The Hindu Business Line : Coming out of its shell

After more than 70 years of selling cashew kernel in bulk in the domestic and overseas markets, Kerala State Cashew Development Corporation (KSCDC) has imbibed the mantra of ‘value addition’, which appears to have put the loss-making pu blic sector back on the track to profitability.

KSCDC, the biggest employer in the country’s cashew industry with 20,000 workers, mostly rural women, in 30 factories spread all over Kerala, has successfully implemented its innovative strategy. The corporation made a turnover of Rs 140 crore in 2008-09 as against Rs 35.11 crore in 1978-79. The positive results might help the company wipe out its accumulated losses amounting to Rs 534.90 crore as on September 30 last.

“The response to the new value-added products, introduced only in April last, has been overwhelming and the demand is so great that we are now in the process of expanding our present capacity of 100 kg a day by converting an unused tannery unit in the factory premises at Kottayam,” K. A. Retheesh, Managing Director, KSCDC, tells BrandLine. There is a demand growth of 500 per cent creating a wide gap between supply and demand, he said.

A significant step taken of late is to attract the motorists/travelling population. The corporation has entered into a tie-up with Hindustan Petroleum Corporation Ltd to sell the value-added products through its 8,400 outlets throughout the country. Besides, “we are in the process of tying up with Keventer Group, a Kolkata-based company, for distribution of our products in India and abroad”, he says. The State’s Civil Supplies Corporation and co-operative supermarket chains have already started sales of CDC cashews and value-added products. The encouraging market response is spurring KSCDC to achieve Rs 350 crore turnover in 2009-10, he said.

The four products developed by the Central Food Technological Research Institute (CFTRI), Mysore, and introduced by the corporation under the brand name CDC Cashews are cashew soup in powder form, cashew powder, which can be used to thicken dishes, Cashewvita, a health drink that can be added to boiled milk, targeted at growing children, and Cashew Bitz, spicy cashew snacks that can accompany a drink.

“These products are true value-added products and their global launch was done at Dubai last April. The response since then has been overwhelming,” Retheesh says. KSCDC, he said, envisages profiling Indian cashews in the global market as value-added products given the country’s status as the biggest producer, processor and consumer of cashew in the world.

KSCDC is in the process of expanding the domestic market targeting the middle and upper middle classes by offering them consumer packs ranging from 20 gm to 1 kg gift packs. Its branded cashews are put in packaging of international standard which helps to increase shelf life up to one year. “The products are affordable as they are available in packs fitting into the wallets of the consumer and hence they move fast,” the manager of a major supermarket said. Kids like them, said a housewife.

The latest addition is going to be cashew noodles aimed at the metros and overseas markets in Asia where this product is popular. The CFTRI is working on developing this product, Retheesh said. The Indian Institute of Foreign Trade is already carrying out a market study for the Corporation in China and Russia and its report is expected early next year.

Above all, there is an economic advantage as for the new products. Whole nuts need not be used. The broken nuts that fetch low price are commercially utilised for manufacturing the value-added products to gain better prices. Besides, rejects could be commercially utilised for manufacturing poultry/cattle feed, says Retheesh. The present management had almost redesigned the role of the corporation during the past three years, he said.

Though India is exporting to more than 60 countries, over 99.5 per cent of India’s cashew production goes into bulk packaging and as plain cashew kernel. Exports of the commodity in value-added form/consumer packs constitute less than 0.5 per cent of the total exports per annum or, in value terms, less than $1 million. Most cashews are either oil- or dry-roasted, market sources inform. They are marketed to the consumers in a mixture with other nuts, as 100 per cent nuts and in confectionery products.

Raw cashew nuts are also sold in health food and dry fruit stores. India currently produces different varieties of cashew kernel including roasted and salted, sugar-coated, spiced and masala-fried. However, no serious efforts appear to have been made by Indian exporters to market such products in branded consumer packs in foreign markets, they add.

Value addition in the cashew industry, according to Retheesh, can take three forms: Incremental value addition to the commodity in its existing form; finding new uses (programmes to promote cashew as a healthy, nut, ideal snack containing high calories and polyunsaturated fat content, expanding the use of cashew kernel in sweets, biscuits and other confectionery); and innovative value-added products. KSCDC has tied up with the State Trading Corporation of India to procure raw nuts. Modernising its 30 factories to meet international standards is under way, which in turn will benefit the factory workers, Minister for Excise and Cashew Industry, says P. K. Gurudasan said. If that goal were to be achieved, the value goes beyond profits.

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