Hexagon Nutrition and its operation:
Hexagon Nutrition Pvt Ltd was formed in 1993, headquartered in Mumbai, India named “Hexagon Chemoils Private Limited”. Further, the company changed its name to ‘Hexagon Nutrition Private Limited’ on December 30, 2005. Hexagon Nutrition (HN) is a global research-oriented organization engaged in formulating, manufacturing & marketing nutraceutical products. The company is coming up with an Initial Public Offering (IPO), see Hexagon Nutrition IPO date and pricing here.
The company claims to be a pure player in the nutrition field that offers products across clinical products, micronutrient premixes, and therapeutic products. Hexagon Nutrition Limited is a fully integrated company engaged across the value chain of nutrition products. Starting from product development to research & development, manufacturing, and marketing & sales, the company presents all the stages. The company sells its products across India under the brand names PENTASURE, OBESIGO, and PEDIAGOLD. It also exports its products to over 70 countries across the world.
Hexagon Nutrition Pvt Ltd.’s distribution network has spread to around 25 regional distributors in Latin America, South East Asia, Africa, and the Middle East. The company has 3 international offices in South Africa, Uzbekistan, and Hong Kong. Hexagon Nutrition has three manufacturing facilities strategically located in Nasik (Maharashtra), Chennai (Tamil Nadu), and Thoothukudi (Tamil Nadu) which are near ports and SEZ. The company also has ISO 9001:2015 Certification and Halal Certification.
Hexagon Nutrition Products
The company is the leading name in the health, wellness, and clinical nutrition space. Hexagon Nutrition offers its products in three segments as below.
1. Branded nutrition products/ clinical nutrition products (B2C segment):
This segment covers daily nutritional requirements across age groups from pediatric to geriatric nutrition. In addition, the products in this category also address nutritional deficiency for chronic as well as nonchronic ailments. PENTASURE brand caters to adult wellness and clinical nutrition, OBESIGO brand caters to weight management and PEDIAGOLD brand caters to pediatric nutrition management.
2. Micronutrient Premix formulations (B2B2C segment):
The claims to be the largest premix player in India and one of the top ten players globally that offer customized micronutrient formulation in the form of vitamin and mineral premixes. The products in this category include malted health beverages, biscuits, dairy products, spreads, flour, and edible oils. This is the B2B segment of the company. The company prepares these products for companies like Amul, Dabur, MARICO, and global customers like The Global Alliance for Improved Nutrition (“GAIN”), Nutriset SAS, etc.
3. Therapeutics Nutrition or Ready to use foods (“RUFs”) and Micro Nutrient Powder (“MNPs”) (ESG segment):
Again, the company offers therapeutic nutrition products in two forms. First, RUTF/ RUSF (Ready to use therapeutics or supplementary foods) and second is Home Fortifications or Multiple Micronutrient Powders (MNPs). These are the products that support children with malnutrition. The products are 1 g sachets which are easy to administer along with staples. MNPs can easily be sprinkled on meals that are prepared at home or in school.
Hexagon Nutrition Founder and Leadership team:
The company is led by Chairman Arun Purushottam Kelkar.
Arun Purushottam Kelkar is the Chairman and Executive Director of the Company. He holds a bachelor’s degree in Engineering from Nagpur University. Mr. Arun Kelkar has also completed a Diploma in Operations Management from the University of Mumbai. He has over 4 decades of entrepreneurial experience. Before starting this venture, he worked with companies like Siemens India Limited, Castrol India Limited, Glaxo Laboratories, etc.
Subhash Purushottam Kelkar is an Executive Director of the Company. He holds a bachelor’s degree in Pharmacy from the University of Mumbai. Mr. Subhash Kelkar has completed a diploma in Industrial Engineering from the Bombay Productivity Council. He has over 3 decades of experience in running the business.
Vikram Arun Kelkar is the Managing Director of our Company. He holds a bachelor’s degree in Management Studies from the University of Mumbai. Mr. Vikram Kelkar also holds a master’s degree in International Business from the University of Auckland.
