Amalgam Enterprises: Readying A New Recipe

Updated: Jun 28 2003, 05:30am hrs
Its makeover time for Kochi-based Amalgam Enterprises. After exiting its core frozen food business, it is focusing on a new area of operations: the home meal replacement sector. A container full of Kerala parathas from the Amalgam basket goes to UK every month, not to speak of the idlis to the US. In a world where food habits change at a fast pace, the Amalgam group is trying to keep itself in the race and enter newer pastures.

It was a few months ago that the Amalgam group sold Amalgam Foods, its frozen seafood business, to Hindustan Lever Ltd (HLL). With this came a change in 25 years of business activity in the seafood sector. Of the total 18 factories under the Amalgam umbrella, 11 were in the seafood sector. Of them, HLL now has taken possession of nine. We are still not out of seafood business. Its only that we have shifted from a commodity to a branded prepared meal manufacturing enterprise, says group chairman AJ Tharakan. He explains that he had been toying with the idea of downsizing and concentrating in an area which holds much promise. The amount (undisclosed) got from the exiting commodity frozen sea food sector should help it invest in its new business interests, he says.

AJ Tharakan, Chairman, Amalgam Group
In the frozen seafood sector, the competition is tough, especially in developed markets. There has to be a major effort at brand-building and search for good pockets. Compared to the size of the frozen seafood sector like the one in Thailand, there is little that a company in India can do. Being mid-cap, there is no resource potential to take up the ever changing stringent food restriction laws. All expansion in this sector has to be from internal generation. And given the competition and the size of the market abroad, it would be near impossible to take up the challenge.

Mr Tharakan who is also the president of the Kerala chapter of the Seafood Exporters Association of India (SEAI), says that with the new strict food regulations the world over, the seafood industry needs to improve a lot. While the processing sector has grown to meet the international norms, it is the down stream industries that need to be developed. He cites the case of fishing harbours in Myanmar which are several times better than the Indian ones. Exporters can only ensure contamination-free processing. The seafood sector is a big ticket market and improvements have to be made at the fishing harbours and landing centres.

The Growth Chart
The size of the group has nearly halved since the sell off. From a turnover of Rs 500 crore, the company should be around Rs 225-250 crore. And this is the size that is ideal for the group, feels Mr Tharakan.

It was way back in 1977 that Mr Tharakan gave up his job in the Indian Revenue Service to set up a small seafood processing factory in Kochi which he asserts had led to a technological revolution in the seafood industry. From there there was no looking back. Till the exit from the frozen seafood sector, the group had seven companies with 18 factories operating along the coast - from Veraval to Kollam on the west and Bhubaneshwar to Mandapam on the east. Once in the business, the group developed a number of overseas association with those including Nissin Foods, Mitsubishi Corporation, Itochu

Corporation, Higashimaru International Corporation of Japan, TIF Food Handles, Ristic GmBH, Worlee GmBH of Germany, Gourmet Club Corporation of the US, Sea Products SRL of Italy, Saudi Fisheries, Danish Free-Drying Ltd, Frionor of Switzerland, Sco-Fro of Scotland and Cascade Marine of the UAE. Perhaps, the command that the group had of the seafood sector helped it to wet lease a few of its seafood factories to HLL and ultimately give up its core business.

Whats Left
The company plans to concentrate on its aquafeed plant, its popular Snowman coldstorage chain, accelerated freeze drying company, individually quick frozen (IQF) products, instant noodles and its new brand of Sumeru brand of frozen food selections.

Mr Tharakan said the groups Higashimaru Feeds (India) Ltd was a fully automated shrimp feed plant in Kochi jointly promoted by the Amalgam Foods Ltd, The Kerala State Industrial Development Corporation and Marine Products Export Development Authority (MPEDA) and Higashimaru International Corporation and Higashimaru Foods Inc are the partners. This was the countrys fully automated shrimp feed plant which commenced commercial production in June 1992. There is a wide range of shrimp feeds and hatchery feed rolling out from the factory and the group now plans to take up production of dog food.

The groups Accelerated Freeze Drying Company Ltd (AFDC) in collaboration with Nissin Foods and Itochu Corporation of Japan has been the countrys first unit to process and export freeze-dried seafood and spice products. Besides freeze dried shrimp, crab meat, lobster meat, squid tentacles and green pepper corns, the product range from this company includes air-dried green pepper corn and vegetables, sterilised black pepper, block frozen and IQF green pepper corns.

The Indo Nissin Foods, promoted by AFDC with Nissin Food Products, Itochu Corporation of Japan ad Brooke Bond India Ltd as collaborators has through its Bangalore factory come out with the Nissin brand of Cup O Noodles and Top Ramen noodles.

Cold Logistics
It was only recently that the Amalgam group diluted its stake in the Snowman Frozen Foods Ltd it had founded and handed over the management to the Mitsubishi Corporation. Now, the foreign equity holding in the company is 84.5 per cent with Mitsubishi holding 60.6 per cent equity. Amalgam now owns 8.4 per cent share from its earlier 51. The company is out to have a series of cold store warehouses throughout the country and a fleet of refrigerated trucks.

This whole cold-chain distribution in the country is in a take-off stage. The potential is immense as there is a rapid growth in both chilled and frozen sectors. In countries like China, Malaysia, Thailand and Indonesia the growth of cold-chain companies is proof for this, says Mr Tharakan. However, such companies need to import equipment for frozen storage and chill rooms so that they can be competitive in power costs and also meet international standards. But such imports still attract a 40 per cent duty, he says.

As a prelude to the growth of the cold logistics, the Amalgam group is now out with its new brand of Sumeru - easy cooking solutions. It has introduced a range of frozen ready-to-cook and ready-to-fry products in the domestic market. In the ready-to-cook category include IQF peeled prawn, fish steaks, skinless boneless fish fillets, all fully cleaned.

The ready-to-fry products, ideal as a quick snack or a small meal have chicken, vegetables, mutton, and cheese cocktail samosas, breaded fish fingers, prawns, nuggets, and spring rolls.

The only imported items in this brand are French fries that come from Europe and are repacked under the Amalgam brand. The products are already available in leading supermarkets all over the country. Products are sold through company-owned display cabinets freezers.

The group has also taken up exports of these items. It is now also into ready-to-serve products, which Mr Tharakan terms as prepared frozen food, exports of which have already begun.

Besides vegetable curries, fish curries prepared in different parts of the country, South Indian meals, chappatis, Kerala parathas, etc are only a few of them, says he. Frozen idlis and South Indian meals are now being exported to the US.

The concept of frozen prepared foods is picking up in India. With the pace of life and new food habits, it is only natural that people will go in for such food that need to placed in the microwave oven and served. It saves time and a lot of effort, he adds.