A Research Proposal For Management Research Project - I On “Bakery And Confectionery Industry With Special Focus On Biscuit Products” Submitted By: Name (Roll No.) Goswami Komal P. 12044311029 Kalotara Sagar M. 12044311037 Khatana Pravin M. 12044311039 Patel Dhruv R. 12044311080 Patel Malay K. 12044311105 M.B.A. Semester III Under the Guidance of: Prof. (Dr.) Mahendra Sharma Prof. & Head V. M. Patel Institute of Management Ms. Harsha Jariwala Prof. Abhishek Parikh Faculty Members V. M. Patel Institute of Management Submitted To: V. M. Patel Institute of Management Ganpat University (2013)
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A
Research Proposal
For
Management Research Project - I
On “Bakery And Confectionery Industry With Special Focus On Biscuit Products”
Submitted By:
Name (Roll No.) Goswami Komal P. 12044311029
Kalotara Sagar M. 12044311037 Khatana Pravin M. 12044311039 Patel Dhruv R. 12044311080 Patel Malay K. 12044311105
M.B.A. Semester III
Under the Guidance of:
Prof. (Dr.) Mahendra Sharma
Prof. & Head
V. M. Patel Institute of Management
Ms. Harsha Jariwala
Prof. Abhishek Parikh
Faculty Members
V. M. Patel Institute of Management
Submitted To:
V. M. Patel Institute of Management
Ganpat University
(2013)
CERTIFICATE BY THE GUIDE
This is to certify that the contents of this report entitled “Bakery And Confectionary Industry With Special Focus On Biscuit Product” by Goswami Komal, Kalotara Sagar, Khatana Pravin, Patel Dhruv,
Patel Malay submitted to V. M. Patel Institute of Management for the Award of Master of Business
Administration (MBA Sem-III) is original research work carried out by him/her/them under my
supervision.
This report has not been submitted either partly or fully to any other University or Institute for award of
any degree or diploma.
Prof.(Dr.) Mahendra Sharma
Prof. & Head
V. M. Patel Institute of Management,
Ganpat University.
Kherva.
CANDIDATE’S STATEMENT
I/We hereby declare that the work incorporated in this report entitled “Bakery And Confectionary Industry with Special Focus on Biscuit Product” in partial fulfillment of the requirements for the award
of Master of Business Administration (Sem. – III) is the outcome of original study undertaken by me/us
and it has not been submitted early to any other University or Institution for the award of any Degree or
Diploma.
Goswami Komal P.
Kalotara Sagar M.
Khatana Pravin M.
Patel Dhruv R.
Patel Malay K.
Date:
Place:Kherva
Preface
“Theory without practice has no fruit Practice without theory has no root.”
It is a great experience being a part of corporate world. Real MBA can be achieved only with
such practical implications. We are very thankful to V.M Patel Institute of Management who
planes such learning programs for its students.
It is matters of proud to be students of such great university where in students are helped to
extract hidden potentials from their selves. We are highly Thankful to all the Faculties of the
department who guided us all the way long as how the entire MRP 1 report is to be conducted.
As a management student, we must have some practical knowledge regarding research and
research methodology.
The education institutions offering management programs play a significant part in un
calculating the much needed managerial skills in their students, the aspiring managers. The real
success of management lies in applying the professional management techniques in all
managerial activities. Practical study is eminent, and plays vital role for the students of
management, because classroom coaching and theoretical study alone are not enough. To survive
in this highly competitive world, practicality outweighs theoretic. Students are supposed to learn
the various principles of business administration conceptually but accuracy and efficiency in
their implementation is possible only through exposure to practical environment.
We have tried our best and have applied all our efforts, knowledge and sources available, in this
project.
Here we try our level best for finding data.
Acknowledgement
It is with profound in deftness that we acknowledge the efforts of all the well-wishers who have
in some or the other way contributes in their own special way to the success of this project.
We would like to express deep sense of gratitude to Dr. Mahendra Sharma. We would also
thankful to Prof. Harsha Jariwala & Prof. Abhishek Parikh for their advise, constant
encouragement and timely help throughout the course of our project.
We would like to thank Prof.Harsha Jariwala & Prof. Abhishek Parikh for provide us this golden
opportunity for preparing report and provide us guideline regarding project report.
We would like to thank all the respondents who give their valuable time for filling questionnaire
and provide necessary information regarding our project report.
Last but not the least we thank all the persons who have directly or indirectly support in this
project report.
