Author: Priya Sheth

28% of food samples tested in 2018-19 found to be adulterated or sub-standard: FSSAI annual report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Nearly 28 percent of the food samples tested for quality were found to be adulterated, according to the 2018-19 annual report of the Food Safety and Standards Authority of India (FSSAI).

The FSSAI data analysed by CNBC-TV18 indicates a consistent rise in instances of food adulteration in the country. Out of the 1,06,459 food samples analysed by the National Accreditation Board for Testing & Calibration Laboratories (NABL) in 2018-19, 28.56 percent were found to be non-conforming.

UP and Jharkhand continue to be among the top five states with the highest adulteration rates in samples tested in the last three years.

The proportion of adulterated or misbranded food sold in India has nearly doubled in the last 8 years. In the year 2012-13, 15 percent of the food samples tested were found to be non-conforming to prescribed standards. Over the years, this has gradually gone up and now stands at 28.56 percent for 2018-19, as per the latest data available.

The FSSAI splits these non-conforming samples into three categories – unsafe, sub-standard and those with labeling defects. A large chunk of the samples analysed by the FSSAI public labs falls under the sub-standard category.

It is imperative, however, to note that this data does not mean that 28 percent of all the food sold in India is adulterated. It indicates that almost one-third of the samples collected pan-India were found to be non-conforming.

The food safety officers in each state regularly collect random samples of milk, water, packaged food among other categories to check for quality. In 2017-18, about 25 percent of the food samples of the total 99,353 were found to be non-conforming.

States like UP and Jharkhand have been reporting high adulteration rates based on samples collected for the last 2-3 years. An analysis of the latest annual report (2018-19) shows that 52.32 percent of the samples sourced in Uttar Pradesh have been found to be non-conforming. This is followed by Tamil Nadu and Jharkhand which have 45.39 percent and 41.68 percent adulteration rates based on samples obtained respectively.

States with the lowest adulteration rates include Arunachal Pradesh, Goa and Uttarakhand.

Penalties for violation of food standards have also been increasing year-on-year. For instance, penalties imposed for violations in 2018-19 stood at about Rs 32.57 crore, compared to Rs 26.35 crore in 2017-18. Therefore, even though penalties have risen, there seems to be a need for stricter enforcement at the state level and the regulator agrees.

“The percentage of substandard samples also depends on the food safety compliance levels in a state and indicates the need for even more effective action,” FSSAI told CNBC-TV18.

India’s food safety regulator says it has been encouraging states to keep a strict tab on the food available. “Surveillance and enforcement activities are carried by states every year. States are encouraged to undertake targeted sampling based on past experience, risk assessment and source information,” said FSSAI in a comment to CNBC-TV18.

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What prompted Kishore Biyani to sell his business to RIL

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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“COVID-19 was one jhatka.. We had no option but to exit,” admitted Future Group’s Kishore Biyani saying that the company lost 7000 crore in the first 3-4 months of the pandemic.

“Pantaloons sale was very different from the sales of this business. There was no other way we could have survived – the rent doesn’t stop and the interest doesn’t stop,” said Biyani.

“Somehow everything came together because of COVID-19 and the only answer was to exit,” added Biyani, referring to his recent deal with Reliance Industries which saw him sell his chain of retail stores, warehousing and logistics business to Reliance Retail on a slump sale basis for Rs 24,713 crore.

Tracing back the journey that led to the business trap, Biyani said that the company made too many acquisitions in the last 6-7 years, especially of small-format stores.

“The one lesson that I’ve learnt over the last few years is that don’t invest too much of resources in new developments with your own money,” said Biyani, referring to AI, big data etc which had seen huge investments but the ROI of which was still a couple of years away.

“Events like these make you very humble. The Future group family has been very supportive in this transition period. Have trained my daughters to not be too attached to what we create. We are still in the food, fashion and home business in some way,” said Biyani in this exclusive chat with BS Nagesh, Founder, TRRAIN at the Phygital Retail Convention.

Speaking about the economy, Biyani said that the post COVID world has not come about and consumption has not started. He expects 30 percent of transactions to come from digital platforms. “We have to think digital first.

