The recovery in Calendar Year (CY) 2021, which was propelled by high consumer spending, modest investment growth, and trade in goods exceeding pre-pandemic levels, represented the fastest rate of growtRs In more than four decades. However, by the end of 2021, the pace of expansion had significantly slowed as the effects of monetary and fiscal stimulants started to wear off and significant supply- chain disruptions had materialised. Additional risks to the recovery are being presented by rising inflationary pressures in several economies.
As a result, after contracting by 3.4% in 2020, global GDP grew by 6.1% in CY 2021, the highest growth since 19761. Global headline inflation remained a concern, reaching 5.2% in 2021, almost two percentage points higher than the 10-year average.2
Both advanced and developing economies are grappling with multi- decadal inflation. Considering the prevailing high rate of inflation and the rising costs of food and energy, higher expectations of inflation could become more widespread, which could result in further increased prices.
The likelihood of the global economy becoming permanently divided into geopolitical units with their own set of technology standards, international payment protocols, and reserve currencies has increased as a result of the Russia-Ukraine war. Due to the reconfiguration of supply chains and production networks, such a tectonic shift would result in major adjustment costs and long-term efficiency losses.
Vaccination rates have reached critical levels in many affluent countries and emerging economies, lowering COVID- 19s worldwide economic and health impact. Consistent consumer spending and moderate investment growth has fuelled economic recovery for several countries. Goods trade has recovered, and is now greater than it was before the outbreak. International trade has expanded as a result of pent- up demand and high commodity prices
Recent increases in potential output for advanced countries are the result of a re-evaluation of the pandemics long- term effects as well as the anticipated effects of US public infrastructure investment programmes and EU Next Generation funds. ThrougRs Infrastructural improvements and technical advancements, notably those related to the transition to green energy, these measures may increase productivity over the medium term.
According to the IMFs economic forecast report, global growth is projected to grow at 3.8% in CY 20233. Demand is projected to rise in the near future as vaccination levels increase further and supply chain bottlenecks become less of an impediment. Many central banks have also started taking initiatives to lower inflation and boost demand. Global headline inflation would fall to 3.8% in CY 2022 and 3.1% in CY 2023 under the baseline scenario, returning to pre-pandemic levels.
Since the second wave of COVID-19 in April-June, 2021 had a big impact on health but not on the economy, the economy rebounded in a K - shape in the fiscal year 2021-22. GDP at constant prices, also known as real GDP, grew by 8.7% in FY 2021-22, compared to 7.3% in FY 2020-21. The preliminary GDP estimate for FY 2020-21 was Rs 135.13 trillion, however the actual GDP estimate for FY 2021-22 is Rs 147.72 trillion, up from Rs 135.13 trillion in the provisional GDP estimate for FY 2020-21.4
Total consumption was predicted to rise by 7.0%, in FY 2021-22 , with significant contributions from government expenditure. Similarly, as a result of increased public infrastructure spending, Gross Fixed Capital Formation has reached pre-pandemic levels. So far in FY 2021-22, both goods and service exports have been strong, but imports have returned sharply as a result of rising domestic demand and increased international input prices.
With vaccinations covering the majority of the population, the economic growth continues to be on a path of recovery backed by the predicted long-term benefits of supply-side adjustments in the pipeline. The Indian economy growth is expected to remain robust at 8.2% in FY 2022-235. The governments focus on introducing reforms to balance supply-side, including deregulation of multiple industries, process simplification, production linked incentives and the elimination of legacy problems sustain the economic growth.
Even the governments significant increase in capital investment will boost the growth of several downstream sectors. A robust infrastructure would also ease supply-chain bottlenecks, ensuring smooth trade within the country as well as international trade. The robust digital infrastructure has also opened up the possibility to expand businesses. In recent years, e-commerce and online food applications have found acceptance among the consumers, leading to more digital adoption and higher market penetration. Atmanirbhar Bharat and Digital India have been the foundation of the robust drive in digital infrastructure.
Rice and Specialty Rice Segment
Rice is a staple food for half of the worlds population and one of the most important consumer foods. In 2021, the top five rice exporting nations, India, Thailand, Pakistan, Vietnam, and the United States, accounted for over three-quarters (74.2%) of worldwide rice export value6.
The Global Rice market size is expected to reach USD 292.39 billion in 2022 and the market is expected to grow at a compound annual growth rate of 2.2% from 2022 to 2028 to reach USD 334.24 billion by 2028.7
In the recent decade, India has become the worlds largest rice exporter, with export revenues of $8.8 billion in FY 2020-21 and $9.6 billion in FY 2021- 22. According to DGCIS data, India exported rice to more than 150 nations in FY 2021-22, demonstrating how the country has diversified its rice export over time.8
The past several years have witnessed increase in rice exports as a result of Indias focus on improving port handling facilities, developing a value chain incorporating important stakeholders and efforts to seek new markets or countries for rice export potential.
Indias overall rice exports increased by approximately 46% in 2021 compared to the previous year to a record 21.4 million tonnes. The rise resulted from higher imports by Bangladesh, China, and Vietnam.
In FY 2021-2022, India exported 39.47 LMT of Basmati valued at Rs 26,415.16 crore ($3.47 billion).9 The Basmati Export Development Foundation (BEDF), which receives funding from APEDA, has taken creative measures to educate farmers who cultivate Basmati rice in the main growing regions about the adoption of good agricultural practices in order to increase exports of high-quality, aromatic and long-grain Basmati rice. In India, the states of J&K, Himachal Pradesh, Punjab, Haryana, Delhi, Uttarakhand and western Uttar Pradesh produce the majority of the countrys basmati rice. In addition to the United States and the European Union, India exports long-grain, aromatic Basmati rice to Saudi Arabia, Iran and other Middle Eastern nations.10 Further, there has been a shift in the international market towards Indian food, particularly Basmati Rice dishes. Various ethnicities other than Persians, South Asians such as Hispanics and Caucasians have also started consuming Basmati. As a result, there is a significant opportunity for the Basmati Rice category to expand market penetration among various ethnicities across geographies apart from India. The household consumption of specialty rice is increasing as its consumption is steadily growing across geographies.
India shipped more than 17 MT of non- basmati rice out of a total shipment of 21 MT of rice in FY 2021-22, with the remaining volume being aromatic, long-grain Basmati rice. Non-basmati rice exports were the leading forex earner among all agri-commodities in 2021-22, with a 27% increase to USD 6,115 million. Benin, a West
African country, is a major importer of non-basmati rice from India. Nepal, Bangladesh, China, Cote DIvoire, Togo, Senegal, Guinea, Vietnam, Djibouti, Madagascar, Cameroon, Somalia, Malaysia, Liberia, U.A.E., among others, are some of the other major export destination countries for non-basmati rice.11
Organic Foods Segment
Organic food is produced using methods that promote ecological balance and biodiversity conservation. There are no food additives or industrial solvents in these foods. Along with preserving the environment, the global organic food market size is expected to grow from $120 billion in 2021 to $137 billion in 2022 at a growth rate of 14%.12 The organic food market is majorly being driven by rising health concerns due to an increase in the number of chemical poisoning incidents throughout the globe. The organic food markets are majorly being driven by the rise in the number of health-conscious consumers owing to the negative consequences of chemical pesticides in food.
The rising awareness about organic food among the people globally is expected to boost the demand in the coming years. The sector is also driven by the widespread public concern over the use of toxic chemicals in agriculture and farming and their adverse health consequences on consumers. In addition, the growing prevalence of chronic diseases such as cancer, diabetes and cardiovascular disease, and the rising expenditure on healthcare, are encouraging consumers to embrace organic foods and beverages.13
North America was the largest region in terms of sales in the organic food market in 2021, while Western Europe was the second largest region in the global organic foods market. Companies in the organic food market are concentrating their efforts on the launch of new product categories and variants. New and innovative organic food products are being developed by organic food producers across globe.
The organic food business in India is a niche sector, which is expected to grow in the future years. It is projected to rise at a CAGR of around 20.5% during the forecast period between 2021 and 2026, reaching a value of over USD 2,601 million by 2026.14 The demand for organic food is expected to surge in the future consumers are more aware and want to opt for clean food.
