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 Mrs. Bectors Food Specialities Limited Q4 and FY '23 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded. A disclaimer, this call may contain some of the forward-looking statements, which are completely based upon our beliefs, opinions and expectations as of today. These statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties.
I now hand the conference over to Mr. Manu Talwar, CEO from Mrs. Bectors Food Specialities Limited. Thank you, and over to you, sir.
Thanks. Good afternoon, everyone. To start with, our Managing Director, Anoop Bector has not been able to join the call. So I will start with reading out his speech, and I'll read out on his behalf. So good afternoon, everyone. On behalf of Mrs. Bectors Food Specialties Limited, I extend very warm welcome to all participants on the Q4 and financial year '23 financial results discussion call. Today on this call, I have with me Mr. Manu Talwar, Chief Executive Officer; Mr. Ishaan Bector, Full-time Director; Mr. Suvir Bector, Whole-Time Director; Mr. Parveen Kumar Goel, CFO and a Whole-Time Director; and [indiscernible], our Investor Relations [indiscernible]. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on exchanges and on company website.
Financial year 2023 has been another very strong operational performance, driving healthy revenue growth and strong margins despite the macro economic uncertainties and challenges that the industry has been facing since last few quarters in terms of inflationary pressure, high freight costs, especially in the first 2 quarters but we continue to witness strong momentum across the businesses and we reported the market build yearly and quarterly performance and consistent in breaking our historical performance, operational and financial results. Our robust performance was delivered by focusing on distribution expansion, excellence in selling execution, technology intervention, coupled with marketing execution, product portfolio optimization and premiumization and other responsible pricing actions aided in offsetting the ongoing pressure from consistent inflation during the year. Company continues to make significant investment on human capital and digitization of our new tracking system and has successfully smoothened the business during the year.
I'm pleased to inform we have enhanced our presence in new geography and existing territories under both Biscuits and Bakery segments. We believe the export business will remain strong given the company's foothold in developed and emerging markets such as South America, Europe, MENA region and North America through a wider range of premium for us.
In Baking segment, we expect this distribution and premiumization-led growth to continue the success of our brand in [indiscernible]. In Delhi NCR to other new regions like Mumbai and Bangalore. Under institution bakery business, we continue to focus on acquiring new clients and leveraging our pre-COVID customer relationships.
Updating on CapEx plan, which we announced previously to meet the growing demand for our products across the segment for reduction of 2 new listed lines that [indiscernible] is estimated to get completed by Q1 financial year '24. And addition of the Bakery plant in MCR is estimated to get completed by the Q2 financial year '24.
[Technical Difficulty]
Sorry to interrupt Mr. Manu Talwar. Yes, please continue. Okay.
I'm reading again from updating on the CapEx plan, which we announced previously to meet the growing demand for our products across segments for addition of 2 new biscuit lines at Rajpura, Punjab is estimated to get completed by Q1 financial year '24 and addition of bakery plant in NCR is estimated to get completed by Q2 financial year '24. As you are aware, that 2 expansion plants in the [indiscernible] Kapolei Maharashtra are well in track and expected to be ready in financial year '24,'25.
I am satisfied with the overall financial year '23 performance of the company with a record turnover and profit. We continue on our journey of strengthening selling and distribution drive to achieve doubling our retail touch points by March '24. The distribution drive would be supported by our robust impact-led marketing, branding campaigns which will drive the next leg of growth for the company across business segments, supported by our passionate teams to address significant opportunities that lie ahead.
Now I will discuss the consolidated Q4 financial performance. The consolidated revenues for the quarter stood at INR 346 crores versus INR 252 crores in Q4 financial year '22, thus registering a growth of 37.2% on a year-on-year basis.
Biscuits. Biscuits segment revenue for Q4 financial year '23 stood at INR 203 crores as against INR 143 crores in Q4 financial year '22, thus registered a growth of 42% compared with Q4 financial year '22, including domestic and export Biscuit segment. Biscuit segment has grown by 48% as compared to Q4 financial year '21. Both domestic and export Biscuit has grown by higher double digit in Q4 financial year '23 as compared to the same period last year.
Bakery. Bakery segment revenue for Q4 financial year '23 stood at INR 128 crores as against INR 95 crores in financial year Q4 '22, thus registered a growth of 34% compared with Q4 financial year '22, including retail Bakery and Institutional segment. Bakery segment has grown 70% as compared to Q4 financial year '21. Both retail and distributional bakery has grown by higher double digits in Q4 financial year '23 as compared to the same period last year.
Margins. EBITDA margin -- sorry, EBITDA stood at INR 48 crores saw growth of 89.5% year-on-year. Our EBITDA margin for Q4 financial year '23 was 13.9% as compared to 10.1% in Q4 financial year '22.
