“Mrs.

Bectors Food Specialities Limited Q2 FY ’22

Earnings Conference Call”

November 15, 2021

MANAGEMENT: MR. ANOOP BECTOR, MD AND PROMOTER, MRS.

BECTORS FOOD SPECIALITIES LIMITED
MR. ISHAAN BECTOR, WHOLE TIME DIRECTOR, MRS.
BECTORS FOOD SPECIALITIES LIMITED
MR. SUVIR BECTOR, WHOLE TIME DIRECTOR, MRS.
BECTORS FOOD SPECIALITIES LIMITED
MR. PARVEEN GOEL, WHOLE TIME DIRECTOR AND
CFO, MRS. BECTORS FOOD SPECIALITIES LIMITED
MR. NITESH KOTIAN, NATIONAL SALES DIRECTOR,
BISCUITS, DOMESTIC, MRS. BECTORS FOOD
SPECIALITIES LIMITED
MR. RAJEEV DUBEY, NATIONAL SALES DIRECTOR,
BREADS, MRS. BECTORS FOOD SPECIALITIES LIMITED
MR. GURPREET SINGH, CHIEF MARKETING OFFICER,
MRS. BECTORS FOOD SPECIALITIES LIMITED

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 Mrs. Bectors Food Specialities Limited
November 15, 2021

Moderator: Ladies and Gentlemen, Good Day and Welcome to the Q2 FY ’22 Earnings Conference Call of
Mrs. Bectors Food Specialities Limited. As a reminder, all participants’ lines will be in the listen-
only mode, and there will be an opportunity for you to ask questions after the presentation
concludes. Should you need assistance during the conference call, please signal an operator by
pressing ‘*’ and then ‘0’ on your touchtone phone. Please note that this conference is being
recorded. I now hand the conference over to Mr. Anoop Bector, MD and Promoter, Mrs. Bectors
Food Specialities Limited. Thank you and over to you, Sir.

Anoop Bector: Thank you so much. Hello and Good Evening everyone. I hope you all are keeping safe and
healthy during these times. Today, on the call, I am joined by Mr. Ishaan Bector, Whole Time
Director; Mr. Suvir Bector, Whole Time Director; Mr. Parveen Goel, Whole Time Director and
CFO of the company; Mr. Nitesh Kotian, National Sales Director for Biscuits, Domestic; Mr.
Rajeev Dubey, National Sales Director, Breads; and Mr. Gurpreet Singh, Chief Marketing
Officer. We have uploaded our investor deck and results, highlights on the stock exchanges, and
the company website. I hope everybody had an opportunity to go through the same. Post the
lockdown in April and May 2021, the company has then done well in all segments. Overcoming
challenges, the company recorded 8% growth in revenues with accelerated growth in the baking
segment, retail as well as institutional. Coming to segment wise performance, in the retail
biscuits segment, the company has grown compared to the first quarter of the year. As compared
to the last year, the company has seen a degrowth in this segment. This is mainly due to the
accelerated increase in retail of biscuits through retail customers in the first half of H1 FY ’21
as there was pantry loading and limited availability due to supply chain crisis during COVID
lockdown in last year.

Considering H1 FY ’20 as the base year, the company has grown in high single digits over the
past two years in the retail biscuit segment. We have seen new geographies doing well. Also the
company launched, non-stop potato crackers which have seen good traction across the country.
As is strategy going forward, we are expanding the sales of our biscuits by emphasizing on
introducing and marketing our premium biscuits, increasing our market share by increasing
brand awareness through digital channels and building visibility in retail stores through in-store
branding activities. The company has invested ₹ 62 crores on additional lines for breads and
buns separately at greater Noida facility. These lines have become operational since October
2021 and we expect benefits from the same from December 2021 onwards. The company has
also started investments on the another biscuit line from the IPO proceeds at Rajpura and is
expected to start commercial production from April 2022. Our exports of biscuits has grown
continuously. We have seen robust double-digit growth during H1 FY ’22. We are one of the
leading exporters of biscuits from India, 50% of exports are under our own brand, Cremica. Our
focus is to increase penetration in select export markets like South, Central, North America,
MENA region, Australia, Asia, and increased premiumization of our products there. We have
already set up a subsidiary in UAE to cater to the Middle East and North Africa (MENA) and
the African markets.

