Mrs. Bectors Food Specialities Ltd
NSE:BECTORFOOD
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Ladies and gentlemen, good day, and welcome to the Q1 FY '24 Earnings Conference Call of Mrs. Bectors Food Specialties Limited. [Operator Instructions] Please note that this conference is being recorded.This call may contain some of the forward-looking statements, which are completely based upon our beliefs, opinions and expectation as of today. These statements are not a guarantee of our future performance and involve [indiscernible] risks and uncertainties. I now hand the conference over to Mr. Anoop Bector, Managing Director. Thank you, and over to you, sir.
Yes. Good afternoon, everyone. On behalf of Mrs. Bector Food Specialties Limited, I extend a very warm welcome to all participants on Q1 FY '24 Financial Results Discussion Call. Today on this call, I have with me Mr. Manu Talwar, our Chief Executive Officer; Mr. Ishan Bector, Whole Time Director; Mr. Suvir Bector, Whole Time Director; Mr. Parveen Kumar Goel, Whole-Time Director and CFO; and Orient Capital, our Investor Relationship Consultant. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on the exchanges and on the company's website. It gives me immense pleasure to inform you that the company has managed to stay ahead of the curve by continuing to invest in its brands and ensuring strong execution of expansion plan across biscuits and bakery segment. Domestic business growth has driven majorly by distribution expansion in existing and new markets, complemented by marketing campaigns for consumer promotions for both biscuits and bakery businesses. We believe the growth of QSR chain and new customer acquisition would boost our institutional bakery business for coming quarters. We continue to build our manufacturing capacities to service our growth. We are commissioning the 2 lines in Rajpura in Q2, enhancing our production capacity and shall be adding capacity on the bakery side in the national capital region by December. Our further investment Indore, Madhya Pradesh and Khopoli Maharashtra for biscuits and bakery respectively, is progressing as per plan to be commissioned in FY '24-'25. During the quarter, the company has successfully navigated the challenges relating to high prices of some raw materials with our prudent raw material procurement, although volatility in prices of essential commodities like wheat, sugar, et cetera, still remains. Company has achieved significant growth in financial performance driven by strong growth across categories over the sequential quarter and [ reset ] the testimony of our activities of building strong leadership team, strengthening distribution reach and marketing. We are confident Mrs. Bectors team would continue with same level of fashion and deliver robust growth led by strong execution across segments, accelerating distribution reach, enhanced marketing input and entry into newer markets. Coming to our Q1 FY '24 performance. It has been another strong quarter for us on the revenue side as well as on the margin front. Our revenues increased by 24.4% and PAT by 174% on Y-o-Y basis. Our focus on sales training program for salesperson, improvement on technology side in order to track our costs and get later frontline report about SKU and inventories have helped us in a long way to reach where we are right now. This will also have been preparing a road map for us to construct our future strategies.Now I will discuss the financial performance. The consolidated revenues for the current quarter stood at INR 374 crores versus INR 301 crores in Q1 FY '23, thus registering a growth of 24.4% on a year-on-year basis. Biscuits, on the biscuit side, our biscuit segment reported a revenue growth of 25%, which stood at INR 223 crores in Q1 FY '24 as compared to INR 170 crores in Q1 FY '23. This segment has grown by 54% over Q1 FY '22. Our domestic biscuit segment and export which witnessed higher double-digit growth in Q1 FY '24 as compared to the same period last year. In the bakery segment, our -- the Bakery segment revenue for Q1 FY '24 stood at INR 136 crores against INR 107 crores in Q1 FY '23, thus registering a growth of 26% Y-on-Y basis, including the tail bakery and institutional segments. Both retail and institutional bakery have grown by higher double digits in Q1 FY '24 as compared to the same period last year. The company continues to focus on increasing distribution and premiumization of the product.On our EBITDA stood at INR 58 crores, resulting in growth of 85.2% and 20.1% from the corresponding quarter on a year-on-year basis and sequential basis retrospectively. EBITDA margin for the quarter stood at 15.5%. That is a growth of 509 bps points year-on-year basis and 155 bps points on a sequential basis. PAT stood at INR 35 crores, saw a growth of 174% year-on-year basis and 26% on a quarter-on-quarter basis. Our PAT margin for Q1 FY '24 was 9.3%, registering a growth of 508 bps and 132 bps on a yearly and quarterly basis, respectively. Company continues to work on expanding its distribution network across India, followed by increase in marketing of its products in order to penetrate and capture new markets. This will assist our company to increase its footprint in North India as well as Western and South India. So, where the product is equally liked by our customers. As we look to the future, I am excited by the opportunities that lie ahead for the company. There is a strong pipeline of significant projects in both our businesses, and we have strong opportunity to grow demand and consumption. With this, I would request to open the floor for question and answers. Thank you so much.
