Interview with Akshay Modi, Joint Managing Director, Modi Naturals

In this interview, Akshay Modi, Joint Managing Director of Modi Naturals (MNL), elaborates on the company's entry into the ethanol sector and its plans for growth and expansion. He also talks about MNL's recent financial performance and its focus on innovation in the organic foods market. 

What motivated MNL to enter the Ethanol division, and what are their growth prospects in this sector? Can you provide an update on MNL's recent developments in this division? 

MNL's entry into the Ethanol sector was driven by the opportunity to enter the clean energy market and expand into a geography that is logistically relevant to our existing oil business. As MNL has prior experience in sourcing grain and by-products, diversification into the ethanol sector was a natural fit. 

MNL is investing INR 160cr in the first phase of building one of the first greenfield grain-based ethanol plants in Chhattisgarh state. We plan to double our capacity after commissioning the first phase. 

MNL anticipates this business to be profitable, with ample scope for expansion. Moreover, we have initiated trial runs of our ethanol plant and expect to commence commercial production in Q1FY24. 

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

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

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

In the consumer business, we are committed to distribution expansion and food innovation to expand our product portfolio and strengthen our brands. We have 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 will also balance out some of the seasonality in oil demand in the summer months. 

Can you describe MNL's future plans for expansion, both domestically and internationally, and the factors that will drive growth in these areas? 

MNL aims to expand its FMCG portfolio by introducing new products, some of which were piloted in Q4-FY23 and will be scaled up this year. We have a strong pipeline of new products to launch in FY24. Our main strategy is to establish a strong domestic presence. We have leveraged all e-commerce platforms, such as Amazon, Blinkit, Big Basket, Flipkart, Zepto and Jio Mart, to reach our customers. We also have a wide distribution network that covers 3,000 modern retail outlets and around 450 distributors across India, with direct access to about 50,000 retail stores. We are constantly enhancing our distribution network to increase our household penetration in the healthy snacking foods category. 

What's your earnings outlook for the next few quarters? Any new product launches? 

Our ethanol plant commissioning this quarter is expected to significantly boost our revenue and profitability. We also plan to announce capacity expansion after commissioning. In the consumer division, we have a strong pipeline of new launches scheduled for the next few quarters, including an extended range of ready-to-cook pasta, new shapes of macaroni and spaghetti, and flavoured roasted peanuts. We have also segmented our peanut butter division to target children and launched a chocolate-flavoured peanut butter under the Oleev Junior brand. We recently added more products to the CSD, and we launched a new brand called Jynx, offering powdered ready-to-mix beverages with various flavours. These new products should provide significant momentum to change our growth trajectory going forward. 

How do you stay ahead of the competition and continue to innovate in the organic foods market? 

We invest in research and development to offer something new and better than existing products. Innovation is key to success in the fast-moving consumer goods sector, and we have launched unique products like mojito and multi-grain pasta, giving us a competitive edge.