Convenience and Health Segment
Convenience and Health food comprises ready-to-eat food, packaged beverages, prepared mixes, canned products and shelf staple products. During the forecasted period of 2022- 2029, the Convenience and Health Food Market is estimated to grow at a CAGR of 4.2%.15 As people relocate to cities, changing consumption patterns have also contributed to the expansion of the convenience food retail business. Increasing demand for ready-to-eat snacks, high demand from emerging countries, expanding disposable income, sedentary lifestyle and development in the working population are driving the convenience food markets growth.
During the forecast period of 2022- 2027, it is expected that the global market for ready-to-eat food will grow at a CAGR of 4.89%.16 Consumers are increasingly demanding food that is locally sourced, sustainable and has simple ingredients. They are increasingly concerned about their health and want to be able to trust where their food is sourced from with the major influencing factors being traceability, safety, transparency, and accessibility.17
Ready-to-eat food delivery has emerged as a significant market due to advancement of enticing, user- friendly apps and tech-enabled driver networks, as well as shifting consumer expectations. Early on in the pandemic, lockdowns and physical distance limitations greatly boosted the category. It is anticipated to continue to be a steadfast part of the culinary landscape in the future.18
Although urbanisation and changes in lifestyle are the main drivers of processed food consumption in urban regions, semi-urban and rural areas are also showing an increase in adoption of convenience and health food.
The rise in demand for healthy meals has produced a whole new category of packaged goods, including immunity- boosting foods, whole grains, seeds, and nuts. Several companies have made efforts to include millets in their product lines. Gluten-free foods are also now finding acceptance among the consumers.18
Consumer Megatrends driving Food industry19
Indian middle class will truly come into its own
Indias economy will change from being driven by the lower classes to being driven by the middle classes by the year 2030. By 2030, over 80% of households—an increase from the current 50% — will have middle-class incomes. In 2030, the middle class will account for 75% of all consumer spending.
2 Aspirations are fast converging across urban and rural India and better access will transform this intent into actual spend
The internet and smartphones have greatly reduced the information gap between urban and rural Indian consumers. Beyond the top 40 cities, the income profiles of developed rural and small urban areas are already fairly comparable. Both of these consumer groups are equally at ease with technology-enabled consumption at a given income level and aim for a comparable selection of brands and standards of living. Indias rural areas have a considerable desire to consume, but their access to organised retail, power and banking services is still limited. Future initiatives to increase physical and digital connectivity as well as the adoption of creative distribution channels would boost well-being and unleash rural Indias actual consumption potential.
5 Millennial and Generation Z preferences will significantly shape the market
These consumers will have greater purchasing power and willingness, but they also will have higher standards. In 2030, 77% of Indians will be born in the late 1980s and onwards. Compared to previous generations, consumers of this generation will have experienced a wider range of product and service possibilities. They already show the propensity to expand their spending over the next ten years, but these younger Indians are also highly discerning about what they view as the ‘best in class products available in every consumption area, from clothing to cars. Richer and more receptive consumers will be available to businesses, but they will be well-informed and make very specific decisions for themselves and their families.
4 India?s eternal hunt for value will aid the growth of e-commerce, ‘value for money? brands and category extensions
Indian consumers are ready to buy brands that are affordable and have ‘just right features and costs. Indias new consumers are spread out over tens of thousands of urban and rural communities, yet they have aspirations to consume more (and the requisite income to fulfil this desire). Asset-light e-commerce models that are supported by offline partnerships and demand aggregators will make it easier for businesses to try out and enter these new markets. Additionally, companies will be able to spend money on brand-new category extensions.
5 Ethically-conscious consumers seeking healthy food
As consumers become more aware of the connection between diet and health, they are turning to healthy eating to achieve their wellness objectives. In particular, 40% of young adults between the ages of 18 and 30 follow a clean- eating diet. Foods that are raw and unprocessed will be more in demand from consumers as they avoid foods that are ricRs In sugar, fat or additives. Consumer trust in companies and their consumption habits are both impacted by social awareness of issues like sustainable supply chains, living wages, animal welfare and food waste.
LT Foods is into consumer food business for the last 70 years, that specialises in Basmati and other speciality rice, organic food and ingredient business, and convenience and health segment.
The Company has complete control over the value chain from farm to fork with a well-entrenched distribution network with supply chain Rsubs across globe comprising 1,300+ distributors across geographies.
The business is led by its flagship brand Daawat with c.25% market share in India and leadership position in Reunion Island, Israel, Far East, among others and Royal with c.50% market share in North America as well as other regional brands such as Devaaya, Rozana, Gold Seal Indus Valley, 817 Elephant, and EcoLife. Over the years the Company has expanded its product portfolio basis evolving consumer trends.
Additionally, the Company has, over the years, adopted various organic and inorganic routes to strengthen its presence across the globe and has also delivered on its strategic pillars of growth, margin expansion and strengthening of financial metrics which is evident in the Companys financial performance. The Company demonstrated 4-year Revenue CAGR of 12%, PAT CAGR of 31% and Return on Equity expansion of 480 basis points. The Company has maintained a healthy Debt-EBITA ratio of 1.7 times and has generated consistent free cash flows.
Basmati and Other Specialty Rice Segment
LT Foods is a market leader with a diverse variety of Specialty Rice and Rice food products in India and across geographies.
The Basmati and Other Specialty Rice segment is one of the key businesses of LT Foods and currently contributes 79% to the overall revenue of the business and has recorded a 3 year CAGR of 10%. This business segment has a presence in more than 60 countries under the flagship brands Daawat, Royal and Regional brands like Heritage, 817 Elephant, Gold Seal Indus Valley, Rozana and Devaaya.
Its flagship brands Daawat and Royal command leadership position in India and US. Daawat, with other regional brands, also holds leadership position in other geographies as well, such as Israel, Reunion Island, Mauritius, and many more.
The Company is present across all price points from speciality to mid-range to value range, across all the channels such as General Trade, Modern Trade, HORECA, E-Commerce via more than 1,200 distributors in India and 100+ distributors in international markets. The Company is present across more than 1,52,000 retail outlets in India.
This segment has witnessed an overall growth of 9% with a growtRs In the consumer business by 20%. With an increase in Rsome consumption across geographies, its small pack witnessed a growth of 15% and on account of recovery in the HORECA business the large pack business witnessed a growth of 58%. Apart from basmati rice, Daawat has also introduced regional rice such as Daawat Kolam, Daawat Sona Masoori, Daawat Govind Bhog and so on. This segment is also gaining strength on a year-on-year basis.
Organic Food and Ingredient Segment
Organic food consumption has risen sharply in recent years as peoples healthy lifestyle habits are changing. With a diverse range of organic rice, cereal grains, soya-based meals, flour, pulses, oil and oilseeds, nuts, spices, herbs, millets and more, LT Foods focuses on meeting customer demand for organic food and food ingredients.
LT Foods started its organic subsidiary, Nature Bio Foods Limited (NBF), in 1999, offering authentic organic food ingredients to consumers in the US and Europe contributing 11% of the Indian organic food export industry during the year under review. The Company provides a range of organic products, including rice, pulses, beans and ancient grains sourced from Asia. The Company also exports organic soya beans and meal, a nutritious protein supplement sourced from the farms of India and African countries of Togo and Uganda.
With export sales accounting for 90% of total revenue, local subsidiaries have been established to operate in Europe and the US through stock and sell model. During the year, it made new investments in Europe and started a dedicated organic packaging and cleaning line.
The organic segment accounts for 13% of total revenue, valued at Rs 705 crores and a 3-year CAGR of 39%. More than 94,000 hectares of certified organic land and 75,000+ farmer families are associated with the Company. In order to assure customer safety and product quality, the production chain is traceable from the field to the packaging.
The Company is among the few in the country to be bestowed with the prestigious CII Food Safety Award.
The Company expanded to new geographies such as Mauritius, Denmark and Slovenia during the year and expanded its product portfolio to include rice syrups, buckwheat, sorghum and sugar. It has been working with agility to expand its organic product portfolio year after year based on market trends and providing safe and healthy organic food ingredients and plans to introduce the brand Ecolife pan-India.
Convenience and Health Segment
Consumer needs have been evolving over a period of time especially with changing lifestyle, increasing globalisation, revolution in technology, and higher level of education (awareness, access to information), and also with impact of recent global crisis like pandemic and geopolitics situation.
Recognising the same, the Company has created a robust mechanism of continuously understanding the emerging consumer needs and trends and developed product on the basis of these trends. We recognised two major trends of health and convenience that the consumer considers while buying kitchen ingredients.
