A

Research Proposal

For

Management Research Project - I

On “Bakery And Confectionery Industry With Special Focus On Biscuit Products”

Submitted By:

Name (Roll No.) Goswami Komal P. 12044311029

Kalotara Sagar M. 12044311037 Khatana Pravin M. 12044311039 Patel Dhruv R. 12044311080 Patel Malay K. 12044311105

M.B.A. Semester III

Under the Guidance of:

Prof. (Dr.) Mahendra Sharma

Prof. & Head

V. M. Patel Institute of Management

Ms. Harsha Jariwala

Prof. Abhishek Parikh

Faculty Members

V. M. Patel Institute of Management

Submitted To:

V. M. Patel Institute of Management

Ganpat University

(2013)

CERTIFICATE BY THE GUIDE

This is to certify that the contents of this report entitled “Bakery And Confectionary Industry With Special Focus On Biscuit Product” by Goswami Komal, Kalotara Sagar, Khatana Pravin, Patel Dhruv,

Patel Malay submitted to V. M. Patel Institute of Management for the Award of Master of Business

Administration (MBA Sem-III) is original research work carried out by him/her/them under my

supervision.

This report has not been submitted either partly or fully to any other University or Institute for award of

any degree or diploma.

Prof.(Dr.) Mahendra Sharma

Prof. & Head

V. M. Patel Institute of Management,

Ganpat University.

Kherva.

CANDIDATE’S STATEMENT

I/We hereby declare that the work incorporated in this report entitled “Bakery And Confectionary Industry with Special Focus on Biscuit Product” in partial fulfillment of the requirements for the award

of Master of Business Administration (Sem. – III) is the outcome of original study undertaken by me/us

and it has not been submitted early to any other University or Institution for the award of any Degree or

Diploma.

Goswami Komal P.

Kalotara Sagar M.

Khatana Pravin M.

Patel Dhruv R.

Patel Malay K.

Date:

Place:Kherva

Preface

“Theory without practice has no fruit Practice without theory has no root.”

It is a great experience being a part of corporate world. Real MBA can be achieved only with

such practical implications. We are very thankful to V.M Patel Institute of Management who

planes such learning programs for its students.

It is matters of proud to be students of such great university where in students are helped to

extract hidden potentials from their selves. We are highly Thankful to all the Faculties of the

department who guided us all the way long as how the entire MRP 1 report is to be conducted.

As a management student, we must have some practical knowledge regarding research and

research methodology.

The education institutions offering management programs play a significant part in un

calculating the much needed managerial skills in their students, the aspiring managers. The real

success of management lies in applying the professional management techniques in all

managerial activities. Practical study is eminent, and plays vital role for the students of

management, because classroom coaching and theoretical study alone are not enough. To survive

in this highly competitive world, practicality outweighs theoretic. Students are supposed to learn

the various principles of business administration conceptually but accuracy and efficiency in

their implementation is possible only through exposure to practical environment.

We have tried our best and have applied all our efforts, knowledge and sources available, in this

project.

Here we try our level best for finding data.

Acknowledgement

It is with profound in deftness that we acknowledge the efforts of all the well-wishers who have

in some or the other way contributes in their own special way to the success of this project.

We would like to express deep sense of gratitude to Dr. Mahendra Sharma. We would also

thankful to Prof. Harsha Jariwala & Prof. Abhishek Parikh for their advise, constant

encouragement and timely help throughout the course of our project.

We would like to thank Prof.Harsha Jariwala & Prof. Abhishek Parikh for provide us this golden

opportunity for preparing report and provide us guideline regarding project report.

We would like to thank all the respondents who give their valuable time for filling questionnaire

and provide necessary information regarding our project report.

Last but not the least we thank all the persons who have directly or indirectly support in this

project report.

Executive Summary

The estimate made by the Ministry of Food Processing Industries (1998), the total market of

bakery product, bread and biscuit is estimated at 1.5mn ton and 1.1mn ton respectively. The cake

market is estimated at 0.4mn ton. The organized segment of the biscuit market is estimated to be

0.44mn tons whereas the unorganized sector accounts for the balance 0.66mn tons.

The confectionery industry has a current capacity of 85, 000 tones, the market is growing at the

rate of 10-15% per annum. The estimated annual production of bakery products in India is in

excess of 3 million tones, of which bread accounts for nearly 50% and biscuits 37% in volume

terms in the organized sector. The bakery sector in India is one of largest segments of the food

processing industries; annual turnover in value terms is approximately

$ 900 million.

Chocolates, hard-boiled sweets, chewing gum and other products are a major growth area. The

bakery industry includes basic baked products like breads, biscuits, cakes, pastries, rusts,

Buns, rolls etc.

The word 'Biscuit' is derived from the Latin words 'Bis' (meaning 'twice') and 'Coctus' (meaning

cooked or baked). The word 'Biscotti' is also the generic term for cookies in Italian. Back then,

biscuits were unleavened, hard and thin wafers which, because of their low water content, were

ideal food to store.

Biscuit industry in India in the organized sector produces around 60% of the total production, the

balance 40% being contributed by the unorganized bakeries. The industry consists of two large

scale manufacturers, around 50 medium scale brands and small scale units ranging up to 2500

units in the country. The unorganized sector is estimated to have approximately 30,000 small &

tiny bakeries across the country.

The annual production of biscuit in the organized sector, continues to be predominantly in the

small and medium sale sector before and after de-reservation. The annual production was around

7.4 Lac tonnes in 1997-98 in the next five years, biscuit production witnessed an annual growth

of 10% to 12%, up to 1999-00.

In order to conduct this MRP-1 report we have done primary research to know the performance

of four major biscuit players with respect to customer loyalty. We have also done the financial

analysis of four major players of biscuit industry through secondary data for last five years,

which includes aggregate industry ratio analysis, separate company’s ratio analysis, aggregate

industry sales trend of last ten years and production trend of last five years.

We have also done the various analysis like SWOT Analysis, five force model, PESTL

Analysis, Strategic Group Mapping,

INDEX

Sr.No Particular Page No

• CERTIFICATE BY THE GUIDE I

• CANDIDATE’S SATELMENT II

• Preface III

• Acknowledgement IV

• Executive Summary V

1 INTODUCTION 1 1.1 Introduction of Bakery and Confectionary Industry in India 2

1.2 History of Biscuit Industry 3

1.3 Industry Profile 11

1.4 Booming with Biscuit 15

1.5 Brands of Major Biscuit Manufacturers 16

1.6 Industry Framework 17

1.7 Biscuit Industry life cycle 18

1.8 Biscuit Making Process 20 2 Major Biscuit Industry Players in India 22 2.1 Parle 23 2.2 Britannia 26

2.3 Sun Feast 29

2.4 Priyagold 31

3 Strategic Analysis and Models 37

3.1 SWOT Analysis 38

3.2 PESTL Analysis 41

3.3 Porters Five Force Model 43

3.4 Strategic Group Mapping 46 3.5 Driver Forces 50

4 Ratio Analysis 51

4.1 Trend Analysis of Production and Sales 52

4.2 Companies Ratio Analysis 54

5 Business Plan 61

5.1 Project Profile 62

5.2 Introduction 63

5.3 Vision 64

5.4 Mission 64

5.5 Selection of the project 64

5.6 Marketing Channel 65

5.7 Plant Location 66

5.8 Finance 67

6 Conclusion and Findings 77

6.1 Conclusion 78

6.2 Findings 80

7 Bibliography 81

Annexure 83

INTRODUCTION

1.1 INTRODUCTION OF BAKERY AND CONFECTIONARY INDUSTRY IN INDIA

The estimate made by the Ministry of Food Processing Industries (1998), the total market of

bakery product, bread and biscuit is estimated at 1.5mn ton and 1.1mn ton respectively. The

cake market is estimated at 0.4mn ton.

The organized segment of the biscuit market is estimated to be 0.44mn tons whereas the

unorganized sector accounts for the balance 0.66mn tons. Bread market is estimated to be

growing at around 7% pa in volume terms, whereas the biscuit market in the recent years has

witnessed a little higher growth at around 8-10% pa. Within the biscuit category, cream and

specialty biscuits are growing at faster pace at 20% pa, while the popular segment is growing.

Besides the industrial areas in leading metropolis the bakery product & confectionery are

carried on small- scale basis also at household level. Whereas, the confectionery industry has

developed remarkably with the international brand mingling with the domestic market toffees,

chocolates etc. produced at large scale in important industrial regions of the country.

Growth promotional activities in 1977- 78 Government reserved the confectionery bread and

biscuit manufacturing for small scale and restricted entry of large producers. During the last 2

decades, small and unorganized players shared the growth in the industry. Currently, there are

an estimated 2 million bakeries across the country engaged in production of bread, biscuits

and other products.

The Indian confectionery market is segmented into sugar-boiled confectionery, chocolates,

mints and chewing gums. Sugar-boiled confectionery, consisting of hard boiled candy, toffees

and other sugar-based candies, is the largest of the segments and valued at around Rs 2,000

crore.

The confectionery industry has a current capacity of 85, 000 tonnes, the market is growing at

the rate of 10-15% per annum. The estimated annual production of bakery products in India is

in excess of 3 million tonnes, of which bread accounts for nearly 50% and biscuits 37% in

volume terms in the organized sector. The bakery sector in India is one of largest segments of

the food processing industries; annual turnover in value terms is approximately $ 900 million.

1.2 HISTORY OF BISCUITS INDUSTRY

Sweet or salty. Soft or crunchy. Simple or exotic. Everybody loves munching on biscuits, but

do they know how biscuits began?

The history of biscuits can be traced back to a recipe created by the Roman chef Apicius, in

which "a thick paste of fine wheat flour was boiled and spread out on a plate. When it had

dried and hardened it was cut up and then fried until crisp, then served with honey and

pepper."

The word 'Biscuit' is derived from the Latin words 'Bis' (meaning 'twice') and 'Coctus'

(meaning cooked or baked). The word 'Biscotti' is also the generic term for cookies in Italian.

Back then, biscuits were unleavened, hard and thin wafers which, because of their low water

content, were ideal food to store.

As people started to explore the globe, biscuits became the ideal travelling food since they

stayed fresh for long periods. The seafaring age, thus, witnessed the boom of biscuits when

these were sealed in airtight containers to last for months at a time. Hard track biscuits

(earliest version of the biscotti and present-day crackers) were part of the staple diet of

English and American sailors for many centuries. In fact, the countries which led this

seafaring charge, such as those in Western Europe, are the ones where biscuits are most

popular even today. Biscotti is said to have been a favourite of Christopher Columbus who

discovered America!

Making good biscuits is quite an art, and history bears testimony to that. During the 17th and

18th Centuries in Europe, baking was a carefully controlled profession, managed through a

series of 'guilds' or professional associations. To become a baker, one had to complete years

of apprenticeship - working through the ranks of apprentice, journeyman, and finally master

baker. Not only this, the amount and quality of biscuits baked were also carefully monitored.

The English, Scotch and Dutch immigrants originally brought the first cookies to the United

States and they were called teacakes. They were often flavoured with nothing more than the

finest butter, sometimes with the addition of a few drops of rose water. Cookies in America

were also called by such names as "jumbles", "plunkets" and "cry babies".

As technology improved during the Industrial Revolution in the 19th century, the price of

sugar and flour dropped. Chemical leavening agents, such as baking soda, became available

and a profusion of cookie recipes occurred. This led to the development of manufactured

cookies.

Interestingly, as time has passed and despite more varieties becoming available, the essential

ingredients of biscuits haven't changed - like 'soft' wheat flour (which contains less protein

than the flour used to bake bread) sugar, and fats, such as butter and oil. Today, though they

are known by different names the world over, people agree on one thing - nothing beats the

biscuit!

1.2.1 SOME INTERESTING FACTS ON THE ORIGIN OF OTHER FORMS OF

BISCUITS:

The recipe for oval shaped cookies (that are also known as boudoir biscuits, sponge biscuits,

sponge fingers, Naples biscuits and Savoy biscuits) has changed little in 900 years and dates

back to the house of Savoy in the 11th century France. Peter the Great of Russia seems to

have enjoyed an oval-shaped cookie called "lady fingers" when visiting Louis XV of France.

The macaroon - a small round cookie with crisp crust and a soft interior - seems to have

originated in an Italian monastery in 1792 during the French Revolution.

SPRING-uhr-lee, have been traditional Christmas cookies in Austria and Bavaria for

centuries. They are made from a simple egg, flour and sugar dough and are usually

rectangular in shape. These cookies are made with a leavening agent called ammonium

carbonate and baking ammonia.

