India : Food processeing Sector Report_August 2013


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India : Food processeing Sector Report_August 2013

  1. 1.       
  2. 2. 2nd largest arable land in the world • India holds 2nd largest arable land in the world. With 20 agri-climatic regions, all 15 major climates in the world exist in India. The country also possesses 46 of the 60 soil types in the world Largest producer of pulses, milk, tea etc. • India is the largest producer of pulses, milk, tea, cashew and mangoes, buffalo meat; and the second largest producer of tea, wheat, sugarcane and rice Largest livestock population • Globally, India has the largest livestock population of 470 million, which includes 205 million cattle and 90 million buffaloes Rising consumption expenditure • Consumption expenditure is likely to reach USD3.6 trillion by 2020, up from an estimated USD1.0 trillion in 2010. Source: World Travel and Tourism Council, Aranca Research Favourable location for exports • Strategic geographic and proximity to food importing nations, makes India favourable for export of processed foods
  3. 3. • The engineering sector is delicensed; 100 per cent FDI is allowed in the sector • Due to policy support, there was cumulative FDI of USD14.0 billion into the sector over April 2000 – February 2012, making up 8.6 per cent of total FDI into the country in that period Growing demand Notes: 2020E – Estimate for 2020; Estimates are from Flavours of Incredible India (Ernst & Young, 2009) FDI – Foreign Direct Investment Strong demand growth • Demand growth for processed food has been rising with growing disposable income, urbanisation, a young population and nuclear families • Household consumption is set to double by 2020 • Changing lifestyle and increasing spend on health and nutritional foods Food processing hub • India benefits from a large agriculture sector, abundant livestock, and cost competitiveness • Investment opportunities will arise in agriculture, food infrastructure, and contract farming • Diverse agro-climatic conditions making it suitable for practicing different crops Policy support • Sops to private sector participation; 100 per cent FDI under automatic route • Agri Export Zones have been set up; under the government’s Vision 2015 plan, mega food parks to be established • Approval of National Mission on Food Processing Increasing investments • Government expects USD21.9 billion of investments in food processing infrastructure by 2015 • Investments, including FDI, will rise with strengthening demand and supply fundamentals • Launch of Infrastructure Development scheme to increase investments in food processing infrastructure 2009 Domestic food spending: USD181 billion 2020E Domestic food spending: USD318 billion Advantage India
  4. 4. Source:, Ministry of Agriculture, APEDA, Meat & Poultry Processing Board, FAOSTAT Note: FY – Indian Financial Year (April – March) MT - Million Tonnes, * - Data mentioned is for FY12 Food processing Fruits and vegetables Milk and milk products Meat and poultry* Marine products Grain processing Consumer food India is the world’s second largest producer of fruits and vegetables With 127.3 MT in FY12, India is the largest producer of milk in the world India is the largest producer of buffalo meat (1.5 MT*) and the second largest producer of goat meat (0.6 MT*) With 8.9 MT production in FY12, India is the second largest producer of fish in the world India produced about 259.3 MT of food grains in FY12 Among the fastest growing segments in India; it includes – Packaged food Aerated soft drinks Packaged drinking water Alcoholic beverages
  5. 5. Contribution of food processing industry in manufacturing (FY12) Source: Ministry of Food Processing Industries ( MOFPI), Annual Report MOFPI (2012-13), Aranca Research The food processing industry is among one of the largest industries in India and ranks 5th in terms of production, consumption and exports With an estimated value of USD121 billion in FY12, India’s food processing industry accounts for 32 per cent of the total food market Food processing segment and market share (FY12) 9% 91% Food Processing Other 40% 5% 11% 20% 25% Meat, Fish, Fruits, Vegetables and Oils Dairy products Grain Mill products Beverages Other food products
