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Agro Tech Foods: Key products
Category Key brands
Vegetable Cooking Oil Sundrop
Popcorn Act II
Peanut butter Sundrop
Source: Company reports and Euromonitor.
Agro Tech Foods is a 48% associate of the US food major ConAgra. It is present in
the edible oil segment with Sundrop brand and other products include Act II popcorn
and peanut and chocolate pudding under Sundrop brand.
Takeaways from recent post earnings conference call:
Distribution expansion & brand building are key action points for Act II. From
nearly 54K stores access in 2007, ActII is now sold across 350K stores (up from
300K stores in early 2010). Management aims Act II to reach 0.5mn outlets over next
year and has long term target of reaching 1.5mn outlets.
Improving portfolio mix. Besides divesture of low margin Rath edible oil brand and
strong focus on popcorn, the company is looking to scale up its presence in peanut
butter category. They are looking to manufacture this product locally this calendar
year (to save on import tariffs and improve profitability) and have acquired land in
Gujarat to set up a plant for the same. Company has divested their low margin Rath
edible oil brand to Cargill in December. As a result, management expects margins
will benefit overall with this divesture.
Overall management expects value added non-edible oil products to grow over
50% in terms of revenue. They may consider introducing a third brand in their
portfolio (leverage parent Conagra’s portfolio perhaps). Would target niche segments
(with potential minimum category size of Rs1bn) where they can enjoy pricing
power.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Agro Tech Foods: Key products
Category Key brands
Vegetable Cooking Oil Sundrop
Popcorn Act II
Peanut butter Sundrop
Source: Company reports and Euromonitor.
Agro Tech Foods is a 48% associate of the US food major ConAgra. It is present in
the edible oil segment with Sundrop brand and other products include Act II popcorn
and peanut and chocolate pudding under Sundrop brand.
Takeaways from recent post earnings conference call:
Distribution expansion & brand building are key action points for Act II. From
nearly 54K stores access in 2007, ActII is now sold across 350K stores (up from
300K stores in early 2010). Management aims Act II to reach 0.5mn outlets over next
year and has long term target of reaching 1.5mn outlets.
Improving portfolio mix. Besides divesture of low margin Rath edible oil brand and
strong focus on popcorn, the company is looking to scale up its presence in peanut
butter category. They are looking to manufacture this product locally this calendar
year (to save on import tariffs and improve profitability) and have acquired land in
Gujarat to set up a plant for the same. Company has divested their low margin Rath
edible oil brand to Cargill in December. As a result, management expects margins
will benefit overall with this divesture.
Overall management expects value added non-edible oil products to grow over
50% in terms of revenue. They may consider introducing a third brand in their
portfolio (leverage parent Conagra’s portfolio perhaps). Would target niche segments
(with potential minimum category size of Rs1bn) where they can enjoy pricing
power.
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