PAT stood at INR 27.7 crores saw a growth of 171% year-on-year. Our PAT margin for Q4 financial year '23 was at 8% as compared to 4% in Q4 financial year.
Now moving to consolidated financial year '23 performance. The consolidated revenue for financial year '23 stood at INR 1,362 crores versus INR 988 crores in financial year '22, thus registering a growth of 37.8% on a year-on-year basis.
Biscuits. Biscuits segment reported a revenue growth of 36%, which stood at INR 807 crores in financial year '23 as compared to INR 592 crores in financial year '22, including domestic and export sales.
Bakery. Bakery segment revenue in financial year '23 stood at INR 487 crores against INR 339 crores in financial year '22, thus registered a growth of 44% year-on-year.
Margins. EBITDA margin for financial year '23 stood at INR 175 crores, saw a growth of 43% year-on-year. Reported an EBITDA margin of 12.9% as compared to 12.4% in financial year '22.
PAT stood at INR 90.1 crores, saw a growth of 57.6% year-on-year.
With this, I would request to open the floor for questions and answer. Thank you very much.
[Operator Instructions] Our first question is from the line of with [indiscernible] from Unifi Capital.
Congrats on a great set of numbers. A couple of questions, and I'll go 1 by 1. First up on the gross margin front Mr. Talwar, it seems to be flat sequentially. So is there a pricing lever available to us that we have not yet extinguished? Or is this a function of high cost inventory that's in assistant that's kind of indicating on flatter gross margins?
In case of a gross margin, you would have seen that we kind of stabilize our gross margin. And we are equivalent to a little better than over last year, and it's in line with the last quarter. So as the prices for the commodities have settled well in the quarter 4. So there was no need to take any further price increase in this quarter. And that -- if you look at our gross margin, which is slightly better than last year, and it's in line with [indiscernible].
Okay. So is it fair to assume that we'll continue with these numbers for the year ahead? Is that the takeaway here?
Yes. So we would maintain and improve these gross margin percentages.
Sure, sure. Two other quick follow-up questions, Mr. Talwar. Is there a blended average capacity utilization number you could share with us for the Biscuits and the Bread lines? We asked this question because given your high growth rates, the idea is just to understand how much of incremental elbow room you have for growth in FY '24 without having to resort to new lines coming in FY '24. I understand there are new lines coming in, but just to understand where are you on utilization numbers.
So our blended capacity utilization as of now should be close to 80% to 83%. And as we brief you in the opening [indiscernible] also. So we have 2 lines in Rajpura, which will be commissioned in this quarter itself on the biscuit side, which will add 2,000 tonnes of capacity, and we have another set of capacity in the next quarter on the Bakery side will come in the NCR. Alongside that, we have some other projects, which is Kapolei project for Bakery. We have MP projects for Biscuits, which is -- which will get commissioned in the next financial year. So if we take into account the [indiscernible], which we are investing in, in this financial year and the next financial year, we have a headroom of going up to almost INR 2,400 to INR 2,500 crores of revenue. So we have sufficient headroom with the capacity which we are building in this year and next year.
Lovely. And just the last question on your exports Mr. Talwar, we understand the business in a ramp-up mode. Any color on how our initiatives to go direct in the export markets are panning out? How should we imagine this business going forward?
So on the export side, as we briefed you, I think in the previous 2 calls also, we are growing very well across the region. But yes, we told you that in the BCC region, we have taken our initiative of setting up our own distribution execution in that region. And that whole effort is going very well, right? And we are investing there. And as we told you, we have our team there, we have office in Dubai. We have now 100% subsidy also there. So the whole effort is progressing very well and still confident that over the next 2 to 3 years' time, this region will contribute very well for us.
Our next question is from the line of Rahul Dani from Monarch Networth Capital Limited.
Yes. Firstly, congratulations on the great set of numbers, Manu sir. I think the initiatives you took has started to come in to play. Just a couple of questions from my end. Just wanted to understand, sir, in the Bread and the Biscuit front, what kind of growth are we seeing from the newer markets we have entered?
Yes. Ishaan Bector will reply.
So Rahul, from all our markets, whether it is very [indiscernible] with a blended of [indiscernible] outstation with Mumbai and Bangalore. We are looking at a 30% plus growth, especially in Mumbai and in Bangalore market. We still see a lot of headroom in terms of ability to grow with Kapolei coming in. We are also very -- we have good expectations coming in from the [indiscernible], which would be, I would say, the second largest market outside of Delhi NCR for us in the foreseeable future. So we are happy with our growth, and we're looking forward to our new capacities coming up in the next 1.5 years.