  6. 6. Source: Ministry of Food Processing Industries ( MOFPI), Aranca Research. Note: NCMSL - National Collateral Management Services Limited Farmers, cooperatives and Private companies Warehouses, cold storage and silos Retail shops, malls, cash and carry Farmers, Amul, ITC, Pepsi, Hindustan Unilever Lever Ltd Food Corporation of India, NCMSL, Arshiya International Kirana shops, Bharti-Walmart, Future Retail, Aditya Birla Retail Limited Inputs Production Procurement and storage Processing Retailing Seeds, Fertilizers and Farm equipments Grading, sorting, milling and packing National Seeds Corporation Limited, Cargill and Advanta India Ltd ITC ltd, Cargill, Adani Enterprises, Olam International Key activities Major players
  7. 7. GDP (USD billion) and growth of food processing industry in India Source: Ministry of Food Processing Industries ( MOFPI), Annual Report MOFPI (2012-13), Aranca Research During FY06-11, the food processing industry expanded at a CAGR of 4.8 per cent; in FY11 alone, the industry grew 7.1 per cent Food processing is an important segment in terms of contribution to GDP, and share in the agriculture and manufacturing sectors In FY11, India had as many as 35,838 registered food processing units with total capital investment of approximately USD52.1 billion According to MOFPI in FY11, capital investments in India’s food processing sector have increased a significant 28.6 per cent over the last year -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 10.0 11.0 12.0 13.0 14.0 FY07 FY08 FY09 FY10 FY11 GDP- Food processing industry Growth - right axis
  8. 8. Annual growth of ‘food products and beverages’ from IIP (%) Notes: ASI – Annual Survey of Industries IIP – Index of Industrial Production Although figures for output of food products and beverages from ASI are not available post FY10, data from the Index of Industrial Production (IIP) suggest strengthening growth momentum in ‘food products and beverages’ in FY11-12 Growth for ‘food products and beverages’ shot up to 14.8 per cent in FY12 from 8.9% in FY11; the sector was the second-fastest growing sub-segment within manufacturing in FY12 and its growth far outpaced that of the overall manufacturing sector in the fiscal year Source: Ministry of Statistics and Programme Implementation (MOSPI), Aranca Research -10 -5 0 5 10 15 20 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Annual growth of Food products & beverages as per IIP Annual growth of overall manufacturing sector as per IIP
  9. 9. Unorganised sector has the largest share in the sector (FY11) Source: Ministry of Food Processing Industries ( MOFPI), Annual Report MOFPI (2012-13), Aranca Research The unorganised sector accounts for 42 per cent of India’s food processing industry The sizeable presence of small scale industries points to the sector’s role in employment generation 42% 25% 33% Unorganised sector Organised sector Small scale industries
  10. 10. Shares in production by value and volume (FY11) Source: Ministry of Food Processing Industries, Aranca Research Rice mills account for the largest share of processing units in the organised sector The government’s focus on infrastructure is likely to see a sharp rise in the number of cold storage units in the years ahead 70% 50% 30% 50% By Volume By Value Unorganised sector Organised sector
  11. 11. Healthy contribution to employment generation (FY09) Source: Ministry of Food Processing Industries, Aranca Research In FY09, the sector employed 48 million people Policymakers have identified the food processing sector as a key one in encouraging labour movement from agriculture to manufacturing Notes: FY – Indian financial year (April – March) Food processing industry Direct employment (13 million) Indirect employment (35 million)
