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

Ladies and gentlemen, good day, and welcome to Bikaji Foods International Q4 and FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Hazel Rathod. Thank you, and over to you, ma'am.

Thank you. Good afternoon, everyone. Thank you for joining us for Bikaji Foods International Quarter 4 and 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.

Thank you, Hazel, and thank you all the investors for joining us for quarter 4 and year ending conference call. So last -- this year FY '25 has been a year of a lot of challenges and a lot of corrections internally. So a major focus in FY '25 was to set an internal house right, be it setting up right process on the card, bringing right people on our bus for a growth journey, setting and pruning all the manufacturing facilities, doing a lot of correction in distribution as well as settling sales organization in a right manner like a proper FMCG company. Also, we've done a lot of investment in technology, like we have started working -- started implementation of SAP and Darwinbox for a future-ready organization. Also we did a lot of experiment with few acquisitions and adding few additional categories. So quarter 3, when we discussed last time, quarter 3 was the quarter where there were a lot of challenges be it inflationary pressure across all key raw material and especially edible oil. Western snacks, like potato crop has been [ dealing ] and price has been very high, so we stopped production last year, early Diwali. So quarter 3 was a quarter of challenge. And when we take quarter 4, there are a lot of significant improvement, be it in top line as well as in bottom line. So gross -- when we see a gross margin, there was a significant uptick in gross margin when we see -- compared to quarter 3. Our quarter 3 gross margin on a stand-alone basis is close to 30.2%, where quarter 3 was close 26%. And at a consol level, our GM was -- GM is close 31.8% quarter 4. And at the full year, we've done at a consol level gross margin 30.7%. This year, the company has delivered close to 10.3% volume growth and 14.8% value growth, driven by strong demand across our core product lines. So from basically market lens, so basically, overall revenue, so revenue has grown 14.8% on a Y-o-Y and 14.6% year-on-year. Volume growth quarter 4 was close to 8.9% and full year was 10.3%. I will hand it over to Manoj ji on business.

Good afternoon, everyone. So the volume growth for the quarter has been 8.9%. Revenue growth for the quarter, if we look at is 14.8% but when we say -- and this is net of PLI. When we add PLI to it, so it was in last year quarter 4, we added PLI for 3 years and that's what is the reason that when we add PLI, it looks as flat. Otherwise, it's a 14.8% revenue growth, for quarter 4. Ethnic snacks category, our core category, has delivered a value growth of 11.4% in quarter 4. Packaged sweets on the back of less number of wedding days because this is highly dependent on the season -- wedding season. It's a negative growth of 1.4%. However, it will be wise to look at our full year number, which I'll talk later. Western snacks after quarter 3, where we witnessed the negative growth, and this is what we explained to you all that, that was a deliberate call in terms of holding our production, holding sales, not a demand issue. And as we had said, numbers talk about it that in quarter 4, we came back at a 21.5% growth. Papad 5% growth for the quarter, but then this is on our peak capacity. So relevant data point would be even more if we look at on a full year basis. So full year volume growth of 10.5% revenue growth of 12.6%, this is including PLI. Net of PLI is 14.6% growth. Ethnic snacks has grown on at 12%. Packaged sweets overall full year is a 13.2% growth. Western snacks on the back of a huge negative growth in quarter 3, but at the full year level is a 17.7% growth. Papad at close to 12% growth on a full year basis. Talking about how we look at our markets. So the core markets have -- on a quarter basis have grown at 10.1%. Focus states grown at 38.6%, other states 12.5% and the export growth has been 29.4% in this quarter. However, at an annual level, when we talk about the core states growth is 11.6%, focus at 26.2%, other states 15% plus and the exports is at 22.5% growth. We have been reading and hearing that the growth is high on the impulse pack. But for us, by investing behind our marketing plans and marketing campaign, which we also spoke in the last quarter, that was about Bikaji Khao London Jao, focused more on the large packs, help us deliver a higher growth in the family pack, which has grown at 13.8%, whereas the impulse pack is at 9.3% growth in the quarter. At a full year level, family packs has grown at close to 16% and impulse pack at 10.5%. In terms of our reach, if we speak about so -- as we got into this financial year, we spoke about that we will -- the target what we took was to cross 3 lakh mark in our direct coverage. So glad inform that we have bypassed our numbers. The team has done a good job in terms of a consistent improvement in our direct reach, and we have ended the year at 3.11 lakh outlets. When we speak about indirect reach, that has -- so this reflects or translates into indirect reach, which is now upwards of 12 lakh outlets. That's where Bikaji has been present in this year.

