Basmati firms plan foreign buyouts

The major domestic basmati players are looking to acquire international distribution networks to augment their overseas business, reduce the risk in the business and strengthen their brands.

All these companies earn nearly 60 per cent of their turnover from overseas.

Until three months ago, the marketing office of Kohinoor Foods in the US supplied its products to the retailers through the distribution companies. But now, the company has decided to change its business model there. The company has planned to open its own distribution offices.

"Now, the company will approach retailers directly instead of going through the distributors. This would help improving the sales of Kohinoor-branded products," said Rajiv Mangla, financial controller of the company.

The company is also planning to open distribution stores in various cities of the US. It has already started one such store in Houston and is ready to open many others in New Jersey and Chicago.

At present, Kohinoor's products are available at major outlets in the world like Tesco, Somerfield, Carrefour, Coles and Woolworth. The company has a presence in 58 countries through 45 distributors.

KRBL, the Rs 725 crore basmati company, is trying to acquire marketing companies in Britain and Europe in order to establish a firm foot there. At present, the company is active in the US, France and West Asia. The company is in talks with distribution companies in Europe and US, where its brand is not strong.

"Our primary aim is to ensure a strong presence of our brand, India Gate, in the international market. We are having talks with three to four companies in the US as well as Europe," said Anil Mittal, the managing director of the company. The company is ready to invest about $10 million to work out a deal.

The Rs 375 crore LT Overseas, owner of Daawat basmati is now present in about 35 countries through 100 distribution networks.

"The focus is shifting from bulk to branded basmati and this needs better marketing and promotion. Therefore, we have appointed new distributors in Australia, Kenya and some countries of West Asia," said Vijay Arora, managing director of the company.

Amira Foods, the Rs 310 crore basmati company, is also looking at international acquisition of distribution companies, as international trade contributes 70 per cent of the company's turnover.