Bikaji Foods International Ltd
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Q1-2026 Earnings Call
AI Summary
Earnings Call on Jul 24, 2025
Strong Revenue Growth: Bikaji Foods reported 15% consolidated revenue growth and 14.2% revenue growth for the quarter, with notable recovery in both rural and urban demand.
Margin Expansion: Gross margin reached 35% on a consolidated basis, with improvements supported by favorable raw material costs and price increases.
EBITDA Performance: EBITDA margin came in close to 15% with PLI benefits, and EBITDA grew by around 30% year-over-year, hitting INR 96 crore.
Distribution Gains: Direct outlet coverage expanded by 15,000 in three months, reaching 326,000 outlets; exports grew strongly at 60.3%.
Nepal JV: Announced a joint venture with CG Group to establish local manufacturing in Nepal, targeting INR 50 crore top line in two years.
Volume Growth Outlook: Volume growth was 7.5% for the quarter and is expected to accelerate to 9–10% from Q2 onward.
Cost Efficiency: Management expects to maintain current gross margin levels, citing ongoing efficiency programs and stable input prices.
Management reported strong month-on-month demand improvement over the last 6–7 months, with recovery visible across rural and urban markets. The festive season is expected to boost demand further, and volume growth is guided to reach 9–10% from the second quarter onwards.
Gross margin reached 35% (consolidated), up sequentially by 225 basis points, aided by lower raw material costs and price hikes. The company expects to maintain these margin levels over the next several quarters, barring any major disruptions in input costs.
Bikaji implemented around 2.5% price increases over the last two quarters, helping to restore margins. Management indicated a willingness to adjust prices in line with commodity cost trends, but stated that any reductions will not come at the expense of margins.
Direct outlet coverage increased by 15,000 outlets in three months, and total direct coverage now stands at 326,000 outlets. The company aims to reach 350,000 outlets by year-end and targets 500,000 in three years. Exports saw exceptional growth, up 60.3% year-on-year.
Family pack sales grew at 15.8%, outpacing impulse packs. Ethnic snacks grew 11.2%, while packaged sweets and papad lagged due to seasonality and fewer wedding dates. New healthier snack offerings and bakery products under the Bikaji brand were rolled out, with early efforts focused on e-commerce.
The company announced a JV with CG Group of Nepal, motivated by high import duties on Indian products. The JV will establish manufacturing locally to improve competitiveness. Bikaji aims for INR 50 crore revenue in two years, with a total investment of INR 30 crore split equally between partners.
Cost-saving initiatives have targeted logistics, employee, and manufacturing costs. Plant utilization is currently around 50%, and management expects further margin improvements as utilization rises. Other expenses are expected to improve by about 50 basis points per year starting FY '27.
Ladies and gentlemen, good day, and welcome to the Bikaji Foods International Q1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded. With this, I now hand the conference over to Ms. Hazel Rathod. Thank you, and over to you, ma'am.
Thank you. Good afternoon, everyone. Thank you for joining us for Bikaji Foods International Q1 FY '26 Earnings Conference Call. From the management, we have with us Mr. Rishabh Jain, CFO; and Mr. Manoj Verma, COO. I now request Mr. Rishabh Jain to take us through the key opening remarks. After which, we can open the floor for the question-and-answer session. Thank you, and over to you, sir.
Thank you very much for joining the call. So from Bikaji, me and Manoj have joined the call. And we have seen a strong quarter performance with a strong 15% growth on a consolidated basis and 11% growth on a stand-alone basis. From last 6, 7 months, we've seen good demand improvement across each month-on-month. So if you see a third quarter of last year, we have been at 5%, 6% growth versus last quarter was good. And this quarter on month-on-month basis, we've seen good demand recovery across each rural as well as urban.
Also, we entered into a facility, and facility is always big for us. Big suite play important roles. And we entered just closing July. And this -- we've seen good demand from each from suites as well as all I think it's next perspective. So we're seeing good demand and see a good sign of good second quarter going on.
From a bottom line perspective, this quarter, we have seen one of the best quarters in last many quarters where overall consolidated length we touched 35% gross margin. With PLI, without PLI also, it's grown 33.7%. On stand-alone basis also, 33.6% gross margin launched on without with PLI -- with PLI, and 32.3% gross margin without PLI. So from gross margin lens also, we've seen good strong performance in last 4, 5, 6 quarters.
