MARKET SITUATION & OPPORTUNITIES IN INDIA. Bhavna Shah, Regional Manager India & Sri Lanka

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1 MARKET SITUATION & OPPORTUNITIES IN INDIA Bhavna Shah, Regional Manager India & Sri Lanka

2 WHAT DOES INDIA STAND FOR TODAY? A COUNTRY WITHIN A Worlds largest democracy. 325 languages spoken 1,652 dialects 28 states, 7 union territories Area 3.28 million sq. kms COUNTRY Agriculture 24% of GDP Manufacturing: 24% Services: 51% Land use: Arable land: 55% Permanent crops: 3% Other: 42% (2001) Coastline: 7,516 kilometers Population: 1.1 Billion with 50% under the age of 25! GDP growth rate 6.9 % Diverse Climate: Tropical south to temperate north IMF has ranked India at the 11 th largest economy

3 Key Economic Indicators India has been ranked as the 10 th largest economy by the World Bank Strong macro-economic fundamentals Ranked 3 rd in terms of Purchasing Power Parity Fast growing significant economy despite global slowdown

4 Oilseeds Production (P) Castor Linseed Niger Safflower Sunflower Soybean Sesamum & Mustard Rapeseed Groundnut Source: Directorate of Economic &Statistics, GOI

5 Vegetable Oil Imports 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, (P) RBD PALM OLEIN REFINED SFO REFINED SBO CPO C. PALM OLEIN CRUDE SFO CRUDE SBO CANOLA/RAPE COCONUT OIL CPKO PKFAD PFAD CRUDE STEARINE COTTON OIL OTHERS Source: SEA

6 PALM OIL vs OTHER OILS IMPORTS 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 POP OTHER OILS 3,000,000 2,000,000 1,000, (P) Source: SEA

7 INDIAN PER CAPITA CONSUMPTION (kgs) Population (Millions) Per Capita (kgs) Source: Oil World

8 DEMAND SENSITIVITY ANALYSIS YEAR POPULACE OIL CONSUMPTION(kg/capita) Millions , , , , , , Source: MPOC Intelligence

9 INDUSTRY GROWTH FAST MOVING CONSUMER GOODS SECTOR PROCESSED FOODS FAST FOODS DEMAND DRIVERS OLEO CHEMICALS SOAPS / PERSONAL CARE BIO- DIESEL

10 Consumption of Basic Oleochemicals 2013 Glycerine Fatty 7% Alcohol 5% Fatty Acid 88% Volume of basic oleochemical consumption = 970,000 Mn MT in FY 13

11 Soaps Accounted for the Highest Consumption Processed Foods 2% Plastics 4% Detergents 5% Consumption Breakdown Rubber 4% Tobacco 3% Pharma 1% Others 1% Personal Care 8% Soaps 72%

12 Growth for Oleochemicals Sector by 2020 Based on demand from key user segments, total oleochemical consumption in India is estimated to grow at a CAGR of 6% over FY13-20 to reach 1,480,000 MT in FY20. Oleochemical demand excluding soaps is expected to grow from 268,000 MT to 524,000 MT, growing at a CAGR of 10% over FY Among the various end-user industries, oleochemical demand from Detergents and Pharma is expected to grow the fastest at a CAGR of 13% and 15%, respectively over FY Oleochemical demand from Soaps and Rubber are expected to be grow the slowest at 4-5% CAGR over FY13-20.

13 Strengths Well established & cleaner technology for production Favourable duty structure Reliable supply PO & PKO together contain the entire range of fatty acids required by oleochemical sector Weaknesses High degree of correlation between the crude petroleum & palm oil Increasing oleochem industry in India is facing the challenge of managing the volatility in price of PO & its derivatives Environmental & sustainability concerns Opportunities Shift in preference of liquid soap & detergents will increase demand for surfactants based on lauric acid, for which PKO is the best source in India Threats RBO is good substitute for oleochem industry. However, increasingly it is used for cooking and technology for oleochem is not yet efficient. Surfactant manufacturers are looking for alternative feedstocks that are both renewable and less correlated with crude petroleum. In the medium term, the strengths of palm based feedstock overweigh the threats

14 Regulatory Changes Removal of Melting Point Limit This will increase POP input into Vanaspati manufacture, thus increasing PO offtake. Stearin accepted for edible uses Will increase imports of CPO and reduce Olein imports as locally produced Stearin will have ready outlet into Vanaspati. PFA changing to FSSAI Will facilitate trade activities, implementation and enforcement as all related regulations are being brought under one umbrella.

15 FSSAI to Replace Following Acts

16 Salient Features of FSSAI

17 Food Processing Sector- Sunrise Sector Largely untapped market Average Indian spends 50% of household expenditure on food items Demand for processed food rising due to urbanization

18 Advantages In the Food Processing Sector India is one of the largest food producers in the world It has diverse agro-climatic conditions and has a large and diverse raw material base suitable for food processing companies India is looking for investment in infrastructure, packaging and marketing India has huge scientific and research talent pool 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

19 Key Growth Drivers Changing Lifestyle Increasing Nuclear Families Increasing Women Workforce Increasing fad for heath and functional foods Increasing disposable incomes

20 Key Opportunities in Food Processing Sector 1 Processable variety of crops 2 Contract Farming 3 Integrated Cold Chain Change in Food Safety Management

21 Nutraceuticals & Cosmeceuticals Tocotrienols Tocopherols Blends

22 Conclusion India is a land of opportunities for Palm Oil Products. Direct Indirect

23 PALM OIL THANK The Oil For YOUThe Future THANK YOU