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Name-Abhik Chakraborty (Roll No-14002) Specialization-Marketing Faculty Guide- Prof. Amlan Bhattacharya
TABLE OF CONTENTS
1. INDUSTRY OVERVIEW 1.1 USES OF SOYABEAN 1.2 GLOBAL SCENARIO 1.3 INDIAN SCENARIO 1.4. SOYBEAN VALUE CHAIN 1.5 MAJOR PLAYERS IN THE INDUSTRY(DOMESTIC & INTERNATIONAL) 1.6 COMPETITORS PROFILES 2. COMPANY ANALYSIS 2.1 COMPANY PROFILE 2.2 COMPANY FINACIAL STATEMENTS 2.3 SWOT ANALYSIS 3. PROJECT PROPOSAL 3.1 PROJECT OBJECTIVE 3.2 BACKGROUND 3.3 SCOPE 8 10 11 12 2 2 3 4 5 6 7 8
Soyabean is an important global crop and processed soyabean is the largest source of protein feed and second largest source of protein feed and second largest source of vegetable oil in the world. The major portion of the crop is solvent extracted with hexane to yield soy oil and soymeal and it is estimated that above 85% of the crop is crushed worldwide. Soymeal is widely used in the animal feed industry. A very small proportion of the crop is consumed directly by humans and several soyabean products appear in a large variety of processed foods. Soybeans derivatives are found in hundreds of human foods, animal feeds and Industrial products. The cultivation of soybean is successful in climates with hot summers, with temperatures between 20 degrees to 30 degrees being optimum. It can grow in a wide range of soils, with optimum growth in moist alluvial soils with a good organic content. Modern soybean varieties reach a height of around 1 m(3ft.) and take about 80-120days from sowing to harvesting.
USES OF SOYBEAN
World Soybean Production
According to BP’s statistical review of world energy 2011 Soybean is one of the major oilseed crops in the world. It is cultivated extensively in south Asian countries and U.S.A. (which account approximately 57% of total oilseed production in the world). This report suggests that 85% of the world’s production is crushed for oil, out of which oil recovery is 17-18% and the meal forms around 80%. GLOBAL CROP CALENDAR Country USA Brazil Argentina China India Sowing/Planting MT) Country
United States Brazil Argentina China India Paraguay Canada Ukraine Uruguay Bolivia World Total
April May June July Aug Sept Oct Nov Dec
TOP 10 SOYBE AN PROD UCERS IN YEAR 2011(I N MILLI ON
83.2 73.5 53.0 14.0 9.8 7.5 4.0 1.9 1.8 1.6 257.5
Soybean Exports- Global Global soybean exports for 2011-12 are projected at 97.58 million tonnes; up 5.16% as compared 92.79 million tonnes in 2010-11 on account of strong demand from China. Major exporters of soybean are USA, Brazil, and Argentina with a market share of about 42%, 25% and 12% respectively of global soybean exports. These three together contribute about 90% of global soyabean exports. Soybean Imports- Global The major importer of Soybean is China. China alone accounts for 60% world import (57.8 million MT this year out of global imports of 95.9 million tons. The other importing nations are European Union, Central Europe, Thailand, South Korea and other East Asian countries.
India is the 5th largest producer of soybean in the world. India’s export of soyabean meal surged to 38.38 lakh tonnes due to robust demand from livestock industry globally and firm overseas market (Thailand, Vietnam & China). According to 2008 survey report, India produces 6-7 million tonnes of beans, 1 million tonne of oil, and 4-5 million tonnes of soy meal in a normal year. Major production states are Madhya Pradesh (60%), Maharashtra (27%) and Rajasthan (8%). There are no imports of soybean into India as it is more feasible to import oil. Most of the beans produced are crushed and used for meeting the growing demand for soy meal and soy oil. In a nutshell India has 4% market share in Global soybean market.
Soybean output has more than doubled in the last 10 years and is expected to reach a level of 14 million tons by 2014, making available around 10 MMT of soybean meal with 7 MMT for exports.
In case of Soya Oil demand is large and is met by 60% import and 40% production whereas soymeal accounted for 84% of total edible oilseed exports from the country. In India it is used as Seeds are eaten whole, split & spouted. Oil used for paints, linoleum, oil cloth, printing inks, soap, insecticides, disinfectants apart from culinary. Meal( remnant after oil extraction), Soya flour, Soya Milk, Soya Curd, Tofu(Soya Paneer)
SOYBEAN VALUE CHAIN
Levell1-Green Soybean (vegetable)
Level 2- Dried & Extracted Soybean(Soy Oil,SoyMilk, Soy Dal)
Level 3- Crushed & Processed Soybean(Soy Meal, Soy Curd, Soy Flour)
MAJOR PLAYERS IN SOYABEAN INDUSTRY
Various players cater to different needs in value chain. They can be categorized as follows SOYABEAN SEED
Monsanto India Mahyco Eagle Seeds & Biotech Ruchi Soya(India) Adani Wilmar(India) J-Oil Mills Inc.(Japan) Cargill Inc.( Belgium)(Parent company of Cargill India Pvt. Ltd.) Bunge(USA )
MAJOR COMPETITORS PROFILES (IN A NUTSHELL)
Ruchi Soya (India) One of the leading manufacturers of high quality edible oils, vanaspati, bakery fats and soya foods in India, it had an annual turnover of over US $ 4Bn in FY11. It ranks among the top Indian FMCG players with its branded portfolio including Nutrela, Ruchi Gold, Sunrich, and Mahakosh. It is present across the value chain from oilseeds to final consumer pack products with access to over 175,000 hectares of land in India for palm oil plantations. It is also expanding in presence by securing lands in Ethiopia, Cambodia and other African countries. Financial Summary
Cargill India (India) Cargill is an international producer and marketer of food, agricultural, financial and industrial products and services. Founded in 1865, our privately held company employs 139,000 people in 65 countries. Cargill maintains a number of businesses in India, with operations including the handling and processing of a wide range of products, including refined oils, grain and oilseeds, sugar, cotton and animal feed. In addition, Cargill operates a value investing business. Their presence in India has been growing since they began a joint venture operation in 1987.
