Mrs. Bectors Food Specialities Ltd
NSE:BECTORFOOD
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Mrs. Bectors Food Specialities Ltd
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Ladies and gentlemen, good day, and welcome to the Q2 FY '25 Earnings Conference Call of Mrs. Bectors Food Specialties Limited.
[Operator Instructions]
Please note that this conference is being recorded. I now hand the conference over to Mr. Anoop Bector from Mrs. Bectors Food Specialties Limited. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone. On behalf of Mrs. Bectors Food Specialties Limited, I extend a very warm welcome to all participants on Q2 FY '25 financial results discussion call. Today on this call, I have with me Mr. Manu Talwar, our Chief Executive Officer; Mr. Arnav Jain, Chief Financial Officer; Mr. Suvir Bector, our Whole-Time Director; Mr. Parveen Kumar Goel, Whole-Time Director. We also have Orient Capital with us on the call who are our Investor Relations adviser. I hope everyone had a chance to review our investor deck and press release, which was uploaded on the exchanges and our company's website.
The company continued its growth trajectory in Q2 FY '25, achieving a 19.7% increase in revenue and a 21.4% increase in gross profit for the quarter. This strong performance was driven by robust growth across both business verticals resulting in highest ever quarterly revenue and PAT for the company.
Coming to macroeconomic environment, we witnessed a rather subdued June quarter consumption pattern on account of extreme heat and Lok Sabha elections, the impact of which continued over the September quarter as well. This coupled with extreme rains and inching inflation made the consumption scenario remained muted, especially in the urban markets. We expect inflation on the back key duty hikes and increased commodity prices to pose a significant challenges as we move forward.
During the current quarter, we successfully completed INR 400 crores capital raise, a milestone that will support several strategic initiatives. The proceeds from this capital raise will be allocated towards key priorities, including the liquidation of select outstanding borrowing. INR 155 crores have already been paid. Further costs have been allocated towards investments in district plants in Dhar Madhya Pradesh and in our subsidiary Bakebest Foods Private Limited, we set up a new bakery facility in Khopoli, Maharashtra. Also, I'm pleased to share recent updates on our credit ratings from CRISIL and ICRA which reflects our strengthened financial and business profile. CRISIL has revised its outlook on our long-term bank facilities to positive from stable reaffirming our rating at CRISIL AA. Our short-term rating in CRISIL remains strong at CRISIL A1. In parallel ICRA has upgraded our long-term rating to AA Stable from AA Positive and reformed our short-term ratings as A1+.
This positive outlook underscore the continued resilience and growth potential of our company. Our focus remains on driving growth through several key areas. We are capitalizing on premiumization trends by delivering quality premium products to lead to rising consumer demand. Strategic capacity and distribution expansions are enabling us to reach more consumers, building a strong presence in new markets. Additionally, our export businesses -- business continues to grow steadily with increasing market share internationally as we bring our trusted products to global audience. Together, these initiatives position us for sustained growth and success. In this quarter, we have re-performed and enhanced our health range of breads with Zero Maida as well as Zero Palm oil, that's becoming one of the leading available brands to move towards cleaner ingredient products.
The change was communicated with the campaign "No means No" highlighting with no maida, no palm oil and no added color through print and digital platform. In Cremica biscuits, our annual property School Shuru Cremica Bourbon Shuru was well received across geographies. This included on-pack promotions supported by TV campaigns in select channels. Our frozen bakery production like cookies muffins [indiscernible] continue to do well and strengthen our presence in the new upcoming segment. We are strategically expanding our distribution reach and increasing our production capacity. We have commissioned one more biscuit line in Rajpura in Q2. Our new upcoming facilities in Dhar and Khopoli are also advancing well with both expected to be operational by March and June, respectively. These additions enhance our ability to serve diverse regions across the country and provide us with competitive edge over other players, unorganized players.
