AURO UNIVERSITY OF HOSPITALITY AND MANAGEMENTA PROJECT ON

Management Accounting

MBA

Block 2 SEM-1

Individual Paper

Made by: Pawan Jariwala

(MBA 14-16)

Submitted to: Meghna Dangi

(Module leader)

ACKNOWLEDGEMENTI take this opportunity to express my profound gratitude and deep regards to my guide (Mrs. Meghna Dangi) for her exemplary guidance, monitoring and constant encouragement throughout . I am obliged to my batch mates for the valuable information provided by them in their respective fields. I am grateful for their cooperation during the period of our assignment Euro India Fresh Foods Pvt Ltd.

Pawan Jariwala.

Table Of Contents

Topics IntroductionCompany ProfileVision &MissionProducts ManufacturedLists of CostsBreak EvenBudgeting TechniqueCost Control Technique

Purchase Department Production Department

ConclusionReference

Introduction :

It was the brainchild of Late Shri Jivanbhai Sansapara who was the head Sahil Star Group, a company that deals in manufacturing, exporting and importing diamonds, that helped create a brand of FMCG snacks and juices named Euro India Fresh Food Pvt Ltd. The company is now looked after by his kin, Mr. Manhar J. Sanspara, Mr. Dinesh J. Sanspara, Mr. Jayanti J. Sanspara and Mr. Mahesh V. Mavani.The founders of Euro India Fresh Foods Pvt. Ltd. are also into the business of real estate in the state of Gujarat, India.

Euro India Fresh Foods Pvt Ltd. is an Indian based snack food manufacturer. The products manufactured by us are tailor made to suit the Indian palate. Our product ranges from a wide variety of flavored chips to beverages. Some of our products include, Euro Chips, Euro Namkeens, Euro Getmore, Euro Wheels, packaged drinking water Euro Spa, Euro’s mango drink Fresho and lemon based drink Euro Lemoni.

Here at Euro, we ensure that we make snack foods as healthy as possible. Refer to the ‘Health Funda’ page to see how we are a healthier option as compared to the rest. Euro India Fresh Foods Pvt Ltd. is an ISO 22000:2005 certified organization which is swiftly capturing the market. We hope to become a leading FMCG company with the snacks, mineral water & fruit juices that we manufacture.

We have also collaborated with Walt Disney and brought out snack foods that will make the kids go crazy. They include Euro Ringoli, Euro Bubbles and Euro Funfill. What’s more is, each of these packets have a little surprise in the form of attractive collectibles which will definitely appeal to children.

Company Profile:

Mr. Manhar J. Sanspara CMD (Chairman and Managing Director) Mr. Dinesh J. Sanspara MD (Managing Director) Mr. Jayanti Sanspara (Executive Director) Mr. Mahesh Mavani (Director) Dr. Mukesh Navadiya (CEO)

Mr. Manhar J. Sanspara CMD (Chairman and Managing Director)

Founder of Sahil Star Group and Chief Managing Directors in Euro India Fresh Food Pvt. Ltd. has gained 25 years of experience in diamond industry. At present he is involved in strategic business decisions pertaining to his FMCG Company and also looks after the overall management of the group along with manufacturing of diamonds. He is also committed to social responsibilities by way of various Medical. Educational & many other Trusts

Mr. Dineshbhai Jivanbhai Sanspara (MD)Young, energetic and talented personnel designated as both partner of Sahil Star Group and Managing Director in Euro India Fresh Food Pvt. Ltd. He has also gained experience of more than 20 years in diamond industry and handles overseas buyers of diamonds and finance department in the group. He aims at making Euro India Fresh Food Pvt. Ltd. top FMCG player.

Mr. Jayantibhai Sanspara (Executive Director)He has been controlling and executing his role as the Executive Director of Euro India Foods from Belgium Known for his enthusiastic and energetic approach towards work also has his control over the proceedings of JR DIAM. He, with his qualified & capable expertise has taken the charge of both the ventures flawlessly.

