ADF Foods rises on plan to strengthen US distribution network

ADF Foods rose 1.33% to Rs 810.15 after the company said its wholly-owned US-based subsidiary will invest upto $5 million to strengthen the US distribution network.

In the company's board meeting held on 26 August 2021, it was approved that the company's wholly owned subsidiary, ADF Holdings (USA) would be making an investment upto $5 million, which would entail asset purchase and setting up of a step down subsidiary in the United States.

ADF Holdings (USA) will have a 70% stake in the share capital of the proposed step down subsidiary. The proposed subsidiary will be a distribution company and will help the company move up the value chain. This will further strengthen its penetration and distribution with the retailers with an enlarged product portfolio.

The company has been investing in building a robust distribution network with uninterrupted supply as a precursor to their increasing capacities. The last quarter, the company had commenced operations from their leased warehouse of 66,000 sq. ft. in the US, which serves as a distribution center for the company. The company also recently made additions in the senior sales and marketing team.

Commenting on the development, Bimal Thakkar, chairman, managing director & CEO, ADF Foods said, We are witnessing strong growth opportunities in our business and thus building our capabilities to tap those opportunities. A strong distribution network is the backbone of a consumer products company, and we are investing aggressively to further strengthen that network. This investment emphasizes our ambition to strengthen ourselves in the US in the long term and to expand our business there. We are sure this investment will bring significant benefits to us both operationally and financially."

ADF is a consumer-focused company and a leader in prepared ethnic food offering ready-to-eat (RTE) items, ready-to-cook (RTC) items, sauces, pickles, pastes, dips and frozen foods under its seven flagship brands. On a consolidated basis, the company reported a 28.8% rise in net profit to Rs 11.14 crore on a 16.7% rise in net sales to Rs 86.19 crore in Q1 FY22 over Q1 FY21.

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