Bangalore-based MTR Foods, a wholly-owned subsidiary of European conglomerate Orkla Brands International, aims to double its revenue to Rs 500 crore by 2012 on the back of expanding its brand presence in northern and western parts of the country with focus on ‘instant mix’ product of the company.
The current turnover of the company is pegged at Rs 250 crore with an EBIDTA (earnings before interest, depreciation, tax and amortisation) margin of around 10 per cent.
“We want to increase our profit by three times by 2012 with better margin expansion and with enhanced focus on domestic market,” Sanjay Sharma, CEO of MTR Foods Private Limited said.
He also said that the company had invested close to Rs 100 crore in last two years to fuel its expansion plan.
MTR Foods was acquired by Norway-based Orkla Brands International in 2007 for $80 million (Rs 354 crore). The acquisition saw the exit of MTR Foods’ shareholders Aquarius and J P Morgan and the past promoter Sadananda Maiya from the company.
However, post-acquisition, Orkla that works on the principle of multi-local brands had leveraged MTR brand than opting for co-branding.
The holding company is now planning to invest in increments as required by the company for its future expansion plan.
“In addition to the traditional south presence, we want to aggressively push foot print of our product in other parts of the country,” Sharma said.
As part of our plan, we want to rationalise our presence in 150 cities in north India with more brand calling in southern regions, he added.
The processed food company has also relaunched its products with new packaging in recent time.
Talking about growth targets, he also said, “ We have grown with 20 per cent compounded annual average growth rate in the last three years and expect to maintain the momentum.”
He, however, said that rising input prices were squeezing the margin of the company.
“We have raised our product prices by seven to eight per cent in a bid to absorb the impact of price rise. However, we don’t have any such plans now,” he said.
Referring to export growth, Sharma said, “Though our major focus is on the domestic market, export presently constitutes 10 per cent of our total revenue. We plan to raise it to 18 to 19 per cent of the overall portfolio.”
The company, which presently exports its products 18 countries, is also planning to raise its marketing headcount in middle east, south east Asia and other parts of the world with sound south Indian diaspora.
Sharma also said that the company would focus on rural market in the next phase in the spices category.
The company proposes to double its manufacturing capacity in its spices unit in Bangalore at an investment of Rs 15 crore, he added.
The food processing industry in India is valued at Rs 45,000 crore of which only around 20-30 per cent of the market falls under the organised category.
The industry, which has both mid and small players in the regional space with a handful of national players like Nestle, MDH, Everest, Shakti and Aachi, is growing around 7 per cent annually.