Page | 1

K.J.SOMAIYA INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH

Team Name: Prometheus

Team Members:

Shyan Kashyap

Siddharth Shah

Rhea Punjabi

Page | 2

INDEX

1. Executive Summary

2. Category / Product / Service Description

3. Market Analysis and Customer Segmentation

4. Market Entry Strategies

5. Competitive Analysis

6. Organization Structure

7. Strategy and Implementation Plan

8. Operations Management, Sourcing and Supply Chain

9. Financial Statements (Funding, Ratios, Break-Even Analysis, Financial

Projections for next 5 years)

Page | 3

NutriPlate Business Plan

Executive Summary

Food is fundamental to health. What one eats has become inextricably intertwined with

how one thinks about wellness and healthy living. Whether one is focused on balance

and energy, prevention and disease management, or ecology and the environment, the

food choices reflect ones evolving needs and values.

Today, working couples and students are putting extra time at work and studies

respectively. This are left them with either of having street food or ready to eat

packages. Street food or fast food has a share of advantages i.e. speed and cost. After

a long day at work or college, one would prefer to eat a meal which is served on the

platter than make one from scratch. The same goes with ready to eat meals that comes

in various packets. However street food or fast food comes with warnings that keep

screaming every time we grab a bite. They are cooked in unhygienic conditions, with

unwashed vegetables and utensils on which food is served. Occasional meal or having

outside food in moderation won’t hurt our health, but eating on a regular basis is not a

favorable option.

With much emphasis being placed on poor nutrition, excess calories, and lack of

physical activity as the main causes of many preventable diseases, the act of eating has

taken on new meaning. The question of what to eat is essential, whether you are an

overweight child at risk for diabetes or a baby boomer concerned with appearance and

reducing the signs of aging. Prevention of health problems remains a fundamental issue

that will drive different ways of healthy eating.

Obesity is a problem in India and since the past decade it is on the rise. Coupled with

sedentary lifestyle, the growing ease of using gadgets, the introduction of video games

and increasing number of television shows – obesity is rising at an alarming rate. A

trade off is observed when choosing unhealthy food options to the healthy ones and this

Page | 4

has led to a lot of health related problems and disorders. This gap faced especially by

working couples and students is what needs to be addressed.

At NutriPlate, we address the need of healthy eating and generating awareness about

the benefits of nutritious food on lifestyle. We combine the elements of hygiene, healthy,

taste, and convenience for our calorie conscious customers. Our business concept is to

give a healthier twist to everyday cooking. Now more than ever, people are looking for

health benefits in their food choices. As a result, they are redefining the value of food

beyond simply taste, price, and convenience.

Our target audience are office goers, working women, students to whom we can provide

diet food tiffins at location convenient to them, may that be office or home or educational

institutions. The tiffin business is thriving and is unorganized in nature. With the plush of

working professionals in India, food is an undying business. With innovation in terms of

variety in meals catering to the vegetarians and non-vegetarians, a health check up

card to map the progress of the customer and packaging of food, we wish to change the

tiffin industry and bring about a formidable change in the eating habits of Indian.

Page | 5

Objectives:

1. To enhance the portability and accessibility of health food

2. To liberate the Indian working class from the hassles of everyday cooking

3. To create a service based company with the primary goal to address the

customer needs in terms of good quality and nutritious food which also provides

energy.

Mission:

1. To provide the customer with tasty yet nutritious food.

2. Become a household tiffin name for every working class Indian.

3. Meeting more than the customers’ expectations

Philosophy:

Our philosophy is to provide healthy diet food made under hygienic conditions

and the best quality health food for our health conscious customers.

Page | 6

sCategory Description

The Indian Food Retail Category:

India is the world's second largest producer of food next to China, and has the potential

of being the biggest with the food and agricultural sector. The total food production in

India is likely to double in the next ten years and there is an opportunity for large

investments in food and food processing technologies, skills and equipment. Health

food and health food supplements are another rapidly rising segment of this industry

which is gaining vast popularity amongst the health conscious. One of most promising

sub-sectors or verticals is the ready to eat/packaged food/tiffin service options.

Growing at the rate of 30%, the Indian food retail is going to be the major driving force

for the retail industry. Food accounts for the largest share of consumer spending. Food

and food products account for about 50% of the value of final private consumption. The

Indian food industry is projected to grow by US$ 100 billion to US$ 300 billion by 2015.

And the retail food sector which is currently at US$ 70 billion is expected to rise to US$

150 billion by 2025.

There are various factors paving the way to revolutionizing food retailing in India.

Among them few are:

Changing life styles and tastes

Growing need for convenience

Increasing disposable income

Increasing numbers of working women

Change in consumption patterns

Higher aspirations among youth

Impact of western lifestyle

Plastic Revolution – Increased use of credit cards and debit cards

Page | 7

According to Euro-monitor, Indians spend US$ 64 billion annually on eating out, which

includes $13 billion on eating in quick-service restaurants (QSRs) such as McDonald's

and Costa Coffee, propelling the industry to grow at 25-30 per cent annually.

Data-monitor states that the role of working women is also one of the driving forces for

the growth of the Ready to eat market in India. This is as women today have very little

time to get involved in regular household chores like cooking. They would prefer to have

eat a freshly cooked meal which caters to all their needs than make one.

Lifestyle changes have necessitated modifications in most urban Indians' diet regime in

terms of meal time fragmentation and diet diversification. With these changes, it has

increasingly become a challenge for Indians to maintain a diet that is balanced and

convenient, yet caters to the Indian taste buds. The desire to eat fresh food among

Indians is currently so prominent that it even overshadows the desire for consumers to

seek variety and authenticity. This was corroborated by the findings of the recent Data-

monitor consumer survey, where consumers across all the age groups said that they

value 'Freshness' claims more than authenticity and originality.

Product description:

We would call ourselves as the ‘modern day dabbawalla’. Observing the need for health

food at corporate offices, hostels and alike, we idea-ted on a business for cooking and

delivering diet food. We not only use the supply chain of the local dabbawallas but also

supply meals that are low calorie-d.

Our body converts the food we eat into energy. The unit of measurement of this energy

is the ‘Calorie’. The foods we eat differ in their calorie content; some are calorie rich –

mithai and oily subzis – while others are less so – salads and fruits. The extra calories

which your body does not burn are converted and stored as fat.

Page | 8

The essence of managing your weight is balancing the amount of calories you eat with

the amount of calories you burn or use in your daily life.

Getting your calorie intake right is just the first step. Even more important is ensuring

that you get calories from the right sources. Foods vary in the amount of calories they

contain. At NutriPlate, we provide balanced, calorie counted meals. Each meal is sent to

you with the number of calories and constituent nutrients

The best way to manage your weight is to watch what you are eating and to increase

your activity – as simple as a 30 minute walk in the morning / evening / post lunch.

However, since people are restricted by time, work, commitments, etc. it makes it

difficult for them to go for walks or indulge in physical activity which is where NutriPlate

bridges the gap. One can be fit by maintaining a healthy and nutritional food intake.

NutriPlate is targeted at the young corporates who are restricted by time to carry their

own home-cooked diet meal that helps them stay active. The working couples, students

staying as paying guests or in hostels that never had an option for diet meals can now

look forward to our service. A significant lifestyle improvement can take place with our

services. People suffering from metabolic disorders and weight issues will benefit the

maximum.

Procurement:

A vendor selected on the basis of competitive bidding would be signed up. Traders from

APMC market at Vashi (the wholesale grain and vegetable market) would be given

contracts for continuous supply of whole grains, vegetables, fruits, spices and other

daily consumables. The supply from this market would enable NutriPlate to achieve

economies of scale, raw materials at wholesale prices and help in cost cutting while

maintaining quality. The contract will be renewed on a yearly basis.

Page | 9

The terms of the contract are stated as follows:

1) Yearly contract renewal

2) Prices are fixed as mutually decided in the contract

3) Prices of the supplies will remain fixed for the year irrespective of market

fluctuation

4) Delivery of the supplies is to be incurred by the vendor

Our team has done a survey of this market. Our findings showed an approximate 50%

difference in the costs between the market prices and the prices offered at APMC

market. Further, a contract with the vendor for fixed supplies will give us discounts and

help us achieve cost benefits. The prices will remain fixed for the year irrespective of

market fluctuations until the contract is renewed and hence, will make the contract

mutually beneficial for both parties.

Supply Chain:

NutriPlate aims at using the services of the Nutan Mumbai Tiffin Box Suppliers Trust to

achieve economies of scale while also maintaining efficiency in service.

Mumbai is a very densely populated city of millions with huge flows of traffic. Because of

this, lengthy commutes to workplaces are common, with many workers traveling by

train. Instead of going home for lunch or paying for a meal in a cafe, many office

workers have a cooked meal sent either from their home, or sometimes from a caterer

who essentially cooks and delivers the meal in lunch boxes and then have the empty

lunch boxes collected and re-sent the same day. This is usually done for a monthly fee,

approximately Rs. 300/- The meal is cooked in the morning and sent in lunch boxes

carried by dabbawallas, who have a complex association and hierarchy across the city.

The reason for selecting dabbawallas for delivering our meals is due to their reliability.In

2002, Forbes Magazine found its reliability to be that of a six sigma standard. More than

175,000 to 200,000 lunch boxes get moved every day by an estimated 4,500 to 5,000

Page | 10

dabbawallas, all with an extremely small nominal fee and with utmost punctuality.

According to a recent survey, they make less than one mistake in every 6 million

deliveries, despite most of the delivery staff being illiterate.

A collecting dabbawala, usually on bicycle, collects dabbas either from a worker's home

or from the dabba makers. As many of the carriers are illiterate, the dabbas have some

sort of distinguishing mark on them, such as a colour or group of symbols.

About The Nutan Mumbai Tiffin Box Suppliers Trust:

NutriPlate will collaborate with this supply chain to cover a large span of the market

share.

This service was originated in 1880. In 1890, Mahadeo Havaji Bachche started a lunch

delivery service with about 100 men. In 1930, he informally attempted to unionize

the dabbawallas. Later a charitable trust was registered in 1956 under the name

of Nutan Mumbai Tiffin Box Suppliers Trust. The commercial arm of this trust was

registered in 1968 as Mumbai Tiffin Box Supplier's Association. The present President

of the association is Sopan Laxman Mare. Nowadays, the service often includes

cooking of food in addition to the delivery.

A collecting dabbawala, usually on a bicycle, will collect dabbas from the NutriPlate

kitchen after NutriPlate has successfully packed the tiffins. As the dabbawallas are

illiterate, we will be marking a code on each dabba. An example of a code, VLP 9E12 E

3.

This means,

VLP= Vile Parle (Suburb in Mumbai)

9E12= Code for dabbawallas at destination

E= Express Towers (Building name)

12= Floor number

E= Code for dabbawallas at residential station

3= Code for destination station (eg. Nariman Point)

Page | 11

The dabbawala will then take them to a designated sorting place, where he and other

collecting dabbawallas sort (and sometimes bundle) the lunch boxes into groups. The

grouped boxes are put in the coaches of trains, with markings to identify the destination

of the box (usually there is a designated car for the boxes). The markings include the

rail station to unload the boxes and the building address where the box has to be

delivered. At each station, boxes are handed over to a local dabbawala, who delivers

them. The empty boxes, after lunch, are again collected and sent back to the NutriPlate.

The service is almost always uninterrupted, even on the days of severe weather such

as monsoons. Dabbawallas are generally well accustomed to the local areas they cater

to, and use shortcuts and other low profile routes to deliver their goods on time.

Delivery:

For Lunch a customer can avail of any of the two depending on his location.

1. Dabbawallas- Only for Lunch & services spanning entire city

2. Delivery Vans- customers in proximity of NutriPlate’s location can benefit from

our delivery van for Lunch as well as Dinner

Menu:

Our menu is be designed by our in-house dietician/nutritionist, who designs the menu

for both Lunch and Dinner. Each meal comes in a variety of cuisines and nutritional

options. These options vary with the days of the week, which is then standard for every

week. This is to break the monotony of the meals offered in a week.

The dishes are incorporated keeping in mind a low calorie meal that would be rich in

fiber. A wholesome high protein meal would help in keeping a check on the weight while

improving muscle tone.

Page | 12

The cuisines that inspire our menu are Indian (South Indian, Gujarati, Rajasthani) and

Continental.

Variety offered:

Everyday meals – Lunch and Dinner

We at NutriPlate understand the importance of satisfying the taste buds of people with a

sweet tooth. Hence, our menu consists of dessert. NutriPlate maintains this 3 course

meal for both Lunch and Dinner.

For example:

Alternate 1 Alternate 2

Starters Salad/low fat curd Lentil Soup/whole grain

sandwich

Meal 1 high fiber veg, and

chapattis/brown rice

Continental dish/ Idlis/

Theplas

Dessert low-fat halwa low-fat custard

Note: The above helpings are 1 unit (plate) of each

Quality Control:

Apart from using quality food, the packaging of our food will also be hygienic, portable

and quality controlled.

Quality control is a process that is used to ensure a certain level of quality in a product

or service. It might include whatever actions a business deems necessary to provide for

the control and verification of certain characteristics of a product or service. Most often,

it involves thoroughly examining and testing the quality of products or the results of

services. The basic goal of this process is to ensure that the products or services that

Page | 13

are provided meet specific requirements and characteristics, such as being dependable,

satisfactory, safe and fiscally sound.

Quality control also might involve evaluating people. If a company has employees who

don't have adequate skills or training, have trouble understanding directions or are

misinformed, the quality of the company's products or services might be diminished.

This is especially important for service-oriented companies, because the employees are

the product that they provide to customers.

NutriPlate’s Quality Control will measure and strive to improve quality in 4 different

departments of the business.

Quality Control spanning different departments

Operations Procurement, Cooking, Packaging

Human Resource Efficiency of employees

Environment Waste disposal, Minimizing oil spillages

After Sale service Customer Feedback, Complaint Redressal

The quality check is regulated at two critical stages:

1. Procurement:

At the procurement stage of receiving raw materials like grains, vegetables, oils,

etc there is a round of inspection to ensure conformity with quality laid down by

the contract between the vendor and NutriPlate.

This will also eliminate any accidental inclusion of expired products or rotten

goods.

Page | 14

2. Packaging:

Once the meal is prepared, it will go through a round of quality check, right from

its taste to right amount of quantities filled in clean containers to its packing. The

packaging of the meal will differ from lunch to dinner.

Since Lunch is delivered by the Dabbawallas and collected on the return route,

tiffin boxes are used to pack the meals for lunch. However, since the area under

delivery for dinner meals are restricted to nearby locations, delivered in our NutriPlate

Van, the packing of the meals differs. The dinner meals will be packed in Plastic plates,

foil, thermacol and other disposable material.

Portion Control:

One reason that can impact our success and efficiency will lie in portion control. The

cooks will know exactly how much of each ingredient to put in every dish while the

packing department will ensure the right amount of quantity in each tiffin and each plate

for lunch and dinner respectively.

Pricing:

Since our menu contains health food, our prices will be

Lunch Dinner

Vegetarian INR 120.00 INR 120.00

Non Vegetarian INR 160.00 INR 160.00

Jain food INR 100.00 INR 100.00

Page | 15

Page | 16

Market Analysis and Customer Segmentation

1. Food will continue to grow in importance in people’s understandings of wellness as

emphasis is placed on behavioral patterns that lead to obesity, diabetes, chronic

heart disease, and other related health conditions and risk factors. In fact, according

to IFTF(Institute For The Future) research, over half (52%) of the adult population

surveyed believe that good nutrition prevents most chronic diseases; 58% believe

that good nutrition eliminates the need for most prescription drugs, and a full 70%

believe that good nutrition delays the onset of chronic disease.

2. Consumers want health information connected to their own personal needs,

delivered to them in a clear and manageable way.

3. Shopping for food is health management. Poor nutrition or over nutrition is

associated with a range of chronic illnesses and, as a result, shopping for food has

taken on greater significance as a health management strategy. People now look at

ingredients and assess the nutritional content of food products as a means of

managing their health. As a health management strategy, food shopping requires

consumers to makes choices with prevention, or weight reduction, or even

maximizing energy levels, as goals.

4. Consumers demand information beyond labels and packaging. Consumers are

beginning to demand information well beyond what is provided on the package or in

the store. They want to know not only whether their food is healthy or not, but also

about the origins of a product, the labour and wages behind it, its carbon footprint,

the growing practices used to produce it, and so on.

Page | 17

5. Bio-citizens are people who form networks based on biological or health similarities,

and who may engage in collective action as a result of their shared identities. The

abundance of social networking tools and platforms now available online has

facilitated the ability of people with similar health values or conditions to share and

generate information. As a result, food and health affinity groups are proliferating

online. We will have an online social networking site, with health affinity groups that

span interests and needs from food allergies, diabetes, new mothers, and people

with hypertension.

