Jay Kailash Namkeen Ltd Management Discussions

Global Economy

The international FMCG (FMCG) market, encompassing merchandise like food and drinks, toiletries, cleansing merchandise, and personal care gadgets, continues to be a cornerstone of the global financial system. This market is characterized by its ubiquity, speedy-paced nature, and constant innovation, making it a vital part of clients daily lives. One of the key factors of the FMCG marketplace is population boom.

As the global populace continues to increase, there may be a consistent demand for essential everyday products. Moreover, urbanization and converting existence, such as the upward push of twin-profits families, have brought about increased convenience and packaged items consumption. E-trade and virtual technology have reshaped the FMCG landscape considerably. Online purchasing, subscription services, and cellular apps have revolutionized how customers browse, buy, and obtain FMCG products, presenting more comfort and accessibility. Additionally, records analytics and personalization have turned out to be instrumental in know-how client options and tailoring products and advertising and marketing strategies consequently. Sustainability and fitness-attention have additionally left an indelible mark on the FMCG marketplace. Consumers are increasingly seeking green and healthier alternatives, prompting FMCG corporations to adapt by offering sustainable packaging, natural products, and plant-based total options.

Industry Overview

The Indian snack food industry continues to witness robust growth, driven by a combination of demographic changes, evolving consumer preferences, urbanization, and increased demand for packaged, hygienic, and ready-to-eat products. According to industry estimates, the Indian savoury snack segment is expected to grow at a CAGR of over 10% in the coming years, backed by increasing per capita income, growth in modern retail, and rising awareness of food safety.

The market is experiencing a shift from unorganized players to branded offerings, as consumers increasingly seek better quality, consistent taste, and trustworthy packaging. Regional flavors and traditional Indian snacks like namkeens and Chana Jor continue to hold strong cultural appeal across geographies, especially in Tier II and Tier III markets.

Quick commerce sales led by Blinkit, Swiggy Instamart, Zepto, and BigBasket have grown 50-100% YoY for most large FMCG companies. The platform is rapidly expanding into new locations, making life simpler for consumers by offering ease of buying at no extra cost and price comparison of the full range, which is not possible with next-door grocers. Companies such as HUL and AWL Agri-Business noted in their earnings that margins are better in e- commerce and, more specifically, quick commerce due to the higher share of premium products sold through these platforms. However, there might be an increased cost on sales promotion to ensure product features are high up on the list during searches on the quick commerce apps. Quick commerce has been gaining share in the top eight to 10 cities at the cost of general trade and modern retail, according to companies and the latest data from researcher NielsenIQ.

Industry Structure and Developments:

Indias food processing sectors market size is estimated to more than double to Rs.60,40,300 crore (US$ 700 billion) in 2030 from Rs.26,49,103 crore (US$ 307 billion) in 2023, driven by growing demand for processed products, according to industry body PHDCCI.

The food processing sector has grown substantially, averaging an annual growth rate of around 7.3%, during 2015-2022. The sector has contributed 10.54% of the Gross Value Added (GVA) in Manufacturing and 11.57% of GVA in Agriculture sector in 2020-21.

According to NielsenIQs report, in 2024, the FMCG industry in India is expected to grow between 4.5-6.5%, owing to strength in the sector and Indian economy.

Indian food processing market size reached US$ 307.2 billion in 2022 and is expected to reach US$ 470 billion by 2028, exhibiting a growth rate (CAGR) of 9.5% during 2023-2028. The Union government approved a new PLI scheme for the food processing sector, with a budget outlay of Rs. 109 billion (US$ 1.46 billion). Incentives under the scheme will be disbursed for six years to 2026-27.

Rural consumption has increased, led by a combination of increasing income and higher aspiration levels. There is an increased demand for branded products in rural India. On the other hand, with the share of the unorganized market in the FMCG sector falling, the organized sector growth is expected to rise with an increased level of brand consciousness, augmented by the growth in modern retail. Another major factor propelling the demand for food services in India is the growing youth population, primarily in urban regions. India has a large base of young consumers who form most of the workforce, and due to time constraints, barely get time for cooking.

The namkeen market in India is estimated to grow at a CAGR of 8.42% between 2023 and 2027. The size of the market is forecast to increase by USD 3,162.26 million. The growth of the market depends on several factors, including rising retail space in Tier-II and Tier-III cities of India, evolving taste preferences, and a growing preference for savory snacks.

(Disclaimer: The Information were taken from secondary source, there might be some mistakes were there)

Present Scenario in Indian FMCG Sector

Indias FMCG sector grew 10.6% in October to December quarter of 2024, driven by strong rural demand and higher essential prices. Rural sales rose 9.9%, outpacing urban growth at 2.6%, fueled by government schemes and festive consumption.

Fast-moving Consumer Goods (FMCG) sector is Indias fourth-largest sector and has been expanding at a healthy rate over the years because of rising disposable income, a rising youth population, and rising brand awareness among consumers.

With household and personal care accounting for 50% of FMCG sales in India, the industry is an important contributor to Indias GDP. The rural demand for FMCG products is expected to increase in 2023 as the rural economy exhibits more evidence of normalcy due to an improving labour market and rising terms of trade for rural production. Multiple government initiatives, such as the minimum support price (MSP) for all rabi crops, increased government spending on rural infrastructure projects and rising credit to agriculture and other non-agricultural economic activities, will increase employment and income levels in rural areas, thereby driving demand for FMCG products.

The Ministry of Food Processing Industries (MoFPI) has implemented schemes like Pradhan Mantri Kisan SAMPADA Yojana (PMKSY), PM Formalisation of Micro food processing Enterprises (PMFME) Scheme and Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) offering financial, technical, and business aids to establish food processing enterprises.

