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Transcript of Food Processing Industry in India (Shoury Gupta)
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July 2011
PROJECT REPORT
Food Processing Industry in India
Dun & Bradstreet
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Contents
INDUSTRY OVERVIEW ............................................................................................................ 3
Industry Structure ................................................................................................................................... 4
Risks......................................................................................................................................................... 5
Outlook..................................................................................................................................................... 5
INDUSTRY STRUCTURE .......................................................................................................... 7
The Segments......................................................................................................................................... 7
REGULATORY & POLICY ENVIRONMENT ............................................................................11
Major Policy Initiatives ......................................................................................................................... 11
Sector Specific Government Policies ................................................................................................ 14
Fruits and Vegetables...................................................................................................................... 14
Fisheries ............................................................................................................................................ 15
Meat and Poultry .............................................................................................................................. 15
Dairy Products .................................................................................................................................. 15
Duty Structure ....................................................................................................................................... 16Foreign Direct Investment in the Industry......................................................................................... 17
Steps taken to attract FDI ............................................................................................................... 17
SEGMENT ANALYSIS .............................................................................................................18
Dairy Products ...................................................................................................................................... 18
Marine Products ................................................................................................................................... 19
Fruits and Vegetables.......................................................................................................................... 20
Meat & Poultry Sector.......................................................................................................................... 22
Market Growth Drivers......................................................................................................................... 23
Methods of Processing Food.............................................................................................................. 26
Dairy Sector........................................................................................................................................... 27
Marine Sector........................................................................................................................................ 29
Meat and poultry sector....................................................................................................................... 30
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Indian Firms need to strengthen R&D base ..................................................................................... 31
Emerging Business Models ................................................................................................................ 32
Terminal Market ................................................................................................................................. 32
Contract Farming ................................................................................................................................ 32
COMPANY PROFILES .............................................................................................................34
Hindustan Unilever Limited (HUL) ..................................................................................................... 34
Dabur India Ltd. .................................................................................................................................... 38
ITC Limited ............................................................................................................................................ 41
INTERNATIONAL SCENARIO .................................................................................................44
Fruits and vegetables .......................................................................................................................... 45
Dairy Sector........................................................................................................................................... 45
Meat and poultry Sector...................................................................................................................... 46Global vs. emerging markets.............................................................................................................. 48
COMPETITIVE LANDSCAPE ...................................................................................................49
RISK ASSESSMENT ................................................................................................................51
OUTLOOK ................................................................................................................................54
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INDUSTRY OVERVIEW
According to Ministry of Food Processing in India, the food processing industry is ranked 5th
largest sectorin terms of production, consumption, export and expected growth in India. The food processing industry in
India is over 200 years old. The Food Processing Industry sector in India is one of the largest industries in
terms of production, consumption, export and growth prospects. It contributed 6.0 per cent to Indias GDP
in 2010. The industry's size is estimated at US $ 70 billion by the Ministry of Food Processing in India as
in 2009. Nearly, one third of the entire Indian food market share comprises of processed food. Changing
lifestyles, food habits, organized food retail and urbanization are the key factors for processed foods in
India, these are post-liberalization trends and they give boost to the sector.
Output (000tons)
Source: Ministry of Food Processing in India
India's food processing sector covers a wide range of products fruit and vegetables; meat and poultry;
milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer
product groups like confectionery, chocolates and cocoa products, Soya-based products, mineral water,
high protein foods and so on.
Post 21st century, food processing was largely confined to the food preservation, packaging and
transportation, which mainly involved salting, curdling, drying, pickling, etc. However, over the years, with
emerging technologies, the sector has widened its scope. It has started producing many new items like
ready-to-eat food, beverages, processed and frozen fruit and vegetable products, marine and meat
products, etc. In 2008, the turnover of the total food market was approximately Rs.250, 000 crores (US $
69.4 billion) out of which value-added food products comprised Rs.80,000 crores (US $ 22.2 billion).
1709 1772
2502
3246
0
500
1000
1500
2000
2500
3000
3500
2001-02 2002-03 2003-04 2004-05
13.68%
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The government has accorded it a high priority, with a number of fiscal reliefs and incentives, to
encourage commercialization and value addition to agricultural produce, for minimizing pre/post harvest
wastage, generating employment and export growth. India's food processing sector covers a wide range
of products fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries,
plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa
products, Soya-based products, mineral water, high protein foods and so on.
Industry Structure
An extensive and highly fragmented industry, the food processing sector largely comprises of the
following sub-segments: fruits & vegetables, milk and milk products, beer & alcoholic beverages, meat
and poultry, marine products, grain processing, packaged/convenience food and packaged drinks. A
large number of players in this industry are small sized companies, and are largely concentrated in the
unorganized segment. This segment accounts for more than 70% of the output in volume terms and 50%in value terms. However, though the organized sector is comparatively small, it is growing at a much
faster pace.
Structure of Indian Food Processing Industry
Source: FAIDA/ Ministry of Food Processing in India
Currently there are over two dozen players in the food processing market. Several global majors are
present in the industry. Despite the entry of new players in the previous years, market shares continue to
remain concentrated with top companies like ITC Limited, Agro Tech Foods, Cadbury India Ltd., PepsiCo
India, Holdings Nestle India Pvt. Ltd., Britannia Industries Ltd. and Hindustan Lever Limited, MTR foods
limited. The food processing industry is characterized by intense competition and escalating price wars.
Dairy sector accounts for majority of the consumers in the industry.
42%
33%
25%
Unorganised Small Scale Industries Organised
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Risks
The industry faces various risks, chief amongst them being: Field losses (Pest, diseases, rodents, etc.);
Pre- Processing (Inefficient harvesting, drying and milling); Storage (Technical difficulties) and wastage by
consumers. Poor road conditions and inadequate port facilities are also adversely affects transportationand causes delays in exports. Inadequate cold storage facility in the country is cited as a reason for the
wastage of food items. India is one of the worlds largest producers of fruits and vegetables but nearly 30
percent of this production is lost due to inadequate cold chain facilities. With a long coastline of 3650
miles, the Indian marine product industry is growing rapidly, but large quantities of marine products are
wasted because of lack of storage facilities. Other food segments like dairy products, and processed
meat, also require cold storage facilities.
Outlook
India has the potential to become the leading food supplier to the world and at the same time it has vast
growing domestic market with over a billion people and population growing at a CAGR of 1.6% per
annum with food being the single largest component of private consumption expenditure accounting for
53% of the total expenditure. Indias large market size, ravenous appetite for food with growing incomes
and changing life styles create incredible market opportunities for food producers, Food processors,
machinery makers, food technology and service providers.
India has a Competitive Advantage in Food Processing
India stands strong on the Global front
Factor India Global Rank Share in Global Production
Arable Land (Million Hectares) 161 2 -
Irrigated Lines (Million Hectares) 55 1 -
Coast Line (Km) 8041 19 -
Major Food Crops (Million Tons) 35 3 4%
Fruits (Metric tons) 47 1 10%
Vegetables (Metric Tons) 82 2 10%
Cattle (Million) 226 1 20%
Source: MOFPI annual report, India Food Processing Sector, 2005
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The UK, the US and Japan are processing 80 per cent, 70 per cent, 75 per cent (of food), whereas India
is processing just 7 per cent. This shows a tremendous growth potential in the country.
Percentage of products processed by various countries
Source: United States Department of Agriculture, USDA
According to market sources, opportunities and investment opportunities in the Indian food industry are
set to shoot up by a huge 42.5% to US$181 billion in 2015 and to US$318 billion by 2020. India is one of
the fastest growing economies in the world. Huge untapped potential in food processing, rising concerns
over food safety, increasing level of disposable income is expected to lead the industry growth in
upcoming years. The industry would create 9 million employment opportunities from the current 1.6 m
and investment of Rs 1, 50,000 crore in the coming 10 years.
80%
70%75%
7%
0%
20%
40%
60%
80%
100%
UK US Japan India
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INDUSTRY STRUCTURE
Indian food processing sector is highly fragmented industry, it widely comprises of the following sub
segments: fruits and vegetables, milk and milk products, beer and alcoholic beverages, meat and poultry,
marine products, grain processing, packaged or convenience food and packaged drinks. A huge number
of entrepreneurs in this industry are small in terms of their production and operations, and are largely
concentrated in the unorganized segment. This segment accounts for more than 70% of the output in
terms of volume and 50% in terms of value. Though the organized sector seems comparatively small, it is
growing at a much faster pace.
The food processing industry in India is a sunrise sector that has gained prominence in recent years.