It is one of the leaders in the leader in edible oil segment in Indian market under the brand name Nature fresh. Since it’s a subsidiary of Cargill Inc. and it is not listed in Indian stock exchanges its financial are not mentioned separately. So in this report I am including whole of Cargill Inc. financial summary. Financial Summary FY11 Sales and other Revenues- $119.5 bn Earnings from continuous operations- $2.69 bn Cash flow from operations- $4.6 bn Cargill invested more than $3 billion globally in fiscal 2011—a record. With 25% of sales and revenues come from Asia-Pacific.
Given the presence of a large number of unorganised participants in the Indian edible oil market, the share of branded product sales has remained low with most low-income consumers opting for cheaper oils sold in loose form. As per industry data, only about 31% of urban households and about 9% of rural households consume branded edible oils, with the national average at 16%. Given the low penetration of branded oils; increasing affluence levels and quality consciousness of the Indian consumers, there is a significant growth potential in the branded segment. Amongst the major edible oils consumed, palm oil is still largely traded as a commodity and sold mostly in loose form, with packaged sales accounting only for 15%-20% of total sales. Sunflower and soya oil, on the other hand, have a high proportion of packaged sales estimated at around 70% and 55% of total sales. The major participants in the organised sector, namely, Ruchi Soya, Adani Wilmar Limited (AWL) & Cargill India, have a strong presence in the branded segment, with branded sales accounting for 38%, 58% and 60% of total edible oil sales of these companies respectively. Moreover, a few mid-sized, regional edible oil companies such as Mantora Oil Products Ltd, Modi Naturals and Tara Health Foods Ltd have also been striving to establish their brands.
COMPANY ANALYSIS OF ADANI WILMAR LTD.
Adani group entered the edible oil refining business through a 50:50 joint venture Company, Adani Wilmar Ltd. with Singapore’s Wilmar Group. The Adani Group of India the leaders in international trading & private infrastructure, and The Wilmar International Limited of Singapore - agri-business group and leading merchandiser and processor of edible oils. The company has production infrastructure across the country with a crushing capacity of over 6000 TPD (Tonnes per Day) and Refining capacity of over 5000 TPD. Adani Wilmar Limited provides edible oil, vanaspati, and specialty fats. The company offers soyabean oil, sesame oil, sunflower oil, cottonseed oil, groundnut oil, mustard oil, groundnut oil, and coconut oil, as well as vegetable ghee. It serves households and institutional buyers. The company offers its products through distributors, super stockiest, brokers, and other trade associates. It exports its products to the Middle East countries, South-East Asian countries, Africa, Ukraine, and Ghana. The company was incorporated in 1999 and is based in Ahmedabad, India.
Adani Wilmar’s flagship brand “Fortune” has been repositioned with a new mantra of ‘Joy of Eating’. Since its launch in 2000, Fortune took just 20 months to become India No.1 edible oil brands, and is still at the top of the charts. As per Nielsen RSA February 2010-11 report, Adani Wilmar’s brands hold No. 1 position in refined Soyabean and Mustard oil, No. 2 in Palmolein and No. 3 in Refined Sunflower oil. “Fortune” also became the 1st edible oil brand to be associated with major sporting events of Common wealth Games 2010 and ICC Cricket World Cup 2011. Adani Wilmar has recently launched value added oil “Fortune Plus”, the new healthy & light edible oil keeping the health conscious consumers in mind. Fortune Plus is a unique Product Offering a variety of special features to appeal to the young and health conscious India. The low absorption oil is endorsed by badminton ace Saina Nehwal. Their “Fortune” brand products are available in a range of edible oils including, soya oil, sunflower oil, groundnut oil, non-refined mustard oil and cotton seed oil. Other growing brands of Adani Wilmar are “Raag”, “Jubilee”, “Kings”, “Ivory”, “Bullet”, “Fryola” and “Avsar”. In India, Adani Wilmar has also added Vanaspati Ghee under its “Raag” brand, Basmati Rice under its “Pilaf Gold” and bakery shortening under its “Jubilee” brand to its product basket. Adani Wilmar’s acquisitions have led to expanding the existing brand range by adding brands like Aadhar, Alpha, Alpha Cookwell, Aadhar Bakewell and A-Kote. Adani Wilmar has set up India’s first port based refinery at Mundra, Gujarat. Today the Mundra refinery is one of India’s largest and most sophisticated oil refineries. Adani Wilmar has production infrastructure across the country with a crushing capacity of over 6000 TPD (Tonnes per Day) and Refining capacity of over 5000 TPD. Adani Wilmar is one of the very few national players in the Industry to have this massive production infrastructure, with all its plants so strategically located to take advantage of the Import Parity and Domestic crop season. Adani Wilmar also has packing operations at Kadi [Gujarat], Latur [Maharashtra], Jaipur [Rajasthan], Dharwad [Karnataka], Dewas [Madhya Pradesh], Nagpur [Maharashtra] and Cochin [Kerala]. With 80 branches, 5000 distributors catering to 1 million outlets, Adani Wilmar’s products reach to 20 million households across India.
