Hindustan Foods Limited announces capex of INR 125 Crores

Hindustan Foods Limited (HFL), one of India's largest FMCG contract manufacturer has announced that, the Company will be undertaking a capital expenditure of Rs.125 Crores in the Northern region of India, via its Wholly Owned Subsidiary ('WOS'), HFL Consumer Products Private Limited.

In August 2020, the Board of Directors of HFL had approved an investment of up to Rs.100 crores in HFL Consumer Products Private Limited, for incurring capital expenditure to commence their business.

The WOS will be setting up a Food & Beverages manufacturing facility for a leading FMCG brand. The work for the said facility will commence from Q4FY21 and commercial production is expected to begin from Q4FY22. The new facility is part of company's consolidated plans to expand its footprint in contract manufacturing space for the FMCG products. The capex by the WOS is likely to be funded through combination of internal accruals and debt.

Update on existing capacity expansion projects of the Company:

- Earlier in the year, Company had planned an investment of Rs.30 crores for setting up two Home Care liquid manufacturing facilities in Silvassa for a leading brand. Despite the Covid restrictions and lockdowns, one of the facility was set up in a record time and commercial production for the same commenced in September 2020. This facility is expected to reach optimal capacity utilization by end of the financial year. The second facility is under construction and commercial production is expected to begin from Q4FY21.

-In November 2020, the Board of Directors had also approved an Investment of Rs.150 crores in the Hyderabad facility, for manufacturing of Home and Personal Care products. The project work for the same has commenced and is progressing as per the schedule. The work for the said facility is expected to be completed by Q3FY22.

Commenting on the Capex plans, Mr. Sameer R. Kothari, Managing Director said, "The demand for contract manufacturing in FMCG industry is growing rapidly. We are in continuous discussions for new projects with our customers which include some of the leading brands in this space.

The recent capex announcements highlight the strength of our customer relationships and the ongoing trends in the industry. Execution skill is the key to success in contract manufacturing space and these new projects are an accreditation of our skills and the trust of the customer. We are committed to our goal of achieving, Rs.2,000 crores of revenue by FY2022 and believe all the capex projects will play a key role in helping us reach this milestone.

We continue to be a preferred partner and one stop solution provider for our customers. With strong manufacturing capabilities, management expertise and strong customer relationships, Hindustan Foods is well positioned for multi‐fold growth in coming years."

Shares of HINDUSTAN FOODS LTD. was last trading in BSE at Rs.1066.55 as compared to the previous close of Rs. 1087.8. The total number of shares traded during the day was 3141 in over 736 trades.

The stock hit an intraday high of Rs. 1140 and intraday low of 1017.15. The net turnover during the day was Rs. 3306031.

Source : Equity Bulls

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