6. Assess Green Health in the Purchasing Cycle. Green health is part of the larger

health and wellness trend. Already we see people making a number of tradeoffs in

their food purchasing decisions—health has joined taste, price, and convenience as

an important dimension of choice for shoppers. Green health, whether it is the

concern for personal health or the sustainability of the environment, may soon begin

to reorder these tradeoffs. For the market segment that is already embracing green

values, it will be important to signal and communicate product attributes that speak

to green values. Some food manufacturers are already including this kind of

information in their packaging, but the demand for all that is green will also extend to

the food retailer as consumers seek companies that are aligned with their values

and aspirations.

7. It was estimated in 2007 that the dabbawala industry was still growing by 5-10% per

annum.

Page | 18

8. Although the service remains essentially low-tech, with the barefoot delivery men as

the prime movers, the dabbawallas have started to embrace technology, and now

allow booking for delivery through SMS. An online poll on the web site ensures that

customer feedback is given pride of place. The success of the system depends on

teamwork and time management. Such is the dedication and commitment of the

barely literate and barefoot delivery men (there are only a few delivery women) who

form links in the extensive delivery chain, that there is no system of documentation

at all.

Page | 19

Market Segmentation

Distinct target populations are addressed by NutriPlate. They are as follows:

1. The first target population is based on their income:

1. Middle Class Clients:

This group does not have a huge amount of income, believes that it is costly

having nutritious packed meals every day, is willing to pay but tries to minimize

the cost. Therefore, we have made Mini and Combo meals for such clients. They

can also buy salads, soups and wraps as individual items from us.

2. Upper Class Clients:

This group is willing to spend whatever it takes to eat the most balanced meals.

We have kept them in mind and designed our customized meals. These include

working professionals and students. Food to students would to deliver close to

their educational institutes. For meals other than lunch, it would be delivered at

their hostels/apartments.

One more income segment is added for students as our target population: i. Lower class students:

It includes the group which prefers to have one vegetable, rice and chapatti,

sweet dish but not non-veg.

ii. Middle class students:

This group prefers to have two or three vegetables, rice, chapatti, sweet dish,

salad, and may or may not prefer non-veg.

Page | 20

iii. Upper class students:

This group prefers some royal type of food which includes costly items and

vegetables for vegetarian students and different varieties of non-veg for the non-

vegetarians.

2. The second target population is based on the metabolic disorders that people are suffering from:

1. Hypertension

2. Low/High blood pressure

3. Diabetes

4. Cholesterol problems etc

3. The third target population is based on the weight issues people have:

1. Customized diets for gaining weight

2. Customized diets for losing weight

4. The last target population is children:

1. “Healthy Junk” concept is introduced specially for children. We will be serving

them their favourite junk once a week but it will be prepared using healthy

ingredients.

2. Special diet care will be taken for obese/under-nourished kids.

Target Market Segment Strategy

Page | 21

To reach the different groups does not require a distinctly different strategy. What

differentiation it will require is different menu offerings to satisfy the different groups.

The upper-end menu items are cost prohibitive for the middle class target segment.

Page | 22

Market Entry Strategies

Keeping our costs down is one of the most important areas of a business however, if we

really want to make money, we have got to put more of our time into income generation

than we do on cost cutting. Just a few hours a day focused on income generation can

pay for the wages of several people. Making ten times, or even hundred times more

profit than what we expect is more about increasing our income than it is about

decreasing our costs.

It is important to understand that a business has two major parts. And both of them are

equally as important as the other. We will be putting 50 percent of our time, effort and

investment into distribution- getting the products and services to the marketplace. The

other half of our time will be spent on sales and marketing, i.e. getting the marketplace

to come to our products and services. This will be a serious challenge as most business

owners and their entire businesses, put about 90 percent of their time into distribution

and only about 10 percent into marketing. But we have to market really well if ever want

to make real money.

Most accountants will show that sales, marketing and advertising fall into the expense

side of your business. Yet, when it is done properly, marketing is the best investment.

Hence, we will develop a strong marketing strategy to yield higher and more profitable

returns.

Let’s think about it this way. If we were to run an Rs.10, 000 advertisements that

returned us Rs.20, 000 in profit in a couple of days, then we would be doubling our

money. And what’s more, we can run this ad as many times as we like because it never

costs us anything; it always makes us money.

Advertisements will also be done by using pamphlets and distributing them in the

targeted areas like students’ hostel areas, pay in guest areas, different colleges and in

universities, corporate office areas. These advertisements should yield a decent amount

of service inquiries.

Page | 23

Our marketing strategy will be based on developing visibility among the potential

customers. This will be accomplished by targeted advertising campaign.

1. The advertisements will be placed in various local newspapers: This will really be a

cost-effective way to reach the local markets. The rates are generally affordable, as the

paper has a shelf life of at least a week. 90 percent of results come in the first four days,

but results will still come in up to six weeks after delivery. We will try to get an early

right-hand page and design the ad with a benefit-oriented headline.

2. Magazine Advertising: We will target the working professionals and students through

magazines. With the help of health and wellness magazines, we will target customers

with health and weight issues. It is usually pretty easy to judge who is reading the

magazine by the types of articles, as well as the other advertisers. People reading

magazines will pay attention to the ads, as the ads generally represent their direct

interest. We will use an early right-hand page and make sure that our ad fits the style of

the magazine. We will also use powerful photos to show the benefits after eating food

from NutriPlate. We will also write articles instead of just advertising.

3. Inserts: This is where we arrange for a flyer to be inserted into a newspaper or

magazine. These will work well, as they literally fall out at the readers’ feet. We will

make sure that the inserts are of high quality and gimmicky. We will make offers that

people have to respond to. We will make our inserts bulky as the bulkier our inserts the

better the chance of readership.

4. Press Releases: This is where we will fax, or e-mail media outlets a story on our

business and encourage them to publish it as free advertising. We will make sure that

we have a noteworthy angle to our article; it is be well written and “print ready”. These

articles will be written by experts and professionals who will guide the masses and at

the bottom of the article, we will mention our services and contact details.

5. Mailbox Drops: We will go full quality and deliver larger catalogs. This is because larger

catalogs seem to be kept and read. We will determine which areas respond the best

and then do them accordingly.

Page | 24

6. Yellow Pages: Statistics show that more than 35 percent of the people turn to the

Yellow Pages when they are ready to purchase something or need to find information

about a certain service or company. Also, response increases with an increase in ad

size, or Unit Display (UD) size. The increase in responses is one for a 1 UD, four for a 2

UD, seven for a 3 UD, and eleven for a 4 UD. Therefore, the bigger the better. We have

to keep in mind that our readers are already buyers; they are just deciding from whom

they should buy from and, thus in general, they will call three advertisers before making

a decision. Therefore, we will run a benefit-filled headline, use keywords so that people

know what we do and make sure that our phone numbers are big and in the bottom

right-hand corner.

7. Billboards and posters: Billboards and posters are excellent as a directional medium.

That means we can use billboards to tell people to take the next left, or that you are five

minutes away. We will put up a great picture, and a short, simple headline along with

easy response instructions.

8. Postcard Mailings: This is where we will send prospects a postcard that advertises our

business. They will make for an ideal teaser- that is, they won’t tell the prospects the

whole story.

9. Internet/ Web pages: People use the internet to research a purchase, so a web page is

a must. We will make sure that we submit our site to all different search engines often.

We will fill our site with interesting information. This is why people will visit us in the first

place.

10. Host Beneficiary: This is where we will promote ourselves to the customers of another

business. This is especially good when we are friends with the other business people

who have customers who fall into our target market.

11. Write a book: This is an instant way to develop credibility. We will market ourselves as

experts and give the book away for free in order to get leads. Of course, it needn’t be a

full book- a small ten page booklet would be enough.

Page | 25

12. Seminars and Events: Holding free or paid seminars is a great way to get your

prospects in the same room all at once. Since our service is informational, it will suit our

business. We will ensure that we have good speakers who are interesting to hear as

they would speak about health and wellness being an important ingredient in today’s

life. Also our speakers would motivate people to switch from their existing lifestyle to a

new healthy one. The venue for the seminar would be centrally located with ample

parking. We will also check what time our target market prefers-some groups prefer

morning while others an evening seminar.

13. Referrals: We will reward people who introduce their friends to us and turn them into

our customers. The key is not taking referrals for granted but rewarding those who shall

be our best ambassadors.

14. Testing and measuring can help increase your number of leads: If we want to make a

sale, we first have to generate leads. And if we first want to increase the amount of

business we do, we need to increase the number of leads we generate. We need to get

more people to visit our business with the view of buying from us. But for this, we need

to know the methods that will work to increase our leads. If we don’t know what’s

working and what’s not, we can’t possibly make informed decisions. We may keep

running an ad that never results in a sale. We will create a tally sheet and include all

the possible ways people could hear about us. We will keep records of where all leads

are derived from and how much they spend. We will monitor how every single product

sells, and why it sells.

15. Increase Range or Variety: The more you have, the more options you can give the

customer, and the more individual tastes you can cater to. This will also give us a more

competitive edge over the others.

16. Sample meals and Demonstration videos: People like to see with their own eyes, and

experience the product before they buy. We will offer a sample meal to the prospects

and also upload various videos online showing our hygienic procedures and the look of

the nutritious and tasty food when ready.

Page | 26

17. Increase product knowledge: We understand that people like to buy from people who

seem to know what they’re talking about. It gives them a sense of security. Hence, we

will ensure that all our team members are as well educated about our products and

services as we are.

18. Sell on Emotion and Dreams: People tend to make their decisions based on emotion,

not logic. In fact, emotion represents 88 percent of most purchasing decisions. We will

emphasize on how our service is going to change their lives. We will focus on the

emotional benefits of our service and spell out the benefits. We will also ask emotionally

focuses questions.

19. Site tours: Inviting people to take a tour of our site will really boost our credibility. If

people see how things are made, and how diligently the workers smile and work, they

are more likely to believe us when we talk about quality.

20. Under promise and Over deliver: We will actually do more than we promise. We believe

that if we just do what we promise, we will probably get our customers back the next

time. But if you do what you promise plus a whole lot more than they were expecting,

we will have customers for life.

21. Run a Frequent Buyers Program or VIP Card: This will be for prospects that are not

interested in our full course meals but may be interested in our individual items like

salads, soups, wraps etc. This is a classic method of getting customers back. We will

give them a card that will get stamped each time they buy. We will offer every tenth

purchase for free.

22. Social groups: We will also form social groups where people feel that they belong

somewhere. People with similar problems or goals can be a part of one group. Here,

they can help each other by sharing new ideas and thoughts and also motivating each

other. Our counselors will also be a part of these groups and guide them along.

Page | 27

Competitive Analysis

Our competitors are any providers of prepared foods; this includes food vendors,

restaurants and street food carts. We compete with them by offering a more user

friendly ordering system, providing hygienic and healthy food, offering a variety of food

choices and aiming to reduce weight and metabolic issues.

A survey found that the major problems with tiffin companies were employee turnover,

inconsistent food quality because of shifting suppliers, and dirty food containers

(particularly stains on the plastic containers). Customers surveyed indicated

dissatisfaction with existing tiffin suppliers. They also complained of food being

tasteless, unhygienic and unhealthy. Based on this survey, it can be inferred that there

is room for improvement in food quality and delivery. Also, one noted trend among

these tiffin suppliers is the switch from metal tiffin’s to the use of plastic tiffin’s, which

leads to significant waste and issue of stains highlighted above. We wish to fill this wide

gap and generate happier and highly satisfied customers.

Our Competitive Edge

Our competitive edge is the attention to servicing customers and an inventive approach

to cuisines. By making customer satisfaction a priority, over time, the local customers

will come to appreciate the attention that their needs are given and will form a long

lasting relationship with us. Also, with our innovative approach to food meals, we will

take the knowledge of innovative cuisine and will create inventive, colourful and

delicious alternatives.

Page | 28

Management/Organization Structure

Since we are new in the market, we begin as a Flat Organization structure.

A Flat organization (also known as horizontal organization) refers to an organizational

structure with few or no levels of intervening management between staff and managers.

The idea is that well-trained workers will be more productive when they are more

directly involved in the decision making process, rather than closely supervised by many

layers of management.

This structure is generally possible only in smaller organizations or individual units

within larger organizations. When they reach a critical size, organizations can retain a

streamlined structure but cannot keep a completely flat manager-to-staff relationship

without impacting productivity. Certain financial responsibilities may also require a more

conventional structure. Some theorize that flat organizations become more traditionally

hierarchical when they begin to be geared towards productivity.

The flat organization model promotes employee involvement through a decentralized

decision-making process. By elevating the level of responsibility of baseline employees

and eliminating layers of middle management, comments and feedback reach all

personnel involved in decisions more quickly. Expected response to customer feedback

becomes more rapid. Since the interaction between workers is more frequent, this

organizational structure generally depends upon a much more personal relationship

between workers and managers.

Page | 29

Personnel Plan:

1. Dieticians/nutritionists: Two

Two dieticians cum nutritionists will be hired for rendering their services to NutriPlate,

their role is defined as:

Designing the menu for Lunch and Dinner they will consider the 3 varieties

offered by NutriPlate Vegetarian, Non-vegetarian, and Jain meals for Lunch and

Dinner six menus (3varieties x 2meals) will be planned for the 6 days of the

week. Hence designing 36 combinations of meals per month (6per day x 6days)

while conforming to the standard of a 3 course meal.

Defining the ingredients of the dishes

Brand selection for ingredients, spices, grains, dairy products etc.

2. Cooks: Five

Five cooks will be permanently hired to prepare the food for Lunch and Dinner.

Chief Executive Officer

Production Finance Research Sales

Managers of departments

Working Teams

Page | 30

These cooks will be rotated for the dinner shift on a daily basis, as the

requirement for the Dinner shift is only three cooks compared to the 5 cooks

working for Lunch. This will also ensure equal distribution of work throughout the

week.

3. Kitchen helpers: Ten

Ten people will be hired permanently. Their role throughout the day is defined as-

Washing Utensils/tiffins

Cleaning premises

Washing vegetables

Cutting vegetables

Assisting the cooks

4. Packers: Four

Four people will be hired permanently to pack the food in tiffins and provide them to

the customers.

Due to the difference in the order quantity demanded between lunch and dinner,

the idle packers during the night shift will accompany the driver of the delivery

van in delivering the meals to customers.

5. Driver: One

One driver will be employed for the van. He will also be hired permanently.

Page | 31

Executive Roles and Responsibilities:

1. Procurement: Shyan Kashyap

The partner of the firm, Shyan will be responsible to single handedly overlook the

procurement department. Her role will be defined as:

Search for the vendors for the raw material, food items, packaging material,

utensils and other fixed assets.

Evaluate the options on basis of quality, price and efficiency in delivering

supplies to the kitchen.

Select the vendor on basis of best competitive prices.

Regularly supervise the conformity to the terms of the contract.

Renew the contract with the vendors.

2. Logistics: Shyan Kashyap

The partner of the firm Shyan will take responsibility for the role of the logistics of the

business. Her role is defined as:

Supervising the deliveries.

Strictly maintain on-time deliveries.

Oversee the deliveries made by the Dabbawallas.

Oversee the deliveries made by the delivery van.

3. Human Resource: Rhea Punjabi

The partner of the firm, Rhea will undertake the responsibility of the human

resource. Her role is defined as:

Payment of salaries to the employees

Fixing the rotation cycle for the cooks for dinner during the week

Ensuring the employees follow the dress code and guidelines in the premises

regarding cleanliness and hygiene

Page | 32

4. Quality Control: Rhea Punjabi

The partner of the firm, Rhea will undertake the responsibility of Quality Control. Her

role is defined as:

Ensure quality standards at procurement and packaging stages.

Food testing and tasting.

Measuring and evaluating the productivity of the employees.

Ensuring orderly disposal of wastes.

Minimizing oil spillages or wastage of raw material, food etc.

Redressal of customer complaints, if any.

5. Finance: Siddharth Shah

The partner of the firm, Siddharth will undertake the responsibility of the Finance

head. His role is defined as:

Maintain and record in books of accounts

Manage funds

Maintain working capital and cash for daily operations in business

Allocation of funds to different departments

6. Marketing & Advertising: Siddharth Shah

The partner of the firm, Siddharth will undertake the responsibility of the Marketing

head. His role is defined as:

Design a marketing plan for the business

Find economical advertising channels for the business

Personnel plan will be done permanently for tiffin system facility. While for corporate and other events, personnel planning will be done temporarily and as per requirement.

