Industry Monitor

Agro-processed Food
Vol.907 July 2009

CONTENTS
INDUSTRY AT A GLANCE ....................................................................................................2 KEY DEVELOPMENTS ..........................................................................................................3 MARKETING .......................................................................................................................3 INVESTMENTS....................................................................................................................3 OPERATIONS ......................................................................................................................3 CORPORATE........................................................................................................................4 GOVERNMENT INITIATIVES ..........................................................................................4 OTHERS................................................................................................................................5 INDUSTRY STATISTICS .........................................................................................................7 PRODUCT FOCUS ...................................................................................................................8 SESAME OIL ........................................................................................................................8 Introduction........................................................................................................................8 Benefits Of Sesame Oil .......................................................................................................8 Manufacturing Processing ...................................................................................................8 Market Scenario ..................................................................................................................9 Exports of Sesame Oil & Its Fractions................................................................................9 Outlook ..............................................................................................................................9 COMPANY SCAN...................................................................................................................10 KOHINOOR FOODS LIMITED.......................................................................................10 Introduction......................................................................................................................10 Key Ratios At A Glance ....................................................................................................10 Performance Analysis........................................................................................................11 Export Market ..................................................................................................................11 Recent Strategies ...............................................................................................................13 Outlook ............................................................................................................................13 STOCK SCAN .........................................................................................................................14 UPCOMING EVENTS ...........................................................................................................16

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INDUSTRY AT A GLANCE
MARKETING New wine goes green in big way - introducing Calnaturale - USA A record 2.5m tonnes of raw sugar to be imported - India Imported fruits are a hot pick - India INVESTMENTS Mega food parks get Rs37bn push - India OPERATIONS Coke opens two plants as part of US$2bn Chinese investment - China CORPORATE Nestle to produce new breakfast cereal in Sderot - Israel Food maker Frutarom acquires the German food maker - Israel Starbucks Coffee company reaffirms its commitment - Rwanda China Discovery acquisition corp announces shareholder approval - China GOVERNMENT INITIATIVES Tamil Nadu govt prepares roadmap to enhance agricultural output - India Karnataka government identifies land for mega marketing parks - India Food Security Law to save Rs135bn - India OTHERS Food safety concerns in California rise from processed food items - USA Bombino Express worldwide fined for illegal import of mangoes to US Half of vegetarian processed food contains meat - Taiwan Gulf rice traders fear further dip in prices - India Non-Basmati rice exports: A threat to national food security - India

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KEY DEVELOPMENTS
MARKETING
Americas USA: New wine goes green in big way - introducing Calnaturale Organically grown grapes and the ultimate in green packaging have been combined in the development of CalNaturale, the newest product being introduced by cutting-edge manufacturer, California Natural Products (CNP) of Lathrop, CA. The company will bring CalNaturale Cabernet Sauvignon––a premium wine made with grapes grown organically in the Paso Robles Appellation and packaged in a flexible carton––to the marketplace in late summer 2009. CalNaturale becomes part of the organic wine category which saw an increase of 30% in 2008. Asia Pacific India: A record 2.5m tonnes of raw sugar to be imported India's raw sugar imports are set to touch a record 2.5m tonnes in the current sugar season ending September. According to industry estimates, import contracts close to 2m tonnes have already been signed by various companies and another 5 lakh tonnes is likely to get contracted by September. Till date, over 1.85m tonnes have already arrived. Most of these imports are from Brazil. The initial contracts were taking place at US$280-300 a tonne. However, with the entry of India and lower output forecast in most production countries, global prices have been on the increase due to which recent contracts have been made at US$325-340 a tonne. India: Imported fruits are a hot pick Fresh green kiwifruit from New Zealand and red globe grapes are gradually becoming popular in the domestic market, say experts. There is good demand for kiwis from Italy, as they are available from October to March, a period which coincides with the marriage season, said Chairman, Yuppa group, an Agroproduce company in India. The company imported 250 tonnes of kiwis and 100 tonnes of red globe grapes last year. Indian kiwi fruit, now being grown in Himachal Pradesh and Manipur, retails in the local market at Rs150-180 whereas when imported from New Zealand or Australia, it costs Rs200-250 per kg. It is the same story for red globe grapes. Grapes imported from California cost Rs200-250 per kg while the same variety grown in India retails for Rs80-100.

INVESTMENTS
Asia Pacific India: Mega food parks get Rs37bn push With individual units investing Rs25 billion, special purpose vehicles (SPVs) bringing in Rs7 billion and the Centre contributing Rs5 billion, a sum of Rs37 billion will have a spinning effect on the 10 mega food parks, going to be set up in the first phase of the 11th Five Year Plan. A total of 30 mega parks are expected to be set up during the 11th Plan. Each food park is expected to have around 30 units, which are collectively expected to attract an investment of Rs25 billion. The parks will be set up in Chittor (Andhra Pradesh), Chikmagalor (Karnataka), Dharmapuri (Tamil Nadu), Pune (Maharashtra), Jalandhar (Punjab), Jangipur (West Bengal), Rai Bareilly (Uttar Pradesh), Haridwar (Uttarakhand), Nalbari (Assam) and Ranchi (Jharkhand), told Subodh Kant Sahai, Food Processing Industries Minister.

