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Ladies and gentlemen, good day, and welcome to the Bikaji Foods International Limited Q3 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. [ Hazel Rapur ]. Thank you, and over to you, ma'am.
Thank you. Good afternoon, everyone. Thank you for joining us to Bikaji's International Quarter 3 and 9 Months FY '25 Earnings Conference Call. From the management, we have with us Mr. Rishabh Jain, CFO; and Mr. Sharma, CEO I now request Mr. Rishabh Jain 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.
Hello to all the investors. Thank you for joining the investor call. So overall, it's a very challenging quarter for all FMCG.However, we're seeing consumption trends are moving up in the fourth quarter and January. Also we've some positive sign in budget [indiscernible] in producing income tax and other factors, which would also have some [indiscernible] in the next year.
So from -- so the quarter has grown close 12% and sales and overall revenue [indiscernible] growth of 13.5% compared to last year. From the [indiscernible], the operating margin was a pressure in fourth quarter -- in third quarter. And in terms of the [indiscernible], we've seen oil price has started moving up, and sudden increase in palm oil taxes from government has impacted overall pricing of palm oil. And overall, all the edible oil impacted overall gross margin in the fourth quarter.
Gross margin pressure was -- we try to pass on the prices of -- prices to consumers and taken some [indiscernible] in third quarter, actual also [indiscernible] price back in fourth quarter. Also there was a key pressure of [indiscernible]. You will see that Western Snacks sales has grown at a subdued [ 0% ] largely. We saw the conscious call which we and [indiscernible] haven taken largely because prices increased substantially and investment [indiscernible]. And do the prices have increased substantially [indiscernible] production in the third quarter, which has also impacted revenue from 2% to close to 1.5%.
It's good to see a YTD number because we see the growth large -- is largely [indiscernible] end of October of this last year, the value was in tens of [indiscernible]. So there were some presale -- sweet sales in second quarter of this year. So overall, our revenue growth in YTD numbers, it was [indiscernible]. Overall, when we remove [indiscernible], it's close to 15% versus [ 1% ] volume growth.
Our EBITDA margin stand above 1.1%. The gross margin has [indiscernible]. From manufacturing lines, it's the same. We are not to creating any major capacity and trying to [ deploy ] the capacity as soon as possible to close to 65%, 70% so that operations efficiency comes in over an overall -- at overall level.
From [ pending ] the distribution level, so largely, that's the core of distribution. We always started to increase the direct reach, and we have further gained distribution and have reached close to 0.5 million outlets in total and a direct reach for [indiscernible] close to 3 lakh outlet, close to 2.8 lakh outlet this year, which is a fundamental for any FMCG, and therefore, we are targeting.
[indiscernible], you can...
Yes. So marketing cap, what we did and which was a big one, [indiscernible] lending job, which ended on 31st of December, been pretty way for us, and that was a [indiscernible]. Because if you look at when you go to the [indiscernible], you would -- you will see that volume growth is just 3%. But actually speaking, if we look at revenue volume growth is 8%. That's the right number. It's because on the back of last year's quarter, [indiscernible] 10% extra was -- 10% was non-revenue volumes. But then that sits in the base [indiscernible]. Otherwise, revenue volume growth is 8% for us. So this [indiscernible] indeed will that do better. We got [ wafer ] penetration now able to increase our weighted distribution, where these kind of this campaign, what we did, we used all communications letters. We use new [indiscernible] like [Foreign Language] and all and expanded across countries, so all the sales and about 3,600 cities.
The winners now who benefited of this program is to the tune of 624,000 winners who've got something out of this promotion. Festive campaign we, did saw impact this very well. However, quarter -- I'm talking overall. So the right way to look at gifting and sweet is a sum total of quarter 3 and quarter 2 because of Diwali being a little here and there kind of a [ storm. ] But overall, it was a good business on gifting for [indiscernible], firstly.
Talking about volume growth now. We look at quarter 3. So the reported growth is 3%. But if we look at revenue volume growth, it's 8% for this quarter. Mix has grown at 10.5%. Package, we said 11.2% revenue growth rates. [indiscernible] flat, where the growth is flat, it's just 0.8%. But that was the conscious call which we took, and as Rishabh just spoke about, because here it was bottom line erosion as we say more, both potato and oil, which are the key ingredients for the products were on the peak [indiscernible] and it was not practically possible to pass as much prices.
And this is one reason that if you see the results of any other listed companies in this category, would have sort [indiscernible]. Papad, again a 9.6% growth in this quarter. It's more [indiscernible] to see look at the continuity that YTD, over the last 9 months, volume growth is 11%. But again, if I just look at revenue volume so it's a 30.3%, which is in line with what we have been talking. Our revenue overall revenue from operations is 17.1. Ethnic Snacks is seeing at 1.2% growth. Packaged Sweets, as I said, that takes the right way to look at quarter 3 and quarter 2 together. So at a YTD basis, Packaged Sweets to 17.5% growth.
