Suguna to set up a branded chain

Coimbatore based Suguna group, a leading poultry company in India, plans to sell processed meat through a network of franchisee-owned branded outlets. The company hopes to invest about Rs 180 crore in setting up processing plants across India over the next three-four years, in addition to its annual capital expenditure of Rs 400 crore in expanding live bird stock.
This retail expansion move will make company shift its focus more on selling processed meat from selling broiler chicken. The move is also seen as logical extension of its existing business of selling processed meat to institutions such as Taj, Marrybrown and McDonald’s, as also to export markets.Suguna Poultry Farm, said the company sees a huge potential for processed chicken in the country because consumers are looking for a hygienic and an aesthetic ambience to buy meat. The Rs 2,000-crore Suguna Poultry opened its first outlet of the proposed chain of quality chicken retail stores under the brand name Suguna Daily Fresh in Chennai.
The outlets will retail fresh chicken, specialty eggs, and frozen fish. It intends to open 150 such franchisee-owned outlets in Tamil Nadu and Kerala by the end of this fiscal.
As part of this retail expan sion, the company is also expanding processing capacity at its plant in Udumalpet in Tamil Nadu. The company is in the process of expanding the capacity to 2,000 tonnes a month from the present 900 tonnes. Within four years, the company intends to have extensive network of 3,000 exclusive shops under the brand name Suguna Daily Fresh across the country. Simultaneously, it plans to set up six processing plants, each having a capacity of 2,000 tonnes a month. Each plant will get an investment of Rs 30 crore. "We already have chicken production centres in 11 states. Each region will have a processing plant initially and then we will establish more plants to support retail expansion,” Soundararajan said.
The company expects the proposed retail expansion to boost the share of processed meat in the turnover to 15-20 per cent from the present 3 per cent in the next four years.
“We will focus more on developing the processed meat market in India and expect to garner a turnover of Rs 3,000 crore by the end of this fiscal,” he said.
Suguna Poultry Farm has bought its Saudi joint venture (JV) partner’s 50% stake in Supreme Suguna Foods. This comes at a time when the company is on a retail expansion drive to tap the growing demand in the domestic market. “Our focus is on the domestic market. The bird flu scare has been affecting exports,” said B Soundararajan, managing director, Suguna.The buyout would cost the Coimbatore-based Suguna Rs 25 crore. Supreme would be merged into Suguna Poultry and the company is funding the stake acquisition entirely out of internal accruals. “The merger process would be completed shortly,” Soundararajan said. Supreme Suguna, a 50:50 joint venture, was promoted as an export oriented unit in 2002 between Suguna and Saudi Arabia’s Supreme Foods Company.The company’s plant at Udumalpet is currently exporting about 400 tonnes of processed chicken a month to the Middle East.Despite the buyout the unit would continue exports, Soundararajan said. The company is planning to scale up capacity at the unit from the present 1,000 tonnes a month to 2,000 tonnes primarily to support ‘Suguna Farm Fresh’, its nationwide retail venture. Currently, exports constitute only Rs 40 crore of Suguna’s Rs 2,018-crore turnover (for fiscal 2008). With demand for broiler chicken increasing 17-18% per annum compared to about 13% in the past, the company believes that the local market offers ample scope for growth.