Hoac Foods India Ltd

HOAC Foods India Limited, operating under the trade name Hariom Atta and Spices, began its journey in 2009 from a single outlet, expanding its product range from MP Sharbati Flour to various SKUs including spices, pulses, rice, and grains based on customer demand. The company emphasizes customization, allowing customers to tailor flour mixes. In 2018, HOAC Foods India Private Limited was incorporated, and by mid-2020, it expanded to 5 retail outlets in Gurgaon, later converting them to franchisee models for scalability. Currently, the company deals in over 200 SKUs, manufacturing 150 of them, and operates through a D2C mobile application and website.

To fuel its expansion, HOAC Foods plans a fundraising through a QIP round this year. The funds will be utilized for working capital and setting up new factories, including one in Vidisha and a manufacturing setup in Dosa, Rajasthan. The company has also established an export entity, HOAC Exports Private Limited, allocating INR 2-2.5 crores for its working capital. This export venture has already shipped two containers to the UK within a month and targets regions like the Middle East, Hong Kong, Australia, and Europe, with expected margins of 15-16%.

HOAC Foods is strategically expanding its B2B segment, having placed products in 600-700 retail counters. The company projects B2B revenue to start at INR 12-15 crores, while B2C revenue is expected to be INR 37-40 crores. To gain market share in B2B, the company offers extended credit periods and competitive margins, resulting in an average overall margin of 10% (9% for B2B and 12-13% for B2C). For B2C, the company plans to open 10 new stores this year, primarily in the Delhi NCR region, focusing on Noida, with potential to increase to 15-20 stores.

The company has invested in operational efficiency by installing fully automated machines in its new factory, which is expected to save INR 1 crore and reduce manufacturing costs. This move is projected to increase spices capacity utilization by 110%. Despite increased expenditure for the new Vidisha factory, the company targets an EBITDA margin of 16% for FY26, up from the current 15%. The company also noted that selling through third-party platforms like Amazon could impact margins by approximately 40%, hence its focus on promoting its own D2C mobile application for online sales, which is projected to grow from INR 1.5 crores to INR 5-6 crores by FY26/FY27.

HOAC Foods projects a revenue of INR 55 crores for both FY25 and FY26, with a long-term aspiration to reach INR 100 crores within the next 3 to 5 years. The company acknowledges an increase in trade receivables from INR 2.26 crores to INR 8.45 crores, primarily due to the extended credit periods offered in the new B2B segment, but anticipates 'good numbers' (reduction) in trade receivables within the next 6 months. B2C payment days are maintained at 1.5 months. The company's partnership with Country Delight, focusing on fresh atta, has been successful without compromising margins.