Food Processing Industry in India

August 2013

Index
I.

Executive Summary

II.

Industry Overview

III. Segment Analysis

IV. Opportunities in the Industry
V . Valuation Benchmarks

Executive Summary
With a huge agriculture
sector, abundant
livestock, and cost
competitiveness, India
is fast emerging as a
sourcing hub of
processed food

India is one of the worlds largest producers as well as consumers of food. Changing food consumption
patterns of Indias population (both spouses working, eating out as income levels rise & entry/
establishment of foreign brands) is expected to increase consumption volume further in absolute terms
drastically over the next few years
Indias agricultural sector is large and diverse, accounting for about 16% of GDP and 10% of its export
earnings. Its arable land area of 159.7 million hectares (394.6 million acres) is the second largest in the
world (after the United States), and its gross irrigated crop area of 82.6 million hectares (215.6 million
acres) is the largest in the world to support the food processing industry
Consumption patterns in India have been undergoing a visible shift. Earlier, the share of cereal products
was the highest, followed by milk & milk products, vegetables, edible oil and meat products. However, in
recent years, the growth rates for fruits, vegetables, meat and dairy products have been higher than
cereals and pulses
India is among the top three global producers of a broad range of crops, including wheat, rice
, pulses, peanuts , fruits and vegetables and the leading producer of milk in the world
The food processing sector is on the radar of many investment firms and strategic investors as processing
sectors like dairy, frozen foods and snack foods segment present a slew of attractive opportunities
Currently, a large part of food processing happens primarily on the commodity side. However, as the
nutritional needs of the Indian consumer increase, alongside a shift towards an urban lifestyle, it is
expected that value-added products will witness high growth
In addition to the changes on the demand side, there are also changes occurring on the supply side with
growth in organized retail, increasing FDI and new product introductions supporting the industrys growth
The opportunity in the food processing industry is vast, but so are the challenges; the need of the hour is
to improve technology and productivity in order to be competitive globally. Foreign players can bring not
only world class brands but also global practices and tap into this fast growing market through M&A

Industry Overview

Industry Overview
Food Processing Industry
Key Highlights of the Sector

Indian Food Processing Industry

The food processing industry is one of the largest industries in India.
It is ranked fifth in terms of production, growth, consumption, and
export

The unorganized sector accounts for 42% of the Indian food

processing industry and there is a significant presence of small scale
players in the sector

The size of the Indian food processing industry is estimated at ~USD

150 billion and is expected to grow at a CAGR of 10% to reach ~USD
200 billion by 2015

Rice mills account for the largest share of processing units in the
organized sector in India. This sector is among the few that serves as
a vital link between the agriculture and industrial segments of the
economy

Indias agri and processed foods exports shot up 63% to set a record
at US$ 16.96 billion in FY 2012-13 as compared to US$ 10.39 billion
in the corresponding period of the last year
The industry has also attracted foreign direct investments (FDI) worth
US$ 1.82 billion during 2012-13

The primarily processed food market accounts for 60% (includes

wheat grains, rice and milk), while the value-added processed food
market is around 40% (includes ready to eat, poultry products, milk
products etc)

Source: Technopak Analysis, February 2013

Major Segments

Growth of Food Processing Sector in India

% Growth

20.00%
Water / Soft
Drinks 9%
($13.5 billion)

15.00%
10.00%

Fruits and
Vegetables 4%
($6 billion)

Alcoholic
Beverages 3%
($4.5 billion)
Food Grain
Milling 34%
($51 billion)

5.00%
Meat and
Poultry 14%
($21 billion)

0.00%
-5.00%

2008

2009

2010

2011

2012

FPI

9.90%

5.30%

-2.70%

14.90%

15.70%

Agriculture

6.30%

0.10%

0.60%

8.60%

3.80%

The graph above shows that the contribution of the food processing
sector to GDP has been growing faster than that of agriculture sector
Source: National Accounts Statistics, 2013

Bread and
Bakery 20%
($30 billion)

Dairy Products
16% ($24
billion)

Current Market Size US$ 150 Billion

Indias Strengths in Major Segments (1/2)

