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

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.

(Source: APEDA)

Fruits and Vegetable Processing

The total installed capacity of fruits and vegetables processing industry has increased from 1.1 million tonnes in January 1993 to 2.5 million 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 is 1.5 million 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 Ministry of Food Processing Industries of India, Indian production stands at 91 million tonnes, having grown at a CAGR of 4%. Approximately 70 million 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 million 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. Every year, India produces about 200 million 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 million cases according to the Ministry of Food Processing Industries. The alcoholic beverages industry provides considerable employment opportunities in the agro – processing industry.

Consumer Food Industries

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 million 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, modernization 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 the growth of the certain sections of the society that remained marginalised for a long time.

Cluster Insights

Key characteristics of the study:

• Average revenue growth of the food processing companies in the last two years was around 26%.
• 30% of the companies are accredited with quality certifications such as ISO 9000: 2000 and others.
• 35% of the companies are involved in exports.
• On an average, the companies operate at a capacity utilisation of around 78%.
• 68% of the companies market their products under a brand name.
• 41% of the companies were established prior to 1990. Around 32% and 27% of the companies were established between 1990-2000 and post 2000 respectively.
• Europe is the most preferred export destination.

Ownership Pattern:

The ownership pattern of food processing companies is inclined towards private limited company.

• Around 65% of the private limited companies fall in the Rs 10 – 100 mn turnover bracket.
• Proprietary firms in the Pune cluster expect an average revenue growth of 42% in the next two years.
• 60% of the private limited companies are engaged in manufacturing as well as trading activities.

Sub segment:

Most of the companies in the fruits & vegetables segment fall in the Rs 10 – 100 mn turnover bracket followed by packaged drink segment.

Turnover Bracket:

America and Europe are the most preferred export destinations for companies in the turnover bracket of Rs 500 – 1,000 mn.

• 50% of the companies in the turnover bracket of Rs 500 – 1,000 mn earn more than 50% of their revenue from the overseas market.
• The companies in the turnover bracket of Rs 10 - 100 mn operate at an average of 80% of capacity utilisation.

Growth & Future Plans:

Companies expect an average revenue growth of 36% in the next two years.

• Companies in the turnover bracket of Rs 100 - 250 mn showed highest average revenue growth of 30% in the last two years.
• 43% of the companies with a turnover bracket of Rs 10 – 100 mn are expecting more than 40% 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 untapped markets and diversification. 50% of the companies are willing to expand their plant capacity while 33% are planning to tap new markets.

Cluster benefits and hindrances:

Marketing initiatives, quality up gradation, manpower training, technology and infrastructure were the dominant benefits derived by the companies. Labour issues, funding and government subsidies are the major obstacles faced by the companies in the cluster.

• Companies with a turnover bracket of Rs 10 – 100 mn faced major labour problems and were benefited the most by infrastructure.