Now I will discuss financial performance starting with biscuits. Our biscuit segment revenue reported a revenue growth of 24%, which stood at INR 320 crores in Q2 FY '25 as compared to INR 259 crores in Q2 FY '24. This segment has grown by 55% over Q2 FY '23. Bakery. On Bakery segment, revenues for Q2 FY '25 stood at INR 167 crores against INR 140 crores -- against INR 140 crores in Q2 FY '24, thus registering a growth of 19% Y-on-Y basis, including retail bakery and institutional segment. This segment has grown 33% over Q2 FY '23. The consolidated revenues for the current quarter stood at INR 496 crores versus INR 415 crores in Q2 FY '24, thus registering a growth of 19.7% on a year-on-year basis. EBITDA stood at INR 71 crores, resulting in a growth of 9% on a year-on-year basis and a growth of 10.1% on a quarter-on-quarter basis. EBITDA margin for the quarter stood at 14.2%.
PAT stood at INR 39 crores and saw a growth of 4.4% year-on-year basis and 10% on a quarter-on-quarter basis. Our PAT margin for Q2 FY '25 was 7.8%. Moving to H1 FY '25 financial performance, the consolidated revenue for H1 FY '25 stood at INR 956 crores versus INR 789 crores in H1 FY '24 thus registering a growth of 18.6%. EBITDA for H1 FY '25 stood at INR 135 crores versus INR 123 crores in H1 FY '24 with an EBITDA margin of 14.4%. PAT for H1 FY '25 stood at INR 74 crores as compared to INR 72 crores with PAT margin of 7.9%.
With this, I would request to open the floor for question and answer.
[Operator Instructions]
The first question is from the line of Arun Maroti from Subh Labh Research.
Congratulations for the good set of numbers, sir. My question is on the financials. We see in this quarter that our other expenses has got shoot up in a very aggressive manner. So I would like to know about that, sir.
So yes, those expenses have gone up. Other expenses have -- primarily the largest contributor in other expenses is the freight and forwarding, the reason for this is 2. One is that our export contribution, export in this quarter is higher. And second, we all know the Red Sea issue, which has been persisting and the freight rates on account of are higher and so is our realization. So actually, realization on account of freight, which gets added on the top line and the expenses come here. So expenses are higher primarily on account of higher contribution of export business; and secondly, the Red Sea issue because of the freights are much higher for the past few months.
So can we quantify the amount? And sir, it will be great if you can guide us that the nature of these expenses will be recurring or is it one time?
No. So this is a very situational, this whole Red Sea issue started because of the war. And this will -- we had a similar impact on the freight charges and in 2022, we had Ukraine war. And now because of the current war, the situation is persisting. As this situation will normalize, these rates will normalize at this point of time to predict on account of this issue getting resolved, we don't have a visibility to that as of now. It's entirely on that issue getting resolved, which is finally led because of war situation, which is persisting now close to a year's time.
Okay, sir. And one question on the gross margins. You said that despite lower CPI in the July and August, our gross margin has gone down slightly. So any specific reason for that?
Our gross margin versus last year is better. Our gross margin versus quarter 1 has slightly come down, and that has come down primarily on account of 1 single item that we have inflationary trends, which are clearly visible on the commodity side, and they have started impacting. And in the recent months, last 1 or 2 months, we have seen a further higher pressure on the commodity inflationary prices. So we see a little more challenging times ahead.
The next question is from the line of Mr. Amit Purohit from Elara.
Congrats on strong revenue growth. Sir, just one on the demand you indicated that, that has muted. So this was referring more to the biscuit -- domestic biscuit demand, right? Otherwise, most of the other segments were doing well, right?
Yes. So what the Managing Director, Anoop mentioned about the trends, which is very much true for the entire FMCG and which is kind of reflecting also in our domestic business. Yes, they are more reflecting in our domestic biscuit business. In case of bakery business, both on the B2B and B2C side, we continue to kind of grow fairly well on the revenue side.
Sure. And I mean, just to get a sense because -- and the growth would be somewhere closer to like mid- to high single digit, is it a fair estimate for the...
On the biscuit side, what we have seen, and I think everyone is aware that there has been a slowdown over the past few quarters. And -- but only in the good sign was that quarter 2 revenue growth over the previous quarter has started showing some good signs of growth. And hopefully, that trend should keep building up. But yes, that buildup as we see in all the reports that urban markets have again kind of slowed down. So it will take probably a few more quarters by the time the trend on the consumption and the growth gets into the good growth bucket.
