and this quarter is a validation of that approach. Before I turn to numbers, let me spend a moment on the operating environment. India's growth slowly remains resilient, but the benign inflation of the early part of the last year has clearly reversed. Headline consumer inflation has climbed steadily through the year to around 4.4% in June 26, and the input cost inflation has been a defining feature of the quarter for us. The West Asia conflict has been an important contributor, though not the only one, and the pressure reached us on three fronts. Inflation in raw materials and packaging materials, escalation in fuel costs, and the consequent impact of the minimum wage hike. Against this, the mitigation measures we had initiated on a war footing, calibrated price increases, and our institutionalized cost optimization mindset under project impact. In other words, the quarter's inflation was very substantially neutralized, leaving only a marginal residual impact. This is the discipline we intend to carry through the balance of the year, and we expect recovery to be progressively exceeded the impact as the prices increase, analyze, and the project impact interventions mature. Financial Performance. Moving to a financial performance for the quarter, the consolidated revenues for the current quarter stood at Rs. 548.7 crores versus 473 crores in Q1 FY26, thus registering a growth of 16% on a year-on-year basis and 12.9% on a sequential basis. Gross profit for the quarter stood at Rs. 258.9 crores. Growth of 20%, with gross margin at 47.2%, against 45.6% in Q1 average 26, reflecting the benefit of price action and cost optimization. EBITDA stood at 72.1 crores, registering a growth of 23.8%. The EBITDA margin for the quarter stood at 13.1%, and expansion of 80 business points on Q1 average 26. PAAT stood at 38.8 crores for the quarter, registering at 25.5% on a year-on-year basis. PAAT margins for Q1 FY27 stood at 7.1%. With this, I request you to open the floor for question and answer. Thank you so much.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Hi, sir. This is Percy Pantaki here. I just wanted to understand what is the domestic biscuit sales growth for this water beef?

Hello, am I audible? Yes, you're audible. Hello?

Hello, can you hear me? Sir, yes, yes, I just wanted to know the domestic biscuit sales growth for the quarter.

It has been high single digit.

Okay, and is it largely volume-driven, or is there any pricing element in the domestic biscuits?

It is pricing and volume both in this.

Understood. Secondly, just wanted to talk about the overall margins for the company. I mean, what is the likely margin that you are looking at for this year, given where the commodity prices are currently? And how are you thinking about what it would be in the next couple of years, given whatever your cost-saving plans or scale leverage, et cetera?

Let me brief a little bit in detail on this to you. So, first thing is, obviously, as the managing director's speech also said, there has been... You know, inflatory trend on account of war, on account of commodity prices going up, on account of, you know, fuel. So that impact, but we have been trying to take proactive actions, both on the pricing side and the cost side, to cover it as much as possible. Quarter one, we have been able to cover up to the maximum extent. Quarter two, again, the impact seems to be rather larger on account of commodity price increase, and we have already initiated actions. So quarter two could be a quarter where we will be able to cover most of it, not entirely, but quarter three, again, we will be fully covered. On the margin side, if you would have noticed that we have been improving quarter on quarter for past two, three quarters, and so have we done in this quarter. And so our target still remains that by quarter four of this financial year, we get to our 14% EBITDA target. So that's the journey plan we have, in spite of the fact that we have quite a fair amount of inflation trend on account of commodity prices and the fuel impact as well as the minimum wage impact. But the pricing action and the cost, the impact program also, which we started about two years back, that's running well. And we expect this year to deliver almost close to 0.4 to 0.5 percent coming out of our cost impact program. I hope this takes care of your story.

Yes, yes, understood, sir. On the exports part, just wanted to understand this quarter, was there any kind of pipeline refill which has happened because the growth would have sort of got affected earlier? So, therefore, would it be fair to say that we should not extrapolate this quarter's export growth going ahead?

So, what I would say is that we had a couple of projects that had slowed down during the U.S. tariffs, but they are now back on track. Like our MD also mentioned that we've launched peanut butter cracker as a variety. So we've successfully added another SKU with the biggest retail in the US, like Walmart, right? And that is a consistent business that we aim to grow. So and our objective is that we're going to keep adding SKUs with the existing partners and keep adding new ones. So, what we're anticipating is that the growth momentum is always going to be there. And, you know, we're already engaging with clients who we've been, you know, talking to since a year back, and their projects have started converting now. So, the growth momentum will always be there for experts, right? And it's not only for the U.S., all the other territories as well. Sorry, I lost your voice. What do you think?

