The Rajkot-based company posted sales of Rs 5,010 crore for FY23, a 24% jump compared to Rs 4,034 crore a year earlier.
In comparison, Jubilant Foodworks that operates Domino’s pizza, Dunkin Donuts and Popeyes restaurants clocked Rs 5,158 crore in sales in FY23 while Nestle’s prepared dishes and cooking aids division of Maggi noodles, sauces, seasonings, pasta and cereals had annual sales of Rs 5,300 crore. This is despite Balaji selling its potato chips, bhujia and namkeens in less than a dozen states, mainly in the western states of Gujarat, Maharashtra and Rajasthan where it is estimated to have a 65% share of the organised market.
The company’s net profit soared to Rs 409 crore in FY23 from Rs 7.2 crore in the previous year when an unprecedented surge in edible oil, logistics and packaging costs hit its margins.
“Our profits were always in the vicinity of 8-9% of our total sales but the two years of pandemic were an exception when we didn’t hike prices despite key raw materials and logistics costs doubling, wiping out our entire margins,” said Chandubhai Virani who cofounded Balaji with his two brothers Bhikubhai and Kanubhai in 1982.
“In FY23, profit is back to normal as edible prices have nearly halved while other input costs have come down too,” he said. “We also lost senior employees with high salaries to competition in FY22, which reduced our staff cost last year.”The company, which started as a supplier of snacks at a movie theatre four decades ago, has seen its sales more than double since the pandemic. Currently, it’s the third largest player in India’s Rs 43,800-crore salty snacks market with a 12% share after Haldiram’s with 21% and PepsiCo with 15% share. As a single brand, Balaji is now bigger than any of PepsiCo’s brands in this space including Lay’s and Kurkure.
“We don’t compete on pricing as our products are significantly cheaper than rivals,” Virani, 66, told ET in a Gujarati accent bereft of any management spit and polish. “We don’t even have a sales target and just chase demand for high quality and affordable priced products.”
A case in point: Balaji’s ’10 pack of salted potato chips has 35 grams compared to PepsiCo Lay’s that offers 23 grams for the same price.
The Balaji model, that has worked so far, is essentially based on offering products 20-30% cheaper than national brands and ensuring steady volumes through economies of scale. It also controls almost every bit of operations with a large chunk of manufacturing on its own through its four factories and hardly any advertising and promotion.
Most FMCG makers spend anywhere between 8-12% of their annual sales on A&P. For Balaji, the A&P cost was less than 2% last fiscal, resulting in lower overheads.
Rivals agree. “The biggest USP of Balaji has been low pricing and in snacking affordability is the biggest factor for consumers who seek value for money,” said Krishnarao Buddha, senior category head – marketing at Parle Products.
