Shrey Report

7/29/2019 Shrey Report

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FINAL REPORT BASED ON 60 DAYS MARKET

WORK AS A NILONS

ARMY SOLDIER IN MUMBAI MARKET

NAME-----------------------------------JOSHI SHREY

NAGAR

COLLEGE---------------------------------- BIMHRD

(BALAJI SOCIETY)

KARMA BHUMI(BEATS)---------MALAD

TERRITORY(Ist30 DAYS)

VASHI

TERRITORY (LAST 30DAYS)


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SUBMITTED TO->1-Mr. Dipak

Sanghvi (M.D of Nilonsenterprises pvt. ltd)

2-Mr. Rajheev Agarwal

(C.E.O of Nilons enterprises pvt. ltd )

AKNOWELDGEMENT

There is joy in work. There is no happiness except in the realization

that we have accomplished something - Henry Ford

The making of any report requires contribution from many people,right from inception till its completion. In my case also, there had

been a few people who have made this happen. It was not only

learning but also an enriching experience.

.

I am deeply indebted to MR . DIPAK SANGHVI SIR havingallowed me to carry out the project successfully. I specially thanksto

MR.RAJHEEV SIR who is having their unique way to motivate us. Ireally wanted to share this thing at this level of summer training we

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saw and worked with those people who are stalwarts of this field its a

dream come true for me.

The report which I am sending based on totally upon my experience

in Mumbai market I may be wrong on some points but as this is my

Ist practical experience this final report is based on that. .It was

really good learning in those 60 days as it is correctly said by CEOsir that market is the best teacher I tried to learn maximum from this

experience and looking forward to work with NILONS again in near

future as a permanent soldier of NILONS army.

.

Teachers open the door, but you must enter by yourselfChinese Proverb

Its not because things are difficult we do not dare,In fact we dont

dare thats why they are difficult.

CONTENTS

S.NO PARTICULARS Pg.No

1 Executive summary

2 Introduction (company profile, product portfolio)

3 Project brief

4 Survey report and Analysis

5 SWOT analysis

6 Conclusion

7 Recommendation

8 Problem faced during project

9 References

10 Annexure 1

11 Annexure 2

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EXECUTIVE SUMMARY

The objective of our summer project is to IDENTIFY GAPS IN NILONS

DISTRIBUTION AND STRATEGIZE TO FILL THOSE GAPS and also TO

ENSURE THAT ALL SOPs ARE FOLLOWED

Nilons is an FMCG company and is renowned throughout INDIA for its

quality and taste it delivers. As the companys punchline boasts, Nilon's

Pickles: Taste that Lingers. It is very true since it delivers the quality

which really lingers in the mind of customer and they are compelled to

purchase which is proved by the marketing survey done by me. Adding

one more feather to the cap, Nilons is the largest and best quality

producer of tooty fruity in INDIA. Nilons also manufactures roasted

vermicelli, jams, papads, gulabjamun mix and macaroni. So Nilons has

a very good line of products and all of them give good competition to

the competitors.

It is truly said that it is very difficult to achieve 100% in any aspect.

Some or the other loopholes or lacunae would always be present. In the

similar way Nilons also possesses some loopholes. There were some

Distribution gaps seen. They are as follows:

KEY ISSUES IN MUMBAI MARKET

1. As Mumbai is the economic capital of

our country in order to tap this huge fruitful

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market we need Planning, Coordination &

timely implementation of strategies which

can only come from implementing 4Ds in

our blood these 4Ds are DISCIPLINE,

DEDICATION, DETERMINATION &DESIRES

which is lacking here in Mumbai.

2. Apart from CRM, VRM is can be the key

for success.

According to me distributor is just like heart

which maintains the product delivery andservice to the retailers , if VRM has not been

done properly area under him can easily be

paralysed and fact is that in Mumbai VRM

has not been done properly.

3.Communication gap is there between-

EX-Our strategy of promoting our brand in retail

malls has not been effectively implemented as

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there was lack of planning and communication

gap there was no prior information from the side

of nilons management to the managers of retail

malls that team of nilons is coming in their stores

to promote the nilons brand. As for every action

there should be a standard procedure they need

in written from the nilons management document

explaining about our actions in advance which

the Mumbai till now not able to do this. Result is

in front of us.

4.There is always misplaced order from the side

of C&FA .They always send what has not been

ordered.

EX-recently i made an order of 10 boxes of

nilons 200 gms pouches (5 mango,2mix,3lime,1

chilli) .They sent all pouches of mix variety.

5.C&FA warehouses are not in proper condition

as distributors as well as retailers complaining

about foul smell of pesticides in nilons products i

have also couriered one sample taken from the

APMC market to the nilons house at Jalgaon (cv-

900gm,batch no-01,dated-september)

6.Wer here in Mumbai to help and coordinate

with Mumbai team to raise the value of nilons

brand & positioned nilons as a cult brand in the

minds of Mumbaikars . But after working 60 daysI and my fellow members felt that Mumbai team

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think were here only to report a negative

feedback against them this can be easily

identified with the attitude of sales man they

were afraid of us .Were trying from our side to

be as supportive as possible rest is on them.

According were just mere cost to the company

and good for nothing.

7. I also found out that there is no feeling of

respect among ground staff for their seniors, I

dont want to disappoint you but every third

person among field staff want to shuffle the

company.

8. Efficiency and affectivity can only come if we

can manage our time. Lack of time management

in the system continuously reducing our

efficiency here.9.There is always a complaint from the retailers

side that they are getting less number of pieces

in RV box, less gram age in cherry packets.

10- Salesmen were found very inconsistent in carrying the samples.They should at least carry the small catalogue given by the company

since it speaks about our entire product length. Also the retailer can

get trapped in some or the other product we sell.

11- Proper distribution of last scheme was not done i.e. smaller

retailers always complained to me saying that when there is a scheme,

they are not told about it. The information is just confined to the

wholesaler. So it maligns the goodwill of the company and also leads to

slow moving of our product to the consumer. In the mean time the

scheme is stopped and new prices are there. Consequently the

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distributor is having products of a price higher than the market. So our

products then move out slowly.