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Coming to the bakery division, retail bakery has grown in double digits with continuous focus
on increasing distribution and premiumization of our products. During the quarter, the company
launched the whole-wheat bun, which help create a café-like experience at home. During this
quarter, the company has purchased land in Khopoli, Mumbai, adjacent to the existing factory
for expansion of our bakery business. This expansion will help us with the ever increasing
requirement of our bread in the Mumbai and the Pune region. We are one of the few bakery
companies in India that can handle fresh, chilled, and frozen products which enables the
company to distribute its products through across India with a focus on quality and consistency.
The company aims to cater to wide variety of retail customers by introducing new niche products
variants to our retail customers such as sub breads, garlic breads, with a target to spend
distribution network and increase penetration in Tier-1 and Tier-2 cities. We plan to focus more
on digital marketing initiatives such as social media integration, influencer marketing, and
content marketing.

Our institutional bakery sales has really doubled from the last year due to a low base. With
restaurants opening up for deliveries and dine-in, we have great momentum in the segment and
we expect this segment to grow faster. We are seeing good momentum in the modern trade and
e-commerce segments too. We are introducing large and mid-size pack of existing high selling
products based on buying patterns and regional preferences or sales through modern trade. We
have started our brand promotions in various e-commerce channels for our biscuits and bakery
products, and are listed with leading e-commerce platforms in India. The company has invested
₹ 6 crores on renewable solar energy in its plant at Rajpura, Phillaur, Tahliwal, and Khopoli, and
the same has been operationalized. We are also investing in rainwater harvesting. This will help
reduce operational cost and improve margins going forward. In the first half of the year, we have
taken a price increase and have been able to recover substantial part of the cost increase.

The company is taking further price correction to offset the balanced increased cost. We expect
to complete this exercise substantially by end of December 2021. With our focus on premium
products, cost optimization, and price correction, we expect to maintain our EBITDA margin
guidance of 14% to 15% for FY ’22. Our biscuits are distributed across 22 States in India through
a widespread network of 1,150 super stockers and distributors supplying to wide range of
customers through our retailed and preferred outlets. We are continuously expanding our retail
reach. Over the last year, retail touch points are 5,50,000 touch points. Our direct touch points
are 2,00,000. We supply our bakery products to our customers through over 210 distributor and
over 18,000 retail outlets. Coming to brand and marketing strategy, we have been marketing
across channels to increase our brand awareness through advertising and print media, digital and
outdoor promotional campaigns. We have entered into arrangements with our preferred retail
outlets, which will help us in enhancing our grand visibility.

Now coming to our results and our Q2 performance. Revenues stood at 256 crores versus 228
crores registering a growth of 8% on a year-on-year basis. Revenues from biscuit segments have
degrown by 3% to 148 crores as compared to 153 crores in Q2 FY ’21. Revenues from bakery

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segments have grown by 32% to INR 83 crores as compared to INR 63 crores in Q2 FY ’21.
The company has seen increased price of raw material especially palmolein oil prices, packaging
material prices which has affected our gross margins. In the first half of the year, we have taken
a price increase and have been able to recover part of the cost increase. The company is taking
further price correction to offset the further increase costs. We expect the benefits of cost savings
to come to the company by end of December 2021. With our focus on premium products cost
optimization and price correction, we expect to maintain our EBITDA margin guidance of 14%
to 15% for FY ’22. Our EBITDA margin for the quarter stood at INR 35 crores versus INR 38
crores in Q2 FY ’21. Our EBITDA margin for the quarter stood at 14.1%. Profit after tax for the
quarter stood at INR 18 crores versus INR 23 crores in Q2 FY ’21. PAT margins for the quarter
stood at 7.3%. I would like to mention the main reason for reduction in PAT as compared to last
year is due to the entry tax provision reversal in the last year amounting to INR 5.5 crores.

