Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AA-/Positive/Crisil A1+’ ratings on the bank facilities of Mrs.Bectors Food Specialities Limited (MBFSL). Crisil Ratings has also withdrawn its rating on Rs 127.5 crore of bank loan facility at the company’s request and on receipt of no-due certificate from lenders. This is in line with Crisil Ratings withdrawal policy.

 

The ratings continue to reflect the sustained improvement in the business risk profile of the company, driven by a significant scale up in operations and healthy operating profitability while maintaining a strong financial risk profile. The business risk profile is expected to further benefit from improving geographical penetration supported by capacity expansion being undertaken, strengthening of distribution network and a strong brand recall. These strengths are partially offset by modest market share in the intensely competitive biscuits segment and susceptibility to volatility in raw material prices and foreign exchange (forex) rates.

 

The operating income has posted a compound annual growth rate (CAGR) of 14% in the last 4 years, supported by strong growth in the bakery segment (36% of total revenue) and healthy growth in the biscuits segment (62%) driven by exports. Revenue increased by ~16% year-on-year to Rs 1870 crore in fiscal 2025, supported by healthy growth in both biscuits and bakery divisions. In the first quarter of fiscal 2026, revenue grew by 7.6% to Rs 473 crore driven by the 19% growth in the bakery segment even as the biscuit segment expanded by 3%. The Goods and Services Tax (GST) rationalisation on biscuits to 5% from 18% is expected to support growth over the medium term. The company is expected to post double digit growth over the medium term supported by GST rationalisation and capacity additions. Operating margin moderated to 13.7% in fiscal 2025 from ~15% in fiscal 2024 owing to rise in prices of key inputs such as palm oil, maida, sugar and cocoa. The company has taken price hikes and adopted cost-saving measures, which are expected to support margins over the medium term. Further, focus on premium product offerings and improving share of exports (with better margins).

 

The financial risk profile has been strengthened by the qualified institutional placement (QIP) of Rs 400 crore (September 2024) raised for capital expenditure (capex) and debt reduction. This has resulted in improvement in networth to Rs 1155 crore as on March 31, 2025, against Rs 662 crore a year earlier. Gearing remained healthy at 0.1 time as on March 31, 2025. The interest cover, ~21 times in fiscal 2025, is expected to remain above 20 times over the medium term. The company has capex plan of ~Rs 300 crore in this fiscal for increasing capacity and 30-40% of it will be funded by debt and rest by internal accruals. Despite sizeable capex, debt protection metrics are expected to remain strong in the medium term. The company has healthy liquidity with unencumbered cash and bank balance of Rs 241 crore as on March 31, 2025.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of MBFSL and its wholly owned subsidiary, Bakebest Foods Pvt Ltd (Bakebest; 'Crisil A/Positive’), as the entities have strong operational and financial linkages.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths 

Strong brand presence in north and northwest India and improving revenue diversity

Around 80% of the company’s domestic biscuit revenue comes from north and northwest India. MBFSL is among the top three players in several states such as Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir, Uttar Pradesh, Uttarakhand and Delhi National Capital Region. Revenue diversification has improved in the bakery segment, with west and south markets providing healthy contribution. The company has presence across 24 states and 6 union territories and a network of more than 490+ super stockists and 2000+ distributors, which supply 770,000+ retail outlets.

 

Furthermore, it has been increasing its premium product portfolio and leveraging its presence with focus on high-margin biscuits, such as cookies, creams and crackers, and reduced dependence on low-margin glucose biscuits. Strong growth in the bakery segment is reflected in its contribution of 36% to overall revenue in fiscal 2025. English Oven is among the leading premium bakery brands in India. With the addition of new lines and products (premium breads, croissants and buns), the business is likely to grow over the medium term.

 

Established relationships with large institutional players

MBFSL has been a preferred supplier of buns to large quick-service restaurants (QSR) customers and is also targeting new quick-service restaurants supported by its continued focus on quality. Longstanding relationships with large institutional customers has resulted in steady revenue over the past few years.

 

The company exported biscuits to over 75 countries as of March 2025. It also undertakes job work for Mondelez International Inc. Established customer relationships are likely to provide stability to operating income and profitability, given revenue visibility and cost-plus margin clause built into long-term contracts with established institutional clients.

