Bikaji Foods International Limited (BIKAJI) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Bikaji Foods International Limited Q3 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Hazel Rathore. Thank you, and over to you, ma'am.

Thank you. Good afternoon, everyone. Thank you for joining us for Bikaji Foods International Quarter 3 and 9 Months FY '25 Earnings Conference Call. From the management, we have with us Mr. Rishabh Jain, CFO; and Mr. Manoj Verma, COO. I now request Mr. Rishabh Jain to take us through the key opening remarks, after which we can open the floor for the question-and-answer session. Thank you, and over to you, sir.

Hello to all the investors. Thank you for joining the investor call. So overall, it's a very challenging quarter for all FMCG.However, we've seen consumption trends are moving up in the fourth quarter, January. Also we're seeing some positive sign in budget for middle class in reducing income tax and other factors, which will also have some positive sign for economy in the next few years. So from -- so this year, this quarter, we've grown close to 12% in sales and overall revenue from operation growth of 14.5% compared to last year. From EBITDA lens, of course, the operating margin was at pressure in fourth quarter -- in third quarter. And from September onwards, we've seen oil price have started moving up, and sudden increase in palm oil taxes from government has impacted overall pricing of palm oil and overall, all the edible oil largely which has impacted overall gross margin in fourth quarter. Gross margin pressure was -- we have tried to pass on the prices of -- prices to consumers and we have taken some price hike in third quarter as well as we are also taking price hike in fourth quarter. Also there was a key pressure of potato. Like you will see that our Western Snacks sales has grown at a subdued percent, at 0% largely. This was a conscious call which we as management has taken largely because potato prices increased substantially and in Western Snacks chips, like potato and oil, that's the two key commodities. And both the prices have increased substantially so that we have subdued the production in the third quarter, which has also impacted revenue to close to 1.5%. It's good to see YTD number because sweets is largely -- this year, Diwali was in end of October. Last year, Diwali was in 10th of November. So there was some presale -- pre sweet sales in second quarter of this year. So overall, our revenue growth in YTD numbers is close to 17%. And overall, when we remove pay rise, it's close to 15% versus 11% volume growth. Our EBITDA margin stand at close to 11.1%. Our gross margin 32%. From manufacturing lines, it's the same. We have not increased any major capacity and trying to deploy the capacity as soon as possible to add close to 65%, 70% so that operations efficiency comes in overall -- at overall level. From planning the distribution level, so largely, that's the core of distribution. We have always started to increase the direct reach, and we have further -- we further gained distribution and have reached close to 11.5 million outlets in total and as direct reach perspective, we are to close to 3 lakh outlets, close to 2.88 lakh outlets this year, which is fundamental for any FMCG and that's what we are targeting. From marketing lens, Manoj ji, you can...

Yes. So marketing campaign, what we did and which was a big one, Bikaji Khao London Jao, which ended on 31st of December, did pretty well for us, and that was the savior because if you look at when you go through the presentation, you would see that volume growth is just 3%. But actually speaking, if we look at revenue, volume growth is 8%. That's the right number. It is because on the back of last year quarter 3, this is 10% extra was going, so 10% was non-revenue volume. But then that sits in the base. So therefore, it looks peak versus otherwise, revenue volume growth is 8% for us. So this promo indeed helped us do better. We got very good penetration, now able to increase our weighted distribution with these kind of -- this campaign, what we did. We used all communication vehicles. We used a few celebrities like Diljit Dosanjh and all and this expanded across country, so all the states and about 3,600 cities. The winners who benefited of this promo is to the tune of 6,34,000 winners who got something or the other out of this promotion. Festive campaign we did, so our gift pack did very well. However, quarter -- and this I'm talking overall. So the right way to look at gifting and sweets is a sum total of quarter 3 and quarter 2 because of Diwali being a little here and there kind of stuff. But overall, it was a good business on gifting for Bikaji per se. Talking about volume growth, if we look at quarter 3, so the reported growth is 3%, but if we look at revenue volume growth is 8% for this quarter. Ethnic Snacks grown at 10.5%, packaged sweets at 11.2% revenue growth. Western Snacks, where the growth is flat, it's just 0.8%, but that was a conscious call which we took and as Rishabh just spoke about because there it was bottom line erosion as we sell more. Both potato and oil, which are the key ingredients for this product, were on the peak of it, and it was not practically possible to pass as much prices. And this is one reason that if you see the results of any other listed company in this category would have certainly bleeded for that stuff. Papad, again, had a 9.6% growth in this quarter. It's more relevant to see, look at the continuity that YTDs over 9 months, volume growth is 11%. But here again, if I just look at revenue volume, so it's 13.3%, which is in line with what we have been talking. Our revenue -- overall revenue from operations is 17.1%. Ethnic Snacks sitting at 12.2% growth. Packaged Sweets. As I said that it's the right way to look at quarter 3 and quarter 2 together. So at a YTD basis, packaged sweets is 17.5% growth. Western Snacks, which if you look at just quarter 3, and I've mentioned, is at 0 growth. However, at a YTD number, it's 16.5% growth. So which speaks about the kind of demand which exists across them all we took and we did not do that. In fact, H1, if I look at it is a 28% plus growth kind of answer, so which is what now with softening of prices in potato and also the oil, you will see this -- in the coming quarter, this will all be made up. Papad at a 15.3% growth on a YTD basis. So has strong momentum going forward. In terms of if we look at our product mix, so it is broadly in line with what it was last year to 62.9% it was last year quarter 4 for Namkeen and Bhujia put together, which is now at 62.1%. So only thing if you refer to this sheet of ours is the Western Snacks contribution. So last year, if we look at quarter 3, it was 7.5%, which has come down to 6.8% and this is what I had spoke about that, that was a conscious call. Rest all categories are in line. And in terms of as we talk about that our core, focused and other, the markets that we export, so if we look at in this quarter, wholesale revenue growth is 10.8%, focused states growing at 14.7%, other states, 8.7% and export has done good now, is at 32.6% growth. At a YTD basis, core states have grown at 11.9%; focused states at 17.1%; and others at 23.7%; exports sitting at close to 31% growth. Our flagship or the continuity on the large pack continues. So we are -- the mix of product between impulse and the large pack is 61% from large pack and 35% coming impulse pack. Both the family pack and impulse pack has done well in the quarter. So family pack growing at 11.6%, impulse slightly higher at 12.9% growth. Rishabh?