Our first major success was with Daawat Quick Cooking Brown rice on the health platform. It was our first solution in this direction, which is enjoying leadership position since its launch. It is great testimony of our efforts using consumer insights based product innovation, which fulfills the consumer needs. Post the successful
launch of Daawat Quick Cooking Brown Rice, the Company launched Daawat Sehat, the Iron and Vitamin fortified rice on the health platform that has been very well accepted by the consumers.
On the convenience platform, the Company launched various new and innovative products
• ‘Kari Kari, a Rice-Based Snack in joint venture with Japanese conglomerate Kameda Seika
• Ready-to-Heat (Microwave Heat & Eat) rice with unique blend of spices and seasonings in the US Market under ‘Royal brand
• Daawat Cuppa Rice which are delicious Ready-to-eat rice meals
• Daawat Biryani Kits that enables consumers to make authentic biryani under 30 min at home
All these products provide different forms of convenience to consumers and have no preservatives or added colours.
All these products received very good response in the lead market launches. This validates the direction taken and the process deployed for new product development and innovation. All these products continue to gain momentum and are being expanded to more geographies across the globe.
Today, Convenience and Health Food segment contributes 2% of the overall revenue, and has grown at a 3-year CAGR of 59%. This year, this segment crossed a milestone of Rs 100 crore and has reached to Rs 121 crore with a growth rate of 62% on Y-o-Y basis.
Business Performance by Geography
The Basmati and other specialty rice business in India are led by LT Foods flagship brands, Daawat, Heritage, Devaaya, Chef Secretz, Rozana, among others. These cater to a diverse consumer portfolio, ranging from value to premium consumers.
Daawat has a strong position in the market owing to its high penetration across all channels like general trade, modern trade, HORECA and e-commerce.
The Company has an existing robust business in Indias rural and urban markets and is striving continuously to increase its business by expanding its distribution networks. It has a strong e-commerce presence, which has helped it generate huge traction.
LT Foods has also witnessed a 13% growth across the e-commerce platforms. The Company is changing its SKU mix in accordance with its focus on enhancing business and is moving from large packs to smaller packs. The Company is planning to further strengthen its supply chain by optimising the system and reducing delivery time. The Company is increasing its visibility through various ad campaigns and strengthening its brand visibility across channels and states.
LT Foods Indian division successfully contributed to 32% of the Companys overall revenue in FY 2021-22. Strong brands, distribution expansion, product range development and the execution
of new Go-To-Market Strategies further augmented the growth of the Company. We have identified the gaps across the value chain till the end consumer and have invested in the new Go-to-Market strategies to reduce the time and cost of delivering the right product at right price to our consumer. The Company has also invested on digitalisation to make these initiatives sustainable.
Contribution to the Total Revenue
On the strength of improved household penetration and presence across modern trade channels, our India business has witnessed phenomenal growth. Households that consume basmati rice in India have increased by 13.6%, and we have increased our number of households by 3.4 lakhs on a year-on-year basis.
In the future, our focus will be on boosting overall brand equity across key categories for our complete speciality range by entering new households and increasing the deptRs In existing ones. We are also increasing frequency and depth of our consumer engagement. Along with efforts to develop new products to address the needs of emerging markets, it is also concentrated on our product-market campaigns aim to drive trials of its Convenience and Health segment products.
The rationale to launch brand Daawat Sehat was to address malnutrition through fortified rice.
Daawat Sehat is a fortified daily rice enriched with iron, folic acid and vitamins B1, B3, B6, and B12. The brand has a +F logo, which is featured on the FSSI website as well.
During the year, the Company did extensive marketing campaigns such as TVC, outdoor advertising, digital campaigns, and so on, to market this product in India and to emphasise the importance of fortified rice. The product during the year received consumer acceptability, generated a revenue of Rs 35 crore and witnessed growth of 269% on year-on-year basis.
Daawat Cuppa Rice
Daawat Cuppa rice offers delicious rice meals instantly. These are dehydrated ready-to-eat meals that can be reconstituted in just 10 minutes by adding hot water. It is a healthy and easy alternative for on-the-go consumption because it is simple to prepare and contains all-natural ingredients without preservatives or artificial colours. Daawat Cuppa Rice come in five different variants that have already gained a lot of popularity with consumers.
The product was successfully launched on Amazon, Big Basket and Jiomart along with standalone outlets in Mumbai and Goa with encouraging response from consumers. The Company also conducted promoter activities to create awareness and generate trials. The brand collaborated witRs Influencers for content creation on social media and conducted visibility campaigns across different E-commerce platforms like Amazon and Big Basket.
Daawat Cuppa Rice continued to be the preferred choice for consumers in the Ready-to-Eat category on Amazon. It had featured many times on the list of ‘Amazon Hot New Releases and ‘Best Sellers throughout FY 2021-22. The product also features on Indigo airlines and Air Arabia menu for their in-flight sales. The brand witnessed a growth of 375% on year-on-year basis.
Daawat-Kamedas Kari Kari snack is an innovative premium Japanese rice based snack whose flavours have been curated as per the Indian palate. This product has been placed in the packaged snacks market which is pegged around Rs 33,000 Crores and growing at a healthy CAGR of 14-16% as well as in the Healthy and Premium snacks market is pegged around Rs 900 Crores and growing at 18% CAGR.
Of Healthy and Premium Snacks Market
This products sale was hit during the pandemic but this year it bounced back witnessing a growth of 108% on year-on-year basis. The Company rapidly increased its presence across channels and is available in Delhi, Punjab, Haryana, Uttar Pradesh, Maharashtra, Karnataka, Telangana, West Bengal, Assam, Manipur and Sikkim and the plan is to expand it to other states as well in the coming year. Various marketing initiatives to build awareness such as display and search advertisement, sampling, in-store activations, participation in various food forums, and so on were implemented to drive traffic to Kari Kari page and E-commerce platform. The consumer response has been very encouraging across 500 modern trade outlets and 250 general trade outlets.
Continuous growtRs In demand in India market paved the way for expansion of this product in the international markets. During the year, the Company also started export of Kari Kari to Australia, UAE, North East and Nepal. The launch has been very well accepted by the consumers in these geographies and there have been repeat orders.
During the year, the Company also launched two new flavours — Jalapeno Cheese and Sweet Thai Chilli in addition to the four existing flavours.
Daawat Biryani Kits
The production of authentic biryani calls for numerous ingredients and recipe expertise. The word ‘Biryani is the most often searched recipe in India, while searches for Chicken Biryani top 100,000 every month. With 115 orders placed every minute on Swiggy and two biryanis being delivered by Zomato every two seconds, it is the most popular meal in India.
Thus, LT Foods with its strong heritage of Daawat, has taken a stride forward by integrating the Daawat MasterChef culinary expertise to create a ‘Rice with Spice journey by introducing a range of Ready-to-Cook Biryani Kits.
Biryani Kit includes everything needed to make the finest and most authentic biryani in just 30 minutes. These recipes are packed with carefully selected, high quality natural ingredients that are free of preservatives and artificial colours and are true to their origin in just the right proportions. Biryani Kit is available in three regional variants: Hyderabadi, Kolkata, and Lucknowi.
The Biryani kit is the perfect combination of authenticity and ease. This is another milestone in the Companys journey to constantly grow its product portfolio on convenience and health platforms througRs Innovation and user insights. The Company is thereby fulfilling the consumer need statement of ‘how to cook fresh authentic biryani at home with convenience.
The Company formulated phase wise go to market strategy and has launched its product in E-commerce and modern retail. The product has a potential in export market as well, with main focus on ethnic consumers in the Middle East, Far East, Australia, UK and US.
Our International business contributes 68% to the overall revenue driven by growth across our flagship brands Daawat, Royal and other regional brands—817 Elephant, Rozana, Gold Seal Indus Valley and Devaaya. The Company has presence across all channels including reputed super market chains and price points in various countries aided by a robust global supply chain network with 100+ distributors in international markets.
The Company has over the years also expanded its product offerings in the organic and convenience and health segment apart from Basmati and Other Specialty Rice segment. Increase in the demand of aromatic rice and speciality rice products from different ethnicities in global markets has led to an increase in our international business by 11% on year-on-year basis.
