Salt Industry Analysis

Salt is one of the most essential commodities in households. The Salt Satyagraha was a campaign of non-violent protest against the British salt tax in colonial India which began with the Salt March to Dandi on March 12, 1930. It was the first act of organized opposition to British rule after Purna Swaraj, the declaration of independence by the Indian National Congress.

The art of salt making in India has been carried on, from the time immemorial. In India manufacturing of salt along with sea coast in Bengal, Bombay, Madras and the Runn of Kutchch, flourished as cottage industry for centuries

The history of Salt production can be traced back to the don of human civilization. In ancient time when seawater evaporated in pits, white layer was formed and it was found tasty and people started consuming it. The white layer was nothing but ‘Salt’. Like this it was the beginning of civilization as well it was the beginning of salt production. This has a long and intriguing history.

During the British regime the indigenous salt manufacturing in certain region of the country was so much suppressed that the local Salt Producer lost their lively hood due to closure of their self employed units, on the other hand salt was imported on the pretext that Indian Salt is black. This challenge was accepted by Indians and a best salt works was designed not only for human consumption but also for industrial use in 1924 at Tata Chemicals, Mithapur. Since than, Indian Salt Industry not lagged behind in production of salt. Salt Production touched about two millions tons by 1947.

While the salt industry generally refers to the top global dry salt producers, many smaller community or family businesses and their distributors can be considered part of the industry for their roles in salt “farming” and channeling the product to local and global markets

Salt’s role in Indian Independence

The government dictated that the sale or production of salt by Indians was a criminal punishable offence and this had an impact on all of India as salt was a basic need.

The Dandi march

Hurt the very core of the British belief that the common man hardly cared.

The Indian Kitchen Salt Market Brand Warso India is the third largest salt producer(after US and China). o Average annual production of about 148 lakh tones. o Exports Salt from 1953. o Exports touched an all time high of 1.6 million in the year 2001.o Exported to Japan, Philippines, Indonesia, Malaysia, Nepal, and Bhutan etc

Size of salt industry:

Salt Production touched two millions tons by 1947. According to ORG-MARG's retail store audit data , the size of the iodized

branded salt market is estimated at 15 lakh tonnes per annum (by value, about Rs 500 crore)

Now, salt production of India is 18 to 20 millions tons per annum . Average annual production of about 148 lakh tones in India.  Exports touched an all time high of 1.6 million in the year 2001. The salt consumption for edible purpose is 6 million tons per annum. The capacity

of iodization plants is 16 million tons with 42 refineries and two giant vacuum salt plants. . Indian salt industry is ready to meet the growing demand of iodized salt.

Growth of salt industry:

‘Indian salt Industry’ is going global by adopting modernization / mechanization.

Indian salt industry is estimated to be growing at 20 per cent annually.

India, particularly Gujarat has very long coast line with favorable climatic conditions; has potential to increase salt production in many folds and to export about 10 millions tons salt per annum

The Indian Salt Manufacturers Association is an apex body of Indian salt manufacturers. There is “Central Salt and Marine Chemicals research Institute” at Bhavnagar in Gujarat. Their main function is to help salt industry through their research work. This institute was established in 1956. In addition to R & D work the institute provides training courses for salt manufacturers for salt production & quality.

The production of iodized salt is now more than 5.0 million tons as against the total requirement of 6 million tons of edible salt. There are 900 iodization plants the usual process of iodization adopted is spray method with acapacity of 16 million tons per annum. There are 42 salt refineries with a total capacity of 3.76 million tons per annum located in the states of Gujarat, , Tamil Nadu, Uthar Pradesh, Rajasthan.

Production areas PercentageGujarat 70%Tamil nadu 15%Rajasthan 12%Others 3%

percentage

gujarat

tamil nadu

rajasthan

others

. In addition to above there are two giant vacuum salt plants of capacity one million tons.Other varieties of edible salt consumed in India are Iron Fortified Salt,Double Forfeited Salt.

• Minor Ports have loading capacity 5000 tons /day to 20000 tons /day in mid stream loading where as big port like Kandla have achieved the av. rate of loading of 25000 tons / day. We have a big advantage that ships of the capacity from 5000 tons to 100,000 tons could be loaded at our ports. There is potential for developing more ports as per requirement. In south India there is also a big port, Tuticorin close to salt manufacturing area.

