A Business Plan

On

Sugar Free Sweets

Submitted To:

Dr. Rajesh Patel

(Director-MBA Department)

Submitted By:

Gadhvi Nikhil

MBA-SEM-III

Roll no-21

Declaration

I undersigned Gadhvi Nikhil, the student of M.B.A.(SEM-3) of N.R.

VEKARIA INSTITUTE OF BUSINESS MANAGEMENT STUDIES,

JUNAGADH. Declare that the project work present in this report is my own

work and has been carried out under the supervision guidance of Dr. Rajesh

Patel.

This business plan is a part of the subject “New Enterprise &

Innovation management” This project work is not submitted to any other

university for any other examination purpose. I have tried my level best to

include all information in this report.

Date : November 25, 2010 Student signature

Place : JUNAGADH (Gadhvi Nikhil)

Table of Contents

Sr. No. ParticularsPage No.

1. Introduction To SSI

2. Project At A Glance

3. Bio data Of Partners

4. Basis & Presumptions

5. Organization Structure

6. Implementation Schedule

7. Location Justification

8. Portrait Of Products

9. Details Of Raw Materials

10.Marketing Exercise

11.Production Process

12.Financial Aspects

13.Profitability Analysis

14.Break Even Analysis

15.Computation Of Ratios

16.Risk Factor

17.Future Prospects

18.List Of Suppliers

19.Conclusion

Introduction to SSI

Small scale industry has place of pride in our economy. It is

the base for medium and large scale industry helps in earning

foreign exchange, helps generating employment opportunities, and

many more benefits are available to the economy.

Hence, the govt. has introduced the Small & Medium

Enterprise Development Bill 2005 in the Lok Sabha, seeking to

enhance the investment cap for small scale units from Rs. 1 crore

to rs. 5 crore. The bill aims to consolidate the laws governing small

& medium enterprises. It also seeks to extend progressive credit

facilities to SME’s in line with the guidelines laid out by the RBI.

In a move to enable small enterprises to grow, the bill

provides that more than 50 employees can be freed from the

purview of Labour laws including the Employer’s Liability Act,

1938.

This report is made within the boundaries of SSI with the

intense to acquaint the students with the functions of entrepreneur.

Project at a Glance

Name of the unit:-1 Gokul Dairy Farm

Address for communication:- Gokul dairy Farm”

Near post office road,

Gandhi gram Society

Junagadh-362001

Type of the Unit Partnership firm

Location of the unit:- “Gokul dairy farm”

Gandhi gram society road,

Junagadh-362001

Name of the Product:- Sugar free sweets

Partner’s name:- Gadhvi Nikhil N

Avalani Bhavin R

Brand name:- Gokul Sweets

Biodata of Partners

Biodata of Partner:-1

Name:- Gadhvi Nikhil N

Address:- New police quarters B-6/96

Near F.M.tower ,

Bilkha road

Junagadh-362001

,

Education qualification:- BBA with marketing

Age:- 22 years

Finance contribution:- 50%

Role in Unit:- Managing finance and marketing

Biodata of Partner: - 2

Name:- Avalani Bhavin R

Address:- Akshar Residency,B-206

Giriraj Main Road

Junagadh-362001"

Education qualification:- B.B.A. in marketing

Age:- 22 years

Experience:- 2 years

Finance contribution:- 50%

Present activity:- Management and study for C.A.

Role in the unit:- Managing production and human resource

department

Basis & Presumption:-

1. It had been taken into consideration that the unit will work

for 8 hours a day for 300 days in a year. In case of emergency

the overtime will be carried out as the production is based on

orders.

2.To achieve full plant capacity the trial production will be

carried out for 15 to 20 days and by taking 6 to 7 samples.

3.Labor and wages mentioned as per the prescribed minimum

requirement of them

4. Interest rate at 9% for fixed and 13% for working capital is

considered in the project profile

5.Margin of money will very from 30 to 35% depending upon

the labor and raw material available to the firm.

6.The costs of land, construction, charges, machinery and

equipments, raw materials and consumables, other expenses

etc indicated in the profile are based on those prevailing at

the time of preparation therefore they are subject to necessary

changes from time to time based on local conditions.