Page | 33

Strategy and Implementation Plan

SWOT analysis:

Strengths:

Simplicity in organization with innovative service

Coordination, team spirit and time management

Low operation cost

Customer satisfaction

One of our biggest strengths is that we provide quick service. The biggest advantage of

this is that it saves a lot of time for our customers. And in this modern world, time is

money hence; quick service is the biggest strength for any company

Though our prices are moderate, our quantity is more and hence it is value for our

customers’ money. It will help us generate more and more happy customers.

The advertisements of our nutritious food will be spread over all around unlike other

typical dabbawallas and tiffin services. This will make us popular in the market and will

add to the appeal .One of the most important people in the buying decision are the kids

who are influenced by the ads they see around them and who in turn influence their

parents. This is because nowadays even kids are conscious of their looks and know the

importance of being strong and healthy while maintaining a toned look. Hence it boosts

the sales.

Weakness:

High dependence on local trains

Limited access to education as the dabbawallas are minimum standard 8thpass

Different Preferences: India is a land of diversity. People in India have different

preferences and taste. The health food industry cannot cater to all the tastes and

Page | 34

preferences of people. For e.g. some people eat Non – Veg and some don’t eat non –

veg, thus creating a problem. .Another difference in preference can be seen in the

choice of the type of food. Some people prefer South Indian while some prefer North

Indian. So we need to appoint different cooks for different cuisines. This increases our

costs

Lack of customization – Our tiffin food is usually pre-made and pre-packed and not

fresh from the oven. So once the dish is made it cannot be altered according to the

customer’s choice or preference. For example, if the customers’ menu is already

decided and after we have dispatched his food pack, he is in the food to have

something else, he will have to place a new order with us and also, it will be very difficult

for us to prepare a new item for him at such short notice.

Opportunity:

Tie up with caterers to serve variety of meals

Opportunity of expansion of service in Mumbai metro

Generating revenue by promoting other number of brands

Explanation services to other cities

Booking of service through internet and SMS

Hectic lifestyles: Nowadays, individuals are getting a lot busy with their work. They do

not get even ten minutes to have a proper meal. Hence, they pick up any tit bits from

their nearest canteen and munch on it in five minutes. We have an opportunity here, as

we deliver even small bites to customers who do not have time to eat full course meals.

Threats:

Indirect threats from fast food chain and hotels

Food court at malls and other mega structures

Flexi timings and work from home culture

Catering service offering tiffin services

Paper food voucher and smart cards

Page | 35

Canned food stuff and ready to eat meals- Nowadays ready to eat products are

more in demand in the market owing to the fact that consumers have to take

minimum trouble in preparation out of which the results are healthy food, rich

nutritional value, easy on pockets and higher value for money as compared to the

foods available from a tiffin service provider.

Porter's five forces framework:

Much strategy (particularly in the private sector) is concerned with establishing and

maintaining competitive advantage. One of the tools available to assist managers in

analysing the near environment for this purpose is Porter's ‘five forces of competition’

(Porter, 1980). This model is widely used as a means of understanding the structure of

an industry or sector, and as a framework within which to identify possible structural

changes.

The model identifies five types of competitive pressure within a sector: established

competitors, new entrants to the market, substitute products, and the bargaining power

of suppliers and of customers. These are summarized in the figure below:

Page | 36

Bargaining power of suppliers: Strong

Vendor has upper hand in deciding forward prices

Inflationary impact of food items

No substitutes available for diet food supplements

Distribution channel of Dabbawallas is the backbone for our Lunch meal deliveries. Any discord

with the link will create havoc in our supply chain. To overcome this, we are looking at building

our own distribution channel after the 1st 5 years for the lunch meals through our own delivery

vans

Bargaining power of customers: Weak

Page | 37

Demand is relatively price inelastic when health conscious customers prioritise their health.

There are few or hardly any substitutes available for diet food meals.

Threat of new entrants: Strong

NutriPlate is starting off with zero goodwill. Hence, to set up its positioning in the market will

take time. During which it may be easy for new entrants to mushroom.

The food industry is synonymous with businesses earning supernormal profits. Hence this

makes it very attractive as an industry, luring many new entrants in the unorganized and

organized sector.

Threat of Substitute products: Weak

Diet food is still a niche market in India, and the existing market proves that there are few

substitutes available.

Rivalry among existing competitors

The exit barriers are relaxed or we can say that it ceases to exist in the food industry. The

competitive advantage NutriPlate has over other food servicing or restaurants is the

distribution channel of Dabbawallas. The degree of competence of the dieticians who design

the NutriPlate menus also defines the product and helps in product differentiation.

Value Chain

Page | 38

Primary Activities include:

Inbound Logistics - examples: Quality control, Receiving raw materials,Control

Supply schedules

Operations- examples: Manufacturing, Packaging, Production control, Quality

control, maintenance

Outbound Logistics-examples: Finishing goods, Order handling, Dispatch,

delivery, Invoicing

Sales and Marketing-examples: Customer management, Order taking,

Promotion, Sales analysis, Market research

Servicing-examples: warranty, Maintenance, Education and training, Upgrades

Value added less cost=

Profit margin

Support Activities

Product and Technology Development

Human Resource Management

Procurement

Administrative, finance infrastructure

Primary Activities

Marketing and

Sales

Services

Outbound logistics

Operations

Inbound Logistics

Page | 39

Support Activities include:

Administrative, finance infrastructure- Legal, Accounting, Finance

management

Human Resource management- Personnel, Lay recruitment, Staff planning

etc.

Product and Technology Development- Product and Process Design,

Production engineering, Market testing, research and Development etc.

Procurement- Supplier management, funding, Subcontracting, Specification

etc.

Organizations need to consider not only the behaviour of current competitors, but also

the potential for other organizations to enter the market. The important issue here is

assessing the level of barriers to entry. For example, in sectors where brand recognition

is important, new entrants need to spend heavily to build a brand. In other sectors, the

minimum economic scale of operations may be high, thereby requiring heavy capital

investment by new entrants.

An organization needs to consider not only those competitors offering similar products

or services, but also those offering products or services that may act as substitutes. For

example, cheaper tiffin services now suffer considerable competition from supermarkets

selling high-quality, easily prepared ‘ready meals’ to eat at home as a substitute for

tasty and easily available food.

Porter argues that the degree of competitiveness or rivalry within an industry depends

on the availability of substitutes, the strength of suppliers and buyers (customers), and

the threat of new entrants (which in turn depends on the ease of entry). Thus health and

wellness research, with its high entry costs, sophisticated technology and patent

protection, has low levels of rivalry and high margins and profitability. Only the growing

power of customers (health services) threatens this profitability. In the restaurant

business, in contrast, the entry barriers and start-up costs are low, customers have a

wide choice and therefore considerable bargaining power, and there is a range of

Page | 40

substitutes. The restaurant trade is highly competitive and margins and profitability are

generally low.

Why eat our tiffin?

a. Our food is prepared from fresh and premium quality ingredients

b. Spice, salt and oil content of the food are low and thus, is suitable for daily

intake.

c. We deliver food in a disposable microwavable packing for dinner and clean steel

utensils for our lunch packed meals

d. Menu for the whole week is designed keeping following parameters in mind:

Nutritional balance: Menu in total is nutritionally balanced for the whole

week, so that Carbohydrates, Fats, Proteins, Vitamins, Minerals &Fibres

are balanced.

Calorie count: An average adult Indian requires about 1,800 to 2,200

Calories per day or 700 Calories each from lunch and dinner. Our meals

adhere to this basic guideline, and every single meal provides about 450 –

700 Calories.

Visual appeal: We try to keep our menu as much as visually stimulating as

possible, by providing sparkling colour drinks, contrasted with natural

colours of salads and veggies.

Variety: We try to blend in as much of variety of food as possible, so that

we can break the monotony of routine life. We keep a promise, that not a

single preparation of ours would be repeated in a fortnight.

e. Timely delivery of meal: For our meal delivery, we have a tie up arrangement

with the famous Dabbawallas, who are six sigma certified for delivering right tiffin,

at the right location at the right time.

f. By the virtue of this tie up, we can deliver lunches all across Mumbai. Meal

delivery areas For Lunch:

i. Western Line: From Andheri to Churchgate

Page | 41

ii. Central Line: Vikhroli to CST

iii. Harbour Line: Chembur to CST

The Value Chain

The Value Chain Porter is a methodology of separating a business system into a series

of value generating activities that develop competitive advantage and it can analysis

describes the activities the organization performs and links them to the organizations

competitive position.

What is the Value Chain Porter merit?

Helps an organization identify how it creates value for customers and locate

where its sources of competitive advantage lie.

Can be created in both qualitative and quantitative forms.

Many organizations do not consciously make decisions to optimize the sources

of advantage resident in their value chain and in so doing, risk losing competitive

Primary Activities

Procurement Human Resource Development

Infrastructure Technological Development

Marketing and Sales

Outbound logistics

Operati-ons

Inbound logistics

Services

The Value Chain

Support Activities

Page | 42

advantage.

Michael Porter introduced a generic value chain model that comprises a sequence of

activities found to be common to a wide range of firms. (Developed in the early 1985 by

Harvard Business School Professor Michael Porter in his book "Competitive Advantage:

Creating and Sustaining superior Performance").Most mangers know that their

organization’s value chain represents the sequence of activities necessary to create a

product or service, produce or deliver it, market and sell it to customers, distribute or

provide it to those customers while ensuring necessary post sales service is completed.

They also know that internal firm infrastructure activities such as human capital

development or procurement support the main stages in the value chain. What

managers sometimes aren’t as knowledgeable of is the fact that the value chain within a

firm or industry is actually comprised of a very specific model of performance that

depicts the discrete stages of organizational value creation. Further, they don’t always

use the model to compare and contract activities across firms for the purpose of

determining where competitive advantages lie.

Profit Margin:

Depends on the Effectiveness in performing these Supporting Activities “Efficiently"

- Revenues (customer is willing to pay for the products) must exceed the cost of the

activities in the value chain.

Generate Superior Value: A competitive advantage may be achieved by reconfiguring

the value chain to provide lower cost or better differentiation.

Use the value chain model to define a firm's core competencies and the activities in

which it can pursue a competitive advantage:

• Cost advantage: Better understanding and reducing costs

• Differentiation: Focus on those activities associated with core competencies and

capabilities

Page | 43

Cost Advantage and the Value Chain Porter

Reduce the cost of individual value chain activities

Reconfigure the value chain.

Define the value chain is define via a cost analysis, by assigning costs to the

value chain activities

Accounting reports are studied in order to modify or reallocate costs and produce

value creating activities.

1- Reduce the cost of individual value chain activities

Porter identified 10 cost drivers related to value chain activities:

• Economies of scale

• Learning

• Capacity utilization

• Linkages among activities

• Interrelationships among business units

• Degree of vertical integration

• Timing of market entry

• Firm's policy of cost or differentiation

• Geographic location

• Institutional factors (regulation, union activity, taxes, etc.)

NOTE

1- A firm develops a cost advantage by controlling these drivers better than do the

competitors.

2- Reconfigure the value chain.

Structural changes - such a new production process, new distribution channels, or a

different sales approach.

*Goal: offer the customer a level of value that exceeds the cost of the activities,

Page | 44

resulting in a profit margin. The term “Margin” implies that organizations realize a profit

margin that depends on their ability to manage the linkages between all activities in the

value chain Porter. In other words, the organization is able to deliver a product / service

for which the customer is willing to pay more than the sum of the costs of all activities in

the value chain.

The model can and should be reconfigured to account for activities specific to the

industry in which the firm competes. For example, in a service industry - such as

professional services - inbound logistics might be replaced with methodology

development or client acquisition. Regardless of industry however, the value chain

Porter is a powerful framework for analyzing both industry and firm specific activities.

Page | 45

Licenses Required for Starting the Business:

NutriPlate is a startup company, working towards making its presence felt in the food

industry. As a private limited company, the following procedure is taken under

consideration:

1. Obtain director identification number (DIN) The process to obtain the Director Identification Number (DIN) is as follows:

Obtain the provisional DIN by filing application Form DIN-1 online. This form

is on the Ministry of Corporate Affairs 21st Century (MCA 21).The provisional

DIN is immediately issued (Provisional DIN is valid for a period of 60 days.

The application form must then be printed and signed and sent for approval

to the ministry by courier along with proof of identity and address:

A. Identity Proof (Any one)

• PAN Card

• Driving License

• Passport

• Voter Id Card

A photograph should be attached to the DIN application and the documents in

proof of identity and address must be attested by a Public Notary or Gazette

Officer of the Government or by a practicing professional (such as practising

Chartered Accountant, a practising Company Secretary or a practising Cost

Accountant or Company Secretary of the company in full time employment of the

company, whose director the applicant is proposed to be appointed).

Page | 46

B. Residence Proof (Any one)

• Driving License

• Passport

• Voter Id Card

• Telephone Bill

• Ration Card

• Electricity Bill

• Bank Statement

The concerned authority verifies all the documents and, upon approval, issues a

permanent DIN. It takes about 3-5 days to issue the permanent DIN.

2. Reserve the company name with the Registrar of Companies (ROC)

Company name approval must be done electronically. Under e-filing for name

approval, the applicant can check the availability of the desired company name

on the MCA 21 Web site.

The RoC in Mumbai has staff members working full time on name reservations

(approximately 3 but more if the demand increases). A maximum of 6 suggested

names can be submitted, they are then checked by RoC staff for any similarities

with all other names in India.

The MCA receives approximately 50-60 applications a day. After being cleared

by the junior officer, the name requests are sent to the senior officer for approval.

Once approved, the selected name appears on the website. Applicants need to

keep consulting the website to confirm that one of their submitted names was

approved.

In practice, it takes 2 days for obtaining a clearance of the name if the proposed

Page | 47

name is available and conforms to the naming standards established by the

Company Act (1 day for submission of the name and 1 day for it to appear on the

MCA website).

3. Pay stamp duties online, file all incorporation forms and documents online and obtain the certificate of incorporation

As a result of MCA's desire to further the e-governance's initiatives, with effect

from 1st of January 2010 it has been made compulsary to pay all stamp duties

on incorporation documents online through the Ministry of Corporate Affairs

(MCA) website. As a result of these reforms, the mode of payment of stamp duty

through affixation of adhesive stamps on Articles of Association and

Memorandum of Association has been replaced by e-payment of applicable

stamp duty on Articles and Memorandum of association through MCA portal.

Further, certain forms: Form 1 (a primary form used in the incorporation process),

Form 5 & Form 44 will also be stamped electronically through MCA Portal.

Further, the reforms also provide that the documents on which e-stamping has

been done, need not to be filed physically and electronic filing of the same would

be sufficient.

For registration, the following forms are required to be electronically filed on the

website of the Ministry of Company Affairs:

Memorandum of Association (duly stamped) and a duplicate thereof.

Articles of Association (duly stamped) and a duplicate thereof.

The agreement, if any, which the company proposes to, enter into with any

individual for appointment as its managing or whole time director or manager.

A copy of the agreement, if any, referred to in the articles.

Page | 48

A power of attorney, if any (with prescribed stamps).

A copy of the letter of the Registrar of Companies intimating the availability of the

proper name.

e-Form No. 1 (with prescribed stamps) for incorporation of a Company.

e-Form No. 18, if desired for change of situation of registered office.

e-Form No. 32 and e-Form 32 Addendum, if desired for Particulars of

appointment of managing director, directors, manager and secretary and the

changes among them or consent of candidate to act as a managing director or

director or manager or secretary of a company and / or undertaking to take and

pay for qualification shares

Document evidencing payment of prescribed registration and filing fee.

The promoters, as being the subscribers to the Memorandum and Articles should

be the same person whose names are appearing in the original application for

availability of name (e-Form 1A). If the names have changed, ROC will not

register the company until and unless, the name is got re-validated with the new

subscribers as applicants, by paying another fee of Rs 500.

4. Visit an authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI) Investors Services Ltd to obtain a Permanent Account Number (PAN)

Under the Income Tax Act, 1961, each person must quote his or her permanent

account number (PAN) for tax payment purposes and the tax deduction and

collection account number (TAN) for depositing tax deducted at source. The

Central Board of Direct Taxes (CBDT) has instructed banks not to accept any

form for tax payment (Chalan) without the PAN or TAN, as applicable.

Page | 49

The PAN is a 10-digit alphanumeric number issued on a laminated card by an

assessing officer of the Income Tax Department. In order to improve PAN related

services, the Income Tax department (effective July 2003) outsourced their

operations pertaining to allotment of PAN and issue of PAN cards to UTI Investor

Services Ltd, which was authorized to set up and manage IT PAN Service

Centers in all cities where there is an Income Tax office.

The National Securities Depository Limited (NSDL) has also launched PAN

operations effective June 2004, setting up TIN Facilitation Centers. The PAN

application is made through the above mentioned service centers on Form 49A,

with a certified copy of the certificate of registration, issued by the Registrar of

Companies, along with proof of company address and personal identity. A fee of

INR 94 (plus applicable taxes) applies for processing the PAN application.

