Freshtrop Fruits Limited is engaged in the export of fresh fruits and processed fruits. The company operates in two segments, Fresh Fruits and Food Processing. The Fresh Fruits segment supplies fresh grapes, pomegranates, and mangoes. The Food Processing segment supplies mango pulp, guava pulp, pomegranates concentrate, tomato paste and puree, gooseberry pulp, clarified products, and red papaya.
The company offers its products in India, as well as exports to supermarket chains primarily in Europe, Russia, and the Far-east. Freshtrop Fruits Limited was incorporated in 1992 and is based in Ahmedabad, India.
COMPANY HISTORY
The company was incorporated as a Private Limited company on 30th September, 1992, at Ahmedabad in the state of Gujarat. It was converted into a Public Limited company on 22nd September, 1994. Freshtrop was one of the first companies in the corporate sector to enter into exporting fresh fruit to developed countries. The company has played a pioneering role in establishing exports of grapes and pomegranates from India to Europe. The Company’s focus on building and maintaining networks of growers at several different locations has enabled it to become a consistent and dependable supplier for the past 20 years. Freshtrop has continuously and successfully supplied to demanding Supermarkets such as ASDA, Tesco, Marks & Spencer, Albert Hynes,DelHaize, Carrefour, Migros and several others.
PRODUCTS
This company is into business of selling
A) Packaged fresh fruits:
Freshtrop Fruits is engaged in the business of exporting fresh fruits to leading supermarket chains across Europe, Middle East markets, CIS countries, etc. It was one of the first Indian companies to pioneer exports of grapes and pomegranates from India to Europe.
The following fruits are exported by the company:
Mangoes
a) The orangish-yellow Alphonso (Happus) variety available from February to April
b)The Kesar variety of mangoes that are harvested between May and June
c) The golden yellow Banganapalli (Baneshan, Safeda) mangoes, which are grown in April and May
d) The yellow Dashehari mangoes that is available from June to August
e)The Chausa mangoes that grow in July and August
Table Grapes
a) Green colored Thompson Seedless grapes available from January to April
b)Red Flame Seedless grapes that are grown from February to April
c) Purple-black Sharad Seedless grapes harvested from December to February
Pomegranates
Available from November to July.
B)Processed fruit products such as Pulp & Extracts:
The food processing division was started few years back as a part of diversification and de-risking strategy that also gave a natural backward integration to its existing seasonal fresh fruits business (and of course, because of the massive growth potential it provides). The food processing division is into non-alcoholic ready-to-drink beverage vertical, which is one of the most lucrative areas of food processing. The products include, Pomegranate Juice, Various Fruits Pulp (Mango Pulp, Guava Pulp, etc.), Tomato Paste, Amla (Gooseberry) Pulp, Red Papaya Puree, Pulp & Concentrate, and Clarified (Mango, Guava & Pomegranate concentrate).
CLIENTS
Freshtrop’s major clients include some of the major retail and supermarket chains from across the world. Its clientele includes:
ASDA, Tesco, Marks & Spencer and Univeg fresh food chains in the US,The Delhaize Group and the Carrefour Group in the UK,Migros in Switzerland,Lidl, Aldi and the Rewe Group in Germany,Albert Heijn BV, Schuitema NV and Olympic Fruit in Netherlands.
FOOD SAFETY & TRACEABILITY
Freshtrop recognizes food safety as the single most essential concern in the fresh produce business. Freshtrop is the first in India and amongst a few in the world to offer 100% traceability of its produce through an online Internet based system which allows every entity of the fresh produce supply chain to track and know the complete history of the product right from its origin at a farm to the shelves of Supermarkets.
Every punnet supplied by Freshtrop is marked by an identification code. By feeding this code in the company’s website, customers can instantly retrieve information regarding the farm at which the produce was grown and the chemicals and the dosage used by the grower during cultivation. That apart, consumers can also learn about the time of harvest of the products in the punnet, the place of pesticide residue testing and the test results and the container in which the product was shipped.
CERTIFICATIONS
GlobalGAP: In 2004, Freshtrop received its first EurepGAP PMO certification. Since then they have continuously expanded the grower base under their GlobalGAP umbrella. In 2009, more than 85% of product exported by Freshtrop was from GlobalGAP certified farms. Freshtrop continuously works with growers to meet and exceed the standards of good agricultural practices.
BRC: Freshtrop maintains the highest standards of safety and hygiene at all facilities. In 2008, Freshtrop received BRC certification for its post-harvest management facility in Nasik. IN 2009, Freshtrop has received BRC certifications for its post-harvest management facilities at Nasik and Sangli.
ISO 22000: ISO 22000 is an international standard that defines the requirements of a food safety management system covering all organizations in the food chain from “farm to fork”. A systematic and proactive approach to identification of food safety hazards, development and implementation of control measures. The standard complies with the Codex HACCP principles.