Organization Structure

Organization is a group of people working together cooperatively

under authority toward achieving and objectives that manually

benefit the participants and organization.

The superior subordinate relationships are defined by organization

charts, which are formal documents that indicate the chain of

command and titles that have been assigned to the managers and

other personnel.

Implementation Schedule

Implementation schedule means actual time required to start the

production process. The major activities in the implementation of

the project have been listed & systematic implementation of

project may take around 11 to 12 months for completion.

Sr. No. Activities Time Period1 Survey for collection of data in

respect of demand, raw material, including power and fuel availability of technology, pollution control

2 months

2 Arrangement for margin money 1 month3 Preparation of project document

and registration1 month

4 Financial assistance 2 months5 Selection of site & development of

land2 months

6 Make shift office 12 months 7 Electricity, fuel and water tying up

for availability2 months

8 Selection of machines and procurement

1 month

9 Selection of raw material and procurement

8 days

10 Recruitment of staff and labor 15 days11 Registration for SSI 15 days12 trial production 20 days

Location Justification

In recent years the concept of industrial location has received much

importance & closer attention for any newly started manufacturing

business. Location of any industry pays a dominant role in success

for failure of the company.

Only best selected location on one side can earn variety of benefit

and any mistake in selection of location on the other side can result

into a great loss. Therefore before selection of the plant location

promoters have to check the various have to check the various

alternative locations in terms of loss contribution and environment

too.

Availability Of Raw Material

All the required raw materials are easily available locally at

market rate for preparing sugar free sweets at proposed location.

Proximity To The Market :

Proximity to the market means nearness to the market. From

marketing point of view, we have very enriched and expanding

market for our products. The most important benefit of nearness to

the market is you can closely be attached with the current market

position of demand, products, competitors, price, consumer beliefs

and attitudes towards the products and many more: we have

selected our location on Gandhi gram main road where the

penetration of dairy products is lesser and only competitors of

sugar-free sweets in Junagadh. So we have a very good market as

rJunagadh is the centre for saurashtra and a highly developing city.

We have a highly developing city. We can create, maintain and

develop the demand easily and profitably. Many hotels are also

consuming the sweets so, the large and beneficial potential is

found out

Availability Of Manpower

Manpower is the heart to run any kind of activities. For effective

running of any firm and activating maximum production & to have

at least cost, labor is required. All skilled and unskilled manpower

can easily be obtained near by the area at cheaper rate and also

with the basic required knowledge to operate.

Availability Of Manufacturing Services

Manufacturing services are the core necessity for efficient and

effective production. Water electricity and other infrastructure

facilities are included in it. As for as our location is concerned

water and electricity is easily available for 24 hours at very

economical rate and other facilities are also available easily as it is

inclusive in the city.

Transportation Facilities:-

By selecting this plant location for sweets will be beneficial more

for transportation mode rate and way we won’t have our own

transportation vehicles, the distribution of sweet will be carried out

through transportation contract will private companies. Which are

easily available at economic rate.

Personal Factor

We have selected this unit because of above all reasons and in

addition, our personal influence for the selection, as we want to

develop this area by anyway if we can society the society in our

earlier stage of business.

Other Ancillary Services:

Other ancillary services like banking, insurance, technically

assistance, warehousing etc are easily available at feasible rate.

Thus viewing all phases of the location, it seems to be most

appropriate location for the firm so we considered it as very

favorable & ideal location for us.

Portrait of Products

“Sugar free sweets”, the name itself suggests that they give

sweetness to those people whom sweets are for away to reach the

products is made for diabetics and diet conscious people.

The concept of sugar-free sweets comes into the Junagadh before

3 years. This is the segment where only a few competitors and

great potential for expansion. We have done search and surveys for

check in the demand and trend of the people towards sweets and

from them sugar-free sweets and we came to know that only 20%

consumers prefer sugar-free sweets in the general time or in

occasions. But by considering today increased number of diabetic

patients and the awareness among the people, we found and larger

& great market for the same.

