Naturals mulls doubling production capacity, shift factory to Panvel

Home-grown old ice cream brand Naturals is planning on doubling its production capacity. The promoters of this closely held 35-year old company will relocate existing manufacturing unit in Kandivali to a bigger facility in Panvel.

The management has started scouting for land parcels to set up the new production unit that will cater to existing and future demand that'll come from store expansion.

Speaking to DNA, Srinivas Kamath, director, Kamaths Ourtimes Ice Creams P Ltd (owner of the Naturals brand), said, the company's Charkop, Kandivali factory, launched in the later part of 2000 with a lot of automation has a daily production capacity of 25 tonne. "We not only make our ice creams but also process the milk and fruits. The factory is currently running full capacity supplying to existing 125 outlets. The plan is to shift production base from Charkop to a much larger factory in the Panvel MIDC area with more than double capacity. It'll be a time-consuming process but is work-in-progress as we speak," he said.

The new factory spread over five acre in Panvel will require an investment of Rs 40 crore and the management will fund the same using internal accruals. Once operational, it will not only make ice creams but also a few other fruit-based products mainly for exports. The company also has a mini unit in Mangalore that is used to make certain ice cream variants like coconut, pineapple, papaya, jackfruit, etc. that are particular to south India. This unit will continue to play its role in the overall production plan.

At the company level, the company has clocked in a turnover of Rs 157 crore as of March 2019, while on retail level it's close to Rs 200 crore. Without adding new stores, the company has been growing over 20% year on year. "This fiscal end, we are targeting revenues of over Rs 192 crore at company level. We would look to add a couple of outlets as well," he said.

The management is also working on doubling the store count to 250 over the next three to five years. In fact, it's only in the last three to four years that the company started expanding beyond South and West regions. "We are very dominant in the NH4 belt followed by Karnataka but we'd not ventured in the North India region. So Delhi, Gurugram, Jaipur, Indore were added in the recent past. The Kolkata store was opened just last year. The plan is to double the store count and expand footprint in various parts of the country. We were also planning to open in Chennai but are unable to because we don't have enough production capacity to service the market," he said.

Naturals's smaller stores measuring 400 to 500 square feet with a set-up cost of between Rs 20 and Rs 25 lakh have a breakeven period of under 15 months. The bigger stores operating in Delhi, Kolkata and soon-to-open at Khar Linking Road, Mumbai and another one coming up in Bengaluru are spread over 1,500 to 2,000 square feet and take longer to break even.

"The larger ones costing around Rs 75 lakh per store are brand experience outlets and are company-owned and operated (CoCO). It was a conscious decision by the management to take the CoCo route considering the costs associated with setting up and operating such stores," said Kamath.

While the company has been selling ice creams through its exclusive brand outlets (EBOs), the advent of online food delivery aggregators like Swiggy and Zomato has increased off-store consumption in a big way. "Our same-store sales have increased manifold. Earlier, business used to be a bit slack during monsoons down by 30-35%, especially in Mumbai. But that's not the case anymore. Earlier delivery used to be just 10-15% of sales, but delivery business has more than doubled now mainly due to online aggregators," said Kamath, adding that the ice cream brand will also be available on Amazon food delivery platform which is set to be operational in October, by or before the Diwali festival.

After launching the first Naturals ice cream parlour in 1984, the promoters took almost a decade to open the second store. This was the also time when the Kamath family launched stores using the franchising route, something that was completely new then. "Our first few franchisee comprised relatives and vendors like milk, fruits suppliers, etc. However, a decade later we started franchising to others who wanted to get into ice cream parlour retailing business. We have also started experimenting with a franchisee-owned and company-operated (FoCo) model now," said Kamath adding that 110 stores are franchised, 15 are FoCo and 12 are