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Future Group sees bright future in private brands biz

Topics »private brands business|launch|future group|food bazaar|festival season

MUMBAI: Competition in the private brands segment, especially in the snacks and personal care, is set
to intensify with the Future Group planning a slew of launches by next month coinciding with the onset
of the festival season when consumer spends are likely to rise.

The Kishore Biyani-led group plans to retail products such as jams, pasta and Chinese noodles under its
Tasty Treat brand and sanitary napkins under Caremate, through its pan-India network of Food Bazaar,
Big bazaar, KB's and Aadhaar chains.

"We plan a series of launches by next month in the personal-care and snacks categories. These would be
jams, pasta and Chinese noodles under our Tasty Treat brand and sanitary napkins under Caremate,"
Future Group's Business Head (Brands), Devendra Chawla, said in Mumbai.

The private brands, currently contribute about 20-25 per cent of the company's food business and the
target is to increase it to 30 per cent over the next 18-months, he said.

Last fiscal, Future Group recorded a total turnover of Rs 10,000-crore, of which retail contributed
around Rs 7,000-crore. Of this, the food business' contribution was around 40-45 per cent.

Marks & Spencer eyes 50 large stores

Marks & Spencer is looking to open 50 large-format stores in 24 cities in India in 3 years, Martin Jones,
CEO, Marks & Spencer Reliance India Ltd said.

A majority of these stores are going to be 20,000 sq ft in size, and stock apparel, footwear, lingerie,
handbags, accessories and beauty products.
The only category that Marks & Spencer is not present in India is food. Jones said if FDI in the retail
sector is permitted, the US-based retail chain will look at launching food as well in India.

“Compared to our 160,000 sq ft store size in the UK, the 20,000 sq ft format will be very viable for India.
We are focusing on opening more of large format stores,” Jones said.

Marks & Spencer currently operates 18 stores in India, most of which are small.

When the company entered India 10 years ago, it was through a franchisee model that required
importing products, which made products expensive.

The retailer then moved out of franchising and forged a joint venture with Reliance Retail.

“We are now sourcing our products locally in India, which has brought down prices,” Jones said.

Poor logistics costs India $65 Billion annually

Bangalore: Despite the Indian retail sector being in the high-growth mode, the country is losing $65
billion every year due to inefficient supply chain systems.

According to a report titled, 'Global competitiveness of retail supply chain-Challenges, Strategies and
Recommendations' published by industry body Confederation of Indian Industry (CII) and Amarthi
Consulting, supply chain costs in India are about 12 percent to 13 percent of the gross domestic product
(GDP) compared with 7 percent to 8 percent of GDP in developed countries.
The report says that India is at 47th position on logistics and is behind countries such as Japan, U.S.,
Germany and China. The supply chain costs in India deal with the procurement, manufacture and
distribution of products and services, and drive the success of the retail sector.

The retail industry in India, which is expected to grow over $879 billion by 2018, is a $410 billion market.
Food and groceries account for 70 percent of the retailed items followed by textile and apparel at 7
percent. The textiles and apparel segment represents about 40 percent of the organized sector, which
account 95 percent of the retail sector.

The retail industry in India faces supply chain challenges like inadequate supply chain infrastructure,
complex taxation laws, high levels of intermediaries, product proliferation and lack of supply chain
visibility, according to the study report.

Some of the key recommendations of the report are improving supply chain infrastructure,
implementation of goods and services tax (GST), reducing intermediaries, and adopting green supply
chain practices. Green supply chains involve integrating environmental thinking into the core operations
of a company, starting from material sourcing to delivery to end-of-life recycling.

Apart from these challenges, the country's demography, geographical spread and distinct consumer
preferences also need to be addressed, said the report.

Govt permits export of 250,000 tonnes of sugar under ALS

The government today decided to allow the export of about 2,50,000 tonnes of sugar

Over the next three months, enabling mills to meet a part of their total export obligation of nearly one
million tones.

