Lt foods (daawat)

L t foods(DAAWAT)

LT Foods Ltd. (LTFL) is one of the leading basmati rice players in India having a strong foothold both in exports & domestic market .

=Key brands include Daawat (leading brand inIndia), Royal (#1 brand in USA) and ecoLife (organic food).

=It is moving up the Value Chain towards a branded foods company by increasing portfolio of organic food and new value added products.

=It is expanding its geographic presence by organic and inorganic growth.

=Its geographical segments include India, North America, Europe, Middle East and Rest of the World.

= Its operations include contract farming, procurement, storage, processing,packaging and distribution.


Middle east@9%

54% market share of USA
26% market share of india
10% market share of middle east

1…Rice@85% revenue@
8%cagr growth in last 5 yrs

2…Organic@9% revenue

3…New products@1.1% revenue@
23% cagr in last 5 yrs

3.A=Health Segment –
=Daawat Quick
Cooking Brown rice,
=Daawat Sehat

3B=Convenience Segment –
=Daawat Sauté Sauces,
=Daawat Cuppa Rice,
=Royal Ready-to-Heat
=Kari Kari


1…Strong Supply chain and Robust Global Distribution Network

2…Strong Brand creation

3…Basmati is commodity but not like sugar etc as area of cultivation is limited (g.i protected)

4…High entry barrier

5…Dull Industry does not attract much competitiors

=As basmati industry require huge inventory and thus it is huge working capital intensive business


1…Strong Supply chain and Robust Global Distribution Network

=LT Foods transformation into an FMCG company requires a strong distribution network. The company
has over the years built an extensive network of distributors and retailers in the domestic as well as
global market. The company serves its customers through

=1,18,000 retail outlets in India,

= 7,200 modern trade channels including hypermarkets, supermarkets, Cash n Carry etc and

=all leading e-commerce platforms.

= 800 distributors across the globe out of which more than 700 distributors are in India and more than 100 distributors in the overseas market.

=The Company also aggressively scaled up its presence in the food service and HoReCa segment, with more than 2000 new accounts comprising restaurants, Biryani chains, Star Hotels and caterers

= Recently, LTF has digitized its supply chain network which led to further improvement in vehicle turn-around-time to 14 hours from 36 hours, while the loading time to trucks have improved to 2 hours from 6 hours earlier.

= The implementation of advanced automated systems and daily systematic operating procedures review has further streamlined the operations.

=The Company’s strong distribution network is a
testimony to the Company’s sustained fnancial performance, year after year.

=In India, we beneft from our strategically
Strong Supply Chain & Global Distribution Network

= In key International markets of the USA, Europe and Middle East, we have established our distribution centres to maintain adequate stocks to ensure
sustained business activity.

=We enjoy a reliable association with renowned and leading logistic companies to ensure effciency in
our distribution process

2…Strong Brand

=we lay constant emphasis on our brand building initiatives to sustain consumer loyalty and limit opportunities for competition.

=Relying on a solid reputation, excellent brand recall and a commitment to consistently deliver value, LT Foods today has securely cemented its position as a global leader par excellence.


=Royal’ was worth $35 million when we acquired in 2007.

=Today, we have grown the brand at a 3-year CAGR of
20%, with Royal remaining the largest selling basmati rice brand in Americas.

=Company recently launched into the ready-to-heat (RTH) segment. Since launch, the business has achieved roughly 30%

= We have also widened our product portfolio, that now comprises of rice variants like Jasmine rice, Arborio rice, Wheat four and Ready-to-heat rice,dawaat

4…Middle east Business

=Middle East accounts for ~45% of the world’s total basmati rice consumption and around 9% of the
total revenue share of the company

=. To further strengthen its footprint in lucrative Middle East markets like Qutar, Oman, Bahrain,
UAE, Saudi Arabia and Kuwait, LTF acquired “Gold Seal Indus Valley” and “Rozana” brand from HUL in

=Post the acquisition of ‘Gold Seal Indus Valley’ and ‘Rozana’, we are now among the leading basmati rice player in several Middle East countries.

=The acquisition of 29.91% equity stake by Saudi
Agricultural & Live Stock Investment Company(SALIC) marks a landmark moment for the Company’s
corporate journey in Middle East

5…Europe Business

=Lt foods has set up manufacturing facility in Rotterdam, Netherlands in 2017

= . The region has recorded more than 80% YoY growth in its revenue that stood at ₹468 crore in FY 19-20 which has been surpassed in
the 9MFY21 with record revenue of ₹590 crores and PAT of ₹15 crores. Despite macro-economic
challenges, the Company registered a healthy EBITDA margin of 3.6%.

