Packaged edible oils in India are one of the largest selling FMCG goods since they are used in a slew of edible products and cooked food. According to Rabo Research, India’s vegetable oil consumption will grow by three percent and exceed 34 million tonnes by 2030.
Anil Modi Oil Industries and its brand Modi Naturals were early movers in this space since they set up shop in 1974 and have been reaping the benefits of this growing market. Launched under the leadership of DD Modi, the family business initially supplied processed edible oil (rice bran oil and wax, sunflower and mustard oil, and byproducts) to FMCG businesses and became known as the largest processor of rice bran oil.
Over time, Modi Naturals entered the consumer segment, pursuing higher product margins, is responsible for the healthy oil brands Oleev, Olivana, Rizolo, and Miller Canola oil. Akshay Modi, who took over as Executive Director in 2008, spearheaded the transformation from B2B to B2C.
Under him, the company recorded a turnover of over Rs 293 crore last year. “Since I joined, we have seen many milestones,” Akshay says. “In 2009, we launched a refined rice oil by upgrading our refinery, and in 2012 we launched the Oleev brand of premium olive oils and blended oils. This year, we unveiled PIPO, which is a premium quality ready-to-cook popcorn.”
For Akshay, the packaged edible oil market is a sea of opportunity. “The market in India was worth Rs 1.3 trillion in 2017, making it the largest selling FMCG packaged good in the country,” he explains. “Premium healthy oils have a Rs 2000 crore market. We are tapping into it with our value-added offerings, purity and processing.”
Modi Naturals refines its oils based on inputs from its R&D team of scientists and nutrition experts, in an attempt to “match the needs of today’s health imperatives.” Akshay adds, “We aim to be the go-to brand for healthy diets and prevention of lifestyle diseases.”
For Akshay, ensuring good quality does not mean that taste can be compromised. “Cooking oils have to make food more palatable, better-cooked and tastier. At the same time, they need to be rich in essential fatty acids that help in breaking down bad cholesterol,” he explains.
According to him, Modi Naturals’ products also contain cardizymes for heart health, antioxidants for waste cleansing from the body and several other nutrients.
In an effort to protect the environment, the business saved around 7,000 tonnes of CO2 emissions in 2008-09 by using alternative fuels for its energy requirements, says Akshay. “This number has been rising steadily over the years and we expect it to increase twofold over the next two years,” he adds.
“We have also initiated a challenging agricultural extension programme through which we reach out to the smallest of farmers near our manufacturing facilities to help them with their sunflower crop, ensuring superior quality produce and high profitability for the farmers.”
However, challenges still remain. Last year, the supply of oilseeds from domestic markets was stagnant, but there is hope as production is projected to rise, Akshay maintains. Another challenge for the brand is the pervasiveness of unhealthy unpackaged oils which are still widely used. “Their quality and beneficial effects may not always be reliable. This is a serious issue for public health,” he comments.
Over the last few years, Akshay’s leadership has seen the company manage operations better. “For supplier management, our supply chain team works closely with senior management along with digital tools to ensure things run smoothly and the supplier is also happy,” he describes.
“For cash flow management, the company maintains strict discipline as per internal policy. For instance, the consumer business runs entirely on advance payment in the unorganised retail sector. For capital management, the company has various avenues to manage its capital requirements such as good relationships with banks as well as being listed on BSE. This opens up opportunities to raise equity and provides investors an easy exit route.”
With Akshay at the helm, the company is expecting rapid growth in both the consumer and manufacturing divisions. “We will do well after just coming out of a 12 to 18-month period of disruptions such as demonetisation, GST and multifold increase in import duties on edible oils,” he says.
MSMEs were the hardest hit by these disruptions. Adding to this, Akshay says, “Medium and small-scale enterprises in India are characterised by fragmentation and disaggregation. This is due to both geography and administrative divisions. Nevertheless, there is plenty of potential as technology and adoption of digitisation are changing the landscape of small businesses across India.”