L T Foods Ltd

Dear Shareholders,

The world economy weathered a number of challenges in the year gone by. Businesses and economies faced numerous problems as a result of the Russia-Ukraine war and the Covid pandemic. However, we are happy to announce that we have achieved robust revenue growth for yet another year, demonstrating the strength of our business model. The Farm to Fork approach, global supply chain hubs, wide distribution network across geographies, and continued investments behind our brands has endowed our business with strength and resiliency to generate market beating growth and profits.

Business performance

Our segments – Basmati and Other Specialty Rice, Organic Food and Ingredients, Convenience and Health – have collectively contributed to an impressive 28% Y-o-Y growth wherein Basmati and other specialty segment saw a growth of 31%, Organic segment grew 11% and convenience and health segment witnessed a growth of 36% i.e. ~2.5% of our revenue.

Our total revenue witnessed remarkable growth, reaching H 6,979 Crore, reflecting a substantial 28% increase compared to the previous fiscal year. Our gross Profit was H 2,401 Crore, an increase of 31% and EBITDA stood at H 744 Crore, a 20% increase from the previous fiscal year. The PAT stood at H 423 Crore and we achieved a remarkable growth of 37% over the previous financial year. Our earnings per share stood at H 12.5 while our debt to equity ratio improved to 0.3.

In India, LT surpassed industry growth with a 14.4% overall growth rate, with specialty and mid-segment products growing at an even faster pace, delivering on our strategic goal of premiumisation. Our market share in India has experienced continued growth, reaching an impressive 29.6% in March 2023. This represents a significant increase of 230 basis points (bps), as reported by the AC Nielsen Retail Survey Audit. The number of households consuming products by LT Foods increased by 31.26% (compared to the category growth of 5.5%) to reach 45.38 Lakh households, as per household panel data. This is the result of a mix of targeted marketing campaigns across several platforms and an expanded distribution network, which has enabled us to reach and service a larger consumer base. Our retail reach also increased by 9.1% and stood at 176,741 outlets.

In our US business, we successfully maintained our market share of 50%+ with our flagship brand, Royal. To cater to the growing demand, we expanded our portfolio, resulting in a remarkable 37% sales growth for Royal RTH foods. Royal RTH became the fourth largest brand in the ready-to-heat rice segment in the US. Additionally, we made a strategic acquisition of the jasmine rice brand Golden Star, and efficiently integrated their operations into LT Foods America, meeting our expectations.

We have continued to build on our leading share in EU. Our Daawat business continues to gain market share in UK and in the top consuming countries of the EU with expanded distribution network and marketing investments and business has overall increased by 23% during the financial year.

In The Middle East, our business has shown a good double digit growth resulting in strengthening our market share in the largest Basmati consuming region in the world. We also hold a leadership position in Israel and other countries as well.

During the fiscal year, we made a strategic deal with SALIC, the Saudi Sovereign Fund. Through a main and secondary investment of H 455.5 Crore, SALIC now holds a 9.22% equity share in LT Foods. This accelerates LT Foods' organic and inorganic expansion plans across business segments. It will increase our growth ambitions, notably in The Middle East and Saudi Arabia region, and reinforce our leading position in the industry.

In The Far East, we have further strengthened our leadership position in markets like Australia and Singapore, building our total share in the Far East to a leading 16% market share.

It is heartening that despite the price increases impacting overall exports to this region, we have been able to mitigate the impact and maintain our position due to brand strengths. Our focus remains on continuing to build on brand, strengthening the distribution network and expanding product penetration across geographies and continents.

Growing Responsibly and Sustainably

Our commitment to giving back to society has always been an integral part of our ethos. As part of our responsible growth strategy, we are continually embracing the principles of Environment, Social and Governance (ESG). During the fiscal year, we advanced further towards our ESG goals. Our priority is to make sustainability the cornerstone of all farm operations. We firmly believe that the well-being and prosperity of our farmers are intrinsically linked to the preservation of the environment. By prioritising sustainable practices, we are not only enhancing the economic viability of our farmers, but also upholding our collective responsibility to protect and conserve the planet's precious natural resources for future generations.