Sure. And in the Biscuit segment?
So again, as the biscuit segment side, if we, as a company, let me first tell you that we are looking at high-teens kind of growth, and we want to sustain and maintain that kind of growth side. And so Biscuit segment, again, with the effort we are putting on the selling and distribution side, marketing side. I think we should continue to grow in high teens on a Biscuit segment and as well as a company.
And sir, just wanted to check, last year, our focus area was to kind of expand our dealer retail networks. So what would be the final touch point as of FY '23? And what is the outlook there?
Sorry, can you come again, Rahul?
Sir, our strategy for FY '23 was to increase our retail distribution ship. So what is the target for next year in terms of retail touch points?
Okay. So as we briefed last year also when we started the last financial year, April of [indiscernible]. We had 1,50,000 shared distribution read for the Biscuit [indiscernible]. And that time itself, we said that our target is by March of 2024, we want to reach a number of [indiscernible]. We also doubled our direct distribution over the [indiscernible]. And so I'm happy to share that by end of last financial year in March '24, we were around [indiscernible] outlet. And this year, we will act another 1 lakh direct reach outlet to achieve our target of 3,20,000 by March of 2024.
Our next question is from the line of Harit Kapoor from Investec.
Am I audible?
Mr. Harit may we request you to use the handset?
Yes. Is this better?
Yes.
Yes. So just a couple of questions on my end. One was on the growth within the segment. So 40-odd percent growth in biscuits and 34%, if could you give us even some qualitative flavor on which segments have within biscuits and which [indiscernible] have done better. That will be very helpful.
So firstly, I think you would notice in all the quarters, overall Biscuits as a business and Bakery segment has quite grown in the same range, right? And within the biscuit also, our exports and domestic, again, have been going in similar kind of range, right? So if the overall growth was around 35%, 37%. So both are in the same range of few percentages here and there. And similar thing was very true for even our English [indiscernible] and the [indiscernible] segment. So in terms of -- both in the domestic and export segment, our effort has been to increase the premiumization. And I must say that we have moved well both in the domestic and export estate to improve our premiumization because that's the target of the company to keep moving up the ladder and improving our realization through driving the premium segment of the scale.
Got it. Got it. And just 1 question on Breads. Last 3 years, you've kind of doubled our distribution reach in terms of touch points there as well. Where do we see this kind of target. We're currently at almost 35,000, I would assume given that your premium [indiscernible] is slightly lower than the overall [indiscernible] for Bread. So where do we see this kind of stabilizing over the next 2 years or so?
For us, what we are seeing is contrary to what we had believed is our station is actually showing us good results outside of Delhi NCR, which is going into smaller cities, primarily that the outlets would not be there. But as we can see that even in the bread industry, the premium category of breads is growing faster than the mass category, right? So the growth rate there is there in the industry. And wherever required to make our distributors successful in smaller cities, we also provide them all the support even in terms of the additional SKU, which is required.
I would not give you the number of outlets because as we are implementing our [indiscernible], we are sort of rationalizing the number of outlets that we believe both is what data is giving, as we get an accurate number of outlets that we are servicing, I'll be better able to give you the number of outlets we're targeting. But definitely, we are looking at even opening our Punjab market very, very shortly. We have started with a beginning. We have started with our recruitment drive and very soon, our products will also be available in Punjab, where we are quite sure our product range is quite acceptable and is a very, very large opportunity which are -- with the Mumbai market, that clearly is not a very big challenge in terms of our ability to drive further premiumization. So yes.
Okay. Great. The third point was on the profitability. I mean we've mentioned last 2 quarters, we want to stabilize in this 13% to 14% band and then kind of look forward. But last couple of quarters, we've already kind of been hitting the upper end of that band. Just wanted to know, going into the next, say, 12 to 24 months, at least the next 12 months, specifically, is there -- are we confident that we've kind of stabilized here and you could look upwards and onwards? Or could there be some headwinds to this going forward?
Well, I think that intent remains the same to stabilize around 14%, continue investing in the business and growing the business well in the high teens. So that's the target. And we are confident of achieving the same. And both few quarters, as we have said that we will then start with [indiscernible] and build up further.
Perfect. And my last 1 is a bookkeeping. You have mentioned a couple of CapEx for Q4 and some investments going into F '25. Some of it will partially be made in '24. Just wanted to know what would be the absolute CapEx number that we are finalizing for F 24?
In the financial year '24?
Yes, yes, financial year '24.
In financial year '24 our CapEx should be close to INR 120 crores.
[Operator Instructions] Our next question is from the line of Amit from Elara.
