NOOYI COMES CALLING; ANNOUNCES PEPSICO WILL INVEST $500 MILLION IN THREE YEARS TO TRIPLE BUSINESS IN INDIA

October 1, Oct 01, 2008 (Asia Pulse Data Source via COMTEX) -- PEP | Quote | Chart | News | PowerRating -- She may have left India long time back in pursuit of a career that made her become Forbes? third most powerful woman in the world. Chennai-born Indra Nooyi, Chairman and CEO of global soft drinks and foods giant PepsiCo, however, knows her country of birth is the place where the future lies. For someone who knows that India is amongst its top three fastest growing markets and in the top ten biggest markets for her company, Nooyi knows investing in India will not be a mindless exercise.

It therefore, is not to anyone?s surprise that Nooyi on a Sunday afternoon called a press conference to announce PepsiCo?s India plans for the next three years.

The announcement she made was not small going by what the company has gone through in India, such as the pesticide controversies and the allegation of depleting ground water at places where its plants are located.

?As a tangible sign of our continued confidence in India, I am delighted to announce that we will be investing USD 500 million in the next three years with the goal of tripling our business here,? Nooyi said.

She said the investment would be made spread over increasing manufacturing capacity, market infrastructure, environment sustainability initiatives, research and development, new product development and agriculture.

When she talked about tripling PepsiCo?s business in India, she however, wouldn?t say what the current level is. ?We have never given a break-up of India specific business but it is substantial,? Nooyi would say that much when pressed further. She said with the fresh investments, the company expects to generate 50,000 direct and indirect jobs in India. By her estimates the company currently creates close to 150,000 jobs through direct and indirect employment in the country.

As the company looked to cash in on the potential of the Indian market, PepsiCo was open to acquiring local brands or companies. ?We are constantly on the lookout to grow both organically and inorganically,? Nooyi said.

Asked if the company had earmarked any budget for acquisitions in India, she quipped: ?We have billions of dollars to target companies in India.?

PepsiCo, which has so far invested over a billion dollar in India, will be giving capacity enhancement a priority. PepsiCo India CEO (Beverages) Sanjeev Chadha said the company would be expanding its existing capacities and also create greenfield plants, without disclosing details. At present, PepsiCo has 43 bottling plans in India, of which 15 are company-owned and 28 are franchisee-owned. Chadha said although new plants would be set up by the company, PepsiCo would continue its existing relationship with bottlers. Terming India as an important place, which is among the top three fastest growing markets for the company, Nooyi said PepsiCo would be introducing more products, which are health and wellness oriented.

She, however, would not disclose how many new products the company planned to bring to India in the next three years but said:

?Typically in a year we may launch 5-10 products.? Of the company?s current product portfolio, she said PepsiCo would look to increase the share of healthy products to 50 per cent from the present level of 30 per cent.

Nooyi feels PepsiCo?s products like Quaker Oats platform has not been launched fully in India and it could see more products from the brand.

Emphasizing on the importance that PepsiCo attaches to India, Nooyi said PepsiCo, whose 26 global leaders were in India on a three-day visit, would continue to stress on its agenda of performance with purpose in the country and carry on with its focus on human, environmental and talent sustainability in India. Going by the past record that the company has had, especially after social organizations made it a target, Nooyi also chose to the moment to trumpet PepsiCo?s commitment towards social upliftment and being a responsible corporate citizen. She made an announcement of PepsiCo launching a pilot programme in India, which delivers against the UN Millennium Development Goal, to eradicate extreme poverty and hunger by 2015.

?PepsiCo is working toward developing nutritious fortified products to reduce micronutrient deficiencies in select developing countries to address the huge challenge of malnutrition among poor,? PepsiCo Chief Scientific Officer Mehmood Khan said. The project is likely to involve public and private partnerships and the products will be developed for India, South Africa and Nigeria in time, he added.

PepsiCo Vice-Chairman Mike White said the company was on track to achieve positive water balance by 2009, which would make the company save and recharge more water that it will use in its beverages plant throughout the year.

As her India visit coincided with the crisis that has gripped the US financial markets, she couldn?t have skipped answering a question or two on the issue.

She termed the US financial crisis as a problem currently confined to the Wall Street, the impact for which on PepsiCo was something which she was not too worried about.

?I do not believe the problem in Wall Street will affect companies like us. The problems at Wall Street have not yet trickled to the main street, where we are,? Nooyi said.

She also said the current problems in the US financial markets would not have any bearing on PepsicCo?s planned investments in India. Although she is concerned that the rising inflation globally, and especially in India was putting pressure on the company?s margins as well as sales in the short term. ?Inflation is a major concern for us globally. Sometimes you can cover part of it with changes in product prices but when you have inflation over 10-12 per cent it is difficult to cover all,? she said. ?Yes, short-term margins do get affected,? she added. Asked about her comments on the Singur controversy and its possible implications on global investments in India, Nooyi chose not to air her views publicly.

?I do not have an opinion on the matter. It is for the company and state government to sort out,? she said.

Yet, she gave thumbs up to West Bengal, despite the problems that Tatas have run into on their plans to set up its Nano car factory. ?We have a plant in Kolkata and it is functioning well. We are bullish on India and we like our business in Kolkata,? she added. Nooyi?s India visit this time was a perfect return of the native, in a way giving something back to where her roots are.

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