food processing industry in india (shoury gupta)

7/29/2019 Food Processing Industry in India (Shoury Gupta)

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July 2011

PROJECT REPORT

Food Processing Industry in India

Dun & Bradstreet


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Contents

INDUSTRY OVERVIEW ............................................................................................................ 3

Industry Structure ................................................................................................................................... 4

Risks......................................................................................................................................................... 5

Outlook..................................................................................................................................................... 5

INDUSTRY STRUCTURE .......................................................................................................... 7

The Segments......................................................................................................................................... 7

REGULATORY & POLICY ENVIRONMENT ............................................................................11

Major Policy Initiatives ......................................................................................................................... 11

Sector Specific Government Policies ................................................................................................ 14

Fruits and Vegetables...................................................................................................................... 14

Fisheries ............................................................................................................................................ 15

Meat and Poultry .............................................................................................................................. 15

Dairy Products .................................................................................................................................. 15

Duty Structure ....................................................................................................................................... 16Foreign Direct Investment in the Industry......................................................................................... 17

Steps taken to attract FDI ............................................................................................................... 17

SEGMENT ANALYSIS .............................................................................................................18

Dairy Products ...................................................................................................................................... 18

Marine Products ................................................................................................................................... 19

Fruits and Vegetables.......................................................................................................................... 20

Meat & Poultry Sector.......................................................................................................................... 22

Market Growth Drivers......................................................................................................................... 23

Methods of Processing Food.............................................................................................................. 26

Dairy Sector........................................................................................................................................... 27

Marine Sector........................................................................................................................................ 29

Meat and poultry sector....................................................................................................................... 30


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Indian Firms need to strengthen R&D base ..................................................................................... 31

Emerging Business Models ................................................................................................................ 32

Terminal Market ................................................................................................................................. 32

Contract Farming ................................................................................................................................ 32

COMPANY PROFILES .............................................................................................................34

Hindustan Unilever Limited (HUL) ..................................................................................................... 34

Dabur India Ltd. .................................................................................................................................... 38

ITC Limited ............................................................................................................................................ 41

INTERNATIONAL SCENARIO .................................................................................................44

Fruits and vegetables .......................................................................................................................... 45

Dairy Sector........................................................................................................................................... 45

Meat and poultry Sector...................................................................................................................... 46Global vs. emerging markets.............................................................................................................. 48

COMPETITIVE LANDSCAPE ...................................................................................................49

RISK ASSESSMENT ................................................................................................................51

OUTLOOK ................................................................................................................................54


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INDUSTRY OVERVIEW

According to Ministry of Food Processing in India, the food processing industry is ranked 5th

largest sectorin terms of production, consumption, export and expected growth in India. The food processing industry in

India is over 200 years old. The Food Processing Industry sector in India is one of the largest industries in

terms of production, consumption, export and growth prospects. It contributed 6.0 per cent to Indias GDP

in 2010. The industry's size is estimated at US $ 70 billion by the Ministry of Food Processing in India as

in 2009. Nearly, one third of the entire Indian food market share comprises of processed food. Changing

lifestyles, food habits, organized food retail and urbanization are the key factors for processed foods in

India, these are post-liberalization trends and they give boost to the sector.

Output (000tons)

Source: Ministry of Food Processing in India

India's food processing sector covers a wide range of products fruit and vegetables; meat and poultry;

milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer

product groups like confectionery, chocolates and cocoa products, Soya-based products, mineral water,

high protein foods and so on.

Post 21st century, food processing was largely confined to the food preservation, packaging and

transportation, which mainly involved salting, curdling, drying, pickling, etc. However, over the years, with

emerging technologies, the sector has widened its scope. It has started producing many new items like

ready-to-eat food, beverages, processed and frozen fruit and vegetable products, marine and meat

products, etc. In 2008, the turnover of the total food market was approximately Rs.250, 000 crores (US $

69.4 billion) out of which value-added food products comprised Rs.80,000 crores (US $ 22.2 billion).

1709 1772

2502

3246

0

500

1000

1500

2000

2500

3000

3500

2001-02 2002-03 2003-04 2004-05

13.68%


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The government has accorded it a high priority, with a number of fiscal reliefs and incentives, to

encourage commercialization and value addition to agricultural produce, for minimizing pre/post harvest

wastage, generating employment and export growth. India's food processing sector covers a wide range

of products fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries,

plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa

products, Soya-based products, mineral water, high protein foods and so on.

Industry Structure

An extensive and highly fragmented industry, the food processing sector largely comprises of the

following sub-segments: fruits & vegetables, milk and milk products, beer & alcoholic beverages, meat

and poultry, marine products, grain processing, packaged/convenience food and packaged drinks. A

large number of players in this industry are small sized companies, and are largely concentrated in the

unorganized segment. This segment accounts for more than 70% of the output in volume terms and 50%in value terms. However, though the organized sector is comparatively small, it is growing at a much

faster pace.

Structure of Indian Food Processing Industry

Source: FAIDA/ Ministry of Food Processing in India

Currently there are over two dozen players in the food processing market. Several global majors are

present in the industry. Despite the entry of new players in the previous years, market shares continue to

remain concentrated with top companies like ITC Limited, Agro Tech Foods, Cadbury India Ltd., PepsiCo

India, Holdings Nestle India Pvt. Ltd., Britannia Industries Ltd. and Hindustan Lever Limited, MTR foods

limited. The food processing industry is characterized by intense competition and escalating price wars.

Dairy sector accounts for majority of the consumers in the industry.

42%

33%

25%

Unorganised Small Scale Industries Organised


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Risks

The industry faces various risks, chief amongst them being: Field losses (Pest, diseases, rodents, etc.);

Pre- Processing (Inefficient harvesting, drying and milling); Storage (Technical difficulties) and wastage by

consumers. Poor road conditions and inadequate port facilities are also adversely affects transportationand causes delays in exports. Inadequate cold storage facility in the country is cited as a reason for the

wastage of food items. India is one of the worlds largest producers of fruits and vegetables but nearly 30

percent of this production is lost due to inadequate cold chain facilities. With a long coastline of 3650

miles, the Indian marine product industry is growing rapidly, but large quantities of marine products are

wasted because of lack of storage facilities. Other food segments like dairy products, and processed

meat, also require cold storage facilities.

Outlook

India has the potential to become the leading food supplier to the world and at the same time it has vast

growing domestic market with over a billion people and population growing at a CAGR of 1.6% per

annum with food being the single largest component of private consumption expenditure accounting for

53% of the total expenditure. Indias large market size, ravenous appetite for food with growing incomes

and changing life styles create incredible market opportunities for food producers, Food processors,

machinery makers, food technology and service providers.

India has a Competitive Advantage in Food Processing

India stands strong on the Global front

Factor India Global Rank Share in Global Production

Arable Land (Million Hectares) 161 2 -

Irrigated Lines (Million Hectares) 55 1 -

Coast Line (Km) 8041 19 -

Major Food Crops (Million Tons) 35 3 4%

Fruits (Metric tons) 47 1 10%

Vegetables (Metric Tons) 82 2 10%

Cattle (Million) 226 1 20%

Source: MOFPI annual report, India Food Processing Sector, 2005


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The UK, the US and Japan are processing 80 per cent, 70 per cent, 75 per cent (of food), whereas India

is processing just 7 per cent. This shows a tremendous growth potential in the country.

Percentage of products processed by various countries

Source: United States Department of Agriculture, USDA

According to market sources, opportunities and investment opportunities in the Indian food industry are

set to shoot up by a huge 42.5% to US$181 billion in 2015 and to US$318 billion by 2020. India is one of

the fastest growing economies in the world. Huge untapped potential in food processing, rising concerns

over food safety, increasing level of disposable income is expected to lead the industry growth in

upcoming years. The industry would create 9 million employment opportunities from the current 1.6 m

and investment of Rs 1, 50,000 crore in the coming 10 years.

80%

70%75%

7%

0%

20%

40%

60%

80%

100%

UK US Japan India


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INDUSTRY STRUCTURE

Indian food processing sector is highly fragmented industry, it widely comprises of the following sub

segments: fruits and vegetables, milk and milk products, beer and alcoholic beverages, meat and poultry,

marine products, grain processing, packaged or convenience food and packaged drinks. A huge number

of entrepreneurs in this industry are small in terms of their production and operations, and are largely

concentrated in the unorganized segment. This segment accounts for more than 70% of the output in

terms of volume and 50% in terms of value. Though the organized sector seems comparatively small, it is

growing at a much faster pace.

The food processing industry in India is a sunrise sector that has gained prominence in recent years.

