Disclosure and Call Details
• Date of disclosure: August 3, 2024
• Earnings Conference Call held on: July 31, 2024
• Key participants:
• President: Ashish Saraf
• Managing Director: Gautam Kumar Pal
• Moderator: Vikash Verma (EY LLP)
• Transcript available on the company's website
• Discussion included forward-looking statements with associated risks
Company Overview
• Established in 2005, specializes in:
• Cocoa butter equivalents
• Specialty fats
• Exotic products from plant-based seeds
• Strong procurement network for sal seeds and shea nuts
• Fully integrated manufacturing facility in Birkoni, Raipur with a capacity of 40,000 metric tons
Market Position and Growth Strategy
• Leading exporter to global chocolate and confectionery brands
• Focus on expanding product range and production capabilities
• Global market for cocoa butter equivalents and specialty fats projected to grow
Financial Performance
• Q1 FY24-25 revenue: INR 133 crores (19.6% YoY increase)
• Exports contributed 73% of total revenue
• EBITDA increased by 43.6%
• Profit after tax rose by 17.2%
• Revenue guidance for FY25 upgraded to over INR 750 crores
Q&A Highlights
• New fractionation capacity will not impact current quarter results; expected 5,000 metric tons for upcoming season
• Current utilization rates at 100%; future projections for FY '25 and FY '26: 50%-70% and 80%-85% respectively
• Value-added products currently at 50%-60%; target for CBE share: 20%-30% in FY '25, potentially 50% in FY '26
• Average prices for CBE increased by 10%-15% due to demand; EBITDA margins expected to maintain between 20%-22%
Competitive Positioning and Future Outlook
• Leadership in processing specialty fats and butters from seeds
• Zero-waste production model enhances cost efficiency
• Significant investment of over INR 100 crores in capacity expansion expected to generate peak revenues of INR 600-800 crores by FY'27
• Ongoing feasibility studies for new projects to enhance growth
Procurement Practices
• Payments for raw materials sourced from tribal communities in Africa made through banking channels
• Spot pricing agreements for purchases
Additional Insights
• High global demand for cocoa, particularly in Europe and the Americas
• Management expects EBITDA margins to rise to 22% by FY '25
• New product developments include Milco Cream and Milco Spread for bakery and Horeca markets
• 90% of current revenues from the food business, with plans to expand confectionery and chocolate segments
Conclusion
• Management expressed confidence in sustainable growth and innovation
• Commitment to maintaining a debt-free status and exploring future projects
• Call concluded with appreciation for participants and a focus on sustainable products.