Dragoco India commissions new facility

Chennai: In order to further tap the growing Indian demand for the flavours and fragrances market, Dragoco India has inaugurated its 3,000-tonne, Rs 18.5-crore facility near Chennai. The company has shut down its existing 1,400-tonne facility.

Dragoco India will manufacture 2,300 tonnes of fragrances and 700 tonnes of flavours. The plant will manufacture only liquid flavours and fragrances; powders will be added to the portfolio later. Till date, around Rs 30 crore has been invested in the joint venture.

The company is a 51:49 joint venture (JV) between the $313-million-turnover Dragoco, Germany, and the Chennai-based Sanmar group. Dragoco India is one of the several successful JVs of Sanmar. The Indian group is content with the investment in the venture, while the management rests with the German partner. Says Sanmar group chairman N Sankar: Dragocos JV illustrates the successful practice of our time-tested JV principles of trust and transparency and unified management.

The total Indian market for fragrances is around Rs 400 crore, and for flavours it is around Rs 200 crore, says Dragoco India chief executive officer C Venkat. The other majors in the domestic market are International Flavors and Fragrances and Givaudan; there are several small-scale players, too.

Says Dragoco Gerberding president and CEO Horst Otto Gerberding: Asia contributes around 26 per cent to our total turnover. India and China are the two fastest-growing markets in this region. And we would like to take advantage of that. We are present in 24 countries and is one of the top 10 players in the world in this field.

The Rs 86-crore turnover Dragoco India supplies mainly to cosmetics (perfume, talcum powder), toiletries (soaps, shampoo, detergents) and food (biscuits, beverages, bakery, sweets) segments. The new 1 lakh-sqft facility also has a pilot biscuit plant to test the companys flavours on the end products. The company ranks second and fourth in the fragrances and flavours market, respectively, in India.

Hair- and skin-care are the two developing market segments and we are now concentrating on them, says Venkat. Cavinkare (shampoo) Hindustan Lever, Henkel Spic (detergents), Nirma (toilet soaps) are some of its main clients. Though the German parent is also present in industrial colours, Venkat says the domestic market is not lucrative enough to focus on that segment.

With an increased capacity, says Venkat, Dragoco India hopes to increase its exports to 20 per cent of its turnover by 2005. Currently, the export revenue is 5 per cent. On the imports side the company imports nearly 40 per cent of its raw material needs.