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)

SUBMITTED TO->1-Mr. Dipak Sanghvi (M.D of Nilons enterprises 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 having allowed me to carry out the project successfully. I specially thanks to MR.RAJHEEV SIR who is having their unique way to motivate us. I really 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 CEO sir 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 yourself Chinese Proverb Its not because things are difficult we do not dare,In fact we dont dare thats why they are difficult.

CONTENTS
S.NO 1 2 3 4 5 6 7 8 9 10 11 PARTICULARS Executive summary Pg.No

Introduction (company profile, product portfolio) Project brief Survey report and Analysis SWOT analysis Conclusion Recommendation Problem faced during project References Annexure 1 Annexure 2

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 and service 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 (cv900gm,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 days I 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. 10Salesmen 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

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

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 the changing 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.

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 are the power the of good creative Nilon's execution. Nilons pickles from company

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) 8g 15g 40 g 50g 100g 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) Dhamaka(classic)(M/X) SAUCE & KETCHUP 6 kg 22 kg 5 kg

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Tomato ketchup

Rs 1 200g 500g 1 kg

Snack sauce Continental(KK)

Rs 1 1 kg 200g 500g 1 kg

ACHAR MASALA

250g 500g 1 kg

ROASTED VERMICELLI CUT VERMICELLE

150g 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 12

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 tooty fruity

12-

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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 17

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 18

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

Distribution system followed by NILONS in MUMBAI

Now looking at the

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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 Monday Tuesday Wednesday Thursday Friday Saturday BEAT 1
MALAD KANDIVALLI

BEAT 2
MUDJETTY SOMWARI BAZAR

CHARCOP POISOR

PATHANWADI CHINIVALLI BANDAR ROAD

KRANTI NAGAR DAFTARI ROAD KURAR VILLAGE

MALWANI NAGAR 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. 21

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 we need 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 every distributor (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 should be 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 to confirm 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 of hygiene 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 CLASSIC pickle 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 done with the use of display boards, banners, hoardings & by running our AD in big retail stores etc. 12. There is huge demand of gingergarlic 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 vermicelli , pasta etc.
15.

flavoured

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. 25

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 motivate

have many brands to sell, they just make a POSTMAN CALL and finish their job. So 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 the actual 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 growth

INDIA'S $182-BILLION FOOD PROCESSING INDUSTRY HAS BEEN GROWING AT OVER 13 PERCENT DESPITE THE GLOBAL 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 global slowdown. And now the government is aiming to double the turnover in the next five or six years by setting up mega food parks to attract global capital The vision: Bring about a three-fold growth in the size of the country's food processing business, increase the level of processing perishables from six percent to 20 percent, raise the 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 now feel the time has come for a revolutionin food technology," said Minister of State for Food Processing Subodh Kant 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 s wellt back his confidence. The country's gross domestic product (GDP) saw a decline in growth to 5.3 percent for the third quarter of this fiscal from8.9 percent in the like period of the previous year, with both manufacturing and agriculture actually registering a decline in output. But the food processing sector continued to maintainapositive growth rate. "In the midst of the global economic meltdown and with the growth in our manufacturing 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 Food Park at Shirwal in Maharashtra: "Food is an essential item. I don't think that the global recession will have any effect on the food industry in India."According to the India Food Report 2008 prepared by leading markets data provider Research and Markets, the Indian food industry was estimated at over $182 billion, accounting for about twothirds of the country's total retail sector. "We expect this market to grow to $300 billion by 2015, which is not 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 WAS ESTIMATED AT OVER $182BILLION, ACCOUNTING FOR ABOUT TWO-THIRDS OF 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 some developed 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 of processed food in a global market is just 1.5 percent at $3.2 billion.The main reason for this is that much of the farm and horticultural produce goes waste or farmers are compelled to dispose them of in distress sales as there is no adequate infrastructure to process and preserve the produce and especially increase its shelf life till it reaches 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 scheme of 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 idea behind these parks is to make the country's farm sector more market-driven than supply-driven. In other 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 is needed.We need so much of this produce every year. This is the current 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 more market information." Each of these parks is expected to generate 30,000 direct jobs and several times of it in indirect opportunities. Based on the success parameters of the first 10 parks, the number will be scaled up to 30 in the next five years. These initiatives are also seen opening up new opportunities for youth and that is why 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," said Sahai, adding a series of laboratories for carrying out research and development 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. "We will 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 in 2003. Nearly 30 per cent of FDI in this sector comes from EU countries such as Netherlands, Germany, Italy and France. Some of the successful ventures fromEU countries 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 workforce can be effectively utilized to setup large low cost production bases for domestic and export markets. diverse agro-climatic conditions India is second in world in terms of arable land (million hectares) Firm strategy, structure and rivalry A large number of domestic as well as multi-national players. copetitive industry Factor conditions Demand conditions High market awarenes.Rapid urbarization, increases literacy and rising per capita income, have all caused rapid growth and changes in demand patterns Related and supporting India has a wide-ranging and large raw material base suitable for food processing industries. India has developed advanced technology to support food processing industry In Five-year tax holiday for new food processing units in fruits and vegetable processing along with