So from a revenue perspective, so we've grown at 14.8%. Well, revenue from operation looks flat, but yes, other than PLI, it's 14.8%. From EBITDA perspective, basically, quarter 3 was an exception. So quarter 4, again, we came in close to 11.2% EBITDA on a stand-alone basis. And consol, it's close to 10% EBITDA. So from raw material lens, what we're seeing and what we explained last time that this year, all the pulses settles in a good favor, like wheat, all the key crops what we purchased are at a very lowest price, which has supported us to improve our gross margin. And also, we have taken a few price hike back to back in quarter 3 and quarter 4, which has helped us in getting a gross margin back to close to 31%. So that's part from the presentation. We are happy to take all the answers -- questions. Thank you.

[Operator Instructions] The first question is from the line of Abneesh Roy from Nuvama.

[Technical Difficulty]

We seem to have lost Mr. Abneesh's line. The next question is from the line of Nitin.

My first question is on our reported volume growth at 8.9%. And if we take around 10% organic business growth, we get to 1% realization growth. In Q3, we had 3% volume and 8% sort of organic value growth. So there is a 5% realization growth in Q3. So that growth has come down to 1% in Q4. So can you help me explain this?

Can you again repeat, please?

No, I'm referring to your Q3 and Q4 performance. So for the organic business, so as per my calculation, this quarter, we have done around 8.9% volume growth and around 10% organic business growth. So there is a gap of 1%, which is largely a realization growth. Same, if I compare with Q3, it was around 3% volume growth and around 8% organic value growth. So there was a gap of 5%. So this 5% coming down to 1%. I'm unable to sort of figure out what led to this?

Our consol growth is close to 14.6% and volume growth is also on consol level at 8.9%, right? So if you look at 14.8%, is close to, 4%, 4.5%, 5%.

I basically wanted to take away the M&A part, Ariba and Hazelnut from the financial and wanted to analyze.

So basically, volume growth without -- at stand-alone is close to 7%, 7.5%. And also one thing to last year's credit, in this quarter we have not added that quarter 3 -- quarter 4 of last year. In quarter 4 of last year, the quarter 3 was full of promo pack versus this year there's no promo pack. So realization also changed this year and product mix also changed. But overall, when realization, improvement so it's close to 3.5% -- [ 3%, 4.5% ] utilization here.

So this is what we had explained in the last call as well that while it's looking a 3% growth. But if you look at revenue growth was in line of 8%. Now this quarter, there is no -- there is very little impact of a consumer of a 10% extra which was there in the erstwhile year.

Okay. So bulk of the promotion was in Q3 in the base quarter and Q4 had the less effect of that. Okay.

It's [ proceeding ] us in quarter 4.

Second question is concerning gross margin ahead. So with palm oil prices and now below September sort of have been -- have seen a correction of, say, like the gap from September '24 is around 17% on a Y-o-Y Malaysian ringgit and the duty hike was 22%. So, like, we seem to be getting in a favorable zone, like we have effective price hikes also. So how do you see the margin outlook ahead in FY '26 gross margin outlook ?

So if we talk only about edible oil, palm oil basically. So the peak of palm oil was close to [ INR 137 ] [Technical Difficulty] seen a lot of correction, of course it's -- from peak it's reduced, INR 13 to INR 14. But yes, largely its [ INR 125, INR 129 ]. We have been seeing that there is a little softening in coming quarters, it will be at [ INR 120 ] but don't see that it will go beyond this. So [ INR 120 ] will be a new normal. That's what as an industry we expect from palm oil perspective. But yes, overall, this year's crop has been very supportive and this year crop is -- rain is -- monsoon is good. So what we see that overall from gross margin and EBITDA lens, this FY '25, '26 lens, we want to get our original gross margin by quarter 2. That's what we have told last quarter, and we are on track that this year at stand-alone level, we are close to 31.8% GM in quarter 4. And that's -- and our target was 32.5%. So we are on track to achieve that.

Okay. And lastly, can you please help me update like what is the cumulative price hike we have accepted in Q3 and Q4?

So in Q3 and Q4 price hike was -- because it was a mix of product mix and also there are a lot of changes in impulse pack. So overall at the average level, the price hike is close to 2%, 2.5%. We've taken one price hike in April. So in quarter 3, quarter 4 it's close to 2.5%.

