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Foods and Inns- Beating Competitors To A Pulp 🥭

Updated: Sep 24, 2023

Mango season recently got over, and to the dismay of most Indians, that means waiting for a whole year to indulge in the king of all fruits. Yet, all year round, to pacify the incessant need, we can enjoy the likes of Maaza, with a hoard of Bollywood stars sensually drinking it.

But have you wondered how we’re able to get mango pulp that delivers the same level of freshness, even in off-season months?

Here is a company that you may not have heard of but is among the largest producers of mango pulp in the country - Foods and Inns! With its star-studded clientele featuring Nestle, Paper Boat, Unilever, PepsiCo, and Coca-Cola, it contributes towards the classic Indian dream of consuming mango in some form, year-round.

In a country that stands as a global giant in mango cultivation and pulp production, with a global market share of about 50%, this industry has the tri-coloured flag all over it and this company is a flag-bearer!

🥭 From the 2 crore tonnes of mangoes cultivated in a year in India, only a mere 1% (about 2 lakh tonnes) of it is processed to make puree/pulp that is exported

Mango-nificent Monopoly

Bang in the middle of this booming industry of agri-food and processed-food exports, having grown at 5Y CAGRs of 9-12% each, Foods and Inns has been that unsung hero, with its revenues from the mango segment having grown at a 24% 5Y CAGR during the same period!

This is owing to yet another industry that uses these pulps - the beverage industry, which in recent years, has made a pivot towards more fruitier and healthier alternatives worldwide - and Foods and Inns has managed to capitalise on it well enough!

So much so, that it contributes towards 50% of Coca-Cola’s (Maaza) and about 20% of Pepsi’s (Slice) supply of mango pulp in India. In fact, to sweeten the pot even more, Coca-Cola intends to invest about US$ 1 billion into expanding its Maaza capacity, making this a direct benefit for Foods and Inns!

While this story is great and the company has become an unmatched monopoly in mango pulp processing in the country (with 82% of revenues coming from this segment), there seems to be potential left on the table for the company to become a full-fledged food processing giant - with just a tad bit of help from something known as the PLI scheme.

Beyond Mangoes

Now, as you might be aware, the mango season in India lasts for about a brief 4-month period, during which the company extracts its processing capacity to make as much mango pulp as it possibly can - but what about the rest of the year?

To make use of its full potential, reduce dependency on its mango segment and become a force to be reckoned with in other product lines, the company is foraying into a varied bunch of verticals!


Foods and Inns' Play

Growth Drivers

Tomato Pulp

Revenues from this segment have gone up by more than 2x in a year (from Rs. 23 crore in FY22 to Rs. 51 crore in FY23), making up more than 5% of revenues now

​With changing food habits, urbanisation and recent volatility seen in tomato prices that made people think twice, the processed tomato pulp industry seems to be picking up

Coupled with European dissension in tomato cultivation due to exorbitant costs, the world may just have to turn to China+1 to fulfil its puree needs, with Foods and Inns ready to chip in

Spray Dried Powder

​The company doubled its spray-dried powder capacity from 500 MT to 1,100 MT in FY23, which will be running at full capacity by the end of FY24

​This is basically the powdered form of a liquid or semi-solid substance, making it easy to store for longer and very soluble in water

With its applications to dry fruits, vegetables, dairy, and colours, the ready-to-eat snack market seems to directly benefit from it, whether it is chips or juice powders


​During the pulping process, nearly 50% of mangoes end up as waste. However, the company has embarked on an initiative to produce pectin (a soluble and versatile fibre used in jellies, jams, marmalades, cough syrups, and even beauty items) from mango peels and waste, making it the first company in India to do so!

With a market valued at Rs. 300 crore, it is a great import substitution opportunity (since 95% of pectin in India is imported). The best part? The largest consumers of pectin in the country are the long-standing business partners of Foods and Inns - Coca-Cola, Pepsi and Nestle - you do the math!

In-House Brands

Additionally, the company has embarked on a play that potentially multiplies its addressable market. Rather than just being a B2B player, it is also launching its own brands - for products which it can easily make using stuff it already makes.