I'm saying there is nothing sort of exceptional this quarter in terms of restocking from the earlier sort of slowdown that we've seen. This quarter growth is all sort of something which is pertaining to this quarter's demand only. Is that the case, or is there some restocking which has happened this quarter?

No, no, no. There's no restocking as such. This is all the growth that's pertaining to this quarter, and some new innovations that we launched have started clicking with retailers. So there's no restocking as a thing that's happening with us.

Okay, okay, because like March month would have been sort of affected for exports, right? You would not have been able to export because of the geopolitical tensions in March, so those shipments would have spilled into this quarter, which would have propped up this quarter's exports growth, or that's not the case?

So June, we, like again, the MD mentioned, because of the geopolitical crisis, we had shipments on delay for the June month as well, right? So it all sort of balances out towards the end. We didn't see any refilling or restocking as an impact from March to June right now.

Okay, so for the rest of the year also, like high teens growth for the company overall, which we have done this quarter, that same kind of growth can continue because there is no one-off as such this quarter.

That's understanding is correct, right? But see, our full year projection continues that we are targeting to hit around mid-teens kind of growth. There is a seasonality also which makes a difference. So, we will still stick to our positions on mid-teens kind of work. Mid-teens, as a company.

Understood, understood. Okay, sir. Thank you so much.

Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead.

Yeah, good evening. Just a few things from my end. First was on, again, on the margins. So, if you look at the sequential improvement, not only in your EBITDA, but in your gross margin also, there has been an improvement here from about 46% to 47%. You know, what do you attribute that to, given the fact that, you know, inflationary trends are only accelerated from Q4 to Q1? I know you did speak about mitigation, but there has actually been an acceleration. So is this Q1 specifically a product category mix differential also that plays out? That's the first. And the second question was on the OPEC side of things. This quarter, you have seen a bump up with the other expenses. Would you attribute that largely to, say, the freight cost challenges as well as the marketing initiatives that you have, the brand investments that you have done? Would these be the two key factors driving up the OPEX growth? These are my first two questions.

Yeah, Harit, good evening. So, yes, on the gross margin, primarily the impact is on account of improvement in both sides, Biscuit Bakery, but there is also a role of a business mix, and there's a slight improvement in the bakery business mix because of the high growth, if you look at that, and that is also added to that bit of margin improvement, which is reflecting there in gross margin. Yes, Opitz, you're absolutely right. It is on account of two items, which is freight and fuel. So, freight on the onward side and the fuel on the large part is on the fuel, which is basically the plant consumption for the manufacturing. And second, yes, we have Aftar, marketing investments.

And the freight cost, and the freight cost is, you know, freight cost is.

Right, right.

Got it, got it. And second bit was on breads, you know, you just mentioned product mix improvement, etc. The growth has also been quite strong this quarter. Any, is there a significant difference between how the retail business under English oven and Nature Bait has done versus the institutional business? Because institutional also would have seen some pickup given what's happening on the QSR side. So, I just wanted to get a color, even if you can't give exact numbers on, you know, how that mix has shifted in the 17% growth.

No, no. So, first is that overall bakery has done well, right? That's why you see the bakery growth, overall bakery growth percentage is higher than the overall risk it goes. So, that was a mixed IRF thing, too. Both the English showroom and the KWSR business have grown better. So, the good news is that... We clearly seen very positive trends after many quarters on the USR business, and very, very confident these trends are here to continue now. So, clearly, the industry is now back on an upswing.

My last question was on Z. You know, you added Capex in Calcutta, and you said the off-takes have been quite encouraging. Would this be on retail as well as institutional, or, you know, the Calcutta foray is only in one of the two segments? Just one clarification.

So, Harit, it is both segments. So, both have started moving well for us. Both on the English Roman side as well as the QSS side, and we are in the process of build-up. What the speech of MD referred to there, you know, we are delighted that strength of English Roman as a brand and the quality of the product is clearly reflecting in a very newer market of East through the consumers, right? So, English Roman is very well accepted and appreciated. On English Open's, on the pre-product side, and is it a reflecting footprint? Yes, it is on the both, both sides, English Open as well as QSR.

Great. Wish the team all the best. Thank you.

Thank you.

Thank you. The next question is from the line of Binesh Shukla from Phillip Capital, India. Please go ahead.

