Suguna Foods rationalising operations to achieve pre-Covid revenues

To create a differentiation, the company plans to focus on processed chicken and value-added vitamin D fortified eggs. Though processed chicken segment is miniscule at present, it will prove to be a segment with growth prospects in the coming years

Hyderabad: Rs 8,700 crore poultry company Suguna Foods is expecting a 20 per cent cut in its revenues this fiscal due to the Covid outbreak. To bring a faster turnaround in its business, the company is rationalising and restructuring its operations by focusing on core markets and categories and exiting from non-core regions.

To create a differentiation, the company plans to focus on processed chicken and value-added vitamin D fortified eggs. Though processed chicken segment is miniscule at present, it will prove to be a segment with growth prospects in the coming years, Suguna Foods GM Marketing Ravindhara Babu said.

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Talking about the Covid impact on the sector and the current scenario, he said, “Poultry sector that experienced losses to the tune of Rs 20,000 crore due to Covid outbreak across the country, is on the path to recovery now. Industry has reached 70 per cent of pre-Covid demand and supply levels and it may take another 2-3 months to reach normalcy levels. Suguna however has reached 80 per cent levels, well above the industry average.”

Several small poultry farmers have experienced liquidity crunch and have closed down their business due to Covid. The government is however looking at restructuring of loans and extension of moratorium to minimise risk. Both the Central and State governments have treated poultry as an essential commodity and this is helping in faster recovery. The sector is transitioning from crisis phase to revival.

Large companies such as Suguna have plans in place to mitigate the liquidity constraints. The company has already tapped e-commerce platforms to meet demand and once the restaurant and hospitality sectors fully recover across the country, there will be uptake in demand in the coming months, he observes.

The company today operates in 20 Indian States and has expanded its footprint to South Asian and African markets. The company has operations in Bangladesh and Kenya and is keenly looking to foray into more overseas markets.

Suguna has attracted investments from International Finance Corporation and Asian Development Bank to a tune of $69 million (over Rs 500 crore). “We are restructuring our investments in critical growth areas where there is opportunity to scale up operations and price realisation. We are investing in feed mill expansion, hatchery capacity expansion and acquisition of new farms. We are into contract farming and today we work with 43,000 farms pan-India, and we also have breeder farms of our own. As part of restructuring, we are also exiting from some markets in India on the basis of productivity, performance and demand,” he informed.

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