= The company has a manufacturing facility in Rotterdam, Netherlands that will help them save on heavy import duty on white basmati rice.

=NBFL has recently acquired 30% stake in Leev, Netherlands through its subsidiary Nature Bio Foods BV.

= LTF has expanded its reach in new countries and also expanded to new customers such as Jumbo with more than 600 store supermarket chain in Europe.

=The stringent food, safety and quality norms in the
region, conventionally creates a strong entry barrier.

=However, with our strong Sustainable Rice Platform (SRP) program, quality standards and extensive distribution network, we continue to deepen our presence across many countries in Europe

6…Organic Food & Ingredient Business

=Company has launched various agro based products under the brand-EcoLife which is well accepted in the market

=With over two decades of existence
and experience, NBF/NBFL now
partners with 80,000+ farmer
families across India, to build
enduring relations with farmers
with over 118,000 hectares of
certifed organic land in India

=frst company in India to be
conferred with the coveted CII
Food Safety Award in FY 2019-20.

has recently acquired 30% stake in Leev, Netherlands through its subsidiary Nature Bio Foods BV.

=This acquisition will enable LTF to supply its organic ingredients to Leev and capitalize on
its strong consumer base of more than 2500 stores in Europe.

= The organic business has a high entry
barrier as it requires around 3 years of cultivation through organic methods to produce pure organic
harvest fit for consumption and distribution as an organic product.

7…New products

=LTF has recently launched its health and convenience product range which includes products such

A…health segment
=Daawat Quick Brown rice and
= Daawat Sehat under the

B…convenience segment.
.=Daawat Sauté Sauces,
=Daawat Cuppa Rice,
= Royal Ready-to-heat and
=Kari Kari under the Currently,

…the new product portfolio accounts for only 1% of the total revenue share, however, the company is planning to take this share to around 12%-15% in next five years.

= All the products have
performed extremely well in the initial launch stage and the company is in process to scale up the operations

A=Cuppa rice
Cuppa rice is also gaining a good traction in
the market and now the company is planning to expand this product to a full scale plant. Currently,
the cuppa rice is majorly servicing the railway demand, where they are receiving repeated order

B=RTH(Ready to heat)
Other product in this segment is the Ready-to heat (RTH) products which have established a good
presence in the US market. The ready to heat business under the brand Royal, which is about 70% of the
total RTH sales have almost doubled in the first half versus year ago. RTH continues to gain new listings
and new distribution in already listed chains and does well for LTF to maintain its business growth in the
future. The company is driving more trial and consumption with the launch of new flavors to continue
RTHs broad appeal across consumer ethnicities. Currently, almost 65% - 70% of the new products is made up by the US ready to heat product

C=Dawat quick brown rice
The Company’s Daawat Quick Cooking Brown Rice – has emerged as the fastest growing product in the new innovations segment.

D=Dawat sehat
The introduction of Daawat Sehat in 2019-20 marked another achievement in our legacy of innovations under health segment. Fortifed with iron, Vitamins and
Folic Acid, this product highlights the Company’s undeterred commitment to develop a need based product portfolio.

E=saute sauces
The Company’s range of saute sauces, available in
5 different variants, also captured a signifcant market share during the year under review.

F=Kari kari
After the successful launch of Kari Kari in the previous fnancial year, the Company has set-up a Kari Kari manufacturing unit in Haryana with a production
capacity of 3,000 units per day


Sustainable Rice Platform is a UN Environment and International Rice Research Institute initiative.

=It has instituted a third-party audit to certify cultivation in sustainable ways

=. LT Foods is among the best growing
companies as per Sustainable Rice Platform standards

=Our srp scre increased from 80 to 96.1 in 3 yrs

=We conduct audits by certified institutions to ensure compliance to globally defined quality and
safety standards.

= We comply with all leading import standards, as
specified by FDA, CFIA, EU, GCC and SASO.

