Hexagon Nutrition has a wide range of products targeting disease-specific and lifestyle conditions, as well as for targeted nutritional requirements, all of which fall under the clinical nutrition vertical of the business. India’s health and wellness nutrition market was worth $10.5 billion in 2020, growing at a CAGR of 11.9 per cent till 2025. It is witnessing rapid category value growth in functional food and beverage ($4.5 billion; CAGR 7 per cent), paediatric and infant nutrition ($0.8 billion; CAGR 4.5 per cent), and medical nutrition ($5.2 billion; CAGR 17 per cent), between 2020 and 2025. 

Key players

Such double-digit growth rates in categories such as medical nutrition are representative of high growth economies such as India, and represent an opportunity for companies, such as Hexagon Nutrition. Key players of health and wellness nutrition include Abbott Nutrition, Nestlé Health Science, Hexagon Nutrition, Baxter, Nutricia, Mead Johnson, Sun Pharmaceuticals and Hindustan Unilever. Hexagon Nutrition supplies a wide range of nutritional products, including whey-based, and disease-specific nutritional products, differentiating it from many of its market peers in terms of breadth of positioning.

India has the largest child population globally – 125-150 million in the age group up to 4 years and, with increasing numbers of women in employment, rising awareness of child nutrition and rapid urbanisation, the paediatric nutrition category presents a significant growth opportunity. The category was provided a fillip in 2017 with the introduction of the Goods and Services Tax (GST). 

“We have some of the leading brands in the health, wellness and clinical nutrition space, addressing consumer needs encompassing wellness nutrition as well as disease specific nutrition and our consumer brands, such as Pentasure, Obesigo and Pediagold,” says Arun Kelkar. Revenue from their portfolio of branded nutrition products stood at Rs33.6 crore in the six months ended 30 September 2021, as compared to Rs43.3 crore in 2020-21. Hexagon’s consumer brands are offered through 17 different products covering both wellness and clinical nutrition (B2C) across a broader set of therapy areas (like diabetic, renal, bariatric, hepatic etc.) as compared to competitors.

“The company culture is inclusive of employee growth,” says Vandita Gadkari, product manager, who has been with the company for 11 years. The leadership has been dynamic and passionate, with a good mix of experienced leaders and the vibrancy and energy of the young leaders. The management has always created opportunities for employee growth and development.

The supplement market in India was valued at $4 billion in 2019, according to consumption data of the Indian nutraceutical market by Assocham, covering all the categories including vitamins/minerals, proteins, herbals, omega-3 and other nutritional ingredients. It is expected to reach $11-12 billion in 2026. Liquid encapsulation is one of the emerging technologies in this category as it provides superior ingredient stability. Such a format will present one of the key formulation opportunities for these products.

“While the regulatory approval of nutritional brands across the globe is a difficult and time taking process along with stringent quality standards to be met, we have been successfully able to get approvals for our brands in, say, 20 countries for our branded nutrition products,” says Vikram Arun Kelkar, the managing director, Hexagon.  Vikram, the elder son of Arun, did his bachelor’s degree in management studies from the University of Mumbai and masters in international business from the University of Auckland. He had also learnt Chinese language in New Zealand, which comes in handy in the business, as the company imports vitamins from the Country.

The stringent process for obtaining the regulatory approval is a significant barrier for newcomers. The barriers include the licences and approvals from various governmental authorities, development of an extensive distribution network through relationships with dealers as well as significant marketing costs and the establishment of a distinct brand to gain product acceptance.

“While our consumer brands are purchased directly through various channels, we also have a sales force of over 100 employees that reaches out to healthcare professionals to recommend our brands as well,” says Vikram. “This strategic approach in addressing the issues pertaining to market entry barriers has enabled us to foray into new geographies,” he adds.

Over the last 28 years, Hexagon has established long-standing relationships with marquee domestic consumer companies such as Coca-Cola India, Kaira Dist Co-op Milk Producer Union (Amul), Dabur India, Marico, Veeba Food Services, Zywie Ventures (Oziva), United Biscuits, Dodla Dairy, Dukes Consumer Care, LT Foods, Gemini Edibles & Fats India, Govind Milk & Milk Products and global customers like GAIN, Nutriset SAS and DPO International Sdn Bhd, says Vikram, who won the ‘young visionary’ award for his ‘outstanding innovation in the eradication of micro-nutrient deficiencies,’ at the PRCI Chanakya Awards 2011. 

Britannia Industries has been buying micro-nutrient premix from Hexagon for bakery application. “The product is good and we have not faced any quality issue so far,” informs Nagesh K, purchase officer, Britannia. Another Hexagon client, Schreiber Dynamix Dairies, which has been buying micro-nutrient premix for dairy (cheese) application, also has had good experience so far, acknowledges Padmanabha P. Shetty, purchase manager, Schreiber Dynamix.

“Hexagon’s focus on R&D helps the company to understand customer requirements, provide customised solutions and deliver high quality and cost-effective products consistently over the years, says Vikram. Typically, it takes six months to two years to develop a customised product, but Hexa’s long-standing relationships with its customers has allowed the company to be a part of the product development cycle of new products from inception, which reflects the confidence reposed in it by its customers, which acts as a strong factor in customer retention.

This confidence also allows the company to cross-sell its products across business segments. This has helped it to understand the customers’ plans, enabling it to forecast, plan and tailor the product offerings accordingly, thereby resulting in business optimisation, improved productivity, efficiency and margins. 

Quality products

“We have also been able to generate significant repeated business from our premix customers. About 50 per cent of our top 10 customers in the six month ended 30 September 2021 in the premix formulations have been associated with us for over five years. Our company became a member of the Plumpyfield franchise network and we supply RUF premixes to Nutriset SAS. We expect our association with Nutriset SAS will facilitate our access to newer markets,” says Vikram.

