PROJECT PROPOSAL Prepared for: Shailja Manocha Prepared by: Himanshu Shekhar Date: March 29, 2010 Proposal #: Marketing plan, DESHI PICKLES (FMCG, BM, SEC-B) EMPI B SCHOOL, SATBARI, NEW DEHI 1. Executive summary A start up to set a Food processing industry to found opportunity in the wastage happening in the fruits and vegetable industry in India. Company has decided to focus on processing of a single fruit, the bulky found mango in its starting years. Initially our company will make mango pickles. Our product name is DESI. Our company will initially tie up with different players in retail chains to entre the market with strength. 1.1.Cause for concern Pickles are specialties of India and have important position in the Indian cuisine. They are eaten along with main course and provide tempting tastes. Pickles are prepared from fruits and vegetables and they supplement the food with vitamins and minerals. There are many types of pickles available in India They are an integral part of any Indian diet. The installed capacity of fruits and vegetables processing industry has doubled from 1.1 mn tones in January 1993 to 2.1 mn tones in 2006. Presently, the processing of fruits and vegetables is estimated to be around 2.2% of the total production in the country. The major processed items in this segment are fruit pulps and juices, fruit based ready-to-serve beverages, canned fruits and vegetables, jams, squashes, pickles, chutneys and dehydrated vegetables. The new arrivals in this segment are vegetable curries in restorable pouches, canned mushroom and mushroom products, dried fruits and vegetables and fruit juice concentrates.1 1.2 Major drivers for food processing industry Food and grocery dominates total retail spend. Higher disposable income, shift in demographic profiles, increasing number of workingwomen and emergence of organized food retail are going to be the key growth drivers for the sector. During the last five years, there has been major progress in India’s food processing sector. Food and vegetable processing has grown from 6% to 10%. Value addition is in food has grown from 20% to 26%.2 Most processed food items are now exempted from purview of licensing, except items reserved for smalls scale sector and alcoholic beverages3. Food processing sector is included in the list of priority sector for bank lending4, automatic approval for foreign equity up to 100% is allowed on most food items except reserved for small scale industry and alcoholic and beer. Government has plan for been put in place for new and strengthening of existing institutional mechanisms for human resources development in the food processing sector. 1 Mofpi (Ministry of food processing industries, government of India) 2 Hindustan times, New Delhi, march 27, 2010 3 Industrial Development and regulation act, 1951 4 Union budget (2006-07) The domestic market for processed food is huge and fast growing. The retail boom will create a huge demand for the food-processing sector in to create a huge demand for the coming year. Government has taken major initiatives to provide impetus to food processing sector. There has been a quantum jump in the fund allocation for 11th five-year plan (2007- 12) schemes including the scheme for infrastructure development. With big retail players coming in food processing field most of food products are being sold on brand form and coming out of commodity form. Factors at a glance. • Declared as priority sector for lending in 1999 • 100% FDI allowed. • Excise duty waived on fruits and vegetables processing from 2000 – 01 • Income tax holiday for fruits and vegetables processing from 2004 – 05 • Customs duty reduced on freezer van from 20% to 10% from 2005 – 06 • Implementation of Fruit Products Order • Tax holidays on profit of New Agro Process business • Rationalization of Customs and excise duties on Capital assets and Products. 