In FY 2021-22, the Companys US business witnessed a rewarding year in terms of growth, margin expansion and improving financial metrics. It delivered a growth rate of 15% versus last year. Unprecedented demand surge occurred in FY 2021-22 as a result of fewer competitive basmati imports as well as COVID scares, which encouraged rice stockpiling. Increased prices made it possible to partially offset inflation and rising costs across a range of inputs.
The boost in sales was mostly driven by the Companys flagship brand, Royal. Due to robust demand and pricing, the consumer business witnessed a growth of 13% on a year-on-year basis. The Royal business increased by almost 50% throughout this time. With a 42.4% market share, Royal is the leading brand of Basmati rice in the US.
The business has expanded across all channels and across all ethnic groups. The Company has also taken proactive steps to assure the availability of key products and has been able to increase consumer home penetration. Factors like multi-tiered initiatives to raise knowledge, recognition and trial of Ready to Heat, along with expansion into new distribution channels and aggressive marketing, contributed to the Companys success.
The Club Channel recorded the highest ever revenue which was driven by the competitively constrained quantities of Basmati coming into the U.S and the growth of Organic Basmati at Costco Bay Area and Costco Los Angeles. The growth was augmented by the continued choice of Club by the U.S consumers for its unrivalled value .
In the Retail Channel (grocery, mass, and specialty), strong base sales of dry and Ready to Heat rice and more than 23,100 new points of distribution across all outlets drove growth. Ready to Heat Rice performed particularly well and witnessed a growth of 40% on year on year basis adding almost 14,400 new distribution points.
Walmart, with its enhanced Royal 5lb store count and fresh distribution of two new Ready to Heat products in over 1,000 stores, was the main driver of consumer growth. The retail channel has a positive business forecast going forward, with new business at various stores serving as major growth drivers.
The Ecommerce channel grew at 33% in Amazon along with a strong presence in other e-commerce platforms. The expansion of the product portfolio, dedicated team, enhanced advertising investments and various digital campaigns contributed to the rise of the e-commerce business. This year, the inclusion of the 817 Elephant brand enabled to further boost the presence.
The Foodservice channel evolved as consumers and chain restaurants were introduced to the portfolio of a growing consumer base. Broadline food distributors demonstrated strong growth over the previous year.
The market for Basmati rice in Europe was approximately 5.0 lakh metric tonnes and increased by 9% in the year under consideration. This expansion was accompanied by a change in food consumption habits that was attributable to COVID and favoured in- home food consumption.
Additionally, this year marked the first full year following the UKs departure from the European Union (Brexit), which took effect on January 1,2021. LT Foods Europe had re-engineered its supply chain strategy during the year to serve the UK market in response to the new tariff regulations. The European Market accounted for 20% of the Companys total revenue.
Despite hurdles caused by several COVID-19 lockdowns in relevant markets, the Company has further bolstered the position in its flagship brand Daawat and strategic private label business.
Particularly, the ‘Daawat brand had grown tremendously, contributing to a 87% growth of brand volume. Several brands and line extensions were introduced, including Daawat Golden Sella, Basant, Indus Valley and Daawat Atta.
In Ireland and UK, the Company increased its customer base. The whole drive and the efforts are in line with the strategic intent of Company to make the business more sustainable that resulted in increase share of retail segment to 35%.
Middle East Region
The Middle East has the largest basmati rice consuming population as it accounts for almost 80% of total basmati consumption worldwide.
The Middle East market includes nations bordering the Persian Gulf, such as Oman, the United Arab Emirates, Qatar, Bahrain, Kuwait, Saudi Arabia, Iraq, and Yemen. With active consumer interaction across all demographics,
LT Foods witnessed growtRs In the premium basmati rice category in the region. Although, the retail sales were muted due to the COVID impact on stockpiling of inventories as well as socio-geopolitical conflict, the Company increased its footprint during the year across all Gulf-based online retail platforms, with the UAE, Kuwait and Qatar being the key targeted countries. Additionally, the Company focused on delivering online customers a superior user experience with premium content and product specifications. Throughout the year, the Company enhanced its presence on key assets of e-commerce platforms, especially during the major buying cycles, to achieve greater prominence.
The Company ensured the availability of the best product offerings across all price points in the Basmati rice category. In addition, the Company integrated social media with presence on various Ecommerce platforms such as Noon.com, Amazon.com in UAE, Tawseel in Kuwait and TalabatMart, Lulu webstore and Carrefour webstore across UAE, Kuwait and Qatar. LT Foods has dominated the Ecommerce space in the UAE, with its brands capturing 33% of the market share in the Ecommerce space (as per data received from Ecommerce platforms).
The acquisitions have been performing in line with our expectations and have helped us strengthen our foothold in this region. Gold Seal Indus Valley and Rozana have been growing at a CAGR of 9% since acquisition and witnessed a growth of 12% in the year under review and the Middle East segment constitutes 6% overall revenue of the Company.
With no prior presence, the Company has been able to penetrate and establish itself in countries like Oman, Qatar and Bahrain owing to the acquisition of Gold Seal Indus Valley and Rozana. It will also broaden our portfolio of high-recall-value brands. Gaining from the synergies of supply chain management and back end processing, it will enable to leverage the distribution networks of the brands acquired in the relevant market which would lead to an improved margin profile.
Rest of World
The Rest of World segment contributes 8% to the overall revenue. The Company was quite proactive in entering new areas, investing in brand, and increasing the product line at the same time to fill up the gaps in the consumer space. It has increased its market share in countries such as Singapore, Australia, New Zealand, Reunion Island, Japan, and Mauritius.
Several marketing strategies were undertaken by the Company in order to boost consumer preference for the brand. In addition, the Companys product portfolio in the Basmati and Other Specialty category, Organic category and Convenience and Health category, has been enhanced.
In Australia, Kari Kari snacks were introduced and were positively embraced by consumers.
Over the past few years, there has been a consistent growth of 10-15% YoY in Basmati rice segment. In Israel, Daawat Persian rice had been launched in the year under review which received a remarkable consumer response.
The 817 Elephant brand continues to dominate in the Israel market. There were several marketing initiatives launched during the year involving TV shows and celebrity chefs along with collaborative advertisements in magazines and food blogs that contributed to the growth of the Daawat brands in Israel.
In Mauritius, the brands Daawat, Devaaya and Heritage are being strengthened to leverage growth. The new products introduced such as the Daawat Cuppa rice and Eco-life have had a resounding positive response from the consumers in the region. The Company is continuously diversifying its portfolio and expanding its presence across all channels.
In Reunion Island, the brand Rozana continued to reign dominant with its 48% market share. The success of new products that were introduced in previous year was visible during this fiscal year. With exceptional brand recall and acceptability by consumers, the Company is capable to reach across consumer segments at different price points.
Integrated Farm to Fork
The Company has an integrated ‘Farm to Fork model and has presence across all aspects of the value chain. To establish an integrated business model and stay relevant to consumers, the Company has made investments across the value chain, including Sustainable Farming, Procurement, Manufacturing Facilities and Supply Chain, Distribution, Sales and Marketing, People, Processes, and Digitalisation.
The Company aims to provide a consistent experience to its consumers through its integrated business approach and finest food products. The Company operates across the value chain with a constant focus on quality, efficiency, economies of scale, optimum utilisation of capital, and human capital.
LT Foods is dedicated to supporting the farming community and is a founding member of Indias Sustainable Rice Production (SRP) scheme. In order to ensure that all its associated farmers receive training and exposure to every facet of SRP, the Company engages them in a variety of outreach programmes.
To encourage acceptance of and adherence to important aspects of sustainability in the production of paddy, LT Food has also partnered with the Indian Council for Agriculture Research. This collaboration will aid in reaching this year 10,000+ additional farmers in several regions witRs Information, awareness, and training.
Water conservation has also been a priority for LT Foods and therefore it has promoted measures at the farm level aimed at increasing water use productivity while continuing to enhance the output of fragrant paddy. These measures include laser levelling, directly sown rice, and alternate wet and dry production methods.
The Company has implemented a number of other initiatives in 2022 to support its sustainable farming goals, including the involvement of Krishi Vigyan Kendra and initiatives for integrated pest management and integrated nutrition management for farmer benefit. It has backed efforts to promote the use of mechanised transplanting and mat nurseries to boost output, lessen the need for labour-intensive jobs like weeding and paddy transplanting, and manage plant populations. In order to boost farmer income, improve soil health, and use less fertilisers, the Company has also advocated focused crop rotation with paddy.