SGF: SGF International E.V. is regarded as a model of industrial self-control in the fruit juice industry and for other sectors of the food industry. This allows tracing not just the history of the products but also possible quality deviations back to their source where they can be eliminated. The participation in this control system assists the producer in the fulfillment of his necessary diligence to market only proper goods.
Kosher: This certificate indicates the adherence to Jewish Dietary Laws. Though Kosher is a religion based dietary law but it also ensures food safety by avoiding food contamination.
HALAL: Halal is a Quranic term which means lawful, permissible or legal. This certificate enables export of fresh products to Islamic countries. The term Halal is used to designate food which is permissible according to Islamic/Shariat law.
FDA: This certificate enables exports of fresh fruits/processed fruit to USA.
SEDEX: Freshtrop is a member of SEDEX (Supplier Ethical Data Exchange), an organization that enables member companies to manage efficiently the ethical and responsible practices of their global supply chains. Their facility at Sangli (Unit II), which is primarily used for post-harvest management of grapes and pomegranates, has been audited by a SEDEX recognized ethical auditor.
For past financial performance visit http://www.screener.in/company/?q=530077
FUNDAMENTAL ANALYSIS
Grape exports from India to Europe are the foremost success story of Indian horticultural exports. India is an important supplier of fresh grapes during the summer months to both Europe and the Middle East markets.
Over the past few years, new markets such as CIS countries and Far-East have opened up offering alternates and giving the industry a healthy growth prospect. This also reduces the over-dependence of this business on EU and the gulf markets.
Modern pack house facilities with forced air cooling systems, APEDA sponsored traceability systems and internationally qualified chemical residue testing laboratories have all helped the industry grow exponentially by offering fresh Indian grapes with all required food safety controls.
Indian food and food processing industry has seen significant growth and changes over the past few years, driven by changing trend in markets, consumer segment and regulations. These trends, as well as changing demographics, growing population and rapid urbanization are expected to continue in the future and therefore will shape the demand for value added products in the food processing industry. The food processing sector in India is hence an attractive sector for investment and offers significant growth potential to investors.
The Indian beverage industry is on a high growth path. Fast urbanization, growing affluent consumers, changing lifestyles and health considerations are main driving factors behind this growth. The non-alcoholic ready-to- drink beverage market has been recording a compounded annual growth of 13% since 2009 and is one segment that has successfully defied the recessionary trends witnessed almost all across the world and all segments.
Demand for processed food has been rising with growing disposable income, urbanization, young population and nuclear families.
Household consumption is set to double by 2020.
India benefits from a large agriculture sector, abundant livestock, and cost competitiveness.
Investment opportunities are coming up in agriculture, food infrastructure, and contract farming.
Potential global outsourcing hub – Global supermarket majors are looking at India as a major outsourcing hub. India enjoys favorable supply-side fundamentals (abundant raw materials supply, cost advantages, The government is helping by supporting investments in AEZs, mega food parks and easier credit.
The food processing industry has the ability to convert raw agricultural produces into products with much longer shelf life resulting in reduction of wastages. This also reduces the threat of the temporary “problem of plenty” at harvest time for farmers thus giving them confidence to increase production.
Priority sector status for agro-processing given by the central Government
Vast domestic market
Large crop and material base offering a vast potential for agro processing activities
Setting of SEZ/AEZ and food parks for providing added incentive to develop Greenfield projects.
Opening of global markets – there are still several un-tapped markets around the world which can significantly fuel growth for the next several years.
The promoters have increased stake in the company from less than 44.99% in 2010 to 55.86% currently.
The management of this company is agile, smart strategist and also a good capital allocator.
The other food processing companies saddled with Debt and trading at PE of 25-45, this company, that would be debt free in coming years, easily expected to grow more than 50% for next two years and growing in an asset light model, led by efficient management who are excellent capital allocator, is available at a PE of ~ 10. The growth and PE is just going to expand from here on.
Indian food processing industry is widely recognized as a ‘sunrise industry’ having huge potential for uplifting agricultural economy, creation of large scale processed food manufacturing and food chain facilities, and the resultant generation of employment and export earnings. Over the last few years, there has been a positive growth in ready-to-serve beverages, fruit juices and pulps, dehydrated and frozen fruits and vegetable products, tomato products, convenience veg spice pastes, reasons being increase in consumption by nuclear families, working women, students and single employees staying alone. An increasing acceptance of new products with market development efforts has been witnessed lately given the fact that there is a good international demand for certain fruits and vegetable products. The Indian food processing industry is primarily export oriented. India’s geographical situation gives it the unique advantage of connectivity to Europe, the Middle East and the far-east.
Hence, one may consider this stock at CMP ₹143 with long-term view. The stock is listed in BSE only.
LINK TO COMPANY WEBSITE CLICK HERE
