Patanjali Foods consolidates on the Food and FMCG business in FY 2023

Patanjali Foods Ltd. (PFL) continued robust business and financial performance in FY 2023.The total income in FY2023 stood at Rs. 31,821.45 Crores against Rs. 24,284.38 Crores in FY 2021-22. The PBT margin grew 9.7% in FY2023 to Rs. 1,178.96 Crores against Rs. 1,074.38 crores in FY2022. The share of FMCG business in overall revenuesgrew exponentially to Rs. 6,218.08 Crores against Rs. 1,683.24 crores in FY22 and reached 19.72% of the overall revenue against 6.95 % in the previous year. The company focus on premiumization, offering range and expanding distribution across multiple channels is reflected in revenues and profitability of Foods business. The food business EBITDA stood at Rs. 1,136.60 Crores (18.28% of the food revenue) in FY2023against Rs. 189.04 crores (11.23% of food revenue) in FY 2022.The FMCG Business contributed72% of the overall EBITDA of the company in line with the objective of improving the quality and sustainability of profits.

The company achieved quantum growth inedible oil business growing by 21% to 1.91 million metric tonnes in volume terms and achieved revenue of Rs. 25,634.45 crores against 1.63 million tonnes and Rs. 22,882.76 Crores revenue in FY2022. The growth in volume was achieved at the back of expanded distribution reach and superior offering to consumers. The EBITDA margin on oil business in FY23 stood at Rs. 230.26croresdespite the challenges around international market volatility.

The company’s focus is to expand geographically in International Market by increasing its presence in the major markets. The company achieved export turnover of Rs. 530.80 crore by exporting its products to 33 countries during the year.

The company’s plans for its Oil PalmPlantationare fully on track as the area under cultivation has increased to 63,816 hectares with overall land allocation of 6,28,000 hectares during FY 2023. The company has signed MoUswith the governments of Assam, Arunachal Pradesh, Mizoram, Nagalandand Tripura in North-East and Telangana and Andhra Pradesh.The infrastructure continues to roll forward, as the first oilmill is being setupinthenorth-eastregioninPasighat,Arunachal Pradesh.

The company recorded robust financial performance in FY 2022-23 consistently for the 3rd year in row after successfully implementing the Resolution Plan as approved by NCLT. Its strategic initiative for acquisition of food business during FY 2023 has turned to be a big milestone for the company to consolidate its food product portfolio with array of brands. The acquired food business with a bouquet of 21 products like Cow Ghee, Honey, Chyawanprash Spices, Medicated Juices like Amla, Aloevera etc and Fruit Juices, Atta etc. under Patanjali name have now become a known household brand and the company is thus able to reposition itself in a very strong and aggressive manner in FMCG market.

The food and FMCG segment has been proving to be a great boost in the company’s initiative to become a FMCG major. The products like Nutraceutical business rose to Rs.509 crore in FY 2023 as compared to Rs.225 crore in previous year FY 2021-22.The company has relaunchedNutraceuticals products like SportsNutritionwith 6products and 18newSKUs.In respect of biscuits &Confectionary,s sales of₹1300Cr witha growthof10%q-o-qand20% y-o-y. Doodh biscuit is nowa₹ 826 Crbrand,contributesto 63% of total biscuits sales.Currently,PFLis 4th largestplayerinthe Biscuitcategoryhavinganational presence.The premiere brand Nutrela has reached to highest-eversalesof 25,600MT achieved duringFY23. The company has achieved consistent growthof6%inTSP productsdespitethe competition from organised and unorganised sector .PremiumOil salesgrowthof 39%year-on-yearto 16,800MT .The company has also entered into DryFruits (Food) processing by setting upprocessingfacilityforalmondsatPatalganga, Maharashtra.

In Q4’23, PFL continues to sustain its growth momentum in the revenues as it posted the growth of 18.15 % since revenues increase to Rs. 7,872.92 crore as against Rs. 6,663.72 crore in corresponding Q4’22 on YoY basis. The food products under Patanjali brand are gaining the market acceptance to sustain the growth as recorded in last 3 quarters of FY 2022-23 majorly after completion of food business acquisition. EBIDTA earnings on food revenue remains to be strong and robust as it crosses over 13.70 % of overall food business revenue. The performance highlights in Q4-23 is given below.

