Tasty Bite Eatables Limited
Loading 38th Annual Report 2021-22
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Chairman’s message

कल, आज और कल

(yesterday,
today, tomorrow)

Dear Shareholders,

25 years is a long time for anyone to be the Chairman of a public company. So, I thought I’d use this opportunity to briefly look at the rearview mirror, then do a quick sitrep of the present and then spend a bit of time on global forces that will shape our business in the years to come. As always, this Chairman’s note will be a कल, आज और कल (yesterday, today, tomorrow) piece!

Let us look back 25 years ago to the first Annual Report (1998-99) after the company was acquired by US based company Preferred Brands International, which Meera Vasudevan & I co-founded in 1994. It was simply titled “The Turnaround”. Some may recall TBEL was a tired, debt-ridden company whose net worth had been wiped out with accumulated losses multiple times its equity capital & had been declared sick by the then regulator BIFR (Board of Industrial and Financial Reconstruction). This was the annual report published a year after the acquisition.

Our long journey was never easy. We caught no step change breaks or inflections. But our growth was steady and consistent. In that context, your support as shareholders, your patience, fortitude, and unwavering commitment to the mission of your company is nothing short of exceptional in the world of listed entities. At no stage in these 25 years, did we feel pressured by you to choose revenues & profits over the purpose of the company. We never came to that fork in the road.

Meera & I were soon joined by a remarkable leadership team that included Ravi Nigam, Sohel Shikari and Hans Taparia. This five-person team that came to be known as the E-Com (Executive Committee) worked with a highly motivated work force and a dedicated management team to build a purpose-driven business around the consumer and the community creating a trajectory of sustained growth for 20+ years.

I am struck by the purpose, energy and optimism reflected in that first Annual Report. We triumphantly announced the turnaround of the company, predicted megatrends of natural, convenient & specialty foods in the US that still drives our growth 25 years later and we hoped to be perceived as India’s most respected food company! We also promised ourselves to make Tasty Bite without using any preservatives or chemical additives, a tall claim to have made in 1998 but still relevant today

We remained committed to that simple oath that we will not put into Tasty Bite what we will not put into our mouths. The annual reports over the next 2 decades continued to reflect those values & energy even as the business grew from sometimes making just 2,000 meals a day in the mid 90s to much more than 300,000 meals a day today. Not to mention more than 10,000 tons of sauces and frozen products catering to the Food Service industry.

Last year’s Annual Report titled Necessarily Natural, Preferably Organic embodies that very principle.

Our long journey was never easy. We caught no step change breaks or inflections. But our growth was steady and consistent. In that context, your support as shareholders, your patience, fortitude, and unwavering commitment to the mission of your company is nothing short of exceptional in the world of listed entities. At no stage in these 25 years, did we feel pressured by you to choose revenues & profits over the purpose of the company. We never came to that fork in the road.

It is with this feeling of gratitude that I will be stepping down as Chairman of Tasty Bite during this fiscal year.

It is with this feeling of gratitude that I will be stepping down as Chairman of Tasty Bite during this fiscal year. Mars has been a terrific partner and shareholder in this journey, and I have committed to stay till they appoint a new Chairperson that will be approved by the board and the general body.

Mars has been a terrific partner and shareholder in this journey, and I have committed to stay till they appoint a new Chairperson that will be approved by the board and the general body. My stepping aside does not mean that I will be retiring from work or turning my back on the business. On the contrary, I will be available to assist in both, the leadership and board transition for as long as it takes.

Let me now move to the आज and review the performance very briefly.

