Sapm Project New

8/9/2019 Sapm Project New

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INTRODUCTION OF THE INDUSTRY

Rationale behind the selection of Industry ustification

The Indian Chocolate Industry has come a long way sincelong years. Ever since 1947 the Cadbury is in India,Cadbury chocolates have ruled the hearts of Indians withtheir fabulous taste. Indian Chocolate Industrys CadburyCom!any today em!loys nearly "### !eo!le across India.The com!any is one of the oldest and strongest !layers inthe Indian confectionary industry with an estimated $%&value share and $"& volume share of the total chocolatemar'et. It has e(hibited continuously strong revenue growthof )4& and net !rofit growth of "4& throughout the 199#.

The brand of Cadbury is 'nown for its e(ce!tionalca!abilities in !roduct innovation, distribution andmar'eting. *ith brands li'e +airy il', -ems, /tar,0ourn vita, er', Celebrations, 0ytes, Choc'i, +elite andTem!tations, there is a Cadbury offering to suit alloccasions and moods.

Today, the com!any reaches millions of loyal customers through a distribution networ' of .la'hs outlets across the country and this number is increasing every day. In 194$ theCadburys manufacturing o!erations started in umbai, which was subse2uently transferredto Thane. In 19$4, Induri 3arm at Talegaon, near une was set u! with a view to !romote

modern methods as well as im!rove mil' yield. In 19%1%", a new chocolate manufacturingunit was set u! in the same location in Talegaon. The com!any, way bac' in 19$4, !ioneeredcocoa farming in India to reduce de!endence on im!orted cocoa beans. The !arent com!any

!rovided cocoa seeds and clonal materials free of cost for the first % years of o!erations.Cocoa farming is done in 5arnata'a, 5erala and Tamil 6adu. In 1977, the com!any also too'ste!s to !romote higher !roduction of mil' by setting u! a subsidiary Induri 3arms td., nearune.

In 19%9, the com!any set u! a new !lant at alan!ur, , to derive benefits available to thebac'ward area. In 199, Cadbury e(!anded alan!ur !lant in a ma8or way. The alan!ur!lant has modernied facilities for -ems, :clairs, and er' etc. Cadbury o!erates as the third

!arty o!erations at halton, *arana and 6asi' in aharashtra. These factories churn outclose to %,### tons of chocolate annually.

In res!onse to rising demand in the chocolate industry and reduce de!endency on im!orts,Indian cocoa !roducers have !lanned to increase domestic cocoa !roduction by $#& in thene(t four years. The Indian mar'et is thought to be worth some 1bn ru!ee ;


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li'e Cadbury India are encouraging cocoa cultivation, the news agency said. Cocoare2uirement is growing around 1& annually and will reach about )#,### tons in the ne(t years.

!rief Introduction

Indian Chocolate Industry as today is dominated by twocom!anies, both multinationals. The mar'et leader isCadbury with a lion>s share of 7#&. The com!any>s brandsli'e 3ive /tar, -ems, :clairs, er', and +airy il' areleaders in their segments. @ntil early 9#>s, Cadbury had amar'et share of over %# &, but its !arty was s!oiled when

6estle a!!eared on the scene. The other one has introducedits international brands in the country ;5it 5at, ions=, andnow commands a!!ro(imately 1& mar'et share. The twocom!anies o!erating in the segment are -u8arat Co

o!erative il' ar'eting 3ederation ;-C3= and CentralAreca nut and Cocoa anufactures and rocessors Coo!eration ;CACB=. Com!etition in the segment will onlyget 'eener as overseas chocolate giants ershey>s and arsconsolidate to grab a bite of the Indian chocolate !ie.

The @5 based confectionery giant, Cadbury is a dominant !layer in the Indian chocolatemar'et and the com!any e(!ects the energy glucose variant of its !o!ular er' brand to besingularly res!onsible for adding five !er cent annually to the sie of the com!anys mar'etshare.

CHOCO"#TE INDUSTRY IN INDI#

The chocolates sales globally have witnessed a decline in the last few years due to the "##9economic crisis. owever, the global chocolate mar'et has shown an u!ward trend since late"#1# with the im!rovement in the economy. *estern Euro!e accounts for the largest mar'etfor chocolate followed by 6orth America and Asia acific. *ith the increased consum!tionof chocolate and substituting it with traditional sweets, the mar'et is e(!ected to accelerate inthe coming five years.

According to the recently !ublished re!ort by Techs ?esearch DIndia Chocolate ar'et3orecast B!!ortunities, "#1%F, the chocolate mar'et revenues in India is e(!ected to

witness the com!ounded annual growth rate ;CA-?= of around "1& from "#1)"#1%. Thechocolate industry is also considered as the most !o!ular !roduct in the food !rocessingsector. *ith the demand of !remium high end chocolate going u! in the mar'etG internationalcom!anies are entering into the mar'et through collaborations and ac2uisitions in order toincrease their share in the mar'et. It is forecasted that India chocolate mar'et will reach @/+)." 0illion revenues by "#1% due to increasing gifting culture in the country and increase inthe income brac'et which will fuel the demand for chocolate !roducts in India. Indiachocolate mar'et is divided into four segments where 0ars chocolate segment accounts forma(imum share of )$&. owever, the demand for assorted chocolates is e(!ected to increasewith the highest growth rate within ne(t five years considering the increasing gifting culturein the country followed by growing demand.

Techs ?esearchs re!ort further elaborates that the domestic mar'et for chocolate hasincreased due to shift in consumer !reference and develo!ment in rural mar'ets. The Indian


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chocolate mar'et is dominated by Crafts 3ood being the mar'et leader followed by 6estleand Amul. There are certain local manufacturers who also !lay a significant role in thechocolate mar'et due to !ro(imity in nonmetro!olitan areas and increasing awarenessamong the consumers. India im!orts chocolate !roducts from a lot of countries such as China,/inga!ore, @AE, alaysia, @5, /witerland and 6etherlands. owever, one of the ma8or

challenges for the local manufacturers is the increasing cocoa !rices in the country which iscurrently being im!orted and act as a main raw material used for !re!aring chocolates bymany leading !layers.

