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TABLE OF CONTENTS

I. Executive Summary.......................................................................2

II. Introduction………………………………………………………………………..3

II. General Company Description…………………………………………………18

III. Products and Services..................................................................20

IV. Marketing Plan..............................................................................22

V. Technical Analysis & Operational Plan.........................................54

VI. Management and Organization....................................................69

VII. Financial Analysis.........................................................................70

VIII. Implementation & Reviews...........................................................82

IX. Appendices...................................................................................85

X. Bibliography.................................................................................98
EXECUTIVE SUMMARY

It has been good learning experiences to do the detailed project report on setting up of the Soup
industry in the Jaipur region as a part of our MBA program. This study has been made in order to
learn and apply that how actually any manufacturing unit is set up.

Today ready meals, soups and sauces are replacing standard home-cooked meals. People are
living increasingly hectic lifestyles, working hours are replacing free time, families are smaller,
and women are working as much as men, all of these trends have increased the need for
convenience foods. Soup is the homemade product and I am quite familiar with process, from
there only I thought taking it as our product. Then project is followed by feasibility study and the
industrial analysis in order to understand market trends and other factors affecting the industry.

Then the market analysis was done by visiting the soup manufacturing unit, by conducting
interviews of manufacturing units owner and by filling the questionnaire by retailers and
customers. Then on the basis of the respondent the demand analysis was done for the product.
After this the demand analysis the process was followed by technical analysis.

The whole journey gave a good experience and great learning opportunity. It has broadened my
theoretical knowledge. This project has helped me to use our ability, skills and knowledge.

Thus, the overall journey to success of the project was quite good and gave me good learning
opportunities.
INTRODUCTION OF
THE PROJECT

INTRODUCTION OF SOUP INDUSTRY IN INDIA

The market for soup in India increased between 2002-2007, growing at an average annual rate of
10.9%. The leading company in the market in 2007 was Unilever. The second largest player was
Nestle. Domestic market has greater than 1,000 million consumers, 300 million upper & middle
class consumers, 200 million more consumers expected to shift to processed food by 2010 and
50% of household expenditure is on food items.

Sales of packaged soup have witnessed a dramatic increase in the last 5 years and Data monitor
estimates that packaged soups market in India to be over Rs 90 crores in 2008 and growing at
CAGR of nearly 17%. This growth is largely fueled by consumer’s demand for at home snack
options and an aggressive marketing campaign undertaken by the leading players in the market.

In western economies soups are a highly mature category and available in various formats such
as chilled, frozen, canned, and dried soups to suit both the evolved consumption habits as well as
budget. In India the market is still at its infancy and concentrated mainly in the urban areas. The
market in India is dominated by dried soup formats through brands such as Knorr followed by
Nestle Maggi

Nestle introduced soups in India at a time when Indian meal options were yet to evolve to
include soups as a part of regular at home diet. For most of its early days dried soups purchase
was restricted to the cooler winter months or for convalescing patients. Marketer’s grappled to
increase the occasions for soup consumption which continued to be limited. Also unlike other
processed foods such as instant noodles, bread or biscuits which had a large mass consumption
base and suited for round the clock consumption soup remained as a premium dinner meal
accompaniment restricted for niche westernized urban households.

In the last few years there has been a growing demand for healthy and quick & easy to prepare at
home food options. This was driven by a growing base of ‘young’ and ‘experimental’ consumers
who were ready to try western fast foods with a caveat that they are affordable and that products
taste continue to have a ‘Desi’ flavor to it.HUL introduced “Knorr” to Indian consumer backed
by a strong and aggressive marketing and promotion campaign. HUL’s presence and marketing
tactics revived an otherwise passive category which has since been growing at an average annual
growth rate of 17% (cagr).
Knorr repackaged soup as ‘essentially desi’ replacing the elitist image attached to it. The
positioning of the product was also changed as a snack option before dinner rather than a meal
option. HUL understood the preference of the Indian consumer for local taste and introduced
their soups in flavors such as tomato chatpata (rasam), corn mast masala, vegetable hara bhara,
tomato makhni, chicken malai tikka and also reduced prices to appeal to a larger audience. Knorr
has added healthier ‘No MSG’ and ‘No preseravtives’ options and strategically positioned soups
as ‘light, healthy, tasty, easy to prepare’ pre dinner snack.

To push growth Nestle also introduced desi variants of its soups, offered single serve packs, and
lowered prices. Interestingly Ching’s Secrets has taken a slightly different approach positioning
itself as the provider of authentic Chinese style soups hoping to carve a niche for itself among
the two major competitors – Knorr and Maggi.

OVERVIEW OF RAJASTHAN

Rajasthan is geographically the largest State in the country. It is landlocked with a total area
3.42 lakh sq kms. The population of the State as per the Census 2001 stood at 5.65 crore.

• The services sector accounts for 45 per cent of the GDP of the state.
• The share of the industrial sector is 32.5 per cent

• Agricultural sector, accounts for 22.5 per cent.

Rajasthan is the leading producer of cement in the country, contributing to 15 per cent of the
national cement output. The State ranks third in terms of salt production, accounting for one-
tenth of the countrywide salt output. While, known largely for its unorganized textile sector,
Rajasthan is also the fourth largest producer of spun yarn in the country. Rajasthan is rich in
mineral wealth and holds a share of about 24 per cent in the total national production of non-
metallic minerals.

The Monthly Review of the Rajasthan Economy gives an updated and analytical view of the
State's economy. The review encompasses detailed sectoral statistics and analysis. The sectors
broadly covered in the review include

• Agriculture allied sectors

• Infrastructure

• Industry

• Labour & employment,

• Investments

• Corporate developments

• State public finance

• Banking

• Small savings and Social sector.

INTRODUCTION OF FOOD INDUSTRY IN INDIA


The food industry is the complex, global collective of diverse businesses that together supply
much of the food energy consumed by the world population.
The food processing sector is critical to India’s development. It establishes vital linkages and
synergy between industry & agriculture, the two pillars of the economy. India is the world’s
second largest producer of food and holds the potential to become the food provider of world.
The growth of this industry will bring immense benefits to the economy, raising agricultural
yields, enhancing productivity, creating employment and raising life-standards of people across
the country, especially in rural areas.

This industry ranks fifth in the country and employs 16 lakh workers, comprising 19% of the
country’s industrial labour force. It accounts for 14% of total industrial output with 5.5% of the
GDP. Its turnover is estimated at Rs.1,44,000 crore, of which Rs.1,11,200 crore is in the
unorganised sector. The liberalisation of the Indian economy and world trade and rising
consumer prosperity has thrown up new opportunities for diversification in the food-processing
sector and opened new vistas for growth.