Executive Summary
The estimate made by the Ministry of Food Processing Industries (1998), the total market of
bakery product, bread and biscuit is estimated at 1.5mn ton and 1.1mn ton respectively. The cake
market is estimated at 0.4mn ton. The organized segment of the biscuit market is estimated to be
0.44mn tons whereas the unorganized sector accounts for the balance 0.66mn tons.
The confectionery industry has a current capacity of 85, 000 tones, the market is growing at the
rate of 10-15% per annum. The estimated annual production of bakery products in India is in
excess of 3 million tones, of which bread accounts for nearly 50% and biscuits 37% in volume
terms in the organized sector. The bakery sector in India is one of largest segments of the food
processing industries; annual turnover in value terms is approximately
$ 900 million.
Chocolates, hard-boiled sweets, chewing gum and other products are a major growth area. The
bakery industry includes basic baked products like breads, biscuits, cakes, pastries, rusts,
Buns, rolls etc.
The word 'Biscuit' is derived from the Latin words 'Bis' (meaning 'twice') and 'Coctus' (meaning
cooked or baked). The word 'Biscotti' is also the generic term for cookies in Italian. Back then,
biscuits were unleavened, hard and thin wafers which, because of their low water content, were
ideal food to store.
Biscuit industry in India in the organized sector produces around 60% of the total production, the
balance 40% being contributed by the unorganized bakeries. The industry consists of two large
scale manufacturers, around 50 medium scale brands and small scale units ranging up to 2500
units in the country. The unorganized sector is estimated to have approximately 30,000 small &
tiny bakeries across the country.
The annual production of biscuit in the organized sector, continues to be predominantly in the
small and medium sale sector before and after de-reservation. The annual production was around
7.4 Lac tonnes in 1997-98 in the next five years, biscuit production witnessed an annual growth
of 10% to 12%, up to 1999-00.
In order to conduct this MRP-1 report we have done primary research to know the performance
of four major biscuit players with respect to customer loyalty. We have also done the financial
analysis of four major players of biscuit industry through secondary data for last five years,
which includes aggregate industry ratio analysis, separate company’s ratio analysis, aggregate
industry sales trend of last ten years and production trend of last five years.
We have also done the various analysis like SWOT Analysis, five force model, PESTL
Analysis, Strategic Group Mapping,
INDEX
Sr.No Particular Page No
• CERTIFICATE BY THE GUIDE I
• CANDIDATE’S SATELMENT II
• Preface III
• Acknowledgement IV
• Executive Summary V
1 INTODUCTION 1 1.1 Introduction of Bakery and Confectionary Industry in India 2
1.2 History of Biscuit Industry 3
1.3 Industry Profile 11
1.4 Booming with Biscuit 15
1.5 Brands of Major Biscuit Manufacturers 16
1.6 Industry Framework 17
1.7 Biscuit Industry life cycle 18
1.8 Biscuit Making Process 20 2 Major Biscuit Industry Players in India 22 2.1 Parle 23 2.2 Britannia 26
2.3 Sun Feast 29
2.4 Priyagold 31
3 Strategic Analysis and Models 37
3.1 SWOT Analysis 38
3.2 PESTL Analysis 41
3.3 Porters Five Force Model 43
3.4 Strategic Group Mapping 46 3.5 Driver Forces 50
4 Ratio Analysis 51
4.1 Trend Analysis of Production and Sales 52
4.2 Companies Ratio Analysis 54
5 Business Plan 61
5.1 Project Profile 62
5.2 Introduction 63
5.3 Vision 64
5.4 Mission 64
5.5 Selection of the project 64
5.6 Marketing Channel 65
5.7 Plant Location 66
5.8 Finance 67
6 Conclusion and Findings 77
6.1 Conclusion 78
6.2 Findings 80
7 Bibliography 81
Annexure 83
INTRODUCTION
1.1 INTRODUCTION OF BAKERY AND CONFECTIONARY INDUSTRY IN INDIA
The estimate made by the Ministry of Food Processing Industries (1998), the total market of
bakery product, bread and biscuit is estimated at 1.5mn ton and 1.1mn ton respectively. The
cake market is estimated at 0.4mn ton.
The organized segment of the biscuit market is estimated to be 0.44mn tons whereas the
unorganized sector accounts for the balance 0.66mn tons. Bread market is estimated to be
growing at around 7% pa in volume terms, whereas the biscuit market in the recent years has
witnessed a little higher growth at around 8-10% pa. Within the biscuit category, cream and
specialty biscuits are growing at faster pace at 20% pa, while the popular segment is growing.
Besides the industrial areas in leading metropolis the bakery product & confectionery are
carried on small- scale basis also at household level. Whereas, the confectionery industry has
developed remarkably with the international brand mingling with the domestic market toffees,
chocolates etc. produced at large scale in important industrial regions of the country.