Western Snacks, which if you look at just quarter 3, I mentioned at 0. However, at a YTD itself, 15.5% growth. So this speaks about the kind of demand which is exists [indiscernible]. We thought and we did not do that. And that H1, if I look at it's a 28% plus growth kind of [indiscernible].-- so which is what now with softening of prices in potato and also the oil, you will see that in the coming quarters, it's still on the [indiscernible]. Papad, 15.3% growth on a YTD basis.
So as a strong momentum going forward, in terms of as we look at our product mix, so it is broadly in line with what it was last year to 62.9% because last year quarter 4 for namkeen and bhujia put together, which is now at 62.1%. So only thing, if you refer to this [indiscernible], is the Western Snacks contribution. So last year, as we look at it quarter 3, it was 7.5%, which has come down to 6.8%, And this is what I spoke about, that, that was a conscious call, which all categories are in line.
And in terms of as we talk about that our full focus and other markets as export. As we look at in this quarter, whole sale revenue growth is a little -- 10.8%, states growing at 40.7%. Other states, 8.7% and export as [indiscernible] is at 2.6% growth. At a YTD basis, core sales have grown at 11.9%; focused sales at 17.1%; and other, 23.7%; exports within [indiscernible] to INR 31 crore.
Our flagship of the continuity on the large pack continues. So we are -- the mix of product between impulse and the large pack is 61% from large pack and 35% coming impulse pack. Both the family pack and impulse pack has done well in the quarter. So family pack growing at 11.6%; impulse slightly higher at 12.9% growth.
Rishabh?
So overall, from revenue, then we got it close to 4.5%. Yes, over quarter-on-quarter, it's largely flat. Last quarter from EBITDA is close to 8$ so from raw material length, [indiscernible] has potentially all the [indiscernible] brand and close to the price has been increased from 100 to 140 level. And currently, it's close to 130 overall at the peak currently. But yes, from this quarter, what we see, it's a good drop this year. We're seeing good drop in all the commodities. And we have seen that, that support overall. In fourth quarter, we see good price -- we've done a good pricing in support taken with long-term PO, but all the key commodity what we already started doing that is the put margin in coming quarters.
The percent [indiscernible]. So we've seen good commodity from net commodity. So that's all on presentation. We're happy to answer all the questions and take all the questions you have.
[Operator Instructions] The first question comes from the line of Abneesh Roy from Nuvama Wealth Management Limited.
My first question is on the segment-wise growth numbers. So I see a big divergence between, say, Q3 and 9 months when I see the data. The bigger divergence is between sweets, where there is a 17% growth in 9 months, which drops to 11% in Q3, which means first half, obviously, you've already given that number. It's almost 20%. So 20% drops to 11%. And similarly, Western Snacks from 16% become 0.
So here, specific question is, I understand Western Snacks, you did call out that conscious call was there because of very low margin. But what happened in sweets? So sweets essentially, marriage season always is a big benefit because of the gifting. And Q3, we have seen whichever category has a high marriage demand, those have done really well. So in your case, if you could discuss in sweets, what is the issue here? And would you expect sweets and Western Snacks even in Q4 to underperform the other two categories for you?
Yes. Abneesh, see, Packaged Sweets, the role of wedding season, of course, is there. But the quantum of getting in Diwali is, by far, high. So it's a very small percentage reserving the Diwali gifting kind of numbers what we do. Now what happens is that last year, Diwali was around 23rd of November, yes. So later part, when this year it goes on 1st of November itself. So this got preponed in quarter 2 itself because [indiscernible], which is a very big account for us, other states and all, so where sweets Swiss is very big. So all this stuff goes -- the preloading starts happening. So this is what is always the case, that quarter 2 and quarter 3 put together is the right number.of wedding season.
Also, if you look at the wedding season, number of wedding days are more in quarter 1 -- quarter 4 vis-a-vis quarter 3, if we compare over last year. But again, I'm reiterating on the fact that, yes, wedding season plays a role, but it is nobody close to what the gifting and the Diwali means for this category for us.
Also, Abneesh Roy, so your last question was -- so for fourth quarter, like [indiscernible] lagging on track. And so the fresh crop is [indiscernible] quarter 2. And so we are -- it's on track and we have again started for full peak production in Western Snacks. And sweets, we will be also in the same range as in fourth quarter. But yes, fourth quarter is still been very low because major sweets production is happening in second and third quarter.
Understood. My second question is on the demand side. So again, here, 3% volume growth versus the first half early teens growth. It's a dramatic slowdown. So -- and when I see even in Q3, India's largest biscuit company seeing 6%, 6.5% volume growth, and you are seeing 3% volume growth. So could you tell us, is there some market share loss? And here, I'm not referring to the official market share data. It may or may not be relevant.
My question here is what really happened? How much is the impact of the [indiscernible], for example, a INR 5, INR 10 price point, if you could take us through that? Because there you can't take a pricing growth. And when you compare your 3% growth to India largest biscuit company at 6%, 6.5% in the same quarter, we are living in the same quarter, same India. Why there is so much of a divergence here both in the snacks category? So if you could tell us how you see near-term volume growth coming back.