Availability of raw materials, changing lifestyles and relaxation in policies has given a considerable push

to the industrys growth. In India, most foods are consumed in the fresh form and a small quantity is

processed for value addition. In recent years, however, the market for branded processed food products

has expanded. As per a study conducted by the Confederation of Indian Industry, the total food market

turnover is over Rs. 2,500 billion (US$ 69.4 billion). Of this, value-added food market comprises Rs. 800

billion (US$ 22.2 billion).

The Segments

An extensive and highly fragmented industry, the food processing sector largely comprises of the

following sub-segments: fruits & vegetables, milk and milk products, beer & alcoholic beverages, meat

and poultry, marine products, grain processing, packaged/convenience food and packaged drinks. A

large number of players in this industry are small sized companies, and are largely concentrated in the

unorganized segment. This segment accounts for more than 70% of the output in volume terms and 50%

in value terms. However, though the organized sector is comparatively small, it is growing at a much

faster pace.


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Despite being the one of the largest producers of agricultural commodities, India does not figure among

the top twenty exports of such commodities or their processed products. For example, the country is

amongst the largest producers of the primary products listed above but is not a large exporter of cereal

preparations, cheese of skimmed cow milk, chicken meat, citrus fruits, fresh cream, wheat flour or food

preparations, frozen potatoes, fruit juices and preparations, tropical dried fruits, ice cream and edible ice,

juices of tomatoes and vegetables, concentrated lemon juices, lemons and limes or even mango juice.

While agricultural production is significant, the food processing industry is still under developed. Of the

countrys total agriculture and food produce, only around 2% is processed. The highest share of the

processed food is in the dairy sector, where 35% of the total produce is processed, of which only 13% is

processed by the organised sector. The processing level is around 2.2% in fruits and vegetables, 21% in

meat and 6% in poultry products.


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Sector wise share in the Food processing industry

Source: D&B Research

The Fruits and Vegetables sector is processed the least. This is because these are too perishable and

most of them cannot be stored for many days. On the other hand, milk and dairy products, Meat and

Poultry products are processed more because they can be stored in refrigeration for long periods of time.

Source- D & B Research

25%

41%

31%

3%

Meat Dairy products Poultry Fruits and Vegetables

Segment Dairy

Sector

Fruits &

Vegetables

Meat &

Poultry

Fisheries Packaged

Foods

Growth Rate 15% 20% 10% 20% 8%

Key

Segments

Value added

milk

products like

butter,

cheese and

ghee

Raw fruit and

vegetables,

fruit pulps,

canned fruits

and pickles

Cattle, buffalo

and poultry

Marine

fisheries,

frozen

products and

minced fish

products

Noodles/

vermicelli

Share of

Organised

Sector

15% 48% 5% - 80%


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In India, most foods are consumed in the fresh form and a small quantity is processed for value addition.

In recent years, however, the market for branded processed food products has expanded. As per a study

conducted by the Confederation of Indian Industry, the total food market turnover is over Rs. 2,500 billion

(US$ 69.4 billion). Of this, value-added food market comprises Rs. 800 billion (US$ 22.2 billion). Growing

at about 14%, the processed food industry has started attracting increased investment to cater to both,

the domestic and export demand.


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REGULATORY & POLICY ENVIRONMENT

The Ministry of Food Processing Industries (MFPI) is a ministry of the Government of India is responsible

for formulation and administration of the rules and regulations and laws relating to food processing in

India. The ministry was set up in the year 1988, with a view to develop a strong and vibrant food

processing industry, to create increased employment in rural sector and enable farmers to reap the

benefits of modern technology and to create a of surplus for exports and stimulating demand for

processed food. The ministry is currently headed by Sharad Pawar, a Minister of State with Independent

Charge. Its main functions are:

Policy support and developmental

Promotional and technical

Advisory and regulatory

The goals of MFPI are as following:-

Better utilization and value addition of agricultural produce for enhancement of income of farmers.

Minimizing wastage at all stages in the food processing chain by the development of

infrastructure for storage, transportation and processing of agro-food produce.

Induction of modern technology into the food processing industries from both domestic and

external sources.

Maximum utilization of agricultural residues and by-products of the primary agricultural produce

as also of the processed industry.

To encourage R&D in food processing for product and process development and improved

packaging.

To provide policy support, promotional initiatives and physical facilities to promote value added

export.

Major Policy Initiatives

The Government has formulated and implemented several schemes to provide financial assistance for

setting up and modernizing of food processing units, creation of infrastructure, support for research and

development and human resource development in addition to other promotional measures to encourage

the growth of the processed food sector.
http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Sharad_Pawarhttp://en.wikipedia.org/wiki/Sharad_Pawarhttp://en.wikipedia.org/wiki/Government_of_India


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Time

Period

POLICIES/ INITIATIVES IMPACT/ PROVISIONS

Pre 19th

century

Food processing industry is declared a prioritysector. New Trade Policy places greater thrust

on Agro-based industries.

The Food processing industry whichwas new to India started getting famous.

With government initiatives it became a

major sector of the agricultural industry.

Fruits & vegetables products, condensed milk,

Ice cream, Meat preparation, Fish/Poultry,

Pectin, Pasta, dairy machineries completely

exempt from Central Excise Duty.

With the removal of Central excise duty,

purchasing powers of consumers

increased. Now, one could buy these

machineries at a cheaper price.

2005 -Custom duty on Packaging Machine reduced.

-Zero duty import of capital goods and raw

material for 100 per cent export oriented units

At this time technology was poor in

India. Importing machinery from other

countries was too expensive. With the

reduction of custom duty, imports of

Packaging Machinery increased and the

industry developed even more.

2005 Income Tax rebate allowed (100% of profits for 5

years and 25% of profits for the next 5 years) for

new industries in fruits and vegetables.

As the income tax rebate was allowed,

the income of players increased and at

the same time, motivated them to invest

more in the food processing industry.

2006 Food Safety and Standard Act FSSA was aided by several scientific

panels and a central advisory committee

to lay down standards for food safety.

These standards included specifications

for ingredients, contaminants, pesticide

residue, biological hazards and labels.

Now the consumers could buy

processed food commodities without

risking their health.

2007 Eleventh Five Year Plan Strategic intervention with redesigned

schemes and strong implementation


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In the Budget for 2007-08, the following fiscal incentives were announced:

Exemption limit of excise duty for small scale Industry (SSI) rose from Rs.1 crore to Rs.1.5

crores.

Excise duty on biscuits reduced from 8% to 0% whose retail price does not exceed Rs.100 per

Kg.

Excise duty reduced from 8% to 0% on all kinds of food mixes including instant mixes.

Soya Bari (food supplements) and ready to eat packaged foods fully exempt from excise duty.

Excise duty on reefer vans (refrigerated motor vehicles) reduced from 16% to 8%. Customs duty

also cut.

Custom duty on food processing machinery reduced from 7.5% to 5%.

Custom duty on sunflower oil (crude) reduced from 65% to 50% and of sunflower oil (refined)

reduced from 75% to 60%.

Special additional duty of 4% waived in the case of refined edible oil.

Central sales tax reduced from 4% to 3% from April, 2007.

arrangements at food parks, cold

chains, street food and abattoirs.

2008 Mega FoodParkScheme Small and medium entrepreneurs found

it easy to invest in capital intensive

activities. The scheme also included

cold storage facilities and training

facilities.

2008 Integrated Cold Chain Facility The scheme was intended to improve

viability of cold storages and enhance

cold storage capacity. Assistance at 25

per cent of the project cost in general

areas and 33.33 per cent in difficult

areas subject to a maximum of Rs. 7.5

million was provided for establishment of

cold chain facilities.


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All services provided by Technology Business Incubators exempted from service tax.

Similarly their Incubates whose annual business turnover does not exceed Rs.50 lakh exempted

from service tax for the first three years.

Sector Specific Government Policies

Fruits and Vegetables

Policy/ Initiative Impact

Though no industrial license is required

for setting up Fruits & Vegetable

Processing industries, setting-up 100per cent Export Oriented Units require

specific Govt. approvals. Many Fruits &

Vegetables Processing industries are

eligible for automatic approval of

foreign technology agreement and up

to 51 per cent foreign equity

participation.

Since, no license is required; more people findit easy to set up fruits and vegetables

industries. The 51% equity motivates moreindustries setting up.

This sector is regulated by the Fruit

Products Order, 1955 (FPO), issuedunder the Essential Commodities Act

Licensing under this Order lays down theminimum requirements for: Sanitary andhygienic conditions of premises, surroundingsand personnel. Water to be used forprocessing, Machinery and equipments,Product standards.