Food
Processing

Fruits and Vegetables

India is the worlds second largest producer

of fruits and vegetables

Milk and Milk Products

India is the largest producer of milk in the

world

Meat and Poultry

India is the largest producer of buffalo meat

(1.4 MT) and the second largest producer of
goat meat (0.5 MT) in FY10

Marine Products

India is the third largest producer of fish in

the world

Grain Processing

India is estimated to have produced about

250 million tonnes of food grains in FY12

Consumer Food

Among the fastest growing segments in

India; it includes -

Source: Indiabusiness.nic.in, Ministry of Agriculture, Meat &

Poultry Processing Board, FAOSTAT Note: FY - Indian
financial year (April - March) MT - Million Tonnes

Packaged
Foods

Aerated soft
drinks

Packaged
drinking
water

Alcoholic
Beverages

Indias Strengths in Major Segments (2/2)

Key Players

Fruits and Vegetables, and

processed grain

Milk and Milk Products

Food
Processing

Cooperative societies: Gujarat (GCMMF), Andhra Pradesh

(APDDCF), Karnataka (KMF), Maharashtra
(Mahasangh), Punjab (MILKFED), Tamil Nadu
(TCMPF), Delhi (NDDB)

Meat, poultry and marine

products

Alcoholic
Beverages

Consumer Food

Aerated Soft
Drinks
Packaged
Food

Advantage India
Major Agricultural Export Zone in India

Segment Analysis
I. Dairy
II. Snack Foods
III. Frozen Foods
IV. Rice and flour

I. Dairy
Market Overview
Milk Production Across Countries ( In Million Tonnes)

Industry Overview
The industry has grown from producing 17mm tonnes of milk in 1951
to producing 122mm tonnes in 2012 (largest in the world)

117.0

The organized dairy market in India is estimated around $24 billion

growing at ~7% by volume (~10% by value)

87.5

15% of the worlds population of milking animals is sheltered in India

and contribute to ~17% of the global milk production

41.1

35.5

32.1

29.7

Russia

Germany

Cooperatives such as Amul and Mother Dairy have a pan India

presence, other than that other dairies have regional presence
1FICCI

India
USA
China
Pakistan
Source: National Dairy Development Board, 2010

360, An overview of the Dairy Sector in India, November 2012

Usage of Milk Produced

Structure of Indian Dairy Industry

Cheese &
Paneer
(Cottage
Cheese)
7%
Milk
Powder
4%
Butter
7%

Indian Dairy
Industry
(122m tonnes)

Organized ~
20% ( 24m)

Liquid Milk
(processed) ~
13.5% (16m)

Unorganized
~80% (98m)

Value Added
products ~6.5%
(8m)

Retained or sold
at rural level
~41% (50m)

Rest loose milk

and value added
products

Total usage of milk

produced in India of 122
million tonnes in 2012

Others*
9%

Fluid Milk
45%

Ghee (clarified
butter)
28%
*includes milk used for
curd, yoghurt, ice-cream etc

Source: Technopak Analysis, February 2013

10

I. Dairy
Ice Cream Market A golden egg in the dairy basket
Ice Cream Industry Growing Steadily
Ice cream is amongst the fastest-growing categories in the packaged
foods category in India and the size of industry is estimated at ~$511
million in 20121 which is growing at a CAGR of 11% for last five years

Market size by category

Ice Cream
Desserts
1%

Dairy Ice
cream
55%

Vanilla, strawberry and chocolate flavours continued to dominate the

market and all the players have dairy ice-cream and bulk ice-cream in
these flavours

Bulk Dairy Ice

Cream
37%

Major companies including Amul , Hindustan Unilever, Vadilal

Industries and Hatsun Agro are now focusing on ice cream parlours
Haagen-Daz and Baskin-Robbins are premium brands of ice cream
in the market and as a result they are priced significantly higher than
other ice cream brands
1Euromonitor

Water Ice
Cream
7%

Size - $511 million, 2012

Report on Ice-cream market in India, April 2013

Major Players

Consumption and Potential

India has the right climate for Ice cream consumption but has a very
low per capita consumption, which is approximately 300 ml per annum
as against world average of 2.3 liters per annum
The market is expected to grow ~12-15% to cross $900 million by
2014-15. The branded market is estimated at ~$200 million and is
growing at 20-25%
Seeing this enormous business opportunity, the war has already
started to grab the most of this pie with national players increasing
their production and international players trying to find a way to enter
the Indian markets
The industry would face some challenges from availability of
alternative options to consumers from traditional kulfis to gelatos and
flavoured yoghurts
Source : Euromonitor report on ice-cream market in India

