Agro Tech Foods to open second production unit

Agro Tech Foods Limited (ATFL), a subsidiary of global food major ConAgra, is setting up its second food manufacturing plant at Shamshabad near the international airport here for the production of its Act II brand of popcorn.

ATFL president Sachin Gopal told Business Standard that the new plant would commence production within four weeks from now. The company’s first plant is located at Kashipur in Uttarakhand.

The Hyderabad-based company is now shifting its front office to the National Capital Region. There had also been changes in the top management of the company recently with Gopal taking over as its president and the former president, Utpal Sen Gupta, being appointed as its vice-chairman.

As a part of its effort to expand the branded food business, ATFL is currently test marketing Sundrop peanut butter. This is the first time that the company has extended its flagship Sundrop edible oil brand to the food category.

According to Gopal, there are two other food products, which the company proposes to introduce in the market during the current financial year. ATFL currently has three food products in its portfolio including Act II popcorn, Swiss Miss beverage and the recently launched Snack Pack, a shelf-stable pudding that does not require any refrigeration.

During the first half of the current year, the company had exited from the poultry feed ingredient and commodity trading business. Gopal said this was in line with the company's strategy of moving away from high-volume, low-margin business and focusing on value-added products in the edible oils and food portfolio.

Consequently, net sales of branded foods business increased 5 per cent to Rs 169.42 crore (Rs 160.84 crore) in the second quarter and 13 per cent to Rs 339.46 crore (Rs 301.1 core) in the first six months of the current year, compared with the corresponding period last year.

On the other hand, the company’s sourcing and institutional business (SIB) declined 59 per cent to Rs 37.49 crore (Rs 90.63 crore) for the quarter and 57 per cent to Rs 87.39 crore (Rs 202.05 crore) for the half year ended September 30, 2008. The SIB segment includes oils and agricultural raw materials procurement, seed buying and processing and poultry feed ingredients.

Stating that ATFL’s focus was on improving its margins by at least 1.5 per cent a year, Gopal said the company's net profit during the first half of this year stood at Rs 7.16 crore as against Rs 6.23 crore in the same period last year. Profit increased despite the turnover declining from Rs 504.05 crore to Rs 427.68 crore.