SOYBEAN INDUSTRY IN INDIA

Ranjan Kotian
Consultant - India 2008

Contents
Soybean An understanding Industry Profile Target Potentiality (Deleted) Deal Street

Soybean An Understanding

Soybean
The soybean (U.S.) or soya bean (UK) (Glycine max) is a species of legume native to East Asia A cream-coloured oval bean about the size of a common pea Soybeans are grown primarily for meal, and oil is a secondary product During processing, the soybeans are cracked to remove the hull and then rolled into full-fat flakes. The rolling process disrupts the oil cells, facilitating solvent extraction of the oil. After the oil has been extracted, the solvent is removed, and the flakes are dried, creating defatted soy flakes. While most of the defatted soy flakes are further processed into soybean meal for animal feeding, the flakes can be ground to produce soy flour, sized to produce soy grits or texturized to produce textured vegetable protein (TVP) for food uses.

Origin and Spread of Soyabean

Soybean production was localized in China until after the ChineseJapanese war of 1894-95, when the Japanese began to import soybean oil cake for use as fertilizer Europeans had been aware of soybeans as early as 1712 through the writing of a German botanist Some soybean seed may have been sent from China by missionaries as early as 1740 and planted in France Shipments of soybeans were made to Europe about 1908, and the soybean attracted worldwide attention The soybean was a recent introduction to India, probably introduced into India from China, Japan and South east Asia via the Naga Hills and Manipur, at the far eastern tip of India In India Soybean cultivation is introduced in 1977 Production of soybean in India at the present time is restricted mainly to Madhya Pradesh, Uttar Pradesh, Maharashtra and Gujarat It is also grown on a small acreage in Himachal Pradesh, Punjab and Delhi

Soybean Value Chain

Level 1 Green Soybean Vegetable

Level 2 Dried & Extracted Soybean Soy Oil, Soy Milk, Soy Dal

Level 3 Crushed & Processed Soybean Soy Meal, Soy Curd, Soy Flour
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Soybean Golden Bean of 20th Century

Soyfoods are a source of high Quality Protein In 1999 The Food & Drug Administration (FDA) announced that food containing soy protein may reduce the risk of coronary heart diseases Soybean is viewed as alternative HRT [Hormone replacement therapy (menopause)] in large part because it is a unique natural source of Isoflavones Soy food such as Tofu, Soy Milk, Soy Flour and Soy Nuts have isoflavones contains of about 37 to 180 mg per ounce Soybeans have favourable nutrient profile for heart health, decreasing negative effect of menopause, reduction of cancer, Dibetes, kidney diseases and allergies According to FDA, Soy proteins lowers the serum Cholesterol; Soyfood provide high quality protein without saturated fat and cholesteroal Soy food contains anti-carunogens that have proved to be protective against cancer Recent Clinical trials have shown that consumption of soy protein compared to other proteins such as from milk or meat can lower total LDL(Low-density lipoprotein) -cholesterol level

Major constituents of Soybean

Industry Profile

Global Scenario
Quantity in Million Tonnes

Soybean is one of the major oilseed crops in the world It is cultivated extensively in south Asian countries and U.S.A.
Account 57% of total oilseed production in the world

World Soybean Production

250

236.05

200 150 100 50 0

186.53

215.72

220.56

85% of the worlds production is crushed for oil

oil recovery is 17-18% the meal forms around 80%

Years

Major Soybean producing Countries

Major players include:

Ruchi Soya (India) J-Oil Mills Inc (Japan) Cargill Inc (Belgium) Heilongjiang Jiusan (China) Bunge (US) Bianchini SA Indstria (Brazil)
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221.62 2007-2008 (Projection)

2003-2004

2004-2005

2005-2006

2006-2007

Global Soybean Crop Calendar

Indian Soybean Crop Calender Mainly grown in Kharif season Monsoon Sowing June July Harvest October December

Global Supply Demand Estimates

The global trade of soybean meal is about 48 million tons The leading soybean meal producing country is US in the 1st place and China, Brazil in the 2nd & 3rd place respectively The leading soy meal exporting countries are:

Argentina (20 million tons) Brazil (15 million tons) USA (6 million tons) India (4 million tons) European Union (2 million tons)
European Union (22 million tons) Central Europe (3.5 million tons) Thailand (2 million tons) South Korea (1.5 million tons) Indonesia (1.5 million tons) Japan (1 million tons) Philippines (1 million tons) Canada (1 million tons)
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The major importers of soybean meal are: -

Indian Scenario
India is 5th largest producer of soybean in the world, with average production of 4,809 TMT (Thousand Metric Tonnes) of soybeans Average consumption in India is 4,812 TMT of soybeans India presently produces about 6 MMT (Million Metric Tonnes) of soybean per annum Soybean output has more than doubled in the last 10 years
is expected to reach a level of 8.6 million tons in 2007-08, making available around 6.2 MMT of Soybean Meal with 4 MMT for exports With current international prices as high as US $300+ per MT, exports of Indian Soymeal earning close to US$ 1 billion or over Rs.4000 crores