Some items like: pickles & chutneys,

tapioca sago and tapioca flour are

reserved for exclusive manufacture in

the small scale sector

By providing license of such products toexclusive companies, small scale firms startedrising up and the market became even morecompetitive.

Export of fruit & vegetable products isfreely allowed.

Free trade leads to economic efficiency. Theinitiative also led to small scale firms rising up.


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Fisheries

Policy/ Initiative Impact

Foreign equity is permitted in fishprocessing sector. Fish processing

projects with a minimum of 20 per cent

value addition can be set up as 100 per

cent Export Oriented Units

Fish processing projects with a minimum of 20per cent value addition can be set up as 100per cent Export Oriented Units

All items can be exported freely except

for silver pomfrets of weight less than

300 grams

Free trade leads to economic efficiency. Theinitiative also led to small scale firms rising up.

Export of marine products is allowed

only after registration of the units as an

exporter with the MPEDA.

Registration did away from the huge no. Of

illegal marine products exports being done till1978.

Meat and Poultry

The Meat Products Control Order, 1973 under the Essential Commodities Act, 1954 regulates the

manufacture, quality and sale of all meat products

A license is required under this order to set up of a factory for producing/processing meat

products

Export of meat is subjected to pre-shipment inspection and a certificate is required from State

Animal Husbandry Department/Directorate of Marketing and Inspection

Slaughter of cows is banned in most of the States. Export of beef is prohibited

Permission from the civic bodies/State Government (Department of Animal Husbandry) is also

required before setting up a meat processing unit integrated with a slaughter house

Dairy Products

Milk and Milk Products Order (MMPO) regulates milk and milk products production in the country.

The order requires no permission for units handling less than 10,000 liters of liquid milk per day or

milk solids up to 500 tons per annum

All the milk products except malted foods are covered in the category of industries for which

foreign equity participation up to 51 per cent is automatically allowed.


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Duty Structure

Government policies have played an important role in shaping the size and structure of the industry. A

gradual reduction in excise and custom duties over the years has translated into greater demands for

processed food products and the resultant increasing production volumes.

Indian Excise Duty Structure

Products Excise Duty

Fruits and Vegetables Exempt

Milk and Milk Products (with a few exceptions) Exempt

Malted Foods 16%

Other Processed Foods 16%

Packaging Materials for Packaging Food 16%

Packaging Machinery/ Equipment 16%

Breads, Biscuits and other bakery products 8%

Source- Rabobank

Indian Custom Duty Structure

Products Custom Duty

Fruit, Pulps, juices, fruit based drinks 30%

Milk and Milk products (with a few exceptions) 30%

Packed preparation of meat, fish and poultry 100%

Other food products 30%

Source- Rabobank


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Foreign Direct Investment in the Industry

The Indian food processing market is one of the largest in terms of production and growth prospects.

Since, India is one of the major food producers worldwide, with new reforms ruling the roost, it

encourages commercialization. The country's food processing market is opening up to a wide range of

investors across the globe. In fact, in the last decade, India moved from an era of scarcity to surplus, in

the area of food production. Consequently, analysts are of the opinion that the Food Processing Industry

in India is on an assured track of growth and profitability over the next five years. It is also estimated that

food-processing market in India will attract a phenomenal investment, in the form of capital, human,

technological, and financial, of over US$32.1 million by 2010.

Foreign Direct Investment in India in past years (in millions)

Source- MOFPI Annual Report

Steps taken to attract FDI

Rural connectivity to unconnected habitations with population of 500 persons or more by 2007

Infrastructure for post harvest management, logistics (including cold chain), markets, retailing,

food processing- are priority areas

Plan to set up modern markets with auction centres

Attracting FDI & private sector investment in infrastructure

0

100

200

300

400

500

600

700

2004-05 2005-06 2006-07 2007-08 2008-09


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SEGMENT ANALYSIS

Dairy Products

Dairy products form an integral component of the human diet. The different products obtained from the

dairy spread from milk to beef. This spread is interspersed by a host of products suited to the various

ages, tastes and nutritional needs of the humans. Dairy industry is one of the most important agro-

processing industries worldwide. According to Ministry of Food Processing in India, India stands first in

the world in terms of milk production in the world and is expected to grow at 15-20 per cent. The current

size of the Indian dairy sector is Rs.3133.5 billion (2009) and has been growing at 5 per cent a year. India

has the highest and ever increasing livestock population in the world with 50% of the buffaloes and 20%

of the worlds cattle population, mostof which are milch cows and milch buffaloes. Indias dairy industry is

considered as one of the most successful development programmes in the post-Independence period.

Livestock Population (In Millions)

Source- Livestock Census 2003 conducted by Department of Animal Husbandry, Dairying & Fisheries

India has emerged as the largest milk producing country in the world with present level of annual milk

production estimated as 94.5 million tonnes. Government expects a production level of 135 million tonnes

by the year 2015. The major dairy processing states are Uttar Pradesh, Gujarat, Punjab, Haryana and

Maharashtra.

292.9

336.5 353.3

419.6470.9 485

0

100

200

300

400

500

600

1951 1961 1972 1982 1992 2003


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Milk Production

Source- Department of Animal Husbandry, Dairying and Fishing

Marine Products

Fish production plays an important role in the socio- economic life of India. It is a rich source of protein

and high quality food. It is also an important source for income and employment to millions of ruralfarmers, particularly women. The 8,000 km coastline from inland and marine resources, 3 million hectares

of reservoirs, 1.4 million hectares of brackish water, 50,600 sq km of continental shelf area and 2.2 million

sq km of exclusive economic zone are Indias vast potential resources for fish producti on.

With a large human population in India and over 250 million economically strong potential consumers of

food and those who have an adequate purchasing power, the domestic demand for the fish and

processed fish food is increasing very rapidly. Marine products have created a huge demand in the world

market. With the high unit value, seafood has been acclaimed as one of the fastest moving commodity in

the world market. The world market for seafood has doubled within the last decade reaching US $49.32

billion in 2005. India's share is only 2.4% at present; it is mainly dependant on shrimp as a product.

However, the situation is changing due to the increased attention/ demand for other fishery resources like

squid, cuttlefish, fin fish, etc. and is being exported to the markets of Western Europe and South East

Asia. This segment also provides employment to 11 million people engaged fully, partially or in subsidiary

activities pertaining to the sector.

0

20

40

60

80

100

120

3.32%


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The production increased from 0.75 million metric tons in 1950-51 to 6.40 million metric tons in year

2003-04. A particularly significant progress in production is noticed from year 2001-2002 onwards. The

share of marine product exports has steadily grown over the years; from a mere Rs 3.92 crore in 1961-62

to Rs 6,292.04 crore in 2005-06, accounting for approximately 1.5% of the total exports from India. Japan,

USA and the Western European countries are the principal buyers of Indian frozen shrimp. Japan

retained its position as the single largest buyer for Indian marine products till 2001-02 accounting forabout 31% in the total export value. Major Fish processing states in India are Kerala, Maharashtra and

West Bengal.

Marine products have created a sensation in the world market because of their high health attributes.

With the high unit value, seafood has been acclaimed as one of the fastest moving commodity in theworld market. The world market for seafood has doubled within the last decade reaching US $49.32

billion mark India's share is 2.4%, dependence on shrimp as a product and is changing due to the

increased attention given on other fishery resource like squid, cuttlefish, fin fish, etc. and penetrating into

markets of Western Europe and South East Asia.

Fruits and Vegetables

Fruits and vegetables is one of the most important and fast growing sub-sectors of the food processing

sector, as fruits and vegetables form an indispensable part of healthy diet. India accounts for 13% of

vegetables and 12% of fruits production globally, with an enviable share in few categories like Mango,

Banana, Cashew, Green Peas and Onion.

The major exporters of fruits are the USA, Spain and Italy. India has a 1% share in the export market of

the world trade.

Exports of Marine Products to other countries by India

Source- MOFPI, Annual Report 2006

0

100000

200000

300000

400000

500000

600000

1970-711980-811990-912000-012001-022002-032003-042004-052005-06


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India produces the

widest range of fruits and vegetables in the world. It is the second largest vegetable and third largest fruit

producer accounting for 8.4% of the worlds food and vegetable production.

