Britannia Industries Limited (BRITANNIA) Q4 FY23 Earnings Concall Transcript

Britannia Industries Limited (NSE:BRITANNIA) Q4 FY23 Earnings Concall dated May. 05, 2023.

Corporate Participants:

Mayank Mundra — Executive Assistant to Managing Director

Varun Berry — Managing Director and Vice Chairman

N. Venkataraman — Executive Director and Chief Financial Officer

Vipin Kataria — Chief Sales Officer

Analysts:

Chirag Shah — CLSA — Analyst

Vivek Maheshwari — Jefferies — Analyst

Arnab Mitra — Goldman Sachs Asset Management — Analyst

Richard Liu — JM Financial — Analyst

Latika Chopra — J.P. Morgan — Analyst

Sheela Rathi — Morgan Stanley — Analyst

Avi Mehta — Macquarie — Analyst

Percy Panthaki — IIFL Securities — Analyst

Shirish Pardeshi — Centrum Stock Broking — Analyst

Kunal Vora — BNP Paribas — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Britannia Industries Limited Q4 FY ’23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Mayank Mundra from Britannia Industries Limited. Thank you and over to you, sir.

Mayank Mundra — Executive Assistant to Managing Director

Thanks [Indecipherable] Hello, everyone. This is Mayank from the investor relations team. I welcome you all to the Britannia Earnings Call to look the financial results of Q4 Financial Year 2023. Joining us today on the earnings call our Vice Chairman and Managing Director, Mr. Varun Berry; Executive Director and CEO, Mr. Rajneet Kohli, Executive Director and CFO, Mr. N. Venkataraman; Chief Sales Officer, Mr. Vipin Kataria; Chief Marketing Officer, Mr. Amit Doshi; and Chief Procurement Officer, Mr. Manoj Balgi. The analyst presentation is present on our website. Before I pass it on to Mr. Varun Berry, I would like to draw your attention to the safe-harbor statements in the presentation.

Over to Mr. Varun Berry to give remarks on the performance.

Varun Berry — Managing Director and Vice Chairman

Good evening. I’m sorry to call you out so late in the evening. So, let’s get to the deck. So, on Page Number 3, you will see our revenue, profit as well as our market share trend. So, for the quarter, we have grown 11% revenues. For the year that’s grown by, it’s a 15% revenue growth. Operating profits for the quarter have been grown by 47%, and for the year, it’s at 30%. Our market share gains continue and with the the second-largest competitor has gone up in this quarter as well.

Moving to the next slide which is our regular slide which gives the five strategic pillars, which we drive to get profitable growth. And I’ll think each one of these as you go forward. So, on the distribution front, as you see, we’ve got, the number of rural distributors has gone up from 26,000 in March ’22 to 28,000 in March ’23. So, we’ve added 2,000 distributors. And the rural market share is 1.4 times what we had for all India. So, we continue to gain more share in rural. If you look at our direct reach, it’s gone up by 2 lakh outlets. We’ve gone from 25,00,000 to 27,00,000 approximately in terms of number of outlets leased directly by us.

So, moving onto the next slide which is on the marketing activities. This quarter, we re-launched Pure Magic which was doing really well. We also had the launch of our aseptic PET bottles, drinks in the aseptic PET bottles. And that’s doing really well for us. On the other front, the brands that were on air, Marie, which is on Season 4 of the Startup Contest was on air. Good Day Choco Chip was on air and is doing quite well. Maska Chaska where we used Ravi Shastri, that has gained good market share this quarter. And Potazos and Rusk, they were all on air. So — and digital activities also were there on most of these brands.

Moving on to the next slide. Innovation, we’ve got some good results there. So, Golmaal which was started off in the East has now got extended to South and West, and we are seeing a 40% sequential shift quarter on quarter. The Nutri Choice Seeds &Herbs, we’re seeing a 50% sequential shift quarter on quarter. Milk Bikis Classic which was launched in Tamil Nadu coming is also assuming a very healthy sequential shift. And Croissant, we launched the variant and Croissant continues to do quite well for us. I’ve already spoken about the milk shakes we have. Our milk shakes in PET — in Tetra Pak and now we’ve launched within the aseptic PET. We’ve added to that our Rich Milk Shakes which was launched last quarter, as well coconut water, which has recently been launched. And one point that I wanted to make our milk shakes is that we are probably one of the few companies which are making these milk shakes from fresh milk. And hopefully, the quality will speak for itself. Winkin Cow is now a INR150 crore brand. We are sourcing all of our aseptic PET from our new factory Ranjangaon. Again, I would urge you, if you’re interested in taking a tour of our factory, we would be very happy to take you there. Our distribution reach is two times shift over the last year as far as milk shakes is concerned. And our overall innovation contribution is looking to be good.

On the adjacent business, we’ve got the bakery adjacencies there that continues to do a profitable growth trajectory, which for many years, we’ve not seen, but now for the last five, six years, we’ve been growing our bread business profitably. We’ve commercialized three new lines in rusk. I don’t know if you know that we never had any rusk line besides one in Madurai. And now we are commercializing three new lines. This will ensure that we produce very good quality products and at the right price. And cake, there was mushrooming cake brands all across and there were different types of cakes which were coming in and we’ve now been able to bridge portfolio gap and we’ve got a full contingent of cake products which are there in base markets.