This section analyses the performance of the Indian food processing industry. Currently,
processed food accounts for merely 2% of total food production in India, which is very low as
compared to the western countries. Taking market forces such as rising income level and
changing consumer behaviour due to rapid economic growth into consideration, it is expected
to reach a growth rate of 10% in 2010 & 25% in 2020. In food processing sector, dairy
products (includes milk, Ethnic sweets etc) and packed food provides immense opportunities
for investment.

The Indian food processing market is one of the largest in terms of production, consumption,
and export and import prospects. Since India is one of the major food producers worldwide,
with new reforms, it presents exciting opportunities for commercial openings for a wide range
of investors.

REASONS FOR INVESTMENT IN FOOD PROCESSING INDIA

1It is the seventh largest country, with extensive administrative structure and independent
judiciary, a sound financial & infrastructural network and above all a stable and
thriving democracy.

2Due to its diverse agro-climatic conditions, it has a wide-ranging and large raw material
base suitable for food processing industries. Presently a very small percentage of these
are processed into value added products

3It is one of the biggest emerging markets. Rapid urbanisation, increased literacy and rising
per capita income, have all caused rapid growth and changes in demand patterns,
leading to tremendous new opportunities for exploiting the large latent market. An
average Indian spends about 50% of household expenditure on food item

4Demand for processed/convenience food is constantly on the rise

5India's comparatively cheaper workforce can be effectively utilized to setup large low cost
production bases for domestic and export markets

MAJOR CHALLENGES, CONSTRAINTS AND CONCERNS

1Under the new trade regime, the food sector will be confronted by challenges of trade
related Intellectual Property Rights, comprising patent laws, copyrights, trade links, etc.
2The inherent strength of high raw material production and large domestic market base has
to be buttressed with operating processing units at optimum capacity levels as per
economies of scale which would enable achieving a competitive edge over imported
products.
3Advances in bio-technology have enabled production of Genetically Modified (GM) foods.
These have already appeared in some countries. GM foods need be critically examined
on their good and adverse impacts on human health.
4Taxes on processed food in India are among the highest in the world. No other country
imposes excise duty on processed food and distinguishes between branded and
unbranded food sectors for taxation.
5Commercial R&D activities in the food industry have remained confined to only a few
areas. R&D activities have scarcely emerged from the laboratory to be extensively
adopted on the field.
6Indian brands have yet to acquire an image in the international markets because of poor
global marketing.
7Most Financial Institutions lack capacity to appraise hi-tech export-oriented projects. There
are no suitable insurance schemes for such projects, most of which deal in export of
perishables. In financing such projects the banks face considerable credit risks. With
new technology, the risk perception is higher than the existing one.

8The sector has been characterised by poor marketing, transport and communication
infrastructure. The market density of fruits and vegetables is low and facilities for
storage and cold chains in the hinterlands are woefully inadequate.

9Erratic and inadequate power supply, lack of roads, education and health facilities and no
or low rural industrialisation accentuates the problems.

GENERAL COMPANY DESCRIPTION

Business Overview

We will be incorporated in Jaipur, Rajasthan as a private company under the name “Yummy
Soups Private Ltd”. Our business is for ready meal originally referred to a frozen or chilled meal
that comes in an individual package, contains all the elements of a single-serving meal, and
requires little preparation.

In ready meal our business will be of manufacturing ready to eat soups. The Soup is made by
combining vegetables in boiling water until the flavour is extracted, forming a broth. Many
types of soups can be found, clear soups, thick soups etc. Commercial soup became popular in
the 1900s with the invention of canning. Soups can sometimes contain particles which can
complicate the processing of the product. Well we will be going for Dried soup production as
Indian Market for soup is dominated by Dried or Chilled soup.

Our Brand Positioning will be of “Jab Lagi ho bhook, Khayiye yummy soups” (when you are
hungry go for yummy soups) with an emotional benefit we offer to our consumers.

Vision Statement

With a vision “ To be the best soup manufacturing company in the world ”.

Mission Statement

1We will be the most successful companies in the world in soup manufacturing.

2We Take Great Care Of Our Customers.

3We Operate With Positive Energy.

Goals and Objectives

1Improve sales which will inevitably lead to more profit.

2Path to Growth by improving profit margin.

3To achieve breakeven point as soon as possible.

4To do effective brand positing and attract more and more customers.

5To serve delicious and healthy soup to customers.


Business Philosophy

To be successful, we will permit marketing to impact our entire business as to establish brand
image is very important for our product so that we can cater our target customers.

That’s because we believe marketing is charged with shaping and communicating your brand
promise. It is not just an advertising campaign, a sales promotion or a public relations event.

Since our brand is really everything what we do or say, we will spend considerable time and
effort conducting Market Analysis & Strategic Planning to effectively differentiate our self from
our competitors and develop a unique selling proposition.

This requires that management buy-in to the marketing process, include Yummy Marketing as
part of its executive team and champion the brand.

Integrated marketing strategies are then followed to successfully communicate our brand, tie
sales and marketing activities together and hold everything accountable.

So initially we will be focusing to increase sales and market share.

SWOT Analysis

Strengths
1Specialization in food processing category marketing and distribution in Urban Market.
2High quality and safe food products at affordable prices.
3Single product focused.
4Efficient supply chain.
5Capable and committed human resources.
6New soup Plant in Jaipur.

Weakness
1Low rural market presence constraints.
2Ability to pass through cost increases in price point Stock Keeping Units.

Opportunities
1New brand for soup.
2Growing package and canned food market in India by 15% annually.
3Other product category like Biscuits, Chips and Ready to Eat Market still unexplored.
4Opportunity to be substitute to other snacks category of food products.
5Potential for growth through increased penetration.
6Growing trend for ‘Out of Home’ consumption.

Threats
1Competitive environment with diverse players like Unilever (Knorr soups) and Nestle
(Maggi soups).
2Less Entry Barriers in the Market segment for product category.
3Substitute Product to Product Segment.
4Rising prices of raw materials and fuels.
5People attraction and retention.
Porters Five Force Model

Internal Rivalry-

There are very few players in the manufacturing of soup at local level in Jaipur and nearby areas
but there are some very big players in this industry like Nestle (Maggi Soup), Unilever (Knorr
Soups), MTR and GCMMF’s Masti. The businesses mainly compete on price, quality,
differentiation and brand image.

