Detailed Narrative
Financial Performance Overview
Chatha Foods reported a revenue of ₹157 crores for the financial year ended March 31st, 2025, marking an 18% year-on-year growth. Gross profit stood at ₹42.31 crores, with a gross margin of 27%. The company's PAT for the period was ₹6 crores, resulting in a PAT margin of 4%. Net worth significantly increased to ₹82.54 crores from ₹57.7 crores in the previous financial year, following a successful IPO listing and reserves build-up.
Operational Highlights & Product Strategy
The company successfully launched various products across QSR channels, including clean label, oven-baked fried, and food service-specific innovations. The total SKU count has expanded to 194, serving 316 QSR outlets across 40 cities. Capacity utilization for the non-vegetarian facility reached 80%. Management noted a significant shift in product mix towards hand-cut and artisan products, which contributed ₹46 crores in FY25 compared to ₹10 crores in the previous year.
New Facilities & Capacity Expansion
Chatha Foods is expanding its manufacturing capabilities with a new vegetarian facility and a joint venture with Allana. The new vegetarian facility, with an installed capacity of 16,000 metric tons, is projected to generate ₹200-210 crores in revenue by FY28 and is expected to go live by September 2025. The Allana JV unit is anticipated to contribute ₹180-190 crores by FY28 and will go live by November 2025. Combined, these initiatives aim for a total revenue of ₹550 crores by FY28.
Margin Dynamics & Cost Management
Gross margin for FY25 was 27%, slightly lower than previous levels. This compression is attributed to the increased share of manpower-intensive hand-cut/artisan products, which incurred an additional ₹60-70 lakhs in manpower costs, and customer acquisition expenses. To address this, the company has invested in an imported cutting line for automation. Going forward⏳, management targets an EBITDA margin of 7-8% and aims to stabilize gross margins around 27%.
Customer & Market Developments
The company onboarded 6-7 million large-sized QSR brands in FY25, with non-vegetarian products contributing approximately 96% of total revenue. Chatha Foods serves major QSRs like Domino's and Subway as one of their 2-3 vendors, supplying 60% and 80% of their requirements, respectively. A significant new development is the closed deal with KFC for a marination model, with a 3-month trial starting in August 2025 for the Tri-City region, which does not require immediate capacity increase.
Receivables Management
Receivables doubled in FY25, primarily due to two factors: extending credit terms for key existing customers to 45 days to support revenue generation, and new customer acquisitions operating on higher credit terms compared to legacy clients. The company is actively working to stabilize receivables at 50-55 days from the current approximately 60 days, aiming for a more efficient cash conversion cycle.