The Hindu Business Line : Satnam Overseas plans rice mill, processing unit in UK

SATNAM Overseas Ltd (SOL), a leading basmati rice exporter, plans to invest about $10 million during current fiscal, which includes setting up of a rice mill and processing unit in the UK and the entry into the ready-to-eat food (RTF) products.

SOL has already launched a few products in the RTF segment, but it has drawn up plans to expand its profile in the international and domestic markets. Production from the processing unit in the UK with a capacity of six tonnes per hour, will start from next month. This will help SOL position its flagship brand, Kohinoor, among the other strong international brands more aggressively. It currently has a share of 10 per cent of the total 2,20,000 tonnes of basmati rice exported out of India and Pakistan.

Under the European Union regulation, Basmati rice could be shipped only in semi-processed form. The processing unit should help SOL, which had to depend on others for producing whole basmati rice in the UK, to overcome constraints in capacity building. Also, with the EU withdrawing duty exemption to both Pakistan and India, SOL saw a prospect of increased export.Talking to Business Line, Mr Rajeev Mangal, Chief Financial Officer, said, at international level, SOL plans to focus on branded basmati rice market instead of private labelling and hoped to increase its share of branded exports to 45-50 per cent during 2004-05 as compared with 21 per cent of last fiscal.

"Till December 2003, European Union was providing duty benefits to Indian and Pakistan Basmati rice. The removal of duty benefit against Pakistani rice by European Union will effectively result in increasing India's export growth by 75,000 tonnes to Europe," Mr Mangal said.

SOL plans to garner 10 per cent of the RTF market, which is expected to touch Rs 200 crore by 2005, through strategic marketing, tie-ups and its own distribution network. Similar emphasis would be given to expand its RTF sales in the international markets.

The company recorded a 17 per cent growth in its revenue to Rs 532 crore during 2003-04 (Rs 454 crore) and its branded sales went up by 39 per cent to Rs 185 crore (Rs 133 crore). It earned a net profit of Rs 14.1 crore, an increase of 49 per cent from Rs 9.49 crore.