Now coming to our half-yearly performance, revenues stood at INR 473 crores versus INR 431
crores registering a growth of 10% on a year-on-year basis. Revenues from biscuit segment have
remained flat at INR 293 crores as compared to 294 crores in H1 FY ’21. Revenues from bakery
segment have grown by 34% to ₹ INR 152 crores as compared to 113 crores in H1 FY ’21. Our
EBITDA margin for the quarter stood at INR 64 crores versus INR 72 crores in H2 FY ’21. Our
EBITDA margins for the half year stood at 13.5%. Profit after tax for the quarter stood at INR
31 crores versus INR 39 crores in H1 FY ’21. PAT margin for the half year stood at 6.7%. Net
debt is INR 39 crores and net debt to equity is at 0.09. Working capital days is at 34 days as on
September 30, 2021. With this, I would request to open the floor for questions and answers.
Thank you so much.

Moderator: Thank you very much. We will now begin the question and answer session. The first question is
from the line of Percy Panthaki from IIFL. Please go ahead.

Percy Panthaki: Sir, if you can give us some idea on the total amount of CAPEX you will do in FY ’22 and ’23
and also the breakup of that CAPEX by purpose per plant?

Anoop Bector: Our first CAPEX which we had been working on and our projects had got delayed, this was the
bakery project which was estimated at around INR 70 crores has already gone on stream. The
breads have been rolled out, the buns have been rolled out of this plant and like I mentioned in
my speech, the complete benefits of this line will start coming into us by December this year
and it is a fully automated line. This is one of the most modern bread lines in the country today
and so this was investment which was actually done last year, but had got delayed and the results
are going to come in now. For the current year, we have also initiated as per our IPO where we
shall be investing around ₹ 40 crores in our biscuit plant in Rajpura, which is already in line with
our investments going forward. In the next year, we are now looking at as I had mentioned to
put up a bread line because the demand for breads is very extremely high for our Mumbai and
Pune area, and we are looking at putting up a very modern bakery facility for which land has

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already been acquired and the process will take around 15 months and I think we shall be
operational by April 2023 and in regard to the biscuit side we are yet.

Percy Panthaki: This bread plant in Mumbai and Pune, what would be CAPEX for that?

Anoop Bector: We are yet working out because its price we are still in talking terms with our suppliers, but this
should be anywhere, this is just an approximate figure which anywhere between INR 50 crores
to INR 60 crores investment that could come in Mumbai.

Percy Panthaki: Total CAPEX for FY ’22?

Anoop Bector: FY ’22 is only INR 40 crores, which is now going to be coming in and should be closing in by
March or April this year because we are targeting the line to start by April in the coming year.

Percy Panthaki: Any maintenance CAPEX or any other type of CAPEX apart from the INR 40 crores this year?

Anoop Bector: There is these solar investments which I mentioned INR 6 crores which has already started, and
we are in fact visualizing because the cooler savings are immensely high. We are looking at to
further see that all our companies during the day time can run on solar power because the
payback are extremely fast and for very long time, so that is being worked out, but currently
there is no major investment which is other than the biscuit line which is coming up in this year.

Percy Panthaki: FY ’23 this bread line in Bombay and anything apart from that for FY ’23?

Anoop Bector: Might be like I had mentioned we would need a biscuit line, so that is still under consideration
and we are considering our business plans. We might like what we had mentioned during our
IPO. Indore is the place where we would be targeting a line coming in the next year and for that
investment is again getting visualized because there have been to determine exactly what we
should invest in that market for that market, so we will be able to come back to you shortly on
that investment.