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other benefits has bolstered theGovernments resolution of encouraging growth in this sector.

Major segments in Indian food

processing 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 many MNCs have launched Indianised versions of their international products in India. since every market has its own taste & preference in order to grab the local market share it is necessary to modify the products to the local taste by using global concepts & technology.

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Sectoral Overview India has arable land of 184 million hectares and produces annually 90 million tonnes of milk (highest in the world), 150 million tonnes of fruits and vegetables (second largest), 485 million livestock (largest), 204 million tonnes food 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 and vegetables, 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 is only 1.5 per cent. Hence, there is immense potential for investment in this sector. To facilitate the prompt growth of food processing industry, the Government has implemented the scheme for infrastructure development comprising a food park scheme, establishing packaging centres, integrated cold chain 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 processing companies Investment requirement of around US$ 15 billion exists in the food processing sector India is looking for investment in infrastructure, packaging and marketing India has huge scientific and research talent pool A largely untapped domestic market of 1000 million consumers 300 million upper and middle class consume processed food 200 million more consumers processed food by 2010 expected to shift to

Well developed infrastructure and distribution network Rapid urbanisation, increased literacy,changing life style, increased number of women in workforce, rising per capita income- 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 food items Strategic geographic location (proximity of India to markets in Europe and Far East, South East and West Asia)

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

The food processing industry is coming of age it is ranked fifth among industries of India. Nearly, one third of the entire Indian food market share comprises of processed food. With policy measures from the government, the food processing Industry accounts for 13% of the country's exports. The industry's size is estimated at US $ 70 billion; including US $ 22 billion of value added products. Indians spend half of their household expenditure on food items at present. The industry would create 9 million employment opportunities from the current 1.6 m and investment of Rs 1,50,000 crore in the coming 10 years. With over 1 billion population and 350 million strong urban middle class and changing food habits, the processed food market is promising a huge potential to be tapped. A joint study by CII and AC Nielsen (market research firm), to understand demand drivers for processed food brings forth the changing Indian meal 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 global cuisines. Multi-cuisine restaurants are mushrooming even in small cities and towns. This reasons the array of foreign investors coming to India which is driving the growth of the industry. Like investments to offer Indians the real taste of Italian pasta; conglomerates from Emilla Romagina are looking at major Indian 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 huge returns by processing Indian food for domestic and global markets. Besides foreign Investors, food processing sector is a major attraction for Indian corporate houses to invest. Reliance, Godrej, Bharti, ITC, Hero, Ballarpur Industries, DSCL, Tata and Mahindra & Mahindra are prominent corporate houses are with end-to-end integrated operations in the food chain.

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 Investment
The total inflow of foreign direct investment in the food processing sector has been around Rs 52.7 bn (US$ 1.2 bn) between 1991 to November 2006. During the last five years, FDI witnessed an inflow of over Rs 24 bn of foreign investment. The highest investment in a single year was in 2001-02 amounting to Rs 10 bn. Maharashtra was among the frontrunners to receive the highest share of FDI in food processing during the last five years. The dairy and consumer industrise received FDI worth Rs 2.7 bn each as foreign investment. Nearly 30 per cent of FDI in the food 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 food processing industry. At the same time, these companies are facing tough competition from strong Indian brands. This level of competition has increased innovations, facilitating a sustained growth of the sector and also improve global competitiveness. The emerging new growth phase of the sector is just in its initial stages with the potential for India to emerge as a leading food supplier to the world.

Foreign Direct Investment in Food

Processing Industry
Given the huge market potential, the Government considers Food Processing a Sunrise industry.The govt allows 100% FDI in FPI. A number of overseas businesses are looking at India as an investment destination.

As the Indian market is booming, foreign companies are increasingly looking at tapping this market. Foreign investment will definitely develop the Indian food and beverages market, 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 of ADEPTA.