• Now only 20% industries have gone for mechanization and modernization, 50% from balance can also go immediately.

• Average yield of salt works is only 100 tons per hectare. This can be increased to

300 tons per annum by adopting modernization.

Towards universal salt iodization: 34 countries have reached the target Percentage of households consuming adequately iodized salt (2000–2007)

Major players and their Market share :

National brands take a 45 per cent share, and local brands account for the remaining 55 per cent share of this market.

Tata and annapurna are market leadersCaptan cook and ashirwad are market challengers.Nirma, dandi, and nature fresh are market followers.

Domestic players CapacityTata salt 40%Annapurna 20%Captain cook 10%Ashirwad 4%

Nirma 5%Others 21%Source: Industry, ORG MARG

capacity

Tata salt

annapurna

Captain cook

Ashirwad

Nirma

others

Differentiation

The various differentiators are `free flowing', `iodised', `granular' and `vacuum evaporation' actually influence brand purchases when salt remains a low-value, low-involvement product with few differentiators of significance? emphasis is being laid on manufacture of high purity salt.

TATA SALT

(Following text is from the press release of Tata Group)Vacuum evaporation process is the purest one currently used only by Tata Chemicals and Nirma. Rest of the large players follows only the refining process. The "free flowing" quality is imparted by introducing certain additives in the manufacturing process. Having launched in ‘83, Tata Salt has been a pioneer in the packaged salt industry and has secured first-mover advantage in the market. But Tata Salt has managed to retain its position as the market leader. The brand has actually grown in value and volume and accounts for around 36% share of the national brandedThe most important competitive advantage in this market is distribution. The ability to get your product to as many outlets as possible and to ensure its availability on a continuous basis is the biggest challenge facing producers. This is so because salt is a basic necessity (not a luxury) with little relationship to personal income that is the salt consumption per person is not likely to vary significantly by income levels. Distribution is a challenge because salt is a low value commodity (probably the lowest value to volume ratio among consumer products) and cannot bear sufficient margins for trade.

To ensure that its sales grow at a sustained rate, Tata Chemicals is leveraging on its strengths- distribution, premium quality (vacuum evaporated) and brand equity (fourth most trusted brand). Tata Chemicals has created a dealer penetration level that is hard to match and it is also looking at exploring avenues to expand its portfolio in the branded salts segment. The company has awarded Bates India with the creative duties for their flagship brand. The account, which was previously with Publicis India, is valued at Rs 8 crores in billing terms. Tata Chemicals had recently conducted customised training programmes for its channel partners — distributors and their field force — with the aim of making Tata Salt’s position even stronger in the Indian market.

These programmes are part of a long-term process by the company to build and improve partnerships with its marketing and distribution partners, better teamwork between manufacturer, marketeer and channel partners and leverage resources in a focused manner. Tata Salt has the intrinsic equity and strength needed to shoulder such an emotional platform. We have reaffirmed our leadership position by changing the category paradigm of health and taste. While Tata Salt has so far been positioned on the rational aspects of ‘purity’ this new positioning places this very proposition within the larger context of the consumer’s life, encompassing both rational and emotional manifestations of purity. It thus juxtaposed the ‘kharapan’ of the product against the honesty and integrity of ordinary Indians. Thus, it reinforces the brand’s leadership position, both in the marketplace and in the minds of Indian consumers.

First Branded Salt

Highlighted the issues of impurities in other salts sold

Freshness Purity…99.8 %

Price…Rs. 8/- Kg for premium segment and Rs. 5/- Kg. for semi urban and rural segment

Tag line “maine desh ka namak khaya hai”

Quality

Convenience

Salt of the Nation’ – emotional connect

Trust and value

ANNAPURNA SALT (FROM HUL) Iodine deficiency is a serious health issue in India. Annapurna salt has played a big role towards reduction of iodine deficiency by providing its consumers with the Right Level of Iodine as prescribed by the Indian government and international standards. Annapurna salt was the first in the world to be endorsed by The International Council for Control of Iodine Deficiency Disorders (ICCIDD). Annapurna has also taken initiatives to educate consumers about the benefits of iodine and its effect on the mental development of growing children.