Congratulations for excellent results. Sir, you highlighted that your distribution strategy still continues. And last time we discussed, you talked about efficiency and fleet on the street that help them to drive growth. Do you think there is further room for, I mean, fleet on the street also going up? And also wanted to know the ad spend part of it because what would be the ad spend for the full year FY '23? And are we looking to increase our ad spends?
Yes. So we achieved our target of having a [indiscernible] suite of approximately [indiscernible], which are there. Yes, as we expand our distribution, as we go deeper, as we expand our geography, we will be adding [indiscernible] plan this year also to add [indiscernible] because that's the only way to drive our distribution. I just wanted to clarify that this is a strategy which will continue for next few years, right? It's because if we have to expand, we have to become a pan-India player, we have to visit new geographies, go deeper. That's the only way to do it and we would continue that journey.
Sure. And I mean, just a follow-up on this, in terms of the growth rate which you are highlighting in terms of teens, given that the momentum is similar, would that be kind of a higher number than probably what we are looking at or?
Yes. So Amit, it will be higher teens, not just in or lower teens. And our target is always to stretch and do better. But as of now, we had an outstanding [indiscernible] large growth. So we would like to maintain a high teen kind of growth consistency in this particular financial year. But yes, definitely aspiration is always to cross your own target.
And any signs that you're seeing in terms of market dynamics wherein you are -- while you are getting into new markets. So for you, competition is not so critical, but just to understand how is the market scenario entering the district category where pricing has been passed on to the consumer? Or do you still think that the price value equation for a consumer is now good enough for Biscuits? Have we taken any price cuts in Q4 and any plans in doing it in Q1 or going forward?
Biscuits is a very, very competitive market as all of us know, right? And we normally follow and watch our market leaders in the market whether any kind of price correction, both upward and downward, which has to be taken. Prices have definitely stabilized in the quarter 4 of the last financial year. And thus, we haven't taken any kind of price increase in this quarter. And even from a consumer perspective, prices have really settled down. So we will see as we progress, how the industry is kind of reacting because we being not a very large player we will have to be market competitive with our products and pricing.
Sure. So I mean there is no pricing action taken in April and May, is what I wanted to understand, at the industry level?
Till date, we haven't taken pricing action.
Okay. Okay. And ad spend, could you share some pointers on that? I mean FY '23, what was the -- as a percentage of sales? And how do you see that going forward?
So overall, our spend are around ad spend between the [indiscernible]. And on the APL side, we [indiscernible] last year from the quarter 3 of last financial year, we had enhanced our spend on the marketing side. And we are maintaining a spend range of 2.5% to 3%, which is on media, which is on outdoor, which is on Sprint and on and in from. So these are the 4 verticals of spend, which we do to build our marketing. And as we cleared up from the quarter 3 of last financial year. We continue to maintain that in the range of 2.5% to 3%. Rather, this year, we started extremely well, I'm sure some of you had a chance to kind of look at it on a Bakery side. We had a very good campaign on the Mother's Day, right? So marketing lender is well planned for this year for the company, and we have any [indiscernible] from the month 1 itself.
Sure, sure. So in the context that we may probably keep it same, right, is what I understand, 2.5%, 3% of sales as the ad spent?
Yes. As of now, we are keeping it around 2%, but as the year will progress, depending upon market situation, our ability to invest more, we will take a decision.
Our next question is from the line of Sameer Gupta from India Infoline.
Two questions from my side. First, this 42% growth that the company has done in Biscuits and you said that it is broadly in line between domestic and exports. So can you give [indiscernible] breakups here in domestic biscuit growth. One is volume versus pricing Y-o-Y basis? And second is in terms of overall growth, how much has the core markets of where our market share is higher with Punjab, Haryana, Himachal versus the newer markets that we have been entering? So just these 2 granular details on domestic growth, if you can.
So firstly, as I said last time also, domestic and export, both have grown in the same region. Now coming to the domestic side, just to share with you that our market share is high in the upper part of the North, which is Punjab, Himachal, Jammu, J&K, where we, again, had a good high double-digit growth. But yes, definitely in the lower part of the norm, which is Delhi, UP and Rajasthan where we were investing heavily on distribution because those are not so strong areas for us.
They have definitely given a much higher growth. So the growth in the lower part of North is much higher, which was also expected and should be there because our share is low there. And so on an overall basis, in North we moved our share from 3.8% to 4.6%. And our share growth was mostly steeper and higher in a place like Delhi, where we moved from 2.9% to 4.7%. And similar was the case in UP and Rajasthan, where both the shares moved up and even in Punjab, where our share was higher, we moved up from 13.6% to 14.5%. So yes, on a growth perspective, lower part of North which is Delhi, UP, Rajasthan had a much higher percentage of growth. But yes, we had a good, high double-digit growth even in the upper quarter.