Thank you very much. We will now begin the question-and-answer session [Operator Instructions] The first question is from the line of Sameer Gupta from India Infoline.
First question, can you give your overall CapEx guidance for the next 2 years. And out of the INR 105 crore earmark for the Rajpura and Noida lines, how much have you already spent until FY '23? That will be my first question.
Our overall CapEx guidance for this and the next financial year is between INR 350 crores to INR 400 crores. Our CapEx for the current financial year, which is INR 2023-‘24 should be approximately INR 225-odd crores and the balance would happen in the financial year '24- ‘25.This is a broad rate of tax.
Got it. And this INR 105 crore on Rajpura and Noida that you have stated in the PPT, all of it will be in FY '24.
Yes.
Got it. Second question, sir, on the biscuits and bakery, you've recorded around 25%, 26% growth in both the segments. Can you give a breakup of volume and value?
So, our overall as a company is largely led by volume -- value or the price led growth is about 5% or 6% out of total 24%. So largely, it's the distribution led, marketing led and the volume led growth.
Got it, sir. This 5% to 6% price increase is similar across bakery and biscuits, is it?
So, this is a price impact versus of this quarter versus the same quarter last year. So our price increase, in fact, is a little higher on the [ basic ] side, but we increased the prices last year in the month of May and June and -- but a little higher on the basic side. But on a company on an average basis, about 5% to 6%.
The next question is from the line of Amit Purohit from Elara Capital. Please go ahead.
Congratulations Sir and thank you for the opportunity. I just wanted to know your thoughts on the gross margin side. You've done pretty well this quarter as well and even the EBITDA margins have been strong despite marketing spend. So how do we think about it? I mean, we have talked about the 14% to 15% kind of margin outlook. Added to that, there are some players talking about the regional players or unorganized guys getting aggressive. So, I just wanted to know your feedback from the market. How are you seeing it and how do we look at FY '24?
So first, I think that both biscuit and bakery are felt competitive industry, right, and the competitive in the industry is there to remain. Our effort and source of growth, as we have mentioned also, is our distribution led and marketing led. So, we are -- we have put a lot of effort last year also. When we spoke to you in all the fourth quarter last year, we clearly stated that on a biscuit side, we had a mission that from a direct peak of 160,000 outlets, we want to get to 3,20,000 direct sales outlets by March ‘24 -- so we are on that journey. In quarter 1, we have reached 550,000 direct sales outlets. And as per [indiscernible], we have crossed 6,00,000 mark of our overall reach a partner. So similar is the journey on the -- also on the bakery side, the entire focus is on distribution expansion and improving the pace execution through digitization and similar efforts are being done on the marketing side on the consumer demand creation, and we took both on bakery and biscuit side marketing initiative to drive our growth. So, I would say that it's the F&B marketing-led inputs, which are driving the growth. Coming to the EBITDA margin, if you are. So, we have delivered a 15.5% EBITDA in this quarter. So, as we have been saying earlier, the endeavor should be to stay in the range around 15% EBITDA and keep it consistent over the next few quarters, right? And so last year, we were around 12.7% EBITDA last 2 quarters. If you're noting, we were touching 14%, down -- now we have crossed 15%. Our endeavor will be to continue to fiscally to deliver around 15% EBITDA with the next few quarters.
Sure. So just a follow-up on that. Have you taken any price reduction on grammage and what would be this especially on the biscuit side or bakery?
So, we haven't taken our price reduction, but we have been offering higher value to consumers right? And that's what we had rolled out to consumer promotion or consumer offering of a higher grammage in Q1. And now in the month of July also, we have rolled out approach consumer promotion on [indiscernible], which has just been launched.
Okay. And raw material scenario remains stable, you would say?
Pardon?
