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Baba Food Processing India Ltd Management Discussions

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Oct 20, 2025|12:00:00 AM

Baba Food Processing India Ltd Share Price Management Discussions

Annexure V

FOOD PROCESSING & FMCG INDUSTRY INDIAN SCENARIO

India is the fourth largest economy in the world and expected to be the fastest growing economy among major G20 countries, with GDP growth estimated to be around 6.5% in FY25. Further India is one of the largest populated countries in the world and is expected to continue having one of youngest populations in the world till 2030. The growing consumption of food is expected to reach US$ 1.2 trillion by 2025-26, owing to urbanization and changing consumption patterns.The food processing sector has become a key contributor to Indias economy over the past few years, thanks to progressive policy measures by the Ministry of Food Processing Industries (MoFPI).

Indias food processing sectors market size is estimated to more than double to Rs. 60,40,300 crore (US$ 700 billion) in 2030 from Rs. 26,49,103 crore (US$ 307 billion) in 2023, driven by growing demand for processed products, according to industry body PHD Chamber of Commerce and Industry (PHDCCI).

According to the Viksit Bharat@2047 report, Indias food processing sector will grow significantly, reaching US$ 1,100 billion by FY35, US$ 1,500 billion by FY40, US$ 1,900 billion by FY45, and US$ 2,150 billion by FY47.

The food processing sector has grown substantially, averaging an annual growth rate of around 7.3%, during 2015-2022. As of 2024, it contributes around 8.80% and 8.39% of Gross Value Added (GVA) in Manufacturing and Agriculture respectively, 13% of Indias exports and 6% of total industrial investment.

Food processing industry contributes 32% to this food market and is also one of the largest industries in the country, contributing 13% to total export and 6% of industrial investment. The food processing industry, within the registered factory sector, employs about 1.93 million people while the unregistered sector also employs approximately 5.1 million workers.

Indias diverse agro-climatic conditions allow for abundant production of cereals, pulses, fruits, and vegetables, making it a leading producer of various foods. As of 2024, the Indian food and grocery market is the worlds sixth largest, with retail contributing 70% of the sales. The Indian food processing industry accounts for 32% of the countrys total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.

A strong food processing industry is essential for our nation to tackle food and nutritional security issues. Processed food offers convenience, extended shelf life, easy transport to remote areas, and improved accessibility, serving as a valuable source of nourishment. Additionally, it offers our farmers increased opportunities for better price realization and expanded selling prospects.

The FMCG sector in India expanded due to consumer-driven growth and higher product prices, especially for essential goods. Rapid delivery services can boost demand for FMCG products. Total revenue of FMCG market is expected to grow at a CAGR of 27.9% through 2021 to 2027, reaching nearly US$ 615.87 billion.CRISIL forecasts 7-9% revenue growth for the FMCG sector in the current FY25, driven by increased volume and rural demand recovery. Rural markets are outperforming urban markets, with rural consumption growing by 9.9% in the December quarter, while urban growth lagged at 5%. Indicating increased demand in rural consumption.

Resilience needs to be the key factor in the manufacturing process, daily operations, retail and logistic channels, consumer insights and communication that will help FMCG companies to withstand the test of time and create more value for consumers in the long run.

GLOBAL WHEAT OUTLOOK

Global wheat production for 2025/26 is forecast at 808.5 million tons, up 8.8 million from the previous year. The European Union is up 13.9 million tons, recovering from the prior years weather difficulties that lowered yields and quality. Yields in Russia are expected to improve, resulting in a 2 percent larger crop. For Ukraine, unfavorable weather conditions during planting and the ongoing war are key factors in a 2 percent reduction in production. A return to trend yields in Kazakhstan is expected to result in lower production. Production in Canada is forecast to be the second largest ever, while the United States crop is forecast lower to 52.3 million tons on declining acreage. On the assumption of normal weather, Argentina is expected to have more favorable harvests. However, Australia is forecast to decline on lower harvested area and lower yields.

Global wheat consumption is projected at 804.7 million tons, up 9.1 million from last year. Food, seed, and industrial (FSI) is set to expand by 1 percent. India is expected to see the largest increase for FSI with record production and sufficient domestic supplies.

Global wheat stocks are forecast to increase marginally from the prior year. India stocks are anticipated to continue rebounding with the improved harvest and prolonged export ban. China stocks are forecast to decline by 3.0 million tons but still represent almost half of world stocks. Among the major exporters, stocks are expected to decline the most for Kazakhstan, on decreased production and only a modest decline in exports. Russia ending stocks are forecast to drop fractionally on continued strong export pace and domestic demand. U.S. stocks are forecast to rise with reduced exports. Among major exporters, collective stocks are forecast higher with the largest stock building expected for the EU.