Percy Panthaki: Second question Sir in terms of your top line targets, I think earlier we were targeting an overall
company level sales growth of 15% for FY ’22, but looking at first half I think that might be
difficult to achieve, so any thoughts on what kind of growth you will be looking at for FY ’22
and then also for FY ’23?

Anoop Bector: Our FY ’23 numbers are going to stand where there are, there is no change in that and we in fact
I would like to mention that the company after the IPO has gone in and brought in lot of new
team members into building a very, very strong team in the organization, so we brought in Mr.
Nitesh Kotian who is also part of the team and as to any question in regard to sales, he will be
happy to take over and answer them, so there have been lot of strategy changes. We have gone
through the first three months under COVID where our sales got lost, so you would have seen
better sales coming in this year, so there is lot of strategy change what Nitesh is bringing in to

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the system, lot of direct selling is happening. I think he would be able to answer on this better,
but effectively for the next year our sales target remain the same and for this year, the reflection
is very clear that our second quarter sales have been higher than the first quarter and we are
targeting a third and fourth quarter so also the good quarter coming in.

Percy Panthaki: Just to jog my memory Sir, FY ’23 your growth targets were around 15% at an overall company
level, am I right in assuming that?

Parveen Goel: Yes, 14% to 15%.

Percy Panthaki: This year I think it would be a little lower than that?

Anoop Bector: Yes.

Moderator: Thank you. The next question is from the line of Vineet Mehta from Sameeksha Capital Pvt.
Ltd. Please go ahead.

Vineet Mehta: First question I had on the domestic biscuit segment, so as you mentioned in the call and also
the previous call that you hired new members and you have also expanded your distribution
reach in the new geographical areas, so I wanted to understand what is the strategy going forward
for the domestic business segment to increase our sales that is increasing our geography or
increasing the products, and how have been the response for the new products and how has been
the response in the new geographies?

Anoop Bector: Thank you for your question, but I am going to ask Nitesh Kotian who has now been with the
company for last more than two months that if he can take over and answer this question?

Nitesh Kotian: Good Evening, what we are going to do is in the domestic business, the biggest intervention
which we are going to do is to add the feet on street, which is the salesman. Currently, we have
close to 336 salesmen which are going in the market and selling off product day in and day out,
and we are aiming to double this salesman from 336 to 621 in the next year itself and we will
keep increasing it as we start moving forward into new markets in the coming year, that is point
number one. What also we are doing is we are targeting from a current outlet of 2 lakh direct
reach to a 3 lakh outlets in the coming year, so that incremental 1 lakh outlet is something which
we will try to build our direct distribution with the addition of the salesman and also in the new
geographies. Emerging markets is going to be one of the key strategy by which we are going to
increase our sales, so in next year we are going to open up West and South, so we are targeting
to launch Cremica in almost all the 5 lakh plus towns in the West and South and targeting around
close to 50,000-60,000 outlets in the domestic GT market in this area. Modern trade is also going
to be a very big pillar or a channel by which we are going to increase our sales. Currently,
Modern trade we are well established in the North area. We have already started to engage with
all the accounts and opening up new geographies in the South and West. We are continuously

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launching new super value packs, which is doing very well in this account and that is how we
are going to start developing the Modern trade at the e-commerce.

Vineet Mehta: Thank you, and my second question was regarding our gross margins and the EBITDA margins,
so our gross margins have declined by around 3.5%, but the impact on the EBITDA has not been
that much, so which are the costs that we have rationalized and how much of that is permanent
in nature?

