Nestle India Ltd to make domestic acquisition investments - Food Processing, India

 

In an effort to hike its contribution to Nestle’s global revenue, Nestle SA’s Indian unit Chairman, Antomio Helio Waszyk, said the company is keen on introducing new product categories in the Indian market. The Chairman further said Nestle India Ltd is also keen on investments in acquisitions in India as part of plans to boost the global Swiss food giant’s growth in emerging markets. However, Waszyk would not divulge the details of the new product categories to be launched nor provide details on the company’s planned acquisitions investments.

Currently, Nestle India’s products are Maggi noodles, Nestle Yoghurt and Kit Kat chocolates. Nestle India Ltd’s announcement comes after a previous announcement last week by its parent company that it would be undertaking a $1.4 billion investment in Brazil, Russia and India from 2010 through to 2012, but Waszyk would not divulge on how much of that amount had been spared for Indian investment acquisitions, rather stating that the company was taking measures to counterbalance the effects of high input costs on profitability. 

According to Waszyk, the company’s chairman and managing director, Nestle India Ltd has its strategies, namely to reduce costs and increase prices according to category, he said in an interview, noting that, whereas the company had increased prices of dairy products, it had not increased prices for products made out of wheat and sugar.

Costs have gradually increased with an increase in the prices of milk, sugar and wheat, subsequently resulting in a net profit for the first 2010 quarter, ended March 31st to rise by a slow 2.5% on year to peak at $43.5 million. Thus, according to Waszyk, whereas Nestle India Ltd will seek to grow its sales volume in India via investments and new products launch, it will try maintaining an operating margin by reducing production costs.

The Indian subsidiary of the Swiss Food Giant is estimated to have a net worth of about Rs 5,150 crore and with the announcement, its chief target is to ensure that India’s contribution to global sales, currently at record lows, increases considerably.

About of 70% of the global food conglomerate’s revenues are expected to come from world emerging markets, India being a chief target with its massive population and considerable market share. Waszyk further reiterated that the company intends to invest more, but with a focus on organic growth as well. Nestle India rose 1.16% to Rs 2,926.50 on reports the company is planning its first domestic acquisition.

 

1 July 2010.