Company Overview :

• DFM Foods Ltd. [ BSE Code – 519588 ] is operating in one of the fastest growing FMCG segment viz., Packaged Snack Food segment and is competing with brands like Kurkure, Lay's, Yellow Diamond, etc..

• Company is a pioneer in introducing branded (packaged) extruded snacks with the brand name 'CRAX' in 1984 which even today enjoys ~8 % marketshare in North India.

• Despite stiff competition, company has grown its sales (by value) at 10 Years' CAGR of 27.20 % and

  at 5 Years' CAGR of 48.08 %.

• Volume growth has been equally impressive with 10 Years' CAGR in sales by volume at 16.65 % and

  5 Years' CAGR in sales by volume at 32.49 %.

• Company increased its manufacturing capacity by ~167 % in FY12 (precisely in November 2011) and within 3 years, it is sitting on verge of approaching 100 % utilisation in its old & new capacities combined which speaks highly of acceptance of company's products in the marketplace.

• Westbridge Capital, one of the largest and most successful public markets fund, has recently, on 30^th January 2014, taken a significant 24.90 % equity stake in the company, at INR 259.10 per share, which augurs very well for future scalability and profitable growth of the company.

• Company is working on a three pronged growth strategy of --

  --diversifying geographical sales presence,

  --diversifying geographical manufacturing presence, &

  --diversifying product offerings via new launches.

• Management has been proactive in its IR initiatives by regular hosting of concalls and publishing of detailed presentations/press releases after every quarterly result. Senior management is professional with decades of experience in the business.

• Despite all positives as also underowned equity structure with low floating stock, company is trading at reasonable :

  1.22x Mcap/Sales TTM,

  1.01x Mcap/Sales Forward

  1.45x EV/Sales TTM

  1.26x EV/Sales Forward

Concerns :

(1) Inter Corporate Deposit (ICD) given to parent The Delhi Flour Mills Co. Ltd.

Here, it is also worthwhile to note the financial performance of The Delhi Flour Mills Co. Ltd. over last 10 years as also its Gross Debt and Equity over same period :

Delhi Flour Mills Financials

Over last two fiscals i.e. FY12 & FY13, the parent company is relocating its flour milling operations to Plot No. 86-B,C,D,E, Sector Ecotech-I, Extension-I, Greater Noida (U.P.) from current location 8377-8381, Roshanara Road, Delhi. Plant & Machinery are imported from Ocrim SPA during FY13 which were already received and civil constuction was going on at the site. Total Project cost was estimated at INR 172 cr. out of which INR 64.73 cr. were spent till FY13. Commercial Production at the said new facility is expected to commence from September 2014 as per company estimates.

To Fund this project, management had approached its Bankers for an additional project finance of INR 58 cr. over and above INR 67.15 cr. project finance tied up in FY12. In addition, company was looking at raising funds via equity route which should be to the tune of ~INR 46 cr..

Now, before discussing any further let's go to our Concern No. 2 and then check whether both concerns stand addressed as on date.

(2) DFM Foods Ltd. promoters sold their personal stake in the company to the tune of 24.90 % at INR 259.10 per share to Westbridge Capital on 30^th January 2014 and raised INR 64.52 cr. in their personal capacity of which no funds came to the company's books.

Here, three things need to be noted :

(a) In the concall hosted by the management after declaration of Q3FY14 results which also coincided with the event of said promoters stake sale, management assured that out of the INR 64.52 cr. raised, 31 cr. will come to DFM Foods books via repayment of ICD given to the parent.

(b) Since parent promoter co., The Delhi Flour Mills Co. Ltd. was already in the requirement of funds in order to finance its project (as discussed above in Concern No. 1), the additional 33 cr. which were raised by the said promoter stake sale seem perfectly fine and exactly matches with the funds requirement as discussed in Concern_1.

(c) Significant investment by a renowned PE Player like Westbridge taking maximum permissible ( w/o triggering open offer ) equity stake of 24.90 % and the fact that one of its founding members, Mr. Sandeep Singhal, has also joined company's board augurs very well for the future of the company and puts to rest both Cocern_1 & Concern_2.