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 encouraging response from investors in the UK for establishing joint quality control testing facility for agriculture products and establishing cold storage facilities in the country. FDI in food already beats the money being pumped into the far more glamorous hotels and tourism industry. There were number of acquisitions and jhoint ventures led by MNCs in the last couple 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 the US$ 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$ 6.24 million in the food industry in the whole of 2006, the current year has already seen 11 deals worth a whopping US$ 158.21 million. In the food processing sector alone, FDI has increased by almost three times to US$ 110.56 million from US$ 43.62 million. And with growing interest of corporate players in the Indian retail market, the Government estimates FDI in this sector to further record a three-fold rise to touch US$ 325.93 million by 2009. 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

38

 Investment Opportunities
Mega food parks

Agri infrastructure, supply chain aggregation, logistics and cold chain infrastructure

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 Vegetables Mango Pulp Pickle and Chutney Other Processed Vegetables fruits and 566238 134613 135382 1459.17 364.24 260.98

107335

370.21

Total for Processed Fruits and Vegetables

501826

1359.54

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Animal Products 459938 7177.51 145889 76515 1125.82 256.04 690901 2629.57 80.37 167.58 668.50 17.51 2.43 3566.96

Buffalo Meat Sheep/ Goat Meat Poultry Products Dairy Products Animal Casings Processed Meat Total for Animal Products Other Processed Foods

Groundnuts Guargum Jaggery and Confectionary Cocoa Products Cereal Preparations Alcoholic and Beverages NonAlcoholic

190053 186718 107197 2147.09 76880.6

513.69 1049.23 227.57 21.83 393.96

49587.9

117.20

Miscellaneous Preparations Milled Products Total for Other Processed Food Grand Total

49606.7 50901.5 713092 1905819

225.77 64.68 2613.93 7539.43

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 Policy initiatives & legal aspects of

Indian food processing industry
Laws relating to food processing industries There are a number of food laws being implemented by various Ministries/Departments. These are primarily meant for two purposes namely (1) Regulation of Specifications of food and (2) Regulation of Hygienic condition of 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 the chairmanship of Shri E.S. Venkataramaiah, Chief Justice of India (retired). The Task Force recommended that there should be emphasis on good manufacturing practices instead of detection of adulteration and prosecution. It also express concern about lack of laboratory equipments and quantified persons. In addition it also suggested that the name of PFA Act be changed to Food Safety Act. 2. Agriculture Produce (Grading & Marking) Act (Ministry of Rural Development) This Act is commonly known as AGMARK and is voluntary. The Act lays down 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. These standards are also voluntary. 4. Essential Commodities Act A number of quality control orders have been issued under Essential Commodities Act such as FPO, MMPO, Meat Product Order and Vegetable
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Oils Control Order. These orders are mandatory and primarily meant for regulating the hygienic conditions. They need to be clubbed under one order which may called Food Products Order.

B. Harmonization of Food Laws The review of multiple laws is necessary to have a uniform and logical approach 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 paper for consideration of Committee of Secretaries (COS). The paper recommends that 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 under consideration of COS for finalization. 2. The Task Force constituted by the Prime Minister under the chairmanship of Shri Nulsi Wadia has submitted its report which is under the consideration of the Government. The Task Force had advocated promotion of food safety and quality. The Task Force has further made following suggestions:o

Food Regulation Authority (FRA) be set up to formulate and update food standards for domestic and export market. FRA should replace the PFA to conform to international standards. The Task Force has given ten specific recommendations such as provision of storage simplicitor, simplification of sampling procedure, simplification of procedure for nominee, time limit for prosecution, standard methods of analysis to be prescribed, penalty should graded according to the gravity of offences and provision of adequate/infrastructure and laboratories. Harmonisation of Indian standard with quality norms of 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 & private to promote the commercial use of technology in India. Under Component 1 of the Plan Scheme for Development of Infrastructure facilities, financial assistance in the form of a loan will be provided to a private sector organisation to the extent of 50% of the cost of capital equipment and technical civil works upto Rs.50 lakhs in general areas and upto Rs.75 lakhs in difficult areas. Under Component 2 of the said scheme financial assistance in 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 control lab. effluent disposal unit and the like, of which, common irradiation facility may be one.

Agricultural & Processed Foods Export Development Authority (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 for setting up of irradiation facilities.

