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W15381

FIELDFRESH FOODS: FROZEN VEGETABLES BUSINESS

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Davinder Singh and Uday Gosain wrote this case solely to provide material for class discussion. The authors do not intend to
illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other
identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
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organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
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Copyright © 2015, Management Development Institute Gurgaon and Richard Ivey School of Business Foundation Version: 2015-09-03

Sanjay Nandrajog, the chief executive officer of FieldFresh Foods Private Limited (FieldFresh), finished
reviewing the report on the operations of the frozen foods business. It was February 2012 and Nandrajog
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was in the midst of business planning for the following financial year (April 2012 – March 2013). The
meeting with the board in which they were to discuss the strategy and plans for each of the business
segments, including the frozen vegetables business, was scheduled for March 5, 2012. The frozen
vegetables business had been in operation for a little less than a year, and it was time to evaluate its
performance and recommend the future course of action to the board.
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FIELDFRESH FOODS PRIVATE LIMITED (FIELDFRESH)

FieldFresh, headquartered at the landmark Airtel Centre, in Gurgaon, India, was incorporated in 2004 as a
joint venture between Bharti Enterprises and the Rothschild family. Bharti Enterprises, one of the largest
telecom companies in India, had decided to become a pioneer in setting up businesses in some of the
underdeveloped sectors of the Indian economy. Agri-business was identified as one such sector. The
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Bharti group believed in both the business potential and the opportunity to impact the lives of millions of
people in rural India through agri-business.

FieldFresh had decided to engage in horticulture, namely fruits and vegetables. Given its abundance of
cultivable land and its 15 agro-climatic zones, India had the potential to become the horticulture basket of
the world, and in fact, produced a wide variety of fruit and vegetables in large quantities. Accordingly,
FieldFresh decided to engage in the entire value chain of fruits and vegetables. Sunil Bharti Mittal,
chairman of Bharti Enterprises claimed: “The underlying philosophy behind our FieldFresh operations is
to link Indian farms to the world by creating India’s first global outsourcing opportunity in fresh
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produce.”

Various studies and visits to Europe and the United States had led to the realization that packed fruits and
vegetables was big business that involved high value creation in these markets. FieldFresh, therefore,
started operations by exporting packed fruits and vegetables to the overseas markets. The company was
confident that with the right inputs of technical knowledge and market access, they would be able to meet
the global quality standards required to supply these markets.

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FieldFresh, like other Bharti companies, had a strong entrepreneurial inclination. Cognizant of the need to

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build competencies required to successfully manage the agri-business, FieldFresh management put
emphasis on learning through experimentation and innovation (see Exhibit 1). For sourcing fresh fruits
and vegetables, the company had tried multiple models, including company-managed agriculture on
leased land, contract farming through existing farmers, sourcing through intermediaries and even
formation of alliances among universities, development agencies and farmers.

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Apart from sourcing, FieldFresh had undertaken innovative initiatives to improve the logistics
infrastructure, which was underdeveloped and not adequately equipped to handle physical movement of
fresh fruits and vegetables. The company collaborated with government agencies and other members of
the cold chain infrastructure in improving the logistics. Mr. Rakesh Bharti Mittal, vice-chairman of Bharti
Enterprises and chairman of FieldFresh, noted: “India presents a great opportunity in horticulture. The
opportunity lies in rapidly enhancing farmer incomes through productivity increases, supply chain

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infrastructure and collaboration with state and non-state players.”

In 2005, FieldFresh set up an agri-centre of excellence in Punjab, a state in north India, with an
investment of ₹1,000 million1 in order to conduct research and development (R&D) of fresh vegetables.
FieldFresh undertook crop R&D on the fresh vegetables that could be exported to markets in Europe.
Mushrooms, okra, chilies, fine beans, snow peas, sugar snaps and cauliflower were grown and exported
from Punjab. Simultaneously, fruits including grapes, pomegranates and mangos were exported from
Maharashtra, a state in western India. The fruits were sourced from traders and farmers (a practice that
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was prevalent among the exporters). The FieldFresh team sorted, graded and packed the produce prior to
the shipment.

