EDIBLE OIL INDUSTRY

Brief History about the Edible Oil Industry

In 1972 the edible oil industry was nationalized and a ghee corporation of Pakistan (GCP) was
established .Since 1988, private sector has also been allowed to enter this industry. With the
passage of time most of the units which were previously controlled by GCP have been privatized
(93-95%).

Present Situation of Edible Oil Industry in Pakistan

The cooking oil and vegetable ghee industry is another large manufacturing sector. A shortfall
has been witnessed over the last two decades.
This shortfall is made up through the import of cooking oil, which is added to the local
production. Pakistan spends 2nd largest amount of foreign exchange on the import of edible oil
which puts a lot of strain on the economy and it is still increasing. The gap is widening
constantly as the population increases and standard of living improves.
Vegetable oil is obtained from edible oil seeds grown especially for this purpose. Pure butter oil
is produced in small units; many people prefer to use this instead of cooking oil or vegetable
ghee. Vegetable ghee is formed when edible oil is hydrogenated. The market for vegetable oil
and ghee is spread all over Pakistan. The manufacturing units are also widely distributed.
The number of vegetable oil and ghee plants operational in the country is about 183 with a
capacity exceeding two million tons.
The edible oil market is about 2.5 million tones (65% of total oil industry), out of which
Banaspati market accounts for 1.5 million tones and Edible oils for about 1 million tones.

Consumption
Per capita consumption in 2002 was 15 kgs. Because of growth in population in increase in
consumption it is expected that the per capita income of edible oil will reach 24kgs in 2010.

COMPANYS PROFILE
Introduction
Hassan Vegetable Oil Refinery & Ghee Mills Pvt, in a brief period of less than 20 years, has
championed quality assurance and customer satisfaction to emerge as one of the top two market
leaders in the Edible Oil and Ghee industry in Pakistan.
Under its marketing name of Hassan Cooking Oil it has introduced international standards of
production and packaging to its industry. With certification of ISO9001:2008, the company
continues to live up to its promise of its distinction in customer satisfaction and consistency in
quality with commitment and dedication.
Currently operating with 3 state of the art production plants, it is the only company in Pakistan
providing pure oils to its customers. With a countrywide distribution network channel, it holds a
good market share and offers a wide range of packaging options. The company takes pride in its
prized employees who form an integral part of this growth and development over the years. The
company not only enjoys loyalty from its customers but also from its employees and boasts of
average employment term as high as 8 years. We aim to continue on its path of leadership and
excellence with ever growing zeal and vigor.

Vision & Mission

Quality assurance and customer satisfaction remain the core values of Hassan Vegetable Oil
Refinery & Ghee Mills Pvt Ltd, and will be the driving force for all future initiatives. The
company aims to build brand loyalty on its journey from excellence to exemplary.
Vision:

To create a healthy and a prosperous future for the generations to come.

To share our knowledge with people around the globe, for a better tomorrow.

To become consumers most trusted brand.

Mission:

Deliver satisfaction and quality assurance to our consumers using state of the art
technology.

Offer a work environment that inspires trust and loyalty in people.

Engage in continuous efforts to explore new horizons in our business.

Quality Assurance
Achieving excellence in quality has been the foremost priority of our company and it has been
followed religiously throughout the course of its production life. Quality is the work ethic that
drives us along, and experts have been committed to achieving optimal quality products. From
raw materials to the finished products, we maintain strict standard of quality inclusive of the
Quality Control Authority and Pakistan Standards. Quality checks are conducted on regular basis
to ensure there zero lapses in quality on every level. The company takes great pride in being
ISO9001:2008 certified, and every employee puts personal commitment to the goal of consistent
quality assurance.
Packaging
In the packaging department, international standards of quality are ensured due to the installation
of state of the art machinery imported from Europe, Singapore and China. As a result our
packaging process is swift and free of weight variation. It also ensures zero spillage, which
results in smooth operation and environment cleanliness.
Facts & Figures

Our product is available in more than 450 cities across Pakistan.

The company ensures availability of product through its vast network of 450 distributors.

The company operates 3 state-of-the-art production units, each with their own quality
assurance laboratory.

A remarkable 32% market share and growing.

Various packaging options available for customer convenience including bottles, tins,
standup pouch, poly-bags, Jerry can and bulk packing.

Nationwide coverage and penetration of the distribution network.

Quality assurance with ISO9001:2008.