And sir, volume versus pricing this quarter Y-o-Y?
About this, I think what is simple that in a whole Biscuit segment between exports and domestic put together, our growth would have been approximately 12-odd percent from the pricing and [indiscernible] volumes.
And this 12-odd percent is similar across export or domestic or there's a wide difference?
Export is marginally higher than domestic on pricing.
Okay. And 1 follow-up here, sir. You said 4.6% market share in the north, PPT mentioned 5.4%. So why is there a difference?
No, no, no. That 5.4%, which you're reading on the left-hand side corner is the premium contribution. If you look at that slide [indiscernible] on the premium profit side.
Got it, sir. Last question. CapEx, you mentioned INR 125 crore in FY '24. Can you give a similar guidance for FY '25 also? I believe there are some greenfield projects lined up.
Yes. So we are in the process of finalizing the final amounts there. In the next quarter meeting, we'll be able to share the exact amount, which will be for 2025 financial year.
Mr. Sameer Gupta, may we request that you return to the question queue for follow-up questions as there are several participants waiting for their turn. Our next question is from the line of Tejash Shah from Spark Capital.
Congrats on good set of numbers. A couple of questions from my side. Sir, you spoke about feet on street strategy for domestic biscuit category in terms of thrust on that part, along with the expansion. So just wanted to know the technicality here, is this expense of feet on Street is routed through our P&L or is it through distributors P&L?
It is on distributor.
Distributor's P&L. And sir, second, as we enter hyper premium market of Maharashtra, Karnataka, what is the strategy to get shelf space because it is a very competitive market. So is it higher discounts? Or is it higher schemes? How do we entice the existing shelf space to be replaced or to get shelf space for ourselves versus the existing brands there?
Okay. Just brief you that we launched in these 3 cities of Bombay Bangalore and Pune, towards the beginning of last financial year. And we -- our chances are product quality and product. So we are not neither over discounting there not pushing anyone. We are placing our products on retail. We are executing it well through merchandising. And so it's pretty happy to share in that in all the 3 markets, we have now reached our presence of almost 17,000 outlets in these 3 cities. And happy to see that in just a short period of some 9, 10 months, our numeric availability or numbers are very well going even in [indiscernible]. So we play on our strength of good product and good quality products which consumers will buy. So in fact -- so primarily, we are building our distribution expansion. We launched in 3 cities in last financial year and this year they'll be launching in a couple of more cities in the year, financial year '24.
Sure. And sir, trade terms also remains the same and in terms of receivable than others?
Yes, almost similar.
Our next question is from the line of [indiscernible] BNP Paribas.
Congrats on the good set of numbers. Sir, my question is on your bakery plant expansion in [indiscernible]. So can you help me with the capacity you are coming over there? Because last quarter, I believe that you are still yet to come out with any particular plan. But have you decided on what -- how much capacity you are planning to put in [indiscernible]?
So here in Kapolei, we are looking at very state of the art center. We are in the kind of lines which are very, very efficient, very large production line. And in fact, we are now just about to close our CapEx plan on these fully automatic lines either we would be in a 4,000 [indiscernible] per hour to 6,000 [indiscernible] per hour, so these lines are going to be fully automatic very, very less manpower under [indiscernible]. So it's going to be a significant capacity expansion. And for us, in terms of let's say steel, we would envision our Mumbai factory to be as big as heavy in terms of capacity.
Okay. Okay. So that will give a significant scale for our bakery business over the next 2 to 3 years if a facility comes onboard in FY '25, then it should give a significant scale over the next 2 to 3 years?
It will give us a long [indiscernible]. Yes.
Okay. And correct me if I'm wrong, bakery business has a little better margins compared to your biscuit business. So if the contribution of bakery business continues to improve. Will that be additional lever for you in terms of overall margins to improve in the coming years?
Just to share with you that our effort is to improve margins in every business. And we have been able to do the same in the previous financial year, which was '22, '23. And as our biscuit division has grown more -- slightly more than the bakery. So Bakery contribution has remained stable over the -- in '22, '23 versus '21, '22. So -- but yes, we are improvement in margins -- so we, as a company, which we have kind of stated on earlier calls also that we are equally focused company. For us, revenue and margins are equally important, while we step up and invest in distribution, marketing, which leads to good growth in revenues. Our focus on cost efficiency and margin remains as strong as ever.
Our next question is from the line of Pallavi Deshpande from Sameeksha Capital.
