Mr. Akshay Modi, Joint Managing Director, Modi Naturals

30 Dec 2022 , 04:17 PM

Mr. Akshay Modi, Joint Managing Director, Modi Naturals interacts with India Infoline.

Modi Naturals Limited has been in business for nearly five decades; how has it changed since its inception? 

Under the visionary leadership of Mr. D.D Modi, the company began operations in 1974 with an oil mill and a solvent plant to manufacture Rice Bran Oil in Punjab . Today, Modi Naturals is one of India’s leading wellness and food-focused consumer goods company. In the highly competitive categories of edible oils and healthy foods, the company has developed a niche, premium, and differentiated brand and product portfolio. In 1985, we expanded our footprint and built a new solvent extraction plant in Pilibhit, Uttar Pradesh, as part of a greenfield expansion. The same plant is now a fully integrated oil extraction, refinery and packing facility. During the same period, we were listed on BSE.  We are the only major player in India to produce multi-source edible oil with olive oil (blended oil with rice bran oil and olive oil), and we are the third largest super premium edible oil brand in the country . The company is present on all e-commerce platforms, including Amazon, Blinkit (Big Basket), Flipkart, Grofers, and Jio Mart. To further penetrate the healthy snacking foods category, the company has a broad distribution network that includes 3,000 organised modern retail outlets and approximately 450 distributors across India, with a direct reach of about 50,000 retail stores

Could you elaborate more on your business verticals? Also, what is your business expansion strategy? 

Our business verticals are divided into three categories:

• Consumer Division – Our oil portfolio, complete with blended oil and pure olive oil range, makes us the largest player in the ‘Goodness of olive oil’ category, as well as the third largest premium edible oil brand in the country. On a large e-commerce platform, we were ranked second in super premium refined oil category. With consumers shifting to healthier products and popularity of olive oil, we have built a niche segment for ourselves. Coupled with backward integration as the only producers of olive oil in India, we have got a good competitive advantage.
  • On the back of this, we have launched a number of new food products under different brands / sub-brands recently and have a robust pipeline of new product introductions in multiple food categories that will be rolled out over the next few quarters. We expect food products to significantly contribute to our growth going forward.
  • We are constantly expanding our distribution network to further add to the organic growth of our brands and products. Recently we started business with CSD canteens, Dmart and a few emerging Quick-commerce companies, to name a few.
• Bulk Business Division – We are one of India’s largest producers of rice bran oil
  • Our Bulk Business is a well-established enterprise that maintains consistent cash flows and implements a value-addition model within its region
  • In terms of the availability of raw materials, our geographical location provides us with a distinct advantage
• Ethanol Division : With an investment of INR 160cr in the first phase, we are in the process of constructing one of the very first greenfield grain-based ethanol distilleries of Chhattisgarh state.

We have prior experience in sourcing grain and by-products, which is why we decided that this is right diversification for the company to undertake.. Additionally, we expect this business to be profitable with a lot of headroom for growth.

What kind of advantage does Modi Naturals have versus its peers? 

Our products are branded and fall into the categories of healthy food and indulgent snacks.  Today, the FMCG portfolio of Modi Natural includes brands such as Oleev, Oleev Kitchen, and PIPO. Oleev and Oleev kitchen are healthy brands with healthy oils/ foods in their range of products.  PIPO is our indulgent snacking brand with differentiated snacks in the portfolio.  The company’s branded product portfolio in the healthy and premium edible oil category includes Oleev Olive oil, Oleev Active oil (healthy Olive oil and Rice Bran Oil blend), Oleev Health Oil (Multisource Oil), Oleev Smart Oil (Multisource Oil), Rizolo Rice bran oil, Miller Canola Oil, and Olivana Wellness Oil (100% natural versatile oil with the goodness of pure olives – can be used for cooking, hair, skin care, and baby care). We are the only  manufacturer of Multi-Source Edible oil with Olive Oil in the country.  With the Indian palate preferring more adventurous flavours than the standard butter/cheese varieties on the market, the company’s branded product portfolio in the healthy indulgent snacking category includes PIPO Popcorn and unique Taste Bomb sachets inside with flavorful Peri Peri, Tomato Salsa, Cheese Burst, and Desi Cocktail.  Modi Naturals is increasing its footprint in this market by releasing a variety of peanut butter (creamy and crunchy) and pasta (100 percent wheat semolina and zero percent maida) under the OLEEV KITCHEN sub-brand.  Rice Bran oil, Rice Bran wax, and De-oiled cakes are some of the products that the company produces and sells under the non-branded umbrella to B2B clientele.