  12. 12. Changing consumer tastes • Wide array of products, coupled with increasing global connectivity has led to a change in the tastes and preference of domestic consumers • This trend has been bolstered by rising incomes, increasing urbanisation, a young population, and the emergence of nuclear families Entry of international companies • Liberalisation and growth of organised retail have made the Indian market more attractive for global players • With a large agriculture sector, abundant livestock, and cost competitiveness India is fast emerging as a sourcing hub of processed food Rising business and product innovation • Companies have been moving up the value chain; for example, cooperatives are transitioning from being pure producers of milk to offering a wide range of dairy products • Firms, both domestic and global, have been focussing on product innovation to cater to domestic tastes, while also introducing international flavours Notes: FY – Indian Financial Year (April – March) Rising demand on Indian products in international market • Strategic geographic location and continuous increase in production of raw materials helps India to supply cheaper products to other countries • India’s exports of processed food and related items rose at a CAGR of 27.3 per cent during FY08–12
  13. 13. Source: Company Website, Aranca Research Alcoholic beverages Aerated soft drinks and packaged drinking water Packaged food Fruits, vegetables, processed grain Milk and milk products Meat, poultry and marine products Consumer food
  14. 14. Source: Ministry of Agriculture, Aranca Research Strong government support Large domestic market Growing demand Strong domestic demand Supply-side advantages Rising export opportunities Rising disposable incomes Growing middle class, urbanisation, a young population Changing lifestyles and food habits India’s greater integration with the global economy Increasing exports with advantage of proximity to key export destinations Expected spike in global demand as emerging markets grow at a fast pace Favourable climate for agriculture; wide variety of crops Large livestock base aids dairy and meat processing sector Inland water bodies, long coastline help marine products Policy support Vision 2015 plan targets trebling of food processing sector Mega food parks, Agri Export Zones to attract FDI and aid infrastructure Approval of National Mission on Food Processing
  15. 15. Rising disposable incomes • Strong growth in per-capita income has resulted in greater demand for food items • Incomes have risen at a brisk pace in India and will continue rising given the country’s strong economic growth prospects. Nominal per capita income is estimated (IMF) to have recorded a CAGR of 11.2 per cent over 2000–12 • There has also been a shift in demand – • From carbohydrates to meat products (in line with the various phases of economic growth) • To convenience foods, organic and diet foods Rising per-capita income in India Source: IMF, Aranca Research Note: E - Estimate, F - Forecast -5% 0% 5% 10% 15% 20% 25% 30% 300 600 900 1,200 1,500 1,800 2,100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F 2013F 2014F 2015F 2016F 2017F Gross domestic product per capita, current prices Growth
  16. 16. Growing middle class, urbanisation • Strong economic growth since the 1990s has led to– • Rapid urbanisation and a growing middle class • Nuclear families and dual income households • Coupled with a young population and increasing media penetration, this has led to a surge in demand for packaged food, alcoholic and non-alcoholic beverages, snacks, savouries, etc Changing wealth dynamics of India’s population Source: McKinsey Quarterly, Aranca Research 1% 3% 7%2% 6% 17% 12% 25% 29% 35% 40% 32% 50% 26% 15% Globals (>22065.3) Strivers (11032.7 - 22065.3) Seekers (4413.1 - 11032.7) Aspirers (1985.9 - 4413.1) Deprived (<1985.9) 2008 2020 2030 Million Household,100% Income segment 222 273 322
  17. 17. Fruit Juices and Concentrates (USD millions) Source: Ministry of Food Processing Industries, Aranca Research. Note – MT is Metric Tonnes Confectioner items (USD millions) 495 529 558 588 750 FY07 FY08 FY09 FY10 FY15E 121 131 143 154 227 FY07 FY08 FY09 FY10 FY15E Dairy whiteners/creamers (MT)Soft and aerated drinks (million cases) 359 373 388 403 479 FY07 FY08 FY09 FY10 FY15E 243 263 284 307 450 FY07 FY08 FY09 FY10 FY15E