And the point you were referring to that gross margin, the input cost has gone up, so you were referring to largely vegetable oil, right? That price would have gone up.
I would request Anoop to brief.
Yes. So this is also actually the edible oil prices have gone up and the cocoa prices have gone up substantially, right? So that is one of the major things. And also the wheat flour prices have started showing upward trend, although we have some hedging in the wheat flour side. But there is a pressure on raw material prices. which is necessary that the -- which has come in mostly from excise duty, import duty hikes which Government of India has imposed and also some escalation of prices internationally. So oil has taken that and wheat, there has been an increase in prices because there was an expected release of wheat from the government, which has probably not happened yet, might happen at a later stage. So these are a few of the reasons why this impact is there.
Any price increase you have taken now or the industry?
No, we are already working on it. So in the biscuit side, the price increase does not come as fast as they come in our bread side because bread is very instant. But on the biscuit side, we have materials which are lying in the market, materials which are lying in our stock, the packaging materials and things like that. So -- but the process has already started. And -- but however, this process takes some time, right? It will take probably 2 to 3 months to fully gear up and get the prices back to whatever increase has happened.
And on your comment that, I mean, the other expenditures were higher because of freight costs, but I mean, most of the exports would build in the freight cost, right?
So as I explained to you, Amit, that freight cost recovery comes in the top line. And the cost comes in other expenses. And that's why the cost is showing that increase because of the increase in the freight cost and a higher contribution of export in this quarter, both are the reasons. And just to add what Anoop was saying was that, yes, biscuit takes time in the time whole journey of price increase take 2 to 3 months' time. But on the bakery side, especially in the North, which is a larger part of the bakery business, price increase is -- the Phase 1 of price increase has already been executed by us in the market.
Okay. And what is the quantum of that price increase if you could share?
I won't be able to share the quantum of that, but yes, probably this price increase is always to commensurate with the material cost increases.
So would this covers up for the RM index increase or how should we think about it?
On the bakery side of the business, it should more or less follow.
Okay and biscuit is yet to be -- yes.
And as said, it is in the process, but the whole stage 1, stage 2, stage 3 rollout will take about 2 to 3 months' time.
And sorry, but just on the margin outlook, you've been guiding for 14%, 15%, should we stick around that kind of margin for near term to medium term?
So we definitely see some bit of a pressure on that in coming quarter or in the running quarter, right? We will definitely have some pressure because as explained that price increase as a full cycle. So yes, there would be -- there can be and there would be some impact on that. But that would be temporary. We saw that again in the quarter 1 of 2022, '23, but we were able to get over that also with very fast. So I see that temporary pressure coming in this quarter, but it should be fine over the next quarter.
And sorry, the last one is on bakery side. What would be the number -- the contribution of the new product launches and that's the last question in our total bakery sales?
On a total bakery business side -- on a total bakery business, our contribution should be close to 4% to 5%.
The next question is from the line of Rishi Mody from Marcellus Investment Managers.
Yes. So this rate component, right, that you have said it's like a reimbursement for us? Or do we inherit any risk on these cargo prices going up?
So we are able to recover the freight cost from our customers. So as of now, we don't have any kind of a major negative impact on our bottom line on account of freight cost, but you can very well understand that with a higher freight cost, we definitely have impact on the customers, right, who are sourcing from us and India. But so far, we don't have any a negative impact in terms of recovery of the costs.
So could you call out that absolute amount that you have recognized in the top line as well as in the expense on freight cost this quarter?
I don't have a ready number as of now in terms of that. But if you can specifically write to our Investor Relations or taking note, we can get back to you.
Within -- apart from the freight cost, anything else in the other expenses, any one-offs or any seasonality impact, which you want to call out?
No, they are very minor. So there's no major item on that.
Okay. On the commodity inflation piece side, you mentioned that breads, you will be taking price hikes, which is understandable. Biscuits also, are you all planning to take price hikes? Or are there any other levers that you all want to use to tackle the inflation?
No, no. We are....Okay Manu, over to you.
Please go head.
