We are building a sustainable business and contributing to a healthier future for all
The year gone by began on a promising note for the world economy but a3er a few monthsthe momentum began to peter out. The deceleration was the result of several factors suchas rising crude prices US-China trade stando3 disruptions in the German auto sectortariff warfare among major nations threats of protectionism along with greater policyambiguity.
Although the country's GDP growth declined to 6.8% in FY2018-19 from 7.2% in FY2017-18the overall economic outlook is largely positive. The economy now is in a state offormalisation and consolidation with strong transitional undercurrents which are actingas a force multiplier.
The country's economy is primarily steered by its predominantly young and aspiringpopulation greater affinity towards brands and premiumisation faster urbanisation andinfrastructure creation and above all enhanced ease of doing business. These trends augurwell for our business. It is also pertinent to mention in this context that the rapidrollout of contemporary retail format stores and stronger marketing efforts by companieshave facilitated the growth of basmati rice consumption in the domestic market. Theoutlook for the domestic basmati rice consumption is favourable supported by demandimprovement from the international market and potential upside from brandeddemand/premiumisation in domestic markets.
To give you a perspective basmati rice exports from India reached `32000 crore duringFY2018-19. As one of India's leading basmati rice exporters we are confident that thefuture roadmap continues to hold out considerable optimism. Against this general positivebackdrop let us now try to evaluate our performance for FY2018-19 and try to identify ourgrowth pivots which will drive our organisation to the next level of value creation.
Sustainable growth in India
It is gratifying to report another year of encouraging performance. Revenue grew by 7%to 33915 crore in FY2018-19 from 33650 crore in FY2017-18. Our leading brands such asDaawat Heritage Rozana Devaaya etc. in India as well as Royal Gold Seal Indus Valley817 Elephant globally contributed to this growth. We delivered an EBITDA of 3421 crore inFY2018-19 as against 3414 crore in FY2017-18. Additionally our profit a3er tax stood at3137 crore in FY2018-19 as against 3144 crore in FY2017-18. Our revenue from basmatiexports stood at 32103 crore in FY2018-19 as compared to 31896 crore in FY2017-18 up by11%. We further strengthened our presence across India as well as in international marketsby continuously investing in brands that accounted for greater market share acrosscategories.
The overall demand for basmati rice continues to be high and we are well positioned tocapitalise on this growth opportunity. Our branded business in India recorded sales of3947 crore in FY2018-19 as compared to 3892 crore in FY2017-18 owing to improvedrealisations from branded products. Moreover our consumer pack business reported a growthof 8% to 31941 crore in FY2018-19 as compared to 31794 crore in FY2017-18.
We firmly believe in the idea of keeping pace with changing consumer needs andpreferences. Therefore in addition to growing the basmati rice business over the yearswe have leveraged our brand to foray into the segment of value-added products (VAP). Ourofferings comprise specialty rice across di3erence price points as well as organic foodsaut sauces rice-based snacks and rice-based convenience products. We successfullylaunched premium rice-based snacks brand Kari Kari' for the Indian market with JVpartner Kameda Seika. We are setting up a unit in Haryana and expect commercialproduction of Kari Kari offerings to start during FY2019-20. We are going to launch DaawatSaut Sauces to offer greater convenience to consumers by ensuring its availabilityacross all important towns in India in addition to major e-commerce platforms a3ersuccessful test launch for one year in selected geographies.
Accelerating global endeavours
Our capabilities in the US and the EU improved as a result of greater marketpenetration. We are solidifying our presence in other regions across the Middle East andAfrica through organic and inorganic routes. Our overall international business touched32103 crore in FY2018-19 as against 31896 crore in FY2017-18. North America has been oneof the strongest international markets for us where the brand Royal' contributessignificantly to overall branded revenues and takes up 45%+ of the US market. Further theacquisition of the 817 Elephant brand has enabled us to achieve leadership position inCanada. During the year under review Daawat gained leadership position in Israel andReunion Island among others.
We have introduced a range of new organic ready-to-heat (RTH) products for theoverseas market with a facility in the US. The new RTH foods facility in Houston USmanufactures 2-minute retort rice in order to fortify our footprint in the high potentialmarket. Our processing and packaging facility in Europe is scaling up and will serverising demand across the continent. In Europe we grew our ethnic business and added newsupermarket customers for our private label. We launched new avatar of Daawat in the UKand Europe across all price segments with enhanced focus on the catering and consumerchannels. All our brands are performing well across geographies and we will make greaterefforts to nurture them and leverage their potential and distribution globally.
Our subsidiary Nature Bio Foods Ltd. (NBFL) has secured equity funding from Rabobank'sIndia Agri Business Fund II with a proposed investment of `140 crore. NBFL received thefirst tranche of `60 crore in FY2018-19. The second tranche is expected to come inFY2019-20.
Continued support from India Agri Business Fund reflects strong confidence in themanagement's strategic growth outlook. These capabilities created in the backend under theglobal organic food ingredients business are likely to support our growth operationsacross the world.
We are focused on the next level of innovation. We signed a memorandum of understanding(MoU) with Wageningen Food & Biobased Research (WFBR) Netherlands to promoteco-operation in the field of research and education. Our collaboration will helpaccelerate the progress of research education and training in various researchdisciplines to strengthen the best practices followed by us at farm level for procurementof paddy and improve compliance with MRL standards in line with global requirements. Withour wide customer base both in India and international markets we will benefit from theexchange of innovative technologies that will aid in better alignment with globalfood/produce standards. The agreement will also enable us and WFBR to encourage andestablish exchange of collaborative scientific research.
We believe our success is the outcome of the efficiency of our people and it is theirexpertise experience and enthusiasm that drive us. With a congenial work culture a focuson learning and developmentthat help our people sharpen their skills with focusedtraining initiativesand a proven reward and recognition programme we nurture ourpeople and help them grow in the organisation.
Caring for community
We believe in sustainable co-existence with communities around us with focus onenhancing their quality of life. LT Foods Limited CSR policy and Fair Farming Foundation(supported with fair trade and social development fund along with CSR Fund) represent ourtwin social engagement programmes which help us address the requirements of communitiesin our vicinity. We continue to develop rural infrastructure and improve the quality ofeducation in rural schools.
We have rolled out a five-year roadmap with an eye on the future. Our objective is tobe a preferred brand for our consumers across geographies. We would also like to remaincategory leaders in key markets and continue to outperform industry growth. We are keepingconsistent focus on building scale enhancing procurement efficiencies improvingmanufacturing yield and improving operating efficiencies along with solidifying our brandsacross geographies. Going forward our market leadership will be clearly driven by highermargins and profitability. With your help and support we will continue to strengthen ourbusiness with a broader sustainability agenda and contribute to a healthier future forall.
|Warm regards || |
|Vijay Kumar Arora ||Ashwani Kumar Arora |
|Chairman ||Chief Executive Officer & |
| ||Managing Director |