Agro Tech Foods to exit from sourcing, institutional business

Agro Tech Foods Limited (ATFL), an Indian subsidiary of global food major ConAgra, is planning to exit gradually from sourcing and institutional business, which includes oils and agricultural raw materials procurement, seed buying and processing operations, food service and poultry feed ingredients. The company wants to first exit from bulk oil and poultry feed ingredients business.

"We want to exit from this high-volume, low-margin and relatively high-risk business, which is not part of our strategy," ATFL president, Utpal Sen Gupta, told Business Standard.

On the other hand, he said, the company was focusing on expanding its branded foods business.

Accordingly, during the nine-month period ended December 31, 2007, the net sales of ATFL branded foods increased 20 per cent to Rs 472.40 crore from Rs 392.80 crore in the corresponding period last year. During the same period, the sourcing and institutional business declined to Rs 418.2 crore from Rs 486.40 crore.

"Our turnover from branded foods during the nine-month period increased due to a 7-8 per cent rise in price and 12-13 per cent increase in volume," Gupta said, adding the company's profit margins were improving with increased sales of branded foods. The company's net profit during the first three quarters of the current financial year stood at Rs 13.1 crore as against Rs 10.8 crore in the same period last year.

ATFL is currently test marketing Snack Pack and Swiss Miss products in Hyderabad. Snack Pack, being imported from the US, is a shelf-stable pudding, which does not require any refrigeration. Swiss Miss is a beverage comprising milk, chocolate and sugar which could be consumed by mixing in a cup of hot water.

With the launch of the two new products, ATFL's branded food portfolio extends to four including Healthy World sunflower oil and Act II popcorn. In the food services segment, which caters to the needs of institutional buyers, the company would be soon launching tomato products called 'Hunts'.

Gupta said ATFL had Indianised the whole range of Act II popcorn, which initially used to be imported. Now the product is being produced in India and sold in small packs priced at Rs 10 each. The company was earlier marketing Act II popcorn in larger packs of Rs 35 each.