a) 5 years of 25% CAGR.
b) Last year US (RTE) Business grew by +25%, domestic business grew by only 8% (FSSAI issue).
c) Aggressive growth in both segments this year. Do not give explicit growth targets,
d) Market reach in US doubled from 8000 to 16000 (out of 36000) outlets in one year.
e) FSSAI issues impacted India launches (Rockr was rejected). New launches this year Rockr Burger (KFC), Chilli Paneer Pockets (McDonalds). FSSAI no longer required to approve products as per supreme court order.
f) Started operation in UK this year. UK RTE market largest in world for Indian foods.
g) RTE market share for Indian food bigger than all other players (Haldiram, MTR, ITC etc.) combined.
h) Limited impact of food price fluctuation.
i) Working with local chains like FAASO’s.
j) Working on complete organic foods and will launch them in two years. Sourcing everything organic is very difficult. Working with farmers to grow organic rice etc.
k) Entered into a tie-up with Wendy’s UAE (15 stores) for QSR supplies.
l) Capacity utilization of various divisions: RTE (80%), Patties (60%), Sauces (50%).
m) New capacity to be added this year in RTE business. Capex plan 5.5 cr for one additional line (existing two lines).
Kagome Impact:
a) Largest manufacturer of Tomato Ketchup worldwide with far superior quality.Looking to develop tomatoes with Kagome help.
b) Will be using Kagome’s research in agricultural technologies.
c) Use each other’s distribution network.
d) Kagome’s name gives an easy entry in quality QSR, example cited was Wendy’s UAE.
Conclusion: Came out highly impressed with management.Entry into UK market +ve for RTE. Newer products with McDonalds, KFC, FAASOS shows traction in QSR. I liked their response on dividends where they said as long as we are able to deploy capital generating significantly higher returns than cost of capital the dividend payouts will be limited. Post that period they will increase significantly.
Discl: Holding from lower levels.
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