Rs 12,000 crore Suguna Foods, a leading name in the poultry business, wants to double its processed food production from 30,000 tonnes per annum in four years, said B Soundararajan, chairman of Suguna Group in a conversation with Sangeetha G.
The company recently seems to have achieved a turnover of Rs 12,000 crore. Tell us about the key milestones of the company and the next target in terms of growth.
The company has achieved the turnover target of Rs 12,000 crore. Going ahead, we think that our poultry feed business and processed food are going to the engines of growth. We have four verticals – farm business which connects us with the poultry farmers, feed business which provides poultry feed to the farmers, processed food division which consists of production and retail ready-to-cook and ready-to-eat products and lastly the soyabean crushing business that produces soyabean oil from the soyabean used as a raw material for the feed business. The soyabean oil branded ‘Mother’s Delight’ is currently sold in Maharashtra, where we have a crushing facility. The facility has a capacity to crush 1000 tonnes of soyabean and produces 180 tonnes of oil per day. We need three times more feed and this will increase our soyabean oil production accordingly. We plan to come up with two more facilities in Madhya Pradesh and retail the product more in Madhya Pradesh.
How are you expanding your processed food business?
In the poultry market valued over Rs 80,000 crore, only 5 to 6 per cent of the business comes from processed meat. The younger generation is more keen to buy processed food. Our processed chicken is sold under the brand name DelFrez and they are also retailed through our stores in the same brand name. We have two facilities in Belgaum and Chandigarh, which caters to those regions. We are coming up with another facility in Bangalore. Currently, our production is 30,000 tonnes per annum and we plan to double it in four years. We have 250 DelFrez stores and these numbers too will go up in the coming years.
Of late, you have been expanding in the African market. Tell us more about the market as well as other international markets you are eyeing?
We have our farm business in Bangladesh and Kenya. Bangladesh is a potential market for growth as their consumption is three times more than that in India. We wanted to understand the African market and hence we ventured into Kenya. The per capita consumption as well as the per capita income in Kenya are low. We plan to explore Uganda in the coming year.
What are the major challenges and prospects of a poultry company while expanding globally?
Currently, our exports are around Rs 70 -80 crore. The Middle East is a large market. Brazil mostly supplies chicken to this market as they are more competitive in terms of pricing – 20 to 30 per cent cheaper than us. They have cheaper availability of both corn and soyabean.
Further, most of the African countries, including South Africa, want to be self-sufficient in chicken production and do not want to be import dependent. Hence, there is limited scope for exports.
The unpredictability of the market, especially during tough times like the pandemic, affects exports. The consumption in rural areas of Kenya was affected and it keeps fluctuating.
While we are more focusing on the domestic market, it is not bereft of challenges. Availability of raw materials for feed is a major challenge. Corn and soyabean are main raw materials and currently free import of corn is not allowed. A large portion of the corn produced in the country is likely to go into ethanol production and this a challenge we are likely to face in the coming years. As more ethanol plants are coming up we might see a crunch in the next four-five years. The government will have to allow free import of corn. Currently, we need permission from the government to import.
Now that inflation has started easing, how do you see the growth of the company this year vs last year?
Inflation affects our farm as well as feed business. But we are able to pass on the higher input cost to the customers in the poultry meat business. The market prices usually help us cover it.
Do you have plans to come out with a chicken-based fast food brand similar to KFC?
We are suppliers of meat to businesses like KFC. But fast food is not our core competence and it is altogether a different ball game. Hence we do not plan to venture into it.