So overall, from revenue lens, we've grown at close to 14.5%, but on quarter-on-quarter, it's largely flat, as you see last quarter. From EBITDA lens, our EBITDA is close to 8%. So from raw material lens, of course, edible oil has essentially hit all the FMCG brands and close to -- the price has been increased from 100 to close to 140 level. And currently, it's close to 130 but, yes, overall it's at the peak currently. But yes, from this quarter, what we see, it's a good crop this year. We're seeing good crop in all the commodities. And we have seen that, that will support overall. In fourth quarter, we're seeing good -- we've done a good pricing through pricing support taken with long-term PO for all the key commodity what we already started doing. That will support the margin in coming quarters, be it pulses, be it [indiscernible] for anything and everything. So we've seen good commodity crop this year in every -- in each and every commodity. So that's all from presentation. We're happy to answer all the questions and take all the questions you have. Thank you.

[Operator Instructions] The first question comes from the line of Abneesh Roy from Nuvama Wealth Management Limited.

My first question is on the segment-wise growth numbers. So I see a big divergence between, say, Q3 and 9 months when I see the data. The bigger divergence is between sweets, where there is 17% growth in 9 months, which drops to 11% in Q3, which means first half, obviously, you've already given that number. It's almost 20%. So 20% drops to 11%. And similarly, Western Snacks from 16% become 0. So here, specific question is, I understand Western Snacks, you did call out that conscious call was there because of very low margins. But what happened in sweets? So sweets essentially, marriage season always is a big benefit because of the gifting. And Q3, we have seen whichever category has a high marriage demand, those have done really well. So in your case, if you could discuss in sweets, what is the issue here? And would you expect sweets and Western Snacks even in Q4 to underperform the other two categories for you?

Yes. Abneesh, see, packaged sweets, the role of wedding season, of course, is there. But the quantum of gifting in Diwali is, by far, high. So it's a very small percentage vis-a-vis the Diwali gifting kind of numbers what we do. Now what happens is that last year, Diwali was on around 23rd of November -- 10th, yes, so later part, when this year it goes on 1st of November itself. So this got preponed in quarter 2 itself because modern trade, which is a very big account for us in our other states and all, so where sweets is very big. So all this stuff goes -- the preloading starts happening. So this is what is always the case, that quarter 2 and quarter 3 put together is the right number. Wedding season, also if you look at the wedding season, number of wedding days are more in quarter 1 -- quarter 4 vis-a-vis quarter 3, if we compare over last year. But again, I'm reiterating on the fact that, yes, wedding season plays a role, but it is nowhere close to what gifting and the Diwali means for this category for us.

Also, Abneesh, so your last question was, so for fourth quarter like Western Snacks is again on track. And so the fresh crop came in potato. And so we -- it's on track and we have again started production -- full peak production in Western Snacks. And sweets will be also in the same range in fourth quarter. But yes, fourth quarter sweets will be in a very low because major sweet production is happening in second and third quarter.

Understood. My second question is on the demand side. So again, here, 3% volume growth versus first half early teens growth, it's a dramatic slowdown. So -- and when I see even in Q3, India's largest biscuit company is seeing 6%, 6.5% volume growth, and you are seeing 3% volume growth. So could you tell us, is there some market share loss? And here, I'm not referring to the official market share data. It may or may not be relevant. My question here is what really happened? How much is the impact of the grammage cut, for example, at INR 5, INR 10 price point, if you could take us through that? Because there you can't take a pricing growth. And when you compare your 3% growth to India's largest biscuit company at 6%, 6.5% in the same quarter, we are living in the same quarter, same India, why there is so much of a divergence here? Both are in the snacks category. So if you could tell us how you see near-term volume growth coming back.

