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Vijay Kumar Arora

Chairman

Being in essential food category, each member of LT Foods family stepped up to ensure the availability of our food products to a growing consumer base without any disruptions.”

Ashwani Kumar Arora

Managing Director & CEO

LT Foods once again exhibited a good year-on-year performance with a 3 Year CAGR evenue growth of 9%, and PAT growth of 45%.”

Dear Stakeholders,

As we report our Company’s performance for the fiscal under review, we hope you and your loved ones are safe. The year 2020 suffered an intense economic slowdown, with global GDP contracting by 3.3%, mostly on account of the severe disruptions caused by Covid-19. The loss of lives overshadowed the negative impact on global trade, lockdowns and subsequent slowdown in businesses.

Amidst a dismal economic scenario, we achieved a solid all-round performance through operational excellence and adoption of right strategies. We are proud of our team’s ability to respond to challenges and their agility and resilience is evident in our continued success. Being in essential food category, each member of the LT Foods family stepped up to ensure the availability of our food products to a growing customer base without any disruptions.

As a Global Consumer Food Company which deals in Basmati and Other Specialty Rice, Organic Food and Ingredient business and Health and Convenience segment, we strive to deliver the finest quality food to our consumers around the world. We realise the value of food for every family and understand the crucial role it plays in bringing families together. Often, the simple joys of life are shared through food and as a consumer-centric Company we are constantly broadening our offerings by adding healthy and convenient hoices in our portfolio for our consumers.

Overcoming Covid-19

Proactive investments in our state-of-the-art facilities for automation and technology advancement in the last few years enabled us to weather the challenges posed by Covid-19. All our plants remained operational since the beginning of the lockdown and automated operations ensured higher efficiency and productivity. We strictly adhered to social distancing protocols at all our manufacturing facilities and at distribution centres around the globe.

Growing Globally

The India market is led by Daawat and other regional brands which have a strong brand recall amongst the consumers. Despite the pandemic, our brands continued to hold their fort as a market leader in the category. Amongst the business segments, consumer business performed quite well and small packs business increased by 10% on year. While the Company’s investments in building a strong and resilient distribution channel helped steer past the covid19 related obstacles, e-commerce channel recorded a strong growth in the distribution mix for the Company. While e-commerce enabled us to communicate more about the product to the customers, digital platforms overall helped us establish a deeper engagement with the consumers. Our sales and marketing campaigns struck the right chords with themes around festivals, experiential cooking and many more initiatives to deepen the engagement with consumers. In the Ready to Eat segment, we launched Daawat Cuppa rice and it was widely accepted by the consumers. We are planning to expand the product mix in ready to eat segment which is gaining prominence in households due to the convenience it offers in consuming tasty and healthy food. We also witnessed huge traction in the organic food health concerns continue to shape consumers’ decision making. Daawat Sehat, a fortified rice product, has also gained significant positive response from the consumers and we believe, it will continue to complement the Nation’s fight against malnutrition.

Vision is to be a leading Indian origin Global Consumer Food Company that creates sustainable business growth, has a positive impact on society and creates value for its internal as well as external stakeholders.”

In the global arena, we registered a 21% growth during the year. Our Global Supply Chain Hubs and our efforts to boost brand preference through dedicated consumer marketing initiatives helped to increase the availability of products. Besides, a strong distribution network in existing and new geographies allowed us to deepen our reach globally.

The Royal Ready-to-Heat (RTH) range, introduced in the United States last year, performed well and demand for convenience food also saw good growth, we leveraged our strong brand equity and drove omni channel campaigns to market the Royal brand in North American markets.

We strengthened our foray in European markets with specific marketing campaigns that promoted our brands in the region. We also widened our brand visibility and outreach by making our products available at leading stores. Our latest product, Daawat ‘boil in bag’ variant was highly appreciated by our consumers as the innovative product aligned to their convenience, health and nutrition expectations.

We reworked our strategy in the Middle East, channelising our products and supply towards the retail and branded business, due to the slowdown experienced by the HoReCa segment. Hence, we aligned our product strategy along with evolving consumer demands, laying a strong foundation for future growth opportunities. We launched ‘Dawaat Cuppa rice’ in the Middle East and redesigned ‘Hadeel’, regional brand for UAE market with a new packaging to create a better recall in the minds of the consumers. The demand for these brands have been overwhelmingly positive after these campaigns

Performance Highlights

LT Foods once again delivered a good year-on-year performance and a 3 Year CAGR Revenue growth of 9%, EBITDA growth of 19% and PAT growth of 45%. The Consolidated revenues stood at ₹ 4686 crore, compared to ₹ 4173 crore in the previous year. Due to significant alterations in product mix and lower input costs, the gross margin increased by 232 basis points to 31.1%. This led to an increase in the EBITDA margin by 58 basis points y-o-y, from 12.2% to 12.8%. Overall profit margins also increased by 139 basis points to 6.2%, owing to a 34% drop in finance costs.