OPERATIONS
Asia Pacific China: Coke opens two plants as part of US$2bn Chinese investment Coca-Cola has opened two bottling plants in Central and Western China as it attempts to cope with booming demand across one of its largest and fastest growing markets. The Georgia-based beverage giant said its Chinese drinks business grew 19% in 2008, and had grown 10% in the first quarter of 2009, compared to only 2% globally. The company has about half of the Chinese carbonated drinks market and

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in response committed to investing US$2bn over the next three years––more than double its investment in the Sino peninsula over the past 30 years. Coca-Cola-China President noted China had overtaken Mexico to become its third biggest market although the average Chinese person consumes only 25 bottles per year, compared to more than 500 in the US.

CORPORATE
Europe Israel: Nestle to produce new breakfast Cereal in Sderot Global food giant, Nestle is producing a new breakfast cereal at its R&D centre in the southern Israeli town of Sderot. The new cereal was created in Israel and is based on technology originally developed for the production of a popular new Bamba snack filled with nougat and sold by Osem. The new cereal, which will be sold first in Israel and then worldwide, is to be named Crunch Rolls Nougat. Cereal is inflated into the shape of a cylinder and filled with nougat. Bamba Nougat was launched in Israel in a limited edition as a marketing campaign, but became a hit. This is the first time that Nestle, one of the world's leading breakfast cereal makers, has produced food products in Israel. Israeli food maker Frutarom acquires the German food maker Israeli food and flavouring maker, Frutarom Industries Ltd. announced that it has signed an agreement to acquire the Savory activity and assets of Chr. Hansen A/S in Germany, in consideration for a cash payment of approximately US$7.3m. The activity's 2008 sales for the financial year ending on August 31, 2008 totalled approximately US$7.7m. The acquired activity holds an extensive customer base, mainly among leading meat producers in Germany, and export activities to Scandinavia and UK. Africa Rwanda: Starbucks Coffee Company reaffirms its commitment As part of its ongoing commitment to East Africa, Starbucks Coffee Company announced that participating stores in the US and Canada will offer for a limited time a selection of African coffees and other products from the region. For every pound of the (Starbucks) Red Whole Bean Coffee sold in the US and Canada, Starbucks will contribute US$1 to the Global Fund to help support AIDS programmes in Africa. Stores in the US and Canada will also feature a 100% Rwanda coffee, which is noted for its crisp and clean finish. Asia Pacific China Discovery acquisition corp announces shareholder approval China Discovery Acquisition Corp announced its shareholders approved the acquisition by China Discovery of all of the outstanding securities of the parent company of HeNan Smart Food Company Limited, resulting in HeNan Smart Food Company Limited becoming an indirect wholly-owned subsidiary of China Discovery. In connection with the closing of the Transaction, China Discovery will change its name to Si Mei Te Food Limited upon the filing of its amended memorandum and articles of association, and will continue to trade on the OTCBB under the symbols CADQ, CADWE, and CADUE until new symbols are issued.

GOVERNMENT INITIATIVES
Asia Pacific Tamil Nadu govt prepares roadmap to enhance agricultural output The Tamil Nadu government has prepared a series of major initiatives including adoption of a system of rice intensification technology to enhance agricultural production in the state during 2009-2010. The state government would take steps to bring 0.75m hectares under the rice intensification system during 20092010 and more attention will be given for perfect adoption of this technology to achieve higher production in paddy, Agriculture Minister, said in the State Assembly in Chennai. The Agri Council would provide necessary recommendation for the agriculture development, besides it will play a major role in providing quality inputs, technologies, post-harvest management, marketing and processing activities.

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India: Karnataka government identifies land for mega marketing parks Karnataka government is planning to set up mega marketing parks in Bangalore, Kolar, Hassan and Mysore. The parks will promote horticulture products. In this regard, the state has already identified 100 acres of land and the land acquisition is underway. The mega marketing project will be undertaken under the public-private partnership initiative. The government will acquire the land and hand it over to the private companies who are interested in investing in the project. The State government will contribute Rs250m while the private firms will chip in the remaining amount. Karnataka has been specifically shortlisted for the development of food processing sector because of its 10 agro climatic zones. India: Food Security Law to save Rs135bn The Centre may have to spend about Rs135 billion less on food subsidy to implement the Rs3 per kg rice or wheat scheme, as a large section of the people above the poverty line (APL) is unlikely to get cheaper foodgrains after the enactment of the Food Security Law. The Centre, which is currently discussing with states and experts the proposed National Food Security Act, has estimated that the subsidy bill will be around Rs290 billion to cover 65.90 million families below poverty line (BPL), if they are given 25kg of rice or wheat each month at Rs3 per kg, Government official said. At present, the Centre issues rice at Rs5.65 per kg and wheat at Rs4.15 per kg to states for BPL families. But the APL families get wheat at Rs6.10 per kg and rice Rs8.30 per kg. The Food Ministry has been proposing for a long time to increase the issue prices of foodgrains for APL families to at least the levels of their minimum support prices (MSPs).