1.3. Plant location Our priority will be given to availability of good generic mango and low infrastructure cost. Raw material location. State Districts Sahranpur, Muzaffarnagar, Bijnaur, Meerut, Uttar Pradesh Baghpat, Bulandshar and Jyotifulenagar Districts of Ratnagiri, Sindhudurg, Raigarh and Maharashtra Thane Andhra Pradesh Krishna District West Bengal Malda and Murshidabad Districts of Madurai, Theni, Dindigul, Tamil Nadu Virudhunagar and Tirunelveli Bihar Muzaffarpur, Bhagalpur, Samastipur Table above shows district wise production of mango in India. According to report from mospi, we found Bihar as a most growing state with 11% GDP. We have decided to set up our plant in Bihar near U.P border to get both benefit of best stimulus packages with easy availability of main raw material mango. Stimulus packages from state government S.no Proposed intervention Estimated project Financial cost outlay in govt. 12th plan 1 Commissioning studies to Develop and enact 0.5 food processing policy Map agri-zones using 2 5 Environ-max approach Find status of organic 0.5 farming & certification Identify clusters and 2 develop business plans 2 Development of two 240 100 (50% Integrated Food Zones grant subject a maximum of rs 50 crore per food zone) 3 Technology 250 (Assuming 85% (35% Upgradation average investment grant for at 50 lakh for 200 each unit It is proposed to units) subject to provide a 25% subsidy cap of Rs 50 for investment in plant lakh) and machinery for all food processing units in state with special focus on dairy and confectionery etc 4 Interest Subsidy 25 Scheme To increase credit take (The corpus off in the sector and fund may be also to make the increased projects financially depending viable , an interest on response) subsidy scheme is proposed which would provide a subsidy of 5% on interest being charged by nodal banks/financial institutions. 5 Quality Assurance 50 37.5 (75% grant) R&D including 50 incubation centres 6 Market linkage and 25 20 development 7 Institutional 70@10% of the total 70 development and outlay project management including strengthening of nodal departments and monitoring and evaluation TOTAL PROPOSED 1,670.00* 770 OUTLAY FOR FIVE YEAR 1.4. SWOT analysis Strength 1. Unique taste and flavour. Weakness 1. Financial weakness 2. High transportation cost Opportunity 1.Changing life of Indian family, including number of working women. 2. Food and vegetable processing has grown from 6% to 10%. 3. Value addition is in food has grown from 20% to 26%. 4. Benefit of many stimulus packages by government. 5. Fast growing food industry. Threats 1. New product concept failure. 2. Fund allocation disturbance. 3. Possible entry in same segment by completers. 2. 4C Frame work of project 2.1. Customers 2.1.1.Segmentation Propety Segment Size Geography Urban 28.40% Income 10,000 INR+ SEC A1, A2, B1, B2, C 13.80% Benefits Quality User Status First time user Total population 1095000000(approx) 2.1.2. Targeting Due to our organization is stimulated toward packages for new industry in State of Bihar so in initial years, we will target customers in local (Bihar, Jharkhand and West Bangal region), further we will increase its target to near by states. 2.2. Context 2.2.1. MARKET POTENTIAL These products have very good market potential as they are consumed in most of the households, restaurants, other eateries, clubs, hostels etc. They are sold through many outlets like grocery shops, departmental stores etc. As per one estimate, the average consumption of pickles in the North-East is around 2 kgs. per family per year. Thus, they are mass consumption products and with proper quality standards, in-roads can be made in the market. Some innovative products using locally popular fruits or vegetables should also be tried as such products are not available in the market at present. 2.2.2 CAPITAL INPUTS5 126.96.36.199. Land and Building Requirement of built-up area is not more than 75 sq.mtrs. Hence, a readymade built 5 Maximum data as suggested from MOFPI. up space with one production hall of 35-40 sq.mtrs. and two other rooms for packing and storage is adequate. The total cost would be Rs. 1,00,000/-. 188.8.131.52. Machinery Our production line will be using a unique mechanism, Sh. M. Nagarajan, a small workshop owner from Uslampathy village in Tamilnadu has developed an innovative technology for cutting lime into small pieces in bulk quantity.6 This technology offers a great value proposition for the pickle manufacturing companies. Our DESHI pickle will buy patent of this machine. Advantage: Salient features of the Innovative machine: - Lemon is cut into 8 uniform pieces with 100% yield - Low initial Cost (Rs. 100000/- per unit) - Processing cost is less (Rs. 0.06 per Kg) - Consume less electricity (7-8 unit in 8 hours of operations) - Less manpower to operate (one labourer required - Cutting Capacity 450 kg/hr - Machine is compact and made of stainless steel, which makes the process hygienic - Saves time on extra efforts to be put in for removing seeds from the cut-pieces of lemon. Perfect cutting at vertical and horizontal axis facilitates removal of seeds by simple cutting. - A novel machine in terms of its cost effectiveness, efficiency, drudgery reduction for women, safety considerations, New design of feeding, charging and power transmission system. 