So basically, also from third quarter from -- if you see from third quarter last year, we have seen -- we have gone far right, and we have seen good gross margin EBITDA improvement. We also, this year, we have seen a good rain, good crop, and raw materials supported as being all be -- all key [indiscernible] edible has also softened. So this is also playing an instrumental role in improving gross margin.
On a timely basis, also, we increased the prices of the -- as well as -- snacks. So in last 2, 2.5 quarters, we have increased prices 2.5%. That has also helped us in regaining our margin back.
On EBITDA and overall from consol basis, we had touched -- EBITDA close to 14.8% and without PLI 13%. So close to 15% EBITDA with PLI. And from a stand-alone basis also, we are just close to 15.8% EBITDA with PLI and close to 3.5% EBITDA close to without PLI. So from standalone lens, also, we are testing close to 14% EBITDA.
This quarter marks the instrumental Acument like we also done JV with initiated a second approval from Board for JV with one of the biggest group in Nepal. That's strong partnership, building capital and talent. So basically, in Nepal, CG Group is one of the biggest company in Nepal. They have another best distribution. And we see Bikaji being there with partners -- partnering with them will become -- they will take a great market share in Nepal in the coming years. And we see good business coming on in the next 3 to 5 years.
So yes, besides this, as we said that now we would be in a distribution game. So we have added further about 15,000 outlets in the last 3 months, taking our direct coverage to 3.26 lakh outlets.
In terms of our marketing initiatives, I mean, as we have committed and budgeted 2%, so in line, quarter 1 is relatively a low spend quarter, and quarter 2 becomes a very high expense market for -- quarter for our marketing strength. So that continuous investment on digital marketing, which is social media, that's on, and we were there all across.
Also, this has been a quarter where we've initiated uncertain NPDs, which are there in the pipeline and have very recently got launched. People talk about the healthier snacks. So the mill it buy, right? So just a brand extension of our Bikaji, Millau is what we have launched this quarter.
Talking about our growth. So overall volume growth is 7.5% for the quarter. Our revenue growth, 14.2%; ethnic snacks, which is our core category, has grown at 11.2%; package suite, which looks pretty low at this point in time at 3.1%, but this is a seasonality -- a seasonal business. So therefore, which is going to get recovered in quarter 2. And so is western snacks at 4.2% revenue growth; papad, a small category, and slowly, which is at 5.8% growth.
The way we look at our business, which is core focus in other markets. So core has grown at 8.5%; focus market at 11.5%; and other markets is at 26.5% growth. Exports has done extremely well with a 60.3% market revenue growth.
In the last quarter, our family packs have grown by far higher than the import tax, which is 5 and 10 rupees pack. So the family pack has delivered a 15.8% growth, whereas import pax are at 8.2%.
On top line lens. So we had touched a top line of close to INR 63 crores at -- growing at 14.2% compared to last year. And overall, from quarter-on-quarter, which is also growing at 6% to 7% versus EBITDA from EPC from last quarter, we grew around 30% around from EBITDA lens in testing INR 96 crore EBITDA in this quarter.
So that's all from the presentation. We are happy to take all the answers. Thank you.
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Abneesh Roy from Nuvama.
Congrats and a good recovery in both volumes and margins. My first question is on the family pack versus impulse pack. So family packs are growing 2x of the impulse. Generally, we see in FMCG that currently, although there is some recovery in terms of the urban demand initial signs, generally downsizing is happening, and smaller packs are going faster. So is this a conscious effort on your side that you're offering more value to customer at family pack because impulse packs are very important from a recruitment purpose and probably an overall market share purpose. So if you could clarify any one-offs here?
And how have you seen the market leader? Have they also seen family packs grow faster than the impulse pack?
Thanks, Abneesh. To the question, if you look at the small pack or the impulse pack, it's not that they have grown slow in terms of category. It is what we have -- we could have done better on the impulse pack side. So that's one to your -- straight to your question.
Now the reason for that has been that there has been what we have witnessed from the market that lots of small and local players. So huge discounting and all that stuff has happened in this INR 5 pack primarily. And which is what has the category growth, but from our -- in terms of a conscious call, we didn't get into that those price wars and all that stuff, which is also on the back of, if you look at relatively low growth on our western snacks. But how we look, see, is that come this quarter 2 onwards, this should get back normal.
So not that we have done differentially high on our large packs, it is by virtue of our brand strength, our distribution and our availability across channels that the momentum continues.