The chocolate industry has a considerable growth !otential in the country but the area ofconcern lies in high in!ut cost of raw materials such as sugar, cocoa, mil' !owder andincreasing !ac'aging cost. Increasing tariffs and rising custom duty also ma'es the im!ortedchocolate costly thereby affecting the sales of !remium chocolates in the country.

The re!ort has evaluated the future growth !otential of chocolate mar'et in India and!rovides statistics and information on mar'et structure, mar'et trends, mar'et sie, etc. The

re!ort will suffice in !roviding the intending clients with cuttingedge mar'et intelligence andhel! them in ta'ing sound investment decisions. 0esides, the re!ort also identifies andanalyes the emerging trends along with essential drivers and 'ey challenges faced by theindustry.

The chocolate mar'et in !recedent years has been witnessing tremendous growth in terms ofvalue as well as volume. The governance of mar'et is maintained by large international giantsthrough franchisee and e(!ansion into new mar'ets which is leading to the growth of thechocolates mar'et in India. Indian chocolate industry has registered a growth of 1& !erannum from "##% to "#1" and is !ro8ected to grow even at a higher rate in future. Theindustry has a !ositive outloo' due to !henomenal growth in the confectionery industry,rising !er ca!ita income and gifting culture in the country.

According to DIndia Chocolate ar'et 3orecast B!!ortunities, "#1%F, the !er ca!itaconsum!tion of chocolates is increasing in the country which will continue to flourish themar'et revenues. It is e(!ected that India chocolate industry will be growing at the CA-?")& by volume between the years "#1)"#1% and reach at ),41,$#9 Tons. The dar'chocolates are e(!ected to account for the larger mar'et share when com!ared to mil' andwhite chocolates in the coming years. The introduction of medicinal and organic ingredientsin the manufacturing of chocolates had lead to a new trend and develo!ment in the country,which will be ada!ted by ma8or manufacturers to remain active in the mar'et.

INDI#N CHOCO"ET INDUSTRY #T $"#NCE %&'%( %&')

The Indian chocolate industry may sur!ass the ?s 7,##crore mar' by "#1 with the hel! ofgrowing consum!tion in the urban and semiurban areas, according to the industry chamberAssociated Chambers of Commerce and Industry of India ;A//BCA=. Currently, theIndian chocolate mar'et is worth around ?s 4,## crore. The Indian chocolate industry isregistering a com!ound annual growth rate of " !er cent at !resent. The demand forchocolates in India has cloc'ed about )& rise as against last year !rimarily in urban areasdue to the rising shift to chocolates from traditional mithai around the festival season.

igh income levels in the urban sector are a good reason for the ra!id growth of thechocolate industry in India. ore than $& of the consum!tion occurs in the urban mar'et.


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Today, the Indian confectionery industry is one of the fastest growing in the world with anestimated mar'et sie of over ?s ",### crore !er annum accounting for an annual growth of1%"# !er cent.

The global chocolate mar'et is estimated to be around H% billion. TheIndian confectionery industry is further categoried into subsectors suas sugar based confectionery, chocolatebased confectionery and gumAfter iberaliation, rivatiation and -lobaliation, India has witnesstremendous growth in 30 sector, !articularly, in the confectionerysegment. any foreign !layers li'e 6estle and Cadbury forayed into tIndian mar'et to ta! 1## million customers and are ruling the roost tildate.

*aor +layers

Cadbury India "td

Co,+any -rofile

Early Days ( # One *an !usiness

John Cadbury was one of ten children of ?ichard Ta!!erCadbury, a !rominent Kua'er who had moved to0irmingham, England from the *est Country in 1794.

In 1%"4, ""yearold John Cadbury o!ened his first sho! at 9) 0ull /treet, ne(t to his father>sdra!ery and sil' business in the then fashionable !art of 0irmingham.

A!art from selling tea and coffee, John Cadbury sold ho!s, mustard and a new sideline cocoa and drin'ing chocolate, which he !re!ared using a mortar and !estle.

Cocoa and drin'ing chocolate had been introduced into England in the 1$#s but remained alu(ury en8oyed by the elite of English society. Customers at John Cadbury>s sho! wereamongst the most !ros!erous 0irmingham families, the only ones who could afford thedelicacy. Cocoa beans were im!orted from /outh and Central America and the *est Indies.

E(!erimenting with his mortar and !estle, John Cadbury !roduced a range of cocoa andchocolate drin's, the latter with added sugar. The !roducts were sold in bloc'sL customersscra!ed a little off into a cu! or sauce!an and added hot mil' or water.


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John Cadbury had a considerable flair for advertising and !romotion. MJohn Cadbury isdesirous of introducing to !articular notice >Cocoa 6ibs>, !re!ared by him, an article affordinga most nutritious beverage for brea'fast,M announced his first advertisement in the0irmingham -aette in arch 1%"4.

e soon established himself as one of the leading cocoa and drin'ing chocolate traders in0irmingham. The !o!ularity and growing sales of John Cadbury>s cocoa and drin'ingchocolate of >su!erior 2uality> determined the future direction of the business.

In 1%)1, John Cadbury rented a small factory in Croo'ed ane not far from his sho!. ebecame a manufacturer of drin'ing chocolate and cocoa, laying the foundation for theCadbury chocolate business.

These early cocoa and drin'ing chocolates were balanced with !otato starch and sago flour tocounter the high cocoa butter content, while other ingredients were added to give healthy

!ro!erties.

0y 1%4", John Cadbury was selling si(teen lines of drin'ing chocolate and cocoa in ca'e and!owder forms.

