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TABLE OF CONTENTS
AGRO BASED FMCG PRODUCTSChapter 1
Executive summary
The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well-established distribution network, intense competition between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage.The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products.
Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the food-processing industry
Objective
The dissertation has been done to study in detail, a very high prospective part of FMCG products known as agro products. The project covers market analysis of major players of this industry in the following category of agro products 1. Milk and milk products,
2. Biscuits, 3. Jam, ketchups and pickles. Market analysis of major player of that particular category is taken as the base for identifying or deciding of feasibility of entrance in that particular sector.
The project provides insight to a domestic player or small investor about the scope of entrance in agro based industry in India through the recommendation and conclusions. Based upon the study and data collected through primary data collection methodProject aims to study on following aspects
1 Detail analysis and Competitive Study of major agro based FMCG players in a particular product category
2 Measurement of Brand awareness and brand perception3 Distribution network and channelization Study 4 Market share of players in product category and market forecasting
5 Consumer Perception and distributor Survey
6 Scope determination and identifying prospective category for investments
7 Development of business plan for feasible product category.
The study has been carried out in following steps:
Step 1: Analyzed agro industry and what are the market share and coverage by major players in different category
Step 2: It is required to find out the factors affecting buying decisions of distributors and customers directly or indirectly.
Step 3: It is required to approach customer and dealers and understand there expectations from the company and product
Step 4: It required the Researcher to identify the areas which category entrance is very likely to be possible on the basis of the dealers and consumers responses and perception.
Step 5: Using quantitative and qualitative analysis.Chapter 2
RESEARCH METHODOLOGY
DEFINITION & SCOPE OF THE PROJECT
Products which have a quick turnover, and relatively low cost are known as Fast Moving
Consumer Goods (FMCG). FMCG products are those that get replaced within a year of FMCG generally include a wide range of frequently purchased consumer products such as
Toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as
other non-durables such as glassware, bulbs, batteries, paper may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars.
.In 2007, the Rs. 68,000-crore FMCG segment was one of the fast growing industries in India.
According to the AC Nielsen India study, the industry grew 7.3% in value between 2006 and
2008
Market share of agro products in their agro fmcg product ccategory
Milk and milk products25%
Coffee and tea22%
Wheat products31%
basmati7%
Ketchup and jams12%
others3%
Source:IMCRThe research was conducted to gather following measurable aspects:
1. Sales and market share of players in different product category.
2. Market coverage and visibility of different players in their product category
3. Consumer purchase influencing factors
4. Cost analysis for identified category for entrance5. Market survey for the potential category of investment
6. Is the investment in the decided category of product is justified? CONCEPTUAL REVIEW OF THE PROJECT AREA The following matter was chosen for the study:
Detail analysis and Competitive Study of major agro based FMCG players in a particular product category
Measurement of Brand awareness and brand perception Distribution network and channelization Study market share of players in product category and market forecasting
Consumer Perception and distributor Survey
scope determination and identifying prospective category for investments
development of business plan for feasible product category
Sales and market share of players in different product category.
Market coverage and visibility of different players in their product category
Consumer purchase influencing factors
Cost analysis for identified category for entrance
Market survey for the potential category of investment
2.1: Primary Objective(s)Method of research
Since more than one category of products are involved in analysis so different means of quantitative and qualitative approach has been used according to convenience in analyzing different payer which include
1 AMUL - category : milk and milk product
2 ITC - biscuits
3 PARLE - biscuits
4 SURYA FOODS- biscuits5 KISSAN-ketchups
6 MAGGI - ketchups
7 TOPS- ketchups pickle
8 PRIYA- pickle
Business plan
ATS agro ltd (hypothetical) category: jam, ketchups ,pickle
Category 3 include a construction of a complete business plan covering following aspect Type of organization: small scale agro based Minimum capital required: 25lakh(excluding land and building) Product category studied : ketchup, jam ,pickle Type of market : established but opportunistic Area covered by major players : 42% Market visibility 93% No of organized small players : scattered
Project analysis:
Phase 1
Production
Listing of machineries
Factory space requirements
Minimum area required
Waste management
Factory specimen
Expansion scope Phase 2
Market analysis and forecasting Method of entrance Consumer behavior measurement using questionnaire and graphs. Phase 3
Financial analysis
Project design cost
Funding of project
Project costing
Subsidies
Employee expenses estimation
Pay back analysis
NOTE:
Nestle is not taken for research in cateogry1 because it uses tetra packaging for its most of products and tetra packaging require at least 10crore of investment and hence it is not feasible for small entrants .2.2 Hypothesis:Null Hypothesis
There is no significant scope of entrance for small player in any category of agro product because there is no significant difference between the mean of sales by major players and their mean of market share in a particular product category .
Alternate Hypothesis
There is significant scope of entrance in the agro based industry for small players since there is significant difference between the mean of sales by major players and their mean of market share in a particular product category . 2.3 Research Design
The following research design was chosen for the research:- Type of Research DesignThe Research Designs used for this Research are Descriptive and Exploratory Research Design but data analysis method was differentiated on the basis of product category
Category 1 milk and milk products
Category 2 biscuits
Category 3 - jam ketchups and pickle
(A) Exploratory Research DesignFirst Phase of research consists of:
The survey of concerning literature
The experience based survey
Discovering of ideas and insights.