Anoop Bector: Effectively, what we are targeting this year is a 14% to 15% and our targets for the next year
will remain what they are and what our main consideration has been that under the present crisis
where you have already seen other players who are in the FMCG business and impact of
palmolein oil has been extremely high. We have never seen this sort of inflation coming into our
company for the last seven-eight years, so it was a journey which was very tough for the whole
six months. We have been working on various options, cutting cost and also trying to build in a
price rise which we have been doing ever since this price rise has been happening, but there is
always a time delay. In the biscuit size, there is always a delay or any FMCG company, there is
always a time delay which takes time for the products to get a price rise or a weight reduction.
We have been able to I think get around 50% of our price impact which has come to us and now
we have been able to recover that from the market with our price increases.

We are now in our second phase of price increase which we are expecting to be completed by
December 31st so if both these things are done I think we shall be going back to our normal
EBITDA levels which are going to be sustainable going forward and also while the journey is
tough, we have worked on cost efficiencies, we worked on getting more efficiencies in our
plants, running our plants better more efficiently, taking out losses wherever we can. All those
things have been able to assess the company and these out of the costs there would be majority
of the costs which are going to be sustainable because that is the new learning which we have
done, so I think this is the way which is going to be there in future and we are looking at surely
once the cost impacts have been taken care of in the raw material site, I think better times are
going to be there for our company.

Vineet Mehta: My last question was regarding the Mumbai plant that you talked about, so how much is the
expected capacity in terms of revenue on the new plant?

Ishaan Bector: For us like the Managing Director said that we are looking at 2023 for this line to come up. What
we are essentially going to be looking at is putting up a fully automatic bread line which can
produce anywhere between 80,000 to 120,000 breads a day, so we are still working on the details
and we are also going to be doing some upgrades to our existing plants which will not at a very
significant cost give us an additional capacity to produce about 18,000 to 20,000 or let me say
3,000 to 4,000 packets of various other bakery per day items as well.

Vineet Mehta: How much will be in terms of revenue, Sir?

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Anoop Bector: You can multiply 120,000 by ₹ 25 as today’s, so it will be anywhere between INR 80 crores or
INR 90 crores that is what our feeling is, so the benefit of the automated bread line are that this
does not need too many people to work and this is only three to five people which run the
complete line and per share and that is the benefit and the bread quality is much superior, can
command premium in the market. Under the normal circumstances, we started Mumbai with an
Indian plant, our bread has been very well accepted in the market. Now time has to come to
graduate and give our customers a much better experience than before and that is the reason why
this larger investment and line from Europe is being discussed and we shall be closing very
shortly, but is not yet closed yet.

Ishaan Bector: So, it is about INR 150 crores.

Vineet Mehta: INR 150 crores, so three times round about.

Anoop Bector: Let me correct you please do not take a multiple as because in this the losses are very much
minimal, extra weight does not go into the bread. Today, everything is so expensive, giving
anything extra over and above the 400 grams bread which Indian plants are doing because which
is they cannot manage, so it is I think going forward we will be seeing most of the companies
would need to get into these sort of investments only, so that is the way forward because they
have very, very low labor cost are there in this plant.

Moderator: Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead.

Harit Kapoor: Good Evening, so my question on the distribution side, we are currently at about 5,50,000
outlets, just wanted to know at an aggregate level, what is the expansion on the distribution side
expected this year and the next, how are we looking at it if you can?

Anoop Bector: There has been a complete changeover in our strategy. Nitesh has joined us, his previous
experiences have been, his long experience has been with Britannia and he has worked in the
toughest of markets of West India where Parle was very, very strong, so there has been change
in strategy where we are adding up a lot of team at the operational levels at the market level and
there is a work which is happening on adding 300 plus people this is in the first year, so year by
year we are going to adding people. Now these people are not going to be on company roles,
they are actually going to be ADSR, which means they are distributors’ people, so it will be the
distributor who will have to keep our people. Earlier, we were employing our people on our
roles, but now as most of the FMCG companies do, we are following that process and that is the
journey to add more retail outlets in the market to create more demand into the market, to create
more demand for our premium products, we need to increase workforce at the market level.
Going forward in regard to what our expectations are, I will request Nitesh to take over and in
case he can let you know what his expectations are.