In 2007, the Rothschild family’s stake in FieldFresh was acquired by Del Monte Pacific Limited (DMPL),
a leading producer and marketer of premium processed foods and beverages in the Philippines. DMPL
brought their experience and strength in the area of processing fruits and vegetables to the joint venture.
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Following this change, FieldFresh added ketchup, sauces, beverages, Italian food items, canned fruits and
many other culinary products, to the company’s product range. These products were sold under the brand
name of Del Monte. A new vertical business handling these products was created and investments were
made in manufacturing, supply chain, and sales and distribution systems (see Exhibit 2). In the meantime,
the exports of the fresh fruits and vegetables had continued to grow as a separate vertical business.

By 2008, FieldFresh had acquired experience in several crop cycles across fruits and vegetables.
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Recognizing the risks posed by the pesticide residues in traded crops, FieldFresh decided to produce and
market crops where it could control or influence the agri-value chain, from seed selection to harvesting.

In 2009, FieldFresh decided to expand the fresh fruits and vegetables business. Apart from exporting to
overseas markets, the company started to sell fresh fruits and vegetables in Indian markets as well. The
retail scenario in India had been undergoing considerable changes since 2005. The organized modern
trade channel had been expanding in the country. The chains of modern trade outlets had aggressive plans
for continued growth. This channel required organized suppliers to source fruits and vegetables for sale at
their outlets. FieldFresh recognized it as an opportunity and started supplying fruits and vegetables to
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these retail chains.

With each initiative and start of a new business segment, the company gained experience in and
knowledge of the various elements across the value chain of the fruits and vegetable business, lending
depth to its strategic decisions. The successful initiatives were supported with increased resources and
1
All currencies are in ₹ (INR) unless stated otherwise; ₹1= US$0.02 on May 25, 2015.

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management attention so as to accelerate growth. The initiatives that were not likely to succeed or be

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profitable were discontinued quickly, thereby releasing resources and management attention to support
successful initiatives. The company’s goal was to post revenues of ₹5 million by the end of the financial
year 2014-2015.

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FROZEN VEGETABLE BUSINESS — INDIA

In the middle of 2010, FieldFresh took a decision to sell frozen vegetables in the domestic market. The
product was launched in April 2011. The Indian frozen vegetable business in 2011 was estimated to be
about ₹6,400 million (see Exhibit 3) with growth rate of nearly 20 per cent. The business was largely in
frozen green peas (FGP) and frozen sweet corn (FSC). The range of other vegetables being sold in frozen
format constituted a small share of the market.

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Among the various channels, food services had the largest share of the business and comprised customers
with a high requirement of frozen vegetables (see Exhibit 4). The general retail trade and emerging
modern trade had a smaller share of the business. This reflected the low consumption of these products in
households. Indian families preferred fresh vegetables and would buy only limited quantities of frozen
vegetables. Food service customers, on the other hand, needed frozen vegetables throughout the year. The
demand for frozen vegetables was high from April to November, when fresh produce was not available in
large quantities.
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The number of brands and companies competing in the frozen vegetables market was large. However,
only a few of these had a pan-India presence. Safal, the fruit and vegetable arm of the dairy manufacturer
and marketer Mother Dairy, was the biggest and had an all-India presence. Godrej, Al Kabeer and
Innovative Foods were the other companies with a pan-country presence. Their primary products were
frozen non-vegetarian products with volumes that were higher than those for frozen vegetables. The
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companies were leveraging the distribution infrastructure that they had established for frozen non-
vegetarian products to sell frozen vegetables. Most of the other companies in the frozen vegetable market
had a regional presence and did not have frozen non-vegetarian products.

Most companies did not have their own processing plants and were getting their requirement processed on
a contract basis. A few companies had set up plants to process and freeze fresh vegetables, and they
utilized their infrastructure to package the product for both themselves and other brand owners.
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FROZEN GREEN PEAS (FGP)

The cultivation of fresh green peas was concentrated in the northern part of India, in the states of Uttar
Pradesh, Uttarakhand, Himachal Pradesh, Punjab and Rajasthan. Small amounts of cultivation were being
undertaken in the states of Madhya Pradesh in central India and Gujarat in western India. On average, the
estimated quantity of annual cultivation of green peas at the national level was about five million metric
tonnes. Like all agricultural produce, there were variations in the harvest quantity from year to year.
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Annually, about 500,000 metric tonnes of fresh peas would be processed by de-shelling and freezing
using individual quick freeze technology. The total output of frozen peas was about 150,000 metric
tonnes. The difference was mainly on account of the shell, which was discarded as waste. The combined
sale of the multiple small processors constituted the major share of the total quantity. The combined sale
of the national level brands was relatively low (see Exhibit 5).