Mr. Mahesh Vallabhai Mavani (Director)He is designated as both partner of Sahil Star Group and Director at Euro India Fresh Food Pvt. Ltd. Having attained 15 years experience in Diamond Industry he is all set to use his expertise in making Euro India Fresh Food Pvt. a leading FMCG company.

Dr. Mukesh Navadiya (CEO)Having passed his BAMS from Gujarat Ayurveda University, Jamnagar he is also practicing doctorate and is now associated with Euro India Fresh Food Pvt. Ltd. as its Chief Executive Officer. He takes care of all the workings of the company and implementation of the project.

Vision and Mission:

Vision

To be one of the leading brands in FMCG industry

To be the most innovative company in the business

To make hunger satisfying products for every class of buyers

To be ranked highest in taste and varieties

Mission:To make products that deliver value for money

To keep on delivering, mouth savoring healthy snacks and beverages for years to come

To grant premium quality products and receive customer satisfaction

Products Manufactured:

Euro’s Chips are fresh and crispy snack foods. They are made by

selecting similar sized potatoes of finest quality which are first taken

for wash and later for manufacturing process. Throughout the

manufacturing process chips are untouched as it is made using

modern manufacturing techniques. Even the packaging process is

fully automated and each packet is nitrogen filled to ensure that the

chips stay fresh and crispy for longer period of time. The variety of

flavors manufactured by us focuses to satisfy Indian palate. Have a

look at the range of potato chips that we offer at Euro Fresh Foods Pvt

Ltd.

Chilli Achar Classic Salted Cream Onion

Masti Masala Mint Lemon Pepper Attack

Tingling Tomato

Euro Namkeen:

Have a few guests or just want to pick something, to munch on? Want to serve some munchies with drinks? Nothing better that serves you better than some few quick bites of Euro Namkeens. From something that is spicy to something sweet , that leaves a lasting taste. The varieties promise everything you need to delight yourself or your guests. We serve in a wide range of flavored Namkeens including: Chana Dal, Aloo Cheese Sev, Bikaneri Bhujia, Tasty Peanuts, Shahi Mixture, Moong Dal, Navratan Mixture, Khatta Meetha, Aloo Tomato Sev, Aloo Pudina Sev, and Ratlami Sev.

Chana Dal Aloo Cheese Sev Bikaneri Bhujia

Tasty Peanuts Shahi Mixture Moong Dal

Navrati Mixture Khatta Meetha Aloo Tomato Sev

Aloo Pudina Sev Ratlami Sev

Euro Farali:

Euro’s Farali is a category that has been introduced particularly for those Indians that observe religious fasts or for those who would like to have some diet food. These products are made with a tinge of ‘Sindhav Salt’ added to them, thus making them suitable for fast observers. The array of Farali products include, Potato Wafers, Kela Wafers, ChiwdaTikha, Chiwda Mitha.

Chiwda Meetha Potato Wafers Kela Wafers

Chiwda Tikha

Euro Disney:

Euro collaborated with Walt Disney to pamper the kids with yummy snacks and exciting goodies. Funfill caters to the taste buds of children with its creamy fillings. These are corn filled snack with cream filling which are healthy for children as they are baked and not fried. Funfill is a unique delicacy that has been introduced in

the family of snack foods. Each packet has a little collectible inside that will cheer the kids up and make them want more. So do not miss the chance to see your kid smiling after he or she opens this packet. We have four flavors that will make kids go gaga over it. They are: Chocolate, Strawberry, Vanilla, Black-Current.

Black Current Funfill Chocolate

Funfill Strawberry Funfill Vanilla

Ringoli:Ringoli from Euro is a different kind of snack, a snack with a hole! Every bite will give you a crispy and crunchy experience accentuated with its unique flavor. We offer these rings in three flavors: Cheese Rings, Masala Ring, Tomato Rings.