So we are already -- we have worked on taking a price rise. The price rise has been very, very instant. It has more affected -- I mean, more from late September into October and when the government brought in increased duties and things like that. And then -- so I mean, we have already started working on it. We would be working on getting the increased costs over the commodities recovered probably I think by the next quarter, we'll be fully -- we should be able to recover it.
Okay. All right. And I'm looking at your balance sheet, your receivable days have gone up by 10 days when I compare it to Q2 FY '24. Anything you want -- like could you explain what's driving that? Like I'm seeing a INR 70 crores increase in receivables?
Yes. So as pointed out that our export contribution in this period has gone up. And what happens is typically in case of exports, the turnaround of the debtors to cash is slightly on the longer side, and that is what is impacting.
So could you just tell me how much is your export contribution for the quarter? And how much is the typical payment cycle there?
Typically, we don't share the breakup between the export and domestic, but payment cycle ranges from 60 to 90 days.
Okay. Got it. Also just any start-up costs on the Rajpura lines in this quarter?
No major impact.
The next question is from the line of Soham Samanta from Centrum Broking.
So just wanted to check on domestic biscuits. So is it fair to assume that this quarter, we have gained mid- to high single-digit volume?
Can you come again, sorry?
For domestic volume on the biscuit side, is it fair to assume the growth is mid- to high single digit?
So growth in this quarter over the last quarter, which is quarter 1 -- quarter 2 over quarter 1, yes, we had a decent growth in the numbers. The growth of the quarter 2 over the last year same quarter has been in low single digit in terms of volume growth.
Okay. And what is our full year expectation for this domestic volume?
Our expectation is that trend of growth should only improve from now onwards. But as we see the trends on the growth under pressure on the FMCG side and the inflationary trends are also not coming full in control as we see from the statement of the RBI Governor both in September and October. So the trend in terms of improving consumption seems to be a little on a slower side as per our estimate and will take another few quarters to get corrected.
Okay. Sir, second question is on A&P like what is our contribution for this quarter, advertisement and promotion on the sales?
Our advertising and marketing spend in this quarter just slow down. We normally maintain our advertising and marketing spend on our B2C businesses of about 3% to 3.5% and that we try and maintain. There could be a bit of up and down over the quarters. So that kind of happens. But yes, our consumer and marketing spends are around 3%, 3.5% for the B2C businesses.
Okay. distribution that we have introduced DMS, right now, the full -- all our distributor has covered in DMS system?
No. So, DMS system, we have onboarded close to 550, 600 of our distributors, right? And these distributors account for almost 65% of our revenue. And so we have implemented the order module there. We are now implementing the secondary phase and the claim management module. And beyond these distributors of small distributors, where we are piloting the mini-DMS and that pilot is going on as we speak, and we should have results of mini-DMS in the November. And then we will start rolling out the mini-DMS sometime in quarter 4. So, the whole effort is that we roll out the balance modules in terms of secondary tracking, inventory management and claim management in this top 500 distributors, which account for almost 65% of our biscuit revenues.
Okay. And sir, on margin, like we have always guided 14% to 15%. But right now, as we have seen some commodity inflation and all, so are you looking this guidance from revised guidance like towards lower side? Or are you still maintaining this margin guidance towards upper side of 15%?
So you see, as I said, guidance which we have given on our margins always is that on an annualized basis, we will be maintaining between 14% to 15% of EBITDA margin, right? And we still stand by margin. Only thing which I was explaining to Amit who asked this question was that because the commodity price going up and as our MD explained that especially in the biscuit side, it takes about 2 to 3 months in the terms of finalizing on pricing and executing that in the marketplace. So you could see some bit of an impact in this coming quarter, right? But yes, in the next quarter, this should more or less stabilize.
Okay. And sir, last question from my side. What is the [ LUP ] contribution on biscuits on an average...
What is the...
LUP contribution.
NPD contribution?
LUP like small package one [indiscernible] packs on biscuit.
Are you referring to INR 5 and INR 10 Sam?
Yes.
Okay. I don't have a ready figure as of now, but I can certainly get back to you on that. You can take note of this and we can get back to you.
The next question is from the line of Abhishek Agarwal, an individual investor.