=Our facilities are also regularly audited by global retail
consumers to ensure compliance to international country specific standards

9…Cost efciencies Having control on the complete
value chain gives LT Foods an edge over its competitors. Staying cost conscious at every
step of the value chain has helped the organization to stay competitive in its space

10…Basmati is commodity but not like sugar etc as area of cultivation is limited (g.i protected)


1…Susceptibility to volatile raw material prices and regulatory changes

=LTF starts the paddy purchase in third quarter and stores it for the rest of the year.

=Being a commodity,
the prices of rice and paddy are susceptible to factors like supply, demand, rain and availability
of healthy land.

=The company usually enters into an understanding with customers for supply of
rice, though this is not binding. Hence, exposure to risks related to any steep decline in paddy
prices, subsequent to procurement, remains high.

= Additionally, exports of agricultural commodities,
including rice, are highly regulated. However, having strong brands, wide geographical reach and
sourcing capabilities have helped the group maintain profitability.

2…Foreign Exchange Rate Risk

=LTF derives 65% of its revenue from the global market making it susceptible to exchange rate
fluctuations. However, the company has put in place a well-framed hedging policy that mitigates
any potential risk due to currency volatility and cause a financial impact.


=In India, there are few major branded players in the Basmati rice business which dominate the local
as well as the export markets. The major peers of LTF in the organized sector include KRBL , Kohinoor
foods, Amir Chand Jagdish Kumar (Export) Ltd, Sarveshwar Food, Misthann Foods Limited, Adani
Wilmar Limited, Amira Pure Foods Limited, Dunar Foods.

=The leading packed rice brands are India Gate, Dawaat, Kohinoor, Golden Harvest and Aeroplane.

=Private label brands like Big Basket, Amazon, Flipkart, and Grofers are trying their hands in this sector plus the edible oil sector like Fortune brand have started penetrating in this sector.

4…Iran sanction
Recent US sanction on Iran has created a rift between the Iranian and Indian government with the
end of oil imports from Iran to India. Iran expected India to be more resilient to US pressure and has
expressed disappointment over India for taking up US orders so easily. As a result of this displeasure,
Iran is planning to stop import of basmati rice and other food products from India (however, there are
exports still going to Iran). Iran advised India to take actions that meet the interests of both countries.
On the other hand, Iran is set to improve trade relations with Pakistan (second largest basmati rice
producer in the world). The Indian exporters and farmers will have to bear the consequences of the
trade relations between the nations

5…contingent liabilities…65 cr

6…Geopolitical Risks
LTF is a global rice company having exports in more than 60 countries. Any geo
political tensions
between major economies can cause supply & demand glut in turn affecting the prices of raw
material and final products

7…Multiple subsideries and few acqusitions.
However all acqusitions are in same business line.



= Roe of last 5 yrs was low due to QIP and huge capex done

=ROE will improve in coming yrs as there is only maintenence capex in near future

2…D/E ratio
Continuously decreasing since last 5 yrs

=520 cr capex in last 5 yrs
=No future major capex except maintenence capex of around 70-80 cr

4…Operating margin @10-12% since last 9yrs(relatively stable)

5…fcf% …capex
2020…9.3%…89 cr

6…Growth rate(average)





Is there any possibility of margins expansion in future with present debt.

Margin will improve due to

1…Increased branded business

2…Company want to increase value added business from 1% to 12-15% in next few yrs

3…Increasing organic business

So margin will definately expand.

However, it may not be comparable to krbl because LT food grows by sales volume while krbl has premium product with less volume growth and higher realization

Thank you
Company looks serious about reduction of debt.
Clearly visible from last few quarters. They have removed their pledge shares and reduced their debt. Can they be debt free in few years because business looks capital intensive and they need to store high Inventory. Some debt bound to be there for working capital.

Long term debt is low.
They have short term debt for working capital@ around 1500 cr.

Since last 3 yrs debt is stable at around 1500cr

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a3284e0d-7876-4457-9645-725446243d01.pdf (1.2 MB)

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how do you see the results for long term perspective. Why there is knee jerk reaction on stock price after the results.

I dont judge growth by quartely results.
Long term growth potential is intact.

Even i dont judge it by yearly results

I normally calculate growth rate by averaging 3 years PAT and then calculate growth rate for 3 yrs,5 yrs and 10 yrs.

Philip fisher also said that company can not grow at every quarter


Sir after seeing the results it looks that though net profit has not grown so much but revenue and margins have expanded and debt also reduced and company is very much on the right track. Pls give your views about overall results if get time also what will be the right price for entering into the script ?
Do they organise any concall?