Growth promotional activities in 1977- 78 Government reserved the confectionery bread and
biscuit manufacturing for small scale and restricted entry of large producers. During the last 2
decades, small and unorganized players shared the growth in the industry. Currently, there are
an estimated 2 million bakeries across the country engaged in production of bread, biscuits
and other products.
The Indian confectionery market is segmented into sugar-boiled confectionery, chocolates,
mints and chewing gums. Sugar-boiled confectionery, consisting of hard boiled candy, toffees
and other sugar-based candies, is the largest of the segments and valued at around Rs 2,000
crore.
The confectionery industry has a current capacity of 85, 000 tonnes, the market is growing at
the rate of 10-15% per annum. The estimated annual production of bakery products in India is
in excess of 3 million tonnes, of which bread accounts for nearly 50% and biscuits 37% in
volume terms in the organized sector. The bakery sector in India is one of largest segments of
the food processing industries; annual turnover in value terms is approximately $ 900 million.
1.2 HISTORY OF BISCUITS INDUSTRY
Sweet or salty. Soft or crunchy. Simple or exotic. Everybody loves munching on biscuits, but
do they know how biscuits began?
The history of biscuits can be traced back to a recipe created by the Roman chef Apicius, in
which "a thick paste of fine wheat flour was boiled and spread out on a plate. When it had
dried and hardened it was cut up and then fried until crisp, then served with honey and
pepper."
The word 'Biscuit' is derived from the Latin words 'Bis' (meaning 'twice') and 'Coctus'
(meaning cooked or baked). The word 'Biscotti' is also the generic term for cookies in Italian.
Back then, biscuits were unleavened, hard and thin wafers which, because of their low water
content, were ideal food to store.
As people started to explore the globe, biscuits became the ideal travelling food since they
stayed fresh for long periods. The seafaring age, thus, witnessed the boom of biscuits when
these were sealed in airtight containers to last for months at a time. Hard track biscuits
(earliest version of the biscotti and present-day crackers) were part of the staple diet of
English and American sailors for many centuries. In fact, the countries which led this
seafaring charge, such as those in Western Europe, are the ones where biscuits are most
popular even today. Biscotti is said to have been a favourite of Christopher Columbus who
discovered America!
Making good biscuits is quite an art, and history bears testimony to that. During the 17th and
18th Centuries in Europe, baking was a carefully controlled profession, managed through a
series of 'guilds' or professional associations. To become a baker, one had to complete years
of apprenticeship - working through the ranks of apprentice, journeyman, and finally master
baker. Not only this, the amount and quality of biscuits baked were also carefully monitored.
The English, Scotch and Dutch immigrants originally brought the first cookies to the United
States and they were called teacakes. They were often flavoured with nothing more than the
finest butter, sometimes with the addition of a few drops of rose water. Cookies in America
were also called by such names as "jumbles", "plunkets" and "cry babies".
As technology improved during the Industrial Revolution in the 19th century, the price of
sugar and flour dropped. Chemical leavening agents, such as baking soda, became available
and a profusion of cookie recipes occurred. This led to the development of manufactured
cookies.
Interestingly, as time has passed and despite more varieties becoming available, the essential
ingredients of biscuits haven't changed - like 'soft' wheat flour (which contains less protein
than the flour used to bake bread) sugar, and fats, such as butter and oil. Today, though they
are known by different names the world over, people agree on one thing - nothing beats the
biscuit!
1.2.1 SOME INTERESTING FACTS ON THE ORIGIN OF OTHER FORMS OF
BISCUITS:
The recipe for oval shaped cookies (that are also known as boudoir biscuits, sponge biscuits,
sponge fingers, Naples biscuits and Savoy biscuits) has changed little in 900 years and dates
back to the house of Savoy in the 11th century France. Peter the Great of Russia seems to
have enjoyed an oval-shaped cookie called "lady fingers" when visiting Louis XV of France.
The macaroon - a small round cookie with crisp crust and a soft interior - seems to have
originated in an Italian monastery in 1792 during the French Revolution.
SPRING-uhr-lee, have been traditional Christmas cookies in Austria and Bavaria for
centuries. They are made from a simple egg, flour and sugar dough and are usually
rectangular in shape. These cookies are made with a leavening agent called ammonium
carbonate and baking ammonia.
The inspiration for fortune cookies dates back to the 12th & 13th Centuries, when Chinese
soldiers slipped rice paper messages into moon cakes to help co-ordinate their defence
against, Mongolian invaders.