Hi, sir. Thank you for the opportunity. My question is on the EBITDA margin firm. So, could you please provide some sense of the EBITDA margin profile across all the four business segments? So, I'm not looking for the exact margin, but could you indicate whether our EBITDA margin for each segment is above or below the company average? Because in our view, the domestic listed margin is operating at every segment, significantly lower side versus our company's average. So, could you please just let us know if our understanding is broadly correct or is there any significant deviation about you?

Yeah, yeah. So, as we have said earlier also, our bakery business EBITDA is above our company average, and our biscuit business EBITDA is slightly below our company average. That's how the EBITDA margins of both the businesses stand out.

Any ideas for what kind of margins are we making in domestic districts?

We don't share that. We can, you know, separately discuss in the meeting, but as of now, as a principle, we haven't shared that.

I'm just going to ask. Secondly, on the domestic business, since we aspire to grow in early teens, sort of growth for domestic business, so I just wanted to know what structural initiatives are we undertaking in the domestic business, specifically on on-ground execution front to achieve this target. Yeah, so this is on the domestic business.

So there are three drivers to that. One, obviously, distribution. As we have briefed that this year, we have taken a target of adding 40,000 build outlet above 200 rupees per outlet. So that target, that's almost increase in build outlets by 12-13% over the previous year. Second is that we are focusing largely in a 400 kilometer. from our manufacturing in Punjab. So that area is being invested and driven more. Third is that, as I said, that we are after marketing investment. So we're investing behind the brand. And, you know, while three of our lead variety brands, which are coconut, which is becoming a clear-cut a leader in the industry to the high growth, continued high growth. Then we have bourbon, which continues to be in the second number in the industry, and digestive is, again, continues to be leading in the category. Over and above this, we are investing behind our premium cream and premium cookies, right, to drive our We have a premium contribution in the business, so these two are being invested behind, both on the distribution as well as on the marketing side, to build that business over the next few quarters to come, alongside we'll be investing in some of the high premium products like Shortbread, which is growing on e-commerce. Continuously quarter on quarter in a very healthy rate, and similarly butter cookies and some other variety. So this is how the levers of the, or I can say these are the levers of revenue growth for the Kremita Biscuit Center.

Understood. Sir, we have opened a new plan in NP, but on the other hand, Britannia and Parley are remain very aggressive in Hindi sticking market, if I call it NP, UP, Gujarat, Rajasthan. So, what is our right to be in this market? Are we going to offer a tactical additional utility input to the retailers, or how are we going to attract new distributors and new retailers?

So, you know, first thing, just to clarify, the empty plant, which has been opened, has been opened for both exports, because it brought it closer to the port, plus we had a... So, we have been manufacturing there, largely export as of now, but we have started investing in the central market, which is empty and some part of Marashita and Gujarat, and this journey of investing in these markets is in the distribution side, largely on the distribution side as of now, and we're very confident over the next few quarters. I think you should start seeing. There will not be any instant large results coming in out of that, but it will be continuous investment over the next few quarters. We can start seeing some good movement of... You know, Kremita brand in these territories.

Okay. So just looking for two data forms, one is for WCGIS. So what is our current revenue contribution is coming from the non upper north market when we compared with three years ago? And second is what kind of grow up, what kind of contribution is coming from the existing plan for export business? What is the second question? What kind of percentage contribution is coming from your existing customer in export market?

Okay, so we will answer the second one. On the first one, we have now almost reached 50% of our general trade business. 50% comes from Aparnaut, 50% comes from the rest of India. Suvih, please, we can answer on that.

Yeah, so more than 95% or 98% business would be the existing. But the thing is that the existing customers, we are consistently and continuously adding newer SKUs to them in the form of innovation to grow their share in the market. I hope that answers the question.

So that the Q3 person is coming from the global client, so what efforts will you be taking to increase this year to near double digits over the next 3-4 years?

The teams, we have a very wide team who are consistently traveling across the world wherever the markets are. We are analyzing data. We are in touch with top-tier retailers as well as distributors to start engaging with our products, and hopefully we'll start seeing conversions as well. But this is a general trend that keeps on going, because for a retailer to materialize, the conversion time is a bit longer. But we are in active discussions with a lot.

Understood. Thank you so much. Thank you.

Thank you. Ladies and gentlemen, in order for the management to answer all of your questions, please restrict your questions to two per participant. The next question is from the line of Amit Purohit from Ilara Capital. Please go ahead.

