Amul

2

1Food Processing Sector in India

2 Challenges in the Sector

3Opportunities & Recommendations

Agenda

3

1Food Processing Sector in India

2 Challenges in the Sector

3Opportunities & Recommendations

4

Food Processing Sector in India Food is the largest consumption category in India...

Food Consumption in IndiaSource: BMI, Q1 2009 & CSO

151.7157.7

168.6180.1 184.4

191.4198

210.3

229.7

0

50

100

150

200

250

2005 2006 2007 2008e 2009f 2010f 2011f 2012f 2013f

CAGR: 5.32%

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Food Processing Sector in India India has huge supply advantages due to diverse agro-climatic conditions and wide

ranging raw material base…

• 52% cultivable land compared to 11% world average

• All 15 major climates in the world exist in India

• 46 out of 60 soil types exist in India

• 20 agri-climatic regions

• Largest livestock population

• Largest producer of milk

• Largest producer cereals

• Second-largest fruit and vegetable producer

• Among the top five producers worldwide of rice, wheat, groundnuts, tea, coffee, tobacco, spices, sugar and oilseeds.

• Sunshine hours and day length are ideally suited for round the year cultivation

Significant Opportunity

India as a global sourcing hub

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Indian Food Trade Supported by a committed government in improving the food trade and providing a

conducive atmosphere for agriculture, India is a net exporter of agricultural products. …

India’s Position in Global Trade

• India stands a distant 21st for the year 2007, with a 1.4% share in the global trade.

• During the period 1980-2007, India’s share in the global exports have increased from 1.1% to just 1.4%, the majority of the increase happening in this decade.

• However, Export of Processed Food and Beverages is growing faster than the overall Food and Beverages…

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34%

29%

17%

10%

7%

1%1%0%

5%

10%

15%

20%

25%

30%

35%

40%

0 2000 4000 6000 8000 10000 12000 14000

Distance (Kms)

Share

of Tra

de

South Asia

Middle East

East Asia

Western Europe

Rest of the WorldUSA & CanadaAfrica

Indian Food Trade India exports mostly to the proximate countries…

India’s geographical situation gives it the unique advantage of connectivity to Europe, the Middle East, Japan, Singapore, Thailand, Malaysia and Korea.

Globally, most of the countries import from countries that are geographically closer.

• For example, 45% of USA imports are from Canada and Mexico.• EU imports 50% from Spain, Netherlands, France, Italy, Belgium and

Germany

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Industry Growth Drivers - DemandUrbanization, rise in disposable incomes and changing lifestyle and aspirations are

leading to significant demand for processed food…

Increasing Urbanization – Lifestyle and Aspirations

Increasing Nuclear Families and Working Women

Increasing spends on health foods

Food Processing Demand Drivers

Changing demographics – Rise in disposable incomes

Demand for Functional Foods

Organized Retail and Private Label Penetration

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Industry Growth Drivers - PolicySupportive Policy, in light of the significant employment and trade potential, to boost the quantity and quality of output in the sector is also driving growth in the sector…

Food Processing Industry

Infr

astr

uctu

re

dev

elo

pm

ent

Tech

nolo

gy

U

pg

rad

atio

n

Qu

ality

Con

trol/

Food

testi

ng

Lab

ora

tory

, R

&D

HR

an

d

Insti

tuti

on

al

Dev

elo

pm

ent

Policy Support

HR and Institutional Development

• Financial assistance to set up training centres

• Strengthening of State Nodal Agencies

• IT

Infrastructure Development

• Mega Food Parks• • Integrated Cold

Chain

• Modernization of Abattoirs

Technology Upgradation

• Grant of 25% of the cost of plant & machinery and technical civil (maximum of Rs 50 lakhs in general areas and Rs 75 lakhs in difficult areas)

Quality Control/ R&D

• Setting up a network of laboratories

• Higher level of assistance to research institutes

• 50-100% subsidy to companies which set up quality testing laboratories

Overview

A-Anand M-Milk U-Union L-Limited.

AMUL means “priceless”

Amul – The Taste of India

Multi-dimensional impact on rural economy and society.

GCMMF

Members: 13 district cooperative milk producers' Union

No. of Producer Members: 2.79 million

No. of Village Societies: 13,328

Total Milk handling capacity: 11.22 million litres per day

Milk collection (Total - 2008-09): 3.05 billion litres

Milk collection (Daily Average 2008-09):

8.4 million litres

Milk Drying Capacity: 626 Mts. per day

Cattlefeed manufacturing Capacity:

3500 Mts per day

State level apex body of milk cooperatives in Gujarat.

Dr Verghese Kurien, former Chairman of the GCMMF.

Rated "AAA/Stable/P1+" by CRISIL.