Croissant, I’ve already spoken about, basically we joining the INR100 crores club in this category. The base markets which are Tamil Nadu and West Bengal, we’re doing a test market. We continue to grow more than 30% year-on-year and the new markets are coming to play. We’ve spoken about the new flavor. We have started to distribute. We are now transitioning to the Britannia Laughing Cow brand. As you know that we’ve got a joint-venture with Bel, and that is scaling up. We’ve spoken about Winkin Cow go against the feedback. Total milk collection is — directly from farmers is at 70,000 liters. But we’re doing about 130,000 liters of bulk collection, which takes our total milk collection to 200,000 liters per day. We are now supplying the entire SMP and SCM for our captive consumption to our bakery division from the Dairy Plant.

Next [Technical Issues]

Operator

Ladies and gentlemen, the line for the management seems to have disconnected. Please stay with us while we reconnect with the management. Ladies and gentlemen, thank you for your patience. We have reconnected with the management.

Over to you, sir.

Varun Berry — Managing Director and Vice Chairman

Sorry, guys. Some technical glitch. So, I was on Slide Number 9, and I was talking about the waste that we reduced in everything that we do, reducing the distance to market for the products that go to to the consumer, as well as reducing the distance or the supplies that we get to the plants. We’ve also got the renewable energy — has moved up and we’ll come to the numbers as we talk about our ESG agenda. We’ve also been on the journey on reverse auctions for our procurement is moving quite well. And in our supply chain replenishment sales productivity are looking pretty good. So, as a result of that, in ’22, ’23, we’ve had a spectacular year from savings standpoint, and it’s nine times what it used to be in ’13, ’14. And it’s been a huge jump shift in the season and it was necessitated through the inflation that we saw and the team really got together to make sure that we make the best of it.

Moving on to Slide Number 10, which is our ESG agenda. So, there are four pillars: people, resources, growth, and governance. So, as far as people is concerned, we are now dealing with almost 3,000 farmers who are enrolled as our milk supplying farmers. We’ve also got a formal extension program. There, over 3,000 farmers have been supported who are beneficiaries of all the support that we provide out of the medical camps that we’ve conducted. There are also approximately 2 lakh beneficiaries of the Britannia Nutrition Foundation. And we’ve got 75% female workmen in the new greenfield factories that we’ve commercialized this year. So, all very strong points.

From a resources standpoint, as I was saying, renewable energy, we’ve moved up from 30% to 36% during this year. Our CO2 emissions have reduced by 1.1% this year. We’ve reduced 51 tons of plastic in the products that we make. We’ve also got 71% of the plastic that we use as recyclable plastic which is basically BOPP and CPP. These are recyclable laminates, as well as the NI [Phonetic] bags that we use for wholesale packs. We’ve also reduced our water consumption by 33% versus ’19, ’20. And this 33% is per ton of products that we make. And we are ’22, ’23 as well plastic-neutral. We’ve collected and sent for recycling almost 33,000 [Phonetic] tons on plastic.

From a growth perspective, we had reduction of sugar. We reduced it by 1% over ’21, ’22, and we’ve reduced sodium by 5% over the same period.

We’ve also done from a governance standpoint, we’ve got 81 critical suppliers who have contributed more than 50% of the total volume sourced by us. And we assess them on quite a few parameters. The parameters that we assess them on are sustainability, social compliance, which is basically using the right kind of labor, etc., diversity in the labor, water management, waste management systems that they use, plastics, how much plastic that they use and how much plastic do they collect, and energy management. So, we’ve assessed them on these and they are coming out good. So, we are happy with the progress there as well.

Moving on to Slide Number 12, which gives us the top-line growth. So, if you’ve already seen, in Q4, we’ve done INR3,900 crores of revenue, which is 11% on a 12-month growth and 28% on a 24-month growth. So, both ways, we’ve got very solid and very good numbers on growth. The year we’ve ended ’22, ’23 at a 15% growth in revenues.

Moving to cost and profitability, Slide Number 14. This is the country’s food price index, which is showing that over the last year, there is a 10% inflation for the foods that all of us consumed. You know about the U.S. dollar, it moved up, but it’s now sort of stabilized with the rupee.

Moving to the next slide, which shows what kind of inflation we’ve seen. So, we’ve only got four commodities here, and these four commodities are about 60% of our total purchase. So, flour, which is the largest, is actually exhibiting fair amount of inflation towards the last quarter. The prices are up 4%. And over last year, they’re up 21%. Palm oil, there’s a deflation. So, it’s down 6% versus last quarter and 14% versus last year. Laminates, again, deflationary, minus 5% and minus 9%. And corrugated boxes, similarly, minus 7% and minus 16%. The other commodities which are showing some signs of inflation, dairy is a very high inflation versus last quarter, at 20%, and versus last year at 54%. We are hoping that at some stage we will see some respite here. But it’s not in sight as of now. Sugar, again, some signs of inflation, while — versus last year and last quarter is flattish, but we are seeing some signs of inflation.

