Agriculture

1. Interface for FDI Through Public Private
Partnership (PPP Mode): Crusade for competitive
linkage by Edible Oil sector of India.
Saket Kushwaha
Professor
Resource & Agricultural Economics,
Institute of Agricultural Sciences,
Banaras Hindu University,
Varanasi-221 005, India
E-mail: saketkushwaha@hotmail.com

2. JVL Agro Industries Limited

3. Vision & Mission
Vision
To delight the consumer through a complete vegetable oils
solution, through continuous research and development in healthier oil
varieties, leading to a single-stop convenience.
Mission
We expect to extend our leadership from saturated fats to the entire
vegetable oil segment in the first stage and then to agro-based premium
food products thereafter, from one region in India to a global
manufacturing and marketing presence.
3

4. Agenda
• Company Brief
• Company Overview
• Industry Dynamics
• Edible Oil Sector Overview
• Palm Oil Positioning
• JVL Positioning
• JVL Capacity Expansion
• Palm Oil Business Cycle
• Summary and Way Forward
4

5. Company Brief
Identity
•Established in 1989
•Over two decades of rich experience in the edible oil industry
•Single largest producer of Vegetable Ghee in India
Products
•Refined Palm Oil , Soybean Oil, Mustard Oil and Vegetable Ghee
Leadership
•One of the Largest crude edible oil importer in India
•Leadership in the most populous states of the country.
Capacity
•Facilities in Uttar Pradesh, Bihar, Rajasthan with an installed
refining capacity of 1400 TPD and an upcoming facility in West
Bengal with a capacity of 1200 TPD Commencing production in
May’12.
Presence
•Available in all Indian states and 2 union territories through a
strong distribution network of over 30 depots, 12 sales points
and 1 lac plus touch points in India
Brands
•Jhoola, Payal, Joohi
Leading brands in Central, Northern and Eastern India
5

6. Company Overview


Listed on the Bombay Stock Exchange
since 1993 and National Stock
Exchange
Trusted 2-decade relationship with
credible Palm and Soyabean oil
suppliers
Revenues ( in USD’ Million)
148
154
257
307
274
485
FY 06
FY 07
FY 08
FY 09
FY 10
FY 11
EBIDTA ( in USD’ Million)


Owns the single largest
manufacturing unit for saturated fats
in India
Revenues have been consistently
increasing in the last five years and
expected to reach USD 560 million in
FY’12
4
4
9
10
14
19
FY 06
FY 07
FY 08
FY 09
FY 10
FY 11
PAT ( in USD’ Million)
1.80

ISO 9001-2008 certified
2.40
5.30
5.80
6.50
FY 06
FY 07
FY 08
FY 09
FY 10
11.12
FY 11
6

7. Milestones and Achievements
Acquired a seed
crushing &
refining plant in
Rajasthan for
mustard oil.
Achieved 100-TDP
production at
Varanasi
1990
1993
Commenced
production with a
25-TPD capacity
Installed a 60-TDP
unit for refined oil;
introduced crude
soybean and
palmolein oil to the
product mix
1995
1999
Commissioned an edible
oil refinery/ Saturated
fats unit in Bihar.
Commenced the
production of a new
refinery UP
Invested in
Started the export of deoiled cakes.
Adamjee
Extraction Pvt.
Received govt. approval
Ltd., Sri Lanka for for a multi-services SEZ
import of
near Saranath/ Varanasi
Saturated fats
in UP on 100 hectare
under the brand ‘Jhoola’.
2000
2006
2007
2008
2009
Switched from
Increased Saturated Emerged as the
chemical processing fats production
first edible oil
to modern
capacity to
manufacturer in
mechanical
200 TPD
North & Central
techniques
India to
commission a 3MW turbine.
Become
Started work onListed in
the Haldia unit National
with refining
Stock
Capacity of
Exchange.C
1000 MT per
day along with otton Farm
oleo-chemical of 5000 ha at
Dima Region
section
of Ethiopia.
Planned to
Acquired 40
hectare of land expand up to
close to
25000 ha
Mumbai for
future
2010
expansion
Commenced
commercial
production
from the
Bihar unit
Introduced
products in
Northern
Formed a whollystates like
owned subsidiary
in Singapore under J&K, HP, MP,
etc.
the name of JVL
Overseas Pte. Ltd.
Achieve
d
highest
ever
turnove
r growth
of over
60%
2011
Globoil
India
Legend
2011, awar
d received
by the
Chairman
JVL Agro
Industries
Limited
7