Exports of Fruits and Vegetables % by various countries

Source- Technology Exports Development Organization Report

Indias share(%) in Global Production of Fruits and Vegetables

Source- EXIM Bank

1412

108

64 4 3 2 1

36

0

5

10

15

2025

30

35

40

41

23 2410

59

77 7690

0

20

40

60

80

100

120

Mango Banana Green Peas Onion

World

India


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Meat & Poultry Sector

It is believed that the Indian Poultry Industry is 5,000 years old, since last 4 decades it began to witness

remarkable growth from backyard to poultry industry. In 2003 India had a livestock population of 470

million that included 205 mn cattle and 90 million buffaloes. The country produces about 450 mn broilers

and 30 billion eggs annually. Cattle, buffaloes, sheep and goat, pigs and poultry are the types of animals,which are generally used for production of meat. Slaughter rate for cattle as a whole is 20%, for buffaloes

it is 41%, pigs 99%, sheep 30% and 40% for goats. The country has 3,600 slaughterhouses, 9 modern

abattoirs and 171 meat-processing units licensed under the meat products order.

The poultry industry is among the faster growing sectors rising at a rate of 8% per year. Vertical

integration of poultry production and marketing has lowered costs of production, marketing margins and

consumer prices of poultry meat. There are eight integrated poultry processing units in the country, which

hold a significant share in the industry.

Category wise share of Meat and Poultry Products

Source- National Meat and Poultry Processing Board

Indian Broiler Meat(Poultry) Production

Source- USDA Report 2011

32

2410

11

23 Beef

Poultry

Pork

Sheep Mutton

Goat

0

1000

2000

3000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


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Market Growth Drivers

1) Changing demographic profile: There is a shift in the demographic profile of the country. The

literacy rates, educational level, composition of population, low rate of fertility and morality

increases the population of old age persons. There is an increased participation of the young

people in work force which has a stimulating aftermath in more and more number of people

shifting to processed food for convenience.

2) Changing life style: In the past few decades, there is a tremendous change in the life style of

the Indian population. The Indian culture has been shifting from joint families to nuclear family.

There is a substantial increase in the literacy rate and educational level. Due to the urbanization

and more no of women participating in the work force, there is a gradual shift to processed foods.

Again with the emergence of MNCs and BPOs the western culture is proliferating which has

changed the demand patterns and provided the much needed impetus to the processed foods. In

addition, more people are now days demanding quality and salubrious foods, which ultimately

hinges on processed foods.

3) Government support: Since the independence, GOI has been giving much importance to the

food industry due to its competitiveness. Now the government is looking for tax sops for the

growing industry.


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4) Urbanization: The economically active population in the country has led to the increased

requirement for processed foods. As a report from the Working Commission on Urban

Development, urban population is expected to reach 433 million by 2021, taking the level of

urbanization to about 32%. This augurs well for food processing Indian players as urbanization is

one of the factors driving demand in this sector.

Urban Population in Millions

Source- Planning Commission, Compiled by D&B research service

5) Road Infrastructure: The quality of roads also influences the decision making process in the

purchase of a processed food product. Often, poor road infrastructure acts as a deterrent to

buying a car, especially when it comes to investing in high end machinery. At the same time,

good quality and manageable traffic conditions prompts one to buy more processed foods and a

producer to invest in modern machinery. The government thrust on infrastructure development

across the country is expected to lower incidences of postponed processed food purchase

decisions, though not in the immediate future. To add to the problems, the cost of transportation

of processed foods is extremely high.

6) COLD STORAGE FACILITIES: In spite of constant steps by government, the cold storage facility

remains to be a key failure of the sector. In the industry, cold storage is the most vital thing

required to provide storage for foods which otherwise are very highly perishable.

7) INADEQUATE QUALITY CONTROL AND TESTING INFRASTRUCURE: Due to inadequate

institutions and standards, consumers find it difficult to trust on the company. These standards

include specifications for ingredients, contaminants, pesticide residue, biological hazards and

labels.

0

100

200

300

400

500

1951 1991 2001 2011 P 2021 P

47.04%


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8) HIGH PACKAGING COSTS: Packaging is another vital part of the food processing industry.

Packaging of foods is a bit costly which refrains many of the consumers from this sector from

buying processed foods.

9) COST AND ACCESS TO FINANCE: One of the key factors responsible for the healthy sales of

automobiles in recent years has been falling interest rates. This augurs well for the growth indemand for passenger vehicles.

10) Rising Income Levels: With rising income levels and the consequent increase in disposable

income, purchasing processed foods is not a matter of luxury now, for at least a part of the

population. Food processing sector has strong correlation with economic growth. Personal disposable

income in the hands of the consumer determines their purchasing power and thus, their ability to

purchase.

11) Increasing food retailing in India: Modern food formats like Food Bazaar and Spencer's have

their eye on the unbranded part of the consumer's shopping basket. This constitutes as much as 60%of the total purchases and growing sharply, says AC Nielsen estimates. Retailers are offering a

package of convenience and freshness, and have an edge over manufacturers that focus mainly on

packaged conveniences.

12) Growth in terminal Markets: A terminal market is a central site, often in a metropolitan area,

that serves as an assembly and trading place forcommodities. Terminal markets

foragricultural commodities are usually at or near majortransportation hubs.
http://en.wikipedia.org/wiki/Metropolitan_areahttp://en.wikipedia.org/wiki/Commoditieshttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Transportation_hubhttp://en.wikipedia.org/wiki/Transportation_hubhttp://en.wikipedia.org/wiki/Agriculturehttp://en.wikipedia.org/wiki/Commoditieshttp://en.wikipedia.org/wiki/Metropolitan_area


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Methods of Processing Food

Pasteurisation: Pasteurization is a process of heating a food, usually liquid, to a specific temperature for

a definite length of time, and then cooling it immediately. This process slows microbial growth in food.

Pasteurization is typically associated with milk; pasteurization of milk was first suggested by Franz von

Soxhlet in 1886. It is the main reason for milk's extended shelf life. High Temperature Short Time (HTST)

pasteurized milk typically has a refrigerated shelf life of two to three weeks, whereas ultra pasteurized

milk can last much longer, sometimes two to three months. When ultra heat treatment (UHT) is combined

with sterile handling and container technology (such as aseptic packaging), it can even be stored

unrefrigerated for 69 months.

Canning: Canning is a method ofpreserving food in which the food contents are processed and sealed inan airtight container. Canning provides a typical shelf life ranging from one to five years, although under

specific circumstances a freeze-dried canned product can last as long as 30 years in an edible state.

Cans are cheaper and quicker to make, and much less fragile than glass jars. Glass jars have remained

popular for some high-value products and in home canning.

Fermentation: Fermentation in food processing typically is the conversion

ofcarbohydrates to alcohols and carbon dioxide or organic acids using yeasts, bacteria, or a combination

thereof, underanaerobic conditions. A more restricted definition of fermentation is the chemical

conversion ofsugars into ethanol. The science of fermentation is known as zymurgy. Fermentation

usually implies that the action ofmicroorganisms is desirable, and the process is used to produce

alcoholic beverages such as wine, beer, and cider. Fermentation is also employed inthe leavening ofbread, and for preservation techniques to create lactic acid in sour foods such

as sauerkraut, dry sausages, kimchi and yogurt, orvinegar(acetic acid) for use in pickling foods.

Sterilisation: Thorough cooking (applying a suitable amount of heat over a suitable period of time)

slowed the decay of foods and various liquids, preserving them for safe consumption for a longer time

than was typical. Canning of foods is an extension of the same principle, and has helped to reduce food

borne illness ("food poisoning"). Other methods of sterilizing foods include food irradiation

and pascalization (the use of high pressure to kill microorganisms).

Drying: Drying is a method offood preservation that works by removing waterfrom the food, which

inhibits the growth ofmicroorganisms and hinders quality decay. Drying food using sun and wind toprevent spoilage has been practiced since ancient times. Water is usually removed by evaporation (air

drying, sun drying, smoking or wind drying) but, in the case offreeze-drying, food is first frozen and then

the water is removed by sublimation. Bacteria, yeasts and moulds need the water in the food to grow.

Drying effectively prevents them from surviving in the food. Example is meat.