Annapurna salt team's strategy: - They aims to increase the range of HUL products in rural markets by taking market share from local players and establishing brands that are not currently in the market. Although New Ventures does not yet receive pressure from other HUL business units to push a particular unit's products, Dhall (Senior Officer at HUL) expects and hopes this will happen once Project Shakti proves itself.Project Shakti was initially launched with personal products only; soaps and detergents and popular foods (including Annapurna salt) were added to the product offering in 2003. Personal products currently comprise 16 percent of sales. Beverages were also added in 2003. HUL already has a strong presence in the rural markets with soaps, talcs, and shampoos and is now focusing on dental products. The Shakti team is instructed to delicately balance the push between brands generating higher margins with those the market dictates. Marketing Annapurna Through Project Shakti True to HLL's vision of eventually converting Captain Cook customers to Annapurna, Captain Cook is not sold through Shakti. A picture of a laughing sun (i.e., the universal symbol for iodine) is printed on all Annapurna salt packaging so that those speaking other languages or even the illiterate can recognize the symbol and identify Annapurna salt. The Pracharani distributes pamphlets and other educational material on IDD during SHG meetings. Other educational marketing initiatives such as a two-week Annapurna salt drive and Iodine Day (as a part of World Health Day) further the stable iodine message in rural markets. The overall market for branded salt is growing rapidly as consumers become more aware of health and quality issues. The packed salt market is growing at rate of 4% per annum and the large brands’ growth is estimated at 7% per annum.

Captan cook

While Captain Cook is positioned on the basis of its unique selling point, the free flowing nature of its salt, Tata Salt is positioned on the purity platform and Annapurna is positioned on the health benefit impact of the iodine content in the salt." Tata Salt, the first branded salt in the country, was launched in 1983, DCW launched its brand in 1991 and Hindustan Lever’s Annapurna was launched in 1996.

Nutra salt

NUTRASALT (A product of Dabur)

In January 1998, Dabur India Ltd. (Dabur), the owner of popular FMCG brands in the country launched salt under the brand Nutrasalt. Dabur advertised Nutrasalt as a salt with low sodium content and positioned it on the health platform.Claiming that the excess amount of sodium in other salt brands was not good for health, Dabur priced the brand at a premium over other brands in the country. While the other brands retailed for around Rs 6-7 per kg, Dabur surprised industry observers by pricing Nutrasalt as high as Rs 20 per kg. Nutra salt,(of dabour India) a low sodium salt and Saffola Salt (marico industries), which is a mineral enriched low sodium salt respectively. Both the above brands are positioned on the health platform and are priced at a significant premium to the normal salt brands.

DANDI SALT

The brand is being advertised heavily on the regional channels and it has managed to gain around 0.97 share of the branded salt market.

SAFFOLA SALT (A product of Marico Industries) In November 1998, Marico Industries, which owned the popular Parachute (hair oil) and Saffola (cooking oil) brands, launched Saffola salt. Marico joined the Nutrasalt category of premium salts by pricing Saffola salt at Rs 20 per kg. Saffola salt was packaged in a reusable jar and was also positioned on the health platform with its mineral enriched low sodium salt.

SHAKTI BHOG AND GOOD HEALTH SALT Shakti Bhog and Good Health are the only two brands with ISI Mark.

DIFFERENT SALTS FROM SABOO SODIUM CHLORO LTD. (Following text is taken from the official website of the Surya Salt). Saboo Sodium Chloro Ltd., is the first and the largest Salt Refinery in North India. The Company has successfully launched its three brands, namely, 'SURYA' SALT, 'SABOO' SALT, and 'TOTA' SALT. 'SURYA' Salt reflects the rich ethnic culture and tradition of Rajasthan known for centuries as the land of RAJPUT warriors, their valour and bravery. 'SABOO' SALT is being introduced as salt of the EARTH using vibrant colours. Our product is NATURALLY Free Flowing and does not contain any harmful anticaking agents which are present in all other brands of free flowing salt. This has been possible because we use imported state-of-art plant & technology and apply most modern techniques to make it NATURALLY Free Flowing without addition of any harmful anticaking additives.Further they claim that most of the manufacturers of free flowing salt are adding 0.85 to 1.00% anticaking agents for making the salt free flowing. However, SABOO, SURYA & TOTA brands of salt are different from other brands of salt, in that they are drawn from pollution free subsoil brine water of Sambhar Lake, famous for centuries as the source of finest quality and healthy salt. These salts are also iodized, treated and packed at most hygienic state-of-art and sophisticated Plants and contain no organic chemicals. They further say that other manufactures make salt from sea water which is open to all kinds of impurities/pollutants like sewage, oil spillage, dead animals, industrial effluents etc. Test Report of the various brands of Surya.