The inspiration for fortune cookies dates back to the 12th & 13th Centuries, when Chinese

soldiers slipped rice paper messages into moon cakes to help co-ordinate their defence

against, Mongolian invaders.

1.2.2 BISCUIT INDUSTRY IN INDIA - AN OVERVIEW

Biscuit industry in India in the organized sector produces around 60% of the total production,

the balance 40% being contributed by the unorganized bakeries. The industry consists of two

large scale manufacturers, around 50 medium scale brands and small scale units ranging up to

2500 units in the country. The unorganized sector is estimated to have approximately 30,000

small & tiny bakeries across the country.

The annual turnover of the organized sector of the biscuit manufacturers is Rs. 4,350 crores.

In terms of volume biscuit production by the organized segment in 2001-02 is estimated at

1.30 million tonnes and in 2012-13 it is 1.714 million tonnes. The major Brands of biscuits

are - Britannia, Parle Bakeman, Priya Gold, Elite, Cremica, Dukes, Anupam, Horlicks, Craze,

Nezone, besides various regional/State brands. Biscuit industry which was till then reserved in

the SSI Sector, was unreserved in 1997-98, in accordance with the Govt. Policy, based on the

recommendations of the Abid Hussain Committee.

The annual production of biscuit in the organized sector continues to be predominantly in the

small and medium sale sector before and after de-reservation. The annual production was

around 7.4 Lac tonnes in 1997-98 in the next five years, biscuit production witnessed an

annual growth of 10% to 12%, up to 2004-05 and in the year 2012 -13 it is 6.25% at 17.14

lack tonnes.

The Union Budget for 2012-13 granted 50% reduction in the rate of Excise Duty on Biscuit

i.e. from 16% to 8%. The Federation's estimate for the current year indicates a growth of

approximately 8% to 9%.

Though dereservation resulted in a few MNCs, i.e. Sara Lee, Kellogg’s SmithKline Beecham,

Heinz etc entering the biscuit industry in India, most of them, with the exception of

SmithKline Beecham, have ceased production in the country.

However, recent imports from china industries cheaper verities of biscuit, needs to be

examined with cautions, especially in the context of the price as the low margin based

domestic industry, which is operating at 60 % of the total installed capital. Exports of biscuits

from India have been to the extent of 5.5% of the total production. Exports are expected to

grow only in the year 2003-04 and beyond.

Biscuit is a hygienically packaged nutritious snack food available at very competitive prices,

volumes and different tastes. According to the NCAER Study, biscuit is predominantly

consumed by people from the lower strata of society, particularly children in both rural and

urban areas with an average monthly income of Rs. 750.00.

Biscuit can he broadly categorized into the following segments:

(Based on productions of 2012-13)

Glucose 44%

Marie 13%

Cream 10%

Crackers 13%

Milk 12%

others 8%.

FBMI (Federation of Biscuit Manufacturer’s of India) is an association of all the biscuit

manufacturers of India. Major players include Britannia, Parle, ITC, Priyagold, Windsor etc.

Glucose 44%

Marie13%

Cream10%

Crackers13%

Milk12%

Others8%

Annual Production in Percentage

In recognition of industry's obligations towards the community, being a part of it, biscuit

manufacturers supply biscuits to the social welfare agencies in all States for the benefit of

school children, senior citizens and other needy sections of the society. FBMI (Federation of

Biscuit Manufacturer’s of India) Members have always responded positively to our appeal as

also by the Government, to rush truck loads of biscuits to the people affected by earthquakes,

floods, famine etc. These members have also participated in supplying biscuits to the people

of war ravaged Afghanistan and presently to the Iraqi people, under the aegis of the UN.

As regards the consumption pattern is concerned. surveys and estimates by industry from time

to time indicate the average consumption scenario in the four Zones have been more or less

close to each other, as below:

1. Northern States: 28%

2. Southern States: 24%

3. Western States: 25%

4. Eastern States: 23%

Though India is considered as the third largest producer of Biscuits after USA and China, the

per capita consumption of biscuits in our country is only 2.1 Kg., compared to more than 10

kg in the USA, UK and West European countries and above 4.25 kg in south east Asian

countries, Le. Singapore, Hong Kong, Thailand, Indonesia etc. China has a per capita

consumption of 1.90 kg, while in the case of Japan it is estimated at 7.5 kg.

In view of the meagre per capita consumption even as penetration of biscuits manufactured by

the organised sector, into rural areas in India, has been very good during the last 10 years, as

also in the metro and other cities, small towns etc. However, in spite of this, the industry has

not been able to utilize about half of their installed capacities.

Consumption of Biscuits

28%

24%25%

23%

1 2 3 4

Biscuit is a comparatively low margin food product in the PMCG (Packaged Mass

Consumption Goods) sector. The commodity is also price sensitive, as a consequence of

which, even when the Excise Duty was doubled on biscuits in 2000-01 biscuit manufacturers,

including the major brands, were not able hike MRPs to the extent of the steep increase in the

Duty. Taxation, both Central Excise Duty as also State Sales Tax, other miscellaneous levies

i.e. turnover tax, local area tax, mandi taxes, purchase tax, Octroi etc., has been a major

deterrent in the growth of the biscuit industry. The CII Study Report has identified Biscuit as

one of the products that should treated as "Merit Good for the purpose of liberal tax policy

both by the Centre and States.

Besides lack of technology up gradation in manufacturing, packaging etc has also been a

factor affecting our industry, along with inadequate financial credit and support particularly

for the medium and small scale biscuit units.

On the other hand, the Government of India has identified food processing industries as a

priority area to be encouraged for growth and development and created the Ministry of Food

Processing Industries (which was till then a Dept in the Ministry of Agriculture), headed by

an Ministry of State with Independent charge.

Biscuit manufacturing as well as other bakery products like Bread etc are agro based

industries, with the major inputs - wheat flour/atta sugar, milk vanaspati/vegetable oil etc all

being agriculture produces.

Industries such as Biscuit are also languishing as they are not able to achieve their potentials

for higher production, in the absence of the concrete food Processing Industry Policy. FBMI

in close coordination with other organizations and apex Chambers, initiated to urge the Govt

of India to formulate a comprehensive Policy Document, for smooth growth and harmonious

development of the industry. The Food Processing Industry Policy, which has been evolved as

a result of various workshops, deliberations and representations by a large cross section of

food processing industries, is yet to be finalized. It is hoped that the Ministry of Food

Processing Industries, GOI would initiate action for implementation of the Policy

expeditiously.

According to the production figures of members’ available up to the calendar year 2013, the total production was 1614000 tonnes as against 1714000

Tonnes in the previous year. The production of biscuit for the last 5 years is as under:

2009 - 1100000

2010 – 1254000

2011 – 1429000

2012 – 1614000

2013 – 1714000

Note: The production of members of FBMI consists of 50% (approx.) of the total production of biscuit in the organized sector.

1.3 INDUSTRY PROFILE

Segments:

The organized and unorganized sector of the biscuit industry is in the proportion of 60%:40% ratio.

Export:

Biscuit is estimated to be around 15% of the annual production during the year 2011-12.

Import:

Biscuits into India have not shown any significant growth during the last two years and has not

affected production/sales by the Indian Biscuit industry.

Marketing :

Wholesale and Retail marketing in the Biscuit industry is carried out with a network of C & F

Agencies (for States and specific Districts), Dealers / Wholesalers and Retail shops.

Biscuit Industry, especially the Small & Medium Sector, consisting of around 150 units(besides

three Large Industries), are facing erosion in their profitability and competitive capability, due to

imposition of Value Added Tax (VAT) by the State Governments @ 12.5% on Biscuits, compared

to VAT oat 4% levied on other similar food products.

Taxation:

On behalf of the industry, IBMA has been pursuing the issue with the Chief Ministers/Finance

Ministers of all States and also with the Chairman of the Empowered Committee on VAT, seeking

reduction in the rate of VAT on biscuit to 4%.

Two Sectors of Biscuit Industry

Organised Sector60%

Un Organised Sector40%

IBMA estimates annual growth in the range of 15% to 20% during the next five years, in the event

of reduction in the rate of VAT on Biscuits to 4%.

1.3.1 BISCUIT INDUSTRY IN INDIA-STATISTIC 1. Annual Growth:

The biscuit industry in India witnessed annual growth as below:-

2008-09 - 14%

2009-10 - 14%

2010-11 - 13%

2011-12 - 15%

2012-13 - 17%

While the growth rate has been stagnating during last 5 years, it has picked up momentum

during the 2011-12 and the first quarter of 2012-13 mainly on account of exemption from

Central Excise Duty on biscuits with MRP up to Rs.100/per kg, as per Union Budget for

2011-12.

2. Annual Production: The organized biscuit manufacturing industry‘s annual production figures are given below: (In Lakh Metric Tons) 2008-09 - 11.00 2009-10 - 12.54 2010-11 - 14.29 2011-12 - 16.14 2012-13 - 17.14 3. Rural-urban penetration of Biscuit:

Urban Market: 75% to 85%

Rural Market: 50% to 65%

HIKE IN COST OF PRDUCTION: Biscuit Industry especially the Small & Medium

Sector, consisting of around 150 units are facing erosion in their profitability and competitive

capability, due to:-

Steep hike in cost of production on account of increase in prices of major raw materials, i.e.

Wheat Flour Veg. Oil, Sugar, Milk, Packaging Materials, Fuel. Wages etc .Recent increase in

prices of Petrol/Diesel in May 2013 has further resulted n cost push. Detailed Comparative

Chart showing adverse impact on Biscuit Industry is given below:

4. Hike in Prices of Raw materials

S.NO Raw Martial Jan 13 May 13 1 Maida 12.23 12.00 2 Sugar 15.09 16.00 3 Parmoline Oil 52.99 57.00 4 S.M.P 122.00 127.00 5 Butter 118.94 130.00 6 Laminate 200.00 230.00 7 F.O 26.63 35.00 8 HM Bag 91.92 105.00 9 Carbon Box Per Kg 25.00 28.00

• The above rates are excluding VAT & other Taxes as well as

• Cost escalation due to increase prices of

• Laminate, hike in prices of Petrol/ Diesel, Revision of wages

S.No Cost per KG Jan 13 May 13 Difference in Rs In %age 1 Glucose 85 gm 31.08 31.73 0.65 2.09 2 Crunchy bite 150

gm 30.18 32.40 2.22 7.36

3 Golmol 150 gm 34.06 34.26 0.20 0.59 4 Butter 250 gm 41.59 43.82 2.23 5.36 5 2 in 1 75 gm 39.01 41.06 2.05 5.26 6 Milk Cream 75

gm 46.38 47.28 0.90 1.94

7 Marie 17 gm 40.37 41.21 0.84 2.08

The per capital consumption as well as pattern of consumption in the four regions, as shown

above, will also increase considerably, in case the industry’s plea for reduction in the rate of

Value Added Tax (VAT) from 12.5% to 4% is acceded to

Market share

Britannia [Get Quote] re launched its Glucose-D biscuit as Tiger in 1995 and boasts of 17-18

per cent share. parle enjoys 70% market share in glucose biscuit category followed by

Britannia Tiger (17-18%) and ITC's sun feast (8-9%).

1.4 BOOMING WITH BISCUIT

The enormous Rs. 6000-crore Indian biscuit market will soon have a new entrant. UK’s

premier biscuit company, United Biscuits, is looking at entering this profitable market by

tying up with local firms.

United Biscuits is the world’s third largest biscuit firm, and is currently exploring

manufacturing, marketing and distribution options in emerging markets like India. It is little

wonder that UB has identified India as a strong market to explore, considering India is the

world’s second largest manufacturer of biscuits, after USA. Access to this huge market is said

to be ultra profitable for several international food brands, and UB is going with the flow.

The biscuit industry in India is presently growing at the rate of 13% per annum. Despite the

potential and the fast growth rate of the industry, penetration is known to be a difficult affair.

Several companies have failed to fit the bill when it comes to consumer tastes, and among

these have been giants like Hindustan Lever.

The industry is primarily held by top players like Britannia and Parle. In terms of value,

Britannia leads the market with 37 per cent market share, followed by Parle’s 31.3 per cent.

However, a new competitor on the scene – ITC’s Sunfeast – has slowly been transforming the

industry with its foray in 2003.

With its focus on bringing new and innovative products to consumers, ITC steadily gained a

considerable market share which currently stands at 6.3 per cent. Apart from good products

and aggressive marketing, ITC has the advantage of well-built distribution channels, thanks to

its tobacco business. However, Sunfeast still has a long way to go as it continues to battle it

out with the industry’s big two.