Sure, Abneesh. So one is that the 3% is not a right number to look at it -- if we speak about our revenue volume growth. So it's 8%. And this somehow connects with your [indiscernible] cuts. So last year in this quarter, all our large cut had 10% extra, which was not the case because of the prices, in any which way that was not time-bound promo what we had done. So if I look at revenue volume growth, it is 8%. That is one.
Second is that Western Snacks is a category which contributes about 8% to our business and is at 0 growth, right? That's the second reason. So therefore, other than this, if you look at the Ethnic Snacks, the other categories are well on track. Nothing to -- which really is concerning or worrying for that stuff. So this is where we are. This number looks low because last year, it was 10% extra, which was going, which is not on this year.
And 10% extra is there in Q4 also in terms of base?
Last year, yes, it was. So this was the this was there this Q4. So that's when we ran this promo last year for 6 months.
Okay. Understood. So last follow-up here. So essentially, at INR 5, INR 10, what has happened in terms of cut there? And Q4, you expect some recovery because you have said that Western Snacks, there is a recovery. So in terms of volume growth...
So Abneesh, largely we have taken some [indiscernible] INR 5, INR 10 in last week of December. That's what we've done. And also we've seen -- we're seeing good flow coming in good pricing support from raw material side. So we see again good margin from that end.
One follow-up. Where have you softness? Because other companies [indiscernible] softness in palm oil until now? Is that correct...
We have not [ seen ] softness in palm oil, but we are seeing some in key commodities, our commodity -- or key commodities.
The next question comes from the line of Percy from IIFL Securities.
So this quarter, if I look at your ASP, it is around 9% Y-o-Y, if the volume is 3%. And the prices -- sorry, sales is 12%. It means that the average selling price, either because of reduction of promotion or the price increase itself, whatever be the route or path, but effectively, the average selling price has increased by 9%. So given the actions that you've already put in the market, including some changes in December, et cetera. how much Y-o-Y growth in the ASP you expect in Q4?
So Y-o-Y, if we look at would be around 3% kind of ASP. So 1.5% we have already done. And no, 3%, 3.5% kind of growth we will see, ASP growth.
No, no, sir, 9% is already there in third quarter. So fourth quarter has to be more than 9%, right?
No, no. Again, Percy, let me explain it to you. While it looks 3%, actually it is 8% growth, revenue volume growth.
Sir, I understand that. I'm saying reduction of promotion is also pricing in a way, right? So the average selling price per kilo has gone up by 9% Y-o-Y this quarter. I'm saying that some initiatives have happened probably in December and January which have not fully affected the 3Q. So what would be the ASP growth for Q4 given whatever actions already taken? That is my question.
So 4.5% in Q4, what we do.
Okay. So around 10% to 11%. And given the inflation that you have seen, would that be enough for you to recover the hit on the margins that have happened this quarter? Or there would still be some sort of partial hit which would still come in Q4 and maybe can be recovered only in Q1 or Q2?
So largely, that's what we'll do. We'll do 1.5% price increase in end March. That's what we'll do, number one. Number two, we are hopeful that we'll again come in gross margin of close to 30% plus. [ 31% ]. And that's what we -- and in the next 3 to 4 months, again, we would have been planning to -- we are working on to come [indiscernible]. That's what [indiscernible]. But yes, in this quarter [indiscernible].
Got it. My second question is on the costs under the gross margin, which is the employee cost and other expenses. So the employee cost is up around 30% and other expenses is also up like 21% also sales of 12% growth. So what are the reasons that the growth here is higher than the sales growth in both these line items? And when do we see this normalizing and coming in line with the sales growth? By which quarter that will happen?
So today basically, in this quarter, third quarter, the [ ad ] cost and other expense, which is the high compared to second quarter, and that's what increasing -- that's what we just spend on one end. Because it's already booked, there was big sweet in facility. So we need to do the [indiscernible] that sort of business is. So that's why when costs increased in this quarter, number one.
Number two, from employment, there is a so called [indiscernible], which is you're getting other realized and people also speak. So therefore, any factor has started in the last 12 months, the people [indiscernible]. But the once utilization is up, this will again come at normal level. But what -- to the point, for next year, first quarter will be again normalized going [indiscernible].
Okay. So by Q1 next year, both other expenses as well as employee cost should grow more or less in line with sales, right?
Right, right.
[Operator Instructions] The next question comes from the line of [ Dalshit Vora ] from ASC Meta Investments.
Am I audible?
Yes. Please go on.
Yes. So my first question was that we are having this road map of ramping up our capacity to 70% utilization, right? So could you give me some kind of a road map or some internal target wherein how and by what time line would you be able to achieve this kind of [indiscernible]?
So last year target is to grow volume by 13%, 14%. That's our target. This quarter was an exception, but we always target to grow volume in [ 8% ] at least. And that's what we have the capacity in the last 3, 4 years. And that's why our target is for [indiscernible].
Okay. Next -- how much time did you say?
So next 3, 4 year target, at least we want to grow [indiscernible].
All right. Okay. And with respect to margins, so this time we've seen quite a fall, how do you see the raw material prices move from here? And also by when do you think the margins will be back to our usual numbers?
