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The company held its conference call for discussing Q3 FY14 results.
Key highlights
The net sales for Q3 FY14 have decreased by 10% to Rs 197.06 crore. The net profit was stagnant at Rs 13.08 crore.
Sundrop Oil and Crystal index on net sales was down by 12 pts to 88 while popcorn index was down to 95.
The company has taken price hike in popcorn due to raw material price rise, which has impacted its sales. Also, ad spend was less than last year, which has impacted the ACT II sales.
The fall in Sundrop was due to weakening of edible oil price, whereas company holds its prices which impacted its volume. Also there was significant spending by Wilmar, which is estimated to be double of that of Agro Tech and Marico spend, which impacted it Sundrop sales.
The competition activity has impacted the company's margin.
The local production of peanut butter is started. Almost, all stock is now locally produced. At present, the company is making gross margin of little above 30% on this small production, which will rise in future, once full production starts and smaller pack are also introduced. From April 2014, the company will start full fledged ad for peanut butter. The company has incurred Rs 35 crore capex on this plant.
The company is waiting for approval from regulator for 2 new products.
The mgmt said that its food business contribution at present is around 17% - 18% and it want to take it to 25%.
The capex for FY14 was around Rs 100 crore and uptil now Rs 35 crore has been spent. The large part of Rs 65 crore will be incurred in next 6 months. Unna Facility which is in Uttar Paradesh and Bangladesh facility work will be over in next 6 – 8 months.
Sundrop Oil, ACT II and Sundrop Peanut butter will be priority of company for ad spend in coming months.
The current tax benefit is due to Kashipur plant, which will be there till 31st March 2015. After that, the company will enjoy tax benefit only for its R&D facility which is in Hyderabad.
As AC Neilson has recalibrated, the direct outlets reach of Sundrop Oil is around 75000 against earlier which was 110000 and ACT II is at 160000 against 220000. Ready to Eat popcorn direct outlet reach is around 60000. Peanut butter store coverage is around 35000 – 55000.
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