Securing Origination: Ruchi Soya at the Rabo Bank Advisory Board Meeting in Hong Kong, 2012

December 28, 2012:

Ruchi Soya Managing Director Mr. Dinesh Shahra, along with Mr. Ankesh Shahra – Director, Business Development for Ruchi Agritrading Pte Ltd, Singapore were invited to attend the prestigious Rabo Bank Food & Agribusiness Advisory Board Meeting that was held in Hong Kong in November 2012. The Theme of the meeting was ‘Burgeoning world food demand and the shrinking corporate universe” and Ruchi was specifically asked to present their views and perspectives on the importance of M&A for Ruchi across the Food and Agriculture supply chain. Spread across two days, there were several important thought provoking issues discussed between the key decision makers of the largest Food and Agribusiness companies from Asia and the world.

Mr. Dinesh Shahra spoke about the importance of acquisitions at the low end of the business cycle and the value that high quality upstream assets at origination offer for companies such as Ruchi. In a discussion moderated by ex-CNBC anchor Ms. Lorraine Hahn, Mr. Dinesh Shahra mentioned that Asian companies should continue to vertically integrate but in order to remain sustainable, they must combine this integration with specialization down the chain. This is to ensure that they remain the most efficient users of the capital they possess, as niche/specialized companies are on a growth trajectory and are delivering exceptional returns.

Ruchi Industries Singapore, the overseas holding company of Ruchi Soya that is consolidating its global assets is in the process of executing the backward integration strategy of Ruchi Soya into palm plantations and agricultural production.  One of the topics discussed in Hong Kong were the challenges that stretch into asset ownership whilst securing origination. “Asset ownership in emerging economies comes with a set of risks that must be evaluated in conjunction with the superior cost structure that these countries generally offer. Sovereign and regulatory risks, management challenges, the ability to influence operations as well as differing tax regimes are all points to watch out for” says Ankesh Shahra.

Ruchi Soya Industries Limited

Featuring among the top five FMCG players in India, Ruchi Soya Industries is the flagship company of Ruchi Group of Industries. A leading manufacturer of high-quality edible oils, soya food, vanaspati and bakery fats, it is also the highest exporter of soya meal, lecithin and other food ingredients from India. Established in 1986, it is the largest producer and marketer of vegetable oils and soya food, the largest oilseed crusher and edible oil refiner, the largest importer of vegetable oil and the largest exporter of soya derivatives from India. Ruchi Soya has also diversified into Renewable Energy and Plantations in the recent past.

New FMCG Entrants ready to take on Big Rivals

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A new breed of FMCG companies in India is aiming to reach the top quickly and challenge the incumbents. While Jyothy Laboratories hopped onto the top-five bandwagon by acquiring Henkel India, Ruchi Soya, with an annual turnover of Rs 18,000 crore, is close to matching the turnover of leading FMCG firm Hindustan Unilever (Rs 19,000 crore). Although Dinesh Shahra-run Ruchi Soya is seen as a commodity company, its growth is driven by brands like Ruchi Gold, Nutrela and Mahakosh. Not content with piggybacking the existing brands, Shahra is planning a foray into other branded commodities such as pulses, rice and salt. Its soap brand ‘Ruchi No.1’ may be a minnow when compared to the offerings from HUL, but with 10-15% yearly growth, Ruchi Soya Industries may just be able to catch up with the FMCG major, sooner or later.

 

Ankesh Shahra is managing the international businesses for Ruchi Soya. It includes establishing a cross-commodity global trading platform headquartered in Singapore, as well as implementing Ruchi Soya’s backward integration strategy into agricultural plantations in Asia and Africa. He has a background in Finance, Economics and International Trade, and represents the third generation of the Shahra family that started the business conglomerate Ruchi Group having business interests across the sectors ranging from Edible oil, Soya foods, Steel, Dairy, Information technology, Realty and others.

 

Shahra said, “I am very grateful to the committee for their kind consideration, and realise the responsibilities that this award carries and look forward to fulfilling each and every one of them. Food security is indeed a prevalent global concern, and Ruchi is taking strategic steps towards ensuring competitive supply to India in the coming several years.”

Ruchi Soya Industries Limited – Social Initiatives – Health

Whilst we would very much like to go into Health awareness programs in a systematic manner, we have started programs which can give immediate relief. We have partnered with The K.K. EYE Hospital which is run by the Sadhu Waswani Mission and has a super specialty hospital for eye care. We conduct Cataract Detection camps; those detected are then taken to the K.K. Eye Hospital for their surgeries. So far 68 financially challenged patients from these villages have got back their sight. These include the adivasis also.

The national program of Pulse Polio is another activity that we have decided to support and is in line with the nation’s goal to eradicate pulse polio. The Primary Health Centre staff is given the vehicle to move around in the villages that their centre is supposed to cover. Even the Cataract camp is held in this centre which gives them an edge also as the patients that come to them are then referred to the camp.

Most diseases are water borne and are a perennial problem to the people of the village of Esambe as there is a scarcity of clean and safe drinking water in this village. We consider it our duty to help provide clean drinking water to attack this phenomenon and as the women of the village of Esambe are ready to take this on a priority, we will address this issue along with them.

Ruchi Soya extends Nutrela into Table Spread Category

MUMBAI: Ruchi Soya Industries, makers of refined oil brands like Ruchi Gold, Sunrich and Nutrela have made a foray into bread spreads with the launch of Nutrela Premium Table Spread.

This offering competes in the same space of butter and cheese spreads, which have well entrenched players like Amul and Britannia in the space. Nutrela table spread tastes similar to butter, but is lighter as it has zero cholesterol and no trans fats.

Talking about the opportunity that the category offers, Sarvesh Shahra, business head, consumer brands division, Ruchi Soya Industries said: “Health is increasingly becoming a matter of concern among Indians and people are look for healthy solutions everywhere. We are already the largest producers of soya chunks and granules. When we were thinking of categories to enter, we found a good opportunity in the health space.”

The table spread market according to Shahra is growing at 10% per annum and as the market grows there is enough space for more brands to enter. The table spread space comprises of butter and margarine at this point.

Ruchi Soya is doing a number advertising activities across outdoor, radio and digital to spread awareness for Nutrela table spread in Mumbai. For one of the activities that the brand tied up with PVR cinemas to offer popcorn made in Nutrela table spread to lucky customers who could locate the winning coupon under their chair.

According to Sandipan Ghosh, AVP- marketing, consumer brands division, Ruchi Soya Industries: “customers could not make out the difference at all and didn’t know that the popcorn was cooked in Nutrela table spread.”

According to Ankesh Shahra who is managing the international businesses for Ruchi Soya said “He is proud of products Ruchi Group is producing”

The product will currently be available in metros and Tier 1 cities. Word for the product is also being spread through sampling and school contact programs.