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We will not stop looking at acquisitions: Siraj ChaudhryInterview with Chairman, Cargill IndiaWe won't stop looking at acquisitions: Siraj ChaudhryInterview with Chairman, Cargill India
Viveat Susan Pinto October 23, 2014 Last Updated at 22:40 IST
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Cargill, the US-based food and agricultural products major, is setting up a unit in Karnataka for Rs 400-500 crore, in one of its biggest investments in India. For a company that has counted on acquisitions of brands and manufacturing facilities to build its presence here, the move is significant. Siraj Chaudhry, chairman of Cargill India, talks to Viveat Susan Pinto on the multinational's plans for India. Edited excerpts:
When will the new plant commence operations?
It should, hopefully, get into production by the second half of next year. The paperwork took some time. That is now complete and the process of building the corn (maize) milling plant has begun. It should be completed by next year. We have also, earlier this year, acquired the Leonardo brand of olive oil from Delhi-based Dalmia Continental, which should strengthen us in that space. We already have our in-house brand, Nature Fresh, in olive oil. The point is that despite the investment into a new project, we will not stop looking at acquisitions. That will continue.
Which segments are you targeting for acquisitions?
We have five acquisitions in the edible oil and vanaspati space. We began with Gemini in 2005, Rath in 2010, Sweekar in 2011, Sunflower Vanaspati in 2012 and Leonardo this year. There are not many domestic targets but whenever something interesting comes up, we will pursue it. We will also look at acquisitions in spaces such as corn milling. Currently, we are setting up a plant of our own in that space but if an opportunity comes up in that area, we could look at it.
Will you look at getting into new food categories in India, beside branded edible oils and commodities where you currently operate?
We have two businesses here. One is the consumer business and the other is what we call the ingredients business. The latter are food ingredients we supply to the industry. So, part of the edible oil business falls under the ingredients vertical and the products churned out of the corn milling plant will be part of this business, since we are supplying it to the food industry. An adjacency here is that food ingredients can also find usage in the pharmaceutical and nutrition industries. We are slowing the building of our order book to cater to these varied industry groups.
Another segment we're building is speciality fats. We see much promise in that segment, with the growth prospects of food processing in India. Companies are coming up with innovative products, bringing down price points. This opens possibilities for us, since the innovation and cost cutting they will undertake will be in production. As suppliers of speciality fats, it gives us a chance to work with manufacturers closely, to see how we can help them create these innovations at an affordable price. It could be in any area such as biscuits, ice-creams, ready-to-eat, etc.
One more segment we're looking at is natural fuels. In the refining of edible oils, you get some by-products, which when further processed creates what we call transformer fuels. This is a natural fuel used to power transformers. We are working with Tata Power and Indian Railways on this.
You re-entered the branded atta space about a year before, with Nature Fresh. What has been the response to it?
It is doing well in modern trade. Our positioning is that this (Nature Fresh) is the closest thing to chakki atta, given that the propensity to consume flour ground at the local shop is high in India. Understandably, most players in the space, including Aashirvaad (from ITC) and Shakti Bogh Atta are playing the same game. But we hope to make a dent in the market. Right now, atta gives us merely two per cent of our turnover. We see this number going up.
Are you looking at new product launches in the future?
We could be looking at more staples. We could consider vegetable or soya proteins. These are natural extensions to the business. When you speak of staples, there are seven or eight -- oil, flour, rice, salt, sugar, pulses, spices and soya proteins. If you establish distribution for one of these, it helps the others, too. We have an oil supply chain and distribution of atta has travelled on it. Similarly, Adani Wilmar has an oil distribution network and has pushed pulses through it. Tata has a salt supply chain and has pushed dal and other commodities. Ruchi has oil and has pushed soya nuggets through it. They are all linked, in other words.