It is intuitive and even axiomatic that Wellness' is holistic. We think ofphysical mental emotional and spiritual wellbeing when we think of the human condition.But why restrict holism to individuals - why not use the same broad brush for institutionsand corporations as well?
It's problematic to draw corporate wellness conclusions only from metrics like MarketShare Revenue Growth and Profitability. Even when they are encouraging these may turnout to be false positives. Companies are responsible not only for the return onshareholder's equity but also for the satisfaction of the customers they serve; thesecurity wellbeing & happiness of the employees who work there; for responsibleconduct towards the larger community in which they exist and for protecting &nurturing the environment and resources that sustains us all. Most importantly they needto stay relevant and thrive. Companies don't have a life cycle. Only their products do.
Over the years this has been the philosophy and the approach of my communication toyou in the Company's Annual Report. This year is no exception. In fact the company'smission and strategy statement (reproduced elsewhere in the Annual Report) has ensuredthis holistic approach for managing and growing the business over all these years.
By no means do I trivialize the standard measurements of corporate performance. Infact you will be pleased with the results your company has achieved this year.
It is once again my pleasure to report an accelerating growth trajectory for thebusiness. You might recall we recorded 17% revenue growth in the previous year; that hasaccelerated to 22% in 2016-17 with net Revenues of H 255 crores as compared to H 208crores in 2015-16. You've heard me use the term profitable growth repeatedly over theyears EBIDTA is one indicator of that. From 6.8% of revenues in 2011-12 it has grownsteadily to 17.8% last year at H 45.4 crores. Profit after tax is another good measure.PAT grew twice as fast as revenues to H 22.8 crores! This was more than 41% compared tolast year.
Both the Consumer Business (CB) and the Tasty Bite Food Service (TFS) business sawmajor capacity expansion and modernization during the year as we gear up for continuedgrowth. We expect Capex to be a recurring activity over the next few years to meet growingdemands across all our 3 technology segments of Ready-to-Serve (RTS) Sauces and theFormed Frozen products (FFP)
TBRC our accredited Tasty Bite Research Center (TBRC) made us proud once again. We wonthe Food Processing Magazine's 2016 R&D Team of the year award.
In our largest consumer market of N.America all three categories Entrees OrganicRice & Grains and Spice & Simmer sauce kits saw market share and double-digitvolume growth during the year. Significantly this growth was widespread across allchannels of Grocery Club and Private Label. This is reflected in Exports Growth in TBELof nearly 22% to H 160 crores.
You will recall we test-marketed the Spice & Simmer range in the US last year.This year saw the national roll out as we moved into major retailers across the US. Two ofour SKUs Thai Green Curry and Tikka Masala won the prestigious SOFI Silver and Bronzeaward in the US in the Sauce & Marinade category.
This year will mark the 23rd year of uninterrupted growth since Tasty Bite was launchedin the US in 1994. Between all our SKUs the brand today has over 125000 PODS (points ofdistribution). With a brand max ACV of nearly 47% it probably has the widest distributionin N.America of any consumer product manufactured in India.
Food Service Business:
The QSR industry in India had a rough year with declining SSSG (Same Store SalesGrowth) across all leading brands as competition increased in metros and thedemonetization only exacerbated the situation.
However the Tasty Bite Food Service business (TFS) managed to maintain its growth pathon the basis of strong product innovation and customer partnership. The TFS business grew18% over last year to H 77 Crores.
The company's strategy of focusing on Natural foods even for the QSR industry helpeddrive market share with each of its customers:
Tasty Bite became the first company in the country to produce All Natural'- preservative free pizza sauce for all leading pizza brands in India. The companyinvested considerably in R&D and new technology this year and became the dominantsupplier of pizza sauce across the industry.
We are in a QSR test market with an innovative frozen multi cuisine rice bowl.It's early days but initial trials are promising and the opportunity is large.
Other Frozen launches for our key customers during the year included spicycheese poppers hara bhara kabab and paneer burger patty.
Our decade-long relationship with Hindustan Unilever (HUL) became stronger witha new specialty line of sauces being added to our portfolio. We expect our business tosharply increase through the next fiscal year
The TFS business took baby steps to expand its global footprint and establishedbusiness in Singapore Malaysia Sri Lanka UAE Kuwait and South Africa with leading QSRbrands. We expect this to be an important growth driver in the coming years.