So my first question is around last call, I remember, sir, you had said that the company would also think about entering the frozen dessert business as this would open the HoReCa category for us. So where are we on that? Do we have aspirations to enter that category? And if yes, what are the kind of margins that we can enjoy there and the asset turns that we can think?
So the frozen -- just let me build on this. We started -- Ishaan, who leads the business, he's not on the call, he would have elaborated better, but let me do it for you. Frozen products as a category, we started developing and started building that almost 2 years back. We started offering it to our B2B customers about a year, 1.5 years back, and they are really moving very, very well. The frozen products in terms of contribution out of our B2B kind of business has really grown well and now is contributing almost over 18% to 20% of our B2B business.
So our frozen -- you see, just to also make it a point, all of us know that the entire QSR business has been on a slow growth trajectory for the last few quarters. But the whole NPD initiative taken by Ishaan 2 years back in terms of building the frozen range and taking it forward has really helped to bridge and our B2B business has been growing very healthy, thanks to the frozen business and the contribution of frozen business growing. Now -- so we have been adding new product lines in the frozen and the frozen side -- in the B2B business side, our NPD contribution is almost touched 8% to 9% in this financial year. So that's going well. The next step, obviously, will be to start introducing also on the B2C segment and build it there, but this journey is moving very well for us.
Got it, sir. So in general, the margins that we enjoy on the frozen products, the gross margins, are they higher than the biscuits category?
So it's in line with the bakery business margin, let me put it that way.
Got it. Got it. So sir, the other question that I have is on the biscuit side, the production that we have, is it all 100% of it is it in-house? Or do we also outsource some of the manufacturing to contract manufacturers?
No, on the biscuit side, we're manufacturing everything ourselves at this point of time. So there's nothing outsourced. But yes, as we briefed you over the previous many quarters is a new category of that which we started about 1.5 years back or almost close to 2 years back now is something which is outsourced and we get it manufactured from our contract line.
The next question is from the line of Rishi Mody from Marcellus Investment Managers.
Just wanted an update on the Project Impact 1.0. I think in Q4, you listed down 6 priorities. If you could just give us an update on what -- where are we in each of those priorities and what impact can we expect over the next 2, 3 years on those?
So Project Impact 1.0 was to drive efficiencies and the cost efficiencies within the company. That project is kind of moving very, very well. And we have projects identified in the different growth areas, whether it's manufacturing efficiencies, whether it's logistics cost or whether it's efficiency on the human source side or whether it's the efficiencies on the revenue management side. So these are all the 4 buckets we are kind of focusing on, which is obviously also added in the presentation. And the whole project is kind of moving very well in direction and kind of adding in terms of bringing our cost down.
This project, I would say because this project is kind of moving well, and we are also being helped by in this project by [indiscernible]. So the full impact of this project will be visible on a 12-month basis in the next financial year in terms of cost optimization. And then very importantly, what this is going to do is that we have also built our internal capability of taking up this project and executing this project. So this will also enable the company in the coming quarters to make this as a way of life to identify the projects in each work areas and then working with each function of the business head to implement, and that will become a way of life in the coming years. That's how it is progressing.
So it's good to hear that it's going well. If you could just share any instances of where any particular bottlenecks you identified and how you are solving for it?
So if I was to give you kind of some example that on a logistics side, in terms of doing the network optimization, increasing the cycle utilization, right, bringing efficiency in the rates. Similarly on the manufacturing side, identifying in terms of faster changeover, right, in terms of reducing the wastages, in terms of line manning efficiency improvement. So there are multiple number of projects which are in each of the work areas, which is mentioned, which I spoke about, right? And this will remain a continuous endeavor and process in our company, right? We will kind of identify also the projects for the next year, then we will implement. So this whole Project 1.0 is kind of not only bringing us efficiencies, but also has been able to build a capability within the organization to make that as a day of live and execute year after year and keep improving the excellence in this execution.
The next question is from the line of Varun Gandhi from Fident Asset Management.
Mr. Talwar, I'd just like to see your commentary on traction you're receiving on quick commerce because -- and I ask this because your larger FMCG manufacturers they recently started talking about how competitive quick commerce is getting in comparison with regular distribution channel. Just like to seek your commentary there.
Sorry, can you just be a little louder?
