What happened in Q3? We have seen some of the food companies struggling to grow. Your revenue is down 6% YoY. Any particular reason?
There has been growth on a sequential basis in Q3 compared to Q2. This is why demand is picking up but there is a real big problem of the schools not opening and kids not buying snacks. Our key market is based on impulse purchase by kids. So schools and institutions sales have not picked up and that is the main reason the sales have not been as good as last year’s Q3. But sequentially, we have done better than Q2 and with the economy regaining momentum and trains and schools and institutions set to reopen in phased manner, we expect a further uptick in demand.
Where would you see the new launches coming up? Do you think markets have taken a reset and new launches will be needed to gather momentum and growth?
As I said, ours is mainly an impulse purchase market. We were basically selling to small kids. 80% of our sales used to come from Rs 5 packets. During Covid, we learnt that we have to make new products for home purchases. So we have developed bigger, higher MRP packs in chips and namkeens and we are also developing some bakery products. There has to be a proper mix of impulse purchase and the take home budget market. We are targeting take home purchase products and we see that coming in from the next quarter.
How has growth shaped up across your product portfolios? How do you see it shaping up going forward?
Our kid-focussed products like Rings and Puffs have not done that well because of schools being closed. But products like Chulbule and Chips have done much better than the extruded snacks because extruded snacks like Ring come with toys that are targeted towards kids. The Chips and Chulbule segments have done well as they are targeted more towards teenagers. But we definitely see growth momentum coming back in all the products with the school opening from next quarter.
What is your strategy on pricing?
We are experiencing unprecedented inflation in palm oil prices and it is trading at record high prices. We are taking various initiatives and process engineering across the value chain and could mitigate the negative impact to a large extent.
Just to give you an example, if you compare our numbers on a YoY basis, there is almost 250 bps negative impact on account of palm oil which we could mitigate through various measures. But if this price continues and is very high, we have to look down on the pricing and probably reduce some weight in the packet or increase MRP but that should be our last resort.
We are trying to absorb higher raw material costs by reducing channel margin and some process engineering at our end. But if nothing happens, we might have to reduce the weight or increase the MRP of the product.
