Quality NZ, set up seven years ago to use the Indian contacts and profiles of the Black Caps backing the venture to promote NZ lamb to the cricket-mad nation of 1.3 billion people, has issued new shares to Alliance to crate a cash injection.
With the backing of former captains Brendon McCullum, Stephen Fleming and Daniel Vettori growth in sales has been encouraging but volumes remain small.
Sales of NZ sheep meat to India were just $2.4m in 2019, up from $1.6m the year before and $1.3m in 2017.
Alliance has been the sole supplier of lamb to QNZ.
The Invercargill processor has now paid an undisclosed sum for 10.4% of the company, which has offices in Bangalore, Mumbai and Delhi and employs 20 staff.
Alliance chairman Murray Taggart said it is not a bailout and the prospects for the company are bright.
“It is not a company with debt that was driving it under or anything like that.
“We believe that India is a market with a lot of potential and you could go along quietly at a very slow rate of growth or you can try and accelerate that growth and one of the limitations for a small business trying to accelerate growth is capital.
“That is the hole we are trying to plug.”
Relationships with hoteliers Marriot, Taj and the Oberoi have given QNZ a foot in the door to 300 five-star hotels.
But without enough working capital it was difficult to exploit that opportunity fully, Taggart said.
“That is required for cool storage and shipping and insurance from when the company is buying it off us to when they get the cash from the end customer … that is essentially what the capital is for.
“If you want to take 20 years you can achieve that capital out of profits or you can put the foot on the accelerator and put some more capital in now and achieve the gains earlier.”
The coronavirus outbreak in China has again underlined to Alliance the importance of developing new markets, Taggart said.
“Rest assured, that is very much front of mind as to why we are investing in India.
“We do not want to be a one-legged stool and India is providing that potential to be another leg to the stool.”
Asked if Alliance would invest more if called on Taggart didn’t rule it out.
“There is a lot of potential there in our view so it is quite conceivable that the growth could outstrip our desire to retain profits and so that is where more capital could be required.”
