In conversation with Akshay Modi, Joint Managing Director of Modi Naturals

In this recent interview Akshay Modi, Joint Managing Director of Modi Naturals, discusses the company's financial performance in Q3FY23 and its plans for sustainable growth and profitability in the long term

Can you explain MNL's Q3FY23 financial performance and how it plans to sustain growth and profitability in the long term?

The Q3 and 9MFY23 performance was impacted by external macroeconomic factors that affected our operational efficiency, especially in our bulk oil business, where we faced a continued reduction in oil prices, and in the consumer division, due to the government-imposed stock limits on wholesalers and retailers since the start of the Ukraine conflict. These challenges have been resolved since November, and we expect to see a positive impact on our Q4 results. We are optimistic about the recovery of demand as market conditions improve for large retailers and wholesalers.

Our distillery project is progressing well and has started trials. It will contribute financially from Q1FY24 and significantly impact our top and bottom lines.

In the consumer business, we are committed to expanding our distribution and innovating our food portfolio to strengthen our brands. We recently launched a new product line of powdered ready-to-mix beverages under the brand “Jynx,” which will help us tap into a new category that appeals to Gen-Z and also balance out some of the seasonality in oil demand in the summer months.

How do you balance short-term goals with long-term sustainability and growth objectives for your company?

Our company is committed to long-term sustainability and growth while also delivering short-term results. That's why we created a sustainable consumer division that aims to balance profitability and growth. Our strategy is based on three pillars: product differentiation, brand building, and professionalization. By doing so, we feel we have gained sustainable competitive advantages that enable us to grow as a leading FMCG company.

You have recently entered into a new category of powdered ready-to-mix beverages under a new brand, “Jynx.” What sets "Jynx" apart from other powdered ready-to-mix beverage brands in the market, and what unique features or benefits does it offer?

Jynx is a brand of powdered beverages that can be easily mixed with water to create delicious drinks in a variety of flavours, such as mango, orange, mojito, and lemon iced tea. We launched Jynx to appeal to Gen-Z consumers who are looking for convenience, variety, and fun in their beverage choices. Jynx also helps us diversify our portfolio and offset seasonality during the summer months. By introducing innovative products like the Mojito drink mix, we are creating a unique value proposition in a market segment that has low competition and high potential.

What are the biggest challenges you are currently facing, and how do you plan to overcome them?

One of the biggest challenges we are currently facing is the rising cost of olive oil, which is a key ingredient in some of our products. Olive oil prices have soared due to several factors, such as droughts in Europe, rupee depreciation, and high import duty. These factors have reduced the supply and increased the price of olive oil in the global market.

To overcome this challenge, we have adopted a strategy of diversifying our product portfolio by having various multi-source oils in our portfolio. This way, we are hedged against inflation in one particular type of oil and can offer our customers a range of options to suit their preferences and budgets. We believe that this strategy will help us maintain our quality standards and competitive edge in the market.

Can you describe MNL's core business areas and the strategies employed to ensure growth and profitability in each sector? 

MNL has three core business areas: Consumer, Bulk Business, and Ethanol. To ensure growth and profitability in each sector, MNL employs specific strategies. 

For the Consumer division, the focus is on organic growth, distribution expansion, and new product development. MNL is the largest player in the "Goodness of olive oil" category and is expanding its distribution network. In the Bulk Business division, MNL maintains consistent cash flows and implements a value-addition model. As one of India's largest producers of rice bran oil, MNL has a distinct advantage due to its geographical location. Finally, MNL is diversifying into sustainable growth by constructing a state-of-the-art ethanol plant in Chhattisgarh, owned by Modi Biotech Private Limited. The first phase of 110 KLD is expected to be commissioned in Q1FY24.