On the raw material input cost scenario remains stable for you? I mean basically the beat [indiscernible].
Raw material commodity pricing, I hope -- I will just request Anoop to pitch in?
Yes. So on the raw material front, definitely, there have been some pressures which are coming on the weak front. But the company has done some forward contracts where they will be quite secure even going forward. So, there will not be any major impact on account of wheat going forward, at least for the next 2 quarters.
Okay. And sir, my second question is on the management side. So we have done quite a bit of talent upscaling for the entire organization with a lot of recruitments. Are we done with that process? Or are we still in the process of hiring talent in terms of whether it's marketing, IT, distribution side?
So, we have done with our leadership hiring now. And so we approved with our leadership hiring in the quarter 1 of this financial year, whatever new positions will lift up. So very well in place in terms of all the leadership positions.
The next question is from the line of Harit Kapoor or from Investec. Please go ahead.
I just had a couple of questions. Firstly, on the distribution side, you've at 2.5 lakh outlets and another probably 30% to go for this year. I just wanted to get your sense of how you're looking at the revenue trajectory. You've done 23%, 24% this quarter. I think your expectation is to kind of the high teen number. Just I was wondering whether there is a possible upside with that as well, given that you still have a large distribution execution to be done for this year itself.
So, on our distribution side, as we told earlier also that we want to double and reach 20,000 outlets by March of ‘24. In terms of growth, I think we've been consistently maintaining that we would be maintaining mid- to high teens kind of growth, right, in the coming quarters also. And that's what -- our aim and effort is to continue maintaining a mid- to high-teens kind of growth.
And the second was on pricing. So when does the pricing kind of come into the base, you're currently are 5%, 6%. Would that be safe in Q3 almost pricing starts to come in the base and it would be largely volume-led growth from there on?
This year, it seems to be largely volume led. Although last year also, we, as a company was largely volume-led, but this year will be entirely distribution and bottom led growth. We don't expect a price increase of price correction like last year in this year.
Got it. And the third thing was on the CapEx side. So, you mix that you put out [ rotator ] in FY '25, which part of FY '25 will be by commission, you mentioned that you expect the commissioning in FY '25. Would this be kind of back end of FY '25 or you expect the indoor and order units and a couple of...
I think Indore should come out in the second quarter and Khopoli should come up in the third quarter of FY '25.
The next question is from the line of Kaustubh Pawaskar from Sharekhan by BNP Paribas.
[Indiscernible] So my question is on the international market, international business. So how the business has performed? And what is your outlook about this part of the business? And second question is on the market share, whether we have gained any market share in any of our key markets. So, these are my 2 questions.
So on the core side, now we continue to do well and grow well -- so export side also this was again a consistent good quarter for us. We've grown well in this quarter. And your second part of the question was on?
Market share, whether we have... India market share?
Share size... Right? In the time last year quarter on last year, we were at in North India, we were 4% market share -- and now the quarter on [indiscernible], 4.6%. So same period last year, we have gained 0.6% market share in the north India. All India level, we have moved from 1.19% in the same quarter last year to 1.43% margin. There has been a consistent market gain over the same period last year.
And this realization growth of 5% to 6% you mentioned, is there any element of mix improvement in the more because of the price increases, what we have taken last year.
So yes, there is. So, as you are aware that as a company, we continue to focus on premium items. And our company is focused on premium creams, cookies, continue to be there. So, on a premiumization side or biscuit side, we have moved up by 5 percentage points, right? So, a premium percentage on biscuit side, that's up 36% and this is a clear cut movement of over 5% on a -- so mix has also improved. All the 3 premium categories are growing much faster than overall growth in biscuits and which is leading to improvement in our premiumization and improvement in OpEx.
Okay. So you may say that Creams contribution has gone up from 31% to 36% now.?
Premium percentage.
The next question is from the line of [ Jana Patel ] from Centrum Broking. [Foreign Language] My question has been answered. The next question is from the line of [ Sasha Jalan ] from Purnartha Investment Advisers.
Firstly, congratulations on great set of numbers. I just have 2 quick questions. One is on new products. Can you please share which ones are those? And what would be their share in revenue?And secondly is on distribution in newer geographies. So, can you please share any comments on any difference in competitive landscape you are seeing for the new geographies compared to Punjab or Delhi and on the neighboring states?