OTHERS
Americas USA: Food safety concerns in California rise from processed food items Food safety is a major concern for more and more Americans as food poisoning continues to plague many. A mild case of food poisoning, however, may be the least of your worries when it comes to many processed food items. Because of consumer inability or unwillingness to take food safety, which is rightfully the responsibility of the producer, upon them, a lot of people are still becoming sick from these food products every year in California. As a result, many are relying on personal injury attorneys to help them file damages claims against these companies for not taking appropriate food safety measures themselves. They are also helping their clients receive settlement funds that can help cover medical costs, they will undoubtedly incur from these food-borne illnesses. USA: Bombino Express worldwide fined for illegal import of mangoes to US Mumbai-based Bombino Express Worldwide has been fined an amount of US$40,000 for illegally importing mangoes and purple yams from India, without the compulsory treatment, according to a media report. Bombino Express tried to smuggle the fruit products into the country last year through the Los Angeles customs declaring them as ‘ladies apparel’. According to a statement issued by the California Department of Food and Agriculture, in July 2008, Bombino Express Worldwide imported 34 packages of Indian mangoes and yams that were labelled ‘ladies apparel’ through Los Angeles International Airport. Airport dogs discovered the packages and prevented the produce from entering the food supply. Asia Pacific Taiwan: Half of vegetarian processed food contains meat The Investigation Bureau has recently found that some processed foods advertised as vegetarian contained meat, and it has vowed to refer producers who knowingly added meat to their products for prosecution on fraud charges. An investigation targeting the producers of the fraudulent vegetarian processed foods has been launched to find out whether meat was deliberately added to the soybean-based products to enrich their texture and flavour. The vegetarian foods showing small traces of meat could have been contaminated by poorly cleaned work tables or cooking equipment in factories that also produce meat products.

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India: Gulf rice traders fear further dip in prices Rice traders in the Gulf are worried the price of the grain, already hit by the economic crisis and excess supply, will fall further if India lifts an export ban, traders said. If India has a good harvest of rice this year and decides to lift its export ban then the rice business will be even less profitable, a trader of Pakistani rice in the Gulf region, said. The price of Basmati rice had fallen to US$1,600 per tonne in June this year from US$1,900 per tonne in the same period last year. If India decides to flood the market with rice, it is expected that the price to fall by at least another 20-30% by the end of the year, another Gulf rice trader said. India: Non-Basmati rice exports: A threat to national food security Centre for Environment and Food Security (CEFS), a national NGO, has initiated an aggressive campaign to ensure food for all. This comes in the wake of government's contemplation to lift the ban on export of rice and at the same time promising Food for all under the proposed food security act. The NGO vehemently flayed the union government's plan to bring in a new export policy for rice in a bid to allow export of non-Basmati rice. The CEFS says that easing exports of rice would mean that over 700 million poor Indians would be deprived of their right to adequate food. India's current rice export policy restricts export permit to countries like Bangladesh, Nepal and African countries through diplomatic channels. The Director of CEFS said that the government should stick to the existing policy, which on one hand allows reasonable exports of rice to friendly countries, on the other it has enhanced the national food security by maintaining comfortable and adequate domestic stocks and keeping a check on the price rise, making it more affordable for the vast majority of poor consumers.

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INDUSTRY STATISTICS
State-wise Number of Food Processing Facilities (Units) and Quantum of Funds Sanctioned for Setting up of these Facilities in India 2006-07 2007-08 No. of No. of Sanctioned Sanctioned Proposals Proposals Amount Amount Sanctioned Sanctioned Andhra Pradesh 41 19 134.76 61.08 Assam 12 3 127.72 10.63 Bihar 2 2 5.89 10.00 Chhattisgarh 6 2 19.39 9.82 Delhi 2 0 4.97 0.00 Goa 0 1 0.00 3.40 Gujarat 17 16 58.93 50.34 Haryana 17 9 66.50 42.42 Himachal Pradesh 11 8 24.16 49.09 Jammu & Kashmir 6 6 12.76 13.91 Jharkhand 1 0 0.95 0.00 Karnataka 26 19 67.06 68.64 Kerala 30 14 108.08 46.76 Madhya Pradesh 8 4 21.07 13.13 Maharashtra 83 43 267.28 113.65 Manipur 4 1 11.21 6.21 Meghalaya 2 0 4.39 0.00 Nagaland 1 0 8.29 0.00 Orissa 3 2 15.00 8.63 Pondicherry 2 0 3.26 0.00 Punjab 21 20 65.77 47.00 Rajasthan 28 15 89.00 44.68 Tamil Nadu 35 11 117.93 40.08 Tripura 1 1 2.77 5.22 Uttar Pradesh 37 34 124.86 129.47 Uttaranchal 15 8 100.76 59.26 West Bengal 23 14 86.10 42.73 India 434 252 1548.84 876.13 States
Source: Indiastat; Cygnus Research

(Rs m) 2008-09 (for first six months) No. of Sanctioned Proposals Amount Sanctioned 40 137.78 5 9.98 3 13.14 8 26.35 6 25.20 1 4.91 29 104.41 20 59.23 5 30.55 3 4.41 0 0.00 31 91.94 32 98.23 12 33.68 98 262.18 0 0.00 1 5.91 0 0.00 2 7.74 0 0.00 53 133.33 40 98.80 32 138.42 0 0.00 34 135.19 3 17.50 13 49.68 471 1488.55

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PRODUCT FOCUS
SESAME OIL
Introduction
India is one of the major producers of many oilseeds like groundnut, mustard, sesame seed and others. Traditionally, Indians consume substantial quantity of edible oils mainly as a cooking medium. Oil extracted from sesame seeds is not as popular as other edible oils like groundnut, cottonseed, mustard but it is used as cooking oil in some parts of the country. Sesame oil is also known as gingelly oil and til oil; it is an organic oil derived from sesames, noted to have the distinctive aroma and taste of its parent seed. Sesame oil derives its dark colour and flavour from toasted hulled sesame seeds. It is commonly used in Chinese and Korean cuisine, usually added at the end of cooking as a flavour highlight and not used as a cooking medium. There are many variations in the colour of sesame oil; cold-pressed sesame oil is almost colourless, while Indian sesame oil, gingelly or til oil is golden. On the other hand, Chinese sesame oil is commonly a dark brown colour.