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Fresh green peas required for processing were primarily sourced from the agri-trade markets. The fresh

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produce would arrive at these markets from December to March. The produce from different growing
regions arrived in a staggered manner over this time period. The quantity and quality of the produce
arriving at the markets influenced the prices, which could vary on a daily basis. The agri-markets were the
major source of fresh green peas for the processors of FGP. Only a small quantity of about 10 per cent
was procured directly from the farmers.

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Fresh green peas needed to be processed within a day of procurement, while they were still fresh. Once
processed, the frozen peas had to be kept at a temperature of minus 18 degrees Celsius. Though frozen
peas were consumed throughout the year, the demand was low from December to April, when fresh peas
were available in abundance and usually at low prices. The frozen produce was required to be kept in cold
storage at a monthly charge. Many manufacturers were willing to sell the stock earlier, even at low prices,
in order to reduce the storage costs. This would, therefore, lead to variation in prices for the frozen

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produce, especially in the food service channel. The brand owners had limited ability to dictate prices in
this channel. They, however, had the ability to decide on the prices in the modern trade and general trade
A category (GTA) channels that catered to the demand from the household segment of consumption.

FROZEN SWEET CORN (FSC)

Fresh sweet corn was grown largely in the states of Maharashtra and Gujarat in western India, Madhya
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Pradesh in central India and Karnataka in south India. About 90,000 metric tonnes of fresh sweet corn
was used for processing into frozen format. The output of the FSC was 23,200 metric tonnes per annum.
Trimurti and Safal were the biggest brands of FSC. Unlike FGP, the share of sale by the small brand
owners was small for FSC; most of the FSC was sold by larger companies (see Exhibit 5).
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SUPPLY CHAIN

Fresh green peas and sweet corn would be sourced mostly from agri-trade markets, with a small quantity
being sourced directly from farmers. The procurement of fresh agricultural commodities was a complex
operation. Depending on the quantity and quality of the produce arriving at agri-trade markets, the prices
varied across markets and time. The processors had, over time, obtained the knowledge and skills
required for efficient procurement of the required agricultural commodities. The companies that did not
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have their own processing equipment had limited capability in procurement. Therefore, these companies
relied on the contracted processors for sourcing the raw fresh produce. This reduced their ability to
influence and determine the procurement cost and consequently, the cost of goods sold.

The frozen vegetables were required to be kept at a temperature of minus18 degrees Celsius through the
entire distribution chain. The logistics infrastructure for physical storage and transportation of the frozen
products was not sufficiently developed in the country, resulting in high distribution costs. Availability of
deep freeze storage equipment was low in the general retail trade segment of the market. The distributors
with appropriate storage and distribution vehicles were limited in number, and they were mostly present
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in big cities that had a sufficiently high demand for the product. These factors resulted in high costs for
transporting the frozen product over long distance. Most companies had a regional presence in markets,
which were close to the production locations.

The companies, in general, did not invest in brand building. Only a few companies such as Mother Dairy
(Safal brand) had invested in building their brands. Most manufacturers sold their product by quoting low
prices rather than brand differentiation or quality. There were two reasons for this. Firstly, most of the

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brands were available within a limited geography and not all across India. Secondly, the food service

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channel which was neither quality-oriented nor brand-conscious, sought low prices.

STRATEGIC CHOICES — FIELDFRESH FROZEN VEGETABLE BUSINESS

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In August 2010, FieldFresh decided to enter the frozen vegetable business using the following to build a
competitive advantage:

1. Launch both frozen green peas and frozen sweet corn.

2. Build national level distribution with availability in metro and tier1 cities.
3. Invest in building consumer brand on the platform of high and consistent quality.
4. Have strong control over the supply chain, especially on procurement and processing of fresh

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produce.
5. Wherever possible, use the existing competencies in growing and sourcing the crop.

