Bikaji Foods International Limited ($BIKAJI)

Ladies and gentlemen, good day, and welcome to the Bikaji Foods International Limited Q4 and FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Mr. Ambesh Tiwari from S-Ancial Technologies Private Limited for opening remarks. Thank you, and over to you.

Thank you. Good afternoon, everyone, and thank you for joining the Bikaji Foods International Q4 FY '26 Earnings Conference Call. From the management team, 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 will have the floor open for question-and-answer session. Thank you, and over to you, sir.

Thank you all for joining the investors call of Bikaji Foods International Limited. Before starting this, one thing which we have recently lost a Chairman on 23rd of April. This was a great loss for the company as it is for the family. He was great visionary and a board leader and was influential figure for the company as well as complete Bikaji. All this [indiscernible] certainty. Now I can start. So largely, this quarter has been a great quarter from many perspective, be it top line where top line growth was close to 18% plus. And in top line also the core market hasn't grown at upward of 15%, which was from last many quarters. It was growing at 10% to 12%. But yes, in this quarter, it has grown at good growth. Export has been doing very well from last 4, 5 quarters. Family Pack, which is a key and for this, we also started 2 campaign, Bhujia ho toh Bikaji after September and Kya Baat Hai Ji. So Family pack has given up 20%. E-com Q-commerce now became 3% of overall business, which is significant and grown over close to 100%. And that's the target what we're taking for next -- this year also. From campaign perspective, of course, these 2 campaigns, this year has been 2 halves where in first half, 6 months, our core Namkeen snacks growth was slow. But after this GST reduction from government and the 2 campaign what we started in next last 6 months, our momentum in overall snacks category snacking has been very significant and good growth. And that's what we want to continue for this year. From bottom line perspective, largely from consolidated consol financial, our gross margin is at 35.6%. This also includes PLI. But yes, overall, there's a 240 basis points year-on-year because PLI was included last year also. From an EBITDA perspective, EBITDA is close to 12.2%. So lastly, in this quarter, we started 2 campaigns end of last quarter, mid of last quarter largely. We continued the same campaign this year also. And our ad cost increased this quarter compared to last year to tune of 1.5% and 1.2%. And from EBITDA, overall we closed to [ INR 88 crores ] of EBITDA with PAT margin of close to 8%. Overall, from a year perspective, so largely our overall yearly revenue from operation is close to [ INR 2,994 crores ] at 9.5% volume growth. In this quarter -- in last quarter, volume growth was upward of 16%, which was highest in any quarter. Overall GM at a full year level is plus 35%, 35.1% and EBITDA margin is 13.7%, upward of 120 basis points compared to last year. From a capacity perspective, so largely, we have not added much capacity last year. But yes, this year, plan to increase the capacity in suite, which is going on. From a distribution perspective, I request Manoj sir to.

Yes. Thanks, Rishabh. So one of the key growth drivers, what we had called out was the continuous increase of footprint, which is distribution. So we delivered the target what we have taken for ourselves was to cross 3.5 lakh outlets, which is what team has done. And this increase has come across all our core focus in other geographies. These campaigns, what Rishabh just spoke about, did extremely well, and that was one of the reasons for our higher growth in the large pack. So large packs has outperformed and these marketing campaigns have worked very well. From core geography standpoint, Bhujia also Bikaji was a major and a great success. And the number speaks louder than what I would say. It is that if we -- if one is to look H1 versus H2, so there is a multiple growth in that stuff. And in rupee, we did the campaign, Kya Baat Hai Ji while looking in Pankaj Tripathi in that, this campaign also did very well for us. And that's what is the reason that we look at quarter 4, so our family pack has grown at 20%, while Impulse grew at 14%. So there's certainly room of improvement on impulse, but family pack outperformed this.

From key initiative perspective, this year also has been very significant for us as we have won SAP go-live this year in December. We also won Darwinbox go-live. There is new logo launch in January this year. We completely changed our packaging, revamped our complete packaging, changed logo our investment in the Hazelnut factory last year. So this year has been very good for the brand. They crossed INR 100 crores revenue this year and target is to grow 50%, 60% year-on-year for next 2, 3 years. Our annual report has been ranked 42nd in American Communication professionals. And from export perspective also, we have crossed INR 100 crores first time this year. From revenue from operation perspective, in quarter 4, we have crossed close to INR 720 crores of revenue with EBITDA of INR 88 crores and PAT of INR 56 crores. From a working capital perspective, our working capital cycle is largely same compared to last year, largely same. There's not much increase in working capital cycle. From raw material perspective, there is -- this war which was started in Feb and March. We have seen a significant increase in our packing material and edible oils largely edible oil has increased to the tune of close to 13%, 14% in fact, and packaging material has increased to close to 25%, 30%. But overall, we have taken a price rise in April this year and which is suffice largely for the current price hike what we're seeing in raw material and packing material. So we'll see how this war goes and we need to take the price rise or not. But yes, as of now, we have taken a price rise, which will manage our overall gross margin and EBITDA. Thank you very much. We are happy to take all the questions.