In this scenario, it would be interesting to see how well a massive European brand like United

Biscuits would fare and who it would tie up with. Talks are presently on with several firms in

India including Parle. UB is said to be eager to tap into the high-margin health segment of

biscuits such as its McVitie’s brand. This would be a good idea in a country which is

increasingly becoming health conscious, particularly the urban population of India.

1.5 Brands of Major Biscuit Manufacturers:

Parle Sun Feast Britania Priya Gold

Parle Sunfeast fit kit Tiger Don

Krackjack - 50-50 CNS

Magix - Pure Magic -

Parle cream - Cream Treat Classic Cream

Butter cookies Golden bacs Good Day Butter Bite

- - Greetings -

- - Little Heart -

Marie Choice Sunfeast benne vita Marie Gold Marie lite

Milk Shakti Sunfeast Milky Magic Milk Biscuit Big Boss

- Sunfeast multigrain - -

Hide & Seek Dark fantasy -

Fun Center - - Kids Cream

Sixer - - -

Golden Roles - - -

Monaco Bites - Nice Time Cheese Crackers

- - - Coconut Crunch

1.6 Industry Framework

Explanation:

The above framework of biscuit industry shows that consumer generate demand of biscuits

through four factors that is brand recall, quality of biscuits, nutrition contents and price of the

biscuits. They deliver the flow of money to manufacturers to satisfy their above demand.

Manufacturer produces the biscuit by keeping in mind the demand of consumers. Then the

flow of the biscuits (goods) reach to the market through three factors i.e. distribution, factory

location and market knowledge. In the final stage goods reach to the final consumer.

1.7 Biscuit Industry life cycle:

Life cycle models are not just a phenomenon of the life sciences. Industries experience a

similar cycle of life. Just as a person is born, grows, matures, and eventually experiences

decline and ultimately death, so too do industries. The stages are the same for all industries,

yet industries cycle through the stages in various lengths of time. Even within the same

industry, various firms may be at different life cycle stages. Strategies of a firm as well as of

competitors vary depending on the stage of the life cycle. Some industries even find new uses

for declining products, thus extending the life cycle. Others send products abroad in hopes of

extending their life.

The growth of an industry's sales over time is used to chart the life cycle. The distinct stages

of an industry life cycle are: introduction, growth, maturity, and decline. Sales typically begin

slowly at the introduction phase, and then take off rapidly during the growth phase. After

levelling out at maturity, sales then begin a gradual decline. In contrast, profits generally

continue to increase throughout the life cycle, as companies in an industry take advantage of

expertise and economies of scale and scope to reduce unit costs over time.

The marketing mix decisions in the decline phase will depend on the selected strategy. For

example, the product may be changed if it is being rejuvenated, or left unchanged if it is

being harvested or liquidated. The price may be maintained if the product is harvested, or

reduced drastically if liquidated.

If we see the overall biscuit industry of India in the life cycle stage we find that it is in the

Growth stage because it is growing at the rate of 15 to 17% every year. It is well established

industry in India. It has a very large number of players in the organized as well as many

players in unorganized sector. It is also well established in local areas of all the parts of the

country. It has also acquired a very large amount of potential sales of biscuit in the country.

Biscuit is such product which is highly consumed by people of all age. The industry is facing

good competition in the country. Four major players of the industry i.e. Parle, Britannia,

Sunfeast and PriyaGold are fighting hard to acquire market share of the industry.

And if we see the particular brands of biscuits than they are in different stages of life cycle.

For example the Parle’s Parle G, Parle Monaco and Krackjack is at its Maturity stage by

capturing most of India’s market. But on the other hand its biscuits like Parle Hide and Seek

and Parle Hide and Seek Milano are in the growth and introduction stage respectively.

1.8 Biscuit Making Process

MIXING: This is a process where all ingredients are put together in right proportion for

dough formation. These ingredients are then fed into Mixers where mixing is done and dough

is prepared for moulding/cutting .Major ingredients are flour, fat, sugar and others

as per the product one would like to have.

MOULDING: In this section we laminate the dough into sheet, which then passes down to

gauge rollers, and sheet thickness is achieved for moulder/cutter. Here we have a cutter or

moulder as per the variety where one gets the shape and sizes of biscuits.

BAKING: This is the area where we pass these moulded wet biscuit into baking oven. The

biscuits are baked on desired temperatures. Various type of heating are available now days as

per the convenience and cost. Different type ovens are available.

COOLING: These baked biscuits are then passed on to cooling conveyors for natural

cooling prior too packing .The temperatures are brought down to room temperatures

PACKING: These biscuit are then stacked and fed into packing machine for packing

Different packing material are available for packing of these biscuit in different packs slug

packs , pouch pack or family packs etc. These packs are then put into secondary packaging

like cartons to be transported to retailers.

Majors Biscuit Industry Players In India

2.1. Parle

In 1929 a small company by the name of Parle products emerged in British dominated India.

The intent was to spread joy and cheer to children and adults alike, all over the country with

its sweets and candies. The company knew that it wouldn’t be an easy task, but they decided

to take the brave step. A small factory was set up in the suburbs of Mumbai, to manufacture

sweets and toffees. A decade later it was upgraded to manufacture biscuits as well in addition

to sweets and toffees. Having already established a reputation for quality, the Parle brand

name grew in strength with this diversification. Parle Glucose and Parle Monaco were the

first brands of biscuits to be introduced, which later went on to become leading names for

great taste and quality. Biscuits were very much a luxury food in India, when Parle began

production in 1939. Apart from Glucose and Monaco biscuits, Parle did offer a wide variety

of brands. Since then, the Parle name has grown in all directions, won international fame and

has been sweetening people's lives all over India and abroad.

Biscuit Basket of Parle-G

There are always some kids who seem smarter than the rest. Ever wonder how they got to be

that way? If you had to think real hard for the answer, then probably you've never eaten

Parle-G. Parle-G is the new generation's official power supply. Providing kids with the vital

vitamins and minerals necessary for all round mental and physical development

Parle-G Magix

What is the power of taste? Can it get government officers to get your papers through faster?

Probably! Can it help you make friends and influence people? It's worth a shot! Can it land

you a lead role in a blockbuster movie, even if you can't act?

Fact is, people will do anything for a taste of Parle-G Magix. But the real question is, will

you be willing to share your packet of Parle-G Magix to find out exactly how much power

you can exert? With two delicious tastes - Chocó & Cashew, Parle-G Magix has put great

power in your hands. Go ahead & wield them wisely

PARLE-G MAGIX CHOCO

Wheat flour, Sugar, Edible vegetable oils, Cocoa Solids, Milk products, Invert syrup, Salt,

Leavening agents, Permitted emulsifier, Calcium & Iron salts, Vitamins and Dough

conditioner. Contains Permitted Natural Colour and Added Flavours.

Best before 6 months from packaging

Krackjack

A little sweet - A little salty… That's what makes Krackjack very, very delicious! This

delightful biscuit is acclaimed in India and across the world for its controversial sweet and

salty taste. Krackjack has won 11 Gold, 3 Silver and 1 Bronze award at the

'Monde Selection'. You can enjoy Krackjack any time plain or with a host of beverages like

tea, coffee or milkshakes

Secret Ingredients

Wheat Flour, Sugar, Edible Vegetable Oils, Invert Syrup, Skimmed Milk Powder, Salt,

Leavening Agents, Lactic Acid, Permitted Emulsifier, Flavours and Dough Conditioners.

Monaco You see, these biscuits are so light and crispy, they lift your spirits. And puts you just in the

right frame to battle the odd irritants life throws up

And you can also top Monaco with your own imagination. You must try it sometime. The

great light taste of Monaco goes well with just about anything, making it just the right party-

time snack

2.2 Britannia

The story of one of India's favourite brands reads almost like a fairy tale. Once upon a time,

in 1892 to be precise, a biscuit company was started in a nondescript house in Calcutta (now

Kolkata) with an initial investment of Rs. 295. The company we all know as Britannia today.

The beginnings might have been humble-the dreams were anything but. By 1910, with the

advent of electricity, Britannia mechanised its operations, and in 1921, it became the first

company east of the Suez Canal to use imported gas ovens. Britannia's business was

flourishing. But, more importantly, Britannia was acquiring a reputation for quality and

value. As a result, during the tragic World War II, the Government reposed its trust in

Britannia by contracting it to supply large quantities of "service biscuits" to the armed forces.

PRODUCT PROFILE

50-50 With a brand name like 50-50, can the product be anything

but fun? Launched in 1993, 50-50 belongs to the family of

crackers and is considered the "very very tasty tasty" snack.

Britannia 50-50 is the leader in its category with more than one-third of market share. The

versatile and youthful brand constantly aims to provide a novel and exciting taste experience

to the consumer. As a result, in 2001, the delicious Maska Chaska was launched as a variant

of the original brand and became an instant success. Recently, another offering from the 50-

50 stable was introduced - Pepper Chakkar. This thin and crisp snack came with a distinctive

peppery flavour and a mysterious ingredient that left everybody wondering "What it eez?"

The consumer's verdict, though, is clear: Britannia 50-50 and its variants are a 100% hit.

TIGER Tiger, launched in 1997, became the largest brand in

Britannia's portfolio in the very first year of its launch and

continues to be so till today. Tiger has grown from

strength to strength and the re-invigoration in June 2005

has further helped bolster its growth in the highly

competitive glucose biscuit category.

Tiger is more aptly described as a "nutri-glucose" biscuit, and comes with the added

goodness of wheat and milk. It is for modern mothers who play an enabling role for their

children to compete in today's world and thus want the best.

Over the years, Tiger has become the mass-market face of Britannia symbolizing fun and

energy in both urban and rural India, and transcending glucose biscuits.

Tiger Coconut was launched in 2001 and Tiger Creams was added to its repertoire in 2002.

Tiger Cream comes in 4 flavours (Orange, Rose Milk, Kesar and Elaichi) and promises to

bring more fun and more energy to children across the country.

GOOD DAY Britannia Good Day was launched in 1986 in two

delectable avatars - Good Day Cashew and Butter. Over

the years, new variants were introduced - Good Day Pista

Badam in 1989, Good Day Chocochips in 2000 and

Good Day Choconut in 2004.

This rich biscuit enjoys a fan following of consumers across all ages, loyal to the brand

promise of a great taste evident from the visibly abundant ingredients. Good Day is amongst

the fastest growing brands in Britannia's portfolio and is today the market leader with almost

2/3 share of the market. The brand is synonymous with everyday treats that infuse happiness

into people's daily lives.

LITTLE HEARTS Little Hearts was launched in 1993 and targeted the

growing youth segment. A completely unique

product, it was the first time biscuits were retailed in

pouch packs like potato wafers. The launch message

introduced a special taste experience that made the

unlikeliest characters - like Dracula and Frankenstein - melt. In 1997, the 'Direct Dil Se'

campaign encouraged youngsters to openly express their feelings.

And in 2003, two variants called Little Hearts Chocolate and Little Hearts Sesame were

rolled out with a campaign "Dil sabka actually sweet hai". With Little Hearts, Britannia has

tasted the sweet taste of success.

MARIE GOLD Britannia's oldest brand enjoys a heritage that spans the

last 50 years - and going strong. In a market swamped

with me-too products and where even the name 'Marie'

has become generic, Britannia Marie Gold has maintained

its stronghold. Today, the ever-popular Marie Gold is

synonymous with the 'Tea Time Biscuit'. Its taste, crispiness and lightness make it a must for

every tea break.

MILK BIKIS Kids may dislike drinking milk, but they love Britannia

Milk Bikis! Milk Bikis has been trusted by mothers as

a source of growth energy of milk and their loyalty to

the brand has made it an integral part of their children's

nutrition regimen.

In 1996, Milk Bikis launched a variant called Milk Cream. These round biscuits come with

smiley faces and are full of milk cream that makes them very popular with children. Milk

Cream also promoted the idea of 'eating milk' in a yummy way, which makes mothers happy

as well.

To keep pace with the demands of the new generation and to bring milk nutrition to the

masses in a delightful form, Milk Bikis, went one step further in the last quarter of 2006 in

providing not just energy but ‘developmental fuel’ for children. With a unique and attractive

honeycomb design and an enhanced product experience, the new biscuit is now fortified with

SMART NUTRIENTS – 4 vital vitamins, iron and iodine, proven to aid mental and physical

development in growing kids.