Market is clearly dominated by Knorr which controls nearly 60-65% of the market. Knorr
successfully connected with the audience and promised to offer a perfect alternate for ‘home-
made soup’. With a wide variety of flavors and a strong marketing activity Knorr is poised to
retain its leading position.
Nestle and Ching’s secrets are the other leading players in the market jostling for the second
position. With a strong loyal customer base, large distribution network, and strong brand equity
Nestle is strongly competing with Ching’s secrets a home grown brand popular for its Chinese
flavors. Further retailers like Aditya Birla’s More and Future Groups’ Big Bazar see a lot of
potential in promoting their own brands to ensure bottom line growth. Therefore HUL can expect
to face strong competition from private label brands Thus the internal rivalry is High for soup
industry business.

Barrier to entry-

The barrier to entry in the industry is high. One of the most fundamental barriers to entry is
resource ownership, the ownership and control over a critical input used in the production of a
soup. Limiting ownership of this input effectively limits entry into the soup manufacturing.

Thus, since we are opening our business on small scale, we can enter in the industry with
relatively small amount of capital.

For soup industry there are high barriers to exit which is due to increase the intensity of
competition in an industry because existing firms have very strong brand image and they will
“stay and fight”. There are several costs associated with exiting an industry.

(1) Asset-write-offs – e.g. the expense associated with writing-off items of plant and
machinery, stocks and the goodwill of a brand

(2) Closure costs including redundancy costs, contract contingencies with suppliers and the
penalty costs from ending leasing arrangements for property

(3) The loss of business reputation and consumer goodwill - a decision to leave a market
can seriously affect goodwill among previous customers, not least those who have bought a
product which is then withdrawn and for which replacement parts become difficult or
impossible to obtain.

(4) A market downturn may be perceived as temporary and could be overcome when the
economic or business cycle turns and conditions become more favourable.

There is High exit barrier so we would be unable to sustain our self because of big market
players.

Bargaining power of suppliers-

The prices of raw inputs required for the manufacturing of soup are depending on the market
prices. As India has a strong agricultural background so it will be easily possible for us to
procure raw materials. Thus, the bargaining power of suppliers is low.

Bargaining power of buyers-

The buyers of our product are the hotels, restaurant and the retail stores like Life Style this
section of the buyers will have bargaining power because they mostly go for bulk purchase. Thus
they can ask for discount on volume purchase. Thus it is expected moderate bargaining power of
buyers.

Threat of substitutes-

Threat of substitutes is very high in the industry if it comes to evening snack. The substitutes for
soup can be Kelloggs corn flakes, Noodles like Maggi, Pastas, Macronis etc. But as a starter for
the dinner or lunch it is given as a first preference. Thus it has high threat of substitute.

PEST Analysis

Political and Legal Environment

1Changes in laws and regulations, including changes in accounting standards, taxation


requirements, (including tax rate changes, new tax laws and revised tax law
interpretations) and environmental laws in domestic or foreign jurisdictions.
2 No government’s legal limitation is there in soup market. But some of the legal limitation
sectors are public utilities that provide cities with electricity, natural gas, telephone
services, and garbage collection.
3There are potential fines set by the government on companies if they do not meet a standard
of laws
4Full repatriation of profits and capital.
5Immediate approvals for foreign investments up to 100 per cent.
6Import duty would be zero for 100 per cent export oriented units. Reduction in customs duty
on packaging machines.
7Income tax rebate granted (100 per cent of profits for 5 year and 25 per cent of profits for
next 5 years) for upcoming industries like fruits and vegetable.
8Government gives financial aid for establishing common facilities in Agro Food Park.
9Full duty exemption on all imports for units in export processing zones.
10 Their ability to penetrate developing and emerging markets, which also depends on
economic and political conditions, and how well they are able to acquire or form strategic
business alliances with local retailers and make necessary infrastructure enhancements to
production facilities, distribution networks, sales equipment and technology.

Economical Environment

1It has to maintain strong focus on greater efficiency in the use of natural resources.
2Economic change, for example a recession creating increased activity at the lower ends of
product price ranges. Rate of interest rises depressing business and causing
redundancies and lower spending levels.

3On reducing waste and emissions.


4The usage of water, energy, emission of Green House gas and waste water, per tonne of
production.
5Lowering the interest rates will ultimately excite consumer demand in the economy and
vice versa.
6These efforts reinforce the trust that people can have in our Company. The results of these
measures, are contained in the write upon creating “Shared Value”.

Social Environment

1Social change involves changing attitudes and lifestyles. The increasing number of
women going out to work, for example, led to the need for time-saving products for the
home.

2Many Indian citizens are practicing healthier lifestyles. Consumers from the ages of 37 to
55 are also increasingly concerned with nutrition.
3This will continue to affect the soup manufacturing industry by increasing the demand
overall and in the healthier ways.

Technical Environment

1The effectiveness of company's advertising, marketing and promotional programs. The new
technology of internet and television which use special effects for advertising through
media.
2They make some products look attractive. This helps in selling of the products. This
advertising makes the product attractive. This technology is being used in media to sell
their products.
3As the technology is getting advanced there has been introduction of new machineries all
the time. Due to introduction of these machineries the production can be increased.
4The well established R&D and technical expertise of Indian research institutions like
Central Food Technological Research Institute, National Dairy Research Institute,
National Research and Development Centre etc have been a great support for food
processing sector in India.
5At present most of the processing in India is manual. Usage of Technology like pre cooling
facilities for vegetables, controlled atmospheric storage and irradiation facilities is very
negligible.

6Modernizing and bringing in state of the art technology should be given paramount
importance by both existing and upcoming manufacturers.

GENERAL
COMPANY
DESCRIPTION

Firm
The firm will be a private firm and will function under the name “Yummy soups private
limited”.

Promoter
My decision for opening soup manufacturing plant was due to the following five reasons:
1Personal Characteristics:
I have a basic knowledge about food processing industry as I have my family
business in hotels and restaurant. I personal feel that concentrating on soup
manufacturing will be a beneficial firm because now a day as ready to eat products is
booming in India.

2Personal Environment:
Local Environment also supported me in selecting this product because in Jaipur there
is not a single soup manufacturing unit. As well as procuring raw material is easy as
the raw material for soup manufacturing is easily available in jaipur.

3Personal Goals:
My personal goal is to produce healthy and tasty soup which will be good for
consumer’s health as well as initially focusing to increase sale and market share.

4Business environment:
The business environment is very supportive for soup product because the overall
Soup industry in India is of 22 million litres among which Packaged branded soup is
Of 0.5 million liters.

5Idea:
This idea was a very different and booming concept in India so accepted the idea of
producing the soup.
Products and Services

Yummy soup private ltd. will be producing vegetable dried soup. The Soup is made by
combining vegetables in boiling water until the flavour is extracted and forming a broth The
packet will range from 100gms to 200gms.

