Insert Cover Image using Slide Master View Do not distort Baby Food & Child Nutrition Market India November 2012
Executive Summary Market Global baby food and child nutrition market has witnessed a turnover of INR x bn during and is growing rapidly especially in the developing nations Indian baby food and child nutrition market is also showing possitive growth and its market size was found to be INR y bn during Drivers & Challenges Government Trends Drivers Increase in Number of New Born Babies Increase in Disposable Income Increasing Working Women Population Increased Reach and Availability Challenges Regulatory Challenges Rise in Ingredient Price Cultural Aspect High Pricing The Infant Milk Substitutes (IMS), Feeding bottles and Infant foods Amended Act Food Safety and Standards Authority of India (FSSAI) Modification in Packaged Commodities Rules Innovation in product variants Inclination Towards Health and Wellness Foods Collaborations and acquisitions Innovative brand building activities Competition Major Players Company A Company B. Company C Company D Company E Company F 2
Introduction Market Overview Import & Export Drivers & Challenges Government Regulations Government Initiatives Trends Competition Strategic Recommendations Appendix 3
Proper nutrition during the child s growing phase reinforces the overall well being of the child for a healthy life in future Introduction Child nutrition or pediatric nutrition refers to the intake of a nutritionally adequate balanced diet, consisting of all the essential nutrients and sufficient calories required for a child s proper growth within the age group of 0 5 years in order to maintain the different physiological requirements at the various stages of the developmental process Factors determining the various levels of nutritional requirements Age of the child Level of activity Environmental conditions During infancy calorie requirements is high and has to be provided mostly in the form of proteins, to support proper growth in height and weight The growth is irregular during toddlerhood, preschool and middle childhood years, which results in variation in desire to eat and calorie consumption Breakdown of energy expenditure by a child in different activities x2 x3 x1 x4 a c b d 4
Classification of baby food and child nutrition products (1/3) Generally, the food administered to babies of upto two years of age are termed as baby foods, which can be in solid, liquid or semi solid form But, as various socio economic, health related and geo societal conventions persist in the society, children more than two years old are also fed with these food products baby foods are also given to children older than two years depending on socio economic, health related and geo societal conventions Baby Food and Child Nutrition Classification Cereal based Cereal based with milk Ready to feed liquids Milk based Rusk and biscuits Malt based beverages 5
The manufacturers of child nutrition products are targeting the developing nations to grab more market share Global Market Overview The global baby food and child nutrition market was estimated to be INR x1 bn in It is expected to reach INR x2 bn in, growing at a CAGR of z% between It is growing rapidly, owing to the changing lifestyle and mindset of parents for acquiring healthy and hygienic growth of the child This growth is being witnessed more in developing nations in comparison to developed nations, especially in the Asian countries Birth rates in the emerging markets, such as Asia and South America, exceed the U.S. by an average of a% Hence, the major players are targeting these emerging markets as U.S. and Europe have limited growth opportunity owing to lower birth rates and static market conditions Among the various baby foods and child nutrition products available globally, the infant formula market is dominated by five major players A(a1%), B(a2%), C(a3%), D(a4%) and E(a5%) 3,000 2,000 1,000 Market Size INR bn 0 x1 Major player s share ()* a5 a6 x2 a4 x3 e a3 x4 e a1 Z% a2 x5 e x6 e e A B C D E F x7 x8 e *Note: Figures are as of Jul 2011 and represents the infant formula market 6
Increasing awareness among parents about proper child nutrition is driving the growth of this market Indian Market Overview (1/2) Indian food supplement market consist of a varied portfolio of products targeting different age groups Child nutrition or pediatric nutrition market is one of those segments which focuses on nutritional requirements of a child The total market size of baby food and child nutrition market for is valued at INR y1 bn and is expected to reach INR y7 bn by The major player in the Indian baby food market is A, holding a market share of a1%, next is B with a share of a2% and remaining share is occupied by other players such as c1,c2,c3 Rising income levels and better product availability are some of the factors driving the child nutrition products industry in India However, the child nutrition product manufacturers witness various government regulations The players are now trying to convince government bodies to introduce their products in their different schemes to combat malnutrition among children Market Size INR bn 50 40 30 20 10 0 y1 y2 Major player s share (2011) a2% a3% y3 e a1% Z% y4 e y5 e A B y6 e C y7 e 7
