REI Agro - Going West
REI Agro - Eyes West Bengal `Gobindobhog` Rice Market
REI Agro Limited plans to foray into the 'gobindobhog' rice market in West Bengal and has commissioned a feasibility study on the market size. The company is also strengthening its distribution channel and increasing capacity to make basmati an everyday affair in Indian homes. In addition, REI is setting up a six megawatt wind farm in Tamil Nadu and looking for another 25 megawatt installation in Karnataka.
REI had 15 per cent market share of the Indian basmati market, but only seven per cent of revenues come from the eastern region. To strengthen its position in the basmati trade in eastern India, it was strengthening its distributor network in the region, which had 40-odd distributors now out of the total number of 435. "Since gobindobhog is a popular fragranced rice variety here, we are planning a processing plant here in West Bengal", said Sundip Jhunjhunwaala, vice-chairman and managing director of the company. N K Gupta, technical consultant and director of the company, was conducting a feasibility study for the 'gobindobhog' project. If set up, procurement of raw material would be done from regions in and around West Bengal as it was not feasible to transport raw material from other regions for rice, said Jhunjhunwaala. The study was expected to be completed within two months. Since 90 per cent of the company's products was sold through small retailers, REI would be concentrating on selling its product through them. Only 3.5 per cent of the company's branded sales were made through consumer packets - the rest was sold from sacks at stores. The company would be increasing output capacity from the existing 49 tonnes per hour to 61 tonnes per hour at its plant in Bawal in Haryana.
REI expected to increase its exports by 25 per cent. The revenue generated from exports was 15 per cent of the total turnover last year, he said. REI sold 265,000 metric tonnes basmati rice in 2005-2006 and clocked a growth of 14 per cent. The company expected topline growth of 25 per cent this year. The bottomline growth last year was 75 per cent, up from Rs 37.85 crore in 200-2005 to Rs 66 crore in 2005-2006. A significant contributor to the company's revenues was its wind-turbine based power generation division. "During the last financial year, the company sold power worth Rs 15 crore to the state electricity boards. This year, sales should be Rs 25 crore of power from the existing capacity of 29.9 megawatt", he pointed out.
REI had 15 per cent market share of the Indian basmati market, but only seven per cent of revenues come from the eastern region. To strengthen its position in the basmati trade in eastern India, it was strengthening its distributor network in the region, which had 40-odd distributors now out of the total number of 435. "Since gobindobhog is a popular fragranced rice variety here, we are planning a processing plant here in West Bengal", said Sundip Jhunjhunwaala, vice-chairman and managing director of the company. N K Gupta, technical consultant and director of the company, was conducting a feasibility study for the 'gobindobhog' project. If set up, procurement of raw material would be done from regions in and around West Bengal as it was not feasible to transport raw material from other regions for rice, said Jhunjhunwaala. The study was expected to be completed within two months. Since 90 per cent of the company's products was sold through small retailers, REI would be concentrating on selling its product through them. Only 3.5 per cent of the company's branded sales were made through consumer packets - the rest was sold from sacks at stores. The company would be increasing output capacity from the existing 49 tonnes per hour to 61 tonnes per hour at its plant in Bawal in Haryana.
REI expected to increase its exports by 25 per cent. The revenue generated from exports was 15 per cent of the total turnover last year, he said. REI sold 265,000 metric tonnes basmati rice in 2005-2006 and clocked a growth of 14 per cent. The company expected topline growth of 25 per cent this year. The bottomline growth last year was 75 per cent, up from Rs 37.85 crore in 200-2005 to Rs 66 crore in 2005-2006. A significant contributor to the company's revenues was its wind-turbine based power generation division. "During the last financial year, the company sold power worth Rs 15 crore to the state electricity boards. This year, sales should be Rs 25 crore of power from the existing capacity of 29.9 megawatt", he pointed out.
REI Agro is a good Long Term Bet and is also recommended by Religare & Kotak. To download Religare Report Click Here.
posted by Raj @ 3:46 PM
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