FieldFresh decided to launch both FGP and FSC because these two accounted for nearly 90 per cent of
the market. The market for other frozen vegetable products was small. By choosing not to launch other
products, the company could focus on the two products and exercise control over the supply chain.

The company decided not to invest immediately in processing. Third party contract processors were
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identified in both north and west India. In the north, a processor based at Rudrapur, a town with a large
agri-trade market for fresh peas, was selected for the production of FGP. This processor was to be the
only supplier to meet the entire requirement of FGP for FieldFresh. For FSC, another processor, based at
Jalandhar, a town close to FieldFresh’s sorting and packing facility at Ludhiana was chosen. This
processor was to meet the requirement of FSC for sale in north and east India. The company selected a
third processor based at Pune in west India for sourcing FSC to meet the market demand in west and
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south India. FieldFresh considered this distinction as important. The distributors and sales team for frozen
vegetables comprised people who had previously been engaged in selling or distributing ice cream, which
required unbroken cold chain distribution.

Prior to launching its own brand, FieldFresh wanted to understand the sales and distribution aspects of the
frozen vegetable business. From October 2010 till the formal launch in April 2011, the company procured
products with the processors’ brand name. FieldFresh sales team sold this product in the city of Delhi.
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The early start gave the sales team the much-needed experience and opportunity to understand the
dynamics of the business and initiate the process of building a distribution network. They built
relationships with potential distribution partners and important customers, and they understood the
product specifications and service demands expected by the consumers. This knowledge, gained prior to
the formal launch in April 2011, allowed the sales team to facilitate the rapid expansion of distribution
across the country.

Within a short time period — nine months from the formal launch — the company had covered 47 cities
with 68 distributors spread across all regions of the country. For width of distribution they had to reach
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the smaller towns, but the sales team had to overcome the high distribution costs associated with this
expansion. They developed special insulated packs for bulk deliveries. These packs ensured that the low
temperature of the frozen product was maintained and the product remained frozen during the
transportation. Deploying these packs, the sales team could use the non-refrigerated logistics system in
place of the expensive cold/frozen logistics vehicles and save on the cost. Various small towns were

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included in the distribution coverage. These towns had to be less than six hours of transport time away

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from a big city where the company had to have a cold storage facility.

The team had established sales to not only the food service channel but also the general trade and modern
trade channels. The sales and distribution dynamics of the food service channel were different from those
for the other two channels. The team for the food service channel was different from the one that handled

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both the general retail trade and modern trade channels. The focus was on coverage of the modern trade
(MT), general trade A category (GTA) and food service A category (FSA) channels. The customers in
these channels sought high quality and service. Exhibit 6 outlines the details on the distribution coverage
achieved by January 2012. The outlets in the general trade others (GTO) and food service others (FSO)
were not covered directly but through the wholesale trade and were categorized as the other channel.

BRAND BUILDING

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The company invested in brand building through many initiatives. The product specifications were set at
higher levels than those for competition. The procurement and processing teams strived to meet and
exceed these specifications. As a result, customers started to recognize and appreciate the higher quality
of the product. This, in turn, created demand for the company’s products. The attractive packaging further
strengthened the quality image of the FieldFresh brand.
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Sampling of FSC among consumers was undertaken across all cities. This was done with the intent to
create awareness and trial, thereby motivating household consumers to adopt and consume FieldFresh
FSC. The sampling activity was undertaken primarily in the MT channel because it provided an
opportunity to interact with a large number of consumers.
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PRICING

The variation in pricing across brands was high (see Exhibit 7). The national brands were priced higher
than the regional brands. The outlets in Modern Trade (MT), general trade A category (GTA) and the
Food Service (FSA) A category required high quality products and these outlets were willing to pay a
higher price for them. The low-priced products were favoured by smaller food service other (FSO) and
general trade other (GTO) customers. FieldFresh had decided to focus its efforts on maintaining high
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product quality coupled with investments in brand building and customer service. Therefore, the company
had decided to price its products at a level higher than the competition.