So firstly, on the [ MPD ] side, as we leave you that we around quarter 3 of last financial year, we had launched or opinion train and we have launched that in the segment. So clearly, the also doing well in the market is reflecting in our market share. Our market share on our inventory side has gone up from 1.4% in quarter 4 of financial year '23 to 1.8% in quarter 1 of ‘23 '24. So that's kind of going well, and this was long just about in quarter 3 of last financial year. On the rough side also, we launched in the policy of last financial year, and that's also building up very well and growing very well. Both our new products are doing fairly well and building up the...
And second question was on the distribution side. So like in new geographies, are we seeing any -- can you share any comments on the difference in competitive landscape from what you are experiencing in Punjab or Delhi?
So, on the competitive landscape, we were always strong on the upper north side, which was Punjab, HP, [ GNP ] and Haryana , right? And we continue to grow even there fairly well. We have grown in mid-teens there. In the lower part of the North, which was UP, Rajasthan, Delhi, MP and East Bihar, we have obviously grown in high double digits, right? So the growth has been much larger there. And even the newer markets of South and West are budding well, where the majority of our effort is going in terms of --[Audio Gap] So what areas -- I know that we are working on the distribution there. If anything more you want to add that, what are the future things you are more excited about here in this space?
So 3 things. One is distribution and growing our penetration. Second is marketing. -- input to a demand right, led plus the new product introduction and the large size of the prime is improving our mix through premiumization. These are the 3 efforts which are being made, and we want to stay consistent on this in terms of driving -- in terms of defining our revenue growth management, RGM. So we will, as of now stick to these 3 things to drive our RGM.
[Operator Instructions] The next question is from the line of [ Nisha Ahir from Fort Capital ].
{Technical Difficulty] Hello.
Yes, we can hear you. Please proceed.
Yes. Thank you for giving me the opportunity. So my question is like for the biscuit and [indiscernible], what kind of growth are we seeing from the new markets that we have entered.
So, the newer markets which we have entered are basically South and West as of now. And the north up country for the bakery side English Oven. So obviously, the base of South is small. So percentage if we hire we never -- and in case of the up country North which is outside NCR, we are growing in a high double digit. So I'll be going in high-target even in Bombay. So the newer territories of Bombay and up country North, it's a growth of a high double digit.
Thank you. The next question is from the line of Rushabh Doshi from Nirmiti Investments Advisers.
Yes. Congrats a great quarter. So my question was on one of the products launched by Cremica Industries which is run by a Akshay Bector. So they have a product called Cremica French Fries, peri peri flavored. So my understanding was they will be focused on the condiment side, and we can use Cremica brand for the biscuit side on the biscuit side. So on the other categories, like can they launch more products. So that's my question.
Can you repeat your question again?
Yes. So my question is regarding the company and Mr. Akshay Bector. They have launched a product, this is Cremica French Fries the Cremica brand. So my understanding is more...
I'll tell you. I understood your question. I don't do. they were in snacking business where they were making chips and these products. So in the snacking side, yes, they could use Cremica as a brand, but not for anything else. So other than the [indiscernible] they were paying like condiments and snacks yes.
And also in future, we want to end up a snacking category. So we'll have to build a new brand like English Oven or we can leverage on there?
What we -- when we create brands, we create them for the particular reason that English Oven was created. And the reason was that we wanted to premiumize. So if our company tomorrow things are entering into a snacking business, we will create a relevant name. Cremica is not a relevant name for getting into a new segment, which might not suit us, right? So effectively, we -- our company can use Cremica for biscuits. And we have our brand on the English Oven tools on anything today. We can use it on anything. We just launched our [ RAS ] in number brand in this open is doing very well in the market. So, in case there are products which are -- there will be a relevant brand, which we will create for that.
Thank you. The next question is from the line of [ Rishabh Shisodia ] is here from [ Samena Capital ].
Slightly on the market opportunity. So, in the north, like Punjab, Haryana, Delhi, how would you define your market size for biscuits, let's say? And if you could quantify that?
You are referring to the industry side?
Yes, industry side sir.
So our -- it is the biscuit industry side, North region contributes almost 23%, 24% of the industry, right? So that's our industry.