Availability of raw materials, changing lifestyles and relaxation in policies has given a considerable push
to the industrys growth. In India, most foods are consumed in the fresh form and a small quantity is
processed for value addition. In recent years, however, the market for branded processed food products
has expanded. As per a study conducted by the Confederation of Indian Industry, the total food market
turnover is over Rs. 2,500 billion (US$ 69.4 billion). Of this, value-added food market comprises Rs. 800
billion (US$ 22.2 billion).
The Segments
An extensive and highly fragmented industry, the food processing sector largely comprises of the
following sub-segments: fruits & vegetables, milk and milk products, beer & alcoholic beverages, meat
and poultry, marine products, grain processing, packaged/convenience food and packaged drinks. A
large number of players in this industry are small sized companies, and are largely concentrated in the
unorganized segment. This segment accounts for more than 70% of the output in volume terms and 50%
in value terms. However, though the organized sector is comparatively small, it is growing at a much
faster pace.
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Despite being the one of the largest producers of agricultural commodities, India does not figure among
the top twenty exports of such commodities or their processed products. For example, the country is
amongst the largest producers of the primary products listed above but is not a large exporter of cereal
preparations, cheese of skimmed cow milk, chicken meat, citrus fruits, fresh cream, wheat flour or food
preparations, frozen potatoes, fruit juices and preparations, tropical dried fruits, ice cream and edible ice,
juices of tomatoes and vegetables, concentrated lemon juices, lemons and limes or even mango juice.
While agricultural production is significant, the food processing industry is still under developed. Of the
countrys total agriculture and food produce, only around 2% is processed. The highest share of the
processed food is in the dairy sector, where 35% of the total produce is processed, of which only 13% is
processed by the organised sector. The processing level is around 2.2% in fruits and vegetables, 21% in
meat and 6% in poultry products.
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Sector wise share in the Food processing industry
Source: D&B Research
The Fruits and Vegetables sector is processed the least. This is because these are too perishable and
most of them cannot be stored for many days. On the other hand, milk and dairy products, Meat and
Poultry products are processed more because they can be stored in refrigeration for long periods of time.
Source- D & B Research
25%
41%
31%
3%
Meat Dairy products Poultry Fruits and Vegetables
Segment Dairy
Sector
Fruits &
Vegetables
Meat &
Poultry
Fisheries Packaged
Foods
Growth Rate 15% 20% 10% 20% 8%
Key
Segments
Value added
milk
products like
butter,
cheese and
ghee
Raw fruit and
vegetables,
fruit pulps,
canned fruits
and pickles
Cattle, buffalo
and poultry
Marine
fisheries,
frozen
products and
minced fish
products
Noodles/
vermicelli
Share of
Organised
Sector
15% 48% 5% - 80%
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In India, most foods are consumed in the fresh form and a small quantity is processed for value addition.
In recent years, however, the market for branded processed food products has expanded. As per a study
conducted by the Confederation of Indian Industry, the total food market turnover is over Rs. 2,500 billion
(US$ 69.4 billion). Of this, value-added food market comprises Rs. 800 billion (US$ 22.2 billion). Growing
at about 14%, the processed food industry has started attracting increased investment to cater to both,
the domestic and export demand.
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REGULATORY & POLICY ENVIRONMENT
The Ministry of Food Processing Industries (MFPI) is a ministry of the Government of India is responsible
for formulation and administration of the rules and regulations and laws relating to food processing in
India. The ministry was set up in the year 1988, with a view to develop a strong and vibrant food
processing industry, to create increased employment in rural sector and enable farmers to reap the
benefits of modern technology and to create a of surplus for exports and stimulating demand for
processed food. The ministry is currently headed by Sharad Pawar, a Minister of State with Independent
Charge. Its main functions are:
Policy support and developmental
Promotional and technical
Advisory and regulatory
The goals of MFPI are as following:-
Better utilization and value addition of agricultural produce for enhancement of income of farmers.
Minimizing wastage at all stages in the food processing chain by the development of
infrastructure for storage, transportation and processing of agro-food produce.
Induction of modern technology into the food processing industries from both domestic and
external sources.
Maximum utilization of agricultural residues and by-products of the primary agricultural produce
as also of the processed industry.
To encourage R&D in food processing for product and process development and improved
packaging.
To provide policy support, promotional initiatives and physical facilities to promote value added
export.
Major Policy Initiatives
The Government has formulated and implemented several schemes to provide financial assistance for
setting up and modernizing of food processing units, creation of infrastructure, support for research and
development and human resource development in addition to other promotional measures to encourage
the growth of the processed food sector.
http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Sharad_Pawarhttp://en.wikipedia.org/wiki/Sharad_Pawarhttp://en.wikipedia.org/wiki/Government_of_India -
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Time
Period
POLICIES/ INITIATIVES IMPACT/ PROVISIONS
Pre 19th
century
Food processing industry is declared a prioritysector. New Trade Policy places greater thrust
on Agro-based industries.
The Food processing industry whichwas new to India started getting famous.
With government initiatives it became a
major sector of the agricultural industry.
Fruits & vegetables products, condensed milk,
Ice cream, Meat preparation, Fish/Poultry,
Pectin, Pasta, dairy machineries completely
exempt from Central Excise Duty.
With the removal of Central excise duty,
purchasing powers of consumers
increased. Now, one could buy these
machineries at a cheaper price.
2005 -Custom duty on Packaging Machine reduced.
-Zero duty import of capital goods and raw
material for 100 per cent export oriented units
At this time technology was poor in
India. Importing machinery from other
countries was too expensive. With the
reduction of custom duty, imports of
Packaging Machinery increased and the
industry developed even more.
2005 Income Tax rebate allowed (100% of profits for 5
years and 25% of profits for the next 5 years) for
new industries in fruits and vegetables.
As the income tax rebate was allowed,
the income of players increased and at
the same time, motivated them to invest
more in the food processing industry.
2006 Food Safety and Standard Act FSSA was aided by several scientific
panels and a central advisory committee
to lay down standards for food safety.
These standards included specifications
for ingredients, contaminants, pesticide
residue, biological hazards and labels.
Now the consumers could buy
processed food commodities without
risking their health.
2007 Eleventh Five Year Plan Strategic intervention with redesigned
schemes and strong implementation
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In the Budget for 2007-08, the following fiscal incentives were announced:
Exemption limit of excise duty for small scale Industry (SSI) rose from Rs.1 crore to Rs.1.5
crores.
Excise duty on biscuits reduced from 8% to 0% whose retail price does not exceed Rs.100 per
Kg.
Excise duty reduced from 8% to 0% on all kinds of food mixes including instant mixes.
Soya Bari (food supplements) and ready to eat packaged foods fully exempt from excise duty.
Excise duty on reefer vans (refrigerated motor vehicles) reduced from 16% to 8%. Customs duty
also cut.
Custom duty on food processing machinery reduced from 7.5% to 5%.
Custom duty on sunflower oil (crude) reduced from 65% to 50% and of sunflower oil (refined)
reduced from 75% to 60%.
Special additional duty of 4% waived in the case of refined edible oil.
Central sales tax reduced from 4% to 3% from April, 2007.
arrangements at food parks, cold
chains, street food and abattoirs.
2008 Mega FoodParkScheme Small and medium entrepreneurs found
it easy to invest in capital intensive
activities. The scheme also included
cold storage facilities and training
facilities.
2008 Integrated Cold Chain Facility The scheme was intended to improve
viability of cold storages and enhance
cold storage capacity. Assistance at 25
per cent of the project cost in general
areas and 33.33 per cent in difficult
areas subject to a maximum of Rs. 7.5
million was provided for establishment of
cold chain facilities.
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All services provided by Technology Business Incubators exempted from service tax.
Similarly their Incubates whose annual business turnover does not exceed Rs.50 lakh exempted
from service tax for the first three years.
Sector Specific Government Policies
Fruits and Vegetables
Policy/ Initiative Impact
Though no industrial license is required
for setting up Fruits & Vegetable
Processing industries, setting-up 100per cent Export Oriented Units require
specific Govt. approvals. Many Fruits &
Vegetables Processing industries are
eligible for automatic approval of
foreign technology agreement and up
to 51 per cent foreign equity
participation.
Since, no license is required; more people findit easy to set up fruits and vegetables
industries. The 51% equity motivates moreindustries setting up.
This sector is regulated by the Fruit
Products Order, 1955 (FPO), issuedunder the Essential Commodities Act
Licensing under this Order lays down theminimum requirements for: Sanitary andhygienic conditions of premises, surroundingsand personnel. Water to be used forprocessing, Machinery and equipments,Product standards.
Some items like: pickles & chutneys,
tapioca sago and tapioca flour are
reserved for exclusive manufacture in
the small scale sector
By providing license of such products toexclusive companies, small scale firms startedrising up and the market became even morecompetitive.