2.5% you are saying and this includes the price hike we have effected post duty increases or excluding that?

This was in quarter 3, right. So quarter 3 and quarter 4 combined, we have taken price hike average of 2%, 2.5%, that's average. In Q1...

I didn't get you for Q1, your voice dropped.

So in Q1 basically we have taken some price hike.

The next question is from the line of Percy Panthaki from IIFL Securities.

Sir, just some confusion on this topic. So if you can just tell us on a consolidated basis, what is the organic sales growth this quarter?

So at consol level, the organic sales growth is close to 14.8% in this quarter at consolidated level.

So there is no inorganic element at all? Is it because that is the growth that you have reported anyways?

So at stand-alone level, our top line has grown at 11.3% in this quarter, and at consol level our top line has grown 14.8%.

And the difference between stand-alone and consol, what are the businesses which come between the two?

So basically, one is THF, The Hazelnut Factory, which we acquired -- which we had taken actually in the end of last quarter, quarter 3, then other one is Ariba and...

But Hazelnut Factory is an associate, right? So you would not be consolidating the sales, right?

We have right to merge that and we have taken -- we have right to merge that and according to Ind AS thing, we can merge into our overall financial.

Okay. So you are -- the consolidated sales does include the sales of Hazelnut Factory?

But it's very small currently. The top line of over...

Sorry, I can't hear you.

It's very small as of now. The yearly top line of Hazelnut is close to INR 60 crores -- INR 55 crore, INR 60 crores at the yearly level. We acquired in the last quarter 3 -- last October, November, in quarter 3.

Okay. So if I look at organic sales at 11.3%, it is lower than the usual 16%, 17% growth that we used to clock at a few quarters ago. So what is the reason for this lower growth? Is it just a general sort of industry slowdown? Or is there some other reason behind it?

I think it's a mix of both, Percy. So when we look -- cut the year in 2 parts, say, quarter -- first half and second half. So first half was well on track, close to 16% growth. Quarter 3 was the year -- was the quarter which has actually slowed down both from the external factors and the internal consumption factors as well. So one was inflation, all that stuff, the overall demand. And the second was that we could not supply because of this, like what I was talking about that we witnessed almost about 15%, 20% negative growth on our western snacks, which was 8% contribution to our overall business kind of stuff. So those were the factors which brought it down. If we look at the upwards movement in quarter 4, is by far up and it's on an upward movement. So to your answer, yes, 11.5% is a little muted growth vis-a-vis the growth what we have been doing, but that also reflects the overall category growth also in that sense.

So is there any visibility on the category growth improving in the near term or that we will have to wait for that?

See, this is a dynamic stuff, but what we read, see and witness in the market, both from demand standpoint and also when talking to these people, so -- objectively and subjectively. So we've seen that this quarter 4 onwards, there's a positive movement. Urban in quarter 3 and till first half of quarter 4 was pretty stressed. And urban also, when I say 33% of urban is the metro towns, which actually was flat or has de-grown in terms of consumption. This is overall food industry I'm talking about. Whereas Tier 1 and Tier 2 towns were doing better, but now there's an upward movement across. So going forward, what we see, looking at crop, looking at a lot of corrective action, looking at the infusion what government has done, I think this should only look up. So the worst is behind us. That's how we look at it.

So this upward movement, is it already visible on the ground to you right now? Or it's sort of something that you're expecting will come in the near future?

No. So that's what I'm saying. So if we compare over quarter 3. So all metrics are up and far ahead of what it was in quarter 3, so which is an indication of that stuff. Also see, one is that, you depend only on external factors. Secondly, what we can do. So circle of influence, what we call is, so there's a lot of readiness above preparedness in terms of the marketing campaign in terms of the product mix, the pricing and all. So as we'll take on -- so our end objective is to grow ahead of the category and beat these external factors as well. So both ways from macro factors, we see that there is a positivity and should be upward movement. And internally also, so how to fight against this, that readiness also gives us confidence, and that's what we are talking about.

Just a clarification on this, sir. You mentioned that Q4, you have seen better momentum versus Q3, but on an organic basis, the sales growth is roughly the same, it is 12% in Q3 and 11.5% in Q4?

So 12% in Q3. So if you see a stand-alone basis, it was close to 6%.

Okay. Okay. Got it. Got it. Second question is on the focus states, sorry?

So it is 6% to 11.5% for the 3 quarters.

