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Hindustan Foods Ltd.

BSE: 519126 Sector: Agri and agri inputs
NSE: HNDFDS ISIN Code: INE254N01026
BSE 00:00 | 30 Jan 552.00 -17.35
(-3.05%)
OPEN

560.05

HIGH

577.40

LOW

541.10

NSE 00:00 | 30 Jan 555.50 -12.00
(-2.11%)
OPEN

551.05

HIGH

569.75

LOW

548.00

OPEN 560.05
PREVIOUS CLOSE 569.35
VOLUME 5947
52-Week high 749.15
52-Week low 328.73
P/E 107.39
Mkt Cap.(Rs cr) 6,224
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 560.05
CLOSE 569.35
VOLUME 5947
52-Week high 749.15
52-Week low 328.73
P/E 107.39
Mkt Cap.(Rs cr) 6,224
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Hindustan Foods Ltd. (HNDFDS) - Chairman Speech

Company chairman speech

We are excited about the future and are working hard on apipeline that will ensure that the Company continues to move onward and upward. From asingle product single location and single customer Company to becoming one of thecountry's most diversified FMCG Contract Manufacturers we have witnessed an all-pervasivegrowth. This growth is expected to further amplify on the back of the various Greenfieldand Brownfield expansions we are undertaking along with the other acquisitions.

DEAR SHAREHOLDERS.

Kronos the God of Opportunity inspired our Annual Report for FY2020-2021. We were cautiously optimistic that amid the 'shadow' of the Covid-19 pandemicwe will find opportunities and that the pandemic will end up being a tailwind for theCompany's growth. I am happy to write that some of that optimism has translated intoresults. We had spoken about the possibilities of more acquisitions as thepandemic-induced economic slowdown resulted in consolidation and made companies realisethe benefits of outsourcing versus having their own factories. Accordingly we were ableto post the highest-ever revenues and profitability numbers in the Company's history andachieve our goal of Rs. 2000 cr.

While the Company had started a manufacturing facility in Goa in FY1983-1984 the magic of Kronos only came to bear fruit in the last 7-8 years where wehave been able to hold strong partnerships with our Customers in various geographies andvarious product categories. This backed by a solid team of professionals has led tomulti-fold revenue growth.

Focusing on absolute numbers it gives me pleasure to report that ourtotal revenue for the year stood at Rs. 2026 cr. recording a 44% y-o-y growth and asuper strong 120.4% growth over the revenues in FY 2016-2017. Additionally Profit Aftertax for the year stood at Rs. 50 cr. i.e. 41 % growth y-o-y and a 134.9% increasecompared to FY 2016-2017. We also clocked an EBITDA of Rs. 120 cr. as against Rs. 93 cr.in the previous year.

Our continued investment in capex financed from internal accruals anddebt has led to a significant gross block of Rs. 633 cr. (on a consolidated basisincluding Capital WiP). This has further led to scalable performance prompting a ratingupgrade from India Ratings.

Further we invested in Aero Care Personal Products LLP. Aero Care isinvolved in manufacturing various colour cosmetics like lipsticks eye makeup facepowder lip gloss oral care and aftershaves. The unit was taken over in January 2022 andwe are very excited about ramping up this facility to its full potential. Also wecompleted the merger of the Malted Beverages packaging unit in Coimbatore and ATCBeverages Private Limited.

Our colour cosmetics plant achieved its highest turnover in March 2022.Likewise even though the performance of the ATC business was unsatisfactory for theentire year the unit achieved its highest turnover in the last quarter of FY 2021 -2022post the conclusion of the merger and expansion.

Besides the new plant in Tamil Nadu started its commercial productionof shoe and the shoe-making facility at Vasai (Mumbai) also started producing InjectionMoulded Sandals and Flip-flops.

As we look at the next phase of growth for the Company we find thatthe environment around us is changing rapidly.

Coming to the immediate future like the other industries even theFMCG industry - our idiomatic bread and butter - took a bit of a beating on account of thereducing rural demand increased volatility in commodity pricing supply chaindisruptions constant inflationary pressures.

In the medium term with the pandemic serving as a catalyst we areseeing consumer behavioural changes. Increasingly consumers rely on social media anddigital channels to learn more about products and buy them. This has led to an explosionof D2C brands and incumbent brands are also having to relook at their advertising anddistribution strategies. This in turn is making FMCG brands demand new capabilities andcapacities from their manufacturing partners - From the ability to scale up new categoriesof products to setting up factories in new geographies.

