Fortune Vs.

Saffola

The competitive edge of Adani Wilmar over

Marico.

GAURI
AJAY SHARMA
PRADEEP AGARWAL
ANKIT SINGH
MITHILESH
VIMAL SINGH
The Edible Oil Industry
The Indian edible oil economy is 4 th largest after U.S,
China and Brazil, harvesting about 25 million tonns of
oilseed.
India’s share in world production around 10%.
The Indian edible oil industry can be classified into the
following segments. Ghanis, small.scale expellers, solvent
extractors, oil refiners and vanaspati manufacturers.
Vegetable oil consumption has increased due to an
increase in the income level of population
India imports half of its edible oil requirements , making
it world’s 3rd largest importer of edible oil.
15000 oil mills,711 solvent extraction units and 284
vanaspati plants; and over 1000 refineries employing
over 1 million people
Total market size of about Rs. 600 billion and import-
export trade is worth about 130 billion.
India’s edible oil industry is growing at a compounded
annual growth
 Major players
Edible oil
National Dairy Development
Board(Anand)
ITC Agro-Tech (Secunderabad)
Marico Industries (Mumbai)
Ahmed Mills (Mumbai)
Adani Wilmar ( Mundra Port )
Vanaspati
Hindustan Unilever(Mumbai)
Wipro (Bangalore)
Rasoi (Kolkata)
Avi Industries (Mumbai)
The Breakup
The Indian edible oil industry is highly fragmented
with a large number of small scale producers.
The ghanis belong to the SSI segment and usually
serve the rural markets.

Out of the total production 70% comes under the

unorganized sector, the branded oil constitute about
30%
 FORTUNE

FORTUNE SAFFOLA
OTHERS 19%
32% SUNDROP

SAFFOLA POSTMAN
18%
NATUREPOSTMAN SUNDROP NATURE FRESH &
FRESH & 6% 13% GEMINI
GEMINI
OTHERS
12%

Source: Comparative study of major players

Competitive Players
National Dairy Development Board – Dhara
Adani Wilmar Ltd – Fortune
Agrotech Foods Ltd – Sundrop
Hindustan Lever Limited – Flora
Panak Foods – Gemini
Ruchisoya – Soyum
Marico Indus. – Saffola
Kaneria Oils – Rani
Geepee Ceval – Chambal
NK Proteins Ltd – Tirupati Aravali ,Aravali
Cargill – Nature Fresh
 Industry Structure
Type of veg. oil No of units Annual capacity Average capacity
industry (lakh MT ) utilization
Oil crushing unit 150000 425(in terms of 10-30%
seed)
Solvent extraction 779 419(In terms of oil 33%
unit bearing material)
Refineries 127 51(in terms of oil) 45
attached with
vanaspati unit
Refineries 225 37(in terms of oil) 29
attached with
solvent unit
Independent 585 35( in terms of oil) 36
refineries
Total refineries 937 123(in terms of oil) 37
Vanaspati units 268 58(in terms of 58
vanaspati, bakery
Consumption Pattern
Extreme variation in consumption. The country’s top
10% of the population consumes 20 kg per capita and the
bottom 30%, less than 5 kg per capita
Strong regional preference for ‘first press’ oils with
natural flavour – mustard, groundnut, coconut oils
Per capita consumption of edible oil (year wise)
Edible Oils 12.7 million MT
Oils 11.2 million MT
Vanaspati 1.5 million MT 
TYPES
Semi-Processed and Processed
Ready to Eat and Snack food
 NATURE OF THE PRODUCT
MARKET
Oils: primarily a commodity market - price sensitive
Effective distribution chain - through a complex network of C&F
agents, wholesalers / stockists & retailers (kirana shops, supermarkets)
Oil sold in bulk (tin, HDPE containers) to institutions; In retail packs
(PET bottles, cans, jars, pouches) to small customers
Most vegetable oil is purchased by household or industrial buyers,
food processors, restaurants and hotels.
Seasonal demand for oils & Vanaspati - September to November
(peak season)
Regulation : Under the Edible Oils Packaging (Regulation) Order,
1998,  edible oils cannot be sold ‘loose’ but can be sold only in
‘packed’ form 
Oil consumption - North is largest market, followed by South, West &
East zones.
Key Inputs
Edible Oils - Oilseeds (such as Groundnut, Sesame,
Mustard, Sunflower), oil cakes and bran
Vanaspati  - Minor (solvent extracted) edible oils -
Sunflower oil,  Soybean oil,  Ricebran  oil
Raw Material
Comprises 70% of the production cost
Oilseeds - the largest cash crop
Import scenario
Oils and Vanaspati substitutes can be freely imported
under OGL 
Large scale imports of oils and Vanaspati substitutes  -
primarily to check price rise and meet supply shortages
Imports during 2007-08 is 5.46 million  MT 
Estimated imports by 2010 is 7 million MT 
Factors affecting Forecasting