Mr. Talwar, I'd like to seek your commentary on quick commerce traction because your larger manufacturers are now talking about how inventory buildup is happening on the regular distribution channels.
Yes. So I'll come to that. First, I would like to clarify that we don't have any inventory buildup with our distributors on the biscuit side and bakery anyway is a daily business. So there's no inventory buildup at all there. So we kind of brought in the fiscal discipline both on the number of days of stock and the outstanding, especially on the biscuit side. And we continue to maintain that fiscal discipline. I just wanted to first mention one.
Coming to e-comm side, e-comm has been a very high focus for us as a company, right, for us as a company over the last almost 2 years. And bakery segment, which has a very high salience on our e-commerce, modern trade e-commerce side, we have really positioned ourselves very well, and we are almost one of the leading players on the e-commerce side. Our contribution also, if you look at our commentary over the past many quarters, has been kind of going up as a company. And now between MT e-comm put together, it is almost kind of 18% of our revenue. And bakery, which has a very high salience has been going extremely well and moving very high, where the contribution has kind of jumped over 25% in that kind of category. So moving very well. Even in the biscuit now, we have very, very aggressive plan of moving very fast on the e-commerce bucket. And in the next 3 to 4 quarters, we will continue our aggressive journey on the bakery side and further build up a very strong position also on the biscuit side.
The next question is from the line of Alisha Mahawla from Envision Capital.
This is Alisha. Sir, while you have been calling out that we're witnessing a little bit of sluggishness in demand in the domestic market, especially in biscuits, our biscuits revenue has grown very strongly both Q-o-Q and Y-o-Y. While I understand this will largely be driven because of exports, has the domestic biscuits business degrown for us? Or has it still managed to grow in say, single digit?
Export business, as I said earlier also that on a quarter 2 over quarter 1 has shown some better trends of growth than previous quarters, right? And quarter 2 over the last year has grown in single digit in volumes. So yes, so growth are still under pressure, as I would say, but trends are looking better. That's how I look at it. But yes, does it the kind of trends we're looking at overall on FMCG and food consumption trends, I won't say that they are very robust kind of trends which we are looking at. They are still very low growth kind of trends, which we are observing and the industry is observing. So it will take about a few more quarters by the time we see some good growth in this business.
I understand. But has this business degrown for us in Q2?
Degrown?
Domestic biscuits business, has it degrown for us in Q2?
Our domestic business in the quarter 2 over the quarter 1 has grown. And even the quarter 2 over the last year in volumes, it has grown.
Understood. And current demands in the 1, 1.5 months that have gone by in Q3 in the exports, are they continuing to be encouraging?
Pardon?
The export demand for biscuits, is that strong even in the 1.5, 2 months of Q3? Or is that also now witnessing a little bit of tepid growth?
Our trends on the exports continues to be in the good trend, right? They continue to be as per our expectations, which we have envisaged, right? So in terms of our volume trends, they stay good.
Okay. And last question, in the last quarter, Q1, you were calling out that because of competition, we upped our marketing spend and promotion spend. So what is the status of the competitive intensity in light of the weak demand? And is that going to maybe make us also spend a little bit more and could further hurt our margins in the near term?
The competition intensity has been extremely high since October, December quarter of '23. So it all started from November, December of '23 and the intensity of the competition in terms of extra gram with pricing continues to be at the same level. It has not narrowed down much so far. But we do expect now in this and the next quarter, definitely, there should be some correction coming in, especially also in light of the commodity prices going up for everyone. So we definitely expect some bit of correction coming in there in the industry.
The next question is from the line of Sakshi Trivedi from Vijay Associates.
I have a couple of questions. First would be, can you share some highlights on the biscuit segment? How was the demand in the domestic market? And can we expect similar momentum to continue in the export market?
Yes, I just answered both the questions to Alisha, right? That the domestic biscuit demand is tepid and it has been like that for a few quarters, but quarter-on-quarter trends looks better. I expect the trends to -- on improvement side, but I would say the demand continues and should for next few quarters remain a little tepid and take a little more quarters to expire. Export has been trending well for us and which is in line with our expectation. We have grown extremely well over the past few quarters in export. And so trend in terms of demand should continue in the same direction on the export side.