Flexible approaches towards research
(B) Descriptive Research Design
Second Phase of Research consists for clear instructions and planned focused path
Pre-Planned research design for analysis. Advances instructions about instrument of data collection. Regression analysis is used for calculating market penetration.2.4 Information Needed
The information needed can be classified into the following heads:-
Primary
Dealers and end users perception about new entrants in pickle jam ketchup industry.Secondary;
Detail study about the major players in a particular product category, other study and researches related to Indian FMCG industry agro based.
Sources of secondary data
The secondary data was collected from research journals, Company websites and visit to competitors and collecting informative booklets.Developed the Research Frame:
This includes deciding upon various aspects for the project on which the entire research is based. The research frame included based on different category:
2.5 Scaling Techniques
Two kinds of scaling techniques were used in the questionnaire:
Ranking Scale
Consumers make relative judgment against other similar objects (Comparative Scales)
They were present with several factors influencing decision making while buying a laptop.
Dealers were present with several factors influencing customer decision making of purchasing a laptop.Likert Scaling
Respondents were presented with five response categories ranging from strongly agree to strongly disagree and asked to respondent according to their experience.Analysis technique
Regression analysis for market share and sales is used in category 1Screen plotting for analyzing market penetration in category 1Construct & Model/Theory in category 1Random sampling and simple mean method in category 2 and 3Questionnaire Design and pre testing
Keeping in mind the information required for achieving the objectives of the research, questionnaire was developed and Pre tested on a small sample of 50 respondents chosen on a convenience basis .The questionnaire was a blend of following type of questions:-
Questions generating classification and identification information (Name, Sex, Age group, Profession, income group, City)
Dichotomous and multiple choice questions
Open- Ended questions were put in to get the views of the respondents at large
Codes were assigned to response of classification questions and to the rating questions
2.6 Sampling TechniquesSample Unit
The sample unit for research comprises of:
End user of different clusters
Dealers of different clustersSample Size
The sample size for study was 100 respondents and 450 dealers from different clusters comprises of different zones of Delhi,Where list of retail outlets, along with their addresses and route maps, as provided by the distributors. Sampling Procedurewe selected various respondents that comprises of End user on simple random sampling method and distributor provided data.Data Analysis and representation
The data collected was analyzed differently in each category
One category used regression analysis while other used simple statistical measures and frequency distribution
The average ratings of performances were arrived at by taking out the simple average of the sum of the rating given to a particular performance parameter.
The representation was done using graphs and charts and scree plotting.
Field work3.1 Markets Visited
1 East Delhi2 West Delhi3 South Delhi4 North DelhiThe different customers whom the distributor serves can be classified as:
Grocery
General/ Stationery shops
Pan/Beedi Shops
Superstores, housing all types of product categories
Chemist/Druggist
Confectioneries
Multi Format Stores (MFS),e.g. Big Bazaar,Spencers,etc.
Food Stalls
Hotels & Restaurants
Canteens
Tea Shops
AMUL parlours
Ice cream & Soft Drinks Shops(IC/SD)
Coffee ShopsThe outlets are also classified by their locations. The various location segments are as follows:
Airport
Bus Stand
Railway Station
Picnic Spot
Cinema Hall
Hotel, Caterer & restaurant School/College
Highway
Market Place
Main Road
Office/BPO
Petrol Pump
Institution
Shopping Mall Scope of ResearchThe research was conducted in two phases first analyzing of all categories two determine scope of entrance second phase included constructing of a business planLimitations
1 The research was conducted in Delhi only selected cities so it cant be generalized for Indian Market
2 Few questions in are not answer by respondents
3 Lack of area knowledge so it was difficult to locate dealers and end users
4 This study need more time and need to approach more areas for more accurate responses
5 Competitors manager and sales persons sometimes hesitate to provide any internal information.
6 Dealers and end users are busy in their schedules so there is lack of time
7 Niche market for each category was not differentiated.
Chapter 3: Critical review of literature
TITLE: GOWTH ANALYSIS OF FMCG SECTOR
SOURCE: SURVEY BY TATA INVESTMENT CORPORATION
YEAR: 2008TATA Investment Corporation Limited, invested in long-term investments in equity shares and in a wide range of industries. TICL invested in almost all the sectors. TICLs portfolio proved to be a very successful portfolio. They had got a very good return from all the sectors. Among these sectors, Fast-Moving Consumer Goods (FMCG) proved to be a very successful sector. It has a very good potentiality in long term in India and on May 20, 2008, this investment valued Rs. 306.72 crores investment in FMCG sector was 5% of the overall investment that was increased in 2008 to 15%of the overall investment. Thus from this, we can value of investment. For this sign malls, etc. in India, the FMCG sector is one of the booming had chosen this sector for my equity analysis. Below, I had given detail investment of TICL in FMCG sector: analyzed non-banking financial company registered with Reserve Investment Company' category. The company's activities comprise other securities of companys portfolio. The overall cost of investment in FMCG sectors, i.e. the cost of value of conclude that, there is a 2140.47%significant increase and also recent development of retails shops, sectors in India.
WHY INDIAN MARKET?Large domestic market
India is one of the largest emerging markets, with a population of over one billion. India is one of the largest economies in the world in terms of purchasing power and has a strong middle class base of 300 million.
