Balaji Wafers, a regional snacking company, has achieved a significant milestone by crossing the annual sales mark of Rs 5,000 crore in the fiscal year ending March 2023. The Rajkot-based company witnessed a 24% growth in sales, with revenues reaching Rs 5,010 crore compared to Rs 4,034 crore in the previous year. Interestingly, multinationals such as PepsiCo have in the past wanted to buy out Balaji Wafers.
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In comparison to other major players in the industry, Balaji’s sales figures are impressive. Jubilant Foodworks, the company behind Domino’s Pizza, Dunkin Donuts, and Popeyes restaurants, recorded sales of Rs 5,158 crore in the same fiscal year. Nestle’s Maggi noodles, sauces, seasonings, pasta, and cereals division reported annual sales of Rs 5,300 crore. It’s worth noting that Balaji with its bhujia, potato chips and namkeens primarily operates in less than a dozen states, particularly in Gujarat, Maharashtra, and Rajasthan, where it holds an estimated 65% share of the organized market.
Balaji managed to achieve a net profit of Rs 409 crore in FY23, a significant increase from Rs 7.2 crore in the previous year when it faced challenges such as rising costs of edible oil, logistics, and packaging. The company’s margins were severely impacted by the doubling of key raw material and logistics costs during the pandemic. “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. In 1982, he co founded Balaji Wafers with his brothers Bhikubhai and Kanubhai.
However, with the decrease in edible oil prices and other input costs, the company’s profitability has returned to normal levels. Balaji also experienced a reduction in staff costs due to the loss of senior employees to competitors in FY22.
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Having started as a snack supplier at a movie theatre over four decades ago, Balaji has witnessed remarkable growth, more than doubling its sales since the pandemic. It currently holds the third-largest market share of 12% in India’s Rs 43,800-crore salty snacks market, trailing behind Haldiram’s with 21% and PepsiCo with 15%. Balaji’s single brand is now larger than any of PepsiCo’s brands in the same market segment, including Lay’s and Kurkure.
“We don’t compete on pricing as our products are significantly cheaper than rivals,” Virani told ET. The company’s success can be attributed to its unique approach of offering products that are 20-30% cheaper than national brands, ensuring steady volumes through economies of scale. For instance, Balaji’s ’10 pack of salted potato chips contains 35 grams, whereas PepsiCo Lay’s provides 23 grams for the identical price.
Balaji controls most of its operations, with a significant portion of its manufacturing done in-house across its four factories. Furthermore, the company’s minimal advertising and promotion expenses have resulted in lower overheads compared to its competitors. While most FMCG companies allocate 8-12% of their annual sales for advertising and promotion, Balaji spent less than 2% on A&P in the last fiscal year.
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Rivals in the industry acknowledge Balaji’s key strength, which lies in its affordable pricing strategy. Krishnarao Buddha, senior category head of marketing at Parle Products, emphasized that low pricing has been Balaji’s biggest unique selling proposition (USP).
