Industry profile

The Indian food processing industry has seen rapid development over the years and is a significant contributor to the countrys GDP. The increase in demand for processed food in the country is mostly because of the increase in disposable incomes and urbanisation. Processed food in India is expected to grow appreciably and keeping this in mind, Madras Consultancy Group (McG), Chennai, India, has released their industry profile on The Food Processing Industry in India. This well researched document provides an insight into the Indian food processing market, structure of the industry, challenges facing the market and growth opportunities. It also includes an overview of the different business segments within the food processing industry. The profile is aimed to provide valuable information to strategic planners, current and prospective investors, international marketing executives and export managers interested in the food processing industry. It is also beneficial to the packaging industry and the retail sector, offering specifics on the various trends and developments. Industry Analysis & Structure This section provides an overview of the industry, giving details on the historical and current market size data. This section also identifies the various developments and trends that have occurred in the industry over recent years. Analysis by Product Segment This section provides insights on the processed food industrys key product segments such as fruits, vegetables, fresh and frozen sea food, meat, dairy, baked goods, confectionery, convenience foods and beverages. It also includes specifics on market share, segmentation, export markets and growth. Company Profiles The major companies across each market segment are highlighted in this section. Key financial information, recent developments as well as the companys current market position are discussed.

Balaji Wafers on expansion spree

Saturday, September 09, 2006
Dhwani Pandya, Mumbai

Balaji Wafers Pvt Ltd, Gujarat-based leading potato chips and namkeen manufacturing company is planning to set up three new plants, two within the country and one in Europe to meet the increasing demand from foreign countries. The two plants in the country would be at Pune and Calcutta. Balaji manufactures and supplies potato chips plus a variety of mixed fried snacks called namkeens to the populace in Gujarat. The company claims to have a presence in 90% of wafer market and 70% of namkeens Market in Gujarat. At present Balaji has six automatic plants to manufacture the entire product range. This family-owned enterprise, now in its 20th year of operation, has 19 product lines to offer the snack hungry population in Gujarat, from potato chips to banana chips and even fried chickpeas with sauted spices. It produces some 5 tonnes of these products per day (approximately 19,000 tonnes per year), raking in around US$15 million per year. Situated in Rajkot, the ethnic snack producer finds immense opportunity for the quality and branded snack items as a reflection of changing consumer preference towards packaged goods. The range of products includes potato wafers in four flavours, banana wafers in two flavours, Chanadal, Mug Dal, Vatana, Tikha Mitha Mix, Khatta Mitha Mix, Aloo Sev, Ratlami Sev, Sing Bhujia, Farali Chevdo and Masala Sing (extruded snack) which are available in packs of 40 gms, 75 gms, 100 gms, and 200 gms. The company has also developed sizeable market in Maharashtra (30%) and Rajasthan (10%). Chandubhai Virani, director, said: "Due to limited production capacity we still have not expanded to other states, but after our full set up we hope to gradually replicate the success of Gujrat throughout the country." The company is willing to install high production capacity units in the other states in near future as part of ongoing expansion plans. In the year 2003, Balaji started a new factory of 25,000 sq m in Rajkot where they installed FMC Potato Processing Machinery (PPM) Chips Line, which can process nearly 5000 kg potatoes per hour to manufacture 1200 kg potato wafers per hour. In the presence of multinationals like Frito Lays, it becomes interesting to find out the reason for Balaji's success in Gujarat. Contemplating on this Virani said, "We stress on valuefor money and quality. Our diligence, personal attention and customer satisfaction are the key reasons for our success." According to Virani, packaging is also a very crucial aspect that affect the margins and consumer preference in the snack industry. Balaji is now concentrating on providing healthier options for snack food. The company will soon provide low fat, low calorie snacks like roasted namkeens in unique flavours