India - a large consumer goods spender
An average Indian spends around 40 per cent of his income on grocery and 8 per cent on personal care products. The large share of fast moving consumer goods (FMCG) in total individual spending along with the large population base is another factor that makesRural and urban potentialRural urban profileurbanrural
Population 2001/02 mn household53135
Population mn 2009/10house hold69153
% distribution2872
Market / towns3768627000
Universal outlets13.3
Source :satatiscal outline ofIndia(20062007)NCAERAround 70 per cent of the total households in India (188 million) reside in the rural areas. The total numbers of rural households are expected to rise from 135 million in 2001-02 to 153 million in 2009-10. This presents the largest potential market in the world. The annual size of the rural FMCG market was estimated at around US$ 10.5 billion in 2001-02. With growing incomes at both the rural and the urban level, the market potential is expected to expand further.
Demand-supply gap
Currently, only a small percentage of the raw materials in India are processed into value added products even as the demand for processed and convenience food is on the rise. This demand supply gap indicates an untapped opportunity in areas such as packaged form, convenience food and drinks, milk products etc. In the personal care segment, the low penetration rate in both the rural and urban areas indicates a market potential.
CHANGE IN INDIAN CONSUMER PROFILEConsumer profile200120042008
Population(millions)94610121187
Population20000)307.3
Chart 1.2.1Interpretation:-
The above pie chart shows the classification of retail outlets present in areas under study. The categorization is made on the basis of monthly sales of Parle products by the retailers and the whole sellers. It has been divided into 6 categories mentioned above.
There are no A category outlets as Parle covers all the Retail outlets under study whereas category B has highest share of 56% with 230 outlets and most of total retail outlets fall under Category B & Category C (80%) visited by the Researchers here.
It can be seen that only 7% outlets fall under category E i.e greater than Rs20000 1.2 Visibility of PARLE products
For Biscuits:Table 1.3.1
BRAND (Biscuits)No. of shopsTotal% VISIBLE
Parle-G410410100.0
Krackjack38541093.9
Monaco39441096.1
Monaco Funion7541018.3
Hide&Seek25541062.2
Milano8541020.7
Orange Kream33041080.5
Mango Kream38841094.6
Elachi Kream39341095.9
Pineapple38141092.9
Chocolate Kream37741092.0
Golden Arch354108.5
Nimkin10141024.6
Marie19841048.3
Milk Shakti18541045.1
Bourbon21041051.2
20-20 Butter34041082.9
20-20 Cashew33241081.0
Chart 1.3.1
Interpretation:-
Brands such as Parle G, Krack jack, Monaco, Orange Kream, Mango Kream, Pineapple Kream, Chocolate Kream, Elaichi Kream are visible in almost all stores (90-100 %) but brands such as Monaco Funion, Golden Arch & Numkin were not available in many stores.
1.3 Coverage with respect to competitors
Table 5.2.3BRANDDirectIndirectNo Coverage
PARLE367430
ITC3082181
BRITANIA3052778
PRIYAGOLD28126103
Chart 1.5.1
Chart 1.5.2
Chart 1.5.3
Chart 1.5.4
Chart 1.5.5
Interpretation:
Among the competitors only Parle covers most of the outlets (90%) directly, rest covers approx. 70-75 % of outlets directly. Also ITC, Britannia & Priyagold has no presence in approx. 20-25 % outlets but Parle full coverage. This is the strength of Parle Company.
1.4 Brand availability with respect to competitors
Table 1.6.1
BRANDNo. of Brands
Nil1 to 56 to 1011 to 15
PARLE02088302
ITC812278517
BRITANIA781939940
PRIYAGOLD10311214451
Chart 1.6.1
Chart 1.6.2
Chart 1.6.3
Chart 1.6.4
Chart 1.6.5
Chart 1.7.1
Interpretation:-
It can be seen that in most of the outlets (56%) Parle sales come under category B as compared to other categories. Compared to competitors the company tops Category B. Company share in Category is also far higher than that of competitors. So, every company has sales of 1-5000Rs in 50 % outlets
Analysis on organized retail outlets
2.1 Parle Sales in Organized Retail
Table 2.1.1
CategorySalesNo. of outlets (Parle)
No coverage00
'A'1-150001
'B'15001-3000010
'C'30001-4499911
'D'>=450008
Chart 2.1.1
Interpretation:-
It can be seen that 35% of outlets have Parle sales between 30,000Rs and 45,000 Rs which is a very good indication. And 27 % outlets have Parle sales above 45,000 Rs.2.2 Parle Sales with respect to competitors in organized retail outlets
Table 2.2.1
CategorySalesNo. of outlets (Parle)No. of outlets (ITC)No. of outlets (Brit)No. of outlets (Priyagold)
No coverage00405
' A'1-150001525
' B '15001-300001020518
'C'30001-45000115142
'D'>450008490
Chart 2.2.1
Interpretation:
In organized retail outlets Britannia beats Parle in Category C (30001-45000). And this is because Parle products are cheaper as compared to Britannia and so sales are high.2. Analysis on Consumer Behavior2.1Type of biscuits preferred
Table 2.1.1
Biscuit PreferredNo. of consumers(out of 100)
Glucose38
Salty08
Sweet and Salty15
Kreams25
Cookies14
Chart 2.1.1
Interpretation:-
The above graph shows the types of biscuits preferred by the consumers. Glucose is most preferred (38) by the consumers followed by kreams (25). Whereas Salty (8) holds the last position.2.2Preference between organized and unorganized retail stores to buy biscuits and confectionary
Table 2.2.1
Type of StoreSales
Unorganized retail (Kirana) stores76
Org. retail stores24
Chart 3.3.1
Interpretation:-
The above pie chart shows the place from where people prefer to buy biscuits and confectionary.