So, that’s the roundup on commodities. So, the summary is that this year, we’ve taken pricing actions to make sure that we offset inflation. We were not clear that kind of inflation because for a prolonged period we’ve seen a very large inflation. So, we said that is important that we take pricing and we make sure that we protect our bottom-line. There is some softening of material prices during the second half of this year. We also stepped up cost efficiencies and we are also evaluating if there is some corrections in price that we need to make. So, outlook is that we will remain vigilant on competitive pricing actions and we will closely monitor the stock price of wheat and sugar. And whenever necessary, we will make the right decision on if there is a price reduction required. There are certain brands and certain packs, there is already initiated price reduction or promotions, and we will continue to watch this space and see what needs to be done as we move forward.

Now moving to Slide Number 17, which is on our operating profits. As you see, from Q1 at 12.3%, Q2 was at 15.2%, Q3 was at 18.5%, and Q4 is at 18.9% operating profit. So, if you were to look at Q4’s 12-month growth and profitability, or operating profit, it’s at 47%, and 24-month growth is at 63%. So, very healthy numbers there.

Moving to the last slide, Slide Number 18. If you look at the quarter results, 11% net sales, 47% operating profit, 47% PBT, and the same number for PAT [Phonetic] The year number, 15%, 30%, 46%, and 52%. If you were to look at ratios, profit from operations in ’22, ’23 16.3% versus ’21, ’22 at 14.3%. Profit before tax is that 19% versus 14.9%. And profit after tax is at 14.5% versus 10.9%. So, those are the results.

As I said earlier, we might have to moderate our pricing at some stage. But overall, the trends are looking very good.

So, with that, I will open the house for questions. Over to you, guys.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Before we take the first question, we’d like to remind the participants that in order to ensure that the management is able to address questions from all participants, we request you to please limit your questions to two per participant. The first question is from the line of Chirag Shah from CLSA. Please, go ahead.

Chirag Shah — CLSA — Analyst

Yeah. Thank you. I just had a couple of quick questions. When I look at other operating income line, that has shot up very sharply in the last two quarters. This quarter, it is almost 17% of PBT. What is that function of? I know there are some incentives from the state government that I included here. But is there any lumpy revenue base that is hitting this quarter in the other operating income line?

Varun Berry — Managing Director and Vice Chairman

Yeah. So, the PLIs that we got from the government, so as we know that there was the PLI scheme which was initiated by the government, and we were one of the first applicants and we’ve got the benefit of that.

Venkat, do you want to take that?

N. Venkataraman — Executive Director and Chief Financial Officer

Yeah. Hello, everybody. So, PLI, especially, this is for the year ’21, ’22 and ’22, ’23, Quarter 3 and Quarter 4.

Chirag Shah — CLSA — Analyst

Sorry. PLI for for FY ’22 and ’23, you’ve got it in the second half of this year. Is that understanding right?

N. Venkataraman — Executive Director and Chief Financial Officer

For ’21, ’22, we realized [Indecipherable] in the current year.

Varun Berry — Managing Director and Vice Chairman

So, ’21, ’22 and ’22, ’23 came in the second half of the current year.

Chirag Shah — CLSA — Analyst

Right.

Varun Berry — Managing Director and Vice Chairman

That’s what [Indecipherable]

Chirag Shah — CLSA — Analyst

So, can you just quantify the PLI amount number, please? And because this number is quite large, and now as a percentage of PBT, how should we think of that number going forward?

N. Venkataraman — Executive Director and Chief Financial Officer

So, about INR90 crores odd is what is appearing in ’24. Now, we are expected to get about INR15 crores to INR20 crores per quarter moving forward.

Varun Berry — Managing Director and Vice Chairman

So, this one — this is the accumulation of many quarters, so this will be a onetime. And as we go forward, it will be about INR15 crores to INR20 crores per quarter. Okay. INR15 crores, INR20 crores per quarter would sustain into the next year?

N. Venkataraman — Executive Director and Chief Financial Officer

Yes.

Chirag Shah — CLSA — Analyst

Got it. Just secondly, how should we read the competitive intensity as of now? Is there a moderation? And how are we in terms of pricing action versus some of our key competition?

Varun Berry — Managing Director and Vice Chairman

So, see, it was a very, very uncertain period, because the inflation, we’ve never seen this kind of sustained inflation for such a long time for many, many years now. So, there was — everyone was double-guessing where this is going. So, we have taken a decision that we will make sure that we cover the inflation to our price increases and we went about that. So, there were areas where we were aware about the premium that we would like to have over other brands. And as I was telling you, we made some corrections. We were hoping that the entire table would move up. Some places it moved up, some places it didn’t. So, competitive intensity is, I would say, maybe slightly higher than what it was earlier. But nothing extraordinary. It’s just that the period was so uncertain that people were double-guessing. And we had the advantage of commodity buying last year, other people didn’t. So, it will pan out. As we go forward, it will sort of — it will all come back to normal. But I think we are now in a phase where inflation is going to be moderate and not going to be what we’ve seen in the last two years.

Chirag Shah — CLSA — Analyst

Right. And if I can just ask one last question. On the LUP side without asking specific numbers, how has the share of LUPs for us really moved in the last couple of years, and how do you see that going forward?

