This year we continued to focus on transforming our business helping us emerge as agrowing global specialty food Company. We are reinforcing our position by creatingenduring value for all our stakeholders building strong brands and deepening our globalpresence.
At LT Foods we bring product differentiation and convenience to our consumers'dailyneeds. Setting the standard for quality and taste we are determined to produce productsthat are healthy and good for the environment.
It gives me immense pleasure to present to you the FY2018 Annual Report. In the yeargone by we continued our focus on transforming our business to emerge as a growing globalbranded specialty food Company with a focus on basmati and other specialty rice organicfood and rice based convenience products. We strive for growth and reinforcing ourpositioning by building strong brands deepening our global presence and creating enduringvalue for all our stakeholders.
India's Consumption Led Growth
India is expected to have a strong domestic consumption driven growth story. Accordingto the Centre for Economics and Business Research India's US$ 2.5 trillion economy makesit the 7th largest in the world in terms of nominal GDP and is on track to overtake theUnited Kingdom and France to become the world's 5th largest economy in 2018. A key driverfuelling the growth of the economy is the overall rising consumer spend. Backed byconsistent range-bound economic growth and rising household incomes consumer spending inIndia is expected to touch US$ 3.6 trillion (about Rs. 240 trillion) by 2020 increasingIndia's share in global consumption to 5.8%more than twice its current levels.
India's average household income will triple to US$ 18500 in 2020 up from US$ 6400in 2010 acting as a major driver in retail growth and leading to the emergence of newconsumer segments.
Rapid macroeconomic demographic and lifestyle shifts in the country bolstered bypolicy and regulatory changes have a strong potential of taking India towards its goal ofbecoming the largest consumer market over the next decade according to a report by MorganStanley. FHigher rural income growing purchasing power and rising aspirations shoulddrive the consumption upswing in overall India.
Most importantly the increasing disposable income levels and a rising number ofaspirational consumers have given rise to consumers seeking 'premium' products.
At LT Foods we bring product differentiation and convenience to our consumers'dailyneeds. Setting the standard for guality and taste we are determined to produce productsthat are healthy and good for the environment.
In a world full of options our Brands stand tall in the hearts and minds of ourconsumers. We are keeping pace with changing consumer trends and guality with continuousinvestments on the brand front as well as at the backend.
Our Journey of Transformation Continues
Over the years we have grown our basmati business with the addition of more brands tomeet different price points to keep pace with changing consumer trends be it health orconvenience and cater to tastes of different geographies. This has helped us in meetingregional consumer preferences and growing our marketing share. Further to grow in sizewe have often taken the inorganic route - both within the country and outside. Ourtransformational journey began with diversification into organic food rice basedconvenience products as well as regional rice. Even as our basmati rice orientationremains strong our ambition is to certainly go beyond. Today we have a strong portfolioof products ranging from speciality rice at every price point organic food saute saucesrice based snacks and convenience rice based convenience products.
Our Global Playbook
In our guest to emerge as a global player FY2018 was a critical year as we madestrong advancement internationally by setting up plants in chosen growing markets. InJanuary 2018 we commenced operations of our manufacturing facility in RotterdamNetherlands with a capacity of 60000 metric tonnes per annum. We also established aready-to-heat plant in Flouston Texas USA which is expected to commence operations byQ2FY2019.
In Europe our new processing unit will help us save on the heavy import duty on whitebasmati rice and at the same time help us to unlock the full potential of the regionthrough improved serviceability and logistics. Going forward I expect the Company tostrengthen our foothold in both these markets.
Our India Playbook
While international market operations is an important driving force of our businessthe India branded market is equally gaining importance over the last decade. The Indiabranded business grew by 13% in value terms versus last financial year. In the last threeyears we have almost doubled our distribution reach in terms of number of retail outletsand distributors. Today our India business is strongly supported by our product presenceacross the all price points and sales channels. This has enabled us to reach 93% of townsin India with over 2 lakh in population. We now have access to 150000 traditional retailoutlets and 2500 modern trade stores including 121 hypermarkets 298 supermarkets and1462 mini markets. We are also known as a solution provider to big chains of hotels andrestaurants.
Good Governance Foremost
Today we see many of our medium- term goals realized. From this position of strengthwe have the ability to become an enduring and prominent global branded specialty foodCompany that is a consistent value generator. As we press forward 'fearlessly' tosurmount new heights of potential we acknowledge the deeper duty we hold for being'responsible'.
This means that we need to be more accountable in managing our external as well asinternal risks better than ever before; in sharing our achievements withgreater'transparency'with our stakeholders; and in sustaining the highest standards ofcorporate governance within our operations. We believe that these responsibilities arepre-reguisites for maximizing shareholder returns and we embrace them wholeheartedly.Furthermore our rising share of branded business; competitive cost structure; andefficient inventory management are expected to drive better return ratios. With a provenand well-defined business model LT Foods is ideally poised to look forward 'fearlessly'yet'responsibly'.
Our vision of the future is not limited to our actions on display today. We arecontinuously evaluating the eating preferences of global consumers. We are continuouslyexploring alternative and new ways to establish new channels of growth and value creationfrom a global perspective. Once committed our value system dictates that we progressforward with conviction and excellence to deliver on our promises.
All this would have not been possible without the dedication and commitment of our teamacross geographies. I would like to thankteam for their hard work and wish them continuedsuccess and growth with the Company.
On this note I would like to thank all co- Directors on the Board and partners inbusiness for contributing to our continuing success. My gratitude also goes to all ourshareholders for their faith and belief in us.
Vijay Kumar Arora