CAPITAL BUDGETINGINTRODUCTION

An efficient allocation of capital is the most important finance function in modern times. It involves decisions to commit firms funds to long-term assets. Such decisions are tend to determine the value of company/firm by influencing its growth, profitability & risk.

Investment decisions are generally known as capital budgeting or capital expenditure decisions. It is clever decisions to invest current in long term assets expecting long-term benefits firms investment decisions would generally include expansion, acquisition, modernization and replacement of long-term assets.

Such decisions can be investment decisions, financing decisions or operating decisions. Investment decisions deal with investment of organizations resources in Long tern (fixed) Assets and / or Short term (Current) Assets. Decisions pertaining to investment in Short term Assets fall under Working Capital Management.

Decisions pertaining to investment in Long term Assets are classified as Capital Budgeting decisions. Capital budgeting decisions are related to allocation of investible funds to different long-term assets. They have long-term implications and affect the future growth and profitability of the firm.

In evaluating such investment proposals, it is important to carefully consider the expected benefits of investment against the expenses associated with it. Organizations are frequently faced with Capital Budgeting decisions. Any decision that requires the use of resources is a capital budgeting decisions. Capital budgeting is more or less a continuous process in any growing concern.

NEED FOR THE STUDY

The Project study is undertaken to analyze and understand the Capital Budgeting process in edible oil manufacturing sector, which gives mean exposure to practical implication of theoretical knowledge.

To know about the companys operation by using various Capital Budgeting techniques.

To know how the company gets funds from various resources and effective allocation of such funds (i.e. allocation between current and long term assets)

SCOPE OF THE STUDYThe scope of the present study includes the following

Understanding the importance of capital Budgeting in Food, fats and Fertilizers Pvt Ltd, Tadepaliigudem

Evaluating of an Investment proposal of setting up Facility at FFF, for manufacturing of Edible Oil.

OBJECTIVES OF THE STUDY

To study the technique of capital budgeting for decision- making.

To understand the practical usage of capital budgeting techniques

To understand the nature of risk and uncertainty

To make suggestion if any for improving the financial position if the company.METHODOLOGY OF THE STUDY

To achieve aforesaid objective the following methodology has been adopted. The information for this report has been collected through the primary and secondary sources.

Primary sources

It is also called as first handed information; the data is collected through the observation in the organization and interview with officials. By asking questions with the accounts and other persons in the financial departmentSecondary sources

It is also collected by someone else and passed through some stastical techniques. The secondary data have been collected through the various books, magazines, broachers & websites.For this study collected information from company Annual Reports.

LIMITATION OF THE STUDYThough the project is completed successfully a few limitations may be there.

Since the procedure and polices of the company will not allow to disclose confidential financial information, the project has to be completed with the available data given to us.

The period of study that is 5 weeks is not enough to conduct detailed study of the project.

The study is carried basing on the information and documents provided by the organization and based on the interaction with the various employees of the respective departments.

Lack of knowledge. Some of the lack full-fledged knowledge of the concept and its difficult to collect a specific opinion from them.

Time limitation. The duration of the project is short to collect the required information accurately

CHAPTERIZATION PLANThe study is presented in five chapters as the following

Chapter-1

This chapter deals with the introduction, need for the study, scope of the study objectives, and methodology, and limitations of the study.

Chapter-2

This chapter deals with the industry profile and the company profile.

Chapter-3

This chapter deals with theoretical aspects of inventory management.Chapter-4

This chapter deals with data analysis and interpretation.

Chapter-5

This chapter deals with findings, suggestions, conclusions and bibliography

INDUSTRY PROFILE

In the Indian context, the term Vegetable Oils is almost synonymous with Edible Oils and land is not used as cooking media. However it is important to keep this distinction in mind not all Vegetable Oils are Edible Some including cater oil are mostly non-edible and some of the edible oils like Ground Nut and Coconut are finding increasing industrial applications as in cosmetic, soap making etc.

By virtue if they are high nutritive content, Edible oils from a major source of nutrition. The fatty acids in Edible Oils are required by the body as a vehicle for carrying vitamins; provide oil cakes, which are by-product of the oil extraction process, are important source of animal nutrition. These can be processed in to edible flavors, which are rich in proteins.

Oil seeds occupy an important position as the agriculture map pf and rank second after food grains as a farm commodity crop. India accounts for a tenth of the world out put of Vegetable Oils and fats. It is the largest produces of Ground Nut, rapeseed, mustard and sesame, second in respect of castor seeds, third in coconut, fourth in cotton seed and fifth in line seed.

Our country has a highly developed oil based industry. Providing gainful employment to nearly 15 million persons besides another half a million engaged in milling and processing units. It is essential a food-oil industry accounting for four fifths of the total supply of Vegetable Oils. Soap paints and varnish industries from the bulk of non-food applications.

In spite of thief national importance, production of food grains has been suffering a negative growth rate all these years. Only during the first plan period, the targets set for production were realized after this no impressive achievement was recorded. The main contributory factors are two fold, first only marginal land, in rain fed areas is being used for their cultivation resulting inevitable in low productivity, second agriculture in India is still subject to the vagaries of monsoon which makes for erratic production. It is little wonder therefore that the annual rate; of growth of oil-seed production for the decade 1965-1976 was a mere 1.2 percent while that of oil seed productivity, an equally dismal one percent.

Viewed in the global context, India has the dubious distinction of having the highest acreage under oil seeds and recording the highest output, and yet showing the lowest yield, at 736 kg. Indias yield per hectare is lower than that of Nigeria (1615.38 Kg) U.S.A. (91474.58 Kg), Argentina (1153.49 Kg) and China (1148.55 Kg.) The following table would give picture of Indias placing in the world settings.

For the year 1980-81, target for oil-seed production had been fixed at 11 million tones, actual production however lagged behind, with; provisional estimates. Placed at 10.2 million tones. Production of live major oil seeds viz./ groundnut, rare seed mustard, sesame, line seed and castor seed and is estimated to be abound 90 lakes tones, which is about 13 percent higher than the previous years production. Production estimates of groundnut at 57 lake tones however show decline of 70,000 tones. At 2 lack tones castor seed production has also registered a decrease of 30,000 tones. Rapeseed, sesame and line seed have however, registered increased over the previous years production levels.

The central Government therefore took various measures to increase production of oil seeds. A centrally sponsored scheme for an intensive oil seed development programmed was operated in 14 states with a coverage target 40.6 lakes hectors under a liberalized pattern of central, assistance. However actual coverage was only 36 lake hectares and the short fall was attributed to serve. Drought conditions in several states during the Kharrif season. Short falls in production persisted in the oil year 1981-82 as well as a result, domestic industry could not meet the consumption needs respect of edible oils. The total edible and supplies from indigenous sources were estimated at about 30 lake tones in 1981-82 (which however higher than the previous years levels of 25 lakes tones). The gap of 10 lake tones had to be filled only though imports. Consequently, the state-trading corporation was asked to import a million tones of Edible Oils during the oil year 1981-82. The allotment of imported Edible Oils was also pruned in a bid to ensure more supplies though fair price shops.

The trend of imports in expected to continue in the year to come despite the best efforts of the union agriculture ministry to raise oil seed output. The genera-based international trade center has projected import of 13 million tones of Vegetable Oils in 1985. As for exports, it is anticipated that India would export 15 Lake Tones of oil equivalent of hand picked-selected groundnut, other nuts and castor oil by 1985.

The composition of our exports is expected to undergo a change palm oil and products (palm oil and FBD palm oil) will in further account for an increasing share of Indian exports soybean oil and rapeseed oil will continue to be imported through their combined share may fall to about one third of the total imports refined rapeseeds oil could be the cheap oil for the liquid market while soybean oil is expected to the supplied to the vanaspati industry. Regarding production of oils, an increase in the

production of solvent extracted oils such as rice bran oil tree oils in lightly to occur the ITC reports says that the country could make significant investments in view of its resource for this oil and the demand of Edible Oils. The report has also forecast a rise in the de oiling of ground nuts cake and other sun cakes the country could also produce 4.5 lakes of tones seed oil per year.

PROBLEMS:

An important feature to be taken note of in the case of seeds is that their production facilities widely from year to due to seasonal conditions as only 8 percent of the total area under oil seeds is irrigated further year substantial parts of the verified areas under oil seeds consists of marginal lands plant population is mostly sub-optional due to the user seed of pure quality and wide spacing the triple alliance of weeds, pests and pathogens cause great deals of losses both in the early state of plant growth as also at crop maturity. Absence of rains at critical stages also causes significant losses in yields particularly in the case of groundnuts poor post, harvest technology including deficiency in marketing support and storage and processing also have advice effect on returns to grower and incentives for production.

Indian Edible Oil Industry

The Indian vegetable oil economy is the worlds fourth largest after the US, China and Brazil, harvesting about 25 million tons of oilseeds against the world. Since 1995, Indian share in world production of oilseeds has been around 10 percent. Although, India is a major producer of oilseeds, per capita oil consumption in India is only 10.6 kg/annum which is low compared to 12.5 kg/annum in China, 20.8 kg/annum in Japan, 21.3 kg/annum in Brazil and 48.0 kg/annum in USA.