Varun Berry — Managing Director and Vice Chairman

See, LUPs, people are thinking that the — because the difference between our volume growth and our revenue growth is very high, LUPs are [Indecipherable] The fact is that the number of packs that we sell is still at a plus 12%, right? While the volume growths are very small, the number of packs are still 12%. So, there is no major shift in LUP versus family packs. It’s just that we’ve taken waste out of our — in LUPs. We’ve taken some grammage out of our LUPs and hence, volume is not growing, but number of packs is still growing very well.

Chirag Shah — CLSA — Analyst

Right. But the share of LUP pre-pandemic to now, would you say for us it has been constant, falling, or has increased?

Varun Berry — Managing Director and Vice Chairman

I would think it would be reasonably constant.

Chirag Shah — CLSA — Analyst

Okay. Fair enough. Thank you very much and all the best.

Operator

Thank you. Ladies and gentlemen, we request you to please limit your questions to two per participant. The next question is from the line of Vivek Maheshwari from Jefferies. Please, go ahead.

Vivek Maheshwari — Jefferies — Analyst

Hi. Good evening, Varun and team. First, on the gross margin for this quarter. You reported, I think, to have been the best-ever. And you did mention about the pricing action. So, so to speak, there is a bit of a mismatch between, let’s say, end consumer pricing versus what the spot input prices are. Where do you think the gross margin should settle at in the coming quarters?

N. Venkataraman — Executive Director and Chief Financial Officer

So, as far as I understand, maybe 1% here or 1% there. Won’t make a big difference.

Vivek Maheshwari — Jefferies — Analyst

Okay. You’re talking about the exit rate?

N. Venkataraman — Executive Director and Chief Financial Officer

I’m talking about the year rate.

Vivek Maheshwari — Jefferies — Analyst

Okay. The year, not the exit, right?

N. Venkataraman — Executive Director and Chief Financial Officer

No.

Vivek Maheshwari — Jefferies — Analyst

But Varun, why would — so, you are saying, it will be closer to the full-year average, you are saying. At the time, the input prices are — have gone down. In fact, the other question I had was, if you look at — because, let’s say, wheat flour has hardened, most of your key inputs would have gone down. As an RM index, if you look at where fourth quarter inflation would be, let’s say, quarter-on-quarter or year-on year?

Varun Berry — Managing Director and Vice Chairman

Can you just repeat that?

Vivek Maheshwari — Jefferies — Analyst

I’m saying, Varun, you have mentioned about different raw material hits the way which input prices are behaving. But if you make an aggregate index, my impression is that it will still be down quite a bit both quarter-on-quarter and year-on year. Can you just quantify if you take the weighted-average where the input index would be right now?

Varun Berry — Managing Director and Vice Chairman

See, we are looking at — in our plan, we’ve taken a 3% inflation. And that might be applicable only to us because as I said, we’ve done some strategic buying last year. And we did get some good prices for our input commodities. So, basis that, our internal plan is looking like low-single-digit kind of inflation.

Vivek Maheshwari — Jefferies — Analyst

As we head into F ’24?

Varun Berry — Managing Director and Vice Chairman

Yes.

Vivek Maheshwari — Jefferies — Analyst

In that context, Varun, shouldn’t there be at least 50 basis-point, 100 basis-point margin expansion in FY ’24 at a gross level?

Varun Berry — Managing Director and Vice Chairman

Well, if we keep it at the exit levels, but the point is that we might have to make a few changes to pricing in certain brands and in certain packs. So, we don’t want to become only margin-hungry and not continue our march on revenue growth, volume growth, and market share growth. So, it has to be a balanced play, and that’s what we’re trying to do. And that’s how we’ve looked at getting the volume triangle every year, which is getting all three together. So, that really is all twisted.

Vivek Maheshwari — Jefferies — Analyst

Got it. Thank you. I’ll come back in the queue, and very pleased to hear your comments — on your preference for revenues over margins. Wish you all the best.

Varun Berry — Managing Director and Vice Chairman

Thanks.

Operator

Thank you. The next question is from the line of Arnab Mitra from Goldman Sachs Asset Management. Please, go ahead.

Arnab Mitra — Goldman Sachs Asset Management — Analyst

Yeah. Hi, Varun. My question is on volume growth. So, as the pricing adverserizes and also you see looking at some [Indecipherable]

Varun Berry — Managing Director and Vice Chairman

Your voice is not clear. Just — we can’t hear you properly.

Arnab Mitra — Goldman Sachs Asset Management — Analyst

Is it better now?

Varun Berry — Managing Director and Vice Chairman

Yes.

Arnab Mitra — Goldman Sachs Asset Management — Analyst

My question was as the pricing adverserizes and you also take some grammage increases, do we expect the volume growth to start picking up now or if there could be a lag between the adverserization of the price and the volume growth starting to pick up for your business?

Varun Berry — Managing Director and Vice Chairman

I would certainly think so. See, but I don’t worry too much about when you — I’m not worried about the number of packs that we sell. So, I would wanted to see aggressive growth as far as number of packs that we sell. But yes, you are right, even volume growth will definitely pick up I would say.

Arnab Mitra — Goldman Sachs Asset Management — Analyst

Okay. Got it. And my last question, Varun, was on just an extension to what Vivek asked on the box margin. So, your exit 8%, versus the average of the year, which is 17.5%. So, would you look at that as the benchmark as what you can deliver given the changing dynamics of your input costs as well as price reductions in terms of FY ’24?