[Operator Instructions] We take the first question from the line of Abneesh Roy from Nuwama.

Congrats on good performance. My question was now Q1 almost 50 days are gone. So are you seeing good momentum continue in Q1 also based on the sales and volume trajectory in Q4? Any divergence you're seeing in Q1?

Abneesh, so momentum, what we are seeing is it's a continued momentum. So post November, the way of the trajectory we are on, this continues. This also is the outcome of the kind of investment in demand generation, what we have done thus far and is giving us -- keeping us on the same trajectory. So in spite of certain price being passed to the consumer, yet we haven't seen any slowdown in terms of the demand.

Also, like we're seeing -- we've seen 2 turbulence in this last 50 days. One, largely Bengal election and the factory, most of the labors are Bengal. So largely some of the labors have moved to Bengal for elections and all. And we've seen some production loss, but the overall momentum seems very strong. And of course, our Chairman loss, so the time the factory was shut for 2.5, 2.5, 3 days. That was also -- but overall momentum side, what we are seeing, we are seeing good momentum.

So just to get clarification on these 2 points, 2.5 days factory shut and Bengal, the workforce has gone. Did it lead to sales loss also or you had preplanned. So in terms of sales, there is no impact. Could you clarify on that?

Yes. So demand we were talking of, that's where you started off. So there's no issue in demand, very well created and that's on. But yes, from supply end, yes, there were some disruptions because ours is not a phasing wherein that most of the billing happens in the last few days. It's a daily progression, a very seamless day on day what we do, right? We have been talking in our earlier calls as well that we work on 2 days every kind of customer or even less than a day. So the production impact has certainly resulted in some sales the quarter could have been even better. But yes, overall, if you look at this quarter will be well in line with what you said.

And the Bengal workforce impact that will come in Q1, right?

Yes. So this Bengal election first phase was on 23rd of April. So these people and after SIR and all the extra government of people were -- there was no choice to hold them or no way one could have hold them. And so majority of them went on leave. And so from 20th of April till say, 16th of May, I mean these people started coming back, there was disruption of the manpower problem in that. But we managed it somehow there was some.

So just to close this point, 2.5 days because of the loss, which had happened, unfortunate plus the election related. So can we say around 4 days of impact overall?

Yes.

Second question is on the inflation. You said palm oil and edible oil inflation is around, say, 13%, 14%. I wanted to understand packaging inflation because it's linked to the crude oil and crude oil inflation is much more than the 24%, 25%, which you mentioned. So if you could clarify on that. And have you taken a shrink inflation, so grammage cut or in the larger packs, it's more of a price hike. So if you could clarify on those 2?

Yes. So from packaging material inflation, we have seen that the average like packing material cost was close to INR 190, INR 200. It has gone up to INR 260, INR 270. But it has again came down to INR 20, INR 25. So it's not a high side as of now, it's manageable. So -- but yes, overall, what we have done, we have increased price in family pack and we have reduced gram in impulse. That's what we can do largely in impulse, overall, the price was close to 3%, which will be manageable, which can manage this increased [ RMM ] price.

We take the next question from the line of Siddhesh Deshmukh from IIFL Capital.

This is Percy Panthaki here. Sir, what is the quantum of price hikes that you have taken?

Yes. So the price hike was close to 3%.

And do you think you will have to take more given where the commodity costs are currently?

Currently, as of now, this is manageable for us. We can manage the same DM largely at this current increase what we have taken. We should be happy with the amount of cycling metal orders which we have blocked. And what we see that the PM prices came down from the price rise increase what we've seen in early days of war, but it has came down significantly. So it's manageable.

Okay. Secondly, I wanted to ask, if I look at your EBITDA margins first half of the year versus second half, there is a sort of lower second half margin versus first half. So is this something normal seasonality? Or is there some other reason behind that?

So largely our major ad cost, which comes in during festivity and festivity. So normally in every year, our major ad cost comes from August to December. But this year, we have continued campaign in the fourth quarter also. So fourth quarter ad cost was significant higher compared to last year quarter. But overall, the ad cost was close to 2%, which was last year 1.6% on a yearly basis.

