Sector Coverage

April 15, 2008

Indian Processed Food Industry
Opportunities Galore

Industry Overview Global Processed Food Industry Indian Processed Food Industry Processed Food Industry - A Sunrise sector Where the opportunity lies- areas for investment Industry Analysis Driving Forces Major Challenges Indian Food Processing Industry by sectors Diary Fruits and Vegetable Grains Meat and Poultry Fish Packaged/Convenience Food Aerated Soft Drinks, Packaged drinking water Exports FDI in Food Processing Government Regulation and support Regulatory framework Outlook

Initiating Coverage Lakshmi Energy & Foods Ruchi Soya

Analyst Sectors -

Nisha Harchekar nishaharchekar@way2wealth.com FMCG, Pharma, Entertainment

15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900 email: research@way2wealth.com website: www.way2wealth.com

WAY2WEALTH Securities Pvt. Ltd.,

Indian Processed Food Industry
Sector Coverage
Opportunities Galore

Executive Summary
The size of global processed food industry is estimated to be valued around US $3.6 trillion and accounts for three-fourth of the global food sales. Despite its large size, only 6% of processed foods are traded across borders compared to 16% of major bulk agricultural commodities. Indian food-processing industry is miniscule in comparison and is estimated to be US $40 billion and is likely to grow at over 10%, on the basis of an expected GDP growth rate of 8-8.5% p.a.
86

Ruchi Soya FY09(E) CMP (Rs) Marketcap (Rs crores) PE (x) Mktcap/sales (x) EV/EBITDA (x) RoCE (%) RoNW (%)

1570 6.8 0.1 5.3 16.8 15.0

With enormous scope for value addition, increase in the consumption of processed food products in India and many fiscal incentives being planned by the government, this sector is poised to maintain the growth momentum in the future. Moreover, the advent of the WTO regime and the possibility of reduced subsidies in developed countries can add to India’s strengths in food production and processing industry. India accounts for less than 1.5% of international food trade despite being one of the world’s major food producers, which indicates huge potential for both investors and exporters. With rapid increase in the per capita income and purchasing power along with increased urbanization, improved standards of living, there lies a large untapped opportunity to cater to 1000 million domestic consumers. It is estimated that 300 million upper and middle class consume processed food. With the convenience needs of dual income families, 200 million more consumers are expected to move to processed food by 2010. The market size for the processed foods is thus bound to increase from US $102 billion currently to US $330 billion by 2014-15 assuming a growth of 10%. The share of the value added products in processed foods would almost double from US $44 billion currently to US $88 billion during the same period, growing at the rate of 15%. This presents enormous opportunities for investment in processed food sector. Several global food giants and leading Indian industrial enterprises are already making their presence felt in a big way in the sector. Some of them are Nestle India, Cadbury's India, Kelloggs, Hindustan Unilever, ITC-Agro, Godrej Foods and MTR Foods. It is estimated that the food production in India is likely to grow two-fold in the next ten years. Thus, there is ample of opportunities for investments in food and food-processing technologies, equipments, especially in areas of canning, dairy & food-processing, specialty processing, packaging, frozen food and thermo processing, cold chains and in the area of food retail. Ministry of food processing in its Vision 2015 document has estimated the size of processed food sector to treble, processing level of perishable to increase from 6% to 20%, value addition to increase from 20 % to 35% and India’s share in global food trade to increase from 1.5 % to 3%. The government’s focus towards food processing industry as a priority sector will ensure policies to support investment in this sector and attract more FDI. India with its vast pool of natural resources and growing technical knowledge base has strong comparative advantages over other nations. According to CII estimates, food-processing sector has the potential of attracting US $33 billion of investment in 10 years and generate employment of 9 million person-days. The food-processing sector in India is clearly an attractive sector for investment and offers significant growth potential to investors. The report outlines the tremendous growth potential in the sector and various opportunities for investments. We initiate coverage on Ruchi Soya and Lakshmi Energy & Foods with a BUY recommendation.
WAY2WEALTH Securities Pvt. Ltd.,

Lakshmi Energy & Foods FY09(E) CMP (Rs) Marketcap (Rs crores) PE (x) Mktcap/sales (x) EV/EBITDA (x) RoCE (%) RoNW (%)

200

1200 7.2 0.9 4.4 29.3 35.5

15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900 email: research@ w ay2 we alth.com website: www .w ay2w ealth.com

5% in the coming fiscal year. distorted pricing and incentives structures. India accounts for less than 1.Indian Processed Food Industry Sector Coverage Opportunities Galore Global Processed Food Industry The size of global processed food industry is estimated to be valued around US $3. Size of global foodprocessing industry – US $3. Japan is the largest food processing market in the Asian region. North America.6 trillion and accounts for three-fourth of the global food sales. One of the most technically advanced food-processing industry globally is Australia as the products produced are of international standards and at comparatively lower prices. . Leading meat-importing countries namely Japan and South Korea have a developed processed food industry. Despite its large size. Indian agriculture. However. Latin America and parts of Asia continue to be on the lower-end of technology competence in food items.6 trillion Indian Processed Food Industry Food and Agriculture: An overview India has the second largest arable land of 161 million hectares and has the highest acreage under irrigation. India’s GDP is expected to grow in the range of 8-8. India ranks second largest food producer in the world and has the potential to immerge the biggest with its food and agricultural sector. inadequate infrastructure. which indicates huge potential for both investors and exporters. though India and China are catching up fast and are likely to grow more rapidly. and Japan are on the higher-end of technology. The growth estimated is Year 2005 2020 2025 2030 2035 India’s GDP ($ billion) 604 2014 3174 4935 7854 India ranks second largest food producer in the world next to China Excessive controls. Countries in the Sub-Sahara African region. However. particularly food processing and allied activities is thus going through a major transformation with the government targeting 4% growth for the agri-sector from 2005-2020. and inadequate credit weighed down India’s agricultural sector for several decades.5% of international food trade despite being one of the world’s major food producers. Germany’s in 2025 and Japan’s in 2035. poor agri-input management. fading controls on product marketing and distribution. fuelled by robust investments and buoyant consumer spending. Over 60% of total retail processed food sales in the world are accounted by the U.S. better price-discovery mechanisms and improvement in credit availability. The share of agriculture in India’s GDP has fallen by more than 60% in the past five decades. only 6% of processed foods are traded across borders compared to 16% of major bulk agricultural commodities. low public investment. France’s in 2020. with a sharper shift towards convenience and diet foods. Next to China. Europe. India’s GDP will exceed Italy’s in 2020. the policy environment is changing with increase in public investment. EU and Japan taken together. According to Goldman Sachs projections.

7 2.0 The Agri challenge 200520 Source: RBI.1 4. retailing and exports are the areas where sizable opportunities are yet to be tapped. financing. accounting for nearly 21% of the global sugarcane production 3rd largest producer of coarse grains (31 million tons). Indian agri-business: Key facts • • • • • • • • • • • • • • Varied agro climatic zones 2nd largest arable land (161 million hectares) in the world Largest irrigated land (55 million hectares) in the world Largest producer of wheat (72 million tones). The Government is taking steps to liberalize the agri sector to encourage investments. which will be beneficial for the foodprocessing sector 4 3 2 1 0 Pre Green Green Revolution Revolution 19511965-80 65 Wider Tech diffusion 198095 Post economic reforms 1995-05 3. cold storages. accounting for nearly 17% of global milk production Largest producer and exporter of spices 2nd largest producer of tea. accounting for nearly 21% of global pulse production Largest producer of milk (96 million tons). accounting for nearly 7% of the global edible oilseed production Source: FICCI.Indian Processed Food Industry Sector Coverage Opportunities Galore Agri GDP growth (%CAGR) 5 Agri GDP is expected to grow by 4% from 20052020. Chand (2005): WTO & Indian Agriculture: Issues & Experience With the upturn of the agriculture sector. accounting for nearly 15% of global wheat production Largest producer of pulses (15 million tones). Ministry of Agriculture . Supply chain management. accounting for nearly 22% of global Rice production Largest exporter of the world's best basmati rice 2nd largest producer of fruits (50 million tons) and vegetables (100 million tons) 2nd largest producer of sugarcane (296 million tons). accounting for nearly 4% of the global coarse grain production 3rd largest producer of edible oilseeds (25 million tons). lot of opportunities has opened up for players having strong linking with the entire agri-value chain and the food-processing sector will be one of the biggest beneficiaries.8 2. accounting for nearly 28% of the global tea production 2nd largest producer of rice (92 million tons).5 2. including maize.

