Mrs. Bectors Food Specialities Ltd (NSE:BECTORFOO) Q2 FY23 Earnings Concall dated Nov. 14, 2022
Corporate Participants:
Anoop Bector — Managing Director and Promoter
Manu Talwar — Chief Executive Officer
Ishaan Bector — Whole-Time Director
Analysts:
Sameer Gupta — India Infoline — Analyst
Amit Purohit — Elara — Analyst
Digant Haria — GreenEdge Wealth — Analyst
Nidhi Babaria — Envision Capital — Analyst
Mayur Parkeria — Wealth Managers — Analyst
Vignesh Iyer — Sequent Investments — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Mrs. Bectors Food Specialities Limited Q2 and H1 FY ’23 Earnings Conference Call. [Operator Instructions]
I now hand the conference over to Mr. Anoop Bector, Managing Director and Promoter, Mrs. Bectors Food Specialities Limited. Thank you, and over to you, sir.
Anoop Bector — Managing Director and Promoter
Thank you so much. Good afternoon, everyone. On behalf of Mrs. Bectors Food Specialities Limited, I extend a very warm welcome to all participants on Q2 and H1 FY ’23 financial results discussion call.
Today on this call, I have with me Mr. Manu Talwar, Chief Executive Officer; Mr. Ishaan Bector, Whole-Time Director; Mr. Parveen Kumar Goel, Whole-Time Director; Mr. Gaurav Jain, Senior Vice President, Finance; and Orient Capital our Investor Relationship Consultant. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on exchanges and on the company’s website.
I’m pleased to share that we have reported the highest ever quarterly sales EBITDA and PAT since IPO. The bond for our products continue to remain robust. We registered strong and profitable growth from all of the business verticals, that is biscuits, domestic and exports; bakery, institutions and retail in Q2 and H1. Our investments in capacity building along with organic talent development, hiring of various blood [Phonetic] department heads has allowed us to substantially grow our business and report stronger and half-year performance.
We are very well positioned to leverage the opportunity — opportunities that lie ahead of us, and will be supported by premiumization, strong leadership team, manufacturing infrastructure, digitization and distribution network. In the current quarter, the company has witnessed marginal improvement in prices of raw materials, but challenging of inflation continued to remain for the entire industry.
I would like — I would now like to provide an update on our capex program. Starting with our Rajpura biscuit line, as you are aware, the company has successfully started commercial production of a new biscuit line with an installed capacity of 12,000 tons per annum with effect from July 15, 2022. Further, we are also adding two new biscuit lines to meet the growing demand. These two lines are expected to be completed by Q1 FY ’24.
In Madhya Pradesh, the company is building new biscuit lines. We have started construction of boundary wall and received approval for construction of building plant. We expect these lines to be ready by FY ’24-’25. Lastly, we have purchased additional land next to our existing basic land in Khopoli, Maharashtra. The new capacity is expected to be completed by FY ’24-’25. We are confident of delivering positive results going forward driven by strong distribution network, marketing and digitization expansion.
Now I will discuss the Q2 financial performance. The consolidated revenues for the quarter stood at INR347 crores versus INR246 crores in Q2 FY ’22, thus registering a growth of 41% on a year-on-year basis. On the biscuit side, our Biscuit segment reported a revenue growth of 40%, which stood at INR206 crores in Q2 FY ’23 as compared to INR147 crores in Q2 FY ’22, including domestic and export sales. This segment has grown by 35% over Q2 FY ’21. Our domestic Biscuit segment and exports witnessed higher double-digit growth in Q2 FY ’23, as compared to same period last year.
On the bakery front. Bakery segment revenue for Q2 FY ’23 stood at INR125 crores, against INR83 crores in Q2 FY ’22, thus registered a growth of 51%. This includes both retail bakery and institutional segment. Bakery segment has grown by 99% as compared to Q2 FY ’21 both retail and institutional bakery has grown by higher double-digit in Q2 FY ’23, as compared to the same period last year. The company continues to focus on increasing distribution and premiumization of its products.
On margins. EBITDA stood at INR44 crores, saw a growth of 42% quarter-to-quarter. Our EBITDA margin for Q2 FY ’23 is 12.8% as compared to 10.4% in Q1 F ’23. PAT stood at INR22 crores, saw a growth of 72% quarter-on-quarter. Our PAT margins for Q2, FY ’23 is 6.3% as compared to 4.2% in Q1 FY ’23.
Moving to half-year performance. The consolidated revenues of H1, first half stood at INR648 crores versus INR472 crores in H1 FY ’22, thus registering a growth of 37% on a year-on-year basis.