Sure. Sure, Abneesh. So one is that 3% is not a right number to look at it. If we speak about our revenue volume growth, so it's 8%. And this somehow connects with your grammage cut. So last year in this quarter, all our large pack had 10% extra, which was not the case because of the prices, in any which way that was time-bound promo what we had done. So if I look at revenue volume growth, it is 8%. That is one. Second is that Western Snacks, the category which contributes about 8% to our business and is at 0 growth, right? That's the second reason. So therefore, other than this, if you look at the Ethnic Snacks, the other categories are well on track. So there's nothing to -- which really is concerning or worrying for that stuff. So this is where we are. This number looks low because last year, it was 10% extra, which was going, which it has not gone this year.

And 10% extra is there in Q4 also in terms of base?

Last year, yes, it was. So this was there till Q4. So that's when we ran this promo last year for 6 months.

Okay. Understood. So last follow-up here. So essentially, at INR 5, INR 10, what has happened in terms of grammage cut there? And Q4, you expect some recovery because you have said that Western Snacks, there is a recovery. So in terms of volume growth?

So Abneesh, largely we had taken some grammage cutting, INR 5, INR 10 in last week of December. That's what we've done. And Q4 also we've seen good crop coming in, good pricing support from raw material side. So we see again good recovery in margin from that sense.

One follow-up. Where have you seen softness? Because other companies are not highlighting any big softness in palm oil till now? It may have corrected.

We have not seen softness in palm oil, but we are seeing softness in key commodities -- our key commodities.

The next question comes from the line of Percy from IIFL Securities.

So this quarter, if I look at your ASP, it is around 9% Y-o-Y. If the volume is 3% and the price is -- sorry, sales is 12%, it means that the average selling price, either because of reduction of promotion or the price increase itself, whatever be the route or path, but effectively, the average selling price has increased by 9%. So given the actions that you've already put in the market, including some changes in December, et cetera, how much Y-o-Y growth in the ASP you expect in Q4?

So Y-o-Y, if we look at would be around, say, 3% kind of a stuff. So 1.5% we have already done. And 3%, 3.5% kind of growth we will see, ASP growth.

No, no, sir, 9% is already there in third quarter. So fourth quarter has to be more than 9%, right?

No, no. So, again, Percy, let me explain it to you. While it looks 3%, actually it is 8% growth, revenue volume growth.

Sir, I understand that. I'm saying reduction of promotion is also pricing in a way, right? So the average selling price per kilo has gone up by 9% Y-o-Y this quarter. I'm saying that some initiatives have happened probably in December and January which have not fully affected the 3Q. So what would be the ASP growth for Q4 given whatever actions already taken? That is my question.

So about 1.5% in Q4 is what we'll do.

Okay. So around 10% to 11%. And given the inflation that you have seen, would that be enough for you to recover the hit on the margins that have happened this quarter? Or there would still be some sort of partial hit which would still come in Q4 and maybe can be recovered only in Q1 or Q2?

So largely, that's what we'll do. We'll do 1.5% price increase in Feb-end, March first week, that's what we'll do, number one. Number two, we are hopeful that we'll again come in gross margin of close to 30% plus, 30%, 31%, and that's what we are -- and in the next 3 to 4 months, again, we are planning to -- we are working on to come at gross margin of [Technical Difficulty]. That's what we're planning. But yes, in this quarter, we are working on gross margin [Technical Difficulty].

Got it. My second question is on the costs under the gross margin, which is the employee cost and other expenses. So the employee cost is up around 30% and other expenses is also up like 21% or so on a sales of 12% growth. So what are the reasons that the growth here is higher than the sales growth in both these line items? And when do we see this normalizing and coming in line with the sales growth? By which quarter that will happen?

So two things basically. In this quarter, third quarter, the ad cost and other expense, which is high largely compared to second quarter, and that's what increase the -- that's what our major spend was in ad because it's already booked, there was big sweet in festivity. So we need to do the ad because that's what our business is. So that's one cost which has increased in this quarter, number one. Number two, from employee front, there is ESOP cost and there is other factories which is getting underutilized and people cost has peaked. So that's what an effect which has started in the last 12 months, the people cost is high. But yes, when once we see utilization up, this will again come at a normal level. But from what -- to the point, for next year first quarter we will see again normalized growth in employee cost. That's what we see.

Okay. So by Q1 next year, both other expenses as well as employee cost should grow more or less in line with sales, right?

Right, right, right.

[Operator Instructions] The next question comes from the line of Darshit Vora from Asit C Mehta Investments.

Am I audible?

Yes, please go on.

Yes. So my first question was that we are having this road map of ramping up our capacity to 70% utilization, right? So could you give me some kind of a road map or some internal target wherein how and by what time line would you be able to achieve this kind of utilization level?

So largely, our target is to grow volume by 13%, 14%. That's our target is. This quarter was an exception, but the overall target is to grow volume 13% at least. And that's what we have build the capacity in the last 3, 4 years. And that's what our target is for next 3, 4 years.

Okay. Next how much time did you say?

So next 3, 4 years is the target, at least we want to grow capacity and volume at 13%, 14%.

All right. Okay. And with respect to margins, so this time we've seen quite a fall. How do you see the raw material prices move from here? And also by when do you think the margins will be back to our usual numbers?

So the fourth quarter, well, it used to improve a bit from here because this was an exception. Oil prices has increased suddenly and in a month's time. So it's -- so that's how we're passing the prices substantially in the coming time. But yes, overall, we see in the next 2 quarters, we'll again hit our original level, that's our target.