184.108.40.206. Miscellaneous Assets Some other assets like graters, working tables, furniture, exhaust fans, storage racks and bins etc. shall be required costing around Rs. 40,000/-. 220.127.116.11. Utilities7 The total power requirement will be 5 HP whereas water requirement will be 750- 800 ltrs. per day. Annual requirement of gas cylinders will be 100 at 100% capacity utilisation. Thus, annual cost of utilities at 100% activity level would be Rs.60,000/-. 18.104.22.168. Raw Material It is suggested to have a set-up which can make 20 tonnes of pickles per year at 100% capacity. The exact product-mix is difficult to suggest as number of imaginative combinations palatable to local population can be made. But it is 6 www.nif.org.in/bd/files/Executive%20Summary_lemon1123.pdf 7 Data according MOFPI. assumed that pickles shall be produced from mango, ginger. Assamese lemon, olive, chilly and carambola, mango. Depending upon the availability of these products (season - off-season) the product mix needs to be determined. All these products are grown/cultivated in ample quantity in Assam and hence there will not be any difficulty in procuring them as even at 100% capacity utilisation, the total requirement of all the products put-to-gather will not be more than 22 tonnes (Assuming 10% loss in processing). Other raw materials required are edible oil, free flowing salt, spices, preservatives, etc. are available locally. Glass/food grade plastic bottles shall be required for packing. Our special composition needs Ethyl 4-(thioacetoxy)butyrate which will be found by a chemical industry in nearest metro Kolkata. 2.3.Compeitors Indians are fond of pickles, which are regularly used along with the main course as well as snacks. Apart from individual households, restaurants, eateries, roadside dhabas, clubs, hostels, caterers etc. are the bulk consumers. There are some branded products available in the market but their formulation is as designed by average pickle making process mostly recommended by CFTRI, mysore or IARI. The product have a indivisual taste and flavour. Our pickle will have core Indian taste because it will be made by process used in general houses in India without using big utensils which disturbes texture of pickle, also we have a core competency of unique mango flavour. Our product will be processed by GMP process that will make our product natural. The real competition would be from the age-old practice of making pickles domestically. Many Indian households make these items during the season. But this practice is gradually disappearing due to changing lifestyles, hassles of making these items and their availability throughout the year from market. There are many variants of these products and with certain change in the ingredients, thus taste differs. Figure1: source :mofpi (showing no. of producers) 2.4. Company Starting as a value provider total investment is estimated 3.5 lakhs including manpower input and capital goods. Our company will look for some promoters, and also gain from stimulus packages by government. Initially we will depend on distribution channel of preexisting players in market like sudha dairy (new project for retailing), which has a good depth in market. Also for big cities like Patna, Muzaffarpur, Ranchi, Kolkata, Vardhman, Bokaro we will contract with big bazaar. households, restaurants, other eateries, clubs, hostels etc. They are sold through many outlets like grocery shops, departmental stores etc. As per one estimate, the average consumption of pickles in the North-East is around 2 kgs. per family per year. Thus, they are mass consumption products and with proper quality standards, in-roads can be made in the market. Some innovative products using locally popular fruits or vegetables should also be tried as such products are not available in the market at present. Initially plant production capacity is 20 tones. Further we will develop our own 4.0 distribution channel. MANUFACTURING PROCESS 3.0. Marketing Mix Pickles and chutney are made in India since many years. Unripe fruits or vegetables are thoroughly washed and then are cut into small pieces. Then these pieces are cured with salt and then mixed with oil and spices and are finally packed. The process more or less remains 3.1. Product- the same in case of all pickles. In case of chutney, fruits or vegetables are washed, cleaned and peeled. After slicing them, they are boiled wherever required. Then this