Nitta Gelatin confident of a turnaround

Nitta Gelatin India Ltd is hopeful of garnering more business, thanks to raw-material availability at more reasonable costs and also the Centre’s recent revision of the regulations relating to crushed bone imports.

The global competitiveness of Indian gelatin had been severely dented in the past few years due to falling prices of hides — used as the raw material by many gelatin manufacturers abroad — even as raw material prices in India surged and reached unsustainable levels.

Crushed bone is the major raw material for ossein and gelatin production, and the industry consumes around 18,000 tonnes of this raw material every month. Gelatin finds application mainly in the healthcare and processed food sector.

“Nearly 60 per cent of our revenue comes from exports,” said Sajiv K Menon, Managing Director, NGIL.

“With gelatin and ossein prices in the global market weakening and the increasing trend in the crushed bone price in India, it was a double whammy for us.”

In addition, the rising export demand for Indian bones has reduced the availability of crushed bones in the domestic gelatin market, adding to the price rise, he said.

As the availability of good quality crushed bones at a reasonable cost is critical for the competitiveness of the domestic ossein and gelatin industry, the government has allowed imports. For the gelatin industry, raw material costs constitute almost 50-55 per cent of the total cost, he said.

The global price of crushed bone is under ₹25/kg, whereas Indian prices today hover around ₹28-30, which itself is a sharp drop from last year’s nearly ₹35/kg, Menon told BusinessLine in an interaction.

And the quality of the imported bones is way superior since it is pre-processed better than by the Indian bone mills, before it is supplied to gelatin manufacturers.

NGIL, one of the first Indo-Japanese joint ventures, currently produces 4,000 tonnes of gelatin and around 10,000 tonnes of ossein annually at its plants in Kerala, Gujarat and Maharashtra.

Despite a challenging business environment, NGIL has notched up a profit of ₹16.6 crore in the first half of the current fiscal, compared with ₹8.3 crore in the same period last year. He attributes the better performance to the concerted efforts on cost reduction, production efficiencies and strict environment management.

However, Menon is quite worried about the concerns raised by the Japanese JV partner on the continuing uncertainties at the Kathikudam plant in Thrissur created by a group alleging environmental violations and river pollution by NGIL.

The protest is going on despite precautionary steps taken by the company, he added. It invested ₹20 crore for environment management systems in the past two years alone, based on the audit conducted by the National Environmental Engineering Research Institute (NEERI) on the Kerala High Court’s directives.

Asked on the recurring protests, Menon said: “Today, we do have options including scaling up production at the company’s ₹80-crore green field plant at Ankleswhar in Gujarat”.

On business plans, he said: “We are open for acquisitions, and is looking for a value buy.”

Plans are also afoot to enhance the capacity at the Kakkanad plant here with an investment of ₹30-40 crore.