Agro Tech to exit commodities trading

Acting in tandem with its parent company, ConAgra Inc's derisking strategy, Hyderabad-based Agro Tech Foods has decided to move away from commodities trading, while sparing some exposure to its institutional business.

Announcing the company's unaudited results for the quarter ended September 2007, (Q2FY08) here, Utpal Sen Gupta, president and CEO, Agro Tech, said it was a planned and graduated move to do away with the low-margin business and shift focus to value-added differentiated products in the edible oils and foods portfolio.

"The disintegration exercise, which was started 12 months back, would be completed by December 2008. Our institutional business, however, will continue," he said.

The decision is significant in the fact that margins from commodities trading are a meagre 1 to 2 per cent. ConAgra, whose revenues stood at $28 billion while fully engaged in commodities trading around five years ago, became a $12-billion company last year after exiting the line of business.

"However, ConAgra is still maintaining profit margins with its sole focus on branded products. We intend to grow in similar lines and enhance shareholder value," Gupta added.

In line with its new branded product-specific strategy, Agro Tech Foods is expanding its basket. The company is currently test marketing two products "� Hunt's Snack Pack, the country's first shelf-stable pudding, and Swiss Miss, a ready-to-use hot chocolate drink "� in Hyderabad.

"The two products, which were introduced on October 15, are currently being imported from the US and will remain as imported ones for some time. We intend to assess the response for these two products in Hyderabad, before going for a pan-India launch," he said, while not ruling out any possibility of manufacturing them here.