Got it. Got it. Got it. Just on the focus states, this 36% growth that we have seen, is there an inorganic component to that as well? And if you can break that out if so?

Yes. So like what Rishabh spoke about that the THF, The Hazelnut Factory, which primarily is in the UP state. So that is -- otherwise, it would be, say, upwards of 20% -- 22% kind of a stuff.

The next question is from the line of Anand Shah from Axis Capital.

Can you call out how much is THF and Ariba done, let's say, in the second half and for FY '25, at least on an annualized basis, what run rate is it clocking? And what is sort of the ambition for FY '26?

So THF and Ariba -- so THF basically has given close to INR 11 crores, INR 12 crores in quarter 4 and Ariba close to INR 7 crores, INR 7.5 crores. That's a mix overall from THF and Ariba in quarter 4. However, from outlook lens, what we see that THF can do close to INR 90 crores of business in this FY '26 and Ariba can do close to INR 50 crores. So that's the target what this both brand has taken in this FY '26.

Go it. So I mean Q4 INR 18 crores came from these2 brands. And on the margin side, would this be at similar margins to the business? Or how does that stack up?

So from THF lens, so it's retail and retail -- for retail quarter 3 is the highest profitable business because Diwali...

Yes. I mean so on an annualized I am saying, not quarterly.

Annualized is largely same for THS. Ariba is not making money as of now because it's running at low utilization, but it's very small.

And Ariba will largely be for the back end and the frozen part, right?

Back-end and frozen part, right. That's addition of category for us.

Got it. Got it. So that will -- so that eventually is not more revenue generated, but that will more feed into your QSR ambition effectively.

Right, right, right. QSR as well as export because in export frozen part is very big.

Yes. Okay. Okay. Okay. Got it. And on distribution expansion, I mean you've been clocking steady growth. So what is the target there? I mean, for '26, '27, let's say, will you continue to add 20% plus outlets?

So yes. So our expansion would be a continued initiative because today, we look at -- we are at about 11%, 12% numeric distribution at a pan-India level. So there's a huge room of growth but it's our -- the approach what we are saying is that we will do a quality distribution increase, which eventually should reflect in the Nielsen or say the REIT stuff as well. So this year, the target what we had taken the last year was to cross 3 lakh direct coverage mark, whereas we ended it at 3.11 lakh outlets, that's the final number which it is. Our plan is to add 50,000 year-on-year outlets, that's the target for next 3 years. So we would be reaching around 4.5 lakh outlets directly in the next 3 years.

Got it. The 15% compounding at least on the distribution side. And most of this would be focus markets?

So primarily focused market, but yes, there is little room in the focus -- in the core markets as well. So that would be a defense strategy so as how to uproot or how to take head on with the local and the regional players as well. So In the rural of core market is what our focus would be, whereas in the focus market, it will be primarily urban followed by rural.

Got it. Very clear. And lastly, I mean 2%, 2.5% is the pricing you've taken in Q3, Q4 and you took one in April, right? I mean what was the quantum of in April?

In quarter 1?

Yes, in Q1, yes.

So quarter 1 is close to 0.5%. 0.5%.

A small one. And so right now, no plans. I mean you are largely covered with...

Right now, I think we are done with all the increase in price. And we are hopeful that by this, we will be -- and there will be a lot of product mix and [ cooperation ] cost in program running on. So we'll be hopeful that with this, we'll be back on track with our original margin in GM and EBITDA.

And that you are saying second half FY '26 is broadly...

Yes, yes, yes.

The next question is from the line of Darshit Vora from Asit C Mehta Investment.

My question was on focus states. So we've been seeing good growth in focus states when compared to core states. And we're also seeing increase in family pack salience of about 100 basis points year-on-year. So what is it that you're doing that is driving this increase in salience? And also that do you expect it to sustain going forward, especially in the focus markets?

Yes. So I'll take your last question first. So yes, we would continue to grow focus states faster than the core states, for 2 reasons. One is that their bases are not as big as what we are in core states. So that's one reason. Second thing is the kind of the efforts what we are making, the investments what we are making, they have to give us a disproportionate results. So that's the reason that these focus states would continue to grow faster. That's one. On the large pack and small pack, for us, large pack is equally important, and that's what is one of our forte or the brand strength that in-home consumption, modern trade equity, we enjoy more. However, what we see is that the small pack is an opportunity for us. So therefore, the focus would be on driving both these packs, the large pack and the small pack.