Mills had imported 20.75 lakh tonnes of sugar in the 2004-05 crop year (October-September) under the
Advance Licence Scheme (ALS), which makes it mandatory for mills to export an equal quantity later.
Mills are still left with an export obligation of nearly one million tonnes and the deadline is March, 2011.
"We have decided to allow mills to meet their export obligation in two tranches. Mills can export 25 per
cent of the quantity (9,67,000 tonnes) in the next three months and the rest of the quantity after
November," a senior Food Ministry official told PTI.

Mills cannot export the sweetener without the release order from the ministry.

The government has decided to allow sugar exports as the country is likely to achieve a higher
production than the annual demand in 2010-11 (October-September) after two year's of low output.

India's sugar production is estimated at 25.5 million tonnes in 2010-11, while demand is pegged at 23
million tonnes.

Furthermore, the retail prices have declined by 40 per cent since mid-January. Retail sugar prices, which
touched nearly Rs 50 a kg in Delhi in mid-January, have come down to Rs 30 per kg now.

In December last year, the Cabinet Committee On Economic Affairs had decided to extend the deadline
to meet the export obligation till March, 2011, considering the low production of the sweetener during
the current season, ending September.

It also gave an option to millers to pay customs duty as applicable during the relevant period and get
exempted from the export obligation.

Robust cold chain can bring down food wastage to 5%

Friday, September 03, 2010

Our Bureau, Mumbai

When we talk about cold chains, Ingersoll Rand is the name that first hits the mind. With its consistent
supply of new and innovative technology adapted to the capricious Indian conditions, the company has
become an unbeaten leader in the industry. An interview with Manjunath M S, business creation leader-
cold chain, Ingersoll Rand India.

How is India's cold chain industry progressing?

According to market data, India is the second largest producer of fruits and vegetables with processing
levels of agricultural and allied commodities only at about 6-8% and cold storage facilities available only
for about 10% of the produce. Huge supply chain gaps and infrastructure bottlenecks result in the
wastage of approximately 35-40% of agricultural produce due to spoilage in the farm to retail journey.
The food chain in India is fragmented, large technological gaps exist in post-harvest management, and
last mile transportation of fresh produce is riddled with bottlenecks.

A robust cold chain industry can bring the wastage of agricultural produce down to about 5% as well as
avoid spoilage for other temperature controlled products and pharmaceutical drugs. India's cold chain
industry is poised for growth with the increasing awareness of the advantages that cold chain can bring
to the food and pharmaceutical industry, and with the growing knowledge about world class cold chain
infrastructure providers in the country.

What are the latest technologies being developed in the cold chain industry?

Some of the latest technologies for the cold chain industry include post-harvest technologies for pre-
cooling, process technologies for controlled ripening, high relative humidity cold stores for fruits and
vegetables, blast freezing and individual quick freezing for fruits and vegetables, among others.

Are you undertaking any project contributing towards minimisation of food loss for the country?

Ingersoll Rand is conscious of the fact that 35-40% of agricultural produce gets wasted due to spoilage in
the farm-to-retail journey due to huge supply chain gaps and infrastructure bottlenecks. We are
committed to sustainable development and fighting food shortage by avoiding wastage. With our world-
class technologies, Ingersoll Rand can make a real difference to the quality of cold chain infrastructure
being developed in India. These technologies have been tested and proven by our customers across the
world.

We are executing a number of projects especially for the storage and transport of fruits and vegetables
and other perishable food items. Further, our key focus is on building cold chain technologies that are
suited especially for India. We have recently launched a refrigerated transportation product for last mile
distribution of temperature controlled and refrigerated products in the Indian market. Designed
specifically for a hot country like India, the new solution will ensure that perishable food items such as
fruits, vegetables will arrive at the neighbourhood grocers at their freshest.

The Thermo King (an Ingersoll Rand brand) B 100 unit has a cooling capacity of 1050W at 0 Degree
Celsius. Designed with the realities of the Indian market, the B100 unit fitted in with a container can be
modelled on small reefer trucks that can negotiate narrow lanes and neighbourhoods. The product is
ready for transportation of medium temperature cooling requirements. In the next few months,
Ingersoll Rand will also launch a product for applications that require temperatures below 0 Degree
Celsius which could serve a variety of applications including special food, dairy, pharmaceuticals and
health.

