Prataap Snacks FY23 margins fall on high input costs

Operating EBITDA decreased by 40 basis points to 3.8 percent in FY23.

Prataap Snacks recorded lower margins in FY23 because of rising raw material costs, said the company in its annual report released on July 10.

The company's operating EBITDA decreased by 40 basis points to 3.8 percent in FY23. This was because the company witnessed a sharp increase in the price of key raw materials such as potatoes, corn, wheat and packaging laminate, which had a negative impact on the margins.

Prataap Snacks adopted a cost optimisation strategy, which resulted in a reduction in raw material costs. It also lowered the quantity of oil used in its recipes and downsized its packets and implemented other mechanisms such as reducing the middlemen in the distribution chain and streamlining its product portfolio.

Prataap Snacks’ revenue from operations increased 18 percent year-on-year to Rs 1660 crore in FY23, said the company in its annual report. However, the snack company’s net loss widened three times to Rs 18 crore year-on-year in the same period.

The company has three verticals, extruded snacks, potato chips, namkeen, and sweet snacks. The extruded snacks section has brands Yellow Diamond and Avadh, which contributed to 58 percent of the total revenue in FY23. Potato chips contributed to 23 percent of the total revenue in FY23. Namkeen and sweet snacks contributed 16 percent and 3 percent to the total revenue respectively.

The company has planned to start a manufacturing unit in Jammu and Kashmir. The new company is strategically located to serve Jammu and Kashmir, Punjab, and Himachal Pradesh. Prataap snacks has 15 manufacturing facilities, including 7 owned facilities in Indore, Assam, Bengaluru, Rajkot and Kolkata. There are 8 contract manufacturing facilities in Kolkata, Bengaluru, Hyderabad, Patna, Kanpur, Karnal and Hisar.

The company’s cash flow from operating profit increased 73 percent year-on-year to Rs 73 crore. Prataap Snacks net cash flow from financing activities grew 20 times year-on-year to Rs 51 crore.

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