12- It was found that the salesmen where not following the SoPs

(standard operating procedures). They should get signature and seal on

the daily selling report everyday but this does not happen.

13- Company should take care of its secondary sales or retailing since

primary sale is just a PSEUDOSALE. Just dependency on the

distributors salesmen is not good since they just make a postman call.

They have a plethora of brands to sell so they just call the name of our

brand and never try to convince the retailers. So utmost attention must

be given to secondary sales because that is where actual turnover

occurs.

AN INTRODUCTION

NILONS ENTERPRISES PRIVATE LIMITED

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MANAGING DIRECTOR: Mr Dipak Sanghavi

CEO:Mr RAJHEEV Agrawal

Sr .G.M.: Mr Deepak Minotra

NSM: Mr Ajay Sheoran

ASM (MUMBAI) :Mr. AYUB KHAN

The foundation of this industry was laid way back in 1962 as a

tiny cottage industry. During those days, the processed food

sector was not the talk of the time. However, it was truly the

vision of a young entrepreneur (the founder Director Late Shri

S.B. Sanghavi) to enter into this segment, leveraging the fact

that India was primarily an Agro-based economy.

'Nilons's' realized that to succeed in food industry, it should have

the right blend of taste, quality, and hygiene. Accordingly, R & D

infrastructure facilities of highest order were established.

Modestly, 'Nilon's' forayed into traditional Indian recipes to

satisfy the taste bud of millions of Indians and gradually spread

its wings across the globe. Doubtlessly, Nilon's became a generic

name for pickles and Tooty-Fruity in India and Abroad.

The foundation of trade channels was laid on trust, personal

relations and transparent dealings which continue to be a guiding

force even today. Nilon's too has changed with time. Becoming

more professional, embracing new technology, and building

capabilities to serve the global village, it has kept pace with thechanging times.

Today Nilon's is 49 years young. Yet it believes in Indian ethical

values of culture and is committed to providing the very best

quality product and services. Nilon's is today India's premier and

best-known food Company.

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Product Brief

The traditional Indian Pickles, Chutney, and Papad own their

origin since the emergence of human civilization. These Indian

ethnic food relishers have stood unshakably for several millions

years. Today these are relished and enjoyed by people around the

global irrespective of their culture, social and food habits. The

acceptance has opened doorways for Indian manufacturers of

processed food products.

'Nilon's' is one such Indian premier processed food company,

which makes available all popular Indian ethnic processed food

products under one umbrella: Pickles, Chutney, Papad, Sauces,

Jams, Vermicelli, Preserves and Instant Mixes. Products are

created to meet international quality and hygiene standards yet

maintaining Indian flavor, aroma, and taste to delight everyone's

taste buds.

THE VISION :

Everyone dreams of 'Perfection'. However, quest of 'Excellence' is

a way of life at Nilon's which is truly reflected in their mission

statement and quality policy. Ambition never ends at 'Nilon's we

are keep working... With 41 years excellence in manufacturing

and marketing processed food products. We aspire to be global

out-sourcing hub and Indian ethnic food products thereby moving

Nilon's worldwide.

THE MISSION:

To continuously strive to improve the existing products to

introduce new mass consumption food products for better market

share and better quality of life deploying core competence.

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Quality Policy:

It is our commitment to provide nothing but the very best quality

products and service meeting trade and consumer satisfaction

yet holding Indian ethical values and culture.

Nilon's Pickles is making waves in the ad world. The brand is a

classic example which shows the power of good creative

execution. Nilons pickles are from the company Nilon's

Enterprises Pvt Ltd which has been in this business since 1962.

The company claims to be the largest manufacturer of pickles and

tooty-fruity in India.

Nilon's Pickles caught the attention of advertising world because

of its new commercial which is making rounds across channels in

India.

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PRODUCT PORTFOLIO- WITH EVERY SKU

Nilon's pickle STD (M/L/C/X) 8 g

15g

40 g

50g100g

200g

500g

250g

400g

1 kg

1.2kg

5 kg

20 kg

Nilon's pickle TARGET(M/L/C/X) 50 g

350g

500g

5 kg

5 star (M/X) 1 kg

6 kg

20 kg

Nilon's PARAMPARA(M/L/C/X) 1 kg

5 kg

KK (M /L/C/X) 400g

1 kg

5 kg

CLASSIC (M/X) 6 kg

22 kg

Dhamaka(classic)(M/X) 5 kg

SAUCE & KETCHUP

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Tomato ketchup Rs 1

200g

500g

1 kg

Snack sauce Rs 1

1 kg

Continental(KK) 200g

500g

1 kg

ACHAR MASALA 250g

500g

1 kg

ROASTED VERMICELLI 150g

CUT VERMICELLE 175g

450g

900g

MACARONI 175g

450g

900g

JAM 200g

500g

PAPAD 1 kg

Alu papad

sabu papad

TF 100g

1 Kg

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PRODUCTS PORTFOLIO WITH PICTURES

1-

2

Chopsticks Green Chilli Sauce

2-ACHAR MASALA

3-CUT VERMICELLE

4-MIXED PICKLE

6-POTATAO PAPAD

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5-SABUTDANA PAPAD

7-LONG VERMICELLI

8-continental sauce

11-soya sauce

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9-khana khajana 12-

tooty fruity

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10-premium mango pickle

Project Brief

The objective of my summer project is to Identify Gaps In Nilons

Distribution And Strategize To Fill Those GapsAnd Also To Ensure

That All Sops (Standard Operating Procedures) Are Followed.

We were also given a target for everyday. They are enumerated below:

40 -50 productive calls

Minimum 20 cases of retailing

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Opening 10 new outlets /institution.

To work with area sales manager (ASM)/area leaders

On objectives for the month.