2.3 Sun Feast

In July 2003, ITC forayed into the Biscuits market with the Sunfeast range of Glucose, Marie

and Cream Biscuits. Sunfeast’s brand essence, "Spread the Smile" connotes happiness,

contentment, satisfaction and pleasure. The mascot Sunny reinforces the emotional aspects of

the brand. In a span of 6 years Sunfeast has launched many new varieties and has its presence

in almost all types of biscuit categories.

Sunfeast Milky Magic

Packed with goodness of milk these deliciously nutritious crisp and crunchy biscuits are a

favorite among mothers and kids. Milky Magic has the ‘Magic of 2’ - A perfect balance of

energy that aids physical strength and mental ability. These biscuits strike the right balance of

milk and wheat which helps in an all round development and nurturing of the child.

Sunfeast Marie Sunfeast Marie Light:

This ideal teatime biscuit is made from the finest quality wheat high in fibre and keeps one

light and healthy through the day.

Orange Marie :

It has the distinction of being one of the most successful i It has the distinction of being one

of the most successful innovative Marie biscuits and is liked by one and all

Sunfeast Golden Bakery

Sunfeast Golden Bakery is a premium cookie on an

innovative and differentiated platform. Launched

nationally in March 2008, these cookies are made from

the recipes crafted by the master bakers of ITC Hotels

and are slowly baked in the traditional way till they are

golden brown and develop the crispy broken crust

texture.

The Sunfeast Golden Bakery cookies are available in

three distinct flavours - Butter-Nut, Butterscotch and

Choco-Nut cookies. These products are designed to

give consumers a rich & truly indulgent experience.

Sunfeast Dark Fantasy

Inspired by the Master Chefs of ITC hotels, it is the richest of

chocolate vanilla biscuits. These biscuits are created using

carefully chosen premium ingredients for a sensory experience

unlike any other. Dark Fantasy is more than a biscuit, it’s a

luxurious mix of aromatic cocoa and vanilla.

Sunfeast Glucose

For those light hunger pangs, a wholesome & nutritious choice as

these golden brown biscuits are made from the best quality wheat.

Sunfeast Glucose biscuits are ideal not just for kids but adults too.

2.4 Priyagold

Surya Food & Agro Ltd. was incorporated in November 1992 and commenced its commercial

operations of manufacturing & selling of biscuits under brand “Priyagold” in October 1993.

Over a period, they have established strong manufacturing capabilities and have invested

substantially in developing consumer preference for our products. Our trademarks / brands “Haq

Se Mango” & “Priyagold” have emerged as one of the most powerful brands in the FMCG sector.

They have three plants located in Greater Noida, Lucknow & Surat. They also outsource some of

our requirements to another plant located in Hyderabad. Their capacities have reached 1,50,000

MT p.a., which along with strong brand building and distribution capabilities have enabled us to

command a sizable market share in the biscuit market despite competition from well-established

players in the industry.

After establishing their foothold in biscuit industry, they continued to adopt strategy to identify and

commercialize profitable growth opportunities by leveraging established brand and distribution

network. Following this strategy, they diversified into manufacturing of “fruit juices” through their

wholly owned subsidiary “Surya Fresh Foods Ltd.” in January 2006. The manufacturing facility is

located at Greater Noida, U.P. They have consciously invested in creating markets for fruit juices

and have established brands such as “Fresh Gold” & “Treat”.

Butter Bite Premium Biscuits:

Priyagold’s Butter Bite Premium will fill you with a buttery experience with crispy & fresh taste.

It’s a combination of pure butter and fresh filthier to give you perfect health.

Ingredients

Wheat flour, Edible Refined hydrogenated vegetable oils (Palm oil/ Soya bean Oil/ cottonseed oil

and sesame oil), Sugar, Sweetened Condensed Milk, Butter, Desiccated Coconut Powder, Invert

Syrup, Liquid Glucose, Pistachio, Almond Nuts, Leavening Agents (Ammonium Bi-carbonate &

Sodium Bi-Carbonate), Processed Cheese, Iodized Salt, Dough Conditioners (Sodium Meta Bi

Sulphite), Contains added flavours (Butter).

Available in

50g, 100g & 230g packs

Butter Bite Badam Pista

Butter Bite Badam Pista brings to you, the real taste and traditional qualities of Badam-Pista

added with great buttery taste. So, all you taste lovers, empower yourself.

Butter Bite Kesar Biscuits

Butter Bite Kesar brings to you, familiar scent of kesar soaked with desi butter, so you get tasty

surprise with every bite. So, let’s not wait anymore, go grab it.

Ingredients

Wheat flour, Edible Refined hydrogenated vegetable oils (Palm oil/ Soya bean Oil/ cotton seed oil

and sesame oil), Sugar, Invert Syrup, Sweetened Condensed Milk, Liquid Glucose, Leavening

Agents (Ammonium Bi-carbonate & Sodium Bi-Carbonate), Iodized Salt, Mono acid Calcium

Sulphate, Dough Conditioners (Sodium Meta Bi Sulphite), Contains Permitted natural Saffron,

Contains added flavours (Saffron).

Available in 50g, & 230g packs

Classic Cream Milk Biscuits

Classic Cream Milk biscuit brings to you all the energy of milk and freshness of flour to provide

you perfect taste along with health. So, enjoy the perfect blend.

Ingredients

Wheat Flour, Sugar, Edible Refined Hydrogenated Vegetable Oils (Palm Oil/ Soya Bean Oil/

Cotton Seed Oil And Sesame Oil), Sweetened Condensed Milk, Invert Syrup, Liquid Glucose,

Iodised Salt, Leavening Agents (Ammounium Bi-Carbonate & Sodium Bi-Carbonate), Permitted

Emulsifiers (Glycerly Mono Stearate), Soya Lecithin, Dough Conditioners (Sodium Meta Bi

Sulphite), Contains Added Flavours (Milk & Vanilla)

Available in

65g, & 130g packs

Kids Cream Butter Biscuits

Kids Cream Butter Biscuit is real creamy sensation for your taste. Continuing Priyagold’s

tradition, it brings to you, perfect combination of taste and health, as it is rich in protein and

calcium. So, all you kids and adults, just rush to have a bite of ultimate taste.

Ingredients

Ingredients: Wheat Flour, Sugar, Edible Refined Hydrogenated Vegetable Oils (Palm Oil/ Soya

Bean Oil/ Cotton Seed Oil And Sesame Oil), Skim Milk Powder, Liquid Glucose, Invert Syrup,

Permitted Emulsifiers (Glycerly Mono Stearate), Sweetened Condensed Milk, Leavening Agents

(Ammounium Bi-Carbonate & Sodium Bi-Carbonate), Iodised Salt, Soya Lecithin, Dough

Conditioners (Sodium Meta Bi Sulphite), Contains Added Flavours (Butter).

Kids Cream Chocolate Vanilla Biscuits

Savour the taste of chocolate & vanilla with Kids Cream Chocolate Vanilla. Priyagold’s yet

another lip smacking biscuit will definitely leave you craving for more. So, don’t wait to taste an

ideal combination of the two.

Ingredients

Wheat Flour, Sugar, Edible Refined Hydrogenated Vegetable Oils (Palm Oil / Soya Bean Oil /

Cotton Seed Oil And Sesame Oil), Sweetened Condensed Milk, Cocoa Powder, Skim Milk

Powder, Permitted Emulsifiers (Glycerly Mono Sterate), Liquid Glucose, Invert Syrup, Leavening

Agents (Ammonium Bi-Carbonate & Sodium Bi-Carbonate), Iodised Salt, Soya Lecithin, Dough

Conditioners (Sodium Meta Bi-Sulphite), Contains Permitted Synthetic Food Colours, Chocolate

Brown: - Eec No. E 155, Ci Name Food Brown 3, Ci No. 20235, Chocolate Carmeline And Added

Flavours (Vanilla).

Kids Cream Strawberry Biscuits

Kids Cream Strawberry Biscuit is full of delicious strawberry cream, a taste to linger long with

you. Priyagold brings to you taste with health. So, all you kids and adults, just rush to have a bite

of ultimate taste.

Ingredients

Wheat Flour, Sugar, Edible Refined Hydrogenated Vegetable Oils (Palm Oil/ Soya Bean Oil/

Cotton Seed Oil And Sesame Oil), Skim Milk Powder, Liquid Glucose, Invert Syrup, Permitted

Emulsifiers (Glycerly Mono Stearate), Sweetened Condensed Milk, Leavening Agents

(Ammounium Bi-Carbonate & Sodium Bi-Carbonate), Iodised Salt, Soya Lecithin, Dough

Conditioners (Sodium Meta Bi Sulphite), Citric Acid, Contains Permitted Synthetic Food Color

(I) Erythrosine : Fd & C Red No. 3, Ci Food Red 14, Ci No. 45430, Eec No. E – 127, Lb – Rot –

I, And Added Flavours (Strawberry).

Available in

75g, & 150g packs

Ingredients

Wheat flour, Edible Refined hydrogenated vegetable oils (Palm oil/ Soya bean Oil/ cottonseed oil

and sesame oil), Sugar, Sweetened Condensed Milk, Butter, Desiccated Coconut Powder, Invert

Syrup, Liquid Glucose, Pistachio, Almond Nuts, Leavening Agents (Ammonium Bi-carbonate &

Sodium Bi-Carbonate), Processed Cheese, Iodized Salt, Dough Conditioners (Sodium Meta Bi

Sulphite), Contains added flavours (Butter).

Strategic Analysis and Models

3.1 SWOT Analysis

External factors Internal factors

External Opportunities ( O)

External Threats ( T )

Internal Strength ( S )

“SO” Maxi-Maxi strategy

“ST” Maxi-Mini strategy

Internal Weakness ( W )

“WO” Mini-Maxi strategy

“WT” Mini-Mini strategy

1. “SO” (Maxi- Maxi) Strategy Maxi-Maxi is a strategy in which a firm use its internal strength to grab the external

opportunities.

In biscuit industry ITC ( Sunfeast ) has used is internal strengths and resources through

forward integration and concentration differentiation to grab the external opportunity of

increasing market share by attacking on parle and Britannia’s weakness of lack of innovation

in between year 2009 to 2013.

2. “ST” (Maxi- Mini) Strategy Maxi-Mini is the strategy in which a firm uses its internal strength to minimize its external

threats.

Britannia has made following efforts ( use Internal Strength ), in order to maintain the threat

of losing market share due to aggressive launching of new biscuit brands by ITC sun feast.

• Britannia has been investing significantly in higher and better quality of human

resources both at the front end and at the back end.

• In 2013, Britannia divided its product portfolio into two distinct categories: "health

and wellness" and "delight and lifestyle." Products such as Tiger glucose and Nutri

Choice biscuits fall under the former category, while Good Day and Treat fall under

the latter.

• Britannia has doubled its ad spending in the last three years. It is also working to

increase trade marketing visibility and, for the first time ever, has signed on with a

trade marketing agency. According to one of director of Britannia Company Mr.

Mehta, Britannia plans to increase advertising and marketing spending to10% to

12% of sales over the next few years from a current 7%.

• On the infrastructure front, Britannia has added 200,000 tons of annual capacity, an

increase of about 60%. It has also devised a long term distributed manufacturing

strategy, put in place a continuous replenishment supply efficiency system, and

strengthened its supply chain management significantly.

3. “WO” (Mini-Maxi) Strategy

Mini-Maxi is the strategy in which a firm minimizing its internal weakness by taking

advantage of external opportunities.

After successfully launching juices, leading biscuit brand Priyagold is planning to enter the

chocolates segment with the long-term aim of becoming a major player in the FMCG food

products.

According to a Nielsen survey, the chocolate market is estimated at about Rs 1,900 crore and

growing at 18-20 per cent with Cadbury being the leader having 72 per cent share. Other

major players include Nestle and Amul.

Thus by this way Priya gold has grab the opportunity to increase its sales by entering in to

chocolate segment and by removing its weakness of existence in only biscuit and juice

segment.

4. “WT” ( Mini-Mini) Strategy

Mini-Mini is the strategy in which a firm minimizing its internal weakness by avoiding

external threats.

In the year 2008 to 2013 two major players of biscuit industry both parle and Britannia not

launched any major brand, which is considered as biggest weakness of these two major

players in that period, This weakness becomes the biggest opportunities for their competitors,

specially ITC Sun feast, which was just newly launched in the market.