Vegetable oil consumption has increased following a rise in household incomes and consumer demand. India imports half of its edible oil requirement, making it the worlds third-largest importer of edible oil. The country buys soya oil from Argentina & Brazil and palm oil from Malaysia & Indonesia.

Currently, India accounts for 11.2 per cent of vegetable oil import and 9.3 per cent of edible oil consumption.

Types of Oils commonly in use in India:

India has a wide range of oilseeds crops grown in its different agro climatic zones. Groundnut, mustard/rapeseed, sesame, safflower, linseed, nigerseed / castorseed are the major traditionally cultivated oilseeds. Soyabean and sunflower have also assumed importance in recent years. Groundnut, soyabean and mustard together contribute about 85 percent of the countrys oilseeds production. Coconut is most important amongst the plantation crops. Efforts are being made to grow oil palm in Andhra Pradesh, Karnataka, Tamil Nadu in addition to Kerala and Andaman & Nicobar Islands. Among the non-conventional oils, ricebran oil and cottonseed oil are the most important. In addition, oilseeds of tree and forest origiUn, which grow mostly in tribal inhabited areas, are also asignificant source of oils. ntil 2002, the olive oil sector in India was predominantly unorganised. than for cooking..

INDIAN EDIBLE OILS INDUSTRY: The demand for edible oils in India has shown a steady growth at a CAGR of 4.43% over the period from 2001 to 2011. The growth has been driven by improvement in per capita consumption, which in turn is attributable to rising income levels and living standards. However, the current per capita consumption levels of India (at 13.3 Kg/year for 2009-10) are lower than global averages (24 kg/year).1 The Indian edible oils market continues to be underpenetrated and given the positive macro and demographic fundamentals it has a favourable demand growth outlook over the medium-to-long term. In terms of volumes, palm oil, soyabean oil and mustard oil are the three largest consumed edible oils in India, with respective shares of 46%, 16% and 14% in total oil consumption in 2010. Given the high price consciousness and varied taste preferences of Indian consumers, ICRA expects

these three oils to continue to account for the bulk of edible oil consumption in the country.

There has been a significant gap between demand and supply of edible oil because of limited availability of oil seeds and shifting of acreage to other crops in the domestic market. This gap has been met through imports, which account for almost 45-50% of the total oil consumption. In H1OY2010-11,2 edible oil imports were observed to be the lowest in the last three years in view of improvement in domestic oilseed production.

Notwithstanding that, ICRA expects the high dependence on imported oils to continue in the foreseeable future due to anticipated domestic supply constraints and the high cost competitiveness of imported oils. Refined and crude palm oil (CPO) have accounted for the major portion of edible oil imports in India (74% in OY2009-10) mainly due to their relatively low prices and ample availability. ICRA expects the dominance of palm oil in imports to continue in the near-to medium term.

1 Oil World 2010

2 OY Oil Year refers to the period

ICRA Rating Feature Indian Edible Oils Industry: Key Trends and Credit Implications

High reliance on imports, domestic edible oil prices have largely been linked to international edible oil prices. After the decline in FY09, international edible oil prices remained at subdued levels during most part of FY10. The prices of major edible oils rose in H2FY11 on account of anticipated higher demand for bio-fuels, given the high crude oil prices as well as expected production shortfalls in palm oil production. Prices have, however, corrected and stabilised in recent months on account of better-than-expected CPO production from Indonesia/Malaysia during Feb-March 2011; demand rationing due to high prices in developing countries suffering from high levels of food inflation besides the geopolitical situation in the Middle East and North Africa. The improved pricing levels for Oil Year (OY) 2011 as compared to OY 2010 have provided some comfort to small/medium scale domestic solvent extractors and enabled relatively better capacity utilisation levels. Over the near term, edible oil prices are expected to remain firm, considering the strong demand for alternative sources of energy like bio-fuels in view of the continued rise in crude oil prices.

The Indian edible oil industry is highly fragmented, with the presence of a large number of participants in the organised and unorganised sectors. This has resulted in severe competition and inherently thin profitability margins. Further, the profitability of market participants has also been vulnerable to risks emanating from weak harvests; commodity price volatility and forex movements.

ICRA notes that while the share of branded oils segment has remained low over the years, it is poised for growth in view of rising income levels; uptrend in urbanisation and increasing quality consciousness of Indian consumers.

The Government of India has cut down import duties on edible oil since April 2008. The current duty differential between crude and refined oils stands at 7.5%, which provides protection to domestic refiners against competition from imported refined oils. Going forward, the industrys profitability is vulnerable to any reduction in this duty differential.

From a business risk perspective, ICRA considers the flexibility to modify product portfolio as a key strength in a market characterised by commodity price volatility. Accordingly, players with a diversified presence and exposure to the three major categories of oil, namely, palm oil, Soya bean oil and mustard oil, would be better positioned for growth as compared to players with single product concentration. Further, according to ICRA, the large-scale integrated players are better placed than small and mid-sized manufacturers to withstand the challenges in the business environment on the strength of benefits related to economies of scale such as marginally lower cost of production and access to cheaper working capital credit. From the perspective of revenue growth and profitability, market participants with a high share of established branded products are better placed than participants operating in the commoditised bulk market.

In the recent past, the Indian edible oil industry has witnessed organic and inorganic expansion by some of its major participants. While ICRA views the increase in scale as a credit positive, the impact of these capex activities on the capital structure and the ability to scale up revenues and profitability to the envisaged extent will be some of the variables to be closely observed from a credit perspective.

BACKGROUND

Historically, India has been a major importer of edible oils with almost 30-40% of its requirements being imported till 1980s. In 1986, the Government of India established the Technology Mission on Oilseeds and Pulses (TMOP) in order to enhance the production of oilseeds in the country. The TMOP launched special initiatives on several critical fronts such as improvement of oilseed production and processing technology; additional support to oilseed farmers and processors besides enhanced customs duty on the import of edible oils. Consequently, there was a significant increase in oilseeds area, production and yields until the late-1990s. However, in order to fulfill its obligations towards various international trade agreements and also meet the increasing demand supply deficits, India began to reduce import restrictions on edible oils in the late 1990s; and it was gradually brought under Open General License. This led to a significant slump in the domestic oil seeds market, as edible oil prices fell sharply in line with the low international prices prevailing at that time. Subsequently, the duty structure was modified so as to maintain a duty differential between crude and refined varieties in order to protect the domestic industry. Nevertheless, due to high import dependence, domestic edible oil prices remain highly correlated to international edible oil price movement, and this has resulted in volatility in the key credit metrics of rated edible oil companies. At the same time, ICRA notes that edible oil companies with benefits of large-scale integrated operations, multi-product offerings and recognizable branded presence in retail markets have fared better as compared to small/medium-scale domestic oilseed crushers.

KEY TRENDS & CREDIT IMPLICATIONS

Favorable demand outlook for edible oils; under penetrated market offers significant growth

Potential:

The demand for edible oils in India has shown a compounded growth of 4.5%over the last 10 years and is estimated at 16.2 million tones for Oil Year(OY) 2010-11. India plays an important role in the global edible oil market, accounting for approx. 10.2% share of consumption; 7% share of oilseed production; 5% share of edible oil production and 13.6% share of world edible oil imports for OY2009-10. As per USDA estimates, India is the third largest consumer of edible oils (after China and the EU-27 countries); and will account for 11% of global edible oil demand and 16% of global imports in OY 2010/11F.

Indias annual per capita consumption has shown a steadily increasing trend from 4 kg in the 1970s to10.2 kg in the late 1990s to current levels of ~13.5 - 14 kg. However, it still ranks well below the world average of around 24 kg (per capita figures including consumption of bio-energy), thereby signifying the high growth potential of the industry. Refer Charts 1 and 2 for trend in domestic demand and percapita consumption of edible oils in India.

Industry remains vulnerable to the risk of narrowing import duty differential:

Beginning 2007-08, there has been a progressive reduction in import duties on crude and refined edible oils. Most of these policy changes have been made in order to comply with foreign trade agreements entered by India with other countries and associations such as ASEAN apart from meeting shortfalls in domestic supplies and curtailing inflation. In the last round of changes in duty structure (April 2008), the duty on crude palm oil was made nil while that on refined palm oil was made 7.5% (7.7% including education cess), with the net duty differential being maintained at 7.5% to protect the domestic industry3. Going forward, the reduction of import duty differential remains a key regulatory risk for the industry.

Branded oil sales, although currently low in India, are expected to grow due to renewed thrust by major players

The share of branded product sales has remained low with most low-income consumers opting for given the presence of a large number of unorganised participants in the Indian edible oil market, cheaper oils sold in loose form. As per industry data, only about 31% of urban households and about 9% of rural households consume branded edible oils, with the national average at 16%. Given the low penetration of branded oils; increasing affluence levels and quality consciousness of the Indian consumers, there is a significant growth potential in the branded segment.

