Prataap Snacks expects double digit EBITDA in the next 2-3 quarters: Amit Kumat

“Sales of higher packets have increased by almost 30% in the last two quarters but still the numbers are not that significant. Probably from 90%, we would be close to 85% as of today for the smaller pack,” says Amit Kumat, MD & CEO, Prataap Snacks

Revenues have seen a strong growth this time around. But how much of this growth was pricing led and how much was volume-led?
For us, the volume and the prices are almost the same. There is no difference between value and volume. It is a 100% value and volume driven growth.

What about the margins then? Margins have been under pressure even this quarter. How much of the impact was due to inflation and do you see the margins continuing to be under pressure even in Q3?
Margin has improved drastically from the last quarter. We were at minus 0.5% on the EBITDA last quarter and it has improved to almost 5%. But if compared with last year, the margins are little bit down only because of the inflationary pressure. The total inflation from last quarter to this quarter is almost 6.5%, out of which we are able to mitigate almost 5%. So the margin downfall is only 1.7% but going forward we definitely see margin improvement and are hoping to get to double digit EBITDA in the next two to three quarters.

Are you planning to take any price hikes going forward? How much of the raw material cost increase have you passed on so far?
We do not intend to increase the prices for now, We are trying to optimise our production cost and channel margin. Most of the benefits that we have taken from last year to this year, have come out of the general reduction and very little from the price increase to the consumer. Going forward also, we intend to do the same thing but not hike prices.

Our consumers are shopping more for smaller packets. Have you seen any downtrading? Have sales of smaller packets increased significantly?
No, almost always 85% to 90% of our sales come from smaller packets but for us there has been almost 30% sales increase in bigger packets. Still the number is not very significant.

A couple of quarters back, you spoke about how the company wants to reduce that contribution from the Rs 5 pack. Like you mentioned, your 85-90% sales are from smaller packets. How do you plan on changing it significantly?
The target is to go to 25% to 30% in the next two years. Sales of higher packets have increased by almost 30% in the last two quarters but still the numbers are not that significant. Probably from 90%, we would be close to 85% as of today for the smaller pack.