Taking LT Foods into new heights

LT Foods is a leading player in the foods business. Starting humbly as a rice miller and trader, under the leadership of the Arora family, it has built a formidable business. Over the years, it has built strong market-leading brands, particularly in basmati rice.  Its brands, Dawaat and Royal, with their brand extensions, like Dawaat biryani kit, have strong market-leading positions, in the domestic and export markets. 

The food business in India is a huge business, broken into different segments, covering agricultural produce of grains, fruits and vegetables, to high-end city restaurants. And historically, each of the segments has been run by small family businesses. In the rice business (which is many times smaller than the wheat business) traditionally, family enterprises also have been the norm, both in the domestic market and in export markets, with no one family dominating the business. Also, most of the businesses are regional businesses, with some families prominent in the North, while others are prominent in the East, or South.

After the green revolution in India, which lasted from the late 60s to the late 70s India shifted from being severely deficient in food production, living ‘ship to mouth’, to being a major producer of wheat and rice, even becoming the largest exporter of rice. It was thus after the green revolution that some of the traditional firms, like Kohinoor and KRBL, thinking ahead, started grading and packaging rice under their brands. LT Foods focussed on building their brands, starting with Dawaat. It was at this time too that the government saw the potential of rice exports, particularly the high value basmati rice.  Pakistan, also emerged as the other major basmati rice producer and exporter. Basmati, with its long grains and unique aroma, is the favoured rice in Iran, the Gulf States and Saudi Arabia.

At the same time, the UK and the US, with their large Indian immigrant populations, also became major markets for basmati rice. LT Foods and a few others seized these opportunities and established a strong foothold in these markets. 

LT Foods also saw the benefits of formalising and corporatising their business structure. This, in turn, helped them to bring professionals on board to help run and grow the business. Their listing on the stock exchange gave them access to vital capital, which allowed the business to grow bigger and faster. 

More recently, the largest companies in India, Reliance, Tatas and ITC, too, have ventured into the food business. ITC was the first to start, followed by Tatas and then Reliance. With the largest number of stores, both Reliance Retail and Tatas, with their Star Bazaar, have also started packaging both rice and wheat under their own brands too. And with the huge funds at their disposal, one might imagine that they could overtake other brands; yet the reality is that brands like Dawaat have their own loyal customers. So, both Reliance and Tata stores have to stock the leading brands like Dawaat or Kohinoor, because that’s what their customers want. Interestingly, in the export markets, the big business houses have virtually no presence. Family-run businesses are much nimbler and adept at trading in these markets. 

LT Foods is also not content with resting on its laurels. It has its own plans to grow into adjacent areas like ready to eat (RTE) and ready to cook (RTC).  It is also fortunate that the next generation of the Arora family has joined the business, ready to take it to new heights.