Lastly we are seeing the need to scale the business responsibly -whether in terms of environmental obligations statutory obligations or sustainabilityand corporate governance-led obligations.

Thus we have decided to get inspired by Goddess Athena and LEAD!Athena the Patron Goddess of Weaving and Spinning is also the Goddess of Wisdom and War.These contrasting qualities are what she uses in helping Heroes like Perseus and Jason toachieve their quests.

We have decided to help our Heroes our Customers achieve their questsof higher market share by -

Learning about their manufacturing and product developmentrequirements

Executing by building and running factories that can deliver theirFMCG products

Adapting to changing market conditions by offering them flexibilityin manufacturing models

Delivering to them the right product at the right time.

We plan to learn the Customer's requirements - whether they areof taking small batches to enable a rapid launch of new products or to optimisedistribution costs by establishing factories closer to the markets. To this end we willbuild our capabilities to handle different geographies and product categories.

Execution continues to remain the foundation on which we build ourcustomer relationships. This execution takes the form of building up an Ice Cream facilityin 10 months in a state where we have had no prior experience and ensure that the projectsare as per the budget even if the external environment sees massive commodity inflation.

As a Contract Manufacturer we need to adapt to the changingneeds of our Customers - from being able to deliver 1500 pieces of fresh Hummus for thelaunch of a new brand to 15000 litons of ice cream. We need to adapt to changingseasonality of demands and the dynamic nature of the external environment with global andmacro variables.

The ability to deliver the product in full and on time (IFOT) iswhat our Customers rely on us for and to be able to execute.

Together these developments will continue to result in a healthyfinancial performance strengthening our stand of being the 'go-to' Contract Manufacturerwhile redefining this largely 'unorganised' and fragmented sector.

While standing by her Heroes Athena always carried a shield and alance to protect them and help them emerge victorious. Brave and disciplined soldiers winwars and our teams are like the proverbial 300 standing at the side of our Customers. Onthe other hand peace is won by the wisdom to understand what wars to avoid. Our M&Astrategy so far has been able to differentiate between the genuine opportunities to growour businesses versus milestones around our neck which could down us.

We have also been quite active in the M&A space and have tried tobe optimal in terms of our capital allocation to acquisitions. To name a few we acquireda 100% stake in Reckitt Benckiser Scholl India Private Limited marking our entry into thefast-growing OTC healthcare and wellness segment as a Contract Manufacturer. The acquiredfacility is registered as an export-oriented unit and currently exports to more than 20countries. We also acquired ATC Beverages in Mysuru to open up a new product category forus but the Covid-19 pandemic ravaged the Company. Our acquisition of Aero Care has alsopaved our entry into colour cosmetics and opened up a new market for us. Both of theseacquisitions posted their highest ever turnovers in the last quarter of FY 2021 -2022.

To summarise we are highly convinced that Contract Manufacturing as asubcategory of the FMCG universe is very relevant and is becoming even more relevant withtime. This is expected to have a simultaneous impact on the Contract Manufacturing sector.We believe the next couple of years are going to be exciting in terms of growth for theContract Manufacturing industry.

We are excited about the future and are working hard on a pipeline thatshall propel the Company onward and upward. From a single product single location andsingle customer Company to becoming one of the country's most diversified FMCG ContractManufacturers we have witnessed an all-pervasive growth. This growth is expected tofurther amplify on the back of the various Greenfield and Brownfield expansions we areundertaking along with the other acquisitions. In order to derisk our business model andfurther decentralise the operations we have also commenced evaluating adjacentfastgrowing sectors within the FMCG space like health and wellness ice-creams and colourcosmetics which have witnessed tremendous growth in the last one year. We will continueto invest in CAPEX across various geographies.

We are confident that our Customers will look at our track record ofexecuting greenfield projects flawlessly & integrating the acquisitions seamlessly. Weare hopeful that they will continue to propel us towards our next goal of achieving thetarget of Rs. 4000 cr. of turnover by FY 2024-2025.

We strongly believe that long-term success is possible only byconnecting economic growth with environmental stewardship and financial performance withsocial responsibility. As a socially responsible company we will always strive to ensurethat our ESG focus is embedded into our strategy and that our growth ambitions are well-suited with sustainable development practices conscientiously using the right approach.

On behalf of the Board I would like to thank all the stakeholders fortheir continued loyalty and support. I am also thankful for the strong encouragement ofour Customers bankers and business associates. We are looking forward to your assistanceto help us achieve a better year ahead and beyond. Last but not least I would like tothank all the employees Board members and management for their dedicated services andsupport that helped us achieve milestones.

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