EID Parry India Ltd’s strategic transition from a primary focus on commodity sugar manufacturing to a diversified portfolio that includes food, bioenergy, and nutrition is gaining strong momentum. Currently, non-sugar businesses account for one-third of the company’s topline.
Non-sugar revenues have risen from 18 per cent of the overall turnover in FY18 to 26 per cent in FY22 and to 33 per cent in FY24. The Company will continue to enhance the proportion of non-sugar revenues in its business, insulating it from commodity sugar realisations. This is expected to enhance the revenue and reduce debt.
“The increasing focus on non-sugar business has helped the Company to de-link from the tightly controlled and cyclical aspects of the sugar industry. The success that we are already seeing in terms of revenue from non-sugar businesses is evidence of our strong business model and capabilities, MM Venkatachalam, Chairman of EID Parry said in the company’s annual report for FY24.
“This shift puts us firmly on a sustainable multi-year growth path, transforming from a single vertical to multiple verticals, with a range of offerings that make the Company a part of their consumer’s everyday lives. Our foray into the food and nutrition segment is underpinned by transformative trends in India’s consumer landscape,” he added.
The ₹2,809 crore EID Parry sees an encouraging future for branded packaged food products. In this direction, the company entered the branded staples segment by launching rice, dal, and millets in the March 2024 quarter.
“We are currently developing several new products with straight grains and value-added categories such as ready-to-cook health mixes and millet-based idli/dosa batters, among others. In the foreseeable future, the company aims to leverage its retail distribution network, which was present at over 110,000 storefronts as of March this year,” said Muthu Murugappan, Chief Executive Officer of the company.
EID Parry has established a Centre of Excellence for new product development and has been hiring experts and professionals for the same.
Despite its strategic shift, EID Parry continues to optimize its sugar business by introducing new variants for institutional and retail markets. The company’s sugar operations provide a foundation for launching other FMCG products.
Currently, the Murugappa Group company sources all its sugar from its own manufacturing facilities. However, it may consider outsourcing sugar from other producers for onward processing into customized sweeteners. This shift could move the company towards a more asset-light model by licensing the manufacture of specific products to quality-driven third-party manufacturers, pointed out Suresh, Managing Director of the company.
The company is also looking to eliminate open-market sugar sales while expanding its range of branded and packaged sugar and food products. Traditionally, EID Parry has marketed sugar through wholesale traders or direct sales to institutional buyers.
The company is focusing on building strong, habit-forming relationships with retail consumers while expanding the distribution of its branded products. “The outcomes of these initiatives should start becoming visible in 12 quarters, initiating a cycle of business sustainability that translates into sizable, scalable, and profitable growth,” Suresh added.