So the fourth quarter will be improve a bit from year because this was an exception. Oil prices has increased readily and in a month's time. So -- it's so -- so that's how we pass the prices substantially in a time. But yes, overall, we see in the next 2 quarters, we'll again [indiscernible]. That's our target.
All right. Okay. And finally, just like to close, would it be -- like would it be possible to either give a range or relatively speak about gross margins across product categories?
Yes, it's difficult.
The next question comes from the line of [ Disha Giria ] from Ashika Institutional Equity.
So if I see the third quarter FY '25 presentation in terms of core and focused market mix, it clearly states that the focus market has gained year-on-year in terms of revenue contribution. So can you specify any such particular market that you have gained market share?
So we have gained market share across focus states, if you look at, right? So be the smaller one like [indiscernible], Karnataka or you look at the large states like UP also for that stuff. This is where it is. So there is a positive movement across these focus states.
So can you specify any quantum of market share increase?
So quantum, see, it is for a large state like say, UP, it's a 30 basis points. 60 basis points in [indiscernible] over last year. Whereas when I speak about smaller states like [indiscernible], there is a 300 basis point movement which has happened. But it's a small size of -- price is not as big kind of a stuff. So it's a varied stuff.
Okay. And then your other state contribution has slightly declined. So what is the reason behind that?
So two things. One is that other states, if you look at now in terms of 9 months, you will not see this. Now this question would not come up or rather the reverse question would stop. But the other states of contribution of sweet and listing is very high. Because there, we play on the back of model trade. That's our largest business there. right? And quarter 3 and quarter 2, when I -- as I was talking about, that there is a shift from quarter 3 to quarter 2 which has happened on this stuff. So other states, if you look at on a 9-month YTD basis, stuff, they've grown at 23.7%.
Okay. My next question is I just wanted a clarification. In your presentation, the volume growth is around 3%, and you have mentioned this over the call that the revenue volume growth grew by 8%. So I'm assuming the difference is only -- I mean, in terms of the [indiscernible] changes in your past [indiscernible]. Is my understanding correct?
Yes, that's correct. Yes.
The next question comes from the line of Mehul Desai from JM Financial.
My first question is on the recently acquired Hazelnut company. How do you see sales growth panning out for this entity in FY '26, '27? And what is the kind of CapEx that you would look at in FY '26, '27?
Yes. So this Hazelnut currently is very small, and it's just added in the end of last quarter. So largely, we see that in next year, it will be close to INR 80 crores, INR 90 crore top line and that can -- that brand can be growing very good. And number two, from CapEx lens for overall [indiscernible], we see close to INR 450 crores of CapEx largely to try to do some -- to build efficiency in the system. That's what we'll do next year.
INR 45 crores to INR 50 crores.
Yes.
And will Hazelnut require CapEx?
No, no. So that is not [indiscernible] we already funded largely. So that will very be CapEx because they already have good CapEx facility that is open outlets. That's what they need to do, and not major CapEx in that plan.
Understood. And broadly, this acquisition -- I mean, it won't be -- if the margins are better than our current company margins...
Margins are better than current company, yes.
Understood. And lastly, in your core markets, the growth are also -- I mean, the fixed line growth would have been in double digits. Or is the trend different in terms of financial growth within core and focus?
No, no. So it's in line with this stuff. Core is relatively even better in this case. So I expect it's done even better there.
[Operator Instructions] The next question comes from the line of Harsh Jain, an individual investor.
So my question was regarding Delhi. Being a Delhi resident, I can say you were quite there in Diwali season. But I think you kind of trailed off after that. So I want to hear your stories, [indiscernible]. Also, I believe [indiscernible] quick commerce and department stores, your presence have been quite low. So I want to hear your commentary on this.
No, no. Certainly, if I think your observation and what you're talking is in line exactly where we stand. So Delhi, you look at all modern trade stores, so which is -- any reliant beat demand of the large testing staff, you will see our good presence during the Diwali gifting and all. But yes, in terms of traditional trade coverage, it is by far low. And that's where we are working on. So very soon, when I say very soon in say, a couple of quarters from now, you will see a changing trend in Delhi as well.
Yes. So one more question if I can. So when we see further acquisitions in Delhi area?
So it's a long -- we don't see any major acquisition in the coming year. That's what our plan is, to grow organically and to use realized capacity, what we've already built. And Delhi is an area [indiscernible] is not so big in Delhi. So we may really focus in this year in [indiscernible]. That's what we'll do.
One more question, please. Would it be better to open QSRs in Delhi for more customer engagement and all?
Yes, you're right. But our major focus is currently in Rajasthan, opening in Rajasthan to QSR outlets. That's what we do. Delhi is maybe next 1, 2 years, 4 years, not immediately.
The next question comes from the line of [indiscernible] from NV Alpha Fund.
My question is, can you call out any PLI incentive that we have received in this quarter? And what was it in the last quarter?
So basically, currently, we are looking at PLI income of close to -- this year's book, PLI close to INR 14 crores per quarter. And we will receive PLI from government maybe in this quarter, third quarter by March. And government is very proactive to do all the audits and to release the funds. So by March, we'll receive PLI of last year, FY '24. There's normally a 1-year lag, filing of claims, audits and everything. So normally, there's a 1-year lag. So we'll receive PLI for last year. And for this year, we'll receive next year. That's the process.