Biscuits. Biscuit segment reported a revenue growth of 32%, which stood at INR385 crores in H1 FY ’23, as compared to INR292 crores in H1 FY ’22, including domestic and export sales. Bakery. Bakery segment revenue in H1 FY ’23 stood at INR232 crores against INR152 crores in H1 FY ’22, thus registered a growth of 53% year-on-year. Margins. EBITDA for H1 FY ’23 stood at INR76 crores, saw a growth of 19% year-on-year, reported an EBITDA margin of 11.7% as compared to 13.5% in H1 FY ’22. PAT stood at INR35 crores, saw a growth of 10% year-on-year basis.
With this, I would request to open the floor for questions-and-answers. Thank you so much.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We have the first question from the line of Sameer Gupta from India Infoline. Please go ahead.
Sameer Gupta — India Infoline — Analyst
Hi, sir, and thanks for taking my question. First of all, a bit congrats on very good set of numbers. I have three questions. So firstly, your distribution and your domestic biscuits, can you give a sense on what is the kind of direct reach and total reach today versus let’s say 12 months back? And how this has grown as in which states has seen the highest amount of growth in terms of reach and which states are lower in terms of total reach coverage, et cetera?
Anoop Bector — Managing Director and Promoter
So should we answer this question now, or you want to ask all three questions?
Sameer Gupta — India Infoline — Analyst
Anoop, maybe you can answer this, and I can take follow-ups, if there are any.
Manu Talwar — Chief Executive Officer
Okay. So as we have been briefing as well, we have a huge impetus on the driving distributions on the biscuit side. And we have a plan of doubling our direct reach outlets from 1,50,000 [Phonetic] from the year segment to these 3,20,000 by March ’24 [Phonetic]. So particularly doubling our direct reach outlets in two years’ time. We are progressing extremely well on that side and we should reach some [Technical Issues] mark by March of ’23, and then we take 3,20,000 on March of ’24. So that’s on the distribution side, but distribution side is also supported by our digitization journey.
And just to first to be up on digitization, and then I will come on the geography side. So on the digitization, it’s fully maintained the sales force automation through a feel this our partner. And this was implemented in the month of April-May. This is helping us to act route-wise performance, sales resource-wise performance on a daily basis. So it gives us that how many calls have been made, how many calls are productive, what is the route productivity, what are the lines sold, right? All those KPIs are visible [Technical Issues] on a daily basis, which help us drive the performance of the sales force and the [Technical Issues]. So this was the first phase of sales digitization.
The second slide of sales digitization, which we had planned was on our distribute management system, where large amount of distributor will be directly connected with us. And we will be able to monitor their inventory, their performance, they allow us also on a virtual basis. So just to share with you, our BMS journey has also started and which will make a significant progress of covering all the large distributors by quarter four of this year. So these are the two large chunk of intervention on distribution side.
Third slide on the distribution side, we had reached earlier that we were adding the distributor sales management, right. So these are adding a large amount of three-fourth [Phonetic] to increase our coverage and drive our sales. So we had a plan of adding over 700 distributor salesman and which we have completed and done with. And that’s also adding to our productivity and sales growth there.
And the fourth bucket was our capability building, which was providing our training through our partner to large amount of sales [Phonetic] in all the key cities. And that program is under implementation as we thought. So these are the four large actions, input action I would call them, which we have taken to drive our distribution, sales execution, sales performance measurement, so which is helping us drive our sales growth, which you are seeing in our numbers, right, which geography is another possibility to us.
So just to share with you these numbers are for northern India. Bihar always stronger [Indecipherable] primarily on the dark side. And so this large amount of distribution growth is coming in the lower part of the north, which is your Delhi, UP, Rajasthan, but nonetheless, we are also growing well on our distribution in upper north, which is Haryana, Punjab, J&K and HP. So that would be my response to your query on our journey on distribution, leading to the sales growth.
Sameer Gupta — India Infoline — Analyst
Just a follow-up sir, here. So direct reach by September, I missed that number.
Manu Talwar — Chief Executive Officer
Our direct reach by September, we have crossed 1,71,000 of it. 1,75,000 outlets, is something which we have crossed. We — yes, we have crossed that much of direct reach of our business.
Sameer Gupta — India Infoline — Analyst
And we’ve planned to do around 2,40,000 by March, right?
Manu Talwar — Chief Executive Officer
We will be doing around 2,25,000 to 2,30,000 by March. And these are the build-outs that which I told you. In terms of outlet which we have started reaching and billing, right. They have already started touching 2,00,000.