The study shows that 76% of people prefer to buy them from general kirana stores whereas 24% people prefer to buy from organized retail stores like Spencers, Big bazaar or Reliance fresh.
4.1 Preference for the biscuit company
Table 4.1
CompanyNo. of consumers
Parle48
Britannia27
Priyagold7
Itc18
Chart 3.4.1
Interpretation:
The above pie chart shows the preference of consumers for biscuit company. The result shows that PARLE got the highest position followed by BRITANNIA and then ITC. PRIYAGOLD got the least preference by the consumers.
4.2 Preference to factors (Taste, Price & Brand image)
Table 3.5.1
Chart 3.5.1
RankTastePriceBrand Image
Rank19622
Rank243957
Rank305941
4.3 Preference according to taste
Table 3.6.1
Rank Parle Britannia Itc Priyagold
rank1413317 9
rank2333919 9
rank3211628 35
rank451236 47
Chart 3.6.1
INTERPRETATION:- The scores of rank1 are multiplied by 1 , the scores of rank2 by 2 and so on. And the sum of all the ranks for the given companies is summed up to get the total scores. As Parle has got the minimum total, therefore it can be infer that consumers prefer Parle most when it comes to taste followed by Britannia and then ITC. Priyagold is least preferred by the consumers.
4.4 Preference according to price
Table 3.7.1
RankParleBritanniaITCPriyagold
Rank142161131
Rank229201536
Rank317332723
Rank412314710
Chart 3.7.1
INTERPRETATION: - Here Parle is the prime choice of consumers when price is given preference followed by Priyagold and then Britannia. ITC is least preferred by consumers in the case of price.
4.5 Preference according to brand image
Table 3.8.1
Rank Parle Britannia Itc Priyagold
rank128391914
rank232362111
rank323193127
rank41762948
Chart 3.8.1
INTERPRETATION:- As Britannia has got the minimum total, therefore it is preferred most by the consumers followed by Parle and then ITC. Priyagold is least preferred by the consumers in case of brand image.Category 3 Market share of various players
Kissan56%
Magi19%
Heinz16%
Others9%
Market vsiblity in various market players:Heinz
organized retail95
unorganized retail47
Market visiblity of kissan:Kissan
organized retail100%
Unorganized retail97%
Market visibility for MaggiMaggi
organized retail100%
unorganized retail92%
1. DATA GIVES NUMBER OF CONSUMERS READY TO ACCEPT NEW KETCHUP.
CONSUMERSNO. OF CONSUMERS
Yes 120
No 80
Total 200
2. DATA GIVES OF CONSUMERS READY TO ACCEPT NEW PICKLES.
CONSUMERSNO. OF CONSUMERS
Yes 145
No 55
Total 200
3. DATA GIVES NUMBER OF CONSUMERS READY TO ACCEPT NEW JAMS.
CONSUMERSNO. OF CONSUMERS
Yes 135
No 65
Total 200
4. DATA GIVES NUMBER OF CONSUMERS READY TO ACCEPT NEW JAMS, PICKLES & KETCHUPS.
Types CONSUMERS READY TO USE
JAMS 65
PICKLES80
KETCHUPS55
Total 200
5. DATA GIVES NUMBER OF DISTRIBUTORS READY TO ACCEPT NEW KETCHUP.
DISTRIBUTORSNO. OF DISTRIBUTORS
Yes 140
No 60
Total 200
6. DATA GIVES OF DISTRIBUTORS READY TO ACCEPT NEW PICKLES.
DISTRIBUTORSNO. OF DISTRIBUTORS
Yes 160
No 40
Total 200
7. DATA GIVES NUMBER OF DISTRIBUTORS READY TO ACCEPT NEW JAMS.
DISTRIBUTORSNO. OF DISTRIBUTORS
Yes 175
No 25
Total 200
8. DATA GIVES NUMBER OF DISTRIBUTORS READY TO ACCEPT NEW JAMS, PICKLES & KETCHUPS.
Types DISTRIBUTORS READY TO USE
JAMS 65
PICKLES90
KETCHUPS45
Total 200
9. DATA SHOWS THE FEATURES CONSUMERS CONSIDER BEFORE TRYING A NEW BRANDFEATURESNO. OF CONSUMERS
DISCOUNT OFFER25
RIGHT PRICE65
QUALITY 45
PACKAGING30
BRAND EQUITY15
OTHERS20
Total 200
Chapter 6:Finding and analysis
Category 1 : Milk and milk products
Butter reported the highest monthly sales (74,764 units) unit-wise. Paneer reported monthly sales of 2,27,986 grams whereas
Ice cream has a monthly sales of Rs.4,07,000.Methai mate reported the lowest monthly sales(2,392 units).
Market Penetration is highest for Amul (0.87) while Icecreams has the lowest market penetration (0.04).