One clarification here. It's mostly regional players, which are more aggressive in the Western snacks or given the Pepsis of the world or ITC? And second is Western snacks is around 10% of your business, broadly 9.2%. So is that Western snack is mostly in the INR 5 and INR 10 pack for you?
Yes. So Western snacks is, yes, primarily INR 5 and INR 10, and we also do have large packs for modern trade and all that stuff. But then that's a limited space in that. In terms of [indiscernible], it's certainly big [indiscernible].
And in terms of your question that the large players, which is in likes of Pepsi and ITC. So if you put together these 2 companies, their market share in, say, Western snacks would not be more than 50% even less in that stuff, right? So there's a huge room, and that's where the regional and local players play pretty strong.
Understood. My second question is on the 2 -- 3 laggard categories in your core business, which is 76% of your business. Ethnic snacks, you have done quite well. In the 3 smaller categories, which is a bit counterintuitive, your growth is below 6%. You did explain the Western snacks and you said it will come back on track. In packaged treats and papad, in the new states, is this a focus area, for example, in focus states, are you also driving package suite and papad. Generally, what we are seeing, these 2 categories are a bit volatile in numbers. I understand packaged which is linked to the festivals and [ marriage ] season. But is there a drive to take this to new geographies or in the existing geographies only where most of the business continues to remain for these 2 segments?
No. So papad goes everywhere and so other sweets. We've been calling and we take pride in saying that we are the second largest papad manufacturer in the country, handmade after legit papad. So this is not just in the core sites. This is across the country and even in the exports market, right?
But it so happens that papad, again, during seasons and -- see the wedding season. So the demand of sweets and papad goes obnoxiously high during these wedding seasons. In fact, in the times we have witnessed that we run short of capacity for papad most importantly.
This time, what has happened is that the number of wedding dates or the weddings were less than what it were in the last or previous year. So therefore, it's reflecting in papad. Sweets is a matter of time. And as Rishi just spoke and you'll see the pricing number coming in, in quarter 2 sales for sweets. So an immediate recovery will be.
Yes. Last question. So Nepal, why do a JV -- almost every Indian FMCG company is present in Nepal, we don't see too many JVs? Why not go 100% on your own?
Second is this INR 5 crore loan which you have gone to Bikaji Bakes. Could you clarify on that? What exactly is this business?
And lastly, on the 2 store addition which you have done. From 13 stores quarter-on-quarter, it is becoming 15. So if you could discuss, is this basically your acquisition isn't at where you have added? And any insights if you can share of your own store, how they are doing? And hazelnut, are you happy now because few quarters have gone? Because generally, most retail companies in the QSR space are not seeing good times at all, except maybe Domino's one exception. But broadly, this space is extremely challenging currently. And if you see the software job addition also TCS has delayed and overall job addition in the IT sector is low. In that context, would you slow down your store addition in hazelnut and in terms of your own stores?
Yes. So we'll take your questions one by one. So starting from your first question, which is on JV in Nepal. So Bikaji as a brand is pretty old and pretty strong in the Nepal market. But the challenges, what we were facing was that there's huge custom duty or the import duty, which was there and which was making our product noncompetitive. So that was the reason that we thought of having a JV and eventually start producing there and selling there. So that will make our products much more competitive and will leverage the brand strength what we have.
Talking about the JV company, which is CG Chaudry Group, who owns YY brand and which is the highest distributed MEGI or FMCG brand in the country. So that's what we are riding along with the CG Group. And we see a huge growth potential initially just by making our products available in length and breadth of the country; and second, by the cloud and their strong presence in the store. So that's the sole objective of having this JV exclusively for Nepal market.
Now talking about the loan and the other stores, I would hand over to Rishabh.
So from THF, in this quarter, we have added 2 stores in THF factory. So basically, THF is doing extremely well for us. And we are largely satisfied with the performance of what they are doing. And this year, they will open close to 8, 9 stores more in the next [ 2 ] -- next 9 months. So they will open a store in a month pipeline. So by end of this year, they will be having close to 19, 20 stores, and largely in European and CR area.
So we are -- then the number on -- in last 6 months, they opened stores, and we are seeing good results coming in each quarter, each outlets.
So we are seeing good numbers versus profitability at overall level in retail also in THF, and we are largely satisfied with the investment that we have done.