Euro’s Bubbles is another product that we have made for the kids. Its creative 3D packaging attracts the children even more. They are light, flavored balls that are

difficult to stop munching once you start. Its crunchy sound echoes in your ears and lures you to get some more. So waste no time and juggle some in your hand and some on your tongue. These balls are available in three flavors, namely: Cheese balls, Masala balls, Tomato balls

Tomato Rings Cheese Rings Masala Rings

Bubble Cheese Masala Ball Tomato Balls

Extruded Snacks:

Euro’s Getmore is tastier, crispier and yummier of all the extruded snacks available. Every crispy crunchy bite will surprise you with its extraordinary taste. All these crispy chips have been manufactured with utmost care and under very hygienic conditions. These flavours are very different and will make it tough for you to resist. Each time you finish a packet, you would feel like running to the

store to ‘GETMORE.’ The flavors that we offer in Euro Getmore are: Tingling Tomato, Chatpata Masala, Green Chutney

Green Chatni Tingling Tomato

New Upcoming Try Angles

EURO Magic Funfill is the unique delicacy introduced for the very first time in the family of Snacks Food. A great mishmash of Corn Pillows with Delightful Crème inside. This amazing snack is one of its kinds. The crème is extracted from choicest of mangoes & strawberries to give a very original and Fresh Taste. Every bite of it will take you to the tour of creamy delight.

Achaare Masti Chilli Masti Tomato Twist

New Up Coming Flippe Puff:EURO Flippe Puff is the unique delicacy introduced for the very first time in the family of Snacks Food. A great mishmash of Corn Pillows with Delightful Crème inside. This amazing snack is one of its kinds. The crème is extracted from choicest of mangoes & strawberries to give a very original and Fresh Taste. Every bite of it will take you to the tour of creamy delight.

Tomato Punch Butter Chaska Cream n Onion

Chatpata Pudina

King Corn:EURO Magic Funfill is the unique delicacy introduced for the very first time in the family of Snacks Food. A great mishmash of Corn Pillows with Delightful Crème inside. This amazing snack is one of its kinds. The crème is extracted from choicest of mangoes & strawberries to give a very original and Fresh Taste. Every bite of it will take you to the tour of creamy delight.

Sausy Tomato Sweet Chilli Nachos Cheese

Beverages:The thirst for water cannot be replaced by any other drink. Keeping that in mind and also ensuring that you get safe healthy drinking water wherever you are, Euro has come up with a bottle of packaged drinking water called, Spa. The water is bottled after a series of purification and sterilization processes, hence making it very safe to drink. Spa goes through the state of the art purification process to ensure that consumers get pure and hygienic drinking water. The process of purification is done through five steps that include:

1) UV Treatment

2) Reverse Osmosis

3) Ozonisation

4) Carbon Filtration

5) Sand Filtration

Our bottled water has an ISI mark issued by the Bureau of Indian Standards. Hence, the next time you feel thirsty, go get yourself a chilled bottle of Euro’s Spa drinking water.

Guava Litchi Fresho Spa

Health Funda: All the products are 100% vegetarian Prepared in less oil No Artificial Colours, Monosodium Glutamate (MSG) and Gelatinare added to

the products 0% Cholesterol 0% Trans Fat Acid No trace of Genetically Modified Organisms – Certified GMO FREE Our products are approved by Food Safety and Standards Authority of India

(FSSAI) Euro India Foods Pvt Ltd. is an ISO 22000:2005 certified organization State of the art manufacturing unit Stringent Quality Control Hygienic Conditions Nitrogen filled packaging to maintain freshness

LIST OF CUSTOMERS

Big Bazaar Dhiraj Sons General & Provisional Stores

Cost Classification

Manufacturing Costs Non- Manufacturing Costs

Direct LaborManufacturing

Overhead

Selling Costs

Administrative Costs

Fixed Manufacturing

Overhead

Variable Manufacturing

Overhead

LIST OF COMPETITORS

Euro Foods Uncle Chips Parle Agro Balaji Other local brands

LIST OF COSTS WITH CLASSIFICATION

Direct Material

Manufacturing Costs:

