X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Edible oils: Slip n’ shine… - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Aug 24, 2002

    Edible oils: Slip n’ shine…

    India is the 4th largest oilseed producing country in the world, after USA, China, and Brazil, with a harvest of about 25 m tonnes per annum. It produces the largest number of commercial varieties of oil seeds over nearly 28.4 m hectares of land. The major edible oils produced in India are groundnut, rapeseed, soya, cottonseed, sesame seed, castor seed, sunflower, safflower etc.

    In 1996, the Government set up a Technology Mission on oil seeds, to increase production of other oil seeds and oil, and to reduce dependence on imports. The strategy revolved around increasing productivity and encouraging winter (Rabi) crops. This led to a sharp increase in oilseed production driven mainly by rapeseed, sunflower, castor seed and soya. Oil seed production jumped from 6.1 m tonnes in the mid 80's to the current levels.

    Groundnut is the most widely consumed and traded edible oil. India is the world’s second largest producer of groundnut, next only to China. But groundnut being primarily Kharif (monsoon) crop is vulnerable to vagaries of monsoon and also speculative activities. Soya bean is the third largest oilseed crop in India next to groundnut and mustard, and accounts for 25% of the annual total oilseeds and about 10% of total vegetable oils produced in the country. India is also the 3rd largest producer of rapeseed and cottonseed and the largest producer of castor seed globally. The 3 oil seeds - groundnut, soya bean and rapeseed - together account for over 80% of aggregate cultivated oilseed output. Cottonseed, copra and several other oil-bearing seeds too contribute to the domestic vegetable oil pool.

    Edible oil: Vital stats…
    (m tonnes) FY00 FY05E FY10E
    Demand 10 14 19
    Per capita consumption (Kgs) 10 12 15

    The edible oil sector is a large employer with an average turnover of about US$ 10 bn per annum. Added to that the sector earns US$ 90 m as foreign exchange amounting per year. On the flip side, edible oil processing is one of the most polluting industries in India. It generates substantial water pollutants, toxic gases and solid waste.

    In the mid-nineties, India had achieved near self-sufficiency in edible oil production. However, over the last few years, rising consumption (11 m tonnes) and a dip in oil seed output has forced India to become the largest importer of edible oil, with imports touching nearly 5 m tonnes in recent times from 0.1 m tonnes in 1993. Edible oil consumption has been rising at around 5-6% pa.

    Edible oil has nearly 100% penetration in urban as well as in rural areas. Other popular cooking mediums are Vanaspati (hydrogenated edible oil) and ghee (home made butter). Vanaspati penetration stands at nearly 25% at an all India level, significantly higher at 40% in urban areas and 15% in rural areas.

    However, out of the total oil consumption of 11 m tonnes, refined oil accounts for only around 2 m tonnes. Even out of this, only 30% is sold as branded refined oil. Major players vying for this pie are Agrotech, Marico Industries, Ahmed Mills, Godrej Foods, HLL and NDDB. The market is highly fragmented among various brands. ‘Sundrop’ refined sunflower oil of Agrotech is the largest sunflower oil brand with around 13% market share. Marico’s ‘Sweekar’ and ‘Saffola’ together account for another 13-15% share of this market. Other leading edible oil brands are NDDB's Dhara rapeseed oil, Godrej Foods (Godrej Cooklite, Sunflower) with 11% market share and Postman with around 6% market share. In Vanaspati HLL's Dalda is the oldest and largest brand with a 29% market share. Other major vanaspati manufacturers are Wipro, Amrit Banaspati, IVP, Madhusudan Industries, Rasoi and Pioneer Agro.

    Though consumption is increasing at a steady pace, it is still skewed towards unbranded products. Even among branded products, loyalty is not very high. Going forward, the industry will sooner or later need to consolidate, as only then the economies of scale will come into play.

     

     

    Equitymaster requests your view! Post a comment on "Edible oils: Slip n’ shine…". Click here!

      
     

    More Views on News

    Marico: Earnings Hit by Lower Volumes and Firming Input Prices (Quarterly Results Update - Detailed)

    Aug 9, 2017

    While GST implementation brought down volumes and profitability in the short run, Marico remains optimistic in the long run.

    P&G: Strong Core Growth (Quarterly Results Update - Detailed)

    Dec 9, 2016

    Procter & Gamble Hygiene and Health Care has announced the first quarter results of the financial year ended June 2017 (1QFY17). The company's sales rose by 12.5%YoY while net profit rose by 50.1% YoY during the quarter.

    Nestle India: Sales Traction From New Products (Quarterly Results Update - Detailed)

    Nov 30, 2016

    Nestle India declared results for the quarter ended September 2016. Here is our analysis of the result.

    GSK Consumer: Price Hike Hurts Volumes (Quarterly Results Update - Detailed)

    Nov 30, 2016

    GSK Consumer Healthcare declared results for the quarter ended September 2016. The revenues dropped by 1.3% during the quarter as compared to a year ago; while the profits declined by 16.6% YoY during the quarter.

    Marico: Margin Expansion Drives Profit Growth (Quarterly Results Update - Detailed)

    Nov 28, 2016

    Marico has reported a flat topline while the bottomline has grown by 18% YoY during the quarter.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE FMCG


    Aug 18, 2017 (Close)

    S&P BSE FMCG 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS