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“We have plans to invest `2,000 cr, go public in 13-14”
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Sunday, 16 October, 2011, 08 : 00 AM [IST]
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MPS Food Products Ltd, part of the Kolkata-based MPS Group, has slated a growth plan which encompasses not just food processing but consolidation of presence in retail space with a dedicated range of outlets. P N Manna, CMD, MPS Food Products, shares the plans with Nandita Vijay. Excerpts:
Tell us about your expansion plans and growth in the food processing sector.
We have a concrete business plan in place. There is a backward integration strategy evolved into the company because it already owns 400 acres of land certified for organic farming from APEDA (Agricultural and Processed Food Products Export Development Authority) and SGS India an inspection and certification agency of the Government of India. The MPS Group comprises nine companies wherein MPS Greenery Developers Limited is engaged in the cultivation of organic fruits and vegetables. These are supplied to MPS Food Products Limited which is engaged in the processing of raw materials. MPS Food was set up with a capital investment of Rs 10 crore in 1995 and over the one-and-half decades has infused capital to the tune of Rs 600 crore for development of infrastructure which not only includes two production plants but also for the domestic and international marketing operations. Our plants are located in the pollution-free zone in West Bengal. Of the two plants, one is at Dahijuri, Jargram in West Midnapore district, and is engaged in production of organic products. The second plant is near the Netaji Subhash Airport in Kolkata and manufactures snacks and sweets. For this expansion, funds were sourced from private equity, promoter contribution and banks.
As part of expansion plans in food processing, we have set up a rice unit at Bareilly in Uttar Pradesh and a unit which is the fourth plant of MPS Food at Howrah district for which construction has begun. We have planned to invest Rs 2,000 crore. To fund its future expansion, the company is gearing up to go public in 2013-2014. The new units will look at production of a range of organic beverages not just in Tetra Paks, but bottles and cans. We have also planned to produce extruded foods and frozen range of non-veg & vegetarian products. There is also a provision to manufacture of potato flakes and chips besides enter the breakfast cereal market with cornflakes to begin with. The facility will also have a multi chamber cold storage centre. The company is also keen to spread its manufacturing base across the country and is toying with the idea to set up units in Karnataka and Maharashtra.
There are several food parks in both Karnataka and Maharashtra. Would you be looking at setting your production base here?
We are not keen on the food parks as the area for each unit is small in size. We are planning greenfield projects in the two states which require land spanning anywhere between 52 acres and 100 acres. Such large expanse of land is not available at the food parks.
Tell us more about the initial public offer (IPO) plans.
The IPO is planned anytime between April 2013 and March 2014. Our parent company has made a provisional registration for collective investment scheme (CIS) from SEBI.
Give us an overview on the production plants of the company.
The company has the required infrastructure for organic processed food products and herbs to cater to the Indian and the international markets. We are HACCP-certified company. Our high quality standards have helped us to bag 17 International and 58 national awards. These include Global Food Excellency Award for Quality – By World Economic Progress Society, International Excellence Award for Food Industry 2008 by IEDRA; National Quality Excellence Award for Food Processing by World Economic Progress Society, New Delhi; Global Food Excellence Award for Quality 2007 by World Economic Progress Society; Winner of International Golden New Millennium Award for Quality & Management Excellency – 2007; International Golden Awards 2007 by Otherways Paris; and International Diamond Eye Award 2007 given by Otherways Paris.
The production plant for flour (rice, wheat and besan) has a production capacity of 150 tonnes a day. In the sacks category, there are constant efforts to expand the range. Recently, we introduced the Mixed Masala range - tomato ketchup, mixed veg pickle and mixed fruit jam in new sachet packs.
Give us details on the marketing efforts.
We are present in 18 states in the country. We have a strong distributor network. Our regional offices are at Mumbai, Guwahati, and Bangalore. It is also important for us to share the efforts of setting up the MPS Retail Food Hub with 3 outlets in Kolkata, one each at Guwahati, Bangalore and Mumbai. In the international market, the company exports to the developed markets which include the US, the European Union covering the UK, the Middle-East, Nepal and Bhutan. It is easy for us to export because of the certification and acceptance in these regions.
What is the impact of the food inflation? Would the company make efforts to increase prices?
Since much of our products are sourced from company-owned farms, we would be prudent in the pricing strategy, which would be competitive.
What are the visible trends in the food processing space?
The food sector is driven by demand and affordability. Disposable incomes and shortage of time will drive the sector, which are seen as visible trends.
What according to you are the key challenges in the space of food entrepreneurship?
The key issue is access to right talent and funds. While there is a dearth of quality and trained human resources, it is also difficult for seeking the right financial partner, be it private equity or venture capitalist to comprehend our business model.
How do you see the future of the Indian food processing industry?
There is tremendous scope for growth, not just in India, but globally. There is significant expansion seen in the grain processing sector with the massive branding of products. We aim to bridge this gap with high quality organic products in both the non-veg and vegetarian space with an aim to promote non-GMO (genetically modified organism) varieties. India’s food processing industry has taken off substantially and will continue to grow rapidly considering the untapped potential in the sector. On the one side, there is huge demand, and on the other, is the supply dynamics, which the food processing industry can capitalise to succeed.
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