Freezing:Freezing food preserves food from the time it is prepared to the time it is eaten. Since early

times, farmers, fishermen, and trappers have preserved their game in unheated buildings during the
http://en.wikipedia.org/wiki/Microbehttp://en.wikipedia.org/wiki/Foodhttp://en.wikipedia.org/wiki/Milkhttp://en.wikipedia.org/wiki/Franz_von_Soxhlethttp://en.wikipedia.org/wiki/Franz_von_Soxhlethttp://en.wikipedia.org/wiki/Refrigerationhttp://en.wikipedia.org/wiki/Shelf_lifehttp://en.wikipedia.org/wiki/Aseptic_processinghttp://en.wikipedia.org/wiki/Food_preservationhttp://en.wikipedia.org/wiki/Home_canninghttp://en.wikipedia.org/wiki/Food_processinghttp://en.wikipedia.org/wiki/Carbohydratehttp://en.wikipedia.org/wiki/Alcoholhttp://en.wikipedia.org/wiki/Yeasthttp://en.wikipedia.org/wiki/Bacteriahttp://en.wiktionary.org/wiki/anaerobichttp://en.wikipedia.org/wiki/Sugarhttp://en.wikipedia.org/wiki/Ethanolhttp://en.wiktionary.org/wiki/zymurgyhttp://en.wikipedia.org/wiki/Microorganismshttp://en.wikipedia.org/wiki/Winehttp://en.wikipedia.org/wiki/Beerhttp://en.wikipedia.org/wiki/Ciderhttp://en.wikipedia.org/wiki/Leaveninghttp://en.wikipedia.org/wiki/Breadhttp://en.wikipedia.org/wiki/Lactic_acidhttp://en.wikipedia.org/wiki/Sauerkrauthttp://en.wikipedia.org/wiki/Salamihttp://en.wikipedia.org/wiki/Kimchihttp://en.wikipedia.org/wiki/Yoghurthttp://en.wikipedia.org/wiki/Vinegarhttp://en.wikipedia.org/wiki/Acetic_acidhttp://en.wikipedia.org/wiki/Picklinghttp://en.wikipedia.org/wiki/Cookinghttp://en.wikipedia.org/wiki/Canninghttp://en.wikipedia.org/wiki/Food_borne_illnesshttp://en.wikipedia.org/wiki/Food_borne_illnesshttp://en.wikipedia.org/wiki/Food_irradiationhttp://en.wikipedia.org/wiki/Pascalizationhttp://en.wikipedia.org/wiki/Food_preservationhttp://en.wikipedia.org/wiki/Waterhttp://en.wikipedia.org/wiki/Microorganismhttp://en.wikipedia.org/wiki/Decompositionhttp://en.wikipedia.org/wiki/Evaporationhttp://en.wikipedia.org/wiki/Freeze-dryinghttp://en.wikipedia.org/wiki/Frozen_foodhttp://en.wikipedia.org/wiki/Sublimation_(chemistry)http://en.wikipedia.org/wiki/Freezinghttp://en.wikipedia.org/wiki/Freezinghttp://en.wikipedia.org/wiki/Sublimation_(chemistry)http://en.wikipedia.org/wiki/Frozen_foodhttp://en.wikipedia.org/wiki/Freeze-dryinghttp://en.wikipedia.org/wiki/Evaporationhttp://en.wikipedia.org/wiki/Decompositionhttp://en.wikipedia.org/wiki/Microorganismhttp://en.wikipedia.org/wiki/Waterhttp://en.wikipedia.org/wiki/Food_preservationhttp://en.wikipedia.org/wiki/Pascalizationhttp://en.wikipedia.org/wiki/Food_irradiationhttp://en.wikipedia.org/wiki/Food_borne_illnesshttp://en.wikipedia.org/wiki/Food_borne_illnesshttp://en.wikipedia.org/wiki/Canninghttp://en.wikipedia.org/wiki/Cookinghttp://en.wikipedia.org/wiki/Picklinghttp://en.wikipedia.org/wiki/Acetic_acidhttp://en.wikipedia.org/wiki/Vinegarhttp://en.wikipedia.org/wiki/Yoghurthttp://en.wikipedia.org/wiki/Kimchihttp://en.wikipedia.org/wiki/Salamihttp://en.wikipedia.org/wiki/Sauerkrauthttp://en.wikipedia.org/wiki/Lactic_acidhttp://en.wikipedia.org/wiki/Breadhttp://en.wikipedia.org/wiki/Leaveninghttp://en.wikipedia.org/wiki/Ciderhttp://en.wikipedia.org/wiki/Beerhttp://en.wikipedia.org/wiki/Winehttp://en.wikipedia.org/wiki/Microorganismshttp://en.wiktionary.org/wiki/zymurgyhttp://en.wikipedia.org/wiki/Ethanolhttp://en.wikipedia.org/wiki/Sugarhttp://en.wiktionary.org/wiki/anaerobichttp://en.wikipedia.org/wiki/Bacteriahttp://en.wikipedia.org/wiki/Yeasthttp://en.wikipedia.org/wiki/Alcoholhttp://en.wikipedia.org/wiki/Carbohydratehttp://en.wikipedia.org/wiki/Food_processinghttp://en.wikipedia.org/wiki/Home_canninghttp://en.wikipedia.org/wiki/Food_preservationhttp://en.wikipedia.org/wiki/Aseptic_processinghttp://en.wikipedia.org/wiki/Shelf_lifehttp://en.wikipedia.org/wiki/Refrigerationhttp://en.wikipedia.org/wiki/Franz_von_Soxhlethttp://en.wikipedia.org/wiki/Franz_von_Soxhlethttp://en.wikipedia.org/wiki/Milkhttp://en.wikipedia.org/wiki/Foodhttp://en.wikipedia.org/wiki/Microbe


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winter season. Freezing food slows down decomposition by turning water to ice, making it unavailable for

most bacterial growth. In the food commodity industry, the process is called IQF or Individually Quick

Frozen. Freezing is an effective form of food preservation because the pathogens that cause food

spoilage are killed or do not grow very rapidly at reduced temperatures. Examples are fisheries, dairy

products, meat and others.

Dairy Sector

India has emerged as the largest milk producing country in the world with present level of annual milk

production estimated as 94.5 million tonnes. Government expects a production level of 135 million tonnes

by the year 2015.

Milk Production in million tons

Source- Department of Animal Husbandry, Dairying and Fishing

78.3 80.684.4 86.2 88.1 92.5

97.1 100.9104.8 108.5

0

20

40

60

80

100

120

Eggs Production

Year Eggs

2001-02 38729

2002-03 29823

2003-04 40403

2004-05 41005

2005-06 45200

Source- State/UT Animal Husbandry Departments


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Weaknesses of the Dairy Sector:

Perishability: Pasteurization has overcome this weakness partially. UHT gives milk long life.

Surely, many new processes will follow to improve milk quality and extend its shelf life.

Lack of control over yield: Theoretically, there is little control over milk yield. However, increased

awareness of developments like embryo transplant, artificial insemination and properly managed

animal husbandry practices, coupled with higher income to rural milk producers should

automatically lead to improvement in milk yields.

Logistics of procurement: Woes of bad roads and inadequate transportation facility make milk

procurement problematic. But with the overall economic improvement in India, these problems

would also get solved.

Problematic distribution: Yes, all is not well with distribution. But then if ice creams can be sold

virtually at every nook and corner, why cant we sell other dairy products too? Moreover, it is only

a matter of time before we see the emergence of a cold chain linking the producer to therefrigerator at the consumers home.

Competition: With so many newcomers entering this industry, competition is becoming tougher

day by day. But then competition has to be faced as a ground reality. The market is large enough

for many to carve out their niche.

Market Shares of major Dairy Sector companies (On Sales Basis)

Source- Ministry of Food Processing

26%

14%

10%13%

10%

27.10%

Karnataka Co-operativeMilk Federation Ltd.

Gujrat Co- operative Milk

Federation Ltd

Tamil Nadu Co- operative

Milk Federation Ltd

Nestle India Ltd

Mother Dairy Ltd

Others
http://www.indiadairy.com/photo_gal_about_dairylabshtml.htmhttp://www.indiadairy.com/ind_marketing_quality.htmlhttp://www.indiadairy.com/ind_marketing_quality.htmlhttp://www.indiadairy.com/photo_gal_about_dairylabshtml.htm


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Marine Sector

The Marine Sector has grown at a CAGR of 8.73%.

Weaknesses of the Marine Sector:

The fish farmers/fishermen as well as the middlemen and end retailers involved in the trade are

mostly illiterate, it is important to introduce the importance of hygienic handling right from the

production stage itself. Only then the success in value addition in the end product will be ensured.

There are no organized and coherent efforts in the country to formulate and implement policies

for the processed fish/fishery products for domestic markets. A separate national fish processing

development board is required on a priority basis.

Efforts are lacking at the national level to coordinate all activities and programs for production,

processing, handling, packaging and marketing of fishery products for the domestic and

international markets. An independent national board is therefore necessary.

The standards for quality of processed fishery products have not been well established. Proper

standards for labeling are also not available.

The marine fish catch is stagnating. Therefore it is imperative to utilize maximum amount of

available resource with minimum wastage.

The major players are Trimbak Sons and Aquarium Paradise.

Fish Production in India in Million Tons

Source- DAHD&F; CSO 2005

0

1

2

3

4

5

6

7

8

9

22.98%


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Meat and poultry sector

India produces approx. 304.77 crore birds on an annual basis, majority (95%) of which is consumed in the

fresh slaughtered form and the remaining 5% is consumed in processed form.Only about 1-2 per cent of

the total meat is converted into value added products.