The worst is yet to come for retailers. We have designed business to be profitable at 90 percent of our targets. In any scenario… we will not be able to touch 70-80 per cent… If you look at long-term planning 5 to 10 years, it will not be easy for physical stores,” said Biyani.

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Parle Agro eyes 10,000 crore revenues by 2022

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Frooti maker Parle Agro is confident of achieving its Rs 10,000 crore revenue target by 2022. After a few challenging months during the lockdown, Parle Agro is now back to its 100 percent distribution levels.

“We have seen a lot of change in the last 45 to 60 days. We are seeing rural driving growth aggressively for all our brands. There is greater normalcy that’s shaping up now in terms of urban and rural trends,” said Nadia Chauhan, Joint MD & CMO, Parle Agro.

The COVID-19 outbreak and the lockdown resulted in a huge dip in out-of-home or on-spot consumption, which impacted business for a large number of beverage companies.

“We saw a huge surge in in-home consumption, especially for larger packs,” said Chauhan. With more relaxations in the market now and October heat setting in, the company has roped in Priyanka Chopra Jonas as brand ambassador & launched malt-flavored fruit juice B-Fizz.

“With category expansions planned, we are hoping to end FY21 with a growth of 10 percent,” said Chauhan. Parle Agro expects the festive season to be at par with what they had seen last year.

“During the festive season, we have gift packs that go into the market. Gift packs are a large part of the business in North India and believe to do reasonably well if not above last year’s numbers,” added Chauhan.

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SBI signs MoU with HUL for an end to end digital solutions for ecosystem

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s largest lender State Bank of India has entered into a partnership with FMCG major Hindustan Unilever to offer corporate solutions to its trade partners. These digitized solutions have been created to cater to the distribution and retail ecosystem of HUL. The partnership also aims to make availing of credit easy for channel partners, provides UPI based payment solutions and PoS terminals to retailers & distributors

The objective of the partnership is to augment the width of credit and will be beginning a pilot in Mumbai and Bengaluru.

“Our relationship with corporates was more around giving credit earlier. This new-age relationship caters to providing solutions to HUL’s supply chain. Availing credit has always been a painful process. This process will be made simple by the integration of SBI’s Yono platform and HUL’s Shikhar app,” said Rajnish Kumar, Chairman, State Bank of India.

HUL sees this as a transformative partnership as it will help its ecosystem of traders & retailers. “These trader ecosystems have been working in informal envt and don’t have access to credit. There is also a reluctance to adopt digital technology. This partnership tries to resolve these constraints,” said Sanjiv Mehta, Chairman & MD, HUL.

SBI will also be offering corporate packages for HUL employees to offer retail products at competitive prices. With this corporate relationship in place, SBI plans to use the same digital services to help other corporates achieve an end to end solutions.

“Have formed a corporate solution group to form a single point contact for corporates. Cashless transaction space is the need of the hour. The new vertical financial inclusion and micro-market will help reach out to remote geographies,” said Dinesh Kumar Khara, MD, SBI.

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India’s media and entertainment sector expected to recover by FY22: KPMG

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The COVID-19 outbreak has affected India’s media and entertainment sector to varying degrees. While traditional outdoor entertainment formats have been affected, digital advertising, OTT and gaming have fared better. Digital advertising spends are likely to overtake TV advertising in FY21, according to a report by KPMG.

The media and entertainment sector is expected to recover to its current levels and post a 33 per cent growth in FY22. The industry is likely to see a contraction of 20 percent in FY21. In absolute terms, the sector is expected to reach Rs 1.86 lakh crore by FY22, according to the KPMG report titled ‘A year off script: Time for resilience.’

The growth in overall revenues was driven by digital and OTT video, which registered a growth of 26 percent in FY20, albeit lower than our earlier estimates. Gaming was the fastest-growing segment with a rapid increase in consumption translating partially into monetisation, although from a lower revenue base, said the report.

“There will be a deeper integration of digital technology across the M&E value chain – from content production to distribution. Technology adoption could however face some challenges in terms of skill development and the shift to a digital-first mindset but will result in operational cost savings and potentially lower lead times over the longer term, “said Girish Menon, Partner and Head, Media and Entertainment, KPMG in India.

