CASE STUDY-India’s halal meat production pioneer Hind Agro Industries finds room for growth in OIC markets

COMPANY OVERVIEW

Hind Agro Industries Limited (HAIL) is a pioneer of halal meat production in India. Established in 1990, the company distributes lamb and buffalo across India, with 29 percent of its products exported primarily to OIC countries. The company is listed on the Bombay Stock Exchange (BSE).

KEY ACCOMPLISHMENTS

1. The company has achieved 4 percent cumulative annual growth, with revenues growing from $20 million to $23 million between 2011 and 2014.
2. Hind Group received 10 consecutive annual awards from APEDA (Agricultural and Processed Food Products Exports Authority) and three National Productivity awards for export of excellent quality meat, from the Government of India’s Ministry of Commerce.

OPPORTUNITIES BEING ADDRESSED: Reaching domestic and international halal food needs

Indian Muslims spent $34 billion on food and beverage in 2014 and there is significant potential in the domestic halal food market. This market is expected to grow by 8 percent per annum to reach $55 billion by 2020. 

However, despite a sizeable potential market for halal food products, lack of clear labelling and halal food regulation is limiting Muslim consumer spend on halal products. 

Food safety and standards authority of India (FSSAI) has made it mandatory to disclose the vegetarian and non-vegetarian ingredients in packaged foods by a clear visible logo but such official declaration is not required for halal or non-halal classification.

There is substantial opportunity for a player with established halal operations to build credibility with Muslim consumers.

India exported $2.1 billion in meat and live animals to OIC countries in 2014. With OIC members heavily dependent on food imports, there is substantial opportunity for market players in India to grow export revenues.

COMPANY STRATEGY

Slaughtering animals raised according to international standards: HAIL is the only company in India to have the unique facilities of slaughtering animals which have been bred and reared on strict guidelines set by the O.I.E. – World Organisation for Animal Health.

Farmers are encouraged to rear male buffalo calves specially for supply to the company under contractual farming. The company has also intensive feed lots to raise male buffalo calves on organic farms with natural feeds.

Close linkages with the government: HAIL has an industry-leading modern abattoir-cum-meat processing plant in India at Aligarh in the State of Uttar Pradesh in North India. It is a joint venture of Hind Industries Limited, the government of Uttar Pradesh, and was assisted by the government of India. This plant is approved by all relevant departments for the production and export of meat products.

Selling to OIC markets: HAIL has exported over $4 million of primarily buffalo meat to OIC countries, underpinned by a credible halal certification and a meat processing capacity of 24,000 metric tons (MT). It is also certified by APEDA.

The partnership with the government has added to the company’s credibility in international markets.

COMPANY OPPORTUNITIES

Expanding into retail via quick service restaurants: Hind group has entered into the retail outlet business for quick service restaurants through its investment in Fast Trax. Although current locations are in Delhi, it is planning to expand nationally.

Drive domestic revenue growth through expanding the retail and product footprint: There is significant opportunity for the company to expand its foodservice footprint through the Fast Trax brand, as well as to venture into prepared frozen and chilled meals for distribution through retail outlets.

Establishing operations overseas: Establishing operations in halal hubs in Malaysia and the UAE will help the company strengthen its foothold in the OIC markets, following the strong example set by Brazil’s BRF, which opened a plant in Abu Dhabi in 2014.

COMPANY CHALLENGES

Managing costs: HAIL has experienced a rapidly rising cost base, with net profits declining by 50 percent between 2011 and 2014 and currently at less than 1 percent of revenues.

Factors causing this include rising raw material costs and transportation costs. To enhance profitability, HAIL needs to review its operations and consider building further economies of scale, potentially through establishing operations in key export markets.

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