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It gives me immense pleasure to present to you the FY2018 Annual Report. In the year gone by, we continued our focus on transforming our business to emerge as a growing global branded specialty food Company with a focus on basmati and other specialty rice, organic food and rice based convenience products. We strive for growth and reinforcing our positioning by building strong brands, deepening our global presence and creating enduring value for all our stakeholders.
India’s Consumption Led Growth
India is expected to have a strong domestic consumption driven growth story. According to the Centre for Economics and Business Research, India’s US$ 2.5 trillion economy makes it the 7th largest in the world in terms of nominal GDP, and is on track to overtake the United Kingdom and France to become the world’s 5th largest economy in 2018. A key driver fuelling the growth of the economy is the overall rising consumer spend. Backed by consistent range-bound economic growth and rising household incomes, consumer spending in India is expected to touch US$ 3.6 trillion (about Rs. 240 trillion) by 2020, increasing India’s share in global consumption to 5.8%—more than twice its current levels.
India’s average household income will triple to US$ 18,500 in 2020, up from US$ 6,400 in 2010, acting as a major driver in retail growth and leading to the emergence of new consumer segments.
Rapid macroeconomic, demographic and lifestyle shifts in the country, bolstered by policy and regulatory changes, have a strong potential of taking India towards its goal of becoming the largest consumer market over the next decade, according to a report by Morgan Stanley. Higher rural income, growing purchasing power and rising aspirations should drive the consumption upswing in overall India.
Most importantly, the increasing disposable income levels and a rising number of aspirational consumers have given rise to consumers seeking ‘premium’ products.
At LT Foods, we bring product differentiation and convenience to our consumers’ daily needs. Setting the standard for quality and taste, we are determined to produce products that are healthy and good for the environment.
In a world full of options, our Brands stand tall in the hearts and minds of our consumers. We are keeping pace with changing consumer trends and quality with continuous investments on the brand front as well as at the backend.
Our Journey of Transformation Continues
Over the years, we have grown our basmati business with the addition of more brands to meet different price points, to keep pace with changing consumer trends be it health or convenience and cater to tastes of different geographies. This has helped us in meeting regional consumer preferences and growing our marketing share. Further, to grow in size, we have often taken the inorganic route - both within the country and outside. Our transformational journey began with diversification into organic food, rice based convenience products as well as regional rice. Even as our basmati rice orientation remains strong, our ambition is to certainly go beyond. Today we have a strong portfolio of products ranging from speciality rice at every price point, organic food, saute sauces, rice based snacks and convenience rice based convenience products.
Our Global Playbook
In our quest to emerge as a global player, FY2018 was a critical year, as we made strong advancement internationally by setting up plants in chosen growing markets. In January, 2018, we commenced operations of our manufacturing facility in Rotterdam, Netherlands, with a capacity of 60,000 metric tonnes per annum. We also established a ready-to-heat plant in Houston, Texas, USA, which is expected to commence operations by Q2FY2019.
In Europe, our new processing unit will help us save on the heavy import duty on white basmati rice, and at the same time help us to unlock the full potential of the region through improved serviceability and logistics. Going forward, I expect the Company to strengthen our foothold in both these markets.
Our India Playbook
While international market operations is an important driving force of our business, the India branded market is equally gaining importance over the last decade. The India branded business grew by 13% in value terms versus last financial year. In the last three years, we have almost doubled our distribution reach in terms of number of retail outlets and distributors. Today our India business is strongly supported by our product presence across the all price points and sales channels. This has enabled us to reach 93% of towns in India, with over 2 lakh in population. We now have access to 150,000 traditional retail outlets and 2500 modern trade stores, including 121 hypermarkets, 298 supermarkets and 1462 mini markets. We are also known as a solution provider to big chains of hotels and restaurants.
Good Governance Foremost
Today, we see many of our medium-term goals realized. From this position of strength, we have the ability to become an enduring and prominent global branded specialty food Company that is a consistent value generator. As we press forward ‘fearlessly’ to surmount new heights of potential, we acknowledge the deeper duty we hold for being ‘responsible’.
This means that we need to be more accountable in managing our external as well as internal risks better than ever before; in sharing our achievements with greater ‘transparency’ with our stakeholders; and in sustaining the highest standards of corporate governance within our operations. We believe that these responsibilities are pre-requisites for maximizing shareholder returns, and we embrace them wholeheartedly. Furthermore, our rising share of branded business; competitive cost structure; and efficient inventory management are expected to drive better return ratios. With a proven and well-defined business model, LT Foods is ideally poised to look forward ‘fearlessly’ yet ‘responsibly’
Our vision of the future is not limited to our actions on display today. We are continuously evaluating the eating preferences of global consumers. We are continuously exploring alternative and
new ways to establish new channels of growth and value creation from a global perspective. Once committed, our value system dictates that we progress forward with conviction and excellence, to deliver on our promises.
All this would have not been possible without the dedication and commitment of our team across geographies. I would like to thank team for their hard work and wish them continued success and growth with the Company.
On this note, I would like to thank all coDirectors on the Board and partners in business for contributing to our continuing success. My gratitude also goes to all our shareholders for their faith and belief in us.
Vijay Kumar Arora