Yes, sir. Thank you for the opportunity, and congrats on good margin. So, I wanted to know, on the price increase that you would have taken, whenever the input inflation goes up, what was the input inflation? Does the price increase in the institution's bakery side of the business, as well as in export, is it an easy pass-through? And what was the price increase in domestic bakery, as well as domestic biscuits, if you could highlight that.

So, you know, impact on account of inflation has been around one-odd percent over the last year, one to two percent approximately, and the price increase which we have taken, where the partial impact would have come in. First quarter, and the balance will come in the quarter, too, because price increase happened during the quarter. The price increase has been on overall as a company around 2% to 3%. You can say in the consumer side of the business, which is English-owned and Crimica, about 2%.

2% to 3% is the total price increase taken, or in this quarter, it is effective 2% to 3%.

No, no, no. Total price increase. So, it's taken over as around 2 to 1.5% in the consumer business, which is English, OAN, and Krimica. And this quarter has seen a partial impact of that because the price increase was taken during the quarter.

Okay. And inflation, cost inflation was just 1% on a YOY basis.

About 1.5% approximately was an inflator impact. For this quarter, the next quarter is higher. So the quarter two is much higher. You see, the last quarter inflator impact started coming towards the end of this quarter. So the more challenging quarter is quarter two.

Okay. Okay. So, and on a, just on the freight cost part, I mean, I understand we have now facility in MP, which will cater to both the export as well as the domestic market. Would you be able to quantify the savings? Because, I mean, earlier you were kind of transporting from the north to JNPP or the export ports.

Yeah, we will be definitely able to quantify the great difference between Punjab versus there. of our export shipment. Amit, what I would request that we will definitely get back to you over the mail on this information. I won't have any information as of now.

Sure, sure. And sir, just to get an idea, I mean, you indicated 14% margin. I could not understand that. That is, you are saying by the end of the quarter, it will be closer to 14% or you were referring to 14% margin for the full year of FY 2017?

What I was referring to on it, like we had just delivered 13.1% EBITDA in this quarter, and so all those are. The inflation of commodity prices and packaging material has been pretty steep, and the large impact is coming in quarter two, but our endeavor will be to keep improving. The endeavor is that in the quarter four, we should get to 14% EBITDA, right? So quarter four's target is to kind of achieve 14% EBITDA for that quarter.

Got it, got it, got it.

And over a medium term, sorry to interrupt, Mr. Amit, could you please rejoin the queue for any follow-up questions?

Sure, thanks.

Thank you. Reminder for all participants, in order to ensure that the management is able to address all of your questions, please limit your questions to two per participant. The next question is from the line of Shirish Pardeshi from Motilal Oswal Financial Services Limited. Please go ahead.

Hi, Anup, sir, and Manu, sir, good evening. Thank you for the opportunity. I have two questions. The first question in the export market, what is our contribution as on date in the US and Europe separately, and what was that number one year before?

So, we are today touching close to 23-25% in US, right? And it has built over the last 3-4 years. I won't add the last 1 year number as of now ready with me, but yes, it has grown over the last 4 years.

In fact, I have the number, so, I mean, I think, you know, the contribution in last year Q1, if it was, it has actually doubled, you know, I mean, then our last quarter, last quarter 26, this quarter 27, we have actually doubled. Okay.

The reason why I was asking, last one year we have seen a lot of beneficials in the U.S. So actually you are saying our business has doubled. So I am not sure.

At the percentage what we are doing, right? At the percentage. So U.S. doesn't happen to be our biggest market.

Okay.

Yeah. So it's, you know, it's from what we were doing. Now what we are doing is doubled.

Thank you. One quick check on this. How the U.S. customers are now reacting? Because I heard Samir is talking about we are introducing new products and new segments. But then is there any indication in the current context is the customers? Because you mentioned Walmart is also picked up some product. So I'm just checking what is the customers giving you feedback in terms of demand? Obviously, the tariff issue will get settled over a period of time.

Customers are very optimistic from line from India. The great part is that even when the tariffs were there, none of the customers stopped working with us on future capabilities and future projects. So they've put an immense faith in our organization looking at our capabilities and the technology that we have. So, retailers are still coming down to India. They are visiting us, and a few retailers are co-creating products with us, which are as per the U.S. standard. So, from my point of view, all the major customers, distributors are very optimistic online from India.