Export of fruit & vegetable products isfreely allowed.
Free trade leads to economic efficiency. Theinitiative also led to small scale firms rising up.
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Fisheries
Policy/ Initiative Impact
Foreign equity is permitted in fishprocessing sector. Fish processing
projects with a minimum of 20 per cent
value addition can be set up as 100 per
cent Export Oriented Units
Fish processing projects with a minimum of 20per cent value addition can be set up as 100per cent Export Oriented Units
All items can be exported freely except
for silver pomfrets of weight less than
300 grams
Free trade leads to economic efficiency. Theinitiative also led to small scale firms rising up.
Export of marine products is allowed
only after registration of the units as an
exporter with the MPEDA.
Registration did away from the huge no. Of
illegal marine products exports being done till1978.
Meat and Poultry
The Meat Products Control Order, 1973 under the Essential Commodities Act, 1954 regulates the
manufacture, quality and sale of all meat products
A license is required under this order to set up of a factory for producing/processing meat
products
Export of meat is subjected to pre-shipment inspection and a certificate is required from State
Animal Husbandry Department/Directorate of Marketing and Inspection
Slaughter of cows is banned in most of the States. Export of beef is prohibited
Permission from the civic bodies/State Government (Department of Animal Husbandry) is also
required before setting up a meat processing unit integrated with a slaughter house
Dairy Products
Milk and Milk Products Order (MMPO) regulates milk and milk products production in the country.
The order requires no permission for units handling less than 10,000 liters of liquid milk per day or
milk solids up to 500 tons per annum
All the milk products except malted foods are covered in the category of industries for which
foreign equity participation up to 51 per cent is automatically allowed.
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Duty Structure
Government policies have played an important role in shaping the size and structure of the industry. A
gradual reduction in excise and custom duties over the years has translated into greater demands for
processed food products and the resultant increasing production volumes.
Indian Excise Duty Structure
Products Excise Duty
Fruits and Vegetables Exempt
Milk and Milk Products (with a few exceptions) Exempt
Malted Foods 16%
Other Processed Foods 16%
Packaging Materials for Packaging Food 16%
Packaging Machinery/ Equipment 16%
Breads, Biscuits and other bakery products 8%
Source- Rabobank
Indian Custom Duty Structure
Products Custom Duty
Fruit, Pulps, juices, fruit based drinks 30%
Milk and Milk products (with a few exceptions) 30%
Packed preparation of meat, fish and poultry 100%
Other food products 30%
Source- Rabobank
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Foreign Direct Investment in the Industry
The Indian food processing market is one of the largest in terms of production and growth prospects.
Since, India is one of the major food producers worldwide, with new reforms ruling the roost, it
encourages commercialization. The country's food processing market is opening up to a wide range of
investors across the globe. In fact, in the last decade, India moved from an era of scarcity to surplus, in
the area of food production. Consequently, analysts are of the opinion that the Food Processing Industry
in India is on an assured track of growth and profitability over the next five years. It is also estimated that
food-processing market in India will attract a phenomenal investment, in the form of capital, human,
technological, and financial, of over US$32.1 million by 2010.
Foreign Direct Investment in India in past years (in millions)
Source- MOFPI Annual Report
Steps taken to attract FDI
Rural connectivity to unconnected habitations with population of 500 persons or more by 2007
Infrastructure for post harvest management, logistics (including cold chain), markets, retailing,
food processing- are priority areas
Plan to set up modern markets with auction centres
Attracting FDI & private sector investment in infrastructure
0
100
200
300
400
500
600
700
2004-05 2005-06 2006-07 2007-08 2008-09
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SEGMENT ANALYSIS
Dairy Products
Dairy products form an integral component of the human diet. The different products obtained from the
dairy spread from milk to beef. This spread is interspersed by a host of products suited to the various
ages, tastes and nutritional needs of the humans. Dairy industry is one of the most important agro-
processing industries worldwide. According to Ministry of Food Processing in India, India stands first in
the world in terms of milk production in the world and is expected to grow at 15-20 per cent. The current
size of the Indian dairy sector is Rs.3133.5 billion (2009) and has been growing at 5 per cent a year. India
has the highest and ever increasing livestock population in the world with 50% of the buffaloes and 20%
of the worlds cattle population, mostof which are milch cows and milch buffaloes. Indias dairy industry is
considered as one of the most successful development programmes in the post-Independence period.
Livestock Population (In Millions)
Source- Livestock Census 2003 conducted by Department of Animal Husbandry, Dairying & Fisheries
India has emerged as the largest milk producing country in the world with present level of annual milk
production estimated as 94.5 million tonnes. Government expects a production level of 135 million tonnes
by the year 2015. The major dairy processing states are Uttar Pradesh, Gujarat, Punjab, Haryana and
Maharashtra.
292.9
336.5 353.3
419.6470.9 485
0
100
200
300
400
500
600
1951 1961 1972 1982 1992 2003
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Milk Production
Source- Department of Animal Husbandry, Dairying and Fishing
Marine Products
Fish production plays an important role in the socio- economic life of India. It is a rich source of protein
and high quality food. It is also an important source for income and employment to millions of ruralfarmers, particularly women. The 8,000 km coastline from inland and marine resources, 3 million hectares
of reservoirs, 1.4 million hectares of brackish water, 50,600 sq km of continental shelf area and 2.2 million
sq km of exclusive economic zone are Indias vast potential resources for fish producti on.
With a large human population in India and over 250 million economically strong potential consumers of
food and those who have an adequate purchasing power, the domestic demand for the fish and
processed fish food is increasing very rapidly. Marine products have created a huge demand in the world
market. With the high unit value, seafood has been acclaimed as one of the fastest moving commodity in
the world market. The world market for seafood has doubled within the last decade reaching US $49.32
billion in 2005. India's share is only 2.4% at present; it is mainly dependant on shrimp as a product.
However, the situation is changing due to the increased attention/ demand for other fishery resources like
squid, cuttlefish, fin fish, etc. and is being exported to the markets of Western Europe and South East
Asia. This segment also provides employment to 11 million people engaged fully, partially or in subsidiary
activities pertaining to the sector.
0
20
40
60
80
100
120
3.32%
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The production increased from 0.75 million metric tons in 1950-51 to 6.40 million metric tons in year
2003-04. A particularly significant progress in production is noticed from year 2001-2002 onwards. The
share of marine product exports has steadily grown over the years; from a mere Rs 3.92 crore in 1961-62
to Rs 6,292.04 crore in 2005-06, accounting for approximately 1.5% of the total exports from India. Japan,
USA and the Western European countries are the principal buyers of Indian frozen shrimp. Japan
retained its position as the single largest buyer for Indian marine products till 2001-02 accounting forabout 31% in the total export value. Major Fish processing states in India are Kerala, Maharashtra and
West Bengal.
Marine products have created a sensation in the world market because of their high health attributes.
With the high unit value, seafood has been acclaimed as one of the fastest moving commodity in theworld market. The world market for seafood has doubled within the last decade reaching US $49.32
billion mark India's share is 2.4%, dependence on shrimp as a product and is changing due to the
increased attention given on other fishery resource like squid, cuttlefish, fin fish, etc. and penetrating into
markets of Western Europe and South East Asia.
Fruits and Vegetables
Fruits and vegetables is one of the most important and fast growing sub-sectors of the food processing
sector, as fruits and vegetables form an indispensable part of healthy diet. India accounts for 13% of
vegetables and 12% of fruits production globally, with an enviable share in few categories like Mango,
Banana, Cashew, Green Peas and Onion.
The major exporters of fruits are the USA, Spain and Italy. India has a 1% share in the export market of
the world trade.
Exports of Marine Products to other countries by India
Source- MOFPI, Annual Report 2006
0
100000
200000
300000
400000
500000
600000
1970-711980-811990-912000-012001-022002-032003-042004-052005-06
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India produces the
widest range of fruits and vegetables in the world. It is the second largest vegetable and third largest fruit
producer accounting for 8.4% of the worlds food and vegetable production.
Exports of Fruits and Vegetables % by various countries
Source- Technology Exports Development Organization Report
Indias share(%) in Global Production of Fruits and Vegetables
Source- EXIM Bank
1412
108
64 4 3 2 1
36
0
5
10
15
2025
30
35
40
41
23 2410
59
77 7690
0
20
40
60
80
100
120
Mango Banana Green Peas Onion
World
India
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Meat & Poultry Sector
It is believed that the Indian Poultry Industry is 5,000 years old, since last 4 decades it began to witness
remarkable growth from backyard to poultry industry. In 2003 India had a livestock population of 470
million that included 205 mn cattle and 90 million buffaloes. The country produces about 450 mn broilers
and 30 billion eggs annually. Cattle, buffaloes, sheep and goat, pigs and poultry are the types of animals,which are generally used for production of meat. Slaughter rate for cattle as a whole is 20%, for buffaloes
it is 41%, pigs 99%, sheep 30% and 40% for goats. The country has 3,600 slaughterhouses, 9 modern
abattoirs and 171 meat-processing units licensed under the meat products order.
