US food major Cargill will invest $240 million, or Rs 1,500 crore, in India over the next few years as it seeks to expand in the lucrative market where doing business has become decisively easier.
Peter van Deursen, CEO Asia Pacific region said “Company is also adapting to Indian market conditions, learning from successes of Patanjali, which has encouraged it to focus on local aspects of the market instead of blindly launching global products. India is an important market for us and this increased investment demonstrates our commitment to the country and the development of the agriculture and food processing industry in this country. Ease of doing business is much better for sure and we recognise that as well. We see some improvements in some areas compared to where it was 10 years ago. There are positive things happening which helps us to tell a better story outside to our shareholders in USA. GST is very favourable to us. (As is) This notion of food standardisation, safety standardisation, global quality standards and I think some improvement on level playing field where everybody is taxed and treated the same way, especially for a big company like us who wants to grow. Country is so big with 1.4 billion people, so where do you prioritise and focus on and what portfolio? You can’t do everything in a country like this. The complexity of that makes business more difficult. a law-abiding company like Cargill faced unfair competition from local companies which did not follow some environmental laws, or resorted to overloading of trucks to save money, which made a lot of differences in low-margin activities. I think the infrastructure for moving product form one place to another is also difficult. So to have a pan Indian approach is costly. So you have to be very selective in where you invest. With GST, products are moving faster, but on infrastructure, I think a lot needs to be done. They were also seeing consumers going for products made by domestic companies not only in India but in other countries that have more nationalist view”.
Investment will be in Cargill’s current businesses including edible oil, cocoa and chocolates, starches and sweeteners and animal nutrition. Cargill will employ 4800 in the next couple of years, up from the current 3500.
On the whole, though, the business environment is much better he said. "When you go to a more harmonised (taxation) system it will help and make things easy. It was very difficult for us to move products from one state to another. Integration makes it easier." While there are fewer barriers in transportation, infrastructure remains a challenge.
A fund managed by Morgan Stanley Private Equity Asia has invested Rs 152 crore in South Indian Health Food makers Manna Foods brand.
Manna Foods’ the flagship product of Manna Health Mix is a ready to cook improvisation of ‘sathumaavu’, a traditional homemade multi-grain mixture of cereals, millets and pulses that is cooked in hot milk. Apart from its flagship product, Manna Foods has a strong suite of health food products including ready to cook millet based infant food, millet grains, soya nuggets, dried fruits, purees and pastes.
"Led by Manna Health Mix, Manna Foods has created a unique health food platform with an array of natural, preservative-free and ethnic food products range. At a time when people are quitting synthetic preparations and switching over to organic and traditional food, Manna Foods is excited about the partnership with Morgan Stanley to write a true success story in Health Foods space in India," shared I S A K Nazar, Company's Promoter.
“We are excited to back a fast growing brand such as Manna which has consistently delivered on its customer promise of natural, healthy and high quality products. At a time when India’s eating habits and lifestyles are creating health challenges, we believe that Manna’s natural foods are well positioned to offer appealing choices to consumers. Additionally, foods based on home-grown grains such as millets are regaining popularity, offering ‘superfood’-type nutritional content at an affordable cost. We look forward to driving Manna's next phase of growth," added Arjun Saigal, co-head of Morgan Stanley Private Equity Asia in India.
The proceeds will be used to fund company’s expansion in south India as well as provide part exit to existing investors. The company had earlier raised Rs 30 crore from early growth investors led by Fulcrum in 2015.
Ethan Khatri, Partner at Fulcrum said “Having partnered with Manna in 2015, Fulcrum has been very happy working with the Manna team under the able leadership of Nazar. We have always felt that Manna has a strong brand and the same has reflected in the strong sales growth posted by the company over the last two years. Joining hands with Morgan Stanley will further help strengthen Company’s positioning in the FMCG space”.
Amazon is preparing to start selling locally made foodstuff through a wholly owned subsidiary in India from March, eight months after the US behemoth received government approval to invest $500 million in the venture, according to two people familiar with the matter.
The unit can sell only locally produced and packaged food products and will directly compete with Grofers and BigBasket in the online segment. Seattle-based Amazon was the first major company to make a large investment in the food-only retailing sector that India created, allowing 100% foreign ownership in subsidiaries that would sell locally produced food items.
Other global retailers including Walmart have shied away from the segment, arguing that selling only low-margin food items does not make economic sense and such ventures should be allowed to stock non-food items such as shampoos to detergent soaps to make them viable.
Amazon won approval in July to invest $500 million in India over five years to sell third-party and its own private-label food articles, sourced and packaged locally, both online and through brick and-mortar stores. Food is the only segment where it’s allowed to sell directly to consumers. The Indian government sidestepped the intense opposition to foreign investment in multi brand retail in 2016 to create a food retailing segment that it said was aimed at creating jobs and helping farmers.
Amazon currently operates an online marketplace in India and isn’t allowed to sell directly to consumers. It can only act as an intermediary by lending its technological platform to local vendors to sell goods.
Tata Global Beverages posted a 39.1% rise in net profit to Rs 120.25 crore for the June-September quarter in comparison with the same quarter of the previous fiscal, which saw Rs 86.32 crore.
Net revenues stood at Rs 1,692 crore, up by 6% from Rs 1,621 crore in the comparable quarter in 2016. Operating profits were up by 23% to Rs 208 crore compared to the corresponding quarter of the previous year, due to improved operating performance, good cost management and lower finance costs.
Group has completed the restructuring of its Russia operations, resulting in the sale of two of the company's overseas subsidiaries, Sunty LLC and Tea Trade LLC.
L Krishnakumar, Chief financial officer of Tata Global Beverages said “The company witnessed a good performance in its India business. While July was a slow month due to GST, August and September saw double digit growth. The quarter saw a number of new product launches across geographies and continued investment to strengthen our brands. The company will continue to innovate in tea, coffee and water with new blends and beverage experiences”.
100 percent organic food company Truefarm Foods India is looking at raising Rs 100 crore in the next 18-24 months from private equity investors to finance its expansion plans.
"We are having talks with private-equity investors to raise around Rs 100 crore in the next 18-24 months to fund our expansion and marketing plans," shared Ravi Jhakar, Director, Truefarm Foods.
Truefarm was setup two years back and is now ready to roll-out wide range of product offerings including pulses, superfoods, spices & nuts, breakfast items, flours & sweeteners.
The company has already tied-up with Reliance Fresh and other leading retail chains and aims to achieve a turnover of Rs 25 crore in the very first year of commercial operation.
"Over the past 18 months, we have invested in capacities, firmed up our products lines and forged distribution partnerships with global retailers including Walmart and Amazon. We are also targeting global consumers across key markets including India, UK, Singapore and USA," added Jakhar.
Truefarm aims to replace most of the food items in daily diet with healthier, chemical free, nutritious and delicious organic alternatives. The company has also appointed Ian Marber, a leading nutrition expert in UK as Director. The company has also engaged with farming communities across the world to cultivate 100 per cent organic crops.
"We are looking at reducing carbon footprint and eliminating diseases caused by toxins and chemicals in our food. The company see it as its responsibility to restore ecological balance which has been disturbed by centuries of exploitation and contamination of resources such as soil and water by use of chemicals. The company aims to replace most of the food items in daily diet with healthier, chemical free, nutritious and delicious organic alternatives “Jakhar added.
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