Punjab State
Cooperative
1%
Hatsun Agro
7%

Others
9%
Amul
31%

Devyani Foods
7%

Vadilal
12%

Mother Dairy
13%

HUL (Kwality
Walls)
20%

Size - $511 million, 2012

11

I. Dairy
New trend in the market
Yoghurt - Untapped Category

Flavoured Milk Big Change in Habit

The American concept of yoghurt is spreading across the country with With Indian consumers slowly moving from carbonated soft drinks to
healthier options, flavoured milk represents one of the fastest growing
leading manufacturers Amul, Mother Dairy, Danone, Britannia and
segments in the Indian dairy market
Nestle vying to capture a large chunk of the market
The current size of industry is estimated around $182 million in India The flavoured milk segment in India is estimated at only ~$67 million in
20121 and is growing at a CAGR of 15-20%
and is growing at a CAGR of 20-25% and is slated to double itself in
next three years, according to consulting firm Technopak Advisors
The ready to drink flavoured milk segment represents a very convenient
option to the Indian middle class where there are no hassles to boil, add
The newly-emerging frozen yogurt category is gradually getting fast
external ingredients to serve this milk
recognition in the market. The latest entrant US-based Pinkberry has
joined the likes of Canadian brand Kiwi Kiss and US' Red Mango
Also plastic bottles or tetra packs have made this category of milk more
convenient for consumers to drink and easier for distributors to ship
The category has yet to percolate to regions like east India where
mishti doi (sweet curd) is very popular
1Business Line, Dec 2012

12

II. Snack Foods

Impulse and Indulgence Products
Segment Break Up (2012, US$ Mn)1

Industry Overview
Impulse
and
Indulgence
products
include
confectionery, pastries, cakes, biscuits, ice creams, sweet and savory
snacks and snack bars

Sweet and
Savoury Snacks
1,477
21%

Confectionery
2,053
29%

Biscuits are have been the most preferred impulse and indulgence
snack with the largest value share in 2012
Parle products is the leader in impulse and indulgence products with
a value share of 15% in 2012

Ice Cream
508
7%

Cakes
305
4%

Manufacturers have started introducing products such as savory

snacks at lower price points to attract consumers from the rural
market which presents a huge untapped opportunity
Healthy snacking continues to become significant,
manufacturers to go down the health and wellness route

Biscuits
2,806
39%

forcing

Major Players Market Share (2012)

Balaji, 1.70%

Major Brands Market Share (2012)

Kurkure, 3.00%

Nestle, 4.10%

Total Segment Size ~US$7.2billion

Balaji, 1.70%

Parle, 14.60%
Haldirams, 4.90
%

Parle, 12.70%
Lay's, 3.80%
Haldirams, 4.60
%

Frito-Lay, 7.60%
ITC, 8.10%

Cadbury, 10.10
%
1

Euromonitor

Britannia, 12.70
%

Total Segment Size (Only Major

Players) ~US$7.2billion

Cadbury Dairy
Milk, 5.30%

Sunfeast, 5.40
%

Britannia, 12.70
%

Total Segment Size (Only Major

Brands) ~US$7.2billion

13

II. Snack Foods

Impulse and Indulgence Products Growth Estimates
Growth Estimates for Major Sub Segments (US$ Bn)1
11.91

7.20

4.16

3.73

2.05

2.67

2.81
1.48

Confectionery

Biscuits

Sweet and Savoury Snacks

2012

5 Yr CAGR Historical
(2007-12)

23.3%

5 Yr CAGR Estimated
(2012-17)

12.7%

Major Growth Drivers

Consumers expected
to
move
towards
premium
options
which offer rich taste

0.87

17.7%

8.2%
Shift
from
plain
biscuits to cookies
and sandwich biscuits
available at lower
price points

1.35

Other

Total

2017

27.4%

12.5%

20.9%

10.6%

Introduction of smaller
packs available at
lower price points in
order to tap rural
markets

Euromonitor

14

II. Snack Foods

Sweet & Savory Snacks
Segment Break Up (2012, US$ Mn)1

Overview
Sweet and savory snack are a sub - segment of impulse and
indulgence products category and include Chips, Crisps, extruded
snacks, nuts, popcorn and other sweet and savory snacks such as
Aloo Bhujia , Moong Dal and Bhujia Sev which are traditional Indian
snacks