We want to start sugar-free sweets for diabetic patients with the

motto of serving society and better and profitable way than the

competitors. We have entered in riche market the initial launching

strategy of use will itself our products quality i.e. delicious test

convenient packaging, superior quality, and nutrition, affordable

price on time delivery or quick delivery.

We will produce many products based on & main ingredients i.e.

dahi, fig and black raisins. The various products are made from it

and other in gradients like cashew coconut powder, pista, almond

and many more each product changes comparatively high price

than the general & common sweets before all are made from dry

fruits.

The products produced & their rate of each product given below

Items

Items Rate (per kg.)

Dry Fruits Roll Cut 400

Angier Cassata 320

Angier Dry Fruit Halva 160

Angier Roll 400Cayce Anger Roll 300Manpasand 320Sangam Slice 150Angir Slice 160Angir Badam Halva 220

Details Of Raw Material

Raw material is the precondition for production function.

Qualitative raw material effective processing and proper

maintenance are milestones for efficient production.

The main raw materials required for preparing sugar free

sweets are as follows

1.fate

2.Ghee

3. Cashew

4.Almond

5.Fig

6.Pista

7.Black raisins

8.Coconut powder

And other required materials are

1 Paper boxes

2 Plastic packets

3 Plastic papers

Containers (for loose selling)

Marketing Exercise

Demand Analysis

The demand of the sugar free sweets in current market specially

in saurashtra is 12 % where demand of the general sweet is larger

than it but the future potentially is grater in terms of demand.

Specially diabetic people will consume occasionally as well as

generally.

Supportive Basis For Growth Is Demand:

Increase the number of diabetic patients & diet conscious people in

the society growth rate 10 %

Current Consumption Pattern

Product are being consumed on routine basis and also occasionally

consumption Size

Consumption size for sugar free sweets is comparatively small

than general sweets

Pick Points With Reference To Demand

Festivals time

marriage seasons.

Segmentation

The market segmentation of sugar free sweet may be classified as under:

Geographical Segmentations:

As sugar free sweet made mainly from the dry fruit and pure materials having very high prices so they are consumed by the class people living in Jalaram society Road, M.G. Road, Azad Chowk, Circle with special reference to Junagadh only and other regions where the rich people are living

Demographic Segmentation:

1 Age group – above 30 years2 Income – high earn3 Personalities- rich & aristocrat personalities4 Social class- higher middle & upper class5 Education- highly educated and well awarded6 Behavioral – well awarded

Psychological Segmentation:

Beliefs & attitudes – favorable, positive

Pricing Decision

Objectives

1 To earn desirable profit2 To society the society3 To fight with competitors4 To create brand equity

Influencing Factor

1 Cost of raw materials 2 Cost of production3 Prevailing demand 4 Competitors price

Pricing Method

1 Cost plus pricing

Distribution Decision

Channel

2 Distributors – retailers- end users3 Hotels & restaurants 4 Wedding planners5 Event managers

Positioning

Product positioning]

(Note: * The product sugar free sweets are expensive and nutritious for the end users.)

By doing comparative study of the above map, we can make out our close competitors are sugar free sweets chemical based and sugar free ice scream.

Brand PositioningThe brand positioning map of the Gokul brand is as follows:

Analysis of Competitors

The main competitors of Gokul sugar free sweets are…

1 Shiv Shakti Sweets2 Sweet Palace3 Bengal Sweets

These are the main competitors providing suger free as well as general sweets the concept of suger free sweets came on Junagadh before 3 years so there is not keen competition but oligopolistic market competition

Competitive strategyTo compete with the existing competitors company will create awarness among the people that such kind of qualitative taylor made and nutritious products are available. Effective advertising through sign boards hoardings and print ads in various materials effective distribution strategy is being adopted

Competitive advantage

1 The quality of the sweets, 2 It’s delicious taste, 3 Effective pricing policy,4 Efficient distribution channels.

Promotion Decision

Objective

1 Create awareness among mass for sugar free sweet & specially among patients

2 Brands awareness3 Brand preference4 Brand loyalty

Budget

5 Rs. 10,000 per month

Tools

6 Signboards, 7 Hoardings, 8 Printed materials, 9 Catalogs, 10 Local magazines, 11 Other materials of social groups.

Production Process:

For making up of sugar free sweets mainly 3 dry fruits are used for a base i.e. Date, fig & Black grapes

Preparation Method

To prepare date based sugar free sweets firstly make it seed less then to crush it in mava maker and to fry it on gas stove with pure ghee. Then after to cut and sliced the dry fruits according to their name and given specification like cashew almond pista and coconut powder etc add to the fried date and again fried it in maska machine then give them different shapes according to their name & specifications give to them. To freeze the mis refrigerator for 3 to 4 hours now date based any item is ready to eat or serve.

