Hence began the metamorphosis 
of an edible oil company into a food major. What is remarkable is the balanced risk outlook of Agro Tech. It believes in a blueprint coupled with an in-depth market research before foraying into other food segments. This is also a part of ConAgra’s global strategy, which Agro Tech too has adopted. Agro Tech also believes religiously in advance planning. No wonder, the moment you enter its boardroom, you will find white boards on the wall cluttered with mappings of the company’s future launches for the next year. Pointing out to one such board, Utpal says, “Our new product – Hunts Snack Pack puddings, which we are test-marketing in Hyderabad and if the results are favourable then we will launch it all over India. We believe in launching what none has tried launching before. Nobody could think of launching pudding!” Indeed rolling out newer categories of products has helped the company. Cut to 2000, when the company decided to unleash a new category of product in the Indian market – branded popcorn in the name of Act II. The product was customised to match Indian market needs. Before the India launch, it was made in a form that could be prepared in a pressure cooker. Utpal justifies the logic behind the same as, “Very few people have microwaves in India and we also took care of the affordability factor. So Act II was launched in a sachet. This was supported by a 360 degree advertisement.” So did it work? Without a speck of doubt as today, Act II is recording an annual growth of 50%!
Launching a new category of product has been its growth mantra. So when players like Godrej, Mother Dairy are gearing up to capture the processed fruits & vegetables market (frozen fruits & vegetables), Agro Tech plans a launch of dehydrated vegetables. Agro Tech’s growth momentum is also strengthened by organic expansions. For instance, after increasing production capacity post-acquisition, Sundrop today has control over 17% of the edible oil market. The future appears brighter for the company with edible oil market’s turnover forecasted to touch Rs.980 billion by 2015.
The company also does not believe in possessing captive processing units unlike its biggest competitor Cargill. Argues Utpal, “If you have a good outsourcing model, you don’t need a manufacturing unit. But yes you need to ensure quality so we have our own labs. And we have been able to save a lot in costs.” The company has also adopted certain debt financial strategies to increase its net-worth. It also reduced its debt from $26.5 million in 2002-03 to $3.8 million in 2006-07 by selling off all non-performing assets! “And for this fiscal year, we have paid off that as well. So now, we are a debt-free company. Now we are focusing totally at new markets – like food services for institutional buyers,” announces a proud Utpal. Agro Tech is also eyeing deals with institutional buyers like ITC Hotels to meet its turnover target of $320 million by FY2010.
Agro Tech today is married to a ‘total’ food chain company. And this one (unlike many others) seems to be a match made in heaven as both of them are attaining synergistic payoffs. Surely, ConAgra doesn’t mind living next to its parent’s home on Devi Road.
of an edible oil company into a food major. What is remarkable is the balanced risk outlook of Agro Tech. It believes in a blueprint coupled with an in-depth market research before foraying into other food segments. This is also a part of ConAgra’s global strategy, which Agro Tech too has adopted. Agro Tech also believes religiously in advance planning. No wonder, the moment you enter its boardroom, you will find white boards on the wall cluttered with mappings of the company’s future launches for the next year. Pointing out to one such board, Utpal says, “Our new product – Hunts Snack Pack puddings, which we are test-marketing in Hyderabad and if the results are favourable then we will launch it all over India. We believe in launching what none has tried launching before. Nobody could think of launching pudding!” Indeed rolling out newer categories of products has helped the company. Cut to 2000, when the company decided to unleash a new category of product in the Indian market – branded popcorn in the name of Act II. The product was customised to match Indian market needs. Before the India launch, it was made in a form that could be prepared in a pressure cooker. Utpal justifies the logic behind the same as, “Very few people have microwaves in India and we also took care of the affordability factor. So Act II was launched in a sachet. This was supported by a 360 degree advertisement.” So did it work? Without a speck of doubt as today, Act II is recording an annual growth of 50%!Launching a new category of product has been its growth mantra. So when players like Godrej, Mother Dairy are gearing up to capture the processed fruits & vegetables market (frozen fruits & vegetables), Agro Tech plans a launch of dehydrated vegetables. Agro Tech’s growth momentum is also strengthened by organic expansions. For instance, after increasing production capacity post-acquisition, Sundrop today has control over 17% of the edible oil market. The future appears brighter for the company with edible oil market’s turnover forecasted to touch Rs.980 billion by 2015.
The company also does not believe in possessing captive processing units unlike its biggest competitor Cargill. Argues Utpal, “If you have a good outsourcing model, you don’t need a manufacturing unit. But yes you need to ensure quality so we have our own labs. And we have been able to save a lot in costs.” The company has also adopted certain debt financial strategies to increase its net-worth. It also reduced its debt from $26.5 million in 2002-03 to $3.8 million in 2006-07 by selling off all non-performing assets! “And for this fiscal year, we have paid off that as well. So now, we are a debt-free company. Now we are focusing totally at new markets – like food services for institutional buyers,” announces a proud Utpal. Agro Tech is also eyeing deals with institutional buyers like ITC Hotels to meet its turnover target of $320 million by FY2010.
Agro Tech today is married to a ‘total’ food chain company. And this one (unlike many others) seems to be a match made in heaven as both of them are attaining synergistic payoffs. Surely, ConAgra doesn’t mind living next to its parent’s home on Devi Road.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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