B100 is an ideal solution for India where small trucks typically run on low horse power engines and do
not have the capacity to run a compressor directly. The B100 unit works with the DC (direct current)
power supply from the alternator that is driven from the vehicle's engine and does not need a separate
fuel engine. It is a unique technology and a great fuel saver.

Where are the opportunities in a cold chain business for India?

India is the second largest producer of fruits and vegetables with processing levels of agricultural and
allied commodities only at about 6-8% and cold storage facilities available only for about 10% of the
produce. About 35-40% of agricultural produce gets wasted due to spoilage in the farm-to-retail
journey. This in itself is an opportunity. With a robust cold chain infrastructure, the country will be able
to bring down agricultural wastage to about 5%. Apart from this, vast opportunities exist in storage and
transport of dairy products, fresh fruits & vegetables, pharmaceutical products and processed food.

Are government policies supportive enough?

The government has been quite innovative in promoting the cold chain industry by offering a number of
quality schemes under which grants and subsidies are offered for capital expenditure.

The Ministry of Food Processing Industries has also taken several initiatives to prevent wastage of
agricultural produce through expansion of cold chain, value addition and preservation infrastructure.
Further, 100% FDI in multi-brand retail will help draw investment for setting up integrated cold chain
projects, develop new technologies for cold storage and help build sustainable supply chains by linking
food growers to post-harvest and processing technologies.
How will FDI in retail affect the cold chain business in the country?

FDI in retail coupled with a mandatory investment in building back-end (farm-to-distribution centre) will
spur growth and investment in quality cold chain infrastructure especially at farm level as well as in
refrigerated transport facilities that will help deliver quality farm produce. This will eventually reduce
post-harvest losses, one of the key reasons for wastage of agricultural produce in India.

Minimum spends to develop the back-end, encouraging multinational companies to invest in building
local technologies, local manufacturing, partnering with local retailers is expected to be a win-win for all
the players in the entire food chain as well as the end-consumer.

With these checks and balances in place, 100% FDI in retail would be a welcome and much needed step
if we really wish to see the next green revolution.

How will external commercial borrowing as announced in the budget 2010-11 help the industry?

The cold chain industry is actively looking at ways to improve the economic viability of their
investments.

ECB will allow users to borrow fund at a much cheaper interest rate and thus reduce the interest
burden. This coupled with all the other duty concessions will certainly work to make investments in cold
chain economically viable.

Why PDS overhaul is a must for India's food security!


Last updated on: September 3, 2010 18:05 IST

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Gopal Krishna

Writ Petition (Civil) No. 196 of 2001 concerning citizen's Right to Food has been listed again for hearing
on September 6, 2010 in the Supreme Court and the central government has to give its response before
that.

In the recent years, the whole issue can be traced back to the public interest litigation filed by the
People's Union for Civil Liberties (PUCL, Rajasthan) in April 2001 in the Supreme Court seeking legal
enforcement of the Right to Food.

The core argument remains that the Right to Food is included in the fundamental Right to Life enshrined
in Article 21 of the Indian Constitution. Although like the Apex Court's 'interim orders' on this historic
case, the Indian government's approach too remains quite interim.

The fact is that it has provided an opportunity to hold the government and the likes of Sharad Pawar,
the Union agriculture minister, accountable.

The court has noted in its August 31 order that 'about 50,000 metric tonnes of wheat has already
deteriorated and is not fit for human consumption. Several lakh metric tonnes of wheat which was
procured was not been properly preserved.'

The court is right in observing that the Food Corporation of India -- a focal point for the public
distribution system (PDS) with a network of 4.78 lakh (478,000) fair price shops making it the largest
retail system of its type in the world -- must properly evaluate capacities of their godowns with focus on
cardholders of Antyodaya Anna Yojana and Below Poverty Line.