Okay. And sir, on the gross margin explained earlier. So just a clarification on that. So the major operation the improvement as to the numbers? Or we can still see further gross margin expansion from here now?
So as of now, I think that our whole effort should be to maintain our margins and [indiscernible] both gross margin and the EBITDA margin, so around 15-odd percent. So that would be our effort. So because we have moved up well if you look at last 4 to 5 quarters. So now the whole effort is to consistently deliver over the next few quarters around this.
[Technical Difficulties] And on the current capacities. So we have –[Technical Difficulty] segment and commercializing some capacity for the year.
Sorry. Just to brief you that capacity for portfolio started in around quarter 3 of financial year '24- ‘25. And we have 2 lines which are being commissioned now in July, August in quarter 2 of this financial year, which is right now in Rajpura plant, which will add 2,000 tons of capacity. And again, on the Bakery side, we will be adding capacity for our fresh English Oven side price in visas in December of this financial year, so December of -- by December of '23. So we have both these biscuits and bakery getting added in this year also and also in next year, where in quarter 2, MP plant is due to be commissioned and the Khopoli in quarter 3 of next financial year.
The next question is from the line of [indiscernible].
Congratulations for a very good set of numbers. So my first question is, we are commissioning the MP plant in Q2 next year. So in terms of establishing the distribution network beyond the MBOs, what are we doing, which are the states that we want to start out with. If you can talk a bit about that?
So we are expanding our distribution in MP which is a central part of India. We are -- as we said, we have already launched in south and west of India. We were in 3 cities and we are launching in multiple new cities now. And we will be present in states of Maharashtra, Karnataka, Telangana and Andhra, right? So, we'll be present in all the 4 states in multiple cities. So over the next financial year, next to next financial year, we expect to make much faster progress in these geographies.
Okay. Any numbers -- aspirational numbers about each in terms of retail outlets or distribution point on those 4, 5 states that you want to kind of capture the market?
So we are in the stage of planning or putting a plan in place for the financial year 24 and 25, 26, especially from a new geography point of view. And we can share in our next quarterly call with you more clear distribution targets for these new geographies.
Sir, the second point was on the bakery side. I think a couple of quarters back, we were saying that where our response to the retail bakery in the Mumbai and around area is very, very good. But this Khopholi plant is still -- will take some time for us to commercialize. So is there any shortage in terms of capacity, availability to sell demand, how are you bridging that gap? Some color on that would be half.
Yes. So like I mentioned, we still have some time for the Khopoli plant to come up, but we have been already for the past last quarter, developed an outsourcing partner, and we have been outsourcing some of our production. So, we are well planned for ramping up both outsourced as well as our own production till the Khopoli plant comes up online, and we don't really foresee any shortages.
And any new developments in terms of customer or product addition on the institutional base side has something this of significant?
Yes. So like we had updated that Subway has become a very important partner to our QSR ecosystem. And we are seeing them putting a lot of trust on our organization as we see our volumes and our business scaling up. On the dessert side, on the frozen side, we are also working very strongly on products for the Café businesses. In fact, we are going to be launching with some of our existing customers and cafes a variety of new products, which are going to be very exciting. So yes, I think these would be the 2 highlights.
Okay. So when you say cafés means Mc Donald's putting up McCafe, Burger King putting a café—those kind of things right?
Yes, absolutely. And also, you could have certain coffee chains, et cetera, and they're also sort of in and increase base.
Okay. And one last question. So when we have done the quarter or current CapEx that we have planned, both MP Khopholi and Rajpura and then NCR bakery. All put together, once they are in place, we should be able to do around INR 2,200 crores, INR 2,300 crores top line, is that the potential of the total CapEx available with us?
Absolutely. So with these CapEx getting delivered in just the next financial year and commissioning a plant, we should have a revenue reachability of around INR 2,400 crores approximately.
The next question is from the line of [ Amit Tavani from Clear Blue Capital ].
My question is regarding actually -- I don't know if it's already been covered in the conference call. But it's regarding the development in the Ukraine and Russia situation where we have kind of stopped exports of food from Ukraine. Has that -- have we seen an impact on the prices of wheat that we are procuring because of that?
See, we currently we work on partial long-term contract. So, we've seen that we will not be majorly impacted because of the Ukraine or but Ukraine and Russia had does impact on everything, right? So there would be some impact which will come in. But on the wheat front, we feel we will not -- we might be marginally affected but not majorly affected.