Amongst the major edible oils consumed, palm oil is still largely traded as a commodity and sold mostly in loose form, with packaged sales accounting only for 15%-20% of total sales. Sunflower and soya oil, on the other hand, have a high proportion of packaged sales estimated at around 70% and 55% of total sales. The major participants in the organised sector, namely, Ruchi Soya, Adani Wilmar Limited (AWL) & Cargill India, have a strong presence in the branded segment, with branded sales accounting for 38%, 58% and 60% of total edible oil sales of these companies respectively. Moreover, a few mid-sized, regional edible oil companies such as Mantora Oil Products Ltd, Modi Naturals and Tara Health Foods Ltd have also been striving to establish their brands. From a credit perspective, ICRA considers high share of branded sales as a strength, given the favourable outlook for growth; relatively high margins; stability of off take and better pricing power as compared to the bulk market. Nonetheless, since branding activities entail high upfront outlay while sales volumes may take time to scale up, profitability margins of companies undertaking large-scale branding efforts are likely to come under pressure during the interim gestation period.

Some trends of consolidation visible in the industry; large-scale integrated players leading the capacity addition process through expansion as well as acquisition/consolidation

The edible oil industry in India in the recent past has witnessed both organic as well as inorganic expansion by some of the major players. AWL has added 1090 TPD of installed capacity for refining and 5050 TPD of installed capacity for seed processing during CY 2010-11 by acquiring five operational plants and undertaking expansion at three out of its four existing plants. AWL has also additionally taken over the operations of other Wilmar associates in India (like Acalmar Oils & Foods Limited) so as to consolidate its pan-India presence. Sanwaria Agro Oils Limited has added 1000 TPD crushing capacity in 2009 through acquisition of two plants. KS Oils has set up new facilities at Kota, Ratlam and Guna, totaling 3400-3600 tpd, and acquired a refining unit at Haldia. Further, some edible oil manufacturers have also undertaken backward integration to strengthen their overall business model. KS Oils has acquired 1,38,000 acres of palm plantations in Indonesia while Ruchi Soya has access to 1,75,000 hectares of agricultural land with palm plantations across different Indian states.

While ICRA considers this consolidation and capacity expansion trend as a favourable development due to the benefits associated with large scale of operations, on the flip side, the adverse impact of such activities on the capital structure; profitability and return metrics of the concerned companies, particularly during the gestation period, presents a downside risk.

Projections:India has becoming a sizable imported of Edible Oils since the mid-seventies. Annual reports are the order of the million tones costing around Rs.600 cores in foreign exchange.

It has been projected that the demand edible oils will increase at the minimum annual rates of 3.5 percent. The growth rate in oil seeds production has been then one annual a half percent per annum in the last decade avoidably import o Edible Oils will be on the rise. At these assumed the levels, the annual import requirements will be around 1.6 millions tones by 1990. If demand grows at the higher rate, say at 5 percent, the volume of exports required will be 2.1 million tones by the same year.

Imports in the range 1.6 to 2.1 million tones will mean India rice bringing 8.10 percent of the projected will export vegetable oil at the time. Such heavy dependence on India to price backs mail. That would be compounded in years of bad harvest. The foreign exchange drain on our exchange (according to World Bank estimates) could be us $3 to 4 billion annually.

At the instance of the Government of India the National Dairy Development Board (NDDB) has under taken the project for restructuring the pattern of production and marketing of oil seeds and Edible Oils. The project has been designed to integration production, procurement, processing and marketing of oil seeds and vegetable oils through a two-tier co-operative structure oil seeds growers co-operative societies at villages level and an oil seeds growers federation at the state level.

A sum of Rs.150 cores required for project investment could come from ploughing back the sale proceeds of 2.5 lakes tones of Edible Oils gifted to the NDDB by the co-operative league USA [CLUSA] NDDB by co-operative union of Canada (CVL). It is sought to involve 6 states Gujarat, Maharashtra, Tamilnadu, Madhya Pradesh, Andhra Pradesh, and Orissa in implementing the project.

Rice bran oil

New technologies:

New technology in the US has proved that rice bran oil is effective in lowering cholesterol. This has encouraged many rice millers in the US to stabilizer rice bran oil extraction. Edible grade rice brand oil is called Heart Oil in Japan. As demand from this oil is likely to broaden the world over and as India is the second largest producer of rice after China, the union government decision to encourage productions of this oil is welcomed in oil quarters. There is great scope, to introduce modern technology in this predominant agro-industry.

The central Government has raised the export ceiling on de oiled rice brand from 216,000 tones to 324,000 tones for the oil year 1989-90 to encourage the domestic production of brain oil and the export of de oiled brand. This is a welcome step at that time when the country is poised for it is highest level of edible imports.

It is now increasingly felt that there exists scope of arguments. The and the availability of Edible Oils through the application of appropriate technology and the other modernization programs in the oil-milling sector of particular interest is the vast scope of producing Edible grade oil from rice brand.

According to study the United Nations Food and Agricultural Organization (FAO) IN 1985, India is the largest producer of the rice brand oil in the world. But compared to Japan were 80 percent of all rice brands are attracted for oil, only one-fourth of all potential bran is used for oil attraction in this country.

Till 1977-78, India produced about 80,000 tones of rice brand oil, but only of industrial grade, 1978-79 only 2,500 tones of Edible Oils, could be produced out of 101,000 tones of rice bran oil. The situation steadily improved since than, thanks in part to the efforts of the solvent extractors, Association of India (SEAI). Out of 250,000 tones of the Edible grade. Production of RICE BRAN Oil is likely to go up from 250,000 tones in 1986-87 to 310,000 tones in 1987-88. In 1988-89, the production is likely to go up 325,000 tones although the potential, identified by the SEAI is of 675,000 tones per annum.

The development of RICE BRAN oil extracts illustrates how by-product utilization can help argument Edible Oil supplies in the county and generate economic activities as well.

The thin brown layers between the husk and kernel in a grain of paddy are called bran. These layers are baric barbarous in nature, indigestible, and refractory to cooking. These bran layers are, therefore, indigestible, and refractory to cooking. This bran layers are, therefore removed by a process called polishing. About 6-Kgs Bran in usually obtained from polishing one quintal of rice.

The bulk of the oil of rice bran (50-80 percent of the total oil) comes into bran during its polishing. In row rice, on an average, bran contains 12-15 percent oil, while in per per boiled rice when oil inside the grain gets deposited on the outer layer the oil content of bran is 18-20 percent consider its fact that half of rice productive in India is par boiled, the average oil content of rice bran could realistically be assumed to an average of about 50 percent.

The estimated production of paddy in the 1988-89 was 93 million tones. Calculated at the modest rate of 5 percent bran on each quintal of paddy for seed purpose, the potential output of oil comes to 610,000 tones out of bran of 4 million tones.

Beginning in the 1970 under private suspires oil extraction from RICE BRAN has been steadily on the increasing move ever the profession of Edible grade RICE BRAN oil to the total has gone up from more 2,300 tones during 1977-78 to our 100,000 tones in 1977-78. The products of Edible Oil are closely related to the use of this oil the Vanaspathi Industry.

In spite of fluctuations in demand the use of RICE BRAN oil is Vanaspathi manufacturing has increased steadily over the year.With the recent decisions of the Government to reduce the allocation of imported oils to the Vanaspathi Industry, it has become more depend on indigenous oils and fats. A situation that is going to further increase its demand for RICE BRAN oil in the coming year. Various Government policies like export of de oiled bran exercise rebate on the use of RICE BRAN oil in the Vanaspathi units, excise in hex an on hardened RICE BRAN oil for use so, and the levy on rice mills have contributed, towards the growth of the sector.

The announcement of a cash compensatory support of 10 percent on the FOB value of exported de oiled from cake for the 3 years 1986-87 to 1988-89 as further boosted the processing of the rice bran.

Andhra Pradesh process the largest quantum of rice bran, followed, Punjab and Uttar Pradesh. This is also due to the growth in the no of solvent extraction units. In 1987, out of 4.86 millions tones of solvent extraction capacity, Andhra Pradesh had 1038 million tones, followed by Punjab with 86 tones Madhya Pradesh with 6 lakes and Uttar Pradesh, with 5,80,000 tones. In 1985-86 Andhra Pradesh processed 39.5 percent of all rice bran produced accounting for 50.3 percent of total Edible grade RICE BRAN oil 40.2 percent of total bran and produced 70 percent of total RICE BRAN oil. 5 states Andhra Pradesh, Punjab, Uttar Pradesh, Karnataka and Haryana produced 81 percent of all rice bran under produced 80.4 percent total RICE BRAN oil.

As a result of the encouragement given from the use of indigenous rice bran oil particularly by the Vanaspathi Industry the processing capacity of rice bran in the country went up from a more 90 lakes tones to 3.4 million tones 1994 and now stands at 80 million tones.