And from Bikaji lens, we opened 1 store in Rajasthan this year, and we'll open 3, 4 stores more in the same pipeline. And we are seeing -- we also see good results coming in from that. So from the tail end, we are not the [indiscernible] We are into a major progress in each retail chain is into package, snacking package, sweets, gifting that contribute big numbers in our overall QSR like you've seen because you also like we are out in Bombay, where close to 55%, 60% sales come from gifting sweets and our package snacking, where we display a complete range of Bikaji products. So that's a major focus for us in U.S. -- in our retail U.S. outlet. So that's one, number one.
And number two, from Bikaji Bakes' lens, it's 100% subsidiary Bikaji Food focusing on doing -- focusing on making some bakery items. We are already into biscuits in a small portion of into biscuits. But bakery is coming -- bakery is doing good in India, and we see good potential. So that's a small -- what we'll do, and we'll focus on doing cross and everything, small, big bakery investment. That's what we...
What brand and mostly e-commerce for bakery?
Mostly e-commerce, yes, mostly e-commerce.
What brand? Bikaji brand?
Yes. It's early to say. Sorry?
Yes, you are saying something I'll come back...
Of course, it's currently in Bikaji brand. That's all.
Understood. One last follow-up and I'll end there. In terms of CG Foods, they do have a reasonable presence in some states through YY model. Through a nonequity, I'm not asking on equity partnership in India, to a distribution synergy in terms of YY Noodles and Bikaji getting distributed in some of the Northeast, et cetera, is that a possibility? Because they do have some reasonable product income...
So we are having a very strong presence in. In Northeast, we are holding plus 55% market share in [indiscernible], right? So we hold a very strong position, and we don't see any collaboration in India as of now. It's just a Nepal JV.
The next question comes from the line of Nitin from Emkay.
I basically wanted to have more insights around the month-on-month demand recovery. Can you throw some light? And additionally, like you have answered to the previous question around some of the markets that discounted players have been merged. If you can call out any specific market. And you are hopeful that in Q2, things will be back. So how those scenarios are emerging? Can you please help on that?
So we have seen good demand recovery in the last 6, 7 months, like you'll see in quarter 3, October, November, this quarter was tough for us and for the industry also. But from [indiscernible] onwards, we've seen good recovery. Like April was little dull because we win in good -- so March was good, but May, June, July, we see good month-on-month recovery in demand. And in we are entering to festivity, we see good demand recovery across each state, each quarter as well as focused in our overall city.
Okay. And in terms of this discounting which is going on in part of your portfolio and discovery in Q2, how you're confident that the discounting will go down? Or are we taking some actions here?
Can you please -- I mean I'm not -- we're not clear in terms of discounting what is the exact question there.
No. So you are highlighting that like particularly Western snacks, there has been [indiscernible] with huge discounting...
No. So -- okay. So I think -- so it's not about discounting, it's about their selling price. So they offer lots of offers and all the stuff, right? So what happens is that these are the assuming kind of stuff that's not sustainable. And which is what we'll update our INR 10 and all that stuff. But yes, we certainly will not go the discounting way or trying to match prices and all. That's what we'll never do.
Okay. Okay. And my second question is around your gross margin recovery. Adjusted for PLI, it is at around 34%, which is a multilevel. There is a sequential recovery of 225 bps. So can you help me understand the factors which have aided gross margin recovery? And also a comment around sustainability of the margin ahead would be helpful.
So basically, it goes both ways, like we also increased price in last 2 quarters and also raw materials supported us. So both ways worked well in our favor. And also, we've done some savings and some saving program in the organization, which is running from last 9 months. And so that's where we have made any focusing on -- focusing on ,which are higher on gross margin. So multiple things are going on to improve the gross margin.
Currently, we have a close to 30%, 35% gross margin at consol level. But overall, at stand-alone level also, we have a higher gross margin. And we see that in next 9 months also, we'll be at the same -- we'll be maintaining the same gross margin, what we see unless we see any major disruption in [indiscernible]. But we will -- in the next 3, 4 months, we have seen a recent good crop, good rain in our core state like Rajasthan, we trucked or material, and we've seen good rain this year. So we don't see any major changes in raw material prices, what we are buying currently.
Yes, this is helpful. And one last thing in terms of your presentation, when you highlight raw material prices. So this is the spot prices you highlight? Or is it like consumption price? The indexing...
It is consumption price, consumption price.
