Be it a biriyani, pulao or jeera rice, it has to be made with basmati rice. Preferring home-cooked food for safety, people across the country have been trying their hand at new delicacies through the Covid-19 lockdown, and basmati seller LT Foods has been a big beneficiary of this trend.
In a freewheeling chat with Moneycontrol, Ritesh Arora, India & Far East Business Head, LT Foods, said: “We have seen a surge in demand for our products in India as well as in international markets. Our consumer business has seen strong growth in all the markets as consumer demand for packaged rice has increased.”
Arora, however, refrained from revealing any numbers on how many tonnes of rice LT Foods, which sells basmati under the Daawat brand, has sold in the lockdown so far.
However, the company’s first-quarter earnings for FY21 gave some indication of the rise in demand. LT Foods posted an 88.57 percent increase in its consolidated net profit to Rs 82.65 crore in Q1 (April-June) on strong sales. Net profit stood at Rs 45.42 crore in the year-ago period.
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Arora feels that the demand for rice may increase further due to the rise in home consumption. He said consumers prefer branded, packaged products because of the safety aspect. The company has witnessed demand for its products rising both in modern trade and e-commerce channels.
Big business
Rice is broadly divided into basmati and non-basmati varieties. Basmati is a rice type originally found in the Indian subcontinent and traditionally consumed as part of Indian and other South Asian cuisines. It is a long and slender grain and is aromatic when cooked.
Gurugram-based LT Foods, which has 12 subsidiaries and joint venture firms, is engaged in milling, processing and marketing of branded and non-branded basmati rice. Daawat and Royal are the company’s main brands and it has operations in 65 countries. LT Foods also processes and markets parboiled rice and has production units in India and overseas.
The company's other brands include Ecolife, Royal, Devaaya, Heritage, Indus Valley, Rozana and Daawat Chef's Secretz.
Sorting out supply-chain issues
With supply chain concerns and acute shortage of manpower, last-mile delivery was becoming challenging for companies, particularly when there was high demand for essentials.
To facilitate smooth supply during the lockdown, the company tied up with various delivery partners, including Swiggy, Zomato and Domino’s, to enable door-step delivery of essentials.
Apart from these tie-ups, delivery vans in select locations are also used to reach directly to consumers, particularly at a time when stepping out has become risky because of Covid-19.
Asked about the pandemic’s impact on LT Foods’ business, Arora said that with rice being considered an essential item there has not been much of an impact and operations are running at full capacity.
Portfolio expansion
LT Foods has expanded its rice portfolio and ventured into the regional rice category with variants such as Sona Masoori and Kolam rice.
“We have been leveraging the strong brand equity of Daawat and robust distribution network to market the new regional products in India,” Arora said.
He added that even the regional rice category has received a positive response from the market.
LT Foods has also ventured into the health and convenience category based on changing consumer needs and preferences.
The company’s health and convenience portfolio includes Daawat Quick Cooking Brown Rice, Daawat Sauté Sauces, Rice based premium snacks — Kari Kari, Fortified Rice and Ready-to-Heat Products.
According to Arora, all these products have been accepted by consumers and have performed well in the test-launch phase.
Performance
The company’s revenue increased by 24 percent on account of an increase in the consumer pack business by 18 percent, organic revenue by 79 percent and new products portfolio by 100 percent.
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LT Foods’ consolidated net income increased to Rs 1,220.71 crore in the April-June quarter of the 2020-21 fiscal year from Rs 985.31 crore in the same quarter of the previous year.
Expenses remained higher, at Rs 1,110.49 crore, when compared with Rs 916.62 crore in the year-ago quarter.
On a standalone basis, the company's net profit rose to Rs 26.42 crore in the first quarter of the current financial year from Rs 21.02 crore in the year-ago period.
Net income on a standalone basis increased to Rs 642.26 crore from Rs 604.49 crore in the year-ago period.
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