All right. Okay. And finally, just like to close, would it be -- like would it be possible to either give a range or relatively speak about gross margins across product categories?

Yes, it's difficult. We can speak on one-on-one on this.

The next question comes from the line of Disha Giria from Ashika Institutional Equity.

So if I see your third quarter FY '25 presentation in terms of core and focused market mix, it clearly states that the focused market has gained year-on-year in terms of revenue contribution. So can you specify any such particular market that you have gained market share?

So we have gained market share across focused states, if you look at, right? So be it the smaller one like Chhattisgarh, Karnataka or you look at the large states like UP also for that stuff. This is where it is. So there is a positive movement across these focused states.

So can you specify any quantum of market share increase?

So quantum, see, it's for a large state like, say, UP, it's a 30 basis point -- 60 basis point increase over last year. Whereas when I speak about smaller states like Chhattisgarh, there is a 300 basis point movement which has happened. But it's a small size of -- price is not as big kind of a stuff. So it's a varied stuff.

Okay. And then your other states contribution has slightly declined. So what is the reason behind that?

So two things. One is that other states, if you look at now in terms of 9 months, you will not see this stuff, this question would not come up or rather the reverse question would come. But let me tell you the other states, our contribution of sweets and gifting is very high. Because there, we play on the back of modern trade. That's our largest business there, right? And quarter 3 and quarter 2, when I -- as I was talking about, that there is a shift from quarter 3 to quarter 2 which has happened on this stuff. So other states, if you look at on a 9-month YTD basis stuff, they've grown at 23.7%.

Okay. My next question is I just wanted a clarification. In your presentation, the volume growth is around 3%, and you have mentioned this over the call that the revenue volume growth grew by 8%. So I'm assuming the difference is only -- I mean, in terms of the grammage changes in your packages. Is my understanding correct?

Yes, that's correct. Yes.

The next question comes from the line of Mehul Desai from JM Financial.

My first question is on the recently acquired Hazelnut company. How do you see sales growth panning out for this entity in FY '26, '27? And what is the kind of CapEx that you would look at in FY '26, '27?

Yes. So this Hazelnut currently is very small, and it's just added in the end of last quarter. So largely, we see that in next year, it will be close to INR 90 crore -- INR 90 crore to INR 100 crore top line that can -- that brand can give, growing very good. And number two, from CapEx lens, from overall Bikaji lens, we see close to INR 40 crores, INR 50 crores of CapEx largely to utilize -- to do some -- to build efficiency in the system. That's what we'll do next year.

INR 45 crores to INR 50 crores?

Yes.

And will Hazelnut require CapEx?

No, no. So that will not fund from Bikaji because we're already funded largely. So that will be very minimum CapEx because they already have good back-end facility, they just need to open outlets. That's what they need to do, and not major CapEx in that brand.

Understood. And broadly, this acquisition, I mean, it won't be -- the margins are better than our current company level margins?

Margins are better than current company, yes.

Understood. And lastly, in your core markets, the growth are also -- I mean, the Ethnic Snacks growth would have been in double digits. Or is the trend different in terms of segmental growth within core and focused?

No, no. So it's in line with this stuff. Core is relatively even better in this case. So Ethnic Snacks has done even better there.

[Operator Instructions] The next question comes from the line of [ Harsh Jain ], an individual investor.

So my question was regarding Delhi. Being a Delhi resident, I can say you were quite there in Diwali season. But I think you kind of trailed off after that. So I want to hear your story, Manoj sir. Also, I believe Bikaji's quick commerce and departmental stores presence have been quite low. So I want to hear your commentary on this.

No, no. Certainly, I think your observation and what you're talking is in line exactly where we stand. So Delhi, if you look at, all modern trade stores, so which is -- so be it any Reliance, be it DMart or the large this thing stuff, you will see our good presence during Diwali gifting and all. But yes, in terms of traditional trade coverage, it is by far low. And that's where we are working on. So very soon, when I say very soon, in say, a couple of quarters from now, you will see a changing trend in Delhi as well.

Yes. Sir, one more question if I -- please. So can we see further acquisitions in Delhi area?

So it's a long -- we don't see any major acquisition in the coming year. That's what our plan is, to grow organically and to use -- utilize the capacity what we've already built. And Delhi is very near to Bikaner and logistics cost is not so big in Delhi. So we majorly focus next year in growing organically. That's what we'll do.

One more question, please. Wouldn't it be better to open QSRs in Delhi for more customer engagement and all?

Yes, you're right. But our major focus is currently in Rajasthan, we'll be opening in Rajasthan 2 QSR outlets. That's what we'll do. Delhi is maybe next 1.5, 2 years -- post 1.5, 2 years, not immediately.

The next question comes from the line of Naitik from NV Alpha Fund.

Sir, my question is, can you call out any PLI incentive that we have received in this quarter? And what was it in the last quarter?

So basically, currently, we are booking PLI income of close to -- this year we booked PLI close to INR 14 crores per quarter. And we will receive PLI from government maybe in this quarter, third quarter by March. And government is very proactive to do all the audits and to release the funds. So by March, we'll receive PLI of last year, FY '24. There's normally a 1-year lag, filing of claims, audits and everything. So normally, there's a 1-year lag. So we'll receive PLI for last year. And for this year, we'll receive next year. That's the process.