Okay, that's helpful. My second and last question, we heard in the morning the market leader has rejuvenated the efforts in terms of key states and other states in terms of advertising and in terms of sales restructuring also. In that context, how this competition is behaving in our key states like Upper North and maybe you can say Punjab and other places?

So, competition continues to be very intense on the biscuit side. And in Upper North, especially. And so, yeah, from a competition intensity point of view, competition continues to be intense in the North India. Okay.

Now, we just wanted to check, Manu, sir, is that required our expense also has to go up in line to maintain the share of voice?

Yeah, we did that. That's why I said, if you remember when I asked to Mr. Harit that our other expenses have gone up and our marketing investments have gone up. So, yes, we have done that, both on our trade promotion side as well as marketing side. Okay.

That's really helpful. Thank you and all the best.

Thank you.

Thank you. The next question is from the line of Archers from Monarch Network. Please go ahead.

Yeah. Hi, everybody. So, yeah. So, my fourth question is, what is the geography-wise revenue contribution and how do you expect this to evolve going forward?

So our large part of revenues in general trade comes from North India only, right? And we expect that contribution of North India should continue to, as of now, remain in the, for the next few quarters, I don't see any change. So North India, and especially the 400 kilometers from our Punjab land, We'll continue to be the high-focus area for us for driving the growth, and thus the contribution of North India, which is about 85% will continue to be around that.

I think we need to speak about the bakery side because bakery we're investing, we've invested heavily in. Sorry, sorry.

So in the English oven side? Our, again, English Open side, again, as of now, revenue is about approximately 80% from North India. In the North India, also, I would like to highlight one thing. So, in the North India, about three, four years back, our almost 75-80% of the revenue used to come from NCR, right, Delhi NCR. We started investing in the upcountry, which was Haryana, Rajasthan, UP, and I'm glad to share that our continuous effort over the last three years to four years, investing in the upcountry territory, our revenues have now become almost equal in the NCR as well as upcountry. So, upcountry continues as a growth engine. Now, in the North India, We are investing in Punjab, right? And we're very confident that Punjab being one of the very large bakery markets for North India, we should be able to see good gains there over the next few years to come. Now, coming to the West India, the West India, our brand was always a preferred brand, a strong brand. We were short on our capacities, right? And now we invested in a new plant in Kapoli, which is a state-of-the-art plant, and which has been, as said in the speech, it's been commissioned in the last, in the March of the last quarter, and it's in a sterilization state. So, we will be doing huge amount of investment on distribution in Bombay, Pruna, and some other parts of Marashtra, and it will be a... A speedy growth for us over the next few years. So we literally want to grow at a very high double digit, and we will be growing at a very high double digit in the years to come in the western side of India, right? And then next comes our investment in Bangalore. We've shortlisted the plant location, which is getting ready, and we will be investing in Bangalore in the new lines, because there, again, we were very, very short on capacity. So the Karnataka market and from Bangalore, the Chennai market, right, will become a good source of growth. We launched in the last quarter in Hyderabad, which is also kind of moving well, and I have briefed in the speech also, Calcutta Market, where we launched, and we have started ramping up there on our English O1 brand as well as on the QSR business. So, yes, deeply over the next four years, there should be substantial buildup of our business, which is non-North on English O1 side. And we have a clear-cut aspiration to become a pan-India, strong English-owned brand, and we'll be walking in that direction, and that's why we're launching in new cities. We added more capacity, a new plant in Bombay. We will be adding in Bangalore. Calcutta started. So, over the next few years, definitely, we will be a pan-India, a very strong bakery brand in English. Alongside what happened, and which was again expressed by MD in the speech, we launched a clean label, helped brand called NatureBase. Nature Bake has started ramping up very, very well. We've just touched a run rate of one prod revenue per month, and we expect that also to ramp up in quarter after quarter and to become a very strong, clean-level bakery product brand over the next few years' time. So I thought I'd just take the opportunity to brief into this.

Yeah, okay. So, thank you. Helpful. Also, but from the export side, US is our biggest market. Is the understanding correct?

It is one of the largest markets, but U.S., South America, and Africa would be our three largest territories.

Okay, and what would be the contribution coming from South Africa?

Oh, it's... Yeah, no, no, you can't. I meant tactical. So, the split would be somewhere around, all the three markets would be around 20-25 watt percent.

But, I mean. No, three years in 2020. Okay, okay. Okay, and so, what would be the movement?