Varun Berry — Managing Director and Vice Chairman

Yeah. I would think so. I would say, average of the year would be more of [Indecipherable] And we don’t give any forward-looking statement, but I would say that’s the benchmark.

Arnab Mitra — Goldman Sachs Asset Management — Analyst

Okay. Thanks so much, sir. And that’s it from my side.

Operator

Thank you. The next question is from the line of Richard Liu from JM Financial. Please, go ahead.

Richard Liu — JM Financial — Analyst

Hi. Thank you. I just had a question regarding the difference in growth between stand-alone and consol. It’s 14% in stand-alone and 11% in consol. What’s that due to? And related to this, what I also noticed is that the COGS figure in rupees crore is exactly the same in stand-alone and consol. I mean, why would that be, sir, despite the difference in revenue? Thank you.

N. Venkataraman — Executive Director and Chief Financial Officer

The couple of things which are impacting, right, out of dairy. The non-biscuit potion of dairy has already moved into Britannia Limited. It has been a year, starting May ’22. So, that is one which is impacting the growth between stand-alone and consolidated. The second that is happening is that with the JV arrangement with Bel, and the transitioning into the distribution arrangement from April this year, the fourth quarter achieved sale has been — it’s been accounted on a joint-venture accounting basis. And therefore, the revenue doesn’t appear there, whereas the share of profits of Britannia appears. So, these two are impacting the almost 1% something. So, we have — our growth rate should be almost about 12.9% or something COGS [Indecipherable]

Richard Liu — JM Financial — Analyst

And the COGS would be similar for both consol and stand-alone?

N. Venkataraman — Executive Director and Chief Financial Officer

Same thing.

Richard Liu — JM Financial — Analyst

Got it. Thank you.

Operator

Thank you. We have the next question from the line of Latika Chopra from J.P. Morgan. Please, go ahead.

Latika Chopra — J.P. Morgan — Analyst

Yeah. Hi. My question was the around now we have full-year FY ’23, if we could share the revenues for the non-biscuit portfolio? And if possible, give some color on the main categories within the segment?

Varun Berry — Managing Director and Vice Chairman

So, the largest categories are cake, rusk, and now, dairy and bread. So, they’re are approximately the same size, about INR600 crores, INR700 crores each, right? So, these four categories are about INR700 crores each. And then we international, which is another INR700 crores, INR800 crores. So, these five categories. And then we’ve got emerging categories like croissant, which is now INR100 crores, and then there are other adjacent [Indecipherable] would be another INR100 crores. Yeah.

Latika Chopra — J.P. Morgan — Analyst

And the second and last question was, again, coming back to revenue growth, you pointed out that pricing is going to moderate. I believe maybe a lot of the pricing might be returned to consumer in form of grammage increases. But at a broader category growth level for biscuits, are you looking at a high-single-digit kind of a revenue growth for this year as pricing moderates? And also wanted to understand the scope for further distribution expansion. You have done a really good job on [Technical Issues] But on direct reach and on rural penetration perspective, is there more headroom to add more outlets with relevant throughput there?

Varun Berry — Managing Director and Vice Chairman

So, I’ll let Vipin answer the distribution question.

Vipin Kataria — Chief Sales Officer

Yeah. Hi, Latika. So, I think, distribution has been our strength and [Indecipherable] right? So, just to give you a perspective, the category has around 92 lakh outlets, each about 67 lakhs [Indecipherable] space is that much. The distribution obviously is spearheaded by rural because our entire portfolio, it’s pretty relevant to rural as well as urban and metro. So, I think the distribution that we’re talking about is pan India and pan geography And what we will see is that even in this year, we will keep improving our distribution in rural as well as urban areas,.

Varun Berry — Managing Director and Vice Chairman

And your first question. So, it’s very interesting actually what Vipin has given the table. The gap between us and the category is 67 lakhs versus 92 lakhs, right? So, still a big number. And the only good thing is that our weighted today is over 90%, so it’s — we are reaching 91% almost — we are 91% weighted distribution and for the first time, we are ranked number one as far as weighted distribution is concerned. So, yes, we would want to expand our distribution because we as we’ve gone direct and as we’ve gone to more and more outlets, share in those outlets has gone up. And we’ll continue to do that through that headroom. And volume, yes. See, the fact is that the volume growth had been timely not because people are not interacting with our brands and our products. Yeah, the number of packs are still — the number of packs that we sell are still much higher than what they were last year. But yes, this year, because it’s not just about the grammage that we are increasing the packs. That’s going to be very small. But we still — what we did last year, volume growth are going to be certainly much better than that [Indecipherable]

Latika Chopra — J.P. Morgan — Analyst

All right. Thank you, Varun, and all the best.

Varun Berry — Managing Director and Vice Chairman

Thank you.

Operator

Thank you. Ladies and gentlemen, we request you to please restrict your questions to two per participant. The next question is from the line of Sheela Rathi from Morgan Stanley. Please, go ahead.

Sheela Rathi — Morgan Stanley — Analyst

Yeah. Thanks for taking the questions. My first question was with respect to the market-share gains this year, I believe that we are doing something differently and I would attribute it to distribution. But what has changed that is driving so much market share gains especially when we are taking so much price hikes?