-RODUCT "INE

1= +airy il'

"= 3ruit 6ut)= /tar4= 0rea'= er'$= -ems7= Eclairs%= 6utties9= Tem!tation1#= il' Treat.

Nestle India "td

Co,+any -rofile


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6estlN>s relationshi! with India dates bac' to 191", when it began trading as The 6estlNAnglo/wiss Condensed il' Com!any ;E(!ort= imited, im!orting and selling finished

!roducts in the Indian mar'et.

After India>s inde!endence in 1947, the economic !olicies of the Indian -overnment

em!hasied the need for local !roduction. 6estlN res!onded to India>s as!irations by forminga com!any in India and set u! its first factory in 19$1 at oga, un8ab, where the-overnment wanted 6estlN to develo! the mil' economy. rogress in oga re2uired theintroduction of 6estlN>s Agricultural /ervices to educate advice and hel! the farmer in avariety of as!ects. 3rom increasing the mil' yield of their cows through im!roved dairyfarming methods, to irrigation, scientific cro! management !ractices and hel!ing with the

!rocurement of ban' loans.

6estlN set u! mil' collection centers that would not only ensure !rom!t collection and !ayfair !rices, but also instill amongst the community, a confidence in the dairy business.rogress involved the creation of !ros!erity on an ongoing and sustainable basis that has

resulted in not 8ust the transformation of oga into a !ros!erous and vibrant mil' districttoday, but a thriving hub of industrial activity, as well.

6estlN has been a !artner in India>s growth for over nine decades now and has built a verys!ecial relationshi! of trust and commitment with the !eo!le of India. The Com!any>sactivities in India have facilitated direct and indirect em!loyment and !rovides livelihood toabout one million !eo!le including farmers, su!!liers of !ac'aging materials, services andother goods.

The Com!any continuously focuses its efforts to better understand the changing lifestyles ofIndia and antici!ate consumer needs in order to !rovide Taste, 6utrition, ealth and *ellnessthrough its !roduct offerings. The culture of innovation and renovation within the Com!anyand access to the 6estlN -rou!>s !ro!rietary technologyO0rands e(!ertise and the e(tensivecentralied ?esearch and +evelo!ment facilities gives it a distinct advantage in these efforts.It hel!s the Com!any to create value that can be sustained over the long term by offeringconsumers a wide variety of high 2uality, safe food !roducts at affordable !rices.

6estlN India manufactures !roducts of truly international 2uality under internationally famousbrand names such as 6E/CA3:, A--I, I5P0A?, 5IT 5AT, 0A?B6E, I5AI+and 6E/TEA and in recent years the Com!any has also introduced !roducts of dailyconsum!tion and use such as 6E/T: il', 6E/T: /I il', 6E/T: +ahi and

6E/T: Jeera?aita.

6estlN India is a res!onsible organiation and facilitates initiatives that hel! to im!rove the2uality of life in the communities where it o!erates.

-RODUCT "INE

6estlN Crunch Cailler -ala'Oil'ybar 5it 5at /marties 0utterfinger


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Aero olo.

"otte India Cor+oration "td

CO*-#NY -ROFI"E

DAt the heart of the cor!orate !ur!ose, which guides us in our a!!roach to doing business, isthe drive to serve consumers in a uni2ue and effective wayF

Its a story born in the age of 0ritish ?a8. *hen children in India found confectionery hard tocome by. It had to be im!orted from across the seas until the year 1914G *hen arrys !ic'edu! the gauntlet and !ioneered the manufacture of sweets the first to do so in the country.arrys sweets went on to become a household name a name that !eo!le recollect withwarmth and a smile. Ever since, the arrys factory was set u! in 6elli'u!!am, in theCuddalore +istrict of Tamilnadu in /outh India. arrys has become synonymous with /weetsand Confectionery. *ith the !enchant we Indians have for sweets is not sur!rising that thissmooth, mil'y and irresistibly delicious confectionery is the best gift any child could get. Andan obsession with 2uality ensured that children had a choice of nothing but the very best inconfectionery.

In the nine decades since, the scenario has undergone a dramatic change. There are a numberof offerings in the mar'et today, each wooing children with a wide array of !roducts. 0utarrys still finds a !rominent !lace in the heart of consumers.

arrys has always stayed at the to!, having weathered the vicissitudes of change, with ourear close to the ground and to the hearts of children, changing, ada!ting and growing withthe times 0ut never losing sight of its values traditions and ethics. At the turn of thiscentury, arrys is !oised on the threshold of greater challenges in a global village, wheredynamism and innovation is the very law of survival.

In the bac'dro! of India 8oining the *TB, and the global giants eyeing the Indian ar'etwith enthusiasm, the com!any needed to strengthen itself and broaden its base to delight

customers across the country and abroad. *ith this vision in the mind, uruga!!a -rou!,!romoters of arrys Confectionery imited entered in to an agreement with otteConfectionery imited, /outh 5orea, by which the, entire shares which uruga!!a -rou!,the founders of arrys Confectionery imited, held was divested to otte Confectioneryimited A /outh 5orean ultinational giant.

otte Confectionery is the first Com!any of the otte family of Com!anies founded by r./hin 5yu'ho. The three s in the otte Emblem stand for ove, iberty and ife. TheCor!orate !hiloso!hy and idealism of otte is driven by dream of a world full of ove where

!eo!le care for each other and res!ect each others thoughts. The otte -rou! has !resence in3ood 0everages, +istribution, Tourism and eisure businessG eavy Chemicals,

Construction and achineryG Information, Communication and Electronics, Trading and/ervices a!art from *elfare ?esearch and /u!!ort /ervices. The otte Confectionery Co.