Meat Production in 000Tons

Source- FAOSTAT

Market Shares of major Meat processing companies

Source- MOFPI

0

1000

2000

3000

4000

5000

6000

7000

1997 1998 1999 2000 2001 2002 2003 2004 2005

3.39%

35%

40%

18%

7%

Al Kabeer Allanasons Limited Amigo Foods Others


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Indian Firms need to strengthen R&D base

The Ministry of Food Processing Industries gives special emphasis on supporting Research &

Development (R&D) activity in the food-processing sector. Efforts have been made to widen the R&D

base in food processing by involvement of various R&D institutions and by funding of laboratory/industry

projects as well as purely industry projects. The thrust areas for R & D activities are as follows:

Upgrading of traditional food technologies to ensure greater productivity, wider acceptability and

quality assurance;

Energy saving technologies.

Improved and more precise methods to assess quality, safety and nutrition parameters in foods;

Import substitution for packaging materials and food additives;

Development of intermediate products and dehydrated products with superior shelf-life

characteristics;

Development of newer and safer chemical / biological preservations with lesser costs;

Ways and means to economize on use of costly edible oils in food preparations;

Development of cost effective and efficient food processing machinery;

Convenience oriented intermediate products in the entire range of traditional foods, which need

minimum preparation in the kitchen to make them ready-to-eat.

Specialty foods to meet the needs like low calorie, high calorie, high protein, lactose free, high

fibre, low sodium, sugar free, geriatric, pediatric, pregnant & lactating, recuperating populations;

Frozen foods;

Modified atmosphere packed dressed vegetables, fruits, meat and fish;

Economic processing of industrial waste and recovery of by-products.

R&D Expenses by major players

Name of the company % share of sales in R&D expenses

Dabur India Limited 0.4

Britannia Industries Limited 0.135

Hindustan Unilever Limited 1.7

Parle Agro Private Limited 3.0

Source- Annual Reports 2009-2010


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Emerging Business Models

The generic value chain of the food processing industry from raw materials to retail to the consumer is

shown below. Traditionally, different players across the value chain played the different roles and worked

more or less independently. Recently, the trend has been towards increasing integration andcollaboration across players in the value chain, to garner mutual benefits. Such integration is being driven

by the manufacturers, who are looking to integrate backward and establish linkages with both raw

material producers (farmers) and aggregators/logistics providers. These links have led to two new models

emerging in the sector Contract Farming and Terminal Markets. These are further discussed below.

Terminal Market

A Terminal market is a central site, often in a metropolitan area, that serves as an assembly and trading

place for agricultural commodities. Here there are different options for disposing off the produce. It caneither be sold to the end consumer, or to the processor, or packed for export, or even stored for disposal

at a future date. It thus offers different options to farmers under a single roof. Typically, terminal markets

operate on a hub and spoke model where the markets form the hubs, and are linked to different collection

centers (spokes) that are located close to the production centers. The typical value chain structure for a

terminal market, as well as the key activities and corresponding infrastructure requirements at each level,

are depicted in the figure below: The Government of India is looking to promote terminal markets, as a

means of integrating domestic produce with retail chains. There are plans to set up such markets in eight

cities across five states, at a cost of US$ 131 million. The cities being considered are Mumbai, Nasik,

Nagpur, Chandigarh, Rai, Patna, Bhopal and Kolkata. The perishable horticultural produce is cleaned atthe collection centers and transported to the terminal markets through reefer vans thereby reducing post

harvest losses. The produce arriving in the terminal market is graded and stored in the cold storage till it

is auctioned through electronic auction system or direct selling.

Contract Farming

Contract Farming is an agreement between the food processor (contractor), who is typically a largeorganised player, and the farmer, whereby the farmer is contracted to plant the contracto rs crop on his

land. He also agrees to harvest and deliver to the contractor a quantum of produce, based upon

anticipated yield and contracted acreage at a pre-agreed price. The food processor provides inputs in

terms of technology and training to the farmer, to improve the yield and quality of the produce. This

results in a win-win situation that generates a steady source of income for the farmer and eliminates

supply shocks and assures good quality farm inputs which are crucial for the processor. The Government


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of India has been actively encouraging contract farming endeavors. The National Agricultural Policy

envisages that private sector participation will be encouraged through contract farming and land leasing

arrangements to allow accelerated technology transfer, capital inflow and assured market for crop

production. A good example in this area has been Pepsi Foods experience with contract farming for its

tomato processing plant at Hoshiarpur in Punjab. Through transfer of technology and providing good

quality seeds and inputs to farmers, Pepsi was able to substantially increase both quality and quantity of

tomato production in the area, so as to meet the demands of its plant. A key aspect of Pepsis approach

was its partnership with local bodies such as the Punjab Agricultural University and Punjab Agro

Industries Corporation Limited, which went a long way in getting the farmers buy-in and ensuring success

of the venture.


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COMPANY PROFILES

The chapter profiles the leading players in the Indian Food processing industry, analyzing their financialperformance in the recent past, and discussing their future plans and outlook. The companies profiled are

Hindustan Unilever Limited, Dabur India Limited and ITC Limited.

Hindustan Unilever Limited (HUL)

Hindustan Unilever Limited (HUL) is India's largest fast moving consumer goods company. The Anglo-

Dutch company Unileverowns a 52% majority stake. HUL was formed in 1933 as Lever Brothers India

Limited and came into being in 1956 as Hindustan Lever Limited through a merger of Lever Brothers,

Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd. It is headquartered in Mumbai, India and has

employee strength of over 15,000 employees and contributes to indirect employment of over 52,000

people. The company was renamed in June 2007 as Hindustan Unilever Limited.

Year of Incorporation 1933

CEO & MD Nitin Paranjpe

Outstanding shares (FY10) 2181.7 Million as on 31st December, 2010

Listing Details BSE, NSE

Face Value (Rs) 1.00

Market capitalization (Rs million) 64,961.71 as in December, 2010

52- week high/low (Rs) 306.7/218.0

Year ending March 31

Hindustan Unilever's distribution covers over 1 million retail outlets across India directly and its products

are available in over 6.3 million outlets in the country, which equals nearly 80% of all retail outlets in India.

It estimates that two out of three Indians use its many home and personal care products, food and

beverages.
http://en.wikipedia.org/wiki/Fast_moving_consumer_goodshttp://en.wikipedia.org/wiki/Anglohttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Unileverhttp://en.wikipedia.org/wiki/Lever_Brothershttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Lever_Brothershttp://en.wikipedia.org/wiki/Unileverhttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Anglohttp://en.wikipedia.org/wiki/Fast_moving_consumer_goods


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HUL is the market leader in Indian consumer products with presence in over 20 consumer categories

such as soaps, tea, detergents and shampoos amongst others with over 700 million Indian consumers

using its products. Sixteen of HULs brands featured in the ACNielsen Brand Equity list of 100 Most

Trusted Brands Annual Survey (2008). According to Brand Equity, HUL has the largest number of brands

in the Most Trusted Brands List. It has consistently had the largest number of brands in the Top 50, and in

the Top 10 (with 4 brands). The company has a distribution channel of 6.3 million outlets and owns 35

major Indian brands like Kwality walls, Red Label, Lakme, Dove and Close up to name a few.

HULs shareholding pattern as of December 2010

Source: Annual Report 2010

Product Portfolio

The company has a distribution channel of 6.3 million outlets and owns 35 major Indian brands.[4]Its

brands include Kwality Wall's ice cream, Knorrsoups & meal makers, Lifebuoy, Lux, Pears,

Breeze, Liril, Rexona, Hamam and Moti soaps, Pureit water purifier, Lipton tea, Brooke Bond (3 Roses,

Taj Mahal, Taaza, Red Label) tea, Bru coffee, Pepsodent and Close Up toothpaste and brushes,

and Surf, Rin and Wheel laundry detergents, Kissan squashes and jams, Annapurna salt and

Atta, Pond's talc and creams, Vaseline lotions, Fair and Lovely creams, Lakme beauty products, etc.