SUPPLY CHAIN

FieldFresh had been procuring fresh sweet corn for exports. The company had gained relevant knowledge
about best practices in farming for sweet corn. They had developed contract farming for sweet corn with
farmers near the company’s sorting and packing facility at Pune in west India. This learning and
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capability to source sweet corn through contract farming was replicated in north India. The company
contracted farmers near its sorting and packing facility at Ludhiana for sweet corn. At both locations, the
company provided the premium variety of extra sweet corn to be cultivated. This provided differentiated
and superior product in comparison to competition. The fresh sweet corn was received at the company’s
sorting facilities at Pune and Ludhiana. The manual removal of corn from the cob was undertaken by
workers at the two facilities. At the Ludhiana facility, the company deployed a mechanical system along

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with the manual one for removing corn. The corn was subsequently sent to processors for freezing and

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packing. The FSC was stored at the processors’ cold storage for which FieldFresh paid a monthly charge.

FieldFresh did not have the experience and knowledge of sourcing fresh green peas. They had selected a
processor who would procure the fresh peas and process them on a contract basis. FieldFresh did not have
control over the procurement cost. The FGP was stocked at the processor’s cold storage and FieldFresh

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paid a monthly charge for this.

BUSINESS PERFORMANCE

The company had been successful in creating a good sales and distribution network within a short time
period, covering major consumption markets and channels. During the first year of operations, the

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company had tested both the product and the market. In financial terms, the year to date performance in
January 2012 showed that the gross margin had been low. The gross margins for FSC and FGP were –6
per cent and 2 per cent respectively, and the combined gross margin was –2 per cent (see Exhibit 8).

While the sales made to MT channel were at positive gross margin, the gross margin was negative for the
rest of the channels. FieldFresh had been able to get higher prices from MT channel outlets due to the
brand building efforts at these outlets. These efforts engaged the consumers who purchased the products
for household consumption. A small section of the outlets in GTA and FSA were convinced about the
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higher quality of FieldFresh products and they were willing to pay the higher price. It was apparent that a
large number of the outlets were going to take longer to recognize the higher quality of FieldFresh
products and, therefore, would be unwilling to pay a premium over the prices for the competition. It
would take the sales team more time to convince these outlets about the higher quality before charging
higher prices.
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THREE-YEAR FORECAST

The business planning exercise at FieldFresh was undertaken annually during January and February. The
teams from various business segments would prepare rolling forecasts for a three-year period. The same
was prepared for the frozen vegetable business segment (see Exhibit 9). The geographical expansion was
proposed to be continued; more cities were to be covered, with 72 cities targeted by the end of the
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financial year 2014-2015. Additionally, the team was planning to increase penetration in MT, GTA and
FSA channels and cover a higher number of outlets in these channels. The goal was to increase the
coverage to 50 per cent of potential outlets over the following three years (see Exhibit 9).

The sales team had decided to focus their efforts on GTA and FSA and continue with brand building
activities. They were confident that starting from the financial year 2012-2013, the net sales revenue
would increase by ₹5 per kilogram and ₹3 per kilogram in GTA and FSA channels respectively. The
sustained marketing efforts would additionally allow them to increase the revenue by ₹2 per kilogram
from sales through MT channels in financial year 2012-13 and by additional ₹2 per kilogram from 2013-
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14 onwards. However, outlets in GTO and FSO channels would continue to look for low prices instead of
quality. The forecast included the expense budget for sales team salaries, marketing and promotion
activities (see Exhibit 10).

Nandrajog had finished reviewing the plan with the team. There was much discussion during the review.
The points raised by different participants were divergent at times. While the sales and marketing team
had an optimistic and aggressive perspective, the finance team was stressing being conservative and

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exercising caution. The supply chain was confident that the experience they had gained would enable a

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reduction in the cost of goods sold by ₹2 per kilogram in the financial year 2012-2013, followed by a
further reduction of ₹1 per kilogram from the financial year 2013-2014.

Nandrajog also had a look at the business plan prepared for Del Monte products business. The list of
channels that Del Monte business would focus on for the various product categories sold under the Del

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Monte brand (see Exhibit 11) caught his attention. Recalling the debate that the team had had about the
similarity between Del Monte and the frozen vegetable business in these channels, Nandrajog picked up
the three-year forecast and reviewed once more the financials prepared for the frozen vegetable business.
Numerous questions ran through his mind: What would be the best way to structure the frozen vegetable
business and scale it up? Could the business manage to be profitable? What should be the way forward?

