Nestle to invest Rs 350 cr on a new plant in Karnataka

FMCG major Nestle today said it will invest Rs 350 crore to set up a manufacturing plant in Karnataka to produce the 'Maggi' range of food products.

The 'Maggi' range includes noodles, soups, ketchups among others.

The company, which has seven other manufacturing plants in different parts of the country, also said it will increase the capacities of those units.

Confirming the development, a spokesperson told PTI that the company has "already laid the foundation stone for a new culinary plant in Nanjangud (Karnakata), which is estimated to require an investment of around Rs 350 crore."

The spokesperson, however, declined to give further details on the capacity of the plant and by when it is likely to be operational.

At present, the company has seven plants in India located at Moga in Punjab, Samalkha in Haryana, Ponda and Bicholim in Goa, Pantanagar in  Uttarakhand, and Choladi in Tamil Nadu.

According to analysts, the capacity expansion will lead to a 55 per cent increase in its expenditure by 2011 over the previous two years.

According to brokerage firm Motilal Oswal Securities, Nestle's capex is likely to touch Rs 700 crore in the 2009- 2011 period, as against Rs 450 crore in the previous two years.

It said Nestle is likely to enhance its capacity at its plants at Moga and Samalkha and other locations.

The Nestle spokesperson, however, did not elaborate on the plans but said: "Nestle India has been growing strongly in a sustained manner and to ensure the growth momentum we will continue to invest in capacity expansion as required, both at existing or new sites."

The analysts pointed out that 'Maggi' range, which includes noodles, soups, ketchups among others, has 25.8 per cent volume growth in the last six months.

Even as the estimated Rs 1,150 crore Indian noodles market saw entry of rivals GSK Consumer and Hindustan Unilever, the "flagship Maggi noodles continues to enjoy good consumer franchise", they said.

Besides, the company's extension of brand into the pasta category and the launch of 'Maggi Resile chow' at Rs 4 in the interiors boosted its sales, it added.

Nestle India reported a 20.3 per cent increase in its net profit to Rs 194.8 crore for the quarter ended June 30, 2010. The company's net sales touched Rs 1,466.7 crore during the quarter, translating into a growth of 21.3 per cent over the same quarter last year.

During the six months period between January and June, 2010, the company's prepared dishes and cooking aids, which are mainly sold under the 'Maggi' brand, accounts 26.3 per cent to its overall sales.