LT Foods Ltd. is strategically targeting a revenue contribution of 8-10% from its convenience and health segment in the next five years, positioning it as a pivotal catalyst for the company’s growth, as stated by Chief Executive Officer Ashwani Kumar Arora.
Utilizing its well-established brands and robust distribution network, the company is harnessing its strengths to promote ready-to-cook and ready-to-eat products within the Convenience & Health segment. This move aligns with the rising consumption trends observed in Indian households, notably accelerated by the post-pandemic era.
“The goal is to take 8-10% of the total revenue from the third vertical (Convenience & Health). Our target is the next five years,” shared Arora, who also serves as the managing director.
The Delhi-based company, renowned for its basmati rice brands, Daawat and Royal, made its foray into this sector approximately four years ago. It initially introduced the Dawat brand extension in the US market and has since then successfully extended its presence within 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.
Additionally, LT Foods anticipates achieving the status of a billion-dollar company in the current fiscal year and aims to surpass the INR 10,000 crore milestone within the next four years.
LT Foods, boasting approximately 10 brands within its portfolio, generated an operational revenue of INR 6,979 crore in the fiscal year ending on March 31, 2023.
Currently, 60% of LT Foods’ revenue originates from international markets, while the remaining 40% is derived from the domestic market. The company has a global presence in over 60 countries, and in certain markets like the United States, it commands a market share exceeding 50% under its brand Royal.
LT Foods operates within three key segments: 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 INR 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 INR 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.