Benefits of Sesame Oil
Sesame oil is very high in linoleic acid, one of the two Essential Fatty Acids (EFAs) our bodies cannot produce. Essential fatty acids are necessary for Uses Cooking normal growth and for healthy blood, arteries, and nerves. They keep the Body massage skin and other parts of body healthy by preventing dryness and scaliness. Hair treatment Recent scientific research has shown that EFAs also play an important role in regulating blood pressure, cholesterol metabolism, and the flow of Food manufacture biochemicals across cell membranes. Overall, EFAs are involved with Worship producing life energy in our body from food substances, and moving that Industrial uses energy throughout our system. Since the advent of food processing, Alternative medicine particularly oil and grain refinement, EFA deficiencies and imbalances are showing up in some people. Linoleic acid deficiencies include hair loss, skin eruptions, mood swings, arthritis-like conditions, susceptibility to infections, failure of wound healing, and in extreme cases, heart, liver and kidney disease. Sesame oil lowers cholesterol and is beneficial for the heart and kidneys. In laboratory experiments, researchers at the United States Food and Drug Administration reported that a diet high in sesame oil significantly lowers cholesterol levels in animals.

Manufacturing Processing
Sesame is one of the oldest oil plants in the world, at around 50% it also has one of the highest levels of oil content. The plants adore the subtropical climate. During blossom, the herb-like growth exudes an enchanting scent. There are white, yellow, brown, and black varieties of sesame. We only use white sesame, in the form of flour for making bread. When pure, untreated seeds are pressed, not only are the healthy ingredients retained, but also the plant’s own content of sesame oil; this provides natural protection against oxidisation and gives the oil its shelf-life. When the seeds are not roasted, sesame oil maintains its mild flavour.

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Market Scenario
Originating in Asia and the Middle East, Sesame has a long history as a valuable oil plant, popular as culinary oil, lamp oil Major Players Sagar Interantional and for the preparation of salves and skin care products. Utsav Overseas Private Limited Sesame oil is rich in calcium, oleic and linoleic acid and has a Shyam Industries long shelf-life. It is very suitable as cooking oil, lending foods a Satnam Overseas fine nutty flavour. The light texture and good moisturising Lala Jagadish Prasad and company qualities also lend themselves well to skin care preparations, Surajbala Exports Private Limited cosmetics, soaps and detergents. Two types of sesame oil are available: light and dark. The dark variety derives its colour and stronger flavour from the fact that the seeds have been toasted prior to pressing. Sesame seed provides a traditional source of oil for many communities in India. The states of Gujarat and West Bengal account for the maximum production of sesame seeds in the country. In the world market for sesame, India has a reputation of being a net Export Oriented Germany exporter. The country is one of the largest exporters of sesame exporting around 0.54m metric tonnes sesame annually. As the production in Turkey India is sufficient to satisfy the domestic consumption demand, the left Netherlands over sesame i.e., around 25% of the total production is exported to United States of America various importing nations of the world. Greece Hong Kong Exports of Sesame Oil & Its Fractions Israel Sesame seed exports from the country are estimated to surge over China 300,000 tonnes in 2008-09 on account of lower production in Sudan and United Kingdom Ethiopia. So far in 2007-08, the country has exported 250,000 tonnes out United Arab Emirates of the total output of 450,000 tonnes. China alone has imported 60,000 tonnes in 2007-08. Considering the demand in the global markets, sesame seed 500 Export of Sesame Oil & Its Fractions exports are set to cross 300,000 tonnes in 2008-09, said Chairman of Indian Oilseeds 400 & Produce Exporters’ Association (IOPEA). Lower output in Sudan and 300 Ethiopia has propelled the demand for Indian sesame seeds in the global market. 200 The production in both the countries has fallen by 25% following damage to the 100 crop. However, India’s export performance in 2008-09 will also depend 0 on production in some other African 2004-05 2005-06 2006-07 2007-08 200809(Aprilcountries and China. New crop in these Dec) countries will start hitting global markets by September, said former Chairman of Source: DGFT; Cygnus Research IOPEA. Apart from China, India exports sesame seed to West Asia and Latin American countries. Increased export demand has already started showing its impact on the prices of sesame seed. Recently, prices soared to a record level of Rs2,000 per 20kg. This is the highest ever price recorded by the commodity. At present, the price is hovering around Rs1, 700 per 20kg. Meanwhile, the area under sesame seed in the current season has increased three-fold.

Outlook
Sesame oil is known for reducing cholesterol and cardiovascular diseases. Sesame oil is popular in several countries such as India, Korea, China and Switzerland as cooking oil. There are few sesame by-products that are used by the pharmaceutical and ayurvedic organisations as ingredients in different products. Most of the units are in the North and in Maharashtra; a few are in Andhra Pradesh. Since people are becoming more conscious about health, the demand for this oil is increasing, as this oil is good for reducing cholesterol. As the production of sesame in India is sufficient to satisfy the domestic consumption demand, the left over sesame i.e., around 25% of the total production is exported to various importing nations of the world.