Any quantification, if you can give us?
No. We seen. -- the government is already -- the Indian government is already talking about cutting down import duty. So you cannot predict the commodity. You cannot talk about a commodity because what is going to be happening, we don't know, right? So you can never predict a commodity. But I think there is going to be a pressure, but there will also -- I mean, we have been -- we have seen in the last years also whenever there has been a pressure, market has responded accordingly. But currently, we do not estimate in the coming quarters, there is anything which is going to be majorly affected because most of our raw materials have been covered for us in this quarter, at least, and let's see how it shapes out in the next quarters.
Got it. How -- when you said that our contracts are long term, what is the period of our contract? No, we -- it depends upon -- we really don't work on some system, but currently, since the markets have been erratic and well -- I mean, wherever we feel markets can be erratic or the crop shortages are there, then we work on long-term contracts. So we could see wheat coming under shortage. So there were the long-term contracts, which have been brought in. And so we -- on the raw material side, we could see some pressure. But right now, we have not had a foresight of it there to what will be the impact? Because currently, we are well secured on certain -- on the biscuit side, on our QSR side. And -- but we will be very difficult to forecast. I'll tell you, frankly. -- because you never know when the Ukraine Russia is going to start allowing wheat -- Indian government is already talking about wheat getting import free. So the world prices of wheat have already fallen down substantially. So we cannot foresight right now on this.
Thank you. The next question is from the line of Bharat Gianani from Moneycontrol.
So to the earlier question, you were alluding that this -- with all the new CapEx that you pointed out in this fiscal as well as in the upcoming fiscal with the Khopholi plant coming as well as the MP plant coming. You could reach a revenue rate of INR 2,400 crores. But that would be by what fiscal INR 2400 crore would be reachable because obviously, in FY '25, there would be some time lag to as you announce your distribution as well as there is a capacity ramp up in your plants. So INR 2,400 crores revenue that you pointed out, that would be reachable by what fiscal year? That would be my first question.
So that was an answer to the question that what will be the peak revenue potential after these capacities are added. And that's where I clarified that on 100% capacity or 95% capacity of the new additions, we have -- we can reach INR 2400 crores. Now in terms of growth, as I clarified earlier also, as of now, we intend to deliver mid- to high-teens revenue growth over the next few quarters, right? And that itself, as you also know, is much higher than the industry growth, which industry is reflecting on an overall basis, both for biscuit and bakery. So, the whole endeavor is to deliver consistently in the 2 high teens of revenue growth by investing in distribution by investing in marketing new products and improving our [indiscernible].
Right. Great. And sir, my next question would be like, I mean, obviously, you have achieved a good margin in this quarter, and we have heard your commentary that you would keep the margins around this level for the next 2 to 3 quarters. But my margin question for you is from a slightly longer-term perspective, basically from FY '25 FY '26, that kind of level. So do you think that in your type of industry and given that the growth prospects that you have -- and given that there is obviously RMC kind of predict as you earlier pointed out that globally, it's very difficult to kind of put a forecast on the commodity. So this 15% kind of margins do you see it is a peak margin that you have reached? Or on a long-term perspective, you can improve from here on. So that would be my last question.
So on a long-term basis, as we have always said that we are an equi-focused company, which focuses on revenue growth and margin growth, right? We have both. And I think we've demonstrated that well over the past few quarters. So as we -- as of now, coming to over 15% EBITDA, our endeavor is to keep delivering consistently around 15% EBITDA alongside mid- to high teens of revenue growth. definitely, after we would have consistent lever, we continue to work on margin improvement KPIs. And in long term, definitely, we feel there is enough opportunity to keep raising the margin bar.
The next question is from the line of [indiscernible]. We lost the line for the participant. The next question is from the line of Rajiv Aggarwal, an Individual Investor.
Congratulations on a good set of results. I have just a couple of questions. One is on the CapEx, given that we are -- I mean, our growth is as we had been projecting. And by FY '25, you would hopefully be ramping up the utilization also. Are there plans to -- or is there a thought beyond FY '25 as to, I mean, some tentative plans on the CapEx beyond that?
