Food processing sector

Food processing sector gets 576-crore FDI

The food processing sector attracted Rs 576 crore of foreign direct investment (FDI) in the first eight months of the fiscal as compared to total FDI of Rs 5,344.22 crore.

In the thick of the recent food inflation, the government had also widened the scope of service tax exemption to include foodgrains and pulses in addition to fruits, vegetable, eggs and milk. The Centre is keen on projecting FDI in the food processing industries, where 100% FDI is already allowed.

Besides attracting FDI through schemes like mega food park, the government has also extended several fiscal incentives during this financial year to enhance FDI in food processing sector, including full exemption from excise duty for specified equipments to preserve, store or transport apiary , horticultural, dairy, poultry, aquatic and marine produce and meat and its processing products.

Project imports status, with concessional rate of basic customs duty of 5%, has been granted for the initial setting up or substantial expansion of a cold storage , cold room (including farm pre-coolers ) for preservation or storage or an industrial unit for processing of agricultural, apiary, horticultural, dairy, poultry, aquatic and marine produce and meat.

While truck refrigeration units manufacturing refrigerated vans/trucks have been fully exempted from basic customs duty, exemption from service tax has been provided to a host of services. These include ‘erection, commission or installation’ of mechanised foodgrains handling equipment for setting up or substantial expansion of cold storage and machinery/equipment for initial setting up or substantial expansion of units for processing of agricultural, dairy, poultry , aquatic, marine or meat products.

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McDonald's India franchisee

McDonald's India franchisee to invest Rs 500 cr to ramp up presence

Hardcastle Restaurants Private Ltd (HRPL), which runs McDonald's outlets in West and South India, will invest Rs 500 crore over the next three years to double the number of restaurants in operation.

The company, which has been operating the fast food chain through a joint venture with McDonald's Corporation, also has converted the partnership into a development licensee model.

The recent change from joint venture to development licensee in India's South West is based on the corporation's view that India's economy will continue to grow rapidly and sustainably, creating significant present and future opportunities for the expansion of the McDonald's Brand.

According to HRPL, which plans to open 30 McDonald's outlets this year, the company's operations are profitable and cash-positive. Same-store sales have seen double-digit growth continuously for the last six years and the company has seen a total compounded growth of 35 per cent in revenues.

HRPL is a debt-free company and will fund the entire investment of Rs 500 crore over the next few years through internal accruals.

Development license:

The DL structure has been successfully employed in over 50 markets worldwide, including Latin America, Indonesia, the Philippines, Turkey and several countries in West Asia for over 20 years, McDonald's said.

Under the model, a licensee owns the entire business, including the real estate, and uses its local knowledge and capital to build the brand and optimise profitability over the long term.

In the past, McDonald's Corporation has converted about 1,700 restaurants in Latin America (18 countries) into a single development licensee under the leadership of previous joint venture partner Woods Staton. In 2009, sales of the Latin America business were in excess of $3 billion.