A number of suggestions have been put forward for augmenting the production of RICE BRAN oil. These include:

1) Uniform systems of rice levy for huller and Sheller millers, so that huller cant remain Wedded their traditional technology with perpetuates wastage and would be compelled to modernize. This would also increase the availability of rice bran for oil extraction.

2) An increase in the excise rebate on using rice bran oil in Vanaspathi manufacturing as well as fro soaps and other industries.

3) Fiscal incentives for production of refined solvent extracted RICE BRAN oil for direct use of cooking medium.

4) Permission for blending similar non-conventional oil with RICE BRAN oils for direct consumption and

5) Minimizing the import of Plan oil so as to boost the price of indigenous oils and provide an intensive to domestic producers.

Deposit all efforts to increase the production of RICE BRAN oil to major out stacks, one in built in the very structure of rice milling in India and the other natural of technology, stand in the way of the fuller development of RICE BRAN oil processing. To take the farmer first, largest production no less than half of fresh rice bran accepts the extraction process is together due to the problems of collection (and stabilization of oil content). This is because no less than 80,000 hullers scatters all over the country, mostly in the rice producing and consuming states, produce these brans.

The technology constraints are closely related to the structural ones. Where as has the husk content or rice bran in Japan is only 3 percent, in India it is more than 12 percent. As a result, the oil content of RICE BRAN in terms of value goes down. Further, when oil extraction is done, the husk leaves a deep color in the oil, when poses problems at the time of bleaching, another acute technological constraint arises from the tendency of rice bran to get dehydrated as a result exposure to the atmosphere as a result, oil contest goes down to a great extent, making it and economical per oil extraction.

The colossal waste of paddy by production including rice bran is ingrained in the structure of rice milling industry in India. The number of rice mills in India increased from 46,000 in 1993 to 107,000 in 1983 and 1,17,000 in 1987. The number of huller mills also increased from 1963 to 80,000 in 1983, before declaring to 78,300 in 1987.

The large number of huller units is a serious drawback, not only because their paddy out turns is low, but also because the bran obtained from huller mills is mixed with husk and other foreign matter. Because of the low oil content, in the rank of rice to nine percent, it becomes uneconomical to extract oil from this bran.

Holler mills are improved versions of hand panders mostly located in small towns and in interior villages mostly located process 200 to 500 tones of paddy in a year. These small hullers generally involve themselves in custom milling of paddy with fixed charges, in cash and in king. They are excluded from paying the compulsory levy imposed on larger mills, which under take commercial milling of paddy.

The huller mills cater to the large number of landless laborers, sharecroppers and poor peasants whose output is frequently at or below subsistence level. It has been estimated that at treats a quarter of the paddy produced in the country is other land pounded or processed through huller unit custom milling. Rice bran obtained out of such paddy, estimate about a million tones, is neither pure enough not available in large enough quantities to be economically collected. Therefore, this quantum of rice bran is as good as not produced at all.

There are a number of reasons why huller mills thrive in states producing rice bran oiled vice. First, huller mills are very cheap, and conveniently located in interior areas. Second, the investment requirement being low, under utilization of huller mills in the lean season doesnt put the owner out of business, because the can often supplement it with other from and non from activities.

Third, the out turn of rice is not really so low when it comes to par boiled rice. And last but not the least, is the reason using a huller mill rather than a modernized. Sheller mill enables the miller to avoid mill point levy of rice and associated problems.

Since about half of the paddy produced in India is rice bran oiled, the loss of rice bran oil potential is colossal, particularly since the bran produced out of par boiled rice contains three o five percent more oil that produced out of raw rice and the oil the bran of par boiled relatively stable and doesnt degrade an account of free fatty acid formation (FFA)

Till such time as the huller mills are modernized an intermediate short-run solution could be applied. This is to use a mini-rice mill or even a modified huller in place of traditional huller, so as to improve the outturn of rice as well as to detain purer bran.

In order to achieve the largest of modernization, the Central Government runs a huller subsidy scheme provides for 50 percent of the cost of install action to improved rice milling equipment as subsidy.

For instance, electricity heated rice bran stabilizer of various power rating and capacities (between 50 and 250 kg. Per hour) as well as steam heated bran stabilities have been successfully field-tested. However, the tests of chemical stabilizers, which are simple and convenient, are yet to yield sufficient results in the field.

The Government of India has decided to install some of these stabilities in research centers like PPRC to demonstrate its advantages to demonstrate its advantages to the millers.

In American mills, rice is rubbed with leather straps instead of by emery, not to get polished rice but also to get good equality. Bran in Japan, rice mills have in built stabilization units. In countries like Belgium Japan, West Germany and U.K the technology of continuous extraction of oil from rice bran is used to achieve maximum economic energy, labor and materials.

While most of these technologies are sophisticated, with a high degree of efficiency of this country, because of the specific nature of the Indian rice milling Industry, Indignation of these process, therefore is of the most importance. There are two major stages in producing Edible grade oil fro rice bran. The first stage consists of stabilization of bran to pressure the oil content. The second stage involves the processing and refining of rice bran oil.

A number of stabilization systems have been successfully developed in India at the Central Food Technological Research Institute (CETRI) Mysore, The Paddy Processing Research Center (PPRC) Thiruvarur (T.N), The Post harvest Technology Center (PHTC) at the Indian Institute of Technology, Kharagpur. The stabilization particularly the wet heat treatment and chemical stabilization particularly the wet heat treatment and chemical stabilization using hydrochloric acid have opened up enormous possibilities of producing low acid bran in the rice mills. The rice mills can now store and accumulated the stabilized bran for selling it in to the solvent extractions. Even a truckload can be accumulated and stored for the sake of greater economic in transport. By the end of this century, paddy productions expected to reach a level of 130 millions tones. Keeping a side 12.5 percent of production towards seed, the potential bran production would come to 5.7 million tones, which in turn would yield 8,50,000 tones of RICE BRAN oil. The exploit this huge potential what is needed is the right perspective and a commitment towards realizing the rich possibilities in event in the agricultural by products they have conventionally been wasted.

Company Profile

PROFILE OF Foods Fats and Fertilizers Limited

Foods fats and Fertilizers limited Tadepalligudem is a family owned organization. It is well known as Foods & Fats but the West Godavari farmers call it as a tawdu factory. This organization is professionally carrying the business activity by Goenka family. The company was established in the year 1962. It is having branches in Chennai, Mumbai, Kakinada, Hyderabad, Kolkata and Baroda.

Historical background of foods Fats and Fertilizers Limited were conceived in 1959 born in 1960 and were on its beet by 1962. Today Foods Fats and Fertilizers LTD has matured into a conglomerate of its industrial units spread over 40 acres contently buzzing with activity and providing employment to over 800 persons.

The wheel of fortune has turned a full circle for Mr. B.K.Goenka the architect of FFF LTD, born and bred in Burma. The Goenka family established and respected in Industry and Trade. The rice bran from Mr. Goenkas mill sought as a mal feed and wrapping papers used for sampling could this oil extracted.

These questions have to wait because in 1942, the Japanese invaded Burma and Mr. Goenka has to abandon his business and return to India. Being an optimist is transformed the adversity into opportunity by his grit and after a brief spell in his native land in Rajasthan, his restless enterprising zeal brought Mr. Goenka to Chennai in 1943. Where he is with his brother export of handloom fabrics in due course, he established a textile business. In 1959, Mr. Goenka read on article by Dr. Raghunath Prasad of central food technological institution of Mysore that oil could be extracted from bran using alcohol as a catalyst.

Simultaneously his brother in Rangoon informed him of plans being setup with Japanese and German technologists for extracting oil from rice bran Mr. Goenka held deliberation with Dr. Raghunathprasad and visited Burma with him to study the relevant technology better, he was in Japan to study in Europe to study the process of Hurgi of Germany and Dr. smith of Belgium.

Location:

The Company is a conglomerate of various industrial units spread over 40 acres of land, with a built up area of apex. 4 lack sft. Located in the vicinity of Tadepalligudem Mandal & Municipality in West Godavari District of Andhra Pradesh.

DEPARTMENTS IN FFF:-

Personnel department

Production department

Marketing department

Accounts department

Research & development

Management:

The manufacturing activities of the company are managed by Sri O.P.Goenka and Sri Sushil Goenka at the helm of affairs as whole time Directors at factory, supported by team of highly educated and committed professional having wide range of experience in the field of oil derivatives and allied fields.

1. Names of Directors:

Sri B.K.Goenka -Managing Director

Sri G.S.Goenka

-Whole Time Director

Sri S.B.Goenka

-Whole Time Director

Sri O.P.Goenka

-Whole Time Director

Sri Bharat Goenka - Whole Time Director

Sri Sitarama Goenka-Whole Time Director

Sri Sushil Goenka

-Whole Time Director

Sri Vianod kumar saraogi -Director

Sri Shiv Kumar jatia -Director

Sri Anand choradi -Director

2. Particulars of present collaboration if any,

No Collaboration (name and address, nature of collaboration, period of collaboration etc.,)

3. Name of chief Executive

Sri B.K. Goenka

Capital Structure:-

Finance is very much needed to any business so finance is as heart to the business the company was incorporated kin the year 1960, the original share capital subscribed is Rs. 5 lakhs. The company is a closely held industrial houses with no public investment in the form of equity share capital. Following is the capital structure as on 31.03.06.