Not yet. We work continuously on our growth plan and also on our capacity plan. So as of -- we had for particular 2, now which we implemented commissioning this year and for next year. And again, towards quarterly quarter 4 of this financial year when we will start planning for next 2, 3 financial years, we'll put down those plans in place. So that's the planning cycle roads. So definitely towards Q4 of this financial year, we will start taking visibility on -- what
So Manu, I would like to add that in Madhya Pradesh, the infrastructure, what we are putting is for actually 4 lines. So major investment is being done for 4 lines, but currently, 2 lines are getting installed. So we will always have capability to invest in 2 more lines without much of major investments. So that can be taken up at whenever there is a need to be going forward.
Right. Right. That's helpful. Second question is on the contract manufacturing piece. Can you share what percentage of our revenue comes from contract manufacturing. And the reason I'm asking is, given the ramp-up in utilization of our own facilities for our own products, is there a thought to reduce contract manufacturing? I'm assuming contract manufacturing would be lower-margin business.
As of the... And contract manufacturing as we are doing contract manufacturing or what we are doing from outside.
No, what you are doing for others.
Yes. We are only working with Mondelez in contract manufacturing. And that percentage of business, Manu, you can please tell them how it has been reducing as a percentage of the total business.
That percentage is continuously coming down year-on-year. Now we are around 4-odd percent, 3.5%, 4% of that because our key entire focus is on a growth of our own business. We are not as much focusing on expanding the contract manufacturing business. So that percentage year on our year is on a reduction side.
Right, sir. And if I may just squeeze in one last question. Yes. Okay. So on the margin front, I mean, my assumption was the company was looking at a range of 13% to 14%. So it was a very good surprise to see it at 3.5%. Now going forward, as new capacities come on stream, there will be certain overheads, which will increase as soon as they are capitalized. So I mean, will there be a substantial impact on the margins because of those overheads in, let's say, Q2 and Q3?
No. So we -- in this month, we are commissioning as like in this quarter, 2 lines in Rajpura, which are very well required to service our growth. And similarly, we are commissioning our NCR plant on the bakery side to service growth. We don't see an impact on margins on account of adding these 2 capacities. So Rajpura is a brownfield expansion. So in fact, it will help only in reducing costs, so not increasing costs.
Thank you. The next question is from the line of [indiscernible]
First of all, congratulations for excellent set of numbers. My question to Mr. Ishaan said it that helps. When we talk about the overall CapEx in the INR 100 crore some next financial year, does that include our new subsidiaries warranted last quarter or back at by English Oven. And if you can separate the CapEx and the overall [indiscernible].
No. That CapEx is not included for the day because it's -- like I said, it's still on a trial that is a very nascent stage right now. And this CapEx that we're mentioning is mostly for the larger manufacturing facilities.
So if you can talk about briefly about the backwards, it will be helpful for [indiscernible].
Currently, we have 4 stores. And the entire reasoning behind this business was to have a display our capabilities on the frozen side. And what we have seen is our range is so diverse today that we have a lot of solutions for cafes, et cetera, and that's also making us learn as to how frozen business can be scalable, right? So what we are seeing in [indiscernible] itself is month-on-month, our sales are improving as we are also improving our menu and focusing on R&D for newer products for our own Cafes first. And as we see this business developing further, we can't look at ramping up of more stores. But currently, it is still at a very conceptual stage.
The next question is from the line of Amit Purohit from Elara Capital.
Yes. Basically, I just wanted to know in terms of total expanded capacity in tonnes, if it is possible to share by FY '25, what to be for biscuits and Breads [Indiscernible]?
Amit, thanks for the question. Amit, can I share with you separately can e-mail it across to you.
Yes, yes, we can do that No problem.
Thank you. The next question is from the line of Himesh from Purnartha Investments.
Could you help us know moderate total capacity utilization maybe at the end of Q1 FY '24?
Good quarter. As the capacity slide. As of now, for the reset side, were around 94%. But as we said, we are just implementing 2 more lines. One has got commissioned into aerating system and the ones which will stand our capacity by [indiscernible]. On a bakery, we are around 70% to 73% utilization as of now on an overall basis.
Okay, sure. And just wanted to understand more detail on the -- the distribution network for the bakery business apart from the northern region. And given the low shelf-life of the product, just wanted to understand the entire supply chain management. If you could just help us understand that.