Other Sweet and

savory
523
35%

Chips/Crisps
509
35%

The market size of sweet and savory snacks in India stood at

~US$1.5 Bn at the end of 2012
This segment grew at a CAGR of 27.4% during 2007-12 and is
estimated to grow at a CAGR of 12.5% during 2012-2017 which is
amongst the fastest in the Impulse and Indulgence products category
Manufacturers are now positioning their products on the health
platform in order to drive sales
Frito - Lay is the category leader with 37% market share in 2012

Major Players Market Share (2012)

Popcorn
19
1%

Extruded Snacks
412
28%
Nuts
15
1%

Total Segment Size ~US$1.5 Bn

Major Brands Market Share (2012)

Haldirams
23%

DFM
1%

Others
21%

Frito-Lay
36%
Others
28%

Prakash
3%

Crax
1%
Bingo!
7%

ITC
7%
Balaji
8%
Haldiram
24%

Total Segment Size ~US$1.5 Bn

1

Lay's
19%
Balaji
8%

Kurkure
15%

Euromonitor

15

II. Snack Foods

Sweet & Savory Snacks Growth Estimates
Growth Estimates for Major Sub Segments (US$ Mn)1
2,667.34

1,477.31
854.96

962.00

850.37

508.52

557.01

411.79

Chips/Crisps

Extruded Snacks

Other Sweet and Savoury

2012

5 Yr CAGR Historical
(2007-12)

5 Yr CAGR Estimated
(2012-17)

Major Growth Drivers

Euromonitor

30.8%

11.0%
Demand expected to
come from rural areas
which
are
not
saturated like the
urban market and
introduction
of
healthier offerings

Total

2017

24.2%

27.4%

15.6%

12.5%

Lower price points as

compared
to
chips/crisps,
strong
innovation
and
promotional activities.
Higher
disposal
income in rural areas
will drive sales from
tier II and tier III cities

16

III. Frozen Foods

Market Overview
Segment Break Up (2012, US$ Mn)1

Overview
The Frozen Processed Food products market is one of the fastest
growing sphere with a market size of US$ 60.88Mn. It includes Frozen
Processed Vegetables, Frozen Processed Poultry and Frozen
Processed Fish / Seafood Products
Frozen Processed Vegetables (Peas, Corns, Cauliflower etc.), Frozen
Processed Poultry Products (Chicken Cutlets, Tikkas, Nuggets etc.)
and Frozen Processed Red Meat (Salami, Sausages, Mutton Kebabs
etc.) have dominated the Frozen Processed Food Market in India
Mother Dairy Fruits and Vegetables Ltd., Al Kabeer Exports, Venkys
and Temptation Foods are the market leaders with a combined market
share of ~56.9% in 2012
Frozen Fish / Seafood Products are gaining momentum in the Indian
market because frozen seafood in particular, is new for the Indian taste
buds. Only 5% of the total produce gets consumed domestically and
the rest 95% is exported

Frozen
Potatoes
3.80
6%

Frozen Fish /
Seafood
9.59
16%

Innovative
Foods, 7.9%

Temptation
Foods, 9.1%

Al
Kabeer, 16.5%

Meatzza
(Darshan
Foods), 5.4%

Ever Fresh
(Temptation
Foods), 7.9%

Euromonitor

Total Segment Size (Only Major Players)

~US$ 45.91 Mn

McCain, 4.6%

Safal (Mother
Dairy), 22.1%

Sumeru
(Innovative
Foods), 9.1%

Venky's, 9.8%
Venky's, 9.8%

Market Size- US$ 60.88Mn

Major Brands Market Share (2012)

McCain
India, 4.6%
Mother
Dairy, 22.1%

Frozen
Vegetables
26.69
44%

Frozen Poultry
10.57
17%

Major Players Market Share (2012)

Darshan
Foods, 5.4%

Frozen Ready
Meals
5.25
9%

Frozen Red
Meat
5.00
8%

Al
Kabeer, 16.5%
Total Segment Size (Only Major Brands)
~US$ 45.91 Mn

17

III. Frozen Foods

Healthy growth in the segment
Growth Estimates for Sub Segments (US$ Mn)1
130.94

Market Size
2012 - US$ 60.88Mn and 2017 - ~US$ 130.94Mn
5 year estimated CAGR 16.55%
60.88