So during this quarter, we have not booked any PLI income in the...

We have booked PLI income.

We have booked INR 14 crores, right?

Yes, yes, yes.

And what was this last year same quarter?

Same.

Same, INR 14 crores. Okay. Got it. Also if you could talk about -- you mentioned that you've seen some softness in the raw material. So if you could give a little more color on the same, which raw material exactly have you seen softness, that would be helpful.

So all key commodities, be it our key commodity like moong dal or potato or peanut, moong dal, all key commodities we've seen softening of prices. Because the fresh crop time -- normally December is the time when fresh crop comes in, and we see a good softening of price in this.

The next question comes from the line of Nitin from Emkay Global.

Just wanted to check on the QSR initiative. So have we rolled out the stores for the pilot which we were planning to do?

Yes. So the first QSR coming in next week, by next week mostly, so in Rajasthan.

Can you help me with like where exactly like this will be?

Sikar.

In Rajasthan.

Sikar, Sikar.

Okay. Okay. Okay. Okay. And the second question is with respect to moth dal. So we were hopeful of some benefit coming in here. So any sense you can provide what is the deflation we see with the new arrival of moth dal?

So normally, we've seen close to 14%, 15% reduction in prices of moth dal compared to moong dal...

And what is the contribution of moth dal now?

Moth dal contribution is close to 10%, 11%. But I'll come back with the number.

Sure, sure. And lastly, like do we -- are we looking for any commodity covers in terms of the volatile raw material setting?

Other than edible oil, we do make a cover around most of the commodity, key commodity.

The next question comes from the line of Abhishek Kumar from Sanctum Wealth.

So my question is partly in continuation with the previous participant's question. So as a policy, so do you guys have any mitigating private policy with respect to such wild swings in the raw material prices, especially our key materials like palm oil, potatoes and dals. So do we have a stated policy wherein we too keep such raw material inventories for a few months or anything on those lines, it would be great if you could share.

So normally, we do like for key commodity other than edible oil, we do long-term contracts with the vendors to hedge the price, and that's what we have started 1.5 years, 1.5, 2 years back largely. And this has helped us in protecting the margin. But yes, edible oil, we normally do for a very, very shorter time. And normally, industry also do the same. So other than edible oil, we normally protect the margin and hedge all the raw materials.

Okay. Okay. Okay. And can you give a rough -- the split of our raw material basket as in how much oil or moth digital, potatoes that would constitute as a percentage of total? Any rough figure?

I can come back with the numbers for each commodity.

The next question comes from the line of Varun Singh from AlfAccurate Advisors.

Sir, sorry, I missed your commentary on raw material costs, especially on the palm oil prices. So what is the expectation and outlook over here? And palm oil is what percentage of our total raw material cost basket, if you can help us understand that?

So palm oil currently it's also at peak. It's not -- its peak was INR 140 currently, close to INR 130, INR 132. It's at a peak right now. We see some reduction in import taxes from government, of course, budget it has not came. But yes, all the -- that's what we are hoping. But yes, overall palm oil, we see next 2 quarters at the same level, INR 120, INR 130. And it's a big -- overall, its contribution is big in our overall purchase.

So of our total raw material basket, palm oil would be what, almost 50%, 60% of the total cost?

Not 50%, 60% but yes, overall close to between 20% to 27%.

Okay, understood. And what is the quantum of price hike that we need to maybe take from here onwards to offset the impact? And can we expect maybe by this quarter kind of -- or when can we expect the margins to be reflecting our -- I mean, given that we have the ability and power to take such kind of price hike, if you can give some understanding on that, sir.

So largely, in next 2 quarters, that's what we are working on, that we can come on the margin what we have been working, right, in the last 2 quarters. That's what we are working on.

Okay. So in October, you already took 2% to 2.5% price hike and more price hikes expected? Do you want to call out anything on that part?

Yes, largely one price hike is expected, and that's what we'll do, look at all the business scenario, sales scenario. But yes, one price hike is expected in the quarter.

Okay. Sure, sure. Understood. And sir, last question is on volume growth. Overall recovery, you highlighted 13% to 15% is the aspiration. So that is -- that number is very much on the track I mean, looking at the January month, how the business has gone for us?

Yes, that's right. So this is well on track, and I mean should be in line with what we have said.

The next question comes from the line of [ Aditya Tambe from Habrok Capital ].

Could you please provide me split of how much of our sales are coming through general trade versus modern trade?

Sorry, say again?

So can you please provide us the split of how much of the sale is coming from general trade versus modern trade?

So general trade is the largest contribution for us, which is about 84%, 85% confirm. The general trade, modern trade is about 8%.

Okay. Got it. And can you also tell us that how is the price hikes being taken up by the customer? Like do you see them going for an inferior product, a slightly cheaper product? Or they are embracing the price increase or the grammage decrease that is being done?

See, I think this is what we spoke about that we have taken a price increase. And in this coming quarter, on this running quarter, there's a likelihood or there's a plan to take one more price hike which would offset the price increase, what we have witnessed on the commodity stuff.

