We have seen a revenue growth of around 40% in the biscuit segments. Could you talk to us about how much of it was volume led and what part of it was actually price led?
Primarily it was largely volume led. We have taken a price of approximately 10 odd percent and largely it is an effort of driving our distribution and growing through volume, premiumisation. These are the two key drivers other than the price which was approximately 10 odd percent and largely led by the huge effort made in terms of driving our distribution.
So your EBITDA margins which have gone to about 14% at a time when commodity inflation generally has been strong. What happens next? If prices come down, will you be able to improve the margins further?
What we are targeting and which we have said earlier to our investor community is that our first target is to consistently deliver over next few quarters 13% to 14% EBITDA. And as far as the commodity prices are concerned, yes there has been some bit of a softening but it has not entirely mellowed down. But yes coming back to the margin, the target is to deliver 14% over the next few quarters before we make the next leap jump moving up from 14%.
Wanted to also understand what your outlook is when it comes to your EBITDA margins as well because near-term target of about 14% had been spoken about which has already been achieved in Q3. So now, will there be revisions on the upside when it comes to margins?
As I said just before that first objective or first target of the company is to consistently deliver this 14% over next few quarters and then obviously we will make a journey from 14% to 15%. But yes, the first target is to consistently deliver around 14% of EBITDA. As you know that we are growing and we are also investing in our growth, so we are investing in our S&D which is sales and distribution, we are investing in our marketing. So alongside this investment in the growth, we are very conscious of margin as much as we are conscious of our revenues so that would be the journey that stay around or consistently deliver around 14% EBITDA for the next few quarters and then move up and do a journey to 15% EBITDA.
Also wanted your sense if you are worried about the threat of increased competition because we were just listening into the commentary coming in from as well and they are talking about how they want to expand their positioning when it comes to the north India and Western Belt as well. Is this something that can impact the competitive intensity and then hence the pricing and margins?
The biscuit market and the landscape is fairly large and with our aggressive growth and distribution we have taken a journey and a target to get to doubling these outlets by March of 2024 and we are very much on that path. So, we are fairly confident.
We have invested in the sales front line, so we have invested in the front line, strengthened the front line to approximately 850 people. We have invested in FSA, which is Sales Force Automation, to assist our sales force to help them improve their own performance. We are in the process of implementing Botree DMS with our distributors and we have also invested in the building sales capability and designed a sales training programme which is under execution.
So with enough going in the input APIs, we are very confident that we should be able to drive our volumes and revenue up in high teens in the coming quarters. Let us understand that what kind of institutional growth you expect going forward, let us say in your bakery business, one is the B2C business which is growing because you are increasing your distribution, your brand is expanding; but what about the institutional business which is always a tough business, highly competitive and very price conscious?
What we see in the market is that institutional business is also growing fairly well. It is growing in high teens and that is what our expectation is for the next few quarters because as the consumption story of India remains really strong and the QSR businesses in India is kind of growing very-very well, so we do expect that even institutional business should continue to grow in teens.
Is there a plan in place to compete with the heavyweights, for example Britannia, , even Patanjali now has become very aggressive in the bakery market, I mean there are disruptions which are clearly happening, the variety of biscuits and the variety of breads are increasing, so what is your plan in place to have an edge?
So our edge is primarily on the bakery side which has been our premium product. The quality of the product and the innovation which we are doing and introducing new product lines in this category will help us perform well in the future as well.
So we are fairly confident and English Oven brand which is our bakery B2C brand is kind of widely-widely accepted by the consumer. So, we feel fairly confident that with the expansion of our distribution and with the product innovation we should be able to continue our leap in the bakery segment.