Okay. So that way, like palm oil prices was -- so my calculation was around INR 131 in Q4. That has seen a moderate correction to INR 128. So whatever the duty decreases and the easing in palm oil prices has not benefited us.
So it will be -- so we're seeing quarter 2 something because we had some stocking has been done. So we'll see in quarter 2, but we raw -- similar prices will remain at the same level. We don't see any media changes because speciality in demand is good this year. So we don't see any major correction in edible oil. It will be the same -- largely same what we have seen in quarter 1.
Okay. So you don't think that whatever the reduction has happened that you'll flow into the numbers. So palm oil prices basically will stay here and on market.
So palm oil prices came down, but we use multiple oil, like palm, cotton, rice. And so palm is reduced, the other oil [indiscernible].
The next question comes from the line of Ron May from SHC Meta Investment Intermediaries.
The line for the participant has disconnected. We'll move to the next question. The next question comes from the line of Vishal Judwaa from Trinetra Asset Managers.
Am I audible to you?
Yes, yes.
Yes. So I just have one question about your second half of this year. As with Diwali and the festival season, like rural [indiscernible] demand and anticipated, easing in commodity costs, what are your key volume and margin assumption for H2?
So if you look at Diwali and when you talk about this, so this primarily gets covered broadly in quarter 2, and then the leftover would be in quarter 3, right? So gross margin, the way we look at -- I mean, the guidance that we have given, we will stay within those numbers.
Right. Any new active SKU launches are you filing up in your plan or not?
So nothing else. It's about our gift boxes. So every year, we come up with some new design. It's the assortment, different packs and all that stuff. But otherwise, if you talk about any new category, no. The pack, you will see some better design, some little bit change, tweaking and that stuff. I mean that's what we certainly do to keep up the excitement and engagement of the customers.
The next question comes from the line of Darshit Vora from Asit C Meta Investment Intermediaries.
Am I audible?
Yes, you're audible.
All right. I have a couple of questions. So first thing being that we -- what is the time and what kind of internal target are we expecting for the volume to come up to double-digit levels? We've seen about 3 quarters of single-digit increase. So any visibility over that?
So we've seen good demand recovery growth month-on-month. So for the rest of the year, we see at least 9%, 10% volume growth. That's the plan. And that's numbers we are looking at, at least.
All right. 9%, 10%. And that would be more towards the second half?
More towards from quarter 2 onwards.
From quarter 2 onwards. All right. And about this Nepal JV that we have done, can you give some kind of details with respect to, say, capital outlay or some kind of time line for the ramp-up of distribution or some kind of revenue potential that we have in mind?
Yes. So basically, from Nepal perspective, so we'll jointly open a plant in Nepal where we'll invest close to INR 30 crores currently. INR 15 crore will be outlay from Bikaji and balance will be from there. It's equal 50-50 [indiscernible]. And we -- currently, our top line is under INR 20 crore. And we see good potential brand is very strong there. But overall, due to question duty and all, we're not able to supply in Nepal market. We see good potential coming up and using and driving distribution of CG Group Y-o-Y, and we see at least INR 50 crores top line in the next 2 years. That's the target what we take.
INR 50 crore of top line in the next 2 years.
Yes.
All right. And finally, just from my side, in the previous quarter, you had mentioned that our margins were gross margins or expectations of around 30%, 31%. This time around, we've come at 33%-plus, and we hope to maintain that sustainably in a way. So how do we plan on doing this given the already taken initiatives.
So on full year basis, what we see that on a stand-alone basis, stand-alone basis you see gross margin of 22% plus. That's the target what we're taking on stand-alone basis without PLI. And we are on track of it this year, of doing the same.
The next question comes from the line of Shirish [indiscernible] from Motilal Oswal.
Just a question on the Nepal. The per capita consumption in Nepal for [indiscernible] is about 7 kg. Do we have any data what is the -- because I do understand why is practically about 100% distribution. So -- and it's a very strong noodle market. In that context, you might say that you have a right to [indiscernible]. But then I was more curious, what is the [indiscernible] or maybe non-Western snack kind of consumption? If you have any data to support.
Shirish, so Nepal as such, I mean, we don't subscribe to Nielsen data, so would not be able to answer in the straight one number. But certainly, what we can tell is that looking at the markets and visiting these staff and all. So this seems to be clearly about INR 600 crores, INR 700 crores market kind of stuff, right? That's the -- that's what we look at it. And when we look at competition and primarily from these Indian manufacturers, such as Haldiram, Bikano, they're pretty much strong there, and there's a consumption base as well. So that's what we see.