IT PAN Service Centers or TIN Facilitation Centers will supply PAN application

forms (Form 49A), assist the applicant in filling up the form, collect filled form and

issue acknowledgement slip. After obtaining PAN from the Income Tax

department, UTIISL or NSDL as the case may be, will print the PAN card and

deliver it to the applicant.

The application for PAN can also be made online but the documents still need to

be physically dropped off for verification with the authorized agent.

5. Obtain a tax account bumber for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department

The tax deduction and collection account number (TAN) is a 10-digit

alphanumeric number required by all persons responsible for deducting or

Page | 50

collecting tax. The provisions of Section 203A of the Income Tax Act require that

all persons who deduct or collect tax at the source must apply for a TAN. The

section also makes it mandatory for the TAN to be quoted in all tax-deducted-at-

source (TDS) and tax-collected-at-source (TCS) returns, all TDS/TCS payment

Chalans, and all TDS/TCS certificates issued. Failure to apply for a TAN or to

comply with any of the other provisions of the section is subject to a penalty of

INR 10,000/- .

The application for allotment of a TAN must be filed using Form 49B and

submitted at any TIN Facilitation Center authorized to receive e-TDS returns.

Locations of TIN Facilitation Centers are at www.incometaxindia.gov.in and

http://tin.nsdl.com. The processing fee for both applications (a new TAN or a

change request) is INR 60 (plus applicable taxes).

After verification of application, the same is sent to Income Tax Department and

upon satisfaction the department issues the TAN to the applicant. The national

government levies the income tax. Since outsourcing, any authorized franchise

or agent appointed by National Securities Depository Services Limited (NSDL)

can accept and process the TAN application.

The application for TAN can be made either online TAN can be through the

NSDL website www.tin-nsdl.com or offline. However, after the payment of the fee

by credit card, the hard copy of the application must be. Upon payment of the fee

through credit card, the hard copy of the application is required to be physically

filed with NSDL.

6. Register for VAT

VAT online registration was introduced by the Commissioner of Sales Tax,

Maharashtra State, Mumbai, Trade Circular No. 4T of 2009, dated January 23,

Page | 51

2009. According to Notification No. VAT/AMD-1009/ IB/Adm-6, dated 26th

August 2009, application for registration of VAT by the founders who are required

to obtain registration or those who voluntarily desire to get registration can be, as

of 1st October 2009, filed electronically on the website www.mahavat.gov.in.

After the completed application form is submitted online, an acknowledgment

containing the date and time for attending before the registering authority along

with code/designation and address of registering authority is generated. The

company should print a copy of the completed e-application and submit it along

with the acknowledgement to the registration authority for verification and photo

attestation on a given date and time along with relevant documents. If the

application is correct and complete in all respect along with relevant documents

then the registering authority will generate TIN after verification of the

documents. Registration certificate will be printed and issued to the company on

the appointed date. Usually, the appointment date is scheduled in the next 10

days.

Other accompanying documentation includes:

Certified true copy of the memorandum and articles of association of the

company.

Proof of permanent residential address. At least 2 of the following

documents must be submitted: copy of passport, copy of driving license,

copy of election photo identity card, copy of property card or latest receipt

of property tax of Municipal Corporation, copy of latest paid electricity bill

in the name of the applicant.

Proof of place of business (for an owner, the case of Doing Business):

Proof of ownership of premises viz. copy of property card or ownership

deed or agreement with the builder or any other relevant documents

One recent passport size photograph of the applicant

Page | 52

Copy of Income Tax Assessment Order having PAN or copy of PAN card

Chalan in Form No. 210 (original) showing payment of registration fee at

INR 5000/in case of voluntary RC and INR 500/in other cases

7. Register for profession tax:

According to section 5 of the Profession Tax Act, every employer (not being an

officer of the government is liable to pay tax and shall obtain a certificate of

registration from the prescribed authority. The company is required to apply in

Form I to the registering authority. The registration authority for Mumbai Area is

situated at VikarikarBhavan, Mazgaon in Mumbai. Depending on the nature of

the business, the application should be supported with such documents as

address proof, details of company registration number under Indian Companies

Act (1956), details of head office (if the company is a branch of company

registered outside the state), company deed, certificates under any other act, and

so forth.

8. Register with Employees' Provident Fund Organization

The Employees Provident Funds & Miscellaneous Provisions Act, 1952 applies

to an establishment, employing 20 or more persons and engaged in any of the

183 Industries and Classes of business establishments, throughout India

excluding the State of Jammu and Kashmir.

The applicant fills in an application and is then allotted a social security number.

The Provident Fund registration focuses on delinquent reporting, underreporting,

or non-reporting of workforce size. Provident Fund registration is optional if

workforce size is not more than 20.

The employer is required to provide necessary information to the concerned

Page | 53

regional Provident Fund Organization (EPFO) in prescribed manner for allotment

of Establishment Code Number. No separate registration is required for the

employees. Nevertheless all eligible employees are required to become

members of the Fund and individual account number is allotted by the employer

in prescribed manner.

As per an internal circular, the code number is to be allotted within 3 days from

the date of submission, if the application is complete in all respects. However, in

many cases applicants have received the intimation letter with the code number

in 12 to 15 days.

9. Register for medical insurance (ESIC)

Registration is the process by which every employer/factory and every employee

employed for wages are identified for the purpose of the medical insurance

scheme and their individual records are set up for them.

As per the Employees' State Insurance (General), Form 01 is the form required

to be submitted by Employer for registration. It takes 3 days to a week for the

Employer Code Number to be issued. The "intimation letter" containing the Code

Number is sent by post to the employer and that takes an additional couple of

days.

The Employee’s individual insurance is a separate process and occurs after

Employer’s registration. The Employer is responsible for submitting the required

Declaration Form and employees are responsible for providing correct

information to the employer. The employee temporary cards (ESI Cards) are

issued on the spot by the local offices in many places. The temporary cards are

valid for 13 weeks from the date of appointment of the employees. It takes about

4 to 5 weeks to get a permanent ESI card. In order to insure that all the insured

persons receive their identity cards to enable them to receive cash and medical

Page | 54

benefit, the identity cards will be delivered to the insured persons directly by the

ESI Corporation rather than through the employers.

The ESI Act applies to all establishments employing 20 or more persons. The

ESI Act provides for sickness benefits, medical relief, maternity benefits for

women workers, compensation for fatal and other employment injuries, etc.

Every employee who receives wages up to Rs. 10,000 per month is covered by

this Act.

Food Licenses Applied for Our Business:

Licensing is very critical for any business conducted in India. It ensures that the

business is legal and out of any wrongdoings. Different businesses required different

licenses and follow varied rules and regulations. For NutriPlate being in the food

business, we would be applying to various licenses pertaining to our food business that

ensures smooth functioning of our business. These licenses shall be undertaken before

the commencement of business.

The Food Safety Standards Act was passed on 23rd August, 2006, by the parliament.

The Government of India on notification set a body known as the Food Safety

Standards Authority of India that formulated the Food Safety Standards Regulations

(FSSR), 2011 that came in to effect from the 5th of August, 2011. The Ministry of Health

& Welfare governs the Food Safety Standards Authority of India (FSSAI). FSSAI

governs all food business operators in the country & has entrusted the powers at

various levels to other designated authorities like the FDA to speed the process of

granting registration or licenses. With the law coming into effect last year, it becomes

absolutely mandatory for every food business operator to register themselves under

FSSAI or acquire a license.

Salient features of FSSAI act are:

Page | 55

a. FSSA will be aided by several scientific panels and a central advisory committee

to lay down standards for food safety. These standards will include specifications

for ingredients, containments, pesticide residue and biological hazards and

labels.

b. The law will be enforced through State Commission of Food Safety and local

level officials.

c. Everyone in the food sector is required to get a license or a registration which

would be issued by local authorities.

d. Every distributor is required to be able to identify any food article to its

manufacturer, and every seller to its distributor. Anyone in this sector should be

able to initiate recall procedures if he finds that the food sold had violated

specified standards.

The Food Safety Standards Act brings under one roof all of the following-

a. Prevention of Food Adulteration Act, 1954.

b. Fruit Products Order, 1955.

c. Meat & Food Products Order, 1973.

d. Vegetable Oil Products (Control) Order, 1947.

e. Edible Oils Packaging (Regulation), 1988.

f. Solvent Extracted Oil, Deoiled Meal & Edible Flour (Control) Order, 1967.

g. Milk & Milk Products Order, 1992.

h. Any order under essential commodities Act, 1955 (10 of 1955) relating to

food.

The Act also aims to establish a single reference point for all matters relating to food

safety and standards, by moving from multi- level, multi- departmental control to a single

Page | 56

line of command. To this effect, the Act establishes an independent statutory authority –

the Food Safety and Standard Authority of India with head office at Delhi. Food Safety

and Standards Authority of India (FSSAI) and the State Food Safety Authorities shall

enforce various provisions of the Act. FSSAI has been mandated with the following key

objectives with reference to Registration and Licensing of Food Business Operators:

Framing of Regulations to lay down the Standards and guidelines in relation to

articles of food and specifying appropriate system of enforcing various standards

thus notified.

Laying down mechanisms and guidelines for accreditation of certification bodies

engaged in certification of food safety management system for food businesses.

In exercise of the powers conferred under section 92 of the Food Safety and Standards

Act, 2006, FSSAI has proposed Draft of Food Safety and Standards Regulation, 2010

under which Part 3.2 makes it mandatory for all Food Business Operators in the country

to be registered or licensed in accordance with the procedures laid down in the

regulation. Hence Licensing or Registration of Food Business Operators (FBOs) shall

be an important activity under FSSAI; this not only envisages integrating the individual

licensing activities of various divisions of FSSAI under a single Licensing System, at

Central or State Level, but also requires Registration of all Food Business Operators

using Local Administration Bodies, when their activity does not require a License. All of

these are covered under the Food Safety & Standards Regulation, 2010 under

deliberation.

Page | 57

Prevention of Food Adulteration Act, 1954

The Act was promulgated by Parliament in 1954 to make provision for the prevention of

adulteration of food, along with the Prevention of Food Adulteration Rules, 1955 which

was incorporated in 1955 as an extension to the Act. Broadly, the PFA Act covers food

standards, general procedures for sampling, analysis of food, powers of authorized

officers, nature of penalties and other parameters related to food. It deals with

parameters relating to food additives, preservative, colouring matters, packing

&labelling of foods, prohibition & regulations of sales etc. Like FPO, amendment in PFA

rules are incorporated with the recommendation made by the Central Committee of

Food Standards (CCFS) which has been setup by Central Government under the

Ministry of Health and Family Welfare comprising members from different regions of the

country. The provisions of PFA Act and Rules are implemented by State Government

and local bodies as provided in the rules.

Prevention of Food Adulteration Act, 1954 will be repealed from the date to be notified

by the Central Government as per the Food Safety and Standards Act,2006. Till that

date new standards are specified, the requirement and other provisions of the PFA Act,

1954 and Rules, 1955 shall continue to be in force as a transitory provision for food

standards.

Fruit Product Order (FPO), 1955

Fruit Products Order -1955, promulgated under Section 3 of the Essential Commodities

Act - 1955, with an objective to manufacture fruit & vegetable products maintaining

sanitary and hygienic conditions in the premises and quality standards laid down in the

Order. It is mandatory for all manufacturers of fruit and vegetable products including

some non fruit products like non fruit vinegar, syrup and sweetened aerated water to

obtain a license under this Order. Following minimum requirements are laid down in the

Fruit Product Order for hygienic production and quality standards:

Location and surroundings of the factory

Page | 58

Sanitary and hygienic conditions of premises

Personnel hygiene

Portability of water

Machinery & Equipment with installed capacity

Quality control facility & Technical staff

Product Standards

Limits for preservatives & other additives

This order was earlier implemented by Ministry of Food Processing Industries (now by

FSSAI) through the Directorate of Fruit & Vegetable Preservation, Headquarter at New

Delhi. The Directorate has five regional offices with headquarter located at Delhi,

Mumbai, Kolkata, Chennai and Guwahati as well as a sub-office at Lucknow under

Northern Region. The field officers of the Regional Offices undertake periodic

inspections of the manufacturing units to ensure maintenance of hygienic conditions in

the factory and draw random samples of products from the factories as well as from

markets which are analyzed in the laboratories to test their conformity according to the

specifications laid under FPO.

The Central Fruit Product Advisory Committee comprising of the officials of concerned

Government Departments, Technical experts, representatives of Central Food

Technology Research Institute, Bureau of Indian Standards, Fruits and Vegetable

Processing Industry and Consumer Organization for recommending amendments in the

Fruit Product Order.

Meat Food Products Order (MFPO) DIVISION

Consumption of meat & meat products and consumers preference to these products is

gradually increasing. In Meat & Meat Processing sector, poultry meat is the fastest

Page | 59

growing animal protein in India. Per capita consumption of meat products has grown

from 870 grams in 2000 to about 1.68 kg in 2005.This is expected to grow to 2Kg in

2009.

Indian consumers prefer to buy fresh meat from the wet market, rather than processed

or frozen meats. A mere 6% of production (about 100,000 MT) of poultry meat is sold in

processed form. Of this only about 1% undergoes processing into value added products

(Ready-to-eat/ Ready-to-cook). Processing of large animals is largely for the purpose of

Exports.

Meat & Meat Products are highly perishable in nature and can transmit diseases from

animals to human-beings. Processing of meat products is licensed under Meat Food

Products Order,(MFPO) 1973 which was hitherto being implemented by Ministry of food

Processing industries w.e.f. 19.03.2004 on being transferred from the Directorate of

Marketing Inspection, Ministry of Agriculture.

The main objectives of the MFPO, 1973 are to regulate production and sale of meat

food products through licensing of manufacturers, enforce sanitary and hygienic

conditions prescribed for production of wholesome meat food products, exercise strict

quality control at all stages of production of meat food products, fish products including

chilled poultry etc.

Under the provision of MFPO all manufacturers of meat food products engaged in the

business of manufacturing, packing, repacking, relabeling meat food products meant for

sale are licensed but excluding those manufacturers who manufactures such products

for consumption on the spot like a restaurant, hotel, boarding house, snack bar, eating

house or any other similar establishment.

Production of meat is governed under local by-laws as slaughtering is a state subject

and Slaughterhouses are controlled by local health Authorities. The current meat

production is estimated at 1.9 million MT; out of which about 21% is exported.

India exports more than 500,000 MT of meat of which major share is buffalo meat.

Indian buffalo meat is witnessing strong demand in international markets due to its lean

Page | 60

character and it’s near organic nature. India is the 5th largest exporter of bovine meat in

the world. Indian buffalo meat exports have the potential to grow significantly.

Due to emerging health threats of the diseases communicable to Human through meat,

the meat consumers are more vigilant towards the wholesomeness of the meat and

demanding meat and poultry products processed in clean and sanitary environment In

metros and urban areas there are upcoming demands for “convenience items” such as

semi cooked, ready-to-eat, ready-to-cooked meat food products.

Vegetable Oil Products Order, 1998

The Vegetable Oil Products industry is regulated by this Order through the Directorate

of Vanaspati, Vegetable Oils & Fats, Department of Food, Public Distribution, Ministry of

Consumer Affairs, and Food & Public Distribution. The earlier two Orders – Vegetable

Oil Products (Control) Order, 1947 and Vegetable Oil Products (Standards of Quality)

Order, 1975 have been replaced by a single Order called “Vegetable Oil Products

(Regulation) Order, 1998 for proper regulation of manufacture, distribution and sale of

Vegetable Oil Products.

Salient Features of the Order:

The procedure of Registration has been simplified.

The Standards of quality prescribed under the Schedule have been tightened.

The requirement where which are vogue and non measurable and thus open to

arbitrary interpretation have been done away with.

Consumers’ protection through quality assured.

Edible Oils Packaging, 1998

Page | 61

In order to ensure availability of safe and quality edible oils in packed form at pre-

determined prices to the consumers, the Central Govt. promulgated on 17th September,

1998, an Edible Oils Packaging (Regulation) Order, 1998 under the Essential

Commodities Act, 1955 to make packaging of edible oils, sold in retail, compulsory

unless specifically exempted by the concerned State Govt.

Salient Features

Edible oils including edible mustard oil will be allowed to be sold only in packed

form from 15th December, 1998.

Packers will have to register themselves with a registering authority.

The packer will have to have his own analytical facilities or adequate

arrangements for testing the samples of edible oils to the satisfaction of the

Government.

Only oils which conform to the standards of quality as specified in the Prevention

of Food Adulteration Act, 1954 and Rules made there under will be allowed to be

packed.

Each container or pack will have to show all relevant particulars so that the

consumer is not misled, so also the identity of the packer becomes clear.

