Ready to cook segment volume growth excluding sweet corn stood at 15.5 percent in Q3FY20 while sweet corn contributed to the extent of 190 bps to the value growth in RTC category.
Agro Tech Foods has registered a 25 percent degrowth year-on-year (YoY) in consolidated profit during the quarter ended December 2019 despite fall in tax expenses, dented by lower operating income.
Profit declined to Rs 7.5 crore during the quarter, from Rs 10 crore in same period last year. Revenue from operations increased 6.17 percent YoY to Rs 228.72 crore in Q3FY20.
At the operating level, the company's earnings before interest, tax, depreciation and amortisation fell 19.4 percent YoY to Rs 14.55 crore during the quarter.
Here are key highlights from Agro Tech Foods conference call by Narnolia Financial Advisors:
As per the management of Agro Tech Foods, volumes in the ready to cook (RTC) segment, excluding sweet corn, stood at 15.5 percent in Q3FY20 while sweet corn contributed to the extent of 190 bps to the value growth in the category. Management envisages better growth to continue in the segment going forward.
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Ready to Eat popcorn performed well in this category with volume growth of 31 percent, while value growth remained low because higher volumes came from lower revenue per tonne packs.
The management expects the category to grow in a range of 20-30 percent and is taking strategic measures to achieve the same. Spreads including peanut butter grew by 19/21 percent in value and volume terms driven by measures undertaken by the company to regain its market share.
Choco spreads continued to do well and contributed to the extent of 400 bps to the value growth of spread category in Q3FY20. The company’s peanut butter market share is constant at 34 percent for the past five years. Breakfast cereals and chocolate confectionery contributed to the extent of 120/70 bps to the foods business value growth, the management added.
Agro Tech Foods launched honey-roasted oats (Breakfast cereals) and will launch a new product in the next three to six months. The company will be increasing prices on account of inflated commodity prices to sustain gross margin. It added 150-200 distributors (in last 12-15 months) taking the total distributors to 1,200, while direct coverage stood at 400,000-410,000 stores as of Q3 FY20, the company's management said.CAPEX for FY21 stood at Rs 35-40 crore. The company has started commercial production in its Bangladesh factory since the past eight to nine months and will continue to build up business gradually, it added.
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