In the last Annual Report, I mentioned we came out of a difficult period but the landing into this fiscal year has not been smooth either. While the financials are significantly better than the Covid quarters, we have work to do on many fronts. Particularly on revenues, material costs, capex management and fulfillment. Let’s take a quick look:

  • For the third year since Covid struck, we dropped revenues. From H 4.55 billion in FY’20 to H 4.04 billion in FY’21 to H 3.86 billion in FY’22. This seems stark after CAGR of 20% for the previous 5 years!
  • Material costs for the year came in at 64% of revenues, 3.6% higher than last year. This was driven by a combination of higher commodity prices including oils, packaging, business mix, inventory provisions and lowered Govt. incentives.
  • The capacity expansion we embarked on 2 years ago continued albeit at a slower pace and during the year we added ₹ 361 million to our gross block. While this has impacted the bottom line, it has ensured our readiness to embrace growth. With this capex we have cumulatively spent ~₹ 960 million of the ~₹ 1500 we had planned to spend though next year
  • Consequently, the Profit after tax at ₹ 103 million is only 2.7% of revenues down from 9.7% last year.

Now, dear shareholders, let me present the flip side and you will quickly see why I am feeling energized despite the financial outcome this year.

  • We are already witnessing our Consumer Business come roaring back. The 17% revenue drop in exports this year hides the amazing turnaround that has occurred in the US consumer market for Tasty Bite. We saw the first quarter up 76% as our largest customer and parent company PBI experiences an all-time revenue record in 2021 followed by a strong 2022. This is our lead indicator.
  • We have turned the corner in the Food Service Business (TFS) with momentum at pre-Covid levels. The ~43% growth we saw this year can sustain as our QSR customers see the spike in their business and our regional expansion continues apace.
  • Perhaps the most important tailwind for the business beyond these market indicators is the quality of our senior management and an amazingly energized workforce. The 8-member Management Committee (M-Com) today is an experienced leadership team with a cumulative experience of nearly a hundred years in the company!
  • The search for the Managing Director is on and I am persuaded that a mission-driven organization like Tasty Bite should attract a high-quality candidate who should be appointed over the next few weeks.

Let me strike a note of caution though. Covid triggered global supply chain disruptions, energy insecurity and inflation pressures of the Russo Ukraine war are still dark clouds, but we must believe they will soon represent the end of a difficult period.

Leadership changes:

Fiona Dawson recently awarded the CBE retired as the Global Head of Mars Foods. She remains a friend of Tasty Bite and our cheerleader. She was replaced by Shaid Shah a 15-year Mars veteran and a reputed corporate leader who has worked globallyacross the various businesses of Mars, in Foods, Confectionery and Pet Nutrition. He has set ambitious goals for the Food business globally and is deeply committed both to Tasty Bite and to the potential the Indian market offers.

Dawn Allen who was on the Tasty Bite Board since the acquisition in 2017 left Mars a few months ago to pursue a new career. She was very dedicated and brought high standards of governance to our Board. She stepped down from the TBEL Board recently and subject to the shareholders’ approval will be replaced by Emmanuelle Orth. Emma, as she is known to her friends, comes to our Board as a talented CFO in the Mars system. You will get to meet her at the Annual General Meeting in September.

Back to the Future:

It has been my practice over the years to periodically speak of social, economic and technology megatrends, how they may affect our business, how we may ride them and indeed even drive them. The title of this year’s Annual Report is Tasty Bite 4.0. This to me represents a new beginning.

It has become obvious to all of us these last few years, that societies are not just divided but polarized. Borders, religions, cultures, rights, gender, climate, privacy are all under scrutiny by a new lens which itself is in dispute.

Equally, there is a unified understanding that our futures are deeply intertwined. We have more in common than we often think.

Here are 5 megatrends that will shape all of us despite our differences, provide business opportunities and separate winners from also-rans.

  • Food as Wellness: This is not a fad, nor is it a lasting fashion. We are what we eat. Unwittingly, the food & ag industry has become the supplier of customers to the healthcare industry. From pesticides in our vegetables and grains, antibiotics, and hormones in our meats, to chemicals & additives used in food processing, our body’s immune system is constantly under attack. Diabetes, cardiovascular disease, obesity, and cancer are at record levels today in our society. They can all be directly linked to the foods we eat. And consumers are increasingly becoming aware of this. The sooner food companies realize it, the better it is for all.
  • It is not enough for food companies to claim legitimacy by following GRAS (generally recognized as safe) standards. Nor is it OK to accept the Codex alimentaria as food pharmacopeia. We need to raise the bar. Companies and food scientists need to step up and keep both our food system and our microbiome clean. Herein lies the opportunity and the responsibility. Let’s pay the farmer, not the pharmacy.