* Unallocable expense on account of depreciation segment wise not considered .

In Q4 FY 23, profit before tax was Rs. 349.39 crore (at a growth of 18.16%) and profit after tax was Rs. 263.71 crore (at a growth of 12.49%) respectively. The revenue and EBIT margins for food business remained to be strong and robust as food and FMCG contributes over 68.30% in EBIT as compared to 14.39% in previous year as compared to on YoY basis. The Company continues to sustain its EBIDTA margins in spite of rising inflation levels, macro challengesas well as the managing the costs aggressively to maintain margins in a healthy range. The food and FMCG business EBIDTA contribute healthy margin over 14.20% in Q4 in overall margins of the company.

On annualized basis, in FY 2022-23, PFL recorded total income of Rs. 31,821.45 crore by posting over impressive 31.04% growth as compared to the previous year. The revenues for food and FMCG segment have reached to Rs.6,218.08 crore as compared to Rs. 1,683.24 crore on YoY basis. PBT & PAT increased during FY 2023 by around 10% although EBIDTA has marginally decreased due to sharp fall in edible oil prices.

The comparative brief summary of annual financial results is appended below. (Rs. In crore)

In respect of edible oils, sales volumeincreasedto1.97millionmtregisteringagrowth of 21% while share of foods&FMCGbusinesshas increasedfrom7%inFY22to 20%inFY23.Branded salesfor FY23is77.09%of annual turnoverwith30.20%y-o-ygrowth.

In respect of biscuit segment,it has successfullyexecutedRCNshipmentsfromGuineaBissau,WestAfricaandsoybeanfromNigeria; Successful launchofAlmond importsfromUSA. It has also signedMoUswithThe WonderfulCompany –world’slargest growerandprocessorof pistachioswith55%volumeshare,andwithMarianiNuts,oneofthelargestprocessorsforalmondsandwalnutsin theworld.

Sales InnovationInitiatives, 600NutrelaWellnessStores planned(NutrelaNutritionBranding+PromoterDeployment @ HighFootfall Stores)Vaidya &AyurvedicDoctorProgramplannedwith1800VaidyaRetailerLoyaltywith9,000Nutrela Preferred OutletsInfluencer Plan–with1,000gymtrainers. NewProductlaunched–Orthocare. E-commerceandModernTradeChannels started. 4lakh uniqueoutletsaddedin 1year;total retail reachis8lakh+ monthly..

Industry Scenario

Food & FMCG:

The company is able to balance its revenues with its strong food products business. PFL has a very large portfolio of food business which is growing at 15% to 20% year on year. The food portfolio has got wide range of products like cow ghee, staples, Edible oils like mustard oil, etc, with the beverages like aloevera juice and amla juice, etc, which have become very popular. New businesses of Biscuits & Nutraceuticals with the expanded distribution across the channels, poised expand its portfolio further into higher margin and value-added categories.

Edible Oil Segment:

Although, the double-digit growth was mainly driven by food business, Edible Oil business faced multiple challenges due to extremely dynamic market conditions followed by high inflationary pressures and volatility in Edible Oil prices in Q2. During FY 23, the edible oil industry witnessed a shaky market condition due to the sharp decline in edible oil prices. It has impacted on the overall revenue levels as well as gross margins for oil business of the company. The increasing production costs as a consequence of high inflationary pressures and other costs like logistics, power & fuel have put the pressure on margins. In order to further strengthen its portfolio of edible oil brands (like Ruchi Gold, Mahakosh, Sunrich, Nutrela, Ruchi Star and Ruchi Sunlight) and to deliver consistent growth, the company continue to invest in its brands of oil business with a focus to expand geographically. All Patanjali brands like Ruchi Gold, Mahakosh, Sunrich, Nutrela, Ruchi Star and Ruchi Sunlight continues to witness tremendous response. Patanjali is operating is one of the largest oil palm plantations in India with over 63,816 hectares under oil palm cultivation engaging with more than 39,000 farmers across nine states in India.

HR Initiative:

The company has initiated the process to put in place ESOP policy to attract the new talent and retain the existing performing human resource. The company plans to implement ESOP policy during CFY 2023-24.