Click NEXT to read on . . .


FDI in retail will improve whole supply chain: Gordon Campbell
Published: Friday, Sep 3, 2010, 8:58 IST

By Praveena Sharma | Place: Bangalore | Agency: DNA

Dr Gordon Campbell, managing director of SPAR International, a voluntary chain that brings wholesalers
and retailers together in nearly 33 countries, had looked to India as an emerging market even as he
drew up his firm’s plan for 2010.

India is now an important site of growth for the firm, Campbell tells DNA

Foreign direct investment (FDI) in multi-brand retailing is a matter of debate in India. How would things
change for you if it is allowed?

It would not affect us. Our development in India is through the Dubai-based Landmark Group. (SPAR is in
India through a licensing agreement with Landmark)

In general, though, we favour FDI in retail as further investment by international retailers, particularly in
the back-of-house operations, would help improve the supply chain and reduce wastage.

Are you looking at sourcing products from India for other markets?

We are looking at buying rice from India for some European markets. That is a possibility.

Why would you import rice from here?

One, because India has a wider variety of rice. As business grows, we would be buying in large quantities
and able to get very good prices. We do that in Europe with products like olive oil, which we source from
Italy.

How has recession changed the retail business in Western markets?


People have to eat, so the food business is somewhat protected. However, there are changes in what
people eat and how they buy. Promotions and private labels have become important. People are buying
the necessities.

They are not buying as much on impulse. Also, people are shopping from more stores. This has made
our business very competitive, and we have become price aggressive.

How important are private labels in India for you?

In the non-food section, there are lots of private labels. Our food labels are now well under way and will
increase very significantly over the next 12 months.

In a market like India, we expect private labels to pick up once consumers realise they offer value at
much cheaper prices in comparison to branded products. Our non-food labels are priced 50% below
branded products. In food, the saving is 25-30% when consumers go for private labels.

Bijou Kurien to chair India Retail Forum 2010


India Infoline News Service / 17:39 , Sep 03, 2010

Aptly themed 'Get the Power', IRF 2010 promises a sharing and empowering experience with great retail
minds from across the globe

Bijou Kurien, President & Chief Executive – Lifestyle, Reliance Retail has been unanimously elected by
the retail industry leaders to chair the India Retail Forum (IRF 2010) scheduled to be held on September
28th and 29th, 2010 at the Renaissance Hotel, Mumbai. Nominated by Sanjiv Goenka of RPG Group and
seconded jointly by Kishore Biyani of Future Group and Thomas Varghese of Aditya Birla Retail, Bijou
Kurien, received support of over 200 industry leaders besides prominent global and Indian trade bodies,
to lead the 7th edition of IRF and make this the biggest ever retail show in India.

Aptly themed 'Get the Power', IRF 2010 promises a sharing and empowering experience with great retail
minds from across the globe. B S Nagesh, the immediate past Chairman of the forum in his welcome
message said that while the 2009 edition of IRF effectively signaled the resurgence of retail in India, the
2010 edition, under the chairmanship of Bijou Kurien, will see world visionaries, retail captains and
policy makers converging to discuss India’s consumption potential and how modern retail can further
stimulate and channelise this consumption and create multifaceted growth of the economy.
Emphasizing the relevance of IRF, Raj Jain, President, Walmart India said, “Retail in India is at an exciting
juncture. Over the years, IRF has brought together top strategists from the retail sector to discuss and
unravel best practices in retailing and supply chain development aimed at strengthening India and its
economy. The forum provides a great opportunity to meet like-minded professionals bound together
with similar goals and aspirations. I look forward to an eventful, insightful and inspiring session and am
convinced that time spent here will contribute greatly in enhancing our retailing knowledge. Let's all join
together to save people money, so they can live better.”

“Modern retail has a huge potential to not only benefit from India's increasing consumption demand but
also create demand for value-added products, boost local entrepreneurship, create jobs and raise
income levels. At India Retail Forum let us explore how we can collaborate to create consumption
demand and offer Indian consumers a better standard of living by providing better products at best
prices”, said India’s retail major Kishore Biyani, Founder & Group CEO, Future Group.

