The Suez Canal attacks and Daawat Basmati Rice
Strong Quarter
Meanwhile, the company reported strong growth in its third quarter results. Its consolidated net profit rose by around 50% year-on-year to Rs 153 crores, driven by expansion in flagship brands like Royal and Daawat.
The company said its key brands saw double-digit percentage growth in both quantity of merchandise sold and the revenue generated despite the disruptions. In its India branded Basmati business, the company saw 15% volume growth and 20% revenue growth.
LT Foods is figuring out ways to make its supply chain infrastructure more resilient, Arora said.
Product Diversification
The company, which gets the overwhelming share of its revenue from the sale of rice, is planning to diversify its business in coming years.
It will focus on two emerging businesses – organic products and value added products. Arora said the recent set-backs have helped the company realize the importance of not depending purely on lower value, commodity products.
“We have rebuilt a more robust and stable portfolio focusing on quality offerings and strategic clients vs only commodity products earlier.” He further said. “Growth will be back on track for organic business next fiscal onwards as we start lapping the base,” he added.
The company’s value added ready-to-heat and ready-to-cook segment has shown promising traction growing at 23% in recent times.
Its value-added products are also sold under the flagship Daawat brand. Some of the examples are Biryani Kits, Snack Packs and Cuppa Rice. Investments are being made in product innovation and capacity augmentation to feed into this consumer trend, Arora said.
Moreover, said Arora, the India branded Basmati business is also doing well, with a 20% jump in revenue during the last quarter. Much of the growth is being driven by rising incomes with the Indian middle class, Arora pointed out.
“We outpaced company average growth..as Basmati consumption rises with income levels,” he said.
Because of this, India could contribute higher to the revenue mix going forward given its 12-15% annual growth rates which exceeds those of other geographies, he said.
To leverage the rising demand, the company would invest in its branded rice business in India through celebrity endorsements, more advertising and better distribution network.