The poultry industry is among the faster growing sectors rising at a rate of 8% per year. Vertical
integration of poultry production and marketing has lowered costs of production, marketing margins and
consumer prices of poultry meat. There are eight integrated poultry processing units in the country, which
hold a significant share in the industry.
Category wise share of Meat and Poultry Products
Source- National Meat and Poultry Processing Board
Indian Broiler Meat(Poultry) Production
Source- USDA Report 2011
32
2410
11
23 Beef
Poultry
Pork
Sheep Mutton
Goat
0
1000
2000
3000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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Market Growth Drivers
1) Changing demographic profile: There is a shift in the demographic profile of the country. The
literacy rates, educational level, composition of population, low rate of fertility and morality
increases the population of old age persons. There is an increased participation of the young
people in work force which has a stimulating aftermath in more and more number of people
shifting to processed food for convenience.
2) Changing life style: In the past few decades, there is a tremendous change in the life style of
the Indian population. The Indian culture has been shifting from joint families to nuclear family.
There is a substantial increase in the literacy rate and educational level. Due to the urbanization
and more no of women participating in the work force, there is a gradual shift to processed foods.
Again with the emergence of MNCs and BPOs the western culture is proliferating which has
changed the demand patterns and provided the much needed impetus to the processed foods. In
addition, more people are now days demanding quality and salubrious foods, which ultimately
hinges on processed foods.
3) Government support: Since the independence, GOI has been giving much importance to the
food industry due to its competitiveness. Now the government is looking for tax sops for the
growing industry.
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4) Urbanization: The economically active population in the country has led to the increased
requirement for processed foods. As a report from the Working Commission on Urban
Development, urban population is expected to reach 433 million by 2021, taking the level of
urbanization to about 32%. This augurs well for food processing Indian players as urbanization is
one of the factors driving demand in this sector.
Urban Population in Millions
Source- Planning Commission, Compiled by D&B research service
5) Road Infrastructure: The quality of roads also influences the decision making process in the
purchase of a processed food product. Often, poor road infrastructure acts as a deterrent to
buying a car, especially when it comes to investing in high end machinery. At the same time,
good quality and manageable traffic conditions prompts one to buy more processed foods and a
producer to invest in modern machinery. The government thrust on infrastructure development
across the country is expected to lower incidences of postponed processed food purchase
decisions, though not in the immediate future. To add to the problems, the cost of transportation
of processed foods is extremely high.
6) COLD STORAGE FACILITIES: In spite of constant steps by government, the cold storage facility
remains to be a key failure of the sector. In the industry, cold storage is the most vital thing
required to provide storage for foods which otherwise are very highly perishable.
7) INADEQUATE QUALITY CONTROL AND TESTING INFRASTRUCURE: Due to inadequate
institutions and standards, consumers find it difficult to trust on the company. These standards
include specifications for ingredients, contaminants, pesticide residue, biological hazards and
labels.
0
100
200
300
400
500
1951 1991 2001 2011 P 2021 P
47.04%
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8) HIGH PACKAGING COSTS: Packaging is another vital part of the food processing industry.
Packaging of foods is a bit costly which refrains many of the consumers from this sector from
buying processed foods.
9) COST AND ACCESS TO FINANCE: One of the key factors responsible for the healthy sales of
automobiles in recent years has been falling interest rates. This augurs well for the growth indemand for passenger vehicles.
10) Rising Income Levels: With rising income levels and the consequent increase in disposable
income, purchasing processed foods is not a matter of luxury now, for at least a part of the
population. Food processing sector has strong correlation with economic growth. Personal disposable
income in the hands of the consumer determines their purchasing power and thus, their ability to
purchase.
11) Increasing food retailing in India: Modern food formats like Food Bazaar and Spencer's have
their eye on the unbranded part of the consumer's shopping basket. This constitutes as much as 60%of the total purchases and growing sharply, says AC Nielsen estimates. Retailers are offering a
package of convenience and freshness, and have an edge over manufacturers that focus mainly on
packaged conveniences.
12) Growth in terminal Markets: A terminal market is a central site, often in a metropolitan area,
that serves as an assembly and trading place forcommodities. Terminal markets
foragricultural commodities are usually at or near majortransportation hubs.
http://en.wikipedia.org/wiki/Metropolitan_areahttp://en.wikipedia.org/wiki/Commoditieshttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Transportation_hubhttp://en.wikipedia.org/wiki/Transportation_hubhttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Commoditieshttp://en.wikipedia.org/wiki/Metropolitan_area -
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Methods of Processing Food
Pasteurisation: Pasteurization is a process of heating a food, usually liquid, to a specific temperature for
a definite length of time, and then cooling it immediately. This process slows microbial growth in food.
Pasteurization is typically associated with milk; pasteurization of milk was first suggested by Franz von
Soxhlet in 1886. It is the main reason for milk's extended shelf life. High Temperature Short Time (HTST)
pasteurized milk typically has a refrigerated shelf life of two to three weeks, whereas ultra pasteurized
milk can last much longer, sometimes two to three months. When ultra heat treatment (UHT) is combined
with sterile handling and container technology (such as aseptic packaging), it can even be stored
unrefrigerated for 69 months.
Canning: Canning is a method ofpreserving food in which the food contents are processed and sealed inan airtight container. Canning provides a typical shelf life ranging from one to five years, although under
specific circumstances a freeze-dried canned product can last as long as 30 years in an edible state.
Cans are cheaper and quicker to make, and much less fragile than glass jars. Glass jars have remained
popular for some high-value products and in home canning.
Fermentation: Fermentation in food processing typically is the conversion
ofcarbohydrates to alcohols and carbon dioxide or organic acids using yeasts, bacteria, or a combination
thereof, underanaerobic conditions. A more restricted definition of fermentation is the chemical
conversion ofsugars into ethanol. The science of fermentation is known as zymurgy. Fermentation
usually implies that the action ofmicroorganisms is desirable, and the process is used to produce
alcoholic beverages such as wine, beer, and cider. Fermentation is also employed inthe leavening ofbread, and for preservation techniques to create lactic acid in sour foods such
as sauerkraut, dry sausages, kimchi and yogurt, orvinegar(acetic acid) for use in pickling foods.
Sterilisation: Thorough cooking (applying a suitable amount of heat over a suitable period of time)
slowed the decay of foods and various liquids, preserving them for safe consumption for a longer time
than was typical. Canning of foods is an extension of the same principle, and has helped to reduce food
borne illness ("food poisoning"). Other methods of sterilizing foods include food irradiation
and pascalization (the use of high pressure to kill microorganisms).
Drying: Drying is a method offood preservation that works by removing waterfrom the food, which
inhibits the growth ofmicroorganisms and hinders quality decay. Drying food using sun and wind toprevent spoilage has been practiced since ancient times. Water is usually removed by evaporation (air
drying, sun drying, smoking or wind drying) but, in the case offreeze-drying, food is first frozen and then
the water is removed by sublimation. Bacteria, yeasts and moulds need the water in the food to grow.
Drying effectively prevents them from surviving in the food. Example is meat.
