Our business model was validated in FY 2021-22
In FY 2021-22, Kriti Nutrients reported a 9.20 per cent increase in
revenues but a 18.28 per cent decline in profit after tax.
The Company's performance during the year under review represented the
sharpest decline in profits in its existence. This decline was precipitated by an
unprecedented increase in soyabean prices within a compressed time frame, which made it
difficult to pass the cost increase to consumers. hat is creditable is that despite the
unexpected aberration, the Company reported a positive bottomline, addressed the needs of
all stakeholders and reinvested in business growth. The capacity to address these
requirements represents a validation of the Company's business model.
Some years ago, the Company found itself at the crossroads of its
existence when it was a commodity- driven company, focusing largely on crushing soyabeans
and marketing the end product. This space was influenced by price swings, margins were
narrow and speculative income often exceeded operating profits.
This speculative income warranted the taking of speculative positions
on how the price of the raw material and end product would behave, a deviation from the
core purpose of the Company.
The management of Kriti Nutrients selected to chart out a different DNA
for itself. The Company increased its focus on marketing its popular edible oils brand
(Kriti); it invested in value-added protein products whose profitability would not be as
critically dependent on short-term soyabean costs. Besides the Company invested in
long-term research to develop differentiated products through disruptive processes.
I am pleased to communicate that this long-term direction was validated
during the year under review. At a time when trading-based companies faced extensive
losses after having been caught on the wrong foot following the sharply unexpected
movement in prices during the year under review, the overall performance of Kriti
Nutrients
- which definitely affected margins
- continue to remaine viable. This sustainability was derived from a
blend of revenues, a growing proportion of which represented value-added protein products.
At Kriti Nutrients, we believe that we are headed in the right
direction. There is a growing traction for protein products in everyday lives, beyond what
can be consumed in the natural form. A deeper study of nutritional sciences has enhanced
an emphasis on this dietary input, resulting in the downstream development of niche
protein-based products that are being marketed for everyday consumption.
Besides, the Indian of today is more concerned about food hygiene and
wellness. Consumers are willing to spend more time and money for enhanced wellness. Thrift
has been replaced by spending; sacrifice has been replaced by a feeling that people
deserve better. Besides, the Indian is earning more, has more reasons to spend and is
being influenced by an evolving environment (wider choice and lifestyle changes).
The 'wellness' word, which one would possibly have dismissed a few
decades ago, is being redefined as 'health, wealth, wellness and happiness.' This
indicates that wellness is not side-stream; it is increasingly relevant.
In line with this strategic direction, the Company has made
forwardlooking investments in people, plants and processes with the objective to deliver
successful products. We are addressing product niches that are relatively
under-penetrated; we believe that this selectivity will protect value- added margins,
strengthening our return on employed capital.
Besides, by widening the portfolio, we are progressively derisking the
Company from a downturn in some end application segments. We believe that by entering new
value-added spaces and by broad-basing our portfolio, we are creating a platform for
sustainable and profitable growth. e believe that Kriti Nutrients is at the cusp of a new
growth journey starting here.