Sorry to interrupt. Ms. Anshul, could you please fall back in the queue for any follow-up questions?

This is my second question, ma'am. So, can I continue with this?

Please go ahead.

Yeah. So, what would be the volume and revenue growth for the overall and segment-wise?

Should I just take it? So, you know, the revenue growth and the volume growth has been, in this quarter, high double digits. And the whole growth has been largely led by volumes in export.

Okay, okay. Thank you.

Thank you. The next question is from the line of Deepak from Unify Capital. Please go ahead.

Hello, sir. Thank you for the opportunity. So, my first question was on the revenue side. You know, firstly, the B2B business, you know, we've not done fairly well in the last two years. So, if you can touch upon the issue that we faced in the last two years and what have we done recently in the current quarter or the past few quarters to correct it, that we're seeing an uptick in revenues. The second thing, sir, in B2C, biscuits, a 9% growth. On a fairly low base, you know, is that a run rate that we should be working with for the puller or you see an improvement given your efforts on distribution, you know, to become the growth rate to become better going forward? And, sir, on the export side, although you had so many challenges, you've done. A fairly good job. So, I mean, I just wanted to understand how the momentum is shaping up for the next few quarters. Yeah. Thanks. Yeah, the first question was on the revenue side, right? Yeah, the B2B bakery.

B2B business, basically B2B bakery business is a QSR business, and we all know that, you know, QSR across all the QSRs were on a lower growth trajectory, but the good news was that All the QSAs were very... They're bullish of investing in India. They continue to invest in new stores and keep opening. It looks like the tide has turned, and, you know, in this quarter, there has been a good double-digit growth in this B2B segment, and we're very confident this trend to continue in the coming quarters, right? That's on the revenue side. On a biscuit side, yes. Our clear-cut aim for this four-year is to deliver a low-teens kind of growth. And we are confident that on a four-quarter basis, on a four-year basis, we should be able to deliver a low double-digit kind of growth on the biscuit side, right? On export side, I'll request V to take on on the momentum.

So, on the momentum, what we're anticipating is a good growth within this quarter as well and the future quarters, but like we've been seeing it in the past, we're anticipating a mid-team growth coming in. Okay, sure.

So, I am assuming that the bakery business and the export business is order book linked, and hence, we are confident of growing these two at a high growth rate. Is that assumption, right? Sorry, come again? Sir, I am assuming that the B2B business, both on the bakery side and the biscuit exports, are order book linked. So, The assumptions of growth that we spoke about are sanguine and could continue for the full year, right?

No, no. So just to clarify to you, in both these businesses, we don't have any long order book. We get orders on a month-to-month basis, right? So it's not that like projects and other things where you get six-month or nine-month orders. It's nothing like that. It's a month-on-month order we get. And based on the delivery, we are talking based on the trends, and so we are confident based on the trends that these trends should be able to continue. And both in a bakery business, we should deliver some low-teens kind of growth, and export we should deliver close to mid-teens kind of growth.

So, my last question is on the margin profile. So, you have done well in this quarter despite the raw material issue, but you're calling out a sequential improvement in the next three quarters. So, but you're also, you know, sounding out on the impact that you'll see in the Q2. So, I just wanted to understand how the sequential improvement is being forecasted for the company despite having a great issue, despite having the need to do more marketing. There's a raw material inflation in terms of the crude, the crude packaging cost and, you know, general trade costs. So, just wanted to understand despite all the relevance, how are we looking at sequential improvement and margins?

Okay. So, as I said, that quarter two impact on commodity prices has been, is much sharper. But we have taken action and we are taking actions. On the pricing, SLF cost side, and I had earlier referred to the project impact also, right, where also the cost savings would kind of accelerate over the coming quarter. So based on that, so we may not see a major improvement in the quarter too, because the heavy impact coming and the actions which we have taken will compensate partially in the next quarter and fully in the quarter three. So, based on these projections and the actions taken by us, we are very confident that in the quarter four, we want to get to and we should get to delivering 14% in the quarter four.

Okay. So you announced the Bangalore CAPEX. So how big could that CAPEX be in any size that you could share? And also, sir, can you call out the CAPEX amount that we invested for the Calcutta, Maharashtra, and the indoor plant? And what kind of asset terms and what kind of scoping in terms of revenue is possible from the recent CAPEX that you've done? Okay, so...