Right. I meant to ask that how is the customer reacting to it? Do you see that maybe they are switching to a slightly inferior or slightly cheaper product that is available in the market?

So inflation is, I think, very well spoken and very well imbibed by all the quality consumers, right? And even if you look at anyone using edible oils in their houses, they also know the kind of prices what they're doing. So yes, quality customer does not look at it as much. But yes, I think the aspirants or the [ ACCT or D ], certainly, consumption at that standpoint would have definitely impacted, but not as much because when you sell a brand, you -- the price and that couple of percentage price here and there does not matter as much -- as long as it's competitive with the peer group.

Right. And could you also like give us some flavor on if there are any new products which are being planned on launching, like in sweets or in snacks or maybe something in slightly healthier segment? Like many customers are talking about maybe not going with the palm oil in food...

Yes. So that's the game in this category. You keep launching. So let's say -- and again, market specific. So for Northeast, we launched a variant called Teekha Toofan, right, doing extremely well. But I think till such time it sustains for, say, 6, 8 months. I mean it doesn't have as much merit to talk about. But yes, these kind of NPDs across states, we keep doing, and that's what energize the category and keep the monotony out of it.

Right. Okay. And like some extra comment if you can give about how is the growth in quick commerce because I think last quarter, you mentioned it's around 160% growth. So how is it looking like this quarter?

So yes, e-comm because of a small basis what we have so yes, this quarter, again, it has grown about 86% growth.

The next question comes from the line of Dharmil Shah from Dalmus Capital Management.

Just a follow-up on the previous participant questions. Whenever there is a sudden price hikes in raw materials, what is usually the policy that company follows? I mean, is it immediately increasing the prices for all the products for the family packs? Or is it like taking a short-term loss, but maybe gain some market share? What is the broad policy that company follows?

So see, the first and foremost, which is that one should not lose market share, right? So to protect market share is the biggest one because if you lose share, regaining share is even a more expensive proposition to do. That's one. But the approach what we follow is that now as we see commodity prices going up, so first is that if there are any kind of schemes running, trade schemes, incentives, all that stuff, so we try and knock it off. That's the first one. Then as we look at now that how further we can improve our efficiency so a consumer hit is the last one to take. But trying everything when it comes and then if we are not able to make up the threshold, we pass these prices to the consumer. This is how it happens. But this process takes about 1.5 months. And also, as my colleague just spoke about that we do -- we have some advanced booking with us. So we can foresee that these price increases are coming and that leaves us with as much time to prepare. Unless and until the price increase like what we witnessed in the oil that -- which is much, much beyond what one would have expected.

Understood. So suppose when there is a price increase or a decrease in the underlying base raw material prices? The prices -- the price changes that you do in your products, be it price increase or decrease, is it based on the competitors' prices or it is more based on the raw material prices?

So both basically, of course, we look at competitor prices, but normally, it takes close 30 to 45 days to pass on the prices. That's what we -- as a policy, we see the prices we -- and then we eventually pass on the prices. But yes, we also see the competitors because that's important for us to do.

So is there a policy to offer better prices than competition or at par or some -- any sense there?

So largely at par with the competitors.

Understood. And lastly, what -- I mean, some of the previous participants also asked, but what would be the raw material mix? How much would be palm oil, you mentioned 20%, 25%? What would be the other key raw materials and their mix?

So pulses, overall total pulses is close to 25%, 30% overall pulses, yes, all the pulses combined.

Palm oil, right?

Yes, but I can get back to you with the exact numbers. But yes, that's overall pulses between 25%, 30%. And there are a lot of material because we are into multi-category. That's overall the benefit that any one -- like edible oil is exception, but yes, if any one commodity increase, that doesn't impact much on the gross margin, like we are into sweets, so milk is a big product, sugar is a big product, papad, western snacks. So complete we have 5, 6 categories.

The next question comes from the line of Manish Poddar from Invesco Asset Management.

So just 2 questions. First is, let's say, if I take this impulse packs, which are roughly, let's say, give or take, 38% to 40% of sales salience, would it be right, they are largely at, let's say, INR 10? And if that is so, what is the sort of -- how much is the average grammage, let's say, because there will be multiple categories. What is the average grammage, which is now available in a particular product at, let's say, INR 5 or INR 10 pack?

Yes. So first is the small pack or the impulse, what we speak about is INR 5 and INR 10, right? That's what it is. And the average grammage, if you look at a INR 5 pack, it would be about 16%, 18% average if we look at. And for INR 10, it would be 2x of that. So that's how it works.

And how does it stack versus the other categories in that same lens? Because I'm not sure how inflation is impacting because there's a basket of products. But let's say, at this price point, just because you are in the market and so you'll have a much better understanding in terms of consumption per occasion is 15 grams, 18 grams a good number versus the other categories in terms of this inflation context?

So I think it's not a like-to-like comparison. When you look at, say, wafers, right? So wafers would be even lower volume for that stuff, grammage if you look at. But then again, the namkeens cannot replace the western snacks or say, Kurkure kind of a stuff and vice versa. So it is more when you look at that, is it a one serving kind of stuff or not. So what we believe is that shifting beyond -- going below, say, 13, 14 grams in a pack will not suffice even onetime serving. So that's where we look at and we compare within our category space itself, so not with different categories in this space.