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Nitesh Kotian: Like I mentioned earlier also, what we are now targeting is to increase our feet on street which
is the salesman, so as rightly mentioned by MD is we currently have close to 336 odd people
going out day in day out in the market and selling our products and we are targeting it to double
by next year to close to 600 odd people, that is point number one. In terms of distribution while
5 lakh outlet is of coverage, we directly cover 2 lakh outlets, which is directly covered through
our sales web and we are looking at increasing it to 3 lakh by next year itself that is on the
markets where we are currently present. We are also opening up West and South that will happen
and in this West and South, we will initially plan to launch in all the 5 lakh plus towns and
anything expected around 50,000 to 60,000 outlets coming from there, so the distribution
strategy is very clear, get the right people on the ground, increase outlets in the co-market, launch
your project in West and South and take your distribution 50,000-60,000 in the initial stage, so
somewhere around a 1,00,050 outlets coming in the next year.

Anoop Bector: Let me take this forward by saying that what Nitesh is planning is to increase direct coverage,
so the indirect coverage what AC Nielsen is showing will be much higher, so those numbers we
will wait and see, but what our targets are to increase our own distribution that is what we are
working on, but indirectly the AC Nielsen which is now at a 5 lakh plus will further move up
because if 2 is staying 1.5 so addition of one will probably show another two, so those numbers
are still we will not be able to visualize those numbers, but yes what we are going to be doing is
we are going to see that our every shop is covered on a weekly or a biweekly basis, and we are
penetrating each and every market in a proper manner and also for South and West India cities
with 5 lakh population, our people will start working on distributors, super distributors, so that
is the plan. Now, this is a plan which will take us one year, so it is not going to be tomorrow, but
yes the journey has already started. It has been initiated and in fact I will also like to mention
where we have further strengthened our HR team. We have brought in our CHRO, Mr. Sanjeev
Dixit has joined us from Himalaya, so he was heading Himalaya International and has a very,
very strong experience within the Indian companies also, so there has been a complete
strengthening of our teams, so along with the people we have also got in a Chief Digitalization
Officer. He has come to us I am not sure, I think he comes to us from Reckitt Benckiser all those
things now, the company is in a stage where a complete buildup of an infrastructure is being
done to get position on the ground, so that is what is happening.

Harit Kapoor: One more question was on the total quantum of pass through on the pricing on damage reduction
size, at an overall level how much would you require in terms of price increase or damage
reduction impact?

Anoop Bector: As of date, we expect 10% cost increase which has come into the company and we have been
able to recover around 5% in the next phase of has already been planned and I think we shall be
by December and we shall be able to recover everything because of packaging, change in
packaging, and also there are the certain other developments because now from April next year
onwards, there was earlier a restriction where you could do only specific grammage after ₹ 10
product, so it could be 120 grams, 150 grams, so now it is going to be price per gram or a price

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per kilo, so you can make your pack, you can reduce your weight as and when you need to, so
those are certain good things which will also come in to the company beyond April this year,
but for us I think substantial price rises would have happened, yes. CSD is an area which
applications are being forwarded, it is a process of six months so that will take six months, it
does not happen before that, and otherwise, we will be able to most of our cost on the domestic
side.

Moderator: Thank you. The next question is from the line of Vinod Malviya from Union Mutual Fund.
Please go ahead.

Vinod Malviya: Thank you for taking my question, so my question was on your export business, in your press
release you have said that the biscuit export business apparently has accrued on a YOY basis.
Now a common commentary which has come from most of the export-oriented company is that
the availability of container has been a major challenge, so just wanted to get your thought, how
you are able to navigate this major challenges industry apparently has been facing and if you can
just give some details regarding, is it more a container issue has been more geography specific
or is it like any sort of details on the container?