Share Capital:(Including Reserves) 41.64 Crs.

Loaned funds:(Secured Loans)

71.49 Crs.

(Unsecured Loans)

17.51 Crs.

TOTAL

130.64 CrsBankers:-

STATE BANK OF INDIA [CHENNAI]

STATE BANK OF HYDERABAD [CHENNAI]

ANDHRA BANK [TADEPALLIDUDEM]

CENTREL BANK OF INDIA [CHENNAI]

INDUSTRIAL DEVELOPMENT BANK OF INDIA LTD [CHENNAI]

KARUR VYSYA BANK LTD [TADEPALLIGUDEM]

Branches:-

MUMBAI

HYDERABAD

KAKINADA

NEW DELHI

Food fats & fertilizers LTD is the flagship company of the FFF group. Today the FFF group has matured into a conglomerate of 20 industrial units spread over 45 acres constantly buzzing with activity and providing employment to over 1000 people.

Today the product range of FFF LTD includes oils of ricebran, soybean, sunflower, groundnut, sesame, palm, salseed, mangokernel, acidoils, wax, gums, deoiled meals {extractions}, crude distilled and hydrogenated fat for industrial use, vanaspati, bakery, shortening; margarine, bakery fats, specialty fats for manufacturing chocolate confectionery and cosmetics, canned fruits and vegetables natural colors for use in food and feed industry, oleo resins and herbal extracts. The company also under takes fabrication and installation of turnkey projects for processing of vagetabel oils and their derivatives.

Multifarious Progress:-

Starting with a solvent extraction plant in 1962 units was continuously added year after year to form a wide spectrum of products. Current manufacturing activities comprise of-

Solvent Extraction Plant 1 [lurgi, Germany]

Solvent Extraction Plant 2 [desmet, Belgium/India]

Solvent Extraction Plant 3 [fabricated and installed by engineering division of FFF group]

Solvent Extraction plant 4 (fabricated and installed by oilex India and engineering division of FFF group)

The above four extraction plants provide versatility of operation in processing different oil seeds/oil cakes at the same time and hence are highly advantageous in marketing. The plants have facilities to process a wide variety of oil seeds/oil cakes like rice barn, soybean, sunflower, groundnut, rapeseed, sesame, mango, sal, Niger, etc. continuous upgradation of manufacturing process through in house and world wide research is our hallmark.

Refiner: - [sharpels USA and engineering division FFF group]

High quality refining of a variety of vegetabel oils.

Fat Splitting Plant: - [wurster & Sanger USA and engineering division of FFF group]

High pressure splitting of oil into fatty acids and sweet water.

Fatty Acid Distillation Plant: - [luwa, Switzerland]

High quality distillation of crude fatty acids obtained from the splitting plant.

Glycerin plant: - [wurster & Sanger USA] Processing of sweet water obtained from fat splitting plant into various grades of refined glycerin.

Stearic acid plant:- [engineering of FFF group]

Hydrogenation of fatty acids into stearic acid flakes.

Hydrogenation plant:- [Bernardino Italy and engineering division of FFF group]

Hydrogenation of fats and fatty acids for industrial use.

Physical refinery:- [yoshinoi technology and engineering division of FFF group]

Refining of high free fatty acid oils by seam distillation.

Canning division:- [fabrication and installation by engineering division of FFF group]

Processing of fruits into pulp juice and bars.

Vanaspati-shortening- margarine division:- [fabrication and installed by engineering division of FFF group]

Production of vanaspati shortening high quality bakery fats and margarine from refined oils

Fractionation plant:- This division produces high quality oleins and stearines from various edible fats for use in manufacture of chocolate confectionery and cosmetics. Leading manufacturers in this field of activity all over the world are our customers.

Turnkey engineering division:- In collaboration with yoshinoi Seisakusho co LTD Japan who have done pioneering work in developing process and technical know-how for refining high FFA rice bran oil, our engineering division has installed and commissioned five plants of a total project cost of RS. 170 million in south India. India is the second largest producer of rice with a large potential of crude rice bran oil to be processed and turned into a fine cooking medium t satisfy the requirements o fan immense Indian market. FFF group engineering division is equipped t set up any vegetable oil and derivative processing project.

Oil palm project:- Plantation of oil palm to progressively cover 25000 hectares in Andhra Pradesh and Karnataka the southern states of India is sponsored by us.High yielding variety of sprouted seeds from India and abroad is grown in our nursery and seedlings are regularly supplied for planting to the farmers to cover the targeted area. Under comprehensive extension services provided by us the maturing of plantation is expected to be ideal mean while the group has set u plant and machinery along with suitable infrastructure t crush the palm fruits and kernels into oil and process the same into refined oils oleins stearines and a host of other products. Total project outlay is estimated to be df1 billion Indian rupees.

International trading:- Besides the export of the manufactured products with large warehouse for dry cargo bulk storage installation for liquid cargo at the ports, required infrastructure at our command and international trading experience of over 40 years the FFF group has set u high standards and achieved substantial growth in international trading of commodities like rice, edible oils, Industrial fats, maize, tapioca, hps groundnut kernels dyes and chemicals. The group has been a pioneer in introducing various Indian products manufactured by us to new international markets and has won awards for our performance. However, a research and development new product is being done on a continuous basis for enriching the international trading in both quality and volumes.

Search And Research:- Research and development is the pivot of our activities and has made us to stand in good steady continuous up gradation of production process with the help of a well-equipped R&D laboratory at Hyderabad and diversification in new research based projects in our corporation. Culture leading us to a steady upward movement.

Serve To Society:- The FFF group is involved in a large way in social service activities the Goenka family trust runs Arts and Science college for women in Andhra Pradesh and a Higher Secondary School in Rajasthan. It has a established a boys college in Andhra Pradesh, a Higher Secondary School in Myanmar and a multistory building in Tamilnadu, providing accommodation to Tourists and Social functions with a library and reading room. In addition to the above projects the group has also being regularly contributing to several educational, medical and social service institutions.

Ethics:-

The FFF group is proud of its inherent values, which are, persuade relentlessly to drive it towards sustainable growth. These values are common language that binds all its people.

The FFF group stands for:-

An intrinsic commitment to its people.

A culture of trust, mutual respect, opens communication and transparency of action. Commitment to welfare-driven initiatives that make a qualitative difference to the lives of marginalized people.

An environment-conscious group through its eco-friendly units.

Indian values with a global mind set.

FFF groups manufacture a variety of products including vanaspati granite readymade garments computer software etc. we have listed a few of our products here.

TANDUL:- Refined rice bran oil

A multi purpose-cooking medium judged as the safest cooking oil in the world. Contains tocopherol and oryzanol that reduce cholesterol. It is expensively used in Japan an evidence for the Japanese larger living.

Packing 15kg/1litre flex pouch.

SUN DELITE:- Refined sunflower oil.

Imported from Argentina and refined in the most modern refinery contains high puff. It lowers cholesterol.. A general purpose cooking oil.

Packing, 15Kg tin/15litre tin/5litre jar/1lite flex pouch.

SURABHI:- Vanaspati

An economical vegetable fat for small-scale bakeries. Multi utility fat widely used all over the country.

Packing, 15Kg bag-in-bix/15Kg tin/15Kg jar.

Bakers Pet:- Bakery shortening.

Multipurpose bakery shortening creamy white and bland in taste. A blend of specially formulated and textured hydrogenated fats to provide excellent plasticity. The largest selling brand in south India for manufacturing cakes beads biscuits filling cream cookies also used for shallow and deep-frying. Packing; 15Kg bag-in-box/15Kg tin/15Kg jar.

FFF:-Vanaspati

100% granulated vegetabel fat. A favorite of south Indian housewives for cooking and deep-frying. A must for all festival cooking and sweet preparations. Packing, 15Kg tin/15 liter tin/1lite flex pouch/500,200 and 100 ml flex pouch.

MELLO:- Margarine.

Margarine made from the choicest of refined oils for bakery industries recommended by the best bakers in the country for cake cream pastry biscuits icing and cookies. Ideal because it is not colored and not flavored.

Packing; 15Kg bags-in-box.

BISCREME:- Aerated bakery shortening.

Uniform dispersion of nitrogen gas in the fat produces a superior bakery shortening [contains 10% v/wt nitrogen] specially used for filling cream and icing. Best for premium biscuits and cookies.

PALM DELITE:- Imported E&D palmolein.

A refined bleached and deodorized palm oleins imported from Malaysia, Economical oil supplied allover the country directly from our ports on the east and west.

Packing, 15Kg tin/1 liter flex pouch/500 ml flex pouch.