So during this quarter, we have not booked any PLI income in the...
We have booked PLI income.
We booked INR 14 crores, right?
Yes, yes.
And what was this last year same quarter?
Same.
Same, INR 14 crores.
Okay. Got it. Also, if you could talk about -- you mentioned that you've seen some softness in the raw material. So if you could give a little more color on the same, which raw material at have we seen softness?
So all key commodity, be it our key commodity like [indiscernible] or potato or peanut, [indiscernible], all key commodities we've seen softening of prices. Because the fresh drop time, normally December is the time that the [ short ] come in, and we see a softening of price increase.
The next question comes from the line of Nitin from Emkay Global.
Just wanted to check on the QSR initiatives. So have we rolled out the store for the pilot which we were planning to do?
Yes. So the first years are coming in next -- by next week, mostly, so in Rajasthan.
Can you -- where exactly [indiscernible]?
[indiscernible].
Okay. Perfect. Okay. And the second question is with respect to [ modal ]. We are hopeful of some benefit coming in here. So any sense you can provide what is the deflation we see with the new arrival of [indiscernible]?
So normally, we've seen close to 14%, 15% reduction in prices of [indiscernible].compared to...
And what is the contribution of [indiscernible]?
Contribution is close to 10%. But I'll come back with the numbers.
Sure, sure. And lastly, we -- are we looking for any commodity covers in terms of the [indiscernible]?
Other than edible oil, we do make cover on most of the commodity -- key commodity.
The next question comes from the line of Abhishek Kumar from [ Santam Wealth. ]
So my question is partly in continuation with the participants' question. So as a policy, so do you guys have any mitigating policies with respect to such [indiscernible] in the raw material prices, especially our key materials like palm oil, potatoes and [indiscernible]? So do we have a stated policy where we need to keep such raw material inventories for a few months or anything on those lines. It would be a very good to share.
So normally, we do -- like for key commodities and edible oil, we do a long-term contract with the vendors to hedge the price, and that's what we started in 2.5 years, up 2 years back largely. And this has helped us in preserving the margin. But yes, edible oil, we normally do a very, very shorter time and normally industry also do the same. So other than edible oil, we normally protect the margin and hedge all the raw materials.
Okay. And could you give a rough -- the split of our raw material basket, as in how much oil or [indiscernible], that would constitute the [indiscernible]? Any rough...
I can come back with the numbers for the commodity.
The next question comes from the line of Varun Singh from [ Alacer Advisors. ]
Sorry, I missed your commentary on raw material costs, on the palm oil prices. So what is the expectation and outlook over here? And palm oil is what percentage of our total raw material cost basket? If you can help us understand that.
So palm oil is currently also at peak. It's not -- it's [indiscernible] currently, close to INR 130, INR 132 at peak right now. We see some [indiscernible] import taxes from government, of course, but it is not [indiscernible]. but all the -- that's what we are hoping. But the overall palm oil, we see next 2 quarters at the same level, INR 120, INR 130. And it's a bit -- overall, its contribution is big in our overall purchase.
So our total raw material basket, palm oil would be what, almost 50%, 60% of the total cost?
Not 50%, 60% but yes, overall close to between 25% to 27%.
Okay, understood. And what is the quantum of price hike that we need to maybe take from here onwards to offset the impact? And can we expect here by this quarter kind of -- or when can we expect the margins to be reflecting our -- I mean, given that we have the ability and power to take such kind of price hike. If you give some understanding on that, sir.
So largely, in next 2 quarters, that's what we are working on, that we can come on the margin what we have been done in the last 2 quarters. That's what we are working on.
Okay. So in October, you already took 2% to 2.5% price hike and more price hike expected? Do you want to call out anything on that part?
Yes, largely one price hike is expected, and that's how we'll look at all the business scenario sale scenario. But yes, one price like is expected in the quarter.
Okay. Sure. Understood. And sir, last question is on volume growth. Overall recovery, you highlighted 13% to 15% is the aspiration. So that is -- that number is very much on that track I mean, looking at the January month, how the business has gone for us.
Yes, that's right. So this is well on track, and I mean should be in line with what we have said.
The next question comes from the line of [ Aditya Tambe ] from [ Harbor ] Capital.
Could you please provide me a bit of how much of our sales are coming with general trade sales versus modern trade?
Sorry, say again?
So can you provide of how much of the sales is coming from general trade versus modern trade?
So general trade is the largest contribution for us, which is about 84%, 85%. The general rate modern trade is about 8%.
Okay. Got it. And can you also tell us how is the price hikes being taken by the customer? Like do you see them going for an inferior product, a slightly cheaper product? Or they are increasing the price increase or the [indiscernible] decrease that is being done?
See, I think this is what we spoke about that we have taken a price increase. And in this coming quarter, on this running quarter, there's a likelihood or there's a plan to take one more price hike which would offset the price increase, what we have witnessed on the commodity stuff.
Right. I meant to ask that how is the customer reacting to it? Do you see that maybe they are switching to a slightly inferior or slightly cheaper product that is available in the market?
