1. Imported Edible Oils - India December 2008

2. Executive Summary

• Edible oil imports have been liberalized since the 19--s and now attract lower tariffs

• No import duty on crude oils in contrast to finished products (refined oils and hydrogenated fat)

• India is the worlds largest importer of edible oils and market demand is expected to sustain

• Loose or unbranded oil accounts for bulk of sales compared to branded and hydrogenated oils

SAMPLE

• Demand for imported oils to remain strong due to growing consumption and constrained supplies

• Organized sector, earlier disadvantaged due to sales tax regime, is not growing its market share

• Domestic production faces supply-side constraints and inefficiencies thereby ensuring the dependence on large levels of edible oil imports

• Rising consumption accompanied by increasing domestic production but large imports are still necessary to bridge the gap

• Palm and soybean oils account for bulk of imports due to their low prices

• Prices have risen at a% p.a. with a dip observed only in 2005 - 2006

Market Characteristics Trends 3.

Introduction

Market Size and Growth

Segments

Market Characteristics

Trends

4. India is the largest importer of edible oils and the growing economy is expected to sustain demand in the market

Worlds largest net importer of edible oils since 19--

Large population and rising per capital consumption are key drivers for this essential commodity

Imports account for a% of total consumption

Imports have risen by b% since 04-05 while total domestic production has risen by c%

Palm and soybean oils dominate imports

Branded oils account for ~u% of total market

SAMPLEOverview Source: 06-07 07-08 2004-05 05-06 A E D C B 08-09 a% 000 MT Size and Growth Largest Trading Partners (2003-2008) Country U a% Country V b% Country W c% Country X d% Others e% Regional Consumption Primarily in urban areas E North and Central D Central and South C West B North, Central and East A 5. Loose or unbranded oil without proper packaging accounts for a large portion of sales compared to branded and hydrogenated oils

Unrefined oils sold without any consumer-ready packaging or brand name

Demand is largely driven by low income households as well as institutional customers

Peanut, cottonseed, sunflower seed and rapeseed oils are sold in this manner

Traders often use blends, legally or illegally, to increase margins

SAMPLEa% Loose Oil b% Branded Oil c% Vanaspati Loose Oil

Packaged pure refined oil primarily used in households

Available as sunflower oil (for its health benefits) but as well as rapeseed and peanut oil

Demand is from middle and upper class urban consumers

Branded Oil Vanaspati (Hydrogenated Oil)

Fully or partially hydrogenated vegetable cooking oil is known as Vanaspati in India

Mostly manufactured using palm oil and also from soybean oil but typically made from the cheapest available oils meeting the required standards

Regulations mandate a% of production to be local but this rule is not effectively enforced

Source: 6. Demand for imported oils will remain strong due to growing consumption and constrained supply side

Low but growing domestic consumption

• Low per capita consumption of a kg compared to worldaverage of b kg

• Yet overall consumption has grown at a healthy rate of c%

SAMPLE2005 Y 2006 Z 2007 U 2008 V 2009 X Consumption Growth 0 000 MT % Growth Source:2004 2005 2006 2007 2008 000 MT 2000 2001 2002 2003 Domestic consumption Edible oils Domestic Production - Oilseeds Economic development is likely to increase per capita consumption and spur the market Since importing oilseeds is not practical due to barriers, oil imports become necessary

Low and inefficient production levels of oilseeds

• Virtually stagnant averaging at u mtpa

• Yields are also significantly lower than the world average

7. Rise in consumption is accompanied by increasing domestic production but large imports are still necessary to bridge the gap SAMPLEConsumption Production Imports 2001 2002 2003 2004 2005 2006 2007 2008 2009 000 MT Source: D 2004 x% y% E 2005 x% y% F 2006 x% y% G 2007 x% y% H 2008 y% I 2009 X Y x% y% A 2001 x% y% B 2002 x% y% C 2003 x% y% x% Domestic consumption & supply Imports vs. domestic production Total in 000 MT % 8. Thank you for the attention About Netscribes Netscribes is a knowledge-consulting and solutions firm with clientele across the globe. The companys expertise spans areas of investment & business research, business & corporate intelligence, content-management services, and knowledge-software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one-stop shop designed to fulfil clients profitability and growth objectives. The Imported Edible Oils report is a part of Research on Indias Food & Beverage Industry Series.For more detailed information or customized research requirements please contact: Disclaimer:This report is published for general information only. Although high standards have been used the preparation, Research on India, Netscribes (India) Pvt. Ltd. or Netscribes is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes (India) Pvt. Ltd. and prior permission is required for guidelines on reproduction. Natasha Mehta,CFA Phone: +65 8448 0449 E-Mail: [email_address] Gagan Uppal Phone: +91 98364 71499 E-Mail: [email_address] Research on Indiais a product of Netscribes (India) Pvt. Ltd. Research on India is dedicated to disseminating information and providing quick insights on hot industries in India and other emerging markets. Track our new releases and major updates in these industries on