Working on more innovative products to boost profit: Sumit Sharma, Prataap Snacks

In a interview to ETNow, Sumit Sharma, CFO, Prataap Snacks said that the company is going to deepen penetration in northern India. Edited Excerpts.

ET Now: Bumper listing what can we look forward from your company right now?
Sumit Sharma: So we are doing a lot of things in terms of innovation, in terms of new product development. So we recently launched healthier snacks. We are also in the process of launching some sweets snacks so that will add the value to the shareholders definitely.

ET Now: In terms of sales, we have seen a 27% kind of CAGR growth over the last four years. Do you think such a high CAGR growth that we have seen over the last four years do you think that can been sustained? Do you think over the next four-five years this kind of CAGR growth can be sustained on a high base that you have actually built up over the last couple of years?
Sumit Sharma: So Prataap Snacks is basically one of the fastest growing company and growth is in our DNA. So you would like to grow in a good pace going forward also.

ET Now: You have been consistently gaining share in some of your key markets. In fact if you are looking at the eastern region, you are amongst the leaders. However if you are looking at the western and the northern regions, this is one space where you are still not the top player. So what has been your strategy and how are you looking at these two markets?
Sumit Sharma: If you look at the northern India and the western part of the country, we have a significant market share in those area in spite of having the competition, lots of regional players and other players and we are gaining the market share.

ET Now: If you are looking at your competition, we just spoke about it. We have had PepsiCo. We have had Crax. DFM Foods have been a very strong competition and one thing that you did mention in your road shows, one thing that you did mention to your investor conference is the north is a place where you struggle to actually kind of find a foothold. So what is your strategy especially for gaining market share in the northern region and we understand that you are doing very well in Mumbai and Delhi as well, so what has been your key growth drivers in these two main metropolitan cities?
Sumit Sharma: So if you talk about north India, we are going to deepen our penetration in the northern India. Also we are looking for new geography in the northern India like Uttar Pradesh, Punjab. We are planning to target in the near future. So that will be the next growth driver for north India.

ET Now: One thing that concerns shareholders is the fact that talking about your margins, you actually operate at quite thin operating margins given the fact that margins also dependent on the kind of input cost that go into your making your products especially given the variable cost of potatoes, etc, that go into your products. So going forward how do you expect to maintain your margins and how do you think margins can be maintained despite the fact that input costs would wary for you even going forward as well.
Sumit Sharma: So if you look at the last few years, there was some reasons which were beyond our control and we did lot of things during the last quarter of the last year. We have also changed the products which can give a better margin. So these kinds of changes we have done and that will result in favourable manner.

ET Now: One thing that we have seen over the last couple of years is the fact that you have hired Salman Khan to be your brand ambassador, operational, promotional and ad expenditures have been quite high. Can operational and ad expenses going forward as a percentage of sales do you see it going further higher given the fact that you want to aggressively gain market share or do you see it consistent over the next couple of years?
Sumit Sharma: So if you look at last two years, the spends on the A&P has increased and we believe that should remain constant that is what I can say. If you compare it with some of the big companies, still it is very low as compared to those companies but if you compare with the regional and other small players that is a very good.

ET Now: Well now you are listed on the exchanges. It has been a bumper listing. What plans you actually enhance shareholders value, what can shareholders now look forward to and what are some the key things that you are looking at in terms your dividend distribution policy, what is it that you have panned out for the next couple of years so that investors will remain happy?
Sumit Sharma: So as I mentioned we are working for lots of innovative products. We are also planning to enter into new geographies that will definitely boost the top line and the bottom line also as far as dividend policy is concerned that will be decided by the board and shareholders going forward.