This is a very special year. In a manner of speaking the company just turned 18! It wasthat many years ago that Preferred Brands International Inc. (PBI) acquired majorityequity in TBEL. It was hence only natural that I would revisit the first Annual Report of1998-99 in which we chronicled the 4C Turnaround Strategy' that helped the companyemerged out of BIFR.
In that report we also discussed Megatrends-three of them on particular. This chartappeared in the 1998-99 Annual Report and is reproduced here.
These megatrends formed the foundation of our business. In this year's Annual Report werevisit them. It is our belief that these same megatrends remain as relevant today as theydid back then. Lets take a closer look.
Health & Wellness: The first megatrend we called Natural' might have beendismissed as a fashion and fad in the 90s. Today the correlation between food andwellness is indubitable and natural foods have become a consumer imperative and organicfoods are on the rise. Chemicals additives artificial preservatives & colors aresimply not acceptable. Even
GMOs and gluten have entered the consumer lexicon and are being viewed suspiciously.
However this megatrend is not only about rejection. It's also about adoption.Vegetables like Kale and Spinach; ancient grains like Quinoa Amaranth and Millets spices& condiments like Turmeric Cinnamon and edible fats like Butter and Ghee have allbeen rediscovered.
Flavor: Back then we called this megatrend international'. The consumerpalate is on world cruise. Globalization rediscovery of new ingredients and the increasedawareness of wellness related to food have all contributed to adoption of new cuisinesand flavors. In fact consumers have already moved from multiple cuisines in a week(Indian Italian Mexican etc.) to multiple cuisines within a meal and within a dish.Sriracha sauce with wings Tandoori Chicken Pizza and Paneer Burger are but incipientexamples of this megatrend. Flavor and great taste will inevitably prevail over pure playcuisine.
Convenience: It's nice to be Epicurean but being a multi-cuisine chef is notpractical. Add to this the crumbling gender barrier (itself a megatrend) with men &women working longer hours resulting in less time in the kitchen and we'll realize wedon't need perspicacity to see the continued growth of convenience foods. While this hasbeen on a growth trajectory for a few decades now the difference today is consumers wantconvenience without compromise.
These three megatrends each represent double-digit growth in an industry whose annualgrowth rate at <1% barely keeps pace with population. Tasty Bite however hasconsistently outpaced industry average and for the 52-week period ending March 2017 thebrand grew 15% in US conventional Grocery.
Corporate Responsibility: There is a fourth megatrend emerging that has less to dowith products and more to do with corporate responsibility transparency and businessprocess. We had dedicated last year's annual report to the Paris climate accord anddiscussed widely the steps your company has taken in the pursuit of the UN SustainableDevelopment Goals (SDGs). This year the company we formally adopted 12 of the 17 SDGs.
Sustainability is embedded in the DNA of the company. Here's a summary of some of theinitiatives:
Sugarcane briquettes continue to fuel our boilers to generate steam accountingfor above 70% of our energy consumption.
Wind energy is nearly 18% of our power consumption.
Water conservation continues to remain a major initiative. This year alone arecord 72 million liters of water was recycled!
Rainwater harvesting is now in its 4th year and the benefits of it are hard toquantify but the rise in water table is significant.
We just commissioned a bio-gas plant that uses our organic waste and todaypowers our Research Center and our campus street lighting.
The Tasty Bite Organic farm now houses the Sustainability Center and a Trainingand Development lab for farmer extension programs.
We continue to be driven by the philosophy that it is no longer sufficient forcompanies to follow sustainable practices only if they make business sense. Ourresponsibility is to make business sense out of sustainable practices.
At the time of going to print we received news from the Great Place to Work Institutethat Tasty Bite was rated Top 25 in India's great mid-size workplaces.
I'd like to express my appreciation and gratitude to all employees at TBEL as theycontinue to make us proud even as they move from strength to strength. It has been myprivilege to lead this team and I continue to be inspired by their dedication andprofessionalism. They remain our true competitive advantage.
On behalf of the Executive Committee (E-Com) that came together as the founding team in1998 (that includes Meera Vasudevan Ravi Nigam Sohel Shikari Hans Taparia) I wish toexpress my deep gratitude to you other stakeholders of the company and to the extendedfamily members of Tasty Bite for your long friendship trust and counsel over the years.What a knowledge-driven energetic and fun journey it has been!
|Thank you |
|Ashok Vasudevan |