Vegetable Soup:

Place: Jaipur, Rajasthan


Style: Instant
Taste: Spicy
Packaging: 52gms and 70gms
Certification: Issued by Govt agencies.
Use: Ready to serve instant tasty soup
Package: One types of packing will be done
52gms X 40 packets
In a carton weight per carton – 2.08 kg.

Competitive advantage

6The first and the foremost advantage is its location in Jaipur since there is no other unit here
so we can get first mover advantage.
7India has plenty of natural resources that provide it a competitive advantage in the food
processing industry. Due to its unlike climatic conditions, it has a wide ranging and large
raw material base appropriate for food processing industries.
8The semi processed and ready to eat packaged food segment is comparatively new and
constantly changing.
9India's cost advantage in manpower can be used to set up large low cost production bases
for domestic and export markets. If one is to add on significant investments that have
come into the country, food processing industry is in a favorable position.
10The Indian food processing industry is forecasted to grow at 9% to 12% in the coming
years.
11The industry has set a goal of increasing its share in the global processed food trade from
1.6% to 3% within the next 8 years.
12India having an advantage of a strong agricultural base should tap this potential favorably
and become a preferred sourcing destination for food products globally.
MARKETING
ANALYSIS
MARKETING PLAN

Market Research

Yummy soups want to establish a large regular customer base, and will therefore concentrate its
business and marketing on local residents, which will be the dominant target market. This will
establish a healthy, consistent revenue base to ensure stability of the business. In addition, tourist
traffic is expected to comprise approximately 15% of the revenues. High visibility and
competitive products and service are critical to capture this segment of the market.

Yummy soups offer a broad range of products of good quality soup. We cater to all of its
customers by providing each customer products made to suit the customer, down to the smallest
detail.

Geographical Area

Local Soup as the product is to be launched in the Jaipur with the manufacturing unit in
VishwaKarma Industrial Area.
Market Segmentation

Yummy soups focuses on the middle-income to upper-income group, teenagers and working
people. These market segments consume the majority of products.

Objective of the survey

1To know about the market potential for the soup.


2To analyse the soup manufacturing, its competition, customer preferences and their
satisfaction level.
3To find out the major players in the market.
4To know the demand for the product.

Source of Information Collection

Primary (Market Survey)

Methodology Adopted:

Research plan was developed by decisions based on Research Approach, Research Instruments,
Sampling Plan and Contact Method.

Research Approach:

Primary data for gathering information was collected using survey research.

Research Instruments:

Questionnaire was used to collect the data on both the sensitivity of demand and supply,
customer preferences and to know the market potential and future growth.

After deciding on the research approach and instruments, sampling plan was developed.
Sample Detail:

Questionnaire is prepared which is filled by the 150 retailers in Jaipur.

Contact Method:

Personal interview was conducted with the manufacturers to know the Unit size and
manufacturing process.

Interpretation of the questionnaire

1)Which age group generally purchases the soup?

2.25%
10.4% 23%
Below25

25-50

50-55

55above

64.35%
Interpretation:

Retailers have said that the age group below 25 purchases about 23% of soup, 25 – 50 purchases
about 64.35% of soup, 50 – 55 purchases about 10.4% of soup whereas hardly there is any
customer above 55 i.e. of about 2.25%. Therefore it is concluded that most of the soup is
consumed by 25 to 55 age group, working group and the second maximum consuming
customers are below 25 which included school going children’s.

2) Who are the most preferred customers for soup?


19.29% 2.46%
Student
35.49%
Working
people
House Wife

Others

42.76%

Interpretation:

According to retailers the student preferred soups are 35.49%, among the working peoples
42.76%, among house wifes its about 19.29% and others like Old age peoples or dieticians are
about 2.46%.
With this we can conclude that most of the soup is preferred by the working people because of
their busy and hectic schedule and the next segment is of student for consumption of soup.

3) From where do you buy the soup products?

20.29% 1.04%
Manufacturer

Wholesaler

Dealer
55.28%
Others

23.39%
Interpretation:

According to retailers 55.28% of retailers buy their soup product from wholesaler, 23.39% from
dealers, 1.04 from manufacturers and 20.29% from others like agents, intermediary’s retail
shops.

The most of the retailers buy the soup product through wholesalers and some from dealers and
other agents. But some of the retailers also buy from the manufacturers who have direct contact
with them or if their retail shops are close to manufacturing unit.

4) How does your soup supplier reach to you?

10.29%
19.86%
Personal Contact

Dealers

Salesmanship

24.32% 45.59% Others


Interpretation:

According to retailers the suppliers reach to them through direct contact are 10.29%, through
dealers are 45.59%, through salesmanship are 24.32% and through other means like
advertisement and promotions are 19.89%.

Hence according to retailers maximum soup supplier reach to them are through the dealers and
secondly it’s by doing salesmanship of their product.

5) What matters more to the customers while purchasing the soup product?
0%
25.16%
Brand

Price

Quality
52.39%
Faith over
retailer
22.45%

Interpretation:

According to the retailers the thing that matter more to customer is 53.39% of customer prefer
brand, 22.45% prefer price, 25.16% quality and nobody trust on the retailers in case of soup.

It means that in the case of purchasing a soup most of the customers are brand conscious rather
than retailers local brand, as well as they also look for the better quality of soup rather that cost
or price of soup.

6) Do they prefer the same brand every time?

19.86%

35.71%

Yes No

64.29%
Interpretation:

According to the retailers most of the customers prefer same brand i.e. 64.29% of customers
prefer the same brand where as only 35.71% of customers prefer some other brand that too
because they are not a regular customers.

This means that in soup industry the brand loyalty is seen in customers they don’t like to switch
their preferred brand of soup frequently.

7) Name the most preferred brand for soup by customers?

2.4%

Knorr

Maggi
45.25%
55.35% Local

Others
Interpretation:

According to the retailers customers preferred Knorr are 55.35%, Maggi are 45.25%, No
customers for local brand as such and others are 2.4%.

So the maximum number of customers prefers the knorr soup of Unilever rather than Maggi and
there is no customer for local brand because there is no local brand in Jaipur and some others are
like homemade soups or restaurant soups.

8) What are the most popular flavors in the soup?


6.61%
22.45%

17.26%
Tomato

Vegetable

Chicken
10.39% Cheese

Others

43.29%

Interpretation:

According to the retailers the flavors preferences are that 22.45% of customers prefer tomato
flavor, 43.29% of customers prefer Vegetable flavor, 10.39% of customers prefer Chicken
flavor, 17.26% of customers prefer Cheese soup and 6.61% of customers prefer other flavors like
Corn, Cashew nut.