On special projects for the area

On distributor and field staff motivation and direction

So we started our project on 01/05/2009 with first two days of training

and warm up and then we were sent to our allotted place. I was sent to

MUMBAI and I was required to find out the lacunae in the distribution

channel and also to meet my daily target set by the company. I worked

under the guidance of the area sales manager Mr. Ayub Khan who is

really extraordinary in sales and marketing. He gave me useful tips of

primary and secondary sales and how to do it.

BASIC WORKING AGENDA

THINK BIG..THINK AGAIN..

UTILIZE YOUR STRENGTH

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JOB RESPONSIBILITY

WORKING PROFILE

REPORTING SYSTEM

ANNUAL ACTIVITY

PRIMARY ORDER SYSTEM

SECONDARY SALES SYSTEM

DEALER PAYMENT SYSTEM

FIELD STAFF EXPENCES SYSTEM

RULE OF FIELD STAFF ATTENDANCE

DEALER HANDLING SYSTEM

COMMUNICATION TO CONTROL DEALER

CSA HANDLING WITH COMMUNICATION TO EVERY TIME

MONTHLY SALES CLOSING SYSTEM

OVERALL ACTIVITY TO BEST SALESMAN

YOU CAN WIN

Now looking at the Distribution system followed

by NILONS in MUMBAI

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There are total 20 distributors in Mumbai i worked under two distributors

namely MR.AJIT (GAJANAN MARKETIN distributor of

kandivalli),MRS.MANJU GUPTA (OM DISTRIBUTORS VASHI AREA)

C &N FA is located in Ghatkopar namely NEENA SALES.

Beat plan of GAJANAN MARKETING

DAYS BEAT 1 BEAT 2

Monday MALAD MUDJETTY

Tuesday KANDIVALLI SOMWARI BAZAR

Wednesday CHARCOP PATHANWADI

Thursday POISOR CHINIVALLI BANDAR ROAD

Friday KRANTI NAGAR MALWANI NAGAR

Saturday DAFTARI ROAD KURAR VILLAGE GANESH NAGAR

Beat plan of OM DISTRIBUTORS

DAYS BEAT 1 BEAT 2

Monday AIROLI GHANSOLI

Tuesday KOPERKHERNE SEC1-4 KARAWA DHARAWA

Wednesday CBD BELAPUR NERUL

Thursday SANPADA APMC SANPADA APMC

Friday VASHI KHOPOLI

Saturday TURBHE COPERKHERNE SEC4-8

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SWOT ANALYSIS

SWOT ANALYSIS means analyzing the following:

STRENGTH

WEAKNESS

OPPORTUNITY

THREAT

STRENGTH:

Strength of NILONS is its BRAND NAME.

Its quality.

Its strong retailing.

Its quality of men force/sales force

WEAKNESS:

Quality is deteriorating

Cannibalism seen in many products in which one kills the sales

of other

Price not kept according to quality.

PR strategy totally neglected.

Frequent fluctuation in prices.

OPPORTUNITY:

Organized market is of Rs.400 Cr and total pickle market is of

Rs.1500 Cr. So there is still a plethora of opportunities left with

the company that can be exploited to its advantage.

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New states to be given more importance instead of working

mainly in a saturated market.

New products to be developed which can move fast and also

give good profit since NILONS brand can be easily used.

THREAT:

Local brands that have edge in taste and also inventory and

other costs.

New good brands like KAMDHENU which give customer quality

as well as competitive price

Other competitors like PRIYA, KAMDHENU, MOTHER, TUFAN etc

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SUGGESTED SOLUTIONS OF KEY

ISSUES

1.To convert a product into BRAND weneed to develop trust & has to deliver

what we had promised. Maintain the

standards of quality of service through

proper planning and execution with

proper action and route plans.

2.Order should be on the same rate at

which sales man took order and deliver

it on the desired time.

3.Handling the disputes of distributors

must be done satisfactorily. Periodical

meeting should be held with everydistributor (between ASM &

distributor).It is necessary to maintain

confidence in him for our brand and

organisation.

4.Surprise visits of ASM , ASS-ASM,& SOs

on field to check whether the field staff

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is doing his work on time or not. Similar

surprise visits should be done from the

side of top management team.

5.Proper communication channel shouldbe developed which is not there. Phone

numbers should be stable and always

switched-on.

6.In order to tackle the problem of

misplaced or wrong dispatched of

goods it is the responsibility of C &Fa toconfirm the order from sales or

distributor before sending the

consignment.

7.Surprise visits must be done to

different warehouses of distributors &

C&Fa to check their condition ofhygiene as there is huge replacement

happening from their side. We are

losing huge amount of money on our

policy of 100% replacement.

8.Sales should be encouraged to do

market alone as in some areas they are

covering the market with distributor

sales man who also promotes products

of other brands due to which effective

selling cant be done.

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9. In case of 5 kg TARGET or CLASSICpickle we can introduced one spoon in

it as most of the retailers sold it open.

It will increase the cost but also bring

differentiation and as we all know that

to achieve competitive-advantage over

our rivals we have to pay that cost.

10. Launching of sachets of jams in 2rs

category.

11. Promotion activity should be donewith the use of display boards,

banners, hoardings & by running our

AD in big retail stores etc.

12. There is huge demand of ginger-

garlic paste in the market we can think

about this category of product if it is

feasible.

13. As we use mango in most of our

products we can introduce aam papad

based on this core competency.

14. WE can also introduced flavouredvermicelli , pasta etc.

15. Proper advertisement strategy should be done like

putting banners in retail outlets, stickers to be put in the

retail outlets and especially superbazar and big bazaars.

16. Advertisement which can be easily understood by

public to be broadcast, since it is difficult to understand

whether our advertisement is of pickles or jam.

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17. Use your brand name many times in an advertisement

and try to show in a few seconds almost the entire

product range. This will speak about our line of products

and also show our strength as NILONS FAMILY. It will be

cheaper also since you dont need to advertise for each

product.

