MTR Foods, a subsidiary of Norwegian conglomerate Orkla, had scaled up its production capacity much before the lockdown was announced. Due to this, its inventory in March doubled from the level of 10-14 days of stock that the company usually holds. The Bengaluru-headquartered firm’s CEO Sanjay Sharma tells Samreen Ahmad that despite the coronavirus crisis, MTR Foods is still hopeful of reaching the Rs 1,000-crore revenue milestone by the end of this year. The FMCG major will also focus significantly on leveraging e-commerce channels, going forward. Edited excerpts…
How is MTR Foods running the show when most of the other branded packaged food products are not to be found in the market?
We started acting early in the crisis as the company is held by Norwegian conglomerate Orkla and Covid-19 crisis had already hit Europe well before it reached India. A lot of pre-planning was already communicated to us by our European counterparts. So we had started working on a plan by March 10. We started building up stocks. As compared to the average stock level of 10-14 days that we hold, we decided to hold an inventory for up to 30 days. The manufacturing cycle had already started working towards that. Currently, it has depleted to 10 days as demands has increased.
What are the major supply-chain challenges that MTR has experienced during the lockdown?
We have faced a business-continuity issue. The first week of lockdown was all about trying to reset the entire system. Our suppliers who were giving us raw materials were not seen as food processing units. So, we had to request the government to recognise them as critical services. We had to restructure our entire plants and methods of working, such as slowing down our lines and ensuring that all sanitation and social distancing norms were being followed. Many workers had gone home because of Ugadi, a major festival in Karnataka. We got government help to bring them back after arranging buses. We have paid 20-30 per cent more to secure trucks to transport our products.
What is the current capacity utilisation of MTR factories? How are you looking to scale up?
Currently our factories are working at 60 per cent capacity, with just 50 per cent of our workforce. We have a unit in Pune that is in the Red zone so for the past four weeks. It has been open only for two days. We have seven contract manufacturers in places like Indore and Guntur, which too are red zones so there have been major challenges to get these working. There’s an on-and-off impact whenever a new Covid-19 case is detected in areas near our warehouses or factories, which has disrupted the supply chain.
How is the company taking care of the health of its employees?
To a large extent, the factories have been quarantined. No outside person can enter the factories, including suppliers. We are following strong sanitisation measures and have arranged transportation for workers who are picked up from homes by buses that are sanitised after every trip. The buses are 50 per cent occupied to avoid any contact. We keep a track of who has travelled in each bus and temperature checks are done. We are working in shifts and those in shift-one are not allowed to interact with those in the second shift. Also plants are sanitised after every shift.
What is your plan for product launches, this year?
On an average we do around 8-10 launches in a year. Even in the current year we have done two launches (hyperlocal spices) before the crisis hit us. Given the current situation, we have kept our innovations on hold at this point of time as we want to see what will be the new normal situation. The consumer life has significantly changed and needs such as convenience are being evoked as the workload in homes have increased. We have seen a lot of demand in basic spices and breakfast mixes. Interestingly, as sweets shops are shut, we are seeing a huge demand for gulab jamun mixes.
Will MTR Foods be able to cross Rs 1,000 crore in revenue this year given the current crisis?
We are currently over Rs 900 crore in terms of revenue and it would be possible to touch the Rs 1,000-crore milestone this year. If the situation stabilises fast and we are able to find an equilibrium between managing this crisis and managing the business supply chain, then I see no reason why we will not hit those numbers.
How will things change for MTR once the lockdown is lifted?
This is one of those events that will change the world substantially. E-commerce is going to come out in a significant way and it is going to be one of our top priorities that we will carry into the future. Our e-commerce sales almost doubled to four per cent in April as compared to last year as we tied up with companies such as Swiggy and Zomato to get our products delivered. Also, as eating out will reduce and consumption patterns will change, we will also have to align our business accordingly.