Okay. Okay. But like 40 basis points Y-o-Y, I understand and Y-o-Y, the margins are not a problem. But I was looking at more versus the first half margins are close to like 13.5%, 14% and the second half margins are like close to 11%. So I was trying to understand that because the movement is like 280 basis points between first half and second half. So is the ad spend the explanation -- or is there some other reason?

Ad spend majorly ad spend. And there was 50 basis points some provision for doubtful debt, which we have taken in last 2 quarters, last quarter, in fact, which was onetime.

Okay. Understood. And can you just tell me what is the ad spend as a percentage of sales in 3Q and 4Q?

So 3Q and 4Q ad cost was close to average 3.2%, 3.3%.

Okay. And in first half, it was like 1% or something, is it?

Yes, 1%.

Got it. Got it. Secondly, sir, just wanted to understand this difference between consol growth of 19% and stand-alone growth of 15%. So is there any organic -- sorry, inorganic remaining now? Or it's just that the subsidiaries are growing at like 70%, 80%, which is giving this kind of growth?

So from consol to stand-alone, largely we have Bikaji USA, which is a core ethnic snacks business, which is doing good. We have Ariba Foods, which works for us for frozen segment. And of course, this THF. THF is going on very well. This year, they've grown at close to 130% to cross INR 100 crores. So retail business is going on very well. So the difference between core ethnic snacks and overall is close to 2.2%, which is THF.

Understood. Understood. So there is no sort of inorganic portion this year on a Y-o-Y basis, right? Everything is annualized?

Yes, yes, yes.

We take the next question from the line of Darshit Vora from Asit C Mehta Institutional Equities.

Congrats on a good set of numbers. Just wanted to firstly understand if you could quantify the CapEx amount that you alluded in your opening remarks.

What amount?

CapEx amount?

So CapEx largely what we'll be doing, there's 2 CapEx, the wheat factory, which is coming in Bikaner. And so this year, we'll be doing close to INR 100 crores of CapEx. That's the plan, less than or close to INR 100 crores CapEx. That is big warehouse, which is changing. The CapEx has been done. It will install in, I think, in the next 15, 20 days. So that will suffice that will solve sort of supply chain problems.

All right. And secondly, just wanted to get a sense on the Western snacks portfolio. So this quarter, we saw about an 8% kind of increase year-on-year. So I mean if we look at the entire year also, we've seen 7% kind of a Y-o-Y increase. So how do we see this moving forward in terms of.

Yes. So if you look at -- I mean, so just Western snack holistically, if we look at quarter 4 has been a 16% volume growth, wherein the ethnic snacks is in line with overall volume growth, which is 16.1% value growth. Packaged sweets did well. Western snacks, one, of course, the INR 5 pack, as I spoke in my earlier statement as well, that the trajectory what moved was more on the family pack and the family pack is more on the ethnic side. So perhaps that's what could have been better. And to your question that going forward, if we look at the quarter 3, there was 25% growth in Western snacks itself. So we will get back to that stuff and Western snacks will grow 20% plus if you look [indiscernible] level as well if we look at -- so the annualized level first half and second half was a key -- a major contrast in terms of growth across category. And even here, if we look at ethnic snacks is at 11% in that stuff. And while Western snacks was better, but then because of this quarter 4, this has come down in this. But going forward, this will fall in place.

Okay. Okay. And are we taking into consideration the grammage cut impact despite that, we'll be seeing that 20% kind of a growth?

See, I think that's now a new normal in terms of as the inflation comes in, grammage starts coming down. And as you know, there's deflation or there's cooling of commodity prices, companies do pass it back to the consumers which is what we saw that during this GST changes. So most of the companies and so did we pass back these extra damages to the consumer, which now, again, with post war after effects, maybe we'll cut down. But this will keep going and coming. We don't see much of a difference in that stuff. One thing I want to bring it to the table that overall, if you look at the Western snacks growth in the last quarter for the category has also not been very bright in that stuff. So relatively, if you look at 8.5% growth, while certainly we could have done better, and we know that what is that now we have to press on. But overall, Western snacks was also on a little slowdown.

We take the next question from the line of Ronak Shah from Equirus Securities.

Sir, my first question is -- am I audible? So my first question is regarding the core versus focus market. So ideally, the long-term aspiration of the business is to grow the focus market at least by 1.3 to 1.5x. However, if you see the fourth quarter or FY '26 as a whole, the growth rates are not that different. So what is holding us back from getting those sort of growth rates into the focus market?