Thirty-five years ago when Chandubhai Virani and his two brothers began Balaji Wafers, they remember it was more of personal relations with bankers that mattered more than a sound business plan or project proposal. Initially, the funding requirement was low with lesser risk involved; hence availing of finance was not a big problem for the enterprise. But as business started improving and the requirement of funding grew larger with greater risk involved in it, the loan procedures became more complex. The documentation hassles became so prominent that obtaining a loan for plant expansion became a Herculean task. Virani now feels lack of awareness about banking operations had delayed the companys growth initially. Moreover, a proactive attitude towards building up the business was also absent among the brothers. Virani, son of a farmer, says: It was enough for all of us to survive on the ancestral agriculture land in our village Dham Dhoraji, but not possible to grow on it. So, our father gave us Rs 20,000 to try our luck by venturing into the world of business and competition. Virani brothers poured their money in the trading business of farm equipments, but could not succeed and lost the invested money, as the iron equipments got tarnished. We were left with nothing, said Virani, adding that the brothers struggled for a job at a canteen at the newly-inaugurated Astron cinema in Rajkot. We worked there at a modicum monthly salary of Rs 90 and Rs 150 respectively. But our desperation to survive was so high that we did not get into any disputes with the management and employees union. It was this attitude that had won us the confidence of the cinema owners and they started revenue sharing with us for the canteen, Virani tells remembering the naming of the enterprise, Balaji, which was given after an idol of Hanuman placed in the canteen. Soon the business grew bigger and investment requirements for further expansion also rose. The initial finance requirement was funded through a loan of Rs 1.5 lakh from a local co-operative bank. The company owned a house, where wafer and other food products were produced, mostly manually and transported to different locations of the city. The company later sought a vehicle loan from a nationalised bank and bought a tempo for quicker delivery. It was very difficult to get a loan. At that time I felt that cordial relations with bank officers proved fruitful in developing our business. They expressed their faith in us and so financing became easier. We grew with a rapid pace and started our first manufacturing plant on a 1000-sq-mt area at Aji-GIDC industrial estate in 1990, said Virani. Since then the company has been registering phenomenal success in the food processing business. In 1992-93, the company procured semi-automatic matheral-blade chips making machine with a capacity to process 200 kg finished wafers per hour. For the investment of Rs 50 lakh towards procurement of the plant and machinery, we had again obtained a loan from the same bank. But with growing requirements of the company, we needed higher capacities and bigger

manufacturing area. So, in 2000, we acquired yet another plot of 3000 sq mt in the same industrial estate, said Virani. The company installed a fully automatic plant with a capacity of 500 kg wafers per day. Till 2000 we had followed manual packaging, but we understood the consumer preferences and hygiene priorities. Therefore, we deployed nitrogen packing facility with our fully automatic plant at Aji, he said. With the addition of new plant, the companys total wafer production reached 700 kg wafers per day. Later, Balaji explored markets outside Gujarat and started marketing in adjoining states of Maharashtra, Rajasthan and Madhya Pradesh. In 2003, we set up our distributors in Maharashtra. Sooner the demand from other states increased, so we spread our wings to Rajasthan and Madhya Pradesh, Virani said. Today, Balaji Wafers holds significant share with its increasing presence in these states. In Maharashtra, the company has covered nearly 70% of the market, while in Rajasthan, the company enjoys 50% market share. In Madhya Pradesh, the company had started exploring markets in 2008-09 only but expects to pick up the pace very fast. Balaji has four large and four small plants to make different food products. In 2004, the company had installed a wafer plant with a capacity of 1,200 kg per hour. This was the most sophisticated plant of Balajis entire production set up. Currently, the company enjoys premium position with respect to manufacturing capacities. According to officials, Balajis Valsad unit, which has a wafer manufacturing facility of 2,200 kg per hour, is the largest potato wafer-making unit in Asia. The company had sourced the entire plant from China. Interestingly, obtaining finance in the later years became just a matter of few signatures and the company would soon get the loan. In the initial years of our operations, when we were in need of money there were a lot of processes which I believe is far less now. There is more need of financial assistance when the units are at elementary levels. Had we been given those facilities from the banks at our infancy period, we would have grown better, Virani said, adding that now many banks have lined up to provide finance. Balaji has outclassed its close competitors Uncle Chips, Frito-Lay and other multinational food processing giants and holds a premier position in Gujarat. Speaking about his future plans, Virani mentioned that the company would try to penetrate more in the other parts of India with greater emphasise on the states where Balaji already has a presence.