In terms of CAPEX, which we have invested or investing this year, can, on current price levels, can cover us up to approximately 3,400, 3,500 crores, right? That is it. B, Calcutta was a small investment, which plant was commissioned last year, so it was a... Small investment, approximately, which I remember around 20-odd euros, right? See, you asked me how much is a total investment. So one is a spillover of investment of last year into this year. So capitalization is happening this year. And there is some bit of new investment which is coming up in this year to build up our, ramp up our capacities.

Okay, so if I, if you could just share the amount for this year, the, you know, the KTEC that was spending from last year, that is one, and the Bangalore one, how big are we planning, you know, the KTEC amount for the Bangalore flexibility?

So, Bangalore capital is still under finalization, right, in terms of final ordering machines and all that. But this year, our approximate investment should be, other than the spill overall last year, this should be close to 200 crores.

Okay. Got it, sir. Sir, although one last question, you know, because we have quite focused on…

Sorry to interrupt, Mr. Deepak. Could you please fall back in the queue for any follow-up questions?

Okay, sure. Thanks.

Thank you. The next question is from the line of Yash Sondhalia from Edelweiss Public Alls. Please go ahead.

Hi, team. Thank you for taking my question and congratulations on good set of numbers. So, I have two questions. So, my first question is on very similar line for domestic biscuit business. So, what I want to understand is basically we always talk about growing in mid-teams volume for the business, but how internally we break this down between gaining market share and growing with the industry. And what is our assumed industry growth when we are assuming mid-teams growth for the domestic biscuit volumes?

So, just come again, what are you asking, how do we break our breakdown between?

So, basically, when we say mid-teens volume growth in the domestic biscuit, how we break it down between gaining market share and growing with the industry.

Okay. So, first thing is that we are talking this year to deliver low-teens growth. And over the four-year period until 2030, we want to deliver mid-teams kind of growth. So that's A. In terms of growth, so be confident that because industry is growing at high single digit and we are planning to achieve a low-teams kind of growth, it should definitely reflect in an improvement in a market share in North India. Got it, got it.

And sir, my second question is like, basically, we are talking about ending our EBITDA margin at 14% as end of this year. But from a medium to long term perspective, for whatever initiatives we are taking and the revenue mix changing for next two to three years, how we see all this translating into our EBITDA margin gains?

So, over... Over a period of next three to four years, say by 2030 financial year, we want to hit EBITDA closer to 16%. That's the aim as of now. So somewhere between 15% to 16%. You see, the only thing which we need to keep in mind that over the next four years' time, we're also targeting a very aggressive growth in the next four financial years. Leaving aside this financially, we're targeting a growth, aggressive growth, and we want to hit a next milestone, like we hit a milestone of 2,000 crores this year. We want to hit a next milestone of 4,000 crores, right? So there's a fair amount of investment, which will also go in, you know, in expanding our distribution, in marketing, opening up new geographies, right? There. Got it. So, yes, on a long-term basis, that getting closer to 16 over next four years' time would be great.

Got it, sir. And so, just one last follow-up on the same. When we are seeing, we are seeing a huge growth, aggressive growth for next three to four years. Ideally, how should we see or how should we keep a tap on it from basically domestic biscuit perspective? What things should we track, distribution, reach, or what do you think will lead to this growth?

You see, as I explained earlier, the driver will be three, the triangular approach. One is distribution. Second is marketing investments or making Kermika brand stronger. And just to update, we are in the process of finalizing our brand study also. Third is driving the premium category, where we are investing now behind premium claims and premium bookies. So these three are the levers, which will be driver of revenue growth over the next few years to come.

Got it. Thanks a lot, sir.

Thank you. The next question is from the line of Naveen from iThoughtPMS. Reminder for all participants, please restrict your questions in order for the management to answer all of them. Thank you. Please go ahead, Mr. Naveen.

Hi, sir. Am I on a thing?

Yeah, yeah.

Yeah, congratulations on just a couple of questions. So just regarding the excess duty situation that we've discussed over the past couple of quarters. So we were getting some input, I mean, not input, sorry, we were getting some rebates and they were taken off. So what's the situation there? And in general, as like an extension to that question, could you also discuss like stocky markets, what kind of excess duty situation we have currently going on?

Sorry, just clarify your question, Vandri, are you talking about regarding some of our export incentives or?

