agro based fmcg products

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.


Yes 145

No 55

Total 200

3. DATA GIVES NUMBER OF CONSUMERS READY TO ACCEPT NEW JAMS.


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.


Yes 160

No 40

Total 200

7. DATA GIVES NUMBER OF DISTRIBUTORS READY TO ACCEPT NEW JAMS.


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



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.3 What is the size of Jam you usually purchase?

( ) 200g

( ) 500g ( ) 1kg


( ) 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.3 What is the size of Pickles you usually purchase?

( ) 200g ( ) 400g ( )1kg


( ) 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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KREAMS25KREAMS

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agro based fmcg products

Documents

fmcg market

particular product category

particular category

category entrance

product step

feasible product category

prospective category

agro industry