Date BasedThe items which are made from the date are:-

1 Dry fruit roll cut2 Manpasand3 Sangam slice

The other fig based and black raisins based items also require the same process as date based

Fig Based

The main items made from fig based are:

1 Angir kasata2 Angir Roll3 Angir Dryfruit halva4 Kaju Angir Roll5 Man pasand6 Angir slice7 Angir badam halva

Black Raisins Based

8 Dry fruit roll cut9 Kishmis kamal10 Kishmis kasata11 Kishmis roll12 Manpasand13 Sangam katri14 Badam kishmis15 Kaju kishmis etc

Financial Aspects:

Fixed capital Details (Section - I)

(a) Land And Building

Sr. No. Particulars Amount (Rs.)

1 Land :500 sq. mtrs. @ Rs. 5000 per sq. mtr.

2,500,000

2 Building:Work shed: 200 sq. mtr. @ Rs. 7500Storage: for raw material 20 sq. mtrs. And for finished goods 20 sq. mtrs.

1,500,000

3 Furniture:Electrification and fixtures

250,000150,000

Total 4,400,000

(b) Machineries & Equipments

Sr. no. Description Qty Price (per unit)

Total Price (Rs.)

1 Mava Maker 4 80,000 320,0002 Dry Fruit Cutter 2 15,000 30,0003 Maska Machine 1 25,000 25,0004 Slice Machine 2 20,000 40,0005 Refrigerator 2 110,000 220,000

Total 11 250,000 635,000

(c) Statement Showing Total Fixed Cost

Sr. No. Particular Cost (Rs.)1 Land building and furniture 4,400,0002 Machineries and equipments 635,000

Total 5,035,000

Land Building Machine & Equip.

Working capital details (Section – II)

(a). Personnel (Per month)Sr. No.

Designation No.s Salary Total

1 Manager 1 7,000 7,0002 Supervisor 2 5,000 10,0003 Accountant 1 4,500 4,5004 Stock Keeper 1 2,500 2,5005 Counter Person 1 3,000 3,0006 Skilled Workers 4 2,200 8,8007 Unskilled Workers 6 1,800 1,800

Total 16 46,600

(b) Raw materials

Sr. No. Particular Qty (kg.) Rate (per kg) Total1 Ghee 30 140 4,2002 Cashew 100 240 24,0003 Almond 70 480 33,6004 Fig 50 280 14,0005 Date 70 35 2,4506 Black

Grapes40 140 5,600

7 Coconut Powder

20 75 1,500

8 Pista 20 280 5,600Total 400 90,950

(c). Utilities (per month)

Sr. No.(Rs.)

Particular Total Value

1. Power – per unit Rs. 4 70002. Water 5000 ltrs 20003. Gas 125 bottles @ 320 (aprx.) per

no.40000

Total 49000

(d) Other expenses (per month)

Sr. No. Particulars Value (Rs.)1 Postage & Stationary 5002 Telephone 30003 Repair & Maintenance 20004 Transportation Charges 150005 Advertisement 200006 Insurance 20007 Miscellaneous Expenses 5000

Total 47500

(e). Statement showing total working capital (monthly)Sr. NO. Particulars Cost1 Personnel 466002 Raw Materials 909503 Other Expenses 475004 Utilities 49000

Grand Total 234050

(f) Working capital Requirement (for 3 months)