2% for fruits and vegetables. Most of the food-processing industries with the exception of beer & alcoholic drinks and items reserved for small scale sector. UNCTAD and AT Kearney has ranked India amongst the top three investment destinations in the world. The food production is expected to double in the next 10 years and the consumption of value added food products is expected to grow at a much faster pace. Structure of Indian Food Processing Industry Organised 25% The industry is unorganized with 75% of the processing units belonging to the unorganised category Unorganised 42% Sm all Scale Industries 33% Source: FAIDA Industries / Ministry of Food Processing The food-processing industry has been identified as a focus area for development and has been included in the priority-lending sector. 30% in Thailand. 1951. Rising consumer affluence and economic liberalization is opening up new opportunities in the sector. like vinegar. 70% in Brazil. around 35% in milk. 78% in the Philippines and 80% in Malaysia. Low level of processing Low level of processing leading to wastage The industry has very low processing level i.g. is growing fast. increase agricultural yields. 21% in meat and 6% in poultry products. This growth will benefit the economy. processing of agriculture produce is around 40% in China.Indian Processed Food Industry Sector Coverage Opportunities Galore Processed Food Industry: A sunrise sector Introduction Food-processing industry is significant for India’s development because it has important link and synergy with industry and agriculture. bread. create employment and raise the standard of living of various associated people. the two main support of the economy. The industry is mainly unorganized with 75% of the processing units belonging to the unorganised category.53 billion. and bakery have been exempted from the provisions of industrial licensing under Industries (Development and Regulation) Act. For e. .10 billion consumers and fourth largest economy in terms of purchasing power parity. Total size of food-processing industry is around US $40 billion growing at 10% and the size of processing sector is estimated to be US $2. which is significantly lower by international standards. With over 1. Value addition to agriculture produce in India is just 20% with wastage estimated to be valued at around US $13 billion.e 2. the organised category though small. Automatic approval up to 100% of equity in case of foreign investment is available for most of the processed food items.

Indian Processed Food Industry Sector Coverage Opportunities Galore Source: FICCI. Some of them are Nestle India. 200 million more consumers are expected to move to processed food by 2010. improved standards of living. Kelloggs. Several global food giants and leading Indian industrial enterprises are already making their presence felt in a big way in the sector.0 % Source: Ministry of Food Processing Annual report 2005-06 Food-processing. Cadbury's India.a growing market With rapid increase in the per capita income and purchasing power along with increased urbanization. This presents enormous opportunities for investment in processed food sector. there lies huge untapped opportunity . The market size for the processed foods is thus bound to increase from US $102 billion currently to US $330 billion by 2014-15 assuming a growth of 10%.2 % Fru its an d Veg eta b les M ilk & D a iry M ea t 6. ITC-Agro. Hindustan Unilever. The share of the value added products in processed foods would almost double from US $44 billion currently to US $88 billion during the same period. Godrej Foods and MTR Foods. there lies a large untapped opportunity to cater to 1000 million domestic consumers. With 1000 million domestic consumers. growing at the rate of 15%.0 % 2 1. It is estimated that 300 million upper and middle class consume processed food. With the convenience needs of dual income families.0 % P o u ltry Pro d u cts 3 5 . KPMG report Processing levels for key Segments in Indian food-processing industry 50 % Fruits & vegetables have the lowest level of processing. Milk is the most processed food item 40 % 30 % 20 % 10 % 0% 2.

25-40% of agri-produce is lost post harvest season. Concor is setting up a countrywide network of 14 cold-chain complexes for horticulture in Delhi. packaging. 40% of the increase (150 mtpa) would be accounted by perishable fruits and vegetables. dairy & food-processing. integrated cold chain facility. specialty processing.7 billion and is expected to grow at 20-25% annually. frozen food and thermo processing. establishing packaging centers. To facilitate the prompt growth of food-processing industry. The Government has announced various policy and fiscal measures to expand the storage capacity. FDI to the extent of 100% is allowed in the sector. . Mumbai and Bangalore among other places. value added centers and irrigation facilities. Blue-Star and Kirloskar Pneumatic are some of the cold storage players and equipments. frozen food and thermo processing. from agri inputs to logistics to front-end infrastructure and distribution. packaging. India’s marketable surplus is set to increase by 350 mtpa to 870 mtpa by 2012. Supply chain An efficient supply chain not only brings down the price of the end product but also eliminates intermediaries by connecting farmers directly to the super stores. equipments. As a result. Where the opportunity lies. With the rising focus on horticulture. Thus. The size of cold chain industry is estimated to be around US $2. various private corporate houses like Reliance have ventured in this space with full vigor. Voltas. Sophisticated applications such as demand forecasting. the Government has implemented the scheme for infrastructure development comprising a food park scheme. cold chains and in the area of food retail. there is ample of opportunities for investments in food and food-processing technologies.5 mt is less than 15% of the annual horticulture production and is mainly dominated by potatoes (80% of capacity). It has announced 15-25% capital subsidy scheme for facilitating construction of rural godowns and has also sanctioned 16 mt of new capacity the last five years.Indian Processed Food Industry Sector Coverage Opportunities Galore According to Government estimates. specialty processing.2-2. Radhakrishna Foodland and Snowman Frozen are major providers of cold storage facilities. The food supply chain in India is highly fragmented with numerous intermediaries and lack of economies of scale. out of which bulk of investment will be from private sector. especially in areas of canning. Canning. financial flow management. The need for investments in the areas of infrastructure and supply chain is evident from the fact that India’s current storage infrastructure for all food items is only 100 mtpa. increasing corporate participation and advent of food parks and agri export zones is likely to result in significant restructuring of cold storage infrastructure with an estimated investment of US $8-10 billion. data integration. One of the key reasons for low levels of food processing is poor infrastructure for storage.areas for investment It is estimated that the food production in India is likely to grow two-fold in the next ten years. cold chains are attractive areas for investments Cold chain The estimated cold-storage capacity at 19. It has thus become an important aspect of organised retail setup. supply-demand matching. According to estimates.000 billion investment is needed in this sector across all segments of the value chain. marketing and distribution of food products. Hence. there is immense potential for investment in this sector. information sharing will enable it to become mature and efficient. Rs 1.