No, see, so inflation is I think very well spoken and very well imbibed by all the quality consumers, right? And even if you look at anyone using edible oils in their houses, they also know the kind of prices that they're doing. So yes, quality customer does not look at it as much. But yes, I think the experience of the [indiscernible], certainly, consumption at that standpoint would have definitely impacted. But not as much because when you sell a brand, you -- the price -- and that couple of percentage price are there does not matter as much as long as it's competitive with the peer growth.
Right. And could you also give us some flavor on if there are any new products which are being planned on launching, like in sweets or in snacks or maybe something in a slightly healthier segment? Like many customers are talking about maybe not going with the palm oil...
So that's a game in this category, you keep launching. And again, market specific. So for Northeast, we launched a variant called [indiscernible], right, doing extremely well. But I think that time it sustained for the 6, 8 months. I mean, it doesn't have as much merit to talk about. But yes, these kind of NPDs across states, we keep doing. And that's what energizes the category and keep the [indiscernible] of it.
Right. Okay. And like tell us some picture -- comment, if you can give about how is the growth in quick commerce. I think last quarter, you mentioned it's around [ 160% ] growth. So how is it looking like this quarter?
So yes, e-comm because of a small basis, what we have is this quarter, again, it has grown about 86%.
The next question comes from the line of [ Dalmil Shah ] from Dalmil Capital Management.
Just a follow-up on the previous participant questions. Whenever there is a sudden price hikes in raw materials, what is usually the policy that company follows? I mean, is it immediately increasing the prices for all the products, for the [ family pack ]? Or is it like taking a short-term loss but maybe gain some market share? What is the broad policy that company follows?
So see, the first and foremost, and this is -- one should not lose market share. right? So to protect market share is the biggest one because if you lose share, regaining share is even more expensive proposition to do. That's one. But the approach follows is that as we see commodity prices going up, so first is that if there are any kind of schemes running, trade schemes, incentives, all that stuff, so we try and knock it off. That's the first one.
Then as we look at that how further we can improve our efficiencies, consumer hit is the last one to take. But trying everything when it comes and then if you are not able to make up the threshold, we pass those prices to the consumer. This is how it happens. But this process takes about 1.5 months. And also, as my [indiscernible] just spoke about that we do -- we have some advanced booking with us. So we can foresee that these price increases are coming, and that leaves us with as much time to prepare.
Unless the price increase, like what we witnessed in the oil which is much, much beyond what one would have expected.
Understood. So suppose when there is a price increase or a decrease in the underlying base raw material prices, the price changes that you do in your product be, it price increase or decrease, is it based on the competitors' prices? Or it is more based on the raw material prices?
So both basically. Of course, we look at competitor prices. But normally, it takes close 30 to 45 days to pass on the prices. That's what we as a policy. We see the prices we =and then we eventually pass on the prices. But yes, we also see the competitors because that's important for us to [indiscernible].
So is there a policy to be for better prices than competition or at par or some [indiscernible]?
So largely at par with the competitors.
Understood. And lastly, what -- I mean, some of the previous participants also asked, but what would be the raw material mix? How much would be palm oil, you mentioned 2025? What would be the other key materials and the mix?
So like purchase, overall total purchase is close to a 25%, 30% overall purchase, all the those combined.
Palm oil, right?
Yes, I can get back to you on with numbers. But yes, that's overall prices, in than 25%, 30%, Then there are a lot of material because we are into multi-category. That's overall the benefit that -- and even like this exception, but if any on covered increase, it doesn't impact much on gross margin. Like we are into sweets or [indiscernible] products, [indiscernible] product or snacks, so complete -- we have 5, 6, categories.
The next question comes from the line of Manish Poddar from Invesco Asset Management.
So just two questions. First is -- let's say, if I take the impulse pack, which are roughly, let's say, give a 38% to 40% of sales savings, would it be right there largely at, let's say, INR 10? And if that is so, what is the sort of -- how much is the average grammage, et because there will be multiple categories. What is the average grammage, which is now available in a particular product? [indiscernible]
Yes. So first is the small part of the impulse, what we speak about is INR 5 and INR 10 think that's what it is. And the average gram, if we look at in a [indiscernible], it would be about 16%, 18%, average if we look at. And for INR 10, it will be 2x of that. So that's how it works.
And how does it stack versus the other categories in that same lens? Because I'm not sure how inflation is impacting because there's a basket of products. But let's say, at this price point, just because you are in the market and so you have much better understanding in terms of consumption brokerage [indiscernible] 15 grams, 18 grams is a good number versus the other categories in terms of this inflation context?
So I think it's sort of a like-to-like comparison. When you look at, say, [indiscernible], right? So [indiscernible] would be even a lower volume for that stuff, grammage if you look at. But then again, the lumpiness cannot replace the Western Snacks purchase or they could put a kind [indiscernible] and vice versa. So it is more when you look at that, is it one serving kind of stuff or not? So what we believe is that going below 13, 14 grams in our pack will not suffice even onetime serving. So that's where we look at and we compare within our category space. It's not with different categories in this space.