In order to provide consumers with the finest farm to fork products possible, LT Foods collaborates with farmers, commission agents, and other stakeholders. The cornerstones to effective procurement that are followed by LT Foods are quality, cost-effective purchasing, and purchase timing.
The procurement network has undergone complete expansion across four states; Haryana, Uttar Pradesh, Punjab, Rajasthan, Jammu and Madhya Pradesh. Its extensive network of 260+ commission agents, located in different states, delivers products of differing quality and rates, which has led to a tailored procurement strategy that takes into account all of the aspects.
To check quality and acquire paddy at affordable prices, the Company taps into its network of farmers and commission agents brokers dispersed 230+ government-approved mandis.
Technology serves as the foundation for every phase of the procurement process, from paddy purchase to quality analysis to decision-making.
The procurement process is based on scientific principles and separated into pre-harvest and post-harvest phases.
The Company has a widespread reach throughout all basmati-growing regions, and its field team members are skilled and experienced. At every stage, strict quality controls are made to guarantee the highest level of quality in order to meet client expectations. The Company also has a specialised procurement team that assures consistent quality, cleanliness, and safety at all times for its organic produce.
A preliminary demand and supply analysis, assessment and future projections is carried out at the start of every season. The quantitative data acquired is then analysed further to estimate supply and demand of international markets. Furthermore, during the purchasing process, logistical accessibility, the ideal buying time, according to variety wise crop availability and demand are taken into account.
Supply Chain and Distribution
In order to assure a steady supply of its products and enhance consumer experience, the Company has developed a global supply chain network.
There are five state-of-the-art manufacturing facilities in India, three modern production facilities in the United States and one in Europe.
In terms of distribution we have four distribution centres in United States, one in Europe, one in United Kingdom, one in Middle East and ten in India to serve variety of national and international customers. It has optimised its operational performance with the focus on strengthening key areas that were considered as an improvement area with special emphasis on milling yield improvements and overall efficiency.
Supply chain improvements have been centred on automating processes and reducing delivery times. The Company switched to a palletisation method, reducing its reliance on manual labour. A world-class distribution centre has been built close to the main manufacturing units to allow for faster cargo deployment using VNA trucks (Very Narrow Aisle Trucks) and forklifts. The Company implemented a new narrow aisle racking systems, which allows to increase storage of finished goods by nearly 45% with a versatility to operate through narrow aisle forklifts. This maximises storage capacity and increases productivity, saves time and costs.
The Company has streamlined its supply chain and has completely digitised the entire planning process from forecasting to replenishment of stocks to the distribution centres. LT Foods has operational depots in the country which helps them replenish their modern retail chains, e-commerce chains efficiently and also help distribute to smaller towns through smaller distributors.
The Company has also setup a supply chain control tower to enhance their capability to deliver better service to end consumers and improve the visibility in the entire value chain. The Company tracks the stock availability and service levels internally to reduce the lead time and be more agile to deliver fresh products to consumers which has led to 50% improvement in the reduction of delivery time.
This year LT Foods Europe has also successfully initiated an automation drive to enhance productivity, become data-driven and provide real-time services throughout the value chain. Inventory management is being improved with the implementation of extended warehouse management resulting in maximisation of resources, reduction of warehouse costs and standardisation of warehouse procedures.
The Companys marketing strategy in India was focused on maintaining continuous relationships with the consumers, expanding its reach and building brand equity. The Company has launched various campaigns across the platforms to reach the relevant consumers. TV campaigns, Youtube campaigns, OTT platforms, Dealer board, Cinemas and Radio are the channels used by the Company with more than 20.9 lakh reach and more than 70 lakh views.
As a brand, the Company is concentrating on reaching out to its
Brown Digital Campaign targeting relevant audience through true view consumers through different platforms with its 360-degree approach and digital being the most sought after medium today, the Company has increased its presence on this platform.
Launch of New TV Campaign across all relevant platforms
Content creation on basis of different topical events
Short Format Videos to build engagement
Launch of new campaign across different platforms
The Company has implemented geography-specific marketing strategies, taking into account the ethnicities, current brand share, and target brand share in the individual geographies.
In the United States, marketing campaigns aimed to boost the brand equity of Royal brand through print and digital advertising and in-store demonstrations. The Company conducted 10 major campaigns with five campaigns targeted towards reaching the South Asian and Middle Eastern diaspora and other five campaigns created with the pursuit of driving household penetration amongst the gen-pop millennial foodies.
The Companys carefully curated campaigns for special occasions included Ramadan (Chefs Secret), Biryani (Chef?s Secret), Summer (Daawat), Onam (SMR), Diwali (Royal), Spring Forward (RTH), Summer (RTH), Back to School (RTH), Diwali (Royal) and New Year New You (RTH). The digital campaign offering ‘quick, flavourful meal inspiration? during back-to-school exceeded the industry benchmarks. The Onam campaign focused on driving cultural awareness through the SoutRs Indian Regional network and digital display and integrations. The Company increased awareness by reaching new and existing consumers through YouTube advertising and programmes.
Digital marketing initiatives were initiated in Europe and Rest of the World as well to strengthen the brand position and create awareness about the brand. The Company used TV, radio, and digital platforms to raise brand recognition among this population as part of its marketing activities in Europe to develop traction for the Daawat brand among the ethnic market. The Company continues to pursue its goal of consumer expansion through additional listings with well-known grocery chains and mainstream consumers.
The Company adopted a strategy of client expansion through new listings with well-known supermarket chains including Picnic and Jumbo and mainstream consumers. The Company has also strategically entered the fast-growing home-delivered food subscription business model as a supplier of basmati rice to major players.
In the Middle East, the marketing initiatives were targeted to attract local consumers. LT Foods was highly active during the notable buying periods in the GCC region such as during Eid, Back to school, Diwali, Yellow Friday , Singles Day and Ramadan.
Consumer engagement in LT Foods advertisements has been high, with category-beating views and click through rates. All of the campaigns had high return on advertising spend (ROAS), which demonstrated that consumers were highly accepting of the quality of the content and offerings deployed during these campaigns.
The products included Kari Kari, Ecolife, Daawat Cuppa Rice and Daawat Basmati and Specialty Rice were displayed in stores, super markets and many such public outlets. The marketing strategy aimed to improve the reach of products by ensuring better visibility at stores.
World?s First Biryani Day
By designating July 3rd, 2022 as the Worlds First Biryani Day around the world, LT Foods has established a special event for Biryani enthusiasts everywhere.
All Biryani enthusiasts now have the chance to express their affection for this dish, which has distinctly Indian flavours but is still popular worldwide. On this day, Biryani lovers all around the world are encouraged to celebrate this outstanding meal by savouring it with their friends and family in their own unique ways and perpetuating the Biryani fervour.
LT Foods celebrated the Worlds First Biryani Day on July 3rd, 2022, with 1500+ underprivileged children in Sonipat, Haryana and Chhatarpur, Madhya Pradesh. The Biryani was well received by both students and teachers. Some of the pupils had their first taste of Biryani, and they fell in love with it straightaway.
The Company believes that Biryani is more than a product, it is celebration of being together. Biryani is truly universal, spanning countries and cultures and transcending all age ranges.
Daawat Basmati Rice conducted a comprehensive 360-degree multi- country digital campaign to raise awareness of the World Biryani Day, which was accompanied by a television and radio campaign, an outdoor campaign, and an influencer marketing initiative on both a national and regional level.
Food Safety and Certifications
LT Foods works on the principle of Quality first and strives for farm to fork experience even before the transplanting of paddy in a designed scientific approach is in place. Soil, water and preceding crops are analysed for pesticides residues, heavy metal and other food contaminant. The basmati paddy seeds are also tested for all food contaminants before it is provided to the farming community. The Company aims to provide best scientific solution to the farming community through sustainable rice platform and work for the compliant quality produced by analysing the paddy crop in its entire sowing cycle. The paddy is analysed at pre-harvest to post-harvest stage and also at farmers farm storage level to mandi and auction centre to procure the best basmati paddy from the farmers and at the same time provide compliant basmati rice to the buyer, exporters and consumers. LT group, through its vision for green and safe environment, also recommends to farming community to use various green chemistry, biomolecules, bio inoculants and work for integrated pest management (IPM) and integrated nutrition management (INM) through various modes of green molecules, nano technology, and products which are naturally and organically farmed and produced. This molecules work for better soil health, reduces soil pollution, air pollution, water pollution and at the same time provide chemical residue free crop. The Company focuses on adding best value to consumer experience and consumers delight.