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EXHIBIT 1: ENTREPRENEURIAL AND LEARNING SPIRIT OF FIELDFRESH

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Right from the onset of the operations, the FieldFresh team had decided to be entrepreneurial. When
faced with challenges, they responded quickly and decisively. In 2005, the initial export shipments of
fresh produce to the United Kingdom were not successful. By the time the air consignment of mushroom
and okra reached offshore destinations, much of the produce had gone bad. The company realized that
timely movement of fresh produce from farm to distant markets was a daunting task because of the

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underdeveloped infrastructure. The facility that handled perishable produce at Delhi airport was not
adequately equipped. The fresh vegetables would reach the airport in refrigerated trucks which
maintained the temperature in the required range of 0 to 2 degrees Celsius. However, the transfer from
the truck to the airport facility and thereafter to the aircraft was not always at the required low
temperature. There were sharp temperature variations which had adverse impact on the quality. Instead
of waiting for the infrastructure to improve over time, the FieldFresh team decided to be entrepreneurial.
They initiated discussions with the Punjab state government to set up a facility to handle perishable
goods at Amritsar International Airport, which was significantly closer in comparison to the Delhi airport.

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This, in turn, reduced the time to move the produce and eliminated the temperature variations.

With the intention of conducting agricultural research and development (R&D), FieldFresh had set up an
agri centre of excellence (ACE) in 2005. ACE was one of the largest integrated horticulture R&D facilities
of its kind in the country. The focus was to develop and conduct trials of export-oriented crops and
promote sustainable farming techniques to ensure optimum use of water, chemical fertilizers and
pesticides. The centre had 300 acres of land developed with an investment of ₹600 million. Of this, 206
acres and 30 acres were used for open cultivation and protected cultivation respectively. A world-class
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vegetable processing facility with sorting, grading, packing and pre-cooling facilities was set up in October
2007. FieldFresh complied with international certifications such as Global GAP & Tesco’s Nurture
Scheme, Marks & Spencer’s Field to Fork for the farms, BRC (British Retail Consortium) Certification for
the Pack House and ETI (Ethical Trade Initiatives) on the personnel front.

For the domestic operations, as a commitment to the state of Jammu and Kashmir, FieldFresh had
initiated contract farming for apples with an alliance formed along with International Finance Corporation
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(World Bank organization) and Sher-e-Kashmir Agricultural University. The alliance was to provide the
required inputs for capacity building of farmers. The alliance partners and FieldFresh provided the
farmers with a good price for the produce. The arrangement provided a good source of fresh apples to
FieldFresh. Similarly, FieldFresh worked with banana growers in the states of Gujarat and Maharashtra to
build their capabilities and source the fruit from them.

In order to establish sourcing which was predictable and dependable, FieldFresh decided to engage
farmers in a long-term relationship. FieldFresh ventured into contract farming in 2008. Instead of owning
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the land and carrying the associated risk (corporate ownership of agriculture land was not allowed, and
the regulatory framework restricted individual ownership to a mere 22 acres of cultivable land), the
company made contracts with numerous local farmers. The farmers were assured of sustained support in
the entire value chain of farming. To support the farmers in producing high quality crops, FieldFresh
provided them with knowledge about contemporary farming techniques through its farm extension team.
The support was provided in the form of latest soil management techniques, better seeds and
implements. The company’s commitment to purchase farmers’ produce at predetermined prices removed
the market risk of the latter and ensured a secure supply of the fresh produce to meet the requirement of
the company. Incentives, in the form of a higher procurement price, were offered for high quality produce.
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Over the years, these efforts had resulted in improving the quality of produce to levels where the
company was confident of substituting imported Del Monte products with the indigenous product. In 2012,
trials were conducted in which sweet corn sourced from local farmers, covered under the contract
farming, was packed in cans for sale under Del Monte brand.

Source: Company records and interview with company executives.