Varun Berry — Managing Director and Vice Chairman

One is distribution, second is the inherent strength of the brands. One thing that we always put on a back burner is the strength of brands. And we truly own stable a very, very solid brand. So, the combination of solid brand with ably supported plus distribution, plus the efficiencies that we are bringing, the freshness of the product that we produce and sell to the outlets with all the factories that we put up, the efficiency that we bring to the table, the quality of the products because these are new lines, technically much better lined than what we were using in the past, I think all that adds up. So, it’s not one factor. But yes, I would say distribution would be still the number-one factor followed by brand strength.

Sheela Rathi — Morgan Stanley — Analyst

And in any way, is it changing the mix of our portfolio from being more premium to becoming more mass?

Varun Berry — Managing Director and Vice Chairman

No, not at all. We — our mass brands have been doing as well as the others. So, there is no change in the portfolio.

Sheela Rathi — Morgan Stanley — Analyst

So, that would be 50%?

Varun Berry — Managing Director and Vice Chairman

If anything, it’s becoming more premium.

Sheela Rathi — Morgan Stanley — Analyst

So, is it fair to assume it’s 50-50?

Varun Berry — Managing Director and Vice Chairman

What? 05-50, what?

Sheela Rathi — Morgan Stanley — Analyst

Premium portfolio would be 50% on the biscuit form?

Varun Berry — Managing Director and Vice Chairman

I don’t know how you define it, but the way we define it is the value products for us are very small. The Tiger brand is very, very small today compared to a Parle G or a 20-20 or some of these brands. So, we have a premium heavy portfolio compared to the others.

Sheela Rathi — Morgan Stanley — Analyst

Understood. And my second and final question is to do with milk inflation. And what we hear is that milk inflation will continue through the year. Does that lead to some recalibration of our dairy strategy?

Varun Berry — Managing Director and Vice Chairman

Well, no recalibration, but we took it on our chin, we took the inflation on our chin, we did suffer some profit downside as far as dairy was concerned. It’s a tough category. But I think we are managing quite well. We’ve immediately established a very strong brand with Winkin Cow. Today, I would think that it’s out of — some of the innovations that we’ve done, this definitely stands out. I don’t know if you’ve tried the products. They’re just fantastic products. And they are premium products. We’re selling it at INR35 and INR40. So, I think we’ve taken a little bit of a brunt on profitability but not on the top-line and we are hoping that we’ll be able to establish solid brand portfolio in dairy as well. Hello?

Operator

Ms. Rathi?

Sheela Rathi — Morgan Stanley — Analyst

Yes, thank you very much. Thanks, Varun.

Operator

Thank you. The next question is from the line of Avi Mehta from Macquarie. Please, go ahead.

Avi Mehta — Macquarie — Analyst

Hi, Varun. Could you give us a sense of the competitive intensity, especially, because your comment last time that you were seeing some enhanced competition in some pockets which did not need pricing action. So, I just wanted to understand why the change this time? And should we read anything in the market share gain in rural basically moderating to 1.5 times, 1.4 times versus at 1.5 times in 3Q and the gap reducing between the two with what we saw in the graph last quarter? Thank you.

Varun Berry — Managing Director and Vice Chairman

It’s not the variation. 1.5 to 1.4 is not a big deal. No, I don’t see a substantial change in the competitive intensity. Yes, there are some categories where there is heavier intensity. There are categories like cake, where there are lots of small players. Even category like rusk, there are lots of regional players. So, what we are doing is we are taking very stringent action in those categories to make sure that, one, we can produce the products at the right price; second, we can compete and win with the local players. Earlier, we used to not look at local players. Just to give you an idea, rusk has some 2,500 producers of rusk across the country, right? And some of them are becoming big in their own small territory that they operate. So, we’ve taken action. We are now looking at it regionally. North for us is a very small market share territory for rusk. So, we are looking at how we deal with that and how we take our rusk market share up in North India. And similarly, in case where there are lots of INR5 packs coming up, we are looking at how do we compete with those local players.

Biscuits, in, I would say, not really, I would say because when there is a price increase, the number two, number three, number four players will always try and take a little bit of advantage with the price and try to push their product. But finally, it all evens out and I don’t think there is a very high intensity as far as competitiveness is concerned. There are some new products that we are doing there. We’ve built inherent barrier to entry of smaller players. So, if you were to look at croissant, I think it’s just two players there, it’s us and Bauli. And the reason for that is that it’s a high capex model where a small player can’t come in with a INR5 crores investment. It requires a very large investment that it’s going to be a very deliberate move that someone will make. And similarly, aseptic PET, again, a very expensive line, but serious barrier to entry. And so, those are the kind of entry barriers that we are creating in certain categories and we will continue to do that as we move forward.

Avi Mehta — Macquarie — Analyst

Got it, sir. And sir, just a second bit, just pushing back on the margin bit. You clearly are — there is a brand strength. There are barriers that have been created by these manufacturing lines. And this quarter did not have any material one-off. We are already at that end of the steady-state guidance. Why is it that we are still arguing for margins to be relatively low given the brands are actually driving the growth themselves? So, what is it that I’m missing which is modulating that margin expectation, sir?