They have inventories worth >200 cr at the end of qtr which they bought when price was high…Will it affect PM next qtr too??

14cdeb5a-8b22-4cf4-b9fc-81b5d5b8982d.pdf (3.1 MB)

Investor presentation

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LT FOODS Q4FY21 Earnings call notes

  • Our consolidated revenue for the financial year '21 was up by 12% at INR 4,686 crores versus INR 4,173 crores last year, on account of increased sales from the U.S., Europe and organic business .

  • The gross margin expanded by 232 bps to 31.1% due to change in product mix and lower input cost.

  • Last year, in quarter 4, there was a lot of panic buying, which was not the trend in this lockdown. And therefore, in quarter 4 financial year '21, the revenue was down by 6% from INR 1,218 crores to INR 1,147 crores versus last year.

  • Our growth continues to be broad-based. The Basmati and Specialty Rice segment of our business, which contributes to the bulk of our revenue, grew by 9%, bolstered by growth in demand, especially in our international businesses.

  • Our organic business, which now accounts for over 10% of the revenue, grew an impressive 51% versus last year. New products business also grew by 45%, and it now accounts for 1.5% of our revenue. Biggest contributor to NPB revenue into its growth has been the RTH business in the U.S .

  • Our U.S. business delivered another strong year in terms of growth, margin expansion and strengthening of financial metrics.

    • The branded business revenue was up by 7% in FY '21 versus last year. The revenue growth was driven by growth in our flagship brand Royal, which has 50% plus market share .

    • Royal ready-to-heat has been performing well and witnessed a growth of 97% in FY '21 versus last year. This product has been very well accepted by the consumers, and the company has adopted a multi-tier campaign to build awareness, consideration and trial of Royal RTH.

  • Europe business continues to grow year-on-year.

    • And this year, it grew 92% versus last year, and it has also shown significant improvement in its return ratios. The company has been extensively working on expanding its customer base by way of new listing with mainstream consumers and increasing traction of brand Daawat in U.K.'s ethnic market.

    • Europe has given a last year growth of roughly INR 300 crores, roughly 100% growth, and now the facilities are running on the full capacity.

    • GI Tagged agreement with the European Union that is proposed in the coming months. It should have a positive impact as the Basmati rice industry and as an LT Foods. It’s a very positive thing. GI is not only protected to India. GI has a right as far as Basmati is concerned. Pakistan has the equal rights. So on the pricing power, I don’t think on the – India will have any impact on that. GI is only a protection from brands other getting registered, nothing else.

  • Our India business overall has been impacted by the severe hit to the HoReCa business due to the lockdowns and nonoperations of hotel, restaurants and also catering business for a big part of the year.

    • Daawat was the leader in this segment with a majority market share in organized hotels and restaurants. Daawat was also a very highly penetrated brand in catering business.

    • HoReCa business saw some recovery in the third quarter, but the same was impacted again in the fourth quarter due to the second wave of the pandemic. HoReCa pre-COVID level, it is roughly around 60%.

    • HoReCa business is roughly globally 15% of our revenue, and India is roughly 25% of our revenue, and that has a severe impact in the coming quarters.

    • But as far as consumer business is concerned, last year also, we have grown by 12.2%. And in the April month, we have seen growth. May is a little slow, but international business is as per plan

  • The consumer business, on the other hand, not only remained strong, but gained due to Daawat’s established wide distribution and our strengthening of Daawat’s leadership in e-commerce. The total consumer pack business saw a growth of 8% versus last year. Our e-commerce has grown significantly and was up by 70% in FY '21 versus last year.

  • Organic business has also registered a revenue growth of 51% in FY '21, with a revenue of INR 556 crores. The revenue growth was driven by new product lines and an increase in demand for organic products as consumers move towards safer and healthier Foods.

  • Our growth strategy has been expanded our consumer base through effective marketing mix and go-to-market strategy that focus on improving our distribution network across all channels, general trade, modern trade, e-commerce. On the margin expansion front, the company has seen a margin expansion across all geography and segment on year-on-year basis through continuous scale and improving product mix .

  • Basmati - the last year crop was good, and we are expecting this year crop, whatever the indication we are getting, that the crop will be okay next year also. So the prices are very stable . Regarding the inventory, this business is all about aging. And this year, we were expecting the higher growth. So one, we have the high inventory. The other is that for the stronger product quality of supply chain, we have built up this inventory level.

