Textile firm to process food

Amartex to invest Rs 158cr in new unit, currently in the process of developing vendor network

The vertically integrated textile player Amartex has decided to foray into the food-processing business with an investment of Rs 158 crore. The project was approved by the empowered committee headed by Punjab Chief Minister Amarinder Singh last week.

The company will put up a fruit-processing unit in Abohar (district Firozpur) because the area is important as a centre for citrus fruit cultivation. This will be a forward integrated project because the finished product (fruit juice) will be sold to consumers at the retail outlets of Amartex. The company has 32 retail outlets in the northern part of India.

Talking to Business Standard the Managing Director of Amartex, Arun Grover said that the company would be putting up one more plant for processing food grains and fresh vegetables in the Rajpura-Patiala belt and the site was yet to be identified.

Sharing his business philosophy Grover said he proposed to set a business model where the farmers and the end users get the benefit but there was no room for the middlemen. He added that he would buy the inputs directly from the farmers . "We are in the process of developing vendor network to acquire the crop from individual farmers".

In order to maintain the uniformity in quality of inputs the company would register farmers and would impart them the information without any cost on the various quality norms.

According to Grover, he would hire agriculture scientists to ensure the authenticity of information on the latest agriculture practices.

Karvy and SBI Caps have been engaged as consultants and the specifications of the project would be ready in a few weeks. The company has decided to roll out 18 mega malls with an area of 5 lac square feet each in the rural locations to support the food processing project.

"The rural malls would provide a platform to the farmers to store their harvest, sell it to Amartex and barter for other items of their requirement.

He said that the focus was more on facilitating the farmers as the diversification of agriculture of agriculture in Punjab as there was a lack of forward linkages.

"The back-end support to the farmers was given to farmers by various government and non-government agencies but due to poor marketing facilities the farmers could not get the expected returns from the diversification of agriculture", said Grover.

The rural malls would solve their problems relaying to the marketing of the products that are to be transported to distant areas. As reported earlier the IPO of the company was on the anvil but that would fund the expansion of textile business. The food processing project would be funded by the mix of debt and internal accruals.