Yes. So for us, our supply chain is focused on opening distributors as well as having our own direct distribution to outlets, where we find it viable and where we are wanting a focus directly from the company. We try to limit our geographical reach to around 3 kilometers at from any plant that we do. And as we scale up Pan India, we could also be looking at factory in upper North, particularly could be at the Rajpura site, where our sites to the no market Mumbai and Bangalore, like we said, are growing well, and Mumbai will be seeing our capacity [indiscernible].
So in terms of distributor addition, could you help us understand, I mean, more of the addition will be done on the southern part of -- I mean, in the Western and the southern part of India or more distribution is required on the Northern part as well?
No, I think both territories, I think in the -- even in Delhi NCR, we have a lot of room to grow. And what we see is an opportunity to, at the moment, still double our distribution numbers in Delhi, NCR. In the rest of North, I think in Punjab and upper north is actually a territory where we are absolutely not present. So a lot of distribution expansion gains are available there for us. And Mumbai, again, while we have been there for some time, we are continuing to see growth in double digits, and there's still a lot of room for distribution expansion there as well. So we'll be focusing both on the North and the West and South markets.
Sure, sure. And on the QSR, any kind of client addition or more each that is required.
Yes. So I think for us, the reach that is required, I mean with QSR, there's 2 fronts of growth. right, as with our existing partners with new store openings. And there we see a quite aggressive and is nature in terms of new store opening plans that are there with our partners. On the second portfolio is how we can diversify our product range and how we can add new customers. So like we had shared that as we got into the Frozen business, we were able to add some way or portfolio for closing bread. And then on the frozen side, like I said, the [ Café ] are also a big opportunity.
So just that back part of the business will be more driven by the store additions currently and not from the client addition, right? Client addition perspective.
Yes, yes. By existing customers. Sure, sure. Yes, that's it from my end. Thank you.
Thank you. The next question is from the line of [indiscernible]
[Technical Difficulty] Yes. Yes. [indiscernible].
[ indiscernible ], we are unable to hear you clearly. [Technical Difficulty] Could you proceed with the question?
So my question was that, as you mentioned, Rajpura will add 2,000 tons of capacity on not by quarter.
Yes.
Should we elaborate on the capacity addition in the Indore plant for the state and [Indiscernible] expansion for bakery.?
So in the MP plant, again, as our MD briefed, we will be starting -- although we're creating a larger infrastructure in terms of building space, but we will be initially starting with 2 lines of approximately 2,000 tonne capacity there. The plan on addition of Khopholi, I would request Ishaan to brief on that.
Yes. So on Khopholi, we are expanding capacity, both on our breads as well as buns. On the bun side, we will be adding an additional -- about 5 lakh bun day capacity, which will be additional. And on the bread side, we will be putting up an additional 1,20,000 bread capacity a day.
In terms of packs, it will be --
I can't understand--
In terms of packs of bread...
Yes. So, like I said, 120,000 bread packs a day...
Okay. 120,000 for breads and 5,000 for buns--
5 lakhs in [indiscernible] buns.
Okay. All right. And the second question is regarding the distribution for North India. Like you said, it will be like you have hoped for the distribution of North India. So do we have any strategic plans by when [indiscernible].
This is for the bakery or the biscuits.
Biscuits.
Expansion in North India what's the plan ?
So as we briefed we -- by March ‘24, we want to reach a direct outlet reach of 320,000, outlets. So that's our plan, which has been fairly consistent from last year when we started this journey, when we were at 160,000, and we wanted to double it our direct reach outlet to 320,000 over the financial year. So that's the target as of now. We had reached around 2,16,000 – 2,17,000 in March of '23. In June of '23, we are around 2.5 lakh outlets direct reach. And as per [ AC Nissen ], our overall reach of biscuit has crossed over 6 lakhs outlets.
In the interest of time, this would be our last question. I now hand the conference over to Mr. Anoop Bector for closing comments.
Thank you, everyone, for joining us. I hope we have been able to answer all your queries. In case your inquiry needs in case you require any further details, you may please contact us or Orient Capital, our Investor Relationship partners. Thank you so much. Thank you for joining.
Thank you -- in case of any further query, you may write to Irfan.raeen@linkintime.co.in. In behalf of Mrs. Bectors Food Specialties Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.