IFM

Indian Flour Mills : 

Indian Flour Mills An analysis

India : 

India The industry had Organised sector – Milling operations Unorganised sector – Chakkis Mostly small scale industries Majorly produced are Coarse flour Semolina Barn Wheat germ Rapid growth in milling industry seen between 1985 and 1997 The milling Industry was spread across all locations and necessarily in the wheat belt

India : 

India This industry witnessed 3 clear phases in its evolution License regime Deregulated period Post liberalization During the first 2 phases FCI (Food corporation of India) played a key role Prior to 1986, wheat cannot be bought in the open market Post 1986 it was made possible

India : 

India Prior to 1986 Price was fixed by FCI Capacities for both milling and storage were fixed The products were sent back to FCI after milling FCI was solely responsible for distribution and sale 1986 – Deregulation Licenses were removed No control; on prices FCI bought lesser qty to cover strategic reserves This manifested into competition and open market Power shifted to consumers Liberalization Consumption and production increased Brought in International players FCI donned the regulator role

Structures Impacting : 

Structures Impacting Government bodies Govt Ministries – Mktg Ministry of Food and Consumer affair – economy and FCI Ministry of Food processing – Milling industries Ministries of Rural areas and development – market system State agriculture mktg boards Taxes Purchase / Product tax Market fee Rural Development fund Pucca Arthiya commission Kuchha Arthiya Commission Mandi expenses Infrastructure Cess

Significant shifts : 

Significant shifts The libaralisation lead to sign GATT and now part of WTO – Product specifications and prices Entry of large and MNC players Support to farmers from the large players Increased focus on Distribution and sales Internationalisation and convergence of food habits Disposable incomes Emerging Organized Retailing

Firm : 

Firm Started in 1992 Closer to the wheat belt Had a capacity of 185tons (from 120) Was considered as a quality product for bakery All segregation happened at the mill level Had its own distribution setup but was focused in North of India

What happened to the Firm? : 

What happened to the Firm? Started incurring losses Technology did not impact scale and cost Support industries did not develop as required Different use of wheat in different parts of Country The MNC entered with huge capacities and expanding The MNC operate milling facilities closer to consumers. The firm was at cross roads!

So what should IFM do? : 

So what should IFM do?

Porter’s Diamond Frame work : 

Porter’s Diamond Frame work

Porter’s Diamond Frame work : 

Porter’s Diamond Frame work Firm Strategy, Structure and Rivalry Competitive and an open market with multiple players Huge Domestic consumption Entry of MNC Large capacities or consolidation is happening Factor Conditions Less Technology driven Segregation and MNCs involvement in product development Policies framed to favor competitiveness Fragmented market with different usages by regions Related and Supporting Industries Growing retailing Increased efforts on logistics No branded processors Ware housing issues Demand Conditions Large wheat consuming population Geographical preferences Influence of Western food habits Demand for packed food – ready to eat and ready to cook New foods like cereals Wheat germs use in skin care

Porter’s Diamond Frame work : 

Porter’s Diamond Frame work Government Gone a long way to create competition No clear strategy to develop domestic players No Investments in R&D Logistics Warehousing Processing Clash of interest among various central and state bodies FCI still around with no clear purpose Chance – Future Options: Become 3rd party converter to MNCs/large companies Relocate closer to consumer location Enter new market Enter new product category Lobby with Government Exit business

Ansoff’s : 

Ansoff’s

Palette People : 

Palette People Chappati Upma