Import of major child nutrition products (1/4) Food preparations for infants Major importing nations () 100 INR mn 80 60 40 20 0 Other foods prepared from cereals INR mn 40 30 20 10 0 x1 y1 x1 y1 Volume x2 y2 Volume x2 y2 Value x3 y3 000 Kg 400 300 200 100 0 Value x3 y3 000 Kg 250 200 150 100 50 0 a3% a1% a4% a2% a5% Major importing nations () *Note: Figures are value wise, HS Code 190110 (Food preparation for infant use put up for retail sale), HS Code 19049000 (Other prepared food obtained from roasted cereal flakes) b1% b6% b5% b4% b3% b2% A B C F G H D E I J K 8
Drivers & Challenges Summary Drivers Increase in Number of New Born Babies Challenges Regulatory Challenges Rise in Ingredient Price High Pricing Increase in Disposable Income Cultural Aspect Increasing Working Women Population Increased Reach and Availability 9
Trends Summary Innovation in product variants Inclination Towards Health and Wellness Foods Innovative brand building activities Collaborations and acquisitions 10
Public: Domestic Company Company A (1/3) Company Information Offices and Centres India Corporate Address Company A, Street A City B State C Tel No. 91 124 7239 Fax No. 91 124 4734111 Website Year of Incorporation 1767 Ticker Symbol 123456 Stock Exchange www.company.co.in ABC City B Products and Services Head Office Category Products/Services Key People Malt based food Malt based food for different age group Name Designation Person A MD, CEO Other nutritional products Cereal based beverages, powdered milk, protein rich foods, nutritional food powders, ghee, biscuits, nutrition bar sweetmeat products and non carbonated water based beverages Person B. Person C Person D Director Director Director 11
Public: Domestic Company Company A (2/3) Financial Snapshot 300 200 100 INR bn 0 x1 y1 x2 y2 Financial Summary Total Income Net Profit / Loss The company earned a net profit of INR x4 bn in FY, as compared to net profit of INR x3 bn in FY The company reported total income of INR y4 bn in FY, registering an increase of z per cent over FY The company earned an operating margin of a1 per cent in FY, a decrease of z1 percentage points over FY The company reported debt to equity ratio of a2 in FY 2011, a decrease of z2 per cent over FY Key Financial Performance Indicators Indicators Market Capitalization (INR mn) Total Enterprise Value (INR mn) EPS (INR) PE Ratio (Absolute) x3 y3 x4 y4 Value (dd/mm/yyyy) u v w x INR bn 40 20 0 Key Ratios Particulars Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales) Liquidity Ratios Current Ratio Cash Ratio Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover y o ychange (2011 10) 2011 2010 2009 2008 Improved Decline 12
Public: Domestic Company Company A (3/3) Key Business Segments 100% 80% 60% 40% 20% 0% Z% Business Highlights A For the last four years, the company has been involved solely in the nutrition business Key Geographic Segments 100% 80% 60% 40% 20% 0% X% B India is the only geographic segment in which the company has been operating for the last four years Description Overview Expansion Plans Export News The company primarily operates in the health food drinks industry in India The company is widespread in India, having regional offices at New Delhi, Kolkata, Mumbai, Chennai and depots at Bangalore, Cochin, Pondicherry, Madurai, Cuttack, Guwahati, Ranchi, Ahmendabad, Indore, Goa, Pune, Raipur, Dehradun, Jaipur and many other cities The company has decided to invest INR x mn during 201 and INR ymn during for expanding the existing production capacities It exports its products to countries such as Bangladesh, Sri Lanka, Nepal, Bhutan, the Middle East, Myanmar, Malaysia, Nigeria, and Kenya 13
Appendix Ratio Operating Margin Calculations (Operating Income/Revenues)*100 Net Margin (Net Profit / Revenues) *100 Profit Before Tax Margin Return on Equity (ROE) Return on Capital (ROCE) Return on Working Capital Return on Assets (Income Before Tax / Revenues *100 (Net Income / Shareholders Equity)*100 EBIT / (Total Assets Current Liabilities)*100 (Net Income / Working Capital) *100 (Net Income / Total Assets)*100 Return on Fixed Assets (Net Income / Fixed Assets) *100 Operating Costs (% of Sales) Administration Costs (% of Sales) (Operating Expenses / Sales) *100 (Administrative Expenses / Sales) *100 Interest Costs (% of Sales) (Interest Expenses / Sales) *100 Ratio Current Ratio Cash Ratio Debt to Equity Debt to Capital Ratio Interest Coverage Ratio Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Calculations Current Assets / Current Liabilities {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)} Total Liabilities / Shareholders Equity {Total Debt / (Shareholders Equity + Total Debt)} EBIT / Interest Expense Sales / Fixed Assets Sales / Total Assets Sales / Current Assets Sales / Working Capital Sales / Shareholders Equity 14
Sources of Information Leading Newspapers Journals / Magazines Business Magazines Secondary Research Print Medium Electronic Medium Company Websites Government Websites / Resources Online Magazines Online Journals / Articles Premium Databases Social Networking Space Leading Industry Vendors Industry Stakeholders Primary Research Interviews Industry Experts Surveys Conducted in Social / Technology Focused Forums 15
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