Yes. Sounds good. My second question would be how do we roll out new products into the market? And do we generally start rolling out newer products where we have strong presence?
So, we have new products rolled in all the 4 business segments of ours, which is B2C and B2B both. So we have in Cremica biscuits, we have in English Oven and we have also on the B2B bakery side as well as export side, right? So in B2B side, whether exports is primely customer-led and so we develop product for customers and they kind of give us order and that journey starts. In a bakery, B2C side where we have, again, a series of new products being launched, which was shared in the speech.
So they -- obviously, we choose a market where to launch and we primarily launch in Delhi/NCR and North market first because that's a stronger market for us and then immediately replicate that in the other markets, right, which is Bombay, Pune, Bangalore kind of markets. That's how we go. On the biscuit side, again, if we have any new kind of products, we choose to do a pilot in 1 or 2 cities and then kind of replicate and take it forward to the entire market.
The next question is from the line of Varun Gandhi from Fident Asset Management.
My next question would be to Mr. Arnav Jain and this would be on the balance sheet. I see that the QIP big proportion of it was used to pay off debt. I wanted to understand what was the understanding behind this? And what's the outlook for raising debt capital hence forth? Would do you see that as an opportunity to improve on ROE? Or does the debt capital structure more or less be in the same line?
[indiscernible] regarding all the debts that we are carrying and since we had the funds available at that time and really on a going forward perspective, there will be some questions debt raising that could be required for the additional CapEx that will be coming in but primarily QIP could seem to help us in terms of funding of the large projects which are coming up right now, which [indiscernible] earlier and along with [indiscernible] large plant that is coming up in Khopoli and Indore.
The next question is from the line of Karan Bhuwania from ICICI Securities.
I had a couple of questions. Firstly, on domestic biscuits business, right? I remember we were trying to enter new geographies in North India in the states of UP, Bihar, Uttarakhand, et cetera. Just wanted to understand how has been the performance in these markets? And what is the status of distribution expansion in these markets?
So just to update you, the new geographies for us were primarily in the South and the West region. North region, we were always present for years, and we were only strengthening our distribution largely in the lower part of the North. So we 2 years back, started a journey with Bombay, Pune, Bangalore and then a few more cities in the last financial year. And that journey has been kind of going fine with the Indore plant coming up and getting commissioned in the quarter 4 of this financial year, we will be able to further strengthen our play in the Central Western and some part of the South region because we will be able to improve our supply chain for it to be logistically closer to these newer territory. So these new territories, yes, the journey so far has been fairly good. We've entered close to 15-odd cities, and we will strengthen it further both for Central, Western and some part of the southern cities as our Indore plants get commissioned in the quarter 4 of this financial year.
Got it. I just wanted to understand also the expansion, how has it been in the lower North market side, as you mentioned, you were trying to strengthen...
As we have briefed earlier also and let me just take you through. So we took a very aggressive drive in from April '22 to March '24 in terms of expanding our direct reach outlets. And these are all those direct reach outlets which were built at least INR 200 in that particular month, right? That's how we take build out, not overall. So our direct build outlets grew very expeditiously almost from 160,000 to over 300,000 now. So now in this quarter also, we are over 310,000 outlets where we are directly reaching expanding. A similar reflection of these outlets on overall reach on India basis has also shown some great progress. And as per AC Nielsen now, we are present and reaching out to more than 700,000 outlets.
So journey has been going, and we continue to kind of build on that journey. So while we were improving our overall kind of presence over the last 2.5 years, we enhanced our focus on the Cremica Preferred Outlets. These are large outlets, aisle stores, where are the entire range and well merchandised range is present. And that has definitely shown extremely good results for us. And now we have almost close to 5,000 Cremica -- sorry, over 5,000 -- over 5,500 Cremica Preferred Outlets outlets now, and we are growing them at a very high speed. And the contribution of the Cremica Preferred Outlets also to our overall volumes is also growing very, very well. So overall distribution reach of over 300,000 outlets, direct reach, overall reach aspiration, it's crossing 700,000 and the high weighted outlets, which we call Cremica Preferred Outlets, also we have been able to drive the growth at a very high growth in that. And there's a lot of focus on CPOs now.