UHT Milk reported for the highest market share (100%) followed closely by Butter (97.2%) and Fresh Cream (97.1%). The lowest market share is reported by chocolates (1.9%).
Amul is available in most number of outlets (396) whereas Amul Paneer is available in the least number of outlets (49).
Amul Ice creams has the highest percentage of reported stock outs (57.89%) whereas Amul Chocolates has the lowest percentage of reported stock outs (6.45%).
Outlet Type-wise:
General Shops has the highest monthly sales Amul Parlor has the highest average monthly sales Chemist shops has the lowest average monthly sales
The highest average percentage stock outs for Amul products is reported by Icecreams&Softdrinks
Shop(IC/SD)(40%).
The lowest average percentage stock outs for Amul products is reported by hotels, canteens & Perfume Shop (0%).
Amul Parlour & Canteen reported the highest average market share (100%) for Amul products.
Amul Parlour reported the highest average market penetration (0.92) for Amul products.
Observation
Amul have 93% market coverage in milk and milk products
Although it is facing stiff competition from mother diary and Nestle in its some product lines but it still have strong position in the market because consumer behavior is reluctant to only major players which is leading to achieve its sales targets efficiently.
Consumers have strong inclination to branded products in this category because of strong quality parameters.
Entrance scope is very limited because market is monopolistic by large players.
Brand building while require large cost.
Large distribution network is required for successful market reach since urban market is highly unorganized in this category.
Cost of maintenance and setting up distribution channel require huge cost
Category 2 : FINDINGS
After close study of the present market situation prevailing in the areas assigned the researchers, following are the observations. Britannia is emerging as Major Competitor in the organized retail outlets. After conducting the survey on 410 unorganized retailers, 30 organized retailers and 100 customers, the researchers found that all product variety of biscuits is covered by major brands. It was also concluded that Parle is the first preference of both the customers and retailers (Organized and unorganized both) because of its price and brand image. Consumers have strong brand preference and brand switching is 85% done among the three already analyzed players. Scope of entrance is very low cause branding, market penetration require huge cost because distinction and differentiation cannot be made because of very large variety offering by market players. Brand Parle G dominates the volume-dominated biscuit market. Cost of production is low but scope of establishment is very low.
Category 3: Findings
25% of the whole market is still to be explored. Tax holiday has been provided by govt to encourage domestic players Only 2 players kissan and maggi have average of 93%market visibility where other players have only 47% in unorganized market. Out of 1billion prospective population the ketchup has only 75% of its accessibility. There is almost negligible domination of players in pickle industry. Product category has a huge scope because of changing spending pattern of Indian consumer. Economy of scale is the biggest factor in this product category. 65% present of urban market sample analyzed are ready to try new brands in this product category. Chapter 7: SWOT Analysis
STRENGTH
1. Low price as compared to competitors.
2. Sizeable market share in the country.
3. Deep and effective coverage.
4. Largest developed distribution system presence.
5. Low Operational Costs.
6. Presence of established distribution networks in both urban and rural areas.
WEAKNESS
1. Breakage of glass while delivering to retailers.
2. No proper replacement system for broken product to retailers.
3. Improper and irregular supply.
4. Poor packaging in family pack of glucose biscuits.
5. Lack of schemes for retailers and distributors.
OPPORTUNITY
1. Rising demand for innovative packaging in packaged foods.
2. Retaining loyal retailers or wholesalers.
3. Improving supply system for established brands.
4. Huge scope of govt co -operation, because of govt schemes.
5. Untapped rural market
6. Rising income levels, i.e. increase in purchasing power of consumers
7. Large domestic market- a population of over one billion.
8. Export potential High consumer goods spendingTHREAT
1. Highly advertised brands such as kissan Heinz maggi
2. Ever increasing competition from local companies.
3. Margin war among the major
Brand
4. Removal of import restriction resulting in replacing of domestic brands
5. Slowdown in rural demand
6. Tax and regulatory structure
Chapter 8: Business plan ATS AGRO LTD is a dream project of three young aspirants who are professionally qualified MBA,s in international business and marketing.
Company will be a small scale production company and will use fruits like apple ,pine apple ,banana ,mango, plum, apricot to produce final products like jams ,squash ,pickle.
Company will be set up in accordance with or under the scheme of PRIME MINISTER SELF EMPLOYMENT SCHEME at solan(HP)
Guidance for establishment of production premises which include :
1 machines and equipment
2 usage factory space
3 waste management
And as well as training for processing of raw material to produce final products will be provide by
Dr Y.S Pawar University of horticulture and forestry (Nauni).