Mumbai . Ltd. have led to increased adherence of safety norms and regulations. However.Food safety management systems The tightening of restrictions and the introduction of the Sanitary and Phytosanitary Agreement by global industry bodies like the World Health Organisation (WHO). Nariman Point. Punjab and Jharkhand and one Northeast region.Daily Stores Big Bazar Pantaloon Food Bazar KB’s Fairprice Value tores Reliance Fresh Reliance Retail Hypermarket Reliance Town Centres RPG Sahakari Bhandar Subhiksha Wadhan Food Retail (Spinach) Source: Media report Spencer’s (Fresh. it has the lowest level of penetration of 1% in organized retail. packaging and quality control. Andhra Pradesh. grading. Hyper) Sahakari Bhandar Subhiksha Super Local. food-processing.400 021. . sorting. Branded foods market size is growing at 1520%. a number of new technologies have emerged both in processing and packaging. freshness and hygiene remains a key factor in determining buying by consumers. which have made an impact on the shelf life of food products. Food parks 30 mega food parks with investments of around US $110 million are coming up across the country to attract FDI in the food-processing sector.w ay2w ealth. Daily. Tel: +91 22 4019 2900 email: research@ w ay2 we alth. Super. The food parks will have facilities ranging from cold storage. Machinery In packaging. Indian companies will have to strictly adhere to international food safety standards in order to gain a larger share of world trade.com WAY2WEALTH Securities Pvt. Express Current outlets 14 1 16 31 12 62 95 240 2 200 18 870 84 Expansion Expected Plans year 1000 4 15 100 1000 100 100 na 1500 471 500 784 5000 na 150 1500 2010 na 2012 na na na na na 2009 2010 2010 2010 2011 na 2009 2010 Big names in the retail industry have outlined huge plans in food & groceries segment Godrej Group Heritage Foods 15/A Chander Mukhi. Food retail Food and groceries form major portion (75%) of the retail pie.. Player expansion plans Player Aditya Birla Group Bharti Wal-Mart Express Retail Services Format More (Supermarket) Trinethra Super Retail Wholesale Stores Big Apple/Big Apple Fresh Aadhar Fresh (Flagship Stores. In recent times. The government for these food parks has identified Maharashtra.com website: www . Express. and R&D laboratories. Players have outlined major expansion plans recognizing the opportunity.

the consuming class. Tel: +91 22 4019 2900 email: research@ w ay2 we alth. Demographic trends The food-processing industry has a bright future due to demographic environment in India. it has a wide-ranging and large raw material base suitable for food-processing industries.com WAY2WEALTH Securities Pvt. India's agricultural production base is huge. thus offering a lot of scope for the food-processing industry. is growing and is expected to constitute over 80% of the population by 2009-10. vast marine land with 10 major ports. Ltd. cheap labour force.400 021. Ministry of Agriculture Share in global production (%) Global Rank 2 1 19 161 55 8. which is a key positive..000 35 50 100 92 72 90 296 31 25 485 4 10 10 22 15 17 21 4 28 7 16 3 2 2 2 1 1 2 3 2 3 1 Low cost production base for domestic and export market can be set up considering India’s comparatively cheap labour force and lower cost of production. Nariman Point. With huge agriculture production base. 485 million livestock (largest). 150 million tones of fruits and vegetables (second largest).Competitive edge India Arable Land (million hectare) Irrigated Land (million hectare) Coast line (km) Major Food Crops (MT) Fruits (MT) Vegetables (MT) Rice/Paddy (MT) Wheat (MT) Milk (MT) Sugarcane (MT) Pulses (MT) Tea (MT) Edible Oil seed (MT) Cattle (million) Source: FICCI. 6. Rising income levels leading to large customer base India with its population of more than 1 billion accounts for close to 17% of the global population. India has access to significant investments to facilitate food-processing industry.Industry Analysis Driving Forces Abundant availability of raw material India has varied agro climatic conditions. lower cost of production. According to NCAER data. India produces annually 90 million tones of milk (highest in the world). India has a competitive edge over others India.000) or above. 204 million tones food grain (third largest).w ay2w ealth. 489 million poultry and 45. The increase in income levels and higher tendency to spend provides great opportunities for companies across various sectors. with an annual income of US $980 (Rs 45. It is one of the most attractive consumer markets in the world with the increase in income levels across the population segments. It has a vast coastline of 8000 km.200 million eggs. Favorable demographic environment works in favour of the industry 15/A Chander Mukhi.3 million tones fish (third largest). Food and grocery comprise the largest share of the spending pie followed by personal care items. Mumbai .com website: www . .

5 0 2. ready-to-cook and ready-to-eat food. there lies significant growth potential for the sector and its investment attractiveness.1 Destitutes (<$327) Aspirants ($327-$449) Climbers ($449-$915) Consumers ($915- 100 50 90. This group is also high in consumption and therefore. money spend by Indians on meals outside the home has more than doubled in the past decade to about US $5 billion a year.0 71.9 $4388) Very Rich (>$4388) 6.3 74. Increase in the population of working women and increase in nuclear double income families in urban areas are some of the other factors that are influencing the lifestyles.4 150 33. As a result.6 28. Changing lifestyles Increase in literacy and exposure to western lifestyles by more and more urban consumers have led to change in mindset and preference.200 23.6 54.0 1997-98 2000-01 1. According to Euromonitor. this trend is expected to provide a further boost to the growth of consumption in India.1 32.8 15.0 54.0 44.1 12. and is expected to further double in the next 5 years.0 2006-07 Growing consuming class (million households-annual income) The Rupee Spending 4% 3% 3% 7% 6% 57% Food and grocery takes away 57% from the consumer’s wallet 5% 9% 1% 5% Food and grocery Personal Care items Home Textiles Savings & Investments Clothing. Thus. Footwear and Accessories Consumer Durable/ Appliances vacation Eating out Movies and Entertainment Books and Music Source: NCAER Relatively young population India has a relatively young population with close to 55% of population in the age group of 20. there has been an increase in demand for processed.59 years. .

transportation and storage can play an important role in reducing spoilage and extending shelf life. The dairy sector has an estimated consumer demand for milk and milk products at Rs 1. high packaging cost. Average income levels for rural India will increase with higher agri-incomes and a gradual shift from farm to non-farm employment. Major Challenges for the Indian Food Industry Food-processing industry is facing constraints like non-availability of adequate infrastructural facilities.a and expected to cross Rs 15 billion by 2010. Health food and health food supplement is another rapidly rising segment of this industry. is estimated to be about Rs 5 billion growing at 30% p. This will open up vast and relatively unexplored section of India to companies. still nascent in India. flavour and texture of foods. soya-based products. which is gaining vast popularity amongst the health conscious. plantation. Major Challenges for the Indian Food Processing Industry are: • Consumer education on nutritional facts of processed foods • Low price-elasticity for processed food products • Need for distribution network and cold chain • Backward-forward integration from farm to consumers • Development of marketing channels • Development of linkages between industry. packaging. fast food. The wine sector.8 million tones. meat and poultry.Indian Processed Food Industry Sector Coverage Opportunities Galore Increase in consuming class in rural areas Rural areas cannot be ignored as it accounts for 50% of India’s consumption Nearly 70% of India’s population resides in rural areas and account for nearly 50% of India’s consumption. Poultry meat is estimated to have production of 1. government and institutions • Taxation in line with other nations • Streamlining of food laws The industry needs to overcome various challenges if it has to grow to the estimated levels. flavors etc. alcoholic beverages. Unprocessed foods are prone to spoilage by biochemical processes. food additives. affordability and cultural preference of fresh food. inefficient supply chain. milk processing. This will result in a consuming class of 56 million rural households by 2010 more than half of India's overall estimated middle class by this time. high protein foods etc. Indian Food Processing Industry by sectors India's food-processing sector covers fruit and vegetables. chocolates and cocoa products. confectionery manufacture. mineral water. tomato paste.400 billion. grain processing and other consumer product groups like confectionery. high taxation. Processed foods need to be offered to the consumer in hygienic and attractive packaging. growing at about 8% p. fisheries. Even with increasing urbanization and migration it is estimated that 63% of India's population will continue to live in rural areas in 2025. alcoholic beverages. lack of adequate quality control & testing infrastructure. Besides.soft-drink bottling. meat and poultry processing.a is expected to have a market size of Rs 20 billion by 2010. Good processing techniques. seasonality of raw material. aquaculture. growing at a CAGR of 11%. ready-to-eat breakfast cereals. and at low incremental costs. 37% of rural households could move into the middle income-and-above consuming class by 2010 according to NCAER survey from just 15-17% in the late 1990s. high inventory carrying cost. milk and milk products. . and presenting them in near natural form with added conveniences. grain-milling and grain-based products. aroma. fishing. The challenge is to retain the nutritional value. ready-to-eat (RTE) industry.a. The most promising sub-sectors includes. is growing at about 50% p. microbial attack and infestation.

