The company held its conference call on 20th Jan 2017 and was addressed by Mr. Sachin Gopal MD
Key Highlights
During Dec'16 quarter, there was around 2% volume and 2% value growth in sunflower oil. Peanut butter showed a volume growth of around 20% but value growth was around 13% which was largely in line with strategy of the company to restructure and synchronise its position in some of the markets. Company took lot of action in this space.
The consumer snacks including Act II popcorn business saw a volume growth of 9% and value growth of around 7-8% in Dec'16 quarter.
Demonetisation didn't have any material impact on the company's business. Generally demonetisation has effect on businesses where there is a wholesale presence, large distribution penetration and traditional sales. The company had hardly any wholesale presence. Moreover its sales are mostly a combination of modern trade and traditional business. So in all there can be some 5-6% affect on the business and nothing more.
Going forward the company plans to introduce 2 new products which are a part of ConAgra Parent's basket in H1 FY'18. Management aims to leverage the existing brand building exercise for these new products.
The company is on its target to increase the food business contribution from currently around 24% to 50% in next 3-4 years.
The company also will increase its distribution network and will hire around 200 people in FY'18 as compared to around 100 in FY'17.
The company plans to increase its sales through wholesale channel which is one of the major agenda in the next Board meeting of the company where ConAgra will also participate and update.
The company plans to invest in Guwahati and Dhaka plants with capex of around Rs 15-20 crore which will be operational in FY'18. With this the company will cater to Western, Eastern and North Indian markets. The Dhaka plant is aimed for Bangladesh market which is underpenetrated and has huge potential for ready to eat market.
There are no major capex aimed at and company expects to be debt free company in next 2 years.
The company has built up a 24 months inventory of corn and is not worried of any price increase on raw material front. For edible oil, it buys on spot basis and any price increase of decrease of sunflower oil is market driven.
Institutional business stood at around Rs 8 crore in Dec'16 quarter.
The company can generate revenue of around Rs 450 crore from present capacity that is already installed.
There is a huge scope for further leveraging on the brands and making those single digit margin products to double digit and then to carry them to higher double digits going forward.
The management continues to remain focused on profitability.
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