  • regarding this new products based convenience business, broadly, in the 5 years where we have set a target for ourselves is from INR 700 crores to INR 900 crores or roughly 10% to 12% of our business.

  • realization in the business has dropped significantly. This year, we have exported non-Basmati to China, so that’s how the – you’re seeing. But as far as Basmati, the same product is concerned, the realization has not decreased.

  • So as far as China business is concerned,

    • in quarter 4, we have exported around 23,000 tons of non-Basmati rice to China.

    • it is at a average rate of INR 22, INR 23.

    • it will be in the – Q1, it will be in the same line, 20,000 tons of – that will be another 20,000 tons – 20,000 to 25,000 tons of sales.

  • the kind of business we are in that – quarter-on-quarter growth is not something in this business is expected. And whatever the growth strategy, it has to be implemented 1.5 years before that. And whatever we have done in the last 2 years, that has resulted in this year, and that’s how the company has delivered an excellent top line growth – bottom line by 45%.

  • On Paddy Prices: It’s very difficult to predict at this moment. But as I said, initial signal what we are getting, the production will not be less this year, although we were doubting that. Because of this pandemic and labor shortage, there may be some impact on the production. But till date, whatever the signals we are getting, they’re saying that the production will be in line with what we thought. So as far as prices are concerned, too early, but we are optimistic it will not be impacting our margin.

  • Financials

    • the increase in the employee cost is basically on account of strengthening in the – strengthening of the European operations. The European operations are going under full swing and revenue growth. In order to have that kind of revenue, the employees were required. So it is – the employees growth is on account of it on the sales front.

    • And regarding the other expenditure, other expenditure, whatever the increase is for the basis increases on account of the sales growth, which has been made during this year. Secondly – second, the increase is on account of the legal and professional charges, which have been incurred. This is basically on account of our supply chain – strengthening of the supply chain facilities, with the projects which we have incurred for the better supply chain. So – and certainly, there are certain provisions, which we have made on a conservative side during the last quarter of this year.

    • Last year, we have invested CapEx in 2 areas. One is roughly INR 50 crore on the growth and INR 50 crore in building infrastructure and the – putting this green energy. That will definitely result in this year, the project we have done in green energy. We have put 3.5 megawatt power plant, which is – which will be done on our own fuel, which we produce in the company. That will lower the cost of our power. And we are building warehouses to see if this – the logistic cost. Rs. 80 cr capex outlined for FY22.

    • Indian debt is around INR 786 crores and foreign debt is around INR 467 crores. And the average cost of the debt is 5.1%.


They have mentioned organic and inorganic business. Can you clear me what is this organic and inorganic businesses? Also how much percentage is revenue from their branded business. They hv said they do not hv any exposure to Iran but in the initial post in this thread Iran has mentioned as a future risk/threat. This is little bit confusing. Pls clarify if possible.
Thank you.
Disc: Invested.

Organic means company grows by its own

Inorganic means growth by acqusition

Export to iran is there but very less comparable to other countries.

I think organic here means the organic food products i.e grown without pesticides


Organic Business

Run broadly under a subsidiary called “Nature Bio Foods Limited”.
Manufacturing facility location: Sonepat, Haryana.

Business Model

  • B2B business mainly in america & europe.
  • Provides ingredients like rice, spices, pulses, nuts, oilseeds used by other brands to make products like rice cakes, baby powder etc.
  • But capabilities are in India as they are working with approx 80k Indian farmers to grow organic food.
  • “Ecolife” is a brand within “Nature Bio Foods Limited”. 10% of organics business; as a group 1.5% of topline.
  • Under this subsidiary it has acquired a 30% stake in Leev, Netherlands which is an organic food company making healthy snacks, breakfast bars etc. Leev is expanding in new products and has a presence across 2500+ outlets across Europe. With this stake acquisition it can also provide its own organic products to the company.


  • EBIDTA Margin: 13.4% (Q3FY20)
  • plan to grow 10-15%/year.

Here they are talking about actual product (organic food and inorganic food products) and not about growth strategies.

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As commoditized business gives low earnings multiple for both LT & KRBL. While peers get fmcg like high multiple (ADF, DFM).

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balrampur sugar margins over the years … yes commodity.

Quite stable margins for LT foods. Which kind of commodity is it?