Uses
Seeds are eaten whole, split & spouted Oil used for paints, linoleum, oil cloth, printing inks, soap, insecticides, disinfectants apart from culinary Meal (remnant after oil extraction), Soya Flour, Soya Milk, Soya curd, tofu (Soya Paneer)
There are intellectual property rights (IPR) issues in soybean. Genetically Modified (GM) soybean may not be viable for India unless the IPR issues are addressed through appropriate models as in say, Brazil
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Soybean Growing Areas in India

According to a statement from the ministry of agriculture in New Delhi on Friday, the area under cultivation for soybean crop increased from 8.7 million hectare in 2007 to 9.5 million hectare this year
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Soybean Cultivation & Production in India

Source: Multi Commodity Exchange of India Ltd

Soybean output has more than doubled in the last 10 years and is expected to reach a level of 8.6 million tons in 2007-08, making available around 6.2 MMT of Soybean Meal with 4 MMT for exports. With current international prices as high as US $300+ per MT, this year would well turn into a record year of highest ever exports of Indian Soymeal earning close to US$ 1 billion or over Rs.4000 crores.
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India in World Soy Industry

India is one of the major exporters of soy meal to the Asian countries South Korea, Thailand, Philippines, Japan are some of the major importers of soy meal from the country Soy meal accounted for 84% of the total edible oilseed meal exports from the country
(Rounded figs.) Annual Seed Production Annual Oil Production Annual Oil Imports Annual Oil Consumption Annual Meal Production Annual Meal Exports Annual Meal Consumption India World (In million tons) 6 1 1.5 2.5 3.5 2.5 1 180 30 9 30 130 43 130 3 3.3 16.7 8.3 3.5 5.8 0.7 % Share

Major Concern The industry is exposed to price fluctuations on its major raw material Government policies play an important role in the edible oil and oil seed sector
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Country wise Trade Profile

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Soy Meal* Export from India

* Soya bean meal is the residue after oil extraction out of soya seeds

(Units in MT)

Source: Multi Commodity Exchange of India Ltd

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Soybean - Price Movement

Source: Multi Commodity Exchange of India Ltd

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Soy Oil Import into India

Source: Multi Commodity Exchange of India Ltd

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Potential of Soy Bean, Soy Oil and Soy Meal

India, a country with a large population, is experiencing rapid income growth Approximately 2/3rd of Indias population is vegetarian, much of the increase in protein consumption is expected to come from a non-meat source Consistently rising domestic demand for edible oil in general and Soy Oil in particular leading to higher imports Higher crush capacity utilization in the industry Lower crop estimate but higher demand projection for Soy Bean in China Increased Soy Meal demand from Far East due to reduced crush in China and Japan Recovery of domestic and global poultry industry from avian flu resulting in revival of demand for feed, thus benefiting Soy Meal manufacturers; and Rising demand for bio-fuels
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Indian Soybean Market Way Forward

Indian Soybean market is worth over US$ 1.11 billion or INR 5,000 crores India is an importer of Soy oil but exports Soy meal which is considered to be one of the premium soy meals among European and Asian countries Indias Soy meal exports are expected to cross 50,00,000 tonne mark, which is 45 per cent ahead of last seasons (Oct 2007 Sept 2008), estimated at US$ 1.64 billion or INR 7,000 crores India export approximately 65% of the total soy meal produced and has turned out to be one of the largest exporter of soy meal usually to the Asian countries Encouraged by the current export trend, the Solvent Exporters Association is planning to send a delegation to Cambodia and other Far-Eastern nation to further strengthen the hold on the markets there Advantages of Indian Soya in world market
price advantage as Indian soy meal is still cheaper when compared with the American or Brazilian soymeal No other country produces cheaper soy meal than India, which contains high protein content of around 48% Only India supplies non-GM soy meal while the U.S., Argentina and Brazil manufactures only/ mainly GM soya meal.
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Players in Soybean Industry

Soybean seed
Monsanto India Mahyco Eagle Seeds & Biotech

Soybean processing
Ruchi soya Adani Wilmar Gokul Refoils & Solvent Liberty Oil Mills Vippy Industries Sanwaria Agro Murli Industries Dewas Soya

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Deal street

Deals in Soybean industry

Year

ACQUIRER

Target Mac Oil Palm Limited (palm oil unit of SICAL Logistics Ltd)

DEAL VALUE (US $ mn)

2007

Ruchi Soya Industries Limited

2006 2004

Ruchi Soya Industries Limited Ruchi Soya Industries Limited

soya processing,edible oil and vanaspati businesses of Madhya Pradesh Glychem Industries Ltd Aneja Solvex Pvt Ltd

N.A. N.A.

2002

Marico Industries Ltd

Meal Maker brand from Plastomech Ltd Desmet Chemfood Engineering from Extraction De Smet NV

0.5

1995

Ruchi Soya Industries Limited

N.A.

# Only RUCHI SOYA looks to be active in Deal Street

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Sources of Information:
National Research Centre for Soybean Multi Commodity Exchange of India Wikipedia

Company websites
Newspaper articles Company research reports

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THANK YOU
This material, prepared contains, general information only. This material is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your finances or your business. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. The presenter shall not be responsible for any loss whatsoever sustained by any person who relies on the content of this material.

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