boiled mass is Our New product sugar, salt, some other is based on finally chutney comparison, mixed with onion, garlic, ginger,development source spices etc. and competitor’s is as we are capable flow chart is as under: offer than other available. packed. The process of giving more competitive Our product will be made by typical Indian family processing. i.e A Pickles Washing and slicing of unripe fruits and vegetables Curing in salt Mixing of ingredients Packing Sun drying In process unripe mangoes are washed and cut into small pieces and then salt and turmeric powder is applied on it and then these pieces are sun-dried for couple of hours. Then mango pieces and other ingredients like methi powder, spices etc. are thoroughly mixed with edible oil and finally packing is undertaken. 221 We have formulated a recipe for our only one lot size . Ingredients: • 1 kg raw green mangoes (cut into 4-8 pieces each) • 1 cup white sea/rock salt • 3 tbsps aniseed/fennel seeds • 1 1/2 tbsp mustard seeds • 3 tbsps kalonji (onion seeds) • 1 tbsp fenugreek seeds • 5 tbsps red chilli powder • 2 tsp sturmeric powder • 3 cups (710 ml) mustard oil Preparation: • Sterilize and thoroughly dry a glass-pickling jar. • Put the mangoes in the jar and cover with salt. Mix well and cover the jar tightly. • Leave the jar out in the sun for a week so that the mangoes soften. • Mix the aniseed/fennel, mustard, onion and fenugreek seeds, chilli powder and turmeric together. • Add this spice mix to the mangoes. • Heat the mustard oil till it smokes and then turn off the fire. Allow the oil to cool fully. • Pour this oil over the mangoes so that all the pieces are submerged. Mix well. Put the tightly covered jar back in the sun for two weeks. Stir everyday to mix well. Core competency- Unique mango flavor in pickle. Ethyl 4-(thioacetoxy)butyrate as a flavoring agent . This invention pertains to a method for flavoring an ingestible composition with a flavoring agent in organoleptically purified form, unaccompanied by substances of natural origin present in mango. The present invention also pertains to ethyl 4- (thioacetoxy)butyrate represented by the formula, CH3COS(CH2)3COOCH2CH3. Specification- As per acceptable flavour Limit –Non (No Hazards concern, As per PFA 1954 & FPO) GMP as a process Our pickle will not have any class II preservative, and will use GMP (good manufacturing process). 3.1.2. Product level 5. HOME MADE 4. REAL MANGO FLAVOUR 3. QUALITY 2. MANGO, OIL, SPICES 1. HUNGER 3.2 Place Initally our company will contract with COMPFED a local dairy “sudha dairy’and Big Bazar, and use their distribution system. Sudha dairy has reach in whole region. Later we will creat a more self-controlled channel having whole saler and retailer. Stage -1 Stage-2 3.3 Price Prices of different competes Oue product is made from batch process so will costly but we will offer value for money and average realization of INR 200/Kg. Our product will more emphasize on quality and will be most precious in segment. 3.4. Promotion. The basic promotional route will be point of purchase, attractive danglers placed near check out counters, and sample trial packs will also be distributed. Our promotion theme will be HOME MADE PICKLES. We will also increase awareness through newspapers and banners. 3.4. Positioning We have given our product name “DESHI”. Which indicates a personal face of product. Desi for what? •For taste Desi for whom? •For every one looking Quality. Desi for when? •Every meal to ensure your desert was perfect. Packaging •A tall cylindrical straight jar that reflect energy, with image of a old Indian grand mother making pickle. 4. Value to customer 4.1. CPV (L) M L L H (H) H L H M We found CPV L/H i.e >1 4.2. CLV initially we will give 10% discount for new customers. CLV8 = ∑Tt=0 (Pt-Ct)rt/(1+i)t – AC Where, Pt= price paid by a consumer at time t (once), i.e INR 200. Ct = direct cost of servig the consumer at time t (once), i.e INR 100 (estimated) i = discount rate = 10% AC = acquiring cost (estimated 20% of total sales of 1st year) i.e INR. 80 T= 30 years rt = probability of repeating buying =60, Calculation: Per year ∑30t=0 (400-200)*1/(1+0.1)2 - 80 =INR.5801.78/ customer 4.3. Perceptual map 8 Page no. 127, chapter 5, Kotler , Marketing Management. (13th edition) 5. Contigency plan Our DESHI pickle will enhance working capital and will diverse in more commodity. We have to establish a value for money perception in mind of customer. Sufficient effort will be done for brand building.
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