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td. is the otte -rou!s flagshi! Com!any in 3oods and 0everages category. otteConfectionery, 5orea, was established with ## em!loyees in 19$7 and today it has morethan $### Em!loyees. It has over ## !roducts !roduced at largescale !lants in 5orea.otte has been actively wor'ing towards establishment of overseas branches, !roductionfacilities and has a !resence in more than 7# countries. otte Confectionerys annual /ales

are over @/+ 9## millions, A!art from 5orea, otte has overseas investments in !roductionfacilities in China, hili!!ines and Qietnam. otte Confectionerys ain line !roducts areChewing -um ;otte Rylitol, otte Juicy 3resh, otte /!earmint, otte 3resh int,3lavono, *hite E, /!out CafN Coffee= Candy, 0iscuits, Chocolates, /nac's, Ice cream, andhealth care !roduct.

If the decades !ast are any indication, theres little doubt that even in the coming century,children grow u! with the brands arrys has established.

-RODUCT "INE

atte Choco ie acto 5ing 0ooroo

"otus Chocolate Co,+any "td.

CO*-#NY -ROFI"E

otus Chocolates ta'e great !ride in being one of India>s select manufacturers of thefinest chocolates, cocoa !roducts and cocoa derivatives. Bur !roducts are su!!lied tochocolate ma'ers and chocolate users across the world, from local ba'eries to multi

national com!anies. Incor!orated in 19%9 and having commenced o!erations in 199",otus is well 'nown as a reliable business !artner for the su!!ly of cocoa andchocolate !roducts./tarting from the cocoa bean !rocessing to delivering fine chocolates... otus s fullyintegrated manufacturing facility is built with the best technologies and e(!ertise fromacross the globe.*e are the one sto! chocolate hub for you our valued customer.ocated 8ust 'm from yderabad in Andhra radesh ;/outh India=, one of India>sfastest growing cities, we have the added advantage of close !ro(imity to the cocoagrowing areas of /outh India. E2ui!!ed with so!histicated machinery from -ermany,@5, +enmar', and Italy, and bac'ed by stringent 2uality !rocesses, we ensure that

our chocolate is develo!ed with its own uni2ue flavor a flavor that leaves a smile ofsavored ha!!iness...

-RODUCT "INE

Chuc'les /u!err Carr Bn Bn igh 5a8oos -obble

il'y unch altys


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Tango Eclairs

Strate/ic $rou+ *a++in/

0hat is strate/y /rou+ ,a+1

A strategy grou! consist of those industry members with similar com!etitive a!!roaches and

!osition in the mar'et. Com!anies in the same strategy grou! can resemble one another inany of several waysL they may have com!arable !roductline breadth, sell in the same

!riceO2uality range, em!hasie the same distribution channelG use essentially the same!roduct attributes to a!!eal to similar ty!es of buyers, de!end on identical technologya!!roaches, or offer buyers, similar services and technical assistance. An industry containonly one strategy grou! when all seller !ursue very similar strategy and have com!arablemar'et !osition.

The !rocedure for constructing a strategy grou! ma! is straightforwardL

Identify the com!etitive characteristic that differentiate firm in the industryG ty!ical

variable are !riceO2uality range ;high, medium, low=, geogra!hy coverage ;local,regional, national, global=, use of distribution channel ;one, some, all=, and degreeof service offered ;nofrill, limited, full=.

lot the firm on a twovariable ma! using !air of these differentiate characteristics. Assign firm that fall in about the same strategy s!ace strategic grou!. +raw circles around each strategy grou!, ma'ing the circles !ro!ortional to the

sie of the grou!s share of total industry sales revenues.

Co,+any Na,e -rofit 2Rs.in crs3 No.of.+roducts

"otus Chocolate Co,+any "td. (%.% '&

Cadbury India "td. )&).%4 '&

Nestle India "td. '&56.7) 8

"otte India Cor+oration "td. 7.77 )


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High

Product

Line

Low

Low Net proft Net Proft High Net proft

Inter+retation9

3rom the above strategic grou! ma!!ing, we can say that nestle is having the nine !roductline and also consists of highestnet !rofit in the overall chocolate industry. nestle is havingthe rivalry with Cadbury which has the highest !roduct line which consists of small net !rofit

but the !ortfolio of the !roducts are very !rofitable which has led to the highest net !rofit inthe year "#1". Cadbury is the second highest !rofitable com!any seen as !er the net !rofitand having the !roduct !ortfolio of 1# !roducts in chocolate industry, among those nestle endto lead the highest !rofit of all segment. ere nestle and Cadbury are almost similar in

!roduct line. Cadbury and 6estle have a close com!etitor with each other in this industry.otus is having its minus net !rofit which is not in the rivalry of nestle and Cadbury.oreover, lotte is also having low !rofit com!arison with nestle and Cadbury.

Strate/ic #nalysis

Industry:s do,inant econo,ic features

'. Sco+e of Co,+etiti;e Ri;alry9

The chocolate industry has become increasingly larger within the last cou!le of years as a

result increase the consumers need and demand. The mar'et is very com!etitive because theyoffer the same !roducts, but has different !hysical attributes to the chocolate and different

CADBURYLOTUS

NESTLE

LOTTE


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costs, which buyers have choices to choose from. Com!anies want to !rovide the best!roducts and to attract buyers im!roving !roducts, which ma'es the chocolate industry verycom!etitive.

ere are the main factors of com!etitive rivalryL

0undle flavorL li'e some fruits, sweet sil', 5esar. 3ruit and nuts.

Im!rovement in !roduct design and !ac'aging

roviding chocolate to the health conscious customers.

%. Sta/e in "ife Cycle9

The chocolate industry is in the ature ife Cycle /tage, where nearly all!otential

customers are already users of the industrys !roduct. The cell chocolate industrys growthand !rofitability de!ends entirely on its ability to attract new customers. 0y increasing andim!roving !roduct innovation, it will attract more !otential buyers and need of customer.

). Nu,bers of Co,+anies in the Industry9

There are many com!anies with only to! m four com!anies in the chocolate industry thatcontrols %# !ercent of the mar'et. Even though there are emerging new com!anies into themar'et, they are relatively small. The four to! com!anies are ran' as follow as the largest tothe smallest chocolate com!any.

