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SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M
Vivekanandan M
Presented by…..
Slide No: 1
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M
1. Environmental Analysis for Vegetable Oil Industry in India
Slide No: 2
2. Porter’s Five force analysis for Vegetable Oil Industry in India
3. Conclusion
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M Slide No: 3
Environment Analysis for Vegetable Oil Industry in India
Leading to Industry Growth Threat to Industry Growth
1. Indian Government imposed 20% import duty on soya bean oil on Nov 18, 2008.
2. In 2007, Indian Government imposed ban on future trading in oil.
1. Indian Government budget 2008-2009 reduced the import duty on vegetable oil by 10%.
Political Factor
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M Slide No: 4
Environment Analysis for Vegetable Oil Industry in India
Leading to Industry Growth Threat to Industry Growth
1. The demand for vegetable oil is expected to increase by 20% from 130 lakh tonne to 156 lakh tonne.
1. Because of reduction in the oil seed cultivation area, vegetable oil production has declined over 10% in the past 3 years.
2. Madhya Pradesh is one of the largest producing state for vegetable oil seed. Rainfall recording below 30% during 2010 has lead to lower cultivation of oil seeds.
Economic Factor
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M Slide No: 5
Environment Analysis for Vegetable Oil Industry in India
Leading to Industry Growth Threat to Industry Growth
1. Population growth of 1.8% will increase the demand for vegetable oil by 7%.
2. During festival season October – November, the demand for vegetable oil increases.
1. Maoism.
Social Factor
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M Slide No: 6
Environment Analysis for Vegetable Oil Industry in India
Leading to Industry Growth Threat to Industry Growth
1. New oil seed crushing machines can be used to crush different oil seeds.
1. AP Organics has commercialized the production of refined rice bran oil. Rice bran oil is a substitute for vegetable oil.
2. Coconut oil is another substitute for vegetable oil, which is mainly consumed in Kerala.
Technological Factor
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M Slide No: 7
Porter’s Five Force Analysis for Vegetable Oil Industry in India
1. Degree of Rivalry – Competitors and their products
Company Products
Ruchisoya Soyabean oil, vanaspati.
KS Oil Mustard oil, de-oiled cakes
Agro Tech Foods Refined oil
Sanwaria Agro Refined oil, de-oiled cakes
Indian vegetable oil is growing at 90% (compounded annual growth
rate)
Profit margins for vegetable oil producing companies is les than 5%
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M Slide No: 8
Porter’s Five Force Analysis for Vegetable Oil Industry in India
1. Degree of Rivalry – Market share
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M Slide No: 9
Porter’s Five Force Analysis for Vegetable Oil Industry in India
1. Degree of Rivalry – Latest M&A
Ruchi Soya acquired Palmtech India Ltd and Gemini Edibles & Fats
India.
KS Oils acquired oil refinery at Haldia Port for Rs: 125 crores.
KS Oils acquired palm plantations in Indonesia and Malaysia.
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M Slide No: 10
Porter’s Five Force Analysis for Vegetable Oil Industry in India
2. New Entrants
On Jul 2009, Jaiprakash Associates entered vegetable oil industry
with an investment of Rs: 80 crores and plans to make a turnover of
Rs: 400 crores by FY 2012.
On Feb 2010, Emami entered vegetable oil industry by launching
soyabean, mustard, oils and plans to make a turnover of Rs: 300
crores.
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M Slide No: 11
Porter’s Five Force Analysis for Vegetable Oil Industry in India
3. Substitutes
Substitutes Description
Applesauce Used for preparing cakes, breads, cookies.
Coconut oil Used for cooking and frying.
Melted margarine/melted butter Used for preparing cookies.
Prune puree Used for baking food.
Mayonnise Used for preparing french fries, potato wedges.
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M Slide No: 12
Porter’s Five Force Analysis for Vegetable Oil Industry in India
4. Buyers
Institutions, house hold, industrial buyers, food processors,
restaurants.
Ruchisoya and KS Oils have done forward integration by
creating a brand for the produced oil and market it through
retail distribution network.
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M Slide No: 13
Porter’s Five Force Analysis for Vegetable Oil Industry in India
5. Suppliers
Raw materials required for vegetable oil industry are –
mustard seeds, soya bean seeds, crude oil processed, oil
cakes, sun flower seeds.
Ruchisoya and KS Oils have done backward integration by
acquiring huge land for cultivating oil seeds.
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M Slide No: 14
Conclusion
Force Effect on the Industry Reason
Degree of Rivalry Favourable Increasing demand for
vegetable oil
New Entrants No Effect Low profit margin and high
capital cost
Substitutes No Effect -
Buyer Favourable Oil is essential for human
Supplier Unfavourable Limited availability of
seeds from farmers
Because of low profit margin, high capital investment and limited availability
of seeds, it becomes not attractive for new entrants. Market for vegetable oil
is growing at 90% (CARG), which will increase the competition among the
companies within the vegetable oil industry to retain and increase their
market share.
SM Assignment TASMAC
Date: Aug13, 2010
Environment Analysis and Evaluation of
Vegetable Oil industry attractiveness in India
Vivekanandan M
Thank You!
Slide No: 15
