Atul Chaturvedi CEO, M/s. Adani Wilmar Ltd.

Transcription

1 Atul Chaturvedi CEO, M/s. Adani Wilmar Ltd. Dear Friends, Good morning and welcome to Globoil, A few days back Mr.Sandeep Bajoria rang me up and requested me to crystal gaze on India in 2025 at Globoil. His voice was so gently persuasive and commanding that I did not have the courage to say no. After having confirmed I realised that I am no gypsy with a crystal ball who could see the future and predict with accuracy the unfolding events. In a fast changing dynamic environment the perils of commenting on future is fraught with danger and can be way off the mark. With Europe in turmoil, China is wobbling, Middle East in throes of worst political crisis and Africa going nowhere. Further, with World witnessing currency wars and competitive devaluations it is becoming something of a nightmare predicting exchange rates. In the midst of so much political and economic uncertainty all around us we do not know what shape the world will finally take after this churning process is over. To speak on India in 2025 requires guts and stature of Dorabji and Thomas Mielke which I sadly don't possess. However, having put my head in the wringer my only earnest request to all the friends is to forgive me if I am way off the mark. Let me make an attempt. My comments would be confined to oils, oilseeds and poultry sector CURRENT SCENARIO IN INDIA: No assessment of the future is possible without analyzing the present. It's the present which will shape the future. Some of the key economic indicators of India are:

2 - 2 trillion economy. In purchasing power parity it's actually a 5 trillion economy. - GDP growing at more than 7% - Agriculture sector struggling at sub 2% growth and contributing less than 15% to GDP.. - Farm incomes collapsing leading to upheavals in rural economy compounded by the fast that 60% of the population depends on Agriculture. Tragic farmer suicides are common. - Minimum support price driven production has ensured India is self-sufficient in basic food like wheat and rice along with sugar. In all these commodities except rice we are surplus but not competitive in world markets due to high domestic values. - Oilseeds and pulses are the biggest sufferers and the period between 1995and 2015 should be considered as the lost decades for these commodities. Practically no growth in oilseed and only marginal increase in pulses. - Presently India is self-sufficient in corn but going forward this may change. DEMAND PROJECTIONS FOR OIL CORN AND MEAL(soya) Oils...in the late nineties when India opened up oil imports under open general license our total consumption used to be only 10.5 MT. of this the imported component was only about 4.5 MT. With rising income levels and changing food habits coupled with competitively priced Palm oils demand sky rocketed and currently we are consuming almost 19 to 20 MT of oil. Out of this the imports are almost MT. In other words local availability has practically shrunk to around 5.5MT to 6 MT.About 70% of our requirement is met by imports which are growing at almost 1 MT per annum valued at around 12 Bln USD.

3 Consumption growth is pegged by my friend Dr. Mehta at 5% and he also estimates we would be consuming around 34 MT of oil by The import requirement of oils would balloon to 25 MT and domestic availability will only be 9MT at current rate of growth.a real scary unfolding scenario. Corn and Soya Meal: Poultry is the real sunrise sector in India with chicken and egg consumption growing with changing food habits. Basic staple consumption is plateauing and youngsters prefer more and more animal proteins in their diets. We feel poultry sector is growing at 10% and is poised to grow at 15 % in next decade. Even at a conservative 12% growth this sector would require the huge quantities at normal rate of inclusion in the feed by Corn MT (current consumption 9.68 MT) Soya meal 13 MT. (Current consumption 4 MT) This again is a scary scenario as domestic availability would not keep pace with this increase. LIKELY UNFOLDING SCENARIO BY 2025: - Vegetable oil imports bill for the country may rise to USD 25 Bln. However part of this oil may come in the form of oilseed and not oil alone. - Oilseed import in future looks a distinct possibility. With soya and other oilseed crop going nowhere and India requiring both oil and meal India is going the China way.

4 - Port based crush plants could be a reality. Canola imports in West coast and sunflower and soya down South is a distinct possibility. - Corn import looks inevitable in future for the livestock sector. - Caveat...Govt. continues to ignore this sector as they have done till now. GM Crop India is a great debating country and debates can last for minimum two decades. The debate on GM has been going on for more than two decades and chances are that finally the Govt. may bite the bullet in next decade. India currently has more than 11 Mln hectares of land under GM, much more than China. Tragedy is that all this land is under cotton. In future this may get extended to corn and oilseeds as well. REGULATORY ISSUES: We are bound to see a more proactive Regulatory regime in future. Food safety issues would become more and more important and with an alert and aggressive media these are bound to be highlighted. Indian vegetable oil industry would be well advised to take food safety issues very seriously or else their very existence could be jeopardized. CONSUMER BEHAVIOUR: Going forward loose oil sales would gradually cease to exist. Packed and branded oils would keep increasing. More and more oils may get launched on health platform. Groundnut and Mustard oil will price itself out. Groundnut would

5 become a dry fruit and mustard oil would be for connoisseurs and die hard Bengalis.Who can afford it. Rice bran Oil may gain in popularity with health conscious consumers. Blended Oils may start getting marketed officially. VOLATILITY: Whether we like it or not volatility will remain the order of the day in the next decade. Be it exchange rate, be it commodity prices, be it employee expectation, be it employee attrition, be it consumer expectations, be it regulatory expectation or be it government expectation and responses. Only companies and organisations, who are nimble footed and adaptable would survive and thrive. Lastly, Globoil under Kailash bhai and his son Aseem would remain a mega event to mirror these changes. On this fact I am willing to stick my neck out. Thank you very much for the patience *^*^*^*