etc Flour.mainly in fresh form.1 92.6 53. ice cream. slices. skimmed milk powder. India is on the verge of assuming an important position in the global dairy industry. the size of the Indian dairy market is Rs 2.6 84. beer and malt extracts. biscuits. juices. starch glucose.9 80. grain based alcohol Frozen & canned products mainly in fresh form Frozen and packed . vermicelli. India’s total milk production is projected to cross 100 million tones by end of 2007 according to the tenth five-year plan estimates. Egg Powder Snack food. concentrates. ready to eat food. potato wafers/chips. Milk and milk products is rated as the most promising sectors and is expected to more than double by 2011.Segmentation of various sectors in the industry Sectors Dairy Fruits & Vegetables Grains & Cereals Fisheries Meat & Poultry Consumer Foods Products Whole milk powder. cheese Beverages. pulps.4 86. Milk and milk products account for a significant 17% of India’s total expenditure on food. frozen & dehydrated products.2 88. namkeens.780 crores by 2011. bakeries.20.5 97. Production and Per capita availability of milk Year Per capita availability (grams / day) 124 124 112 128 176 220 225 230 231 233 241 245 Production in million tonnes 17 20 22 31. cornflakes. malted foods. butter and ghee. condensed milk. which is expected to more than double to Rs 5.340 crores. .27. India is the largest producer of milk in the world with production of 97. alcoholic and non-alcoholic beverages Dairy Milk and milk products is rated as one of the most promising sectors in the processed food industry. The organized sector comprising of large dairy plants processes about 13 million tones. According to estimates by Dairy India. whereas the unorganised sector (halwaiis and vendors) process about 22 mtpa.1 million tones in 2005-06. growing at a CAGR of 4%.1 100 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 * Provisional Source: department of Animal Husbandary and dairying About 35% of milk produced in India is processed.

etc). All other local dairy cooperatives have their local brands (For e. Dabur India is exploring the possibility of entering into the milk-based drink segment.000 tones in volume terms. Amul has also forayed into the flavored yoghurt segment. Indiana Dairy. . Saras in Rajasthan.000 tpa branded butter market. Walmart. Many corporates are planning a foray into the dairy business sensing the big opportunity. and has been growing at a CAGR of 8-9% during 1999. Aavin in Tamil Nadu. Gokul. valued at US $133 million is estimated to be growing at 8-10% pa. Verka in Punjab. Vijaya in Andhra Pradesh. Other private players include J.Milk Uses in India 22% Value Added (Unorganised) Vlaue Added (organised) 7% 63% Packed liquid Milk 8% Unprocessed Source: Cygnus The traditional dairy products are India’s largest selling and profitable segment and accounts for more than 50% of milk and dairy products. Big names like Reliance. Reliance and Walmart have already made an entry into this business by signing deals with farmers to procure 7 lakh litres and 15 lakh litres of milk per day. The cheese market is estimated to be US $110 million in value terms and an estimated 54. by 2011 private dairies are slated to outpace the cooperative sector and become the largest producers of milk in the industry.2003. Private dairies are likely to contribute double the quantity of milk that would be contributed by cooperatives in 2011. Heritage Foods. Dairy Specialties. As per estimates by dairy India 2007. the import of technology and machinery has effected modernization and technological breakthrough in production of traditional milk products and this has encouraged the growth of the organized sector in the dairy segment. The 55. Yakult Danone plans to launch health drinks and yoghurts based on probiotics bacteria. Dabur are entering the private diary sector through tie ups with farmers Major Players The packaged milk segment is dominated by the dairy cooperatives. K Dairy. Gujarat Co-operative Milk Marketing Federation (GCMMF) is the largest player.g. etc. With liberalisation. The ice-cream market in India is estimated to be about US $199 million pa. Warana in Maharashtra.

w ay2w ealth. cheese. the consumption of value added fruits and vegetables are also low compared to the primary processed food in general and fresh fruits and vegetables in particular.Indian Processed Food Industry Sector Coverage Company Nestle India Milkfood GlaxoSmithKline Consumer Healthcare Opportunities Galore Some of the major dairy products manufacturers in the country Brands Milkmaid. ice cream. Lactogen.com WAY2WEALTH Securities Pvt.. Ghee. Ghee Milk. The installed capacity of fruit and vegetable processing industry has increased from 11.2% of the total output of fruits and vegetables is processed as per estimates. Ice cream and other milk products Infant Milkfood. . Glactose. Ltd. Cerelac. Maltova. Ghee.400 021. Curd. Tel: +91 22 4019 2900 email: research@ w ay2 we alth. powdered milk. Complan. milk products Kwality Dairy (India) Gujarat Co-operative Milk Marketing Federation H. Ghee Malted food Milk. Ice Cream. Mumbai . Butter Milk Flavoured milk. Bonniemix. milk fluid and other milk based baby foods Skimmed milk powder. This throws up a huge opportunity for the sector through increased penetration in the domestic market.08 lakh tones in 1993 to 21. The industry is still nascent and just about 2. Heinz Heritage Foods Britannia Cadbury Mother Dairy Source: Company website Fruits and Vegetable Processing India is the 2nd largest producer of fruits (50 million tones) and vegetables (100 million tones). The government expects the processing in this sector to grow to 10% in 2010 and 25% of the total produce by 2025. Boost.J. whole milk powder. cheese. Viva Indana. Ghee. Butter. The country's share in the world trade of processed fruits and vegetables is still less than 1%. F&V processing is still at its nascent stage with processing level of only 2. milk powder and Dairy whitener Butter. Milo. ghee. Everyday Milkfood Horlicks. Kream Kountry Amul Farex. Nariman Point. dairy milk whitener. malted Milkfood Milk. milk powder.com website: www . butter. and other milk products Malted Milkfood.2% of total output 15/A Chander Mukhi. Likewise.18 lakh tones in 2006. Vitamilk Heritage Milkman Bournvita Mother Dairy Major Products Sweetened condensed milk. Milk Powder. malted foods.

Real. Nariman Point. barley and millets like jowar (great millet). spices & masala Frozen Foods Grains India produces more than 200 million tones of different food grains every year. 15/A Chander Mukhi.w ay2w ealth.00. About 15% of the annual production of wheat is converted into wheat products.com WAY2WEALTH Securities Pvt. Ltd. of the Rs 3. All major grains like rice.000 pulse mills in the country with a milling capacity of 14 million tones.com website: www . There are 10. IQF Vegetables Frozen fruits and vegetables Pickles. Ketchups. Jam. Pickle IQF fruits and vegetables.Indian Processed Food Industry Sector Coverage Opportunities Galore Fruit & Vegetable exports (Rs crores) 1800 1600 1400 1200 1000 800 600 400 200 0 2001-02 2002-03 2003-04 2005-06 Source: APEDA Major players Company HUL Dabur India Mother Dairy (Safal) Temptation Foods Godrej F&B Capital Foods Mafco Priya Foods MTR Foods Allana Cold Storage Brands Kissan.500 crores worth of basmati rice produced.most processed grain Branded rice is growing at 15% in domestic market and 25% in international market India is the second largest rice producer in the world with a 20% share in world rice production. bajra (pearl millet) & ragi (finger millet) are produced in India. Annapurna. Tel: +91 22 4019 2900 email: research@ w ay2 we alth. Pickles. The total rice market in India is estimated to be worth around Rs 1. . Fresh F&V (Retail) Frozen Foods. Knorr. maize.400 021. milling about 75% of annual pulse production of 14 million tones. Mumbai .000 crores (growing at 3-4% annually) of which only 10% of the rice is branded. Fruit Beverages. only around Rs 500 crores worth is sold in branded form.. The branded rice sales have taken off in recent years and have been growing at around 15% in the domestic market compared to 5% for unbranded rice. Added to this. wheat flour. Fruit Juices. The branded rice sales growth is an impressive 25% in the international market as compared to stagnant sales of unbranded rice. Real Activ. Rice. wheat. Coolers Safal Pure Temptation Private Label Mafco Priya MTR Allana Products Jams. soups Fruit Beverages Frozen processed fruits and vegetables. Fruit Juices Frozen Foods.

