1. Presentation by Sanjaya Mariwala – MD for KARVY COMTRADE LIMITED Bangalore 7 th Oct 2006

2. Indian Spice Industry and Market scenario A perspective

3. INDIA Largest Exporter of SpicesLargest Exporter of Spices Largest Consumer of SpicesLargest Consumer of Spices Largest Produces of SpicesLargest Produces of Spices Largest Importer of SpicesLargest Importer of Spices Fastest growing market of SpicesFastest growing market of Spices

4. Consumption by Sectors SegmentVolume Rs. Value Food service, QSRs, Restaurants 15,000 tons 90-100 crores Oleo Industry 50,000 tons 350 crores Exports in various forms 300,000 tons 1750 crores Food Industry – organised and unorganised 500,000 tons 3500 crores Retail in all forms 10,00,000 tons 7000 crores

5. Drivers of Growth in India Growing disposable incomesGrowing disposable incomes Trying/Venturing new food ideasTrying/Venturing new food ideas Exposure to Restaurants/Eating outExposure to Restaurants/Eating out Growth of Packaged foodsGrowth of Packaged foods Expansion and penetration of QSRExpansion and penetration of QSR Industrial Capacity growth – VA,Export….Industrial Capacity growth – VA,Export….

6. World markets of Spices Growing Awareness of India & ChinaAwareness of India & China Increase in acceptance of Indian/Chinese/Thai – Ethnic foodsIncrease in acceptance of Indian/Chinese/Thai – Ethnic foods Emergence of Fusion cookingEmergence of Fusion cooking Globalisation of tastesGlobalisation of tastes Use of spices in other “natural” areas of consumptionUse of spices in other “natural” areas of consumption

7. Spices Used in? FOODFOOD PERSONAL CAREPERSONAL CARE HEALTH CAREHEALTH CARE Snacks, meats, frozen foods, sauces, soups,seafood Paste, perfumes, creams, Deos, lotions Nutraceuticals, Medicines, Topicals

8. Fastest Growing Sectors Oleo Industry – 8-10% paOleo Industry – 8-10% pa Ground Spices – 8-10% paGround Spices – 8-10% pa Industrial 5% paIndustrial 5% pa Food Service 7-8% paFood Service 7-8% pa Retail/Pvt Label 8-10% paRetail/Pvt Label 8-10% pa Medicinal/Nutra 15-20% paMedicinal/Nutra 15-20% pa

9. Concerns/Threats facing the industry Consumption will grow fasterConsumption will grow faster Agri production and Productivity will not keep pace.Agri production and Productivity will not keep pace. Traditional farmers getting out of these cropsTraditional farmers getting out of these crops Traditional areas reducingTraditional areas reducing

10. Contnd… Pesticide residues in our crops not acceptable; can not sell world widePesticide residues in our crops not acceptable; can not sell world wide Practices of adulteration and use of contaminants giving us a bad namePractices of adulteration and use of contaminants giving us a bad name Presence of toxins make our crops unacceptablePresence of toxins make our crops unacceptable Artificial Protection under high tariffs not promoting Global competenceArtificial Protection under high tariffs not promoting Global competence

11. Characteristics of Spice crops/Markets Today They are generally grown as mixed crops.They are generally grown as mixed crops. Mostly rain fed, not irrigated except some- susceptible to fluctuations with climate.Mostly rain fed, not irrigated except some- susceptible to fluctuations with climate. Information available is poor in general, systems of collecting information are weak.Information available is poor in general, systems of collecting information are weak. Till now traditional farmers-uneducated have farmed them.Till now traditional farmers-uneducated have farmed them. Markets are not so price sensitive (trader driven)Markets are not so price sensitive (trader driven) Quality is a casualty in the market today.Quality is a casualty in the market today.

12. Opportunities in our face New areas have huge potential: Orrisa, Bihar, NE states.New areas have huge potential: Orrisa, Bihar, NE states. Andhra, TN and K’Taka strong farming communities: Can do in Copra, Chillies-why not in other Spices?Andhra, TN and K’Taka strong farming communities: Can do in Copra, Chillies-why not in other Spices? Young educated farmers are getting involvedYoung educated farmers are getting involved Emergence of Bio Tech in India can unleash productivity revolutionEmergence of Bio Tech in India can unleash productivity revolution More Value added activities being outsourced to IndiaMore Value added activities being outsourced to India

13. What will be the Industry Scenario in future? Value Addition will grow.Value Addition will grow. Indian Companies will go global.Indian Companies will go global. Retail & Food Service consumption will expand.Retail & Food Service consumption will expand. Retail sector in India will grow.Retail sector in India will grow. Price sensitivity will increase. (organised buying)Price sensitivity will increase. (organised buying) Industry will migrate to other countries if production does not increase.Industry will migrate to other countries if production does not increase. Speculation without relating with International prices will carry extreme risks.Speculation without relating with International prices will carry extreme risks.

14. To Sum Up: In the Short Run:1-2 yearsIn the Short Run:1-2 years –Demand for spices will be Robust –Supply will be Tight –Market will be Volatile but Firm In the Medium Term: 2-3 yearsIn the Medium Term: 2-3 years –Supply will fluctuate but increase –Demand will stay Robust –Prices will be Volatile In the Long Term: 3-5 yearsIn the Long Term: 3-5 years –Tariffs will be rationalised-protected margins will go –Demand changes will happen UP or DOWN –Supply will Increase