After a successful leadership stint with the Daawat and Heritage brands of basmati rice in global markets, Delhi-based L T Foods Ltd is working on innovations such as enriched basmati, with added nutrients and vitamins, commercialisation of paddy byproducts and a range of other value adds on rice-based products. Vijay Arora, chairman and managing director, unveils his plans in an interview with Dilip Kumar Jha. Edited excerpts:
Why this diversification?
Diversification is the key to success. We want basmati rice to enrich consumers with complete nutrition, vitamins and other immediate needs of the human body, without adding these from outside. The proposed diversification is a step in that direction. Our Daawat and Heritage brands have already established the company on a global scale, with these selling in 45 countries, including the US, Canada and the Middle East, in leading retail chains like Walmart, Costco, Ebro Puleva and Federal Foods, to name a few. These brands have scaled L T Food to a Rs 1,200-crore company since its inception in 1980. It is now looking at Rs 7,000 crore of sales in the next couple of years.
With urbanisation picking up, what would be your strategy?
We are geared to tap the opportunities, as we are bullish on the rising demand in the food segment. We have plans to launch ready-to-cook/ready-to-eat products in the near term on the platform of convenience and health. As part of the plans, we will launch value-added rice products, rice-based snacks and organic foods. Under our new brand, My My, the company will fill the void in the healthy snack market with rice-based namkeen, cakes and chips, aiming at an overall yearly growth of 25 per cent.
How has the recent acquisition in the US helped you?
It has helped us gain substantial market share and introduce new products there. Today, we enjoy over 40 per cent market share in branded basmati rice in the US.
Any plans of increasing prices across products?
Yes, we’re planning to raise our product prices, which will be in line with the ongoing trend in the market.
How are you targeting growth?
We are working on expanding our domestic reach to expand our retail and geographical universe. We have a strong distribution network of 400-plus distributors serving more than 80,000 retailers across India. We will also remain focused on Africa and Weat Asia/North Africa. Our long-term objective is to expand our footprint globally, by increasing our product portfolio. With a growth target of 20 per cent year-on-year, we aim to become an agri-based, value-added company and rank high on customer delight.
What helped the dramatic growth in sales?
Our revenues grew 88 per cent to Rs 434.5 crore, mainly influenced by three factors — geographical expansion, better realisations and cost control. Our expansions to increase ground presence have helped us gain major market share in the US, the Middle East and Africa.
Any significant change in consumer acceptance?
There is growing acceptance of basmati rice within the country and abroad. The Indian consumer is becoming brand-conscious and switching to packaged rice. The overall market is also growing at 20 per cent (yearly) and India has emerged as a leading basmati exporter.