(3) Company operates in a very competitive environment and that too at low price points of Rs. 5 and Rs. 10 per pack. Competitors are biggies like Pepsi, ITC, Parle and the new entrant GCL (Gopal Corporation) as also strong mid-size players like Balaji and Prakash Snacks; forget here numerous regional players which operate at small scale.

Here, two things need to be noted :

(a) Company has carved out a niche for itself in 6-10 years age bracket and concentrates its marketing activities on said genre. Its “gift with every pack” strategy is one of its kind amogst competition and has enabled it to sustain as well as grow handsomely against competition.

(b) Company increased its capacity by 167 % in FY12 (precisely in November 2011) and old plus new capacity should get to 100 % utilisation well before FY15-end which means in just 3 years timeframe, entire increased capacity got absorbed by the market which speaks highly of acceptance of company's products in the marketplace. If we look at volume growth attained by the company over last 5 years, the picture gets more clearer :

Key Monitorables :

(1) Repayment of ICD :

Management has assured the shareholders about repayment of INR 31 cr. ICD given to The Delhi Flour Mills Co. Ltd. out of the funds raised via promoters' stake sale to Westbridge Capital. We need to monitor whether the actual repayment happens during Q4FY14 or not.

(2) Increase in Manufacturing Capacity :

As discussed before, company should run out of existing capacities (old & new combined) in FY15 and so it will require to draw plans for capacity augmentation soon (before Q1FY15). Since the company has now expanded into West & East India as also it is actively looking for entering into Southern market, so, the roadmap towards increase in existing capacities will be key monitorable aspect asto where and how the company plans to increase its manufacturing presence.

(3) Sales Growth :

Company's sales growth, particularly in West & East India will be key monitorable to check whether the company's products are finding same level of acceptance as they have found in North India. Also, sales growth in North India will also need to be closely watched out for to ensure company doesn't loose out in its home market.

(4) Sales Mix :

Starting FY14, company has started to focus on 'Natkhat' brand which is at Rs. 2 price point as also has launched new product in the form of 'Kruchoids'. Going forward it will be interesting to see the sales mix as to whether other products gain sales momentum vis-a-vis company's flagship brand 'Crax' Corn Rings or not.

(5) Debt & Equity Dilution :

How the company manages CAPEX plans over next two years will be key aspect to monitor – whether it goes for entire debt funded CAPEX or dilutes equity to what extent or how it balances debt-equity structure to finance CAPEX.

(6) New Product Launches :

Company, in all likelihood, is going to go for aggressive new product launches starting FY15. Profile of products launched, its respective peer scenario as well as how well they get received in the marketplace will be key monitorable.

Private equity investor Lighthouse to buy 25% in Bikaji Foods

My thoughts on Balaji Wafers Stake dilution article :

Mentioned below is 3 Years' CAGR in Sales attained by 8 major Indian Organised Snack Food companies. Key thing to note here is that these eight companies constitute ~70 % of Indian Sweet & Savoury Snacks Market :

	3 Years' CAGR in Sales
Pepsi [ Snacks ]	19.93 %
Haldiram [ All Geographies Combined ]	25.58 %
Balaji Wafers	33.15 %
ITC	N.A.
Bikaji Foods	28.39 %
Bikanervala	17.29 %
Prataap Snacks	30.56 %
DFM Foods	46.13 %

Also interesting to note here is the EBITDA & PAT Margins (4 years' Avg. & of FY13) of each company :

Key things to note from above :

DFM Foods has registered highest 3 Years' CAGR in Sales over FY10-FY13. It has outperformed all the peers quite handsomely.

EBITDA margins of DFM are at par with Haldiram & just second best to Balaji Wafers which is a very satisfying thing. Its important to note here that Haldiram's major sales come from Sweets & Namkeen and Extruded Snacks forms only a small portion of its sales. Similarly, Balaji Wafers' major Sales contributors are Chips (Wafers) & Namkeens. Its only Pepsico & Prataap which have major contributions coming from Extruded Snacks.

DFM Foods' Scale of Operation (FY13) is smallest amongst all the companies mentioned with Pepsico & Haldiram at 2500+ cr. and Balaji at 913 cr. with ITC, Bikaji, Bikanervala and Prataap at 500 cr., 325.5 cr., 350.2 cr., and 343.8 cr. respectively.