Yes. So my question actually was towards understanding that despite increase in focus states higher than core states, we are seeing more salience in family packs. So what kind of is driving that thing?

Two, three things. One is that when we say -- today also, if you look at in focus states, our market share when we look at just for the large pack is by far high. So in the stores where we are selling, so it is more -- so the distribution is an area of improvement, whereas the store where we are selling large packs, what they are selling is doing good. So therefore, there is a same-store growth also happening, which is basis the large pack. That's one. Second is modern trade and new age -- of new age is the Qcom growth is on the back of large pack. That's the factor which is doing good. Lastly, the promotional campaign, what we do and mostly what you can really address is on the large pack, like last year of 6 -- 4 months, we did a mega campaign, which is Bikaji Khao London Jao, this was all on the large pack itself. So those are the factors which is helping these large pack growth in focus states and overall also. Like, other states, if you look at -- so the major contribution is the large pack. It's lack of -- less of distribution. It is more on leveraging the modern trade stores across states.

All right. All right. Okay. That's great. And...

But going forward to -- sorry, I mean -- but going forward, you will see that as we get distribution high, so small pack will also be growing faster. So that's where -- so we are not taking eyes off from the small pack. They have a role to play.

All right. So we expect the overall breakup to remain largely the way it is right now with both growing equally?

Yes. So going forward, you will see that the small pack will grow a little faster. That's what the strategies and the initiatives which are rolling out are the ones because that's how we will gain new outlets. Indirect reach will not be on account of large pack. it will be -- small packs will be playing the role.

All right. Okay. But then because of that, would it bring some kind of volatility in terms of volume growth that we see or -- in margins as well?

Not really. No, no, not really. Yes.

All right. All right. And secondly, we've been seeing slight decline in package suites, and you alluded to the fact that there was weakness in the wedding season in the last quarter and before that. So apart from this, any other reason that is playing into this decline in packaged sweets growth?

No, no. I think the right way to look at it is at a full year number, that's one right number to look at. Secondly, sweets, if you look at is a key about, say, 75% of our business happens between Rakhi to Diwali. So that is 4 months contribute to about 70%, 75% of sweets business, which is really, really big. And that's where if you look at our capacity utilization is upwards of 100% kind of on the sweet stuff, right? Quarter 4 and the rest of quarter 1 and quarter 4 are the weak quarters on that stuff. And then they are highly dependent on the sweet season -- sorry, the wedding season because that's when we sell bulk sweets as well. Now if we look at the number of [Foreign Language] what we say the wedding days, this year by far less than what it was in the last year quarter 4. So that's the reason that this quarter 4 looks good -- looks small, but it's a small business to our overall pie. Hence, I don't think that that's a cause of concern point to point.

[Operator Instructions] The next question is from the line of Abneesh Roy from Nuvama.

So you had a plan for house of brands strategy over a longer time frame. Could you update us on what's the thought process there? Are you going a bit slow on that so that you can first understand on these acquisitions, what is the way forward? And on your own restaurant foray, if you could update FY '26, what is the expansion plan there? Are you happy with the FY '25 performance of the restaurant business?

So restaurant business, Abneesh, as we spoke about that we will get into that stuff. So yes, we opened 1 store in Rajasthan. That's so-called QSR stuff in Sikar last quarter, we did one. This year also, we'll add about 4 to 5 outlets that's the -- and this is what we had called out. So, therefore, in our growth plans, QSR is not really adding up or we are not taking any large numbers on that account. Certainly, for next year, hereafter is what we'll call out on our QSR strategy. So that's how the plans are. Other than this, on the house of brands, if you look at THF, yes, it's doing good, so which is a retail brand, the aggressive plans they have falling well in place. That's where it is. Bhujialalji , which was a small acquisition, and that was clearly to play on the modern trade and on the e-com platforms as a brand B strategy that has also now is falling on place. But going forward, what our plans are that we will not add -- we'll try and build Bikaji even a larger brand. That's the strategy.

Sure. My second question is on the demand side. Most FMCG companies in Q4 call have said a strong outlook, better outlook in FY '26 versus FY '25. You have delivered around 10% kind of volume growth in FY '25. Of course, there is an aid of the 10% extra grammage which you are giving, especially in the first half. So if you marry the extra grammage which you are giving, which is there in the base and softer food inflation and some of the other macro, good monsoon, lower interest rates, then how do you see your volume growth? Would you target a high single-digit kind of volume growth in FY '26?