  • Madhu: Under the Madhu brand, the company offers its renowned mango pulp directly to consumers. This segment comprises two varieties of pulp – Alphonso and Kesar, delivering the company's signature flavours to individual customers

  • Kusum: In FY18-FY19, Foods and Inns made a strategic acquisition by taking over Kusum Spices, gaining entry into India's expansive and burgeoning spice and masala market under the brand Kusum Masala. With a strong focus on establishing a robust distribution network, this brand provides essential spices such as red chilli, turmeric, coriander, and cumin powder, along with offerings like garam masala, jeera powder, and a diverse range of blended, value-added spices

  • Green Top: The company has expanded its horizons into the frozen foods segment through its Green Top brand. This brand offers a wide array of products, including snacks like samosas and spring rolls, frozen parathas, and frozen vegetables, as well as ready-to-cook foods like dal makhani, providing consumers with convenient and delectable options.

While these are segments where the company is actively employing resources and effort, there are various other initiatives under R&D like sustainable packaging and waste management innovation that are part and parcel of high-waste industries like food processing.

Coupled with a note-worthy diversification already being visible in the revenue mix, with mango pulp now making 82% of revenues compared to 92% in 2019, and the space being consumed incrementally by the reasons listed above, it is safe to assume that this trend can continue to the extend of a 60-40 split between the mango segment and the new diversification plays by FY28!

Thank You, Government

I think we’ve all heard of the Production-Linked Incentive (PLI) scheme in passing, a part of which is aimed towards bolstering the food processing industry within the country, and Foods and Inns is a direct beneficiary!

The scheme offers incentives to companies which meet a certain set of criteria.

The PLI scheme encompasses three distinct categories:


Qualifying Criteria


Sales Incentives

Ready to Eat/Consume (RTE/RTC) foods, processed fruits and vegetables, marine foods, and mozzarella cheese

Minimum FY20 sales of Rs. 500 crore for RTE/RTC and Rs. 250 crore for processed fruits and vegetables

Additionally, companies must make a minimum investment of Rs. 100 crore for RTE/RTC and Rs. 50 crore for processed fruits and vegetables

Attain a 10% sales CAGR from FY22 to FY27

The company stands to receive 10% of incremental sales as incentives

Incentives for International Marketing and Advertising

Indian brands selling products entirely produced within India

Branding and marketing activities can be undertaken directly by the applicant or through its subsidiary or another authorized agency

The company stands to receive a reimbursement of 50% of the expenses incurred for branding and marketing abroad over the period spanning FY22 to FY26

In the preceding year, the company submitted its inaugural claim under the PLI scheme for FY22 and secured a claim amounting to Rs. 9.71 crores. Based on projections, the company is anticipated to accrue claims totalling approximately Rs. 156 crores from this scheme over the next 6 years.

Let’s Talk Numbers

In the past five years, the company has demonstrated a notable 24% Revenue CAGR. However, it's worth highlighting that a substantial portion of this growth was achieved specifically in FY22 and FY23, where the company experienced an impressive 64% revenue growth on a 2-year CAGR basis.

This surge can be attributed to the robust expansion of the Indian beverage sector and the government's introduction of the PLI scheme for the Indian food processing industry.

Looking ahead, the company aims to sustain a similar growth rate, targeting a 25% CAGR over the next two years.

Shifting our focus to margins, the diversification play has had a positive effect:

  • In FY18, when the company's business was primarily centred around mango pulp (comprising about 95% of its operations), the EBITDA margins stood at 8%

  • Fast forward to FY23, with diversification reducing the revenue contribution from mango pulp, the company has witnessed an improvement in margins, with EBITDA margins at 10%

This trend suggests that the company's margins are likely to continue improving as diversification into higher-margin businesses unfolds. Projections indicate that EBITDA margins may rise to 12% by FY25.

For forecasted revenue CAGR of 25% and PAT CAGR of 40% over the next two years, the stock is trading at a two-year forward PE of 10x, which implies a PEG of just 0.25x. Theoretically, a PEG below 1x would be considered cheap, given a lower PE relative to the forecasted earnings growth.

Clearly, there seems to be a lot of “pulp” left in the stock and the company’s growth story, so might as well browse in this fruit aisle!


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