MTR Foods to expand in north, mulls IPO

MTR Foods Limited, the iconic Karnataka-based processed foods firm, is embarking on an ambitious expansion plan in north India. It proposes to set up a manufacturing plant there to cater to regional needs and also launch a number of new products aimed at the market.

"This is part of our long-term objective of achieving a turnover of Rs 500 crore in the next four years to five years. This will help us reach out to our customers in a short time and also enable us to cut costs," said chairman and managing director P Sadananda Maiya.

The MTR brand has a strong presence in northern and western India where there are more working women than in the south.

"To begin with we plan to set up a vermicelli manufacturing plant in the north," Maiya added. The company, which has some north Indian items in its product portfolio like channa masaala and paav bhaji masaala, will also introduce new varieties like chaat masaala and other curry masaalas.

MTR Foods also plans to expand its product portfolio by getting into the marketing of value-added snack foods which will enable it to become a total meal solutions provider.

It also seeks to develop markets across the world and increase exports from Rs 16 crore in fiscal 2005-06 to Rs 20 crore in 2006-07. It recently forayed into Asian countries like Japan, China, South Korea and Hong Kong.

Maiya said that the company plans to enter the capital market in the next two years to three years with an initial public offer to fund its expansion plans and also repay its debts of Rs 28 crore.

"We are in the process of completely automating our plants in Bangalore. We also plan to modernise our other manufacturing plants by replacing some of the aging machinery."

Maiya said that MTR Foods' turnover was marginally up to Rs 135 crore in 2005-06 from Rs 134 crore last year. It reported a profit before tax of Rs 6 crore as compared to a loss of Rs 90 lakh in the previous year. During the present year, it is targetting a turnover of Rs 155-170 crore.

"We could not grow much last year because we were laying the foundations of market expansion by appointing new dealerships, and undertaking promotions. The impact of this will be felt this year," he said.

MTR Foods' turnover nearly trebled, from Rs 30 crore to Rs 88 crore, between 1999-00 and 2001-02.

MTR Foods appointed a professional manager as CEO after JP Morgan took up a stake of 26 per cent and Magnus Capital 16 per cent several years ago.

It has now undergone a management restructuring with the departure of the CEO and induction of Ramanathan as national sales manager.