In 2003, ITC launched Sunfeast with six ranges. But it was a calculated risk. ITC stuck to

category favourites like Glucose, Marie and Bourbon cream. Along with that, it also launched

innovations such as orange-flavoured Marie, Marie light and butterscotch-flavoured cream

biscuits. In 2004, Sunfeast followed this up with the launch of Sunfeast Milky Magic. More

recently, it also has launched the Sunfeast Snacky and Sunfeast Golden Bakes.The biscuits

industry had not witnessed any major product innovation in years.

AC Nielsen has indicated that both Parle and Britannia are losing market shares. According

to the AC Nielsen retail sales audit in March 2011, both Britannia and Parle have lost

volumes. Britannia’s shares have dropped from 35.8 per cent in 2009-10 to 30.5 percent in

May 2011 (volumes).

Parle’s shares have also dropped from 42.2 to 38.4 percent in the same period. Even Priya

Gold has seen a minor dip from 6.4 per cent to 5 per cent. ITC’s Sunfeast has been a big

gainer with its share increasing from 2.7 to 6.7 per cent.

In order to avoid this external threat of loosing their market share, Marie — was launched by

Parle in early February 2006. Britannia launched its new double-flavoured Mariegold and 50-

50 Chakkar. And Parle is all set to launch at least two new products before the end of this

year.

Thus by this way both Parle and Britannia have avoided external threat by minimizing

internal weakness of lack of continuous innovation in a biscuit industr

3.2 PESTL Analysis:

s

Explanation

In analyzing the macro-environment, it is important to identify the factors that might in turn

affect a number of vital variables that are likely to influence the organization’s supply and

demand levels and its costs . The "radical and ongoing changes occurring in society create an

uncertain environment and have an impact on the function of the whole organization" A

number of checklists have been developed as ways of cataloguing the vast number of possible

issues that might affect an industry. A PESTL analysis is one of them that is merely a

framework that categorizes environmental influences as political, economic, social and

technological forces. Sometimes two additional factors, environmental and legal, will be

added to make a PESTL analysis, but these themes can easily be subsumed in the others. The

analysis examines the impact of each of these factors (and their interplay with each other) on

the business.

Political

• Taxes

• Production and Distribution licenses

Economical

• ↑ in per capita income

• India’s GDP growing at an average 8%

Social

• ↑ in per capita consumption

• India is 3rd largest producer of biscuit

Technological

• Innovation

• R&D

Legal

• Discrimination law, consumer law, antitrust law, employment law

• Health and safety law

1. Political factors are how and to what degree a government intervenes in the economy.

Specifically, political factors include areas such as tax policy, labour law, environmental

law, trade restrictions, tariffs, and political stability. Political factors may also include

goods and services which the government wants to provide or be provided (merit goods)

and those that the government does not want to be provided (demerit goods or merit bads).

Furthermore, governments have great influence on the health, education, and infrastructure

of a nation.

2. Economic factors include economic growth, interest rates, exchange rates and the

inflation rate. These factors have major impacts on how businesses operate and make

decisions. For example, interest rates affect a firm's cost of capital and therefore to what

extent a business grows and expands. Exchange rates affect the costs of exporting goods

and the supply and price of imported goods in an economy

3. Technological factors include ecological and environmental aspects, such as R&D

activity, automation, technology incentives and the rate of technological change. They can

determine barriers to entry, minimum efficient production level and influence outsourcing

decisions. Furthermore, technological shifts can affect costs, quality, and lead to

innovation.

4. Legal factors include discrimination law, consumer law, antitrust law, employment law,

and health and safety law. These factors can affect how a company operates, its costs, and

the demand for its products.

3.3 Five Force Model

Explanation

1. The Threat of Substitute Products

The existence of products outside of the realm of the common product competitors which

increases the propensity of customers to switch to alternatives

• Relative price performance of substitutes : low

• Buyer switching costs : low

• Perceived level of product differentiation : high level of differentiation

The substitute products includes Khari, Tost, Nankhattai, Bhakhari, Khakhara, Bread,

Packaged snacks and other bakery products affects the demand of biscuit. The uses of these

all home made products are responsible for either in increase or decrease in the demand of the

biscuits in the country.

2. The Threat of the Entry of New Competitors Profitable markets that yield high returns will draw firms. This results in many new entrants,

which will effectively decrease profitability. Unless the entry of new firms can be blocked by

incumbents, the profit rate will fall towards a competitive level (perfect competition).

• The existence of barriers to entry (patents, rights, etc.) : low

• Brand equity : high in organized sector

• Switching costs or sunk costs : low

• Capital requirements : high in organized sector

• Access to distribution : strong distribution channel is required

• Customer loyalty to established brands : high in organized sector

• Government policies : moderate

The biscuit industry can be divided in to two parts, organized sector and the unorganized

sector. For new firms it is easy to enter in the unorganized sector, but if a firm wants to enter

in the organized sector then it must have adequate production capacity, heavy promotional

and advertisement and strong distribution channel. The player with all the above resources is

a big threat to the existing industry players.

3. The Bargaining Power of Customers Also described as the market of outputs. The ability of customers to put the firm under

pressure and it also affects the customer's sensitivity to price changes.

• Degree of dependency upon existing channels of distribution : high

• Buyer volume : high

• Buyer information availability : high( through advertisement )

• Availability of existing substitute products : high

• Buyer price sensitivity : moderate

In the industry there are most of customers who are price sensitive and in the market there are

many biscuits which are available in the low to moderate price range which affects the

demand of the premium brand of biscuits. And the other factor is the like of the customers for

the other bakery products.

4. The Bargaining Power of Suppliers Also described as market of inputs. Suppliers of raw materials, components, labor, and

services (such as expertise) to the firm can be a source of power over the firm. Suppliers may

refuse to work with the firm, or e.g. charge excessively high prices for unique resources.

• Degree of differentiation of inputs : moderate

• Presence of substitute inputs : high

• Employee solidarity (e.g. labor unions) : high in organized sector

The main suppliers of the biscuit industry includes the suppliers of sugar, wheat, milk have

their own impact on the industry. Apart from this the suppliers of other ingredients like

chocolate, glucose, butte, cashew, coconut, strawberry etc also affects the prices of biscuit

products.

5. The Intensity of Competitive Rivalry For most industries, this is the major determinant of the competitiveness of the industry.

Sometimes rivals compete aggressively and sometimes rivals compete in non-price

dimensions such as innovation, marketing, etc.

• Number of competitors : 14 players in organised sector

• Rate of industry growth : high ( 15-17% p.a.)

• Exit barriers : low

• Level of advertising expense : high in organized sector

• Economies of scale : high in organized sector

There is tough competition in the organized sector between major four players Parle,

Britannia, Sunfeast and Priyagold to grab the market share in the industry.

3.4 Strategic Group Mapping

Explanation :

The above graph of strategic group mapping of Price and Distribution shows that Parle and

Britannia strong have distribution channel with low prices.

While Priyagold and Sunfeast have moderate level of distribution channel and moderate

prices.

And while Marico and Horlicks have low distribution channel and high prices.

Explanation The above graph of strategic group mapping of Nutrition content and Brand shows that Parle and Britannia have strong Brand name with high nutrition content.

While Priyagold and Sunfeast have moderate level of Brand name and moderate Nutrition content.

And while Marico and Horlicks have low Nutrition content and low Brand name.

Explanation

The above graph of strategic group mapping of Innovation and Technology shows that Parle

and Britannia have advance Technology and high Innovation.

While Priyagold and Sunfeast have advance level of Technology and moderate Innovation.

And while Marico and Horlicks have advance level of Technology and low Innovation.

.

Explanation

The above graph of strategic group mapping of Packaging shows that all the players in the

biscuit industry have advanced level of packaging but Parle has upper hand compare to other

players of biscuit industry.

3.5 Divers forces

According to Innova Market Insights, two opposing forces within the sweet biscuits market

are at work globally. From one side, the treat image of biscuits is driving the premium sector

forward; from the other, rising health concerns have also raised interest in better-for-you

products.

Chocolate biscuits have been one of the main beneficiaries of rising interest in the treat image

of biscuits and the market has continued to see growth in most countries despite ongoing

financial and health concerns. According to Lu Ann Williams, Research Manager for Innova,

this is probably attributable to the ongoing demand for everyday treats and the continuing

tendency to “trade off,” by mainly choosing healthy options but then having an indulgent

product as a reward. “Biscuits with some sort of chocolate content accounted for a significant

48% of the global sweet biscuits launches recorded by Innova in 2011, although this was

down from over 60% five years previously, perhaps reflecting the greater choice of biscuits

varieties and flavours now on offer,” she notes.

While indulgence is keeping the market for chocolate biscuits buoyant, health can still be a

factor in purchasing decisions, although not to the same extent as for some other food and

drinks products. Companies have been endeavouring to improve the nutritional profile of

their standard products in many instances and this may have inhibited growth in the specific

healthier or better-for-you biscuits market. Nearly 30% of global biscuits launches in 2011

were positioned on a health platform of some kind, rising to over 40% for savoury biscuits

and falling to just over a quarter for sweet biscuits.

By far the most popular health claims were those relating to naturalness and the lack of

artificial additives and/or preservatives, reflecting rising levels of interest in clean labelling.

Over 30% of launches carrying health claims used this type of positioning, equivalent to 12%

of biscuits launches as a whole.

RATION ANALYSIS

Ratio analysis involves establishing a relevant financial relationship between components of

financial statement. Two companies may have earned the same amount of profit in a year, but

unless the profit is related to sales or total assets, it is not possible to conclude which of them

is more profitable. Ratio analysis helps in identifying significant relationship between

financial statement items for further investigation. If used with understanding of industry

factor and general economic conditions, it can be powerful tool for recognizing a company’s

strengths as well as its potential trouble spots.

4.1 TREND ANALYSIS OF PRODUCTION AND SALES

4.1.1 AGGREGATE INDUSTRY SALES TREND

EXPLANATION

The above trend of sales of biscuit industry shows that, the overall sales of Biscuit industry is

gradually increase in each year except in the year 2012-13. This trend of industry sales shows

that biscuit industry is in the growth phase.

0500

10001500200025003000350040004500

Sales Trend

Sales Trend

4.1.2 AGGREGATE INDUSTRY PRODUCTION TREND

Year 2008-09 2009-10 2010-11 2011-12 2012-13 Annual Prod. Fig. 1.1 1.25 1.42 1.6 1.75

EXPLANATION

The above annual production figures of Biscuit industry shows the increasing trend since last

five years. This graph also shows that in order to meet the demand of Biscuit products, all the

firms increasing their production almost at the rate of 15 to 20 % in each year.

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2008-09 2009-10 2010-11 2011-12 2012-13

Production Trend

Production Trend

4.2 Companies’ Ratio Analysis

4.2.1 Liquidity Ratio

Current Ratio

Current Assets = ------------------------ Current Liabilities Year 2008-09 2009-10 2010-11 2011-12 2012-13 Parle 1.32 2.23 2.23 2.69 2.66 Priyagold 0.89 1.99 2.33 3.18 2.32 Britannia 0.85 0.84 1.07 1.17 1.22 Sunfeast -0.039 0.97 1.25 1.33 1.36

Interpretation:

It is generally believed that 2:1 shows a comfortable working capital condition that is current

assets should be twice to the current liabilities. Current ratio means ability of the firm to meet

its obligation.

The current ratio of four major players of last five years shows that out of four players only

two players that is Parle and Surya ( Priyagold) is able to maintain the ideal ratio 2:1 since

last four years while other two players Britannia and Sunfeast are failed to maintain ideal

current ratio. So we can say that Parle and Surya food are successfully able to meet their

obligations.

From the above graph we can see that when ITC newly entered in the biscuit market with

sunfeast it had negative current ration in year 2008-09, after that the current ratio of the

company is continuously increasing.

-0.5

0

0.5

1

1.5

2

2.5

3

3.5

2008-09 2009-10 2010-11 2011-12 2012-13

Parle

Surya

Britaniya

Sunfeast

1.1 Quick Ratio

Current asset – Inventories = ------------------------------------------------- Current liabilities

Year 2008-09 2009-10 2010-11 2011-12 2012-13 Parle 1.130178 1.128705 1.783645 2.076996 2.163145 Priyagold 0.22123 0.53 0.72368 1.17375 0.96101 Britannia 0.153244 0.41 0.47 0.52 0.68 Sunfeast 0.0762671 0.43 0.57 0.58 0.56

Interpretation:

The Quick ( Acid Test ) ratio is the measurement of firm’s ability to convert its current assets

quickly in to cash in order to meet its current liabilities. This is very exacting standard of

quick liquidity and it is satisfactory if the ratio is 0.5:1.

