Flex Foods Ltd.: Appetising growth

CMP: Rs.26.25
Target: Rs.45
BSE Group: S
BSE Code: 523672
52-Week High/Low: Rs.45/14
Market Cap: Rs.34.37 cr.
Flex Foods Ltd. (FFL) started commercial
operations in 1992 by establishing 100%
EOU for vacuum freeze dried vegetables,
mainly mushrooms and culinary herbs with a total processing capacity of 2,000 TPA. The project was part-
financed by a public issue of secured redeemable PCDs aggregating Rs.6.40 cr. The capacity has since gone up
several fold. FFL utilises over 70% of its production capacity for mushrooms and the rest for other vegetables
and fruits.
FFL was promoted by the Rs.2,000 cr. Flex Group. Uflex holds 47% in its equity. The Flex Group has interest in
diverse areas such as packaging, manufacturing pouches & machines, investments etc.
Manufacturing Plants:
Its processing infrastructure comprises the most modern plant and equipments from leading technology
providers like Niroan of Denmark, Non of Holland, Binder of Germany and Eurotek of UK along with others
from Indian companies. The plant can process upto 20,000 TPA of fruits & vegetables in the form of freeze
dried, frozen, IQF, air-dried and canned products. All the steps from the receipt of raw materials till final
packaging of the products are under strict quality environment & hygienic conditions to achieve the highest
level of microbiological & phyto-sanitary standards.
FFL offers a wide range of Vacuum Freeze Dried, Air-Dried, Frozen and IQF (Individually Quick Frozen)
product range of mushrooms, herbs, spices and fruits/vegetables, meeting strict quality & hygiene standards.
Canned button mushrooms in various shapes and sizes are also available as per customer requirements.
Application of Products:
FFL's products are used in the preparation of soups, sauces/dips, baby foods, breakfast cereals and ice creams
besides catering to institutional and consumer markets.
Technical Support:
FFL has technical assistance from Agrisystems, Holland, for the production of button mushrooms.
Manufacturing Excellence:
.. Leading exporter of mushrooms, vegetables & fruits
.. Modern processing plant
.. Part of the Rs.2000 cr. Flex Group
.. Smart rise in turnover & profits
..Sharp rise in share volumes

With world-class manufacturing facilities and state-of-the-art technology, GMP & Quality systems make FFL a
leading company in its category.
FFL lays top priority on sourcing and quality control of input materials to ensure the highest standards of
quality, hygiene and product safety. In order to maintain the right quality of finished products, most raw
material inputs including mushrooms, herbs and fruits & vegetables are grown under the supervision of in-
house experts under optimum farm conditions and best agri-practices are followed throughout the growing &
harvesting cycles .
Equity Holding:
.. Promoters - 59%
.. PCBs - 5%
.. Public - 36%

Good Agricultural Practices
FFL employs a team of over 15 agri-scientists and experts in food technology, cultivation, agronomy and
horticulture sciences. Good Agricultural Practices (GAPs) through regular interaction with farmers & growers
awareness programmes ensures productivity and quality.
The areas of healthcare, nutraceuticals, biotechnology, natural and herbal preparations have a very promising
future. The profit margins in healthcare and biotechnology are substantially higher compared to other sectors.
The future of the industry looks bright as the Government of India has taken several measures for developing
this industry. The Indian mushroom industry has geared up itself for considerable growth over the next few
years as export demand escalates. The mushroom industry's future is positive due to changing public
perceptions of the fungus. Mushroom has many medicinal values including the treatment of cancer.

FFL uses the most modern compost technology. It has taken steps to produce economically and efficiently
the best quality of mushrooms and herbs and produces high-yielding, visually attractive mushrooms with the
desired flavour. It mainly produces white button mushrooms as the world demand continues to be centered on
white mushrooms, which accounts for nearly 40% of the world production with major growers located in USA,
Netherlands and China.
The total food production in India is likely to double in the next ten years and there is an opportunity for large
investments in food processing industries. Health food and health food supplements is another rapidly rising
segment of this industry, which is gaining popularity amongst the health conscious people around the world.
The opening of the Indian economy coupled with favourable regulations for the Indian food processing sector
will have a positive impact on the overall industry and FFL.
Investment Perspective:
FFL is part of the booming foods industry and has introduced a range of frozen and air-dried products for the
export market, which will improve its turnover and profits.
Based on the bright prospects of the industry, FFL is expected to register sales of Rs.50 cr. with net profit Rs.12
cr. in FY09, which would give it an EPS of Rs.9.6.
The share of FFL is traded at Rs.26.25, discounting its projected EPS of Rs.9.6 by just 2.9 times against the
industry average of 22 for the food industry. This leaves sufficient scope for the FFL scrip to rise in the future.
Investment in this share is likely to fetch decent gains of about 60% in the medium-to-long-term.


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