1.2.2 BISCUIT INDUSTRY IN INDIA - AN OVERVIEW
Biscuit industry in India in the organized sector produces around 60% of the total production,
the balance 40% being contributed by the unorganized bakeries. The industry consists of two
large scale manufacturers, around 50 medium scale brands and small scale units ranging up to
2500 units in the country. The unorganized sector is estimated to have approximately 30,000
small & tiny bakeries across the country.
The annual turnover of the organized sector of the biscuit manufacturers is Rs. 4,350 crores.
In terms of volume biscuit production by the organized segment in 2001-02 is estimated at
1.30 million tonnes and in 2012-13 it is 1.714 million tonnes. The major Brands of biscuits
The above graph of strategic group mapping of Price and Distribution shows that Parle and
Britannia strong have distribution channel with low prices.
While Priyagold and Sunfeast have moderate level of distribution channel and moderate
prices.
And while Marico and Horlicks have low distribution channel and high prices.
Explanation The above graph of strategic group mapping of Nutrition content and Brand shows that Parle and Britannia have strong Brand name with high nutrition content.
While Priyagold and Sunfeast have moderate level of Brand name and moderate Nutrition content.
And while Marico and Horlicks have low Nutrition content and low Brand name.
Explanation
The above graph of strategic group mapping of Innovation and Technology shows that Parle
and Britannia have advance Technology and high Innovation.
While Priyagold and Sunfeast have advance level of Technology and moderate Innovation.
And while Marico and Horlicks have advance level of Technology and low Innovation.
.
Explanation
The above graph of strategic group mapping of Packaging shows that all the players in the
biscuit industry have advanced level of packaging but Parle has upper hand compare to other
players of biscuit industry.
3.5 Divers forces
According to Innova Market Insights, two opposing forces within the sweet biscuits market
are at work globally. From one side, the treat image of biscuits is driving the premium sector
forward; from the other, rising health concerns have also raised interest in better-for-you
products.
Chocolate biscuits have been one of the main beneficiaries of rising interest in the treat image
of biscuits and the market has continued to see growth in most countries despite ongoing
financial and health concerns. According to Lu Ann Williams, Research Manager for Innova,
this is probably attributable to the ongoing demand for everyday treats and the continuing
tendency to “trade off,” by mainly choosing healthy options but then having an indulgent
product as a reward. “Biscuits with some sort of chocolate content accounted for a significant
48% of the global sweet biscuits launches recorded by Innova in 2011, although this was
down from over 60% five years previously, perhaps reflecting the greater choice of biscuits
varieties and flavours now on offer,” she notes.
While indulgence is keeping the market for chocolate biscuits buoyant, health can still be a
factor in purchasing decisions, although not to the same extent as for some other food and
drinks products. Companies have been endeavouring to improve the nutritional profile of
their standard products in many instances and this may have inhibited growth in the specific
healthier or better-for-you biscuits market. Nearly 30% of global biscuits launches in 2011
were positioned on a health platform of some kind, rising to over 40% for savoury biscuits
and falling to just over a quarter for sweet biscuits.
By far the most popular health claims were those relating to naturalness and the lack of
artificial additives and/or preservatives, reflecting rising levels of interest in clean labelling.
Over 30% of launches carrying health claims used this type of positioning, equivalent to 12%
of biscuits launches as a whole.
RATION ANALYSIS
Ratio analysis involves establishing a relevant financial relationship between components of
financial statement. Two companies may have earned the same amount of profit in a year, but
unless the profit is related to sales or total assets, it is not possible to conclude which of them
is more profitable. Ratio analysis helps in identifying significant relationship between
financial statement items for further investigation. If used with understanding of industry
factor and general economic conditions, it can be powerful tool for recognizing a company’s
strengths as well as its potential trouble spots.
4.1 TREND ANALYSIS OF PRODUCTION AND SALES
4.1.1 AGGREGATE INDUSTRY SALES TREND
EXPLANATION
The above trend of sales of biscuit industry shows that, the overall sales of Biscuit industry is
gradually increase in each year except in the year 2012-13. This trend of industry sales shows
The debt-equity ratio shows the proportion of long term external equities and internal equities
I.e. proportion of funds provided by long term creditors and that provided by shareholders or
proprietors. The debt equity establishes the relationship between outside long term liabilities
and owner’s fund.
The above graph shows that Surya food has highest debt-equity ratio as compare to other
three players in last five years, which shows that Surya food’s long term liabilities are higher
than its shareholder’s fund.
The above graph also shows that Parle has very minor portion of long term liabilities (debt) in
last three years and it has no debt portion in first two years 2008-09 and 2009-10. As compare
to Surya food the other three players have very low portion of debt in its capital structure.