That's very helpful. Secondly, on the domestic bakery side -- on the B2C side, I remember we're trying to expand in Mumbai, Pune, Bangalore, right, but majority of our revenue still came from Delhi/NCR. Just wanted to understand how has been this diversification generally and how much of the revenues of the domestic B2C bakery now comes from these markets?
So first, let me just step back and take you that we were primarily in NCR in North India and NCR was a very big market. It was about 2 years back, we started expanding into the country of North and many other cities of North. And that journey has extremely gone well for us. And now North upcountry, which I call it other than the NCR contributes very, very well to the business and that grew business over 2 years very well. We also started journey a few months back in another big bakery market in North India, which is Punjab. And our next year focus will remain in North India a lot on building up our Punjab business over the next few years' time, but that happens to be a very big bakery market, which we must kind of make our product available and expand there.
Coming to Bombay side, Bombay market has been doing very well for us, but we have been constrained on capacity, and that's the reason we are putting a state-of-the-art plant, bakery plant both for the English Oven as well as on the bun side, on the bread and bun side. And that plant should come in place in the '25-'26 financial year. And that would really help us in expanding further in the Bombay, Bombay upcountry, Pune and other cities, right? So that will provide a very aggressive growth engine to us because we can clearly see that Bombay consumers really like English Oven and Pune customers really like English Oven. But we need now with expanding capacity, we should be able to expand and make it present all progressive and be able to grow that very, very well. Bangalore is a very high contributor e-commerce market, and we'll be doing very well on the e-commerce side in the Bangalore, along with retail general trade.
And yes, we do definitely have a plan to expand further. As you are aware that we are building a small bakery in Calcutta, where we'll be able to start our business not only for QSR but also for the English Oven in the Calcutta market and then expand from there. And this also probably will happen in the quarter 1 in the next financial year where they will start rolling out. And then beyond this, we have some plans to expand some more key cities, right, where we want to build our business. But we will be in a position to share with you probably in the next quarter investor call that what are these cities and what the plans looks like.
Got it, sir. Very helpful. Just a quick follow-up in this. We bought the Cremica brand for breads business as well, right? So how is the thought process in terms of which brand you'll be deploying in which particular market for the bakery side? Just wanted to get clarity on that. yes.
So actually, we've already launched our rusk in English Oven and our immediate reaction is we want to be launching Cremica rusk also our customers, like Manu mentioned that we are already covering 70,000 outlets as per AC Nielsen and people are aware about Cremica brand. So we feel that the rusk business will really having a longer shelf life, we will be able to spread it out much further. And so we'll start using it in case of bread, English Oven has been a very well expected brand. But we will keep Cremica will be within the purview, but no immediate decisions have been taken for what we should be doing. But yes, Cremica rusk, we will roll out immediately.
Our last question will be from the line of [indiscernible]
Sir, I just wanted to know that you are seizing of a competition now. What will be the revenue growth guidance? It will be remained in fact at around high teens or any decrease in that?
As far as guidance we have clearly [indiscernible] that our annualized net swales, we will be endeavoring to grow around mid to high teens kind of range, right? And so on an annualized basis, our guidance remain the same on revenue that on an annualized financial year basis, we will be attaining mid to -- mid teens to high teens kind of growth.
Okay sir. And on the PAT margins, any sense of improvement that operating leverage will play out in near term or anything like that?
So in terms of EBITDA margin, as I said earlier that our annualized EBITDA margin guidance was always 14% to 15%, somewhere in between. As I said, the commodity price has been extremely high over the last 30 to 50 days, and that's kind of reflecting. There could be some minor correction. But on an annualized basis, we will have an endeavor to remain between 14% to 15% range. There could be some temporary correction, but overall, we will [indiscernible]
As there are no further questions, I would now like to hand the conference over to Mr. Anoop Bector for closing comments. Please go ahead.
Thank you, everyone, for joining us. I hope we have been able to answer all your queries. In case you require any further details, you may please contact us or Orient Capital, our Investor Relations partner. Thank you so much.
Thank you so much. On behalf of Mrs. Bectors Food Specialties Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.