Organizational details
Type of organization: small scale agro based
Minimum capital required: 25lakh excluding land and building
Product category studied : ketchup, jam, pickle
Type of market : established but opportunistic
Area covered by major players: 75%
Overall Market visibility: 93%
No of organized small: players scattered
Project analysis:
Phase 1
Production:
Listing of machineries
Cost 4lakh
Fruit and Vegetable Washer: cost 4lakh
Suitable for washing various fruits/vegetables. The machine can wash and clean multiple kinds of fruits and vegetables. The fruits are subjected to strong water agitation for removal of dirt. The washed fruits are then conveyed to the next state by a pick up conveyor
Fruit Mill Crusher/Hammer Crushing Machine
Cost 2lakh
Suitable for crushing hard seedless fruits before pulping or juice extraction. Available in following models:
Available in Capacity : C 114300 kg/hr(1 HP)
C 1171.5/2 T/hr(3 HP)
C 1203 T/hr(7.5 HP)
C 1235 T/hr(10 HP)
C 12610 T/hr(20 HP)
Cooking Kettle (Fixed Type)with scraper attachment cost : 3lakh
The Kettle is available with fixed scraper attachment. The Teflon scraper scrapes the inner surface of Kettle and is driven by attached geared motor or gearbox-motor attachment. The scraper attachment ensures that there is no blackening or charring of product while cooking or heating.
Multifunction Vegetable Slicer / Chopper(BPM-309) cost 4lakh
Suitable to slice and chop various vegetables like carrots, potatoes and ginger etc. The machine can produce variable sized slices which are then conveyed to the chopping section. The intermittent chopping blade action produce slices/chops/cuts/finger-cuts etc. The cuts sizes can be varied by the variable infeed conveyor
Vaccum Filler
Cost 2lakh
Suitable for filling viscous liquids like juice, ketchup and syrup in glass bottles with narrow necks. Available in 2-6 head models in MS or SS finishes.
VF 212 Head10-12 bottles/min
VF 244 Head20-25 bottles/min
VF 276 Head35-40 bottles/min
The above models are also available with partial vacuum to fill PET bottles.
Colloidal machine picture is not available : cost 2.5 lakh
Purpose to bring same thickness in pulp extracted
Lug cap sealer for capping jams and pickles
Cost 1.25
PP cap sealer for ketchups cost : 1lakh
Assembly line 1lakh
Factory space requirements
Minimum area required for production :2400sqmeter
Area available: 5000 sq meter x 2 floors
Waste management : as per govt guidelines
Minimum Storage space required: 800sq m
Expansion scope : 2600
Storage space 4000 sq meter
Estimated production
1.5 ton per product per day
Factory specimen :
Phase 2
Market analysis and scope: presented in chapter 5 and 6
Method of entrance:
Franchising Self establishment
Consumer behavior measurement: using questionnaire and graphs (done in chapter chapter 5)
Branding
Corporate name: ATS AGRO LTD
Brand name: Jam Jammie
Ketchup- Saucamania
Pickle- AchaRam Distribution channel of ATS AGRO
Phase 3
Financial analysis
Project design cost: Technical design and turnkey development will be done by food processing department Nauni university solan
Charges for developing TECHNICALLY FULFILLED BLUE PRINT :10,000
Over all cost project: 25-35 Lakh excluding land and building
Funding of project: project will be able to raise fund since the project has been designed and approved by Nauni University which is eligible to raise funds under :
Prime Minister Rojgar Yojana or Agro Product scheme under NABARD
75% of the cost of project will be financed 25% should be brought by promoters
cost of machinery 20 lakh
Project costing in
Subsidies 40% subsidy at the time of loan pay back
Specimen of project costing and profitablity analysis
Production capacity : 300000 kg half yearly
Selling cost : ketchup Rs 33 ,pickle Rs31, jam Rs34
Packaging size : 500gm and 300gm
1 PROJECT COST/CAPITAL INVESTMENTS.NoDescriptionAmount Rs.
1Preliminary & Preoperative Expenses10000
2Fixed Capital81500
3Working Capital for 2 month(s)1505000
Total Project Cost1596500
2. MEANS OF FINANCES.NoDescription%ageAmount Rs.
1Promoter Contribution15%239475
2Subsidy20%319300
3Term Loan65%1037725
Total1596500
3. Financial aspects:
A. FIXEDCAPITAL 1 Land and building rented: Rs8000per month
2 Machinery and EquipmentS.NoDescriptionQty.RateAmount Rs.
1Fruit Washing Tank150005000
2Juice Extractor12500025000
3Steam jacketed kettle13400034000
4Stirrer11250012500
5Installation and misc. Items5000
Total81500
B. Working capital
1 Salaries and wages per month
SNO.Description
Nos.Sal/mnthAmount
1Production manager150005000
2nutrition11500015000
3Skilled labor150005000
4Semi skilled labor325007500
32,500
2. Raw material per month
Description UnitQtyRate Amount
1Fruits and vegetablesKgs1000005500000
2Vinegar ,salt , spicesKgs 12006072000
3Color ,preservativesKgs 252005000
4sugarKgs 600159000
5Bottles of 500ml15000445,000
6 Bottles of 300ml10000330,000
7Cartons and whraps100202000
Total663000
3. Utilities per month
SNO.Description Unit Amount rs
1Power1.89000
Fuel for boiler 150 x1015000
water22000
260000
4. Other expenses per month
Sno.Description Amount
1Postage & Stationery Expenses1000
2Transportation Expenses100,000
3Advertising expense7000
4Consumable Stores
1500
5Repairs & Maintenance
3000
6Miscellaneous Expenses1000
Total 113500
4 Total working capital per monthS.No.DescriptionAmount Rs.
1Rent8000
2Salaries and Wages28500
3Raw Material688000
4Utilities21000
5Other Expenses7000
Total752500
5. COST OF PRODUCTION (PER ANNUM)
S.NoDescriptionAmount Rs.