Overall, how much capacity do you have at your plants, and where are your plants located? What is the current capacity utilization at your plants? 

Our plants are located in four locations: Haryana, Uttar Pradesh, and Hyderabad with a new greenfield distillery under construction in Raipur, Chattisgarh.  Our Rice Bran Oil and Oil Packing lines are located in Uttar Pradesh (Pilibhit). There is a Solvent Extraction plant with a capacity of 800 Tonnes per day (TPD), a Refinery with a capacity of 100 TPD, and a Packing Line with a capacity of 50 TPD .  Another packing line with a capacity of 25 TPD is located in Hyderabad. Our popcorn plant is in Sonipat, Haryana, and it has a packing line capacity of 5 TPD. Both units are leased and thus asset light. We have outsourced the production of pasta and peanut butter.

How did you become a multi-brand FMCG company? What steps have you taken to increase your branded sales share? 

Historically, our company was involved in the commodity business. Some of our products include rice bran oil, rice bran wax, and rice bran de-oiled cakes. The entirety of our revenue in FY12 came from sales of non-branded products. Since the beginning of the fiscal year 2013, we have been focusing our efforts on the premium grocery market. Some of the products in this market include multi-source edible oil (blended oil), olive oil, canola oil, rice bran oil, popcorn, pasta, and peanut butter. In the current fiscal year (FY22), sales of branded products account for approximately 35 percent of total revenue. In addition, branded sales are growing at 21% CAGR from FY15 to FY22. Our strategy is to boost revenue from branded sales by emphasizing the food segment more while simultaneously expanding our premium branded edible oil offerings. In addition, to develop new products in rapidly growing niche categories. The company holds a strong position in the industry and is committed to increasing both its market share and its profitability in a manner that is both scalable and long-term by concentrating on the production of high-quality goods and conducting extensive marketing and advertising efforts.

What kind of strategy have you built for your consumer segment? 

The ‘OLEEV’ brand, which is the company’s flagship product, has established itself as a front-runner in the market for edible oils and serves the premium customer target audience. ‘Oleev Active’ has continued to increase its dominance in the category of multisource edible oil over the past few years. The ‘PIPO Popcorn’ product range has received favorable acceptance over the course of the year, which bodes well for its future. The expansion of distribution and innovative new distribution methods, such as modern trade and online shopping, were major driving forces behind the growth, which was also supported by significant financial investments in advertising and marketing. Lara Dutta,  fitness icon and former Miss Universe, has been appointed as the Company’s brand ambassador for our olive and multisource cooking oils. This marks the beginning of a new era for the brand and reflects the brand positioning statement ‘Behtar Kal Ki Shuruaat, Aaj Se.’

What motivated you to enter the ethanol market? 

Modi Naturals has diversified into the production of ethanol as a step toward achieving sustainable growth. A greenfield ethanol plant that is state-of-the-art and completely owned by Modi Naturals and operated by its 100% subsidiary, Modi Biotech Private Limited, is currently being constructed in the state of Chhattisgarh . With this endeavour, the company can further its commitment to its core values and to longterm growth, and it can also diversify its portfolio of businesses.  This project is also in line with the vision and roadmap for the Ethanol Blended Petrol (EBP) program that was laid out by the Honorable Prime Minister of India, Shri Narendra Modi. That program has a goal of 20% ethanol blending by the year 2025. The investment over the next two years is expected to be approximately ₹250 cr., with the first phase of 110 KLD with an investment of ₹160 cr, to be commissioned in FY23

 

At last, what are the company’s primary focus areas for the next few years? 

The consumer goods, bulk edible oil and feeds, and ethanol manufacturing verticals are the three areas in which the business intends to concentrate its efforts in the coming years in order to achieve the rapid expansion that is projected for it . The company strives continually to meet the ever-evolving needs of its customers and to delight them by providing products that are both differentiated and innovative and provide good value to the customer. The company holds a strong position in the industry and is committed to increasing both its market share and its profitability in a manner that is both scalable and long-term by concentrating on the production of high-quality goods and conducting extensive marketing and public relations efforts.