Calling upon the entire retail fraternity to join him in extending support to Kurien in making IRF '10 a
huge success, B S Nagesh said that IRF was all about sharing, learning and evolving together, and was
recognized as a global standard conference. IRF goes way beyond just speeches, presentations and
discussions -- it literally stimulates our minds, bodies and souls. I myself experience its great energy
every year. I eagerly look forward to the 2010 edition of IRF, which promises to be bigger, better and
busier than ever! With his unique style, his remarkable accomplishments and tremendous passion for
retailing, Kurien is the ideal Chairman to make this huge business, knowledge and networking platform
even more relevant for the participants, he added.

Accepting the chair, Kurien said that with its Conferences, Exhibitions and Awards, IRF continues to
provide a great platform for the retail industry. With over 3500 delegates expected to attend from all
over the world, IRF 2010 provides an opportunity to meet and interact with key stakeholders in the
business and also understand what is currently happening in the retail world. We can learn from
international visionaries and also from our peers in India, within a tightly packed two-day programme
that encompasses visionary addresses, CEO power tracks, motivational sessions and workshops.

On behalf of Confederation of Indian Industry (CII), Thomas Varghese, Chairman, CII National Committee
on Retail called upon all stake holders in Retail industry to come together at IRF and make full use of the
opportunity to participate in the transformation of India. The subject of permitting FDI in Indian multi
brand retail is being hotly debated. The CII Conclave at IRF will engage the top industry leaders in a
structured discussion to conclude on the way forward. This could be set in the backdrop of the
imperatives of Indian retail and the requirement of significant investment to transform the retail
market.

Kal Patel who will be representing consumer electronics retail major Best Buy Inc of USA said that it
would be the first time he would attend IRF in his role as President Asia. “Our CE/Appliances Retailing
business in China is giving us a lot of confidence on the potential growth from emerging markets and I
am curious about the potential for Global retailers in India. Organized retailing will really help the
manufacturing industry take off in India,” he added.

Samir Kuckreja, President, National Restaurant Association of India (NRAI) and CEO & MD, Nirula’s
expects a strong presence of leading food professionals and restaurateurs from across the world at the
NRAI Conclave that will discuss growth strategies for the Rs430bn foodservice business in India.

S. Sivakumar, Chief Executive - Agri Businesses, ITC Limited will join world’s five biggest retailers at IRF to
discuss the Cash & Carry format which he believes: holds the key to harmonizing the interests of
traditional and modern retail. International delegations led by Alliance for US India Business, Global
Retail Network, European Home Centre Retail Association, IGD and Indo French Chamber of Commerce
and Industry among others will see participation of delegates from some 50 countries at IRF.

“The GRN Retail Franchise Summit will include brands from Canada, UK, The Netherlands, USA and many
more”, revealed Brendan Dorrian, CEO of Global Retail Network, UK. “With the increasing spirit of
enterprise in the retail sector the Franchising format is finding large and growing presence in hundreds
of malls and otherwise all around the country and I believe that IRF 2010 will provide an excellent forum
for debating the issues involved for managing orderly growth and for evolving the directional steps the
Franchising Industry should work towards in the coming years”, said C.Y. Pal, Chairman, Franchising
Association of India (FAI).

Talking about the retail possibilities, IRF Chief Convenor, Amitabh Taneja said, “Structured employment
and better life for people are two key issues that modern retail can address. Speeding up the
modernization process is extremely vital as the retail sector has the ability to create some 10 million
additional jobs in next 5 years time. Over one billion sq feet of quality retail and entertainment space
with annual revenue of Rs12000bn, a whopping Rs1300bn in annual VAT collections and over Rs120bn
in additional income tax revenues to the exchequer – all these can actually happen in just five years
time”. “There is of course a lot more to discuss at the forthcoming IRF,” he concluded.

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