And when we look at internally, simply put, so currently, our distribution was lacking. We were more towards India border side. That's what was it. And now if we were to go up Nepal, that one is the transport cost, which makes things expensive.
And second thing is that someone is to build a route to market. So the objective of this JV is to leverage on their route to market and brand, which is already an established brand, push that brand there. So that's what it is.
And as Rishabh said, in terms of our business opportunity, we can more than double in the next 2 to 3 years' time.
That I understand. I was just more curious because in the press, this year said that you will manufacture trade and do the marketing spend. So obviously, you should give some number that there is investment of INR 30 crores. But then is manufacturing is going to solve the distribution problem because if the market is very large and if there is already established players which are there and you have been selling some quantity from India, so I was more curious what is the number which you -- I mean, the INR 50 crore number on the profit looks very conservative. But then if you can tell me what is the export business we have done in FY '25 to Nepal?
Yes. So that's what I -- to your question, again, Shirish. Like we bring to the table, the import duty is 55%, which makes you less competitive in those markets. So this would help us ease down on those numbers and therefore, ability to invest behind building our business goes as much. That's one.
Second is, if you look at Haldida has also gone the same way. They have also done a JV partnership there. And so it's what we can also top 3 players from India [indiscernible] So they already are already -- they've started or about to start. That's what is the status.
Okay. Coming back to India business. Just a quick question on the PLI. What kind of PLI you have factored in for FY '26?
So for FY '26, we have factored close to INR 50 crores PLI in our books. So it will be valid equal in each quarter.
Okay. And just last question on hazelnut. What kind of revenue momentum we can expect exiting quarter 4 in this year because, obviously, there is a lot of learning curve [indiscernible]
So quarter 4 will be type of INR 100 crores area. That's what we'll see.
Okay. And any color because now you're settling down so margin exit, when you do INR 100 crores, what kind of gross margin you would achieve?
So this year will be a lot of expansion. So major focus will be driving growth and driving open stores this year. So next year will be 8% to 10% EBITDA. This year will be largely 4% to 5% -- 4% to 6% type of EBITDA.
[Operator Instructions] The next question comes from the line of Hatim Brocwala from JM Mutual Fund.
Sir, my question is that currently, all the input commodities are now correcting. So whether there is scope for us to cut down -- cut on the product prices to drive volume growth?
Yes, of course. I mean we look at how competition is moving, if we were to drive volume growth. So those are the measures as a business and as the steering committee in our company, how we look at it. So we certainly evaluate and we keep doing these things as the commodity prices eases.
But is there an opportunity without impacting margins, I mean, current margin?
Of course. See, this we'll only do if we have that ability to invest. It is not at cost of margin man. So there is a target of improving bottom line as well. So it is not by eroding margins and we give some extra offers that lot. So as you started that as we see the ease in commodity prices, that's what we will pass to the consumer. And we have done it in the past as well.
The next question comes from the line of Twish from Rare Enterprises.
Am I audible?
Yes, you are.
Yes, ma'am.
Sir, my question is regarding your new product launches, in particular, the milling in [indiscernible]. If you can please share any kind of commentary on how the market response has been? And what you think the opportunity could be for this healthy snack segment? And if you have any more healthy snack launches in the coming quarters that you've planned?
Yes. So I think it's too early to comment on this mill at because it has just come out, and so we will be doing some pilot stuff and we'll be riding on these QCon channels and all that stuff. Distribution would get built over a period of time. And -- but the prime base what we can say is that when we launch, so there's a huge product testing what we do, and it has come out very well, and that's what was the panel, what -- and that's how the panel gave clearance to launch it.
Talking about the healthy food. So one is there's nothing called healthy food. You may say healthy snacks. You may say less unhealthy snacks. That's a better way to put that up. So we also have a range of products which are roasted, [indiscernible], healthier, namkeens and all. But the market still is very, very niche. So as much voice, what we hear about healthy snacks, if we go down the consumer that in India, Indian markets, at least, it is not as much there. I think it will take about 5, 7 more years. That's when people will be talking even more about the healthier snacks and companies would then start focusing on that stuff. But to be future ready, we have a range of products which are in amongst the healthier one.
The next question comes from the line of Aditya Tambe from Havro Capital.