Out of these 8 companies, Prataap has got Sequoia backing (51 % stake), Bikaji recently got Lighthouse PE backing (25 % stake), DFM got Westbridge backing (24.90 % stake) and Balaji is in final talks with Capital International PE (15 % stake). Pepsico and ITC are capable conglomerate while Haldiram has each family fraction catering to respective region. Its only bikanervala which is the weakest amongst the lot that is looking for a funding partner since last many years but has not got anyone yet.

Since four out of eight companies have got (or about to get) PE investors, its worthwhile to note here the valuations at which each respective PE-investment deal was stuck :

Anand Rathi initiates coverage on DFM Foods Ltd. with a Buy in its report dated 21st March 2014. (Target Price Rs. 460)

DFM is a niche player, focused on ready-to-eat snacks for children.

Over FY1993-2013 this segment has exhibited a 15% CAGR.

■ Increase in ad-spend over FY09-13 from 4.3% of net sales to 4.6% has helped the company improve pricing power and thus the EBITDA margin from 5% to 9.3%

■ It has aggressive plans to expand its distribution network. It plans to expand retail outlets to 0.4m by end-FY16, from 0.2m in FY13. It also plans to expand distribution over FY15-16 to the Canteen Stores Department, modern trade and the Railways

■ We initiate coverage with a Buy, and a price target of `460, at a PE of 25x FY16e

Key risks. Increase in raw material prices and competitive pressures

Some additional Data Points for members' ref. :

Projected Growth :

Key Players in Indian Sweet & Savoury Snacks Segment

( Note – These Players together control 90 % + marketshare of the segment )

Crax Brand Key Marketshare Figures

----------------

Extruded Snacks Marketshare Trend of Key Brands

Bikaji Foods PE-deal details out.....The valuation part of the deal is noteworthy as it is much higher than earlier reported and the stake dilution is almost half than earlier reported in press......

Majumdar & Partners acted as advisors for the deal where Lighthouse has picked up 12.5 % equity stake in Bikaji for INR 90 cr.....Bikaji (FY13 Revenues = 325.50 cr. & EBITDA = 24.39 cr.) is valued at an EV of INR 739 cr. much higher than previously anticipated of 499 cr.

Valuation multiples at which deal is stuck :

EV/Sales (TTM) = 2.27

EV/EBITDA (TTM) = 30.29

just to draw a comparison :

3 Years' CAGR in Sales of Bikaji is 28.39 %  v/s  DFM's 3 Years' CAGR in Sales at 46.13 %

3 Years' CAGR in EBITDA of Bikaji is 35.01 %  v/s  DFM's 3 Years' CAGR in EBITDA at 40.31 %

4 Years' Average EBITDA Margin of Bikaji is 7.39 % v/s DFM's 4 Years' Average EBITDA Margin at 11.94 %.

Contribution of Savoury Snacks to FY13 Revenues of Bikaji is 89 %  v/s  Contribution of Savoury Snacks to FY13 Revenues of DFM at 100 %

Seems Westbridge has stuck a good deal in DFM (@ TTM - EV/Sales = 1.41 & EV/EBITDA = 13.32) and could very well fetch good returns from it. The Bikaji-Lighthouse deal seems to be a comforting news for DFM shareholders.

Rgds.

Packaged salty snacks topped FMCG sales in 2013: Report

NEW DELHI: Indians consumed more packaged salty snacks than any other fast moving consumer goods (FMCG) in 2013, as they emerged as the fastest growing grocery category, according to data compiled by researcher Nielsen. 

To drive growth in an otherwise uncertain consumption environment, snacks makers such as PepsiCo, ITC and Parle introduced low price points, stepped up distribution in smaller cities and towns and made their products to suit regional taste preferences. Others such as Haldiram, Balaji, Garden, Bikano, Yellow Diamond and DFM Foods' Crax, on the other hand, are playing on low price points, local flavours and quick turnaround time in churning out innovations. Snack sales are usually immune to seasonal fluctuations, which often affect beverages. 