Freezing:Freezing food preserves food from the time it is prepared to the time it is eaten. Since early
times, farmers, fishermen, and trappers have preserved their game in unheated buildings during the
http://en.wikipedia.org/wiki/Microbehttp://en.wikipedia.org/wiki/Foodhttp://en.wikipedia.org/wiki/Milkhttp://en.wikipedia.org/wiki/Franz_von_Soxhlethttp://en.wikipedia.org/wiki/Franz_von_Soxhlethttp://en.wikipedia.org/wiki/Refrigerationhttp://en.wikipedia.org/wiki/Shelf_lifehttp://en.wikipedia.org/wiki/Aseptic_processinghttp://en.wikipedia.org/wiki/Food_preservationhttp://en.wikipedia.org/wiki/Home_canninghttp://en.wikipedia.org/wiki/Food_processinghttp://en.wikipedia.org/wiki/Carbohydratehttp://en.wikipedia.org/wiki/Alcoholhttp://en.wikipedia.org/wiki/Yeasthttp://en.wikipedia.org/wiki/Bacteriahttp://en.wiktionary.org/wiki/anaerobichttp://en.wikipedia.org/wiki/Sugarhttp://en.wikipedia.org/wiki/Ethanolhttp://en.wiktionary.org/wiki/zymurgyhttp://en.wikipedia.org/wiki/Microorganismshttp://en.wikipedia.org/wiki/Winehttp://en.wikipedia.org/wiki/Beerhttp://en.wikipedia.org/wiki/Ciderhttp://en.wikipedia.org/wiki/Leaveninghttp://en.wikipedia.org/wiki/Breadhttp://en.wikipedia.org/wiki/Lactic_acidhttp://en.wikipedia.org/wiki/Sauerkrauthttp://en.wikipedia.org/wiki/Salamihttp://en.wikipedia.org/wiki/Kimchihttp://en.wikipedia.org/wiki/Yoghurthttp://en.wikipedia.org/wiki/Vinegarhttp://en.wikipedia.org/wiki/Acetic_acidhttp://en.wikipedia.org/wiki/Picklinghttp://en.wikipedia.org/wiki/Cookinghttp://en.wikipedia.org/wiki/Canninghttp://en.wikipedia.org/wiki/Food_borne_illnesshttp://en.wikipedia.org/wiki/Food_borne_illnesshttp://en.wikipedia.org/wiki/Food_irradiationhttp://en.wikipedia.org/wiki/Pascalizationhttp://en.wikipedia.org/wiki/Food_preservationhttp://en.wikipedia.org/wiki/Waterhttp://en.wikipedia.org/wiki/Microorganismhttp://en.wikipedia.org/wiki/Decompositionhttp://en.wikipedia.org/wiki/Evaporationhttp://en.wikipedia.org/wiki/Freeze-dryinghttp://en.wikipedia.org/wiki/Frozen_foodhttp://en.wikipedia.org/wiki/Sublimation_(chemistry)http://en.wikipedia.org/wiki/Freezinghttp://en.wikipedia.org/wiki/Freezinghttp://en.wikipedia.org/wiki/Sublimation_(chemistry)http://en.wikipedia.org/wiki/Frozen_foodhttp://en.wikipedia.org/wiki/Freeze-dryinghttp://en.wikipedia.org/wiki/Evaporationhttp://en.wikipedia.org/wiki/Decompositionhttp://en.wikipedia.org/wiki/Microorganismhttp://en.wikipedia.org/wiki/Waterhttp://en.wikipedia.org/wiki/Food_preservationhttp://en.wikipedia.org/wiki/Pascalizationhttp://en.wikipedia.org/wiki/Food_irradiationhttp://en.wikipedia.org/wiki/Food_borne_illnesshttp://en.wikipedia.org/wiki/Food_borne_illnesshttp://en.wikipedia.org/wiki/Canninghttp://en.wikipedia.org/wiki/Cookinghttp://en.wikipedia.org/wiki/Picklinghttp://en.wikipedia.org/wiki/Acetic_acidhttp://en.wikipedia.org/wiki/Vinegarhttp://en.wikipedia.org/wiki/Yoghurthttp://en.wikipedia.org/wiki/Kimchihttp://en.wikipedia.org/wiki/Salamihttp://en.wikipedia.org/wiki/Sauerkrauthttp://en.wikipedia.org/wiki/Lactic_acidhttp://en.wikipedia.org/wiki/Breadhttp://en.wikipedia.org/wiki/Leaveninghttp://en.wikipedia.org/wiki/Ciderhttp://en.wikipedia.org/wiki/Beerhttp://en.wikipedia.org/wiki/Winehttp://en.wikipedia.org/wiki/Microorganismshttp://en.wiktionary.org/wiki/zymurgyhttp://en.wikipedia.org/wiki/Ethanolhttp://en.wikipedia.org/wiki/Sugarhttp://en.wiktionary.org/wiki/anaerobichttp://en.wikipedia.org/wiki/Bacteriahttp://en.wikipedia.org/wiki/Yeasthttp://en.wikipedia.org/wiki/Alcoholhttp://en.wikipedia.org/wiki/Carbohydratehttp://en.wikipedia.org/wiki/Food_processinghttp://en.wikipedia.org/wiki/Home_canninghttp://en.wikipedia.org/wiki/Food_preservationhttp://en.wikipedia.org/wiki/Aseptic_processinghttp://en.wikipedia.org/wiki/Shelf_lifehttp://en.wikipedia.org/wiki/Refrigerationhttp://en.wikipedia.org/wiki/Franz_von_Soxhlethttp://en.wikipedia.org/wiki/Franz_von_Soxhlethttp://en.wikipedia.org/wiki/Milkhttp://en.wikipedia.org/wiki/Foodhttp://en.wikipedia.org/wiki/Microbe -
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winter season. Freezing food slows down decomposition by turning water to ice, making it unavailable for
most bacterial growth. In the food commodity industry, the process is called IQF or Individually Quick
Frozen. Freezing is an effective form of food preservation because the pathogens that cause food
spoilage are killed or do not grow very rapidly at reduced temperatures. Examples are fisheries, dairy
products, meat and others.
Dairy Sector
India has emerged as the largest milk producing country in the world with present level of annual milk
production estimated as 94.5 million tonnes. Government expects a production level of 135 million tonnes
by the year 2015.
Milk Production in million tons
Source- Department of Animal Husbandry, Dairying and Fishing
78.3 80.684.4 86.2 88.1 92.5
97.1 100.9104.8 108.5
0
20
40
60
80
100
120
Eggs Production
Year Eggs
2001-02 38729
2002-03 29823
2003-04 40403
2004-05 41005
2005-06 45200
Source- State/UT Animal Husbandry Departments
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Weaknesses of the Dairy Sector:
Perishability: Pasteurization has overcome this weakness partially. UHT gives milk long life.
Surely, many new processes will follow to improve milk quality and extend its shelf life.
Lack of control over yield: Theoretically, there is little control over milk yield. However, increased
awareness of developments like embryo transplant, artificial insemination and properly managed
animal husbandry practices, coupled with higher income to rural milk producers should
automatically lead to improvement in milk yields.
Logistics of procurement: Woes of bad roads and inadequate transportation facility make milk
procurement problematic. But with the overall economic improvement in India, these problems
would also get solved.
Problematic distribution: Yes, all is not well with distribution. But then if ice creams can be sold
virtually at every nook and corner, why cant we sell other dairy products too? Moreover, it is only
a matter of time before we see the emergence of a cold chain linking the producer to therefrigerator at the consumers home.
Competition: With so many newcomers entering this industry, competition is becoming tougher
day by day. But then competition has to be faced as a ground reality. The market is large enough
for many to carve out their niche.
Market Shares of major Dairy Sector companies (On Sales Basis)
Source- Ministry of Food Processing
26%
14%
10%13%
10%
27.10%
Karnataka Co-operativeMilk Federation Ltd.
Gujrat Co- operative Milk
Federation Ltd
Tamil Nadu Co- operative
Milk Federation Ltd
Nestle India Ltd
Mother Dairy Ltd
Others
http://www.indiadairy.com/photo_gal_about_dairylabshtml.htmhttp://www.indiadairy.com/ind_marketing_quality.htmlhttp://www.indiadairy.com/ind_marketing_quality.htmlhttp://www.indiadairy.com/photo_gal_about_dairylabshtml.htm -
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Marine Sector
The Marine Sector has grown at a CAGR of 8.73%.
Weaknesses of the Marine Sector:
The fish farmers/fishermen as well as the middlemen and end retailers involved in the trade are
mostly illiterate, it is important to introduce the importance of hygienic handling right from the
production stage itself. Only then the success in value addition in the end product will be ensured.
There are no organized and coherent efforts in the country to formulate and implement policies
for the processed fish/fishery products for domestic markets. A separate national fish processing
development board is required on a priority basis.
Efforts are lacking at the national level to coordinate all activities and programs for production,
processing, handling, packaging and marketing of fishery products for the domestic and
international markets. An independent national board is therefore necessary.
The standards for quality of processed fishery products have not been well established. Proper
standards for labeling are also not available.
The marine fish catch is stagnating. Therefore it is imperative to utilize maximum amount of
available resource with minimum wastage.
The major players are Trimbak Sons and Aquarium Paradise.
Fish Production in India in Million Tons
Source- DAHD&F; CSO 2005
0
1
2
3
4
5
6
7
8
9
22.98%
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Meat and poultry sector
India produces approx. 304.77 crore birds on an annual basis, majority (95%) of which is consumed in the
fresh slaughtered form and the remaining 5% is consumed in processed form.Only about 1-2 per cent of
the total meat is converted into value added products.