18. Documentation should be properly done like filling of

daily sales report. Name of every product should be there

so that he /she does not forget anything. See Annexure 1

19. If our secondary sales are dependent much on

distributors salesmen then give them some incentive in

their hand not in the hand of distributor as it will

motivate them and also increase the sale.

20. Give distributors salesmen also a target. Since they

have many brands to sell, they just make a POSTMAN

CALL and finish their job. So motivate

them by giving incentives.

21. Give more emphasis on your secondary sales for the

reasons stated earlier in the report. Primary sales will

anyway happen. It is the secondary sales which yield theactual revenues.

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Conclusion

Distribution of products is good but there is inconsistency of

supply of products like jams, achar masala, ketchup etc. So it

instigates the retailer and also consumer to jump to other

brands.

Field staff should always carry some sample or the small

catalogue book, if the products are cumbersome to carry.

Quality and supply of products to the retailer is good and this is

proved by the survey.

Product placement and also our retailing are stronger than

other available brands but it is not up to mark. Still we need to

do lots of hard work to uproot the local brands.

Please work for the awareness of the brand in the mind of

consumer and also to the retailer.

Quality seems to be getting bad in the bulk pack though it is

good in consumer packs. This should be taken care of since

NILONS is famous for the quality it delivers.

India's food industry on

the path of high growthINDIA'S $182-BILLION FOOD PROCESSING INDUSTRY HAS BEEN GROWING AT OVER 13 PERCENT DESPITE THEGLOBAL SLOWDOWN.PACKED AND PROCESSED FOOD IS INCREASINGLY BECOMING POPULAR

By Aroonim Bhuyan

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INDIA'S $182-BILLION food processing industry has been growing at over 13 percent despite the globalslowdown. And now the government is aiming to double the turnover in the next five or six years by setting upmega food parks to attract global capital The vision: Bring about a three-fold growth in the size of the country'sfood processing business, increase the level of processing perishables from six percent to 20 percent, raisethe value addition from 20 percent to 35 percent and increase India's share in the global food trade from 1.5

percent to three percent."We have seen the revolutions in the information technology and biotechnology. I nowfeel the time has come for a revolutionin food technology," said Minister of State for Food Processing SubodhKant Sahai."People say whatever the circumstances, one will need food. So, this is one industry that will never

close down, "Sahai, who holds independent charge of the ministry, said in an interview. He has statistics a swellt back his confidence. The country's gross domestic product (GDP) saw a decline in growth to 5.3 percentfor the third quarter of this fiscal from8.9 percent in the like period of the previous year, with bothmanufacturing and agriculture actually registering a decline in output. But the food processing sector continuedto maintainapositive growth rate. "In the midst of the global economic meltdown and with the growth in ourmanufacturing sector also having fallen, the food processing industry is growing at a robust 13.7 percent today,from levels of 6.7 percentin 2004-05," said Sahai. Agreed Pradeep Chordia, chairperson of the Chordia FoodPark at Shirwal in Maharashtra: "Food is an essential item. I don't think that the global recession will have anyeffect on thefood industry in India."According to the India Food Report 2008 prepared by leading markets data providerResearch and Markets, the Indian food industry was estimated at over $182 billion, accounting for about two-thirds of the country's total retail sector. "We expect this market to grow to $300 billion by 2015, which isnot very far. And by 2025, it is expected to be worth $344 billion ,"said an official in the ministry of food

processing industries

.

THE INDIAN FOOD INDUSTRY WASESTIMATED AT OVER $182BILLION,ACCOUNTING FOR ABOUT TWO-THIRDSOF THE COUNTRY'S TOTAL RETAIL

SECTOR.

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SOME FACTS ARE WELL KNOWN AND BACK THE

AMBITIOUS VISION SET BY THE GOVERNMENT:

! India is the world's largest producer of milk.! It has the largest number of livestock in the world.! It is the world's second largest producer of fruit and vegetables.! It is the third largest producer of food grain.

! It has the third largest output of fish.! It the largest producer, consumer and exporter of spices.At the same time, while processing of food to consumable standards are at levels of up to 80 percent in somedeveloped countries, the overall processing level in India has languished at single-digit level till recently."While the whole world was processing at 70-80 percent ,we were processing just six-seven

percent.Now,afterfour years, this has gone to 10 percent," said Sahai, adding thatIndia's share in exports ofprocessed food in a global market is just 1.5 percent at $3.2 billion.The main reason for this is that much of thefarm and horticultural produce goes waste or farmers are compelled to dispose them of in distress sales as thereis no adequate infrastructure to process and preserve the produce and especially increase its shelf life till itreaches retail stores. The wastage level of fruit and vegetables in India currently stands at a whopping 35

percent, explain ministry officials, adding it was to bring a complete turnaround to this schemeof things that the government launched the ambitious Vision 2015 programme. An essential part of the

programme is the flagship Mega Food Parks Scheme, which is instilling a lot of hope among stakeholders -

from agriculturists to industrialists- and 10 such projects are already in the pipeline acrossthe country. The ideabehind these parks is to make the country's farm sector more market-driven than supply-driven. Inother words, farmers will need to produce what the markets demand rather than what they feel like."Through food parks, processors will tell farmers, 'Look! this is what you will produce now since this is what isneeded.We need so much of this produce every year. This is thecurrent market rate, this was what you were getting, and this is what we will pay you'. So all sides are happy,"explained the ministry official."What we want is the farmers should get more and moremarket information." Each of these parks is expected to generate 30,000 direct jobs and several times of it inindirect opportunities. Based on the success parameters of the first 10 parks, the number will be scaled up to 30in the next five years. These initiatives are also seen opening up new opportunities for youth and that iswhy the government is setting up the National Institute of Food Technology Entrepreneurship and Management(NIFTEM), not far from the national capital. "Courses in the institute will start from the 2010 session," saidSahai, adding a series of laboratories for carrying out research anddevelopment work at various institutes was also in the pipeline.The minister said India's food processing industry which has the potential to attract Rs.1,000 billion ($20

billion) worth of investment, now needed to link better with the world marketto achieve its full potential. "Wewill become the food factoryof the world."

