Harish Damodaran

New Delhi, May 19 After Seychelles, Hatsun Agro Product Ltd is now planning to put up a manufacturing facility for its ‘Arun’ ice-cream in Fiji.

“We hope to commission the plant by September. Just as in Seychelles, this unit will also be set up through a local franchisee who will manufacture and market our ice-cream brand in Fiji,” Mr R.G. Chandramogan, CMD of the Chennai-based company, told Business Line.

Hatsun’s 3,000 litres per day (LPD) plant at Seychelles was commissioned in mid-May and “we have captured a 70 per cent share in the market there”, he claimed. The Fiji unit will also be a similar-sized facility that would basically source the raw ingredients (milk powder, dairy fats, dry fruits, etc) and packing material from Hatsun.

But why, of all places, Seychelles and Fiji, to manufacture ice-creams (‘Arun’ ice-cream is current being sold in Brunei as well)? Well, one reason is that these are not big enough markets for the Unilevers and Nestles to set up shop. That automatically reduces competition and brand promotion costs.

Secondly, in Fiji, the import duty on ice-creams, at about 27 per cent, is more than the five per cent for raw material. Thirdly, ice-cream is expensive to export since it has to be transported in frozen containers and also occupies more space. This is not so with regard to dairy ingredients, which can be shipped out in bulk without maintenance of any cold chain. And the franchisee route would involve no equity infusion from the company’s side, which again makes it possible to establish a market presence at a relatively low cost.

Ice-cream contributed around Rs 45 crore to Hatsun’s topline of Rs 800 crore last year, with three fourths of its turnover coming from sale of liquid milk under its ‘Komatha’ and ‘Arokya’ brand. “Although ice-cream generates barely six per cent of our total sales, the entire selling and distribution network for our branded milk has been built on the base provided by ‘Arun’. In fact, it has been very important for our brand equity and continues to be so even today,” Mr Chandramogan added.

Hatsun currently has a capacity to manufacture 50,000 LPD of ice-cream and claims to be the market leader in the South.

Related Stories:
Hatsun expanding domestic, export markets
Hatsun targets growth in milk ingredients business
Hatsun Agro project to encourage farmers to take up dairying
Hatsun Agro targets 4,000 `pure' dairy farms

(This article was published in the Business Line print edition dated May 20, 2008)
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