The above graph shows that Plarle is successful to maintain the ideal quick ratio from last

five years, while surya food has maintained its ideal quick ratio since last four years, while

Britannia and Sunfeast both are maintaining ideal quick ratio since last three years.

From the above graph we can also conclude that in last two years all the four major players of

biscuit industry have successfully achieved ideal quick ratio.

So we can say that all the four players are able to convert their current assets quickly in to

cash in order to meet its current liabilities in last two year

0

0.5

1

1.5

2

2.5

2008-09 2009-10 2010-11 2011-12 2012-13

Parle

Surya

Britaniya

Sunfeast

4.2.2. Profitability Ratio

2.1 Net Profit Ratio

Net Profit After Tax = -------------------------- * 100 Sales Year 2008-09 2009-10 2010-11 2011-12 2012-13 Parle 9.067993 11.5235 8.64549 5.926095 8.8175515 Priyagold 2.29279 0.91093 0.43939 1.01312 2.849581

Britannia 8.25 9.25 8.48 4.86 7.31

Sunfeast 24.84 24.84 22.19 21.4 21.5

Interpretation:

This ratio indicates how well company is performing. It is the basic criteria for measuring the

performance of the company. It measures how many percentage of net profit generated by

sales.

Net profit is also known as the net margin. It measures the relationship between net profit and

sales of the firm. A company with high net profit would be in advantageous position to

survive in the face of falling selling prices, rising cost of production or declining demand.

The above graph shows that all the four players have fluctuating trend in net profit ratio. ITC

has highest net profit ratio in last five years compare to other biscuit players, while Surya

food is far behind compare to ITC, Parle and Britannia.

0

5

10

15

20

25

30

2008-09 2009-10 2010-11 2011-12 2012-13

Parle

Surya

Britaniya

Sunfeast

2.2 Capital employed ratio

PAT = ----------------------- * 100 Capital Employed

Year 2008-09 2009-10 2010-11 2011-12 2012-13 Parle 137.81 109.25 152.88 178.7 148.51 Priyagold 79.13 52.54 45.25 32.38 45.79 Britannia 41.2 41.02 34.49 19.22 26.37 Sunfeast 36.09 33.09 36.26 37.24 36.6

Interpretation:

Rate of return measures profitability from a given level of investment. It is excellent indicator

of overall performance of a company. It shows how efficiently the company has utilized its

assets.

The above graph shows that the trend of capital employed ratios of all the four players are

fluctuating Parle has highest capital employed ratio compare to other three players. Which

shows that Parle has higher profitability from given level of investment and it has optimum

utilized its assets to generate it maximum returns compare to all three other players.

020406080

100120140160180200

2008-09 2009-10 2010-11 2011-12 2012-13

Parle

Surya

Britaniya

Sunfeast

2.3 Interest coverage ratio :

EBIT = ----------------------- * 100 Interest

Year 2008-09 2009-10 2010-11 2011-12 2012-13 Parle 958 421.7586 677.3529 166.4925 302.4219 Priyagold 672 94 16.0625 3.872 5.08547 Britannia 32.03 87.69 90.1 21.98 35.49 Sunfeast 68.97 56.01 209.63 456.67 258.92

Interpretation:

The interest coverage ratio is also known as “ Time Interest On Ratio “. The interest coverage

ratio measures the debt servicing capacity of firm in so far as fixed interest on long term is

concerned. A high ratio may imply unused debt capacity and a low ratio is a danger signal

that the firm is using is excessive debt.

The above graph shows that Parle has the highest interest coverage ratio compare to all other

three players. Because company has very low debt compare to other players.

Interest coverage ratio of Surya food (Priya Gold) is highly fluctuating, in the year 2008-09

the ratio is 672 and in the year 2011-12 the ratio is just 3.87, which shows that company is

using excessive debt in the year 2011-12, which is dangerous signal and shows the

inefficiency of the finance department. Interest coverage ratio of Other two players Britannia

and ITC (sun feast) shows the fluctuating trend

0

200

400

600

800

1000

1200

2008-09 2009-10 2010-11 2011-12 2012-13

Parle

Britaniya

Surya

Sunfeast

4.2.3 Activity Efficiency Ratio

3.1 Total Asset Turn Over Ratio

Net Sales = ------------------------------------------ Total assets Year 2008-09 2009-10 2010-11 2011-12 2012-13 Parle 2.193431 2.027496 2.644023 3.256953 3.608123 Priyagold 2.23972 2.90736 3.03072 2.03637 2.19742 Britannia 3.06 3.53 3.07 3.56 3.01 Sunfeast 0.98 0.95 1.08 1.17 1.16

Interpretation:

The Total asset turnover ratio indicates the level of efficiency of industry. The higher ratio

indicates the more efficient use of Total assets by all biscuit industry payers and lower ratio

indicates that the Total assets are not adequately utilized in business.

The above graph shows that Total assets ratio of Parle is almost in Increasing trend, while in

the other three players the ratio is in fluctuating trend.

The above graph also shows that Parle , Britannia and Surya Food (Priya gold) have good

Total asset turnover ratio, but only Sun feast (ITC) has poor Total asset turnover ratio

compare to other three biscuit players.

0

0.5

1

1.5

2

2.5

3

3.5

4

2008-09 2009-10 2010-11 2011-12 2012-13

parle

Surya

Britaniya

Sunfeast

3.2 Debt to equity ratio

Long term liabilities = ----------------------------- * 100 Shareholder’s fund

Year 2008-09 2009-10 2010-11 2011-12 2012-13 Parle 0 0 0.001084 0.000794 0.009972 Priyagold 0.01573 0.11385 0.18658 0.78242 0.68253 Britannia 0.090924 0.01 0.02 0.01 0.14 Sunfeast 0.01885318 0.03 0.01 0.02 0.02

Interpretation:

The debt-equity ratio shows the proportion of long term external equities and internal equities

I.e. proportion of funds provided by long term creditors and that provided by shareholders or

proprietors. The debt equity establishes the relationship between outside long term liabilities

and owner’s fund.

The above graph shows that Surya food has highest debt-equity ratio as compare to other

three players in last five years, which shows that Surya food’s long term liabilities are higher

than its shareholder’s fund.

The above graph also shows that Parle has very minor portion of long term liabilities (debt) in

last three years and it has no debt portion in first two years 2008-09 and 2009-10. As compare

to Surya food the other three players have very low portion of debt in its capital structure.

00.10.20.30.40.50.60.70.80.9

2008-09 2009-10 2010-11 2011-12 2012-13

Parle

Surya

Britaniya

Sunfeast

BUSINESS PLAN

5.1 PROJECT PROFILE

1. Name of the Project: BISCUIT INDUSTRY

2. Location within state/Country: AHMEDABAD G.I.D.C.

3. Nearest Road, Rail & Sea connection: AHMEDABAD

4. Estimated Capital Cost of the Project: 1,50,80,000

5. Raw Material: FOOD, SUGAR, BEKARY

6. Environment Impact: The project is an Environment Friendly Activity. There will be no Ecological

imbalance and Pollution hazards to the Localities because of the Project.

7. Time-frame for selection & completion

Of selection of Project: period of 12 months.

8. Government Incentive package applicable

To the Project: Capital Investment, Power, Interest, Transport, subsidies, etc.

5.2 INTRODUCTION

Ahmadabad is rural area attached to the Ahmadabad city. In Ahmadabad G.I.D.C. established which declared

as a industrial zone. The Bakery is the raw material required for this project. . Biscuits are the most

consumable wheat-based bakery product. They are highly nutritious, easy to digest, compact

in size, can be preserved for a long time and are easily and cheaply transportable over a long

distance because of their lightweight, the project location is selected here. Ahmadabad is connected to

Ahmadabad and other metro city with Roads and Railways.

The making of Bekary is the most universal spread manufacturing process all over. Biscuit industry in

India in the organized sector produces around 60% of the total production, the balance 40%

being contributed by the unorganized bakeries. The industry consists of two large scale

manufacturers, around 50 medium scale brands and small scale units ranging up to 2500 units

in the country,

This industry has carved for itself an important place among the Bakery’s of the State. It would provide

fulltime employment to the labours and skilled workers.

Name of the product

"Powepack Biscuit"

Charactaricties of product healthy

Crunchy

Light for health

With glucose

Selling phase

Which area u will cover....which class of people u will select....which of advertisement u will

select.

5.3 VISION OF THE PROJECT

“Customer Satisfaction’- by providing high quality in a professional and reliable manner through merit shop

philosophy, allowing it to be competitive, adaptable and creative”

5.4 MISSION OF THE PROJECT

• To provide jobs to rural skilful employees.

• To develop the economy of the region.

• To popular eco friendly products.

• To obtain maximum growth with minimum investment.

• To use the modern technology to the Biscuit industries.

•

5.5 SELECTION OF THE PROJECTS

• the main reasons that encourage me to select this project are given as follows as

• The main raw materials for the industry,

• Government policies beneficial to this project.

• I am interested in the Biscuit manufacturing industry.

• The local market not any Biscuit industry.

Today Biscuit demand increases day by day

My potential customers as follow as

• Biscuit manufacturing company

• Retailer of the Biscuit Product

• Government institution like Railways, State Transport

Competitor

• Other SME unit of biscuit in local market

• Major Player of the industries.

• Machinery to used are as follows • 1. Flour mixer • 2. Rotary forming machine for hard Biscuit • 3. Rotary forming machine for soft Biscuit • 4. Tunnel Gas Oven • 5. Oil Spray machine • 6. Cooling conveyor • 7. Layout Turning Machine • 8. Sandwich machine • 9. Packaging

5.6 MARKETING CHANNELS

The marketing channels plays important role in the distribution of the products to reach the potential

customers. The selection of the marketing channels is also important .so choose my marketing channels as

follows as

• Wholesaler & Distributor:

These People working as a company partner because they are giving place our product.

• Wholesaler & Retailer:

The registration with the trading companies like India mart will also be the marketing channel

LEGAL FORMALITIES

for the starting a SME unit , every unit has some legal formalities to complete for starting anew business or to

dissolve any industries. Here depicted some legal aspects which are necessary to be completed by

entrepreneurs.

1. Approval letter from DIC.

2. Power sanction assurance letter from G.E.B.

3. Certification of water supply.

4. Application for Telephone.

5. Octroi Exemption letter from Municipal council.

6. turnover tax, local area tax, purchase tax,

7. Application for loan to Urban Bank, Ahmadabad

8. Certificate from industrial pollution Office

5.7 Plant Location:

Corporate

Office Entry Gate

Inventory Store

Canteen

Toilet

Store Room

Manufacturing Area

The factor influenced to choose the plant layout are as follow as:

1. Availability of Raw materials:

2. Availability of Skilful labours:

3. Good Transportation facilities:

4. Availability of the Water and Power supply:

5.8Finance

Total set up cost excluding land and building for the capacity envisaged is 29million naira which breakdown includes machines of 14.5 M, generators 3.7M a working capital requirement for 3 months of production of 5.4M and other cost for preliminary expenses and NAFDAC certification.

Annual production cost for this capacity is 15.9M which includes material usage of 10M and utility of 2.3M

At average weight of product is 25gramms/packet and 40,000 Packets Daily(1Ton) or 555 cartons daily Turnover for the first year is -N- 40.4M and a net profit before taxation of 14.9M.

According to the projected income statement, the project will start generating profit in the

first year of operation. The project’s initial investment will be fully recovered within 3

years.