Okay. So you're at 16 to 18 grams. That's what you're trying to say.
Yes.
Okay. And the second one is, let's say, in terms of this direct reach. So let's say, the last trailing 12 months, you've added roughly 60,000 outlets. How much of this would be, let's say, in the state of, let's say, Rajasthan? And how much of it will be ballpark in the state of the Uttar Pradesh? That will be as these 2 data points.
So I think Uttar Pradesh would be in line of about 15,000 -- 15,000, 20,000. And Rajasthan would be about 6,000 kind of a number. Well, I can get back to you state-wise. So often will not be...
The next question comes from the line of Ashish, an individual investor.
I have one question. You have qualitative comments on the shift from unorganized to organized sector. especially in light of the inflationary scenario, which is happening right now. So does the shift slow down? Or how do you think this movement is going forward?
So this would be purely anecdotal out of what we observed in the marketplace because you don't have any authentic data on the side of unorganized players and all [indiscernible]. Of course, what has happened is that this shift would continue as the consumer and brand awareness goes up. However, what we also realize sometimes that when these oil pressure goes up, so a branded company cannot compromise on quality of products. So not the right oil, not used oil beyond the point. However, when we see the local players, unorganized stuff, so they do not get as impacted as the organized stuff. So that's the only stuff and would vary from state to state.
But yes, if you look at on a trajectory of shifting from unorganized to organized, yes, that has also helped in this category to deliver these kind of numbers.
The next question comes from the line of [ Dalmil Shah ] from Capital Management.
Sorry, a follow-up question on the price increase again. When you are taking price increase, is it a pan-India level? Or is it based on in some of the regions where maybe a region where you have a better run, you can take more price increase? How was it decided?
So normally, based on region. So normally, we see which region is having much impacted because product may depend in every region. So we see [ region-wise. ] And eventually, if we take the price hike. Like MRP increase in [indiscernible] nationally, that's what we do.
Okay. And would it be fair to assume that costs at [indiscernible] maybe slightly higher price increase than the focus states?
No, it will not be the case. See, we get governed with [indiscernible]which consumer prices. Let's say, a pack is INR 100 MRP. It would be for consumer both [indiscernible] and anywhere in that stuff, right? However, what we do as I was talking about, that price increase is also controlled by [indiscernible] 5% trade scheme, right? And which is with launch at the kind of realization goes up by as [indiscernible] and which is what varies from state to state looking at competitive pressure, looking at our ambition and the strategic objective of why are we giving it. Is it a tactical or a strategic investment? So both differs from state to state. Rest price to consumer continues into -- there's an MRP increase. It will not be the case that it goes up in one state, it does not happen in the other state.
The next question comes from the line of Abhishek Kumar from [ Santam Wealth ].
I have a question. So we basically categorize our markets into core focus and others. So I have a question. How -- when does the shift from others to focus happen? So do we have a revenue threshold or a market share result when that when we start we'll be counting other state into our focus state. And once we start doing that, what all changes?
Yes. So I think that's a very good question. And we have spoken about it earlier also. But let me explain again. See, what we see is it's not about our internal stuff. It is purely external and from a consumer standpoint, from a shopper standpoint, right? So what we believe is that wherever -- when we are in the high single-digit market share is what we can call that, that can move upwards in the core state. And somewhere around 3% to 5% to 7% will be the focus state kind of our stuff.
Now the logic of cutting these geographies into three parties that there in the states where our brand equity, strong market share is relatively better. We do different kind of marketing initiatives there. In the states where we hardly are present or we have barely operations, which is what's currently parked in our [indiscernible] states, there the marketing, it's more of route to market that you make your product available in their stores kind of stuff. So these changes will not happen very random or very fast. But yes, it's a journey of 3 to 5 years. That's why you see that states would be moving up.
So what we believe is that in the next couple of years is what a few states from focus, we would ship it to core. And we'll put states from others who are doing better or where we have our [indiscernible] plan. We'll ship to focus. To your question, what will we do differently is what, we will start deploying people, investment on brands and all this stuff would start happening in those states.
The next question comes from the line of Shirish Pardeshi from Motilal Oswal Financial Services.
Just two quick questions. Fundamentally, in the times where the food inflation is high, consumer generally does the down trading. I'm just looking at Slide 22, where you have been able to maintain your..
[Technical Difficulty]
Hello?
[indiscernible]
So on Slide 22, I'm referring, you've been able to maintain the family pack contribution around 59%, 60%. The sense most of the consumer companies are saying there's a down trading, there is a pack grammage which will come down. Just tell me how you've been able to manage because there is a competition angle also. Because the competition scale has been going up and up in the snacking. And generally, my reference point is that in the snacking business, the small pack contribution would be about 45% to 50%. But you have been able to manage between 35%, 36%. So tell me what's happening with -- particularly about your company?