57.85
26.69

23.57

21.15
10.57

9.59

3.80
Frozen Vegetables

Frozen Fish / Seafood

Frozen Poultry

5 Yr
CAGR
Estimated
(2007-12)
5 Yr CAGR
Historical
(2012-17)

Current
Trends

Frozen
Vegetables

Frozen
Poultry

16.74%

17.15%

17.40%

18.31%

Busy lifestyles
and hygiene
awareness is
luring customers
towards frozen
processed
vegetables

Euromonitor

15.77%

Fish and Seafood

are picking up pace
in the market as
people are looking
to change over
from Chicken and
Red Meat

15.73%

Stands second in
terms of market
and value share.
Kebabs and Cutlets
are all time
favorites among
Indians

5.25

5.00

Frozen Potatoes
2012

Frozen
Fish /
Seafood

8.36

11.39

8.62

Frozen Red Meat

Frozen Ready Meals

Total

2017

Frozen
Potatoes
17.83%

17.97%

Potato Products
such as
Fingers, Patties, Cutl
ets etc. are enjoyed
best as quick meals
and have a great
potential as it has
emerged as a party
snack category

Frozen
Red Meat

Frozen
Ready
Meals

17.89%

9.78%

16.97%

Red Meat is
considered heavy for
the heart as compared
to White Meat but in
some parts of the
country it is not liked
that much however, it
has export potential

15.59%

Food that takes

less time to cook is
a hit amongst the
people living in
urban parts of the
country, given their
lifestyles and
choice of cooking

18

IV. Rice & Flour

Rice market in India
Basmati Rice Export Statistics

Rice Market in India

India leads the global production and export of Basmati rice, but this
variety accounts for less than 2% of the total Indian rice production
The packaged rice market in India is estimated at $2.24 billion in
20121, and has been growing at a CAGR of over 30% for the past
three years and it is projected to reach $5.5 billion by 2016
The size of the global rice industry is approximately 459 million metric
tonnes (mn MT), or $275 billion2 of which Basmati industry accounts
for 6.7 mn MT or $5.8 billion (2.1%), of which India accounts for
~72% of Basmati produced or 4.8 mn MT ($ 4.4 billion) approximately

Others
16%
UK
3%
Kuwait
10%
Iran
18%

Basmati is exported across the globe, with a majority of consumers

(by volume) in the Middle East, UK and US

Saudi Arabia
27%

UAE
26%

Countries

Market Size of
Exports

Saudi
Arabia

$1.18 billion

UAE

$1.14 billion

Iran

$792 million

UK

$132 million

Others

$704 million

Source: Investor Presentation, KBRL, 2012

Major Players

Growth Factors
India, being a large market with a widening middle-income group and
an increasing number of double-income households, holds great
potential for the packaged rice segment, even in the Ready to Eat
Ready to Cook categories
The packaged rice market, though still at a growing stage, with few
national and international players capturing a large share of the
market, has witnessed a healthy year-on-year growth in the past
couple of years

The popularity of packaged rice is a consequence of the comparative

convenience and ease of procuring clean, high quality rice as
opposed to the labor-intensive processing required in the traditional
purchase from wholesale grocery markets or rice mills

1Technopak

Major Listed Players

Brands

KBRL

India Gate, Doon

Kohinoor Foods

Kohinoor, Charminar

LT Foods

Dawaat, Heritage

REI Agro

Raindrop

Major Unlisted Players

Brands

Amira Foods

Amira

Best International

Best

Deva Singh Sham Singh

817 Elephant

Shri Lal Mahal

Shri La

Analysis, 2012, 2 Horizon Research, July 2012

19

IV. Rice & Flour

Wheat Flour Market in India
Wheat Four Market-Segment Breakup

Wheat Flour market in India

India is one of the worlds largest wheat producers, yet branded
wheat flour account for an inconsequential portion
Brands such as Ashirwad from ITC and Pillsbury from General Mills
dominate the packaged flour market in India, which is growing at 1015% annually and is estimated at over $750 million in 20121
Although big players have a pan India presence, regional players like
Shaktibhog, Kanak, etc have a significant pie in the market
The reason for dominance of the unorganized sector is the price
point, because the whole chacki system has thorough control over
price and depending on a customers financial position, it selects the
wheat, which can be cheaply processed flour
1Business

Organized
Sector
8% ($750
million)

Organized sector
includes branded
packaged flour sold in
stores
Unorganized
Sector
92% ($8.62
billion)