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EXHIBIT 2: FIELDFRESH AND DEL MONTE JOINT VENTURE

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FieldFresh Foods, a joint venture (JV) between Bharti Enterprises and Del Monte Pacific Ltd., had
invested ₹1,150 million in a state-of-the-art research and development and manufacturing facility at
Hosur, Tamil Nadu, a state in southern India. The facility was capable of producing food and beverage
products under the label Del Monte, a brand with over 120 years of rich international heritage. Formed in
2007, the JV for the processed food and beverage business had introduced a range of over 68 stock

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keeping units by 2010. The sales and distribution had made major inroads in the consumer and
institutional markets in India.

At the inauguration of the manufacturing facility, Rakesh Bharti Mittal, vice-chairman and managing
director of Bharti Enterprises, had stated:

This investment underlines FieldFresh Foods’ commitment to delivering world class products of
great quality and taste for the discerning Indian consumers and raising the standards of the

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industry. Going forward, our vision is to make Del Monte one of the top 10 brands in the
processed food and beverage industry over the next few years.

The facility was spread across 21.4 acres and aimed to create new benchmarks in the Indian processed
food and beverage industry. It had the capability to produce fruit drinks as well as culinary products such
as ketchups, sauces, mustard sauce and mayonnaise, making it the first of its kind in India.

Sanjay Nandrajog, the chief executive officer of FieldFresh Foods, had elaborated:
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. . . the facility has been designed as a fully integrated unit, with capabilities ranging from product
research to processing, and from packaging to warehousing. We are confident that this facility will
provide us with the speed to market advantage and the opportunity to create world class offerings
that suit the Indian palate.

Apart from producing innovative consumer products, the facility was designed to give the Del Monte
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brand greater flexibility and responsiveness in meeting the ever-evolving needs of its customers,
especially the hotels, restaurants and catering clients, airlines and modern retail. The pan-India
distribution for the brand covered approximately 35,000 general trade outlets, 2,500 modern retail outlets,
and several large-sized quick service restaurant chains, hotels, independent restaurants and airlines.

Source: Company record and press releases.

No

EXHIBIT 3: FROZEN VEGETABLES MARKET IN INDIA (2011)

Volume Value
(t) (₹ Mn.)
Frozen Green Peas (FGP) 150,000 5,000
Frozen Sweet Corn (FSC) 25,000 1,000
Others 12,000 400
Total 187,000 6,400
Do

Note: t = metric tonne and Mn.= million

Source: Company files.

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t
EXHIBIT 4: CHANNEL-WISE SPLIT FROZEN VEGETABLES MARKET IN INDIA (2011)

os
Value
Channel (₹ Mn.)
Modern Trade (MT) 750
General Trade A Category (GTA) 200
General Trade others (GTO)

rP
950
Food Service A Category (FSA) 1,200
Food Service Others (FSO) 3,300
Total 6,400
Source: Company files.

EXHIBIT 5: MAJOR BRANDS/COMPANIES IN THE FROZEN VEGETABLES MARKET

yo
IN INDIA (2011)

Quantity sold in
2011 (t)
Brand (Company) FGP FSC Presence Channels Strategy
Safal (Mother Dairy) 30,000 6,000 All India MT, GTA, GTO, Brand building;
FSA, FSO oldest brand (since
op
late 1980s)
Al Kabeer* 5,000 700 All India MT, GTA Ride on frozen
meat distribution
Yummiez (Godrej) 2,000 All India MT Ride on frozen
meat distribution
Sumeru (Innovative 1,000 500 All India MT, GTA Ride on frozen
Foods) meat distribution
tC

Trimurti* 2,000 12,000 South, West GTA, GTO,WS Low Price

Pagro* 2,500 500 North, West MT, WS Low Price
Mansfield* 2,000 500 North GTA, GTO,WS Low Price
Others 105,500 3,000
No

Notes:
* The brands and company names are the same.
t = metric tonne
Source: Annual Plan Document, FieldFresh.
Do

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t
EXHIBIT 6: DISTRIBUTION STATUS FOR FIELDFRESH FROZEN VEGETABLES IN JANUARY 2012

os
Cities covered 47
Distributors 68
Outlets covered
MT 613
GTA 1,400

rP
FSA 240
Source: Sales Reports, FieldFresh.

