Kishore Biyani, pioneer of organised retail in the country, has put in place a plan to help him emerge a key producer and marketer of packaged foods and beverages.
Talking to Business Standard, the 53-year-old chief executive officer of the Rs 18,343-crore (Rs 183.43-billion) Future Group said he was targeting a turnover of Rs 20,000 crore (Rs 200 billion) from his food & beverage business by 2020.
“This business has touched nearly Rs 1,000 crore (Rs 10 billion) in turnover.
"It has the potential to grow even further, which is why we have an ambitious target for it,” he said.
Future Consumer Enterprises, vehicle for Biyani’s fast moving consumer goods and F&B interests, closed 2013-14 with net sales at Rs 823 crore (Rs 8.23 billion) and a net loss of Rs 7 crore (Rs 70 million).
Debt at the end of 2013-14 was Rs 110 crore (Rs 1.1 billion) and the business currently contributes 4.48 per cent to Future Group’s total revenue.
His foray into F&B was set in motion last week, when Prime Minister Narendra Modi inaugurated the 110-acre Tumkur food park, near Bangalore.
Biyani has invested Rs 200 crore (Rs 2 billion) in the initial phase.
Another Rs 750-800 crore (Rs 7.5-8 billion) will be invested in the next few years, he said.
The money will be used to set up a flour mill, rice mill, pasta plant, spice plant, paste factory and bakery unit.
And will be used as a captive facility for the products Biyani proposes to manufacture and market on his own.
Biyani already has eight in-house brands, including Tasty Treat, Premium Harvest and Fresh & Pure, operating in processed foods, branded commodities and dairy segments, respectively.
The others -- John Miller, Clean Mate, Care Mate, Ektaa and Sach -- operate in the male grooming, home care, personal care, community foods and oral care segments, respectively.
Biyani proposes to take his in-house food brands aggressively across the country through a chain of convenience stores and through general trade.
“We already have 200 convenience stores under KB’s Fair Price and Big Apple.
"This number will be increased as we go forward,” he said.
His group is believed to be in advanced discussions with South India-based supermarket chain Nilgiri for a possible acquisition, which he believes will strengthen his retail presence in the region.
Biyani is also planning to introduce external brands into the Indian market via tie-ups with international players.
The first move in that direction was Sunkist, a Californian beverage maker with whom Biyani entered into a long-term agreement in December 2013 to manufacture, market and sell its products in India.
This will be launched in select markets in the next fortnight.
The food park in Karnataka, as well as two more at Kharagpur in West Bengal and Madhya Pradesh, will act as a manufacturing hub for these external products and in-house brands that Biyani will push as part of his F&B play.
“We have acquired land in Kharagpur. Land acquisition in Madhya Pradesh will kick off after we finalise the location there, which will happen shortly,” he said.
The retail king is also eyeing joint ventures for his food parks with companies for specialised processing units in areas such as biscuits, chocolates and softdrinks.
Once it is fully operational, the Tumkur food park alone will have 50 processing units.
- Aggressive manufacturing and marketing in-house and external brands on the cards
- Products will be taken across the country through convenience stores and general trade
- Target is to increase turnover from the current Rs 1,000 crore (Rs 10 billion) to Rs 20,000 crore (Rs 200 billion) by 2020
- To tie up with international players keen to launch their products in India
- Three food parks, one each in Karnataka, Madhya Pradesh and West Bengal, are in the making
Image: Kishore Biyani; Photograph: Rediff Archives