8. Addressing Wider Market Through an Intelligent
Product Mix
One of the leading
brands in
Central, Northern
and Eastern India
• Jhoola
Leveraging its
established Brand
power to sell all its
products
• Refined Palm Oil
• Refined Soybean
Product Mix
• Saturated fats
• Palmoline Vegetable
Oil
In India Palm, Soybean
and Mustard
constitutes 75% of total
edible oil consumption
• Mustard Oil
• Fatty Acid
Customised Packaging
From 200 ml to 1 litre to
15 kg
Addressing the varied
needs of all income
segment .
JVL’s complete product mix helps in addressing different sections of consumers in different
parts of the country.
8

9. Cost Efficient Production Facilities
One of the lowest per ton
production cost
Single largest Saturated fats manufacturing unit
in India
Reduced packaging cost
In-house facility for packaging material production
Reduced power cost
compared with the
prevailing grid tariff
A 3-MW captive plant in the Varanasi
facility, fulfilling most of unit’s power requirement
Better bargaining power
and logistical
competitiveness
Northern and Central India’s largest crude oil
importer
Informed decision making
Invested in ERP for transparency,
enhanced scalability and accuracy
Uninterrupted raw material
supply
Trusted 2-decade relationship with suppliers
locally and internationally
Over 80% capacity
utilisation in Varanasi, Bihar
and Alwar units
Enhanced capacity utilisation
Lower overall
production
cost and better
sales margin
9

10. Current Production Capacity
Saturated fats and Edible oil production capacity
Plant Location
Product
Capacity (TPA)
UP and Bihar
Saturated Fats
198,000
UP and Bihar
Refined Palm Oil
231,000
UP
Refined Soybean Oil
33,000
Rajasthan
Mustard Seed Crushing
80,000
Rajasthan
Solvent Extraction
90,000
Packaging material production capacity
• 1,800,000 HDPE jars per annum
• 4,200,000 tins per annum
• Also manufactures the handles and caps required for the containers
Oil Production Capacity of 1,400 TPD (as on March 31, 2010)
TPA – Tonnes Per Annum; TPD – Tonnes Per Day
10

11. JVL’s presence in India
Mumbai
Ludhiana
Delhi
Varanasi
Guwahati
Haldia
Bihar
Feeding point
Alwar
Krishnapatna
m
Marketing area
Manufacturing location
Proposed location
11

12. Edible Oil Sector Overview
Does India have enough edible oil?
Indian Edible Oil: Rising Demand-Supply gap
Consumption (LHS)
MMT
Domestic Production (LHS)
18.0
9.1
14.0
5.7
5.5
5.2
10.0
8.0
2.0
10
9
8
7
6
5
4
3
2
1
0
5.8
12.0
4.0
9.2
8.4
16.0
6.0
MMT
Demand - Supply Gap (RHS)
12.2
12.0
6.5
11.9
7.0
6.2
7.2
16.6
15.6
15.0
13.0
6.6
6.5
7.4
0.0
2005
2006
2007
2008
2009
2010
Consumption
Production
Gap
• Consumption has
been growing at 59% annually
• Domestic
production lags at
2% p.a.
2011
• Domestic
production can’t
keep up with the
demand.
12

13. Palm Oil Positioning
Incremental demand to be met by Palm Oil
World Palm Oil Production 2011
Colombia
2%
Indian Edible Oil imports – Palm leads the
way
Nigeria Others
6%
2%
Palm
Thailand
3%
Malaysia
37%
Indonesia
50%
Soyabean
8000
7000
6000
5000
4000
3000
2000
1000
0
2007
Others
73%
2008
2009
2010
2011
•Palm Oil easily available
• India is the world’s largest consumer of Palm oil
•Palm oil plantation is not dependent on the vagaries of
•Palm oil available from Malaysia and Indonesia, will
monsoon.
account for a large part of incremental import growth.
•So being a crop that gives fruits for 21 years, it does not
•Indonesia better option due to higher production .
have the volatility of production.
13

14. Palm Oil Business Cycle
Indonesia’s Expertise
India’s Expertise
Plantation
CPO
Productio
n
Refinery
Packaging and
Branding
Distributio
n
14

15. Summary
India/Nigeria Opportunity:
India and Nigeria offer huge growth potential in Palm Oil space
(From consumption and Production Perspective)
JVL Agro Presence:
JVL Agro is expanding, set to become one of the largest
players and requires assured supplies of Palm Oil.
• Currently sourcing through traders in Singapore.
• Current import of Palm Oil: 500,000 TPA
• Requirement in coming years: 2,000,000 TPA
15

