Agro Tech Foods Limited (ATFL), the Indian subsidiary of global food major ConAgra, proposes to set up four more manufacturing units including one in Bangladesh over the next three years at a cost of around Rs 100 crore.
ATFL, which currently has two manufacturing facilities at Kashipur (Uttarakhand) and Hyderabad (Andhra Pradesh) in the country, is the maker of Sundrop and Crystal brand of edible oils and Act II popcorn.
Of the proposed four units, according to ATFL chief executive officer Sachin Gopal, the peanut butter manufacturing facility coming up in Gujarat would be the first to commence operations.
“Right now, the civil works on the Gujarat plant are being executed. The facility will commence commercial operations this year," Gopal told Business Standard adding that this would enable the company to use locally sourced peanuts.
Stating that ATFL would “at least” be doubling its manufacturing capacity in a couple of years, he said the company would expand the category of ready-to-eat (RTE) meals, peanut butter and cooking sprays.
Agro Tech’s plan is to “move from being a commodity-centric to food-centric company and (to be) seen as leading FMCG player. In the near term, it plans to increase its share of food business to 25 per cent from 15 per cent as of now,” Gopal said.
As a part of this plan, apart from introducing new products in the food segment, ATFL is targeting to have its presence in 500,000 retail stores in a year’s time as compared with 300,000 stores at present.
Last year, ConAgra has acquired 3.66 per cent stake of tobacco and hotels major ITC in ATFL for about Rs 52 crore. Thus, the US-based company had increased its overall shareholding in ATFL from 48.1 per cent to 51.77 per cent.
In 2010, ATFL had sold its vegetable oil brand Rath to Cargill. Gopal said the sale of Rath was consistent with company's focus on high-margin, value-added products and increasing its presence in the branded food segment.
In fact, right from 2006 onwards, the company started focusing on improving its gross margins, which were around 10 per cent at that time. Today, ATFL gross margins are over 20 per cent.
In 2010-11, ATFL reported an income of Rs 725.6 crore and profit after tax of Rs 31.8 crore. The company’s gross margin during the year declined to 20.8 per cent (Rs 149.2 crore) compared with 23.2 per cent (Rs 150.5 crore) in 2009-10. ATFL attributed the fall in margin to a significant increase in commodity prices.