Edible oils shall be packed in conformity with the Standards of Weights and

Measures (Packaged Commodities) Rules, 1977, and the Prevention of Food

Adulteration Act, 1954 and Rules made there under.

The State Governments will have power to relax any requirement of the

packaging order for meeting special circumstances.

Solvent Extracted Oil, De-oiled Meal and Edible Flour (Control) Order, 1967

The Order is basically a quality control order to ensure that the solvent extracted oils in

particular are not reached to the consumers for consumption before the same are

Page | 62

refined and conformed to the quality standards specified in the Order for the purpose.

Standards for the solvent (hexane), which is to be used for extraction of oil from the oil-

bearing materials, have also been specified so as to eliminate possible contamination of

oil from the solvent used.

Salient Features

Governs the manufacture, quality and movement of solvent extracted oils, de-

oiled meal and edible flour;

Consumer protection through quality assurance of solvent extracted oils, de-oiled

meal and edible flour;

Eliminates the possibility of diversion of the oils for uses not intended.

Prohibit by, offer to buy, use or stock for use, any solvent not conforming to the

quality standards for extraction of vegetable oils, and Specifies particulars to be

declared on the label affixed to the container.

Milk & Milk Product Amendment Regulations - 2009 (MMPR-09) DIVISION (MMPO, 1992 has been renamed as MMPR, 2009 )

Consequent upon de-licensing of Dairy Sector in 1991 under Industrial Development &

Regulation Act, the Department of AH, and Dairying & Fisheries had promulgated the

Milk and Milk Product Order (MMPO) 1992 on 9/6/92 under section 3 of the Essential

Commodities Act 1955. The objective of the order is to maintain and increase the supply

of liquid milk of desired quality in the interest of the general public and also for

regulating the production, processing and distribution of milk and milk products. As per

the provisions of this order, any person/dairy plant handling more than 10,000 liters per

day of milk or 500 MT of milk solids per annum needs to be registered with the

Registering Authority appointed by the Central Government.

There is no restriction on setting up of new dairy units and expansion in the milk

processing capacity, while noting the requirement of registration is for enforcing the

Page | 63

prescribed Sanitary and Hygienic Conditions, Quality and Food Safety Measures as

specified in Vth Schedule of MMPO-1992. In order to comply the provisions of Para 5

(5) (B) of MMPO-92, two inspection agencies i.e. National Productivity Council (NPC)

and Export Inspection Council (EIC) of India have been notified for annual inspection of

registered dairy units, on rotation basis.

As per present provisions, the dairy unit handling up to 200.0 TLPD of milk or 10,000

MT of milk solids per annum. Where the entire activity of procurement, processing and

marketing of the dairy units lies within the State or Union Territory, the Registering

Authority shall be an officer of the concerned State Govt. or U.T. and the dairy unit

handling more than 200.0 TLPD of milk or 10,000 MT of milk solids per annum shall be

registered by the Central Registering Authority. Accordingly Registering Authority shall

deal with applications of registration and issue Registration Certificate under this order

and perform within its jurisdiction.

Since inception the Central and the State Registering Authorities have registered 803

dairy units with combined milk processing capacity 881.50 lakh litres per day in

Cooperative, Private and Government Sector upto 31.03.2008.Further the Central

Registering Authority (CRA) has granted 12 new registration with the milk processing

capacity of 25.0 LLPD (nine dairy unit for milk processing and remaining three units for

marketing / trading), enhanced the milk processing capacity of 14 dairy units and

cancelled the registration of 10-dairy unit during 2008-09.Now it has been subsumed as

milk and milk products regulations under Section-99 of the Food Safety& Standards Act-

2006 .

Alongwith the licenses mentioned above, NutriPlate being a startup company would

require the following:

1. Registration of our company

2. Electricity and water connection clearance post approval from the respective

Maharashtra government.

Page | 64

Operations management, Supply chain and Logistics

Millions in Mumbai commute everyday to earn a living. Banks, colleges, hospitals,

government offices, private offices, factories and ports are all spread across different

parts of the city. In a country where hot and freshly cooked home food is the most

preferred for consumption, carrying of lunch boxes is a big burden for the working

populace. However, this problem is unheard of in this metro city thanks to the presence

of the 100 year old organization of “Dabbawallas”.

The Dabbawala community has about 5000 people working with them. These

Dabbawallas deliver lunch boxes for about 2 lakh people at their work places on time.

The work doesn’t end here. They also carry the empty lunch boxes back to the homes

of the customers. The unbelievable part is they make only one mistake in sixteen million

transactions and have been consistently good at it for all the time of their operations.

This credibility earned them a six sigma designation by the Forbes magazine and ISO

9001 accreditation. The three main reasons for their success are as follows.

1. Supply Chain Management

Surprisingly there is no use of Information systems or technology for their Supply chain

side. A rigorous level of practice over the years has led to the unwritten steps to follow

for accurate supply chain management and time precision. There are about 40000

transactions (delivery and return) of lunch boxes taking place daily. The figure below

shows their Supply chain model.

Page | 65

Dabbawallas use cycles or go by foot to every household. The waiting time to

collect a lunch box is maximum 2 minutes

Every Dabbawala has to assemble at his/her reported collection point at sharp 9.

30 am

From these collection points they assemble at the nearest railway station which

is the Aggregation point

The next mode of transport is the trains where the carriers containing lunch

boxes are transported to the destination railway stations

From every Destination station the dabbas are carried over carts, cycles and

carriers to the destination zones which are given a specific number

From these zones, the lunch boxes are carried to the offices or workplaces which

reach by lunchtime

From here the reverse process of delivering the empty lunch boxes back to

homes starts

All through the above process, there is no slack at any point of time

Traffic Jams, pedestrians, delays in train and signals do not stop the functioning.

The trademark white cap wore by these Dabbawallas are known to everyone

including the police who don’t interfere in their process.

Page | 66

2. Coding System

Coding System is meticulously followed in order to avoid any mistakes involving

interchange of lunch boxes, that is, wrong Tiffin box reaching the customer.

As given in the above Diagram, the Coding system can be explained as follows:

BVI: Borivali, a suburb in Mumbai. This denotes the residential station

9 RC 14: Code for Dabbawallas at destination. This user code is different for

each customer

RC: Raheja Chambers, name of a building or office

14: Floor Number

E: Code for Dabbawala at Destination station. For example, E is a code for

Nariman Point, Churchgate

Jain: Name/Surname of the customer

3. Employees

All the employees or Dabbawallas are the stakeholders in this organization. This is the

source of their motivation. Most of the employees are illiterate and rest is school

dropouts. However they are literate enough to understand the codes and comprehend

which lunch box belongs where. They are given basic idea about writing the alphabets

and numbers on the boxes on joining the organization. Every Dabbawala takes about 3

hours for completing his assignment and has to cover 60-70 km on foot, carts, cycles

Page | 67

and carriers combined. Alcohol consumption is strictly avoided during work hours. The

employees’ monthly salary is about Rs.6000 per month.

Key Features of the Dabbawallas organization:

Organization Turnover is about Thirty Six Crores annually

Uninterrupted and on time service delivered even in occasions of bad weather

and transportation/traffic problems

Dabbawallas are well used to the local areas where they are functioning and

make use of short cuts to save time

No error inspite of lunch boxes changing hands six times

During the working hours, they do not take a break or rest and thus no slack is

present in the system

They do not use vehicles which require fuel which makes them 0% Fuel reliant

They do not use any modern technology for carrying out the logistics

There are no disputes between the employees and no presence of any union

Unique organization with Six Sigma designation and 99.99% rate of performance

Cost of Service per lunch box = Rs. 450 per month and is standard price for all

Customer Satisfaction accounts 100% with utmost trust

Discipline and Time Management

These disciplined workers work perpetually and effectively in a city that movement is

difficult due to the extremely high number of residents. They have received World

record in best time management.

Motivation

The dabbawallas are highly motivated individuals. Their job is very important. It is a very

big deal in India if a customer does not receive his box on time or even receives a

wrong box.

Page | 68

Interdependence and trust

There are many small groups and each group has to be responsible for itself and for

every other group. So there is a high interdependence. If one team is not working well

then the whole procedure is at risk.

Close to the customer

They are very close to the customer. They try to satisfy the need of every customer by

taking and delivering on time with no mistake.

Training time

Three months is the training time and a practice test in order somebody to be a

dabbawala. In contrast big companies like Mc Donald’s spend less than one day to train

their employees.

Small Group Formation

A group consists of few people with a supervisor. The team members share the

revenue. Trust and respect are the raw materials that describe a group. They are six

sigma certified!

Conclusion

The Dabbawallas organization is a standout example of efficient Logistics and Supply

Chain Management. Today the Dabbawallas have welcomed the use of internet

technology only for increasing their customer base and nothing more. Many fast food

chains and hotels in the city will always be competing with the Dabbawallas but their

hope of failure of Dabbawallas system may never materialize.

Page | 69

J-I-T Inventory

Companies attempt to minimize the amount of inventory they maintain because of the

high cost of holding it. Many inventory holding costs are obvious: financing, warehouse

space, supervision, theft, damage, and obsolescence. Other costs are hidden:

diminished motivation, sloppy work, inattentive attitudes, and increased production time.

Many businesses have been able to simultaneously reduce their inventory holding costs

and increase customer satisfaction by making products available just in time (JIT) for

customer consumption.

For example, Wraps that are cooked to order are fresher and more individualized than

those that are prepared in advance and stored until a customer orders one. Many tiffin

service providers have discovered that JIT systems lead not only to greater customer

satisfaction but also to lower costs through reduced waste.

OPERATIONS MANAGEMENT

Operations scheduling forms a very important part and acts as the back – bone for the

performance of the manufacturing or the service organizations. With the help of the

operations scheduling, two very important factors or the aspects of the resources within

an organization that can be pertained are as follows –

1. Allocating the resources within an organization.

2. Setting up the time – table.

It has been observed that the operations scheduling has a direct affect on the

effectiveness of the production function.

Page | 70

Time Schedule:

Processing: 2.5 hrs

Distribution: 2.5 hrs

Scope for delay: 15 mins

Total Time: 5 hrs 15 mins for Lunch delivery cycle

1. Lunch:

Preparation of vegetables before cooking: 8 am

Reporting time for Helpers employed: 8 am

Preparation time: 30 mins

Cooks reporting time: 8.30 am

Food processing: 1.5 hrs (8.30 am to 10 am)

Packers reporting time: 9 am

Pre-packaging preparation: 9 am to 10 am

Food packaging: 30 mins (10am to 10.30am)

Table attached below detailing the efficiency of NutriPlate

Dabbawalla collection: 10.30 am

Loading of tiffins : 10.30 am

Page | 71

Departure: 10.45 am (from kitchen and departure from

Jogeshwari)

Customer Receival: 11.30 am to 12 pm

Return collection of dabbas: 12.30 pm to 1.30 pm

2. Dinner:

Preparation of vegetables before cooking: 5 pm

This includes washing, boiling, steaming, cutting, sorting of vegetables.

Cooking commencing time: 5.30 pm

Food processing: 1.5hrs (5.30 pm to 7 pm)

Packaging in plates: 7.30pm

Pre-packaging preparation: 6.30 pm to 7 pm

Food packaging: 30mins (7 pm to 7.30 pm)

Table attached below detailing the efficiency of NutriPlate

Loading in Tata Magic Ace: 7.30 pm

Loading: 15 mins

Departure: 7.45 pm (from kitchen and departure from

Jogeshwari)

Customer Receival: 8 pm to 9 pm

Page | 72

Packaging Efficiency for 1 packer

minutes Tiffins packed per min Efficiency (tiffins)

1 6 6

30 6 180

Packaging Efficiency of NutriPlate

total no. of packers 4

efficiency of 4 packers (total packers x

efficiency of 1 packer) 720

*The unit of measurement for Efficiency is tiffins

Hence we keep a buffer of 20 tiffins incase of human error.

In our food servicing business it is necessary to do a Network Analysis of our

distribution to optimize the route of the delivery vehicle.

Vehicle cost

The vehicle used for delivery purpose for dinner meals is a Tata Magic Ace bought on

EMIs of Rs.20,000 per month with an initial deposit of Rs.10,000 which will be paid for

in 12 months since the commencement of business, as the mini-truck is used only for

dinner delivery service.

Page | 73

The Tata Ace is a mini-truck (similar to Japanese Kei truck) launched in May 2005 by

Tata Motors in India. It is in competition with the prevalent three-wheeled goods carriers

from Bajaj Auto, Piaggio, Mahindra and Force Motors.

It has an all-steel cabin. It offers a flexible seating capacity of 4-7 passengers with

adequate legroom which can then be converted to store the 300-odd dinner meals

plates. The Magic offers high fuel efficiency and very low maintenance. The 12-inch

tyres provide higher ground clearance, and the rigid front axle is designed to handle

tough roads. The Magic's turning radius of 4.3 metres (14.1 ft) is nimble enough to

navigate the bylanes and traffic of the suburbs.

Page | 74

The Magic meets BS-III emission norms and has been developed for use in any market

— be it urban, semi-urban or rural. It is backed by a 36,000 km/12-month warranty.

Fuel Cost

Mumbai CNG Price = 33.1 Rs/Kg While the Most Recent price change date: Friday,

February 17, 2012.

Following the accounting principle of conservatism, we have assumed the mileage for

1kg CNG is 12km in our vehicle Tata Magic Ace.

Potential Market Demand

Offices, Residences, Paying Guests, Hostels are the target market for the business. We

see a potential market for both Lunch and Dinner. The details of which are given below-

1. Lunch:

The Dabbawalla Distribution will be used as a channel distribution for Lunch. The

following are the minimum potential demand:

*estimated on the basis of accounting principle of conservatism:

Location Average Market Demand (No. of persons)

MIDC Andheri 100

Mahalaxmi(Opera House etc) 100

Lokhandwala 80

churchgate 60

Marine Lines 60

Stock Exchange 60

VT/Crawford/Fort 50

Powai 50

Page | 75

Colaba 50

Dadar 50

lower Parel 40

Total 700

The unit of measurement in the above data is no. of persons.

2. Dinner:

Our total demand is 300 for 1 night for which the Vehicle would be used.

Locations Average Market Demand

Lokhandwala 50

Juhu 50

Versova 50

Bandra(W) 50

Vile Parle 40

Khar 40

Santa Cruz(W) 20

total 300

The unit of measurement in the above data is no. of persons.

Page | 76

Assumptions: All assumptions have been made in view of the accounting principle of conservatism.

There are no liabilities of the business as everything is paid in Cash and there are no

transactions on credit.

1. Demand: Market Potential

Per day demand

lunch 700 meals

dinner 300 meals

Output per day 1000 meals

Meal type part of

total output

lunch QTY. dinner QTY.

veg 50% 350 150

non veg 35% 245 105

jain 15% 105 45

TOTALS 100% 700 300

2. Raw materials: VEGETABLES

Nutriplate enjoys a 50% discount in the bulk purchase of vegetables and vegetables

from our vendors at APMC market, Vashi. These are assumed to be the Forward rates

offered to us by the vendor in our contract with him.

Page | 77

Vegetables Market price per kg After discount

Tomato INR

40.00

INR 20.00

Cucumber INR

30.00

INR 15.00

Carrot INR

40.00

INR 20.00

Onion INR

15.00

INR

7.50

Brinjal INR

40.00

INR 20.00

Peas INR

60.00

INR 30.00

Beans INR

40.00

INR 20.00

Bittergourd INR

40.00

INR 20.00

Cauli - Flower INR

40.00

INR 20.00

Cabbage INR

35.00

INR 17.50

Lettuce INR

100.00

INR 50.00

Spinach INR

90.00

INR 45.00

Coriander INR

100.00

INR 50.00

Capsicum INR

40.00

INR 20.00

Drum Sticks INR INR 20.00

Page | 78

40.00

Bajri INR

22.00

INR 11.00

Fenugreek INR

70.00

INR 35.00

lady finger INR

40.00

INR 20.00

chillies INR

40.00

INR 20.00

ginger INR

40.00

INR 20.00

FRUITS Market price per kg After discount

Apple INR

100.00

INR 50.00

Pomegranite INR

100.00

INR 50.00

Grapes INR

100.00

INR 50.00

Sweet lime INR

60.00

INR 30.00

Papaya INR

40.00

INR 20.00

Coconut INR

15.00

INR

7.50

Orange INR

100.00

INR 50.00

However relatively, the discount offered on grains and non vegetarian items are lesser

compared to the economies enjoyed in purchase of vegetables.

