MANAGING DIRECTOR OF ASIA’S LARGEST PROCESSOR OF VALUE-ADDED SPICES TELLS YOU WHY THE SPICE ROUTE LOOKS SO GOOD

Vallabhdas Kanji Limited is Asia’s largest processor and India’s largest exporter of value-added spices. Headquartered in Kochi, VKL currently has subsidiaries in the US, Germany and Vietnam. Last month, VKL acquired Beeta Chemicals, Mumbai, to deliver enhanced, value-added products to its customers. With a $6-million private placement deal in October with UTI Venture Funds under his belt, VKL managing director Ajay Mariwala tells Nidhi Nath Srinivas why the spice route is looking so good for companies as well as investors.

Why have you set up a subsidiary in Vietnam?

In Vietnam, we are setting up a green field venture for processing and steam sterilising black and white pepper. Vietnam is a major source of this raw material and is currently the largest and most cost-effective producer in the world.

Instead of bringing the raw material back to India, processing and reexporting it, we propose to go near the raw material source itself. It significantly cuts down the cost-chain and improves servicing of the global market.

We are also looking at the Vietnam subsidiary providing a foundation on which we will have the opportunity to participate in the growth of the Vietnamese economy for all of our businesses, which are, spices, seasoning, flavours and fragrances.

Have you tied up with any local retail chains and foreign supermarkets for own label packaging?

We are in the process of tying up with some leading retail chains in India, for packing in their own (private) label.

We are currently packing products that are retailed under private labels in the UK, Europe, US, Mauritius, Japan, Singapore, Australia and Africa. We have indigenously developed packaging that matches the requirements of these respective markets.

What makes value-added spices so attractive for private equity investors?

Value-added spices are a good transaction for private equity because one, through value addition, the margins are attractive; two, the next big outsourcing boom will be in packaged food. While much of it will flow from the full implementation of WTO, spices will be a category that will be a front-runner. This is because most of the spices come from Asia and the processing capabilities have improved significantly in the Asian countries.

Do you have any plans to expand your brand in India?

Yes, we expect to launch our brand in India during the financial year 2007-08. We will formulate our plans and roll out the products sometime next year.

What will be Beeta Chemicals' contribution to your portfolio of products?

The acquisition enables VKL’s existing Seasoning & Private Label businesses to deliver enhanced, value-added benefits to its strong customer base worldwide, The acquisition brings to VKL’s product portfolio a separately marketable range of products that extend into segments as diverse as industrial application, food service, bakery and retail, as well as makes available an entirely new range of fragrances.

The next big outsourcing boom will be in packaged food. While much of it will flow from the full implementation of WTO, spices will be a category that will be a front-runner AJAY MARIWALA M D , V K L