  18. 18. Exports of processed food and related items (USD millions) Source: Ministry of Food Processing Industries, Aranca Research; Notes: FY – Indian Financial Year (April – March) During FY08-12, India's exports of processed food and related products increased at a CAGR of 27.3 per cent to USD24.0 billion Main export destinations for food products have been the Middle East and South East Asia 10.9 10.7 10.7 14.0 24.0 FY08 FY09 FY10 FY11 FY12 CAGR: 27.3%
  19. 19. Rising demand from rest of the word • Share of exports in total output of processed food stood at 19.8 per cent in FY12 • This has primarily resulted from – • Greater exports to advanced economies • More demand from emerging/ developing economies as they experience strong growth Exports of key processed products (USD millions) Source: Ministry of Agriculture, APEDA, Aranca Research Notes: FY – Indian Financial Year (April – March) 244 2,329 1,253 78 659 305 50 682 2,628 2,300 53 858 505 488 3,456 3,234 3,226 1,915 1,154 1,106 746 Guargum Basmati rice Buffalo meat Non basmati rice Other cereals Groundnuts Jaggery and Confectionery FY10 FY11 FY12
  20. 20. Supply-side advantages • Growth in food product exports has been aided by – • Significant improvements in product and packaging quality • Greater private sector participation • India has a location advantage – it is geographically close to key export destinations (Middle East, South East Asia) • The US and the UAE are the top destinations for India’s exports of processed food and agriculture- related products, followed by Vietnam and Saudi Arabia Top ten destination countries of India’s exports of processed food and agriculture related products in FY12 (USD million) Source: Ministry of Food Processing Industries, APEDA, Aranca Research 3,061 1,490 1,402 1,171 852 795 734 576 406 396 USA UAE Viietnam SaudiArabia Malasiya Indonesia Iran Bangladesh Kuwait Nigeria
  21. 21. Shares in APEDA exports (FY12) Source: APEDA, Aranca Research In FY11, APEDA products had 41.6 per cent share in total exports; non-APEDA products made up the rest Within APEDA products, cereals had the highest share (36 per cent) while for non-APEDA products marine products dominated with a share of about 21 per cent Shares in non - APEDA exports (FY11) 21% 20% 20% 14% 11% 14% Marine Products Sugar & Mollasses Oil Meals Spices Tea & Coffee Others 36% 17%5% 35% 6% 1% Cereals Animal products Processed Fruits & Vegetables Other processed foods Fresh Fruits & Vegetables Floriculture & Seeds Source: APEDA, Aranca Research
  22. 22. Notes: * Data for Global share is taken from different sources India’s comparative advantage lies in its favourable climate, large agriculture sector and livestock base, long coastline, and inland water resources India also has an edge in cost of production compared to its competitors in Asia and the developed world Units Global rank Arable land (million hectares) 157.9 2* Area under Irrigation (million hectares) 63.1 1* Coast line ('000 kilometers) 7.5 18** Cattle (million) 205.0 1** Source: World bank, FAOSTAT, CIA World Fact book, Aranca Research Notes: * - For the year 2009; ** - For the year 2012 Production (million tonnes) FY12 Global Share*(%) Global rank Milk (Cow & Buffalo) 127.3 16.9% 1 Pulses (nes) 7 19.7% 1 Buffalo meat 3.4 42.8% 1 Bananas 29.6 27.8% 1 Mangoes and Guavas 15.18 39.0% 1 Tea 0.96 23.0% 2 Rice (Paddy) 155.7 23.6% 2 Sugarcane 277.7 ~24.0% 2 Wheat 93.9 ~10.0% 2
  23. 23. Encouragement to private sector • 100 per cent export-oriented units are allowed to sell up to 50 per cent of their produce in the domestic market • Export earnings are exempted from corporate taxes Tax incentives and other sops • Import duty scrapped on capital goods and raw materials for 100 per cent export-oriented units • 100 per cent tax exemption for 5 years followed by 25 per cent tax exemption for the next 5 years for new agro-processing industries • Full excise duty exemption for goods that are used in installation of cold storage facilities Relaxed FDI norms • 100 per cent FDI under automatic route (except for alcohol, beer, and sectors reserved for small scale industries) • Repatriation of capital and profits permitted Source: Ministry of Food Processing Industries, APEDA, Aranca Research Notes: FDI – Foreign Direct Investment
