US-based Cargill eyes larger food play in India

Will step up investment behind brands and manufacturing plants

US-based Cargill Inc, which derives close to Rs 10,000 crore from marketing and processing edible oils, staples and food ingredients in the country, proposes to step up investment in India as it seeks a greater share of the Rs 3.85 lakh-crore domestic processed food and beverage market.

The Indian unit of the $134-billion company is eying acquisitions of edible oil brands and manufacturing plants in southern India, says Siraj Chaudhry, chairman, Cargill India. “In the medium term, we would certainly look at addressing this either by acquiring brands or assets in the south,” Chaudhry, who has worked with fast-moving consumer goods companies such as ITC, told Business Standard.

Cargill's Gemini edible oil, which was acquired in 2005 from a Pune-based company called Parakh Foods, has a presence in the South. Barring Gemini, all its other brands, including in-house brand Nature Fresh and acquired products Rath, Sweekar and Sunflower are strong in the west, north and east of India. Chaudhry says acquisitions in the south would help rebalance its edible oil portfolio. “We were fortunate to acquire brands such as Rath, Sweekar and Sunflower, which have a strong history and parentage in the country. These brands were core to us, but non-core to their original promoters.”

Rath was acquired from ConAgra subsidiary Agrotech in 2010, Sweekar from Marico in 2011 and Sunflower Vanaspati from Wipro Consumer Care and Lighting last year. While Cargill has never disclosed the size of these acquisitions, analysts have pegged these buys between Rs 30 and Rs 100 crore.

The company, which has been growing at a clip of 10-11 per cent in the last few years, recently re-entered the branded atta space under Nature Fresh and has also stepped into the branded olive oil segment, regarded as a small but growing niche. Chaudhry says the company may look at pulses and other staples to expand its product portfolio here.

Cargill, which competes with Indian companies such as Adani Wilmar and Ruchi Soya, is also looking to beef up its supply of food ingredients to the institutional segment by targeting specialty oils, fats, sweeteners, flour-based products, etc. Cargill derives over Rs 2,000 crore of its revenues from supply of ingredients to food and beverag companies and is looking to grow this business.

Towards this end, the company is looking to set up a corn-milling plant in Karnataka with an investment of Rs 400 crore, which will produce modified starch for the food processing and pharmaceuticals industries, Chaudhry says. "We are in the process of identifying land for the plant. Work on the plant is likely to begin by 2014-end."  

Cargill has also set up an application centre in Gurgaon, Haryana, the second such in Asia-Pacific after China, which will will act as a research and development hub for development of ingredients for the food processing industry in the country. "This centre will work closely with other application centres across the world including ones in Europe, Latin America and the US," Chaudhry says.