Growth in Foreign Direct Investment (FDI)According to the Reserve Bank of India, the actual inflow of foreign direct investment(FDI) in the food and food processing sector has been over US$ 711.4 million till March,2004. Total FDI in 2004 in the sector was US$ 111.2 million up from US$ 36.5 million in2003. Nearly 30 per cent of FDI in this sector comes from EU countries such asNetherlands, Germany, Italy and France. Some of the successful ventures fromEUcountries are Perfetti, Cadbury, Godrej-Pilsbury, Nutricia International,

Manjini Comaco, etc

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.

Competitive Advantage

India has several competitive advantages in the food processing sector,which have been analysed using the framework shown below.Indian Food Processing Industry

Indias comparatively cheaper workforcecan be effectively utilized to setup largelow costproduction bases for domestic and exportmarkets.diverse agro-climatic conditions India issecond in world in terms of arable land

(million hectares)Firm strategy, structure and rivalryA large number of domestic as well asmulti-national players.copetitive industry Factor conditionsDemand conditionsHigh market awarenes.Rapid urbarization,

increases literacy and rising per capitaincome, have all caused rapid growth andchanges in demand patterns Related andsupportingIndia has a wide-ranging and large rawmaterial base suitable for food processingindustries.

India has developed advancedtechnology to support foodprocessing industry

In Five-year tax holiday for new foodprocessing units in fruits and vegetableprocessing along with

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other benefits has bolsteredtheGovernments resolution of encouraginggrowth in this sector.

Major segments in Indian foodprocessing industry

Food Processing Units in Organised Sector (numbers)

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Food processing industry booms

Indianisation

There is a saying that companies need to, think globally but act locally.While foreign food products still entice us, the demand for world class Indian

products are also increasing. In order to satisfy the domestic taste birds manyMNCs have launched Indianised versions of their international products inIndia. since every market has its own taste & preference in order to grab thelocal market share it is necessary to modify the products to the local taste byusing global concepts & technology.

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Sectoral Overview

India has arable land of 184 million hectares and produces annually 90 milliontonnes of milk (highest in the world), 150 million tonnes of fruits andvegetables (second largest), 485 million livestock (largest), 204 million tonnesfood grain (third largest), 6.3 million tonnes fish (third largest), 489 million

poultry and 45,200 million eggs. India's agricultural production base is huge.However, processing level is very low i.e. around 2 per cent in fruits andvegetables, 26 per cent for marine, 6 per cent for poultry and 20 per cent for

buffalo meat. The share of India's export of processed food in global trade isonly 1.5 per cent. Hence, there is immense potential for investment in thissector. To facilitate the prompt growth of food processing industry, theGovernment has implemented the scheme for infrastructure developmentcomprising a food park scheme, establishing packaging centres, integrated coldchain facility, value added centres, Irradiation Facilities and Modernized

Abattoir.

Advantage India

India is one of the largest food producers in the world India has diverse agro-climatic conditions and has a large

and diverse raw material base suitable for food processingcompanies

Investment requirement of around US$ 15 billion exists in

the food processing sector

India is looking for investment in infrastructure, packagingand marketing

India has huge scientific and research talent pool

A largely untapped domestic market of 1000 millionconsumers

300 million upper and middle class consume processedfood

200 million more consumers expected to shift toprocessed food by 2010

Well developed infrastructure and distribution network

Rapid urbanisation, increased literacy,changing life style,increased number of women in workforce, rising per capitaincome- leading to rapid growth and new opportunities in

food and beverages sector

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50 per cent of household expenditure by Indians is on fooditems

Strategic geographic location (proximity of India tomarkets in Europe and Far East, South East and West Asia)

Indian food processing aims at consumer convenience; with push fromgovernment for private participation is coming of age.

The food processing industry is coming of age it is ranked fifth amongindustries of India. Nearly, one third of the entire Indian food market sharecomprises of processed food. With policy measures from the government, thefood processing Industry accounts for 13% of the country's exports. Theindustry's size is estimated at US $ 70 billion; including US $ 22 billion of valueadded products. Indians spend half of their household expenditure on food itemsat present. The industry would create 9 million employment opportunities fromthe current 1.6 m and investment of Rs 1,50,000 crore in the coming 10 years.

With over 1 billion population and 350 million strong urban middle class andchanging food habits, the processed food market is promising a huge potentialto be tapped. A joint study by CII and AC Nielsen (market research firm), tounderstand demand drivers for processed food brings forth the changing Indianmeal patterns: Working lunch seems to be replacing conventional meals in the

day, with a need for no fuss packaging.

In addition to this, the study says, Indians are willing to spend on globalcuisines. Multi-cuisine restaurants are mushrooming even in small cities andtowns. This reasons the array of foreign investors coming to India which isdriving the growth of the industry. Like investments to offer Indians the realtaste of Italian pasta; conglomerates from Emilla Romagina are looking at majorIndian cities to set up Italian food processing plants. Most recent one was the

proposal from West Midlands of UK to the Ministry of Food Processing

Industries of India. Other foreign food companies like McDonald's, Pizza Hut,Cadbury's, Tropicana, Pepsi, Coke, HLL, Nestle, etc. are already earning hugereturns by processing Indian food for domestic and global markets.

Besides foreign Investors, food processing sector is a major attraction for Indiancorporate houses to invest. Reliance, Godrej, Bharti, ITC, Hero, BallarpurIndustries, DSCL, Tata and Mahindra & Mahindra are prominent corporatehouses are with end-to-end integrated operations in the food chain.

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InvestmentThe total inflow of foreign directinvestment in the food processingsector has been around Rs 52.7 bn(US$ 1.2 bn) between 1991 to

November 2006. During the last fiveyears, FDI witnessed an inflow ofover Rs 24 bn of foreign investment.The highest investment in a single

year was in 2001-02 amounting toRs 10 bn.