With the upcoming festive season, advertisement spends appear to be recovering in Q3FY21. The overall reduction in advertising expenditure therefore may turn out to be lower than the contraction in economic activity. Bharat could lead in defining digital behaviour. Rural demand has shown unexpected resilience within weeks of the lifting COVID-19 lockdown alongside an already deepening engagement with the internet for the rural digital consumer.

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FMCG cos ramp up capacity to cater to elevated demand

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With consumers preferring to purchase more packaged food in light of the pandemic, India’s FMCG companies are working on ramping up manufacturing to cater to this surge in demand.

Most FMCG companies have started moving towards adding 15-20 percent additional capacity. Companies are looking at a combination of ways to scale up this capacity – either looking to add new lines in existing units or an addition of new facilities.

“There is an expectation that demand in certain categories will remain elevated. We had been contracting third parties for manufacturing for the last few months. We would prefer if we could scale up our own capacity if there is demand potential,” said an industry official. Categories such as biscuits, honey, ready to eats, sauces & dips and health & nutrition products are expected to see high demand levels sustain.

“What we need to do is, we need to add lines over a period of time to scale up capacity. The infrastructure is there. So there is an incremental investment in capacity,” said Sanjiv Puri, Chairman & MD, ITC. The cigarettes-to-hotels conglomerate is making certain investments in its existing facilities and it said that there are also certain ICMLs (Integrated Consumer Goods Manufacturing and Logistics) facilities that are under final stages of completion.

Biscuit makers Britannia and Parle Products are also looking at expanding capacities to cater to the elevated demand for biscuits. “We believe that consumption of packaged foods will remain high and are therefore working towards augmenting capacities,” said Parle Products. While Britannia said that it would be investing about Rs 700 crore to set up five factories over the next two years, Parle is looking to double investments on capacity expansion year on year.

Marico too is working on aggressively growing its food vertical. With increasing launches in the food space under the Saffola brand, the company may look to double revenues from the food vertical to Rs 500 crore over the next 2-3 years, said sources.

Dabur has also gone ahead with the expansion of its food business. “The recent months have seen Dabur enter the PET category besides launching value-added milk category under the Real brand. The Company has also launched premium health-focused variants with a Low-Calorie range under Real Activ,” said Mohit Malhotra, CEO, Dabur India. “We are also aggressively expanding our culinary business under the Dabur Hommade brand while also looking at expanding to other food categories. Some of these initiatives have already been rolled out with the launch of Chutneys and Pickles range, value-added tea and the extension of Real into value-added milk category,” said Malhotra.

Dilen Gandhi, Sr. Director & Category Head – Foods, PepsiCo India, said, “In the food category, the jump is in both penetration and frequency with greater demand coming for the larger packs across channels. During these recent months, consumer demand for health foods has increased which in turn has further accentuated consumer adoption of Quaker Oats.”With some improvement in overall markets and consumer sentiment, FMCG companies are hoping that 2021 will be a better and more stable year.

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Expect a consumption pick-up in festive season; to expand capacities for surge in demand for packaged foods: ITC Chairman

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Cigarettes to hotels major ITC expects consumption to pick-up in the upcoming festive season. The company is already seeing rural growing faster than urban markets. Categories like chocolates, gift boxes for biscuits and juices are expected to see an enhanced demand. It has now started seeing some recovery in discretionary categories.

“Economic activity is improving and we expect an upward trend in the festive season. The overall consumption should see an uptick. We are already seeing a fair amount of buoyancy in the FMCG portfolio,” said Sanjiv Puri, Chairman & MD, ITC.

During the lockdown, ITC saw robust growth in its FMCG portfolio. It launched about 40 products across the packaged foods, ready to eat, frozen foods space during the lockdown. The company also saw its sales in the e-commerce space double.

To cater to the surge in demand, ITC is investing in expanding capacities by adding more lines in existing integrated consumer goods facilities and by adding new units.

“Handwash segment is 5-6x as compared to what ITC was producing earlier. We are also making investments to cater to surge in demand for packaged foods. Cuttack, Hyderabad facilities will cater to elevated demand, ” said Puri.