“Hexagon strives to deliver quality and provide solutions customised to our requirement,” informs Rohit Bhagat, business head, India, Life Health Foods India, which has been a customer of micro-nutrient premix for plant-based beverages. “Their service levels are good and they take personal interest in ensuring the last mile delivery,” Bhagat accepts.

“R&D is the genesis of our business and critical in maintaining our competitive edge,” says Nikhil Arun Kelkar, joint managing director, Hexagon Nutrients. Nikhil, who did his bachelor’s degree in dental surgery from the Nair Hospital Dental College, Mumbai, and diploma in Marketing Management from Narsee Monjee Institute of Management Studies. He was inducted into the business of handling medical nutrients by his father.

Somerset Indus Healthcare Fund I invested Rs25 crore in 2016, on a Rs250 crore valuation. “When we looked at the company, it had already built premix business to some scale and had created a presence for its clinical nutrition brand,” says Mayur Sirdesai, partner, Somerset, explaining the reason for the investment. “Also, the company’s approach to product development, especially on the clinical nutrition segment, was based on scientific validation. The company had good process-driven manufacturing facilities in Nashik and Chennai and a credible team. We believed that they had an early mover advantage in the fast- growing sunrise segment of nutrition and nutraceutical,” Sirdesai adds. Having completed its normal investment cycle, the fund is looking at an exit at this point of time and continues to have a positive view on the business and the segment.

“The company has a good leadership team with proper defined roles and responsibilities and it has been able to build a credible second line of management in the critical functions over the years,” Sirdesai feels. According to him, on the clinical nutrition business, the company has been able to scale up and has done reasonable geographic penetration as well over the years. 

“While expectations are always high with relevant job pressures, the management has been congruent in giving equal importance to employee comforts and well-being to its best extent, both professionally and on humanitarian grounds,” contends senior manager Pooja Shanbhag, who has 18 years of experience in the company. “With the reach of the organisation increasing exponentially on a pan-India and global basis, the organisation and its management have been consciously active in delegating responsibilities to the talents acquired, who carry immense experience and acumen in their specific verticals”.

Hexagon has two dedicated in-house R&D facilities, located in Nashik and Chennai, and a team of 11 professionally qualified and experienced members that helps develop customised solutions for its customers. “We have developed a rich understanding of ingredients used in the premixes and how these ingredients react with our customer’s products,” says Nikhil. “This rich understanding has helped us create premix formulations, which do not impact the organoleptic properties of the end product,” he feels. “Hexagon has an in-house capability for sensory evaluation of its clinical and wellness nutrition supplements.” 

“To ensure that products meet the desirable quality standards, we make most of our products at our manufacturing facilities at Dindori near Nashik, Chennai and Thoothukudi, which are equipped with advanced equipment, modern technology and automated systems,” informs Arun. 

“Hexagon has its presence across retail pharmacies, hospital network, prominent e-commerce players like Amazon, online pharmacies such as Tata 1mg Healthcare Solutions Private Limited,” says Vikram, commenting on the company’s pan-India omni-channel distribution capabilities. Its websites also address different consumer demands. The company has established a 250-strong distribution network in India. During the six months ended 30 September 2021, about a tenth of Hexagon’s total consolidated revenue was generated from domestic sale of its branded nutrition products through online platforms.

The company has also been exporting its products to over 70 countries such as South Africa, Malaysia, Ethiopia, France, French Polynesia, Ghana, Indonesia, Kenya, Madagascar, Mozambique, Papua New Guinea, Nigeria, the Philippines, Qatar, Russia, the UAE, Angola, Mauritius and Brazil. “The judicious mix of domestic and global presence not only mitigates the risk of dependence on certain regions, but also helps us to leverage our brand value,” he points out.

Igniting inspiration

According to Arun, Hexagon has demonstrated consistent growth in profitability, recording a CAGR of 24.18 per cent during the past three years. Om Lal, senior vice-president, Hexa, who has put in 12 years at the company, says that the leadership and management system works on the philosophy of not only motivating teammates or peers but also igniting inspiration and giving them reasons to perform to their optimal potential.

“Our supervision and leadership approach firmly stand at bringing out the best in our people that not only gives momentum to our growth but also augment their professional skills. We regularly invest our time and efforts in team-building events and activities to boost the morale of our employees and fine-tune their skills,” Lal adds.

“The roles and responsibilities are delegated as per the interest and specialisation of the individuals,” says Sharmili Kuckian, assistant manager technical services. She finds the daily morning meetings or weekly meetings as much useful as employees are encouraged to discuss their issues on a common platform so that as a team we can be much more productive.

Buoyed by the high employee morale, Vikram is optimistic. “We intend to grow our current branded segments by augmenting our online sales through enhanced digital marketing and exploring newer online platforms. We intend to increase our national footprint by expanding to tier two and tier three cities over the period of next 3-5 years,” he says. 

Hexagon is going public now. It has filed its draft red herring prospectus with the market regulator SEBI for its initial public offering at a face value of Re1 per equity share consists of a fresh issue of shares aggregating to Rs100 crore, and an offer for sale of up to 30,113,918 shares. Market sources say the company may raise about Rs500 crore.

The proceeds from its fresh issuance worth Rs33.5 crore will be utilised for the repayment or prepayment of borrowings by the company and subsidiaries, while Rs15 crore will go for funding incremental working capital requirements; Rs19.17 crore for capital expenditure requirement for expanding existing facility; and Rs7.15 crore for investment in subsidiary and financing capital expenditure at existing facilities and general corporate purposes. Equirus Capital and SBI Capital Markets are the book running lead managers to the issue. 

With rising levels of awareness among the people about building immunity, particularly in the post-Covid days, Hexagon has set its eyes on the world for a new growth era.