For LT Foods Ltd, the owner of Daawat basmati rice brand, the past fiscal and lockdown periods have thrown up more opportunities than challenges, thanks to the boom in sales to the home segment.

For FY20, overall sales were up 7 per cent to ₹4,184 crore; the April-June quarter of the current fiscal is also expected to be good. In an interview with BusinessLine , Ashwani Arora, Managing Director and CEO, spoke at length on the performance of the company and future plans. Excerpts:

How has the company faced the lockdown since March? What new strategies were adopted for coping up with the sudden business disruption?

Post the lockdown, the company took requisite permission from the authorities to run its operations as LT Foods is a consumer foods company and falls under the category of essential services. Following receipt of permission, the company’s primary focus was to service the customers, manage business operations in the changed scenario with agility, and yet maintain the safety of our colleagues and workers. The business was not disrupted in a big way as it has a robust supply chain and distribution network and a well-defined and structured procurement policy.

Nevertheless, the company did face a few challenges such as shortage of labour, arrangements of logistics and supply of packaging material for the first two-three days. But as the company has long-standing relationships with reputed shipping companies and packaging vendors, it was able to resolve these challenges very quickly.

The company has also been extensively working on adopting new strategies in this ‘new normal’. The primary focus is on ensuring the health and safety of the entire workforce and providing the products to consumers. To facilitate a smooth supply chain, the company has tied up with various delivery partners such as Swiggy, Zomato and Domino’s. The company has also formed a team headed by senior management that e-meets regularly to evaluate and respond to crises. It has also prepared a mitigation plan to resolve issues, if any, on immediate basis.

How has the company performed in the last fiscal?

The company saw a surge in demand for its products in India as well as international markets. Our consumer business has seen strong growth in all the markets, as the consumer demand for packaged rice has increased and is expected to increase further due to the rise in home consumption. Also, consumers are preferring branded packaged products, keeping in mind the safety aspect due to the pandemic.

However, the HORECA (hotels, restaurant and canteen) business has seen a decline due to the lockdown. But with HORECA’s focus on online deliveries and with the government announcing opening up of outlets on selective basis in a few States, we have also seen some upswing in this category.

The company recently announced its results for FY20. Overall sales climbed 7 per cent to ₹4,184 crore. EBITDA margins also expanded by 140 bps to 12.2 per cent versus 10.8 per cent over the previous year. In absolute terms, EBITDA was up 21 per cent to ₹509 crore from ₹421 crore. Net profit also increased by 45 per cent to ₹199 crore.

Your company is primarily known for its basmati rice brands. Are you planning to expand your product portfolio based on rice varieties from various parts of the country?

The company has expanded its rice portfolio and has also ventured into the regional rice category with variants such as Sona Masoori and Kolam. It has also ventured into the health and convenience category based on the changing consumer needs and preferences. The health and convenience portfolio includes Daawat Quick Cooking Brown Rice, Daawat Sauté Sauces and rice-based premium snacks. All these products have been very well accepted by the consumers and have performed well in the initial launch phase.

It is also testing waters in the highly competitive North Indian market with wheat flour, which has a low shelf life. But it is still early days for this venture.

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