  24. 24. Focus on infrastructure • Assigned priority sector for bank credit • 60 Agri Export Zones (AEZ) have been set up across the country • According to Vision 2015, formulated by MoFPI, the government plans to establish 30 mega food parks in public-private partnership mode across the country; out of these 10 have already been approved in the first phase • Government has also announced setting up of 15 Mega Food Parks in its FY12 Budget, as part of the third phase of Mega Food Park Scheme Incentives for development of storage facilities • Investment-linked tax incentive of 100 per cent deduction of capital expenditure for setting up and operating cold chain facilities (for specified products), and for setting up and operating warehousing facilities (for storage of agricultural produce) Source: Ministry of Food Processing Industries, APEDA, Aranca Research Focus on R&D and mordenisation • The government launched initiatives such as for the Setting Up/Upgradation of Quality Control/Food Testing Laboratory, R&D and Promotional Activity scheme and the Technology Upgradation/Setting Up/Modernisation/Expansion of Food Processing Industries Scheme
  25. 25. Source: APEDA, Aranca Research Jammu & Kashmir: Apples, walnuts Punjab: Basmati rice, vegetables Himachal Pradesh: Apples Rajasthan: Coriander, cumin Gujarat: Mangoes, vegetables, sesame seeds Andhra Pradesh: vegetables, mango pulp, grapes, gherkins Maharashtra: Grapes, grape wine, mangoes, flowers, onion West Bengal: Pineapple, litchi, Darjeeling tea, vegetables Uttar Pradesh: Basmati rice, potatoes, mangoes, vegetables Uttaranchal: Basmati rice, aromatic and medicinal plants Madhya Pradesh: Onions, garlic, seed spices, lentils Karnataka: Gherkins, rose, onions, flowers, vanilla Tamil Nadu: Flowers, mangoes, cashew nuts Assam: Ginger
  26. 26. Cumulative FDI inflows (Apr 2000–Jan 2013) into the food and agriculture sector (USD million) Source: Department of Industrial Policy & Promotion, Aranca Research Between April 2000 and January 2013, FDI in agriculture and food processing in India stood at USD5.2 billion Demand growth, supply advantages, and policy support have been instrumental in attracting FDI Notes: FDI – Foreign Direct Investment, 1,489 1,801 1,135 385 223 101 52 0 400 800 1,200 1,600 2,000 Agriservices Foodprocessing Fermentation Vegetableoil Agrimachinery TeaandCoffee Sugar 0% 10% 20% 30% 40% Cumulative FDI inflow (USD million) Share of total FDI inflow (%) - right axis
  27. 27. 12th Five Year Plan (2012-17) outlay shares: Food Processing Source: Ministry of Food Processing Industries (2009-10 Annual Report), Aranca Research The government’s main focus is on supply-chain related infrastructure like cold storage, abattoirs and food parks Notes: GOI – Government of India 36.3% 45.4% 11.5% 5.5% 1.3% Infrastructure development National Mission on Food Processing Strengthening of institutions Food Safety, R&D and Promotional Activities Innovation Fund Scheme Plan allocation to the Food Processing sector: USD2.9 billion
  28. 28. Source: Thompson ONE Banker, Assorted News Articles, Aranca Research PE investments in the food and agriculture totaled USD229 million during 2011-12 Company Investor Type of business Deal value (USD million) Godrej Agrovet Temasek Agribusiness 105.0 Nuziveedu Seeds Blackstone Group Floriculture 80.0 Nilgiris Dairy Actis Private Equity Dairy 65.0 Prakash Snacks Pvt Ltd Sequoia Capital Snacks 30.0 Parag Milk & Milk Products IDFC Dairy 29.0 Amalgamated Beans Coffee Trading Co Darby Asia Investors Non-citrous fruit farming 25.0 Bush Foods Overseas Pvt Ltd Standard Chartered Pvt Eq Ltd Rice milling 25.0 Tirumala Milk Products Carlyle Group Milk production 22.0 The CREMICA Group Motilal Oswal Private Equity Advisors General food products 15.0 Nashik Vinters Verlinvest SA Wine and liquor 15.0 Parag Milk & Milk Products Motilal Oswal Private Equity Advisors Dairy products 14.1 Godrej Tea IL&FS Investment Managers Coffee Coffee and tea 13.5 MajorPEdeals Jan2010–Mar2013