Okay. So you're at 16 to 18 grams. That's what you're trying to say?

Yes.

Okay. Okay. And the second one is, let's say, in terms of this direct reach. So let's say, in the last trailing 12 months, you've added roughly 60,000 outlets. How much of this would be, let's say, in the state of, let's say, Rajasthan? And how much of it will be ballpark in the state of the Uttar Pradesh? That will be helpful, these 2 data points.

So I think Uttar Pradesh would be in line of about 15,000, 15,000, 20,000. And Rajasthan would be about 6,000 kind of a number. Well, I can get back to you state-wise so often will not be handy but...

No, no, this is useful, this is useful.

The next question comes from the line of [ Ashish ], an individual investor. [Operator Instructions]

I have one question. Your qualitative comments on the shift from unorganized to organized sector, especially in light of the inflationary scenario, which is happening right now. So does the shift slow down? Or how do you think this moving going forward?

So see, this would be purely anecdotal out of our -- what we observe in the marketplace because you don't have any authentic data on the size of unorganized players and all, but movement. Of course, what has happened is that, yes, this shift would continue as the consumer and brand awareness goes up. However, what we also realize sometimes that when these oil pressures goes up, so a branded company cannot compromise on quality of products. So the right oil, not used oil beyond the point. However, when we see the local players, unorganized stuff, so they do not get as impacted as all this stuff. So that's the only stuff and would vary from state to state. But yes, now if you look at on a trajectory of shifting from unorganized to organized, yes, that is also helping this category to deliver these kind of numbers.

The next question comes from the line of Dharmil Shah from Dalmus Capital Management.

Sorry, a follow-up question on the price increase again. When you are taking price increase or decrease, is it a pan-India level? Or is it based on the regions where -- maybe a region where you have a better brand, you can take more price increase? How is it decided?

So normally, based on region. So normally, we see which region is having much impacted because product mix is different in every region. So we see region-wise and eventually, we take the price hike. Like MRP increase in [indiscernible] nationally, that's what we do.

Okay. And would it be fair to assume that core state would have maybe slightly higher price increase than the focused states?

No, it will not be the case, see we get governed with UAC, which is universal and consumer price. If, let's say, a pack is INR 100 MRP, it would be for consumer both runway there and anywhere in that stuff, right? However, what we do, as I was talking about that price increase is also controlled by that if I was running 5% trade scheme, right, and which is withdrawn, so it's the kind of realization goes up by as much percentage. And which is what varies from state to state, looking at competitive pressure, looking at our ambition and the strategic objective of why are we giving it? Is it a tactical or a strategic investment? So those differs from state to state. Rest price to consumer continues, since there's an MRP increase, it will not be the case that it goes up in one state and does not happen in the other state.

The next question comes from the line of Abhishek Kumar from Sanctum Wealth.

I have a question. So we basically categorize our markets into core focus and others. So I have a question how -- when does the shift from others to focus happen? So do we have a revenue threshold or a market share threshold when that -- when we start maybe counting others state into a focus state? And once we start doing that, what all changes?

Yes. So I think that's a very good question. And we have spoken about it earlier also, but let me explain again. See, what we see is it's not about our internal stuff. It is purely external and from a consumer standpoint, from a shoppers' standpoint, right? So what we believe is that wherever when we are in a high single-digit market share is what we can call that, that can move upwards in the core state and say somewhere around 3 to 5, 3 to 7 will be the focus state kind of a stuff. Now the logic of cutting these geographies into 3 part is that there in the states where our brand equity is strong, market share is relatively better, we do different kind of marketing initiatives there. In the states where we hardly are present or we have very poor presence, which is what currently parked in our other states, there it's less of marketing. It's more of route to market that you make your products available in the stores kind of a stuff. So these changes would not happen very random or very fast. But yes, it's a journey of 3 to 5 years. That's where you see that states would be moving up. So what we believe is that in the next couple of years is what a few states from focus, we would shift it to core and we'll pick a few states from others who are doing better or where we have our plans to [indiscernible] we'll shift to focus. To your question, what will we do differently is what -- we will start deploying people, investment on brands and all this stuff would start happening in those states.

The next question comes from the line of [ Shirish Pardeshi from Motilal Oswal Financial Services ].

Just two quick questions. Fundamentally, in the times where the inflation -- food inflation is high, consumer generally does the down trading. I'm just looking at Slide 22, where you have been able to maintain your [Technical Difficulty]. Yes. So on Slide 22, I'm referring, you have been able to maintain the family pack contribution around 59%, 60%. The sense most of the consumer companies are saying there's a down trading, there is a pack grammage, which will come down. Just tell me how you have been able to manage because there is a competition angle also because the competition scale has been going up and up in the snacking. And generally, my reference point is that in the snacking business, the small pack contribution would be about 45% to 50%, but you have been able to manage between 35%, 36%. So tell me what's happening with particularly about your company?