00.10.20.30.40.50.60.70.80.9
2008-09 2009-10 2010-11 2011-12 2012-13
Parle
Surya
Britaniya
Sunfeast
BUSINESS PLAN
5.1 PROJECT PROFILE
1. Name of the Project: BISCUIT INDUSTRY
2. Location within state/Country: AHMEDABAD G.I.D.C.
3. Nearest Road, Rail & Sea connection: AHMEDABAD
4. Estimated Capital Cost of the Project: 1,50,80,000
5. Raw Material: FOOD, SUGAR, BEKARY
6. Environment Impact: The project is an Environment Friendly Activity. There will be no Ecological
imbalance and Pollution hazards to the Localities because of the Project.
7. Time-frame for selection & completion
Of selection of Project: period of 12 months.
8. Government Incentive package applicable
To the Project: Capital Investment, Power, Interest, Transport, subsidies, etc.
5.2 INTRODUCTION
Ahmadabad is rural area attached to the Ahmadabad city. In Ahmadabad G.I.D.C. established which declared
as a industrial zone. The Bakery is the raw material required for this project. . Biscuits are the most
consumable wheat-based bakery product. They are highly nutritious, easy to digest, compact
in size, can be preserved for a long time and are easily and cheaply transportable over a long
distance because of their lightweight, the project location is selected here. Ahmadabad is connected to
Ahmadabad and other metro city with Roads and Railways.
The making of Bekary is the most universal spread manufacturing process all over. Biscuit industry in
India in the organized sector produces around 60% of the total production, the balance 40%
being contributed by the unorganized bakeries. The industry consists of two large scale
manufacturers, around 50 medium scale brands and small scale units ranging up to 2500 units
in the country,
This industry has carved for itself an important place among the Bakery’s of the State. It would provide
fulltime employment to the labours and skilled workers.
Name of the product
"Powepack Biscuit"
Charactaricties of product healthy
Crunchy
Light for health
With glucose
Selling phase
Which area u will cover....which class of people u will select....which of advertisement u will
select.
5.3 VISION OF THE PROJECT
“Customer Satisfaction’- by providing high quality in a professional and reliable manner through merit shop
philosophy, allowing it to be competitive, adaptable and creative”
5.4 MISSION OF THE PROJECT
• To provide jobs to rural skilful employees.
• To develop the economy of the region.
• To popular eco friendly products.
• To obtain maximum growth with minimum investment.
• To use the modern technology to the Biscuit industries.
•
5.5 SELECTION OF THE PROJECTS
• the main reasons that encourage me to select this project are given as follows as
• The main raw materials for the industry,
• Government policies beneficial to this project.
• I am interested in the Biscuit manufacturing industry.
• The local market not any Biscuit industry.
Today Biscuit demand increases day by day
My potential customers as follow as
• Biscuit manufacturing company
• Retailer of the Biscuit Product
• Government institution like Railways, State Transport
Competitor
• Other SME unit of biscuit in local market
• Major Player of the industries.
• Machinery to used are as follows • 1. Flour mixer • 2. Rotary forming machine for hard Biscuit • 3. Rotary forming machine for soft Biscuit • 4. Tunnel Gas Oven • 5. Oil Spray machine • 6. Cooling conveyor • 7. Layout Turning Machine • 8. Sandwich machine • 9. Packaging
5.6 MARKETING CHANNELS
The marketing channels plays important role in the distribution of the products to reach the potential
customers. The selection of the marketing channels is also important .so choose my marketing channels as
follows as
• Wholesaler & Distributor:
These People working as a company partner because they are giving place our product.
• Wholesaler & Retailer:
The registration with the trading companies like India mart will also be the marketing channel
LEGAL FORMALITIES
for the starting a SME unit , every unit has some legal formalities to complete for starting anew business or to
dissolve any industries. Here depicted some legal aspects which are necessary to be completed by
entrepreneurs.
1. Approval letter from DIC.
2. Power sanction assurance letter from G.E.B.
3. Certification of water supply.
4. Application for Telephone.
5. Octroi Exemption letter from Municipal council.
6. turnover tax, local area tax, purchase tax,
7. Application for loan to Urban Bank, Ahmadabad
8. Certificate from industrial pollution Office
5.7 Plant Location:
Corporate
Office Entry Gate
Inventory Store
Canteen
Toilet
Store Room
Manufacturing Area
The factor influenced to choose the plant layout are as follow as:
1. Availability of Raw materials:
2. Availability of Skilful labours:
3. Good Transportation facilities:
4. Availability of the Water and Power supply:
5.8Finance
Total set up cost excluding land and building for the capacity envisaged is 29million naira which breakdown includes machines of 14.5 M, generators 3.7M a working capital requirement for 3 months of production of 5.4M and other cost for preliminary expenses and NAFDAC certification.