No. So what we are looking at it is 12% to 13% kind of a volume growth in '26. And I think our strong plans in place, so what we say should happen. I mean, that's how we look at it.

But what has changed? Because I remember in Q3 most the FMCG companies, including you were saying the overall demand situation is quite challenging. And Q3 call was having a lot of questions on the real volume growth ex of the 10% grammage and all that kind of question. And now within 1 quarter, you have seen a good performance improvement. Q4, 11% like-to-like stand-alone growth versus 6.5% previous. So it's a good performance. And now you're talking about 12% to 13% volume growth. So, one, how confident are you? And second, is this more of a sector change? Or is this something you have really cracked as a winning market share, which is giving you the confidence level?

So Abneesh, two things. Like as you started off with quarter 3, let me answer that. So quarter 3, we witnessed about 20% negative growth on western snacks, volume growth I'm talking about, right? Now western snacks contribute to 8% to our business with a 20% negative growth, and we called it out that, that's not a demand issue. That's purely a supply issue and a conscious call which we took, right? This quarter, again, we have bounced back with upwards of 20% growth in the Western category. That in itself, that's one. Second is that last quarter, the denominator or the earlier -- the 10% extra scheme was also impacting our volume growth, which we tried and clarify that net of -- if we look at revenue volume growth, it's upwards of 8.5% kind of a stuff. So that's one on quarter 4 over quarter 3. Going forward, what we are saying is that this -- overnight, these growths will not come up to kind of the positive momentum what we are seeing the way the company, Nielsen is projecting kind of a growth. So this would be an upward trajectory quarter 1, quarter 2 and thereafter. That's what it is at a holistic level. We are optimistic on a 12%, 13% volume growth.

Sir, last question on capacity expansion. You did say papad growth was slightly constrained because of capacity being full. In FY '26, any plans to add capacity in any of your verticals either through third-party or in-house?

So in papad, we doesn't need a major CapEx. It's largely a fully manual process. So yes, there is small plan to increase the CapEx, but it will not involve a major investment. But yes, in papad, we've also taken a growth of close to 10%, 11% in this year.

And other verticals, anything you want to call out on CapEx?

On CapEx perspective, so that we are investing in 1 big warehouse in Bikaner. So that investment will be close to INR 65 crores, and it will be part of CWIP what we have filed in March -- the numbers of March '25. So this mega big warehouse will come up in the next 3.5, 4 months. So this will solve logistical issue. Currently, we don't have space to keep stock more than 2, 2.5 days. So there's a lot of production issue coming -- keeping up. So that will solve this production issue, and it will help in improving our fill rate and sales. So these are big investment coming up in this year. And there is no any other major CapEx addition. That's what we -- it will be a regular maintenance CapEx that will be coming up in this year.

The next question is from the line of Amit from HG Hawa.

Sir, my question was with respect to like the -- what is the ad spend as a percentage of revenue? And how do you evaluate the ROI across campaigns?

Yes. So our ad spend, as we call so well within budget, what we say is close to 2% is our ad budget. And this is what we park aside for the year to come as well. So that's the kind of number we are budgeting or maybe a little ahead of that. So the mood point is that, yes, we believe in marketing investment and would continue to do that. ROI when we speak about -- so it's not as easy because there are lots of overall umbrella -- branding umbrella activity what we do to help our entire business growth. So in the name of Bikaji, not brand specific. But yes, whatever we do, say, for example, if you -- the mega campaign, what we did was on the BKLG, so which is Bikaji Khao London Jao. So we saw a huge upward increase in this -- our large pack. And that's what has helped large packs grow by far ahead of what the industry or the category growth or other players have seen. That's one. Second is that our gifting, so which is season, which is gift packs and also the sweets. This is a huge number. Now while selling in is one part, you also have to ensure that offtakes happen or complement the sell-in part. And to support that, there is, again, a huge media investment what we do across communication vehicles, and this is where we spend. And the proof of pudding is that -- and how we look at it is that if we could generate offtake, so there is least of leftover or nil leftover at our retail outlets is -- speaks about the success of the marketing investment, and this is how we look at it.

And the second question was connected to like the modern trade and e-commerce, like what share of our revenue comes from these channels? And do you plan to expand them further?

Certainly, yes. So if you look at the last 3, 4 years, modern trade has been -- or both these channels have been growing by far than the overall business or general trade to compare with. We would continue to invest in both these platforms and would be growing. So modern trade is almost 2.5x, 2x of the overall company growth. This e-comm channel is even higher. So this is at about -- it's grown at almost about 50% last year. That's the kind of growth. And we see this continued momentum.