The maximum numbers of customers are for vegetable flavor soup and the second most preferred
flavor is tomato flavor.

9) At what price you purchase the soup from the suppliers?


2.09%
29.25%
Dicounted Price
33.34%
Fixed Price

Whole sale price

Others

35.32%

Interpretation:

According to the retailers the price at which they purchase the soup from suppliers are 29.25% at
discounted price, 35.32% with fixed price, 33.34% at wholesale price and 2.09% at other prices.

This means that most of the retailers have to purchase at fix price and at wholesale price
especially the retailers like Big Bazar, Vishal Mega mart are generally offered at wholesale price.

10) Frequency of Quantity purchased?

2.09% 15.04%

30.45%
Weekly

Monthly

Quaterly

Yearly

52.47%
Interpretation:

According to the retailers 15.04% of them purchase the quantity weekly, 52.47% purchase
monthly, 30.45% purchase quarterly and 2.09% purchase at yearly or annual basis.

It means that most of the retailers purchase the soup packets on monthly basis.

11) Quantity sold in a day (Packets)?


17.8%
24.32%
Below 20

20 - 30

30 - 40

40 above

30.45% 27.43%

Interpretation:

According to the retailers the quantity sold is 17.8% for below 25 packets, 27.43% for 20 – 30
packets, 30.45% for 30 – 40 packets and 24.32% for 40 and above packets to be sold in a day.

It means that approximately 20 to 40 packets are sold in a day by the retailers.


Over all Analysis of Market Research

Over half the adults interviewed in the course of the exclusive consumer research commissioned
for this report agreed soup is a good snack. The retail market for soups grew by 10.9% at current
prices between 2002 and 2007, with most of this growth due to dried soups, largely spearheaded
by the Knorr and Maggi. Retailers have also been quick to capitalize on the higher margins
attracted by dried soups. Suppliers of wet ambient soups have sought to communicate the quality
proposition of fresh chilled soups with the launch of ambient soups in foil pouches, a style
associated with freshness. Fresh chilled soups, however, still only accounted for 14.4% of retail
soup sales in 2007, compared to 61.5% for dried soups in India.

The relatively small size of the sector was reflected by only 13% of adults interviewed agreeing
that dried soups were actually better quality than canned soups. Home-made soups are an
important factor in the soups market with trade estimates suggesting that as much as a third of
overall soup consumed by households is accounted for by home-made soup. The consumer
research undertaken for this report shows 30% of adults make their own soups during the year
and 19% mostly consumed home-made instead of bought soups, with this latter figure being as
high as 40% amongst those living in Jaipur. Introducing new dried soup into the market has been
another way in which suppliers have sought to create further sales growth.

While new flavors have made, during the research conducted for this report, shows that a few
traditional recipes, such as tomato, chicken, mushroom and vegetable, are the favorites and main
flavors sold. This shows the flexibility and convenience of soups, as does being able to use
bought soups as a cooking ingredient at home.
Economics
Facts about your industry:

1Overall soup industry in India is 22 million liters and packaged branded soup is 0.5 million
liters. Sales of packaged soup have witnessed a dramatic increase in the last 5 years and
Data monitor estimates that packaged soups market in India is over Rs 90 crores in 2008
and growing at CAGR of nearly 17%.

2Current demand in target market is good as Indian processed food industry is showing a
growing trend with increase in its contribution to GDP.

3Trends in target market:-

 Showing a growing trend among the Student consumer because of knorr, as it has
been able to place the soup into the Indian menu as a form of evening light snack.

 Showing a growing trend among the working people because now a day’s women’s
are also working so it is use as a light weight food.

 Then suggested by the doctors and dietician as a healthy food with low calorie as now
a day’s people are more calorie conscious.

1Growth potential is their if I would be able to establish a good brand image among the
consumers because the people are brand conscious in case of soup and opportunity is less
because it is dominated by big players like Unilever and Nestle.

2The barriers in entering the soup market with new company are as follows:

o High capital costs


6)Capital cost is higher because of the various licenses which are required for the
processed food industries and for maintaining the quality standards to meet the
customer’s requirement.

o Moderate production costs

7)Production cost is moderate because the raw materials are easily available and can
be easily procured and Technical support is not much required because only two
machines are used they are Cutting and Mixing.

o High marketing costs

8)The marketing cost is very high due to the advertisement and brand promotion, in
this industry brand image is very important.

o Consumer acceptance and brand recognition

9)Consumer’s expectation is of fresh, healthy and quality products as well as the


customers are brand loyal so it is important to have a brand image.

o Training and skills

10)Not much training and skills are required for the staffs which are required in
manufacturing unit.

1How could the following affect my soup manufacturing unit company:-

o Change in technology would not affect the manufacturing process much.

o Change in government rules and regulations will definitely affect the production
process of soup.

o Change in the economy will also affect as soup is mostly targeted to the economic
class people

o Change in the processed food industry can only effect when the average growth in
this industry will come down.

Product
My product is soup manufacturing now from customers’ point of view my product will be
healthy, quality and good product to eat.

Features and Benefits

My product is only one that is manufacturing of vegetable soup.

1The most important features about vegetable soup

 Inexpensive ingredients.

 Easy to manufacture or produce.

 Demand for dried soup in Indian market

1The benefits that the product will do for the customer

 Easy to cook

 Soup can be consumed anytime in a day.

 An ideal feature that you can eat until you feel satiated and still achieve your main
goal of losing the extra kilograms.

 Soup is in fact a top 4 of the most recommended food during a weight loss diet.
Customers

After conducting the primary market research and looking at the market condition of other
competitors we came into conclusion that target market for soup are middle income to elite class
people as well as we can target to working peoples also.

We will directly approach to consumers for selling our soup. Since it is a consumer product, we
will sell it through a channel of distributors and retailers.

1Age

10)The age group would be from 10 to 50.

1Gender

11)For both male and female.

1Location

12)The manufacturing Unit will be located in Vishwakarma Industrial Area in Jaipur,


Rajasthan.

1Income level

13)Middle to upper income group peoples


Competition
There are many competitors in the soup industry as well as some substitute products like
Noodles, Kellogg’s etc.

The major competitors are HUL’s Knorr, Nestle’s Maggi, MTR, and GCMMF’s Masti. The
competitors which we have in this industry are very strong players will several other products in
the market they will compete with us for our products as they have the same target customers but
we can get the location benefit as a first mover advantage because there is no manufacturing unit
in Jaipur.

