MARKET SITUATION &

OPPORTUNITIES IN INDIA

Bhavna Shah, Regional Manager India & Sri Lanka

WHAT DOES INDIA STAND FOR TODAY? A COUNTRY WITHIN A

COUNTRY § Worlds largest democracy.

§  325 languages spoken – 1,652 dialects

§  28 states, 7 union territories

§ Area 3.28 million sq. kms

§ 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!

•  Agriculture 24% of GDP Manufacturing: 24%

•  Services: 51%

§  GDP growth rate 6.9 %

§  Diverse Climate: Tropical south to temperate north

§  IMF has ranked India at the 11th largest economy

Key Economic Indicators

India has been ranked as the 10th largest economy by the World Bank •  Strong macro-economic fundamentals

Ranked 3rd in terms of Purchasing Power Parity •  Fast growing significant economy despite

global slowdown

Oilseeds Production

Source: Directorate of Economic &Statistics, GOI

2012-13(P) 2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02

Castor Linseed Niger Safflower Sunflower Soybean Sesamum & Mustard Rapeseed Groundnut

Vegetable Oil Imports

Source: SEA

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13(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

PALM OIL vs OTHER OILS IMPORTS

Source: SEA

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13(P)

POP

OTHER OILS

INDIAN PER CAPITA CONSUMPTION (kgs)

Source: Oil World

0

200

400

600

800

1000

1200

1400

2008 2009 2010 2011 2012

Population (Millions)

Per Capita (kgs)

DEMAND SENSITIVITY ANALYSIS

YEAR   POPULACE   OIL  CONSUMPTION(kg/capita)      

    Millions   14.6   15   15.5   16   16.5   25.5  

                               

2011   1,241   18.12     18.62     19.24     19.86     20.48     31.65    

2012   1,258   18.37     18.88     19.50     20.13     20.76     32.09    

2103   1,276   18.63     19.14     19.78     20.42     21.05     32.54    

2014   1,294   18.89     19.41     20.05     20.70     21.35     32.99    

2015   1,312   19.15     19.68     20.34     20.99     21.65     33.46    

2016   1,330   19.42     19.96     20.62     21.29     21.95     33.92    

Source: MPOC Intelligence

INDUSTRY GROWTH

PROCESSED FOODS FAST FOODS

FAST MOVING CONSUMER GOODS

SECTOR

DEMAND DRIVERS

OLEO CHEMICALS SOAPS / PERSONAL CARE

BIO- DIESEL

Consumption of Basic Oleochemicals 2013

Fatty Acid 88%

Fatty Alcohol

5%

Glycerine 7%

Volume of basic oleochemical consumption = 970,000 Mn MT in FY 13

Soaps Accounted for the Highest Consumption

Soaps 72%

Personal Care 8%

Detergents 5%

Plastics 4%

Rubber 4%

Tobacco 3%

Processed Foods

2% Pharma 1%

Others 1%

Consumption Breakdown

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 FY13-20. ■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 FY13-20. Oleochemical demand from Soaps and Rubber are expected to be grow the slowest at 4-5% CAGR over FY13-20.

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

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.

FSSAI to Replace Following Acts

Salient Features of FSSAI

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

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

Key Growth Drivers

Changing Lifestyle

Increasing Nuclear Families

Increasing Women

Workforce

Increasing fad for

heath and functional

foods

Increasing disposable

incomes

Key Opportunities in Food Processing Sector

1 •  Processable variety of crops

2 •  Contract Farming

3 •  Integrated Cold Chain

•  Change in Food Safety Management

Nutraceuticals & Cosmeceuticals

Tocotrienols Tocopherols Blends

Conclusion

Direct Indirect

India is a land of opportunities for Palm Oil Products.

THANK YOU PALM OIL – The Oil For The Future

THANK YOU