LT protocol also focuses on analysing the basmati paddy and rice for various food contaminant like for pesticides residues, heavy metal, mycotoxins, NOTS and various microbiological parameters along with best organoleptic sensory and cooking attributes with robust physico- chemical analysis. All analysis are based on high end scientific approach with science in the inner core of the group where Assurance Lab analyses the major food contaminants with its world-class facility setup at Bahalgarh
unit as per ISO 17025, ILAC MRA and accreditation from NABL, EIC, APEDA and FSSAI. Assurance Laboratory is an independent testing facility which maintains confidentiality and impartiality in all its functions established by LT Foods to ensure food safety from farm to fork. The laboratory is a state-of-the-art facility in the region and specialises in rice and cereals testing encompassing complete characterisation of its physical, nutritional and chemical parameters. The centre for excellence has received international recognition and accreditation whicRs Includes prestigious ILAC-MRA (International Laboratory Accreditation Cooperation-Mutual Recognition Arrangement) that allows the laboratory to expand its businesses globally in all those economies where ILAC-MRA is registered.
The laboratory maintains traceability of results to its highest level by working with NMI-UK known as LGC by participating in various proficiency testing programmes and procuring all its certified reference material and reference materials from them which are ISO 17034:2016 compliant.
We also joined hands with National Meteorological Institute of India - National physical laboratory for organising proficiency testing programmes among referral and testing laboratories across India.
Metal speciation to determine toxicity levels of Arsenic (its various species like mono methyl Arsenic, dimethyl Arsenic, Arsenobetaine) and methyl Mercury at sub ppb levels in baby food, RTE and other food matrices.
LT Foods Limited Sonepat, Haryana
BRC Global Standard for Food Safety (Issue 8: August 2018)
IFS Version 7, October 2020
SQF Food Safety Code for Manufacturing, Edition 8.1
• KOSHER (OU)
• ISO 9001:2015
• ISO 14001:2015
• ISO 45001:2018
• ISO/IERs 17025:2015 Accredited Laboratory
Approved by EIC (Export Inspection Council of India)
Registered Processing Unit by NPPO (National Plant Protection Organisation) for China.
Registered under USFDA
LT Foods Limited Varpal, Amritsar
BRC Global Standard for Food Safety Issue 8
FSSRs 22000 (ISO 22000:2018, ISO/TS 22002-1:2009)
Daawat Foods Limited Mandideep, Madhya Pradesh
BRCGS Global Standard for Food Safety issue 8 + Costco Addendum
Food Safety Modernisation Act as per USFDA
IFS Food Safety Version 7
FSSRs 22000 V5.1(inclusive ISO 22000 & ISO /TS 22002-1)
Kosher Certification (OU)
ISO 9001 : 2015
ISO 14001 : 2015 ISO 45001 : 2018 Kosher (OU)
Social Certification Sedex SA 8000
Registered under Processing Unit NPPO
Registeration of Rice Mill for China & USA
• Approved by EIC (Export council of India)
• Vegetarian certificate of product - whole plant scheme
• APEDA registration cum member certificate
• Sustainable Rice Platform (SRP)
• Food Safety Standards Authority of India
Nature Bio Foods Limited (Organic Division)
FSSC V 5.1 BRCGS Issue 8 IFS
KOSHER (JK + OU) SMETA SA 8000 ISO-14001
• Certificate of Manufacturers Registration for Export to USA (NPPO) and China
• National Programme for Organic Production Standards
• National Programme for Organic Production (NPOP), India and the National Organic Program (NOP) technical standards (USA)
• EU Organic
Raghunath Agro Industries Private Limited, Amritsar, Punjab
FSSRs 22000 (ISO 22000:2018, ISO/TS 22002-1:2009)
LT Foods Americas
• FSSRs 22000 v.5
• Food Safety System Certification - recognises as a core standard within the Global Food Safety Initiative (GFSI)
• Certified Organic - USDA NOP - National Organic Program (NJ and CA Facilities)
• Non-GMO Project Verified
• Kosher - Orthodox Union
• C-TPAT (Customs Trade Partnership Against Terrorism at all LTFA facilities
• US-OSHA and Cal-OSHA Compliance (Occupational Health & Safety)
• US-FDA, State, County, and Local Health Department Registration
• US-FDA LACF Compliance (Low- Acid Canned Food Regulations)
- (RTH and Texas Facility)
• CFIA (Canadian Food Inspection Agency)
LT Foods Europe
BRC Grade A IFS
• GMP+ tommm-m
Digitisation is high on the agenda of LT Foods. As part of our global digital transformation program, we have kicked off the Digital Transformation journey for the next few years. The program objective would be leading to such business benefits for e.g.
• More Sales & Top Line
• More Opportunities
• Increase Customer Base
• Expand Profit Margins
• Better Market Position
• Gain Credibility
• Strong Brand Value
• Strong Compliance
To start as first steps, some of the key initiatives which we have shortlisted are Finance Transformation and HR Transformation across all our operating geographies. The next round of transformation would be around Customer & Supplier experience solutions.
The use of Digital solutions offers a variety of opportunities for us to realize both significant efficiency gains and more resilient and compliant processes.
The overall program is structured across 4 guiding principles
• Bring Visibility
• Gather insights
• Integrated working model
• Intelligent automation
LT Foods Ltd is proud of its work culture and the journey it has covered from a close knit family run organisation to a professorially run organisation. Promoters are being supported by professionals with relevant experience to take organisation to next level of
|Operational focus||Strategic focus|
|its growth. It principally reinforces its dedication to providing equal opportunity, respect, and fairness to all employees. It enables people to truly have a sense of ownership, learn and develop as individuals, and perform to their highest potential while growing the business in a symbiotic relationship.||journey two years back as part of its commitment to continuously enhance its people strategies. The goal is to create a future-ready organisation that can support the Companys next phase of expansion.|
|The Company has long believed in giving internal talent opportunity for leadership roles and its talent management programme ensures that talent is prepared for such opportunities when they arise. The Company launched an HR Transformation||The Company focuses on identifying, developing, and managing high potential talent in order to meet the demand for generating tomorrows leaders and to complement the Succession Planning initiative. Succession planning ensures that the key positions of the Company have a viable stream of internal talent. Through|
its Campus to Corporate initiative, the Company lays the foundation of recruitment of new talent into the organisation.
To promote holistic learning among its employees, LT Foods L&D framework - LT University has multiple academies that include self-paced e-learning courses, sponsored programs, training on newly implemented organisational changes, Leadership Development, Skill-Based Programme s, and programmes tailored to specific cohorts such as Sales and Operations Academies. The Company collaborates with premier business and engineering institutes to recruit Management and Engineer trainees, which enhances employer branding among future talent.
The Performance Management System was reviewed and revised for the year under review to make it more enabling and objective. Goal Alignment, Meritocracy and Differentiation, Culture of Continuous Feedback, Focus on Potential and Performance, and Strong Governance are the main pillars on which the new PMS architecture is based. For all employees across all sites, training and awareness sessions on the new PMS structure are being conducted. The new PMS is anticipated to improve role clarity and boost levels of accountability and ownership.
The Company introduced a new platform to the collection of several other ongoing engagement programmes with the goal of improving employee connection and engagement even further. Amber, an AI-based employee engagement tool, is also being introduced to employees in sequential phases to connect and engage with them.
The technology offers an anonymous platform for reaching out to employees on a regular basis in order to capture real-time employee sentiments.
To nurture the Companys growth, the Company has a committed team of 2,000+ team members globally, including India.
Environment, Social and Governance
The value system of the Company places a priority on giving back to society in various ways. It has consistently carried out measures to achieve its ESG goals and integrated the ESG framework into its operating framework. The Company is committed to ethical sourcing and harvesting and works to improve the lives of farmers by enabling them to employ sustainable farming practices that also preserve environment for future generations.
The Company also upholds the highest governance standards across its operations.
With a 14% increase in revenue and a noteworthy strengthening of the balance sheet in FY 2021-22, the Company continues to achieve on all of its strategic pillars, namely growth, margin expansion, and further strengthening the financial metrics.