Yes. So [ Shirish ], one is that now when we say here that it's a down-trading kind of stuff happening, for our products, if you look at any consumer who's been buying 1 kg pack, or say for that even 400 gram pack will not move to a 13-gram or a 30-gram pack kind of a stuff. Also, the impulse packs, what we speak is more on-the-go kind of stuff, family pack is in-home consumption. So that's what we have not seen those kind of shifts. Of course, another thing what we attribute when we were doing this analysis ourself, so we did one campaign, Bikaji Khao London Jao. So maybe to a certain extent, that has also helped protecting our -- the family care pack, and this is where we are.

Okay. My second question is that in the context where e-commerce, quick commerce, these channels are penetrating faster. In the current context, snacking is a big segment and wholesale does give a lot of [ flip ] in terms of distribution and scale. Now in your assessment, does wholesale channel is still relevant to you? And how does it help? And what are the activities you are doing to scale up the distribution?

Yes. So certainly, wholesale would always be a very, very integral part of our route to market structure. Because if you look at this category is available in about 9.2 million outlets, right? And the source to reach to these outlets, the media is wholesale or offers only. No company can afford to make their direct reach to anywhere close to these numbers. So that's where the role of wholesalers is. Now kind of activations, what we do, we do some wholesale beat, some extra discounting to wholesale, in certain cases where the throughput of wholesale is very high. So there it's an alternate day replenishment to the wholesale. So those are the things we do in that separate wholesale beat. So yes, wholesalers get disproportionate focus in this now.

And what would be our wholesale contribution to net sales?

So to -- our wholesale contribution would be upwards of about 50%, 55%.

Okay. But for the industry, it's very high, about 70%.

So our -- as you, Shirish, spoke about that, our contribution of large pack is by far high. So yes, the companies who are purely into INR 5 and INR 10 there, this would be even higher in that stuff. And our coverage, if you look at our reach is also not as high. I mean, I think once we reach, say, about 20 lakh outlets, so perhaps that's where the wholesale contribution will also go up and will also drive our reach in that space.

Okay. And last question. When I look back, say, sometime September, October, and then compare November, December, the promotion intensity discounting, which has gone up because the sales was not happening. In fact, Diwali has not met the expectation of most of the companies. Now is that promotion intensity and discounting which you have seen in the market, some places, say, maybe in the wholesale dominant places, is that intensity has come down because parallelly, the commodity inflation is also inching up or things are status quo in the month of Jan, Feb?

No, no. It has certainly come down in that stuff. So the companies are looking at increasing prices and all that stuff. So that's their take.

The next question comes from the line of Sunil Shah from SRE PMS.

Yes. Sir, checking on the numbers and the fourth quarter of last year has been one of the best ever for us, and we are stepping into this fourth quarter right now. So clearly, we have burden of our own overachievement of last year's fourth quarter. FY '25 degrew over FY '24 in terms of the numbers. Sir, my point here is to understand from you, is there any strategic thought process which you are revisiting or relooking your targets of rolling out about 350,000 outlets by next year or so. So are we revisiting any of the fundamental structural things that we have thought of at the start of the year and because this year has been tough and challenging, specifically the third quarter. So is there any revisit on the broader thoughts that you have in the company? Or is it like a cyclical factor I mean then in the next 3, 6 months, we'll be back on track. So just wanted to understand, is there any change in thought process broader terms from the company's point of view?

No, no, there is no change in the thought. Largely, our focus is to drive direct reach. That's what our focus is, this year also from day 1, we have started talking that we will -- this year, we'll add close to 50,000 new outlets, and we are on track. Like we have added close to 38,000 outlets and the quarter -- in this quarter also, our target is on track. So that's what our drive is to have close to 3 lakh outlets this year. And that's what our target was in this year.

Sir, even on the product side, western snacks or something which is perhaps not doing well, are we revisiting any of those as well?

No, no, it's not like it's not doing well. In quarter 2, you see that western snacks were doing very good. Third quarter, as we have mentioned earlier also, so largely third quarter due to palm oil and potato price increase and [ non-revenue ] potato also for a few days. So we have stopped manufacturing of -- or reduced manufacturing of western snacks specifically. And that's what has resulted in 0 growth. But yes, overall in end of December, again, potato prices came in at a normal level, and we started production at peak. So this quarter, you again see the western snacks going at the same level what we are doing.

Sir, this challenging environment, do you see any kind of elimination of competition from smaller players or anything or it won't seem substantial?

Can you repeat, please?

May I request you the repeat the question, please?

Sure. So this challenging environment, do you see elimination of competition of any -- some small organized players? Or this is too small a period in which we see elimination of competition?

So competition in small players, if you look at so that's the cycle. The small -- these will -- a few will come, few will grow. That will always be happening kind of a stuff because certain company is not able to sustain, not able to do -- even survive in the kind of environment of inflation and all this stuff. So that always will be the story. If you look at, say, Nielsen report, any of the state would have at least 200 reported companies who existed and now a few of them have weeded off. So that's an ongoing cycle.

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for their closing comments.

Thank you, everyone. Thank you all the investors for taking time out. Hopefully, we met your expectations in terms of answering the questions whatever came up. We'll be happy to reach out to you, or you guys can reach out to us for any clarification you wish to seek. Thank you, organizers, for being patient and organizing for this call. Thanks again on behalf of Bikaji.

Thank you. On behalf of Bikaji Foods International Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.