Sameer Gupta — India Infoline — Analyst
Great, sir. That is very helpful. Second question on the biscuit side. So biscuit growth of 40%, if you can give any kind of a color how much of it is domestic or — and exports. And within domestic, again, how does this growth compare across states which are the states which have contributed the highest in terms of growth and which have grown less than average? Any color on that, sir, would be helpful.
Manu Talwar — Chief Executive Officer
So firstly, let me answer your question, that both our exports and domestic, they are both growing very, very aggressively. Both are next to next to each other. Both are growing in large high teens, right. And they are duly supported by the high teens volume growth, right. So it’s a good revenue growth supported by the high teens volume growth both for exports, as well as domestic business. On the domestic side of our business, as of now all our territory are going extremely well. But in terms of percentage of growth, because we were always had a much larger business than upper side of north. So in terms of percentage you can say. The lower part of north in percentage term is growing more than the upper north. But yes, the business is growing again in both double-digit, high-teens across our territory.
Sameer Gupta — India Infoline — Analyst
Great, sir. And just a follow-up here. We also had reiterated around an Analyst Meet last time we met that Maharashtra and South also our [Phonetic] implants, there we might be looking at other revenues directly supplying. Right now, we may not be directly supplying, but other revenues. So how much of that has materialized?
Manu Talwar — Chief Executive Officer
So just to share with you, we have launched — we have launched our distribution of our products directly, right. So our distributor network like in north, in Bombay, Pune and Bangalore, right. And so we started this journey about three months to four months back. Journey is building up well. Our products are being accepted well in these territories. And we have a plan to keep growing this distribution in this particular financial year itself. So we have launched in three cities. Product is being accepted well. We are present as of now over the last few months in over 5,000 outlets. And we have a plan to enter a few more cities in this financial year before end of March.
Sameer Gupta — India Infoline — Analyst
Great, sir. Last and final question from me, more than — more a bookkeeping one. So breads, contribution of Delhi NCR today and two years back? Just bookkeeping.
Manu Talwar — Chief Executive Officer
You see both Bangalore and Bombay has grown well for us. And also we are also now selling in a lot more cities which are outside Delhi NCR, which are in, say 200-kilometer distance from the daily NCR, right. So I won’t have exact answer on two-year back and all, I can get back to you later, in terms of the exact percentages. But to just to share with you that, yes, we also on Bombay business, Bangalore business and nearby cities to daily NCR. We have also covering them well, and they have also growing well for us.
Sameer Gupta — India Infoline — Analyst
Today’s number, if you can share, sir. That would be helpful. Current.
Ishaan Bector — Whole-Time Director
Yeah, I can — I can intervene. So now we actually look at our territories as Delhi NCR, outstation north [Phonetic], Bombay and Bangalore. Delhi NCR today would be contributing about 55% to 60% of our sales and about 40% is coming from Northern markets outside of Delhi NCR, Bombay and Bangalore.
Sameer Gupta — India Infoline — Analyst
Great. Great, Ishaan. Great, Mr. Manu. Thanks. And this will be all. I’ll get back in the queue, I have any more.
Operator
Thank you. We have the next question from the line of Amit Purohit from Elara. Please go ahead.
Amit Purohit — Elara — Analyst
Yeah, sir. Thank you for the opportunity, and congrats for excellent numbers. Sir, I wanted to understand on your new territories that for a specific on biscuits, you indicated 5,000 outlets have been reached. So what is the type of outlets, it’s largely modern trade or it’s a mix of both?
Manu Talwar — Chief Executive Officer
Our 5,000 outlets, which I spoke about biscuits general trade FMCG outlet.
Amit Purohit — Elara — Analyst
Okay. And since earlier training [Phonetic], you had some thoughts on focusing on modern trade in these market, or what is our modern trade salience and right now at an aggregate level and also in the new territories like UP and on, how is the strategy? I mean is it not so much modern trade? Or is it largely GP-led?
Manu Talwar — Chief Executive Officer
No, no. So we have — we had a very specific plan on modern trade both in northern India and getting it to the western and southern markets, right. And our modern trade business, it’s the highest growth business today for us as a business vertical in biscuits, right. So the modern trade is doing very well. And also we have started penetrating in the South and West markets. So we have a target to get over — you see, modern trade universe in India is around 5 to 500,000 [Phonetic] outside store base.
Amit Purohit — Elara — Analyst
Okay.