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Rs m

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COMPANY SCAN
KOHINOOR FOODS LIMITED
Introduction
Kohinoor Foods Limited engages in the production and wholesale of various food products in India. Its products include basmati rice, pulses, ghee, coffee, cashews, milk powder, sugar, spices, curries, coconut powder, wheat, and ready to eat food products. The company also offers ready to eat Indian curries, cook-in sauces, cooking paste, spices, seasonings, and frozen food. Kohinoor Foods markets its products through retail outlets, distributors, and stockists. It also has operations in the United States, the United Kingdom, Dubai, Canada, Japan, Australia, Singapore, and other European countries. Strengthening the global distribution network The Kohinoor brand has already made an impression in the UK retail market and has become the No. 2 brand in dry basmati in a very short time. It is one of the fastest growing brands in TESCO also captures more than 48% of the ethnic food shelves. The company’s Basmati rice has now started exporting to 65 countries. The company has introduced branded basmati rice into the large and competitive Saudi Arabian market with the appointment of an exclusive distributor to market Kohinoor basmati rice. Indian food is well received across the world now.

Company’s Financial Performance At A Glance (Rs M)
Net Sales Operating Profit/Loss OPM (%) NPM (%) Depreciation Interest PAT
Source: BSE India; Cygnus Research

2007-08 6350.60 847.80 13.35 0.84 103.90 691.10 53.20

2006-07 5892.30 610.40 10.36 3.75 104.00 198.20 220.70

2005-06 5410.80 517.40 9.56 3.98 84.00 155.80 215.10

2004-05 5036.00 392.60 7.80 3.07 57.90 119.70 154.80

Key Ratios At A Glance KEY RATIOS 2007-08 2006-07 2005-06 2004-05 3.72 3.10 2.73 2.48 1.73 1.11 0.59 0.29 1.82 1.58 1.38 1.30 13.35 10.36 9.56 7.80 0.84 3.75 3.98 3.07 10.97 9.44 9.49 10.07 3.70 16.75 18.26 15.41

Debt-Equity Ratio Long Term Debt-Equity Ratio Current Ratio OPM (%) NPM (%) ROCE (%) RONW (%)
Source: Company; Cygnus Research

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Performance Analysis PERFORMANCE ANALYSIS OF KOHINOOR FOODS Quarterly Performance Financial Year Performance OND08 OND07 Var (%) 2007-08 2006-07 Var (%) Sales 1471.60 1559.00 -5.61 6350.60 5892.30 7.78 Other Income 0.00 4.30 -100.00 21.00 25.80 -18.60 PBIDT 274.20 221.70 23.68 847.80 610.40 38.89 Interest 260.40 81.30 220.30 691.10 198.20 248.69 PBDT -13.80 140.40 -109.83 156.70 412.20 -61.98 Depreciation 26.30 30.00 -12.33 103.90 104.00 -0.10 PBT -40.10 110.40 -136.32 52.80 308.20 -82.87 TAX 4.50 27.50 -83.64 0.40 -87.50 -100.46 PAT -35.60 82.90 -142.94 53.20 220.70 -75.89
Source: Company; Cygnus Research

During the 2007-08 review, turnover grew at a steady 8% YoY with net sales of Rs6,350.63m as against Rs5892.3m in FY07. This was largely driven by continued strategic focus on the branded and high valueadded segments. Branded sales witnessed a robust growth of 23.62% to Rs4,533.6m from Rs3.667.4m in the last financial year contributing to 71% of turnover. With increased sales of high-margin branded basmati rice and foods segments, operating profit margins witnessed improvement. The EBIDTA margin (earnings before interest, depreciation, tax and amortisation) of the company increased to 13.35% in 2007-08 from 10.36% in the previous year. However, there was a decrease in Net Profit to Rs53.2m from Rs220.7m in 2006-07 due to an exceptional item.

Export Market
Branded basmati exports increased by 28.66% in 2007-08 to Rs1,405m from Rs1092m. The company made a major breakthrough during the year by commencing export of Kohinoor branded basmati to Saudi Arabia, the largest market for basmati rice in the world with the appointment of a strong distributor. With the overseas offices in US, UK and Dubai; Kohinoor Foods is aggressively pursuing the mainstream markets in these regions. The company’s Basmati rice has already entered the mainstream markets of US, UK, Australia, Switzerland, Mauritius, Romania and the Middle East. It has retailed across the world in prestigious stores like Tesco and Somerfield in UK, Coles and Woolworths in Australia, Metro and Globus in Switzerland and Romania.
6.5

Operating Income

Product Mix

Foods 7%

6.0

Rs bn

5.5

Rice 90%

.

