Financial Daily from THE HINDU group of publications
Saturday, Jul 17, 2004
Dabur Foods' pulp processing plant to go on stream by Sept Sees 10% savings on fruit procurement
Sindhu J. Bhattacharya
Mr Amit Burman, CEO
New Delhi , July 16
DABUR Foods' fruit pulp processing plant at Siliguri is expected to become operational from September and it will result in at least 10 per cent cost savings on account of fruit procurement.
Also, Dabur Foods is expecting some benefit to accrue from the Budget proposal to award a five-year tax holiday on profits from new food processing production units being set up at this production site.
"The Siliguri pulp plant is expected to become operational by September this year. In fact, the Budget announcement of a five-year tax holiday on all profits made by new food processing units will help Dabur Foods significantly," the Chief Executive Officer, Mr Amit Burman, told Business Line, but declined to specify the extent of monetary benefit this Budget provision could mean.
He said typically, food processing units like the one at Siliguri do not make profits in the first year so quantifying the benefit would be difficult. Mr Burman said the commissioning of the Siliguri plant would help Dabur Foods improve monitoring of raw material quality of its products besides ensuring a substantial cost reduction.
"We have been procuring fruits from different parts of the country till now - mangoes from southern India, pineapples from Thailand and some eastern States of the country, grapes from Mangalore and pink guavas from Bihar. But with the Siliguri plant expected to become operational soon, procurement will largely be concentrated in and around Siliguri. This will mean up to 10 per cent reduction in raw material sourcing," Mr Burman said.
Besides, the pulp processing plant will also help the company in implementing technology it has developed in-house for the fruit drinks brand Coolers. Thus, Dabur Foods will be able to develop and market more ethnic fruit drink variants, Mr Burman added.
Dabur Foods Ltd, a 100 per cent subsidiary of Dabur India Ltd, has invested Rs 20 crore for establishing this backward integration project to benefit from the large fruit-producing zone particularly pineapple, leechies and guavas. Mr Burman said that while the focus would be on fruit processing, the plant would help Dabur develop various fruit concentrates and supply these to the overseas market as well, thus increasing the company's export volume.
Meanwhile, Mr Burman said Dabur Foods has identified several new product areas it will enter to meet the Rs 200-crore turnover target by 2006-07. The company has decided to enter businesses of soups and tomato puree under the Hommade brand, besides the just-launched fruit drinks under Coolers.
"We have decided to expand our product portfolio under Hommade. After successful test marketing, we have decided to launch Hommade tomato soup in liquid form (in cartons) by September this year. Also, Hommade will be extended to tomato puree and coconut milk," Mr Burman said.
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