Arnab Dutta

Nestle India Ltd, the country’s largest food company, is investing close to Rs 6,500 crore in its bid to ramp up production capacity and expand distribution reach in the vast hinterlands. Swiss multinational Nestle, which is doing business in India since 1912, is currently in an unprecedented capex cycle, says its a top executive from the local arm.

According to Suresh Narayanan, Chairman and Managing Director of Nestle India, the local subsidiary of the Swiss-headquartered Nestle SA., the firm is investing Rs 6,000 to Rs 6,500 crore over a period of 5-6 years starting 2020. While some Rs 3,200 crore worth of investments have already been done between 2020 and 2023, it is on track to invest another Rs 2,800 crore to Rs 3,300 crore till 2025.

“Today we are investing around 7-8% of our turnover through capex, which is much higher than what it ever was. In the last 7-8 years, it was in the region of about 2-3% [of our turnover]. The investments are channeled towards our upcoming factory in Odisha and increasing capacities of our Maggi range and coffee segment. We are also increasing the number of [production] lines for chocolates – putting up a chocolate facility at Sanand [factory],” he said in a recent interaction. Apart from ramping up its capacity, funds are also directed towards augmenting investments in Nestle’s distribution.

After setting a greenfield plant at Gujarat’s Sanand in 2022 with an investment of over Rs 700 crore to ramp production of its hot-selling Maggi instant noodles, the company plans to invest close to Rs 900 crore to set up the packaged foods plant in Odisha. Located in the Khurda district near the state capital Bhubaneswar, it will be the 10th manufacturing plant for the company that set up the first plant in India in 1961 in Moga, Punjab.

Nestle India, which follows a January-December financial year format, ended 2023 with a 13.2% rise in its net sales, which grew too Rs 19,210 crore from Rs 16,790 crore in 2022. While net profit for the year jumped 25.5% year-on-year to Rs 2,999 crore. According to Narayanan, the growth has broadly been volume based, however, of late the extent of volume growth has come down in comparison to last year.

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