"Conversion from loose to packaged, new formats, and convenient price points of Rs5 and Rs10 are key differentiators driving this category," said ITC Divisional chief executive (Foods) Chitranjan Dar. According to him, ITC's newer innovations under its flagship salty snack brands, Mad Angles and Tangles, have been key sales drivers. 

Salty snacks were the fourth fastest growing category in 2012, but last calendar year they topped all other fast-growing categories such as packaged rice and diapers. Pace of growth, however, slowed down from 29 per cent to 25 per cent over the past two years. That still was far quicker than the 9.4 per cent growth in 2013 sales posted by the overall FMCG sector, where the pace has slowed from the previous year's 18 per cent, according to Nielsen data. 

The salty snacks market was worthRs12,679 crore last year. A low-cost business compared with those like chips or biscuits, salty snacks operate on limited barriers to entry. Five of the top six fastest growing FMCG categories in 2013 were foods — snacks, chocolate, atta, non-refined oil and rice — all in excess of 20%. Popular items such as biscuits posted just 7 per cent growth, while detergent sales rose 10 per cent and soaps expanded 4 per cent. 

"Snacks isn't a me-too product... there's a value addition," said Shirish Pardeshi, executive director of investment banking as well as head of consumer and consumer services practice at Anand Rathi Advisors. PepsiCo, the market leader for salty snacks, had launched several local flavours under popular brand Kurkure. Chief executive Indra Nooyi projects about twothirds of PepsiCo's revenue growth to come from snack sales, driven by emerging markets. PepsiCo's senior director, foods marketing, Vidur Vyas said affordable indulgence and convenience were boosting growth in the category. 

"Traditional namkeens and localisation have been a crucial factor in driving category growth," said Parle Products group product manager BK Rao. Parle's first attempt to enter the category over three years back wasn't successful but it re-entered a year later and has met with good response, Rao said. The maker of Hide & Seek and Monaco biscuits sells namkeens under the brand Parle and FullToss. 

The unorganised snacks market remains undocumented, but industry players conversion from loose to branded is happening rapidly. Three years back, Pepsi-Co restructured its foods division to set up a mass-priced, low-cost traditional business model under its Lehar brand, mainly to fight off smaller brands. 

Key Takeaways from the Report – Industry Perspective :

• 'Indian Branded Sweet & Savoury Snacks' segment has grown at a CAGR of 26.2 % over 2008-2013 (in value terms) to become the third fastest growing segment of Indian Packaged Food Industry.

• The segment is categorised into 'Western Snacks' and 'Traditional Snacks' which together give it a ( 2013 ) market size of ` 110.68 bn. 'Western Snacks' comprises of Chips/Crisps & Extruded Snacks (like Rings, Puffs, etc.) whereas 'Traditional Snacks' comprises of Namkeens, Bhujia, Papad, Khakhra, Nuts, Sweets, etc.

• Only Twenty Seven organised players contribute to 95 % of the segment sales with Nine Players controlling ~71 % of the marketshare. These Nine players include :

  Pepsico, Haldiram, Balaji Wafers, ITC, Bikaji Foods,

  Bikanervala, Prataap Snacks, DFM Foods & Apricot Foods.

  [ Note :- Financial Profile of each of these nine companies is included in this report ]

• Extruded Snacks as a category stands out amongst all other categories having registered highest volume growth over 2008-2013 ( CAGR = 21.9 % ) and its projected 16.9 % ( CAGR ) volume growth over 2013-2018 which is again highest in the segment.

• Only Six companies control 82 % of the Extruded Snacks market. Pepsico is the leader in the space whereas Prataap Snacks, DFM Foods and Haldiram are noteworthy marketshare gainers over last ten years.

• Opportunity is huge ahead of every serious player in Indian Branded Sweet & Savoury Snacks segment because of the fact that Indians are natural snacks' consumers, and entire 124 crore Indian public is served by only Twenty Seven major branded savoury snacks players atpresent. Rural markets are still unpenetrated and lower price points ( ` 2, ` 5 & ` 10 ) prevalent in the segment could drive aggressive sales in rural India.

• Competition is likely to intensify going forward as more of the organised business groups enter into this space ( recent entry of Tobacco major Gopal Corporation is a case in point ) to grab their share of opportunity as also existing players make a dent in peers' stronghold by offering similar products with superior distribution and marketing reach.

