Indian snack producer Prataap Snacks Ltd posted a Rs. 1,037.7 crore ($152.4m) income for the year ended March 31, 2018, enormous kudos for a company that started with a seed capital of Rs 15 lakh ($22,000) in 2009-10.
In the past eight years, the Indore-headquartered snack maker has transformed itself from a single-product company to one with multiple branded products in its portfolio – including extruded snacks, chips, namkeen and sweet snacks – challenging rivals such as PepsiCo (Frito-Lay), Haldirams and Parle.
“FY18 has been an exciting year for Prataap Snacks. We surpassed the milestone of 1,000 crore in revenues this year, an important step in our growth journey,” said Amit Kumat, MD and CEO of Prataap Snacks.
The advantages of being small and nimble
“While it is not easy to fight the strong distribution and brand equity of a multinational firm, a local player may have an advantage of making necessary changes in products and strategy sooner, with low overheads.
"We are not totally dependent on big and elaborate consumer research like the MNCs, because we believe it slows down product innovation. I make regular visits to markets get ideas and get those weighted through small researches if needed,” he added.
Kumat said the range of Yellow Diamond snacks has found favor with children, in particular the puff rings. The company is one of the highest advertising spenders on kids’ channels on Indian TV.
Analysts tracking the sector also noted the company is winning with its competitive pricing strategies, with 99% of its products priced within the Rs 5-10 ($0.07-0.15) bracket, including its newest offering, Yum Pie, a sweet snack.
“We had some issue [with the launch of Yum Pie] because of summer and chocolate was melting. That is behind us now and we are trying to develop a few more products in the sweet snack category,” said Kumat.
Creating value for shareholders
For its FY2018, Prataap Snacks posted a 106.2% rise in operating EBITDA to Rs 869.3m ($12.8m), while profit after tax (PAT) was higher by 114.7% to Rs 441.8m ($6.5m).
FY2018 highlights
Total income of Rs. 10,377.3m, higher by 15.5% yoy
Operating EBITDA of Rs. 869.3m, an increase of 106.2% yoy
EBITDA margins expanded from 4.7% to 8.4%
EPS (diluted) was Rs.19.9 per share in FY18 compared to Rs. 9.9 per share in FY17, on an enlarged capital base due to the IPO
EPS was Rs 19.9 ($0.29) per share in FY 2018 versus Rs 9.9 ($0.145) per share in FY 2017, on an enlarged capital base due to the initial public offer (IPO).
“The Board has recommended a maiden dividend of Rs 1 ($0.014) per share as we endeavor to create value for all our shareholders,” said Kumat, adding the company could expect a further growth as it delves deeper into the sweet snack category and expands its distribution into new geographies.
“We are looking at 18-20% growth for the next three to four years and that will mainly come from geographical expansion, new product introduction and something good in sweet snack category.
Prataap currently has a distribution network of more than 220 super stockists and over 3,500 distributors, and is present in around 1.7 million outlets. It is now looking at other markets in South Asia.
“We intend to exploit macroeconomic factors and the trends in the snacks market, which are similar to those of the Indian snacks market, in these proposed new geographies,” said Kumat.