The Hindu Business Line : Surya Food to enter packaged juice market

AFTER giving established brands tough competition with Priya Gold brand of biscuits, Surya Food & Agro Pvt Ltd has now decided to enter the packaged juice market. It has set up a separate company, called Surya Fresh Foods Ltd, for the purpose and has earmarked Rs 25 crore investment in the project.

The Chairman, Mr B.P. Agarwal, told Business Line "We have decided to foray into packaged fruit juice. The product should be in the market by May this year, under brand name Fresh Gold and we will begin with six flavours initially. This project is expected to see investments of about Rs 25 crore."

He said the company is planning to price this product lower than the existing brands - Real by Dabur Foods and Tropicana by PepsiCo — to rapidly gain market share.

Surya Food is also expanding its biscuits portfolio with Rs 20-crore investment by doubling the production capacity to 500 tonnes per year by 2006. This will include a new manufacturing unit in Uttaranchal, which will commence production by next fiscal.

The company has also bagged the lucrative Indian Railways Catering and Tourism Corporation Ltd contract for supplying biscuits from next month, but Mr Agarwal declined to comment on the worth of this contract.

He also said that a host of new products are on the anvil, beginning with Tangy Tomato, a salty snack that is being positioned in direct competition with Lay's potato chips at lesser prices. The company is targeting 50 per cent sales growth to Rs 300 crore this fiscal.

At present, Surya Food has six manufacturing facilities of which four are in Uttar Pradesh and two in Gujarat, with a total installed capacity of 250-300 tonnes per annum. However, Mr Agarwal said the high duty structure and rigid price points in the biscuit industry make it difficult to utilise more than 65 per cent of this installed capacity in any one year.

Plagued with under-utilised capacities and steadily rising input costs and unable to raise prices, biscuit manufacturers have been seeking an excise-free regime.

"Unless the Government exempts biscuits from excise levy, there is unlikely to be a healthy growth in this sector, where unorganised players command 45 per cent of the Rs 4,000-crore market and capacity utilisation is only 60-65 per cent due to prohibitive costs of operation,'' Mr Agarwal, who is also the President of the Federation of Indian Biscuits Manufacturers Association, said.

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