Meat Production in 000Tons
Source- FAOSTAT
Market Shares of major Meat processing companies
Source- MOFPI
0
1000
2000
3000
4000
5000
6000
7000
1997 1998 1999 2000 2001 2002 2003 2004 2005
3.39%
35%
40%
18%
7%
Al Kabeer Allanasons Limited Amigo Foods Others
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Indian Firms need to strengthen R&D base
The Ministry of Food Processing Industries gives special emphasis on supporting Research &
Development (R&D) activity in the food-processing sector. Efforts have been made to widen the R&D
base in food processing by involvement of various R&D institutions and by funding of laboratory/industry
projects as well as purely industry projects. The thrust areas for R & D activities are as follows:
Upgrading of traditional food technologies to ensure greater productivity, wider acceptability and
quality assurance;
Energy saving technologies.
Improved and more precise methods to assess quality, safety and nutrition parameters in foods;
Import substitution for packaging materials and food additives;
Development of intermediate products and dehydrated products with superior shelf-life
characteristics;
Development of newer and safer chemical / biological preservations with lesser costs;
Ways and means to economize on use of costly edible oils in food preparations;
Development of cost effective and efficient food processing machinery;
Convenience oriented intermediate products in the entire range of traditional foods, which need
minimum preparation in the kitchen to make them ready-to-eat.
Specialty foods to meet the needs like low calorie, high calorie, high protein, lactose free, high
fibre, low sodium, sugar free, geriatric, pediatric, pregnant & lactating, recuperating populations;
Frozen foods;
Modified atmosphere packed dressed vegetables, fruits, meat and fish;
Economic processing of industrial waste and recovery of by-products.
R&D Expenses by major players
Name of the company % share of sales in R&D expenses
Dabur India Limited 0.4
Britannia Industries Limited 0.135
Hindustan Unilever Limited 1.7
Parle Agro Private Limited 3.0
Source- Annual Reports 2009-2010
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Emerging Business Models
The generic value chain of the food processing industry from raw materials to retail to the consumer is
shown below. Traditionally, different players across the value chain played the different roles and worked
more or less independently. Recently, the trend has been towards increasing integration andcollaboration across players in the value chain, to garner mutual benefits. Such integration is being driven
by the manufacturers, who are looking to integrate backward and establish linkages with both raw
material producers (farmers) and aggregators/logistics providers. These links have led to two new models
emerging in the sector Contract Farming and Terminal Markets. These are further discussed below.
Terminal Market
A Terminal market is a central site, often in a metropolitan area, that serves as an assembly and trading
place for agricultural commodities. Here there are different options for disposing off the produce. It caneither be sold to the end consumer, or to the processor, or packed for export, or even stored for disposal
at a future date. It thus offers different options to farmers under a single roof. Typically, terminal markets
operate on a hub and spoke model where the markets form the hubs, and are linked to different collection
centers (spokes) that are located close to the production centers. The typical value chain structure for a
terminal market, as well as the key activities and corresponding infrastructure requirements at each level,
are depicted in the figure below: The Government of India is looking to promote terminal markets, as a
means of integrating domestic produce with retail chains. There are plans to set up such markets in eight
cities across five states, at a cost of US$ 131 million. The cities being considered are Mumbai, Nasik,
Nagpur, Chandigarh, Rai, Patna, Bhopal and Kolkata. The perishable horticultural produce is cleaned atthe collection centers and transported to the terminal markets through reefer vans thereby reducing post
harvest losses. The produce arriving in the terminal market is graded and stored in the cold storage till it
is auctioned through electronic auction system or direct selling.
Contract Farming
Contract Farming is an agreement between the food processor (contractor), who is typically a largeorganised player, and the farmer, whereby the farmer is contracted to plant the contracto rs crop on his
land. He also agrees to harvest and deliver to the contractor a quantum of produce, based upon
anticipated yield and contracted acreage at a pre-agreed price. The food processor provides inputs in
terms of technology and training to the farmer, to improve the yield and quality of the produce. This
results in a win-win situation that generates a steady source of income for the farmer and eliminates
supply shocks and assures good quality farm inputs which are crucial for the processor. The Government
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of India has been actively encouraging contract farming endeavors. The National Agricultural Policy
envisages that private sector participation will be encouraged through contract farming and land leasing
arrangements to allow accelerated technology transfer, capital inflow and assured market for crop
production. A good example in this area has been Pepsi Foods experience with contract farming for its
tomato processing plant at Hoshiarpur in Punjab. Through transfer of technology and providing good
quality seeds and inputs to farmers, Pepsi was able to substantially increase both quality and quantity of
tomato production in the area, so as to meet the demands of its plant. A key aspect of Pepsis approach
was its partnership with local bodies such as the Punjab Agricultural University and Punjab Agro
Industries Corporation Limited, which went a long way in getting the farmers buy-in and ensuring success
of the venture.
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COMPANY PROFILES
The chapter profiles the leading players in the Indian Food processing industry, analyzing their financialperformance in the recent past, and discussing their future plans and outlook. The companies profiled are
Hindustan Unilever Limited, Dabur India Limited and ITC Limited.
Hindustan Unilever Limited (HUL)
Hindustan Unilever Limited (HUL) is India's largest fast moving consumer goods company. The Anglo-
Dutch company Unileverowns a 52% majority stake. HUL was formed in 1933 as Lever Brothers India
Limited and came into being in 1956 as Hindustan Lever Limited through a merger of Lever Brothers,
Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd. It is headquartered in Mumbai, India and has
employee strength of over 15,000 employees and contributes to indirect employment of over 52,000
people. The company was renamed in June 2007 as Hindustan Unilever Limited.
Year of Incorporation 1933
CEO & MD Nitin Paranjpe
Outstanding shares (FY10) 2181.7 Million as on 31st December, 2010
Listing Details BSE, NSE
Face Value (Rs) 1.00
Market capitalization (Rs million) 64,961.71 as in December, 2010
52- week high/low (Rs) 306.7/218.0
Year ending March 31
Hindustan Unilever's distribution covers over 1 million retail outlets across India directly and its products
are available in over 6.3 million outlets in the country, which equals nearly 80% of all retail outlets in India.
It estimates that two out of three Indians use its many home and personal care products, food and
beverages.
http://en.wikipedia.org/wiki/Fast_moving_consumer_goodshttp://en.wikipedia.org/wiki/Anglohttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Unileverhttp://en.wikipedia.org/wiki/Lever_Brothershttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Lever_Brothershttp://en.wikipedia.org/wiki/Unileverhttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Anglohttp://en.wikipedia.org/wiki/Fast_moving_consumer_goods -
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HUL is the market leader in Indian consumer products with presence in over 20 consumer categories
such as soaps, tea, detergents and shampoos amongst others with over 700 million Indian consumers
using its products. Sixteen of HULs brands featured in the ACNielsen Brand Equity list of 100 Most
Trusted Brands Annual Survey (2008). According to Brand Equity, HUL has the largest number of brands
in the Most Trusted Brands List. It has consistently had the largest number of brands in the Top 50, and in
the Top 10 (with 4 brands). The company has a distribution channel of 6.3 million outlets and owns 35
major Indian brands like Kwality walls, Red Label, Lakme, Dove and Close up to name a few.
HULs shareholding pattern as of December 2010
Source: Annual Report 2010
Product Portfolio
The company has a distribution channel of 6.3 million outlets and owns 35 major Indian brands.[4]Its
brands include Kwality Wall's ice cream, Knorrsoups & meal makers, Lifebuoy, Lux, Pears,
Breeze, Liril, Rexona, Hamam and Moti soaps, Pureit water purifier, Lipton tea, Brooke Bond (3 Roses,
Taj Mahal, Taaza, Red Label) tea, Bru coffee, Pepsodent and Close Up toothpaste and brushes,
and Surf, Rin and Wheel laundry detergents, Kissan squashes and jams, Annapurna salt and
Atta, Pond's talc and creams, Vaseline lotions, Fair and Lovely creams, Lakme beauty products, etc.
