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key takeaways of our recent meeting with Mr. Sachin Gopal, CEO, Agro Tech Foods (Agro Tech).
· Margin improvement the key focus area
Agro Tech’s revenues declined at 14% CAGR, while PAT grew at 16% CAGR, in the past three years, a testimony to the management’s efforts at improving the company’s margin profile. As part of its long-term margin improvement strategy, the company also sold its Rath brand to Cargill. Currently, Agro Tech’s gross and PAT margins, at 23% and 3.8%, respectively, are far lower against its peers, as the company is highly dependent on the low-margin refined oil business. However, going forward, the company intends to expand its packaged food business, and launch new products with gross margins greater than 30%. Overall, the company intends to expand gross margin to 40% over the long term. Also, it is increasing product prices in its cooking oil segment more than raw material cost inflation. The company has zero debt on its balance sheet and INR 890 mn in cash.