Dear shareholders,
I take pleasure to address you through the pages of this Annual Report for the fiscal
year 2021-22. You have shown conviction in us and we will continue to take all necessary
action to further strengthen your belief in us.
Macro overview
Before I provide my analysis of the Company's performance during the year, it is
essential to describe the context in which this performance was achieved. So, due to the
pandemic, uncertainty in the macroeconomic sphere, changes in consumer sentiment/ demand,
alteration in consumption patterns, high inflation, and weakness in international markets
due to the Russia-Ukraine war continued to present challenges that we needed to grapple
with which were beyond our control. We did well as we once again proved the robustness of
our strategy and the resilience of our business model to register a sound performance in
2021-22. Even amid the many challenges, we remained focused on making strategic
investments and taking advantage of opportunities in austerity, agility and discipline.
Over the course of the year, we remained guided by the objective of offering quality food
products to our consumers and institutional customers in India and overseas. Further, we
did not hold back on our strategic plans and carried out a number of initiatives to
transform our critical functional areas and prepare the business for future growth.
Amid the continuing effects of the virus during the year, we maintained the protocols
of health and safety and the leadership team continued working to monitor the global
situation and provide support for assertive decision-making. With advances made during the
year in terms of the number of those immunized against COVID-19, we were able to ensure
that virtually 100% of our workforce was vaccinated with at least two doses. Our actions
went beyond caring solely for our staff, with this also extending to society as a whole.
Performance analysis, 2021-22
During 2021-22, we witnessed unprecedented challenges in the business environment, but
the Company has been successful in mitigating them and managed to post an annual
consolidated revenue growth of 12.2% during the year to H 988 crores. The salience of our
brands really stood out and our focus on premiumization paired with robust operational
standards helped to withstand any major demand/pricing pressures. I'm happy with the
progress we achieved in striking the right balance between scale and profitability.
Dependence of any single category is never a good idea for any consumer company and we
focused on adding new products in both our business segments- biscuits and bakery during
the year. Given the nascent stage of the packaged food industry in India, we believe in
focusing on high gross margin through premiumization and this strategy will stand us in
good stead in the future. A summary of our 2021-22 performance is given below:
Consolidated revenue stood at H 988 crores, vs. H 881 crores in the previous year,
registering a growth of 12% Revenue from the biscuits division expanded by 3% to H 592
crores, vs. H 574 crores in the previous year
Revenues from the bakery segment increased by 31% to H 339 crores, vs. H 259 crores in
the previous year
EBITDA declined by 13% YoY and stood at H 123 crores.
EBITDA margins were at 12.4%, vs. 16% during the previous year Profit after tax stood
atH 57 crores, vs. H 72 crores in FY2021
The chief factor enforcing reduction in net profit as compared to
FY2021 was due to the entry tax provision reversal in the last year amounting to H 5.5
crores. Also during the year, due to the pandemic, the Company witnessed some expenses
which were lower than usual in the previous year. However, going forward, we see strong
growth potential in both our biscuits and bakery divisions. MBFSL is India's largest
biscuits exporter with a 12% market share and a presence in 63 countries around the world.
Exports under our own brands stand at a healthy 45% and our revamped export strategy will
enable us to deepen the penetration of our products and gain both revenue and market share
in the future. We incorporated a subsidiary in the UAE to unlock opportunities in the MENA
and African markets, and all our decisions will be guided by expectation around portfolio
premiumizationandbuildingourmarginprofile.
In India too, our biscuit brands under Mrs. Bector's Cremica' have been able to
compete well on crowded shelves, with customers picking our products for premium quality,
taste and nutrition. Our focus in the domestic market is to achieve scale by continuing to
deepen brand presence beyond North India to cover all the major parts of the country, and
we are working on transforming our distribution to be able to achieve this goal. We are
amongst the largest suppliers of buns to quick service restaurants (QSR) chains in India
and our bakery brand, English Oven', is one of the fastest growing brands within the
premium bakery space. Further, we have launched many innovative bakery products, such as
sub-breads branded as English Oven Sub' and the commissioning of a sheeting line has
opened up our capability to produce an even larger range of value-added products,
including focaccia, panini and ciabatta breads. Going forward, we will continue to focus
on expanding our product portfolio, scale and reach to be able to reach more households
and institutional customers across India.
Getting ready for the future
MBFSL is at a unique point in its journey where we are looking at adding to our
strengths and preparing the foundations for accelerated growth. Towards this extent, we
are getting our drivers ready, including expanding our distribution reach in existing
markets and entering new geographies, building management strength by hiring senior
leaders and professionals in various critical areas such as operations, marketing, sales
and IT, and enhancing capacities to capture growth opportunities in existing markets and
new geographies.
We are focusing on technology to drive efficiency on and supply chain fronts. As a
major step in this regard, we have initiated to implement salesforce automation and
distributors' management system, which will help us to drive product availability across
our channels, especially our premium outlets, to improve sales efficiency.
We have a large presence in North India and are looking to expand reach in our existing
markets and steadily explore newer markets. We are in the process of expanding our Rajpura
facility in Punjab and have plans to set up a greenfield facility in Madhya Pradesh to
cater to the west and south India markets. Furthermore, in terms of new capex, the Company
started investment on another biscuit line from the IPO proceeds of H 40.5 crores to
finance the cost of the Rajpura expansion project, and the commercial production for this
plant started in July 2022 (post balance sheet development). Besides, for bakery plant
extension in Mumbai, the Company has already purchased land in Khopoli adjacent to our
current factory. The total project cost is estimated at H 73 crores, including land, out
of which H 25 crores would be invested in FY2023 and the balance in FY2024. Commercial
production is planned to start by October 2023.
Conclusion
As we look to the future, I am excited by the opportunities that lie ahead for the
Company. There is a strong pipeline of significant projects in both our business divisions
and we have a strong opportunity to grow demand and consumption in the post-COVID
environment. Mrs. Bectors has a long and remarkable history spanning well over four
decades and I am committed to furthering this impressive heritage by helping the Company
add to its successes every year, constantly improving, evolving and building our new
future.
Anoop Bector |
M A N AG I N G D I R EC TO R |