Food processing units qualify for complete profit exemption in the first five years and 100% FDI is permitted in the food processing sector.

Consumers choose food products based on their utilization efficacy, in addition to perceived value and shelf life. In an environment of rising prices, consumers also seek innovation in various FMCG products. This requires manufacturers to consider how their business processes, products and marketing collectively represent their brand. Alignment with the criteria of the intended consumer can stimulate and predict spending patterns.

INDIAN PACKAGED FOODS INDUSTRY OVERVIEW

The Indian packaged food industry ranks sixth globally in terms of production, consumption, exports and anticipated growth. There is an increasing demand for specialty and high-value processed or packaged foods, in addition to ready-to-eat and ready-to-cook foods. The Indian Packaged Food Market is anticipated to reach USD 3.4 billion by 2027, expanding at a CAGR of 4.6% between 2022 and 2027, according to a research report by Industryarc.com. Various packaged foods, including savoury snacks, baked products, breakfast cereals, processed meat, frozen sweet corn and ready-to-eat meals, are readily available in retail stores.

The Indian packaged food market is segmented into offline channels such supermarkets, hypermarkets, convenience stores, brick-and-mortar businesses and e-commerce. Due to their well-established infrastructure, convenient shopping, profitable sale deals and one- stop solution, supermarkets are attracting billions of people worldwide. The majority of Indian purchases are made offline because more than 60% of the population lives in rural areas with poor to moderate e-commerce services.

Key Drivers of Packaged Food Industry in India:

Continuous urban population growth and increased employment rates have caused consumers to live a hectic lifestyle. Due to the lack of time available for culinary and meal preparation, processed foods such as ready-to-eat products and snacks have gained popularity in urban areas.

India has one of the worlds largest working populations. With rising discretionary incomes, this demographic can be considered the largest consumer of processed foods. This population is further anticipated to increase steadily over the next five years.

In both urban and rural areas, the proportion of women who are employed has been steadily rising. As a consequence of their hectic lifestyle, they have less time for domestic tasks such as cooking. This is resulting in an increase in the demand for industrialized and ready-to-eat foods.

Snacks Food Market

Snacks consist of a vast array of foods that are consumed in small quantities as an appetiser between meals. These include, namkeen, potato chips, extruded snacks, popcorn, nut mixes, granola bars, biscuits, cakes and dried fruits, among others.

They are widely available in sweet, salted, sour and spicy flavours and include maise, potatoes, cereals, seeds, legumes, pulses and flour among other ingredients. Snacks are packaged in airtight containers or sealed packets to prevent contamination from moisture, grime, pollen and germs.

According to a report published by market research company IMARC Group, the Indian snacks market size was Rs 42,694.9 crore in 2024 and is expected to reach Rs 95,521.8 crore by 2032, exhibiting a growth rate (CAGR) of 9.08% during the forecast period.

Company Overview

Operational performance

Jay Kailash Namkeen Limited operates in both the B2B and B2C segments of the snack food market. With a strong manufacturing base, we initially catered to institutional buyers and other brands through bulk manufacturing. Since April 2022, we expanded into the consumer market under our own brand "Jai Kailash Namkeen", offering a diverse range of traditional Indian snacks, including namkeens, extruded products, and Chana Jor Namkeen.

Our operations span across key Indian states such as Gujarat, Bihar, Chhattisgarh, Madhya Pradesh, Maharashtra, Rajasthan, Telangana, and Uttar Pradesh.

Financial Performance

The Company has reached a turnover of Rs. 1502.42 Lakhs from the second year of its incorporation even under the conditions of uncertain prices of raw material and heavy competition and market situation worldwide.

• The Company recorded steady revenue growth during FY 2024-25, supported by expansion in B2C sales and diversification of product offerings.

• Profitability improved due to better cost control, increased operational efficiency, and a higher share of branded product sales.

• Investments were made in upgrading packaging infrastructure, strengthening distribution networks, and brand promotion activities.

Opportunities and Growth Drivers

• Expanding B2C Reach: Increased focus on branded products opens opportunities to expand into new retail markets and geographies.

• Consumer Trends: Rising health consciousness and demand for hygienically packed snacks align with our offerings.

• E-commerce & D2C: Digital platforms offer new sales channels to reach younger, urban consumers.

• Export Potential: Traditional Indian snacks have strong demand in overseas markets, providing export potential.

Challenges and Risks

• Raw Material Volatility: Fluctuations in the prices of ingredients like pulses, oils, and spices can impact margins.

• Competition: The snack food segment is highly competitive with both organized and unorganized players.

• Distribution Costs: Expanding into remote markets may lead to increased logistics and warehousing expenses.

• Regulatory Compliance: Any changes in food safety regulations or tax structures may require operational adjustments.

Internal Controls and Risk Management

The Company has implemented robust internal control systems to ensure accurate financial reporting, regulatory compliance, and operational efficiency. Periodic internal audits, quality checks, and SOP reviews are conducted to mitigate risks and enhance transparency.

Outlook for FY 2025-26

Looking ahead, Jay Kailash Namkeen Limited aims to:

• Strengthen its brand presence through increased marketing and retail penetration.

• Expand product portfolio with innovative and regionally relevant offerings.

• Explore new domestic markets through strategic partnerships and distribution alliances.

• Continue investing in capacity building, automation, and packaging innovations to improve productivity and reduce costs.

The Company remains committed to creating sustainable value for all stakeholders by maintaining high standards of quality, operational excellence, and ethical business practices.