Unorganized sector
includes the chacki
flour, home flour etc

Line and imagesfood.com

Pilsbury Brands

1Technopak

Other Brands

Analysis, July

20

Opportunities in the Industry

21

Why Invest in the Food Processing sector in India

1

Vast Resources of Raw

Material

India is one of the largest producer

of wheat and rice

In the recent years, there has been

a shift from conventional farming of
food grains to horticulture
Now fruits, vegetables, ornamental
crops, medicinal and aromatic
plants, spices, plantation crops
which include coconut, cashew nuts
are done through horticulture and
cocoa and allied activities have been
done through it

Low Cost of Production

The relatively low-cost but skilled
workforce can be effectively utilized
to set up a large, low-cost
production base for domestic and
export markets

Its 350 million strong urban middle

class with its changing food habits
has a a huge market for agricultural
products and processed food

India is the worlds largest producer

of milk owing to the strong business
models formed through cooperative
movements in the country

Conventional Farming to
Commercial Farming

With a huge population of 1.08

billion and population growth of
about 1.6 % per annum, India is a
large and growing market for food
products

It is the second largest producer of

groundnuts, fruits and vegetables.
That it accounts for about 10 % of
the worlds fruits production

Market in the form of large

urban middle class

6
Government Assistance
In an effort to boost the food
sector, the Government is working
on agri zones and the concept of
mega food parks. Twenty such
mega parks will come are proposed
across the country in various cities
to attract Foreign Direct Investment
(FDI) in the food-processing sector
Approval of National Mission on
Food Processing

Conducive food processing

policy environment
The government has allowed 100 %
FDI in the processing sector
Fiscal initiatives and interventions
like rationalization of tax structure on
fresh foods as well as processed
foods and machinery used for the
production of processed foods
Simplification of documentation and
procedures under taxation laws to
avoid unnecessary harassment

22

Key Growth Areas (1/2)

Food Processing
Segments

I. Dairy

II. Snacks

Opportunities within
each of the Food
Processing Industry
Segments

1) Ice Cream
2) Flavored Milk
3) Yoghurt

1) Extruded Snacks
2) Sweet and Savory
snacks

Reason of Growth

Major Brands

With consumer tastes evolving, flavored milk and

yoghurt are fast gaining popularity, especially
among the urban population. Secondly, the demand
for ready-to-eat foods is rising rapidly with growing
urbanization, an increase in the number of nuclear
families, the rising size of the Indian middle class,
rising health awareness and evolving consumer
preferences due to more exposure to global markets

Extruded snacks are priced much lower than

chips/crisps which is the reason for the growth in
this category. They are quite popular among
children and much more affordable than other
savory snacks. Rings in extruded snacks are
performing very well in the market
Sweet and savory snacks is unlikely to be affected
by competition from other snack categories like
sugar and chocolate confectionery, ice cream and
snack bars. The advantage of savory snacks is that
they do not contain sugar and can be consumed
with coffee or tea

1Indian

Poultry Industry Broiler Meat and Table Egg, ICRA, 2013

23

Key Growth Areas (2/2)

Food Processing
Segments

III. Frozen Food

IV. Others

Opportunities within
each of the Food
Processing Industry
Segments

1) Frozen
Vegetables &
Puree
2) Frozen Chicken &
Meat Products

Logistics and cold

chain infrastructure ,
machinery and
packaging

Reason of Growth

Major Brands

Frozen or processed vegetables and puree have taken

important place in Indian kitchens because the prices of
vegetables are volatile (irrespective of seasonal
volatility) or some time become short of supplies, so
urban middle class is looking for alternative to manage
their kitchen budgets and get things available when
required
The demand for processed poultry and processed red
meat & meat products is on the rise in India. Rising
income levels are combining with the greater hygiene
awareness to result in decline in the number of Indian
people who buy live birds from home slaughter. Indian
poultry has been growing at around 8-10% annually1
over the last decade with broiler meat volumes growing
at more than 10% while table egg g at 5-6% driven by
increased domestic consumption
A new opportunity in storage and logistics for food
products has emerged due to rising food wastage,
increasing production of food grains such as rice and
wheat, government schemes to promote PPP (Public
Private partnership) in the sector and entry of global
retailers who want strong logistics support to manage
the demand for their stores. Despite having an
abundance of crops, India faces challenges in storage of
grains / dairy products due to lack of infrastructure,
inadequate refrigeration / racking and also poor farming/
non tech irrigation methods leading to a very low
conversion rate of food grains into processed foods