Our efforts to strengthen the Balance Sheet allowed us to generate significant cash flow of ₹ 345 crore, driven by a decline in overall debt by ₹ 205 crore to ₹ 1,253 crore. A major part of our capital allocation was for upgrading our business and improving Return on Capital Employed ratio, which rose by 193 basis points to 15.6% and Return on Equity improved by 283 basis points to 15.3% in FY21.

The robust revenue-growth and profitability has been mainly fuelled by our ability to provide superior consumer experiences through strong global brands. Our flagship brands like ‘Daawat’ and ‘Royal’ enjoy market leadership in India and the US, with a market share of 20%+ and 50%+ respectively. Other brands such as Heritage, Devaaya, Gold Seal Indus Valley, 817 Elephant and Rozana has also emerged as preferred brands.

The organic segment contributes 12% to the overall revenue. The Company procures and supplies quality ingredients to organic food manufacturers and also performs marketing of end use organic food products through its subsidiary companies. The organic business has delivered consistent and remarkable performance during the year as it grew by 51% during the year.

The Health and Convenience segment also witnessed significant growth as consumers increasingly opted for health and convenience food. The segment grew 45% during the year. The product category’s potential can also be gauged by the phenomenal 48% CAGR growth over the last 3 years. Leading with the baton is the Royal Ready to Heat portfolio of aromatic rice which is available in different flavors conforming to cuisines preferred by the target customers. Royal Ready to Heat garnered 97% growth during the year versus the category growth of 17% in its market in North America. Daawat Saute sauces have also been supplementing the experiential cooking segment. Daawat Cuppa rice was launched in India during the latter half of the year and is already charting high growth trajectory. The product has also been launched for the Middle East market. Our Daawat Sehat and Brown Rice fulfills the customers demand for healthy, and nutritious rice and delivered a strong growth. Kari Kari is yet another feather in the cap and with this premium and healthy snack, we are increasingly meeting consumer demand for healthy and convenient food.

Benefiting Communities

With a vision to be a leading Indian origin Global Food Company that ensures sustainable business growth, has a positive impact on society and creates value for its internal as well as external stakeholders, we continue to maximise value creation for both society and our shareholders. We also remain focused on best business practices and processes for Environment, Social, and Economic Sustainability.

Further, during the year, LT Foods worked on various sustainability initiatives to create shared value for its stakeholders

LT Foods has been awarded a ‘Significant Achievement Certificate’ in the Category of ‘Large Value Chain on Basmati Rice, by Confederation of Indian Industry (CII). The Award was given on the basis of Impact on Environment in terms of reduction in Water Usage, Energy, reduced use of Chemicals, Pollution and Waste Management and Promotion of biodiversity and Societal impact of sustainable practices on lives and livelihoods of people, who are a part of the supply chain.

LT Foods has become the first Company globally to be certified with the highest level of verification – L3, by UN-backed Sustainable Rice Platform (SRP) ecolabel. This will enable the Company to use Sustainable Rice Platform (SRP) verified logo on rice packs produced by 1000+ verified farmers opting for sustainable methods of farming for rice production. LT Foods works with farmers to grow sustainable & residue free basmati rice as per the SRP standards under its Agri Program. The L3 SRP certification is the highest level of verification for sustainable cultivation of rice.

Our strategy is in line with the strategic pillars of Growth, Margin Expansion and Strengthening of Financial Metrics to create a strong, progressive, sustainable, profitable and growing consumer business across all geographies that Creates Value for all its stakeholders.”

The Company is also is driving numerous CSR initiatives such as adoption of villages, providing better sanitations facilities, offering opportunities for empowerment, sponsoring the education of girls and is also collaborating with NGOs to improve the quality of life in communities.

We will continue to work in this direction to create shared value and enable people to lead healthier and happier lives. As a responsible partner for communities, we aspire to improve the livelihood of people across the value chain and aim to adopt sustainable practices that minimise the impact of our operations on the natural environment.

Strategic Roadmap

We work towards nurturing goodness by providing our consumers with a portfolio of food products led by our flagship brands “Daawat” and “Royal” and regional leading brands.Keeping our focus on the strategic pillars of Growth, Margin Expansion and Strengthening of Financial Metrics to create a strong, progressive, sustainable, profitable and growing consumer business, we strive to create value for all stakeholders. We endeavour to achieve this by strengthening our leadership position across geographies via organic and inorganic routes and grow via product portfolio expansion through continuous innovation in business segments including Basmati and Other Specialty Rice, Organic Food and Ingredient business and Health and Convenience segment. We are consciously investing in growth in politically stable countries to strengthen our business across geographies. We aim to drive our agenda of margin expansion via cost management, benefits of scale and better product mix across geographies and business segments. A well-defined capital allocation framework is also in place with prudent financial policies that help balance the earnings and borrowings, to create sustained value for our shareholders/stakeholders.

We would like to convey our sincere admiration for the Board of Directors, my co-workers, suppliers, distributors and all the shareholders/stakeholders for their ongoing support and active involvement in our journey.

Thanks and Regards

Vijay Kumar Arora

Chairman

Ashwani Kumar Arora

Managing Director & Chief Executive Officer