So just wanted to understand in the 3 cities that we penetrated in FY '24 with 17,000 outlets, what would be the volume sales for Biscuit?
So volume for the last financial year was not much as we were just in the process of opening outlets and servicing those outlets. But we kind of very confident that it's a too early statement to make, but I think that the South and West should start contributing well in next 2 to 3 years' time as a contribution of domestic Biscuit sales on India basis. As of now, you would kind of completely agree that the first is the journey of seeding, right, opening more cities, opening more outlets.
If you look at Bombay, Bangalore, [indiscernible] are very big city. So for us to, in the first 9, 10 months, we opened -- have our products blend in 17,000 outlets and servicing customers from there. It's an extremely large number, right? So we will be opening more cities in this financial year and adding more outlets in these 2 cities. And we [indiscernible] in the south and west I must add that we are also penetrating faster and very well through modern trade channel. And there will be a significant effort also in the financial year, '23, '24 to penetrate much faster than general trade to the modern trade on the domestic Biscuit side.
So just to understand if there were growth that you've shown in the Biscuit side, just want to understand how much of it on the volume growth side, how much of it would be to organic growth and how much will be to this -- the new geographies that we have penetrated? So maybe some color you can give us on Delhi, like you mentioned, how much is the volume growth there?
The first thing is that large growth is primarily from Northern India. Bombay, Pune and Bangalore have partly contributed to the growth because we were just placing our products and penetrating our products and starting our journey in these areas. Second, the growth which we got on the domestic side, I would say around 9% to 10% would have come from the price and the barrel entire growth has come from the volumes. So large part of the growth in the year -- last financial year of -- financial year '23, it is volume driven.
Right. This is much higher than the industry growth. I understand that the market share numbers, which you shared.
What you think [indiscernible].
Our next question is from the line of Ameet Kalyanpur from East India Securities.
Sir, the capacity expansions, which have been mentioned at Rajpura, NCR, MP and Kapolei. So what will be the respective capacities at the [indiscernible]?
So Rajpura will get commissioned in the next few months' time -- next 2 months' time. And Rajpura, we will -- we are commissioning through line. So it will give us 2,000 tonnes of additional capacity a month. Kapolei will take some time. Kapolei capacity will get added only towards the later part of next financial year.
So at NCR, what will be the capacity addition?
[indiscernible] capacity to about -- by about 80,000 bread per day ready. And in Kapolei, it looks like it would be about [indiscernible] per day.
Okay. And at the [indiscernible]?
[indiscernible] starting there with 2 lines. So we're really starting there with 2 lines, with approximately 2,000 tonnes a month. And as we have a large area there. So we will keep expanding as we need to put up more lines to fulfill our demand in future. But we will first start with 2 lines there, proximately 2,000 tonnes.
It's 2,000 tonnes per month?
Yes.
Okay. And what will be the debt for this CapEx that you have planned, the 2 CapEx, any debt -- additional debt being planned or it's from internal?
Overall, on the funding of our project, we have kept a ratio of some 65% to 70% of debt and the balance to our own funds. That's the kind of ratio we are maintaining. But just to give comfort to all of you that -- even if you look at our ratios, our debt equity ratio, which was 0.27, if I'm right, last year has further improved in the financial year '22, '23, to 0.22. So we're fairly more than comfortable on our debt equity ratio. And -- but yes, for financing of these projects, we're keeping around on own funds of 30% to 35% and borrowed funds are up 65% to 70%.
Our next question is from [indiscernible] from Subh Labh Research.
First of all, congratulations for excellent set of numbers. My question is for Mr. Ishaan. Regarding the -- we have talked about investment of the [indiscernible] or only on subsidiary. [indiscernible] limited.
Mr. Naveen, may we request you to use the hand set.
Hello?
Yes, go ahead, please.
Yes, So my question is regarding this INR 1 crore investment in [indiscernible]. Is it related to back work CapEx? And if you can throw some more light on the our reason about the back work CapEx? It will be quite helpful, sir.
Yes. So for the longest time, we've been talking about developing our frozen bakery league of products, right? And [indiscernible] we've always part of ourselves as more of a vehicle company rather than just a [indiscernible] a large part of the portfolio, but the value addition coming in from Bakery. So we actually, we have all the right or the necessary product for a company today to sort of open up a cafe whether it is a pizza, whether it is a burger, whether it is croissant or whether it is desserts like muffin, tea, et cetera. So we had the whole bouquet of products.
And with the entire cost as of a Bakery we had incorporated [indiscernible] where we have set up 4 cafes which are using almost the majority or almost 80% of the Bakery product captively from our range of products that we have out there for the market. So that's what the work has been about. We have about 4 stores, it is still at a very nascent stage, and we are very excited about the opportunity and also going to our customers that [indiscernible] can be a one-off dilution for everything decrease that would be required to open up a cafe anywhere in India.