24

Valuation Benchmarks

25

Common Stock Comparison (1/2)

USD in Millions
Sales

S. No.

Company Name

Market
Cap

Net Debt

EV

2012

EBITDA

2013

2012

Net Income

2013

2012

2013

I. Dairy Products
1

Vadilal

$14.61

$24.90

$39.51

$54.66

$59.07

$6.84

$6.57

$1.11

$0.92

27.34

11.79

39.13

32.53

41.22

3.84

3.88

1.99

1.15

68.20

22.93

91.13

190.15

261.06

13.16

11.14

7.88

4.54

155.67

841.66

997.33

1,033.49

1,746.25

194.80

271.50

74.68

128.22
10.26

II. Snacks
2

DFM Foods

III. Frozen Foods

3

Venky's

IV. Rice & Flour

4

REI Agro

LT Foods

26.34

225.59

251.93

275.63

408.05

34.11

43.56

4.34

Kohinoor

14.31

145.87

160.18

206.68

223.48

6.42

21.84

(7.32)

1.05

ADF Foods

14.69

0.66

15.35

29.93

32.75

3.78

3.03

1.23

2.57

Tasty Bites

6.80

5.65

12.45

15.83

20.41

0.97

2.33

0.32

1.16

V. Other

Source: Company Filings, BSE

Market Data as of 16th August ,2013
Financials for the year ending March , converted at average exchange rate for the year
USD-INR Exchange rate 60

26

Common Stock Comparison (2/2)

USD in Millions
EBITDA Margin

S. No.

Company Name

PAT Margin

2012

2013

EV / Sales

2012

2013

EV / EBITDA

2012

2013

P/E

2012

2013

2012

2013

12.52%

11.13%

2.04%

1.56%

0.72

0.67

5.77

6.01

13.13

15.88

11.80%

9.42%

6.11%

2.80%

1.20

0.95

10.19

10.08

13.74

23.67

6.92%

4.27%

4.15%

1.74%

0.48

0.35

6.92

8.18

8.65

15.04

I. Dairy Products
1

Vadilal

II. Snacks
2

DFM Foods

III. Frozen Foods

3

Venky's

IV. Rice & Flour

4

REI Agro

18.85%

15.55%

7.23%

7.34%

5.79x

3.43x

5.12x

3.67x

2.08x

1.21x

LT Foods

12.37%

10.68%

1.57%

2.51%

0.91

0.62

7.39

5.78

6.08

2.57

Kohinoor

3.11%

9.77%

NA

0.47%

0.78

0.72

24.93

7.34

NA

13.60

ADF Foods

12.62%

9.26%

4.11%

7.85%

0.51

0.47

4.06

5.06

11.94

5.71

Tasty Bites

6.14%

11.42%

2.03%

5.67%

0.79

0.61

12.82

5.34

21.21

5.87

10.62%

11.33%

3.73%

4.77%

1.76x

1.17x

10.86x

5.44x

10.33x

5.79x

12.37%

10.68%

3.07%

5.67%

0.79

0.62

7.39

5.34

9.01

5.71

18.85%

15.55%

7.23%

7.85%

5.79

3.43

24.93

7.34

21.21

13.60

3.11%

9.26%

1.57%

0.47%

0.51

0.47

4.06

3.67

2.08

1.21

V. Other
7
8

Mean
Median
Maximum
Minimum

Source: Company Filings, BSE

Market Data as of 16th August ,2013
Financials for the year ending March , converted at average exchange rate for the year
USD-INR Exchange rate 60

27

Precedent Transactions
Mergers & Acquisitions
Date

Target

Buyer

Type of Business

16-Jul-13 Dhanalakshmi Srinivasan Sugars Pvt. Ltd. V V Minerals Pvt. Ltd.

29-Jun-13 Mawana Foods Ltd.
Usha International Ltd.
1-Jun-13 JK Sugar Ltd.
Dhampur Sugar Mills Ltd.

5-Jul-11 Jay Mahesh Sugar Industries Ltd.

12-Oct-10 Candico India Ltd.
27-Aug-10 GMR Industries Ltd.

