The Hindu Business Line : Cashew body to sell products in Russia, China

Kochi, July 29 The Kerala State Cashew Development Corporation (KSCDC), which continues to be in the red, now appears to be on the right track with an approach to become a profit-making public sector in the current fiscal. The company employs around 20,000 workers in 30 factories spread across the State

Unlike in the past, the corporation is concentrating on full-capacity utilisation. Besides, it has entered into a tie-up with State Trading Corporation (STC) for import of raw cashew to get over the working capital constraints and launching of value-added products with a technical tie-up with the Central Food Technological Research Institute (CFTRI), Mysore.

Marketing studies

Fully realising the difficulties in marketing its branded products in consumer pouches in the US and the European markets monopolised by the big multinationals, the KSCDC has taken the initiatives to market its products in Russia and China.

The Indian Institute of Foreign Trade (IIFT) has already been entrusted to conduct marketing studies in these two countries with Central assistance and its report is expected by year-end, Dr K.A. Retheesh, Managing Director of KSCDC, told Business Line on Thursday.

He said the corporation has already launched its four value-added products in the domestic and Gulf markets. There was good response from the Gulf where the Emkay Group would be marketing them through hits supermarket chain in the entire GCC countries, he said.

Marketing tie-up

However, the sales will become effective after getting a quality certification from the local Government there, which is expected soon. The response from the Indian domestic market for its valued-added products: Cashew soup, cashew powder, cashew vita and cashew bits and cashew kernels in consumer packs has been very encouraging and many Indian multinational companies have come forward to sell these products through their retail outlets in the country. Permission from the State Government has been obtained for entering into marketing tie-up with them, he said.

At present, the marketing is done through the Government super markets in Kerala. The potential demand is high and hence to meet it, the KSCDC is currently in the process of expanding its production capacity from 100 kg-a-day to 300-kg-a-day and to introduce three shifts in its unit located at Kottiyam in the Kollam district. He said that the raw material price has shot up in recent months following the significant rise in the prices of kernel in the world market. “When the kernel price shot up by 59 per cent, the corresponding increase in raw nut price was 56 per cent and, therefore, the corporation is not benefited by it.”

Market fluctuations

Timely execution of import orders from producing countries in Africa, when the raw material price was at lower levels could not be done by the corporation being in the public sector. Operational freedom to take decisions at the right time watching the market trends/movements is the only way out to enjoy the benefits of market fluctuations, he said. However, there has been a decline in the cashew kernel price in the world market of late and it has dropped to $3.16 a pound from $3.65 a pound for W-320 variety a fortnight ago, he said.

But, still it is the highest ever and the reasons attributed are the inflation globally and reported default by Vietnam, he said.

The corporation, he said, is targeting a turnover of Rs 300 crore for the current fiscal with Rs 100 crore coming from the sales of its branded four value-added products and cashew kernels in consumer pouches. The Government financial support has been limited and the corporation gave employment for 165 days in 2006 and 195 days in 2007.

In 2008 also it is working continuously and losses are reduced to Rs 12 crore in 2006-07 and Rs 9 crore in 2007-08 and expecting at least to break-even in 2008-09. By bringing professionalism in all the sectors of the corporation, Dr Retheesh said, he is confident of “removing the stigma of loss-making PSU to a profit-making one in the near future.”

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