Bunge to make Dalda volume player

Bunge to make Dalda volume player

Author | Source: The Economic Times | Friday, Jul 21,2006 7:18 AM

Bunge to make Dalda volume player

Bunge, owner of Dalda, is ready for more acquisitions. The MNC is in talks with some cooking oil brands to enter new segments of the market.

Bunge is also in talks with Reliance Industries for supplying branded oil. Bunge's aggressive moves come after it finally took over the marketing of mother brand Dalda from Hindustan Lever three years after acquiring it.

“We are talking to a few companies with regional and niche brands for an acquisition. The idea is to make Dalda the volume player and use acquired brands to enter segments like health to broadbase our offering,” said a top company official. However, he was reluctant to divulge any names of potential targets.

“The valuations are simply too high at present. But the bottomline is we are very, very interested,” he added. Bunge had bought Dalda for Rs 90 crore from HLL. Bunge has just finished putting in place a new all-India distribution network from the scratch to replace HLL's sales force who were responsible for marketing Dalda till now for a fee, under the original sale agreement.

“It was tough to accomplish that within a few months. But now, we have complete control over our destiny. Our target is to raise Dalda's volumes from 40,000 tonnes annually to 1,50,000 tonnes per year,” the official said. Bunge is now finalising an ambitious advertising and promotion plan to boost sales of both Dalda vanaspati and cooking oil, largely refined soya. Meanwhile, Bunge is trying hard to stem losses in its local oilseed crushing plants.

Its Pithampur plant for soya has been bleeding heavily because it lacks parity with imported oils for more than eight months every year. The plant had been put up for sale, but found no buyers at a suitable price. Bunge has now decided to shift gears by trying a new business model for operating it.

“We have decided to shut down the plant for eight months and operate it only between October and March when the soya crop is in. Even these operations will be contracted to an outside company, with lower costs, under our supervision. That way, we will be able to drastically cut our overheads and stem losses,” he added.

Bunge has two crushing plants in India at Pithampur and Bundi. Bundi has an advantage because it can crush both soya and mustard crops.

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