Yes, so my understanding is that we used to have some incentives that we don't pay more. And we were looking for ways to remedy that. As an extension to that question, I just wanted you to maybe give me a little more details on like the key sort of US, EU and South Africa in general, right? So what the duty structure there is like and how you're getting this incentive or you used to get it?

So, the incentives are, you know, still not happening, and I mean, nothing on the incentive side from the government yet, and repeat your second question, please.

No, I just wanted to understand what kind of duties are paying for each market.

So, we don't pay duties. The duties are being paid by the importer, right? So, and currently with, you know, FTAs happening, so New Zealand is a market for us. FTAs just happened there. UK is turning out to be a good market for us. So, we are there. Now, we are looking at bigger gains. So, whenever FTAs are happening, and otherwise, you know, we are not, the importer has to pay the duties, so we will actually not know exactly what duties each of the countries are paying.

Got it, got it. Yeah, and one more thing that I just wanted to clarify is, so a couple of calls back, or even in the last call, we discussed the capex cycle, right? So we were supposed to be O with one big capex cycle, and the investments were supposed to moderate. So maybe, you know, long-term view next five years. So I understand that our current revenue potential with the capacity that we have and we are going to add is around 3,500 crores, right? But we aspire to do, let's just say something around 4,000 crores by FY30. So considering the addition of some small capacity in the future, what should we expect the CapEx run rate to be like? Where will the funding come from? Any clarity on that would we get?

So, in terms of capacity, the capacity which I shared with you, which take us, that's on the current prices, right? So, we know every year there is some bit of price increase. Secondly, it doesn't include time low, right? So, that will get added to that. And so these two will be additional, plus as our business is growing, So it looks like we definitely need to invest in some more capacities to grow in those respective territories, right? We are in the process of working out. So in terms of adding, and in terms of, you know, cash flow side, if you would have looked at our debt equity ratio is more than comfortable. We normally do a bridge between borrowing and investing our own money, even in this year. The additional capes which we are planning to do in this particular year, it will be almost 60% to 50% coming out of our own funds, and 40% will be borrowed funds. So we do a dual mix, but as you can see, our debt equity ratio continues to be healthy and comfortable.

Oh my God, thank you. Maybe just one bookkeeping question, if I can squeeze it in.

Sorry, sorry to interrupt. Could you please, could you please fall back in the queue for any follow-up? Sure, yeah.

Thanks a lot.

Yeah, thanks a lot.

The next question is from the line of Bhavya Gandhi from Bajaj Alternative Investment Management Limited. Please go ahead.

Hi, thanks for the opportunity. So, just wanted to understand, what should be contract manufacturing mix in the overall top line on a full year basis? If you can provide some number. And on the export side, what should be mix?

So, I'm contract manufacturing. I love business. Our focus has been growing our business, so it's just about 1, 1.5% now, right? And as far as export contribution is concerned, export contribution now is kind of touching almost close to 35% here.

Okay.

And just your thoughts, instead of focusing on in-house manufacturing, wouldn't it make more sense to invest more on the brand side because that Kremika and English owner known brands increase the distribution, use the capital more efficiently on the branding side? Any thoughts on that side?

So, first thing, should we invest more on brand? 100% we should. And if you look at our trajectory over the last four years, we have more than doubled our investment on brand, and objective is to keep enhancing that, right? We, on our consumer brand, approximately, if I remember, remember, we are now almost touching 2% on our consumer businesses of Remika and English over, and objective is to keep further strengthening and moving up. Coming to the manufacturing, yes. We do use some bit of contract manufacturing, not much. In future, should we be using a little more than what we are doing today? Maybe, yes. But I think that one very important thing to understand from us, and right yesterday also, I was in market somewhere in upcountry of North India, where both English over and Kremika were there. And one thing which creates a differentiation for us is quality of our products. The quality of our product is the biggest challenge. Like, I was giving you an example of Calcutta. So, Calcutta, nobody knows our brand English zone, right? We launched it. Consumers are trying it. Consumers are loving it. I did a Calcutta market 30 days back. And same is the response on the quick commerce side, right? So, yes, we're very conscious of quality and the standard we deliver to our consumers because that's being the forte and that's a driver of growth for us. But should we leverage contract manual action more? Definitely, we are planning that.

Got it. Fair enough, sir. Thank you so much. Thank you so much. That's it for mine.

Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand over to the management for closing remarks. Over to you.

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 MUFD, in time, our investor relations partners. Thank you so much.

On behalf of Mrs. Pector's Food Specialties Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.