Leading multinational trading firm Cargill sees Asia as the most important growth engine over the next five years, with investments in the region likely to grow by 16-20 per cent. The company is strongly focused on India and has kick-started plans to invest $240 million within next the four years.
Cargill, whose India revenue is Rs 80 billion ($1.2 billion), has 3,500 employees in the country. The company has identified animal nutrition, health oils, cocoa products, and building silos among growth areas. Siraj A Chaudhry, Chairman, Cargill India Private Limited said, “We are keenly looking at this space and going forward, we will decide if the opportunity lies in doing something on our own or looking at partners.”
Cargill, which has a big international business in cocoa products, makes cocoa bean powder, butter and other cocoa products, which it sells to leading chocolate manufacturers. Similar business opportunities exist in India as well, Chaudhry said, adding that apart from chocolate manufacturers and ice cream makers, the company is targeting bakeries and confectionery makers for its chocolate products, as they are also big purchasers but are mostly not in the organised segment.
In India, Cargill procurers about one million tonnes of various commodities such as corn, wheat and oil. However procuring cocoa from the international market has been a challenge now as prices are rising sharply across the globe.
Cargill acquired Vijaywada-based Fish Feed Mill in January and upgraded it by investing $10 million. It also spent $18 million in setting up a manufacturing unit in Kurkumbh near Pune for $18 million to establish itself as a significant player in hydrogenated oils and fats for different feed & industrial applications. The company is setting up its first corn silo at Davengere, Karnataka at a cost of $15 million. The facility is expected to be completed by September or October. However a large chunk of the $240 million is yet to be invested. Chaudhry said, “Most of India’s growth will be organic but the company is not averse to inorganic growth. However that depends on good assets being available at a reasonable valuation.”
“Going forward, we are also looking at setting up a greenfield operation to expand our premix & nutrition and aquafeed businesses, apart from making significant investments to grow our animal feed business over next year or two,” he added.
Edible oil, where currency and edible oil price risks are high, is Cargill's largest business in India. Chaudhry said, “We actively use hedging mechanism (to mitigate these risks). While for currency risk the hedging ratio depends upon our assessment, for commodity price risk we hedge on Indian commodity derivatives exchanges and international exchanges like Boursa Malaysia.”
He said the company will be launching health oils and wheat derivative products such as Suji (semolina) and Dalia (porridge) over the next few months, to cater to consumer demand for healthier and nutritious meals.
Off late the company is working on adopting recyclable plastic for its product packaging. It uses plastic for packaging but several state governments are banning plastic use.