So if you look at in terms of the growth of focus markets vis-a-vis category is over-indexed in that sense, which means vis-a-vis performance of whatever we are doing now is doing -- is ahead of category. However, to your question and so what we intend to do is of our 1.5x growth system. So there have been certain challenges that have been -- which keeps coming and we keep addressing. So like I just spoke about that UP, one of the large focus market, we made those investments and results started coming in. So going forward, what we see and what we have been saying would continue that the focus states has to grow faster. The 4 states did extremely well in quarter 4 is on the back of like the mega campaign, what we did bhujia and the biggest consumption happens in these 4 states as well and Bhujia outpeformed, and that's what helps these 4 states overdeliver. In fact, going forward, if one was to give some guidance for next year. So 15% growth would not be sustainable. What we look at it is that's about 13 plus/minus kind of growth we'll look at from core states and from focus states would be, of course, up 20%.

Understood. Understood. And when we see the EBITDA margin profile ex of the PLI benefit, in FY '27, considering the price hikes plus the inflationary trajectory, which we are sensing, how we are expecting the margins to flow in? On top of that, we are having a higher focus on E&P as well. So overall, how you are thinking your FY '27 EBITDA margin?

So from perspective, ad budget this year will be close to 2%, which is same from last year. So we're not increasing our ad budget, number one. Number two, from EBITDA lens, we have taken on price rise in April, what we see in the price increase of raw material packing material. So that will suffice the overall cost pressure what we got largely. So from that perspective, gross margin, the target of gross margin at consol should be same for us. We need to maintain the gross margin this year. That's important. That's challenging also because that's a very fluctuating year as of now started with a very fluctuating year where we're seeing the fluctuation in edible oil as well as raw material depending on how what react. But yes, overall, our target is to be -- to maintain the same gross margin and that's -- and EBITDA lens largely -- so if we maintain the same gross margin, EBITDA will improve because there is a lot of fixed costs, which will be fixed and there is production from outside Ban, which is CMU will also increase -- so there a lot of operational efficiency which will come in this year.

Understood. Understood. And lastly, on the retail business front. So we are seeing very good traction over there. So over a period, how we are sensing to open the newer stores on top of that, how the overall OpEx and all are looking like?

So from retail largely, our major focus investment was on THF last year and THF is doing extremely well. So they have closed 19, 20 stores. Intent is to open 8, 10 stores every year for next 3 years and to grow our business at 50%, 55% top line growth. That's the target. And that's the best they are profitable. So that's not EBITDA dilutive. That's important for us at the same speed what they want to grow for next 2, 3 years. So from Bikaji also, we opened out 2 outlets will open in the next 6 months, and we will see how we grow our own retail business.

We take the next question from the line of Abhishek Mathur from Systematix..

Just wanted to check out of our direct reach of about 3.5 lakh outlets, what would be the split in terms of how much is in focus markets, how much is in core, et cetera? And also, if you can -- so we have a target of about 5 lakh in 3 years, about 50,000 per annum. Of that 5 lakh, what is our target split in terms of how much would be in focus and core and the others?

Yes. So currently, if you look at out of 2.5 lakh outlets, so about 120,000 outlets is in 4 states. So here, the distribution is more led to the wholesaler. So whereas if you look at indirect reach is about 8.2 lakh. Coming on to focus states. So we cover about 1.7 lakh outlets in the focus state. And here, our indirect reach, I mean, so the wholesale channel and the other stuff. Our overall reach here is 3.5 lakh outlets. And in the other states, we cover about 60,000 outlets. This all adds up to 3.5 lakh outlets. Going forward, the increase is to come from the core as well because that's where now we are going down for set up, increasing instead of keeping our dependence on wholesalers, we are trying and we are getting in directly there so as to sell grain so as to establish NPD and the stock rate in the store. So that's what will help us drive same-store growth in 4 states, whereas the key driver would be distribution reach in the focus states. So that's where the majority of the new stores was coming.

Right. So if I hear you correctly, the delta of 150,000 in the next 3 years, most of it will come from the focus -- will be in the focus states. Is that right?

Right. So this would be from 4 and focus states. Other states would be incidental because that's where we do not have as much priority in general trade. So there, we do need-based kind of a stuff. So the other state sales is driven by the growth, what we take pride on is on the basis of the other channels such as modern trade, e-com, institutions, so on and so forth. So doing extremely well in all that stuff and which is what is getting the brand recall. So there also, if you look at the indirect reach in the other states is also about 1.8 lakh outlets there.

Right, sir. And secondly, on the raw material inflation front, you have talked about the packaging material and the edible oils. But in terms of our pulses and flour, that part of our basket, what is the trend that you're seeing on inflation? Or is it benign as of now?

