India's Suguna Poultry FarmLtd.: Can it Go Pan- India with its Current Business Model?

Details

Themes: Strategy
Pub Date : 2009
Countries : India
Industry : Retailing

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Awards and Achievements

Suguna has received several awards for its contribution to the poultry industry. It was adjudged 'Best Performer' by the National Productivity Council²⁴ , New Delhi for 'Excellence in Domestic Broiler Birds Marketing, Hatching, Eggs Export, Processed Meat Export, Quality Consciousness, Research & Development and Continual Development of Value-Added Products', six times in a row (1995-2002)

Global Partners

To fill the gap in consumption in India, Suguna has launched several initiatives. Suguna is spending nearly INR 400 crore on expansion every year.²⁵Getting financial assistance was a tough task for the company as initially no bank was willing to offer funds. But the scenario has changed to a large extent. Many banks are coming forward to support the company’s expansion plans. Nearly 10 banks have already connected with the farm. State Bank of India (Mumbai branch) has extended its credit facility to the existing as well as new farmers in this regard and will also take part in financing maize cultivation activity.

Apart from national banks, Suguna is the first Indian agribusiness company to get funds from International Finance Corporation (IFC), the private arm of the World Bank. To support the company's expansion plans (setting up hatcheries and feed mills) and to meet working capital and capital expenditure requirements, IFC granted an amount of INR 50 crore ($11 million) as equity in 2006.²⁶ Being positioned as a leader in the broiler industry, it diversified into layer breeding through a partnership with the world’s No. 1 primary breeding company for layers, Lohmann Tierzucht Gmbh of Germany in 2007. It already captured a 6.6% market share in the layer segment in 2007.²⁷

Retail

It stepped up its forward integration efforts by setting up retail outlets of chicken called 'Daily Fressh', a processed meat retail chain, in 13 locations in Tamil Nadu. The outlets offer an array of whole and portioned fresh, hygienic, nutritious and tender chicken apart from branded eggs, sausages and salami. The retail chain received outstanding response to its retail outlets and the company is planning to set up another 200 retail outlets in Tamil Nadu, Kerala and Karnataka in 2008.

It is also planning to launch valued-added products like ready-to-cook, ready-to-eat mutton and fish products at high-end retail stores. In addition, the company is planning to focus on themarketing of its branded eggs. The company has a line up of four branded eggs - Suguna Heart, Active, Pro and Shakti. It sells 8.5 lakh branded eggs a month.²⁸ These branded eggs are rich in Vitamin E and Omega-3 fatty acids, which are nutritious, and bacteria free. These eggs benefit people with diabetes and heart diseases. The company sells these eggs to Indian retailers and talks have been going on with Wal-Mart for the supply of these branded eggs.²⁹ Soundararajan, said, "The goal is to mobilise at least 5 per cent of our revenues from the value-added products from this year, compared to about 2 per cent now (2008)."³⁰

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24]National Productivity Council (NPC) is an autonomous body that awards the organisation which improves the productivity periodically..
25]"Suguna forays into branded retail", http://newstodaynet.com/newsindex.php?id=9052%20&%20section=9, July 10th 2008
26]"Suguna readying to tap retail revolution", http://www.financialexpress.com/news/Suguna-readying-to-tap-retail-revolution/197396/2, April 23rd 2007
27]"Radically Different", op.cit.
28]"Radically Different", op.cit.
29]"Suguna in talks with Wal-Mart to supply branded eggs", http://www.thehindubusinessline.com/2008/06/25/stories/2008062550361100.htm, June 25th 2008
30]"Radically Different", op.cit.