The rise was nevertheless widespread, with Basmati and other specialty rice growing by 9%, organic food and ingredient revenues by 19%, and the convenience and health sector by 62%. The Convenience and Health category contributed to about 2% of the total revenue and achieved Rs 121 crore after surpassing the Rs 100 crore milestone.
The Gross Profit was up by 14% from Rs 1,608 crore to Rs 1,836 crore and the margins stood at 33.7%.
The Company did an additional investment in brands up by 50 bps and also there was an increase in the freight cost by 180 bps that led to an increase in the other expenses which were up by 139 bps compared to last year.
Account of increased freight cost was 13.6% compared to 12.5% on Y-o-Y basis.
The Company has generated significant free cash flows amounting to Rs 373 crore up by 8% driven by strong performance in FY 2021-22, that has led to decline in overall debt by 229 crore. The Finance cost was reduced by 21% and the overall fund cost was down from 5.2% to 4.8%.
The PBT was up by 6.5% to Rs 428 crore from Rs 402 crore.
The PAT was up by 7% to Rs 309 crore from Rs 289 crore. The Earnings per Share stood at Rs 9.13 up by 7%.
The Cash profit was up by 9% from Rs 432 crore to Rs 398 crore.
On the Balance Sheet front, the debt-equity ratio improved from 0.7 to 0.5 times as the overall debt of the Company was down by Rs 229 crore to Rs 1,061 crore on yearly basis. The debt to EBITDA ratio stood at 1.7 times vs. 2.2 times. Current ratio has also improved significantly to 1.78 from 1.70 last year. The Return on Capital Employed stood at 15.6%. The Normalised Return on Capital Employed on account of insurance claim stood at 16.2%. The Return on Equity stood at 14.4%.
On account of Companys continuous focus on working capital optimisation, its net working capital has reduced by 28 days to 207 days in FY22 vs. 235 days last year.
Standalone Financial Performance
(Rs in Crores)
|FY 2021-22||FY 2020-21||Y-o-Y Growth (%)|
Consolidated Financial Performance
(Rs in Crores)
|FY 2021-22||FY 2020-21||Y-o-Y Growth (%)|
|Ratios||FY 2021-22||FY 2020-21|
|Debtors Turnover (no. of days)||41||38|
|Inventory Turnover (no. of days)||238||256|
|Interest Coverage Ratio (in times)||7.2||5.6|
|Current Ratio (in times)||1.8||1.7|
|Debt Equity Ratio (in times)||0.5||0.7|
|Operating Profit Margin (in %)||9.1%||10.3%|
|Net Profit Margin (in %)||5.7%||6.1%|
|Return on Net Worth (in %)||14.4%||15.3%|
On a standalone and consolidated basis, the Company saw a significant increase of 41% and 29% respectively in the interest coverage ratio on account of increase in EBIT and reduction in debt and finance cost due to better operational performance. The Debt-Equity Ratio also improved on account of reduction in debt by Rs 229 crore. There was a reduction in Return on Net Worth Ratio as the increase in Net Worth was more than the increase in PAT.
|Type of Risk||Description||Mitigation Plan||Stakeholders Impacted|
|Changing Consumer Preferences||Changes in consumer tastes may have a negative impact on demand. Given the growth and popularity of social media, consumer preference is dynamic||In order to obtain consumer insights and adjust to shifting consumer preferences, the R&D team of the Company works in tandem with the strategy team. The Company also tracks and actively monitors social media trends to quickly identify shifting consumer wants and provide cutting-edge products.||• •|
|Perception||The majority of the Companys revenue comes from the sale of basmati rice, and it is still viewed as a commodities player.||Over the past seven decades, the Company has transformed from a rice trader to a consumer food Company wherein more than 80% of our business comes from our own brands that enjoy strong equity around the world, an integrated ‘Farm to Fork approach, a well-established distribution network, global supply chain Rsubs, automated state-of-the-art processing units strategically located in India, the US, and Europe, and a strong distribution network with more than 1300 distributors worldwide. By demonstrating year on year sustainable growth and margins, the Company has been able to position itself as a Consumer Food Company to an extent.||• •|
|Competition||As other companies diversify into more consumer food offerings, it poses threat to business expansion||The Company has invested in several brand-building initiatives worldwide and holds a market leadership position in countries like India, the US, the Far East, Europe, and so on. Its market share have grown year after year across several geographies owing to ongoing brand promotion and superior quality product.||• •|
|Moderate growth for new products introduced||A consumer food Companys accomplishments are exclusively based on its ability to offer new items successfully at regular intervals while adapting to shifting consumer preferences. Since the new products may not be well- received by consumers or may fall short of sales goals, new product launches in the consumer market have a relatively low success rate.||The Company seeks for and makes investments in Rsigh- value new concepts in expanding categories where it can make use of its solid brand equity and distribution system.||• •|
|Prior to releasing a new product onto the market, the Company follows a strict procedure with well-defined stage gate process from conceptualisation to execution. This thorough procedure evaluates the products market demand, commercial feasibility, return on investment, potential future demand, and so on. Each product is initially tested in a limited market before being released on a bigger scale with the necessary expenditure in marketing and brand-building initiatives. LT Foods has introduced a number of items on the marketplace for convenience and health.|
|Private Labels||Private label business also exists in this segment||The Company makes investments in brand-building initiatives to increase consumer brand memory and the value chain to provide a dependable experience for consumers and enters only into strategic private label business.||• •|
# Consumers # Shareholders
# Value Chain Partners
# Government Body
# Employees % Community
|Type of Risk||Description||Mitigation Plan||Stakeholders Impacted|
|Increase in use of pesticides exceeding MRL (Minimum Residue Levels)||The performance of a Companys operations might be threatened by frequent changes in a nations MRLs.||• In order to assure residue-compliant paddy that meets botRs International requirements and the farmers revenue, LT Foods has been working closely with farmers on the back end to teach them how to utilise pesticides.||• • •|
|• The business has instructed more than 13,000 farmers to plant residue-free paddy as part of the SRP (Sustainable Rice Production) initiative.|
|• The Company is a key participant in the Sustainable Rice Platform (SRP), a project of the UN Environment and the International Rice ResearcRs Institute, and it is the first Company worldwide to get the Sustainable Rice Platform (SRP) ecolabel?s highest level of certification, L3. The highest degree of verification for rice growing that is sustainable is the L3 SRP certification.|
|Volatility in raw material prices||Any unexpected shift in raw material costs brought on by unfavourable weather, pricing, or supply dynamics may have an effect on the Companys business operations and profit margins.||• The Company has an integrated procurement process in place, collaborating with the farmers for prompt procurement of quality paddy at affordable pricing. Further the strength of its brands substantially works as a shock absorber in case of any fluctuation in the raw material costs and pass the same to its consumers to an extent.||• •|
|• To guarantee a steady supply of raw materials to meet future business requirements, the Company has implemented and developed a number of programmes and makes use of improved technology. Initiatives are also being done to put in place an efficient procurement strategy that aids in adapting to shifting supply patterns and price volatility in various places.|
|• The Companys Inventory Policy specifies that raw materials must be purchased in accordance with the needs of the business.|
|Political Instability in Operating Geographies||Political upheaval and instability in the regions where the Company works might have a negative influence on the Companys financial performance.||The Company has an insurance strategy in place to hedging all insurable risks. LT Foods has a well-defined policy in place to select countries that are politically stable in nature, have future growth opportunities for business expansion, and also where the consumption of the product category is increasing.||• •|
|Scarcity of Raw Material supply due to unavoidable reasons||An unexpected scarcity of raw material supply due to unavoidable circumstances||The Company carries sufficient amount of stock against its confirmed orders to avoid any such disruption on this account. Further, it has diversified procurement hubs to mitigate the said risk.||• •|
# Value Chain Partners
# Government Body
# Employees 0 Community
|Non-Compliance with various Regulatory requirements||Any account of non- compliance might subject the business to legal repercussions, resulting in financial loss and penalties. The Companys reputation may potentially suffer as a result of the same.||The vast digital-led global compliance tool invested by LT Foods ensures necessary compliances mapped across regions and is regularly monitored using a two- step verification for each completed compliance. All offices and manufacturing sites regularly hold training to underline the value of the compliance framework and how non-compliance may negatively affect the organisations reputation.||• •|
|To keep the team members and management up to date with the changing legal requirements, regular training are also held. The Company communicates on a regular basis to emphasise the significance of compliances.|
|Violation of Code of Conduct||Any violation of the Companys Code of Conduct can have a negative effect on both the Companys reputation and the success of its operations.||The Code of Conduct at LT Foods defines the Companys dedication to morality and honesty. It is signed by any new hires and is also a requirement for new hire orientation. To maintain the document current with evolving governance standards, it is regularly reviewed with the Board of Directors. Additionally, the business has a whistleblower policy that enables all stakeholders to alert the authorised Ombudsman to any fraud or unethical behaviour.||•|