Maharashtra was among the front-runners to receive the highest shareof FDI in food processing during thelast five years. The dairy andconsumer industrise received FDIworth Rs 2.7 bn each as foreign investment. Nearly 30 per cent of FDI in thefood processing sector comes from EU countries such as Netherlands, Germany,

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Italy and France. Perfetti, Cadbury, Godrej-Pilsbury, Nutricia International,Manjini Comaco are some of the successful ventures from EU countries.

Major Food Processing Companies in India

The entry of multinational companies has increased competition in the foodprocessing industry. At the same time, these companies are facing toughcompetition from strong Indian brands. This level of competition has increased

innovations, facilitating a sustained growth of the sector and also improveglobal competitiveness. The emerging new growth phase of the sector is just inits initial stages with the potential for India to emerge as a leading food supplierto the world.

Foreign Direct Investment in FoodProcessing Industry

Given the huge market potential, theGovernment considers FoodProcessing a Sunrise industry.Thegovt allows 100% FDI in FPI. Anumber of overseas businesses arelooking at India as an investment

destination.

As the Indian market is booming,foreign companies are increasinglylooking at tapping this market.Foreign investment will definitely develop the Indian food and beveragesmarket, at the same time the quality of the product will also increase. As more

and more investment takes place in the retail sector, the entire food supply chain

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will benefit as the quality as food will improve, feels executive officer ofADEPTA.

Investment opportunities are available not merely in food production, but also in

infrastructure development, marketing, inspection & testing services,technology development and so on. Recently India has received an encouragingresponse from investors in the UK for establishing joint quality control testingfacility for agriculture products and establishing cold storage facilities in thecountry. FDI in food already beats the money being pumped into the far moreglamorous hotels and tourism industry.

There were number of acquisitions and jhoint ventures led by MNCs in the lastcouple of years, which again proves the growing importance of this sector for

the foreign players.

Foreign direct investment (FDI) in the country's food sector is poised to hit theUS$ 3-billion mark. In the last one year alone, FDI approvals in food processing

have doubled. While there were only two private equity deals worth US$ 6.24million in the food industry in the whole of 2006, the current year has alreadyseen 11 deals worth a whopping US$ 158.21 million.

In the food processing sector alone, FDI has increased by almost three times toUS$ 110.56 million from US$ 43.62 million. And with growing interest ofcorporate players in the Indian retail market, the Government estimates FDI inthis sector to further record a three-fold rise to touch US$ 325.93 million by2009.

Many major multinational companies like Coca-Cola, Pepsi, Britannia, Danone,Nestle, Cadbury, Lever's Kelloggs, Heinz, International Best Foods, Walls,Perfetti and Van Melle already have a presence in India

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Investment Opportunities

Mega food parks

Agri infrastructure, supply chain aggregation, logistics and cold chaininfrastructure

Fruit and vegetable products

Animal products, meat and dairy

Fisheries and seafood

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Grains and cereals

Packaged/ convenience goods/ready to eat food

Wine and beer

Machinery/Packaging

Establishing infrastructure, cold chain, etc.

Exports

Export of Processed Food products (2005-06)

Items Quantity Value

Processed Fruits and Vegetables

Dried and Preserved Vegetables566238 1459.17

Mango Pulp134613 364.24

Pickle and Chutney135382 260.98

Other Processed fruits andVegetables

107335 370.21

Total for Processed Fruits and

Vegetables

501826 1359.54

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Animal Products

Buffalo Meat459938 2629.57

Sheep/ Goat Meat7177.51 80.37

Poultry Products145889 167.58

Dairy Products76515 668.50

Animal Casings1125.82 17.51

Processed Meat256.04 2.43

Total for Animal Products 690901 3566.96

Other Processed Foods

Groundnuts190053 513.69

Guargum186718 1049.23

Jaggery and Confectionary107197 227.57

Cocoa Products2147.09 21.83

Cereal Preparations76880.6 393.96

Alcoholic and Non- AlcoholicBeverages

49587.9 117.20

Miscellaneous Preparations49606.7 225.77

Milled Products50901.5 64.68

Total for Other Processed Food713092 2613.93

Grand Total1905819 7539.43

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Policy initiatives & legal aspects ofIndian food processing industry

Laws relating to food processing industriesThere are a number of food laws being implemented by variousMinistries/Departments. These are primarily meant for two purposes namely (1)Regulation of Specifications of food and (2) Regulation of Hygienic conditionof Processing/Manufacturing. Some of these food laws are mandatory and some

are voluntary. The details of various food laws in operation in India is as under:-

A FOOD LAWS:

1. Prevention of Food Adulteration Act (Ministry of Health)

The Act lays down specifications for various food products and is mandatory.The Ministry of Health in 1995 had constituted a Task Force under thechairmanship of Shri E.S. Venkataramaiah, Chief Justice of India (retired). The

Task Force recommended that there should be emphasis on good manufacturingpractices instead of detection of adulteration and prosecution. It also expressconcern about lack of laboratory equipments and quantified persons. In additionit also suggested that the name of PFA Act be changed to Food Safety Act.

2. Agriculture Produce (Grading & Marking) Act (Ministry of RuralDevelopment)

This Act is commonly known as AGMARK and is voluntary. The Act laysdown the specifications for various agricultural commodities including some

processed foods.

3. Laws being operated by Bureau of Indian Standards (BIS)

BIS is the largest body for formulating standards for various food items. Thesestandards are also voluntary.

4. Essential Commodities Act

A number of quality control orders have been issued under EssentialCommodities Act such as FPO, MMPO, Meat Product Order and Vegetable

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Oils Control Order. These orders are mandatory and primarily meant forregulating the hygienic conditions. They need to be clubbed under one orderwhich may called Food Products Order.