1Total Working Capital 9030000
2Depreciation@15%12225
3Interest@12%
124527
Total9166752
6TURNOVER (PER YEAR)S.NoDescriptionUnitQty.Rate Rs.Amount Rs.
1 Total Unit kg/annum 300000339900000
Total9900000
7 FIXED COST (PER YEAR)S.NoDescriptionAmount Rs.
1Depreciation12225
2Interest124527
3Rent96000
4Salaries & Wages @40%136800
5Other Expenses incl. Utilities @40%134400
Total503952
8. PROFIT ANALYSIS & RATIOS1Net ProfitRs.730048
2Percentage of Profit on Sales7%
3Percentage of Return on Investment46%
4Break Even Point41%
Chapter 9: Recommendation and Conclusion
Majority of the product classes require very low investment in fixed assets.
Existence of contract manufacturing.
Marketing assumes a significant place in the brand building process.
Extensive distribution networks and logistics are keys to achieving a high level of penetration in both the urban and rural markets.
Factors like low entry barriers in terms of low capital investment, fiscal incentives from government and low brand awareness in rural areas have led to the mushrooming of the unorganized sector.
Providing good price points is the key to successConclusion
Agro based FMCG products provide large opportunity to small business players to enter in the fastest growing industry of the country and make mark of own among largest players of the world.
By 2015 FMCG sector of India will have largest spending of the world since it has a growth of 333%per annum so this sector provides growing and aspiring entrepreneurs of the country to place themselves globally
CHAPTER 10: ANNEXURE
Questionnaire
1. Location of the outlet (Segment):
a) Airport
b) Bus Stand
c) Railway Station
d)Picnic spote) Cinema Hall f) HoReCa
g) School/collegeh) Highway
i) Market place
j) Main roadk) Office/BPO
l) Other place________
2. Type of outlet (Retailers category):
a) Grocery store b) General storec) Pan shop
d) Super store e) Chemist shopf) Confectionary/Bakery
g) IC/SD shop h) Sweet shopi) Co op store
j) MFS
k) Food stall
l) Others____________
3. Name of the Outlet: __________________________________
4. Address: ___________________________________________
____________________________________________
5. Contact Person:______________________________________
6. Contact Number:_____________
7. Shop a) open at:_____________ b) Closed at: ______________
8. Refrigeration : a) Ref______Lit b) Visicooler______Lit c) DF________Lit
9. Average daily foot fall per day? __________________________
10. Average daily sale: a) Total______ b) Dairy ______ c) Milk_____ D) IC______
11. Quantities (in kg/units) sold per month (avg.):
PRODUCTSCATEGORYAMULADDl. DEMAND
Butter
Infant Milk Pwdr (A Spray)
Dairy whitener (Amulya)
Cheese
UHT Milk (Taaza etc)
Fresh Cream
Paneer
Cond Milk (Methai made)
Ghee
Chocolate
Milk Based Beverage
Ice cream
12. If case of not being able to meet the demand, Please rate the following reasons, according to their importance.
(1.Strongly Disagree, 2-Disagree,3-Neutral,4-Agree,5-Strongly Agree)
REASONS12345
Inadequate Supply from Distributor
Inconsistency in supply
Irregular demand pattern
Shortage of storage space
Not enough money to buy stocks
Poor Replacement policy debar excess stocking
Need more frequent supply by dist
If other please specify: _________________________________________________
__________________________________________________________________________________________________________________________________________
13. If not keeping Amul products, please rate the following reasons according to their importance.
(1-Strongly Disagree, 2-Disagree,3-Neutral, 4-Agree,5-Strongly Agree)
REASONS12345
Distributor not visiting the place
WD not providing credit facilities
Near expiry products being supplied
No demand for such products
Less margin/scheme
Poor replacement of damaged products
Not having enough storage place
Competitors doing better
If other please specify: _________________________________________________
__________________________________________________________________________________________________________________________________________
14. Frequency of service by Amul WD: ___________ per week.
15. Are you satisfied with present way of working?___________________________
Consumer Survey:
NAME:-________________________________________________AGE:- _________________________________________________PHONE NO.:- ___________________________________________1) How many members are there in your family?Ans-2) Who initiates the shopping of groceries in your family?
a) Male membersb) Female memberc)children/teenager
Ans.3) From where do you prefer to buy biscuits?a) Kirana store
b) Organized retail market (Like Reliance fresh, spencers, Big Baazar, etc.)
Ans. (If answer is b please mention the name of retail chain)
5)Which biscuits do you prefer?
a)glucose b)salty c)sweet and salty d)Creams e)cookies
Ans.
6)What type of confectionary do you like the most?a)hard boiled candy b)eclairs c)mint d)bubble gum e)bars
8)Which brand do you prefer most?a)PARLE b)BRITANNIA c)PRIYAGOLD d)ITC Sunfeaste) Other
Ans.
9)Rank the factors in order of preference when buying a biscuit??
TastePriceBrand image
10)Rank the following out of 5 in respect to the given factors
FACTORSPARLEITCBRITANNIAPRIYAGOLD
Taste
Price
Brand image
Category 3
QUESTIONNAIRE
NAME: _________________________________________
AGE: _________________________________________
GENDER: M ( ) F ( )
OCCUPATION: _________________________________
ANNUAL INCOME:
( ) Rs. 50000 & less ( ) Rs. 50000 - 200000
( ) Rs. 200000 - 500000 ( ) Rs. 500000 & above
Ketchup
Q.1) Which brand do you prefer?