We have indirect competitors and substitutes from Kellogg’s and noodles market although they
belong to different segment but the target market are same for us as well as ready to eat food
market.

By comparing my product with strong player I could say one thing that I can get the advantage of
being local player in the market. Using the Competitive Analysis table below for comparing my
company with most important competitors of the industry, by estimating the importance of each
competitive factor to the customer with 1 = critical; 5 = not very important.

Table 1: Competitive Analysis

Importanc
Unilever(Knorr
Factor Me Strength Weakness Nestle(Maggi) e to
)
Customer
Vegetable Single Low rural Knorr soup with Maggi Soup Will rank
Soup product market different flavors as 3
Maggi Sauces
focused presence as well as other
Products Maggi Noodles
constraints. brands of
then some other
Unilever
brand of Nestle
Price for Less price Can be of Knorr soups Maggi’s range Will rank
Price
per packet charged different range between being Rs. 32 to as 2

is Rs.30 for quality Rs. 29 to Rs. 33 Rs. 35 for 52 g


52 gm. and 34 grams to to 70 g packs
68 grams in Maggi
quantity. introduced 1
serving packs of
12 g for Rs. 8 –
a first time in
India

Good Strength Technology Standard quality Standard quality Will rank


quality local changes and a strong and a strong as 1

Quality suppliers of brand image. brand image.


raw
material
Better Can choose The Good selection. Good selection. Will rank
product and the best customers as 3

Selection better suited. are left with


services. different
options.
No after No extra Difficult to They also don’t They also don’t Will rank
sales charges get the offer services. offer services. as 4

Service service feedback


from
customers
Can rely on The It is not Can easily rely Can easily rely Will rank
us. reliability possible to on them on them as 2

Reliability attracts get at early


more stage
customers.
It will be Will be It will be They are stable They are not Will rank
Stability
maintained able to difficult to with knoor as a stable because as 3

in case of create trust accept there are several


quality among changes in soup product. other products of
standard customers. future. Maggi.
No NO extra Can be They have their They have their Will rank
expertise cost to difficult to expertise sheaf. expertise sheaf. as 2

Expertise incur judge the


exact taste of
customers
No If it is good If it is bad A strong and A strong and Will rank
reputation than no that will good brand good brand as 1
Company
it’s a new need of destroy your image. image.
Reputation
brand further present
product promotions brand.
Suitable Easy The first Best Location Best Location Will rank
location procuremen food as 2

Location t of raw manufacturin


material g unit in that
location.
Good Good Can create Extremely good Extremely good Will rank
Appearanc as 3
impression negative
e
image
Through Reduce the Have to Through dealers Through dealers Will rank
dealers burden of make a and distributors. and distributors. as 3

Sales direct strong


Method contact distribution
with channel
retailer
Took loan Will have The interest No credit No credit Will rank
from Bank to invest charge is policies because policies because as 2
Credit
less high they are they are
Policies
Launched by the Launched by the
strong branded strong branded
companies. companies.
Will do by Will give Will have to Very good Advertisement is Will rank
sales mouth pay a huge advertisement good with a as 1

promotion publicity to capital for policy because it strong punch


& our product advertisemen is able to create a line they
Advertisin advertisem by our t. place for soup in generally go for
g ent in customers Indian menu the
News paper they generally go advertisement
then direct for the through TV.
advertisem advertisement
ent on TV. through TV.
No image Good Bad Strong image Good image Will rank
yet impression impression among the among the as 1
Image
customers customers.

Competitive Environment

Market is clearly dominated by Knorr which controls nearly 60-65% of the market. Knorr
successfully connected with the audience and promised to offer a perfect alternate for ‘home-
made soup’. With a wide variety of flavors and a strong marketing activity Knorr is poised to
retain its leading position.

Nestle and Ching’s secrets are the other leading players in the market jostling for the second
position. With a strong loyal customer base, large distribution network, and strong brand equity
Nestle is strongly competing with Ching’s secrets a home grown brand popular for its Chinese
flavors. Further retailers like Aditya Birla’s More and Future Groups’ Big Bazar see a lot of
potential in promoting their own brands to ensure bottom line growth. Therefore HUL can expect
to face strong competition from private label brands like Feasters from More.
Strategic plan
Marketing plan is needed in order to survive in the market. It helps to penetrate in the market.

Few strategic plans regarding my product are as follows:

1We have adopted penetrating strategy as it will attract more customers.


2Steady supply with timely delivery and high quality of soup product would be one of the
strategic strength of the marketing plan.
2Some discounts will also be given to the retailers on achieving the targets.
3More credit facility will be granted.
4Various gifts like calendars, pens, folders, diaries and other utility gifts can be given to the
retailers on their anniversaries, birthdays and other occasions so as to motivate them to
achieve higher targets and sell more.
5On achieving the higher targets, retailers will be given gifts hampers.
6The orders are currently will be taken telephonically.
Promotion

Initially we will you use methods other than paid advertising, such as trade shows, catalogs,
dealer incentives, word of mouth and network of friends or professionals because advertisement
through various media will not be cost effective for us.

Since the advertisement through TV will be very effective for us as our competitors generally do
because it directly reach to the customer and they can be aware of new local product and once
they are aware then they will try for my brand also. It is very important for me to create a brand
image because of strong competitors in this market but it is not possible for me to go for an
advertisement through TV now.

Initially I would like to project a image of quality and healthy soup at reasonable rate so other
promotional strategy are as follows:

1Additional Indian flavors in vegetable soup.

2New offer – 10% free in 70 g packs

Promotional Budget
The amount spend on promotional budget will be around 500000 initially than later on it can be
increased or decreased as per the situation permits.

Pricing

Since the Knorr soups range between Rs. 29 to Rs. 33 and 34 grams to 68 grams in quantity
whereas Maggie’s range being Rs. 29 to Rs. 30 for 40 g to 70 g packs and Maggi introduced first
serving packs of 12 g for Rs. 8 – a first time in India

So the price for my soup packet is Rs.27 to Rs.28 for 40 gm to 65gm packs and it is not a low
pricing strategy, if the price is less than the quantity is also less for per packet. This pricing
strategy is adopted because the customer will not be ready to compromise with quality they will
be ready to pay for the better quality product.

Place

Knorr soups is easily available in almost all super-markets, departmental stores etc whereas
Maggi soups are available mostly in super-markets and very few stores.

Almost no presence in the rural markets.

So I will place my product in departmental stores because at initial stage no supermarket will be
ready to accept my product and if they are ready to accept than they will charge a high cost.

Proposed Location

The location where I will establish my manufacturing Unit is Vishwakarma Industrial Area
(VIA) in Jaipur.

