PepsiCo engages 12,000 farmers in contract farming

PepsiCo's contract farming has picked up very fast—the company had procured 22,000 tonnes of potato in the last harvesting season

Riding on high sales of its snack brands like Lays and Uncle Chipps, PepsiCo has engaged 12,000 farmers across the country for contract-farming of potato.

"There are 12,000 farmers doing contract farming of potato for us, involving 16,000 acres of land," Nischint Bhatia, executive vice-president for agro-business at PepsiCo Holdings told PTI.

He said that out of the 12,000 farmers, 6,500 of them are in West Bengal, working on 2,600 acres.

Mr Bhatia said that PepsiCo's contract farming had picked up very fast, adding that the company had procured 22,000 tonnes of potato in the last harvesting season.

He said that with the growing sales of its snack brands, the company would adopt more farmers in the country for contract farming.

At present, PepsiCo is involved in contract farming for potato only.

Mr Bhatia said that farmers were ensured a captive off-take even in periods of glut and also a remunerative price.

He said that PepsiCo was buying potatoes at Rs6 per kilo from the farmers, which was higher than what others were getting by selling the crop to intermediaries.

Asked whether the company would enter into contract farming for other crops, Mr Bhatia said that the company was planning to follow a similar line for oats.

He said oats were presently being imported for its Quaker Oats brand and the company was in talks with various agricultural universities for cultivating the crop in the country.

"It is still in the research stage and may take three to four years," Mr Bhatia said. He said that oatmeal was becoming a popular breakfast cereal in India due to health reasons.
 

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Continued range trading

We expect the market to trade in a range on Thursday

Yesterday we had suggested that the market will trade in a narrow range and remain listless for now. This is what happened. The market opened higher, thanks to overnight strength of the US market. The Dow Jones Industrial Average rose 43.91 points (up 0.41%) to 10,784.89. The Nasdaq rose 20.99 points (up 0.88%) to 2,395.40 and the S&P 500 gained 5.91 points (up 0.51%) to 1,165.81. 

Asian markets were also positive, except Shanghai. But Indian indices soon lost their entire gains and at one time slipped into the red. They recovered in the late afternoon after European markets opened in the black and thereafter closed mildly positive. The BSE Sensex added 36 points (up 0.21%) at 17,447 and the Nifty went up by 18 points (up 0.35%) at 5,223. Volatility was caused by the rollover in the derivatives section from the March 2010 to the April 2010 series ahead of the expiry of the near month March 2010 contracts on Thursday, 25th March.

The biggest gainers were HDFC Bank (2.53%), Reliance Industries (1.42%), Tata Power Company (1.39%), Tata Steel (1.15%), Oil & Natural Gas Corporation (0.85%). The biggest losers were Bharti Airtel (3.10%), Tata Motors (2.89%), DLF (1.94%), Grasim Industries (1.63%), ACC (1.56%), and Wipro (1.07%).

Mutual funds (MFs) sold shares worth a net Rs359.50 crore on Monday, 22nd March 2010, which was much higher than the Rs 101.80 crore on Friday, 19th  March 2010. The advance/decline ratio was negative. We expect the market to trade in a range on Thursday which is the day when derivatives expiry takes place. The market is closed tomorrow on account of Ram Navami.

Among macroeconomic news today, the finance ministry has said that the private sector will be allowed to issue infrastructure bonds.  The prime minister said that investment in infrastructure will be to the tune of $1 trillion in the five years to 2016-17. There has been lower investment than envisaged in the 11th Five Year plan in the power, road and port sectors because of the poor performance of these sectors. In the mid-term appraisal of the 11th Plan, the panel expressed concern over the slow growth of the farm sector over the past two years.

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Court’s decision to wind up Indage leaves producers disappointed

The Bombay High Court has ordered India’s oldest wine producer Indage Vinters to wind up. The country’s fledging wine industry calls it a ‘sad’ development, but says that it was bound to happen

On 19th March, India’s oldest wine producer, Indage Vinters, was ordered to shut shop by the Bombay High Court following a winding-up petition filed by its creditors. 

Considering that it was the remarkable guts and perseverance of Shyamrao Chougule, the founder, who brought international quality wine and champagne to India in the 1980s, the nascent wine industry in the country is saddened over this development.

However, given the efforts the company put in to fund its acquisitions in Australia and South Africa, it was a matter of sheer luck whether Mr Chougule’s gamble would pay off or lead to his company’s ruin.

The global financial crisis sealed the fate of the company—the international market did not perform to expectations and its plans to sell exotic Indian wines in overseas markets did not materialise. Domestic demand for international wine also fell far short of the hype created by the industry itself.

“This is a very sad chapter for the Indian wine industry as Indage Vinters were the pioneers in this sector,” said Violet D’souza, director and owner of Indus Wines. She added that the decision was expected as employees and vendors were facing problems with the company. Sula Wines’ vice president, Pradeep Panchpatel, echoed the same views.

This is not the first time the Chogules and Champagne India have been in such trouble. However, this time the situation looks too bad for them to bounce back.