Suvir Bector: In regard to the containers, you are definitely correct that there has been a very big shortage and
a drastic price increase, but what we have done as a company is that we have established really
strong relations where a lot of the shipping lines, so we are working directly with MERCK,
MSE, CMA, and Hapag and we have contracts for across the globe with them, so we have long-
term contracts. Let us say for North American territory, we have already booked for the year and
we get a fixed allocated space which means that we will always every week get containers for
our dispatches, so that is how we have worked around it, so we booked it around six to eight
months back and we are currently all secure.

Vinod Malviya: You mean to say that you had done the booking for container almost six to eight months back
and that has been the main advantage?

Suvir Bector: Yes, so how you do it is that you give a forecast, you take the forecast, you talk to your customers
in regard to a monthly volume and you communicate the same where the ship prices were, so
based on that we come into an agreement and the freight as well as the container availability is
blocked so per week basis.

Anoop Bector: Another thing which Suvir you can mention is about the FOB and the CIF, because most of our
sales are FOB, right?

Suvir Bector: Yes, so what we have done is that for example if we had an existing CIF contract where we have
taken the freight before the freight had risen right, so we converted all the clients into FOB or
we have done it as per the new agreed freight, the higher freight which we have blocked already

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for the customers, so majority of our bookings are now basis on FOB where the customers are
absorbing this rate.

Anoop Bector: All the large customers they prefer FOB because they are buying so many containers and they
do contracts with large shipping lines, their contractual powers are much bigger, so they prefer
FOB which also suits us, so wherever there is a CIF, the price mechanism has been changed and
the price cost effect has been taken, but yes there was a big issue which in container availability,
it is now getting better.

Vinod Malviya: Has this container issue been like more geography, so if you want to supply material to a Middle
East and Africa that was not a challenge by the material if you want to supply container to
America, Europe that was a major challenge, any geography specific which was there in the
quarter?

Suvir Bector: What was happening was that major volume where shippers were preferring to ship the volume
was towards the American region because the stakes were substantially higher over there and
they were not preferring the Middle Eastern region. Like, I said that it really did not impact us
because of our relations with the shippers and because of our contractual terms with them.

Moderator: Thank you. The next question is from the line of Harsh Shah from Incred Capital. Please go
ahead.

Harsh Shah: Sir, thank you for taking my question, Sir I am trying to understand the biscuit margins for next
year given the rapid expansion plans which we have, so the first thing is that will our current
manufacturing facility in North service the West and South market or are we planning to put up
a facility even there because given the freight cost which will be involved if we use the North
facilities and I think that we might be offering higher rebate to our distributors to establish our
brand in West and South? Secondly, when you are planning to increase our direct reach type, it
comes under cost right, so since we have this ambitious target of adding 50% more outlets?
Thirdly, since if we are talking about having the new salesman, the new FOS on the distributor
payroll, so what will be the distributor ROI be, will it be in the same range, will it come down
to I am trying to kind of understand how the margins will look over the next one year?

Anoop Bector: Truly good, I think it is a very detailed question, but wherever I missed out your question you
might have to ask me again here and between me and Nitesh, we are going to answer your
question. Firstly, you are absolutely right when you supply your biscuits from a far off
destination, their shipping cost is going to be much higher that is totally right , but what we are
doing is we have a whole list of SKUs so what we are doing is we are planning out what are the
SKUs and at what price we will be selling to the markets in West and South India, so because
we as such as a company have a lot of premium biscuits which normally every factory does not
produce in every State so a premium biscuit is normally even by large companies will be
produced only in specific countries and shipped out because it is very important because the

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plants which you require for premium products are very different and quality parameters are
very different, so what we are doing is we are making a plan on what are the biscuits which are
going to be going down South or in the Western regions, yes. To offset this, like I mentioned
earlier there is even during our IPO we have been talking to each and every investor and telling
them there is a plan to put up a plant by next year in Indore, which is center of India and will
end of the day help us to cover up these markets in the Central India, Southern India or Western
India because then the proximity to the market gets better, so that has already been planned but
yes we need to start creating a market for the plant to run and those costs we are very intelligently
taking up and making it a low cost plan to launch these markets. It is going to be only 500,000
towns and above and we are taking here that we do not get it on our margin side that is for sure.