( ) Kissan
( ) Maggi ( ) Heinz
( )Tops
Q.2 How frequently do you purchase?
( ) Every forth night ( ) Once a week ( ) Every month ( ) Occasionally
Q.3 What is the size of ketchup you usually purchase?
( ) Pichkoo pack( ) 200g ( ) 600g ( ) 1kg
Q.4 Which flavor of ketchup you like the most?
( ) Hot & Sweet
( ) Teekha Masala
( ) Tomato Chatpata
( ) Tomato Pudhina
Q.5 Which offer available influence you the most to purchase this brand?
( ) Discount Offer
( ) Buy one & Get one
( ) Combo pack
( ) Others___________________________________
Q.6 Are you ready to try a new brand?
( ) Yes
( ) No
Jams
Q.1) Which brand do you prefer? ( ) Kissan
( ) Morton ( )Tops
Q.2 How frequently do you purchase?
( ) Every forth night ( ) Once a week ( ) Every month ( ) Occasionally
Q.3 What is the size of Jam you usually purchase?
( ) 200g
( ) 500g ( ) 1kg
Q.4 Which flavor of ketchup you like the most?
( ) Strawberry
( ) Orange
( ) Mix fruits
( ) Mango
Q.5 What are the main reasons you buy this brand?
( ) Right Price
( ) Like the quality
( ) Like the packaging
( ) Family prefers this brand
( ) Best taste
Q.6 Are you ready to try a new brand?
( ) Yes
( ) No
Pickles
Q.1) Which brand do you prefer?
( ) Mothers
( ) Maggi ( )Tops ( ) Haldirams
Q.2 How frequently do you purchase?
( ) Every forth night ( ) Once a week ( ) Every month ( ) Occasionally
Q.3 What is the size of Pickles you usually purchase?
( ) 200g ( ) 400g ( )1kg
Q.4 Which flavor of ketchup you like the most?
( ) Mango
( ) Ginger
( ) Mix
( ) VegetablesQ.5 What are the main reasons you buy this brand?( ) Right Price
( ) Like the quality
( ) Like the packaging
( ) Family prefers this brand
( ) Best tasteQ.6 Are you ready to try a new brand?( ) Yes
( ) No
QUESTIONNAIRE
NAME: _________________________________________
AGE: _________________________________________
GENDER: M ( ) F ( )
OCCUPATION: _________________________________
ANNUAL INCOME: ( ) Rs. 50000 & less ( ) Rs. 50000 - 200000
( ) Rs. 200000 - 500000 ( ) Rs. 500000 & above
Q.1) Which all products you sell?
( ) Ketchups
( ) Pickles ( ) Squash
( )Jams
Q.2 Which is the maximum selling brand in ketchup?
( ) Kissan
( ) Maggi ( ) Heinz
( )Tops
Q.3 which is the maximum selling brand in Pickle?
( ) Mothers
( ) Maggi ( )Tops () Haldirams
Q.4 which is the maximum selling brand in Jams?
( ) Kissan
( ) Maggi ( )Tops
Q.5 Which is the maximum selling brand in Squash?:
( ) Priya
( ) Maggi ( )Tops
Q.6 Do sales of the brand vary during the year?
( ) Yes
( ) No
( ) Cant Say
Q.7 Do consumers ever complain for the existing brand?
( ) Yes
( ) No
Q.8 What is the most important consideration for choosing a brand for consumers?
( ) Price
( ) Brand Equity
( ) Quality
( ) Convenience
Q.9 Would you be interested in stocking a new brand of Jam?
( ) Yes
( ) No
Q.10 Would you be interested in stocking a new brand of Ketchup?
( ) Yes
( ) No
Q.12 Would you be interested in stocking a new brand of Pickle?
( ) Yes
( ) No
Q.13 Would you be interested in stocking a new brand of Jam
( ) Yes
( ) No
_________________________________________
Chapter 9: BIBLIOGRAPHYWebsites:
www.amulindia.comwww.parle agro.com
www.itc foods.com
www.britania.comwww.surya foods.com
www.icmar-research.netwww.nauniuniversity.netwww.minstryofagricultreandfoodprocessing.comwww.dipp.reasearch.netwww.termpaper.comBOOK:Dealmakersin agro India- :JK Bajaj
Research methodology and Report writing- MC Knodia
Indian afood market- R Raganathan
Trends of agro industry-S Sreeja Paul Theron
Term papers
Agro feeding India by: ICMAR
Statistic outline of food industry: byDIPPProject developmentfor ketchup makers by: Nauni UniversityComparative sales report: Parle distributor
Manufacturing
GCMMF
Head office
Retail...n
WDn
WD1
Depot...n
Depot...1
Retail1
Third leg
Second leg
Procurement Channel
GCMMF
Head office
Upstream flow
Village1
VCSn
VCS1
MU...n
MU1
Villagen
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GLUCOSE38GLUCOSE
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SWEET AND SALTY15SWEET AND SALTY
KREAMS25KREAMS
COOKIES14COOKIES
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SWEET AND SALTY15
KREAMS25
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