This location is very much suitable according to the availability of raw materials as well as
technical requirements.

The location is not that important to customer in soup manufacturing because they will not visit
the unit only the thing matters is that it should be hygiene place away from diseases and other
bacteria’s.
The place where my unit resides is well established and spacious as well as easily approachable.
It is better for me to be near to the suppliers as well as retailers so that I will not have to face
shortage of stock and can have better distribution network.

**Note: For the picture of packet refer to annexure III

MARKETING CHANNEL

The manufactured products will reach to customers through the retailers. In this case products
will always go through some channel, thus in this there are many intermediaries who perform
different functions. All these intermediaries form a channel which is knows as marketing
channel. These channel serves the customer and as the best form of taking the customer
feedback.

Since it is new firms so will start with the local channel as we are aware of the customers and
then slowly and gradually we can expands the operations.

Distribution Channels

Most of the soup manufacturers go through a distribution channel to reach the end consumer,
whether that consumer is a shopper in a retail grocery store or a diner at a fine restaurant. The
conventional distribution path for a packaged food product is from manufacturer to distributor
to retailer. Since we do not have the time to promote and sell this new product. So we will use
food distributors. The product will be sold through the middleman. The main middlemen for
our product in the distribution channel are as follows.

1Food distributors:

They will purchase products from us or from our distributor and then sell and distribute
the products to retailers, food-service companies, and other distributors.

2Direct Store Delivery:

We will deliver products directly to the nearby retailers.

3Food wholesale distributors:

They are very similar to distributors, but they do not perform as many services, such as
stocking and managing retail shelves.

4Self-distributing retailers:

We will contact large retailers, such as Big Bazaar and Wal-Mart, who have their own
distribution center. We will deliver directly to these centers. The retailer then distributes
the product to individual retail stores. This system accounts for roughly 34% of
distribution centers in the Jaipur.

Since my soup product is new, so firstly will introduce it at small local retail markets. This
will be a great way to test the soup in market. Many small retailers like to help new local
businesses. These retailers are also a valuable resource for advice on pricing, packaging,
and promotions. Starting locally gives us an opportunity to tweak our product, packaging,
and promotions.

Sales Forecast

Sales per month is 5000 packets

Therefore sales of packets per year is 5000 * 12 = 60000

So In 1st year will produce 70% i.e. 42000 packets

In 2nd year will produce 75% i.e. 45000 packets


In 3rd year will produce 80% i.e. 48000 packets

In 4th year will produce 85% i.e. 51000 packets

In 5th year will produce 90% i.e. 54000 packets

Demand Forecasting

Total demand for the soup is 11206008

So In 1st year will cater the 55% demand i.e. 6163304.4

In 2nd year will cater the 57% demand i.e. 6387424.56

In 3rd year will cater the 60% demand i.e. 6723604.8

In 4th year will cater the 62% demand i.e. 6947724.96

In 5th year will cater the 65% demand i.e. 7283905.2

DEMAND AND SUPPLY GAP

Demand:

Urban Population  2592067

Growth rate  35.10%

Therefore,
Net population presently = 2592067 * 1.3510

= 3501883

20 % below poverty line  3501883 * (20/100)

= 700377

Therefore Net population = 3501883 – 700377

= 2801506

Per household member in Jaipur is 6

Therefore the total number of families = 2801506/6

= 466917

Now, taking assumption that each family will consume 5 packets in a month

Therefore total consumption for 1 year  466917 * 5 * 12

= 28015020

Now will exclude the demand for branded product,

Demand for branded soup is 60%  28015020 * (60/100)

= 16809012

Therefore, Net Demand  28015020 – 16809012

= 11206008

Supply:

Name of retailer total retailers visited * total no of packets they keep * no of months in 1 year
Small retailers 25 * 10 * 12  3000

Departmental Stores 15 * 25 * 12  4500

Supermarkets 10 * 50 * 12  6000

13500

Total number of retailers in Jaipur

Supermarket 31

Departmental Store 71

Dealers 180

Small retailers 443

761

Total Supply  761 * 13500  10273500

Gap:

Total Demand – Total Supply

11206008 – 10273500

 932508

Interpretation:

By studying and analyzing this gap and the other strategies of competitors, my production
capacity would be approximate 2.5% of this gap, i.e. equal to 24000 packets per year.
The market for soup is growing rapidly in India. It is growing by 12%. Infect the Indian
manufacture are not able to meet the requirement of the present demand. The demand for the
soup product is increasing in the foreign market. Growing agro-based industry and working life
system of peoples is quite supportive to the demand of such product. Food processing industry is
also increasing rapidly and showing the turns. Thus the demand for the soup is higher than the
supply for soup.

TECHNICAL
ANALYSIS
TECHNICAL ANALYSIS & OPERATIONAL PLAN

Manufacturing Process and Technology:-

For making soup mixer and pressing & wrapping machine are the two which are essential. It is
standardised and simple for all products.

The production processes of soup are as follows:

Mixing

• All ingredients are mixed together.

• Fat is sprayed into the mixer.

Mixing room:

• The mixer, together with the fat tank and the dosing tank can be installed in a non air-
conditioned room.

• In order to empty easily the content of the mixer into trolleys or bins, it is necessary to
install the mixer onto a platform measuring about 4x3 meters.

• Ideal height of the room: 6 meters.

Maturation

• After mixing, the powder must maturate about 24 hours in a room with a temperature of
18 to 20°C and humidity not exceeding 45%.

This allows:

• Reduction of the temperature of the mix and solidification of the fat.

• Escaping of the air accumulated (during mixing) between the particles. The result more
fluid non-sticking powder and more homogeneous mixing.
During maturation, powder can be stored in 60 litre bins, 2/3 filled, or in non-deep trolleys.

It is preferable not to fill totally the bins or trolleys, in order to avoid high compression on the
powder situated beneath. This also reduces the maturation time.

Forming and wrapping

Equally to the maturation room, the forming and wrapping room must be set at 18 to 20°C and
45% RH.

If this isn't followed:

• Press and wrapping machines will have to be constantly cleaned.


• High variation in packet weight will be measured.

Each forming/wrapping line measures:


with open doors ~ 3'150 x 2'635 mm, height ~ 1'750 mm.

In order to increase the precision in weight of the packets, it is recommended to use an automatic
powder infeed system, controlled by the press. With such a system, the forming/wrapping line
will measure 5'023 mm and the height will be 2'410 mm.

Efficiency

• With a good homogeneous mix, 95% efficiency is possible. A part from the temperature
and humidity control, the quality and regularity of salt particles is essential. A fat with a
low melting point requests frequent cleaning.