Annual production cost for this capacity is 15.9M which includes material usage of 10M and utility of 2.3M
At average weight of product is 25gramms/packet and 40,000 Packets Daily(1Ton) or 555 cartons daily Turnover for the first year is -N- 40.4M and a net profit before taxation of 14.9M.
According to the projected income statement, the project will start generating profit in the
first year of operation. The project’s initial investment will be fully recovered within 3
years.
5.8.1 SOURCE OF FINANCE:
Supply of finance is very important factor in the establishment of an enterprise is old. Finance is the life line of
the Business. Finance deal with the arrangement of the sufficient capital for the smooth run of the
Organization. Following are the certain sources of the finance scheme:
A) Own Capital:
According to the rules setup by the various financial institution 25% to 35% of the capital should be the
own investment of the entrepreneur. 33.33% of the project cost will be financed by the promoter himself
B) Term Loan from the Commercial Bank:
Urban co. Bank, Ahmadabad Gujarat lend Rs 1,00, 00,000 at the rate of interest 13.75%
5.8.2 Cost Of the Project
Sr No. Particulars Amount
1 Building 25,00,000
2 Plant and Machinery 80,00,000
3 Furniture and Misc. 2,00,000
4 Land 2,00,000
5 Preliminary and preoperative exp. 80,000
6 Working capital (3 months) 41,00,000
Total 1,50,80,000
5.8.2.1 Total Fixed Capital:
Sr no. Particulars Amount
1 Building 25,00,000
2 Plant and Machinery 80,00,000
3 Furniture and Misc. 1,50,000
4 Land 2,00,000
5 Preliminary and preoperative exp. 80,000
Total 10930000
5.8.2.2 Building:
Sr no. Particulars Cost of the item Amount
1 Corporate Office 4,20,000 5,20,000
2 Show Room 3,50,000 3,50,000
3 Work Shop 8,00,000 9,50,000
4 Toilet 1,00,000 130,000
5 Store room 5,50,000 5,50,000
Total 2500000
5.8.2.3 Plant and Machinery:
Sr no. Particular Quantity Amount
1 Hydraulic Hot press 01 50,05,000
2 Steam Boiler 01 13,10,000
3 Chimney with Ladder 01 4,90,000
4 Air-pre Heater 01 2,88,000
5 Dust controller 01 2,07,000
6 Pressure reducing
station
01 3,90,000
7 Glue Machine 01 3,10,000
Total 8000000
5.8.2.4 Furniture and Miscellaneous Expenses:
Sr no. Particulars Quantity Amount
1 Furniture
Office chairs 8 20,000
Almirah 8 40,000
Racks 20 50,000
Tables 2 5,000
Computer and Accessories 1 35,000
Fans 8 10,000
Sofa set 1 20,000
2 Work shed ----------- 20,000
Total 200000
5.8.2.5 Land
Sr no. Particular Price/acre Amount
1 Land Area (2 acre) 1,00,000 2,00,000
5.8.2.6 Preliminary and Preoperative Expenses:
Sr no. Particular Amount
1 Deposit for Power, Water, Telephone 20,000
2 Loan Application process fees 10,000
3 Deposit for internet 5,000
4 Legal Stamp Duty and Registration 20,000
5 Travelling 13,000
6 Consultancy 12,000
Total 80000
5.8.2.7 Depreciation (per annum):
Sr no. Types of Assets Cost of Assets Rate of
Depr.