Following the success in India, Adani Wilmar introduced branded Edible oil to MiddleEast and is now exporting its products to more than 19countries in the Middle-East, South East Asia & East Africa. They have a diverse product mix in respect of agro-commodities, which includes food grains, castor oil, pulses, soya meal, rapeseed meal and castor meal. Adani Wilmar have created a fully operational network that helps in creating healthy mix of midstream and downstream, and went on its way to develop upstream business
COMPANY’S FINANCIAL ANALYSIS
According to the Individual - Audited financial statement for the Year of 2011, Total operating income increased with 39% from INR 61,100,340,808 to INR 85,429,157,813. Total expenditure increased with 40% from INR 60,856,603,759 to INR 85,337,869,640. Profit after taxation decreased by 14.5% from INR 200,981,086 to INR 171,258,394. Return on equity (Net income/Total equity) went from 14.53% to 2.33%. The Return On Asset (Net income / Total Asset) went from 8.07% to 1.07% The Net Profit Margin (Net Income/Net Sales) went from 1.03% to 0.16% when compared to the same period of last year. The Debt to Equity Ratio (Total Liabilities/Equity) was 218.67% compared to 180.14% of last year.
Finally, the Current Ratio (Current Assets/Current Liabilities) went from 1.62 to 1.35 when compared to the previous year.
SWOT ANALYSIS OF THE INDUSTRY (W.R.T. TO ADANI WILMAR LTD.)
Strengths 1. Multifold increase in capacity over years. 2. Well-dispersed mix of proximity to raw materials and accessibility to the markets through its crushing and refining units. 3. Has smartly moved from supply chain to manufacturing.
4. Has an efficient network of qualified and experienced operators and engineers. 5. Has built up a strong stable portfolio of brands.
6. Efficient marketing and distribution network covering over 5, 83,000 retail outlets. Weakness 1. Company’s raw materials are agro based and hence subject to volatility in the national and international commodity markets. Opportunities 1. Foraying into other healthy food products by making prominent presence in value chain (mass, value, premium). 2. Strengthening its leadership in the branded edible oil segments. 3. Setting up of commodity exchanges have provided reasonable opportunities for the industry as well as the company to hedge and manage the impact of price fluctuations.
4. Price advantage as Indian soymeal is still cheaper when compared with the American or Brazilian soymeal Threats 1. Exposed to foreign exchange risk on account of products which are imported and further processed before sales in the domestic markets. 2. Any change in Government policy with respect to edible oils /food items can have a major impact on the profits of the company. 3. The business is subject to many regulations by several authorities which could have an adverse effect on company's business and the results of operation.
Project Objective To derive market potential for Soya TVP (Popularly known as Soya Bari) in Kolkata market and recommend channel marketing strategy for the product.
Back ground • Current TVP (Soya Bari) Market is divided in two categories : a) Consumer packs – 200g, 75g, 1 Kg packs b) Bulk Packs • – 20 Kg HDPE Sack (90% - Rest 5 Kg / 10 Kg Bags)
TVP in bulk economy pack has already grown to a dominating position, setting a market trend but sales realization / Kg is low as it largely caters to lower strata of Indian population. The delivered margins for this category is also low because of the presence of regional players in each potential region Consumer packs are emerging and gaining market share on YoY basis , delivered margins in this segment is high and largely driven by Quality and Brand conscious customers. Market is dominated by Nutrela which is the only national player enjoying more than 90% of the share
Key Insights about the scope of the project 1. Current TVP Market Size (In terms of Volume and Value) of Kolkata with respect to Bulk Packs & Consumer Packs 2. Industry Analysis with respect to competition for the Product with respect to Bulk and Consumer packs i.e. Information related to Taxes, Primary Freight, Secondary Freight implications, commercial practices etc. 3. Annual Demand projection with seasonal variations 4. Common Trade Practices with respect to Bulk and Consumer packs 5. Trade Price and Margins thereof at all level (Retailer, Wholesalers and Traders) 6. Value Chain Analysis – How the product reaches from Factory to the Trade and then to consumer 7. Sales promotions and Channel marketing Strategy of the competitors (Nutrela in Consumer Packs and Local Players / Ruchi Soya in Bulk Packs