An official from Nasik Valley Grape Promotion Association said that Indage’s travails will impact nearly 50% of the wine industry. Indage had tie-ups with around 15 small wineries like Flamingo, Century and Pratamesh to purchase wine in bulk and the decision of the High Court will probably spell the end of the road for these units, unless they can persuade other wine majors such as Sula, Grover or the UB Group to buy their stock.

But again, the entire industry is already saddled with large quantities of unsold wine from last year.

“Grape framers and other vendors will suffer from the fallout of the Indage collapse,” the official said. As of now, nobody expects Indage to be bought out in a hurry.

A former investor in the company attributed Indage’s downfall to the large gamble that it took in acquiring wineries in Australia and South Africa. “It was a big gamble and they couldn’t handle it. The writing on the wall was clear, they were overleveraged and we didn’t think their plans, which looked perfect on paper, would materialise,” he said. {break}

On the desperation of the group to grow rapidly, the investor said, “It was the race to remain number one. Those days, Vijay Mallya of the UB Group was planning a big presence in the wine industry and Ranjit Chougule—who was in charge of Indage—was worried about losing market leadership. What we did not expect is that it would unravel so fast—in just six months.”

Indage Vinters has said that it will challenge the order. “It is the company's contention that notwithstanding the order passed by the Honourable Court, it is not expedient to wind up the business at this stage and therefore the Board of Directors in its meeting held on 19 March 2010, has decided to challenge the said order by filing an appeal in the competent court,” Indage Vinters said in a statement to the Bombay Stock Exchange.

An email sent to the company remains unanswered, while managing director Ranjit Chogule and Vikrant Chogule refused to respond to messages.

It must be noted that Indage was pursuing a corporate debt restructuring (CDR) package for nearly Rs400 crore. This was led by ICICI Bank while the other lenders were IndusInd Bank, Allahabad Bank, UCO Bank, IDBI Bank and Bank of Rajasthan.

During the hearing on 19th March, Indage said that it had told the High Court that it plans to present a proposal with the support of some secured and unsecured CDR lenders in the next hearing. Indage said it was also ready and willing for a scheme of arrangement under Sections (391) to (394) of the Companies Act, to restructure its outstanding liabilities.

However, there might be some light at the end of the tunnel. On 23rd March, Indage Vintners Ltd has now informed BSE that the High Court has granted a stay of 15 days while considering the petition of winding up filed by the company’s creditors. The company’s statement says: “This is pursuant to the submission by the Company that the plans underway will find an amicable solution to meet with all obligations of the Company.”

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COMMENTS

Jane

7 years ago

I can confirm that Indage UK ltd has went into administration last week after 2 torrid years of cash starvation and poor management. Customers, suppliers and employees have all suffered financially!!!

Anil Agashe

7 years ago

It is a sad end true. The company must be sold immediately through transparent auction. Wine industry is in trouble right now but can be revived. One thing is the pricing. If the pricing is right demand can be revived.

MUKESH KUMAR

7 years ago

SAVE INDAGE FROM COMA!

WHEN ALL KINDS OF COMPANIES IN THE PAST HAVE BEEN GIVEN 'NEW BLOOD' & LEASE OF LIFE, IN A COUNTRY WHICH HAS TONS OF MONEY TO THROW AWAY AT ROGUES, RASCALS & MINIONS WHO DON'T EVEN MATTER, CAN THE GENIUSES IN BUSINESS, GOVT. & WINE INDUSTRY ITSELF NOT COME TO THE RESUCE OF AN INSTITUTIONAL WINE MAKER IN INDIA WHICH, NOT ONLY DARED TO MAKE & PROMOTE INDIAN WINE, BUT MADE IT GLOBALLY ACCEPTABLE & GOT LAURELS TOO FOR INDIAN WINES, IT WOULD BE A DISGUST & A SHAME IT THE COMPANY IS NOT RESCUED!

IT WILL BE A SHAME FOR NOT ONLY INDIAN WINE INDUSTRY, BUT ALSO THE GOVT. & THE PEOPLE OF THIS COUNTRY ITSELF!

CAN VIJAY MALLYA OR OTHER BIGWIGS OF THE INDIAN INDUSTRY NOT TAKE IT OVER AND REVIVE IT JUST LIKE THE TAKEOVER OF AIRLIINES?

AS THE WORSE OPTION, LET SOME FOREIGN WINERY TAKE IT OVER & MAKE AFFORDABLE WINE IN INDIA, WHICH IS A HUGE UNTAPPED MARKET FOR WINES IN THE BREWING!!!

Ian Hude

7 years ago

Indage was/is a pioneer and deserves our admiration. Their assets should be bought over by one of the other majors- probably UB because they have the international presence and savvy to make a success of it.

R Balakrishnan

7 years ago

Old habits die hard. Serial defaulters are given chance by the indulgent system and each time, more money goes down the tube. The beauty of the wonderful system is that the promoter can have wine and the creditors, peanut shells

Ramesh Sopan

7 years ago

Suchitra, your test buds did not smell rat! Recheck how its Australian/south African acquisitions are doing....by the way wine, which has some thing to do with quality. It is the business done with passion; we Indians are at least a generation behind that...we spell quality as quantity!

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