National Biscuit Industries Limited SAOG (NBII) Earnings Call Transcript & Summary

Good morning, everyone. Myself Shweta, Board Secretary of National Biscuit Industries Limited SAOG. I welcome you all to the MSX Discussion Session for the period ended 31st March 2025. With me are Mr. Aiman Khalfan Al-Hadhrami, Head of HR; and Mr. Harkamal Kumar, Finance Controller of the company. We will have a question-and-answer session at the end of the meeting. In the next slide, I'll be presenting the income statement and balance sheet as of 31st March 2025. Taking you through the income statement for the year ended 31st March 2025, in comparison with the figures as on 31st March 2024, sales has grown from OMR 17.2 million to OMR 19.7 million, resulting in a growth of 14%. Cost of sales has grown by 14%, which is in line with the increase in sales. Other income, which includes interest on fixed deposits and scrap sales has grown by 3%. Expenses has increased from OMR 1.8 million to OMR 2 million. Profit for the period has increased from OMR 723,000 to OMR 916,000 resulting in a growth of 27%. Earnings per share has increased from [ 723 to 916 baisa ]. Next is the balance sheet as of 31st March 2025 in comparison with the figures as on 31st March 2024. The property, plant and equipment of the company has decreased from OMR 6.38 million to OMR 6.32 million where depreciation is OMR 609,000 and addition is OMR 551,000, resulting in a net decline of 1%. Intangible assets have also decreased by 18% due to depreciation. Write-off use of asset has increased from OMR 641,000 to OMR 616,000. Inventories of the company has increased from OMR 2.9 million to OMR 3.3 million. Trade and other receivables have decreased from OMR 4.9 million to OMR 4.7 million. The company has put excess funds in Wakala deposit of OMR 900,000. Bank balance has increased from OMR 138,000 to OMR 1.1 million. On the liability side, the retail earnings have increased from OMR 6.7 million to OMR 7.3 million. Noncurrent liabilities have increased from OMR 1.34 million to OMR 1.348 million. Current liabilities have increased from OMR 5.8 million to OMR 7 million. Moving on, I will take you through property, plant and equipment as on 31st March 2025. Balance of property, plant and equipment as on 1st April 2024 was OMR 6.38 million. Total additions during the period is OMR 551,000, and depreciation for the period is OMR 609,000. Balance as of on 31st March 2025 is OMR 6.32 million, resulting in a decline of 1%. Trade and other receivables has decreased from OMR 4.9 million to OMR 4.7 million. Paid and other payables has increased from OMR 5.5 million to OMR 6.9 million, where a major component is listing fees of new launches, which is going to arise in near future. That is all from my side, and now we'll open question-and-answer session, if any. We'll wait for 5 minutes and conclude the session.

Yes, [ Mr. Shagor ].

I just had a couple of questions, starting with the industry. What is your presence in the market currently? How is the competition doing? And do you guys see any growth in the market or any growth in your market share? Would you be able to capture any more market share? Just a basic understanding of how sales growth are you guys projecting in the near future.

Sales, your question is within Oman or within GCC or at company level? So I'll reply on 3...

On the company level.

Within Oman, we are growing year-on-year basis, and we are expecting a company to grow further by 10 to 12 percentage. Same is the case with GCC. We are growing our share across all GCC markets even in this year, trend is upward in the first quarter. And we see the trends are going up. We are innovating new products and we just innovated in last year. And on back of them, we expect the sales will improve.

Would you mind telling us what you're currently -- what your current capacity utilization is?

It's around 60% at the plant level, but few of the lines are fully occupied. So a few of the biscuits lines are completely occupied, our snacks plant capacity is low, and we are trying to make new products and make the existing products more successful to increase those capacities.

Right. We had seen a significant surge in the local made products demand due to the regional conflicts and everything in the [indiscernible] and everything. Do you see any uplift in demand going back to the previous levels once these things settle? Or do you think that the increased demand is here to stay now?

None of the products, our products have seen such surge because our competition is with the industry, which is within GCC. So our products compete with the products coming from UAE and Saudi. Very few products made in Turkey or Indian-made products, which, in fact, the [indiscernible] products are U.S. made products, and there are hardly any food material, which are competing with us as such in biscuit category except the [ McVitie's ] or Oreo, I don't see many products, and we don't have those range where we are competing with them.

Right. We have seen that this year, you guys have almost paid out all of your debt, and you guys are now generating good cash. Obviously, you have a significant appreciation as well. What is the management's plan with this cash going forward? Do you -- or do you plan to keep it with the company? Do you plan to distribute to our shareholders or do you buy some -- any capital expenditures plan.

There are all 3 things. Basically, the dividend payout proposed by the board is higher than the existing dividend. Earlier,, it used to be 25%. This time proposal is 50%. And secondly, there is major CapEx planned for our warehousing abilities. And then there are outstanding, on this slide, which you are able to see, you can see there is a outstanding liabilities, short-term liabilities, which are going to come in next 3 to 4 months, we will all settle 3. And we have kept some amount in Wakala deposits for short term, but those funds are required in this year itself.

Okay. The outstanding liabilities that you mentioned, would you care to explain or would you put some color on what these liabilities are apart from the accounts payable and the accrued expenses or the other payable thing?

As I just explained, we are in the -- Currently, we are innovating new products. When we are doing new innovations, we have to make them stabilize in the market. We're doing a lot of expense in the listing, and we have given some approval to our distributors for listing and the claims are yet to arrive in booked. But those approvals have been gone to hypermarkets and few of them has committed to us and few of them are still pending in the pipeline. But yes, those are market commitments, and we'll be honoring them in next 3 to 4 months.

Right. Right. Makes sense now on capital expenditures you mentioned -- you just mentioned that your current capacity utilization is 60%. So I'm assuming that the CapEx that you are mentioning is not on the plant level. You said I think it's on the warehouse level. Could you give us an idea of the magnitude of that expansion? What would that cost if you guys have any budgeted numbers or something?

So currently, we are renting out our warehouses. So we want -- and we have got 2 locations. We want to consolidate and make a bigger warehouse within the plot of land, which is available behind our factory. It will be around OMR 2 million, but that entire OMR 2 million will not be spent in one go. So initially, we are planning to spend somewhere around OMR 1.4 million, OMR 1.5 million in the first phase, and the work has already been started.

Right. So the expenditure that you are mentioning is not that big with regards to the profits that you guys make and the cash that you already have. So we should be -- would we be correct in assuming that the current payout ratio is to remain there unless something unexpected happens because you guys have just, as you rightly mentioned, you guys have -- this year only increased your payout ratio to double than what it was in the previous year. Should we be expecting this number to continue?

That will all depend upon the next year profit, and I'm not the right person to make a decision on that, that's bold decision. Our management has no role to play in the payout ratio.

That's right. That's right. That's true. I was just asking in terms of what your payout policy, if any, is there and assuming that the profits are in line with the current year [indiscernible] small growth. But yes, I take your point that that's on the board level. Yes. Okay. Now one last final question. Do you expect any margin improvements in the coming years? I'm assuming that you source your raw materials, which would be wheat and flour from imports [indiscernible]? Do you expect any margin accretion in the coming years?

No, the existing booking of raw material is at the higher prices than the last year. So we feel there will be slight margin decrease. Yes, there is no increase in plan, and we won't be able to take price increase as such because of the competition as well as restriction in this part of the board. So there will be a slight hit to the margin, but there is no increase that we can foresee as such. Are there any more questions or should we close the session? Thank you, gentleman.