We have not seen any major price rise in all.

We take the next question from the line of Soham Samanta from Motilal Oswal Financial Services Limited.

Sir, just wanted to check on focused market. Last time you called out that Delhi market was not performing well, while UP has been doing good. So on a full year basis, how the 2 major market have been doing in the focus market, UP and Delhi?

Sorry, Delhi and which one?

UP?

So UP, if you look at in terms of TAM, so out of 6 markets, UP is equal to rest of the 5 -- the focus states. So that's the size of price for UP. Delhi is not as big in terms of -- I mean, however, it is -- it has a weight, but not as big the TAM there. In terms of our performance, UP has outperformed, so has brought in the overall numbers, whereas Delhi, as we said last time, that has not done well. And we have not invested also behind Delhi as much in this stuff. So Delhi has brought these -- the growth numbers down only.

In UP, what kind of growth we're expecting 20%, 25% kind of growth or it's higher than that?

Yes, upwards of 20% growth, yes.

Okay. And if we want to maintain that 15% kind of top line growth, in that case, on product-wise, how we are looking like ethnic versus packages, as you mentioned, that estern snacks to be the higher growth category, I mean 30% to 50%. But ethnic and package is how we're looking for next couple of years?

So if you look at the critical -- to your question that if one is to deliver 15% year-on-year growth. So one category you cannot choose to ignore is the traditional snacks, which is about 70% of our business. So that has to take lead, followed by the second largest category is sweet, which is about 12.5% to our business, right? And this is where when we see when we are on our strat plans. So this is one category where the shift from unorganized to organized is going to happen. So for the category, this growth is going to be large, and we cannot miss the opportunity. So therefore, -- this would be second one. Third is Western snacks, our base is very small. So even 20%, 25% will not add as much value to our overall consol growth of that sub. But yes, Western snacks will continue to grow in double digit, 20% plus kind of a growth year-on-year, Western should do. And this is what we are talking of also that in next 3 years, currently, what it is 8.5% Western contribution should move to about 11% in the next 3 years.

And sir, last question from my side in core markets like Bihar, Assam and Rajasthan, within 3 markets, what is the most growth driver as of now? Or how do you look at each market?

No, say again, what is the?

So basically, what is the fastest growth driver within this 3 markets.

So Rajasthan, in fact, is our homeland in terms of closes to Bikaner and all that stuff and is way up. So put together, Bihar and Asam is equal or less than what the Rajasthan market is. So the delta what comes, the growth what comes, Rajasthan is the largest. This year, if you look at when we say when we report numbers 4 and 4 delivered 15%. So it's not just one state. It's a whole state performance wherein all these states have done extremely well. And I think all are inputting the team what they spread behind this growth, I think this has paid us dividend. The campaigns, what we did. So when we say Bhujia also Bikaji, that was a very strict campaign because we witnessed in the first half that there was a slowdown in Bhujia category per se. So I'm not talking Bikaji. I'm talking of overall Bhujia as a subcategory. And we being market leader, it was our responsibility to spike up this growth, build this category further and hence, these campaigns were done rolled out and worked very well for all 4 states.

We take the next question from the line of Shirish Pardeshi from Motilal Oswal Financial Services Limited.

Just 2, 3 questions. About 3, 4 months before, there was a lot of noise around GST rationalization, unorganized player will exit. There is a lot of momentum, which you said that the unorganized player will be able -- will not be able to compete at INR 5, INR 10 or maybe compliance burden will happen. So in your experience, given this framework, which is now implemented, which are the states you have seen this has been beneficiary to us? Or is there realistically anything has happened because parallelly, we might have got the benefit of 5%, but inflation is also inching up?

So I think very nice question, Shirish. And if you look at what we did, so the family pack there, this has impacted more in that stuff. So -- and as our numbers are, I'm sure other companies also would have done better. In this INR 5 and INR 10 play, the regional and local nuances are also very, very high. So it is like a few new players get in and few get weed off kind of a stuff. So that's what is the phenomenon and the trends what we see. But going forward, if you look at -- so it will not -- and this is what we always have been calling it out on our calls that the results of the impact would be seen over 2 to 4 quarters, you will see the impact in this stuff. But certainly, this GST regime change would benefit the organized or the larger players also.

But really, is there any trend you are picking up that the national branded players are getting the sales and unorganized are tapering down? Or it's too early to judge because parallelly, again, I'm using the word inflation is inching up.

