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ITC Foods open to tie-ups for adding capacities in biscuits
The Hindu Business Line - 27 Sep 2004

Mohan Padmanabhan

THE biscuits segment of ITC Foods Division, spearheaded by the Sunfeast range, is now witnessing a situation of demand outstripping supply, and the company is not averse to adoption of the partnership route in a big way (as opposed to only contract manufacturing) to augment all-India supplies.

Talking to Business Line in Bangalore recently on the scorecard for the branded foods business of the company, with focus on biscuits and confectionery, Mr Ravi Naware, CEO, ITC Foods Division, admitted that the supply position for biscuits right now was not comfortable and that efforts were on to add to capacities.

He said the company was extremely careful in adding new supply locations, which have to fit in with the existing supply chain, as stringent quality control and various mandatory compliance tests have to be adhered to at every stage by the suppliers.

He clarified that there was no problem as such in adding to capacities, as demand exceeding supplies was a positive sign. Maintaining consistent quality at lower prices while keeping overall investments down is a formidable challenge, he admitted. This is particularly so for confectioneries, where it was absolutely essential to maintain attractive price levels.

Third in market: Mr Naware said as per an ORG-Marg study, the size of the organised biscuits market in the country was around Rs 3,000 crore per annum, and both Parle and Britannia straddle the market in a big way.

ITC's Sunfeast occupies the third position. He said two of the Sunfeast brands - "Butter Scotch Cream" and "Orange Marie" - were doing extremely well in the market today.
Stressing on sustained quality as a must for biscuits and confectionery items, he said, "We create products, after intensive tests at our food laboratory (which is part of the integrated R&D centre in Bangalore) which are differentiative and superior to what is available in the market; the underlying principle is good quality with a reasonable price."
He said that some Rs 10 crore plus has already been invested on sophisticated testing equipment at the food lab for product development back-up, covering biscuits, candy and also atta. "We plan to put in Rs 5 crore more," he added.

He attributed Aashirvaad's leadership position in the atta segment within a reasonably short time entirely to the efforts of the R&D team headed by Mr Jasbir Singh and other product specialists.

He said the recently launched "Milky Magic" in Tamil Nadu, West Bengal and Bihar, through a tie-up with Aavin of Chennai has been a huge success.
"We produce some 2,000 tonnes of milk biscuits per month now, out of which some 1,500 tonnes are sold in Tamil Nadu alone because of the Aavin link.

Some of the new biscuit products in the Sunfeast range hitting the market are Strawberry Cream, Pineapple Cream and Sunfeast Coconut, all in 100 g packs, with an MRP of Rs 12 per pack." He said the plan was to complete the full range of biscuits, including the crackers, by March 2005.

In the confectionery segment, the division has 14 different kinds of candies under the Candyman and Minto brands.

Mr Naware said the company has adopted protective packaging for the Minto section, which has done wonders for the product, improving their shelf life (or bottled life, perhaps), in a big way. All products in the candy range have been developed in-house.