Therefore, we have set ambitious goals for training farmers in sustainable farming practices. By 2025, our aim is to train 50,000 farmers in sustainable farming methods. We are pleased that more than 16,000+ farmers have already been trained during the year under review.

Some other notable developments include our efforts towards bringing 2.5 Lakh acres of organic farmland under sustainable cultivation by 2030. Indeed, we have already done so with 1.64 Lakh acres of farmland, paving the way for healthier agricultural methods and a greener future.

In accordance with our commitment to the environment, we established ambitious plastic sustainability goals. Guided by the principles of Reduce, Reuse and Recycle (3Rs), we are diligently working to minimise our plastic footprint. We have achieved 100% plastic neutrality through Extended Producer Responsibility (EPR).

Enhancing brand equity

During the fiscal year, we continued to strengthen our brand equity through well-crafted marketing campaigns designed to engage consumers globally. This has helped us gain more share across geographies. Daawat has attained more than 29%+ share in India and enjoys close to 50% share of Basmati in US, apart from leadership share in geographies like Australia, Israel and others in the Far East.

Digitalisation

At LT Foods, we embrace technological advancements in an ever-evolving world. We have been leveraging the power of data-driven insights and integrating machine augmentation into our processes. A noteworthy achievement in our digitalisation efforts has been the comprehensive, end-to-end digitisation across our procurement process, ensuring seamless efficiency from paddy acquisition at the market yard to unloading; and likewise, in rice procurement from requirement generation to contract finalisation,

By prioritising sustainable practices, we are not only enhancing the economic viability of our farmers, but also upholding our collective responsibility to protect and conserve the planet's precious natural resources for future generations. Therefore, we have set ambitious goals for training farmers in sustainable farming practices. In our advanced SAP system. We remain dedicated to refining and optimising our operations through strategic deployment of cutting-edge technologies.

Strategic objectives

We continue our work on our three core strategic pillars::

Growth: We are pursuing a target 5-Year revenue CAGR of 10-12% we will also continue to grow our core Basmati business by investing more on brands and expanding our distribution reach with Revised Route to Market and product portfolio expansion by leveraging the brand equity and the existing distribution network. In organic segment we will grow with expansion of portfolio as well as stock and sell model in different geographies.

We will also further solidify our presence in existing regions and expand our reach in new geographical areas. Further, we will focus on new products in the Ready-to-Eat, Ready-to-Cook and Rice-based snacks segments.

Margin expansion: We aim to increase our 5-Year EBITDA margin by 140-150 basis points (bps). We will implement measures that lead to a change in product mix, optimise efficiencies across the value chain, and capitalise on economies of scale.

Strengthen financial metrics: We will focus on further strengthening our balance sheet metrics and return ratios. Our aim is a Return on Capital Employed (ROCE) of 23% by FY 2024-25, and a Return on Equity (ROE) of 20% by FY 2024-25. These financial metrics will reflect our efficient use of capital and commitment to delivering value to our shareholders.

Daawat has attained more than 29%+ share in India and has enjoys close to 50% share of Basmati in US, apart from leadership share in geographies like Australia, Israel and others in the Far East.

Looking ahead

We remain steadfast in our commitment to delivering exceptional value to our stakeholders through continuous growth in our business, our financial matrices and products that delight global consumers, while operating in a environmentally and socially responsible manner.

Our strategic focus on a robust supply chain, expanded global distribution networks, digitisation and sustainability enabled by investments in our global talent pool, will continue to strengthen our position as a global consumer food Company. We are confident that we can scale new heights, meet the evolving needs of our consumers and drive sustained growth in the years to come.

We thank our consumers, shareholders, business partners and key advisors for their continued trust in our Company. With the support of our shareholders, we look forward to nurturing goodness while maximising our shareholders' returns. We will create a fully integrated, global, sustainable, predictable, profitable and growing consumer business across all geographies, in line with our commitment to grow responsibly.

Thanks, and regards,