1. otus Chocolate Com!any td". Cadbury India td). 6estle India td4. otte India Cor!oration td


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anufacturers have reacted with !ac'aging innovations, such as the Smemory wra!!er fromars that allows bars to be twisted, closed and saved. ars says the innovation Dem!owersthe consumerF. It also drives brand loyalty.

4. Ca+ital Re>uire,ents9

Chocolate com!anies re2uire minimum ca!ital to enter and remain in the mar'etsuccessfully. Com!anies re2uire ca!ital to create !roducts that attracts consumers and fortotal assets and revenues to enlist other !roducts. A valuable ca!ital in the chocolate industryis the consumers because revenue and !rofits de!ends on them who buy the com!anies!roduct.

This ma'es the mar'et very com!etitive and large com!anies that have big economies ofscale !rovide a highly automated service to a large number of customers, and have thefinancial resources re2uired in building and maintaining a large chocolate mar'et.

The chocolate industry en8oyed sweet success in "##9, with domestic industry revenuesto!!ing H11 billion. Chocolate businesses have !erformed well des!ite a tough economy dueto innovations in chocolate manufacturing and increased consumer awareness aboutchocolates health benefits. Chocolate businesses include a number of enter!rise o!tions. Poumight decide to run a gourmet chocolate candy store, manufacture your own organicchocolate !roducts or rent chocolate fountains. Bther ideas include a chocolate fondue cafN,chocolate gift sho! or chocolate gift bas'et business.

FIN#NCI#" #N#"YSIS

!#C?$ROUND OF FIN#NCI#" #N#"YSISBne of the most common ways of analying financial data is to calculate ratios from the datato com!are against those of other com!anies or against the com!any>s own historical

!erformance.

3inancial analysts often assess the firm>sL

1. -rofitability its ability to earn income and sustain growth in both shortterm and longterm. A com!any>s degree of !rofitability is usually based on the income statement,whichre!orts on the com!any>s results of o!erationsG

". Sol;ency its ability to !ay its obligation to creditors and other third !arties in the long

termG). "i>uidity its ability to maintain !ositive cash flow, while satisfying immediateobligationsG

4. Stability the firm>s ability to remain in business in the long run, without having to sustainsignificant losses in the conduct of its business. Assessing a com!any>s stability re2uires theuse of the income statement and the balance sheet, as well as other financial and nonfinancial indicators.
http://en.wikipedia.org/wiki/Income_statementhttp://en.wikipedia.org/wiki/Income_statementhttp://en.wikipedia.org/wiki/Income_statementhttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Income_statement


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!#"#NCE SHEET

2Rs in Crs3

-articulars &6 ( &8 &8 ( '& '& ( '' '' ('% '% (')

SOURCES OF FUNDS 9

/hare Ca!ital )%.1 )7.%7 )9.)" )9.)" )9.)"?eserves Total "1$.17 "9.$ 47$."1 $.74 %$).#%Total Shareholders: Funds "44.7" "9#.#4 #%.$% $%.77 %9".#%/ecured oans 9.1% #.9" #.$) 1.#4 #.$@nsecured oans ).1) ).#9 ".7 "4%.$# "$7.%)Total Debt 1".)1 4.#1 ).)9 "49.$)4 "$%.47

Bther iabilities # # # ")4.4% "$%.#Total "iabilities "7.#) "94.# 1".#7 11$9.%9 14"%.9#--"IC#TION OF FUNDS 9

-ross 0loc' )4.#1 $"7. %1).% 1##).7" 11).79ess L Accumulated +e!reciation "$7.41 "9%.)4 ))".%) )%1.% 4$.$essL Im!airment of Assets #.#9 ".% # ).4 ).4

6et 0loc' "$$.1 )"$.$) 4%1.#" $1%.$9 1#44.$9Ca!ital *or' in rogress %.47 %.#4 1#7.)% )%9.9% 1$%.7"Investments 9.4 .)" ".1 4).4 91."7Current #ssets@ "oans A #d;ances

Inventories 17#.19 1%#.$1 ")7."9 )#).)7 )$.1$/undry +ebtors 1%.#7 ".$ "7.94 4$.%1 )9.4Cash and 0an' 11%.49 11#.4 174.17 1%7.99 1%$.""oans and Advances 4%.7% ".7) 1.#% 41.7" )7."9Total Current Assets ).4 )$9.4) 49#.47 79.%9 $"%."#"ess 9 Current "iabilities and

-ro;isions

Current iabilities "49.9) "%$.$) )$).$" 47.%% )$.14rovisions 174.7$ "19.$% "#.# %.7" "7.17Total Current iabilities 4"4.$9 #$.)1 $14.11 1$.$# $).)"

6et Current Assets $9.1 1)$.9 1").$ $).)# $4.%9+eferred Ta( Assets 14.%4 1.94 "1.14 "9."7 44.)"+eferred Ta( iability ").#9 ".#1 ".97 )7.#9% $$.%7

6et +eferred Ta( %." 9.#$ 4.%) 7.%) "".$Bther Assets # # # $".)$ %1.9Total #ssets "7.#) "94.# 1".#7 11$9.%9 14"%.9Contingent iabilities "1.%# 4#.97 4".$$ 4%.# 7%.) *e are ta'en the all data of balance sheet by average.