HULs Segment wise sales in 2010

53%

9%

17%

15%6%

Indian Promoters

Financial Institutes

FII's

General Public

Others
http://en.wikipedia.org/wiki/ACNielsenhttp://en.wikipedia.org/wiki/Hindustan_Unilever#cite_note-3http://en.wikipedia.org/wiki/Hindustan_Unilever#cite_note-3http://en.wikipedia.org/wiki/Hindustan_Unilever#cite_note-3http://en.wikipedia.org/wiki/Kwality_Wall%27shttp://en.wikipedia.org/wiki/Knorr_(brand)http://en.wikipedia.org/wiki/Lifebuoy_(soap)http://en.wikipedia.org/wiki/Lux_(soap)http://en.wikipedia.org/wiki/Pears_soaphttp://en.wikipedia.org/wiki/Lirilhttp://en.wikipedia.org/wiki/Rexonahttp://en.wikipedia.org/wiki/Hamam_(soap)http://en.wikipedia.org/wiki/Pureithttp://en.wikipedia.org/wiki/Liptonhttp://en.wikipedia.org/wiki/Brooke_Bondhttp://en.wikipedia.org/wiki/Bruhttp://en.wikipedia.org/wiki/Pepsodenthttp://en.wikipedia.org/w/index.php?title=Close_Up_(toothpaste)&action=edit&redlink=1http://en.wikipedia.org/wiki/Surf_(detergent)http://en.wikipedia.org/wiki/Rinhttp://en.wikipedia.org/wiki/Wheel_(detergent)http://en.wikipedia.org/wiki/Kissanhttp://en.wikipedia.org/wiki/Pond%27s_Creamshttp://en.wikipedia.org/wiki/Vaselinehttp://en.wikipedia.org/wiki/Fair_and_Lovelyhttp://en.wikipedia.org/wiki/Lakme_cosmeticshttp://en.wikipedia.org/wiki/Lakme_cosmeticshttp://en.wikipedia.org/wiki/Fair_and_Lovelyhttp://en.wikipedia.org/wiki/Vaselinehttp://en.wikipedia.org/wiki/Pond%27s_Creamshttp://en.wikipedia.org/wiki/Kissanhttp://en.wikipedia.org/wiki/Wheel_(detergent)http://en.wikipedia.org/wiki/Rinhttp://en.wikipedia.org/wiki/Surf_(detergent)http://en.wikipedia.org/w/index.php?title=Close_Up_(toothpaste)&action=edit&redlink=1http://en.wikipedia.org/wiki/Pepsodenthttp://en.wikipedia.org/wiki/Bruhttp://en.wikipedia.org/wiki/Brooke_Bondhttp://en.wikipedia.org/wiki/Liptonhttp://en.wikipedia.org/wiki/Pureithttp://en.wikipedia.org/wiki/Hamam_(soap)http://en.wikipedia.org/wiki/Rexonahttp://en.wikipedia.org/wiki/Lirilhttp://en.wikipedia.org/wiki/Pears_soaphttp://en.wikipedia.org/wiki/Lux_(soap)http://en.wikipedia.org/wiki/Lifebuoy_(soap)http://en.wikipedia.org/wiki/Knorr_(brand)http://en.wikipedia.org/wiki/Kwality_Wall%27shttp://en.wikipedia.org/wiki/Hindustan_Unilever#cite_note-3http://en.wikipedia.org/wiki/ACNielsen


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Financial Summary (In Rs crore)

Indicator/

Year2003 2004 2005 2006 2007

2008-09

(15month

s)

2009-10

(12month

s)

Gross

Sales*(In

Rs crore)

11,096.02 10,888.38 11,975.53 13,035.06 14,715.10 21,649.51 18,220.27

Net

Profit(In

Rs crore)

1,804.34 1,99.28 1,354.51 1,539.67 1,743.12 2,500.71 2,102.68

Earnings

per share

(Rs)

8.05 5.44 6.40 8.41 8.73 11.46 10.10

Investme

nt(In Rs

crore)

2,574.93 2,229.56 2,104.20 2,413.93 1,440.80 332.62 1,264.08

Fixed

Assets(InRs crore)

1,369.47 1,517.56 1,483.53 1,511.01 1,708.14 2,078.84 2,436.07

Exports(In

Rs crore)1,416 1,459 1,461 1,369 1,413 1,638 1,066

48%

30%

20%

2% Soaps and Household

Care

Personal Products

Foods

Others


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Hindustan Unilever has been consistently recognized within India and globally by eminent organizations

and the government for its achievements in various fields. The organization has been recognized among

others by TERI, Far East Economic Review, Asian Wall Street Journal and Business world. More

recently, Hewitt Associates ranked Hindustan Unilever among the top four companies globally in the list

of Global Top Companies for Leaders. The Company was ranked number one in the Asia-Pacific region

and in India. During 2008, Unilever announced its collaboration with the Indian Dental Association (IDA)

in conjunction with World Dental Federation (FDI) through its Pepsodent, leading oral care brand to help

improve the oral health and hygiene standards in India. The Demerger and transfer of certain immoveable

properties of Hindustan Unilever Limited to Brooke Bond Real Estates Private Limited was an event of the

company on April 2008.

HULs Total Expenditure distribution in 2010


HUL has more than 670 live patents and 700 million consumers use HUL brands in India as part of their

daily lives. The company moves with the mission of 'add vitality to life' through its presence in over 20

distinct categories in Home & Personal Care Products and Foods & Beverages. HUL identified five key

platforms and have articulated goals, both short term and long term goals, stretching to 2015, would work

in areas of health & nutrition & women empowerment on the social front, the economic agenda would be

to enhance livelihoods and the environmental agenda would focus on water conservation and cuttinggreen house gases.

6% 1%7%

6%

6%

16%58%

Carriage and Frieght

Depriciation

Others

Staff Costs

Rent, Repairing etc.

Advertising Costs

Materials


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Dabur India Ltd.

Dabur India Limited (DIL) is an Ayurvedic and natural health care company. It is engaged in

manufacturing and marketing fast moving consumer goods and Ayurvedic products. It operates through

three business units: consumer care division, international business division and consumer healthcaredivision. It has manufacturing facilities in eight states of India. As of March 31, 2010, it also had

manufacturing facilities in eight countries: India, Bangladesh, Nepal, Dubai, Sarah, Ras-Al-Khaima, Egypt

and Nigeria.


CEO & MD Sunil Duggar

Outstanding shares (FY10) 1740.7 Million as on 31st

December, 2010



Market capitalization (Rs million) 19809.17as in December, 2010

52- week high/low (Rs) 218.95 /121


Daburs shareholding pattern as of December 2010


69%6%

17%

6% 2%

Indian Promoters


FII's

General Public

Others


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Product Portfolio

It is well equipped for the cut throat competition. The company's success rests on the 13 of its superbly

equipped ultra modern manufacturing facilities. Its products are marketed in more than 50 countries. The

company is powered by a management team of highly qualified experts experienced in this field.

Leading brands of the Dabur India Limited:

Dabur: It is the health care brand. These include Dabur Chyawanprash, Dabur Honey, Dabur Real

fruit juices

Vatika: It is the personal care brand. The Vatika Hair Oil & Shampoo the high growth brand

Anmol: It is the value for money brand

Hajmola Tasty: It is the digestive brand

Daburs Segment wise sales in 2010


Financial Summary

Indicator/

Year2005 2006 2007 2008 2009 2010

Sales(In Rs

crore)1417 1757 2080 2396 2834 3417

Net

Profits(In

Rs crore)

156 214 282 333 391 501

18%

5%

23%

3%

31%

20%Oral Care

Home Care

Foods

Skin Care

Health Supplements

Hair Care


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Fixed

Assets(In

Rs crore)

295 512 379 465 559 677

Net

Earnings

per share

(Rs)

5.4 3.7 3.3 3.9 4.5 5.8

Daburs Total Expenditure distribution in 2010


Expenditure in India is growing in the band of 12-14% and this is accompanied by a healthy rate of

household savings of about 24-25% of the GDP, which points to a sustained growth in consumption over

the next couple of decades making India one of top 5 consuming economies of the world .

47%

15%

3%

25%

5%

7%

Power

Store and Spares

Repair and

MaintenanceProcessing charges

Plant and Machinery

Others


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ITC Limited

The company has its registered office in Kolkata. It started off as the Imperial Tobacco Company, and

shares ancestry with Imperial Tobacco of the United Kingdom, but it is now fully independent, and was

rechristened to Indian Tobacco Company in 1970 and then to I.T.C. Limited in 1974

The company is currently headed by Yogesh Chander Deveshwar. It employs over 26,000 people at

more than 60 locations across India and is listed on Forbes 2000. ITC Limited completed 300 years on 24

August 2010.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-

Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care,

Stationery, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its

traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly

gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded

Apparel, Personal Care and Stationery.