BAKERS DELITE:- Puff pastry fat, An in house development to produce a smooth fat designed of ruse in puff pastry products. A specialty fat, which gives a flaky, puff with a good life. Packing; 15Kg bag-in-box.

GOLDEN SPREAD:- Margarine for puffs

Specially formulated product for puffs. There is already a great demand for these margarine for its superior quality.

Packing; 15Kg bag-in-box.

BAHAAR:- Mango bar

A papad made from mango pulp favorite mouth tingler for the young and the old.

Packing; 20gms sachet.

FFF GLYCERINE:- Refined glycerin made from sweet water obtained in fat splitting.

Grades available---industrial white-IW

Chemically pure-CP

Indian pharmacopeia-IP

Packing; 250kg plastic drums.

TRIFFA:- Fatty acids/stearic acids.

Standard and hardened quality distilled fatty acids made from rice bran palm coconut sunflower rapeseed Soya and linseed oil. Custom made formulations available on order. Raw material for cosmetic premium soap lubricants chemical industries rubber and PVC formulations.

Packing, 110Kg in plastic carboys for liquids 50Kg woven hdpe lined bags for hardened quality in flake form.OTHERS:- Crude palm, oil-bulk.

Refined palms oil-bulk; contract farming by farmers. We provide imported seedlings after acclimatizing know how for growing is provided to the farmers. Specialty fats;

Refined kokum fat [garcenia]

Sal stearines [shorea Robusta]

Produced from forest sources. An important nontimber forest produces.

Mango stearines [magnifier India]

Shea stearine.

Cosmetic ingredients --- mango oleins

Shea oleins.

Refined rice bran oil wax:- Used in various industries like paper coating candles water proofing floor shoe and furniture polish cosmetics carbon paper printing inks fruit and vegetable coatings and pharmaceuticals. Rice barn oil wax may substitute wax like carnauba.

Exporters of :- Indian rice [non-basmati]

De oiled rice barn

De oiled saled meal- pellets non-dusty.

Importers of:-

Palm oil and its fractions.

Crude sunflower oil

Crude soybean oil

Have sea-worthy barges for unloading from ships when anchored near shallow water ports. Presence in all minor ports in India. West coast Kochi and Mangalore east coast gopalpur Kakinaka and nagapattinam

Turnkey project Supplier for double solvent refining of high FFA oils up to 20% such as Rice bran oil solvent extracted high FFA oils. The refined oil obtained is of excellent quality as per food standards.

GARMENT EXPORTERS:- We export woven garments to United States of America, United kingdom Canada Germany Japan Chile France and Australia.

Our customer span ranges from chain stores mail order boutiques and wholesalers order sizes vary from 1000 to 1,00,000 units.

GRNITE EXPORTERS:- We initially started exporting rough blocks and have expanded by exporting cut-to-size slabs and random slabs. Later we shifted towards manufacturing of finished products like monument artifact items and fireplaces.

SOFTWARE DEVELOPMENT:- Goenka InfoTech limited provides the full range of IT solutions and services in the following segments.

1. Conformance services.

2. Web gardening.

3. Software maintenance and web enabling legacy applications.

4. IT applications in power sector.

5. Smart card based solutions.

The 500 square meters of software development center at Hyderabad has been designed to provide the state of art infrastructure for software professionals.

NEW PROJECTS:

Apart from horizontal expansion, We have also expanded out operations vertically. It may be noted that the company had implemented several projects during the last 5 years which includes 6MW co-generation industrial waste based power plant, Bakery shortening Plant at Colombo, Srilanka (Joint Venture).

In-house R & D and Technology Base

As a pioneer in Edible industry. We have over the years built up a strong in-house R & D and technology base. Sri Om Prakash Goenka, who is a Chemical Engineer, with 40 years of experience in the line, is one of the leading oil technologists of the company and he is the back bone for the implementation of various projects in the company.

We had a technical collaboration agreement with Yoshino Scishakusho Co.Ltd., Japan, who are the pioneers in developing the technology and process know how for refining Rice bran Oil with high FFA (Free Fatty Acid) and making it suitable for edible use. Out Engineering division has designed, fabricated, installed and commissioned successfully on turn-key basis.5 Edible Oil Refinery Plant at a total project cost of Rs.170 million, based on the above technology.

The potential of a seed is not recognised, until one fine day we see it standing strong, majestic and gigantic as a tree So true. Its the tree that captures our attention and not the seed from which it sprouts!

Yet, we will fail not to recall the modest start of the 3F group with Foods Fats & Fertilisers Ltd. Its a saga of 45 years and the Vision of Mr. B.K Goenka (Chairman and Managing Director) that has made the 3F group a conglomerate of 20 diversified industrial units.

Starting with edible oil extraction and refining at Food Fats and Fertilisers Ltd we branched out into multifarious vistas vis-a- vis oil palm cultivation, manufacture of edible oils and its by-products, bakery shortenings and margarine, specialty fats, commodity trading, garments, power, etc. Notably, we have emerged as one of the largest Bakery fat & Margarine manufacturers in India and World leaders in Specialty fats ( CBS ) Technology.

With the committed team enterprise of over 1000 employees, the 3F group steered past the Indian landscape to expand overseas. Our network and goodwill has been vibrantly growing in countries abroad eversince.

Other products manufactured at the facility are bakery shortenings, fatty acids and tailor made solvent fractionated specialty fats. These products find use in textile, soap, Foods Fats & Fertilisers Ltd was conceived in 1959, born in 1960 and was on its feet by 1962.

Today Foods Fats & Fertilisers Ltd was matured into a conglomerate of 20 industrial units spread over 40 acres constantly bussing with activity and providing employment to over 1000 persons .

Our product range today includes oils of rice bran, soyabean, sunflower, groundnut , sesame, palm, sal seed, mango kemel, acid oils, wax, gums, deoiled meals (extractions), crude distilled and hydrogenated fatty acids, oil tractions, stearic acids, glycerine, hydrogenated fats for industrial use, vanaspati / shortening, margarine, canned fruits, vegetables, bakery fats, speciality fats for manufacturing chocolate, confectionery and cosmetics, natural colours for use in food and feed industry, oleo resins and herbal extracts, fabrication and installation of turnkey projects for processing of vegetable oils and their derivatives.

Research and development is the pivot of our activities and has made us to stand in good stead. Continuous upgradation processes and diversification in new research based projects is our Corporate culture leading us to steady upward movement.

FFF has been a major player in the 3F Group of industries for almost half a century. Continued progress in the edible oil & fats field heralded the setting up of yet another subsidiary -the Asia Pacific Commodities Limited (APCL) in March 2002.

Its facilities comprises; a modern 250 TPD Desmet physical refinement plant, 100 TPD interesterfication plant, fatty acid distillation plant, dry fractionation plant and state-of-art solvent fractionation plant. These fac cosmetics, candle, bakery, confectionery, food and chemical industries.

The APCL project was implemented under Target 2000 Scheme of Government of Andhra Pradesh and hence is eligible for sales tax exemption/deferment. APCL has clients based all over India & overseas.

Modesty Garmentsis one of those rare organizations to which success has come naturally, since its incorporation.

Success in this highly competitive field has been the result of a devotion to quality, commitment to delivery schedules and a desire to always perform better. Today these qualities are recognized and appreciated by importers of woven garments. The world sees Modesty as an indispensable partner in their business, someone who understands their needs and is able to translate that understanding into concreteterms.

Since its inception in 1988, Modesty has grown to a turnover of US$ 12 million, producing 4.5 million garments.

New Delhi , India 's capital is the hub of Modesty's operation. In addition to manufacturing facilities, most of our support departments , shipping quality control, designing, sampling are also here.

Modesty Garments has a team of 1500 dedicated employees who are all a part of oursuccess.

We ensure that our total fabric is checked before it goes into production. Each and every fabric is tested to Buyer's requirements for shrinkage and colour fastness.

Modesty Garments exports woven garments to United States of America , United Kingdom , France and Australia . Modesty's customer span range from chain stores, mail order, boutiques and wholesalers. Order sizes vary from 1,000 to 1,00,000 units. All receive the same care and attention

The company was established in 1990. It initially started exporting rough blocks to countries like Japan and Australia. It then expanded its business by exporting cut-to-size slabs and random slabs to various countries like Indonesia, Dubai, Singapore, Saudi Arabia & Newzealand. The cut-to-size slabs which were exported to Dubai were used in the construction of famous bank called the 'Bank of Oman' and the ones which were exported to Indonesia were used in the construction of non-alignment building in Indonesia.

Later the company shifted its way to manufacture of finished products like monuments, artifacts items and fire places to countries like Belgium, Germany, France, Holland, Scotland, Netherland, UnitedKingdom etc.

Monuments:

Dutch model, Irish model, Belgian model, French model, English model, German model, Leaves, Books with leaves, Heart, Doppel Heart, etc.

Artefact Items:

Flower vases, Lanterns, Urns, Bowls, Birdbaths, Fountains, Single Pillar, Three piece pillar, Ashtray, Balls( 10cms to 60cms) and all other round items.

