INDIA: Venky's hatches better H1 results
India's largest Poultry company, Venky's (India) Ltd, showed superb H1 results, thanks partly to Quick Service Restaurants (QSRs) Kentucky Fried Chicken (KFC), Pizza Hut, TGI Friday and Dominos. For the 178-day period ending 25 Sept., turnover grew 5.5% from US$20.2m to US$21.3m and profits before tax jumped from US$17,000 to US$275,000.Poultry business has seasonal swings, and H2 is normally more profitable, so the full year's performance will be much better. The business environment too has been kind to Venky's: maize price drops have lowered feed costs, and the QSRs have ambitious growth plans. Venky's has feeble competition in reaping this boom, with its ready range of processed chicken for the QSRs and 'chicken-in-minutes' segment.Venky's main facility at Kamshet, just up the mountains South West of Bombay, has a slaughtering capacity of 4000 birds per hour, currently being expanded/ upgraded at a cost of US$860,000. Early this month, Anuradha Desai, chairperson and managing director had elaborated her plans. CIM is presently marketed in six cities in western India, where the outlets will be increased. Later they will reach out to other cities. The cold chain will also be expanded. It is also commissioning a new eggs unit at Bhor in Western India.The QSR segment is seeing fast growth, especially the pizza toppings business which is doubling each year. QSR sales last year were 240 tonnes, which hopefully will rise to 350 this year. Venky's is the only supplier to Pizza Hut and KFC in India, and the main supplier of pizza toppings to dominos and TGI Friday. Venky's is also a major supplier to Flight Kitchens, Hotels and Restaurants.Till a few years back, Venky's had nil competition in the QSR and CIM markets. With new players entering, its fortunes dipped between 1998-99 (profit US$3m) and 1999-2000 (profit US$1.2m). With some nifty marketing and improvement in processing, packaging and delivery, the slide now seems to have been arrested.
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