Sanwaria Agro to invest Rs 200 cr to raise capacity

Suresh P. Iyengar Mumbai | Updated on November 15, 2017

Sanwaria Agro Oils plans to invest Rs 200 crore this fiscal to enhance its processing capacity and venture into new products. The company plans to raise Rs 50 crore through external commercial borrowing (ECB).

Mr C.A. Anil Agarwal, Director, said that the company has not firmed up fund raising plans yet, but will definitely look at raising Rs 50 crore through ECB.

“We have credit limit of Rs 800 crore from various banks. Though the RBI has signalled softening of lending rates, but we do not want to rush. We are also weighing the option of private equity,” he said. It has a short-term debt (less than one year) of Rs 300 crore.

The company has a solvent extraction plant of 200 tonnes a day of soyabean and other oilseeds in Itarsi. It processes soyabean to extract soya oil and soyameal. It recently launched value-added edible soya products. The company proposes to set up a processing unit for basmati, wheat and soya flour of 100 tonnes a year in Madhya Pradesh.

“We plan to import pulses for retail distribution under our brand. We will source basmati rice from Madhya Pradesh,” said Mr Agarwal.

Shift towards brand

The BSE-listed Sanwaria Agro is shifting to sell goods in branded form rather than selling them in bulk. It has three brands — Sulabh, Narmada and Sanwaria. It currently sells its branded soyaoil, soya nuggets and vanaspati through Hariyali Kisan Bazaar, Pantaloon (Big Bazaar), Vishal Retail, Reliance Fresh and ITC Choupals. Apart from the established retail chains, the company intends to tap the potential of its existing distributors and bulk buyers to sell its packaged goods.

Sale of branded goods contributes about 10 per cent to its total annual revenue. This is expected to touch 30-40 per cent with the launching of new products such as pulses, basmati rice and wheat flour. The company's revenue for this fiscal was down 10 per cent at Rs 1,420 crore (Rs 1,592 crore).

The EBITDA (earnings before interest, taxes, depreciation and amortisation) margins, which currently hover between six per cent and 11 per cent, will move up to 15-20 per cent with the company's focus on branded value-added products, he said.

The industry is slowly moving to sell edible goods in packaged form as the Government is planning to make it mandatory, he added.


Published on May 08, 2012

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