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-ROFIT A "OSS

2Rs in Crs3

-articulars &6 ( &8 &8 ( '& '& ( '' '' ('% '% (')

INCO*E 9

/ales Turnover 1$#7."7 1%7).41 ""99.4$ "%%7.$9 ))1$.$1E(cise +uty %#.)" ).77 $#.%9 9#.#1 1"7.$4

6et /ales 1"$.9 1%19.$4 "")%.7 "797.$% )1%%.97Bther Income 1.74 1).4 1%.$ )%.47 ").1"/toc' Ad8ustments "#."$ 1.4" 4"."% 1$.7% )4.79Total Inco,e 1$".9 1%)1.7$ ""99.41 "%".9) )"4$.%%EB-ENDITURE 9

?aw aterials $##.97 7##.11 91).79 11"1." 1").)4ower 3uel Cost 4%.7" #.)% $9.%) 9".#$ 11.9#Em!loyee Cost 11#.7# 14).% 11.41 "#".4 "4#."$Bther anufacturing E(!enses 199.)9 "#4.7 "%#.%) ))1.49 )$).4)/elling and AdministrationE(!enses )#).$9 )7).49 44.9$ 49.%" $44.4)iscellaneous E(!enses 19.%4 "%.4$ "%. 1.9" 4$.%essL reo!erative E(!ensesCa!italiedTotal E(!enditure 1"%).)# 1##.%$ 1%99.)7 ")49.)4 "$$).94B!erating rofit "79.$ ))#.91 4##.#4 #).9 %".94Interest ".$ 1.") 1.4" ".$1 %.$"-ross rofit "77.#1 )"9.$7 )9%.$" ##.9% 74.)"+e!reciation )).%) 4#.17 49.$"7 9.$# 9).#9rofit 0efore Ta( "4).1% "%9. )4%.99 441.)9 4%1.")Ta( $4.)4 7$.#% 97.$4 1".4" 1"".13ringe 0enefit ta( ".99 #.$ # # #+eferred Ta( 1.") #.%1 4."4 1.)" 14.7)?e!orted 6et rofit 174.$% "11.9$ ".9 )14.$ )4).99E(traordinary Items #.)) #.4% ".#9 #.997 ".9Ad8usted 6et rofit 174.9 "1".44 "7.$9 )1.$ )4$.9Ad8st. below 6et rofit # # # #.##" # 0alance brought forward %".$) 11.%7 14#.%$ ")".7 )7%.)%A!!ro!riations 141.)7 1%$.9% 1$).7# 1$9.#" 171.97 0alance carried down 11.%7 14#.%$ ")".7 )7%.)% #.4#+ividend 1#4.# 11%.4$ 11%.4$ 11%.4$ 11%.4$E2uity +ividend & 111." 1"$." 1"$." 1"$." 1"$."Earnings er /hare@nit Curr "4.9% )".#) )$.1$ 4%.#7 1.%#0oo' Qalue@nit Curr 7).7# %.$% 19$.11 ")#.$1 "$9.)%

*e are ta'en the all data of !rofit loss by average.

Ratio #nalysis


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The relationshi! of one item to another e(!ressed in a sim!le mathematical form is'nown as the ?atio.

The relationshi! can be e(!ressed asL

1. ercentage". Times). ro!ortion of numbers4. +ays

?ation is used as benchmar' for evaluating the financial !osition and the !erformanceof the com!any. ?atio hel!s to summaries the large 2uantities of financial data and to ma'e2ualitative 8udgment about the financial !erformance of the com!any. ?atio in general, is astatistical yardstic' by means of which the relationshi! between figures can be com!ared andmeasured.

?atio analysis is a widely used tool of financial analysis. It is defined as the

systematic use of ratio to inter!ret the financial statement so that the strengths andwea'nesses of a firm as well as its historical !erformance and current financial can bedetermined.

Inter!retation through ratiosL

Bnly calculating ratio is useless there must be a logical inter!retation that can beuseful to management for ma'ing !olicy and ta'e im!ortant decision. Investors can use thisfor finding out the ris' involved and what would be the return from the !articular com!any.ethods used for deriving inter!retation are as below.

a. Com!arison with ideal ratiob. Com!arison with !ast year ratioc. Com!are with ratio of other com!etitor com!anyd. el! of some related ratio.

'. Current ratio

It is a measure of general li2uidity and is most widely used to ma'e the analysis for shortterm financial !osition or li2uidity of a firm. It is calculated by dividing the total of thecurrent assets by total of the current liabilities.

CURRENT R#TIO CURRENT #SSETS CURRENT "I#!I"ITIES

-articular %&&6(&8 %&&8('& %&'&('' %&''('% %&'%(%&')

otus Chocolate Com!any td 1.$ 1.91 " 1.% 1.9

Cadbury India td #.9) 1.11 1.1 1."4 1.)1

6estle India td #.$$ #.$) #.$" #.7 #.1otte India Cor!oration td #.91 #.77 1."$ 1.$$ 1.41

Total


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2008-09 2009-10 2010-11 2011-12 2012-2013

0

0.20.4

0.6

0.8

1

1.2

1.4

Cou!n1

Above gra!h shown the current ratio of chocolate industry of five year. The current ratioof the industry is increase in "##%#9 to "#111", but in "#1"1) the current ratio of theindustry is decrease.

%. Interest co;era/e ratio

The interest coverage ratio ;IC?= is a measure of a com!any>s ability to meet its interest. Itdetermines how easily a com!any can !ay interest e(!enses on outstanding debt. ayments.Interest coverage ratio is e2ual to earnings before interest and ta(es;E0IT= for a time !eriod,often one year, divided by interest e(!enses for the same time !eriod. The interest coverageratio is a measure of the number of times a com!any could ma'e the interest !ayments on itsdebt with its E0IT

INTEREST COER#$E R#TIO E!IT INTEREST EB-ENSES

-articular %&&6(&8 %&&8('& %&'&('' %&''('% %&'%(%&')

otus Chocolate Com!any td 4.% 14."" ".%) 4.) #.1$

Cadbury India td )9.%" 7".44 $4.9 %7.)1 $1.9

6estle India td 47".") $.99 1,#$1."9 "7".$1 9.)7otte India Cor!oration td #.") "%.%) $.#9 7% 1#.$)

Total 4'5.') 55'.


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Above gra!h shown the Interest coverage ratio of chocolate industry of five year. TheInterest coverage ratio of the industry is increase in "##%#9 to "#1#11, but in "#111" to"#1"1) the Interest coverage ratio of the industry is decrease.