So the CapEx are in the [indiscernible] these things? We are a company on company-operated model. So if you can throw more light about the franchise as well as [indiscernible] in the next 1 or 2 years, the ratio will be how much between the [indiscernible] and the franchisee-led models?
We haven't really thought that far ahead. Seeing our model, I mean, the success of our modules we have got to franchise savings, but we are first focusing on building a strong brand opening more number of stores. And I think that is something that we will work on a later stage.
Our next question is from the line of [indiscernible] Desai from Turtle Capital.
Sir, my first question is, so we have gained market share on the Biscuit side. Any sense -- are we gaining market share from the players like Britannia and Parle or more like Tier 2 players like [indiscernible] in those geographies?
So we are still a very small player. If you look at -- I shared what is a non-India market share gains, right? And if I look at that number on all-India basis, our market share would be just about 1.39%, right. I thought there'll be some marginal gains from different players. It's very difficult to say that it's coming from a regional player or from the large players.
Okay. Okay. Specific [indiscernible] where we are doing much better? Or it is like across the board, we are doing equally there?
So -- and we were focusing more on the premium segment side. And so we have seen that we are doing well there, and that's the whole objective that we build our premium segment, both on cookies and [indiscernible].
Okay. Okay. And second question is on institutional bakery side. So on that segment, any new products that we have won with our existing customers where we are kind of [indiscernible]. And also QSR segment in general because of the overall discretionary spend slowdown is going through a challenging time. So are we seeing any challenges on that front for us?
See, with our existing customers, we are working on a couple of projects, these are ongoing projects. So it's not right for me to really speak about them. But yes, on the sweet side, on the dessert category, where [indiscernible] finding our portfolio which is helping us increase our presence with some of our partners. We have also started working with a couple of new concepts with 1 of our customers. We are supplying now frozen pizza [indiscernible] balls, not a pizza itself but frozen [indiscernible].
But what we are seeing is that over time, on the -- even on the QSR front, the acceptance of frozen products is becoming very good. We see a very bright future for this industry. I think the focus for us has to be to execute world-class R&D as a scheme. And that's where we are focusing on. I'm very sure that we will be able to add new customers sequentially and we have a very strong line of products that we are working on. So that's fair.
And I think on the QSR space I think whatever slowdown that you see is probably going to be very short term. The point is that there is just so many opportunities in terms of [indiscernible] to add number of stores. And what we also see is that even our customers seem very bullish on the number of stores that they are planning for the next 3 to 4 years in terms of store additions. So we are very optimistic about this business and we have a lot of good time.
Our next question is from the line of Vignesh Iyer from Sequent Investments.
Sir, congratulations on strong setup number? Sir, this is regarding in the Q3 FY '23 call, if I'm not wrong. So you did say that we are moving towards 13% to 14% EBITDA margin and we are here and we'll be targeting something like 14% to 15% margin in coming quarters. So just wanted to understand how are we placed as of now? Because if I'm right to understand were actually taken any price hike as such compared to quarter 3 due to the raw material price stabilize. So just [indiscernible].
Yes. As we said in Q3 also that over the next few quarters, we would like to stabilize and deliver 13% to 14% EBITDA. We have delivered close to 14 and last 2 quarters of the last financial year. And I think it's very important for any organization to bring that stability of delivery. The whole objective [indiscernible] doing that stability of consistent delivery of around 14%. That's why we say 13% to 14% EBITDA. And then once we stabilize this level of EBITDA, obviously, the next step will be moving up from 14% to 15%. So we stick to what we said. Yes, we have delivered close to 14% in the last 2 quarters. Our objective is to sustain and maintain that consistency while working on the growth side and then take prepare for that next step and move towards 14% to 14% -- to 15% revenue.
Okay. But would this movement from this 14% to 15% would it be primarily due to premiumization?
It's -- yes, premiumization of our revenue and our product is a key contributor to that journey. But that's not the only reason. It's a revenue scale, the revenue growth, working on cost efficiency and other 2 big elements, which are drivers to the margin improvement.
Our next question is from the line of [indiscernible].
Congrats on good set of numbers. Just 2 questions from my side. First, what is your view on wheat crop going forward..
Sorry to interrupt, maybe request you to use the handset?
Am I audible now?
Yes, sir, please go ahead.
Sir, just 2 questions from my side. Firstly, what is your view on wheat crop going forward?