Coming down to your people strength when you are working into the market, increasing people
yes it is going to be a burden, but definitely the burden is much lesser because the cost of ADSR
are much lower. In fact, the going forward plan is normally companies do not keep these many
people as what we have kept on company roles, they are on third party roles which is also a
cheaper plan, so there is a complete transition of things of people down the line happening and
this is being done to get more control of the market. In fact all our distributors are going to be
on DMS so this was not there till last year, I think Nitesh can also talk about DMS, how we can
control our distributors market, how we can efficiently monitor his working, I think Nitesh over
to you in case you can given an update on the question on this subject.

Nitesh Kotian: I think right questions asked, I think MD Sir has already answered it, but let me just again
reemphasize it. First of all, as MD Sir said that most of our employees right now out of the 336
who are in the field are at the company payroll and the moment we move down to ADSR, which
is distributor payroll, it comes out close to 50% less cost, point number one. Point number two,
yes, will it impact my distributors otherwise yes, but we also worked very closely with the
distributor to ensure that ROIs are maintained and while we do not have, we look at it case to
basis if at all our channel partners have an issue, we work very closely with them to ensure that
their returns are healthy, point number one. Point number two in terms of in the new markets
and especially in DMS what we are doing is in the last three months, we have been able to put
our Distributor Management Software in 456 distributors and by the year, we are targeting that
all our 200 distributors will be starting using our own DMS. This will give us complete visibility
in terms of what SKUs at an outlet level are getting sold, improve our premiumization by
targeting the right outlets, which was scientific database, data analytics and try to improve our
product mix and hence get better margins out of it, so in nutshell this is a transition which we
have just started the journey and I will see how it goes, but I am pretty confident that in the
coming one year, we should be able to achieve this number.

Anoop Bector: Another update on this Nitesh is as per AC Nielsen you know after volumes sale from a shop is
quite high after the senior leaders are sales. As the AC Nielsen are there on a particular soft sales
is high, what is important is we have to increase our reach, so we were trying to increase our
reach, but the only way forward for this is people down the line and our products are sustainable

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in the market, that is an important thing and we have seen this in modern trade, we have seen it
is general trade, so whichever shop we are present our biscuit sales from that particular shop is
quite high, so we do not envisage issues like that going forward because of the quality of the
biscuits, susceptibility of the biscuits, so what our plan is I think is very robust, very, very strong
and also going forward the ADSR distributor actually costs very low and there is no added add-
on cost every year. Now when you have company role people, there are add up costs every year,
every year there is a free pay rise, so this does not happen with ADSR people because they do
multiple responsibilities, they do and they go into the market, they work for the distributor, so it
is a more better utilization of manpower down to line, so we are very bullish about it.

Harsh Shah: Thank you for your elaborate answer, so in a nutshell assuming the palm remains where it is, so
we are not expecting any significant pressure on margins, on biscuit margins given the initiatives
we are trying to undertake, am I right Sir?

Anoop Bector: There is a major exercise where we have actually gone through each and every cost, each and
every products, each and every SKUs, and we have worked out on a strong plan on recovering
the cost, so I think going forward the company will be coming out stronger on recovering all
costs here.

Moderator: Thank you. Ladies and Gentlemen, this was the last question for today. I would now like to hand
the conference over to Mr. Ishaan Bector for closing comments.

Ishaan Bector: 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 many please contact us or Mr. Deven Dhruva from Orient
Capital, our Investor Relation partners. Thanking you so much.

Moderator: Thank you. On behalf of Mrs. Bectors Food Specialities Limited, that concludes this conference.
Thank you for joining us and you may now disconnect your lines.

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