Manufacturing cost is the expenditure incurred in carrying out the production processes of an organization. The manufacturing cost includes direct costs, for example, labor, materials, and expenses, and indirect costs, for example, subcontracting and overheads. The costs identified as manufacturing costs are as follows:

1. Direct Materials:

The materials that go into final product are called raw materials

Potato Oil Seasoning (Flavor) Film (packet) Carton

2. Direct Labor

The term direct labor is reserved for those labor costs that can be essentially traced to individual units of products. Direct labor is sometime called touch labor, since direct labor workers typically touch the product while it is being made. Direct labor includes worker working in

Input Department Peeling Department Washing Department Slicing Department Frying Department Seasoning Department Packaging Department

3. Manufacturing Department

Manufacturing overhead, the third element of manufacturing cost, includes all costs of manufacturing except direct material and direct labor. Variable manufacturing overheads includes

Electricity Gas (gas generator) Nitrogen (N2) flush Utility expenses Repairing costs Maintenance costs

Fixed manufacturing overheads includes

Rental costs (if gas generator is hired on rent) Transportation costs Meals Depreciation

Indirect labor includes

Labor used in service department Security guards Labor in engineering department Warehousing Labor Labor in quality department Overtime

Indirect materials includes

Food Stickers

Non Manufacturing CostsNon manufacturing costs are those costs that are not incurred to manufacture a product. Examples of such costs are salary of sales person and advertising expenses. Generally non manufacturing costs are further classified into two categories

1. Marketing and Selling Costs2. Administrative Costs1. Marketing and Selling Costs

Marketing or selling costs include all costs necessary to secure customer orders and get the finished product into the hands of the customers. These costs are often called order getting or order filling costs. These costs include;

Commissions Placement costs Transportation costs (per unit of product is charged)

2 . A d m i n i s t r a t i v e c o s t s

Administrative costs include all executive, organizational, and clerical costs associated with general management of an organization rather than with manufacturing, marketing, or selling. Examples of administrative costs include executive compensation, general accounting, secretarial, public relations, and similar costs involved in the overall, general administration of the organization as a whole. For PepsiCo, Snacks department following costs are identified as its administrative costs;

Salaries Office expenditure including furniture and stationery costs Depreciation costs (offices)

Cost Classification on the basis of cost behaviour:

Apart from classifying costs as manufacturing and non-manufacturing costs, costs are also classified on the basis of their behaviour. These are the

Variable costs Fixed costs

1. Variable Costs

Variable cost is a cost that varies, in total, in direct proportion to changes in the level of activity. The first is electricity cost. The electricity is generated from gas generators so the gas will also be considered as a variable cost.

2. Fixed Costs

Fixed Cost is a cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. Second is the cost of the permanent staff. The transportation cost i.e. cost of transporting potatoes from the arm to plant and then from the plant to warehouse is also considered as a fixed cost. The rental cost e.g. of the generators that are used to generate electricity is also fixed cost.

OTHER COSTS

Other costs include the fringe benefits and the extra benefits given to the

employees. Fringe benefits are perks offered to employees in order to keep them

motivated and for the purpose of retaining them.

Fringe benefits given to labour include

Meal

Transportation

Overtime

Extra benefits to higher executives includes (varies with status)

Pay roll

Provident fund

Medical free facility

Transport

Fuel expense

Cell phones (monthly bill of cell paid)

BREAK EVEN

Fixed Cost = Rs. 10, 00, 00, 000

Desire Profit = 12.5%

Sales to Earn Desired Profit = 85, 00, 00, 000

Sales to Earn Desired Profit = (Fixed Cost + Desire Profit) / P.V. Ratio

(P.V. Ratio = 24%)

BEP = Fixer Cost / P.V. ratio

= 10, 00, 00, 000 / 0.24

= Rs. 41, 66, 00, 000

BUDGETING TECHNIQUES AT EURO FOODS

A budget is a plan expressed in rupee amounts that acts as a road map to carry

out an organization’s objectives, strategies and assumptions.

