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•Corporate Actions and Investments
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AGRICULTURE AND FOOD INDUSTRY IN INDIA FOOD PROCESSING SECTOR - EXECUTIVE SUMMARY
Executive Summary
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INR bn +12% • The industry is valued at INR 3.4 trillion (USD 70 bn) and is
5,000 4,784
4,186 expected to witness a CAGR of 14% in the period 2009-
4,000 3,680 2012E
3,430
3,000 • India is one of the top producers of milk, pulses,
2,000 sugarcane and tea in the world
1,000 • Government has taken major initiatives towards ensuring
0 multi-fold growth in this sector that has an investment
2009 2010e 2011e 2012e opportunity of about INR 1.1 trillion (USD 24 bn) by 2015
… with dairy sector having the highest penetration in the • Mega Food Parks are coming up in India to integrate the
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market supply chain and promote food processing
Diary Sector 37% • Foreign direct investments was ~INR 6.3 bn (USD 143
mn) in 2007-08
Fruits & Vegetables 10%
• States like Andhra Pradesh, Uttar Pradesh and Madhya
Meat & Poultry 6% 10% Range 6 – 10% Pradesh are highly attractive for food processing industry
Fisheries 12% Scope: Food processing includes Diary Sector, Fruits & Vegetables,
Meat & Poultry, Fisheries, Packaged Foods, Beverages and Staples
Packaged Foods 3%
Source: Source: Ministry of Food Processing Industries, IBEF articles & KPMG Research
• Globally, India is second and third largest producer of vegetables (100 MT) and fruits (50
MT) respectively
India accounts for 8.4% of the world’s F&V production Growth
Fruits and • Less than 2% of total vegetables produced are processed commercially in India Rate
Vegetables • Share of organized sector in fruits processing is ~48% and ~20% of processed F&V are +20%
exported
Mango and its other products alone constitute 50% of the total F&V exports
• India is the largest tea producer in the world accounting for 28% of global production
and 5th largest coffee producer accounting for 4% of total production in the world Growth
Beverages • There are 100 plants across India under aerated soft drinks segment Rate
• Exports in soft drinks are valued at INR 7.2 bn (USD 156 mn) per annum +27%
• Attracted FDI of more than INR USD 1 bn
• India is the second largest wheat producer globally with an output of 70 MT valued at Growth
Staples INR 9 bn (USD 195 mn) Rate
• There are 10,000 pulse mills with 14 MT milling capacity per annum +85%
Note: Fisheries sector include marine, in-land and aquaculture; Packaged foods primarily include ready-to-eat snacks, chips, namkeen, bakery
products etc.; Beverages primarily comprises non-alcoholic beverages like aerated soft drinks, fruit juices and hot beverages
Conversion of USD to INR – average of that year from oanda.com
Source: Press articles; Ministry of Food Processing website; IBEF & KPMG research report “Food Processing- market & opportunities”, Apr 2008
• In the last five years per capita consumption expenditure has • India has largest irrigated land and livestock population in the
gone up by 20% world
• Consumption of primary and secondary processed foods has • India is a favorable market to set-up large low cost production
grown rapidly over the past few years due to the following base with effective utilization of available cheap workforce
factors: • Cost of production in India is 40% lower than many of the
Four-fold growth in size of households in middle-income to very locations in Europe and about 10-15% lower to that of United
rich segment Kingdom
Increase in the youth (age group 15 – 25) in the country
Growing migration of population from rural to urban India
Growing food retailing in India
Expenditure on Food by Indian Consumers
• The food retail business in India is growing at a 30% annual rate,
Milk & milk
and provides a huge scope for food processing players
products, meat Primary & secondary
& marine products processed foods • Food retailing formats are growing in India ranging from
30% neighborhood stores, supermarkets, hypermarkets to cash and
Others
34%
carry stores
HUL, ITC and Dabur has already forayed in to this space and are
70% 66%
planning to increase their outlets
Agri-products
• Established players are planning to tap the backward linkages and
expand their geographies
Players include Reliance Fresh, More, Spencer’s Daily, Food Bazaar,
Food World, Nilgiris etc.
Source: FICCI - E&Y study “‘Flavours of Incredible India – Opportunities in the Food Industry’, Oct 2009; Indian Brand Equity Foundation report 2008; Chilli Breeze article
“Food Retail in India – Growth, Growth and More Growth”; Business Line “Food retailing needs to perfect franchise recipe “, Apr 2009
• Government plans on establishing 30 mega food parks in all states enabling integration of the fruit
and vegetable sector from farm gate to the retail outlet
Operations towards developing 10 parks has begun
Mega food parks All parks are expected to be established by 2015
• Government to provide financial support by means of capital investment in Food Parks, subject to a
maximum of INR 506 bn (USD 11 bn)
• Government is planning to declare a tax holiday for all food processing units
• It also plans to extend 100% depreciation benefit for infrastructure projects in the sector from first
Tax rebates year onwards
• Income tax rebate is allowed for 100% of profits for first 5 years and 25% for next 5 years
• Reduced custom and excise duties on various products
• Government plans to design a curriculum for skill development programmes in consultation with
HRD ministry, Labour ministry and institutions
Skill development • Plans to collaborate with aid agencies like World Bank and Asian Development Bank to raise funds
plans for running large-scale skill development programs
• Prepare a blueprint for Skill Development Mission and collaborate with Industrial Training Institutes
(ITI) to focus on training the workers at various levels of food processing
Source: Ministry of Food Processing India; ET Interview with Food-processing minister “Food processing can create more jobs”, Jul 2009; The Financial Express “Food
processing min plans Rs 1,200-crore VC fund” Sep 2009 Note: Conversion of USD to INR – average of that year from oanda.com
Source: Maharashtra State Agricultural Marketing Board “Projects: Terminal Markets”, IBEF and other press articles; Economic Times “Food processing can create more
jobs”, Jul 2009; igovernment article “India to set up 30 food parks”, May 2008; Yahoo news “High taxes hitting food processing sector: Assocham” Nov 2009
High taxes on
branded
agricultural
products
Source: Economic Times “Food processing can create more jobs”, Jul 2009; igovernment article “India to set up 30 food parks”, May 2008; Yahoo news “High taxes
hitting food processing sector: Assocham” Nov 2009; IBEF report 2008; igovernment article “India to set up 30 food parks”, May 2008
Sep 2007 Field Fresh Foods Pvt Ltd. Del Monte Pacific Ltd 4500-5500 /100%
Jun 2008 Parag Milk Foods Pvt. Ltd (“Parag/ Motilal Oswal Venture Capital Advisors 600
Gowardhan”) Private Limited
Jun 2007 Karuturi Networks Bennett, Coleman and Co Ltd (BCCL) NA
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