Manu Talwar — Chief Executive Officer
We have a target of sucking [Phonetic] and crunching beyond 2,000 by March. As of now, we are, we have already in September crossed around 1,600 store lease. And we have started our journey both our west and south modern trade stores. So modern trade is growing very well, growing at a very high growth same trade and one of the highest growth business verticals spectrum. We have started our journey on modern also 4,000, where we have a target of crossing over 2,000 store base by March, 2,000 [Phonetic], and we are now sitting at approximately [Technical Issues]
Amit Purohit — Elara — Analyst
Sitting at approximately –?
Manu Talwar — Chief Executive Officer
1500.
Amit Purohit — Elara — Analyst
Yeah. That is at an all-India level, right? You’re saying?
Manu Talwar — Chief Executive Officer
That’s in all-India level. South and west, Amit, we have just [Technical Issues] up in the last few months.
Amit Purohit — Elara — Analyst
And what would be the contribution of modern trade in our total sales?
Manu Talwar — Chief Executive Officer
Modern trade in our overall sales as of now to be close to 9% to 10%.
Amit Purohit — Elara — Analyst
9%?
Manu Talwar — Chief Executive Officer
Yeah.
Amit Purohit — Elara — Analyst
Okay. And sir, just understanding the cost also better. So we have seen there is a sequential improvement in gross margins and with commodity pricing easing off, you think the gross margin trajectory would keep improving and whatever price increases that we’ve taken is now good enough or in fact more than compensates for the cost increase?
Manu Talwar — Chief Executive Officer
Yes. So as of now, yes, will be almost close to our last year same period [Technical Issues]. But I’m sure, just to brief you that, in place in that same [Technical Issues] who chase the industry [Technical Issues] as of now. So they would be — we are going to take some of the price increases also in this quarter, October to December quarter, just to ensure that we are able to maintain and improve our gross margin.
Amit Purohit — Elara — Analyst
And what would be the price increase that you would have taken in the first half, say from April to now or calendar year, whatever, if you could help us at an aggregate level for biscuits as illustrated [Technical Issues]?
Manu Talwar — Chief Executive Officer
Sir, both [Technical Issues] press release, as you can see, we’ve taken [Technical Issues] to protect our gross margins, right, because visible both in a quarter and H1 results so far.
Amit Purohit — Elara — Analyst
Okay. So would this be like 20% plus kind of price increase?
Manu Talwar — Chief Executive Officer
No. So it’s not that high, but I can probably say those exact numbers on pricing —
Amit Purohit — Elara — Analyst
Sure, sure.
Manu Talwar — Chief Executive Officer
As a percentage.
Amit Purohit — Elara — Analyst
Okay. And sir, on the cost — the cost side, which is basically your ad spends and your distribution costs, so we have seen a significant increase on a Y-o-Y basis. What do you — would ascribe it to more due to the distribution cost? Or it would be largely because of increased ad spends as well? Or would it be the mix rate [Phonetic]?
Manu Talwar — Chief Executive Officer
So [Technical Issues] the cost at three reasons [Technical Issues]. So first reason. Yes, we have incremental marketing expense there. Second reason is that, our logistics also, also cut, because in our growth mix [Technical Issues] rental higher mix on account of export logistics, and there is a bit of a tapering season [Technical Issues] that’s the second reason. Third reason is that, we have last year people cycling COVID. So [Technical Issues] extremely low, both [Technical Issues] not there, but now as versus that both our domestic and [Technical Issues]. This was kind of everything in the last year same period.
Amit Purohit — Elara — Analyst
So what is the average, I mean likely advertising costs for the full year or freight cost, I mean if you could help us broadly? As a percentage of sales, if you could?
Manu Talwar — Chief Executive Officer
As of percentage to sales, we normally spend about — just a moment, I’ll tell you. So what was the percentage to say, both in [Technical Issues]. We normally spend about 8%. And out of this 8%, approximately [Phonetic], as of now 3% is the ABL [Phonetic] with digital [Technical Issues] and balance around 5%, 4%, approximately is the RB [Phonetic] spends on the sales promotion. So this is a broad [Technical Issues].
Amit Purohit — Elara — Analyst
All right. Okay, sir. Thanks a lot. I’ll wait for — I’ll come back, if I have more questions. Thanks.
Operator
Thank you. We have the next question from the line of Digant Haria from GreenEdge Wealth. Please go ahead.
Digant Haria — GreenEdge Wealth — Analyst
Yeah. Hi, sir. Congratulations on the great performance. Sir, first question is on the export side, if we have seen a similar growth Y-o-Y, which is a 30% plus. I just wanted to know that, is it more of our own brand, which has increase in exports. Or is it white label, any color on this.