Rs. 2 34 050 X 3 Months = Rs. 7, 02, 150

Total Capital investment

Sr. No. Particulars Value (Rs.)1 Fixed Capital 50350002 Working Capital 702150

Total 5737150

Sources of Finance

Sr. No. Particulars Contribution Value1 Owned Capital 35% 2008002

2 Borrowed Capital 65% 3729147Grand Total 5737150

0500000

1000000150000020000002500000300000035000004000000

OwnedCapital

BorrowedCapital

Contribution

Value

Contribution Value

Interest On Capital

Sr no. Particulars Rate Value (Rs.)1 Owned Capital 9% 1807202 Bank loan 12% 447498

Total Interest 628218

Depreciation Details

Sr no

Particular Gross block

Rate Depreciation

Net Block

1 Building 1500000 10% 150000 13500002 Furniture 250000 8% 20000 2300003 Machines

& Equipments

635000 10% 63500 571000

Total 2385000 233500 2151500

Cost Of Production

SR NO. Particulars Value (Rs.) 1 Total requirement of working

capital2808600

2 Depreciation on Building 1500003 Depreciation on machinery 635004 Depreciation on Furniture 200005 Interest on Bank Loan 4474986 Interest on owned Capital 180720

Total cost 3670318

Sales Turnover (Monthly):

Yearly Sales Turn over

Sr. no. Particular Qty Rate Amt

1 Date Based 300 500 150000

2 Black Raisins Based

250 600 150000

3 Fig Based 400 550 220000  Total 950 1500 520000

Sales =520000 X 12 Months= Rs. 62,40,000

Fixed Cost

Sr. No. Particulars Value (Rs.)1 Depreciation on building 150,0002 Depreciation on furniture 20,0003 Depreciation on machinery 63,5004 Interest on bank loan 447,4985 Interest on owned loan 180,7206 Insurance 10,0007 40% Salary & wages 18,6408 40% Other Expenses 19,000

Total 909,358

Profitability Analysis

Particulars Amount (Rs.) Sales volumeLess: Cost of production [Excluding interest]

62400003,042,000

Earning before Interest & Tax Less: interest on Capital

3198000628,218

Earning before TaxLess: income tax at 35% (assumed)

2569782899424

Profit After Tax 1670358 Profit

Profitability = ---------- X 100 Sales

936577 = ---------- X 100 = 15%

6240000

Break Even Analysis

Break even analysis is widely used technique to study cost volume

profit relationship. The narrow interpretation of the term break even analysis refers to a system of determination of that level of activity where total cost actual total selling price.

In nut-shall, BEP means like level of output of sales at which no profit no loss is activated.

Break even point for sugar free sweets

Fixed CostBEP = ------------------- X 100 Fixed Cost + profit

909,358= ---------------------- X 100 909,358 + 936577

= 49.26 %

Computation Of Ratios

Return on Investment

Net Profit 936577x 100ROI = ----------------- X 100 = ---------------

Total Investment 2,737,150

= 34.21%

Return on Fixed Assets

Profit 936577 X 100= ----------- X 100 = ----------------Total Fixed Assets 5,035,000

= 18.60%

Risk Factors

For inception of any activity, the risk factor is involved with itself. Risk factor is like living without being born. So, before starting any organization or unit the entrepreneurs have to keep in mind the weak as well as threatening feets of the firm.

The risk factors involved with Utsav Dairy Farm may as follows:

1 The demand of the products may not be generated as

predicted.

2 The firm will have to face strong competition.

3 The promoters of the firm are not much experienced in the

field of entrepreneurship and in the food items.

4 Consumers will not be got much well aware about the

products.

5 In the very first year the company may face loss.

Future Prospects

The modern world is fast growing, it is expanding considerably in food habits. New innovation of yesterday is old for today, it is a past and tomorrow is a present.

The following are the future prospects of my unit:

1 Expansion in existing tem with different flavors and

ingredients

2 Expansion in existing market and cover the entire Gujarat.

3 Diversifying in other sugar free food items.

4 Development of various branches whole over the Gujarat.

List Of Suppliers

1.Ambika machines,

Rajkot Highway,

Saverkundala.

2.Rathod machines

6 Mavdi Plot,

Rajkot.

3.Gayatri Refrigerator

Kalawad Road,

Kotecha Chowk,

Rajkot.

4.GAS

Gujarat Essence.

Rajkot.