Can you give a number like what percentage of revenue comes from these channel?

So about 8% comes from -- our modern trade channel contributes about 8% and 2% is this Qcom e-com business.

Sir, any plans to enter any adjacent FMCG categories like beverages or something like frozen snacks?

Not for now.

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

So just two questions. One is, in this pricing, which you have taken, how would we [ stack ] against competition, let's say, both unorganized and organized? Would they have followed a similar pattern. Just if you could give us some sense on that.

So see, if we compare against organized players, so we are -- so this is one when we say 4 key stuff, so pricing is one of it. We cannot be over-indexed or under-indexed. So this is almost hand in hand. But of course, when we speak about the local, regional or say, the unorganized small players, we never look at it, and they are always cheaper. So they are at about what 0.85 index to what we are. That's the kind of differential. And we are very mindful. So when we take any price increase, so it's not a random call or it's not in isolation. We do quite a study in terms of brand-wise, in terms of company-wise, geography-wise, and that's how we take price increases.

So would it be right that the -- let's say, you're saying about the price index, but let's say, the unorganized players would have also taken a price increase alongside or the competitors have take a share in the quantum which you all take in that ratio?

So with the commodity price increase, like if palm oil has moved up from INR 85 to, say, INR 140 or INR 125. So they also cannot survive. So they have also taken price increase. I'm saying the differential would continue.

Okay. And Verma ji, if you can call out, let's say, how -- the second one is -- what is the growth in Rajasthan for the full year, if you can help me with that? And...

So Rajasthan full year is about 12%, close to 12% is the Rajasthan growth.

And in volume terms.

Volume terms would be -- it's about 8%, 8.5% kind of volume growth. 8% or 8.5% kind of. I can get back to you on this stuff, but...

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

My question is slightly on the long-term basis. So if we want to have a thought process for the next 3 to 5 years. And as a company, if we intend to grow at a 15% CAGR kind of a number. Sir, a, the driver would be that we are increasing our distribution network, that 311,000 will scale up to about 4.5 lakh over the next 3 years or so, 50,000 every year. So that is one thing that we are increasing the presence. The second is once our presence is established, then we can keep on introducing new products over there. At the same time, we can increase the same-store sales. How are we looking at this situation over a long-term point of view in terms of distribution, in terms of new products, in terms of sales per store, specifically in the context of competition, which is really there for us and also the ability to have price rise in a scenario of increased raw material prices. So if you could give us some indication strategically from a 3-year point of view or a slightly longer period is also good.

Sure. So see, when we say 15% growth kind of a number, so the assumption is that about, say, high single-digit number would the category growth. So that would be organic growth. We'll have to hold to that. And then we have to do a differential growth so as to gain market share. As we speak, we are less than 9% or say, 8.5% market share. So there's a huge headroom where we don't aspire to be say, Haldiram's, but clearly if we say that our aspiration is in the next 3 to 5 years' time, we should be at about 11.5% to 12% market share that's the ambition. And this would -- we can achieve if we differentially grow to the category growth. Now the growth drivers would of course be the distribution, so that's reach. And the second is the throughput increase. So in the core states where our market shares or our penetration is already high, where the task is to grow same-store growth, throughputs. And in the -- so here, if you look at, let's say, if core states, say Rajasthan has grown by 12%. So here, the same-store growth is 8% and 4% is the new store growth kind of a number. Whereas when we get into focus states, this is reverse. So it is more led by new store growth and not as much as the throughput growth. Now to complement our distribution or the route-to-market initiatives, is the role of marketing so as to create brand awareness, which is what will help generating offtake, same-store growth and all. That's what we -- that's the strategic call is. On -- in terms of new product introduction, new categories, that's what we are keeping out of scope when we speak about these growth plans going ahead.

Right. Okay. Sir, in FY '25, it's not been a year which has been really great that we can boast about it. Anything which was structurally important for us, which will kind of deviate us from the 3-year thought process?