which could translate into encouraging spending patterns ™ A rising number of Indian expatriates as well as a growing preference for basmati in the Middle East are likely to keep demand on the boil ™ Recent projections made by the IMPACT model developed at the International Food Policy Research Institute (IFPRI) indicate that the demand for rice will increase by 1.a ™ Growing per capita incomes..com website: www . 0. The country wise breakup of exports is given in the figure below.400 021. Tel: +91 22 4019 2900 email: research@ w ay2 we alth. as well as grains processing. Basmati is expected to maintain a robust growth of over 6% in the medium-to-long term. . India produces around 2 million tones of basmati p. while the rest is exported. averaging around 24.000 billion rice market by volume and about 5% by value. the basmati rice category is growing at 6%.Indian Processed Food Industry Sector Coverage Opportunities Galore While the total rice market is growing at 3-4% p. Demand for branded rice is likely to grow at around 15% ™ Basmati accounts for only 2% of India’s Rs 1. Outlook The demand for basmati rice is expected to grow for the following reasons: ™ Growth in world population from 6. Indian basmati rice commands premium over its traditional rivals in terms of prices and quality. 0. ™ The global rice trade is expected to grow at 2-3% p. indicating a latent robustness in the country’s consumption. strengthening production to around 34 million tones by 2014. MMT 15/A Chander Mukhi. rising disposable surpluses.a. 0. complemented by an increase in income levels.w ay2w ealth. This segment thus offers opportunities in marketing of branded grains. 7 6 5 4 3 2 1 0 Sau d i Ar a b i a Ku w a i t UAE UK USA Others Source: Rice India January 2006 India exports around one million tones of basmati rice every year.7% p. Ltd. around 50% of India’s total basmati production is consumed within.com WAY2WEALTH Securities Pvt.1 billion in 2005 at 1. In d ia n B a s m a t i R ic e E x p o r t D e s t in a t io n s 0. signifying a huge growth potential ™ The median age of the Indian population is one of the youngest in the world. Mumbai . growth in the Indian population from 1. Saudi Arabia comprises 60% of the exports. The Indian retail space is also experiencing enormous growth in retail chains and malls ™ Rising disposable incomes are growing branded volumes. Pakistan is India’s sole basmati competitor in the international market. increasing consumerism and increase in the share of organised retail. Indian Basmati rice commands a premium in the international market.1% annually over the next three decades ™ Branded rice is becoming popular in both the domestic as well as the export market.2 billion in 2002 to more than 8 billion in 2030. 0. India is the largest producer and exporter of basmati rice accounting for around 74% of the global production.a over the next 10 years.a. Nariman Point. 0. 0.

57 15/A Chander Mukhi.eat/ Ready-to-cook). Ltd. Hungama. Mr Miller. Lakshmi Foods Rasoi Raa Kasauti. Apsara. A mere 6% of production of poultry meat is sold in processed form. Indian consumer prefers to buy freshly cut meat.39 8885. Heritage. In meat & meat processing sector.9 million mt.29 2002-03 Qty. The production levels have been almost constant at 950. Details of exports in terms of quantity and value of meat products are given below: Quantity in mts and value in Rs crores Items Buffalo meat Sheep/ Goat meat Poultry Products Animal casings Processed Meat 2001-02 Qty. Ikon. Orange.com website: www .77 306970.3 4973.13 1144.53 415228.06 19876. poultry meat is the fastest growing animal protein in India.42 33.000 mt with annual exports of less than 10. Mutton and lamb is relatively small segment where demand is outstripping supply.45 39.59 110.63 107.55 26450. Nariman Point.w ay2w ealth. Daawat.58 3915.accounting for over 55% and 16% of the world’s buffalo and cattle populations respectively (the world’s largest bovine population). This has restricted large processing companies from developing business interests in this sector.17 669.a of which 40-50% is utilized.400 021. The total processing capacity in India is over 1 million tones p.68 kg in 2005. This is expected to grow to 2 kg in 2009.54 154. It ranks second in goats. The estimated production is 15.63 1. Value Low preference level for frozen meat has resulted in only 6% of poultry meat sold in processed form 1536. Taj Mahal Kohinoor.07 130.. Bemisal.Indian Processed Food Industry Sector Coverage Major players Company KRBL Kohinoor Foods LT Overseas Lakshmi Energy and Foods Usher Agro REI Agro Brands India Gate. (MFPO). rather than processed or frozen meat.28 267.95 156. Doon. Value 243355.84 986.01 8296.36 202. Convenience Food Rice. Mumbai .45 1.48 1305.43 552.2 732.47 140. Growth in Buffalo meat production has been less rapid (CAGR of 5% in the last 6 years).13 2004-05 Qty.11 12. Rain Drop Products Rice Rice. Josh. Value 297897. Per capita consumption has grown from 870 grams in 2000 to about 1. third in sheep and camels. Rice King. India ranks among the top six egg producing countries and ranks among the top five chicken producing countries. Of this. The current production levels are estimated at 1. Processing of meat products is licensed under Meat Food Products Order. Wheat Rice.000 mt.07 9.33 12.28 79. Tel: +91 22 4019 2900 email: research@ w ay2 we alth. Hansraj.02 464.4 264607. Value 343817.57 7. and seventh in poultry populations in the world. Lion.27 4. Cereals Rice Opportunities Galore Meat and poultry processing At 485 million India has the world’s largest livestock population. 1973.00. Real Magic. which explains the high prices in domestic market. This is because of low processing of value added meat products and consumer preference for fresh meat. . Wheat Rice. Total meat production in the country is estimated at 5 million tones annually.1 16820.81 1615. Processing of large animals is largely for the purpose of exports.8 2003-04 Qty. only about 1% undergoes processing into value added products (Ready-to. Nur Jahan.000 tones growing at CAGR of 13% through 19912005.com WAY2WEALTH Securities Pvt. Of this about 21% is exported.

has been rising.02 million sq.118 km. of continental shelf. Processing of fish into canned and frozen forms is carried out almost entirely for the export market. 2.400 021.9 million tones.75 mt in 1950-51 to 6.7 million tones.5 million sq. ..km. and 3. km.000 crores of which foreign investments were of the order of Rs 700.87 million tones.00. Ltd. It is widely felt that India’s substantial fishery resources are under-utilised and there is tremendous potential to increase the output of this sector. Most of the production of meat and meat products continues to be in the unorganised sector. which can be quickly cooked. With the rise in per capita incomes and busy lifestyles. of exclusive economic zone including 0. India is endowed with rich fishery resources and has vast potential for fishes from both inland and marine resources. Nariman Point. 15/A Chander Mukhi. Harvesting from inland sources is around 2. In 2005-06. Mumbai . The total processed meat production in India is likely to double in the next 10 years and has a huge potential with the growing number of fast food outlets in the country. however. Branded products like Venky’s and Godrej’s Real Chicken are. becoming popular in the domestic market. actual catch is to the tune of 2. coastline.com WAY2WEALTH Securities Pvt.937 fishing villages. Fish Processing India is the third largest fish producer in the world and is second in inland fish production. it contributed about 1% of the total GDP and 5. The potential could be gauged by the fact that against fish production potential in the exclusive economic zone of 3.com website: www . Fish production in the country has increased from 0.w ay2w ealth.000 mt of meat of which major share is buffalo meat.50 mt in 2005-06.3% of the GDP from agriculture sector. In last six years there was substantial investment in fisheries to the tune of Rs 3.Indian Processed Food Industry Sector Coverage Opportunities Galore Country-wise Exports of Meat Products in Value Terms (April 06-March 07) 8% 8% 7% 54% 14% 9% Philippines Saudi Arabia UAE Malaysia Angola Others Source: CMIE Processed meat has huge potential with rising number of fast food outlets and is expected to double in next 10 years India exports more than 5. The geographic base of Indian marine fisheries has 8. Tel: +91 22 4019 2900 email: research@ w ay2 we alth. Indian buffalo meat is witnessing strong demand in international markets due to its lean character and near organic nature. the demand for processed meat products.

