The Hindu Business Line : Sterling Agro to expand contract farming

Chennai, Nov. 10 Sterling Agro Product Processing Pvt Ltd, a Siva Group company, plans to expand its presence in contract farming of vegetables and in domestic and export marketing of processed vegetables.

According to Mr Sreeram Chellappa, Chief Executive Officer, Sterling Agro, one of the country’s largest exporters of pickled gherkins and other processed vegetables, plans to expand its product range and launch its own brands in the domestic and export markets. This will be in addition to expanding its presence in the existing line of exports for third party brands and bulk packs which represent a Rs 60-crore business.

Gherkins contribute the lion’s share of the business with the produce coming from 6,000 acres under contract farming, mostly in Karnataka and Tamil Nadu. The company plans to expand the contract farming area to about 10,000 acres by spreading to southern parts of Tamil Nadu and Andhra Pradesh.

Investment plan

“Huge investments” are planned to expand its processing facilities, product development and marketing, he said, while declining to specify the size of investment. The objective is to grow to be a Rs 500-crore business over the next five years.

The first of the investments would be in a new processing unit to be commissioned in mid-2011. The company now processes and packs gherkins in a factory with a capacity to handle over 21,000 tonnes a year, about 1,500 container loads. A similar facility would cost about Rs 20 crore. Its largest markets are Europe, the US and Canada. Sterling Agro supplies to the food service segment that caters to restaurants and fast food joints and to large retail chains such as Costco, Wal-Mart, Tesco and Reitzel International.

The company will also launch its own brands in these markets and West Asia. In the domestic market, it is planning to launch a range of branded processed foods by the end of the current financial year.

Mr Chellappa said two companies within the group, Sterling Agro and Planet Pickle, handle the retail segment and bulk exports. They will be merged to form a single entity which will be renamed in line with the Siva Group’s style (the group was till recently called Sterling Group).

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