Amount
1 Plant and Machinery 80,00,000 10% 8,00,000
2 Furniture 2,00,000 20% 40,000
3 Building 25,00,000 5% 1,25,000
Total 9,55,000
5.8.3 Working Capital Requirement:
Sr no. Particular 1 Month 3 Month
1 Raw Material 11,51,000 34,53,000
2 Salary and Wages 1,25,000 3,75,000
3 Power and Fuel 24,000 72,000
4 Other Manufacturing
Expenses
12,000 36,000
5 Selling and Office
expenses
17,000 51,000
Total 39,87,000
5.8.3.1 Raw Material:
Sr no. Particulars No. of
Tons/month
Price/tons
(Rs)
Cost/month Cost /year
1 Food 140 5000 7,00,000 84,00,000
2 Sugar 70 4000 2,80,000 33,60,000
3 Bakery 25 6800 1,71,000 20,52,000
Total 11,51,000 1,38,12,000
5.8.3.2 Salary and Wages:
Sr no. Name of the
Post
No. of
member
Salary /head Salary /month Salary /year
1 Manager 1 14,000 14,000 1,68,000
2 Accountant 1 9,000 9,000 1,08,000
3 Office staff 3 4,000 12,000 1,44,000
4 Chemist 1 4,500 4,500 54,000
5 Supervisor 1 6,000 6,000 72,000
6 Machine
Operator
1 5,500 5,500 66,000
7 Skilled labour 7 3000 21,000 2,52,000
8 Unskilled
labour
10 3000 30,000 3,60,000
9 Women
mazdoor
3 3000 9,000 1,08,000
10 Mechanic cum
Electrician
4 3500 14,000 1,68,000
Total 32 1,25,000 15,00,000
5.8.3.3 Power and Fuels:
Sr no. Particulars Per month Per Annum
1 Fuel 8,000 96,000
2 Power 16,000 1,92,000
Total 24,000 2,88,000
5.8.3.4 Other Manufacturing Expenses:
Sr no. Particulars Per month Per annum
1 Repairing of the
Machine
8,000 96,000
2 Packaging Material 4,000 48,000
Total 12,000 1,44,000
5.8.3.5 Office Selling, Distribution Expenses:
Sr no. Particulars Per month Per annum
1 Transportation 2,500 30,000
2 Telephone and internet
bills
1,500 18,000
3 Postage and
Stationeries
13,000 1,56,000
Total 17,000 2,04,000
5.8.3.6 Trade credit
Year :- 1495905
5.8.4 Cost of the Production:
Sr no. Particulars Per month Per annum
1 Raw Material 11,51,000 1,38,12,000
2 Salary and Wages 1,25,000 15,00,000
3 Other Manufacturing
Expenses
12,000 1,44,000
4 Consumables 20,000 2,40,000
5 Repairing of machines 15,000 1,80,000
Total 13,23,000 1,58,76,000
5.8.5 Profitability
Sr no. Particulars Per month Per annum
1 Sales 18,35,274 2,20,23,288
2 Less: Cost of Production 13,23,000 1,58,76,000
3 Gross Profit 5,12,274 61,47,288
4 Less: Office, selling, distribution exp. 17,000 204000
5 Less: Interest on loan
13.75% bank
1,12,500 1350000
Net Profit 382774 4593288
5.8.6 Cash Flow Statement
Particular Rs
Operation Activity
Wages and salary 1500000
Repair & machine 180000
Manufacturing Expenses 144000
Selling & Distribution 204000
Total 2028000
Add Investment activity
Building 2500000
Plant & machinery 8000000
Furniture 200000
Land 200000
Total 10900000
Add Financial activity
Loan 10000000
Total cash flow income 22928000
5.8.7 PROFIT & LOSS ACCOUNT
Capicity Utilization 85% 85% 79% 79% 79% 2013-14 2014-15 2015-16 2016-17 2017-18 A Sales 22023288 24,225,616 26,648,177 26,648,177 26,648,177 B Cost of Production Raw Material 1,38,12,000 15,048,000 16,552,800 16,552,800 16,552,800 Power 2,88,000 2,88,000 2,88,000 2,88,000 2,88,000 Wages and Salaries
15,00,000 15,00,000
15,00,000
15,00,000
15,00,000
Factory Overhead 120,000
120,000
120,000
120,000
120,000
C Administration and Selling Exp.