Varun Berry — Managing Director and Vice Chairman

We have to remain competitive. We don’t want to lose — we don’t want to see it [Indecipherable] As an analyst, you always look at how do you get more margins. We are not looking at quarter-to-quarter. We are building a brand for the — we are building a business for the next 100 years. So, we have to moderate all three of these to make sure that the momentum continues on all three.

Avi Mehta — Macquarie — Analyst

Okay, sir. That’s all from my side. Thank you very much, sir.

Operator

Thank you. The next question is from the line of Percy Panthaki from IIFL. Please, go ahead.

Percy Panthaki — IIFL Securities — Analyst

Hi, Varun. Congrats on a good set of numbers. My question is on your distribution. So, for any company, there will be at any given point of time an optimum level of direct distribution. Beyond that, the cost advantage — the cost benefit sort of equation is not advantageous. So, in your new, at current point of time, where do you think that ceiling lies beyond which it really doesn’t make sense for you? Of course, that’s a moving target. I’m saying as of today, what is the number beyond which it doesn’t make sense to go directly?

Varun Berry — Managing Director and Vice Chairman

No. So, Percy, the point is that we are already at about 90.7% weighted distribution. And we are joint number one as far as weighted is concerned. So, the question can be that, how far do you want to go, if you’ve already got to 90% plus, then how far do you want to go. But the other side of the coin is that there is this huge penetration with the hilly belt, where the gap — so, let’s say, the gap between us and the number-two player in share, but the number-one player in distribution, today, we are still lower than them by about 5 lakh outlets, rights? Now, if you were to look at the same gap in the hilly belt it will be huge, right? They will be probably 12 lakhs, 13 lakhs more than us in he hilly belt, which is obviously a small subset of the total country. So, what we are doing and that’s why we’ve segregated the result and we are saying that we want to drive our share and distribution. That is where our surge on distribution is going to come. And that hilly belt is more rural than urban, but I’m not saying that it’s going to be real surge. We have to build urban as well in those states. But I would say that we can easily add another 5 lakh, 6 lakh outlets without batting and handling.

Vipin, what do you say?

Vipin Kataria — Chief Sales Officer

I think considering large dimension to the 6,500 [Phonetic] distribution, right? So, right now, we spoke about 67 lakhs, which is our direct plus indirect. But I think beyond the DNA boundary if you’re moving up over direct distribution, because that gives you direct access to the retailer, and that gives you access to some more and more brands, right, which increases your market share, which increases your brand penetration. So, therefore, we are going in a very planned manner in terms of which are the most relevant side of markets. And like Varun said, we have a hilly belt, metros, urban, and in a lot of small markets, we have a distribution pool, our indirect loop. through our embedded. Therefore, there is a good balance of direct distribution, which takes care of weighted and there is indirect distribution, which helps us [Indecipherable]

Percy Panthaki — IIFL Securities — Analyst

Right. My next question is on the diversification of your portfolio. So, can you give me some kind of flavor on what kind of diversification has happened, let’s say, over the last five years, in the sense that if you can just give me a ballpark CAGR of five years for the biscuit portfolio and for the non-biscuit portfolio separately? And if possible, do you have some targets in mind in terms of five years down the line, what percentage of your share will come from non-biscuits versus what it is today?

Vipin Kataria — Chief Sales Officer

See, I think, so if you consider this year, we have grown 1.5 times in the non-biscuit portfolio. So, to just give you a sense of next five years, I think the growth rate will only have a higher tier. So, like Varun spoke about, croissant or wafers, or the entire set of that we have done with [Indecipherable] the entire drinks portfolio. So, we have a large distribution muscle and what we’re doing is we are leveraging our entire distribution throughput on more and more brands, which are over and above the entire biscuit portfolio.

Percy Panthaki — IIFL Securities — Analyst

And last question on Time Pass snacks brand. Are you taking a pause there? Is there no sort of plan to ramp that up in the near term?

Varun Berry — Managing Director and Vice Chairman

We have done some launches and relaunches within the test market directly. We are testing them out. I don’t know if you’ve tried them. Some really good products. But still only in the test market directly. So, we want to be careful. We want to make sure that we — when we spread it across the country, we have a willing conversation. So, we are going to be patient there. We are not going to [Speech Overlap]

Percy Panthaki — IIFL Securities — Analyst

Okay. That’s all from me. Thanks, and all the best.

Operator

Thank you. The next question is from the line of Shirish Pardeshi from Centrum Stock Broking. Please, go ahead.

Shirish Pardeshi — Centrum Stock Broking — Analyst

Hi. Good evening, Varun and team. Thanks for the opportunity, and congratulations. One question to start with the volume growth. If we look at the full-year growth at 15%, is it fair to assume that the volume growth would be in the range of about 2%, 3% for full year FY ’23?

Varun Berry — Managing Director and Vice Chairman

About that much, yeah. It’s very small, small thing to do.

Shirish Pardeshi — Centrum Stock Broking — Analyst

And similar number for Quarter 4 also?

Varun Berry — Managing Director and Vice Chairman

Yes.

Shirish Pardeshi — Centrum Stock Broking — Analyst

The second question, you always been guiding us that the new product contribution number, would you have in mind what number we ended in FY ’23 and what we should be expecting in FY ’24?