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 Food safety & quality

Fruit Products Order (FPO), 1995 Fruit Products Order -1955, promulgated under Section 3 of the Essential Commodities Act - 1955, aims at regulating sanitary and hygienic conditions in manufacture of fruit,vegetable products. It is mandatory for all manufacturers of fruit, vegetable products to obtain a license under this Order. To ensure good quality products, manufactured under hygienic conditions, the Fruit Product Order 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 through the Directorate of Fruit & Vegetable Preservation at New Delhi. The Directorate has four regional offices located at Delhi.The Directorate has four regional offices located at Delhi, Mumbai, Calcutta and Chennai, as well as sub-offices at Lucknow and Guwahati. The officials of the Directorate undertake frequent inspections of the manufacturing units and draw random amples of products from 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 concerned Government Departments, Technical experts, representatives of Central food Technology Research Institute, Bureau of Indian standards, Fruits and Vegetable Products and processing Industry, is responsible for recommending amendments 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 of Essential 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 Development in 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 the Allocation 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 Animal Husbandry & Dairying under Ministry of Agriculture was promulgated on 9th June, 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 and distribution of milk and milk products throughout the country. The order also seeks to ensure the observance of sanitary requirements for dairies, machinery and premises, and quality control standards for milk and milk products. So far, 254 registration certificates under MOP, 1992 has been issued by the Department of Animal Husbandry and Dairying. Food Quality the Ministry cleared a proposal for release of Rs.59.2 lakhs to Food Research and Analysis Center, New Delhi for upgradation of its Food Analysis and Quality Control Laboratory for analysis of food products. The main objective of the proposal is to upgrade the existing analytical laboratory and bring it on par with any other modern analytical laboratory in the country. During the year under review, the Ministry cleared a proposal in principle for release of 12.32 lakhs to CCS Haryana Agriculture University, Hissar for upgradation of quality control and food analysis laboratory of the Department of Food 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 various pathogen and mycotoxins and to estimate nutritional parameters including minerals, 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 quality assurance system. This system ensures that the products are safe and of good quality. The system is extremely desirable in view of the changing scenario in the International trade. The Ministry provides grant of 50% subject to a limit of Rs.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 programme organised 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 an important requirement for ensuring the quality of products from health and safety aspects and is crucial for exports.

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 Policy initiatives
Most of the processed food items have been exempted from the purview of licensing 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 bank lending in 1999. Also, the new trade policy places greater thrust on agro-based industries. Automatic approval for foreign equity upto 100 percent is available for most of the processed food items except alcohol, beer and those reserved for small-scale sector subject to certain conditions. Fruits and vegetables products, condensed milk, ice cream, meat production, fist/poultry, pectins, pasta, dairy machineries completely exempt from Central Excise Duty Excise duty on processed fruit and vegetables has been brought down from 16 percent to zero level in the budget, 2001-2002. In the Budget 2006-07 excise duty has been waived on condensed milk, ice cream, 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 idli mixes 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 are already exempted from payment of excise duty. To ensure easy availability of credit, Government has included food processing industries in the list of priority sector for bank lending. NABARD has created a refinancing window with a corpus of Rupees one thousand crore for agro processing infrastructure and market 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 specific product from geographically contiguous areas

53 food parks approved to enable small and medium food and beverage units to set up and to use capital intensive common facilities such as cold storage, warehouse, quality control labs, effluent treatment plant, etc. Vision 2015 adopted by the Ministry of Food Processing Industries envisages:

Trebling the size of the processed food sector Increasing level of processing of perishables from 6 per cent to 20 per cent Value addition to increase from 20 per cent to 35 per cent Share in global food to increase from 1.5 per cent to 3 per cent.

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50

 SWOT Analysis
SWOT Analysis of FoodProcessing Industry Strengths

Abundant availability of raw material Priority sector status for agro-processing given by the central Government Vast network of manufacturing facilities all over the country Vast domestic market

Weaknesses

Low availability of adequate infrastructural facilities Lack of adequate quality control & testing methods as per international 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 for agro processing activities Setting of SEZ/AEZ and food parks for providing added incentive 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 our focus 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 to the 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 care segment. 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 been approved 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) in the urban areas are fuelling a demand for packaged foods. India already has all the requirements for a head-start in the foodprocessing industry. Basic materials such as foodgrains, pulses, vegetables and meats (non-beef) can be sourced locally or easily imported 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 jointventures to avail of their technological advantage. Supermarkets are just beginning to appear in India's big cities and this is the time for international chains to set a foothold. Competition will only increase with time. There has been some civilised resistance from ultra-nationalistic quarters of opinion to foreign food products. This resistance will be less if a local partner is involved.

India's liberal intelligentsia is gradually building the opinion that foreign investments in the processed food sector will benefit rural agriculture, thus beating the nationalists with their own slogans. The liberal intelligentsia is gradually prevailing.

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