See, unorganized when you say unorganized, you don't track because you don't get data. It is like it's -- when you do market visits, you get some sense in price. But yes, if you talk about the local and regional players. So yes, I mean, so this is where certain players we have seen that the kind of traction what they had has slowed down is not as much. The kind of trade investments they were doing, it's a little muted stuff. But for their survival, they will certainly do for 2 quarters at least. So I think the right time, maybe next quarter onwards, as the year will pass by, you will see those impacts coming in.

Okay. Sorry, I'm stretching. Let's pick up, UP as an example. So what happens to have on [indiscernible] EBITDA. These brands are still existing, but if I check on the ground, they're still growing.

So see, EBITDA and [indiscernible] is not a small brand for that reason. I mean, if you look at the kind of player, so in UP itself, there are 200 listed brands there, right? Top 10 brands that you look at after that, any brand is less than 1% market share. So that's the fragmentation in this UP though which actually is not a state, it's a site country is still. So that's what it is. [ Morano ] another brand, if you look at on account of its UP, it's among top 10 players in the country for that stuff. I'm talking of the players which were regional and local like, [indiscernible] [ Popat ] Mahesh Namkeen, which is only the geography of 100 or 150 kilo like [indiscernible] Namkeen in those are the ones I'm talking about.

So the likes of and all what you're saying?

Exactly.

Got it. Okay. Got it. Second, on Slide 10, given promotions which we ran, consumer offer, Bikaji campaign, UP campaign with Mr. Tripathi and the other packaging what -- so on a broader terms, if I split what are -- I mean, tangibly, you may not be able to quantify, but in the current era of packaging or maybe packaged food industry itself is so complex. Such kind of measures has brought any benefit to the company in terms of quantitatively, you can say that we got distribution expansion or volume growth or maybe some percentage of sales would have happened. I mean just a ballpark number?

So Shirish, you come from a FMCG background and so when company plans any consumer offer. So this is not just to subsidize sales. It's always now the objective of that the will is give you 20% extra, 30%. This, again, is not kind of investment you're doing. So for example, Paytm, if we look at it, this comes at negligible cost to us. So hence, if one was -- my sales team is to plan, so I cannot have a very bullish number on this stuff. But yes, certainly, delta will come in. And the investment what we do, the kind of focus what we bring in are the larger or the big ingredients to get a good result out of it, which is in terms of that the motivation to the team, the postal activation around that, what you create. So there is more power of execution on ground and which is what gives us delta for sure. And the number speaks more louder than what I can speak on this stuff that you look at what was quarter 1 or quarter 2 and then what is post so when these campaigns were up on air or was on ground. So this has certainly given this stuff. Any company, when they do these kind of offers, there could be 2 objectives. One is that if they are seeing decline, they say that I want to hold it. And holding on those numbers in itself is an achievement because they knew the relative is and at what rate they were falling down. And the other is that what growth are they wanting to or next trajectory you want to go on. So those are the measures what we see, what we track. And this is this, we'll call out for our next promotion in the campaigns.

No, I understand. no. We both are from the same background. So my worry is that these are all routine activities. We need to do promotion. We need to excite the consumer, but then we are creating a benchmark. So it becomes more challenging that the next promotion has to be better than the previous one. So that's why I was worrying because we are building a base.

Yes. So you will see the next campaign will be Phase 2 of it. So certainly, we'll not repeat the exact stuff. You will see build, let's say, last year in UP. What we did was that not trying to establish Bikaji. Now the part 2 would be a different communication would the challenge statement, identified challenge statement or opportunity, we will try and address with the campaign. So not -- it will not be airing of the same film what we did last year. So that's what is -- Sergei, I think you have a very good point, and we are -- we work in the same way itself, not to repeat, to build on that.

All right. My last question, Rishabh, on Ariba DHF, can you give us how the momentum is picking up? I mean we have also given some press release last time saying that we are looking for JV in Nepal. So in terms of scale up, in terms of our 100% acquisition path to profitability, something if you can tell?

Yes. So from THF lens, THF the large top line was close to INR 50 crores. This year, they double top line. And what we see that THF grew it for 50% to 60% year-on-year for next 3 years at least. They have a strong plan. And largely, they are focusing on the northern part of India, UP, Haryana, Punjab and they can go towards Bihar and that part. Largely, that part still target on for the next 3 years. So from THF [indiscernible], the reduced retail investment is going on very well. Ariba does the best manufacturing capability, and they are just solving our export problem, which we had -- which was there before Ariba depending on other vendors. And during their peak time, there was a supply chain issue. And we were seeing that after Ariba our export growth is growing at 50%, 60%. And this year also, this will be the same momentum that we see this year. So Ariba is largely manufacturing facility of course, concluding the focus because they cannot be a EBITDA dilutive to us, and that's what we are working on. Currently, they are at low utilization. This will be close to 55%, 60% and that will solve this EBITDA issue also.