Yes. So Shirish, one is that now when we say here that it's a down-trading kind of stuff happening, for our products, if you look at any consumer who's been buying 1 kg pack, also for that reason, 400 gram pack will not move to a 13-gram or a 30-gram pack kind of stuff. Also, the impulse packs, what we speak is more on the grow kind of stuff, [indiscernible] consumption. So that's what we have not seen those kind of [indiscernible]. Of course, another thing what we at when we were doing this analysis, so we did one campaign, Bikaji Khao London Jao. So maybe to a certain extent, that has also helped protecting our the family pack, and this is where we are.
Okay. My second question is that in the context where e-commerce, quick commerce these channels are penetrating faster, in the current context snacking is a big segment, and wholesale does give a lot of [ slip ] in terms of distribution and scale. Now in your assessment, does wholesale channel still relevant to you? And how does it help? And what are the activities you are doing to scale up the distribution?
Yes. So certainly, wholesale would always be very, very integral part of our route-to-market structure. Because if you look at this category is available in about 9.2 million outlets, right? And the source to reach to these outlets, the media is wholesale or [indiscernible] only. No company can afford to make their direct reach to -- anywhere close to these numbers. So that's where the role of wholesaler is.
Now kind of activations, what we do, we do some wholesale, be it some extra discounting to wholesale in certain cases where the throughput of volatile is very high. So there, it's an alternate replenishment to the wholesale. So those are the things we do in the separate wholesale. We so -- yes, wholesalers get disproportionate focus on.
And what would be our wholesale contribution to net sales?
So to -- our wholesale contribution would be upwards of about 50%, 55%.
Okay. But for the industry, it's very high, about 70%.
So our [indiscernible] spoke about that, our contribution of large part is by far high. So yes, the company worked early into INR 5 and INR 10 where this would be even higher in that stuff. And on coverage, if you look at -- our reach is also not as -- I mean, I think once we reach, say, about 20 lakh outlets, so perhaps that's where the wholesale contribution will also go up and will also drive our [indiscernible].
Okay. And last question. When I look back, say, sometime September, October and then compare to November, December, the promotional intensity discounting, which has gone up because the sales was not happening, in fact, Diwali has not made the expectation of most of the companies. Now is that promotion intensity and discounting which you have seen in the market, some places, say, maybe in the wholesale dominant places, is that intensity has come down? Because finally, the commodity inflation is also inching up? Or things are status quo in the month of Jan, Feb?
No, no. It has certainly come down in that stuff. So the companies are looking at increasing prices and all that stuff. So that's the...
The next question comes from the line of [ Sunil Shah ] from [ SRE PMS ].
Yes. Sir, just to say the numbers. In the fourth quarter of last year has been one of the best ever for us, and we are stepping into this fourth quarter right now. So here we have burdened off our own overachievement of last year's fourth quarter. FY '25, we grew over FY '24 in terms of the numbers. Sir, my point here is to understand for you, is there any strategic [indiscernible] which you are revisiting or relooking, your targets of rolling out about 3,50,000 outlets by next year or so?
So are we visited any of the fundamental structural things that we have thought of at the start of the year? And because this year has been to challenging, specifically in the third quarter. So is there any revisit on the broader thoughts that you have in the company? Or is it like a cyclical factor, I mean, then in the next 3, 6 months, we'll be back on track. So just wanted to understand, is there any cabinets from the company's point of view?
No, no, there is no change in the thought. Largely, our focus is to drive direct reach. That's what our focus is. We also target from day when we started, talking that we will -- this year, we'll add close to 50,000 new outlets. And we are on track, like we have added close to 38,000 outlets in the quarter in this quarter also our target is on track. So that's sort of our drive is, to have close to 3 lakh outlets this year. And that's what our target was in this year.
Sir, on the product side, Western Snacks or something which is perhaps not doing well, are we noting growth in those as well?
No, no, it's not like it's not doing well. Until quarter 2, you'll see that Western Snacks are doing very good, third quarter, as I mentioned earlier also. So largely third quarter due to palm oil price increase and not to also but [indiscernible] few days. So we have stopped manufacturing of -- or the reduced refactoring of Western Snacks specifically. And that's what has resulted in 0%, 0 growth. But the overall quarter in end of December, again, potato prices came in a normal level, and we started [ production at ] peak. So this quarter, we again see the Western Snacks, the same level what we are doing.
Sir, at this challenging environment, do you see any kind of elimination of competition from smaller players or anything? Or [indiscernible] on the substantial?
May I request you the repeat the question, please.
Sure. So this challenging environment, do you see elimination of competition of any -- some small organized players? Or this is so solid period in which we can see a regulation of competition?
So competition in small places, if you look at, so that's the cycle. These will come, few will go. That will always be happening kind of our stuff. Because certain companies not able to sustain, not able to survive in the kind of environment of inflation and all this stuff. So that always will be the story. If you look at the Nielsen report, any of the sale would have at least 200 reported companies who existed and now feel them have weeded off. So there's an ongoing cycle.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for their closing comments.
Thank you, everyone. Thank you all the investors for taking time out. Hopefully, we met your expectations in terms of answering the questions whatever came up. We'll be happy to reach out to you, or you guys can reach out to us for any clarification you wish to seek. Thank you, organizers, for being patient and organizing for this call. Thanks again on behalf of Bikaji.
Thank you. On behalf of Bikaji Foods International Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.