Fire Places:

These are made in all designs and colours.

All these products are exported in Indian materials like Paradisom, Himalayan blue, Vizag blue, Kerala green, Ruby red, Kashmir white, Wiscon white, Absolute black, Juprana and Black galaxy.

Recently the company has taken up a running factory where it is manufacturing all monuments and airfacts items. Apart from Indian materials it started processing foreign materials like Nero Impala from South Africa and Blue perl from Norway and re-exporting the same to European countries.

The company has also got a set of skilled workers and designers in both fields of monuments and round items, which facilitates it to manufacture any product when provided with appropriate drawings or designs.

VIATON INFRASTRUCTURES PVT LTD

VIATON ENERGY LTD

The above companies are promoted by the 3F group and Creative group.

Power: Power is a critical driver of economic growth and industrial development. India is facing a huge gap between demand and supply year on year. The company aims to set up power projects based on an entire gamut of generation / transmission/ distribution of power. The company has been alloted licenses for power projects based on bio mass in Chattisgarh, Maharashtra and Punjab.

Minor Airports/Ports/Contractual Jobs:

The Company foresees increasing infrastructure requirement in India, keeping in view of the huge development phase happening - aims to build in infrastructure facilities in the above area, in more specifically, the tier 2 and tier 3 locations.

3F IN OVERSEAS

CEYLON SPECIALIOTY FATS

Ceylon Specialty Fats Pvt.Ltd (CSF) is a subsidiary of Foods Fats & Fertilisers Ltd.

CSF has been established to take advantage of Sri Lankas strategic geographic location as an international business center between China, the Far East and countries east of the Suez. Under the Indo Sri Lankan Free Trade Agreement, CSF will be able to export its manufactured products into India duty free.

The factory is situated in the prestigious export-processing zone in Biyagama, located about 35 kms from Colombo. The factory is modeled on the latest technology and is largely fabricated from imported machinery.

CSF is equipped to produce 100 TPD of bakery shortenings and margarine and 30 TPD of Specialty Fats. Unlike hydrogenation, which produces high trans fatty acids, which are detrimental to health, CSF produces trans-free hard fats using the interesterification Technology.

Ceylon Specialty Fats will focus on making specialty fats for the bakery and confectionery industries. These specialty fats will be natural ingredients to chocolates, ice cream, pastries, biscuits, breads, and many other applications. The modern factory will also be able to produce table and industrial margarine that has a growing market both in Sri Lanka and abroad.

3F AFRICA

The 3F group pushes on into the remote and less accessed countries of the world because it sees a mutual opportunity for growth and development even in far removed nations.

3F Africa has operations in various West African countries such as Ghana, Burkina Faso, Benin, Mali, Togo, Nigeria and Ivorycoast. 3F Africa is a wholly owned subsidiary of Foods Fats and Fertilisers Ltd., India. The company is involved in procurement and trading of various commodities.

The commercial and economic activities of the company have extended beyond the boundaries with various procurement centres and warehouses spread all over which are well netted with efficient transport conduit.

Our in-house clearing and forwarding center at the port ensures swift and efficient foreign trade. The African experience has given 3F group, the joy of co-operation among developing nation.

PARKER INTERNATIONAL

SMALL BUT POWERFUL

The 3F group has always believed in the above adage. This prompted us to set up Parker International at Singapore - one of the worlds most prosperous countries with strong international trading links.

Parker International caters to the groups trading activities of Agro commodities.

SPECIALITY FATS

Celebrations are never complete without confectioneries. And confectioneries are incomplete without a kiss of Speciality Fats. The 3F Group has been a silent partner in sweet moments. Obscure, hidden and yet adding flavor you have relished.

Over 30 years starting from 1975 we have grown hand in hand with the confectionery industry providing her with exotic fats extracted from Shea nuts, Sal seeds, Kokum kernel, Mango kernel and Illipe. These products have been tailor-made to suit the needs of various confectioners. FFF Ltd is today one of the largest sources of specialty fats in the world.

FFF Ltd. pioneered in India, the process of both dry fractionation and solvent fractionation through in-house development of the process technology. We manufacture world-class Sal, Mango & Shea stearine using modern solvent fractionation techniques. We also have the capability to produce Illipe & kokum fats and high quality Palm Mid Fraction (IV-33). These products find extensive application in the manufacture of cocoa butter equivalents (CBE), which are used in the chocolate industry. Tailor-made CBEs have functional properties similar to cocoa butter and are far more economical. In combination with cocoa butter it standardizes product quality and enhances product shelf life. This is made possible by use of special types of CBE's known as Cocoa Butter Improvers (CBI) which raise the melting point of chocolate for better storage stability in tropical climates. The Speciality Fats Division has always observed stringent quality assurance systems in its processes.

FFF is today, one of the largest sources of speciality fats in the world. Testimony to mark our quality is the continued patronage we enjoy from large manufacturers of Cocoa Butter Equivalents from Japan, Malaysia, Italy, Holland, UK & the Scandinavian countries.

OIL PALMS

The Oil Palm Division (OPD)has successfully set up a complete cycle of operation(s) and moved from the POC (Proof of Concept) stage to Ramp up stage in a short period of time.

In Andhra Pradesh

Operations in 9 Mandals of West Godavari Dist./4 Mandals of Vizianagaram District with a potential of 40250 ha.

Nurseries in West Godavari and Vizianagaram Districts

12,500 ha area under Oil Palm

Multiple collection centres

10-20 T/hr Palm Oil Mill ( Including Production of Palm Kernel Oil) Refinery / Fractionation Unit for further processing of CPO&CPKO 7.5 Mw power plant based on Palm waste as its fuel

In Karnataka

Operations in 3 district of Koppal,Gadag and Raichur with a potential of 30,000 ha.

One nursery in Koppal District

2,500 ha area under oil palm.

Multiple collection centres

5 -10 MT FFB/ Hour Palm Oil Mill coming up in Koppal District.

In Mizoram

Operations in 3 district of Aizwal,Serchhip and Saiha with a potential of 20,000 ha.

One nursery in Serchhip District

In its first year of area expansion covered 500 ha under oil palm

In Gujarat

Operations in 2 distrcts of Surat and Tapi with a potential of 18,400 ha.

One nursery in Tapi District

In its first year of area expansion covered 500 ha under oil palm

In Orissa

Operations in 3 distrcts of Dhenkanal and Jajpur with a potential of 12,000 ha.

One nursery in Dhenkanal District

In its first year of area expansion covered 500 ha under oil palm

In Tamilnadu

Government of Tamilnadu has allotted Toothukudi district for Oil Palm Development during2008. Arrangements are being made for establishing Nursery and start related operations

Farmers our partners to Success

We look at farmers as our partners to success and we promise

To give them the best quality sapling / best extension practices

To ensure quality plantation / best yield at field level

To provide training to farmers

To look at intercrop in aged plantation increased income to farmers

To be a support to the farmer in his other needs.What the Future has in Store

A major ramp up in acquiring a very good area coverage in the subsequent year(s)

Areas of Operation

OPD AP Nursery - Dubacherla Village, West Godavari district. Mill/Office - Yernagudem village, West Godavari district

OPD KARNATAKA Nursery - Kinnal Village, Koppal District. Office - Koppal Town, Koppal District.

OPD MIZORAM Nursery - Mat Valley, Serchiip District Office - Serchhip Town, Serchhip district.

OPD GUJARAT Nursery - Bhatpur Village, Surat district. Office - Vyara taluk, Surat district.

OPD ORISSA Nursery - Krusnakumarpur Khamar Village, Dhenkanal district. Office - Dhenkanal town, Dhenkanal district

Oil Palm division Images

OILS AND FATS

The food we eat is an expression of love. We as the 3F group try to express this love in different ways. We are with you, right through the day, unnoticed and yet keeping you in the finest of spirits, body and mind.

Yes, we are with you as edible oils and fats adding flavour to all that you savour. Be it homemade edibles or bakery products, we add taste to every thing you smack into.

Tandul, Palmdelite, Royaldelite, Soyadelite, 3F Sunflower oil and Surabhi are few of the names dedicated to ensure a salubrious and healthy meal. Hygiene and quality are what we are pledged to and this has made our edible oils a household name for over 40 years.

Our range of Bakery shortenings, Margarine and Vanaspati are the delight of bakers and confectioners.

Bakerspet and Bakers Delight for crisp, flaky puffs and croissants. Mello Margarine, Mello Cream, Golden Spread for soft and fluffy pastries that melt in your mouth. 3F Vanaspati, Trim and Surabhi for the much relished Indian sweets. All these, keeping at the fore front of our mind your health and nutrition balance.

For more details on our

Edible oilsBakery FatsOTHER PRODUCTS

There is never a product with no use. We put this philosophy to use by furthering on our residual products. We call it the By-products division where every remnant of a processing or extraction function finds an alternative application.

