Chairman’s Message

Dear Shareholders,

LAST YEAR, MY NOTE TO YOU WAS TITLED “GROWTH & INNOVATION IN A POST-COVID WORLD.” THE UNDERLYING ASSUMPTION WAS WE’D BE LOOKING AT THE PANDEMIC IN THE REARVIEW MIRROR, EVEN AS WE ACKNOWLEDGED SOME PERMANENT BEHAVIORAL CHANGES FOR A NEW TOMORROW.

Instead, we have seen a global spike from 7 million cases I mentioned in the Annual Report last year to an alarming 173 million cases a year later. Tragically, almost 4 million people have died and even this is acknowledged to be vastly under-reported. The cases in India skyrocketed recently and today we stand 2nd only to the US in Covid cases and fatalities.

This has been a very difficult year for the families of our employees, contractors, suppliers and farmers. I know you too dear shareholders, are dealing with more than you planned for. I wish you a safe return to normalcy from this long period of turbulence.

As a company, we have been agile and responsible in dealing with this situation, the best we can. We have, and will be contemplating further measures to deal with this uncertainty but before I get into that let’s take stock of the difficult year gone by:

• After a 5-year annual growth rate (CAGR) of over 20%, your company saw net revenues decline for the first time ever by 11% to INR 4.04 billion from INR 4.55 billion.
• Our Consumer business though, represented by exports managed to grow 9% for the year from INR 2.76 billion to INR 3.01 billion. The US continued to reel under Covid most of the year but Tasty Bite sales were up in all channels (grocery, club & private label). Not surprisingly, online sales continued to grow the fastest yet another year.
• Organic Madras Lentils and the range of Organic Grains was followed by the introduction of several new SKUs and today, with 60+ organic SKUs, Tasty Bite has become a largely organic brand in North America.
• The TFS (Tasty Bite Food Service) business which is essentially domestic dropped 44% from INR 1,502 million to INR 842 million as our QSR customers were hit hard.
• ‘TastyBite Xclusive’ launched last year targeting HoReCa has been aborted as restaurants and catering establishments struggled to keep their doors open across our test markets. We are in the process of redesigning this initiative.
• These setbacks did not stop us from continuing our capacity expansion plan through the year despite the physical challenges posed by Covid, adding INR 371 million to our asset base to prepare for the growth ahead.
• It’s a tribute to our resilience and discipline that profits after tax (INR 393 million) managed to remain at 96% of last year (INR 409 million) enhancing profitability to 9.7% of revenues, up from 9%. This was driven by across-the-board improvements in operating efficiencies, cost discipline and incredible dedication of team Tasty Bite.

Is Covid here to stay?

Every day, we wake up to news of increased infections, new variants, vaccine shortages, poor infrastructure and inadequate preparedness. To a lesser or greater extent this seems to be the situation everywhere in the world. There is a widening acknowledgement that this virus is now endemic - here to stay permanently as our unwelcome guest. How we deal with it as individuals, as a community and as a business will set us apart and determine our future. So far there are no global or corporate role models - only temporary heroes, shifting fortunes, and the lucky or unlucky ones. The only common denominator the whole world seems to be dealing with is the terrible duo: unpredictability & uncertainty. For a business that is unprepared, this can translate to fuzzy forecasting, poor planning, tentative execution and a faulty review. Fortunately, I believe your company is acutely aware of its environment and dealing with crisis of today without losing its focus on the future.

Here is how we are looking at the changed environment.

Necessarily Natural, Preferably Organic:

Consumers globally have a heightened awareness of food and its role in wellness. This has been a megatrend Tasty Bite has championed for more than 25 years. Our commitment to keeping products all natural without the need for chemicals, artificial colors, flavors or preservatives is well documented. This is a very high bar for most food companies. For us it’s a way of life.

This year however, we raised this bar further. You will recall my earlier message that on the back of our organic rice and grains line, we launched our bestseller SKU Madras Lentils across all channels. The results were so encouraging that we currently have nearly 60 organic SKUs and more than 20 variants across Canada and United States.

Growth of the Tasty Bite organic range has been nothing short of spectacular. Just 3 years ago, only 10% of our branded volume or revenue was organic. Last year it was about half. This year 70% of the Tasty Bite branded business is organic.

This is truly mission aligned as we continue to build a socially responsible business that will continue to provide consumer delight.

Food Service industry pivots globally - expect new winners and losers:

Lockdowns came in different flavors through the year, creating new problems, unfamiliar to the Food Service industry. Partial store openings, restricted hours, new safety protocols, ageing perishable commodities, cost escalations and an uncertain consumer turnout, in the dine in, takeout and delivery segments are just a sample what the industry is dealing with. No one was spared-fast food chains, restaurants, catering establishments, hotels. The effect on our customers impacted us quickly.

The ramifications to the nearly USD 4 trillion global industry are widespread and long lasting. But it has also opened up opportunities for innovators. Our customers are looking at new technology enabled business models. Everything from precision farming, emerging cellbased foods, plant-based meats, new processing technologies, customized nutrition, cloud kitchens, driverless and drone deliveries are each examples of multi-billion industries in the making.

We are witnessing green shoots in our local and regional markets of these emerging technologies and we will be exploring new business options with our customers. If we are to stay mission aligned with our TFS purpose of being the natural partner of choice to leaders in the Food service industry, then I am persuaded we can do nothing less.

Tasty Bite Foundation repurposed for Covid Relief:

I am extremely grateful to our parent company Mars and to our Board of Directors for having repurposed the Tasty Bite Foundation during the year, from “integrated rural development” to Covid relief. The work and the speed at which programs were implemented these last few months by the Foundation and the employees of TBEL in supporting our local communities will forever inspire.

It is true this was one of the more difficult years in our history as the largest Covid cases happen to be the US and India, our 2 most important markets. But the measures we have in place now to tide over the short-term impediments and the strategic plans we have across product segments, geographies and channels allows us to face the future not with anxiety but with renewed energy.

It is difficult and probably unwise to describe a company in one word. But there is one that best portrays Tasty Bite and one that has been repeatedly demonstrated over the years. Resilience.