B. Harmonization of Food Laws

The review of multiple laws is necessary to have a uniform and logicalapproach for regulating the quality of food. The following action is being taken

by various Ministries:-

1.The Ministry of Civil Supplies & Consumer Affairs has brought out a paperfor consideration of Committee of Secretaries (COS). The paper recommendsthat BIS should formulate standards for all food items in the country. This will

be a major step towards harmonization of food laws and is still underconsideration of COS for finalization.

2.The Task Force constituted by the Prime Minister under the chairmanship ofShri Nulsi Wadia has submitted its report which is under the consideration ofthe Government. The Task Force had advocated promotion of food safety andquality. The Task Force has further made following suggestions:-

o Food Regulation Authority (FRA) be set up toformulate and update food standards for domestic

and export market.o FRA should replace the PFA to conform to

international standards. The Task Force has given tenspecific recommendations such as provision ofstorage simplicitor, simplification of samplingprocedure, simplification of procedure for nominee,time limit for prosecution, standard methods ofanalysis to be prescribed, penalty should gradedaccording to the gravity of offences and provision of

adequate/infrastructure and laboratories.

o Harmonisation of Indian standard with quality normsof Codex and WTO.

The Central Committee of food Standard (CCFS) should be

replaced by FRA governing body for expeditious decisions.

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Ministry of Food Processing Industries (MFPI)

MFPI is willing to support food processing by radiation in the public & privateto promote the commercial use of technology in India. Under Component 1 ofthe Plan Scheme for Development of Infrastructure facilities, financialassistance in the form of a loan will be provided to a private sector organisationto the extent of 50% of the cost of capital equipment and technical civil worksupto Rs.50 lakhs in general areas and upto Rs.75 lakhs in difficult areas.

Under Component 2 of the said scheme financial assistancein the form of grant will be provided to the entrepreneurs upto Rs.4 crores for

creation of common facility in a food park, such as cold chain, quality controllab. effluent disposal unit and the like, of which, common irradiation facilitymay be one.

Agricultural & Processed Foods Export DevelopmentAuthority (APEDA)

Under the Plan Scheme of APEDA,financial assistance to the extent of

50% of the cost subject to a ceiling of Rs.50 lakhs per beneficiary is given forsetting up of irradiation facilities.

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Food safety & qualityFruit Products Order (FPO), 1995

Fruit Products Order -1955, promulgated under Section 3 of the EssentialCommodities Act - 1955, aims at regulating sanitary and hygienic conditions inmanufacture of fruit,vegetable products. It is mandatory for all manufacturers offruit, vegetable products to obtain a license under this Order. To ensure goodquality products, manufactured under hygienic conditions, the Fruit ProductOrder lays down the minimum requirements for:

1. Sanitary and hygienic conditions of premises, surrounding and personnel.

2. Water to be used for processing.

3. Machinery and equipment.

4. Product standards.

Besides this, maximum limits of preservatives, additives and contaminants have

also been specified for various products.

This order is implemented by Ministry of Food Processing Industries throughthe Directorate of Fruit & Vegetable Preservation at New Delhi. The Directoratehas four regional offices located at Delhi.The Directorate has four regionaloffices located at Delhi, Mumbai, Calcutta and Chennai, as well as sub-officesat Lucknow and Guwahati. The officials of the Directorate undertake frequentinspections of the manufacturing units and draw random amples of productsfrom the manufactures and markets which are analyzed in the laboratories to

test their conformity with the specid fications laid under FPO.

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The Central Fruit Advisory Committee comprising of the officials of concernedGovernment Departments, Technical experts, representatives of Central foodTechnology Research Institute, Bureau of Indian standards, Fruits andVegetable Products and processing Industry, is responsible for recommendingamendments in the Fruit Product Order, In view of the demands of the industry,and the liberalised economic scenario, major amendments were made in FPO

during 1997.

Meat Food Products Order (MFPO)

Meat Food Products Order, 1973 (MFPO) promulgated under the provisions ofEssential Commodities Act, 1955 provides for sanitary and other requirements,limits of heavy metals,preservatives, insecticides, residue, etc., for meat food

products. This order was being implemented by Ministry of Rural Developmentin the Ministry of Rural Area & Employment. As on 31st March 1998 there

were 128 licenses issued under MFPO 1973.As per the recent amendment to theAllocation of Business,Ministry of Agriculture (Deptt. of Agriculture &Cooperation) would now be the Administrative Ministry for this Order.

Milk & Milk Products Order (MMPO)

Milk and Milk Products Order, 1992 administered by the Department of AnimalHusbandry & Dairying under Ministry of Agriculture was promulgated on 9thJune, 1992 under the provision of Section 3 of the Essential Commodities Act,1955 with a view to maintain an increased supply of liquid milk of desired

quality to the general public. This order regulated production, supply anddistribution of milk and milk products throughout the country. The order alsoseeks to ensure the observance of sanitary requirements for dairies, machineryand premises, and quality control standards for milk and milk products. So far,254 registration certificates under MOP, 1992 has been issued by theDepartment of Animal Husbandry and Dairying.

Food Quality

the Ministry cleared a proposal for release of Rs.59.2 lakhs to Food Researchand Analysis Center, New Delhi for upgradation of its Food Analysis andQuality Control Laboratory for analysis of food products. The main objective ofthe proposal is to upgrade the existing analytical laboratory and bring it on parwith any other modern analytical laboratory in the country.

During the year under review, the Ministry cleared a proposal in principle forrelease of 12.32 lakhs to CCS Haryana Agriculture University, Hissar forupgradation of quality control and food analysis laboratory of the Department ofFood Science and Technology of the university. The main objective of the

proposal are to provide quality assurance and analytical services to the food

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processing industries, to undertake micro biological examination of variouspathogen and mycotoxins and to estimate nutritional parameters includingminerals, vitamins, food value in calories, protein carbohydrates, fats etc.

Hazard Analysis and Critical Control Point (HACK)

Hazard Analysis and Critical Control Point (HACK) is an important qualityassurance system. This system ensures that the products are safe and of goodquality. The system is extremely desirable in view of the changing scenario inthe International trade. The Ministry provides grant of 50% subject to a limit ofRs.10 lakhs towards the cost of implementing Total Quality Management(TQM) including HACCP and ISO-9000 certifications.