Page | 79

Grains Market price per kg After Discount

Lentils/ Dals INR

80.00

INR

60.00

sugar INR

40.00

INR

30.00

Wheat flour INR

25.00

INR

15.00

rice INR

60.00

INR

50.00

Non Vegetarian Market price per kg After Discount

Chicken INR

200.00

INR

125.00

Fish INR

190.00

INR

115.00

Types Average price per kg

Veg INR 24.05

Fruit INR 36.79

Grains INR 38.75

Nonveg INR 120.00

Intake of No. of Units(in grams) of each type in a standard 300 grams meal served by NutriPlate for Lunch or Dinner

Types Grams Kg Cost (avg price x kg)

veg 125 0.125 INR

Page | 80

3.01

grains 125 0.125 INR

4.60

fruit 50 0.05 INR

1.94

Non veg 125 0.125 INR

15.00

Hence the cost per meal is,

Vegetarian/Jain (veg, grains & fruits) is INR 9.54

Non Veg(non-veg, grains & fruit) INR 21.54

However essential items which can’t be quantified for each meal, are assumed to be

100% of this cost, applying the accounting principle of conservatism.

These essentials include:

Salt, Oil, Gas, Detergent, Spices, Ghee, Milk, salt, Olive oil, Butter, etc

The cost for the meal now including essentials is,

Vegetarian/Jain (veg, grains, fruits & essentials) is INR 19.08

Non Veg(non-veg, grains, fruit & essentials) is INR 43.07

Total sum of all items

(grain, veg, fruits)

INR 1,133.50

per kg

Average of all items including essentials

(grain,veg,fruits, essentials)

INR 68.70

per kg

Page | 81

Items required for 1 month (7500kg*) INR 515,227.27

per kg

Purchase of raw material INR 6,182,727.27

per kg

*The demand per day being 1000 meals per day, with each meal being 300 grams(0.3

kg) and made for 25 working days of the month, the production of meals per month is

7500 kg

3. Employee Salaries

FIXED

EMPLOYEES

salary Number total

cooks INR

20,000.00

5 INR

100,000.00

dieticians INR

60,000.00

2 INR

120,000.00

packers INR

9,000.00

4 INR

36,000.00

helpers (all day

operations)

INR

10,000.00

10 INR

100,000.00

driver INR

12,000.00

1 INR

12,000.00

Totals

Total salaries per month INR

368,000.00

salary per year INR

Page | 82

4,416,000.00

4. Dabbawalla service

Dabbawalla charges per

tiifin per month

300

Carrying capacity of 1

dabbawala

35

NutriPlate’s no. of dabbas

(only lunch)

700

No. of dabbalwalas required

for a day

20

Hence

% of dabbawallas

employed from union

0.4 %

Total service charges of Dabbawallas,

dabbwalla charges per yr INR 2,520,000.00

dabbawalla charges per

month

INR

210,000.00

5. Fixed Assets

Page | 83

Assets: Capacity Qty Rs.

Cost

Total

Modular

Kitchen

6" * 4" 1

42,000.0

0

42,000.0

0

Food

Processor

4

4,000.00

16,000.0

0

Juicer Mixer

Grinder

4

4,000.00

16,000.0

0

Electric

Cooker

5.4l 4

3,000.00

12,000.0

0

Refridgerator 600l 2

60,000.0

0

120,000.

00

Microwave

oven

30liter

s

4

16,000.0

0

64,000.0

0

Toasters &

Sanwitch

Makers

3

2,400.00

7,200.00

Stove/Burner

s

4

4,000.00

16,000.0

0

Induction

Cook Top

6

4,000.00

24,000.0

0

Dish Washer 2

34,000.0

68,000.0

Page | 84

0 0

Hand

Blender

4

2,000.00

8,000.00

Aata Maker 4.5kg 4

15,000.0

0

60,000.0

0

Water

Purifier

20l 2

2,200.00

4,400.00

Vacuum

Cleaner

2

5,000.00

10,000.0

0

Lights 10

250.00

2,500.00

Celing fans 6

1,000.00

6,000.00

exhaust

Fans

3

900.00

2,700.00

Computer &

Assesories

2

35,000.0

0

70,000.0

0

Invertor 800va 2

8,000.00

16,000.0

0

Air

Conditioner

1.5l

3star

2

30,000.0

0

60,000.0

0

Coffee

Maker

10cup

s

3

1,500.00

4,500.00

Electic Kettle 3

1,500.00

4,500.00

Page | 85

Food

Warmers

5

2,000.00

10,000.0

0

vessels

idli pans 48

pieces

/tray

30

700.00

21,000.0

0

saucepans 5

1,500.00

7,500.00

kadhais 5

3,000.00

15,000.0

0

spatulas

variety

spoons

20

300.00

6,000.00

saucepots 3

gallon

s

5

4,500.00

22,500.0

0

Furniture & Fixtures

Tables Chairs

Set

3

8,000.00

24,000.00

hometo

wn

Totals

Machinery & Equipment TOTAL Furniture TOTAL

715,800.00

24,000.00

Page | 86

Totals after Depreciation

furniture cost per yr

4,800.00

fixed assets cost per yr

143,160.00

(Assuming life span of fixed assets is 5yrs0

Hence, calculating for total fixed asset value,

Total of 1 time investment for 5 yrs INR 739,800

Per day fixed asset cost after depreciation* INR 493.2

*Assuming life span of fixed assets is 5yrs and 300 working days in a year

In Dec 2012, a vehicle(Tata Magic Ace) bought on 1st Jan 2012 on EMIs of Rs.20,000

for 12months with a deposit of Rs.10,000 becomes a fixed asset for the year 2013.

Hence in The Balance sheets, the value of the vehicle is added in 2013.

A 2nd vehicle (Tata Magic Ace) is bought in the year 2015 on EMIs, which is then again

converted into a fixed asset of Rs.2,40,000 but after assuming a depreciation this value

is now Rs.48000 (assuming life span of 5yrs)

Page | 87

6. Packaging

Per month qty requirement cost

dinner

Plastic Plates 7500 (300 X 25 DAYS)

5.00

Foil 7500 (300 X 25 DAYS)

5.00

lunch

Steel Dabbas

(1time investment)

800 (700 dabbas +100 backup)

400.00

lunch & dinner

Plastic Spoons 25000 (25 working days X 1000)

2.00

Plastic Fork 25000 (25 working days X 1000)

2.00

Tissues paper packets 25000 (25 working days X 1000)

1.00

Total of 1 month INR 226,666.67

Total of 1 yr INR 2,720,000.00

7. Utilities

quantity

requirement

cost total/month

Aprons 38

300.00

950.00

Page | 88

cleaning cloth 10

200.00

2,000.00

Plastic Gloves (20

people)

38

20.00

760.00

Measuring Cups 10

200.00

166.67

Storage Containers 20

400.00

666.67

Chopping board

(6piece knife)

5 500 416.67

Brooms 3 100.00 300.00

Cleaning Supplies

(combination of items)

4

500.00

2,000.00

Sponges 10

10.00

100.00

Toilet Paper packets 10

100.00

1,000.00

Total for 1m INR 8,360.00

Total for 1 yr INR 100,320.00

8. Other Expenses

Particulars Amt for a yr for a month

Rent 1440000 120000

Insurance 500000 41666.66667

Maintenance 600000 50000

Page | 89

fuel 14400 1200

Marketing and

Advertisement

240000 20000

Legal 120000 10000

Telephone

(variable)

12000 1000

vehicle 240000 20000

Total for 1m INR 263,866.67

Total for a yr INR 3,166,400.00

9. Per meal cost (2 to 8) transferred to customer

VEG NON VEG JAIN

cost * INR

66.25

INR

90.24

INR

50.00

profit % 81.12 77 100

selling price INR

120.00

INR

160.00

INR

100.00

*The above costs were achieved by the following calculations,

When meals per day are 1000 and working days of the year are 300,

Page | 90

Salary per meal per day INR 14.72

Dabbawalla charges per meal INR 12.00

Raw materials cost per meal

Vegetarian/ Jain per meal INR 19.08

Non Vegetarian per meal INR 43.07

Fixed assets per meal INR 0.49

Packaging per meal INR 9.07

Utilities INR 0.33

Other expenses INR 10.55

Hence per day revenue is,

LUNCH REVENUE DINNER

REVENUE

VEG INR

42,000.00

INR

18,000.00

NONVEG INR

39,200.00

INR

16,800.00

JAIN INR

10,500.00

INR

4,500.00

TOTAL INR 91,700.00

INR 39,300.00

And revenue for the year,

Page | 91

Lunch Dinner

INR

27,510,000.00

INR

11,790,000.0

0

And per day cost of meal is,

Lunch cost dinner cost

VEG

INR

23,188.50

INR

9,937.93

NON VEG INR

22,108.89

INR

9,475.24

JAIN INR

5,250.00

INR

2,250.00

TOTAL INR 50,547.39

INR 21,663.17

And cost for the year

Lunch Dinner

Cost PER

YEAR

15164217.1 6498950.186

Now, finding the total revenue and cost per day (for both lunch and dinner).

Using the above four tables we can get,

Page | 92

Revenue

per day

INR 131,000.00

cost

per

day

INR 72,210.56

per

month

INR

3,275,00

0.00

pe

rmo

nth

INR

1,805,26

3.94

per yr INR

39,300,0

00.00

per

yr

INR

21,663,1

67.29

10. Prepaid expenses for the year

vehicle INR

10,000.00

vendor

565,000.00

TOTAL

DEPOSITS

INR 575,000.00

11. Cash Balance

Assumption: rise in cash bal proportionate to rise in expenses

WHILE cash balance for current year 2012 is INR 1,200,000.00

Page | 93

2013 2014 2015 2016 2017

INR

1,260,

000.00

INR

1,272,00

0.00

INR

1,272,00

0.00

INR

1,284,000.00

INR

1,296

,000.

00

Other general assumptions

We have assumed the mileage for 1kg CNG is 12km in our vehicle Tata Magic

Ace

Prepaid expenses for the consecutive years increases proportionately to the rise

in expenses

Every consecutive year we invest 10% of our profit into the business

We have assumed that our sales grows to 8 % and 9 % for the years 2013-14

and 2014-15 and this implies that our expenses would also increase from 6 %

but it stays constant for 2013-14 and 2014-2015. This anomaly is because we

assume that by the 3rd year we would enjoy economies of scale.

Page | 94

2012-13

2013-

14 2014-15

2015-

16

2016-

2017

sales

growth 7 % 8 % 9 % 9 % 12 %

rise in

expenses 5 % 6 % 6 % 7 % 8 %

Inventory is zero

As we are a food service business where no inventory of finished goods can be

maintained, while inventory of raw materials is also nil, as our vendor contract for

raw material supply states that supplies be made to Nutriplate for 5 days in a

month, to maintain fresh raw material and to avoid wastage of food.

Tax is zero

Tax Structure in Food Processing Industry

The Government has taken necessary steps to rationalize and simplify the tax structure

for the food processing industry.

100 percent tax exemption for first five assessment years beginning with the initial

assessment year is available under section 80-1B(11A) of Income Tax Act, 1961 to

undertakings deriving profit from the business of processing, preserving and packaging

of fruits or vegetables and new units in the business of processing, preservation and

packaging of meat or meat products or poultry or marine or dairy products. Under sub-

section (11A) of section 80-1B of the Income-tax Act, 1961 a deduction from profits upto

specified amounts is allowed in the case of an undertaking deriving profit from the

business of processing, preservation and packaging of fruits or vegetables or from the

integrated business of handling, storage and transportation of food grains subject to

specified conditions, if such undertaking begins to operate such business on or after the

1st day of April, 2001.

Page | 95

Financial Statements:

Funding:

It is a critical part for any business. Without money it becomes difficult to carry out day

to day operations. Funding can be availed from banks, friends, family or venture

capitalists.

The NutriPlate project would be funded by the 3 partners themselves. No outside

funding or any bank loan is availed to run the start - up company. Each partner would

bring in capital from own sources into the business.

Ratios:

Financial ratios are useful indicators of a firm's performance and financial situation.

Most ratios can be calculated from information provided by the financial statements.

Financial ratios can be used to analyze trends and to compare the firm's financials to

those of other firms. In some cases, ratio analysis can predict future bankruptcy.

Financial ratios can be classified according to the information they provide. The

following types of ratios are used for our company:

1. Proprietary ratio: This ratio indicates the extent to which Tangible Assets are

financed by Owner’s Fund.

Proprietary Ratio = (Tangible Net Worth/Total Tangible Assets) x 100

29,126,778.17/1,922,960.00 = 15.15

The ratio will be 100% when there is no Borrowing for purchasing of Assets.

Page | 96

2. Gross Profit Margin Ratio:

The gross profit margin is a measure of the gross profit earned on sales. The gross

profit margin considers the firm's cost of goods sold, but does not include other costs. It

is defined as follows:

Gross Profit Margin = Gross Profit/Net Sales x 100

33,016,952.73/ 39,300,000 x 100 = 84.01

A higher Gross Profit Ratio indicates efficiency in production of the unit.

3. Operating Profit:

Operating Profit = Operating Profit/Net Sales x 100

20,194,552.73/39,300,000.00 x 100 = 51.39

Higher the ratio indicates operational efficiency.

4. Net Profit: = Net Profit/Net Sales x 100

5.

20,194,552.73/39,300,000.00 x 100 = 51.39

It measures overall profitability.

Page | 97

6. Fixed Asset Turnover Ratio:

Fixed Asset Turnover Ratio = Net Sales/Fixed Assets

39,300,000.00/1,775,000.00= 22.14

Page | 98

7. Return on Assets:

Return on assets is a measure of how effectively the firm's assets are being used

to generate profits. It is defined as:

Return on Assets = Net Profit After Tax/Total Assets

20,194,552.73/1,922,960.00 = 10.50

8. Current Asset Turnover Ratio:

Current Asset Turnover Ratio = Net Sales/Current Assets

39,300,000.00/1,775,000.00 = 22.14

9. Return on Equity Capital:

Return on equity is the bottom line measure for the shareholders, measuring the profits earned for each rupee invested in the firm's stock. Return on equity is defined as follows:

Return on Equity Capital = Net Profit After Tax/Net Worth

20,194,552.73 /29,126,778.17 = 0.69

Page | 99

Page | 100

Break Even Analysis:

The Break Even Analysis states the sales units required to sell for each variety of meal offered. At NutriPlate, we offer, vegetarian, non vegetarian and jain food.

Breakeven Analysis

NutriPlate Company Ltd

2012

Cost Description Fixed Costs (Rs.)

Variable Costs

Cost of Goods Sold 6,283,047

Raw Materials (only veg) 5,188,065

Fixed Costs

Salaries (includes payroll

taxes) 4,416,000

Repairs & maintenance 600,000

Advertising 240,000

Car, delivery and travel 2,774,400

Accounting and legal 120,000

Rent 1,440,000

Telephone 12,000

Insurance 500,000

Packaging 2,883,200

Total Fixed Costs 12,985,600

Total Variable Costs 11,471,112

Page | 101

Breakeven Sales level 241,593

Breakeven Analysis

NutriPlate Company Ltd

2012

Cost Description Fixed Costs (Rs.)

Variable Costs

Cost of Goods Sold 6,283,047

Raw Materials (only

non veg) 6,182,727

Fixed Costs

Salaries (includes

payroll taxes) 4,416,000

Repairs & maintenance 600,000

Advertising 240,000

Car, delivery and travel 2,774,400

Accounting and legal 120,000

Rent 1,440,000

Telephone 12,000

Insurance 500,000

Packaging 2,883,200

Total Fixed Costs 12,985,600

Total Variable Costs 12,465,775

Page | 102

Breakeven Sales level 186,147

Breakeven Analysis

NutriPlate Company Ltd

2012

Cost Description Fixed Costs (Rs.)

