AGRO TECH FOODS - A NEW DAWN ?

 

Agro tech Foods is a  subsidiary of  one of the world’s largest , US food major ConAgra Foods .

This company was originally promoted by  Mr C N Balu in 1986 and started operations in Karnool Dt of Andhra Pradesh.In the earlier stages,company’s business was limited only in the processing of edible oil ,mainly sunflower. Company had a marketing alliance with ITC and  its products were sold  mainly in the brand name of ‘Sundrop’ .Later ITC took equity participation in this company and its name changed to ITC Agro. In 1997 ConAgra took major stake in this company . But even after this stake sale ITC hold about 30% stake in this company. Even with a majority stake ,ConAgra was not aggressive and not interested to bring any of its popular international offerings to Indian market through this company. This may be because of  two reasons .First one is the presence of ITC in its management itself .Even if ITC held some interest in this company , during this period they were trying to enhance their presence in Indian food market through the parent company itself. In one sense ,ITC itself is a potential competitor for Conagra .Sensing this ,Conagra seems to be reluctant to introduce more products from their international brands through a company shared with the future competitor. Secondly .Indian market was not prepared to accept RTS /snack food type offerings at that time ,which also limited its scope here. But now India has grown a lot and the habits of  Indians changing very  positively for accepting the products of a company like ConAgra . What is positive at this juncture is the decision of ITC to completely exit from this company . Now ITC is selling their stake through market operations and some mutual funds are accumulating this stock. Big investors like Rakesh Jhunjunwala already entered in this scrip in the past . Currently ITC’s  holding in this company is  very limited and it is expected to exit completely in this quarter itself. At present Agrotech foods offering only limited products which includes Sundrop edible oil, ACT II Popcorn , Sundrop Peanut Butter, Healthy World Quick Dried Tender Green Peas, Crystal  sunflower oil ..etc.  Now the circumstances are very favorable for aggressive launch of its well accepted products in vast  Indian market  , and it is every reason to believe ConAgra can’t  ignore  this  market for long time . Supported by a world leader,  Agro tech foods may turn as a multibagger even from current alltime high level .The  moot question is the attitude of Con Agra towards this company going forward .Risk takers with patience may go for it at  CMP  Rs.327/-