CavinKare ‘plants’ its foot in Bangladesh

CavinKare CMD CK Ranganathan, expecting Rs 250 crore sales volume from this plant, said the blueprint for the greenfield project had been finalised a quarter ago. “We will be making an investment of Rs 25 crore in a phased manner.  We expect the project to become fully operational by June this year,” he told DTNext . Despite being a protected economy, the buyers’ profile in Bangladesh, where it has established a wholly-owned subsidiary – CavinKare Bangladesh (P) Ltd in 2004, is quite like our country. “Our brand is visible and our advertising presence is better used to serve and reach out to customers in West Bengal. All these builds up national demand for us,” says Ranganathan. Equally bullish on domestic as well as overseas operations, he says in Sri Lanka, its own distribution channel can produce goods worth Sri Lankan Rs 2 billion. Sharing the growth and expansion strategies of his company, which is eyeing a turnover of Rs 1,400 crore for the year ending March 2017, he said “our growth has been good. Post-demonetisation, we are looking at a 20 per cent growth though we have not yet frozen the figures for 2017-18.” 

Ranganathan also welcomed the proposed move of the government to introduce the January to December calendar year of accounting. “This will make life easy especially in the context of auditing and we also expect our profitability to be better. We have noted that our sales in the first six months of the summer starts to taper during the July to September period when the spend levels begin to come down in winter. Once the calendar year of accounting is introduced, we will see the sales  start off with a bang and end in such a way that our profitability will reflect the true picture.” South, contributing 50 per cent of its turnover, continues to be the dominant market for CavinKare as far as the personal care category is concerned. “We were earlier seeing 65-70 pc growth from South. But with other locations doing well, the ideal situation would be when this region constitutes 30 per cent of our turnover, along with sizeable shares coming in from rest of India. Within the next 3 years, we see South generating one-fourth of our sales. In North, we have been steadily improving,” he says. 

Giving the break-up of the company’s sales categories, Ranganathan said he is betting on the dairy portfolio – curd, ghee, lassi, paneer and milk, to be the growth driver. “Currently, dairy contributes 22 to 23 per cent of our sales, which is again primarily from South but it has the potential to rise to 40 per cent in three years. In value terms, the sales from our dairy segment (Rs 200 to Rs 250 crore) is higher than in terms of growth, he said, noting personal care at 200 crore and snack category would comprise the two other components. CavinKare, which is exploring a  factory, will consider expanding  the snack category once it generates 10 per cent sales. “We are formidable in the West, especially in Mumbai. Plans are on to cover Maharashtra but it is prudent to establish a factory only when it achieves the double-digit mark,” says Ranganathan. 

The company is confident of its December-launched coconut water Cocoma, where it has invested Rs 60 crore in the processing and packaging plant at Erode. “It is doing good and seems to be promising,” Ranganathan says, adding CavinKare is looking at export opportunities by targeting Europe and the US markets. We are preparing the ground for that but first we will cater to the national demand.” CavinKare plans to invest Rs 100 crore in 2017-18, half of which would go to enhance its presence overseas. Its Rs 175 crore brand spend will go up by 20 to 25 per cent, says the industrialist, who took on the MNCs by disrupting the market with the introduction of sachets.