EXHIBIT 7: RELATIVE PRICING OF FROZEN VEGETABLES IN INDIA

Pricing Index

yo
FGP FSC
Safal (Mother Dairy) 100 100
FieldFresh 115 115
Al Kabeer 80 86
Yummiez (Godrej) 93
Sumeru (Innovative Foods) 80 71
op
Trimurti 53 71
Pagro 53 57
Mansfield 53 57
Smaller brands 40 43
tC

Notes: ₹ Mn.
Source: Interview with FieldFresh sales team.

EXHIBIT 8: FINANCIAL PERFORMANCE-FIELDFRESH FROZEN VEGETABLE

(YTD JANUARY 2012)

FGP FSC TOTAL

No

Volume Revenue Gross Volume Revenue Gross Volume Revenue Gross

Channel (t) (₹ Mn.) Margin (t) (₹ Mn.) Margin (t) (₹ Mn.) Margin
Modern Trade (MT) 94 7 23% 68 4 17% 162 11 21%
General Trade A (GTA) 91 6 0% 131 7 -3% 222 13 -2%
Food Service A (FSA) 48 2 -30% 48 2 -19% 96 4 -25%
Other* 95 6 -10% 191 7 -17% 286 13 -14%
TOTAL 328 21 2% 438 20 -6% 766 41 -2%
Do

* consists of General Trade Others (GTO) and Food Service Others (FSO).
t = metric tonne
Source: Internal financial report.

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t
EXHIBIT 9: THREE-YEAR FORECAST (VOLUME/REVENUE) FIELDFRESH FROZEN VEGETABLE

os
BUSINESS

FY 2012-2013 (Present in 58 FY 2013-2014 (Present in 67 FY 2014-2015 (Present in 72

cities) cities) cities)
MT GTA FSA TOTAL MT GTA FSA TOTAL MT GTA FSA TOTAL
Total Number of 2,264 2,320 6,960 11,544 2,537 2,600 7,800 12,937 2,810 2,880 8,640 14,330

rP
Outlets
FieldFresh 976 1,800 800 3,576 2,030 2,080 2,340 6,450 2,248 2,304 2,592 7,144
Coverage
Market Size Est. 4,890 2,645 10,858 18,393 5,480 2,964 12,168 20,612 6,071 3,283 13,478 22,832
(t*)
- FSC 1,902 974 4,176 7,052 2,131 1,092 4,680 7,903 2,361 1,210 5,184 8,754
- FGP 2,988 1,670 6,682 11,340 3,349 1,872 7,488 12,709 3,710 2,074 8,294 14,078
FieldFresh Vol. 614 587 1,609 2,810 1,203 920 2,574 4,697 1,636 1,123 3,629 6,388
(t*)

yo
- FSC 284 300 770 1,353 533 546 1,076 2,155 708 605 1,555 2,868
- FGP 330 288 839 1,457 670 374 1,498 2,542 927 518 2,074 3,519
FieldFresh Revn. 44 36 83 163 89 55 134 278 121 68 188 377
(₹ Mn.)
- FSC 19 17 38 74 37 31 53 121 50 34 76 160
- FGP 25 19 45 89 52 25 81 157 71 34 112 218
Gross Margin 11 4 -12 3 26 7 -17 15 38 10 -16 32
(₹ Mn.)
op
-FSC 4 2 -3 3 10 4 -3 10 14 5 -1 18
-FGP 7 2 -9 0 16 3 -14 5 24 5 -15 14

*t: metric tonne

Source: Annual Plan Document, FieldFresh.
tC

EXHIBIT 10: THREE-YEAR SALES AND DISTRIBUTION OVERHEAD BUDGET (₹MN.) —

FIELDFRESH FROZEN VEGETABLE BUSINESS

2012-2013 2013-2014 2014-2015

Salaries 23 28 32
‐ MT 11 14 16
‐ GT 8 9 10
‐ FS 4 6 6
Marketing
No

4 5 6
Promotion 5 9 12

Source: Annual Plan Document, FieldFresh.

EXHIBIT 11: THE FOCUS CHANNELS FOR THE DEL MONTE PRODUCTS

Italian Packaged Culinary

Range Fruits Products
MT High High Medium
Do

GTA High High Medium

GTO Low Low Low
FSA High Low High

Source: Annual Plan Document, FieldFresh.

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