  29. 29. Source: Thompson One Banker, Aranca Research Notes: M&A – Mergers and Acquisitions M&A activity Target company Acquirer company Type of business Deal value (USD million) United Spirits Ltd Relay BV Liquor 2,045 GMR Industries Ltd EID Parry Sugar 114.8 Jay Mahesh Sugar Industries NSL Sugars Ltd Sugar 51.99 Olam International Ltd Hemarus Industries Ltd Sugar 73.8 Eastern Condiments McCormick & Co Seasonings, sauces 35.0 Krishidhan Seeds Summit Partners Agricultural seeds 30.0 Bajaj Hindustan Sugar & Ind Bajaj Hindusthan Sugar, ethanol 14.1 Associated Distilleries Globus Spirits Liquor 14.0 Taraori Rice Mills Pvt Ltd Ebro Foods SA Food and Beverage 14.0 Candico India Keventer Agro Candy items 11.2 M&Adeals Jan2010–Mar2013
  30. 30. Source: Thompson ONE Banker, Aranca Research Note: JV – Joint Venture Players like McCormick had identified India as a strategic market way back in the 1990s Global players like Hershey are now keen on entering the increasingly attractive Indian market Established players like Nestle and Coke are extending their global JVs to India Foreign Players Indian Partner Type of business Stake ratio Year Molson Coors Cobra India Brewing NA 2011 Dan Cake Phadnis Group Cake and biscuits 66:34 2011 McCormick Kohinoor Foods Ltd Basmati and food products 85:15 2011 McCormick Eastern Condiments Seasonings 26:74 2010 Nestle, Coca Cola -- Beverage 50:50 2010 Hershey Godrej Chocolates 51:49 2007 McCormick AVT Spices 50:50 1994
  31. 31. Source: National Dairy Development Board, GCMMF (, Aranca Research Operation Flood was initiated in 1970 by the National Dairy Development Board to achieve national self sufficiency in milk production by creating nationwide milk grids; under Operation Flood – India’s milk production rose to 127.3 million metric tonnes (mmt) in FY12 from 21.2 mmt in FY1969 India retained its position as the world’s largest milk producer in 2011-12 Dairy cooperatives offer employment opportunities to about 12 million farm families
  32. 32. Source: GCMMF (, Aranca Research Dairy cooperative societies (‘000) Members (million) Milk procurement (million kg/ day) Liquid milk marketing (million litres/ day) Milk drying capacity (million tonnes/ day) 261 2.9 2.6 1.8 13.3 842 10.0 11.0 9.3 72.5 507.5 5.0 5.8 3.6 34.5 PHASE I (Jul-1970 to Mar-1981) PHASE II (Oct-1979 to Mar-1985) PHASE III (Jul-1985 to Mar-1996)
  33. 33. 0.9 1.3 1.5 1.7 2.1 2.4 FY07 FY08 FY09 FY10 FY11 FY12 GCMMF (Amul) sales (USD billion) Source: GCMMF (, Aranca Research Notes: CAGR – Compound Annual Growth Rate FY – Indian Financial Year (April – March) Gujarat Cooperative Milk Marketing Federation (GCMMF) is the largest food products marketing organisation in India Set up in 1967, it is India’s largest exporter of dairy products and has been accorded ‘trading house’ status CAGR: 20.8%
  34. 34. Source: GCMMF (, Aranca Research Main brand: Amul Products: milk (including flavoured), butter, margarine, cheese, curd, desserts, infant food Facts and Features Producer members (million) 3.18 Village societies 16,117 Milk handling capacity (million litres/ day) 13.67 Total milk collection (FY12, billion litres) 3.88 Daily milk collection (FY12, million litres) 10.6 Milk drying capacity (million tonnes/ day) 647 NOTABLE AWARDS Authority Excellent performance in dairy product exports for 11 consecutive years APEDA CIO International IT Excellence Award (2003) for positive business performance through resourceful IT management and best practices IDG’s CIO Magazine (USA) International Dairy Federation Marketing Award (2007) for Amul’s pro-biotic ice cream launch International Dairy Federation
  35. 35. Primary focus on crushing and trading activities Expansion of extraction and refining capacity; focus on branded products Focus on developing upstream business; secured access to 185,000 hectares of palm plantation; major expansion of refining capacity Source: Ruchi Soya website, Aranca Research Top edible oil producer in India with market share of 18.2 per cent Strong presence in Edible oil and meal market Sales growth at a CAGR of 25 per cent Over FY01-12 Market capitalisation of USD473.05 million Revenue base of over USD6,375 million Organic growth phase Strong brands like Nutrela and Vansapati and Sunrich Focus on R&D Acquisitions of companies and plats facilities 2001-04 2005-08 2008-12 One of the world’s fastest growing FMCG company Aggressive acquisitions of lands for soya and palm plantations