Manu Talwar — Chief Executive Officer
So I’ll take this. Our focus very clearly is on building up of a brand. And so we have been working very aggressively in the Middle East side to be growing our business. In fact, we have added distributors in these areas, especially in Saudi Arabia, we have added distributors. So work is on in — during this period, during — for building brand building. But on the sales side between branded and third-party brand would be very similar like 50% each till now.
Digant Haria — GreenEdge Wealth — Analyst
Okay. Sir, even during IPO, we were 50-50, today also we are 50-50, which means both the brands are growing.
Manu Talwar — Chief Executive Officer
Yes. [Speech Overlap] same. So, there is not much different on the branded and the unbranded side.
Digant Haria — GreenEdge Wealth — Analyst
Okay. Good, both are growing equally fast. So…
Manu Talwar — Chief Executive Officer
Yes, both are growing well.
Digant Haria — GreenEdge Wealth — Analyst
Okay, sir. Sir, and second question was, sir, the last entire — last four quarters inflation had been behind us non-stop and even our other costs were going up because we are implementing this distribution changes in our given domestic biscuits. Sir, now — even now it feels that the raw material inflation is not going away so easily. So as a company, are we better prepared than last year? Because last year it was after 10 years at such inflation was coming and we took a lot of time to pass it on. But the next rounds of inflation as and when they come, will we be able to do it better than say what we could do last year?
Anoop Bector — Managing Director and Promoter
Yes. With the journey what Mr. Manu Talwar has mentioned also on strengthening distribution, strengthening digitization, strengthening into information of the market, it is adding strength to the company to react faster. So definitely going forward in case there are such inflationary trends or such reasons when we have to react to the market, our reaction will be much faster for sure. Yes.
Digant Haria — GreenEdge Wealth — Analyst
Right. And then this other expenses, which always used to go much faster. I think, now they have stabilized. So now we can expect this operating leverage to continue, right, because as the distribution investments gain will lead us to more sales, these costs will not rise as fast or is that not the right understanding?
Anoop Bector — Managing Director and Promoter
Yes. So, definitely, I mean the benefit is going to be coming in, because we’ve invested on people like why I had said in the speech also that our top line management was brought in with a great experience, and we are seeing the results of that coming into the company, we are aware that we have gotten a lot of people on feet on street people, so that our distribution could be increased. And now with the support of the digitization and the DMS system, which Manu had mentioned that our large distributors will be on DMS by March this year and end of this quarter.
So I think these results will be released more positive towards the company. So definitely it will be that. But our effort on branding, distribution — investing on distribution, we’ll have to keep continuing.
Digant Haria — GreenEdge Wealth — Analyst
Right, sir. Perfect, sir. Thank you. All the best to you and your team sir.
Anoop Bector — Managing Director and Promoter
Thank you.
Operator
Thank you. We have the next question from the line of Nidhi Babaria from Envision Capital. Please go ahead.
Nidhi Babaria — Envision Capital — Analyst
Hi, sir. Thank you for taking my question. Sir, what would be the price hike for us in the last three years, as our revenue growth is around 23%, three year revenue CAGR? What would be the volume and — volume breakup and price hikes during these three years?
Anoop Bector — Managing Director and Promoter
What price hike, this will be — Manu, would you be able to give a three year price hike?
Nidhi Babaria — Envision Capital — Analyst
Like just on an average basis.
Manu Talwar — Chief Executive Officer
No, it will be less, have to give you separately. But just to share with you that our majority [Technical Issues] definitely happen in this financial year because of the pressures over the last six, eight months. But yes, I can — we can get back towards [Technical Issues]
Nidhi Babaria — Envision Capital — Analyst
And on a Y-o-Y basis, if that is easily available.
Manu Talwar — Chief Executive Officer
Pardon.
Nidhi Babaria — Envision Capital — Analyst
Y-o-Y basis like Q2 ’22 versus Q2 ’23.
Manu Talwar — Chief Executive Officer
So see our price increase as a company, in this particular H1, over the last year H1 on an exit of September, right, should be around 9%-odd. And our larger part of growth is coming through the volume growth.
Nidhi Babaria — Envision Capital — Analyst
Okay. And sir, any picture on the new geographies like how easily I’d be able to take these price hikes? Because Northern Belt is surely our home area. But when we go to other parts of the Nordic — North reasons only where we are expanding. Any outlook on what is the growth trajectory over there, and all the acceptance level also?