5.0

Soyabean (Traded) 3%

4.5 2004-05 2005-06 2006-07 2007-08
Source: BSE India; Cygnus Research

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Common Size Comparison Net Sales Other Income Staff Expenses Other Expenditure Depreciation Financial Expenses PBT Tax Charges PAT

July 2009

Common Size Comparison Kohinoor Foods RT Exports Ltd Lakshmi Energy Foods 100.00 100.00 100.00 0.33 9.66 0.25 2.10 1.66 0.43 8.14 18.30 1.92 1.64 9.33 2.04 10.88 3.79 3.23 0.83 25.02 16.03 0.01 0.08 5.46 0.84 24.96 10.57

Source: BSE India; Cygnus Research

When we compare the Kohinoor Foods with RT Exports and Lakshmi Energy Foods, operational performance is moderately worst then its peers. In other income, Kohinoor stands in the last and the RT Exports stands at the first. When we compare the other expenditure, Kohinoor stands at the middle of its peers. Depreciation and tax charges are showing comparatively same for all the three companies. Financial expenses of the Kohinoor Foods shows comparatively high when compared to its peers. Cost Structure Cost Structure as Percentage of Operating Income 2007-08 2006-07 Raw Material Consumed 82.88 79.90 Manufacturing Expenses 7.19 6.22 Staff Expenses 2.10 1.78 Selling & Administration Expenses 8.14 9.01 Power & Fuel Cost 1.22 1.28 Depreciation 1.64 1.77 Interest 10.88 3.36 Tax Charges 0.01 1.48
Source: Company; Cygnus Research

2005-06 79.98 5.27 1.46 8.08 1.33 1.55 2.88 1.16

2004-05 80.74 4.64 1.24 7.55 1.36 1.15 2.38 1.20

The overall cost structure consists of raw material expenses, manufacturing expenses, staff expenses, selling & administration expenses, power Raw Material Mix & fuel expenses, depreciation, interest & financial expenses and tax charges. Overall Paddy cost structure as a percentage of sales of 21% the company has declined marginally from 104.81% during 2006-07 to 114.06% during 2007-08 and registered a hike of Other Raw 925.22 basis points. Raw material Materials expenses, manufacturing expenses, selling 77% & administration expenses and interest expenses accounted for the company’s major cost. During 2007-08, over 2006-07, Ready To Serve staff cost inflated by 31.53 basis points; Food 2% Raw material expenses witnessed a hike of 297.93 basis points; manufacturing Source: Company; Cygnus Research expenses increased by 97.46 basis points; depreciation expenditure declined by 12.89 basis points; interest expenditure went up by 751.87 basis points and tax charges has gone down by 147.86 basis points.

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Stock Performance
130 110 90 70 50 Jul-08 Jun-08 BSE Kohinoor Foods Dec-08 Jan-09 May-09 Sep-08 Aug-08 Mar-09 Nov-08 Apr-09 Feb-09 Oct-08 Promoter s 35% Others 42%

July 2009

Relative Market Cap Performance

Shareholding Pattern

Financial Inst. 7% Public 16%

Source: BSE India; Cygnus Research

Company stock price which was at Rs100.55 at the end of June 2008 has declined to Rs64.05 by May 2009, because of poor performance of the company. During 52 week period consideration of the company share registered a high of Rs120.25 on August 2008 and a low of Rs53.45 on March 2009. The market capitalisation of the company in June 2008 was Rs2.65 billion while in May 2009 it was only Rs1.80 billion. The relative market capitalisation had declined by 31.99% in June 2008 as compared to May 2009.

Recent Strategies
The company is aiming to add at least another 25 countries to the list of customer countries in the next two years in the food business.

Outlook
A rapidly growing domestic economy with changing consumption patterns presents a huge opportunity for the company going forward. The company is committed to build a global food brand and has drawn up a strategy to continue its focus on the branded foods business. It will continue to introduce new products and penetrate new markets overseas. Focus on branded business The company will continue its focus on branded product sales and capitalise on the high margin convenience foods segment and believes that 90% of the turnover would come from the branded segment, basmati rice and food business by 2009-10 as compared to 71% in 2007-08. Kohinoor Foods plans to increase its total market share in the domestic branded basmati market from 38% to 42% by 2009-10 through aggressive and focused marketing strategies and expects to garner additional market share from a growing market. It expects the food business to contribute 25% of our turnover by 2009-10.

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July 2009

STOCK SCAN
160 150 140 130 120 110 100 90 80 10-Jun 11-Jun 12-Jun 13-Jun 14-Jun 18-May 19-May 20-May 21-May 22-May 23-May 24-May 25-May 26-May 27-May 28-May 29-May 30-May 31-May 15-Jun 1-Jun 2-Jun 3-Jun 4-Jun 5-Jun 6-Jun 7-Jun 8-Jun 9-Jun Sensex LAKSHMI DABUR

Relative Market Cap Performance

150 140 130 120 110 100 90 Sensex kohinoor foods AGRO TEC H

Relative Market Cap Performance

10-Jun

11-Jun

12-Jun

13-Jun

14-Jun

18-May

19-May

20-May

21-May

22-May

23-May

24-May

25-May

26-May

27-May

28-May

29-May

30-May

Source: BSE India; Cygnus Research

SENSEX

16 May-24 May Week’s global cues and profitbooking made Sensex register gain during this period. This week share price increased by 5.80% from Rs75.90 to Rs80.30.

25 May-31 May Investors Remained Bullish during this period and buying seen in the market. Sensex gained during this period. Increase in volume of shares traded resulted in the hike of stock price from Rs80.30 to Rs82.70.

31-May

LAKSHMI

01 Jun-07 Jun Sensex ended in positive note during this period on increased capital inflow by funds after a positive infrastructure data. Bullish sentiments prevailed in the market. Stock moved in tandem with BSE Sensex.