So sorry, I missed on one of your -- the earlier questions wherein you spoke about the pricing part as well that also what happened? So what happens is that, of course, last year, this was the second half wherein the inflation challenges came in. So this quarter 3 was a derailer, right? And this hit not only us, the overall FMCG industry or overall industry per se kind of a stuff. I think the resilience what we as an organization showed is that still did best in the worst and bounce back in quarter 4. We going forward, however, this category is highly dependent on the commodity prices. But I think the departure what we have already made is that we are not solely dependent on the commodity prices, the ability to react and ability to make predictions of what is coming our way is what I think we are much better prepared than what we were before. So that's the structural change what we have done and built in the organization. However, these are dynamic numbers that sometimes these commodity prices are by far beyond expectation and that impacts us, but then I think that's the way this will move.

[Operator Instructions] The next question is from the line of Niril Parekh, from Awriga Capital Advisors.

I had a basic question since I am new to the company, pardon me for my ignorance. Given that the PLI [indiscernible] work after 3 to 5 years what are [Technical Difficulty].

Your voice is not clear. Your voice is not clear.

Am I audible now?

Yes, yes.

So after the PLI income goes aways and manufacturing plants ramp up completely. From a 5-year perspective, what are the steady-state margins that we should think about this company?

So this you are talking, after 5 years right?

5 years. Yes.

So basically we've got [Technical Difficulty].

Hello sir, are you there?

Sorry. Yes, so we've got PLI until FY '27. And currently, so we invested in all the plant where we are giving minimum guarantee. There is big cost running plant at lower capacity and all the outside plant, new plant are running at lower capacity. So of course, PLI will phase in next 2 years, but our capacity utilization will increase significantly in the next 3, 4 years. And this will offset PLI income and what we think that our steady EBITDA after 4, 5 years should be around 15%.

Okay. And is that driven by any product mix which would lead to improving...

Of course it will be driven by multiple things, be it investing in branding. So it will help in commanding price from consumer, number one. Number two, of course, product mix is an important thing because we are already focusing on a few products which are high in gross margin, currently contributing close to 15%, 16% target to take this to 18%, 19% in the next 2, 3 years, investing in cost saving program within the organization at each level, be it production, logistics or building strong trade scheme systems. So getting proper ROI of each investment what we do, be it in sales or everywhere. So there are multiple things going on as an organization, which would help us in driving this 15% target.

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

I just wanted to check like the Rajasthan market has grown 12%. So how has been the growth in other core markets like Bihar and Assam?

Yes. So it's Rajasthan followed by Assam and then Bihar. So that's how is the growth stuff.

Okay. And second question is with respect to at the start of the call, Rishabh ji has highlighted lots of correction internally. So can you please help us like the key initiatives we have taken internally, like apart from he has deliberated on SAP implementation and Darwinbox and all and M&As?

So I would rephrase that correction, I mean, I think the right way to put it is that keep -- the improvement. So it would be a consistent improvement or improving over our -- what we're doing. So let's say, for example, ERP. So we were at -- Microsoft 365 is the ERP, which we have been using. What we felt and studied that having SAP would help us increase our efficiencies, link all functions better and all. So that's an improvement or an investment we decided to do. That's one. Right now, the distributors, so this would always be a dynamic stuff that how do you upgrade and the distributors. So as you grow business, the certain distributors, you find that now the ability to invest in business, financial or maybe in terms of their bandwidth of the increased business, not -- so then you have to take certain tough calls and say that now we'll have to part ways with few of them. So those are the kind of improvement in our distribution network, talking about people right? So doing P/P, so performance to potential metrics, there's always a tail which you'll have to cut and see that how do you improve overall capability standards in that stuff. So those are the stuff. So not talking on HR and you also touched upon the Darwinbox, right, got deployed. So earlier the PMS what we were using, we felt that this would be -- as the size of our organization is growing, as the people number is growing, we need to have it even a better version of it, and that's where the investment on Darwinbox. So that's how -- no, the improvement over years is what's happening.

And the last bookkeeping question on this employee cost increase for this quarter. Is there any specific reason for this?

So if you see at a stand-alone level, there was some grouping of which is not -- which was passed last year in other expense, which has been an employee cost. So it is corrected. It was done in this year. And overall, the employee cost, if we exclude this, is close to 16% increase in employee cost.

Okay. Just last, sort of a suggestion or sort of help we need in terms of going ahead with the M&As in the business. So it's getting a bit complicated. If you can sort of help us provide a disclosure separating the organic business and the M&As, that would be really helpful.

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Thank you once again for being on the call. Hopefully, we could answer your questions. And we would appreciate to take any question which is left out and one of you or any of you can reach out to Pratik for these questions, and we'll get back to you on that. Thanks. Thanks, once again.

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