Macroeconomic factors: Population; per capita income;

purchasing power; oilseeds
Other factors: Prices – domestic/international,
Availability - oil, oilseeds
Influence of branded products – ‘ health ’ message
Growing preference for convenience foods
 Market Potential

  
Edible Oil Demand Projection 2004 2010 2015

Total Demand (Mln. Tonnes) 10.9 15.6 21.3

Total Area under Oilseeds (Mln. Hectares) 23.4 28 32

Yield (Tonnes/hectare) 1.07 1.2 1.4

Production of Oilseeds (Mln. tonnes) 25.1 33.6 44.8

Domestic supply of edible oils (Mln. tonnes) 7 10.1 13.4

Total edible oil imports - (Mln. tonnes) 4.3 5.9 8.3

Imports as share of demand 39.40% 38.10% 39.50%

Source: Rabo Bank

Production process
Oil mills crush oil seeds and extract oil, 70% of which
is sold in the open market. The remaining 30% is
refined and sold as branded oil. After the extraction of
oil, residual seeds are processed further by solvent
extractors, to make solvent-extracted oil. Most of the
solvent extracted oil is used to make ‘vanaspati'.
Small scale expellers, much like the ghanis, use metal
screws to press or expel oil from seeds. However, they
are larger than the ghanis, oil expelling capacity being
in the range of 5-10 tonnes per day, compared to
around 50-60 kilos a day for ghanis.
 Solvent extractors belong to the organized segment and are
also the second largest after the SSI segment, in the domestic
edible oil industry. They use modern technology to process
low oil & high meal seeds (eg. Soya bean, cottonseed) into
edible oil and de-oiled cake.
Oil refining also belongs to the organized sector and has
recorded rapid growth in recent times. Refiners generally
refine both expeller oils and solvent extracted oils.
Vanaspati is made by hydrogenation of refined oil to
vegetable shortening or spread and is similar to the milk
product ghee and absorbs around 10% of the total edible oil
supply in India.
Role of operation manager
1. Planning
2. Scheduling
The responsibilities of an operations manager involves the
process of planning, designing, and operating production
systems and subsystems.
Most operation managers also have the additional
responsibility of quality assurance, materials management and
inventory control, scheduling, and maintenance planning.
When managing warehouse or transport staff, the role
may also include:
Implementing health and safety procedures
Managing staff training issues
Motivating other members of the team
Project management
Setting objectives.
Key market influencers:
 
Prices and demand-supply pattern of other edible oils
in the country and abroad
Monsoon in the country
Pests, diseases and other environmental factors
Speculation and Hoarding
Consumption of by-products
Production fluctuations
Marico industry
Marico is a leading Indian Group in Consumer
Products & Services in the Global Beauty 
and Wellness space
Turn over of about 2.93 billion Rs.
Marico markets well-known brands such as
Parachute, Saffola, Sweekar, Hair & Care, Nihar,
Shanti, Mediker, Revive.
Marico's branded products are present in Bangladesh,
other SAARC countries, the Middle East, Egypt,
Malaysia and South Africa. 
Saffola
The positioning adopted to target health conscious
consumers
The company's continuous efforts in maintaining the
association between Saffola and heart care.
It also deals with Marico's innovations in :
1. product formulation (like the launch of blended edible
oils), 2. product delivery and
3. pricing strategy.
Adani Wilmar group
The AWL was the result of a 50–50 joint venture
between the Adani group and Wilmar Trading Private
Limited (WTPL) of Singapore, made in June 1999, to
enter into the edible oils business.
WTPL had a turnover of US$2.1 billion in 1999. It was
the world’s second largest player in edible oil trade.
Under this joint venture, crude edible oil was to be
sourced and imported from Indonesia and Malaysia,
refined at Mundra and marketed for domestic
consumption.
Fortune
“ Fortune Hai Light. Thoda Aur Chalega” to the joy of
eating and now the new tagline is “ab bas toot pado”.
Fortune (sunflower, kachi ghani) & Raag