08 Jun-15 Jun Sensex gained during this period as buying seen amid encouraging global cues. Negative investor sentiments pushed the share price to fall by 18.82%.

© Cygnus Business Consulting & Research Pvt. Ltd. 2008

15-Jun

1-Jun

2-Jun

3-Jun

4-Jun

5-Jun

6-Jun

7-Jun

8-Jun

9-Jun

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Industry Monitor – Agro processed food
This week registered negative trend of 4.19% from Rs115.85 to Rs111.00. Negative investor’s sentiments made the share price fall by 0.59%. The share price inflated by 2.90% as the company has big plans to launch a new brand in the skin care segment, which has attracted the investor’s during this period. Share price gained Lack of demand on around 9.96% as it shares made the moved in tandem stock price to fall by with Sensex. 2.03%.

July 2009
The share increased 0.97%. price by

DABUR

The share price inflated by 18.51% as the company is planning to achieve new KOHINOOR markets and expand its assortment of food products to domestic market. The stock price opened at Rs115.10 and closed at AGRO Rs129.80, TECH registering increase of 12.77% due to bullish sentiments in the market.

Negative investor’s sentiments made the share price fall by 10.84%.

Positive investor’s sentiments pushed the share price to move up by 1.08%.

Share price gained The share around 11.74% as it plummeted moved in tandem 14.46%. with Sensex.

price by

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Industry Monitor – Agro processed food

July 2009

UPCOMING EVENTS
1. Event Date Venue Highlights ZAK India Agro Spices Processed Food Expo-Dhaka Jul 09-11, 2009 Bangladesh-China Friendship Conference Centre, Dhaka It will showcase the Indian Agro, Spices & Processed Food products. This event will provide an excellent platform for business to business contacts and help producers, manufacturers, importers & exporters to network with food retail chains, super markets, convenience centers, grocery stores, hotels & restaurants, caterers and more. ZAK Trade Fairs and Exhibitions Private Limited. 49 (Old No. 27), Veerabadran Street, Nungambakkam, Chennai, India, Tel: +(91)-(44)-42959595; Fax: +(91)-(44)-28202728, E-mail: enquiry@zakgroup.com AgriFood Manufacturers & Producers Expo Jul 19-21, 2009 Gallagher Convention Centre, 19 Richards Drive Midrand, Midrand Expo featuring the products, the ingredients and the processes that take agriindustries to market. Supported by the Agro-Processing division of South Africa's Department of Trade and Industry, who host foreign buyers to the event, the expo represents a showcase for the continent, allowing local, regional and international exhibitors to promote their products alongside each other to mutual benefit. Exhibition Management Services. PO Box 650302, Benmore, South Africa. Tel: +(27)-(11)-7837250; Fax: +(27)-(11)-7837269 E-mail: director@exhibitionsafrica.com; web: www.exhibitionsafrica.com Foodex Yemen Aug 09-23, 2009 Sanaa Expo Center, Sanaa Foodex Yemen is the largest platform for food and beverage companies to reach its end-consumer. Foodex Yemen can be very successfully utilised to launch new product, enchance brand positioning, have face to face interaction with consumers, and obtain instant market-feedback. Apollo International Exhibitions. Sitteen Rode, Faj Attan, Post Box 15434, Sanaa, Yemen. Tel: +(967)-(1)-441000; Fax: +(967)-(1)-448086 Agricultural Food Fair Aug 29-Sep 05, 2009 TBA, Gornja Radgona Agricultural Food Fair showcases all kinds of food processing and packaging machines, materials, systems and products under one roof. This is the show where the public get to taste quality products and have the opportunity to buy directly from the manufacturers. This is the unique opportunity to meet senior buyers & decision makers from all facets of the user industry. Pomurski Sejem d.d. Cesta na stadion, Gornja Radgona, Slovenia Tel: +(386)-(2)-5642100; Fax: +(386)-(2)-5642160 E-mail: info@pomurski-sejem.si; Web: www.pomurski-sejem.si

Contact Details 2. Event Date Venue

Highlights

Contact Details 3. Event Date Venue Highlights

Contact Details 4. Event Date Venue Highlights

Contact Details

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Industry Monitor – Agro processed food
5. Event Date Venue Highlights

July 2009

Contact Details 6. Event Date Venue Highlights

Contact Details 7. Event Date Venue Highlights Contact Details 8. Event Date Venue Highlights Contact Details 9. Event Date Venue Highlights