Eatco Venky's Alkabeer ASF Seafoods Bell Foods Allana Real Good Chicken MAFCO Products Meat.5 2.7 1.2 6. rusks. corn flakes.. The sectors that are projected to achieve high growth between 10-20% in 2005-06 in bakery segment include bread.2 1.4 6. rolls.6 6.3 0.9 1. buns. bread and biscuit account for about 82% (4 million tones) of the total bakery products. Chilled/ Frozen sheep and Goat meat Poultry products Frozen buffalo meat. cakes. pastries.1 1.2 3. which includes bread.3 2.8 3 3 3.81 6.8 5.78 0. poultry and fisheries Company Arambagh Hatcheries Hind Industries Venkateshwara Hatcheries Alkabeer Exports Limited ASF Seafoods Bell Foods Frigo Refico Allana Godrej Agrovet MAFCO. Dairying and Fisheries Major players in meat. pastry which is expected to achieve up to 11% growth and biscuits over 13%.2 0.8 2. ready to eat and ready to cook products.52 0.7 0. rice flakes. cakes. The annual production of bakery products.Year Production and export of marine products Fish production Export of marine (million tones) products Quantity Marin ('000 Value tones) (Rs crores) e Inland Total 0. Chilled/ Seafood Marine foods Frozen buffalo and other meat Poultry products Pork and other meat products Packaged/Convenience Food This segment mainly comprise of pasta. rusk etc.9 1. Poultry Frozen buffalo meat. cakes. Bread and biscuits constitute the largest segment of consumer foods. The two major bakery industries. biscuits.3 20 20 40 80 140 503 521 412 482 2 4 35 235 893 6288 6793 6086 6460 7019 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2002-03 2003-04 2004-05 2005-06(P) 3. buns.8 3. biscuits etc. . noodles. viz.76 2. is estimated to be 50 lakh tones in 2004-05 with estimated value of Rs 69 billion.5 2. Mumbai Brands Arambagh Sibaco.57 551 Source: Department of Animal Husbandry. The organised sector has a market share of 45% and the balance 55% is with the unorganised sector in the baked products.4 3. breads. pastries.4 2.5 0.

9 kg while in the case of Japan it is estimated at 7. Exports of biscuits would also pick up. Volumes.000 crores is accounted for by the organised sector. instrumental in obtaining the excise duty exemption. the biscuitmanufacturing segment is poised for a stronger growth in the coming days. as per Union Budget for 2007-08. mainly on account of exemption from central excise duty on biscuits with MRP up to Rs 100/per kg. It has already increased with Indian biscuits turning favourite choice in several Middle East markets. Indian Biscuit Manufacturers’ Association (IBMA). Hong Kong. mainly due to improvement in rural market penetration.5 kg in South East Asian countries like Singapore. China has a per capita consumption of 1. This shows the huge untapped potential of biscuit industry in India. .000 crores of which Rs 3.5 kg. Exports of Biscuit is estimated to around 10% of the annual production during the year 2006-07 With the entry of big players. The biscuit industry in India witnessed annual growth as below: 2003-04 2004-05 2005-06 2006-07 15% 14% 14% 13% Growth rate of biscuits is expected to pick up from 13-15% during 2003-07 to 17-18% in 2007-08 While the growth rate has been stagnating during last 4 years. Thailand. the domestic biscuit manufacturing sector is to see a healthy competition that would ensure good quality products at affordable prices to the consumer. Glucose and milk biscuits account for 25% each and Marie biscuits 20% of the biscuits market. UK and West European countries and above 4. momentum is expected to pick up during 2007-08. Bread The bread industry with estimated production of 27 lakh tones in 2004-05 is represented by both the organised and unorganised sectors with 55% and 45% contribution to production. The per capita consumption of biscuits in our country is only 2. Growth in biscuit marketing has been achieved. The export of high end products (like cream biscuits) to former East European countries has also begun to rise. brand loyalty and strong distribution networks are the main drivers of growth. high level of fragmentation are the main features in the bakery industry. and only onethird of this is from the organised sector.Biscuits The size of biscuits market in India is Rs 5. The overall market size for bread in India is a little over 36 lakh loaves a day. Low margins. Modern Industries. Local manufacturers with numerous local brands cater to populous segment and contribute considerably in the bread segment.1 kg compared to more than 10 kg in the USA. Brands like Modem and Britannia are major players in the bread market and together they account for 90% of the organised bread market. Thus. Indonesia etc. estimates annual growth of around 17-18% in 2007-08. The large organised sector players who are prominent in the high and medium-price segments include Britannia.

Cakes Biscuits Confectionery The organised market for confectionery estimated at Rs 2. Alpenliebe. Eclairs.Bread. Happydent Coffee break. Pan Pasand. Caramilk. is estimated to be US $461 million in 2007 and is projected to reach US $498 million in 2008. Hide & Seek Priya PriyaGold Britannia Sunfeast Products Bread Biscuits Biscuits Biscuits Biscuits. diminishing culinary skills and the rising need for convenience on the demand side. dominate the chocolate market in India. Gems. Centerfresh.com website: www . The Indian sugar confectionery market is projected to expand at a CAGR of 8% until 2011. disintermediation.Indian Processed Food Industry Sector Coverage Opportunities Galore Major players. Koffi Toffi. Mangobite Mentos. coupled with increasing disposable incomes. Ltd. Poppins. Nariman Point. Krackjack. which together account for about 90% of the total chocolate market. hypermarkets and convenience stores coupled with the trend towards higher allowances for children are likely to be the primary growth drivers for sugar confectionery.a 15/A Chander Mukhi.000 crores is growing at around 7-8% p. Increase in affluent consumers who show a tendency for impulse purchases of products such as sugar confectionery. Kismi. Nutties Loco Poco. which includes products such as sweets. The yearly growth rate from 2002 to 2006 was 7.. Major players Company Cadbury India Candico (I) Lotte India Corp Nestle India Parle Perfetti Ravalgaon Sugar Farms ITC Brands Dairy Milk. Packaged foods in India have grown at approximately 7% p. Klearmint Mint-o.com WAY2WEALTH Securities Pvt. low affordability and the Indian housewife’s preference for home cooked food. Manaco. Gumbo Jumbo Coffee bite. Chlormint. streamlining of taxation. Candyman Sugar confectionery market is projected to expand at a CAGR of 8% until 2011 Ready-to-eat foods Ready-to-eat foods market in India is expected to reach Rs 2. jellies and gums. The ready-to-eat foods market in India has remained under-penetrated owing to factors like consumers’ penchant for freshness.Celebrations. according to a study by Euromonitor International.900 crores by 2015 from its present size of Rs 128 crores (2006). Two major players namely Cadbury India and Nestle India. Milky Bar Melody. economies of scale on the supply side.2%. Coconut Punch Kit Kat. The factors contributing to this growth would be changes like cold chain development.400 021. with about 70% in sugar confectionery and the remaining 30%. Biscuits Company Modern Foods Inds Parle Priya Food Products Surya Foods and Agro Britannia Industries ITC Brands Parle-G. Bread. Tel: +91 22 4019 2900 email: research@ w ay2 we alth.a.w ay2w ealth. the development of supermarkets. Lacto King. The retail value of the Indian sugar confectionery market. .Temptations. The Indian candy market is currently valued at around US $664 million. in chocolate confectionery. Mango Moods. Mumbai .