Manu Talwar — Chief Executive Officer
See our growth is primarily as we [Technical Issues] response also, is led by our sales and distribution and the sales execution, these are the two key pillar and KPI is driving a sales [Technical Issues] this is covering larger number of outlets [Technical Issues]. So these are the two key KPIs which are driving us in our existing geographies. And we are putting all our efforts through sales digitization to training of the sales force to enhance our excellence in sales execution, right, and the selling and distribution. That’s a key theme. This is duly not supported by the inputs on the marketing side, the brand side.
And as I briefly mentioned in between the brand and marketing is largely led as of now to digital media and the print media, right, and on the in-shop and on-shop activity. So these are the three large verticals based on three large areas, where we are effectively doing our marketing. And as we have got a new leader in marketing, Gurpreet Kaur who joined us in July, so that in part of investment in marketing is also scaling up and supporting well over and above our sales execution and S&D execution to build up revenue growth.
Nidhi Babaria — Envision Capital — Analyst
Okay. And sir, on modern trade side, what would be the revenue contribution last year for us, like this year as you mentioned, it’s roughly 9%. And what — like what was the store accounts serving in modern trade last year versus this year?
Manu Talwar — Chief Executive Officer
Our contribution has also improved in modern trade as a part of our sales by almost 25% over last year, contribution to say, which you are asking.
Nidhi Babaria — Envision Capital — Analyst
Okay. And how many store counts have we increased, like currently there are 1,600 last year?
Manu Talwar — Chief Executive Officer
[Technical Issues] store coverage in modern trade as of now, we are targeting to be beyond 2,000 and we’re very sure that in two years after that we should be able to cover almost 85%, 90% of the users, which is…
Ishaan Bector — Whole-Time Director
No Manu, the question is, what was it last year?
Manu Talwar — Chief Executive Officer
How much was the outlet coverage last year.
Nidhi Babaria — Envision Capital — Analyst
Yes.
Manu Talwar — Chief Executive Officer
I’ll just tell you.
Nidhi Babaria — Envision Capital — Analyst
And also sir, what type of asset on do we expect that these new lines coming in, like whenever like within six to eight months, whenever we will be at peak utilization levels.
Anoop Bector — Managing Director and Promoter
See on the biscuit side, it could be anywhere above 3.5 times, okay. And on the bread side, it will be around 2 times, 2.5 times. So on the biscuit side you will have a larger, much higher turnover — asset turnover on the bakery side, it’s a bit lower. But the automation got the investment, it drives the profit which compensates us for the higher investment, because automation levels are very, very high.
Nidhi Babaria — Envision Capital — Analyst
Okay. And any color on QSRs demand, how the QSR segment is doing for us?
Anoop Bector — Managing Director and Promoter
QSR as you’ve already seen most of the QSRs also now today, let’s state you’ve seen their results, and so very, very robust. They are growing well, the — So I think they’re doing extremely well.
Nidhi Babaria — Envision Capital — Analyst
Okay. Have you added any new QSR or have we increased any share of business with any of the players?
Anoop Bector — Managing Director and Promoter
Ishaan, do you want to take this?
Ishaan Bector — Whole-Time Director
Yes. So the last time we had updated that we are — we got on-boarded with Subway. So our share of business is increasing as we are proving ourselves to be a more reputed supplier. Other than that we are working with some other QSRs and as and when we get a big crew we will be very happy to update.
Nidhi Babaria — Envision Capital — Analyst
Okay. Sir, just the last question that modern trade store count numbers last year.
Ishaan Bector — Whole-Time Director
Yes, Manu?
Manu Talwar — Chief Executive Officer
I missed it. What was the question?
Ishaan Bector — Whole-Time Director
Last year’s store count for modern trade.
Manu Talwar — Chief Executive Officer
It was around close to 1,200.
Nidhi Babaria — Envision Capital — Analyst
Okay. Thank you, sir.
Operator
Thank you. We have the next question from the line of Mayur Parkeria from Wealth Managers. Please go ahead.
Mayur Parkeria — Wealth Managers — Analyst
Good afternoon, sir, and thank you for taking my questions.
Operator
Mr Parkeria, I’m sorry. This is the operator, we cannot hear you clearly sir.
Mayur Parkeria — Wealth Managers — Analyst
Am I audible now.
Operator
No, sir. Please switch to your handset.
Mayur Parkeria — Wealth Managers — Analyst
Hello.
Operator
Yes, thank you. Please go ahead.