Variable Costs

Cost of Goods Sold 6,283,047

Raw Materials (only non

veg) 5,188,065

Fixed Costs

Salaries (includes payroll

taxes) 4,416,000

Repairs & maintenance 600,000

Advertising 240,000

Car, delivery and travel 2,774,400

Accounting and legal 120,000

Rent 1,440,000

Telephone 12,000

Insurance 500,000

Packaging 2,883,200

Total Fixed Costs 12,985,600

Page | 103

Total Variable Costs 11,471,112

Breakeven Sales level 259,712

Financial Projections:

Opening Day Balance Sheet:

Opening Day Balance Sheet

NutriPlate Company Ltd

Assets

Current Assets

Cash in Bank Rs. 1,200,000

Utilities Rs. 8,360

Prepaid Expenses Rs. 575,000

Total Current Assets Rs. 1,783,360

Fixed Assets

Machinery & Equipment Rs. 715,800

Furniture & Fixtures Rs. 24,000

Total Fixed Assets Rs. 739,800

Total Assets Rs. 2,523,160

Page | 104

Liabilities & Net Worth

Current Liabilities

Taxes Payable Rs. -

Total Current Liabilities Rs. -

Long-term Liabilities Rs. -

Total Liabilities Rs. -

Owners' Equity (Net Worth) Rs. 2,523,160

Total Liabilities & Net Worth Rs. 2,523,160

Profit and Loss Statement Projections:

Profit and Loss Projection (5 Years)

NutriPlate Company Ltd

2012 Current year

2012

Sales Rs. 39,300,000

Cost/ Goods Sold (COGS) Rs. 6,283,047

Gross Profit Rs. 33,016,953

Operating Expenses

Salary (Office & Overhead) Rs. 4,416,000

Maintenance Rs. 600,000

Advertising Rs. 240,000

Page | 105

Car, Delivery (dabbawalla)and Travel Rs. 2,774,400

Accounting and Legal Rs. 120,000

Rent & Related Costs Rs. 1,440,000

Telephone Rs. 12,000

Insurance Rs. 500,000

Packaging Rs. 2,720,000

Total Expenses Rs. 12,822,400

Net Profit Before Taxes Rs. 20,194,553

Income Taxes Rs. -

Net Operating Income Rs. 20,194,553

Profit and Loss Projection (5 Years) NutriPlate Company Ltd 2012 1st year 2013 Sales Rs. 42,051,000 Cost/ Goods Sold (COGS) Rs. 6,728,160 Gross Profit Rs. 35,322,840 Operating Expenses Salary (Office & Overhead) Rs. 4,636,800 Maintenance Rs. 630,000 Advertising Rs. 252,000

Car, Delivery (dabbawalla)and Travel Rs. 2,673,120 Accounting and Legal Rs. 126,000 Rent & Related Costs Rs. 1,512,000 Telephone Rs. 12,600 Insurance Rs. 525,000 Packaging Rs. 2,856,000 Total Expenses Rs. 13,223,520

Page | 106

Net Profit Before Taxes Rs. 22,099,320 Income Taxes Rs. - Net Operating Income Rs. 22,099,320

Page | 107

Profit and Loss Projection (5 Years) NutriPlate Company Ltd 2012 2nd year 2014 Sales Rs. 42,444,000 Cost/ Goods Sold (COGS) Rs. 6,791,040 Gross Profit Rs. 35,652,960 Operating Expenses Salary (Office & Overhead) Rs. 4,680,960 Maintenance Rs. 636,000 Advertising Rs. 254,400

Car, Delivery (dabbawalla)and Travel Rs. 2,700,864 Accounting and Legal Rs. 127,200 Rent & Related Costs Rs. 1,526,400 Telephone Rs. 12,720 Insurance Rs. 530,000 Packaging Rs. 2,883,200 Total Expenses Rs. 13,351,744 Net Profit Before Taxes Rs. 22,301,216 Income Taxes Rs. - Net Operating Income Rs. 22,301,216

Page | 108

Profit and Loss Projection (5 Years) NutriPlate Company Ltd 2012 3rd year 2015 Sales Rs. 42,837,000 Cost/ Goods Sold (COGS) Rs. 6,853,920 Gross Profit Rs. 35,983,080 Operating Expenses Salary (Office & Overhead) Rs. 4,680,960 Maintenance Rs. 636,000 Advertising Rs. 254,400

Car, Delivery (dabbawalla)and Travel Rs. 2,700,864 Accounting and Legal Rs. 127,200 Rent & Related Costs Rs. 1,526,400 Telephone Rs. 12,720 Insurance Rs. 530,000 Packaging Rs. 2,883,200 Total Expenses Rs. 13,351,744

Page | 109

Profit and Loss Projection (5 Years) NutriPlate Company Ltd 2012 4th year 2016 Sales Rs. 42,837,000 Cost/ Goods Sold (COGS) Rs. 6,853,920 Gross Profit Rs. 35,983,080 Operating Expenses Salary (Office & Overhead) Rs. 4,725,120 Maintenance Rs. 642,000 Advertising Rs. 256,800

Car, Delivery (dabbawalla)and Travel Rs. 2,728,608 Accounting and Legal Rs. 128,400 Rent & Related Costs Rs. 1,540,800 Telephone Rs. 12,840 Insurance Rs. 535,000 Packaging Rs. 2,910,400 Total Expenses Rs. 13,479,968

Page | 110

Profit and Loss Projection (5 Years) NutriPlate Company Ltd 2012 5th year 2017 Sales Rs. 44,016,000 Cost/ Goods Sold (COGS) Rs. 7,042,560 Gross Profit Rs. 36,973,440 Operating Expenses Salary (Office & Overhead) Rs. 4,769,280 Maintenance Rs. 648,000 Advertising Rs. 259,200

Car, Delivery (dabbawalla)and Travel Rs. 2,756,352 Accounting and Legal Rs. 129,600 Rent & Related Costs Rs. 1,555,200 Telephone Rs. 12,960 Insurance Rs. 540,000 Packaging Rs. 2,937,600 Total Expenses Rs. 13,608,192

Page | 111

Balance Sheet Projected:

Balance Sheet (Projected)

NutriPlate Company Ltd

Beginning Projected

2012 2013

Assets

Current Assets

Cash in bank 1,200,000.00 Rs. 1,260,000.00

Prepaid expenses Rs. 575,000 603,750

Total Current Assets Rs. 1,775,000.00 1,863,750

Fixed Assets

Machinery & equipment Rs. 143,160.00 Rs. 191,160.00

Furniture & fixtures 4,800 4,800

Total Fixed Assets Rs. 147,960.00 Rs. 195,960.00

Total Assets Rs. 1,922,960.00 Rs. 2,059,710.00

Liabilities and Equity

Current Liabilities

Taxes payable 0 0

Total Current Liabilities Rs. - Rs. -

Total Liabilities Rs. - Rs. -

Page | 112

Owners' Equity

Invested capital Rs. 8,932,225 Rs. 10,951,681

Retained earnings Rs. 20,194,553 Rs. 22,099,320

Total Owners' Equity Rs. 29,126,778 Rs. 33,051,001

Total Liabilities & Equity Rs. 29,126,778 Rs. 33,051,001

Page | 113

Balance Sheet (Projected) NutriPlate Company Ltd Projected Projected 2014 2015 Assets Current Assets

Cash in bank 1,272,000.00

1,272,000.00

Prepaid expenses 609,500

609,500

Total Current Assets 1,881,500.00

1,881,500.00 Fixed Assets

Machinery & equipment Rs. 191,160.00 Rs.

299,600.00

Furniture & fixtures 4,800

4,800

Total Fixed Assets Rs. 195,960.00 Rs.

304,400.00

Total Assets 2,077,460.00

2,185,900.00 Liabilities and Equity Current Liabilities Taxes payable 0 0 Total Current Liabilities 0.00 0.00 Total Liabilities 0.00 0.00 Owners' Equity

Invested capital Rs. 13,161,612.71 Rs.

15,391,734.31

Page | 114

Retained earnings Rs. 22,301,216 Rs.

22,631,336

Total Owners' Equity Rs. 35,462,829 Rs.

38,023,070

Total Liabilities & Equity Rs. 35,462,828.71 Rs.

38,023,070.31

Balance Sheet (Projected) NutriPlate Company Ltd Projected Projected 2016 2017 Assets Current Assets Cash in bank 1,284,000.00 1,296,000.00

Prepaid expenses 615,250

621,000 Total Current Assets 1,899,250.00 1,917,000.00 Fixed Assets Machinery & equipment after dep Rs. 395,600.00 Rs. 395,600.00

Furniture & fixtures after dep 4,800

4,800 Total Fixed Assets (net of depreciation) Rs. 400,400.00 Rs. 400,400.00 Total Assets 2,299,650.00 2,317,400.00 Liabilities and Equity Current Liabilities Taxes payable 0 0 Total Current Liabilities 0.00 0.00 Total Liabilities 0.00 0.00 Owners' Equity

Page | 115

Invested capital Rs. 17,654,867.91 Rs. 19,905,179.11 Retained earnings Rs. 22,503,112 Rs. 23,365,248 Total Owners' Equity Rs. 40,157,980 Rs. 43,270,427 Total Liabilities & Equity Rs. 40,157,979.91 Rs. 43,270,427.11

Page | 116

Cash Flow Statements:

Cashflow Statement for the year 2012 Cashflow from Operating Activties Rs. Rs. Cash Receipts from Customers 39,300,000.00 Cash Paid to Suppliers (9,003,047.27) Cash paid to employees (4,416,000.00) Cash generated from Operations 25,880,952.73 Income Tax Paid - Net Cash from Operating Activities 25,880,952.73 Cashflow from Investing Activities Purchase of Fixed Assets 739,800.00 Net Cash from Investing Activities 739,800.00 Cashflow from Financing Activities Share Capital 29,126,778.17 Net Cash from Financing Activities 29,126,778.17 Net Increase / (Decrease) in Cash & Cash Equivalents 55,747,530.90 Cash & Cash Equivalents at Beginnning of period 1,200,000.00 Cash & Cash Equivalents at End of Period 56,947,530.90 Cashflow Statement for the year 2013 Cashflow from Operating Activties Rs. Rs. Cash Receipts from Customers 42,051,000.00 Cash Paid to Suppliers (9,453,199.64) Cash paid to employees (4,636,800.00) Cash generated from Operations 27,961,000.36 Income Tax Paid - Net Cash from Operating Activities 27,961,000.36 Cashflow from Investing Activities

Page | 117

Purchase of Fixed Assets 147,960.00 Net Cash from Investing Activities 147,960.00 Cashflow from Financing Activities Share Capital 33,051,000.71 Net Cash from Financing Activities 33,051,000.71 Net Increase / (Decrease) in Cash & Cash Equivalents 61,159,961.08 Cash & Cash Equivalents at Beginnning of period 56,947,530.90 Cash & Cash Equivalents at End of Period 118,107,491.97 Cashflow Statement for the year 2014

DIRECT METHOD

Cashflow from Operating Activties Rs. Rs. Cash Receipts from Customers 22,301,216.00 Cash Paid to Suppliers (9,543,230.11) Cash paid to employees (4,680,960.00) Cash generated from Operations 8,077,025.89 Income Tax Paid - Net Cash from Operating Activities 8,077,025.89 Cashflow from Investing Activities Purchase of Fixed Assets - Net Cash from Investing Activities - Cashflow from Financing Activities Share Capital 35,462,828.71 Net Cash from Financing Activities 35,462,828.71 Net Increase / (Decrease) in Cash & Cash Equivalents 43,539,854.61 Cash & Cash Equivalents at Beginnning of period 118,107,491.97 Cash & Cash Equivalents at End of Period 161,647,346.58

Page | 118

Cashflow Statement for the year 2015 Cashflow from Operating Activties Rs. Rs. Cash Receipts from Customers 22,631,336.00 Cash Paid to Suppliers (9,543,230.11) Cash paid to employees (4,680,960.00) Cash generated from Operations 8,407,145.89 Income Tax Paid - Net Cash from Operating Activities 8,407,145.89 Cashflow from Investing Activities Purchase of Fixed Assets 542,200.00 Net Cash from Investing Activities 542,200.00 Cashflow from Financing Activities Share Capital 38,023,070.31 Net Cash from Financing Activities 38,023,070.31 Net Increase / (Decrease) in Cash & Cash Equivalents 46,972,416.21 Cash & Cash Equivalents at Beginnning of period 161,647,346.58 Cash & Cash Equivalents at End of Period 208,619,762.78 Cashflow Statement for the year 2016 Cashflow from Operating Activties Rs. Rs. Cash Receipts from Customers 22,503,112.00 Cash Paid to Suppliers (9,633,260.58) Cash paid to employees (4,725,120.00) Cash generated from Operations 8,144,731.42 Income Tax Paid - Net Cash from Operating Activities 8,144,731.42

Page | 119

Cashflow from Investing Activities Purchase of Fixed Assets - Net Cash from Investing Activities - Cashflow from Financing Activities Share Capital 40,157,979.91 Net Cash from Financing Activities 40,157,979.91 Net Increase / (Decrease) in Cash & Cash Equivalents 48,302,711.33 Cash & Cash Equivalents at Beginnning of period 208,619,762.78 Cash & Cash Equivalents at End of Period 256,922,474.12 Cashflow Statement for the year 2017 Cashflow from Operating Activties Rs. Rs. Cash Receipts from Customers 23,365,248.00 Cash Paid to Suppliers (9,723,291.05) Cash paid to employees (4,769,280.00) Cash generated from Operations 8,872,676.95 Income Tax Paid - Net Cash from Operating Activities 8,872,676.95 Cashflow from Investing Activities Purchase of Fixed Assets - Net Cash from Investing Activities - Cashflow from Financing Activities Share Capital 43,270,427.11 Net Cash from Financing Activities 43,270,427.11 Net Increase / (Decrease) in Cash & Cash Equivalents 52,143,104.06 Cash & Cash Equivalents at Beginnning of period 256,922,474.12 Cash & Cash Equivalents at End of Period 309,065,578.18

Page | 120

Future:

The business of nutraceuticals is pegged at Rs 6,000 crore and growing at 20 percent. There is

increased awareness of health products among consumers, increased burden of diseases, and

higher disposable incomes to be the key reasons behind the rise in sales for this segment. With

37 percent of consumers shopping from large-format retail stores, modern food retail will double

from Rs 315, 000 crore to 675,000 crore by 2025. Not only physical retail stores, but online retail

too is growing at 50 percent and has a huge potential.

Talking about the future of health-related products, the word health has innumerous meanings.

Be it a teenager or an elderly, the concept of health and healthy food varies vastly. So, first we

need to educate the consumers as to what healthy, nutrient, and wellness-products are and

what they offer. Consumers can be educated and made aware of health products through

advertisements and so brands should invest more on marketing strategies. Make your products

innovative and talk more about the benefits. In order to drive penetration in the market, we know

about the right product placement at the right areas and have the clear focus on our target

group.

The fresh food demand continues to remain high. India continued to see a growing number of

mid- and high-income consumers with aspirations to move up the value chain in 2010, with this

trend keeping demand for fresh food high in the year. The rise in demand was intense enough

to put strains on production, even though India is in the top five countries globally in terms of

producing and consuming fresh food. Better retail distribution also meant that availability

improved throughout the country, as retailers and food companies expanded into under-

developed rural and semi-urban areas.

Rising prices are a cause of concern. 2010 was marked by sharp spikes in both consumption

and prices in practically every fresh food product category, from vegetables to fruits. Prices

were boosted by a number of factors in 2010. In addition to the impact of growing consumption

linked to higher disposable incomes, errant rainfall in key production areas and natural disasters

in and around India further put pressure on prices. Food price inflation climbed to as high as

18% in 2010, causing public outcry and a slew of government measures to ease prices, from

price control to imports. Prices did fall by the end of the year but 2010 overall took fresh food

Page | 121

costs for consumers to a new high.

Large format retailers continue attempts to attract customers. Large format retailers across the

country ramped up their fresh food sections towards the end of the review period, using

strategies such as keeping prices constant, offering clean and neat storage and packing and

introducing private label ranges. Retailers such as Hypercity, Reliance Fresh, More, Star Bazaar

and Food Bazaar continued to expand in terms of location and range, thus attracting more

consumers. However, the vast majority of fresh food purchases still occur via roadside vendors

and wet markets across India. The dominance of these channels is unlikely to change in the

self-tanning but large format retailers are offering a retail experience that can unlock more

spending because it better matches the social aspirations of the upwardly mobile mid-income

group.

Fresh food consumption set to increase. Fresh food consumption will continue to see strong

growth during the forecast period, largely mirroring India’s economic expansion. This will result

in improvements in the supply chain and retail experience for fresh food. In addition, economic

growth will increase disposable incomes, which in turn will enable consumers to buy more and

experiment more with their purchases, while also reducing price-sensitivity. Product categories

where sales are usually seen as festival-driven will begin to move into regular consumption,

including varieties of nuts, seafood and exotic fruit. Higher prices will dampen demand to an

extent but the impact of price increases will be largely counterbalanced by strong economic

growth.

India is in a phase of rapid economic and demographic transition. Per capita income has been

rising steadily since the 1980s. Life expectancy is increasing and birth rates are falling. The

impressive growth rates of the 1980s were maintained in the last decade with reforms to open

up the Indian economy. Poverty levels continue to decline as does the incidence of malnutrition

and stunting. A key feature of this remarkable period of growth has been the change in the

nature of the Indian diet. As the world economy becomes more integrated and communication

faster, diet transition would have been inevitable. But it is clear that during the most recent

decade globalization has played an enormously important role in the transformation of food

consumption patterns of Indian households. This is particularly evident in urban areas. The

change in consumer tastes and demand has critical implications for the whole food supply

system.

