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Project Proposal for Domestic Steel Furniture

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									             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

2.2.2.1. 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/-.

2.2.2.2. 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.

    2.2.2.3. 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/-.

    2.2.2.4. 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/-.

    2.2.2.5. 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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