In the Q2 FY24 conference call for Patanjali Foods, the company addressed key performance indicators, challenges faced, and strategic initiatives employed to ensure sustained growth in a dynamic market.
Financial Performance:
1. Overall sales experienced an 8% YoY decline.
2. Subdued demand in the rural economy, attributed to sustained high food inflation and irregular monsoons, significantly impacted FMCG staples.
Challenges in Edible Oil Business:
3. Headwinds in the edible oil business, including soya, sunflower, and mustard oil segments, contributed to falling prices and overall sales de-growth in Q2.
4. The edible oil business continues to be loss-making, primarily driven by hedging losses.
5. Market dynamics show mid and small-sized players losing market share due to challenges in navigating oil price volatility.
6. Anticipation of improvement in H2, driven by festive demand and the marriage season.
Strategic Focus on Edible Oil Business:
7. The focus is on premium oil brands and enhancing distribution strength to mitigate the impact of volatile oil prices.
8. Efforts to bring more predictability to the edible oil business.
Growth in Food and FMCG Division:
9. The Food and FMCG division’s share of total sales increased to 32%, up from 25% QoQ.
10. Nutrela, a strong player in the FMCG space, demonstrated an 11% YoY growth.
11. The biscuit portfolio exhibited robust growth, recording a 20% YoY increase.
Retail Network and Product Portfolio:
12. The retail network surpassed 3 lakhs, growing at 9% QoQ.
13. A breakdown of product performance was discussed (details in attachment).
14. Patanjali has been leveraging its strong distribution network, particularly in the Nutrela and biscuit portfolios.
Growth Strategies for Biscuit Portfolio:
15. The biscuit portfolio is experiencing volume-led growth, expanding to 1 lakh+ retail touchpoints.
16. Premium and strong brands like Nariyal and Doodh biscuits outperformed the overall segment.
In summary, Patanjali Foods is actively addressing challenges in the edible oil business, emphasizing premium brands, and leveraging its robust distribution network to foster growth. The strategic focus on the Food and FMCG division, particularly in high-margin businesses, along with the expansion of retail touchpoints, positions the company for recovery and sustained success in the dynamic FMCG market.