A company might have a master budget or profit plan for the upcoming year. The

master budget will include a projected income statement and balance sheet.

Within the master budget will be operating budgets such as a sales budget,

production budget, marketing budget, administrative budget, and budgets for

departments. In addition there will be a cash budget and a capital expenditures

budget.

It is a common practice that the budgets prepared for the next accounting year

will be detailed by quarter or by month. It is also typical that the annual budget

will not be changed once the actual year begins. For managers, a budget is a guide

that it not so rigid that it prevents timely action when needed. In rare

circumstances the annual budget might be revised, but only when the business

environment has radically changed.

OPERATING BUDGET APPROACH

The company uses the operating budget approach in which the budget is made

for the whole year i.e. 12 months from January to December which is reviewed

almost every month but it is not the rolling one to check if there are some

variances there are afterwards corrected according to the current situation.

PARTICIPATIVE BUDGETING APPROACH

The company also uses self-imposed budgeting or participative budgeting

approach in which they ask all the managers from different departments to give

their requirements and allocate costs to their requirements then these

requirements are overviewed by administration for budgeting. For instance, plant

manager are consulted for all the overheads because later it becomes very

difficult to knock down the whole process.

BUDGETING COMMITTEE

Budgeting committee is divided into

Control committee

Planning committee

COST CONTROL TECHNIQUES

1. PURCHASE DEPARTMENT

a) They buy potatoes in bulk, once in a year when prices are low,

thereby reducing the cost.

b) Most of the machinery (80%) has been purchased that have been

manufactured in India and only 20% of it has been bought from

China.

c) They also resort to bulk buying techniques for all raw materials that

they use in the manufacturing process.

d) They manufacture the pet bottles in-house (bottles used in juice

bottles), thus are able to cut back on their purchase expenses.

e) One of the techniques used by the company to reduce its costs

includes “Opportunity Buying”, i.e. they buy in bulk when the market

prices of the raw materials that they require are the lowest and

maintain a huge stock of the items.

2. PRODUCTION DEPARTMENT

a) The company has substituted lower cost material wherever possible

in their production line so as to bring down the overall cost of

production of potato chips, without compromising on the quality.

b) Euro Foods Ltd. has been able to reduce their overall wastage to a

great extent which has helped them to cut back on their expenses.

c) The company makes optimum utilization of its labor force by offering

them on the job training, this enhancing their efficiency. This helps

the company to operate with bare minimum workers, thus avoiding

the cost of idle labor.

d) The company has employed the latest and most updated machinery

in its production line, hence leveraging upon the economies of scale

reducing the cost.

e) The company confirms regular maintenance of all machinery, thereby

preventing any breakdowns and ensuring smooth functioning of the

entire process. An uninterrupted production line is thus able to

minimize the overall cost structure.

CONCLUSION

Euro India Fresh Foods Pvt. Ltd. may be a new player in town, but it is growing in

leaps and bound. Started in 2011, the company has come a long way since then.

Today the company is well known for its extensive product line and the quality

that it offers. The company offers best quality products at the lowest market rate,

owing to its highly capital intensive production process which is equipped with

the state-of-the-art machinery which ensures a smooth functioning of the entire

operation. The cost cutting techniques adopted by the company have worked out

well so far, enabling it to offer high quality products at low prices. The company

has major expansion plans in the near future and aspires to become a national

brand within a decade. Considering the current scale of operations, if the

company continues on the same path, it has a very bright foreseeable future

ahead.

REFERENCES

Euro India Fresh Foods Pvt. Ltd.. 2014. Euro India Fresh Foods Pvt. Ltd.. [ONLINE] Available at: http://euroindiafoods.com/. [Accessed 27 November 2014].