As the situation is still evolving, ITC believes that it is important to conserve cash at this point in time. The company is looking at opportunities to optimize spends. ITC has decided to go ahead with an asset-right strategy for the hotel business.

Answering questions on issues of buybacks and restructuring, Puri said, “Nothing is cast in stone forever. Buybacks, restructuring are tools which are available but it depends on the opportunity in the market. We will look at giving enduring value to all stakeholders.”

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Focus on cost reduction, innovation and agility to tide over pandemic: ITC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Cigarettes-to-hotel major ITC is working on using agility, technology, and cost reduction measures to ride over the impact of the COVID-19 crisis that has hit the economy severely. The last few months have been tough for certain businesses in the non-essentials space.

“During the first quarter, the nationwide lockdowns particularly impacted your Company’s performance in the Hotels, Cigarettes, Education and Stationery Products (ESPB), Paperboards & Packaging businesses. However, it is encouraging that the FMCG-others segment delivered comparable revenue growth of 19 percent,” said Sanjiv Puri, Chairman and MD, ITC at the company’s annual general meeting.

A huge part of the revenue growth came from staples, convenience foods and health and hygiene products. For instance, the manufacture of ITC’s hygiene products like Savlon sanitisers was ramped up by 275 times to cater to the surge in demand. ITC was also able to launch 40 new products amid the lockdown.

“The current spate of localised lockdowns is impacting the recovery momentum. The near-term outlook remains uncertain as consumer trends and industry dynamics constantly evolve in the backdrop of the yet unfolding impact of the pandemic and shape of economic recovery. Your Company shall continue to closely monitor the situation and respond with agility to strengthen its market standing while sharply focusing on cost reduction measures, ” added Puri at ITC’s 109th AGM.

For companies to survive in this new normal, they would have to reimagine the future. ITC has broken this up into three phases – survival, reboot and next normal. Despite short term challenges, ITC is confident about focusing on top strategic priorities to create a larger value for stakeholders.

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HORECA reliant small & medium FMCG manufacturers see business drop by 40-50%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The hospitality and catering segment is perhaps going to be the last to recover from the impact of the pandemic. The HORECA segment, as it is called, has traditionally been a significant revenue generator for not only large FMCG companies but also for the small and medium enterprises. These SMEs have seen business shrink by 40-50 percent, said sources. This has been because these SMEs have been heavily reliant on the HORECA segment. These players are those that supply atta, sugar, cookies to hotels, cafes and restaurants.

“We had expanded and aligned capacity to the orders we were getting from the hospitality industry. Now, business is just 20-30 percent of what it used to be earlier. We have a lot of spare capacity which has been put to no use,” said an SME into cookies manufacturing.

Even food delivery and take-outs which have been permitted so far are seeing few takers.

“The industry is struggling. We are seeing only 20-30 percent of normal orders via delivery or take-outs. Therefore our procurement and inventory have gone down significantly,” said a restauranteur.

FMCG companies too have temporarily halted manufacturing lines for bulk packaging.

“We have halted production for 15 kg, 20kg and 40 kg packs have been because demand from institutions is very low. This used to be a high volume, low margin business but at this rate it is unsustainable,” said an industry official.

The cash and carry segment too is feeling the impact of low demand from the HORECA industry.

“We saw a 24 percent decline in sales of HORECA segment during the COVID-19 period. Footfalls and frequency from the HORECA segment increased but the average invoice value has gone down,” said LOTS Wholesale Solutions in a response to CNBC-TV18.

“Sales have now started picking up and has reached over 70 percent of the pre-COVID level,” it said. Most of the cash and carry players had been seeing a 10 percent YOY growth from this category.

“We at METRO have been reinventing and restructuring our strategies in real-time to adapt to our customer needs. We tied up with the government, defence services and few hospitals, as well as partnered with online food aggregator and logistics companies to supply inventories to HoReCa during the lockdown phase,” said Arvind Mediratta, MD & CEO, METRO Cash & Carry India.

“We hope for the sector to rebound in the next six months. However, it may take a year to reach the pre-COVID level of business,” he added.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow