It will be ready by the second half of the next calendar year, helping the company to expand its business-to-business (B2B) and consumer foods portfolio in India, a top official with the company said.
The Indian subsidiary of the $134.9 billion-by-revenue American multinational has three edible oil refineries in India—at Paradip in Odisha, Kandla in Gujarat, and Kurkumbh in Maharashtra.
“The plant (in Bangalore) will process corn to produce glucose and other derivatives that will be used as sweeteners, thickeners and for other purposes in the food and healthcare industry," said Siraj Chaudhry, chairman of Cargill India, on the sidelines of the Federation of Indian Chambers of Commerce and Industry (Ficci) Food World event in Mumbai on Wednesday.
This is Cargill’s first major capacity expansion project in India in 10 years, he said.
In the consumer foods category, Cargill India has edible oil brands such as Leonardo, Sweekar, Gemini and Nature Fresh. The company has also entered the specialty fats and specialty ingredients business, and is a supplier of edible oil to food companies. In the edible oils space, Cargill competes with companies such as Adani Wilmar Ltd and Ruchi Soya Industries Ltd.
“We intend to get more into the adjacencies, i.e. businesses that are adjacent to our existing businesses," said Chaudhry, citing the company’s entry into the flour business as an example of a business that’s related to its edible oil segment. Cargill sells wheat flour under the brand Nature Fresh Chakki Atta.
In February, Cargill, which has a strong presence in the olive oil segment worldwide, acquired the Leonardo brand of olive oil from Dalmia Continental Pvt. Ltd. In 2011, it acquired the refined sunflower oil brand Sweekar from Marico Ltd. Gemini, a sunflower oil brand with a strong presence in western India, was acquired in 2005 from Parakh Foods, a Pune-based company.
“We continue to look at the edible oil space for acquisitions. If we can fast-track our growth through an acquisition then we will definitely look at it. Now that we have entered the corn milling space, we will be looking at that too. Of course, our objective is not to remain a one-plant company in that space," said Chaudhry.
Olive oil is one of the fastest growing segments in the edible oil space. The olive oil market in India has grown rapidly in the last decade from 1,000 tonnes in 2003 to 12,000 tonnes in 2013, according to the Indian Olive Association.
“We have a 26% market share in olive oil and we expect market to grow at a rate 15%," said Chaudhry.
Backed by its parent’s research and development prowess, the company is entering into new areas like transformer fuels.
“Using by-products generated from our edible oil refineries, we have created fuel that replaces the fossil fuel-based solutions used in transformers and enhances the reliability and life of a transformer. A few companies in India have already started using it," he said. The company is eyeing a 5% market share in this space in the next few years.
Another new segment that the company has entered recently and which it is focusing keenly on is animal nutrition and feed.
On the distribution front, Chaudhry said that the company is trying to strengthen its position in the northern and southern regions, the south being the weakest region for the company. The company has been on the lookout to acquire a regional brand in the south, but hasn’t found a perfect match so far.
Organized retail is a strong channel for the company and 12-13% of the sales come from organized retail. Cargill India is also selectively looking at small e-commerce companies in major cities as a distribution channel. “Selling olive oil on e-retail is probably better than say selling 10 kg of atta," said Chaudhry. Atta is Hindi for wheat.
Cargill had also tried direct delivery of olive oil via SMS orders in select localities, but it discontinued this model of delivery.
On Cargill’s future plans, Chaudhry said that the company will continue improving its edible oil products by introducing new blends. It might also add more variants in the atta product line such as multi-grain atta, he added.
“Cargill India’s aim is to be the partner of choice to most food companies and a reliable quality brand for staples like oil and atta," said Chaudhry.