16. Way Forward
Strategic Intention
• Step 1
Start buying directly from Nigeria and / or Indonesia in
association with a local partner.
• Step 2
Setup a Refinery of 1000 TPD and packing facility in Nigeria
/ Indonesia at a suitable location preferably in Joint
Venture.
• Step 3
Setup plantation and crushing mill in Nigeria and / or
Indonesia with 75 k hectare as cultivated land in the next 5
– 7 years preferably in Joint Venture (Public Private
Partnership –PPP Mode).
Investment Required
16

17. •FDI in Retails
•Service Sectors
•Infrastructure
•Agriculture

18. Perceived Key Growth Driver under developing scenario
Economic Growth : The per capita Income
Expanding Middle Class : Most Popular income sector to be touched
for vibrant share.
Rapid Urbanization : Incremental Migration rate breeding varied
problems.
Investment in Infrastructure : Mainly in power, telecommunication,
road, railways and oil pipelines.
Rising Brand Consciousness : Globalization is fascinating 60% of the
population is below the age of 30
have exposure to Western
consumption

19. Rationale for FDI in Retail
A.
Competition :
 Catalysts to spur competition & innovation in retail industry.
 Ensure highly efficient-low margin business model.
B
Consumers
Improved product availability, quality & reduce wastages.
 Consumers to get best products and services at reasonable price.
C.
Back End & Supply Chain Improvement :
Inadequate storage facilities cause heavy losses to farmers.
25%-30% of F&V and 5%-7% of food grain in developing countries are wasted.
 Chance
to
Strengthen
agriculture
infrastructures
for
Food
Availability, Accessibility and Affordability leading towards parity in consumption.
FDI in retail to bring investment, technology, management know how etc.
Food inflation and fluctuation in food prices can be controlled.

20. Rationale for FDI in Retail
D.
Better Realization for Farmers :
Today, Intermediaries dominate the value chain.
Nigerian farmers realize only 1/6th of the total price paid by the final consumer
against 2/3rd by farmers in nations with a higher share of partial organized retail.
FDI to ensure better realization for farmers & producers.
F.
Economic Growth :
Sourcing from India will increase. Exports to get significant boost.
Nigeria can also become a shopping destination for the world in Selected sector.
Expansion of stores and operations lead to employment generation .
Sectors like Agriculture, Textile and Handicraft will get a significant boost.

21. Contribution Respective
to GDP
12%
India
6%
14%
Japan
8%
20%
Brazil
China
USA

22. US
France
UK
Germany
US
Sales:
$374.5 bn
Sales: $130
bn
Sales:
$102.6
billion
Sales: $101
billion
Sales: $77.3
bn
Earnings:
$12.9
billion
Earnings:
$5.2 billion
Earnings:
$1.5 billion
Earnings:
$4.2 billion
Stores:
6,800
worldwide
Stores:
87,422
worldwide
Earnings:
$5.5 billion
Stores:
3,729
worldwide
Stores:
2,221
Stores:
2,258

23. US
Taiwan
Malaysia
Thailand
Organised
Indonesia
Unorganised
China
India
0
20
40
60
80
100
US
Taiwan
Malaysia
Thailand
Indonesia
China
India
Unorganised
15%
19%
45%
60%
70%
80%
95%
Organised
85%
81%
55%
40%
30%
20%
5%

26. •Increase in consumer class.
Consumer class will grow
Upper class
from 50 million at present to
583 million by 2025.
With more than 23 million
people taking their place
among the world’s
wealthiest citizens.
Middle class
Lower class

27. SKILLED
WORKERS
INFLATION
COMPETITION
REAL
ESTATE
PROBLEM
TAXATION
POLICIES
PROBLEM IN
RAISING
FUNDS
MARKET
POWER
SUPPLY CHAIN
MANAGEMENT

28. • Major challenge faced by Organized retail sector:
In Retail, over 70 per cent of the labor force in
both sectors combined (organized and unorganized)
is either illiterate or educated below the primary
level.
• Labor Laws

29. • Investment into warehouse and cold storage chain will
result in significant efficiency on supply chain.
• Farmers benefited through direct marketing and contract
farming programme.
• Improves farm production through modern techniques.
• Increasing availability of low interest credit for farmers.

30. Go SLOW
•
•
•
•
•
•
•
Environment
Lack of Historical data
Continuity
Poor Documentation
Fixing Liabilities
Dying Zeal
Trading Hub leaving no avenue to struggle

31. 31