S.NoCharacteristicTest results1Moisture, % by mass0.092 %2Water Insoluble, % by mass0.098 %3Acid Insoluble, % by mass-4Chloride Content (as NaCl), % by mass99.10 %5Calcium (as Ca), % by mass0.32 %6Magnesium (as Mg), % by mass0.044 %7Sulphate (as SO4), % by mass0.281 %8Alkalinity (as Na2 Co3), % by mass0.140 %9Iron (as Fe), ppmNil10Iodine Content (as I), PPM30 PPM11Practical Size (a) 24 Mash (b) 100 Mash+ 2 %+ 96 %

Recent trends in salt industry

As we know production of salt is 18 to 20 million tons per annum and it is the third largest manufacturer of the world. Out of this 3.5 millions tons salt is washed in mechanized washing plants & upgraded to international standard having purity 99.5%.& it is exported to countries like Quatar, Japan, etcIn order to meet the increasing demands of high quality salt more of 15 salt washing plants have come up .Not only this the price of above salt having such purity is even entertaining marginal profits of 15-16 USD per ton  Edible salt is also meeting up with the new challenges faced of supplying iodized salt (for promotion of health).The production of iodized salt is now more than 5.0 million tones as against the requirement of 6 million tones. With 42 new salt refineries all over salt production sites of India & new varieties like iron fortified salt, double fortified salt, health salt the production is increasingNew export demands have also come up from Korean conglomerate Samsung corporation to source a large percentage of salt from India this would not only help in economical boom but also increase the share of salt production by IndiaSalt exports which were restricted to Bangladesh ,Honk Kong,  Thailand would be removedThis would be beneficial to salt manufactures from Rajasthan Tata Chemicals is weighing the possibility of foraying into the low-volume, high-margin business of flavoured salt. Industry sources said the company would target the global markets, and produce the quality accordingly.  Although the company will produce the salt in India, it would export its flavoured salt to international destinations such as south-east Asia, the Middle-East and

Europe. Flavoured salt, which has an aroma, is mainly used in cooking non-vegetarian food items like fish, chicken and meat.

Internationally, various flavours such as lime, rosemary, basil, sariette, marjoram and thyme are available. The commodity is also available in certain select shops in India.  Although the market for flavoured salt is still in its infancy, it is emerging a potential market for chemical companies both in India and abroad.  The market potential for the commodity was not immediately available as it is a niche market and the Tatas are believed to be only evaluating demand for the product.  

 

SALT PRODUCTION IN THE COUNTRY INCLUDING UN-RECOGNISED SECTOR FROM 1947 TO 2005 ('000 MT) YEAR PRODUCTION YEAR PRODUCTION 1947 1929.8 1977 5328.5 1948 2374.8 1978 6693.5 1949 2075.8 1979 7037.0 1950 2661.9 1980 8007.4 1951 2776.1 1981 8923.2 1952 2868.9 1982 7308.4 1953 3213.2 1983 7004.8 1954 2758.6 1984 7652.9 1955 3025.2 1985 9874.9 1956 3317.6 1986 10111.5 1957 3670.1 1987 9899.5 1958 4195.7 1988 8311.5 1959 3177.9 1989 9870.3 1960 3435.5 1990 12398.0 1961 3480.6 1991 12394.6 1962 3886.1 1992 13552.8 1963 3544.1 1993 13727.8 1964 4646.8 1994 12344.2 1965 4119.3 1995 12544.0 1966 4521.5 1996 14466.1 1967 4488.2 1997 14251.1 1968 5043.7 1998 11964.4 1969 5173.4 1999 14452.7 1970 5588.2 2000 15651.3 1971 5426.1 2001 14284.0 1972 6517.1 2002 17879.2

1973 6860.2 2003 14882.4 1974 5912.9 2004 14761.2 1975 5842.9 2005 19923.9 1976 4076.4 2006 18850.0

Striking improvements in the use of iodized salt Percentage of households consuming adequately iodized salt, selected countries (around 1995 and around 2005)

 

Private sector plays a dominant role contributing over 97% of the salt production.while the public sector contributes the rest. Co-operative sector contributes about 7% whereas the small-scale sector (less than 10 acres) accounts for nearly 30% of the total salt production in the country.