    Tasty Bite is well positioned.

  • Precision farms: There is a quiet revolution underway in Agriculture. It goes by many names - controlled environment agriculture (CEA), vertical farming, hydroponics, aquaponics, urban farms etc. Almost US$20 billion has been invested in the industry in the last 5 years. Spreading quickly across the US, Canada, France, Holland, Israel, Middle East, Singapore, China & Australia, these indoor farms are harbingers of an exponential age with yields up to 100X open field agriculture. Effectively, our yield of the 25-acre organic Tasty Bite farm can now be produced in less than 10,000 sq ft!
    While many challenges remain in making these farms economically viable, the immense flow of capital, emergence of new entrepreneurs and Silicon Valley intervention through robotics, IOT, digitization & software are all converging. The implications are profound. Precision farms will produce very high quality, phytonutrient rich produce for food, beauty care and the pharma industry. Companies that embrace this technology either as producers or customers will differentiate powerfully and accelerate consumer wellness. The industry appears to be moving slowly and imperceptibly but prepare for a tsunami.
    The specific impact of this on Tasty Bite is not yet clear but I believe it is one that needs to be closely watched and better understood.
  • Meat alternatives: The plantbased meat industry is another recent phenomenon. It was born out of 4 specific drivers: Health concerns of excessive meat consumption, animal agriculture’s massive carbon footprint, animal cruelty, and the wellness associated with a plant-based diet. Even a minor substitution of the US$2 trillion global meat industry presents a gigantic opportunity with a clear triple bottom line positively impacting people, planet, and profits.
  • The current hype however is not on plant-based foods but on “plant protein”. So, soybean, yellow peas and mushrooms are ascending, but the reality is not protein but the increasing realization of the importance of a plant-based diet.

    This has always been a sweet spot for Tasty Bite and hence we are well positioned.

  • Digital Supply Chains: The Agri food supply chain is being digitized rapidly and not just in the developed world. Smart phones in the hands of farmers in Africa, Latin America and South Asia and digital tools & block chain in the hands of companies has helped build the bridge between the farmer and the consumer globally. Companies that facilitate this integration and disintermediation will have a significant competitive advantage through improved food safety, traceability, and trust.
  • The metaverse is another work in progress. Think of it as a combination of the real and virtual worlds, of augmented and virtual realities or an internet landscape where millions of consumers can interact not just with each other but with objects. Food companies for instance can create unique experiences for their consumers from health tips to recipe ideas, offer a virtual tour of the farms they buy the produce from, the factories they manufacture the food in and even meet the employees who work there.

    Tasty Bite has been increasingly adopting these technologies and today can trace produce to at least the district and in some cases to the taluka level. Soon this will extend to the village and ultimately the farm. It is not inconceivable that we will one day know which specific farmer harvested the greens that go into our Kashmir Spinach for instance.

  • No Plan B, No Planet B: Climate change is no longer a college debate where we can take sides. Water scarcity and hunger are now real. Depending on where you are living you can take your pick of wildfires, flooding, species extinction, pandemics, or uncontrolled migrations. The big existential assumption is that we will behave responsibly as people, companies, and nations to protect the only planet we have for our children and their children to come.

You have heard me say this before, but I believe it is worth repeating. We don’t follow sustainable practices merely because they make business sense. It is our responsibility to make business sense out of sustainable practices.

At Tasty Bite we remain committed to our organic farm, a renewable energy program, water recycling, biogas through vegetable waste, rainwater harvesting and steam generation through sugarcane briquettes. Over the years, each of these projects has brought our teams immense joy, our consumers closer and not surprisingly our margins higher.

It is for all these reasons that at the end of 25 years, I feel a sense of a new beginning. Hence this Annual Report is titled Tasty Bite 4.0

Ashok Vasudevan

Chairman, Tasty Bite Eatables Ltd.