HULs Segment wise sales in 2010
53%
9%
17%
15%6%
Indian Promoters
Financial Institutes
FII's
General Public
Others
http://en.wikipedia.org/wiki/ACNielsenhttp://en.wikipedia.org/wiki/Hindustan_Unilever#cite_note-3http://en.wikipedia.org/wiki/Hindustan_Unilever#cite_note-3http://en.wikipedia.org/wiki/Hindustan_Unilever#cite_note-3http://en.wikipedia.org/wiki/Kwality_Wall%27shttp://en.wikipedia.org/wiki/Knorr_(brand)http://en.wikipedia.org/wiki/Lifebuoy_(soap)http://en.wikipedia.org/wiki/Lux_(soap)http://en.wikipedia.org/wiki/Pears_soaphttp://en.wikipedia.org/wiki/Lirilhttp://en.wikipedia.org/wiki/Rexonahttp://en.wikipedia.org/wiki/Hamam_(soap)http://en.wikipedia.org/wiki/Pureithttp://en.wikipedia.org/wiki/Liptonhttp://en.wikipedia.org/wiki/Brooke_Bondhttp://en.wikipedia.org/wiki/Bruhttp://en.wikipedia.org/wiki/Pepsodenthttp://en.wikipedia.org/w/index.php?title=Close_Up_(toothpaste)&action=edit&redlink=1http://en.wikipedia.org/wiki/Surf_(detergent)http://en.wikipedia.org/wiki/Rinhttp://en.wikipedia.org/wiki/Wheel_(detergent)http://en.wikipedia.org/wiki/Kissanhttp://en.wikipedia.org/wiki/Pond%27s_Creamshttp://en.wikipedia.org/wiki/Vaselinehttp://en.wikipedia.org/wiki/Fair_and_Lovelyhttp://en.wikipedia.org/wiki/Lakme_cosmeticshttp://en.wikipedia.org/wiki/Lakme_cosmeticshttp://en.wikipedia.org/wiki/Fair_and_Lovelyhttp://en.wikipedia.org/wiki/Vaselinehttp://en.wikipedia.org/wiki/Pond%27s_Creamshttp://en.wikipedia.org/wiki/Kissanhttp://en.wikipedia.org/wiki/Wheel_(detergent)http://en.wikipedia.org/wiki/Rinhttp://en.wikipedia.org/wiki/Surf_(detergent)http://en.wikipedia.org/w/index.php?title=Close_Up_(toothpaste)&action=edit&redlink=1http://en.wikipedia.org/wiki/Pepsodenthttp://en.wikipedia.org/wiki/Bruhttp://en.wikipedia.org/wiki/Brooke_Bondhttp://en.wikipedia.org/wiki/Liptonhttp://en.wikipedia.org/wiki/Pureithttp://en.wikipedia.org/wiki/Hamam_(soap)http://en.wikipedia.org/wiki/Rexonahttp://en.wikipedia.org/wiki/Lirilhttp://en.wikipedia.org/wiki/Pears_soaphttp://en.wikipedia.org/wiki/Lux_(soap)http://en.wikipedia.org/wiki/Lifebuoy_(soap)http://en.wikipedia.org/wiki/Knorr_(brand)http://en.wikipedia.org/wiki/Kwality_Wall%27shttp://en.wikipedia.org/wiki/Hindustan_Unilever#cite_note-3http://en.wikipedia.org/wiki/ACNielsen -
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Source: Annual Report 2010
Financial Summary (In Rs crore)
Indicator/
Year2003 2004 2005 2006 2007
2008-09
(15month
s)
2009-10
(12month
s)
Gross
Sales*(In
Rs crore)
11,096.02 10,888.38 11,975.53 13,035.06 14,715.10 21,649.51 18,220.27
Net
Profit(In
Rs crore)
1,804.34 1,99.28 1,354.51 1,539.67 1,743.12 2,500.71 2,102.68
Earnings
per share
(Rs)
8.05 5.44 6.40 8.41 8.73 11.46 10.10
Investme
nt(In Rs
crore)
2,574.93 2,229.56 2,104.20 2,413.93 1,440.80 332.62 1,264.08
Fixed
Assets(InRs crore)
1,369.47 1,517.56 1,483.53 1,511.01 1,708.14 2,078.84 2,436.07
Exports(In
Rs crore)1,416 1,459 1,461 1,369 1,413 1,638 1,066
48%
30%
20%
2% Soaps and Household
Care
Personal Products
Foods
Others
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Hindustan Unilever has been consistently recognized within India and globally by eminent organizations
and the government for its achievements in various fields. The organization has been recognized among
others by TERI, Far East Economic Review, Asian Wall Street Journal and Business world. More
recently, Hewitt Associates ranked Hindustan Unilever among the top four companies globally in the list
of Global Top Companies for Leaders. The Company was ranked number one in the Asia-Pacific region
and in India. During 2008, Unilever announced its collaboration with the Indian Dental Association (IDA)
in conjunction with World Dental Federation (FDI) through its Pepsodent, leading oral care brand to help
improve the oral health and hygiene standards in India. The Demerger and transfer of certain immoveable
properties of Hindustan Unilever Limited to Brooke Bond Real Estates Private Limited was an event of the
company on April 2008.
HULs Total Expenditure distribution in 2010
Source: Annual Report 2010
HUL has more than 670 live patents and 700 million consumers use HUL brands in India as part of their
daily lives. The company moves with the mission of 'add vitality to life' through its presence in over 20
distinct categories in Home & Personal Care Products and Foods & Beverages. HUL identified five key
platforms and have articulated goals, both short term and long term goals, stretching to 2015, would work
in areas of health & nutrition & women empowerment on the social front, the economic agenda would be
to enhance livelihoods and the environmental agenda would focus on water conservation and cuttinggreen house gases.
6% 1%7%
6%
6%
16%58%
Carriage and Frieght
Depriciation
Others
Staff Costs
Rent, Repairing etc.
Advertising Costs
Materials
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Dabur India Ltd.
Dabur India Limited (DIL) is an Ayurvedic and natural health care company. It is engaged in
manufacturing and marketing fast moving consumer goods and Ayurvedic products. It operates through
three business units: consumer care division, international business division and consumer healthcaredivision. It has manufacturing facilities in eight states of India. As of March 31, 2010, it also had
manufacturing facilities in eight countries: India, Bangladesh, Nepal, Dubai, Sarah, Ras-Al-Khaima, Egypt
and Nigeria.
Year of Incorporation 1884
CEO & MD Sunil Duggar
Outstanding shares (FY10) 1740.7 Million as on 31st
December, 2010
Listing Details BSE, NSE
Face Value (Rs) 1.00
Market capitalization (Rs million) 19809.17as in December, 2010
52- week high/low (Rs) 218.95 /121
Year ending March 31
Daburs shareholding pattern as of December 2010
Source: Annual Report 2010
69%6%
17%
6% 2%
Indian Promoters
Financial Institutes
FII's
General Public
Others
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Product Portfolio
It is well equipped for the cut throat competition. The company's success rests on the 13 of its superbly
equipped ultra modern manufacturing facilities. Its products are marketed in more than 50 countries. The
company is powered by a management team of highly qualified experts experienced in this field.
Leading brands of the Dabur India Limited:
Dabur: It is the health care brand. These include Dabur Chyawanprash, Dabur Honey, Dabur Real
fruit juices
Vatika: It is the personal care brand. The Vatika Hair Oil & Shampoo the high growth brand
Anmol: It is the value for money brand
Hajmola Tasty: It is the digestive brand
Daburs Segment wise sales in 2010
Source: Annual Report 2010
Financial Summary
Indicator/
Year2005 2006 2007 2008 2009 2010
Sales(In Rs
crore)1417 1757 2080 2396 2834 3417
Net
Profits(In
Rs crore)
156 214 282 333 391 501
18%
5%
23%
3%
31%
20%Oral Care
Home Care
Foods
Skin Care
Health Supplements
Hair Care
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Fixed
Assets(In
Rs crore)
295 512 379 465 559 677
Net
Earnings
per share
(Rs)
5.4 3.7 3.3 3.9 4.5 5.8
Daburs Total Expenditure distribution in 2010
Source: Annual Report 2010
Expenditure in India is growing in the band of 12-14% and this is accompanied by a healthy rate of
household savings of about 24-25% of the GDP, which points to a sustained growth in consumption over
the next couple of decades making India one of top 5 consuming economies of the world .
47%
15%
3%
25%
5%
7%
Power
Store and Spares
Repair and
MaintenanceProcessing charges
Plant and Machinery
Others
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ITC Limited
The company has its registered office in Kolkata. It started off as the Imperial Tobacco Company, and
shares ancestry with Imperial Tobacco of the United Kingdom, but it is now fully independent, and was
rechristened to Indian Tobacco Company in 1970 and then to I.T.C. Limited in 1974
The company is currently headed by Yogesh Chander Deveshwar. It employs over 26,000 people at
more than 60 locations across India and is listed on Forbes 2000. ITC Limited completed 300 years on 24
August 2010.
ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-
Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care,
Stationery, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its
traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly
gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded
Apparel, Personal Care and Stationery.