INDIAN WHEAT OUTLOOK

Wheat is a major crop in North India. It is a Rabi crop grown in the winter and harvested in the spring season. Wheat is the second most cultivated cereal crop in India (after Rice) and has an estimated yearly production of 105-115 million MT. Madhya Pradesh, Punjab, Uttar Pradesh, and Haryana are the largest Wheat-producing states in India. Most varieties of Wheat have a 100-130 days growth period and give an average yield of 30-40 Quintals per hectare. Wheat grows best in Alluvial, loamy soils with average water-holding capacity. The soil pH should be neutral. Too much rain during the growth season can destroy crops. Rain and hailstorms promote fungal infections in Wheat particularly yellow rust that drastically reduces grain size.

State wise Wheat Production Estimates All India

- Acreage is 1.8% higher than the last year i.e. 34.59 million hectares in current season vis-a-vis 33.64 million hectares last year.

- Yields are projected to increase by 1.8% in comparison to last year i.e. from 3,113 kg per hectare in 2023-24 to 3,169 kg per hectare in 2024-25

- Wheat production in the country for Rabi 2024-25 is estimated to increase by 3.6% to 109.63 MMT against last years estimate of 105.79 MMT.

Source: RFMFI & Agriwatch Wheat Production Estimate 2025 Report

FLOUR INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian wheat flour market, including both refined and whole wheat varieties, is experiencing robust growth. The IMARC Group estimates that the market will reach $11.9 billion by 2033, with a CAGR of 3.61% between 2025 and 2033. This growth is driven by factors like rising consumer preferences for packaged wheat flour, increased focus on hygiene and convenience, and changing lifestyles.

The packaged atta (whole wheat flour) market is also growing significantly, reaching INR 84 billion in 2024 and projected to reach INR 255.7 billion by 2033 with a CAGR of 13.16%, according to IMARC Group. The refined wheat flour market is also seeing growth, with a projected CAGR of 4.0% from 2026 to 2033.

GOVERNMENT INITIATIVES

Bharat Atta: Subsidized Wheat Flour Scheme: In a bid to maintain stability in food prices, the Indian government has unveiled a subsidized packaged wheat flour initiative accessible to all consumers with brand name of "Bharat Atta," through various cooperative outlets and federations.

Free Cereals: Indian government announces cereals would be provided to 800 million beneficiaries entitled to subsidized food. Under the said scheme GOI distributes approx. 18 MMT of wheat.

Price Controls: The government has implemented various measures such as banning wheat and wheat products exports, putting import duty on wheat imports, OMSSD to millers at subsidised rate, etc.

OMSSD: The Indian government has not yet indicated about open market sale scheme (OMSS) policy for the current fiscal 2025-26. In Previous year,The Food Corporation of India began selling wheat to private players from December 2024 and has so far sold around 3 million tons, from state reserves.

OPPORTUNITIES & THREATS

The Company has well- equipped fully automated flour and whole wheat atta plant with sufficient warehouse capacity and working capital fund and various certifications viz., FSSC and BRCs which gives us the opportunity to attract consumers, institutional users as they get the best quality products as per food standards. The Company has hedge over other competitors due to procurement of raw material in large quantity i.e. best quality at minimum cost. It also has workforce which distinguish from other in various aspects such as in structure of management, capability and talent of workforce. Finally, we have developed brand image of our brand in consumers which is great opportunity in our region.

There are various threats to the Company such as the market Competitors, which indulge in cost cutting of the product, which forces the Company to sell its product as low cost. This also led to loss to the Company. On the other hand, Companys raw material is based on agro product which is affected by calamities, which deteriorate the quality of the product, which is the major threat to the Company. Further the government regulatory policies is also one of the threat to our business.

OUTLOOK

We have focused on selling our products in our brand name "Bhajan" and "Panchakanya" to our esteemed consumers through our retailers and modern trade. We have been success in this motive and at present we are able to sale more than 1/3rd of our production to consumers in consumer pack only. Further, we are exploring international trade, and big corporate buyers and in the same direction we are now available on Blinkit too.

