Nestle India is planning to avail govt's PLI scheme to boost exports: CMD

Currently, about 5 per cent of Nestle India's sales comes from exports to its affiliate companies in regions where demand from the diaspora is high

The country’s largest food company, Nestlé India, is planning to avail the Union government’s production-linked incentive (PLI) scheme to boost exports. The first food major to express interest in the PLI plan is awaiting the finer details of the flagship scheme.

According to Nestlé India Chairman and Managing Director Suresh Narayanan, aligning the scheme’s objectives with Nestlé India’s expansion plans may help the company grow the exports business. 

“The finance minister has announced the PLI scheme for food processing, which is a very positive move…  Once we have the detailed scheme, we will figure out how our exports business can be grown (through it),” he said.

The scheme promises to be a game changer, but everything depends on the execution. “In terms of policy initiative, the kind of support the food processing industry is being given should reflect on the ground through the right execution. We are the largest producer of milk and second largest in cereals, fruits and vegetables. However, less than 10 per cent of our farm produce is utilised in food processing industry. Thus, we have a great prospect in the processed food market,” Narayanan said.

Nestlé recently began a new phase of expansion with its board approving Rs 2,600 crore of investment budget till 2024. It came nearly a decade after its last expansion phase during 2009-12, when it set up its eight manufacturing plants in Himachal Pradesh and added capacity to the existing facilities for Rs 2,300 crore.

“There is opportunity to grow our exports business and we need to leverage the demand from global markets. Instead of making just for ourselves we can make for others (other markets), too,” Narayanan said. 

Currently, about 5 per cent of Nestlé India’s sales comes from exports to its affiliate companies in regions where demand from the diaspora is high. Products such as Maggi noodles, sauces, masala, confectionaries and coffees top the list of exported products. 

“Demand for such items continue to build up from across the globe and from neighbouring markets like Nepal and Bangladesh.”

Also, to cater to the growing demand from the local market, capacity expansion is imperative. The company’s installed capacity has already been utilized by 85 per cent, while its volume uptake is growing at the double digit rate every year.

The pandemic, pushing people indoors, has changed the eating habits. As a result, the demand for ready to cook items has surged by high double digit rates. Elaborating on the company’s expansion plans, Narayanan said construction activities at its upcoming green field project (ninth plant) in Sanand (Gujarat) had begun. “Further, we will be investing to add fresh capacity at our existing facilities at Ponda (Goa), Nanjangud (Karnataka), Moga (Punjab) and Samalkha (Haryana) to ramp up capacities in ready to cook, coffee, confectionary and milk & nutrition categories”.

The upcoming plant will add 20 per cent to its existing capacity of producing Maggi noodles. As for coffees, chocolates and confectionaries, production capacity is expected to go up by 10 to 20 per cent.