So I just wanted to get some updates on like the frozen food segment that you were planning to export from India. And there is currently the market leader which already does it. So any color on how it is happening if we are able to get into stores and gain some market share.
Yes. So on the frozen food, we do not sell in Indian domestic market. This is primarily for our exports business. And the frozen part has a huge share of business in our exports business to the upwards of 35%. That's where it is. And that also would have been better if we had our capacities earlier because we were also outsourcing it stuff. So that's where it is.
But the way we have built our capacities and the -- again, we call it being future ready. So as and when the country or the channels are matured enough to maintain and sell these frozen products, which is -- which needs end-to-end cold chain. That's when we shall be launching it in Indian market, but not in the next couple of years is what -- this would be export business product only.
Right, sir. So to follow up on that, how -- can you just square on how the market has changed? Like if someone is already storing a competitor's product, then how do you convince them to go for Bikaji instead of them or to keep both of them in their stores?
So today, if you look at any categories, the categories are highly fragmented, and you will see a lot of players playing around and within the store itself. So the exclusivity no more exists. That's one.
Now how we'll do it is, one, in terms of, of course, we have to be consumer preference. So therefore, if your product doesn't taste well or the quality not up to the mark, you will never get a repeat. What we also do is that we do some branding activation in these stores, which is the stimulus for a retailer to keep and place our product, give visibility of our product.
Third is that the cloud, what we have. So in the stores where we already are selling PKG products. This becomes an addendum to the list what they have. So this is how we go about it. And also what we realized was that many a times, we ran out of stock. I mean, we did not have -- was not having ability to supply the orders because we were also outsourcing during the season time, if you look at, that's where the demand is highest there. And in the yesteryears, we were struggling. Now if you see a numbers speak louder than what I would say. If you look at our quarter 1 export business, growth is outstanding. And this is what has helped us [indiscernible].
Sir, on the factory acquisition, like you already [indiscernible] that we are adding 1 outlet per month, that is what we see. But how do you see this over 2, 3 years or 5 year phenomenon? Do you see this as only a tier opportunity? Or like do you plan to scale this up faster? Or like after this year, we might to go lower on these store additions? How do you think about this?
So store addition would -- will continue to drive on our direct coverage. What happens is that, that may not translate into indirect coverage because it will be a diminishing return beyond the point. But when you cover directly, your cloud on the store or ability to sell range is always high. So what we're looking at it is that now currently, we are at 3.25 lakh outlets. The target what we have is to exceed 3.5 lakh outlets by end of the year. But year-on-year, is what we shall be adding 50,000 outlets. That's what is the target that we have for ourselves and should reach to 500,000 outlets in our direct coverage. That's the target what we have in the next 3 years.
Right, sir. But sir, also on the acquisition we did. So what about that [indiscernible]
So some -- lens, what we see that this year is a major expansion, what we'll do this year. But next year, from next year onwards, they will open pipes and price in exports every year. That's the target.
Okay. Okay. And also, we were focusing on our focus states. So like do we have any update like if there were any market share gains, like if we could see some wins in these focus states like any market share in that happened over last 1, 2 quarters?
So across all 6 focus states, there's a movement upwards of market share gain across states. What happens is that -- and so is the numeric distribution as well. So both these metrics has moved up. There are certain states which are now close to 6% market share as well. So 5.8%. For example, [indiscernible], if you look at, which is on our focus states. Karnataka, as I speak about it, is upwards of 3% market share. So there are certain movements. And so nowhere have we seen that it has not slowed in throughput.
The next question comes from the line of Brianne from Belgium Capital.
Yes, sorry, states. I understand [indiscernible].
Sorry, the voice is not audible.
Is it audible now?
Yes, yes.
Yes, sir. It's audible now.
Sir, sorry, I would have missed out. What would have been the volume growth, excluding the acquisitions in the stand-alone business? Would it be 5%, 5.5%?
Close to 6%.
Close to 6.5%?
Close to 6%.
Sure. So then the additional -- I think the extra offerings that we had given last year would ease out in the base by September quarter, right? So until that time, the volume growth would understood whatever aspirations we always had about 12%, 13%, right?
Right. Last year also, quarter 4 of '25, we have seen full volume growth of 10% extra that we were. In quarter 1, we started slowing down. So from quarter 2 onwards, we will see good volume growth because in quarter 2, there will be no extra grammage in last year number.
