ShapeShapeauthorShapechevroncrossShapeShapeShapeGrouphamburgerhomeGroupmagnifyShapeShapeShaperssShape

Venky's Plans to Expand in 25 Countries

by 5m Editor
25 October 2010, at 10:12am

INDIA - Venkateshwara Hatcheries Group's vice chairman and joint managing director explains his company's global expansion in the poultry and fish sectors.

India Inc's global drive has been a series of high-profile acquisitions, reports Economic Times of India. However, poultry major Venky's, the brand of the nearly $1-billion Venkateshwara Hatcheries Group, has chosen a silent route for its global foray. Its expansion, targeting 25 countries, is through offering feed, health and hygiene services at the doorstep of farmers in South-East Asia, the Middle East and even Latin America.

This way, it establishes trust with its customers and then work its way forward, offering its range of retail products. VH group vice chairman and joint managing director, B. Venkatesh Rao said the global plan is being routed through Uttara Impex, which has combined the overseas activities of several group companies.

When did the group's globalisation programme begin?

Mr Rao said: "We began a couple of years ago, offering our vaccines and biosecurity products to countries in South East Asia and the Middle East. Service is our forte and that is what we have taken overseas. In another couple of years, we should be in 25 countries, having established our presence in 17 countries. We usually send out a team of people who survey the market. Then we send our service people, as we did in Syria a year ago.

"There, the poultry farmers wanted doctors at their doorstep. We do that. Or our team in Vietnam, where we rotate the team every fortnight, sending out people from here. Then, we found that European manufacturers of biosecurity and poultry health products were building their brands based on the inputs we manufactured (through contract) for them. So, while we continue to supply the material to them, we have chosen to set up our own vaccine manufacturing plant.

"This is in Switzerland, which helps us overcome the prejudice that some countries have to a 'made in India' tag. Setting up our own vaccine manufacturing plant has other benefits: we supply the raw material from our India plant and the vaccine directly to the users, eliminating expensive dealer commissions. This makes our product definitely lower in price than the competition."

What is the driver for the global presence?

Mr Rao explained: "We don't want to be just another MNC or a global supplier. We are building a data centre in Pune as we will have seven global plants in the next two years and regional offices across the globe. In addition, we are setting up a customer care centre in Switzerland. We set up a feed plant in Bangladesh recently. Brazil, the world's cheapest chicken market, will be our sourcing for grain, mainly maize and soy from the neighbouring Argentina.

Maize accounts for 75 per cent of feed costs. We will directly source feed from growers there to supply our plants in Viet Nam and Bangladesh. Indonesia is another location we are looking at for our next step of growth. In 2010-11, we have an RBI cap on overseas investment of about 1.5 to 1.6 billion rupees (INR). So, next fiscal we will invest a similar amount in creating capacities.

Any plans for the non-poultry sector?

Mr Rao added: "Yes, we are looking at setting up a floating fish feed plant in Viet Nam. The traditional practice in South-East Asia countries has been dip feeding, which means feed is thrown underwater. But you don't know how much of it reaches the fish and how much is wasted. Instead, the international system of floating fish feed monitors consumption. We plan to set up a plant to make this feed in Vietnam by next year. This is a major diversification for us."

When do you launch your ready-to-eat products internationally?

Mr Rao concluded: "We have been exporting these products and expanding our capacities. Our new INR2 billion processing plant at Davanagere in Karnataka will be operational by April next, adding to our Pune plant capacities. This second plant will expand our capacities and we can open more of the Venky’s XPRS fast food outlets, with at least 40 in another three years.

"This chain of mainly grilled chicken preparations will go abroad too, where we are scouting for partners. We have hired chefs from Europe and South-East Asia for easy-to-cook products. With the growth of international fast food chains like KFC, we will be able to use our Davanagere capacities fully."