:
Target Different brands for different customer types

for eg. Vitamin–E fortified sunflower oil to target

Health conscious customers
 Fortune mustard oil
Fortune soybean oil
Fortune sunflower oil
Fortune mustard oil
Fortune groundnut oil
Fortune vanaspati oil
Fortune vegetable oil
OPERATIONS
The state-of-the-art 600 tons per day (tpd) refinery was
being set up in Mundra with technical know-how from
the Wilmar group.
The company intended to run the refinery at full capacity.
 Almost half of the refined oil would be sold in bulk, in
which case, the buyer would take care of the logistics.
The Other half would be sold through the distribution
network to be set up by the company in the regions
mentioned above.
Prior to the refinery, awl was importing and trading in
both crude and refined edible oil.
Currently, the packing facility was planned at the itself.
Reasons for advantage Adani Wilmar
1.PRODUCTION
Fully automated German technology plant
name of the Vendor for software and machinery : alfa laval
& west falia
vaccum technology: Reynolds(boosters and injectors)
So , shell has perfect vaccum so FFA(free fatty acids)
reduces so quality increases
continuous process :per litre manufacturing cost decreases
 
 
2.INVENTORY
Backward integration:
Less cost ,because it has its own terminals 4 storage of
the raw mat(crude oil)
So they don’t have 2 give d duties and other fares
So negligible freight charges
Strong inventory management : use of software for
inventory management.
3.CAPACITY ENHANCEMENT
Adani has doubled the capacity of its port-based
refinery unit in Haldia to 1,600 tonnes per day by
December 2009.
Total outlay on the project is estimated at Rs 100 crore
including the land acquisition cost.
4. PROMOTION
Proper packaging : do not sells loose oil so brand
awareness increases.
Advertisements
Strong distribution network
 
5. EMPLOYEE MANAGEMENT
Good working conditions
Incentives
Career planning
Performer of the year awards to the top performers.
Social responsibilities
Key Success Factors
Raw material sourcing:  focus on improving yields, 
getting better quality oilseeds, ensuring regular supplies -
through symbiotic relationship with farmer
Branding essential for success (Oils –
Better distribution network to improve reach
Efficiency in operation - to become price competent and
withstand competition
Proposed future trading in edible oils will help curtail
price volatility and lend knowledge-based assistance to
farmers to eliminate unofficial markets
 WHAT DID THEY DO ?

Provided a mix of all elements like product

differentiation, backward integration and entered market
at the right time
Set up its oil refinery at Mundra, Mumbai
Decreased logistics & transportation cost
Decreased the time to market edible oil
The above factors helped shave off a rupee from the
selling price of a litre of oil
Conducted health check-up programs for health
conscious people
Future prospects
This industry is a high volume, medium growth
sector characterized by excess/idle capacities
owing to in efficient operations. Imports have been
influencing prospects, leading to domestic industry
crisis
Forecast: in the next two years soya bean edible oil
market would have 75 per cent market share and
sunflower edible oil 25 per cent market share in the
overall edible oil segment
.
planning to expand the number of sales offices from 55 to
65 within a year. During the period, we will also increase our
retail outlets from three lakh to 4.25 lakh and distributors from
1,600 to 2,200 as well.”
The Rs 45,000 crore edible oil consumption which has been
growing at the rate of six per cent per annum had degrown last
year due to rise in prices and drought conditions.this year due
to good monsoons, we hope the market to grow at the rate of
eight per cent per annum within a year.”
AWL has aggressive marketing plans. The edible oil
industry in India is estimated at 13 million tonnes, out
of which around 20 per cent is in the branded category.
According to a Nielsen RSA Jan 2009 report, AWL,
the market leader, enjoys a market share of around 19
percent in the refined oils segment, with a total
revenue of Rs 6,000 crore.
Now, the company aims to increase its market share to
about 25 per cent.
With the removal of Excise and introduction of VAT
etc, the organised sector now faces the advantage of
taking over unorganised, loss-making units.