Hexagon Nutrition Financial snapshot and Valuation:
Hexagon Nutrition reported a total income of INR 21.54 billion in FY 2021 as compared to INR 21.08 billion for FY 2020 recording a growth of 2.19%. Total expenses slightly declined during the period from INR 18.64 billion in FY 2020 to INR 18.61 billion in FY 2021. The company registered a growth of 23% in profit after tax during the same period. Hexagon Nutrition has been in profit over the last three years reported and the profit after tax has been going up. This reflects the strength of its operational capacity.
The major expenditure of the company is the Cost of Materials Consumed. However, this expense has declined during these three years reported. The cost of materials consumed in FY 2019 was INR 12.72 billion while it declined to INR 11.03 billion in FY 2021. However, the profit after tax increased during the same period.
| All amounts in INR Million (Year ended March 31) | 2019 | 2020 | 2021 |
|---|---|---|---|
| Total Income | 2359.02 | 2108.26 | 2154.35 |
| Total Expenses | 2161.53 | 1864.6 | 1861.92 |
| Profit after Tax | 148.25 | 185.67 | 228.61 |
| Earnings Per Share-Diluted | 1.21 | 1.51 | 1.86 |
| Net Cash from Operating Activities | 362.9 | 238.58 | 286.32 |
| Debt-Equity Ratio | 0.30 | 0.29 | 0.15 |
| Return on Equity Ratio | 64% | 80% | 98% |
| Return on Capital employed | 14.7% | 14.5% | 16.1% |
| Return on investment | 9.93% | 10.8% | 11.9% |
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Nutrition and Wellbeing Industry Overview:
The nutrition and wellbeing industry looks promising in India and across the globe. The Government of India has also increased its expenditure on public health issues following the pandemic. The government has doubled its budgetary allocation for nutrition during the pandemic from INR 1880 crores to INR 3700 crores from FY 2020 to FY 2021. Post pandemic also, governments across the globe will keep the focus on the nutrition and health care of their citizens. That will drive the growth in this industry. Hexagon will benefit from it.
The Indian economy is expected to grow at the rate of over 8% by 2025. The demand for functional nutrition is expected to witness significant growth driven by younger professionals with intense lifestyles and increasing disposable income. Indians are ready to spend more on discretionary items such as nutrition and wellness product.
The market size of India’s health and wellness nutrition market was US$ 10.5 billion in the year 2020. The market is estimated to grow at a CAGR of 11.9% till the year 2025. Covid-19 has exacerbated nutritional deficiencies in low- and middle-income countries. People are more concerned about nutritional factors or consuming nutritional products.
The Indian food fortification premix market was valued at US$ 80.0 million in the year 2020 and is expected to reach US$ 149.6 million in the year 2026. The global premix industry grew from US$ 4.4 billion in the year 2018 to around US$ 5 billion in the year 2020. This market is expected to grow at a CAGR of 4.4% from the year 2021 till the year 2026.
Company Strategies and outlook:
The company engages in various marketing initiatives to build brand awareness. In addition to leveraging and engaging distribution networks for marketing initiatives, the company also undertakes direct promotional initiatives like advertising its products through digital marketing. Hexagon Nutrition is planning to expand its operation in Nasik (Maharashtra). The company is planning to come up with an Initial public offering to raise funds to meet its expansion plan.
Hexagon Nutrition is a pioneer in the micronutrient premix formulations business in South Asia. The company also claims to be the market leader in customized premix formulations in India. It is an integrated company across the value chain. The company is a leading brand in nutrition & wellness and has a long relationship with its customers like Dabur, Amul, etc. That shows the strength of the company’s operation. With the government’s focus on Nutrition for all and increasing awareness among the consumers, the company has a conducive environment for future growth. Investing in this company through IPO would be good a good decision for long-term investment. However, it is yet to see the valuation of the company.