Key Takeaways from the Report – Company Perspective :

CRAX Brand Key Marketshare Figures

Source :- Exemplar Research, Channel Checks, Euromonitor International, Company Reports

• DFM Foods Ltd. via its 'CRAX' brand is a key player in Extruded Snacks category of Indian Branded Sweet & Savoury Snacks segment.

• Over last five years, company has gained significant marketshare of the category.

• If we consider 3 Years' ( FY10-FY13 ) CAGR in Sales, then, DFM has outperformed industry as well as almost all of its peers quite handsomely :

3 Years' CAGR in Sales

( 2010-2013 )

• Its main product offerings ( CRAX Corn Rings ) are targeted towards children of age group 6-12 years --- an isolation strategy which has done wonders for the company so far.

• If we take into consideration DFM's key product offerings and its target audience, then, key competitors for it are Pepsico, Haldiram ( Extruded Snacks ), ITC, Prataap Snacks & Venkataramana Food Specialities.

  
  

  • As per our analysis, Prataap Snacks ( via its brand YD Rings ), as a peer, poses an immediate threat to DFM Foods because of its almost similar marketing strategy, same target audience, identical product USP and low margin business model.

  
  

  
  

  
  

  • Prataap has recently ( in 2013 ) commenced its Rings manufacturing plant ( technology from American Extrusion ) and is going all out to make a dent into DFM's ( CRAX Corn Rings ) marketshare. Aggressive marketing strategy is adopted by Prataap by getting associated with popular children tv show 'Chhota Bheem' and Mr. Amitabh Bachchan starrer children-oriented supernatural movie 'Bhootnath Returns'.

  
  

  
  

  
  

  • Medium-term Revenue Growth is not under threat for DFM because of an aggressively expanding market size itself as also unsaturated nature of company's Western & Eastern Sales presence. However, for this to happen, company has to expand its manufacturing capacities intime, fill the many gaps prevalent in its distribution network as also design a wise consumer-pulling marketing strategy.

  
  

  
  

  
  

  • EBITDA margins of the company might not show a significant improvement considering the fact that all its peers ( except Balaji Wafers ) operate at a lower EBITDA margin as also likely intensification of the competition in the space.

Industry --- Key Facts & Figures :

• 'Packaged Food' segment is one of the fastest growing segment of Indian FMCG sector.

• 'Branded Sweet & Savoury Snacks' segment is the third fastest growing Indian Packaged Food segment. It has grown at a 5 Years' CAGR of 26.2 % over 2008-2013 ( in value terms ).

  
  

  • 'Western Snacks' and 'Traditional Snacks' are the two broad categories under Branded Sweet & Savoury Snacks segment. Although, in volume terms, both the categories' contribution is almost equal ( 50.73 % v/s 49.27 % ), but, in value terms, Western Snacks dominate the space with 62.73 % share as at 2013.

  
  

  
  

  Chips/Crisps & Extruded Snacks (like puffs, rings, etc.) form 'Western Snacks' category whereas Namkeens, Bhujia, Papad, Khakhra, Nuts, Sweets, etc. form 'Traditional Snacks' category.

  
  

  • Only Twenty Seven organised players constitute 95 % of the total Indian Branded Sweet & Savoury Snacks segment sales with Nine players dominating the space with 71 % of the marketshare.

  
  

  
  

  • Pepsico leads the race with 35.1 % marketshare (2013) with Haldiram ( all family fractions' geographies combined ) standing second at 23.5 % marketshare. Pepsico is a clear leader in 'Western Snacks' space whereas Haldiram dominates the 'Traditional Snacks' space.

  
  

  
  

  • Each of the two major players have seen their marketshare gradually decline because of the emergence of other strong players like ITC, Balaji Wafers, Prataap Snacks, Bikaji Foods and DFM Foods.