2,04,000 204,000 204,000 204,000 204,000
D Gross Profit Before Interest
6,30,3288 7,065,616
7,983,377
7,983,377
7,983,377
E Total Financial Expences Interest on Term Loan
1,350,000 1,237,500
1,100,000
962,500
825,000
F Operating Profit 4,953,288
5,828,116
6,883,377
7,020,877
7,158,377
G Preliminary Exp. H Profit and Loss Before Tax
4,953,288 5,828,116
6,883,377
7,020,877
7,158,377
I Provision for Tax 732,193
874,224
1,032,507
1,032,507
1,032,507
Net Profit
4,22,1095 4,953,892
5,850,870
5,988,370
6,125,870
5.8.8 BALANCE SHEET
At the End of Construction Period
2013-14 2014-15 2015-16 2016-17 2017-18
Liabilities Owner's Fund 6,250,000
6,250,000 6,250,000
6,250,000
6,250,000
6,250,000
Reserve and surplus 4,22,1095
4,953,892 5,850,870
5,988,370
6,125,870
Secured Loan Term Laon
10,000,000 10,000,000
9,000,000 8,000,000
7,000,000
6,000,000
Working capital adv. 2,124,000
2,124,000 2,124,000
2,124,000
2,124,000
Current Liabilities and Provision
Trade Credit 1,495,905
3,059,108 4,666,930
5,529,430
6,391,930
Creditore Total
16,250,000 24,019,000
25,387,000 26,891,800
26,891,800
26,891,800
Assets Fixed Assets
10,930,000 9,97,5000
9,97,5000
9,97,5000
9,97,5000
9,97,5000
Current Aseets , Loans And Advances
Raw Material 13,812,000
15,048,000 16,552,800
16,552,800
16,552,800
Cash and Bank Balance 5,240,000 Debtore 1,52,000 284000 284000 284000 284000 Miscellaneous Expandature and losses
preliminary Exp. 80,000 80,000
80,000
80,000
80,000
80,000
Total
16,250,000 24,019,000
25387000
26,891,800
26,891,800
26,891,800
CONCLUSION AND
FINDINGS
6.1 CONCLUSION
After preparing a MRP-1 report on Bakery industry with special focus on biscuit products,
we have finally reached to the following conclusions;
• Biscuit industry in India in the organized sector produces around 60% of the total
production, the balance 40% being contributed by the unorganized bakeries. The industry
consists of two large scale manufacturers, around 50 medium scale brands and small
scale units ranging up to 2500 units in the country, as at 2000-01. The unorganized sector
is estimated to have approximately 30,000 small & tiny bakeries across the country.
• Biscuit market in India is growing at the rate of around 15-17% in every year, that means
it is still in Growth stage, Right now Biscuit market in India is about Rs.6000 crores and
it is potentially very strong to Grow at the rate of 20% in every year. Even IBMA
estimates annual growth in the range of 15% to 20% during the next five years, in the
event of reduction in the rate of VAT on Biscuits to 4%.
• Per capita consumption of Biscuits in the country is only 1.8 kg, as compared to 2.5 kg to
5.5 kg in South eastern countries and European countries & USA respectively.
• After making Research on Customer Loyalty of four major brands of biscuits i.e. Parle,
Britannia, Sun fest(ITC), Priyagold (Surya Food) , We can finally conclude that
Customers of Parle and Britannia are more loyal compare to other brands like Sunfeast
and Priyagold. But when we compare the loyalty of Parle and Britannia, Parle has upper
hand.
• After making ratio analysis of biscuit industry both aggregate and individuals of four
major players, we can finally conclude that the aggregate Current ratio, Quick ratio, Net
profit ratio, Expense ratio, Capital employed and Fixed assets turnover ratios are
showing fluctuating trend in last five years, while aggregate liquid ratio and networking
capital ratio shows the decreasing trend in last five years.
• The trend analysis of sales of biscuit industry shows that, the overall sale of Biscuit
industry is gradually increased in each year except in the year 2010-11. This trend of
industry sales shows that biscuit industry is in the growth phase.
• The trend analysis of annual production figures of Biscuit industry shows the increasing
trend since last five years. This graph also shows that in order to meet the demand of
Biscuit products, all the firms increasing their production almost at the rate of 15 to 20 %
in each year.
6.2 FINDINGS
After preparing a MRP-1 report on Bakery industry with special focus on biscuit products,
we have finally reached to the following findings;
• We found that Biscuit Industry is right now prevailing in Growth stage, it is grow at the
rate of 15 – 17% every year.
• We have also found that in order to sustain the current market share all current market
players have to struggle a lot, they have to keep strong distribution channel to reach the
product in each place of the country and Parle become successful to do this.
• Apart from strong distribution channel other factors like aggressive promotions and
advertisement, strong research and development, new innovations at regular interval on
continues basis etc. Also play a vital role in sustaining existing customers and attracting
new potential customers. This thing has been proved by ITC Sunfeast in the year 2008-
09 was 2.7% but its aggressive efforts on new innovations and promotional schemes had
increased it market share to 6.7% in 2004-05.Britannia’s shares have dropped from 35.8
per cent in 2009-10 to 30.5 percent in May 2011 (volumes). Parle’s shares have also
dropped from 42.2 to 38.4 percent in the same period. Even Priya Gold has seen a minor
dip from 6.4 per cent to 5 per cent.
• After making Research on Customer Loyalty of four major brands of biscuits i.e. Parle,
Britannia, Sun fest(ITC), Priyagold (Surya Food) , We have also found that Customers of
Parle and Britannia are more loyal compare to other brands like Sunfeast and Priyagold.
But when we compare the loyalty of Parle and Britannia, Parle has upper hand.
BIBLIOGRAPHY
Book:
Malhotra Naresh k. (2007), Marketing Research (An Applied Orientation), Fifth edition,