Sugar
Sugar
Sugar
Fruits & Vegetables,
Empower India Ltd.
Spices and Grains
Roquette Freres
Corn
General Mills Inc.
Packaged Foods
Deepak Fertilisers and Petrochemicals Fruits Processing
Bunge India Pvt. Ltd.
Edible Oils
Edible Oils & Dairy
Bunge India Pvt. Ltd.
Products
NSL Sugars Ltd.
Sugar
Keventer Agro Ltd.
Candy Items
EID Parry India Ltd.
Sugar

18-Nov-10 Eastern Condiments Pvt. Ltd.

McCormick & Company Inc.

29-Jan-13 Jharkhand Mega Food Park Pvt. Ltd.

31-May-12
9-May-12
31-Mar-12
10-Feb-12

Riddhi Siddhi Corn Processing Pvt. Ltd.

Parampara Food Products Pvt. Ltd.
Desai Fruits and Vegetables Pvt. Ltd.
Amrit Banaspati Company Ltd.

10-Feb-12 Amrit Corp. Ltd.(Gagan Brand)

Seasoning & Sauces

Deal Value Percentage

($ Mn)
Acquired(%)

NA
1.36
NA

100
1.36
100

NA

100

174.95
12.14
12.02
56.9

100
100
49
100

19.3

100

51.7
11.27
18.29

50
18.29

36

36

Source: VCCEdge

28

Precedent Transactions
Private Equity Investments
Closing
Date

Company

Investors

Business Type

Stake
Deal Value
EV /
Acquired
($ mn)
EBITDA
(%)

22-Jul-13 Capricorn Food Products India Ltd. Quadria Investment Management Pvt. Ltd.

Fruits & Vegetables Processing

$10.07

2-Jul-13

India Value Fund Advisors Pvt. Ltd.

Spices

40.00

3-Apr-13 Bush Foods Overseas Pvt. Ltd.

Hassad Food Company

Rice Milling

145.00

11-Nov-12 Dodla Dairy Ltd.

Cargill Ventures

Dairy Products

20.46

28-Sep-12 Prabhat Dairy Pvt. Ltd.

India Agri Business Fund Ltd., Abraaj Capital Ltd.

Dairy Products

18.50

18-Sep-12 Parag Milk Foods Pvt. Ltd.

IDFC Private Equity Fund III

Dairy Products

28.88

31-Aug-12 Future Consumer Enterprises Ltd.

Future Ventures India Ltd.

Cereals & Pulses

66.00

30-Apr-12 Tirumala Milk Products Pvt. Ltd.

Carlyle Asia Growth Partners IV

Dairy Products

11.92

VKL Seasoning Ltd.

13-Mar-12 Dunar Foods Ltd.

International Finance Corp., TVS Shriram Growth Fund-IA Rice Milling

Fruits & vegetable, Hydrated
Flakes and Powders
6-Dec-11 Sresta Natural Bioproducts Pvt. Ltd. Peepul Capital III LLC

25.00

6-Apr-11 Bush Foods Overseas Pvt. Ltd.

25.00

14-Feb-11 Karuturi Global Ltd.

Standard Chartered PE Aram

Rice Milling
Emerging India Focus Funds, India Focus Cardinal Fund,
Monsoon India Inflection Fund Ltd., Monsoon India
Inflection Fund II Ltd. , Elara Capital Plc
Vegetables & other Processing

11-Feb-11 Innovative Foods Ltd.

India Equity Partners Fund I

Packaged Foods

16.36

30-Sep-10 Mrs. Bector Food's Specialties

Motilal Oswal Private Equity Advisors

Packaged Foods

15.00

Average
Median
Minimum
Maximum

15.00

50.96

34.87x
22.73
10.07
145.00

NA
NA
51
23.66
NA
NA
NA
20.99
40.28

NA
NA
NA

12.92
NA
NA
NA

8.41
6.38

26
20

NA

27.08
98
20
36.33x
26.00
20.00
98.00

57.8

9.4

NA
NA

18.98x
9.40
6.38
57.80

Source: VCCEdge

29

Foreign Ventures
Major Joint Ventures in India
Year

Foreign Players

Indian Partner

Types Of Business

Stake
Ratio

2011

Dan Cake

Phadnis Group

Cake & biscuits

66:34

2011

McCormick

Kohinoor Foods Ltd.

Basmati and food

Products

85:15

Eastern Condiments

Seasonings

26:74

Beverages

50:50

2010
2010

2007
1994

McCormick
Nestle

Hershey

Godrej

Chocolates

51:49

AVT

Spices

50:50

McCormick

Source: Thomson ONE Banker, Aranca Research

30

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