LT Foods Eyes Upto 10% Revenue From Convenience, Health In Five Years: CEO
The company is leveraging existing brands and distribution strength for its ready-to-cook and eat products in the health segment.
LT Foods Ltd. is eyeing up to 8–10% revenue from its convenience and health segment in the next five years as a "growth enabler" for the company, according to Chief Executive Officer Ashwani Kumar Arora.
The company is leveraging existing brands and distribution strength for its ready-to-cook and ready-to-eat products in the Convenience & Health segment, a category where consumption has increased in Indian homes, particularly after the pandemic.
"The goal is to take 8-10% of the total revenue from the third vertical (Convenience & Health). Our target is the next five years," Arora, who is also the managing director, told PTI.
The Delhi-based company that owns basmati rice brands, Daawat and Royal, entered this segment around four years ago with the brand extension of Dawat in the US market and has subsequently extended it in the Indian market.
"We have achieved an impressive three-year compound annual growth rate of 30%, resulting in this segment contributing 2.5% to our overall revenue. Furthermore, our year-on-year growth has surged by an impressive 36% in this segment," he said.
"This segment is one of the growth enablers for us going forward because we are leveraging our existing brand and distribution," said Vice President – Finance and Strategy, Monika C Jaggia.
Besides, LT Foods expects to become a billion-dollar company this fiscal and cross the milestone of becoming Rs 10,000 crore in the next four years.
LT Foods, which has around 10 brands under its portfolio, had a revenue of Rs 6,979 crore from operations in the financial year ended March 31, 2023.
Presently 60% revenue of LT Foods comes from the international market and the rest 40%from the domestic market. It has a presence in over 60 countries and in some markets as the US, it controls more than 50% of the market, where it operates with the brand Royal.
LT Foods has three verticals - Basmati and Other Specialty Rice; Organic Food and Ingredients; and Convenience and Health.
"Going ahead, LT Foods is committed to growing its market presence and solidifying its position in the core Specialty Rice business and Convenience and Health segment through organic and inorganic routes," said Arora.
The company will continue to invest in marketing and brand-building initiatives, consumer insights and product innovation to enhance its competitive edge by expanding its market share and distribution reach, he said.
"With an unwavering focus on having a sustainable, scalable and profitable business, we are also optimistic about maintaining the growth momentum this year and further solidifying our position in consumer space in India as well as globally," Arora said.
Jaggia added that consumers' needs and food preferences are changing, and in order to be relevant, more products would be added in this category. The company may also consider some acquisitions for expansion in the segment.
When asked about Capex, Arora said it is normally around Rs 100 crore for a year, but it can be increased, in case of some acquisition by the company.
LT Foods recently acquired Golden Star Trading Inc along with its brand Golden Star through its subsidiary LT Foods Americas Inc, where it had invested around Rs 200 crore.
When asked whether LT Foods was still looking for further acquisitions, Arora said, "We are generating cash flow every year and we have an appetite for inorganic growth."
Over the government's recent curb on the export of Basmati rice below $1200 per tonne, Jaggia said, "This is not going to impact us. We are a branded player and sell products at much higher prices."
LT Food is working with farmers in Madhya Pradesh, Punjab and Haryana for sustainable sourcing of rice.
"We are working with farmers on two fronts - one is the SRP (Sustainable Rice Production) program as well as for organic cultivation. We are working with more than 70,000 farmers to educate and help them to produce organically," Jaggia said.
Besides India, LT Foods' other global brands source from other countries for their requirement. It has a plant at the Netherlands, a packaging unit and an RTE plant in the USA and the opening up of a new facility in the UK. In India, LT Foods has five manufacturing facilities in Punjab, Haryana and Madhya Pradesh.