Year of Incorporation 1974
CEO & MD Y. C. Deveshwar
Outstanding shares (FY10) 1269.7Million as in December, 2010
Listing Details BSE, NSE
Face Value (Rs) 1.00
Market capitalization (Rs crore) 149770.93 as in December, 2010
52- week high/low (Rs) 197.90 /133.20
Year ending March 31
ITC's aspiration to be an exemplar in sustainability practices is manifest in its status as the only companyin the world of its size and diversity to be 'carbon positive', 'water positive' and 'solid waste recycling
positive.' In addition, ITC's businesses have created sustainable livelihoods for more than 5 million
people, a majority of whom represent the poorest in rural India.
http://en.wikipedia.org/wiki/Imperial_Tobaccohttp://en.wikipedia.org/wiki/Yogesh_Chander_Deveshwarhttp://en.wikipedia.org/wiki/Forbes_2000http://en.wikipedia.org/wiki/Forbes_2000http://en.wikipedia.org/wiki/Yogesh_Chander_Deveshwarhttp://en.wikipedia.org/wiki/Imperial_Tobacco -
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ITC Ltds shareholding pattern as of December 2010
Source: Annual Report 2010
Product profile
In FMCG, ITC has a strong presence in:
Cigarettes: W. D. & H. O. Wills, Gold Flake Kings, Gold Flake Premium, Navy Cut, Insignia, India
Kings, Classic (Verve, Menthol, Menthol Rush, Regular, Mild & Ultra Mild), 555, Benson & Hedges, Silk
Cut, Scissors, Capstan, Berkeley, Bristol, Lucky Strike, Players and Flake.
Foods: (Kitchens of India; Ashirvaad; Minto; Sunfeast; Candyman; Bingo; Yippee, Sunfeast Pasta brands
in Ready to Eat, Staples, Biscuits, Confectionery, Noodles and Snack Foods);
Apparel: (Wills Lifestyle and John Players brands);
Personal care: (Fiama di Wills; Vivel; Essenza di Wills; Superia; Vivel di Wills brands of products in
perfumes, haircare and skincare)[2]
Stationery: (Classmate and Paperkraft brands)
Other businesses
Hotels: ITC's hotels (under brands including ITC Hotel /Welcome hotel) have evolved into being India's
second largest hotel chain with over 80 hotels throughout the country.
Paperboard, Specialty Paper, Graphic and other Paper;
Packaging and Printing for diverse international and Indian clientele.
InfoTech (through its fully owned subsidiary ITC InfoTech India Limited which is a SEI CMM Level 5
company)
32%
21%14%
11%
22% NRI's etc
Financial Institutes
FII's
General Public
Others
http://en.wikipedia.org/wiki/Tobacco_industryhttp://en.wikipedia.org/wiki/W._D._%26_H._O._Willshttp://en.wikipedia.org/w/index.php?title=Gold_Flake_Kings&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Kitchens_of_India&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Ashirvaad&action=edit&redlink=1http://en.wikipedia.org/wiki/Mintohttp://en.wikipedia.org/w/index.php?title=Sunfeast&action=edit&redlink=1http://en.wikipedia.org/wiki/Candymanhttp://en.wikipedia.org/wiki/Bingohttp://en.wikipedia.org/w/index.php?title=Wills_Lifestyle&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=John_Players&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Fiama_di_Wills&action=edit&redlink=1http://en.wikipedia.org/wiki/Vivelhttp://en.wikipedia.org/w/index.php?title=Essenza_di_Wills&action=edit&redlink=1http://en.wikipedia.org/wiki/Superiahttp://en.wikipedia.org/w/index.php?title=Vivel_di_Wills&action=edit&redlink=1http://en.wikipedia.org/wiki/ITC_Limited#cite_note-1http://en.wikipedia.org/wiki/ITC_Limited#cite_note-1http://en.wikipedia.org/wiki/ITC_Limited#cite_note-1http://en.wikipedia.org/wiki/Classmatehttp://en.wikipedia.org/w/index.php?title=Paperkraft&action=edit&redlink=1http://en.wikipedia.org/wiki/Hospitality_industryhttp://en.wikipedia.org/w/index.php?title=ITC_Hotel&action=edit&redlink=1http://en.wikipedia.org/wiki/ITC_Infotechhttp://en.wikipedia.org/wiki/ITC_Infotechhttp://en.wikipedia.org/w/index.php?title=ITC_Hotel&action=edit&redlink=1http://en.wikipedia.org/wiki/Hospitality_industryhttp://en.wikipedia.org/w/index.php?title=Paperkraft&action=edit&redlink=1http://en.wikipedia.org/wiki/Classmatehttp://en.wikipedia.org/wiki/ITC_Limited#cite_note-1http://en.wikipedia.org/w/index.php?title=Vivel_di_Wills&action=edit&redlink=1http://en.wikipedia.org/wiki/Superiahttp://en.wikipedia.org/w/index.php?title=Essenza_di_Wills&action=edit&redlink=1http://en.wikipedia.org/wiki/Vivelhttp://en.wikipedia.org/w/index.php?title=Fiama_di_Wills&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=John_Players&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Wills_Lifestyle&action=edit&redlink=1http://en.wikipedia.org/wiki/Bingohttp://en.wikipedia.org/wiki/Candymanhttp://en.wikipedia.org/w/index.php?title=Sunfeast&action=edit&redlink=1http://en.wikipedia.org/wiki/Mintohttp://en.wikipedia.org/w/index.php?title=Ashirvaad&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Kitchens_of_India&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Gold_Flake_Kings&action=edit&redlink=1http://en.wikipedia.org/wiki/W._D._%26_H._O._Willshttp://en.wikipedia.org/wiki/Tobacco_industry -
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Financial Summary:
Indicator/
Year2005 2006 2007 2008 2009 2010
Sales(In Rscrore)
12994.51 13578.32 14003.76 14654.32 15611.92 18153.19
Net
Income(In
Rs crore)
7875.26 10076.61 12500.78 14558.43 16146.85 18756.57
Fixed
Assets(In
Rs crore)
4136.91 4405.13 5610.91 7295.65 8485.97 9151.39
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INTERNATIONAL SCENARIO
The food processing industry is one of the pivotal sectors of world economy. It is one of the largest
sources of employment, with strong backward and forward linkages. In developed economies like US and
UK, the food processing industry contributes to about 3-4% in the countrys GDP.
Sector wise shares of Food Processing
Source- United States Department of Agriculture
50%
10%
5%
5%
7%
23%Agricultral Crops
Beverages
Meat
Fish
Semi processed products
Dairy
Continent wise share of Processing food
Source- United States Department of Agriculture
68%
17%
6%
1%
5%
3%
Europe North America South America Africa Australia Asia
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Fruits and vegetables
Fruits and vegetables is one of the most important and fast growing sub-sectors of the food processing
sector, as fruits and vegetables form an indispensable part of healthy diet. Medical research has
established that intake of fruits and vegetables in the requisite measure help prevent cardio vascular
disease and obesity. Asia dominates the world vegetables scene accounting for nearly 60% of globalproduction, with China and India ranking as 1st and 2nd European Union and U.S.A follow next.
Fruit and vegetable products (both fresh and processed) accounted for 22% of total agricultural exports
from developing countries. Fruit trade is heavily concentrated in Bananas, Citrus, Grapes and Apples.
Fresh produce comprising citrus, pears, peaches, nectarines, plums and kiwi fruit, and processed
produce comprising tomato based products, fruit juices and concentrates, packed vegetables as well as
tinned and frozen fruits are mostly certified under Protected Geographical Indication status.
Over the last quarter of a century (1980-2004), the fruit and vegetable market has been one of the fastest
growing of all agricultural markets as could be observed from the data presented in table:-
Year Production Consumption1982-84 691 -
1992-94 899 782
2002-04 1342 1189
Global fruit and vegetables consumption increased by an average of 4.5% per annum between 1990 and
2004. This was higher than the world population growth rate, meaning that the global per capita
consumption of fruit and vegetables has also increased. According to World Health Organization, for the
prevention of chronic diseases such as heart diseases, cancer, diabetes and obesity, fruit and vegetable
consumption should be at least 400g per day per capita. If in 1992-94 only 40% of the countries reached
this level, almost half of them did so in 2002 04.
Dairy Sector
In many respects the dairy industry occupies a special position among the other sectors of agriculture.
Milk is produced everyday and gives a regular income to the numerous small producers. Milk production
is highly labor-intensive and provides a lot of employment. For many dairy farmers and companies 2009
was a remarkable year. The financial crisis in the global economy caused international demand for dairy
produce to decline in late 2008 and had a dramatic impact on product prices during the first half year of
2009. For the first time since the mid-nineties global consumption per capita declined. The financial crisis
impacted on every aspect of the dairy business: production, trade, consumption and prices. The general
trend was stagnation but it turned out different per region. Chinese non-skimmed milk powder (WMP)
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demand in the second half year was a key driver of rising dairy commodity prices and recovery of the world
dairy market. Asia acted as an engine for the global dairy industry. As a consequence of the general
recession, most companies experienced a decrease in their turnover