The Hindu Business Line : A turnaround year for Agro Tech Foods

LAST fiscal has been a turnaround year for Agro Tech Foods Ltd (ATFL), a subsidiary of global food major ConAgra. The company's net profit during the year, after payment of Rs 6.2 crore towards settlement of the Mantralayam undertaking belonging to ITC, stood at Rs 2.6 crore against a net loss of Rs 12.5 crore in 2002-03. It reported a turnover of Rs 1,260 crore, registering a 13 per cent growth over the previous year's turnover of Rs 1,113 crore.

Both the branded foods and bulk and processed commodities (BPC) segments of AFTL have registered significant growth rates during 2003-04 when compared to the company's performance in 2002-03. Its key brand Sundrop ended the year with 14 per cent growth in volume, while Crystal, an economy segment brand, registered a growth of 27 per cent. Similarly, the volume of ACT II brand grew by 9 per cent.

The company's BPC business also achieved a 14 per cent increase in turnover. "A good monsoon offered opportunities, which were harnessed," AFTL stated in its annual report.

The only brand of the company that registered a decline in volume last year was Rath, a vanaspati product. Its volume declined by 9 per cent as the company exited it from "unprofitable markets." AFTL, however, stated that this decline was lower than the decline of vanaspati market and the brand had achieved its profitability target.

In the current year, AFTL plans to expand its branded oil business by building on the success achieved during 2003-04. The plan is to grow Sundrop and strengthen its brand equity by focusing on various offerings under the brand. In the case of Crystal, the company's strategy is to build preference for the brand through targeted marketing activities in key markets. On the other hand, the company will continue to focus on cost reduction to contain prices and promotional activities to strengthen consumer loyalty enjoyed by Rath in its core markets.

Apart from developing a range of value added products offering health and nutrition benefits under its Healthy World brand, AFTL has stated that it would expand the vending operation of ACT II popcorn. In the BPC segment, the company is looking at opportunities for value added operations to build a foundation for future growth.

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