 

Strong financial risk profile

Capital structure and debt protection metrics remain strong, as indicated by networth of Rs 1155 crore and gearing of 0.1 time as on March 31, 2025, and interest coverage ratio of 21 times in fiscal 2025. The financial risk profile will remain strong over the medium term despite sizeable capex plans, partly funded by debt. Expected annual cash accrual of over Rs 200 crore will be sufficient to cover ensuing debt obligation. The working capital cycle remains efficiently managed, as reflected in receivables and inventory of 28 and 31 days, respectively, as on March 31, 2025. The company had strong liquidity and financial flexibility supported by low bank limit utilisation of below 40% for the 12 months through July 2025. It had unencumbered cash balance of ~Rs 241 crore as on March 31, 2025.

Key Rating Drivers - Weaknesses 

Modest market share in the intensely competitive biscuits industry

MBFSL is a relatively small player in the biscuits industry vis-à-vis other manufacturers, as reflected in overall revenue of Rs 1,870 crore in fiscal 2025 of which biscuits formed ~62%. Although its brand Cremica has established presence in north and northwest India, it has limited presence in other parts of the country. However, the company is gradually expanding its manufacturing network across the country to strengthen its presence in other regions. Furthermore, the biscuits industry is intensely competitive, with large players such as Britannia Industries Ltd (‘Crisil AAA/Stable/Crisil A1+’) vying for a greater market share. With the entry of ITC, Mondelez and Unibic in the biscuits segment, competition has intensified across product categories.

 

Susceptibility to volatility in raw material prices and forex rates

The biscuits segment, accounting for ~62% of the revenue in fiscal 2025, is price-sensitive, with limited product differentiation, especially at the lower-end of the segment. Thus, players have limited ability to pass on increase in input prices (wheat, sugar and oil accounting for 50-60% of overall cost) to customers. Therefore, profitability will remain vulnerable to sharp fluctuations in raw material prices and forex rates. While the company undertakes forward contracts to hedge its forex exposure, it is able to pass on price rises to consumers with a lag.

Liquidity Strong

MBFSL has a strong liquidity profile supported by healthy cash accrual. Annual expected cash accrual of over Rs 200 crore should sufficiently cover planned capex and existing debt obligations of Rs 4-15 crore in the medium term. Further, average utilisation of fund-based working capital limits of Rs 115 crore remains below 40% for the 12 months ended July 2025. Unencumbered cash balance stood at Rs 241 crore as on March 31, 2025.

Outlook Positive

MBFSL’s business risk profile is expected to improve in the near-to-medium term with sustenance of healthy margins, strong brand presence in biscuits and bakery segments, improving geographical diversity and established relationships with large institutional clients.

Rating sensitivity factors

Upward factors

• Sustained growth in scale of operations with operating profitability being maintained at 14-15% leading to healthy net cash accrual
• Increase in market share through geographical and product expansion
• Timely completion of ongoing capex and sustenance of strong financial risk profile

 

Downward factors

• Weaker-than-expected operating performance, leading to lower revenue and moderation in the business risk profile
• Sustained decline in operating margin to less than 11-12% resulting in lower-than-expected net cash accrual
• Any large, debt-funded acquisition or capex impacting the financial risk profile

About the Company

Mr Anoop Bector set up MBFSL as a joint venture (JV) with Quaker Oats (now a subsidiary of PepsiCo Inc) to supply packaged ketchup to McDonald's, in addition to buns, batter and bread. Quaker Oats withdrew from the JV in 1999. In fiscal 2014, the company underwent business reorganisation and demerged its food supplements (sauces, spreads and namkeen) division. MBFSL is now focusing on digitisation and strengthening its senior leadership team in operations and supply chain. The new CEO, Mr Manu Talwar, has experience of over three decades and business leadership exposure in consumer-facing industries. The company has expanded its geographical presence over the years.

 

MBFSL operates in three segments: it sells biscuits under the brand Mrs Bectors Cremica; buns and other bakery items to institutional investors viz. large QSR chains,; and bread and bakery items under its brand English Oven to modern retail chains and distributors.

Any other information: Not applicable