So wheat crop early [indiscernible], we had good announcement that crop is good. We had record production in India. Then we had some challenges in the later months of Feb March that there were unseasonal rains, which was kind of impacted. Things seem to be stable now. I don't have an expert view on this. So I would not like to comment any further on that. So we see somewhat of stability now as of now on the commodity on the wheat side. That's what I will stick to at this point of time. I won't be able to comment on any further on this particular [indiscernible].
What kind of asset terms we can expect from upcoming addition of new biscuit line of Rajpura and bakery line and if you have any commissioning Q1 and Q2 or Fy '24?
[indiscernible] an average asset terms for our company with so much of investment going in, we'll have now stay around 3%. We have a better asset terms on the business side, which is 3.5% to 4% and our base is 2.5% to 3%, we would maintain those kind of asset terms because you would say that the way we are growing and also investing in investment by the time -- any investment takes time to stabilize, it's always at a lesser percentage of utilization and then it goes to a higher level of utilization. So yes, we would maintain our company as a term of approximately around 3% [indiscernible] around the bakery side a little higher than the on the biscuit side.
Our next question is from the line of [indiscernible] Securities.
Sir, I just wanted to understand 1 data point from you for the newly acquired geographies of -- newly entered geographies of South and West, what is the size of opportunity there in terms of number of retail outlets and what is the potential target reach for the next few years?
See South and West of India for biscuit industry is the most premium market, right? And the size of revenue as the industry of south and west is equal to more than North India, right? So as an opportunity is a very big opportunity of...
I wanted to understand, I mean the data point, just a data point, the number of retail outset, which these geographies have?
So I will have to contact to you on that. The [indiscernible] outlet universe of South and Rest of India, I don't have ready and in hand that particular part of it.
Understood. But -- and how are we -- I mean, what are the number of outlets that we are looking to add quarter-on-quarter or yearly in these geographies?
In the coming financial year, which is the existing financial year of 2023, '24, we expect that we should be able to almost double our outlets in South and West of India by growing in the same city and entering the new city. That's our target for this existing financial year of financial year '23.
[Operator Instructions] Our next question is from the line of Amit Kashyap from Subh Labh Research.
Hello.
Yes, sir, please go ahead. Mr. Amit, can you hear us?
Am I audible?
Yes, sir, your line is unmute, please go ahead.
So I would like to know the margin percent for the frozen products and the current pace of share of the product to...
You are not able audible.
May we request you to use the handset, Mr. Amit?
Yes. Am I audible now?
Yes, sir, please go ahead.
Hello?
Yes, yes, please go ahead.
My question is with regard to the management profile, sir. But what is your margin profile for the frozen products and the current percentage of share of frozen products in the revenue?
So frozen products are still at a very, very base for us. Our largest customer for the frozen side would probably be some way where we are providing cost. But on the margin side, we don't share a retail margins of businesses. whether it is on the B3 of the business. So we have to keep it in [indiscernible].
Okay, sir. And 1 follow-up on you, sir, the additional product line which we are introducing in the future. So what time we can expect a breakeven for that?
Can you repeat your question?
Sir, the additional product lines, which we are adding in near future in the Rajpura area for the biscuit capacity. At what particular time we can expect a breakeven for that particular product line? The timing maybe the 6 months.
The new lines, which we are focusing on a bakery and biscuit side, has a payback period of approximately 7 years. So that's the way we calculate. It has a payback period of approximately 7 years based on the current forecasted sales over the next few years.
Our next question is from the line of [indiscernible] Investment Advisers LLP.
Congrats on the great set of numbers. So I just wanted to understand what is our presence for modern trade and e-commerce. And also, like in modern trade for both breads and the state in which geographies are we currently presenting? And you know how well is this trade segment growing further.
So on the modern trade side, we are present in about 2,300 outlets this year. Our target for the next year is to be present in almost double the number of outlets, which is about 80% coverage of the number of doors. On the bread side, we are primarily in almost all monetary and e-commerce in [indiscernible]. And we have also now started in fact, signed the national duties with a couple of companies and our endeavor is to sign [indiscernible] all across, which will help for our penetration into modern trade comes across India.
So how big is this trade segment in our domestic business for both bread and biscuit?
Sorry, can you say again?
How -- so how big is this the trade segment in our domestic business for both bread and biscuit? The modern trade and e-com?
Modern trade and e-commerce for biscuits, I would think could be rough-- sorry, 14%, and on the biscuit side, it would be around 11%.
In the interest of time, that will be our last question for the question-and-answer session. I would now like to hand the conference over to Mr. Manu Talwar for closing comments.
Thank you, everyone, for joining us. I hope we have been able to answer all queries. In case you require any further details, you may please contact us or Orion Capital, our Investor Relations partners. Thank you.