Move to enable a farther reach in northern, eastern markets
MTR Foods, the Bangalore-based food processing company, is planning to utilise the services of a third party manufacturer for the first time. The contracted plant in Mathura for producing vermicelli is expected to give it a push in the northern and eastern markets where it is trying to expand its presence. The company is also planning a capacity expansion in spices.
MTR has nine plants in Bommasandra Industrial Area in Bangalore which caters to its product categories like spices and masala, beverages, vermicelli and frozen food. The company has so far produced its brands inhouse.
“The plant in Mathura would help us supply to the north and eastern parts of the country. It would help us source wheat faster and also trim freight costs by 6-7 per cent,” said Sanjay Sharma, chief executive officer, MTR Foods.
While it caters majorly to the south, products like vermicelli under its portfolio see demand from across the country. Presently, the company produces around 1,100 tonnes of vermicelli per month. The plant would add a further 150 tonnes per month to the total.
Vermicelli forms around 14 per cent of its business. Around 75 per cent of its business comprises of spices and masala, instant mixes and ready to eat food. Rest is from other segments like vermicelli, ice cream, milk-based beverages, frozen food and pickles and papads. The company has revenues of around Rs 300 crore at present.
Spices and masala form nearly 35 per cent of its business and is learnt to be growing at nearly 25 per cent. To meet the demand, the company is setting up a new spice processing plant at its existing facility for an investment of Rs 12-15 crore which will be sourced from internal accruals. This is expected to double capacity from 450 tonnes per month.
The company’s total manufacturing capacity is 3,000 tonnes per annum. The spice and masala market in India is valued at Rs 10,000 crore of which roughly around Rs 2,500 crore is branded.
The food processing industry in India is valued at Rs 45,000 crore of which only around 20-30 per cent of the market falls under the organised category.
The industry is categorised by the presence of mid and small players in the regional space with a handful of national players. Some of the prominent ones, include Nestle, MDH, Everest, Shakti and Aachi. The industry is growing around 7 per cent.
MTR Foods is owned by Norway-based Orkla group which acquired the company in 2007. It has been learnt that since the acquisition, Orkla has invested close to Rs 100 crore in upgrading MTR Foods’ manufacturing capacities and improving food safety standards.