). Return on ca+ital e,+loyed ratio

?eturn on ca!ital em!loyed ;?BCE= is a measure of the returns that a business is achievingfrom the ca!ital em!loyed, usually e(!ressed in !ercentage terms. Ca!ital em!loyed e2uals acom!any>s E2uity !lus 6oncurrent liabilities ;or Total Assets U Current iabilities=, in otherwords all the longterm funds used by the com!any. ?BCE indicates the efficiency and

!rofitability of a com!any>s ca!ital investments.

ROCE E!IT C#-IT#" E*-"OYED

E!IT 2EUITY G NON(CURRENT "I#!I"ITIES3

E!IT 2TOT#" #SSETS ( CURRENT "I#!I"ITIES3

-articular %&&6(&8 %&&8('& %&'&('' %&''('% %&'%(%&')

otus Chocolate Com!any td ).#4 4.1" .4" # #Cadbury India td 44.9$ 4.) )9.#9 41.7% )#.)4

6estle India td 17).1) 174.1$ 1%.$ $9.91 4.1otte India Cor!oration td # 1".)7 # 1.41 1.%%

Total %%'.') %)4.84 %&).'' '').' 55.)%

#;era/e 44.%6%4 46.8654 4&.5554 %6.%54 '8.))

0

2040

60

80

Cou!n1

Above gra!h shown the ?BEC of chocolate industry of five year. The ?BEC of theindustry is increase in "##%#9 to "##91#, but in "#1#11 to 1#1"1) the ?BEC of the

industry is decrease.


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6estle India td 119.7% 1"4."" 11).97 9#.)1 $9."otte India Cor!oration td # $.#% # 1.#9 1.4%

Total '7%.)< '5


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2008-09 2009-10 2010-11 2011-12 2012-2013

2.2

2.2"

2.3

2.3"

2.4

2.4"

2."

2.""

2.6

2.6"

Cou!n1

Above gra!h shown the 3i( asset turnover ratio of chocolate industry of five year. The3i( asset turnover ratio of the industry is increase in "##%#9 to "##91# and "#1#11 to"#1"1), but in "#1#11 the 3i( asset turnover ratio of the industry is decrease.

7.In;entory ratio

Inventory to sales ratio establishes relationshi! between the sales with average stoc'. Thisratio measures the velocity of conversion stoc' in to sales. @sually, a high inventory salesindicates efficient management of inventory because more fre2uently the stoc' are sold, thelesser amount of money is re2uired to finance the inventory. A low inventory to sales ratioindicates an inefficient management of inventory, over investment in inventories, sluggish

business, and !oor 2uality of good and lower !rofit as com!ared to total investment. A highinventory turnover may be the result of a very low level of inventory which results inshortage of goods in relation to demand and !osition of stoc' or the turnover may be high dueto conservation methods of valuing inventories at lower value or the !olicy of the being to

buy fre2uently in small lot.

INENTORY R#TIO S#"ES INENTORY

-articular %&&6(&8 %&&8('& %&'&('' %&''('% %&'%(%&')

otus Chocolate Com!any td 9.#9 9.7 %.#1 4.4 $.49Cadbury India td 9.)7 9.$% 9.7 9.19 7.74

6estle India td 1#.$9 11.19 11.%7 11.7 11.$4otte India Cor!oration td 9.)1 9.$) 9.)" %. %.%%

Total )6.


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5.Debtors ratio

+ebtors Turnover ratio is a test of the li2uidity of the firm. This ratio establishes therelationshi! between net credit sales and accounts receivables. The ob8ective of this ratio is todetermine the efficiency with which the debtors are being managed. It suggests the number of

time the amount of credit sale is collected during the year.DE!TORS R#TIO NET S#"ES DE!TOR

-articular %&&6(&8 %&&8('& %&'&('' %&''('% %&'%(%&')

otus Chocolate Com!any td 7.17 %.7) 9.97 9.$ 9.#$Cadbury India td 1#$.7" %#.$ 7).#7 71.#% 7$.74

6estle India td 9#." 9.14 1##.#4 %$.14 %4.%7otte India Cor!oration td ).)" ).91 .1) 4$.%" )$.)

Total %45.


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'.Total #ssets

-articular %&&6(&8 %&&8('& %&'&('' %&''('% %&'%(%&')

otus Chocolate Com!any td %."" 9.)1 11. "".$7 17.47

Cadbury India td #$.1 4".97 74#.%% 1,#%1.4" 1,)7#.716estle India td 47).) %1."7 %.4" ),1"9.9$ ),%7).$otte India Cor!oration td 4#.44 4".$4 44#.4) 44.49 4".4

Total '&%6.'' ''57.'8 %&


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Above gra!h shown the Inventories of chocolate industry of five year. The Inventories of theindustry is increase "14.$ in "##%#9 to "#1"1).

). Total "iability

-articular %&&6(&8 %&&8('& %&'&('' %&''('% %&'%(%&')otus Chocolate Com!any td %."" 9.)1 11. "".$7 17.47

Cadbury India td #$.1 4".97 74#.%% 1,#%1.4" 1,)7#.71

6estle India td 47).) %1."7 %.4" ),1"9.9$ ),%7).$otte India Cor!oration td 4#.44 4".$4 44#.4) 44.49 4".4

Total '&%6.'' ''57.'8 %&


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2008-09 2009-10 2010-11 2011-122012-20139#

98

99

100

101

102

103

104

10099.2#

103.0# 103.0# 103.0#

Total Share Capital

$ot% ,h%re C%pit%

Above gra!h shown the Total share ca!ital of chocolate industry of five year. The Total shareca!ital of the industry is decrease 99."7 in "##%#9 to "##91# and "##9"#1# to "#1#11 intotal share ca!ital is increase 1#).#7, but in "#1#11 to "#1"1) the total share ca!italconstant.