CEO & MD Y. C. Deveshwar

Outstanding shares (FY10) 1269.7Million as in December, 2010



Market capitalization (Rs crore) 149770.93 as in December, 2010

52- week high/low (Rs) 197.90 /133.20


ITC's aspiration to be an exemplar in sustainability practices is manifest in its status as the only companyin the world of its size and diversity to be 'carbon positive', 'water positive' and 'solid waste recycling

positive.' In addition, ITC's businesses have created sustainable livelihoods for more than 5 million

people, a majority of whom represent the poorest in rural India.
http://en.wikipedia.org/wiki/Imperial_Tobaccohttp://en.wikipedia.org/wiki/Yogesh_Chander_Deveshwarhttp://en.wikipedia.org/wiki/Forbes_2000http://en.wikipedia.org/wiki/Forbes_2000http://en.wikipedia.org/wiki/Yogesh_Chander_Deveshwarhttp://en.wikipedia.org/wiki/Imperial_Tobacco


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ITC Ltds shareholding pattern as of December 2010


Product profile

In FMCG, ITC has a strong presence in:

Cigarettes: W. D. & H. O. Wills, Gold Flake Kings, Gold Flake Premium, Navy Cut, Insignia, India

Kings, Classic (Verve, Menthol, Menthol Rush, Regular, Mild & Ultra Mild), 555, Benson & Hedges, Silk

Cut, Scissors, Capstan, Berkeley, Bristol, Lucky Strike, Players and Flake.

Foods: (Kitchens of India; Ashirvaad; Minto; Sunfeast; Candyman; Bingo; Yippee, Sunfeast Pasta brands

in Ready to Eat, Staples, Biscuits, Confectionery, Noodles and Snack Foods);

Apparel: (Wills Lifestyle and John Players brands);

Personal care: (Fiama di Wills; Vivel; Essenza di Wills; Superia; Vivel di Wills brands of products in

perfumes, haircare and skincare)[2]

Stationery: (Classmate and Paperkraft brands)

Other businesses

Hotels: ITC's hotels (under brands including ITC Hotel /Welcome hotel) have evolved into being India's

second largest hotel chain with over 80 hotels throughout the country.

Paperboard, Specialty Paper, Graphic and other Paper;

Packaging and Printing for diverse international and Indian clientele.

InfoTech (through its fully owned subsidiary ITC InfoTech India Limited which is a SEI CMM Level 5

company)

32%

21%14%

11%

22% NRI's etc


FII's

General Public

Others
http://en.wikipedia.org/wiki/Tobacco_industryhttp://en.wikipedia.org/wiki/W._D._%26_H._O._Willshttp://en.wikipedia.org/w/index.php?title=Gold_Flake_Kings&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Kitchens_of_India&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Ashirvaad&action=edit&redlink=1http://en.wikipedia.org/wiki/Mintohttp://en.wikipedia.org/w/index.php?title=Sunfeast&action=edit&redlink=1http://en.wikipedia.org/wiki/Candymanhttp://en.wikipedia.org/wiki/Bingohttp://en.wikipedia.org/w/index.php?title=Wills_Lifestyle&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=John_Players&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Fiama_di_Wills&action=edit&redlink=1http://en.wikipedia.org/wiki/Vivelhttp://en.wikipedia.org/w/index.php?title=Essenza_di_Wills&action=edit&redlink=1http://en.wikipedia.org/wiki/Superiahttp://en.wikipedia.org/w/index.php?title=Vivel_di_Wills&action=edit&redlink=1http://en.wikipedia.org/wiki/ITC_Limited#cite_note-1http://en.wikipedia.org/wiki/ITC_Limited#cite_note-1http://en.wikipedia.org/wiki/ITC_Limited#cite_note-1http://en.wikipedia.org/wiki/Classmatehttp://en.wikipedia.org/w/index.php?title=Paperkraft&action=edit&redlink=1http://en.wikipedia.org/wiki/Hospitality_industryhttp://en.wikipedia.org/w/index.php?title=ITC_Hotel&action=edit&redlink=1http://en.wikipedia.org/wiki/ITC_Infotechhttp://en.wikipedia.org/wiki/ITC_Infotechhttp://en.wikipedia.org/w/index.php?title=ITC_Hotel&action=edit&redlink=1http://en.wikipedia.org/wiki/Hospitality_industryhttp://en.wikipedia.org/w/index.php?title=Paperkraft&action=edit&redlink=1http://en.wikipedia.org/wiki/Classmatehttp://en.wikipedia.org/wiki/ITC_Limited#cite_note-1http://en.wikipedia.org/w/index.php?title=Vivel_di_Wills&action=edit&redlink=1http://en.wikipedia.org/wiki/Superiahttp://en.wikipedia.org/w/index.php?title=Essenza_di_Wills&action=edit&redlink=1http://en.wikipedia.org/wiki/Vivelhttp://en.wikipedia.org/w/index.php?title=Fiama_di_Wills&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=John_Players&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Wills_Lifestyle&action=edit&redlink=1http://en.wikipedia.org/wiki/Bingohttp://en.wikipedia.org/wiki/Candymanhttp://en.wikipedia.org/w/index.php?title=Sunfeast&action=edit&redlink=1http://en.wikipedia.org/wiki/Mintohttp://en.wikipedia.org/w/index.php?title=Ashirvaad&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Kitchens_of_India&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Gold_Flake_Kings&action=edit&redlink=1http://en.wikipedia.org/wiki/W._D._%26_H._O._Willshttp://en.wikipedia.org/wiki/Tobacco_industry


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Financial Summary:

Indicator/

Year2005 2006 2007 2008 2009 2010

Sales(In Rscrore)

12994.51 13578.32 14003.76 14654.32 15611.92 18153.19

Net

Income(In

Rs crore)

7875.26 10076.61 12500.78 14558.43 16146.85 18756.57

Fixed

Assets(In

Rs crore)

4136.91 4405.13 5610.91 7295.65 8485.97 9151.39


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INTERNATIONAL SCENARIO

The food processing industry is one of the pivotal sectors of world economy. It is one of the largest

sources of employment, with strong backward and forward linkages. In developed economies like US and

UK, the food processing industry contributes to about 3-4% in the countrys GDP.

Sector wise shares of Food Processing

Source- United States Department of Agriculture

50%

10%

5%

5%

7%

23%Agricultral Crops

Beverages

Meat

Fish

Semi processed products

Dairy

Continent wise share of Processing food

Source- United States Department of Agriculture

68%

17%

6%

1%

5%

3%

Europe North America South America Africa Australia Asia


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Fruits and vegetables

Fruits and vegetables is one of the most important and fast growing sub-sectors of the food processing

sector, as fruits and vegetables form an indispensable part of healthy diet. Medical research has

established that intake of fruits and vegetables in the requisite measure help prevent cardio vascular

disease and obesity. Asia dominates the world vegetables scene accounting for nearly 60% of globalproduction, with China and India ranking as 1st and 2nd European Union and U.S.A follow next.

Fruit and vegetable products (both fresh and processed) accounted for 22% of total agricultural exports

from developing countries. Fruit trade is heavily concentrated in Bananas, Citrus, Grapes and Apples.

Fresh produce comprising citrus, pears, peaches, nectarines, plums and kiwi fruit, and processed

produce comprising tomato based products, fruit juices and concentrates, packed vegetables as well as

tinned and frozen fruits are mostly certified under Protected Geographical Indication status.

Over the last quarter of a century (1980-2004), the fruit and vegetable market has been one of the fastest

growing of all agricultural markets as could be observed from the data presented in table:-

Year Production Consumption1982-84 691 -

1992-94 899 782

2002-04 1342 1189

Global fruit and vegetables consumption increased by an average of 4.5% per annum between 1990 and

2004. This was higher than the world population growth rate, meaning that the global per capita

consumption of fruit and vegetables has also increased. According to World Health Organization, for the

prevention of chronic diseases such as heart diseases, cancer, diabetes and obesity, fruit and vegetable

consumption should be at least 400g per day per capita. If in 1992-94 only 40% of the countries reached

this level, almost half of them did so in 2002 04.

Dairy Sector

In many respects the dairy industry occupies a special position among the other sectors of agriculture.

Milk is produced everyday and gives a regular income to the numerous small producers. Milk production

is highly labor-intensive and provides a lot of employment. For many dairy farmers and companies 2009

was a remarkable year. The financial crisis in the global economy caused international demand for dairy

produce to decline in late 2008 and had a dramatic impact on product prices during the first half year of

2009. For the first time since the mid-nineties global consumption per capita declined. The financial crisis

impacted on every aspect of the dairy business: production, trade, consumption and prices. The general

trend was stagnation but it turned out different per region. Chinese non-skimmed milk powder (WMP)


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demand in the second half year was a key driver of rising dairy commodity prices and recovery of the world

dairy market. Asia acted as an engine for the global dairy industry. As a consequence of the general

recession, most companies experienced a decrease in their turnover

food processing industry in india (shoury gupta)

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