Fatty Acids, Glycerine, Stearic Acid and RB wax are our principal by-products from extraction and refining of Rice bran, Vegetable, Palm and other oils.

Each of these products is an essential ingredient of varied industries such as the Textile, Pharma, Cosmetics, Plastic, Rubber, Cement, Explosive, Paints, Coolants and many others.

Beside we also manufacture these products based on customer specification to suit their needsCONSUMER PRODUCTS

Yet another division dedicated to marketing and trade of consumer goods is the Consumer Product Division. We seek to make a foray into the retail segment by capitalizing on the groups existent marketing network.

CPD had tied up with Coca-Cola, the worlds largest brand in Beverages segment. It will be marketing the companys products, in the city of Chennai (Tamil Nadu, India) to start with and will gradually expand to other cities. The division has complete warehousing facilities and logistical set up to support the venture.

We have also established strategic distribution alliance with the Global major Hyundai Electronics for consumer durable products such as Air conditioners, Refrigerators and other electronic goods.

The division is in the process of launching Premium quality branded Pistachios in the Indian market. These pistachios are picked from the best farms in Iran and sauted with saffron and condiments. Low cholesterol and added health properties have made the pistachios an appetising treat amongst royal Arab families

The division plans to introduce a melange of brands and products into the market in the near future.

NATURAL PRODUCTS

When Mother Nature smiles, she expresses herself as 'INDIA.'-the country that is blessed with nature's bounty of flora and fauna. From time immemorial explorers have visited our country in search of herbs with healing properties. And India has always shared with the world all that she has. We as a group continue this tradition of sharing, through our Natural Products Division.

Our focus has been medicinal plants and their therapeutic values. These herbs are procured from some of the most far removed locales of the country, which serve as their natural habitat. Herbal extracts and bio-nutrients are then obtained from these plants. This is done under stringent pharmaceuticalquality standards.

Our systematized procedure involves:

Procuring medicinal herbs. Extracting active ingredients from these verdure. Purifying and concentrating the active ingredients. Standardizing the ingredients. Analysing and certifying each production batch using modernscientific equipment. Clinical study and documentation of the efficacy of these products. Making available tested herbal extracts for healing and medicalpurposes.

We at FFF are privileged to be engaged in this highly specialized activity, giving to the world the benefit of India's bio-diversity in medicinal plants.

The ancient is forever young.....Because it's always rediscovered in infinite ways...

RESEARCH AND DEVELOPMENT

Research & Development is the pivot of our activities and has helped us stand in good stead. It is due to the continuous development activities that we have been able to introduce, products that have been well accepted both in domestic & international markets. Some of these products such as exotic fats, rice bran wax & solansol have gained global recognition. We have recently started search & research on herbal extracts.

Whilst being in the commodity business, it has been our tradition to charter our course by continuous value addition. At FFF, we have a penchant to create high value products from waste or low value by products.

In the normal course also, through our research & development, we try to improve the quality of our existing products such as bakery shortenings & margarines.

ENGINEERING

Our quest for new products had led us to the formation of this division. A small workshop set up to manufacture pilot plants for our product development, has culminated into a well equipped, self-sufficient engineering division.

This division besides having supplied five miscella refining projects, caters to the continuous internal requirement of the 3F Group. Besides cost Division enables the toideas into plant-scale reality. An embryo in the form of a laboratory trial is converted into a mammoth manufacturing facility by the expertise of this division.

We start small, yet achieve big.... WE achieve the unthinkable!CAPITAL BUDGETINGCapital budgeting(or investment appraisal) is the planning process used to determine whether an organization's long terminvestmentssuch as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for majorcapital, or investment, expenditures.

Many formal methods are used in capital budgeting, including the techniques such as

Accounting rate of return Payback period Net present value Profitability index Internal rate of return Modified internal rate of return Equivalent annuity Real options valuationThese methods use the incremental cash flows from each potential investment, orproject. Techniques based on accounting earnings and accounting rules are sometimes used - though economists consider this to be improper - such as theaccounting rate of return,and "return on investment." Simplified and hybrid methods are used as well, such aspayback periodanddiscounted payback period.

NET PRESENT VALUE

Infinance, thenet present value(NPV) ornet present worth(NPW)of atime seriesofcash flows, both incoming and outgoing, is defined as the sum of thepresent values(PVs) of the individual cash flows of the same entity.

In the case when all future cash flows are incoming (such as coupons and principal of a bond) and the only outflow of cash is the purchase price, the NPV is simply the PV of future cash flows minus the purchase price (which is its own PV). NPV is a central tool indiscounted cash flow(DCF) analysis and is a standard method for using thetime value of moneyto appraise long-term projects. Used forcapital budgetingand widely used throughouteconomics,finance, andaccounting, it measures the excess or shortfall of cash flows, in present value terms, once financing charges are met.

NPV can be described as the difference amount between the sums of discounted: cash inflows and cash outflows. It compares the present value of money today to the present value of money in future, taking inflation and returns into account

The NPV of a sequence of cash flows takes as input the cash flows and a discount rate or discount curve and outputs a price; the converse process in DCF analysis taking a sequence of cash flows and a price as input and inferring as output a discount rate (the discount rate which would yield the given price as NPV) is called theyieldand is more widely used in bond trading.

USE IN DECISION MAKING

NPV is an indicator of how much value an investment or project adds to the firm. With a particular project, ifis a positive value, the project is in the status of positive cash inflow in the time oft. Ifis a negative value, the project is in the status of discounted cash outflow in the time oft. Appropriately risked projects with a positive NPV could be accepted. This does not necessarily mean that they should be undertaken since NPV at the cost of capital may not account foropportunity cost,i.e.,comparison with other available investments. In financial theory, if there is a choice between two mutually exclusive alternatives, the one yielding the higher NPV should be selected.

If...It means...Then...

NPV > 0the investment would add value to the firmthe project may be accepted

NPV < 0the investment would subtract value from the firmthe project should be rejected

NPV = 0the investment would neither gain nor lose value for the firmWe should be indifferent in the decision whether to accept or reject the project. This project adds no monetary value. Decision should be based on other criteria, e.g., strategic positioning or other factors not explicitly included in the calculation.

CAPITAL BUDGETING DEFINITION

Capital budgeting is a long-term economics decision making. Each potential project's value should be estimated using adiscounted cash flow(DCF) valuation, to find itsnet present value(NPV). (First applied toCorporate FinancebyJoel Deanin 1951; see alsoFisher separation theorem,John Burr Williams: Theory.) This valuation requires estimating the size and timing of all the incremental cash flows from the project. (These future cash highest NPV(GE).) The NPV is greatly affected by thediscount rate, so selecting the proper ratesometimes called thehurdle rateis critical to making the right decision. The hurdle rate is theMinimum acceptable rate of returnon an investment. This should reflect the riskiness of the investment, typically measured by thevolatilityof cash flows, and must take into account the financing mix. Managers may use models such as theCAPMor theAPTto estimate a discount rate appropriate for each particular project, and use theweighted average cost of capital(WACC) to reflect the financing mix selected. A common practice in choosing a discount rate for a project is to apply a WACC that applies to the entire firm, but a higher discount rate may be more appropriate when a project's risk is higher than the risk of the firm as a whole.

INTERNAL RATE OF RETURN

Theinternal rate of return(IRR) is defined as thediscount ratethat gives anet present value(NPV) of zero. It is a commonly used measure of investment efficiency.

The IRR method will result in the same decision as the NPV method for (non-mutually exclusive) projects in an unconstrained environment, in the usual cases where a negative cash flow occurs at the start of the project, followed by all positive cash flows. In most realistic cases, all independent projects that have an IRR higher than the hurdle rate should be accepted. Nevertheless, for mutually exclusive projects, the decision rule of taking the project with the highest IRR - which is often used - may select a project with a lower NPV.

In some cases, several zero NPV discount rates may exist, so there is no unique IRR. The IRR exists and is unique if one or more years of net investment (negative cash flow) are followed by years of net revenues. But if the signs of the cash flows change more than once, there may be several IRRs. The IRR equation generally cannot be solved analytically but only via iterations.

One shortcoming of the IRR method is that it is commonly misunderstood to convey the actual annual profitability of an investment. However, this is not the case because intermediate cash flows are almost never reinvested at the project's IRR; and, therefore, the actual rate of return is almost certainly going to be lower. Accordingly, a measure calledModified Internal Rate of Return(MIRR) is often used.

Despite a strong academic preference for NPV, surveys indicate that executives prefer IRR over NPV[citation needed], although they should be used in concert. In a budget-constrained environment, efficiency measures should be used to maximize the overall NPV of the firm. Some managers find it intuitively more appealing to evaluate investments in terms of percentage rates of return than dollars of NPV.

EQUIVALENT ANNUITY METHOD

Theequivalent annuitymethod expresses the NPV as an annualized cash flow by dividing it by the present value of the annuity factor. It is often used when assessing only the costs of specific projects that have the same cash inflows. In this form it is known as theequivalent annual cost(EAC) method an