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FMCG, agriculture companies make a beeline

Viveat Susan Pinto & Dilip Kumar Jha  |  Mumbai 

Aditya Agarwal, director of Emami Ltd, has his hands full these days. Besides managing operations at the Kolkata-based company, he has to oversee work at sister concern Emami Biotech’s sprawling land in Africa. The latter had acquired 40,000 hectares or 100,000 acres on lease in Ethiopia last year. “The purpose”, says Agarwal, “was to undertake jatropha cultivation for the production of biofuel. We have begun work in that direction”.

Emami, according to Agarwal, will not stop at jatropha cultivation alone. On the cards is the cultivation of sunflower, soya, sorgum, maize and castor, work for which has already begun. “The availability of cheap labour, continguous land and a congenial business environment drew us to Africa. We have no regrets of going there,” he says.

Emami is a case in point. A host of allied fast moving consumer goods (FMCG) as well as agri-based such as Ruchi Soya are rushing to the continent in search of virgin land and markets.

Whether it is Godrej Consumer Products (GCPL), Dabur, Marico or Rasna International, the Ahmedabad-based soft-drink concentrate major, all of them see sense in making their presence felt in Africa. “It’s a developing market. There are similarities in income and demographic profiles between India and Africa. So, why not?” asks Sunil Duggal, chief executive officer, Dabur India. The company has been eyeing the African markets for buyouts for some time now. It has manufacturing facilities in Egypt and Nigeria.

GCPL, meanwhile, has completed a few buyouts in Africa, including Rapidol and Kinky in South Africa a few years ago, and Tura in Nigeria a few months ago. Marico, on the other hand, has been looking to firm up its presence in Africa following the acquisition of hair care brand Fiancee in Egypt a few years ago.

Rasna, in contrast, is keen to set up a manufacturing unit in Africa, with the objective of catering to the local market there.”We have been exporting to the region for some time now. Setting up a manufacturing unit will only help,” says Girish Jaggi, vice-president, international operations, Rasna International. A similar rationale prompted Emami to acquire a manufacturing unit in Africa recently. “Africa is an important market for us. Setting up base there brings down our costs. That’s one. Plus we can also get into Europe easily from there,” says Prashant Goenka, head of Emami’s international business.

Besides the proximity to consumption markets within Africa as well as continents such as Europe, the openness of governments there to foreign investment is what is driving in the FMCG and agri space to Africa.

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First Published: Tue, July 13 2010. 00:37 IST