Promoter & Non-Executive Chairman
CY 2023 has been a year marked by healthy operational and financial progress for Varun Beverages Limited (VBL). Despite the abnormally high unseasonal rains in the peak season, we are pleased to conclude CY 2023 on a strong note. The performance is a testament to the resilience and adaptability of the Company in navigating dynamic market conditions.
One of the key objectives this year was to build upon the strong demand we experienced in CY 2022. To this end, we embarked on a strategic expansion program, commissioning multiple greenfield and brownfield facilities across India. Along with this, we also expanded our distribution network and chilling infrastructure. These strategic investments have not only fortified our manufacturing footprint but also opened avenues into previously untapped markets, allowing us to extend our reach and enhance our market presence.
The year saw us achieving an impressive YoY volume growth of 13.9%, reflecting the strong and consistent demand for our products. Our proactive approach in expanding our product portfolio, particularly with the addition of the energy drink ‘Sting’, and our endeavors in Dairy, Hydration, and Juice segments, have played a role in assisting this growth. Financially, the year was equally successful, with a healthy increase in our top line by 21.8%. Our EBITDA and PAT also saw strong growth of 29.5% and 35.6% respectively, underscoring our financial strength and operational efficiency.
As we move into CY 2024, VBL continues to build on the strong operational foundation laid during the year. We successfully commissioned new production facilities at Bundi; Rajasthan and at Jabalpur; Madhya Pradesh, as well as expanded our capacity at six existing locations namely Pathankot, Kosi, Bharuch, Tirunelveli, Begusarai and Guwahati. The commissioning of multiple greenfield and brownfield beverage manufacturing lines in CY 2023 was a significant step in enhancing our operational capabilities. These expansions are vital for meeting increasing consumer demand and tapping into new market opportunities and have set the stage for our continued growth in the beverage industry.
Central to our expansion strategy for CY 2024 is the further development of manufacturing facilities, with a focus on adapting to evolving consumer preferences and market trends. We are particularly concentrating on increasing our production capacities in the juices and value-added dairy products segments. Moreover, an integral part of our growth strategy involves continuously strengthening our distribution network and chilling infrastructure. This is essential for enhancing our presence in existing and under-penetrated markets.
At VBL, we are deeply committed to integrating sustainability into every aspect of our operations. Our approach to sustainability is comprehensive, addressing environmental, social, and economic dimensions. We strive to minimize our environmental footprint through initiatives such as investing in PET recycling, enhancing energy efficiency, and improving water conservation in our manufacturing processes. These efforts are not only part of our endeavor to achieve a net positive environmental impact but are also aligned with PepsiCo’s global PEP+ objectives.
A highlight of this year’s sustainability initiatives is our participation in a groundbreaking project with PepsiCo India. In a significant move towards environmental stewardship, PepsiCo India has introduced 100% recycled plastic PET (excluding label and cap) bottles for certain carbonated beverages. As a key partner of PepsiCo, VBL takes immense pride in actively participating in this transformative initiative.
Furthermore, our commitment extends to social responsibility. We engage in meaningful community development projects, focusing on education, health, and well-being, aimed at uplifting local communities and contributing to their sustainable development. Ensuring the well-being of our employees and fostering an inclusive, safe work environment is also a crucial part of our sustainability ethos.
This year represents a landmark achievement in our international operations, VBL has entered into a binding agreement to acquire 100% stake in The Beverage Company (Proprietary) Limited (BevCo) in South Africa. Valued at approximately ZAR 3 Billion (~INR 13.20 billion), the acquisition is a significant step towards expanding our presence in the African market. BevCo holds franchise rights from PepsiCo Inc. in South Africa, Lesotho and Eswatini, along with distribution rights for Namibia and Botswana.
This acquisition, which aligns perfectly with our strategic goals, offers an excellent opportunity to significantly enhance our presence in the African market — a region known for high demand for soft drinks and favourable demographics. The integration of BevCo into VBL’s operations is expected to yield substantial synergistic benefits in the future.
This year, VBL has been distinguished with the prestigious title of “PepsiCo’s International Bottler of the Year 2022”. This esteemed recognition, which we are proud to receive for the second time, underscores our unwavering commitment to operational excellence, robust governance practices, and sustainability initiatives. The International Bottler of the Year award from PepsiCo is the highest annual honor bestowed upon a bottling partner, acknowledging VBL’s exceptional all-around market performance and our significant investments in enhancing operations and capabilities.
At VBL, managing our business efficiently for the benefit of all stakeholders is a cornerstone of our philosophy. A critical element in delivering value to our shareholders and securing their long-term confidence is through a consistent and transparent return of capital. In alignment with this approach, our Board of Directors established a formal dividend distribution policy following the Company’s listing in November 2016.
For CY 2023, adhering to the guidelines of this dividend policy, the Board of Directors recommended a total dividend of ₹ 2.50 per equity share with a face value of ₹ 5 each. This decision aligns with our commitment to consistent shareholder value creation and reflects our solid financial performance over the year.
Additionally, we decided to sub-divide/split the existing equity shares of VBL to broaden our shareholder base and increase the accessibility of our shares to a diverse range of investors. Each equity share, previously with a face value of ₹ 10 fully paid-up, were divided into two shares, each having a new face value of ₹ 5 fully paid-up.
As we reflect on this year’s achievements, we extend our sincere gratitude to our stakeholders for their support and trust. Your confidence in VBL has been a driving force behind our success. As we continue to navigate through dynamic market environments, we remain committed to delivering sustainable growth and value. Our focus on innovation, strategic expansion, and sustainability initiatives is firm, and we are dedicated to upholding our standards of excellence. We look forward to a future of continued success and shared prosperity.
We express our deepest appreciation to our shareholders, investors, bankers, and creditors for their support and belief in our vision. A special thanks to our dedicated employees, whose tireless efforts and commitment have been instrumental in our achievements. We are also immensely grateful to our Board of Directors for their guidance and strategic insights, helping steer the Company towards new opportunities and sustained growth. Your collective contributions have been invaluable in our journey, and we look forward to your continued partnership.
Warm regards,
Promoter & Non-Executive Chairman