5.8.1 SOURCE OF FINANCE:

Supply of finance is very important factor in the establishment of an enterprise is old. Finance is the life line of

the Business. Finance deal with the arrangement of the sufficient capital for the smooth run of the

Organization. Following are the certain sources of the finance scheme:

A) Own Capital:

According to the rules setup by the various financial institution 25% to 35% of the capital should be the

own investment of the entrepreneur. 33.33% of the project cost will be financed by the promoter himself

B) Term Loan from the Commercial Bank:

Urban co. Bank, Ahmadabad Gujarat lend Rs 1,00, 00,000 at the rate of interest 13.75%

5.8.2 Cost Of the Project

Sr No. Particulars Amount

1 Building 25,00,000

2 Plant and Machinery 80,00,000

3 Furniture and Misc. 2,00,000

4 Land 2,00,000

5 Preliminary and preoperative exp. 80,000

6 Working capital (3 months) 41,00,000

Total 1,50,80,000

5.8.2.1 Total Fixed Capital:

Sr no. Particulars Amount

1 Building 25,00,000

2 Plant and Machinery 80,00,000

3 Furniture and Misc. 1,50,000

4 Land 2,00,000

5 Preliminary and preoperative exp. 80,000

Total 10930000

5.8.2.2 Building:

Sr no. Particulars Cost of the item Amount

1 Corporate Office 4,20,000 5,20,000

2 Show Room 3,50,000 3,50,000

3 Work Shop 8,00,000 9,50,000

4 Toilet 1,00,000 130,000

5 Store room 5,50,000 5,50,000

Total 2500000

5.8.2.3 Plant and Machinery:

Sr no. Particular Quantity Amount

1 Hydraulic Hot press 01 50,05,000

2 Steam Boiler 01 13,10,000

3 Chimney with Ladder 01 4,90,000

4 Air-pre Heater 01 2,88,000

5 Dust controller 01 2,07,000

6 Pressure reducing

station

01 3,90,000

7 Glue Machine 01 3,10,000

Total 8000000

5.8.2.4 Furniture and Miscellaneous Expenses:

Sr no. Particulars Quantity Amount

1 Furniture

Office chairs 8 20,000

Almirah 8 40,000

Racks 20 50,000

Tables 2 5,000

Computer and Accessories 1 35,000

Fans 8 10,000

Sofa set 1 20,000

2 Work shed ----------- 20,000

Total 200000

5.8.2.5 Land

Sr no. Particular Price/acre Amount

1 Land Area (2 acre) 1,00,000 2,00,000

5.8.2.6 Preliminary and Preoperative Expenses:

Sr no. Particular Amount

1 Deposit for Power, Water, Telephone 20,000

2 Loan Application process fees 10,000

3 Deposit for internet 5,000

4 Legal Stamp Duty and Registration 20,000

5 Travelling 13,000

6 Consultancy 12,000

Total 80000

5.8.2.7 Depreciation (per annum):

Sr no. Types of Assets Cost of Assets Rate of

Depr.

Amount

1 Plant and Machinery 80,00,000 10% 8,00,000

2 Furniture 2,00,000 20% 40,000

3 Building 25,00,000 5% 1,25,000

Total 9,55,000

5.8.3 Working Capital Requirement:

Sr no. Particular 1 Month 3 Month

1 Raw Material 11,51,000 34,53,000

2 Salary and Wages 1,25,000 3,75,000

3 Power and Fuel 24,000 72,000

4 Other Manufacturing

Expenses

12,000 36,000

5 Selling and Office

expenses

17,000 51,000

Total 39,87,000

5.8.3.1 Raw Material:

Sr no. Particulars No. of

Tons/month

Price/tons

(Rs)

Cost/month Cost /year

1 Food 140 5000 7,00,000 84,00,000

2 Sugar 70 4000 2,80,000 33,60,000

3 Bakery 25 6800 1,71,000 20,52,000

Total 11,51,000 1,38,12,000

5.8.3.2 Salary and Wages:

Sr no. Name of the

Post

No. of

member

Salary /head Salary /month Salary /year

1 Manager 1 14,000 14,000 1,68,000

2 Accountant 1 9,000 9,000 1,08,000

3 Office staff 3 4,000 12,000 1,44,000

4 Chemist 1 4,500 4,500 54,000

5 Supervisor 1 6,000 6,000 72,000

6 Machine

Operator

1 5,500 5,500 66,000

7 Skilled labour 7 3000 21,000 2,52,000

8 Unskilled

labour

10 3000 30,000 3,60,000

9 Women

mazdoor

3 3000 9,000 1,08,000

10 Mechanic cum

Electrician

4 3500 14,000 1,68,000

Total 32 1,25,000 15,00,000

5.8.3.3 Power and Fuels:

Sr no. Particulars Per month Per Annum

1 Fuel 8,000 96,000

2 Power 16,000 1,92,000

Total 24,000 2,88,000

5.8.3.4 Other Manufacturing Expenses:

Sr no. Particulars Per month Per annum

1 Repairing of the

Machine

8,000 96,000

2 Packaging Material 4,000 48,000

Total 12,000 1,44,000

5.8.3.5 Office Selling, Distribution Expenses:

Sr no. Particulars Per month Per annum

1 Transportation 2,500 30,000

2 Telephone and internet

bills

1,500 18,000

3 Postage and

Stationeries

13,000 1,56,000

Total 17,000 2,04,000

5.8.3.6 Trade credit

Year :- 1495905

5.8.4 Cost of the Production:

Sr no. Particulars Per month Per annum

1 Raw Material 11,51,000 1,38,12,000

2 Salary and Wages 1,25,000 15,00,000

3 Other Manufacturing

Expenses

12,000 1,44,000

4 Consumables 20,000 2,40,000

5 Repairing of machines 15,000 1,80,000

Total 13,23,000 1,58,76,000

5.8.5 Profitability

Sr no. Particulars Per month Per annum

1 Sales 18,35,274 2,20,23,288

2 Less: Cost of Production 13,23,000 1,58,76,000

3 Gross Profit 5,12,274 61,47,288

4 Less: Office, selling, distribution exp. 17,000 204000

5 Less: Interest on loan

13.75% bank

1,12,500 1350000

Net Profit 382774 4593288

5.8.6 Cash Flow Statement

Particular Rs

Operation Activity

Wages and salary 1500000

Repair & machine 180000

Manufacturing Expenses 144000

Selling & Distribution 204000

Total 2028000

Add Investment activity

Building 2500000

Plant & machinery 8000000

Furniture 200000

Land 200000

Total 10900000

Add Financial activity

Loan 10000000

Total cash flow income 22928000

5.8.7 PROFIT & LOSS ACCOUNT

Capicity Utilization 85% 85% 79% 79% 79% 2013-14 2014-15 2015-16 2016-17 2017-18 A Sales 22023288 24,225,616 26,648,177 26,648,177 26,648,177 B Cost of Production Raw Material 1,38,12,000 15,048,000 16,552,800 16,552,800 16,552,800 Power 2,88,000 2,88,000 2,88,000 2,88,000 2,88,000 Wages and Salaries

15,00,000 15,00,000

15,00,000

15,00,000

15,00,000

Factory Overhead 120,000

120,000

120,000

120,000

120,000

C Administration and Selling Exp.

2,04,000 204,000 204,000 204,000 204,000

D Gross Profit Before Interest

6,30,3288 7,065,616

7,983,377

7,983,377

7,983,377

E Total Financial Expences Interest on Term Loan

1,350,000 1,237,500

1,100,000

962,500

825,000

F Operating Profit 4,953,288

5,828,116

6,883,377

7,020,877

7,158,377

G Preliminary Exp. H Profit and Loss Before Tax

4,953,288 5,828,116

6,883,377

7,020,877

7,158,377

I Provision for Tax 732,193

874,224

1,032,507

1,032,507

1,032,507

Net Profit

4,22,1095 4,953,892

5,850,870

5,988,370

6,125,870

5.8.8 BALANCE SHEET

At the End of Construction Period

2013-14 2014-15 2015-16 2016-17 2017-18

Liabilities Owner's Fund 6,250,000

6,250,000 6,250,000

6,250,000

6,250,000

6,250,000

Reserve and surplus 4,22,1095

4,953,892 5,850,870

5,988,370

6,125,870

Secured Loan Term Laon

10,000,000 10,000,000

9,000,000 8,000,000

7,000,000

6,000,000

Working capital adv. 2,124,000

2,124,000 2,124,000

2,124,000

2,124,000

Current Liabilities and Provision

Trade Credit 1,495,905

3,059,108 4,666,930

5,529,430

6,391,930

Creditore Total

16,250,000 24,019,000

25,387,000 26,891,800

26,891,800

26,891,800

Assets Fixed Assets

10,930,000 9,97,5000

9,97,5000

9,97,5000

9,97,5000

9,97,5000

Current Aseets , Loans And Advances

Raw Material 13,812,000

15,048,000 16,552,800

16,552,800

16,552,800

Cash and Bank Balance 5,240,000 Debtore 1,52,000 284000 284000 284000 284000 Miscellaneous Expandature and losses

preliminary Exp. 80,000 80,000

80,000

80,000

80,000

80,000

Total

16,250,000 24,019,000

25387000

26,891,800

26,891,800

26,891,800

CONCLUSION AND

FINDINGS

6.1 CONCLUSION

After preparing a MRP-1 report on Bakery industry with special focus on biscuit products,

we have finally reached to the following conclusions;

• Biscuit industry in India in the organized sector produces around 60% of the total

production, the balance 40% being contributed by the unorganized bakeries. The industry

consists of two large scale manufacturers, around 50 medium scale brands and small

scale units ranging up to 2500 units in the country, as at 2000-01. The unorganized sector

is estimated to have approximately 30,000 small & tiny bakeries across the country.

• Biscuit market in India is growing at the rate of around 15-17% in every year, that means

it is still in Growth stage, Right now Biscuit market in India is about Rs.6000 crores and

it is potentially very strong to Grow at the rate of 20% in every year. Even IBMA

estimates annual growth in the range of 15% to 20% during the next five years, in the

event of reduction in the rate of VAT on Biscuits to 4%.

• Per capita consumption of Biscuits in the country is only 1.8 kg, as compared to 2.5 kg to

5.5 kg in South eastern countries and European countries & USA respectively.

• After making Research on Customer Loyalty of four major brands of biscuits i.e. Parle,

Britannia, Sun fest(ITC), Priyagold (Surya Food) , We can finally conclude that

Customers of Parle and Britannia are more loyal compare to other brands like Sunfeast

and Priyagold. But when we compare the loyalty of Parle and Britannia, Parle has upper

hand.

• After making ratio analysis of biscuit industry both aggregate and individuals of four

major players, we can finally conclude that the aggregate Current ratio, Quick ratio, Net

profit ratio, Expense ratio, Capital employed and Fixed assets turnover ratios are

showing fluctuating trend in last five years, while aggregate liquid ratio and networking

capital ratio shows the decreasing trend in last five years.

• The trend analysis of sales of biscuit industry shows that, the overall sale of Biscuit

industry is gradually increased in each year except in the year 2010-11. This trend of

industry sales shows that biscuit industry is in the growth phase.

• The trend analysis of annual production figures of Biscuit industry shows the increasing

trend since last five years. This graph also shows that in order to meet the demand of

Biscuit products, all the firms increasing their production almost at the rate of 15 to 20 %

in each year.

6.2 FINDINGS

After preparing a MRP-1 report on Bakery industry with special focus on biscuit products,

we have finally reached to the following findings;

• We found that Biscuit Industry is right now prevailing in Growth stage, it is grow at the

rate of 15 – 17% every year.

• We have also found that in order to sustain the current market share all current market

players have to struggle a lot, they have to keep strong distribution channel to reach the

product in each place of the country and Parle become successful to do this.

• Apart from strong distribution channel other factors like aggressive promotions and

advertisement, strong research and development, new innovations at regular interval on

continues basis etc. Also play a vital role in sustaining existing customers and attracting

new potential customers. This thing has been proved by ITC Sunfeast in the year 2008-

09 was 2.7% but its aggressive efforts on new innovations and promotional schemes had

increased it market share to 6.7% in 2004-05.Britannia’s shares have dropped from 35.8

per cent in 2009-10 to 30.5 percent in May 2011 (volumes). Parle’s shares have also

dropped from 42.2 to 38.4 percent in the same period. Even Priya Gold has seen a minor

dip from 6.4 per cent to 5 per cent.

• After making Research on Customer Loyalty of four major brands of biscuits i.e. Parle,

Britannia, Sun fest(ITC), Priyagold (Surya Food) , We have also found that Customers of

Parle and Britannia are more loyal compare to other brands like Sunfeast and Priyagold.

But when we compare the loyalty of Parle and Britannia, Parle has upper hand.

BIBLIOGRAPHY

Book:

Malhotra Naresh k. (2007), Marketing Research (An Applied Orientation), Fifth edition,

Ch.8(page no.290-291)

Articles:

ITC case study by AC Nielsen

Websites: 1) http://www.quickmba.com/marketing/product/lifecycle/

2) http://hubpages.com/hub/Bakery-Industry

3) http://www.shareacafe.com/pdf/History-of-Biscuits.pdf

4) http://parleproducts.com/brands/brands_prod_biscuits.asp

5) http://britannia.co.in/companyoverview_overview.htm

6) http://britannia.co.in/brandstories_tiger.htm

7) http://www.itcportal.com/foods/foods_sunfeast.html

8) http://priyagold.com/aboutpart1.html

9) http://priyagold.com/prod13bourbon.html

10) http://priyagold.com/prod15marielite.html

11) http://www.business-standard.com/india/news/priyagold-to-launch-chocolates-in

12) http://www.moneycontrol.com/financials/britanniaindustries/balance-sheet/BI

Annexure

Balance Sheet of Britannia Industries

(Rs. Cr.)