We are also invested in 100% subsidiary of our company which is coming up at Bihta, Patna, Bihar with total capacity of 350 tpd and also we are coming up with Besan, Sattu, Rice Grits and Millets manufacturing from our existing plant this year. This will add additional revenue as well as profit to the company.

RISKS & CONCERNS

Regulatory risk: Any sudden change in the regulatory policies can adversely affect the industry which in turn can impact the Companys business.

Wheat is highly controlled by government with object to control inflation, maintain buffer stock in country, distribution of wheat under various schemes of government. Government procure wheat to the tune of around 30% of production, sales the wheat under OMSSD to millers and sale of whole wheat atta under subsidised rate, banning export and imposing duty on wheat imports, imposing stock limit for traders and millers etc are regulatory policies by government which has direct and indirect impact on our business. To mitigate the same, we maintain the stocks with in such limit that any changes in rates due to changes in policies not affect much to our business. Further we focus on brand which also support in mitigating the risk of subsidised rate of atta by government.

Competition risk: Rising competition from the organized and unorganized players and other major producing nations could impact sales and in turn profitability.

We are not just flour miller rather is the market leader of branded segment of flours. Due to quality, consistent supply, brand image, wide varieties, convenience in carrying, value for money peoples are moving towards branded now a days. Enhanced focus on a 360-degree brand building exercise and engaging customers at multiple points resulting in an integrated communication approach. Therefore, risk from another producer is mitigated.

Raw material risk: Non availability of raw materials may impact the production and which in turn may have an impact on the sales and profitability of the Company. At the same time, higher cost of raw materials in off seasons may also impact the bottom-line.

Our company has only raw material i.e. Wheat which is available in Bihar, UP, MP and Rajasthan and in last several years we have well connected with farmers, traders, aggregators ensuring regular timely and quality wheat supply and therefore availability is not a constraint. Further company has infrastructure and working capital fund to store sufficient quantity of wheat to overcome the supply as well as cost of wheat in off season. Due to these company productions, sale as well as profitability is not impacted.

Geographical risk: Company is restricted its market in eastern zone only which shows high geographical risk. Any substantial happening in this zone markets can impact the business of the Company.

The Company has started its market from Jharkhand nine years back and now it has its footprints in Jharkhand, Odissa, West Bengal and Adhra Pradesh. After operation of subsidy Unit at Bihar, Company will further expand its market in Export market along with domestic market in Bihar, North east, Maharashtra, Telangana, Karnataka. This will moderate the risk arising from geographical instability

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate internal control procedure for the purchase of raw material , stores including components, procurements & management of fixed and other assets, sale of goods, human resource management, quality and operational management and other internal control system which is reviewed by internal auditor and managed by audit committee with the recommendation of the top management and timely reviews and recommendations are considered to strengthened the internal control system to ensure that the system is operating effectively and consistently throughout the period.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Year 2021 2022 2023 2024 2025
Revenue 10,655.10 9,711.10 18,953.95 18,420.13 20,580.57
Revenue Growth % -13.10% -8.86% 95.18% -2.82% 11.73%
CAGR 17.89%
EBIDTA 570.05 536.48 1,104.53 1,229.13 864.05
EBIDTA margin % 5.35% 5.52% 5.83% 6.67% 4.20%
CAGR 10.96%
PBT 307.39 284.16 694.84 838.52 554.87
PBT Margin % 2.88% 2.93% 3.67% 4.55% 2.70%
PAT 247.07 153.23 500.44 613.93 430.56
PAT Margin % 2.32% 1.58% 2.64% 3.33% 2.09%
CAGR 14.90%
Networth 1,699.98 1,999.52 2,499.96 5,896.40 6,326.96
ROE 15.91% 8.28% 22.24% 14.62% 7.04%
ROI 9.57% 7.16% 13.54% 12.17% 7.19%
BV 35.42 41.66 52.08 36.12 38.75
EPS 5.15 3.19 4.17 4.49 2.49

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements are prepared as per the Accounting Standards applicable to the Company. Detailed disclosure of accounting treatment has been highlighted in nots to accounts of financial statements.

DISCLOSURES WITH RESPECT TO DEMAT SUSPENSE ACCOUNT/UNCLAIMED SUSPENSE ACCOUNT

No shares are in the demat suspense account or unclaimed suspense account as on 31.03.2025

CAUTION

Statements in the Management Discussion and Analysis Report describing the Companys objectives, projection, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward-looking statements may not prove to be accurate. Actual results might differ materially from those either expressed or implied. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the Management Discussion and Analysis Section of this Annual Report.

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