Page | 122

The present paper looks at the impact of globalization on both the demand side and the supply

side of the food system in India. There are six key stylized facts characterizing the changes in

food demand in Asia. These facts pertain to changes in the consumption of rice, wheat, protein

and energy-dense foods, and diet diversification. There is a two-stage process of diet

transformation. During the first stage consumers move away from inferior goods to superior

foods and substitute some traditional staples with primary food products that are more prevalent

in western diets. In the second stage the influences of globalization are much more marked with

increased consumption of proteins, sugars, fats and temperate zone products. The figures on

the demand structure for food in India are consistent with our analysis of a two-stage process of

dietary change. As the demand profile changes with economic growth and globalization, so the

supply systems must adapt to accommodate this change.

The driving forces of diet and nutrition change

Since the 1980s India has enjoyed quite remarkable economic growth. Incomes have been

steadily rising and per capita real expenditure has increased across all groups. Significantly,

and consistent with high rates of growth, the proportion of per capita expenditure on food items

has fallen. Economic growth has been accompanied by rising urbanization (see tables 1 and 2).

Indian cities are expanding with substantial increases in the growth rates predicted in the next

thirty years.

Reforms introduced in the 1990’s have been successful at maintaining these rates of growth.

Tables 2, and 3 provide a picture on the nature of urbanization in India. In 1950, the degree of

urbanization was estimated at 17.3%. By 2000, this figure stood at 28% and it is projected that

by 2030 the figure could be as high as 41%

Increased urbanisation has seen the rise of the middle classes and it is predominantly the

lifestyle preferences of this group that mark a change with the past. Moreover, economic growth

alters the structure of the labour force in urban areas characterised by increased female

participation with important consequences for the family diet. As more women enter the labour

force, the traditional role of the Indian housewife to be in charge of food preparation is eroding.

Whilst women may still have prime responsibility for providing the daily meals, the nature of

these meals may change. The consumption of ready made meals, or foods that cut the long

preparation time of traditional dishes, are likely to be a predominant feature of the diet for

families where there is a high female participation rate. Chapatti-mixes for example can be

Page | 123

likened to the availability of ready-made bread mixes in developed countries. Both are designed

to appeal to women whose opportunity cost of time is high.

Moreover, working couples with no children may enjoy on average higher disposable incomes

and are thus likely to consume food outside the home on a regular basis. It should be noted that

whilst the emergence of the nuclear family is growing, India is still far from having the same

numbers of two-income families that characterize labour markets of developed nations. With

further increases in economic growth and greater integration in the global market, this may

change more rapidly and consequently, we may see an even stronger upward shift in demand

for convenience processed food.

Increased economic growth not only brings about divergences in the diets between different

socio-economic groups but also across the age divide. Food preferences of older age groups

tend to be relatively static over time. Where there is increased income for consumption, food

preferences still tend to remain within an identifiable traditional boundary. Whilst there may be

increased expenditure on superior foods, these tend to be prepared according to long-standing

customs and practices. Younger generations are more influenced by new foods particularly

when these are introduced through an advertising campaign that targets the group specifically.

The divergence between the dietary habits of young and old tends to persist over a long-time

horizon if not indefinitely. Generally, lifetime eating habits form at a young age and are difficult

to reverse as age increases (see FSA, 2002; HPA, 2001 ).

The process of diet transformation in India can be seen as involving two separate stages:

(i) Income-induced diet diversification. At the start of the process of faster economic growth,

diets diversify but maintain predominantly traditional features;

(ii) Diet globalisation. As globalisation begins to exert its influence, we see the adoption of

markedly different diets that no longer conform to the traditional local habits.

During income-induced diet diversification, economic prosperity enables consumers to afford a

more varied and balanced diet and to demand nutritionally superior food products. In this stage,

the demand for food would still be largely directed towards traditional foods with positive income

elasticities of demand as opposed to foods that display negative elasticities. Consumers

typically move away from rice consumption or may consume higher quality varieties of rice.

Increased consumption of wheat, in the form of bread and other wheat-based products, such as

Page | 124

cakes, and cookies is also observed.

As growth consolidates and the economy opens up to globalisation, households start to adopt

food consumption patterns that differ from the traditional ones. The new dietary habits reflect

global patterns, and could be quite unlike the habits that had developed locally over many

generations. Consumers exhibit strong preferences for meat or fish, temperate zone foods such

as apples and highly processed convenience foods and drinks all of which are readily available

in the emerging supermarkets and fast-food outlets.

A critical implication of globalization is the severing of the link between diets and the local

availability of resources and local habits. In the second stage of diet globalization in particular,

consumers have access to varieties of food that were not previously available to them. Thus,

consumers are no longer constrained in their demand to purchasing local produce.

The adoption of a globalized diet should be seen as a dynamic process: once the national diet

opens up to the world influence, it will always be subject to ongoing changes. Thus, over a

longer time horizon, we may continue to see a sequence/series of discontinuous structural

breaks. Future generations may start to consider the energy dense diet as their traditional diet

and move away from this to one that is more healthy with increased income. (see Popkin 1993

for a full discussion).

Trends in diet diversification in India

The two-stage model of diet diversification has a number of specific implications on the demand

for food. During diet diversification, we should observe an increase in the demand for all

traditional foods as income increases, such as rice, wheat, pulses, cereals, and animal

products. During the second stage of change, as global influences begin to exert their effects,

we should observe that the increase in demand is mainly concentrated on wheat, animal

products and related foods, and there could be a decline in the consumption of traditional foods

such as rice, pulses and cereals. However, it is important to note that income-induced

diversification is still continuing and will do so for a long time to come but there are signs that

diet globalization is emerging. Diet globalization is a phenomenon to watch over the future.

The evidence on diet change is both direct (food consumption/demand) and indirect (health

indicators, indicators of malnutrition, incidence of diet-related diseases like obesity, cancer,

diabetes, etc.).

Page | 125

During the 1980s, consumption of both animal and vegetable products increased very

substantially. Among the animal products, the largest proportional increase was in the

consumption of milk. Among the vegetable products there were large increases across all food

groups, but particularly for rice, pulses, wheat and cereals. Rice and pulses are essential

components of the traditional diet. The 1980s also saw an increase in the consumption of spices

and oil crops. Overall, the structure of food consumption has not changed markedly during the

decade, but there was a rise in demand across all the main food groups.

The 1990s, by contrast, saw a significant change in the pattern of food consumption. There was

a marked increase in the consumption of animal product, especially animal fats, whereas the

increase in the consumption of vegetable products was relatively modest. Among vegetable

products, there were large increases in the consumption of wheat, starchy roots, vegetable oils,

sugar and sweeteners, and fruits, whereas the consumption of rice, pulses and cereals has

declined. These are evidence of a structural break relative to the previous decade. The 1990s

were associated with the consumption of significantly larger amounts of energy-dense foods in

the form of fats, oils and starchy roots. Whilst starchy roots represent a staple, the considerable

increase in the 1990 captures the increased consumption of potatoes, a food with strong

associations with energy-dense food products such as fries and potato chips. The decline in the

consumption of rice and pulses and the increase in the consumption of wheat are particularly

significant. It is important to note that the use of wheat in the diet is changing as well, since

there is a move away from the traditional chapatti to more commercialised bread products

similar to those found in the West. This pattern is indicative of a specific move to a more

western diet in the early stages of diet transformation. Traditionally, wheat represented a key

staple in the north of India whereas in the south rice tended to dominate the habitual diet. With

economic growth, dietary preferences in the south are moving away from rice towards wheat

whereas in the north preferences are veering more towards rice. The net effect for India as a

whole is a decline in total rice consumption given the neagtive income elasticity of demand for

rice.

The values of the income elasticity of demand for the different categories of food can help us

understand the changing food consumption patterns by Indian households. As income

increases, the structure of consumption will shift away from low-elasticity towards high-elasticity

food. This can certainly be extremely valuable for predicting the demand for the different food

categories by Indian households as a result of income growth during the first phase of diet

diversification

Page | 126

The figures on consumption patterns and elasticity for the staples reveal a clear direction away

from what are regarded as inferior foods. However, what these figures do not fully capture is the

changing nature of the household food basket itself. The demand for wheat is rising but more

precisely it is increased household demand for bread that is rising. Additionally, while we see

that consumption of fruits and vegetable is rising it is also clear that consumption of temperate

zone fruits and vegetable accounts for an increasing share of this.

Diet diversification and health

The process of diet transformation has far-reaching consequences for public health. The

adoption of a more varied and nutritionally balanced diet, typical of income-induced diet

diversification, generally leads to a substantial improvement in public health indicators. The

health implications of the globalisation of diets are less clear-cut. On the one hand, the

availability of a much broader range of food products enables consumers to overcome the

limitations of the traditional local diets in terms of availability of resources. Also, the process of

food standardization that is put in place by large food distributors and supermarket chains can

ensure higher levels of food hygiene. Both these aspects would be associated with an

improvement in health indicators.

The incidence of moderate and severe malnutrition in India for children between the ages of one

and five has fallen markedly across all states. In 1991-2, severe malnutrition for India stood at

11.1% but by 2000-1, the figure has fallen to 6.4%. Moderate malnutrition too has fallen for the

same periods from 45.1% to 41.3%. Table 6 gives a detailed breakdown for all states.

The reduction in severe malnutrition is explained precisely because of diet diversification. From

table 4 it can be seen that there is amarked increase in the consumption of milk, animal protein

and fruits and vegetables all of which combined can explain the reduced incidence of

malnutrition.

On the other hand, the increased consumption of highly-calorific and more energy-dense food

could lead to increased incidence obesity and of diet-related diseases, like diabetes, coronary

heart disease and certain types of cancer. It seems clear that dietary patterns are contributing to

a clear change in the trends of chronic diseases in India. There is clear evidence of a

demographic, epidemiological and nutrition transition in India that is fuelling the epidemic of

chronic diseases and obesity, particularly in the urban areas. The mechanisms and institutions

Page | 127

that drive economic growth and consequently globalization are primarily concentrated in urban

centres with a lagged effect in rural areas.

Urbanization, food consumption patterns and food security are strongly related. Table 9 shows

that in some cities a large part of urban growth can be attributed to the growth of the informal

urban economy, with households living in slum accommodation on the peripheries of urban

centres. Supermarkets and fast food outlets etc. tend to target the middle-classes and so the

location of these enterprises is likely to be in areas that are inhabited by or serve these higher

income groups.

The food consumption patterns of poor migrants in the urban slums are different from those in

the formal urban economy who enjoy substantially higher incomes. Urban slums are often

characterised by copycat street foods, that is, food stalls that seek to mimic the branded

products of fast food outlets. Moreover these street vendors are part of the unregulated

economy and this has implications in terms of food safety which could exacerbate the poor

health effects of a nutritionally- deficient diet.

The development literature has not focused specifically on the analysis of the dietary habits of

the urban poor, precisely because the overwhelming majority of India’s poor live in rural areas.

However, the consumption patterns of the urban poor cannot be ignored, particularly given the

rate of urban expansion, and are likely to differ markedly from those of the rural poor.

An important social aspect of the globalization of the diet is that, once the traditional food

consumption habits have been displaced by the new consumption patterns, the change

becomes largely irreversible. Processed food is both easier to prepare and less time-intensive

than the traditional food. The skills required to prepare the local food that have been developed

over centuries and had been passed on from generation to generation can easily be lost. The

globalized diet therefore becomes an absorbing state, in the sense that it would be virtually

impossible for the dietary habits to revert back to the old traditional ones. This process is very

visible in Western countries, where the availability of convenience food is leading to a rapid loss

in the ability of households to prepare the traditional recipes. The globalization of diets would

therefore have critical implications for the whole food culture of the country, leading to a cultural

homogenization to the global model.

Transformation of Food Supply Systems

Page | 128

India is beginning to observe a dramatic change in food supply systems in response to rapid

urbanization, diet diversification, and the liberalization of foreign direct investment in the food

sector. The observed changes are in both the retail sector as well as in the production sector.

This section describes the changes in food supply systems, with a particular emphasis on

provisioning the cities. It then proceeds to examine the implications for domestic production and

the specific impact on small farmers.

Feeding the burgeoning urban masses is one of the most important food policy challenges

facing India today and for the foreseeable future. There are three specific dimensions to the

issue of feeding the cities. The first stems from the quantitative aspect. Towns are getting larger

and so the size of the urban market is expanding. This requires not only increases in total urban

food supply, but also the establishment of large suppliers in order to manage the increased level

of activity in the market. The second dimension derives from the qualitative aspect of demand

changes in cities. The rapid diversification of the urban diet cannot be met by the traditional food

supply chain. It requires in effect the commercialization and diversification of domestic

production systems and/or increased food imports. The third dimension draws from the location

of urban centres. India’s most populous cities and towns tend to be located on the coast.

Importing food to satisfy the changing food demand could be relatively easier and less costly

than acquiring the same food from the domestic hinterlands. There will be a growing choice, at

the margin, between domestic supply and imports, although one would suspect that both would

rise in absolute terms.

The change in urban food demand is almost simultaneously accompanied by changes in retail

preferences. Western style marketing outlets are gaining a foothold in most Indian cities. Whilst

income-induced diet diversification may be met by local suppliers with few changes to the

existing production environment, the second stage of diet globalization requires a shift away

from traditional products. A globalization result in a significant increase in the size of the

domestic food market and this generates powerful incentives for foreign suppliers and

supermarkets to enter the food sector. Trade liberalization greatly facilitates the widespread

establishment of global supermarket chains and fast food outlets and thus speeds up the

diffusion of homogenous foods and of a global diet in the Indian market

Vertically integrated food supply chain that links input suppliers, producers, processors,

distributors and retailers becomes essential for meeting the changing demand requirements as

efficiently as possible.

Page | 129

Integration arrangements may differ. At one end of the spectrum the decision- making authority

of the farmer is displaced further down the production line to the processor or retailer (who may

be one and the same) so that farmers essentially are employed by these large processing firms

(see Reardon and Barrett 2002). Importantly though, there are ways in which small farmers can

enter the chain at various points in the production line without compromising their autonomy.

For example, farmers may sell their produce at a particular point and not be tied in any further.

In this case, the farmer may be guaranteed a buyer but if there is a collapse in product price the

farmer is no more protected than if he were operating at subsistence level. Thus, the nature of

the contractual arrangement can vary and need not necessarily involve reducing the decision-

making authority of individual producers.

Vertically integrated firms are necessary to meet the changing tastes of consumers located in

urban areas. This need not have adverse consequences for Indian agriculture by any means. In

fact, integration may bring benefits. Vertically integrated firms can play an important role in

disseminating technologies to allow agricultural transformation. Moreover, they can facilitate the

process of improving product quality. Foreign-owned firms in particular, may be a source of

capital and provide export opportunities. The net effect of a highly integrated agricultural system

is difficult to predict a priori. Whilst there may be genuine concerns over the long- term

livelihoods of small farmers, there are also clear benefits.

Income-induced diet diversification has the potential for generating a tension between small and

large domestic suppliers. Given the larger scale of production, large farmers could have an

advantage over small farmers in terms of their ability to make use of more cost-effective

production techniques. If conditions for increasing returns in production are met, then many

small producers may effectively be driven out of the production sector. In their place, we could

see the emergence of monopolistic suppliers consisting of large firms that employ more cost-

effective technologies and operate under increasing returns to scale. Or, with proactive

government support, small farmers could become increasingly commercialized and integrated

into the market.

During diet globalization, domestic suppliers could face strong competition from foreign

suppliers. It is important during this stage for domestic suppliers to signal that they can adapt

production to meet the procurement requirements of large food outlets. Domestic producers

have a comparative advantage over foreign producers of fresh produce. Fresh foods are costly

to transport and store for prolonged periods. If domestic agriculture can produce the goods

Page | 130

locally, then they have a cost advantage over foreign competitors. In India, we are already

beginning to see agricultural diversification and the emergence of contracts between farmers

and large food outlets.

Whilst there are challenges faced by domestic producers during the process of diet

diversification, globalization brings with it some important opportunities. The dynamic nature of

the transformation of the food market places a new urgency on domestic farmers to modernize.

Previously, Indian agriculture could be characterized as quite static, focusing predominantly on

traditional cereal and rice production mostly in a subsistence context. Liberalization of

agricultural markets requires the need to move out of subsistence agriculture to one that is

commercial in nature.

Moreover, the exposure of Indian farmers to international competition can be seen as a very

real opportunity to supply world markets with foods for which India enjoys a comparative

advantage. Thus, whilst diversification is important, rice and cereals should not be totally

ignored. The challenge here is for farmers to produce those varieties of rice and cereals for

which world demand is growing. For example, the rising export demand for basmati rice.

Indian agriculture is responding to the changing domestic demand and the effects of

globalisation. This is happening through both public and private investment. The Indian

government, recognizing the increasing demand for fruits and vegetables, has dramatically

increased investment in horticultural production in the last 15 years and this is expected to stand

at Rs 20 billion by the next five-year plan.