Mayur Parkeria — Wealth Managers — Analyst
Okay. Good afternoon. And sorry for the disturbance. Is it okay now?
Anoop Bector — Managing Director and Promoter
Yes.
Mayur Parkeria — Wealth Managers — Analyst
Yes. So sir, just wanted to check — have you given any long-term guidance with respect to the business sir? Sorry, I am not aware, can you in terms of next three year, five year any long-term guidance have we given?
Manu Talwar — Chief Executive Officer
We haven’t officially spared any long-term guidance here on our business, but we are in the process of creating our plan and strategy over the next few months time. We should be in a position, and we’ll be happy to share somewhere towards the end of this financial year or starting in the next financial year on a guidance over next three to four years’ time.
Mayur Parkeria — Wealth Managers — Analyst
Okay. So, both on the top line or bottom line or in terms of efficiency or anything. So all forms from — it will help if you can touch upon whenever you plan to give that in the next quarter or so.
Manu Talwar — Chief Executive Officer
Yes.
Mayur Parkeria — Wealth Managers — Analyst
Right.
Manu Talwar — Chief Executive Officer
So on a directional basis, I can definitely share with you that we are very, very firm of driving our revenue growth, alongside our margin side. So we are keeping our eye on our margin, definitely, we know that we need to aggressively drive our revenue because in both categories of business, which we are doing domestically, which is basic as well as the success, we have a very large potential over the next few years to consistently grow up to become a Pan India player over next three to four years’ time. And that’s clearly our intent, but yes, alongside our revenue growth, we’re very, very firm that we will have — we will do that journey alongside keeping an eye on the margins, so that we are able to grow both well over the next few years, in general that would be our guidance, but yes, specific plans, definitely around Q1 of next financial year was something we [Technical Issues] happy to share.
Mayur Parkeria — Wealth Managers — Analyst
All right. And just another clarification kind of just let me know if this working is correct from my side or the understanding. Sir, our interest cost — as I see finance cost as I see is closer in the region of INR4 crores, it was closer to the region of INR1 crore, INR1.2 crores, year-on-year last Q2 of FY ’22 right. That’s an increase of almost closer to INR2.3 crores. If I annualize that it is around INR11 crores, INR12 crores and at current rates, it’s like an utilization of almost close to INR100 crores more on. So, sir am I getting this math right and what is driving this kind of increase in financial costs? And when I see the cash flows they remain pretty much robust. So just was wondering where is this coming from.
Anoop Bector — Managing Director and Promoter
Hello. Manu, you are taking this.
Manu Talwar — Chief Executive Officer
I’ll take it possibly then Praveen can add. So you see what happens that when the — our commodity prices are extremely volatile. We had to ensure our supply chain is protected. And as a part of ensuring our supply chain is protected correctly for this financial year, we had done some contracts of booking our commodity for over the next two months of this financial year. Some part of that cost as a part of the written agreement is the carrying cost which is interest cost, which is reflecting here. So there is a little larger pie in the interest bucket. But over the next quarter we should see some bit of normalization. But just to share with us, at these spike which is [Technical Issues] this quarter is on account of that, which is a specific cost of carrying, which is part of the contract of these commodities, as we are using the allocated commodity that’s of a contract and reducing that carrying costs, it will get normalized. Cash flow continues to be fairly robust, and so you would have seen that and in terms of our cash flow this our EBITDA, they’re kind of terms growing healthy.
Mayur Parkeria — Wealth Managers — Analyst
Sir, just trying to dwell this a little long. Just one more step-down, is this to protect the price or is it to protect the supplier sir?
Manu Talwar — Chief Executive Officer
No, it is to protect the price, now listen, so supply chain has already been — so, normally we would do at some places, we — this is all on storage of certain commodities, especially on the wheat side, where things are not very sound. So you will see a reflection of this in the coming quarters where the cost will be — the debited costs will be accommodated, we will settle down in this quarter, some in the next quarter some.
Mayur Parkeria — Wealth Managers — Analyst
Okay. Will this…
Manu Talwar — Chief Executive Officer
It was just the carrying cost, which will actually. Yes.
Mayur Parkeria — Wealth Managers — Analyst
I understand. But will this have any kind of impact on the gross margins whether positive or adverse in the next coming quarters?
Manu Talwar — Chief Executive Officer
There will not be — there’s nothing going to be adverse. So it’s obviously positive, because we’ve already booked the cost.