 

Threats of new entrants

Potential for the Growth of Salt Industry• India has very long coast line and out of that Gujarat Coast line is of 1600 Kms• In Gujarat in addition to existing salt industry lot of Land available along the side ofcoast for developing more salt works.• Climatic conditions are suitable for salt industry.• Easy Availability of skilled labours• Good Administration of our Govt. and their Corporation.• Our low cost of production• Govt. supports for critical infrastructure facilities.• Minor Ports have loading capacity 5000 tons /day to 20000 tons /day in midstream loading where as big port like Kandla have achieved the av. rate ofloading of 25000 tons / day. We have a big advantage that ships of the capacityfrom 5000 tons to 100,000 tons could be loaded at our ports. There is potential fordeveloping more ports as per requirement. In south India there is also a big port,

Tuticorin close to salt manufacturing area.• Now only 20% industries have gone for mechanization and modernization, 50%from balance can also go immediately.• Average yield of salt works is only 100 tons per hectare. This can be increased to300 tons per annum by adopting modernization.Opportunities• Export Market- 1) Quatar 2) Malaysia 3) Philippines) Japan 5) China 6)Vietnam 7) Indonesia 8) Nepal• India’s location is very suitable to supply salt to China, Japan, MiddleEast and to other Asian countries.• India has potential to increase productivity as well as quality.• Available manpower.

Proceedings of the 2nd International Conference on the Ecological Importance of Solar Saltworks (CEISSA 2009)Merida, Yucatan, Mexico, 26 – 29 March 2009189

“THE STATUS OF SALT INDUSTRY IN INDIA”D.S.JHALAChairman“Dev Salt Private Limited”88- Panchvati Society,Bedi Road, Jamnagar-361002, Gujarat,INDIA

Bargaining power of buyers

There is plethora of players in the salt industry. There is not much difference in the product quality as the raw material is same, the constituents are same; the difference is in the positioning of brands. . Also price range is between 10-12Rs per kg therefore brand loyalty can be easily retained. Since the product is a necessity so unavailability of one may lead to switching over. The competitive advantage will be strong supply and chain logistics. Bargaining power of buyers will not gain much relevance in salt industry as -there is less fluctuation in prices.-per capita consumption is 12 kgs including both edible and industry salt.

Threat of substitute

There is plethora of players in the salt industry. There is not much difference in the product quality as the raw material is same, the constituents are same; the difference is in the positioning of brands. . Also price range is between 10-12Rs per kg therefore brand loyalty can be easily retained.

Rivalry among existing firms

-TATA is a clear market leader in salt industry.-we have achieved surplus in the edible salt industry in 1950s so the supply is more than demand thus showing the sign of maturity stage in the salt industry.-also the people of bottom of pyramid have easy access to non branded salt.Thus giving a space to the unorganized sector.

BARGANING POWER OF SUPPLIERSThere is a clear market leader i.e. tata salt. The share of tata salt in the branded market segment is 60 percent. There is no near competition to existing brands according to their market share. Besides the market of branded salt is growing at 20% so there is great scope for brands to put forth themselves because of prevalence of almost 40% unorganized sector .

Environment analysis

Political factors:

 The imposition of value-added tax (VAT) …4% on salt will have multi-dimensional impact effecting consumers compromise on purity and hindering iodization programmes. This move is likely to adversely affect the multiple small players doing their best to provide processed, iodized salt to the consumer. As per an ORG survey, over 60% of the branded salt segment is dominated by local brands. Imposition oftax will serve as a strong disincentive to the efforts of this community, since they would be at a disadvantage as compared to loose, bulk, unbranded, directly-from-sea-to-market salt merchants.

Economic factors:

Socio-cultural factors:

Technological factors

Future prospects of salt industry:

Still 70% of total market is in the hands of Unorganized sector.

Brand switching extremely easy and brand loyalty very difficult to attain

Intense struggle in terms of positioning and promotion

Companies are reluctant to enter the market