|Type of Risk||Description||Mitigation Plan||Stakeholders Impacted|
|Liquidity and Financial Risk|
|Foreign Currency Risk||Due to the Companys operations in more than 60 countries, currency fluctuations might result in reduced profits.||The Company has put in place a regulated hedging programme that reduces any possible risk brought on by currency fluctuation that might have an effect on the Companys finances. To make sure there are no deviations, the policy is reviewed often.||•|
|Volatility in Interest Rates||A risk exists in obtaining finance to operate a firm profitably due to changes in the interest rate regime, rising borrowing costs, and difficulties with liquidity at lending institutions.||• The Company continues to diversify its risk by obtaining money from a group of banks at competitive interest rates.||•|
|• Over the past few years, the Company has decreased borrowing costs, increased interest coverage ratios, and enhanced cash flow from operations. The Company has generated significant free cash flows amounting to Rs 373 crore up by 8% driven by strong performance in FY 2021-22, that has led to decline in overall debt by Rs 229 crore. A robust improvement in cost of borrowing and improved interest coverage ratio from 5.6 times to 7.2 times, led to the credit rating improving from ‘CRISIL A to ‘CRISIL A - Positive.|
# Consumers # Shareholders # Value Chain Partners # Investors
# Government Body # Suppliers # Employees % Community
|Cyber and Data Security||The loss of crucial information as a result of cyberattacks may have a negative impact on the Companys operations. This may also have an effect on the Companys reputation and financial success.||A grievance office has been established in accordance with the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2021. The Company has identified critical IT systems to ensure identification and implementation of preventative controls to ensure smooth operation of the business. The Company has implemented the latest cyber security technologies to prevent loss of sensitive information due to unauthorised access.||• ••|
|Type of Risk||Description||Mitigation Plan||Stakeholders Impacted|
|Failure to meet product quality and safety requirements||As a Consumer Food Company, any failure to meet quality and safety standards for its products can result in reputational risk, loss of consumer trust, and legal ramifications.||• The Company conducts product quality and safety checks at each stage of the value chain.|
|• Prior to incorporating their supplies into the value chain, all suppliers and vendors must pass stringent quality checks.|
|• There is also a proper feedback mechanism in place for consumers to contact the Company at any time.|
|• A strict compliance system is in place to ensure regulatory compliance, with dedicated quality personnel at each manufacturing unit.|
|Talent Acquisition and Retention||The Companys ability to pursue its growth strategy may be compromised due to a talent acquisition and retention mismatch.||The Human Resources department ensures that the talent acquired is in line with the needs of the organisation and that they understand the Company?s strategic goals. The Company also ensures that its talent has a growing, challenging, ethical, enriching, and fulfilling career, as well as a culture of openness and transparency. It also ensures that the workforce has access to appropriate training and development tools in order to increase productivity at all levels. The Company holds regular town hall meetings around the world to keep team members up to date on any new developments about the Company and to make them feel proud. These sessions also provide them with a framework/open platform to share their ideas and opinions.|
|Disruption due to climatic changes||Any alteration in the pattern of precipitation might negatively affect the health of the crop, which can have an effect on business operations in terms of crop quality.||• It is a fallacy that Basmati is a crop that is dependent on rainfall and that its output would suffer from an unreliable pattern of precipitation. Most regions where basmati is produced are not dependent on rainfall and have access to various irrigation methods, such as canal and groundwater.||• • • •|
|• The Company monitors climatic changes to guarantee that there is little to no impact on the Company as a result of climatically linked changes.|
|• The Company keeps a careful eye on the execution of environmental policies as well as any modifications made to them.|
|Energy and Water Scarcity||Any shortage of water or electricity may cause operations to be disrupted.||• Strengthening the ESG Framework in the organisation across the value chain to ensure business continuity||• •|
|• Initiatives for energy and water conservation, as well as sustainable packaging, are being implemented.|
|• In keeping with the global transition and to strengthen its sustainability programme, the Company has established a carbon neutral, renewable energy plant at its Haryana manufacturing facility. Green energy plants will be built in its other manufacturing units as well.|
|• Utilising rainwater harvesting throughout plant life|
With a 14% increase in revenue and a further strengthening of the balance sheet in FY 2021-22, the Company continues to deliver on all of its Strategic Pillars, namely, growth, margin expansion, and further strengthening of financial metrics.
The Company continued to work on its strategic pillars despite some of the challenges faced by the FMCG industry with regard to input cost inflation and increase in logistic costs.
The rise was nevertheless widespread, with Basmati and other specialty rice growing by 9%, organic food and ingredient revenues by 19%, and the convenience and health sector by 62%. The Convenience and Health category made about 2% of the total revenue and achieved Rs 121 crore after surpassing the Rs 100 crore milestone.
The Company aims to further consolidate and grow its market share by increasing consumer penetration across all segments. LT Foods endeavours to widen its supply and distribution network across the globe by expanding its product offerings based on evolving consumer trends. To drive margin expansion, it plans to modify its product mix with products that assure higher margins, increase efficiency and drive cost synergies.
The Company endeavours to achieve this through solidifying leadership position across geographies via organic and inorganic routes and grow via product portfolio expansion through continuous innovation across business segments, such as Basmati and Other Specialty Rice, Organic Food and Ingredient business and Convenience and Health segment. It is consciously investing in growing in politically stable countries to strengthen its business across geographies. It aims to drive its agenda of margin expansion via building economies of scale and unlock synergies, adding efficiencies across the value chain and driving premiumisation. Going forward, the Company will continue to focus on its strategic goal to create progressive, sustainable, profitable and growing business to create value for its stakeholders. Digitalisation, HR Transformation, Innovation and ESG will act as enablers for this next level of growth.
For the Companys Strategy refer to page number 08 of the Report.
Opportunities and Threats
The industry overview section and mega trends in the food industry on page 64 provide a comprehensive review of opportunities across businesses, highlighting emerging opportunities for the Company. The corresponding threats have been included in the risk mitigation section of the report on page 94, documenting risks and potential mitigation action plans.
Governance and Audit
The Company is committed to sustaining the highest standards of integrity, transparency, and accountability in order to gain the trust of consumers, shareholders, workers, suppliers, distributors, local community, and other stakeholders. The Company is cognizant of the importance of a corporate governance model that is continuously strengthened, with consistent efforts being made to accomplish this objective. The engagement of MSKA & Associates as Group Statutory Auditor will reinforce the framework for monitoring compliance throughout the Companys extensive geographic operational presence during the year under review.
Internal Control Systems and Their Adequacy
LT Foods has a well-established system of internal controls and procedures aligned with the size and scope of its activities. Internal audits of the Companys operations, premises, and stockyards are conducted on a regular basis to verify that the established processes are being adhered to. The Audit Committee examines internal auditor reports and assesses the internal control systems operational effectiveness. The Committee then makes recommendations to the Board of Directors for changes to the Companys business processes, systems, and internal controls. The Company has established an in-house team that persistently works on changes offered by Grant Thornton Bharat, LLP, a renowned team of auditors. Internal auditors collaborate with the Audit Committee to develop annual internal audit plans. To automate the internal control environment and keep track of operations and performance, the Company deployed SAP, the worlds top ERP system.
Statements in this report on Management Discussion and Analysis, describing the Companys objectives, projections, estimates, expectations or predictions may be ‘forward-looking statements within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied since the Companys operations are influenced by many external and internal factors beyond its control. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, based on any subsequent developments, information or events. Readers are cautioned that the risks outlined here are not exhaustive. Readers are requested to exercise their judgement in assessing the risks associated with the Company.
Gold/NCD/NBFC/Insurance and NPS
Gold/NCD/NBFC/Insurance and NPS