Contact Details

Wine & Spirits Exhibition-Poland Sep 14-17, 2009 Poznan International Fair Grounds, Głogowska street 14 60-734 ,Poland Wine & Spirits Exhibition will continue to be a professional meeting place for producers, exporters, importers and distributors of wine and spirits from all over the world. The exhibitors will be offered tasting rooms. There will also be expanded drinkware/glassware services. Poznan International Fair Limited. Glogowska Street 14, Poznan, Poland Tel: +(48)-(61)-8692000; Fax: +(48)-(61)-8665827 E-mail: info@mtp.pl; Web: www.mtp.pl Agri & Food Processing India Sep 22-24, 2009 Bangalore International Exhibition Centre, Bangalore, Karnataka, India Agri & Food Processing India 2009 is one of India's rare agriculture and food processing events, at this stage where agriculture and its related activities offer the potential for an exponential growth display in the years to come. India is one of the largest agricultural economies, with the largest population engaged in this primary sector. Adhesion Group. 35/37 rue des Abondances, Boulogne, France Tel: +(33)-(1)-41864187; Fax: +(33)-(1)-46038626 Basel Wine Fair Oct 24-01 Nov, 2009 Exhibition Center Basel, Basel, Basel-Stadt , Switzerland Basel Wine Fair - 2009 One of the largest wine fair in Switzerland, Basel Wine Fair has become the leading commercial platform for boutique wineries from around the world with limited-production wines available only in a handful of fine restaurants and specialised retailers. M. C. H. Swiss Exhibition (Basel) Limited. Ch,Basel, Switzerland Tel: +(41)-(61)-2062247; Fax: +(41)-(61)-2062189 Food Expo - Oman Oct 26-28, 2009 Oman International Exhibition Centre, Muscat, Oman Food Expo - Oman is the only show in Oman for the food and beverage industry. It covers everything related to food processing and food technology as well as catering, hospitality services, and agriculture. Omanexpo, LLC. P. O. Box 20, P.C 117 Wadi Kabir, Muscat Sultanate Of Oman, Oman. Tel: +(968)-(24)-790333; Fax: +(968)-(24)-706276 Icecream China Oct 28-31, 2009 Tianjin China International Exhibition Center, Tianjin, China Icecream China has been held on a yearly basis for ten years successfully. As this great event gained quite lots of No. 1 title, it has been regarded as miracle in the food and exhibition industry. Icecream China is well known by both manufacturers and suppliers of equipment and raw materials in frozen food industy and it is the most important event for them. Tianjin Qilong Exhibition Service Co, Limited. 32 Youyi Road, Hexi District, Tianjin, India. Tel: +(86)-(20)-87033630

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Industry Monitor – Agro processed food
10. Event Date Venue Highlights

July 2009

Contact Details 11. Event Date Venue

Highlights

Contact Details 12. Event Date Venue Highlights

Contact Details 13. Event Date Venue Highlights Contact Details 14. Event Date Venue Highlights Contact Details

China Fisheries & Seafood Expo Nov 03-04, 2009 Qingdao International Convention & Exhibition Center, Qingdao, China China Fisheries & Seafood Expo is a highly successful, established international exposition. Year after year, thousands of pre-qualified buyers and decision makers visit the show ready to do business. No other show of its type in Asia comes close to matching the size or success of China Fisheries & Seafood Expo. Sea Fare Expositions, Inc. 4250, 8th Avenue NW, Suite, Seattle, United States Of America. Tel:+(1)-(206)-7895741; Fax:+(1)-(206)-7890504 Food Processing & Packaging Indonesia Nov 11-14, 2009 Jakarta International Expo ,Gedung Pusat Niaga Lt. 1 Arena PRJ Kemayoran , Jakarta, Indonesia Food Processing & Packaging Indonesia is where you can raise your profile in the industry and add value to your brands, locate new agents and distributors for your products, launch a new product and generate media interest. Develop a personal and direct relationship with your clients, show your full product range in real life rather than a catalogue, let buyers use all five senses to gain a full appreciation of your product, get immediate feedback on your product range. Krista Media Pratama PT. Krista Exhibitions, Jln.Blandongan 28 DG, Jakarta, Indonesia. Tel:+(62)-(21)-6345861; Fax:+(62)-(21)-6340140/6342113 FRUIT ATTRACTION Nov 04-06, 2009 Feria de Madrid, IFEMA Feria de Madrid Feria de, Spain Fruit Attraction Exhibition is annual event. This is a unique platform for the fruit and vegetable industry, focusing the exhibitor participation in Spanish producers and distributors, producers from Europe and the rest of the world, particularly from Latin America. The event will be held between 04-06 Nov 2009 at Feria de Madrid. Info IFEMA. Parque Ferial Juan Carlos I, Madrid, Spain. Tel:+(34)-(91)-7223000; Fax:+(34)-(91)-7225801 SibProdMash Dec 01-04, 2009 Siberian Fair , Novosibirsk, Russia SibProdMash is the leading part of this technology forum. It showcases all kinds of food processing and packaging machines, materials, systems and products under one roof. This is the unique opportunity to meet senior buyers & decision makers from all facets of the user industry. The Siberian Fair, 220/10, Krasny Prospekt, Novosibirsk, Russia. Tel:+(7)-(3832)-106290; Fax:+(7)-(3832)-259845 Food & Life Expo Dec 03-06, 2009 New Munich Trade Fair Centre, Munich, Germany Traditionally, the exhibition draws food and drinks makers of Germany as a whole providing the exhibitors with an excellent opportunity to show the latest technologies and promote modern competitive equipment in the market. Gesellschaft Fur Handwerksmessen GmbH. Willy Brandt Allee, Munich, Germany. Tel:+(49)-(89)-949550; Fax:+(49)-(89)-94955239

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Industry Monitor – Agro processed food
15. Event Date Venue Highlights Contact Details

July 2009

India Foodex-Bangalore Dec 05-07, 2009 Palace Grounds, Bengaluru, India India Foodex-Bangalore is the International Exhibition on food products, Beverages, Food processing, Machinery, Food packaging machinery, Food additives, Dairy and Poultry, Meat, Processed food Products and Technologies. Media Today Pvt Ltd. T-30, First Floor, Khirki Extention, Malviya Nagar, New Delhi, India.Tel:+(91)-(11)-26682045; Fax:+(91)-(11)-26680153

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