Risks of Edible Oil Industry

Risk # 1
Substandard Processing and Product:
Due to the fact that there are no such strict government regulations on the edible oil
manufacturers, a lot of local oil manufacturers are using substandard processes. The packaging
machines used in the edible oil industry are quite cheap. This has encouraged the small investors
to invest in this market/industry and produce low quality Product.
The producers generally purchase the packaging equipment, while the other process is done in a
substandard manner. That is, the manufacturers just boil/heat the oil on a normal stove, without
undergoing any kind of refining or blending and using the packaging machine to pack the
oil/ghee sell off their product. These sellers are selling this low quality, least refined oil at a
market price or slightly lower than the markets rates prevailing in the mark. This has hindered
good reputable companies to sell their product in the market because the customers are not so
literate. The cost of production of these companies is very high because they are fulfilling the
standards determined by the Pakistan Standard Institute. The customers dont really know that
the companies though are selling at a slightly lower prices are not selling the right product.
Recommendations:
The players of the Edible Oil Industry need to educate the public/consumer that why are they
charging a high amount as compare to loose and low brands. The companies have to create
market awareness, as already discussed that consumers are becoming health conscious. This can
be a company effort or combine efforts of the premium quality edible products, may be via
Pakistan Vanaspati Association. This kind of a strategy can avoid easy entrants in the industry
.this will also discourage the local manufacturers who do not follow the quality specifications.
Risk # 2
Dependence on Imported Oil
(Low production of edible oil seeds, high amount of foreign exchange is invested in importing
crude oil and increasing crude edible oil prices).
A very important aspect here to mention is that until 1970 we were self-sufficient in edible oil
production but after that the share of imported oil has been increasing rapidly to meet the
growing demands .Pakistan spends second largest amount of foreign exchange on the import of
edible oil (average 700 million $ per year) and 70% our demands requirements are met through
imported oil. Our local farmers are hesitant to cultivate oil seeds because they are not sure that
whether their product will be sold in the market at the right price or not, because the imported
edible oil price is lower than local oil price. This indicates that are edible oil manufacturers are
largely dependent on imported oil which is not good and economically viable in the long run.

Recommendations

The edible oil industry is agro based and Pakistan being an agrarian economy lacking in oil seed
cultivation seems to be a shocking thing. There is a strong need for the government to Pakistan to
protect the local suppliers of oil and farmers and provide subsidies to them so that they cultivate
the oil seeds in sufficient amount and thus we can at least we can again try to become selfsufficient in our edible oil production and save our foreign exchange. The government already
knows the importance of this matter. The government has taken various steps regarding this issue
and formed certain association to encourage the production of oil seeds. But the current situation
(Data form SBP annual report, Economic survey and other sources) reflects that issue is still
unresolved.
The government needs to consult industry specialist of our country and other countries though
can assist the government to come over with this issue. The Pakistani farmers and manufacturers
also have compromise on some of their benefits in order to get a long term gain for the country.
Risk # 3
Counterfeiter Brands
Because of the fact that edible oil sector is unorganized and entry is easy there are Counterfeit oil
brands existing in the industry. These counterfeiters copy the product of existing market leaders
and sell them with inferior quality. These counterfeiters just by charging a little low price are
playing with the lives of consumers. This also affects the sales of the original companies.
Recommendations
The companies should try to create brand awareness and make the consumers knowledgeable
about these counterfeiter brands, so the consumers dont get fooled by these counterfeiters.
Risk # 4
Environmental Hazards
The Edible Oil Industry has created great hazards to the environment. This issue is already in the
notice of the government but the government is not taking any action right now. The companies
have certain important responsibilities towards the environment and need to take concrete
measure in order to gain long term benefits.
Recommendation
It is recommended that in-house improvement and adoption of cleaner technologies be
undertaken immediately. The in-house improvement and adoption of cleaner technologies have
the potential to reduce the pollutant.

Environmental Management Systems (Ems)

Edible oil mills in Pakistan should implement Environmental Management Systems (EMS) in
their industries for a better, environment Friendly management. The companies need to hire
management though have experiences in somewhat same area, because the release of gasses
during the process is the normal phenomenon in many industries, for example Textile Industry.
Risk # 5
Unaware Consumers
The consumers dont know have the proper knowledge about the storage and usage of the edible
products, thus creating an unethical stance for the organizations in this industry.
Recommendation
The consumers should be educated about how to store a product. Some precautionary measures
should be communicated either through advertisements or print material on the package or tin.
The ads should also tell the consumers that Banaspati (Ghee) should not at all be consumed by
the heart and blood pressure patients but none of the organizations teaches this to the consumers.
Mostly consumers get to know about this from their doctors. The reason the company needs to
educate their consumers because the companies, otherwise, are damaging the trust of innocent
consumers. We have the example of cigarette industry who clearly state in their advertising as
well as on their cigarette packets that how important the health issues are.
Risk # 6
Market Saturation
The edible oil industry seems to be very saturated with about 183 small and medium size
enterprises operating. There are about 10 big players with Dalda, Habib and Soya Supreme
Being the top three.
Recommendations
The best way to differentiate is to be exceptional in value addition. Only making the oil tin or
package more attractive is not enough. The companies should try to communicate that how their
particular brand of oil is of a greater value as compared to other brands by mentioning the health
benefits which the consumers would get by using the product. This can be ensured through heavy
promotional campaigns and bright new selling ideas.

Risk # 7

Smuggling
Smuggling is also an important factor which affects this industry. Government estimates that .87
million tons of oil is smuggled into Afghanistan every year and 0.05 million tones is smuggled to
Iran as well.
Recommendation
The companies can export oil to the areas where oil is being smuggled .if the demand of local
people in the smuggled areas will be fulfilled in the right way they wont need to smuggle oil for
Pakistan. Also the Recent developments in Afghanistan have allowed the oil companies to export
their oil to Afghanistan. This was only possible due to the improved road link.