P&l account for 3 years

Particular 1st Year 2nd Year 3rd YearSales 6240000 6864000 7550400Net Sales / Income (A)

6240000 6864000 7550400

Manufacturing Exp.:

     

Raw Materials 1091400 1200540 1320594direct wages 265200 291720 320892Utilities 588000 646800 711480Repairs & Maintenance

24,000 26400 29040

Total Manu. Exp. (B).

1968600 2165460 2382006

Gross Profit (A-B) (C)

4271400 4698540 5168394

Adm. Selling Exp .

     

Telephone 36,000 39,600 43,560Postage & Stamp Duty

6,000 6,600 7,260

Miscellaneous Exp.

60,000 66,000 72,600

transport exp. 15,000 16,500 18,150Salary 294000 323,400 355,740Depreciation 2151500 2,366,650 2,603,315Insurance 24,000 36,000 36,000Interest      Own Capital 190720 190720 190720Borrowed Capital

447498 447498 447498

Total Adm. Ex. (D)

3,224,718 3,492,968 3,774,843

Operating Profit (C-D)

1,046,682 1,205,572 1,393,551

(Less) Tax 110,105 421,950 487,743

Balancesheet for 3 years

Particulars 1st Year 2nd Year 3rd Year

Capital Liability

     

Own Capital 2008002 2008002 2008002(+) Int. on Capital 688218 688218 688218(+) Net Profit 936577 783622 905808  3632797 3479842 3602028Borrowed Loans

3729147 3729148 3729149

Creditors 250000 270000 260000Total 7611944 7478990 7591177

Property Assets

     

Fixed Assets

     

land & Building Less Dep.

1500000 1350000 1215000

Machine Less Dep.

635000 571500 514350

other fixed assests less dep.

250000 230000 211600

debtors 702150 1167665 1167665Cash and

bank4,524,794 4,159,825 4,482,562

 Total 7611944 7478990 7591177

Cost sheet for 3 years

Particulars 1st year 2nd year 3rd yearRaw Material Consumed

     

Op. Stock of Raw Material

  -  

Purchase 1091400 1200540 1320594Cost of R.M. Consumed

1091400 1200540 1320594

Direct Wages 265200 291720 320892Utilizes 588000 646800 711480Prime Cost 3036000 2139060 2352966Factory Overhead

     

Salaries 294000 323400 355740Dep. On Building & Machine

150000 165000 181500

Maint. & Repairs of Machine

24000 26400 29040

Work Cost. 3504000 2653860 2919246Office / Adm. Overhead

     

Telephone 36,000 39600 43560Postage & Stamp Duty

6,000 6600 7260

Insurance 24,000 26400 29040Mis. Expenses

5,000 5500 6050

Interest on Cap.

688218 757039.8 832743.78

Depre. On other fixed Asset.

20000 18400  

Cost of Production

4,283,218 3,507,400 3,837,900

Selling & Dist. Overheads

     

transport exp. 15000 16500 18150Cost of Sales. 5,888,814 6,377,852 6,922,277Sales 6270000 6897000 7586700Profit 381,186 519,148 664,423

Conclusion

To end up the discussion, since the starting of the project with the selection of the sugar free sweets for a new segment of consumers with the greater potentially.

This is my pleasure to put this report before the University for launching the “sugar free sweet”. As a promoter of this unit, I have made all the required efforts for the successful launching of all products. I hope that the sugar free sweets will be successes in the market and specially my brand, “GOKUL Sugar free sweets”. The main aim of mine for launching this kind of product is just to society the society by providing best quality products for the diet conscious and diabetic patients.

Govt. should support these kinds of small scale units to serve the public with qualitative food items. I also want to help in generation of employment opportunities and to raise standard of living. At least I am again very thankful to all of the concerned people who helped me in preparing this report. This is also true for me as I thought my report could express my thoughts & researches for sugar free sweets. It was a great experience that I might want to deal in future. That’s all it will be great opportunity for every student.

Disclosure of significant accounting policy.

1) We take double entry system in book keeping area.

2) Method of depreciation = Written down method

3) Valuation of Inventory=Cost price or market price

which ever is less.

Accounting Year = 1st April to 31st March.