Mayur Parkeria — Wealth Managers — Analyst
Okay. Sir, finally last question. Sir, on the bread side when we see into the market, there are many value-added products, which are there in terms of the bread category as an overall. Do you have any plans to go that side right now? Or first we know it’s just the right now the B2B supply and our own basic product which is there or how do we see that part of the business, and some medium-term understanding on that.
Manu Talwar — Chief Executive Officer
Ishaan, do you want it.
Ishaan Bector — Whole-Time Director
Yes. So for us — currently, we are still a small player in the entire game. For us, our focus is going to be to firstly get what we have out there, increase our distribution, increase our presence, open up more cities. And we see that as a natural form of growth for a growing brand on the premiumization bit, we are always testing the boundaries of premiumization and we’ve always done so in the past with breads such the footlong bread that we launched, the paninis that we’ve launched. So we will continue to work on introducing premium varieties. But with the aim that they should be available or we readily acceptable by the larger audience, rather than a very niche customer.
Mayur Parkeria — Wealth Managers — Analyst
Okay. So mass — within that mass or mass premium?
Ishaan Bector — Whole-Time Director
Mass premium. So they are going to be premium, but we would like to develop these markets, like our experience with footlongs also has been that, yes, there is a market, but to get the consumer into the habit of taking a footlong home and getting him to make a footlong, it’s a journey, which I would say we as a brand are first movers in and we are trying to create a market and I’m sure that over time this will lead to higher brand recognition for us premiumization. But the idea should always be to have these products where we can sell volumes in.
Mayur Parkeria — Wealth Managers — Analyst
Right. Okay, sir. Thank you so much and wish you all the best.
Operator
Thank you. We have the next question from the line of Vignesh Iyer from Sequent Investments. Please go ahead.
Vignesh Iyer — Sequent Investments — Analyst
Thank you for the opportunity, sir, and congratulations on a good set of numbers. I would like to know — if I’m not wrong, given you had said in the quarter when con call that you aspire to do somewhere around 13% to 14% margins. So as of now, it seems that on the raw materials side, the — more or less the volatility has reduced a bit and taking into consideration that can we say Q4, you might have a chance to reach around that 13% to 14% margin, Q4 of FY ’23? Hello?
Manu Talwar — Chief Executive Officer
Yes. Going forward, we are seeing certain decrease in the cost, and we surely see improvement coming in going forward. And by Q4, we would look at touching the numbers what we’ve estimated at.
Vignesh Iyer — Sequent Investments — Analyst
Okay. Right. Sir, yes, also second question of mine. Sir, in your management commentary you said that the new line that is what the purchase in [Indecipherable] for the factory, should be completed by FY ’24, ’25. Is — this is the same factory, right, which is going to cost around including the factory around INR75 crores, if I’m not wrong.
Manu Talwar — Chief Executive Officer
Yes.
Anoop Bector — Managing Director and Promoter
So till we are in the work in process. So by the time things are finalized, we’ll be coming back to you with the exact numbers on what we are planning to do. And so the target date is FY ’24, ’25, land is already in possession. We have sent our papers for approvals — for the necessary approvals to the government, and once we have it, then everything else will move ahead.
Vignesh Iyer — Sequent Investments — Analyst
Okay, because if I’m not wrong in the quarter one management commentary, you said that we expect to start the production in October 2023, is there any — so…
Ishaan Bector — Whole-Time Director
Yes. So there has been a slight change in plan, because we are also with this journey, you have seen a 50% growth coming in in the bakery side right, 100 growth coming in approximately two years. So there are very dynamic changes happening. So while our planning was happening, there are certain changes happened, where we have to directionally make certain amendments in our leads, which were — which are to be met in the future. And so that is the reason why there was a bit of delay, we were running — because in this plan, there was a small need for more land, so that land acquiring took us further time, and therefore this whole process got delayed. But otherwise, we are sure that the factory is coming up and in the next — by next three months, we’ll be able to give forward to everyone our complete plan on what is happening here.
Operator
Mr. Kapoor, does that answer all your questions?
Manu Talwar — Chief Executive Officer
Hello.
Operator
Mr. Kapoor, does that answer all your questions. Sir, I believe this participants’ questions have been answered. There is no response from his line. We’ll move to the next one. [Operator Instructions] As there are no further questions from participants, I would like to hand the floor back to the management for closing comments. Please go ahead, sir.
Anoop Bector — Managing Director and Promoter
Yes. Thank you. Thank you so much. Thank you, everyone, for joining us. I hope we have been able to answer all your queries, in case you require any further details you may please contact us or Orient capital our Investor Relationship partners. Thank you.
Operator
[Operator Closing Remarks]