Okay. Just last question. On the warehouse, what we were trying to build into the adjacent location, would fully covered the operational -- I mean, even we started.

Trials has started 2 weeks back largely. And it will start completely in -- by 15th of June. So by end of this quarter, so by next quarter, we'll see a benefit in this. And of course, we'll see benefit because currently, we have space of keeping finished good less than 2 days. And this wide capacity to keep storage of around 6 to 8 days. So of course, we'll see a momentum, we'll see production running seamless and all. So we'll see momentum in the second quarter.

We take the next question from the line of Nitin Gupta from HDFC Securities.

My first question pertains to the very first question around like people movement from our factory. So when you have highlighted for West Bengal laborers have moved from 20th April to 10th May. So I just wanted to reconfirm like how many days of sales got impacted. So that time answering to that, you had confirmed 4 days. I just wanted to double check on that.

So largely, there are 2 things. One, overall labor movement from Bikaner to Bengal, and there was a loss of a Chairman where our factory got close for 2.5 days. So overall, close to 4 to 5 days, 4, 4.5 days loss of production was there in -- and now like it's close around 16 -- from 16, 17 from this 1 day, all the labors that came back and our production is in full swing. So -- so we'll try to cover this. But yes, until now the loss is 4 to 4.5 days.

Okay. So 4 to 5 days, like it's more of a scattered impact, not a continuous impact. fine. And second, just wanted to understand like how at a consol level, how do you see the growth for FY '27? And also wanted to sort of understand like how we are placed with sweets. So was there a capacity constraint that's where the growth in last 3 years was around 6% CAGR or like any other reasons you wanted to fight for the sweets business slowdown?

So from sweet largely, of course, that's more of manual. So capacity was constrained. And sweet different challenge. Like during fest, we have capacity constraint during nonfest, we have surplus capacity because during fest, we work in 100% -- and so we are building a sweet factory in, which will solve this sweet production issue. And also, we are trying to build all-season suites, small pack, INR 5, INR 10 pack in sweets and everything. So that can be all season that can improve overall growth of sweet category. And from sweet snacks largely growth was to 9% and our target is to be at 11% to 12%. That's the target what we are taking on. And not so on sweet, 11%, 12% growth, our major focus will be on our ethnic snacks and snacks.

But the way Manoj has highlighted like big part of formalization is spending on sweet side. So don't you think we should target a higher growth? Or is there a genuine sort of constraint in terms of driving this formalization on the growth?

So Nitin, talking on sweets business, if you look at, so these 4 months, the festive from, say, Rakhi to Diwali, 80% of our sites business comes in these 4 months. And then balance 20%, 25% comes in 8 months. So in these 4 months, we are over utilized our output is -- it exceeds 100% over time and all that stuff starts happening, whereas in rest of the time, it is very poor utilization. Now that's the dichotomy we are in if we increase capacity, so which means that in off-season time, we will be further under utilizing our capacity. for this stuff. So that's the stuff and which is what we are trying that how do we make speeds around the year kind of a category leveraging on our e-com modern trade stuff, and that's the work which is on. So what Rishabh spoke about is that when we build budgets in our annual operating plan and all that stuff, we have kept sweet about 12.5%. However, the working is on that how that we can exceed these numbers because that's where the opportunity is. Now how soon and how much we explore on that stuff would be on our capability and speed to act.

Last question pertains to like how we are placed with e-com and particularly quick. And any thoughts around like Q seeing a faster growth convenience channel. So in terms of the portfolio expansion, maybe leveraging the third party, we wanted to do something for the quick commerce to ride on the faster growth rate?

So yes. So e-commerce is doing the entire FMCG, even other categories as well. And so it's true for Bikaji. If you look at last year, our e-com contribution to overall business was 2%, which now has moved to 3%. So that's the kind of business shift the importance this channel is gaining. This channel has delivered about upwards of 75% of growth, whereas against company's growth of far less 11%, 12%, that's the kind of over index growth. We are present across all players and have a strong JVP, so the joint business planning for the year, quarter and so forth. So the growth drivers are, of course, 1 is that inorganic growth, which is that as these accounts are getting into from, say, Tier 1, Tier 1 to Tier 2 and further below. So that's the inorganic growth, how we look at it is. And also what we're doing is that in the increase of number of SKUs ranged on these platforms. Now when we speak to e-com platforms or Qcom platform, what they're saying is that the growth in the metro towns is getting stagnated because exploded what they could. So even they are looking at the out of the box thinking that how do we grow metro and therefore, new categories, premium stuff, so let's say, introduction of new sweets range and all that stuff, which is what will certainly benefit us and these channels is there. This is what it is. So we see a huge growth -- continued growth in this channel for us next year as well.