  36. 36. Source: Company Annual Report, Aranca Research Note: KRBL - Khushi Ram and Behari Lal Salient characteristics • KRBL is world’s largest rice miller and basmati rice exporter • It has strong brand presence through global retail giants like Carrefour, Bharti-Walmart, Spencer and Future Group • It is the largest producer of contract farming basmati rice in the world • The company accounts for 25 per cent of India’s total exports of branded basmati rice • KRBL is well-integrated in terms of farming, rice processing, oil production and power generation Sales (USD million) Exports (USD million 140.5 178.2 FY11 FY12 247.6 285.7 333.1 339.0 340.3 292.4 FY08 FY09 FY10 FY11 FY12 9M FY13 CAGR: 33.4%
  37. 37. Notes: PPP – Public Private Partnership, AEZ – Agri Export Zones, FDI – Foreign Direct Investment Untapped market with strong growth potential • Fragmented market leads to lower processing levels and value addition • The government plans to raise value addition to 35 per cent by 2015 (from 20 per cent in 2005) • PPP modules ideal for the private sector • Strong demand growth – household consumption set to double by 2020 Potential global outsourcing hub • Global supermarket majors are looking at India as a major outsourcing hub • India enjoys favourable supply-side fundamentals (abundant raw materials supply, cost advantages) • The government has helped by investing in AEZs, mega food parks, easier credit Supply chain infrastructure and contract farming • Both firms and the government are eager to boost efficiency and access to markets • Investment potential of USD22 billion in food processing infrastructure; 100 per cent FDI in this area • Firms increasingly taking recourse to contract farming in order to secure supply
  38. 38. 37.5 544.4 1,088.5 10th Five Year Plan 11th Five Year Plan 12th Five Year Plan Fund allocated for infrastructure development in food processing industry (USD million) Notes: PPP – Public Private Partnership, AEZ – Agri Export Zones, FDI – Foreign Direct Investment Government’s focus and launch of various schemes to provide excellent infrastructure facility in food processing sector opens up various opportunity for private investors Various schemes launched by government provides capital grant, subsidy, duty free export of products and tax incentives to the investors Project wise fund allocated in 12th Five Year Plan (USD million) CAGR: 27.2% 677.0 349.0 58.1 Mega Food Parks Scheme Scheme for Integarted Cold Chain Scheme for Modernsiation of Abattoirs
  39. 39. Agricultural and Processed Food Products Export Development Authority (APEDA) NCUI Building 3, Siri Institutional Area, August Kranti Marg, New Delhi – 110 016 Phone: 9111 26513204, 26514572, 26534186 Fax: 91 11 26526187 E-mail: Marine Products Export Development Authority (MPEDA) MPEDA House, Panampilly Avenue PB No 4272, Cochin-682 036 Phone: 91 484 2311979/2311803 Fax: 91 484 2313361 e-mail:,
  40. 40. AEZ: Agri Exports Zones MFP: Mega Food Parks CAGR: Compound Annual Growth Rate FDI: Foreign Direct Investment MT: Million Tonnes IIP: Index of Industrial Production FY: Indian Financial Year (April to March) So FY12 implies April 2011 to March 2012 GOI: Government of India INR: Indian Rupee PPP: It could denote two things (mentioned in the presentation accordingly) – Purchasing Power Parity (used in calculating per-capita GDP) Public Private Partnership (a type of joint venture between the public and private sectors)
  41. 41. PE: Private Equity APEDA: Agriculture & Processed food products Export Development Authority GCMMF: Gujarat Cooperative Milk Marketing Federation USD: US Dollar Wherever applicable, numbers have been rounded off to the nearest whole number
  42. 42. Year INR equivalent of one USD 2004-05 44.95 2005-06 44.28 2006-07 45.28 2007-08 40.24 2008-09 45.91 2009-10 47.41 2010-11 45.57 2011-12 47.94 2012-13 54.31 Exchange Rates (Fiscal Year) Year INR equivalent of one USD 2005 45.55 2006 44.34 2007 39.45 2008 49.21 2009 46.76 2010 45.32 2011 45.64 2012 54.69 2013 54.45 Exchange Rates (Calendar Year) Average for the year
  43. 43. India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Aranca and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.