Mar '09 Mar '10 Mar '11 Mar '12 Mar '13 Sources Of Funds Total Share Capital 25.11 23.89 23.89 23.89 23.89 Equity Share Capital 25.11 23.89 23.89 23.89 23.89 Share Application Money 0 0 0 0 0 Preference Share Capital 0 0 0 0 0 Reserves 405.91 419.63 525.2 590.93 731.92 Revaluation Reserves 0 0 0 0 0 Networth 431.02 443.52 549.09 614.82 755.81 Secured Loans 39.19 6.14 1.62 1.53 1.94 Unsecured Loans 0 0 7.74 3.25 104.16 Total Debt 39.19 6.14 9.36 4.78 106.1 Total Liabilities 470.21 449.66 558.45 619.6 861.91

Application Of Funds Gross Block 273.51 250.35 315.37 392.12 453.18 Less: Accum. Depreciation 146.07 154.39 174.81 193.75 212.19 Net Block 127.44 95.96 140.56 198.37 240.99 Capital Work in Progress 0.86 31.7 11.08 16.03 9.69 Investments 291.32 330.08 359.86 320.05 380.83 Inventories 122.25 134.22 184.8 214.94 301.53 Sundry Debtors 19.92 44.31 20.85 28.61 46.33 Cash and Bank Balance 7.08 16.31 21.23 48.53 43.54 Total Current Assets 149.25 194.84 226.88 292.08 391.4 Loans and Advances 90.71 83.22 108.12 90.41 185.86 Fixed Deposits 0 0 14.11 0.12 0.23 Total CA, Loans & Advances 239.96 278.06 349.11 382.61 577.49 Deffered Credit 0 0 0 0 0 Current Liabilities 176.19 223.03 239.89 238.12 269.66 Provisions 59.48 97.34 78.33 84.91 100.65 Total CL & Provisions 235.67 320.37 318.22 323.03 370.31 Net Current Assets 4.29 -42.31 30.89 59.58 207.18 Miscellaneous Expenses 46.3 34.24 16.06 25.58 23.23 Total Assets 470.21 449.67 558.45 619.61 861.92

Contingent Liabilities 58.55 61.24 67.24 102.63 169.55 Book Value (Rs) 171.64 185.65 229.84 257.35 316.37

Balance Sheet of ITC (Sunfeast)

( Rs. Cr. )

Mar '09 Mar '10 Mar '11 Mar '12 Mar '13

Sources Of Funds Total Share Capital 247.68 248.22 375.52 376.22 376.86 Equity Share Capital 247.68 248.22 375.52 376.22 376.86 Share Application Money 0 1.21 0 0 0 Preference Share Capital 0 0 0 0 0 Reserves 6,101.54 7,586.28 8,626.79 10,003.78 11,624.69 Revaluation Reserves 60.84 59.9 59.17 57.08 56.12 Networth 6,410.06 7,895.61 9,061.48 10,437.08 12,057.67 Secured Loans 31.56 88.69 25.91 60.78 5.57 Unsecured Loans 89.29 156.67 93.82 140.1 208.86 Total Debt 120.85 245.36 119.73 200.88 214.43 Total Liabilities 6,530.91 8,140.97 9,181.21 10,637.96 12,272.10

Application Of Funds Gross Block 4,740.94 5,746.27 6,227.17 7,134.31 8,959.70 Less: Accum. Depreciation 1,442.63 1,795.51 2,065.44 2,389.54 2,790.87 Net Block 3,298.31 3,950.76 4,161.73 4,744.77 6,168.83 Capital Work in Progress 313.74 186.15 399.97 1,130.20 1,126.82 Investments 3,053.96 3,874.68 3,517.01 3,067.77 2,934.55 Inventories 1,534.21 2,002.99 2,636.29 3,354.03 4,050.52 Sundry Debtors 230.15 527.76 547.96 636.69 736.93 Cash and Bank Balance 34.04 52.45 67.47 103.54 153.34 Total Current Assets 1,798.40 2,583.20 3,251.72 4,094.26 4,940.79 Loans and Advances 2,213.39 1,150.25 1,188.42 1,390.19 1,949.29 Fixed Deposits 0 3.21 788.35 796.62 416.91 Total CA, Loans & Advances 4,011.79 3,736.66 5,228.49 6,281.07 7,306.99 Deffered Credit 0 0 0 0 0 Current Liabilities 3,464.01 2,499.10 2,736.95 3,113.01 3,619.76 Provisions 682.88 1,108.18 1,389.04 1,472.84 1,645.33 Total CL & Provisions 4,146.89 3,607.28 4,125.99 4,585.85 5,265.09 Net Current Assets -135.1 129.38 1,102.50 1,695.22 2,041.90 Miscellaneous Expenses 0 0 0 0 0 Total Assets 6,530.91 8,140.97 9,181.21 10,637.96 12,272.10

Contingent Liabilities 171.07 92.97 98.72 129.56 308.08 Book Value (Rs) 256.35 315.63 23.97 27.59 31.85

Surya Foods & Agro Ltd. (Priyagold)

Mar 2008

Mar 2009

Mar 2010

Mar 2011

Mar 2012

Mar 2013

Rs. Crore (Non-Annualised) Net worth 59.09 63.61 68.18 70.48 70.32 79 Subscribed equity capital 0.69 0.69 0.69 0.69 17.98 17.98 Free reserves 1.78 62.82 65.39 66.87 52.32 61.02 General reserves 0 56.52 56.52 56.52 39.22 38.31 Balance from profit & loss account 1.78 6.3 8.87 10.35 13.1 22.71 Reserves & surplus 58.4 62.92 65.49 66.89 52.34 61.02 Total borrowings 0.5 1 7.76 13.15 55.02 53.92 Bank borrowings 0.5 1 6.8 8.77 21.05 20.52 Short term bank borrowings 0.5 1 6.7 8.43 20.88 20.3 Long term bank borrowings 0 0 0.1 0.34 0.17 0.22 Borrowings from corporate bodies 0 0 0.96 4.38 6.5 0.59 Group / associate cos. 0 0 0.96 0 0 0.1 Borrowings from promoters / directors 0 0 0 0 0 0.98

Other borrowings 0 0 0 1.776E-

15 3.28 0 Secured borrowings 0 0 6.8 8.77 45.3 52.84 Unsecured borrowings 0.5 1 0.96 4.38 9.72 1.08 Current liabilities & provisions 4.67 17.9 14.36 15.2 10.82 14.62 Sundry creditors 2.47 2.96 4.53 6 1.84 3.75 Deposits & advances from customers & employees 0.72 2.25 7.04 6.92 7.22 4.45 Share application money 0.78 0 0 0 0 0 Other current liabilities 0.32 11.66 1.42 0.64 0.77 2.32 Provisions 0.38 1.03 1.37 1.64 0.99 4.1 Deferred tax liability 4.14 5.51 6.74 6.3 6.83 7.21 Total liabilities 68.4 88.02 97.04 105.13 142.99 154.75 Net worth (net of reval & DRE) 59.05 63.58 68.16 70.48 70.32 79 Contingent liabilities 0.2 0.01 22.09 29.24 28.86 28.75

Gross fixed assets 37.4 58.15 68.03 70.96 113.19 127.04 Land & building 7.44 15.65 15.81 15.82 52.01 63.36 Plant & machinery 23.87 37.9 45.4 47.49 52.36 60.68 Transport & comm. equipment/infrastructure 0.81 0.85 0.93 1.32 1.37 2.39 Furniture,amenities & other fixed assets 0.39 0.44 0.73 0.95 1.07 0.52 Capital work-in-progress 4.89 3.31 5.13 5.35 6.35 0.06 Intangible assets 0 0 0.03 0.03 0.03 0.03 Less: Cumulative depreciation 4.17 7.22 11.76 15.56 19.4 23.93 Less: Arrears of depreciation 0 0 0 0 0 0 Net fixed assets 33.23 50.93 56.27 55.4 93.79 103.11 Investments 3.01 18.35 9.47 9.65 11.39 15.4 Current assets 32.11 15.85 28.57 35.47 34.42 33.86

Cash & bank balance 0.55 0.69 0.73 1.75 0.79 1.78 Inventories 27.35 11.89 20.98 24.47 21.72 19.81 Receivables 3.71 2.71 5.57 7.71 11.6 12.27 Expenses paid in advance 0.5 0.56 1.29 1.54 0.31 0 Loans & advances 0.01 2.86 2.71 4.61 3.39 2.38 Deferred revenue expenditure 0.04 0.03 0.02 0 0 0 Total assets 68.4 88.02 97.04 105.13 142.99 154.75

Total income 115.67 197.2 282.8 318.87 291.98 348.45 Sales 115.55 197.14 282.13 318.62 291.18 340.05 Industrial sales 114.53 196.01 280.97 318.61 291.17 339.32 Income from non-financial services 1.02 1.13 1.16 0.01 0.01 0.73 Income from financial services 0.12 0 0 0.24 0.1 0.05 Interest 0.12 0 0 0.04 0.03 0.03 Other income 0 0.02 0.05 0.01 0 0 Prior period income & extraordinary income 0 0.04 0.62 0 0.7 8.35 Change in stock 0.11 1.59 1.15 -0.36 0.36 2.18 Total expenses 115.37 194.27 281.38 317.11 289.39 340.94 PAT 0.41 4.52 2.57 1.4 2.95 9.69 PBDITA 2.7 9.8 9.18 5.34 9.75 18.94 PBDTA 2.7 9.79 9.14 5.18 8.5 17.77 PBT 1.29 6.69 4.34 1.24 4.29 13.08

Parle Biscuits Pvt. Ltd.

Mar 2008

Mar 2009

Mar 2010

Mar 2011

Mar 2012

Mar 2013

Rs. Crore (Non-Annualised) Issued equity capital 0.5 0.5 0.5 0.5 0.5 0.5 Reserves & surplus 331.78 397.97 484.47 571.32 654.6 791.69 Free Reserves 331.77 397.96 484.46 571.31 654.59 791.68 Other free reserves 331.77 397.96 484.46 571.31 654.59 791.68 Specific Reserves 0.01 0.01 0.01 0.01 0.01 0.01 Bank borrowings 0 0 0 0.62 0.52 7.9 Current liabilities & provisions 169.75 201.11 36.44 54.54 74.29 106.47 Sundry creditors 34.85 31.51 30.17 43.34 59.05 86.61 Deposits & advances from customers & employees 1.26 1.89 1.68 3.44 5.3 4.3 Other current liabilities 5.25 6.32 1.78 6.15 8.63 14.11 Provisions 128.39 161.39 2.81 1.61 1.31 1.45 Deferred tax liability 3.03 0 0.18 1.32 1.08 7.32 Total liabilities 505.06 599.58 521.59 628.3 730.99 913.88 Net worth (net of reval & DRE) 323.84 398.47 484.97 571.82 655.1 792.19 Contingent liabilities 8.88 18.33 41.62 47.84 72.1 72.19 Total assets 505.06 599.58 521.59 628.3 730.99 913.88 Gross fixed assets 94.09 101.17 147.04 219.76 309.66 490.92 Net fixed assets 57.83 55.66 94.6 151.73 217.61 367.19 Investments 185.61 273.91 336.61 311.81 276.85 187.18 Current assets 247.05 264.59 81.4 135.56 199.81 282.98 Loans & advances 3.16 2.18 6.47 25.5 33.56 73.37 Total income 683.34 764.85 780.68 1037.99 1437.3 1593.3 Sales 663.37 729.93 750.64 1004.57 1405.31 1554.74 Income from financial services 19.66 31.15 25.98 32.69 29.81 34.43

Total expenses 635.69 697.33 691.83 977.74 1389.39 1473.64 Raw material expenses 307.34 364.87 382.35 574.46 842.86 892.38 Power, fuel & water charges 10.57 12.05 10.25 18.4 24.32 35.84 Compensation to employees 12.88 21.37 8.55 12.83 14.19 20.42 Indirect taxes 86.8 56.17 57.94 73.61 91.03 28.87 Selling & distribution expenses 57.7 61.51 54.63 67.58 80.26 106.4

Other operational exp. of indl. Enterprises 1.13 0.84 0.76 0 0 0 PBT 66.25 99.19 125.42 115.31 111.48 192.64 PAT 47.45 66.19 86.5 86.85 83.28 137.09