4. $ross -rofit

-articular %&&6(&8 %&&8('& %&'&('' %&''('% %&'%(%&')

otus Chocolate Com!any td 1.9 ".$) 1.7 4.)$ 1.%

Cadbury India td ")%.)7 "7%.14 )#9.9$ 44).74 44."

6estle India td %$.1% 1,#"%." 1,"7".%$ 1,41." 1,%"9.77otte India Cor!oration td ".% 9.$ 1#.#9 ").) ").%4Total ''&6.&) ')'6.75 '48


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otus Chocolate Com!any td ".1 ".7" ".17 ).4% #.""

Cadbury India td "4).7 "%1.4" )1).%$ 44%.1 41."$

6estle India td %$$.%" 1,#"9.$ 1,"7).94 1,4$.)$ 1,%$.)7otte India Cor!oration td $.1" 9.%) 1#." ").)% ").9"

Total '''6.7' ')%).7% '7&&.'5 %&'


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2008-09 2009-10 2010-11 2011-12 2012-20130

"0

100

1"0

200

2"0

10011#.2

14#.12 182."3

20#.#4

Total Income

$ot% (nco!e

Above gra!h shown the total income of chocolate industry of five year. The total income ofthe industry is increase "#7.74 in "##%#9 to "#1"1).

6. Total E+enses

-articular %&&6(&8 %&&8('& %&'&('' %&''('% %&'%(%&')

otus Chocolate Com!any td "".1) ".7$ "%.9 4).% 4.%1

Cadbury India td 1,4"1.41 1,$#.91 ",)#).#$ ),##.) ),7"4.$9

6estle India td ),".%$ 4,14$.1% ,1#$.)9 $,#4).$) $,$#1."1otte India Cor!oration td 1$).7% 1%#.% 19.#$ "9.) "7.#)

Total 4')).'6 7&&).


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'. TE*-ER#TURE9

A !eculiar !roblem that hinders the distribution to faroff !laces is the tendency of chocolatesto melt under even moderate heat. The tem!eratures can reach as high as


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2.Government policies in terms of licensing, duties, movement of agricultural commoditiesetc. also affect the introduction of !roducts, time lag for a !roduct launches, ta(es, e(cise, etcall influence the business.3.Market ro!t" driven by overall economic growth and urbaniation also contributes. Anoverall booming economy will consume tonnes of chocolates because consumer s!ending

increases.Also, the absolute number of consumers in middle class u!!er middle classincreases.4.R#pee depreciation im!roves e(!ort realiations, however it also ma'es im!ort of rawmaterial ;es!. cocoa= e(!ensive.$ro=th O++ortunities in Indian Chocolate Industry

Unta++ed *aret A "i,ited Consu,+tion9

The fact that chocolate is not a traditional food, high !rices and domestic !roduction!roblems will !rovide the main !roblems to mar'et growth. As these mar'ets develo!, !riceswill fall ma'ing these !roducts more accessible to the wider !o!ulation. owever the Indian

mar'et is still unta!!ed and !rovides immense sco!e for growth, both geogra!hically as wellas !roduct bas'et wise. Chocolates right now reaches about 7#mn to 7mn consumers. It isestimated that chocolates have a !otential mar'et of about 11$mn consumers.Chocolate consu,+tion in India is e(tremely low. er ca!ita consum!tion is around 1$#gmsin the urban areas, com!ared to %1#'g in the develo!ed countries. The !er ca!ita chocolateconsum!tion in India is still much below the East Asian standards. ence !er ca!itaconsum!tion has a immense sco!e for im!rovement. In rural areas, it is even lower.Chocolates in India are consumed as indulgence and not as a snac' food. A strong volumegrowth was witnessed in the early 9#>s when Cadbury re!ositioned chocolates from childrento adult consum!tion. The biggest o!!ortunity is li'ely to stem from increasing the consumer

base. eading !layers li'e Cadbury and 6estle have been attem!ting to do this by value

for money offerings, which are affordable to the masses. *e also believe that the near termo!!ortunity lies in increasing !enetration rather than increasing intensity of consum!tion.In the +ast fi;e years@ the chocolate business /ro=n by '


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1. Re;a,+ the !roduct to 'ee! the e(citement alive.". Com!anies should loo' at ne= a;enues, while e(!anding the reach of its !roducts.Distribution will hold the 'ey. Com!anies need to reach out to smaller towns, where threefourths of the !o!ulation does not even 'now the !roduct.). *er/er A #c>uisitions9 ergers Ac2uisitions with com!anies that match the !roduct

!ortfolio overall growth strategy should be considered which will not only strengthen thecom!any to establish a stronger hold in the country but also ward off !ossible com!etition inthe select category. /uch collaborations will also facilitate com!anies to use each othersdistribution networ's.

CONC"USIONThe Indian Chocolate Industry is a uni2ue mi( with e(treme consum!tion !atterns, attitudes,

beliefs, income level and s!ending. At one hand, we have designer chocolates that areconsumed when !riced at even ?s "##O'g while there are !laces in India where !eo!le havenever even tasted chocolates once. @nderstanding the consumer demands and maintaining the

2uality will be essential. Com!anies will have to 'ee! themselves abreast with thedevelo!ments in other !arts of the world.-RICIN$ is the 'ey for com!anies to ma'e their !roduct reach consumers !oc'ets. ?ight

!ricing will ma'e or brea' the !roduct /@CCE//. Econo,ical distribution of the !roductswill also be e2ually im!ortant.The co,+anies: strate/ies should focus on dri;in/ sales throu/h a ri/ht +roduct ,i@

efficient ,aterials +rocure,ent@ reduced =asta/es@ increased factory efficiencies and

i,+ro;ed su++ly chain ,ana/e,ent.

Theres an immense sco!e for growth of chocolate industry in India geogra!hically as wellas in the !roduct offering.The Indian Chocolate Industry is destined to /ro= and =ill do so in the future.

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