We take the next question from the line of Mahima, an individual investor.

Yes, hello. Am I audible?

Yes, you are.

Congratulations for your results. I was asking that as lifestyle changes, are you planning to enter into a healthy smart segment?

See, frankly speaking, there's nothing called healthy snack. There could be less unhealthy snacking, right? And in our portfolio also, there's a long list of SKUs which fall in that space. So in terms of future, we are, right? And there's a range. But today, if you look at the contribution of these categories is by far low. Today, the companies which are surviving is purely on the Qcom platform, you will still see these -- the clean label products kind of a stuff. But when you speak on the masses, this is not true for now. We perhaps are 5, 6 years behind time in as many years, you will see that these things will start picking up even faster. From our readiness standpoint, yes, we have the entire range with us.

We take the next question from the line of Utpal Sakia, an individual investor.

First of all, I'd like to pay my heartfelt tribute to the Founder Chairman [indiscernible]. So I have actually 2 short questions. The first 1 is as a company is trying to build consumption habit of bhujia and other Indian snacks in the western countries, so how are the consumers' behavior evolving? Are we seeing a good momentum and the consumer primary in the western market, primarily is consumer of the Indian origin? Or are we also attracting mainstream Western consumers?

So is this you're talking from the export standpoint, right? This question is more from exports lens from domestic, I mean so if you can clarify. I'll answer accordingly.

No, it is for export oriented.

Yes. So 1 is that there's a huge Indian base product, right? So that is our primary [indiscernible], which is what we focus on. And there, if you look at the true approach of growing business, 1 is the new growth category. So for the category leaders around we a 50% market share. Then our task would be that how do I grow consumption grow users, right, or occasions of consumption, right? That was if I was a major player. When I'm not a major player, then my job is not to build categories there I'm not looking at that how many more people have started eating bhujia there. I will look at that how do I each share that I mean today, they are eating of competition or some other categories, how do I get them to my phone. So this is what we are working on for overall namkeen what is called the frozen item because there we are gaining share from the competition. We are not building category. For our bhujia [indiscernible], which is our product and if you look at across players, Bikaji, bhujia is #1 in the bhujia segment. That's where we build consumption and our consumers, to your question, is not just Indians, -- what we see when we travel to these places when we interact to our consumers there. So there are lots of foreign origin guys as well that who like this snacking. Something is very famous about India is one is tourism and second is food and India's food is appreciated across. We are taking this food, this snacking stock to their country. This is gradually shifting. It's not a major shift, but it is not just stuck to Indian diaspora. It is the foreign foreigners as well who consume our products.

We take the next question from the line of Darshit Vora from Asit C Mehta Institutional Equities.

So just wanted to pick on this Western snacks. Just wanted to understand why do you think that industry growth is coming low for the Western snack front? And the other part to this question is that if the industry growth is kind of moderated I mean lower than Western snacks, how do we plan to grow higher? Is it distribution expansion or like innovation products else?

So I'll take your latter question first. See, one is that we have very small share. If you look at all India level at Western snacks is 1.1% market. So it's drop in the ocean. That leaves us with the opportunity of disproportionately high growth. theoretically, this is one. Now to your first question, when we say relatively -- so these growth trends keep changing. So if it is down does not mean that it is the right takeaway would be when you see the declining trend that over the last 4 quarters, this is coming down. Then you can extrapolate and come to some conclusions or correlation of that stuff. One quarter in particular, leads us with no, it is just a reference point. So please consider that if Western Snacks has not done well is our reference point only.

Okay. Okay. Got it. And secondly, just wanted to clarify on the gross margin front, you said that you're going to maintain margins on the gross margin side. So is it like margins or absolute gross profit because you earlier alluded that we will be maintaining gross margins. So you mean gross margins or absolute gross profit. I just wanted to clarify that.

The gross margin term of percentage.

Ladies and gentlemen, we take that as the last question and conclude the question-and-answer session. I now hand the conference over to the management for their closing comments.

Thank you so much for taking time out for the call. It was a good interaction, and we tried and answer most of the questions. Still anyone failed to let out, happy to get connected separately or through our Relations manager. With this, thank you so much and look forward to connect again.

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