It provides direct and indirect industry related employment to over 1.w ay2w ealth.000 employees. juices. chana masala. Installed capacity of sweetened/aerated water as on January 2006 is reported to be 29. It has attracted one of the highest foreign direct investments in the country. pakoras.a. Packaged drinking water Aerated soft drinks The soft drinks constitute the 3rd largest packaged food regularly consumed after packed tea and packed biscuits. Ready to eat Indian delicacies.60 lakh tons p. samosa. There has been a spurt in growth for the last 3-4 years. Indian curries.. out of which Rasna has almost 90% volume share. The Indian RTE foods market. sugar and transportation industry. Ready to eat/cook foods. Sauce & Ketchups Packaged bhel puri chats. Packaged drinking water There are 218 companies. The carbonated drinks are the mainstay and accounts for 85% of the total soft drink market. urbanization and proportion of urban working women in India. Nariman Point. Non-carbonated soft drink category includes sub category like fruit drink.carbonated soft drink and non-carbonated soft drink. Ltd. . Kitchens of India MTR Kohinoor Gits Products Instant mixes. however the growth rate has been stagnant and in fact on declining trend on account of controversial issue of pesticide. Bingo. Pulihora paste. which have been granted licence for manufacturing packaged drinking water and packaged natural mineral water. The industry needs to concentrate on broadening the market and increasing penetration amongst Indian consumers. The soft drink market can be broadly divided into two major segments. The packaged foods industry in India has not experienced significant growth due to inadequate demand arising from low household incomes and consumer preference for fresh and home-cooked food. refrigeration.000 crore. Mumbai . Ready to Eat Cooking Paste. There is thus a huge untapped market opportunity arising due to rapid demographic shifts in income. among others. The preparatory soft drink market is around Rs 250 crores. The aerated soft drinks industry in India comprises over 100 plants across all states. plastic.Indian Processed Food Industry Sector Coverage Opportunities Galore RTE foods is expected is growing at CAGR of 73% and is the fastest growing category in packaged food segment between 2000-2005. The chilled and dried ready meal segments are non-existent. Variety of ethnic Indian cuisine Aerated Soft Drinks.com WAY2WEALTH Securities Pvt. Major players Company Dabur India Priya Foods Capital Foods Haldirams ITC MTR Satnam Overseas Ltd Gits Brands Hommade Priya Ching’s Secret. contributing to approximately 90% of the market and growing at a CAGR of 63% between 2001 and 2006.25. 80% of the packaged water sale comes from the bulk containers (5 litres and above). It has strong forward and backward linkages with glass. canned/preserved segment is more popular. Smith & Jones Haldirams Aashirvaad Atta. with ready-to-eat foods (RTE) being the fastest growing category at CAGR 73%. 15/A Chander Mukhi.com website: www . which can largely be attributed to a range of various packaged sizes to suit the consumers. dairy drinks and more. Tel: +91 22 4019 2900 email: research@ w ay2 we alth.400 021. Soft drink market overview: Indian soft drink market is valued to be Rs 6. gravies and rice. Puries.

57 79.3 1688.47 415228.29 1500.43 2252. Miranda.09 65252.98 11.2 288.43 Source: APEDA 15/A Chander Mukhi.com WAY2WEALTH Securities Pvt. Mumbai .17 140.58 1125.13 Dairy Products 464.07 Processed Foods 1709813.44 988950.94 403.39 8885.33 Preparations 322346.55 39.85 2032.09 2002-03 Qty.59 15882.06 1836282.9 212.29 2273.73 140123. .3 507.77 306970.93 1772601 4727.17 224. Ltd.41 499692. Limca. Value Processed Fruits & Vegetables Dried & Preserved 209157.Indian Processed Food Industry Sector Coverage Major Players Company Pepsi & Co Brands Pepsi.21 51809.36 201. Packaged drinking water Opportunities Galore Coke Exports The Ministry of Food Processing Industries has been encouraging the new processing capacities for agro-food products through its various policy initiatives and plan schemes providing financial incentives for setting up of new units and modernization of existing units. Aquafina Coca Cola.w ay2w ealth.73 1206.1 4973.2 96107.7 50901.56 256. Beverages Miscellaneous 23189.5 589976.48 16.77 64.23 107197 2147.8 986.86 120.19 48426.5 1235.58 275.81 629550.5 12.78 537.99 119.51 1.4 191522.36 144. Packaged drinking water Soft Drink.39 Milled Products Total for other 1031177.78 224.400 021.94 268.95 16820.01 156.36 7177.58 389.3 486.02 24774.53 793467 67889.04 2.43 552.07 182.8 1536.26 429798 520.39 1905819 7539.31 56384.84 63052.87 Cocoa Products Cereal 38087. Value 566238 1459. Fanta. Value 351034.16 194.2 225.21 Animal Products 297897.24 260.54 155. Thumps Up.57 Total 1359.14 76515 668.33 7.07 130.81 2004-05 Qty.57 Grand Total Other Processed Foods 178. Duke’s.77 113. Sprite.75 111948.4 264607.67 Preparations Alcoholic & Non 49671.44 436.93 2003-04 Qty.96 129648.79 12.03 297. Tel: +91 22 4019 2900 email: research@ w ay2 we alth. Mountain Dew.3 176109.74 26164.37 154.58 Buffalo Meat Sheep/Goat Meat 3915.82 17.63 1.53 1462.03 1144.57 2502884 5467.37 46275.34 Pickle & Chutney Other Processed 61332.96 117.2 177114.81 110.49 52513.95 2316.29 1100..45 9. Nariman Point.15 Vegetables 76735.28 202.13 Processed Meat 292652.11 145889 167.98 370.57 1125 .6 49587.86 118.67 8296.47 170.74 120561.81 153.75 300.71 108.63 107.com website: www .83 102.81 117883.5 227. Kinley Products Soft Drink.69 186718 1049.72 2005-06 Qty.28 77 27. Value 216640.32 90988.84 669.51 80.1 89514.38 12.11 713092 2613.59 459938 2629. The export of processed food items has been as under: Export of processed food products Items 2001-02 Qty.5 196.65 295013.02 545755.62 210.96 503 664.27 616755.2 21439.53 26450.27 732. 7up.54 243355.3 544.93 250.82 5747.97 120.42 33.2 Total 112812.85 30045.35 28964.49 Confectionery 1293.6 67193.16 137.48 4.29 80760.49 241.15 241.18 241.01 154.91 1615.29 Alch.74 Fruits & Vegetables 385984.45 343817.33 690901 3566.58 38687. Lehar.71 765.47 35549.83 393. Value 211160.4 1279619 331.4 1720.77 423925 561.85 49486.73 66070.3 277.75 243.06 Poultry Products 19876.3 1305.13 359726 1800.34 190053 513.09 76880.8 4381.35 1780.37 54792.17 134613 135382 107335 501826 364.28 Animal Casings 267.45 2024.57 21.68 Groundnuts Guargum Jaggery & 365893.34 Mango Pulp 38758.9 49606.33 355.

sesame oil. Some of the important policy changes are as follows Regulation and Control As per extant policy.4 million next year. Details of FDI inflow Since 2000-01 is as under: 1500 1250 1000 Rs crores 750 500 250 0 200001(AprMar) 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (AprMar) FDI 1036. The outlay for the foodprocessing segment has been increased from US $19. ™ 15/A Chander Mukhi. The food-processing sector continues to attract FDI. pastry. export & import.1 182. In the last one-year alone. ™ Foreign investments are allowed in SSI reserved items under an export obligation (pickles.com website: www . groundnut oil. bread. FDI approvals in food-processing has doubled. sweetened cashew nut products. FDI in the country's food sector is poised to hit the US $3-billion mark. Nariman Point.9 441.0 Source: MOFPI Maharashtra was among the front-runners to receive the highest share of FDI in food processing during the last five years.1 176. ™ Automatic approval to FDI up to 100% equity in FPI sector excluding alcoholic beverages and a few reserved items. tapioca sago and its flour). Ltd. The dairy and consumer industries received FDI worth Rs 2.5 million in 2004-05 to US $41. rapeseed oil. ground and processed spices other than spice oil and oleoresin. export promotion and incentives to high priority industries. chutneys. the food-processing sector needs investment of about US $28-35 billion to meet the changing food demands in India.7 billion each as foreign investment.Indian Processed Food Industry Sector Coverage Opportunities Galore FDI According to industry estimates. Tel: +91 22 4019 2900 email: research@ w ay2 we alth. Italy and France. Mumbai .1 510. fiscal policy. Germany. Food-processing and agro industries have been accorded high priority with a number of important relieves and incentives.0 26. FDI up to 100% is permitted under the automatic route in the food infrastructure (food park.5 174.9 198. hard-boiled sugar candy.com WAY2WEALTH Securities Pvt. Nearly 30% of FDI in the food-processing sector comes from EU countries such as Netherlands. exchange & interest rate control. taxation. Add to this the US $55 million that has been invested in sugar and cooking oil companies. ™ FDI up to 100% is permitted on the automatic route for distillation & brewing of alcohol subject to licensing by the appropriate authority.. cold chain/warehousing). .w ay2w ealth. more than twice the earlier amount.400 021. Government Regulation and Support Since liberalisation several policy measures have been taken with regard to regulation & control.