Understood. No, because till September quarter, we had a 15% volume growth, and I was assuming that there would have been...
Yes. You're right.
So for the full year, for the first half, we would have a single -- mid-single-digit volume growth. And for the second half, the aspiration continues to be double digits. Is that what...
Yes, yes, yes.
Got it. And the question on the operating costs. When we look the total operating cost in terms of per kilo, how should we model it out for next 2 years? What should be the trajectory given the distribution rate that we are expanding, given the size that we are reaching? What should be the operating cost per kilo trending going ahead?
So basically, we don't see business as an operating cost per kilo year-on-year or month-on-month basis. We see it as a key cost. We measure key costs, like logistic cost is big for us. Employee cost is big for us, and manufacturing costs. So we see each cost is a big 5, 6 points are there, which are big for us from cost perspective.
And we are mainly focusing on bringing more efficiency in each cost lens. So currently, we're in the expansion phase. So be it in employee, we had a lot of addition in employees as well as frontliners in sales in the last 2 years. And a result started coming in the last 2 quarters, and we'll see a lot of improvement in employee cost as well.
Number two, so manufacturing cost, we are doing a lot of energy. We are moving to solar and everything. So we'll see efficiency in each cost measure.
Thus, also we are currently close to 50% utilization. So running plant at lower shift or lower util is always a costly affair. When we have fixed salary, fixed employee cost, all costs are fixed. So once we start raising this capital intake and take this to 70%, 75%, we'll see at least to [ 0.3 to 0.5 -- 50 ] basis point improvement in margin every year for the next 2, 3 years.
Sure. So I mean, I understand we just have -- if I have to -- you have multiple cost line items. We just have to look forward for our total other expenses, excluding employee cost is somewhere around 14%, 15% of the sales. So it will be multiple -- so understood, yes.
So what we see at least -- so it will be improving 50 basis points each year. So from other expense lens, you will see there are like a few costs which are sitting in like consultancies or many other third-party costs at manufacturing costs, which we'll see improving in coming 2, 3 years.
And for this year, should we consider 50 bps or starting '27 only we should consider 50 bps?
Starting '27.
Starting '27.
Yes.
The next question comes from the line of Dara Shah from Delvis Capital Management.
So first is on the competition you mentioned that whenever the raw material price increase is largely from the local players. So just wanted to understand is the unbranded players, which competing such situations? Or these are the regional cards that primarily compete with you?
So these are primarily local and regional brands. So it will not be a national player role in that stuff.
But not the unbranded one, right?
No. So unbranded also. So -- but unbranded is what you cannot measure. But the data what you get is for the local and regional players. So you see the pressure the discounting much higher than what it used to be.
Understood. Coming to other steps, I mean, I know it's a very small part of the overall business retail arena business states especially are moving as fast [indiscernible] growth what is the growth driven by [indiscernible]?
Sorry. Can you please repeat the question?
For the other states part of the business, I know it's a very small business right now, but what states specifically are growing -- picking all the other states?
So in fact, when you see the kind of growth that we've delivered in other states, it's a game of all states doing well. But yes, to your question, it's like in all like Maharashtra, Gujarat, these states have done very, very well.
Right. Understood. This is primarily because of increased direct outlet cover, right? Or is there something else?
In the other states, our strategies that we are riding on modern trade, we are riding on e-com. That's what it is. And then we are riding on -- we make super stock as the distributors and they drive this distribution there.
Understood. And lastly, very, I mean, very broad question, but there is a lot of buzz around obesity drugs in India as well. These are very price [indiscernible]. But once these are made accessible to the mass population, you think snacking company [indiscernible] any long-term risk in terms of [indiscernible] continued trends maybe over the next 5 to 6 years.
So we will take it as it comes. But for now, if you look at as we export to several countries, and countries like U.S. where these laws are -- the factory requirements are even more stringent. And we abide by all of them. So we are actually ahead of time. But I mean, if it comes, it will be true for us also, and we'll live up to whatever is expected in that case.
Thank you. Ladies and gentlemen, we'll take this as a last question for today. I would now like to hand the conference over to the management for closing comments.
Thanks, Adele. Thank you, friends, for taking time out. Hopefully, we answered the questions to your expectation. Just in case if you feel any of the question was not well explained or does not bring in the clarification you were looking for, please reach out to us. We'll be glad to take the questions separately as well. Thank you once again. Bye.
Thank you. On behalf of Bikaji Food International, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.