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1 Food Processing Sector in India

2 Challenges in the Sector

3Opportunities & Recommendations

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Challenges in the Sector Challenge 1: Productivity Issues

India's overall agriculture productivity is still low…

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Challenges in the Sector Challenge 2: R&D

Commodity-centric R&D

Lack of a holistic approach involving a matrix of farm enterprises

Compartmentalization of R&D agencies

Lack of effective bilateral flow of information amongst research, extension, and implementation departments

Poor validation and feedback mechanisms

Lack of large-scale on-farm validation of techniques and feedback thereon, leading to practically no scope for enhancement

Key Problems in Indian R&D

A seven-step mechanism is required to set-up a research-development-technology transfer continuum involving all stakeholders

1. Problem identification and prioritization

2. Convergence of existing technologies to match the need

3. Generation of need-based viable technologies using the holistic farming system approach

4. On-farm assessment and evaluation

5. Feedback on the technologies

6. Refinement of technologies, if necessary

7. Ensuring timely availability of inputs

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Challenges in the Sector Challenge 3: Human Resource Development

Warehousing & Distribution

Industry level

Enforcement

Regulatory and trade issues

Food production

•Food safety awareness

•Auditing and inspection skills

•Process development

•Managerial and Operational level HRD

•Institutional Development

•Focus on packaging techniques, storage and safe transportation

•Platform to make policy decisions

•Inclusion in academic curriculum

•Emphasize food safety in storage conditions

•Training in Warehousing and Distribution

The industry is in dire need of highly skilled/trained manpower across different levels to handle various operations

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Challenges in the Sector Challenge 4: Supply Chain Hindrances

Necessity for a Strategic focus on Supply Chain in FPI

• This situation discourages processing units to reach optimum size and achieve economies of scale.

• Additionally, lack of consistent quality hinders small scale units to build brand equity for themselves in international and domestic markets.

Seasonality

Perishability

Variability

Seasonal production Vs Year-round Processing Operations

Highly perishable nature of raw materials

Variable quality of raw materials due to cyclic variations and changingweather conditions

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Challenges in the Sector Challenge 5: Low Adherence to Quality Standards

Increasing need for food processors to adhere to quality standards for both domestic as well as export market

Increasing Globalization

Stringent SafetyNorms

Rising Customer awareness on Quality and Health

• Lack of requisite controls across the agri-value chain-from farm inputs to storage of produce to food processing techniques

• Poor compliance to requisite food standards in export countries

• Absence of basic standardization and certification infrastructure

Competition Products Major Competitors

Cheese Range

Britannia Cheese, Mother Dairy Cheese, Gowardhan, Kraft

Mithaee Range (Ethnic sweets) Haldirams

Milk RangeMother Dairy, Nestle, Aarey,Gokul

Amul IcecreamsKwality Walls, Mother Dairy, Pastonjee, Vadilal

Chocolate & Confectionery Cadbury, Nestle, Parle

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1 Food Processing Sector in India

2 Challenges in the Sector

3Opportunities & Recommendations

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A developed Food Processing sector will help overcome the biggest challenges in front of India:

• Low farmer income and high subsidies

• High wastage along the value chain

• Poor hygiene and safety standards

Opportunities & Recommendations Food Processing sector has strong synergies with the inclusive growth mandate of the government and also provides a platform to significantly transform the face of rural

India…

Given the huge potential opportunity, players should consider the constraints as opportunities waiting to be exploited and make investments for the overall growth of the industry.

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Opportunities High domestic demand and supportive policy provides significant opportunities across

the Food Processing value chain…

Financial & Business Services

Farm Inputs FarmingMarketing/ Aggregator

ProcessingLogistics (Food)

Retail/ Food

ServicesConsumer

Product Design

Distribution

MarketingTransport Services/ Infrastructure

Quality Control Market Intelligence

Policy Support

Financial & Business Services

Farm Inputs FarmingMarketing/ Aggregator

ProcessingLogistics (Food)

Retail/ Food

ServicesFarm Inputs Farming

Marketing/ Aggregator

ProcessingLogistics (Food)

Retail/ Food

ServicesConsumer

Product Design

Distribution

Marketing

Product Design

Distribution

MarketingTransport Services/ Infrastructure

Quality Control Market Intelligence

Policy Support

Key Opportunities

Mega Food Parks

Integrated Cold Chain

Backward and Forward Integration

Food Safety Management Systems

Training Facilities

B2B Sales

Quality Control Labs

Joint Research Facilities

Customized Farm Equipment

Promotional Strategy

In the initial stages, Amul Butter had a staid and boring image.

Sylvester daCunha - The man behind change of image.

The moppet

Friday to Friday star.

Where does Amul's magic actually lie?

Distribution NetworkFarmers

VillageCooperativeSocieties (withChilling Units)

VillageCooperativeSocieties(without ChillingUnits)

LocalRestaurants/Other Milk relatedbusinesses

Milk Sold toVillage &Local Residents

Milk ProcessingUnion &Warehouses

Warehouses

Wholesalers

Retailers Home DeliveryContractors

Consumers

NetworkServices Veterinary

Services Animal

Husbandry Animal Feed

Factory Milk Can

Producers Agriculture

University Rural Mgmt

Institute Trucking

Facilities

Chilling Plants

Consumers

Amul’s Supply Chain

Intelligent and Innovative Marketing

Amul follows an Umbrella Brand

International Marketing

Amul Cyberstore

Spoken Web

A T M

Amul Outlets

SWOT Analysis

BCG Matrix

Business growth

Rate

High Low

High

Low

Amul Chocolate

Amul Butter

Amul Cheese

Amul Chocolate drink

Amul Ice-cream

Relative Market Share

Amul Sweets

Future OutlookAmul plans to double to processing capacity of our dairy plants to 20.7 million kg per day, by 2020.

Plan to expand our cattle feed manufacturing capacity, more than four times to 12,000 MT’s per day, by 2020.

Tapping the rising demand for new value-added products.

CSR Initiatives

Orientation to Distributors & Retailers

Amul Yatra

Amul Relief Trust

Care for a drink…….

Cheers!!!!!

Any Questions???

Ankit Patel Paulami Patel

Megha Kabra

Karan Gomber Manal

MotaTejas Jain