Nariman Point. Liberal corporate tax policy is applicable for export and domestic earnings. Quantity restrictions on all food products have been removed. quality control labs. They may import free of duty all types of goods. . etc. ™ Up to a maximum of 24% foreign equity is allowed in SSI sector Fiscal policy and taxation: ™ ™ ™ Rupee is now fully convertible on current account and convertibility on capital account with unified exchange rate mechanism is foreseen in coming years.w ay2w ealth. and items reserved for exclusive manufacture in the small-scale sector. warehouse. poultry and fish.Indian Processed Food Industry Sector Coverage ™ Opportunities Galore No industrial license is required for almost all of the food & agro processing industries except for some items like: beer. potable alcohol & wines. pats and yeast is also completely exempt. Mumbai . Fruits & vegetables. including spares up to 20% of the CIF value of the capital goods may be imported at a concessional rate of customs duty subject to certain export obligations under the EPCG scheme.com website: www . including capital foods. Ltd. Units in EPZ/FTZ and 100% EOUs can retain 50% of foreign exchange receipts in foreign currency accounts. and dairy machineries are completely exempt from central excise duty. Customs duty on refrigerated goods transport vehicles has been reduced form 20% to 10%. Excise Duty of 16% on dairy machinery has been fully waived off and excise duty on meat. poultry and fish products has been reduced from 16% to 8%. Capital goods. where there is an additional requirement of balancing the dividend payments through export earnings. Export linked duty free imports are also allowed. ™ Animal fats & oils etc. cane sugar. 50% of the production of EPZ/FTZ and 100% EOU units is saleable in domestic tariff area. Free Trade Zones (FTZ) and Export Processing Zones (EPZ) have been set up with all infrastructures. income tax rebate allowed (100% of profits for five years and 25% of profits for the next five years) for setting up of new agro-processing industries to process and package fruits & vegetables. setting up of 100% Export Oriented Units (EOU) is encouraged in other areas. pectin. 53 food parks approved to enable small and medium food and beverage units to set up and to use capital intensive common facilities such as cold storage. ™ ™ ™ ™ Export promotion: ™ Food-processing industry is one of the thrust areas identified for exports. All profits from export sales are completely free from corporate taxes. Profits from such exports are also exempt from MAT.com WAY2WEALTH Securities Pvt. Repatriation of profits is freely permitted in many industries except for some. ™ ™ ™ ™ ™ ™ ™ 15/A Chander Mukhi.400 021. effluent treatment plant.. hydrogenated. Central excise duty on preparation of meat. Agri export zones and food parks Setting up of 60 agri zones for end-to-end development for export of specific product from geographically contiguous areas. Tel: +91 22 4019 2900 email: research@ w ay2 we alth. Also. Peak rate of customs duty has been reduced from 30% to 25% (excluding agricultural and dairy products) and duty structure on designated items has been rationalized.

and premises. the Government of India had passed a new legislation Food Safety and Standards Act. The Act proposes establishment of a new authority. The food laws in India are enforced by the Director General of Health Services. preservatives and labeling. machinery. sweetened aerated water. ™ Meat Food Products Order. Feeding Bottles and Infant Foods (Regulation of Production. 1963. ™ Essential Commodities Act. • Industrial Licenses. 2006: In August 2006. distribution.Indian Processed Food Industry Sector Coverage Opportunities Galore Regulatory Framework There are different laws that govern the food-processing sector in India. and regulation of sales. and supply of milk products. • SEO (Control) Order -1967. In order to rationalize the multiplicity of food laws. merging eight separate Acts. establishes sanitary requirements for dairies. pesticide residues. • BIS Act. and sets quality control standards for milk and milk products. Government of India (GOI). contaminants. The Standards of Weights and Measures Act. preservatives. which will be a single reference point in relation to the regulation of food products. the Food Safety and Standards Authority. • Environment Protection Act. food colours. 1995: Specifications and quality control requirements regarding the production and marketing of processed fruits and vegetables. ™ • The Infant Milk Substitutes. 1976. vinegar. 1986. 1954 and Rules (Ministry of Health & Family Welfare): Covers specifications related to food colour. Various food laws applicable to food and related products in India are: Prevention of Food Adulteration Act (PFA). 1992: Regulates the production. • Export (Quality Control and Inspection) Act. and Standards of Weights and Measures (Packaged Commodities) Rules. 1955 (Ministry of Food & Consumer Affairs). a Group of Ministers was recently set up to suggest legislative and other changes to formulate a modern. 1968. reorganisation of scientific support pertaining to the food chain through the establishment of an independent risk assessment body and a new Food Law. 1977: Designed to establish fair trade practices with respect to packaged commodities ™ Agriculture Produce (Grading & Marking) Act (Ministry of Rural Development). and insecticide residues for meat products ™ Milk and Milk Products Order. The prevailing laws and standards adopted by the Government to verify the quality of food and drugs is one of the best in the world. ™ The Food Safety and Standards Act. • VOP (Control) Order – 1947. 1973 (MFPO): Administers the permissible quantity of heavy metals. Ministry of Health and Family Welfare. • Pollution Control (Ministry of Environment and Forests). integrated food law. 1992 and Rules 1993. ™ Fruit Products Order (FPO). Supply and Distribution) Act. and synethic syrups. preservatives. • The Insecticide Act. packaging and labeling. Multiple laws/regulations prescribe varied standards regarding food additives. . 1986.

Indian Processed Food Industry Sector Coverage Opportunities Galore Major Food Processing Companies in India Major MNCs Major Indian companies Nestle. The foodprocessing sector in India is clearly an attractive sector for investment and offers significant growth potential to investors. Amul. The government’s focus towards foodprocessing industry as a priority sector will ensure policies to support investment in this sector and attract more FDI. Britannia. Haldiram. Nissinmet. India with its vast pool of natural resources and growing technical knowledge base has strong comparative advantages over other nations. Coke. We initiate coverage on Lakshmi Energy & Foods and Ruchi Soya. Vision 2015 adopted by this Ministry of Food Processing envisages Trebling the size of the processed food sector Increasing level of processing of perishables from 6 % to 20 %. Pepsi. Heinz.5 % to 3% Vision Document Projections 2003-04 ($ Total food consumption Processed foods 274 Primary processed food 136 Value Added Food 138 205 126 79 48 2014-15 ($ Indian food-processing industry is poised for explosive growth driven by changing demographics. low cost of technology and rise in commodity branding has resulted in a change in the Indian food industry. Perfetti. India is now poised for the Food Revolution. Godrej. Outlook With the success of Green and White Revolution. Conagra. Parle. Ajinomoto. . According to CII has estimates. Value addition to increase from 20 % to 35% Share in global food trade to increase from 1. Indian MNCs likely to enter Reliance. Unilever. growing population and rapid urbanization along with increased government support. Kellogs. food-processing sector has the potential of attracting US $33 billion of investment in 10 years and generate employment of 9 million person-days. Entry of multinationals. Tatas. These factors will increase the demand for value added products and thus improve the prospects of food-processing industry in India. Venky's Walmart. Glaxo Smithkline. IT. thapars etc. Bharti Group. Wipro. Dabur. Wyeth.

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