ITC eyes NE biscuit market with joint venture
Packaged food from a top brand of the ITC will now be made in Assam with the conglomerate joining hands with a local food major — Sunanda Ram Deka (SRD) Group — to set up a joint venture.
The SRD Group is known for its Repose brand of bakery. The joint venture called North East Nutrients Private Ltd has already been registered and the National Stock Exchange informed. This is ITC’s first joint venture in the Northeast and the registered office of the company will be at Calcutta.
The project cost is Rs 146 crore which will be financed by a consortium of banks. The plant would be set up on a 10-acre plot at Ramhari in Mangaldoi of Darrang district, with a production capacity of 100 tonnes daily. “The products manufactured would be biscuits and other items under the Sunfeast brand of the ITC,” a source said.
Confirming the development, a senior ITC official said the joint venture would manufacture packaged food to cater to the region. A source said the ITC would have 76 percent equity in the new venture with the rest owned by the SRD Group. The products would be out in a year’s time and a memorandum of understanding has been signed. Discussions between the ITC and the Assam group were ongoing for quite some time before the project fructified.
The biscuit market in the Northeast is growing at 15 to 20 per cent and the Indian Biscuits Manufacturers’ Association says the consumption in the east and the Northeast is around 28 per cent.
The Mangaldoi-based SRD Group have been in the food business for decades and manage a Horlicks factory and a Britannia cake factory in collaboration with Britannia Industries Ltd and an ORS factory in collaboration with Jagdale Industries, along with its own units.
“This is a significant development in the entrepreneurship sector of Assam and will encourage others to start similar venture. The ventureis starting in Mangaldoi and not at Guwahati which shows everything need not happen in the capital city,” R.S. Joshi, chairman of the Federation of Industry and Commerce of North Eastern Region (Finer) said.
An official in the industries department said since it was a mega project (more than Rs 100 crore), Dispur will provide whatever help is required under the 2014 Industrial and Investment Policy of Assam if the company makes a request. The policy states a project with large fixed capital investment of a minimum of Rs 100 crore or generating regular employment for at least 1,000 people is given mega project status.
A high-powered committee to be notified by the government will consider additional incentives to be provided to such projects on a case-to-case basis. The committee shall consider the mega project status in a single integrated unit.
In July 2003, ITC made a foray into the biscuits market by launching the Sunfeast range of biscuits and it is also a key player in the pasta and instant noodles segments.
Congo venture for tea major
MK Shah Exports Ltd, which has 12 tea gardens in Assam and Bengal, has become the first Indian company to buy gardens in the Democratic Republic of Congo in Africa.
The company, through its African subsidiary — Great Lakes Plantations — has bought M’bayo and Madaga tea estates in Congo recently.
“We are the first Indian company to enter the Congo. The acquisition includes 1,500 hectares of land, as well as two tea-manufacturing factories. The area includes a tea plantation, timber plantation and cinchona tree plantation, from the bark of which the anti-malarial drug quinine is extracted,” Jaydeep H. Shah, the director of Great Lakes Plantations — the African unit of MK Shah Exports Ltd — told The Telegraph.
Both the properties are in Bukavu, which is only 35km from neighbouring Rwanda. This is the company’s first acquisition in Africa.
MK Shah Exports Ltd, which started as a tea-trading firm, carried out backward integration by way of purchase of tea estates in Assam.
Shah said Congo offers much better soil and climatic conditions for the manufacture of high quality tea leaf than Uganda.
“Rwanda has many government controls/regulations, which plantations owners need to adhere to whereas in Congo these regulations are far less stringent,” he said.
A Belgian company originally planted the estates and before the purchase, a local company owned it.
“The purchase was taken care of by our internal accruals. We continue to remain a debt-free company,” he said.
He said with this acquisition, MK Shah Exports Ltd consolidates its position as India’s largest orthodox tea manufacturer.
“The foray into Africa helps us to diversify our base as well as our offerings to our clients. We can now provide top class CTC and orthodox teas to our clients abroad,” he said.
Of late, a couple of Indian companies have bought gardens in Africa.
“Africa has many inherent advantages such as an abundant supply of manpower, good terrain and climatic conditions, a relatively stable cropping pattern when compared to that of India — all of which makes it an attractive destination to invest in. However, one thing is certain for us as far as making any investment decision is concerned — we invest only in quality properties,” he said.
The company produces 13 million kg from its gardens in India and the crop from the two new gardens in Africa will be 3.5 million kg.
“Our estate is just across the Rwandan border and thus, shares most of the characteristics of Rwandan teas. Being situated at approximately 6,000 to 6,200 feet above sea level ensures that the teas manufactured there posses a unique flavour and aroma,” he said.
Production has started and a team of managers who were earlier stationed at plantations in Assam are looking after the property.
“There are multiple villages surrounding the periphery of our property from where our workers come,” he said.
On the mode of selling its teas from Africa, he said the plan is to sell privately to its customers in Europe and US.
“A part of these may be sold at Mombassa auctions,” he added.