  
  

  
  

  
  

  
  

  Key Players in Indian Sweet & Savoury Snacks Segment

  ( Note – These Players together control 95 % marketshare of the segment )

  Large Players ( by FY13 Annual Sales )	` 500 cr. +	Pepsico Balaji Wafers Haldiram ITC
  Mid-Size Players ( by FY13 Annual Sales )	` 200 – 500 cr.	Parle Products Prataap Snacks Bikaji Foods Bikanervala DFM Foods
  Small Players ( by FY13 Annual Sales )	` 100 – 200 cr.	Parle Agro Cavinkare Venkataramana Food Specialities Agrotech Foods Apricot Foods
  Micro Players ( by FY13 Annual Sales )	` 1 – 100 cr.	Perfetti Van Melle Samrat Namkeen Jabson Food Euro India Fresh Foods Atop Food Products Zee Foodex Chheda Specialities SKB Food Products Advance Tech Energy Edibles Melar Healthcare Priniti Foods Krushi Corporation Grove Ltd.

  Source :- Onground Research, Channel Checks, Company Reports, Rating Reports, Exemplar Research, Euromonitor International,

  
  

  
  

  
  

  • 'Extruded Snacks' as a category stands out amongst all other categories of Branded Sweet & Savoury Snacks segment not only because of the highest volume growth registered by it over last 5 years ( 2008-2013 CAGR = 21.9 % ) but also because of its projected volume growth over 2013-2018 at a CAGR of 16.9 % which is highest amongst the segment.

  
  

  
  

  
  

  ( Growth YoY )	2014	2015	2016	2017	2018
  Volume Growth :
  Chips / Crisps ( Volume Growth )	11.64 %	10.82 %	9.19 %	8.22 %	7.96 %
  Extruded Snacks ( Volume Growth )	19.54 %	17.92 %	16.42 %	15.49 %	15.10 %
  Value Growth :
  Chips / Crisps ( factoring-in normal price increase based on price trend till 2013 )	20.78 %	19.38 %	17.21 %	15.90 %	15.10 %
  Extruded Snacks Segment ( factoring-in normal price increase based on price trend till 2013 )	26.57 %	24.54 %	22.62 %	21.31 %	20.65 %

  Source :- Euromonitor International, Exemplar Research

   

   

   

  • Six companies dominate Extruded Snacks category by controlling 82 % market as at 2013. They include Pepsico, ITC, Prataap Snacks, DFM Foods, Haldiram & Vekataramana Food Specialities.

  
  

  
  

  • Pepsico is the leader with its Kurkure & Cheetos brands controlling 52.7 % marketshare ( 2013 ) of the category ; ITC, with its brand Bingo occupies second slot ( 10.8 % marketshare ) while Prataap, with its brand Yellow Diamond ( 5.9 % marketshare ) and DFM Foods with its brand CRAX ( 5.6 % marketshare ) occupying third and fourth position respectively.

  
  

  
  

  • If we talk of specific brands, then, over last five years ( 2008-2013 ), CRAX ( DFM Foods ), Yellow Diamond ( Prataap Snacks ) and TakaTak ( Haldiram ) have gained significant marketshare at the expense of Peppy & Piknik ( Venkataramana Food ) and other smaller players.

  
  

  
  

  
  

  
  

  
  

  
  

  
  

  Extruded Snacks Marketshare Trend of Key Brands

  
  

  	2013	2012	2011	2010	2009
  Kurkure & Cheetos ( Pepsico )	52.7 %	55.2 %	53.8 %	49.2 %	52.9 %
  Bingo ( ITC )	10.8 %	10 %	11 %	11.9 %	11.5 %
  Yellow Diamond ( Prataap )	5.9 %	4.7 %	4.6 %	4.9 %	4.8 %
  CRAX ( DFM )	5.6 %	5.3 %	5.1 %	4.1 %	3.9 %
  TakaTak ( Haldiram )	4.3 %	4.3 %	4.2 %	3.8 %	3.3 %
  Peppy & Piknik ( Venkataramana )	2.7 %	3,3 %	4.0 %	4.8 %	6.0 %

   

  
  

  
  

  • Key driver for robust growth of Extruded Snacks segment has been lower price points ( ` 5 & ` 10 ) which, coupled with innovative promotional activities, have made the segment extremely popular, especially amongst school going children.