Varun Berry — Managing Director and Vice Chairman

FY ’23, we’ve done is — the way we qualify new products is — new products which have been launched in the last 24 months. So, last 24 months products are approximately three 3%, 3.5% of that total revenue. We are trying to scale that up as we go forward to about 4% in ’23, ’24.

Shirish Pardeshi — Centrum Stock Broking — Analyst

Okay. And last question on the manufacturing units, so two greenfield and one brownfield in Odisha. So, what are the products we are manufacturing, because what you have been guiding us that you are closer to the market and UP is the largest glucose market. So, what kind of throughput we are expecting. And I’m supposing that all these three are under PLI.

Varun Berry — Managing Director and Vice Chairman

No, PLI is separate. We’ve also got GST. We have got a lot of GST benefits as well. So, see, it’s not that we are doing these factories because we are getting some benefits from them. These factories are required. If you think about it, we do 1.3 million tons of products every year, right? Even if we are growing at 5%, that would mean 65,000 tons of extra product that we need to do every year, even at a 5%. And 65,000 means how many — one, two — so, we need four lines for that. And so, one option would be to build the mega plants and keep adding lines. That’s very tough with our kind of product because it takes a lot of space, it takes a lot of labor. And if you’re getting benefits from these schemes, then it’s better to — like in the North, we don’t have any factories. So, the U.P. factory is going to be — we’ve only got Uttaranchal, which is — which was done in many, many years ago. And now, U.P. is becoming a very large part of that business. So, they have a factory there that we can have the best products, the fresh products. So, this factory is not producing anything different from what we do in other factories. They’re the same products which are being produced there. Yes, we are looking at rusk coming in house to an extent. We hope that already cake coming in house. And we are looking at putting up some hi-tech innovation lines in some of the factories in wafers and all of that, even crackers, some hi-tech cracker lines. But basically, if we look at bulk of the investment, it’s going to be in the base line, of the base brands.

Shirish Pardeshi — Centrum Stock Broking — Analyst

That’s wonderful. Just one extension on to Venkat. How much capex we would require for this — to complete this project in F ’24?

N. Venkataraman — Executive Director and Chief Financial Officer

In FY ’24, we estimate it to be in the region of INR500 crores to INR600 crores. These are largely being dairy investments, the brands and dairy investments. It’s all going to be some investment in Ranjangaon and the facility that’s coming up in Bihar.

Varun Berry — Managing Director and Vice Chairman

And thereafter, it will moderate. So, we lagged two years of high intensity as far as capex is concerned. And thereafter, it will moderate because we will capacity, we will have put up a dairy facility, which obviously is going to be capex-heavy. And thereafter, it will become the [Indecipherable]

Shirish Pardeshi — Centrum Stock Broking — Analyst

Thank you, Varun. I hope you have left lot of benchmark for Rajneet to walk on — walk tightly next year. All the best.

Varun Berry — Managing Director and Vice Chairman

Thank you.

Operator

Thank you. Ladies and gentlemen, we will take the last question for today from the line of Kunal Vora from BNP Paribas. Please, go ahead.

Kunal Vora — BNP Paribas — Analyst

Yeah. Thanks for the opportunity. You mentioned that this strategy to make in house, can you talk more about this? What is the current mix of in-house? How will this change with new additions and whether the productivity will restrict the margins?

Varun Berry — Managing Director and Vice Chairman

So, it’s not changing dramatically. It probably goes from in-house, it will go from 57% to around 65%. But certain products categories, it will be a much larger change. So, for example, rusk, we had in-house only one line for domestic. We had one line in [Indecipherable] for international business. But domestic, there was only one line in our Madurai factory. And now we are putting up three more lines. That will move up dramatically, but biscuits, the overall, it will only go up from 57% to 65%.

Kunal Vora — BNP Paribas — Analyst

Okay. And secondly, what’s the rationale for launching coconut water and would you look for larger player in the beverages category? And would you invest aggressively in the Come Alive brand and will you take it to duty?

Varun Berry — Managing Director and Vice Chairman

It is in duty. Yes, we are looking at it. Obviously, beverages is an important play for us and that’s why we’ve invested in the race of [Indecipherable] And coconut water is a third party manufacturing. But, it’s a very, very good product. I don’t know if you’ve tried it. And yes, Come Alive will be a very important brand for us as we move forward. It will encompass different healthy products. Generally, very, very healthy products. And obviously, if we are looking at how do we build the concept that a brand which is going to be so credible for us.

Kunal Vora — BNP Paribas — Analyst

Understood. And lastly, on dairy from INR700 crores this year, where do we look to go in FY ’24 and maybe next three to five years?

Varun Berry — Managing Director and Vice Chairman

So, we don’t give forward-looking statements but we are looking at aggressive growth in that category.

Kunal Vora — BNP Paribas — Analyst

Okay. Thanks very much. That’s it from my side.

Varun Berry — Managing Director and Vice Chairman

Thank you very much.

Operator

I would now like to hand the conference over to Mr. Mayank Mundra for closing comments. Over to you, sir.

Mayank Mundra — Executive Assistant to Managing Director

Thanks, everyone, for spending time with us on this call today. We look forward to interacting with you again.

Varun Berry — Managing Director and Vice Chairman

Thank you, guys.

Operator

[Operator Closing Remarks]