This Ministry sponsored a one-day seminar and five day training programmeorganised by APEDA from 30th November to 5th December 1998 in

collaboration with NSF-International strategic Registration Limited, USA,which is the main authority for certifying HACCP-9000. HACCP is animportant requirement for ensuring the quality of products from health andsafety aspects and is crucial for exports.

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Policy initiativesMost of the processed food items have been exempted from the purview oflicensing under the Industries (Development and regulation) Act, 1951, except

items reserved for small-scale sector and alcoholic beverages.

Food processing industries were included in the list of priority sector for banklending in 1999. Also, the new trade policy places greater thrust on agro-basedindustries.

Automatic approval for foreign equity upto 100 percent is available for most ofthe processed food items except alcohol, beer and those reserved for small-scalesector subject to certain conditions.

Fruits and vegetables products, condensed milk, ice cream, meat production,fist/poultry, pectins, pasta, dairy machineries completely exempt from CentralExcise Duty

Excise duty on processed fruit and vegetables has been brought down from 16percent to zero level in the budget, 2001-2002.

In the Budget 2006-07 excise duty has been waived on condensed milk, icecream, preparations of meat, fish and poultry, pectins, pasta and yeast. Excise

duty on ready to eat packaged foods and instant food mixes like dosa and idlimixes have been reduced from 16% to 8%. Excise duty on aerated drinks has

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been reduced from 24% to 16%. Fruit and vegetable processing units arealready exempted from payment of excise duty. To ensure easy availability ofcredit, Government has included food processing industries in the list of prioritysector for bank lending. NABARD has created a refinancing window with acorpus of Rupees one thousand crore for agro processing infrastructure andmarket development.

Licensing powers delegated to regional offices under Full Product Order, 1955.

Setting up of 60 agri zones for end-to-end development for export of specificproduct from geographically contiguous areas

53 food parks approved to enable small and medium foodand beverage units to set up and to use capital intensivecommon facilities such as cold storage, warehouse, quality

control labs, effluent treatment plant, etc.

Vision 2015 adopted by the Ministry of Food ProcessingIndustries envisages:

Trebling the size of the processed food sector

Increasing level of processing of perishables from 6per cent to 20 per cent

Value addition to increase from 20 per cent to 35 percent

Share in global food to increase from 1.5 per cent to3 per cent.

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SWOT Analysis

SWOT Analysis of FoodProcessing Industry

Strengths

Abundant availability of raw material

Priority sector status for agro-processing given by thecentral Government

Vast network of manufacturing facilities all over thecountry

Vast domestic market

Weaknesses

Low availability of adequate infrastructural facilities

Lack of adequate quality control & testing methods as perinternational standards

Inefficient supply chain due to a large number of

intermediaries

High requirement of working capital.

Inadequately developed linkages between R&D labs and

industry.

Seasonality of raw material

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Opportunities

Large crop and material base offering a vast potential foragro processing activities

Setting of SEZ/AEZ and food parks for providing addedincentive to develop greenfield projects

Rising income levels and changing consumption patterns

Favorable demographic profile and changing lifestyles

Integration of development in contemporary technologies

such as electronics, material science, bio-technology etc.offer vast scope for rapid improvement and progress

Opening of global markets

Threats

Affordability and cultural preferences of fresh food

High inventory carrying cost

High taxation

High packaging cost

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Conclusion

Indias humungous market size, ravenous appetite for food

(given the existing low per capita consumption) with growing

income and changing lifestyle create incredible market

opportunities for the global manufacturers of food products &

machinery and service providers. The policies are investors

friendly. Importantly, financial, technological and human

resources are available aplenty in country.

Given the growth potential of the Indian food and beverage

market, many companies are drawing up their expansion

plans. Director of ORANA A/S discloses India is one of ourfocus market. as the market grows we will invest in India

accordingly. Innovation will be are focused area: we will take

this innovation to our global market. Local manufacturing is

also on our radar screen.

With private equity players joining in the action, FDI in food

sector is poised to exceed Euro 2.1 billion. In the last year alone

FDI approvals in food processing have doubled, according tothe report. According to a Venture Intelligence Report, while

the food and beverage sector witnessed private equity

investments of Euro 4.2 million in two deals last year, this year

has already seen 11 deals worth Euro 106.4 million. There

appears to be high scope for consolidation in a fragmented

market, with most business promising good and sustainable

returns. In fact companies are recording higher growth rate

from this sector compared to the home & personal caresegment.

For global players it makes tremendous investment and

commercial sense to be a part of the burgeoning Indian food

processing industry. Commitment and patience are the key to

success in this industry, so this is JUST THE

BEGINNING

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Points to be noted:

Foreign direct investment of around US$1 billion has already beenapproved in India's food processing industry since 1991.

Changing lifestyles, breakdown of the joint-family system, increasing

number of working wives and Western influence (via TV channels) inthe urban areas are fuelling a demand for packaged foods.

India already has all the requirements for a head-start in the food-processing industry. Basic materials such as foodgrains, pulses,vegetables and meats (non-beef) can be sourced locally or easilyimported if local availability is inadequate.

Foreign investors can own 100 per cent equity in plants they set up.However, it is advisable to take a local partner.

Many Indian firms are eagerly seeking foreign partners for joint-ventures to avail of their technological advantage.

Supermarkets are just beginning to appear in India's big cities and this isthe time for international chains to set a foothold. Competition will onlyincrease with time.

There has been some civilised resistance from ultra-nationalistic

quarters of opinion to foreign food products. This resistance will be lessif a local partner is involved.

India's liberal intelligentsia is gradually building the opinion thatforeign investments in the processed food sector will benefitrural agriculture, thus beating the nationalists with their ownslogans. The liberal intelligentsia is gradually prevailing.

Shrey Report

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