  
  

  
  

  • Consumption pattern suggests that Brand Loyalty is absent in this segment ; however, brand preference exists to a certain extent. Product Loyalty is completely absent because of which companies need to continuously innovate to offer more flavours as also engage consumers in varied ways.

  
  

  
  

  'Taste' & 'Price Point' are the key determinants of purchase decision of consumers in the segment. For products targeted at children, 'Gift' (bundled with each product packet) is the third most important determinant of the purchase decision.

   

   

   

  • Assessment of Competition :

    
    

    
    

    
    

    • Pepsico with its brands Lay's & Uncle Chipps in Chips/Crisps segment (Western Snacks) , Kurkure & Cheetos in Extruded Snacks segment (Western Snacks) & Lehar in Traditional Snacks segment is a clear leader in Indian Branded Sweet & Savoury Snacks segment. However, if we observe its overall marketshare of the segment over last 10 years, then, it seems to have lost considerable ground :

    
    

    Pepsico Marketshare Trend

    in Indian Branded Sweet & Savoury Snacks Segment

    
    

    2013	2012	2011	2010	2009	2008	2007	2006	2005	2004
    35.1 %	36.5 %	36.7 %	37.4 %	39.3 %	40.1 %	41.1 %	46.5 %	45.7 %	44.3 %

    
    

    Source :- Euromonitor International, Exemplar Research

    
    

    
    

    
    

    • In contrast, Haldiram as a group has more or less maintained its marketshare to become the second largest player of Indian Branded Sweet & Savoury Snacks segment :

    
    

    Haldiram Marketshare Trend ( all family fractions' geographies combined )

    in Indian Branded Sweet & Savoury Snacks Segment

    
    

    2013	2012	2011	2010	2009	2008	2007	2006	2005	2004
    23.5 %	23.7 %	24.1 %	24.1 %	24.2 %	23.0 %	21.5 %	20.8 %	21.3 %	21.4 %

    
    

    Source :- Euromonitor International, Exemplar Research

    
    

    It is worthwhile to note here one important fact regarding Haldiram --- although for calculation of marketshare figures, 'Haldiram' as a brand is considered, but, the rights for 'Haldiram' brand are clearly demarcated amongst different family fractions with each family fraction's respective company/ies handling manufacturing, sales and distribution of 'Haldiram' brand of products for the respective geography :

    
    

    Geography	Family Fraction	Respective Companies
    North India	Manohar & Madhusudan Agarwal	Haldiram Snacks Pvt. Ltd. Haldiram Manufacturing Co. Pvt. Ltd.
    West & South India	Shiv Kishan Agarwal	Haldiram Foods International Pvt. Ltd. Komal Foods Pvt. Ltd.
    East India	Prabhu Shankar Agarwal	Haldiram Bhujiawala Ltd.

    
    

    
    

    
    

    
    

    
    

    In this report, for assessing financial and segmental positioning of 'Haldiram', figures of all the above-mentioned five companies are taken as one single consolidated entity.

    
    

    
    

    
    

    
    

    
    

    • All the other players in the segment command a marketshare in single digits ; however, their relative growth over the years is noteworthy and exceptional which suggests :

      an expanding overall marketsize,

      gradual shift towards organised from unorganised, &

      also explains the marketshare-loss suffered by the leader of the segment (Pepsico).

    
    

    Key players that have gained significant marketshare over last ten years include ITC, Balaji Wafers, Prataap Snacks, DFM Foods, Bikaji Foods, Parle & Apricot Foods.

    
    

    
    

    
    

    
    

    
    

    • Let's now assess the financial profile of nine companies which together control 71 % marketshare of Indian Branded Sweet & Savoury Snacks segment. Here we will look at :

    
    

    Actual Revenue & YoY Revenue Growth for each fiscal over FY10-FY13,

    3 Years' CAGR in Sales (Revenue) achieved by each player, and

    
    

    EBITDA & PAT Margins – 4 Years' Average as well as of FY13.

    
    

    
    

    
    

    
    

    
    

    Comapnies covered are :

    Pepsico,

    Haldiram (all family fractions' gepgraphies combined),

    Balaji Wafers,

    ITC,

    Bikaji Foods,

    Bikanervala,

    Prataap Snacks,

    Apricot Foods,

    DFM Foods.