Food Processing Engineering IT & ITeS-BPO Textile     PREFACE | FOREWORD | EXECUTIVE SUMMARY| METHODOLOGY|CLUSTER OVERVIEW | COMPANY LISTING|LAUNCH EVENT|EDITORIAL TEAM| SPONSORS Alphabetical Listing Total Employees Turnover Revenue Range Region Exported Offerings

Overview of Food Processing Industry

The food processing industry plays a vital role in the diversification and commercialisation of agriculture by ensuring value addition to agricultural produce, generating employment, enhancing the income of farmers and creating markets for export of agro foods. In short, the food processing industry provides linkages and synergies between the industrial and agricultural sector. Change in lifestyle and food consumption patterns and increase in the disposable income are some of the key growth drivers for the industry.

Fruits and Vegetable Processing

The total installed capacity of fruits and vegetables processing industry has increased from 1.1 mn tonnes in January 1993 to 2.5 mn tonnes in January 2007. The processing of fruits and vegetables is estimated to be around 2.2% of the total production in the country.

Meat & Poultry Processing

In meat and poultry processing sector, poultry meat is one of the fastest growing animal proteins in India. Through 1991-2005, the estimated production was 1.5 mn tonnes, which has grown at a CAGR of 13%. Per capita consumption has grown from 870 grams in 2000 to about 1.68 kg in 2005 and is expected to grow to 2 kg in 2009.

Milk & Milk Products

India is the largest milk producing country in the world. According to the Annual Report FY07 of Ministry of Food Processing Industries of India, Indian production stands at 91 mn tonnes, having grown at a CAGR of 4%. Approximately 70 mn rural Indian households, primarily, small and marginal farmers and landless labourers, are engaged in the business of milk production.

Marine Products

The country has a long coast line of over 8000 kms, 50600 sq kms of continental shelf area and 2.2 mn sq kms of exclusive Economic Zone. Of the total value of exports, 63.5% is contributed by frozen shrimps. Among all, the US is the largest importer of Indian marine products, contributing to 13% in quantity and 30% in value of total exports, as per the Ministry of Food Processing Industries.

Grain Processing

Milling of rice, wheat and pulses form a part of the grain processing industry. India is self reliant in grain production. It is the second largest rice producer in the world, with a 20% share in the global production. Every year, India produces about 200 mn tonnes of different food grains. All major grains, such as paddy, wheat, maize, barley, millets like jowar (great millet), bajra (pearl millet) and ragi (finger millet) are produced in the country.

Alcoholic Beverages

India is the third largest market for alcoholic beverages in the world. The demand for beers and spirits is estimated to be around 373 mn cases, according to the Annual Report FY07 of Ministry of Food Processing Industries of India. The alcoholic beverages industry provides considerable employment opportunities in the agro – processing industry.

Consumer Food Industry

Consumer food industries include packaged / convenience food, aerated soft drink and packaged drinking water. Packaged food consists of ready-to-eat and ready-to-cook products, pastas, breads, cakes, pastries, biscuits, rice flakes, bun rolls, noodles etc. As per the Ministry of Food Processing Industries, bread and biscuits constitute the largest segment of consumer food with the production of about 4 mn tonnes p.a. Of the total production of bread, 40% is produced in the organised sector and the remaining in the unorganised sector. In production of biscuits, the organised sector produces about 80% of the total production.

Policy Initiatives

The Government has undertaken several policy measures and initiatives. Some initiatives can be named as follows:

• Most of the processed food items have been exempted from the purview of licensing under the Industries (Development & Regulation) Act, 1951.



• In order to ease the availability of finance, the industry is included in the list of priority sector.



• Excise duty levied on the ready-to-eat products, instant food mixes, aerated drinks and fruits and vegetables processing units is reduced.



• Foreign equity up to 100% for most of the processed items except for alcoholic beverages and those reserved for the small-scale units.



• A large number of foreign collaborations have been approved.



• Excise Duty of 16% on dairy machinery has been fully waived off and excise duty on meat, poultry and fish products has been reduced from 16% to 8%.

Future Outlook

India has the potential of being the biggest producer within the food and agricultural sector. In this respect, the country is endowed with a large production base for a variety of food crops due to its varied agro-climatic conditions. The Government of India under the Ministry of Food Processing Industries has adopted a Vision 2015 which envisages:

• Trebling the size of the processed food sector



• Increasing level of processing of perishables from 6% to 20%



• Value addition to increase from 20% to 35%



• Share in global food trade to increase from 1.5% to 3%

The areas identified to develop the food processing industries in India are - establishing mega food parks, modernisation of abattoirs, cold chain/value addition and preservation infrastructure, upgrading safety and quality of street food and establishment / upgradation of quality control laboratories.

Policy reforms in the food processing sector are already in their advanced phase, and have prompted several corporate like Reliance, ITC, Bharti and Godrej to invest in this sector. The growth in food processing industries would not only help in the growth of agricultural sector, but also in the growth of these segments that may have remained marginalised for a long time.

Cluster Insights

Cluster Insights are aimed at highlighting the performance and expectations of the small and medium enterprises operating in the food processing sector in the Kolkata cluster. The sample considered for this analysis are the food processing firms profiled in this publication; the variables considered for analysis include operational structure, business practices, and future plans.

Key characteristics of the Kolkata food processing cluster

• Average revenue growth of the food processing companies in the last two years was around 24%.



• 24% of the companies possessed quality certifications such as ISO 9000: 2000 and others.



• 55% of the companies were involved in exports.



• 41% of the profiled companies generated more than 50% of their total revenue from the international market.



• Asia (excluding Middle East) is the most preferred export destination.



• On an average, the companies operated at a capacity utilisation of around 87%.



• 59% of the companies were established prior to 1990. Around 38% and 3% of the companies were established between1990-2000 and post 2000 respectively.

Ownership Pattern

The ownership pattern of food processing companies was inclined more towards public limited companies.

• Around 60% of the public limited companies fall in the Rs 10 – 100 mn turnover bracket.



• Private limited companies in the Kolkata cluster recorded an average revenue growth of 25% in the last two years.

Sub segment

Most of the companies in the Packaged / convenience foods segment fall in the turnover bracket of Rs 10 – 100 mn, followed by milk & milk products segment.

• 60% of the companies in packaged / convenience foods segment were involved in exports.



• Companies dealing in milk & milk products operated at an average of 87% of their installed capacity.

Turnover Bracket

• 25% of the companies in the turnover bracket of Rs 10 – 100 mn earned more than 50% of their revenue from the overseas market.



• The companies in the turnover bracket of Rs 100 - 250 mn operated at an average of 88% of capacity utilisation.

Growth & Future Plans

The food processing companies in Kolkata cluster expect an average revenue growth of 33% in the next two years.

• Notably, 17% of the profiled companies are expecting more than 50% revenue growth in the next two years.


• Most of the companies have envisaged future plans. The plans range from capacity expansion and modernisation, to enter into new markets and diversification. For instance, 40% of the companies are planning to tap new markets while 30% are willing to expand the plant capacity.

Cluster benefits and hindrances

Marketing initiatives, quality up gradation and funding from the financial institutions were the dominant benefits derived by the companies operating in the cluster.