• Considering that it takes a certain time to get from your suppliers ingredients with a
regular and sufficient quality, efficiency arises with experience

Labour

• Mixer: One or more operators, according to the quantity of batches per hour.

• Press and wrapping machine: One operator. With a perfect powder, one operator can
follow several lines.

• You must of course add the staff for laboratory, maintenance and secondary packing
(bags, boxes etc.).

Cleaning and maintenance

• Most of the users run their lines 24 hours per day, 7 days a week and reserve 1 shift for
maintenance.

• Machines are to be cleaned with vacuum cleaners and moisture clothes.

• Never use compressed air near the machines!

Choice of Technology:-

The choice of technology is influenced by the variety of considerations such as capacity, input
and product mix. Our capacity to produce soup is not high due to the less demand in the
market so for producing the soup we have adopted this technology that can work on diesel as
well as on electricity and which provides uninterrupted output as per our requirement.

Mixing Machine:

Capacity : 1300 pcs/hr

Frame steel quality

Rustfree power

380 volt resistance heat

200’c (+10%) filling interval between 100gm and 400gm

Working pressure 6-8 ATM

Net weight 400 gm

Dimensions: 750x1300x1600mm (LxWxH)

Pressing and wrapping machine:

Bag Size: L55-110 mm (Length)

W30-80 mm (Width)

Capacity: 55-65 bag/min

Filling range: 5- 40 ml

Total weight: 220V/50HZ/1.9KW

Weight: 350 kg

Dimensions: 600x790x1740mm (LxWxH)

**Note: For the picture of machines refer annexure I

Appropriateness of Technology

The technology utilises normal raw materials (i.e. vegetables) required for production of soup
it can be easily operated by the local man power and it also protects ecological balance. With
this technology there is no hazardous condition threatening the life of manpower as it is safe to
operate. The soups produce by this technology cater to the required needs of customers.
Technical Arrangements

Technical arrangements are to be made and technical knowhow is needed for soup we will be
purchasing 1 mixer, 1 Pressing and wrapping machine, 2 tanks and 2 trolleys. Procurement of
this mixer and pressing machine will be done from Delhi where as tanks and trolleys will be
available in Jaipur.

The costs of these technologies are estimated as follows:-

5Mixer- 75000

6Pressing and wrapping machine- 100000

72 tanks:- 60000

82 trolleys- 70000

There will be no extra installation and implementation cost as such to bear because these can
be easily operated by semiskilled labour.

Material Inputs

a)Raw materials required:

For making vegetable soup the basic requirement is of vegetables and another
important thing is salt no other preservatives are required.

The requirement lists are as follows:

1Energy (kcal)
2Protein (gm)

3Carbohydrate (gm)

4Sugar (gm)

5Cholesterol (mg)

6Fat (gm)

7Corn flour

8Carrot

9Cauliflower

10Green peas

11Beans etc there can be other vegetables too.

12Green chillily

13Coriander

14Salt

15Black pepper

b)Utilities:
Total power requirement will depend upon the product manufactured it can be about 100
to 200 HZ, we are in industrial area so there is less chances of electricity cut-offs, but we
are prepared for power break down.
Other utilities like the screws and other spear parts of the machinery so we will have an
extra spear of these things so that our production does not hault for that moment.

Product Mix:

The product mix is required in soup manufacturing industry because it will be beneficial to
attract customers i.e. in soup variations in size are aimed at satisfying a broad range of
customers.

So in my soup manufacturing company we will go for the manufacturing of soup in two different
packet size one will be of 52 gm initially then we will also go for 65 gm at later stage.

Capacity of Plant

Plant capacity can be defined in two ways feasible normal capacity and nominal maximum
capacity. So we generally concentrate on feasible normal capacity in our project.

a)Technological Requirement:
We will be producing round about 2000 packets of soup monthly so we will be having
the same mixing and packaging machine for these packets.

b)Input Constraints:

There are no such input constraints except power supply but since we are situated in
industrial so there is no power cut off problem.

c)Investment Cost:

We are not having any of the input constraints, so the relationship between the capacity
and investment cost is predicted to be good.

d)Market condition:

Market condition is favourable as the processed food industry is showing the growth
trend and the demand for soup is also increasing in India. The trend of consuming soup
has recently experienced rapid growth. The market for processed food is very strong now
a day that is why we have installed machines of higher capacity. These soups are also
now served as snack food and the consumption can be done any time in a day. Despite
high competition in the immediate area, yummy soups will position itself as a place
where customers will enjoy a delicious vegetable soup.

e)Resources of the firm:

The firm have good managerial resources but have to arrange financial resources by
taking loan. Since we are an Small scale enterprise so we can get the loan of about 50 lac
to 1 crore.

f)Government policy:

The capacity level is influenced by government as this industry is given additional


capacity regardless of economies of scale.

Licenses

Location and Site:-

We will be opening our Yummy soups pvt ltd in Vishwakarma Industrial Area will take the plot
on rent. We have chosen this place as there is proximity to raw material and no governmental
barriers are there:-

• RAW – MATERIAL :-

An important consideration for location is the proximity to the sources of raw material and
nearness of the market. We will be procuring raw material from Jaipur itself. We have decided
the site after taking these things into considerations as raw material will be easily available.

• AVAILABILITY OF INFRASTRUCTURE :-

Power, water, transportation and communication are not a constraint in our project. In Jaipur
there is no problem of power cut-off especially in industrial area where our location is there.

We have decided to open yummy soup at such site through high the distribution channel can be
easily established and we can reach to our end customer directly. So there will be no hurdles in
procuring raw material and also in final consumption to consumers.

• LABOUR SITUATION:-

Labour situation is also good as we do not required highly skilled labour, semi skilled labour will
be able to do the work efficient the only thing he have to do is fix the quality, quantity and
standard level.

• GOVERNMENTAL POLICIES:-

Since my project is on a private sector industry so there are certain governmental restrictions and
inducements.

Machineries and equipments:-

The requirement of machineries and equipments is dependent on the packets produce.

• Procurement of plant and machinery :-


We are procuring mixing machines from Bandex suppliers pvt ltd, Noida and Wrapping &
packaging machine from Damian pvt ltd. As we are purchasing 2 trollies and 2 tanks it is
providing us discount of 15 % and will be delivered by them. The guarantee period is of 1 year
and any type of servicing will be done free of cost for 1 year. There will be no installation cost
which have to be beared by us and then can be easily operated.

• Constraints in selecting machineries and equipment :-

Certain constrain like ease of absorption and cost is taken into consideration as my project is
capital intensive.

Structure and Civil works:-

• Site preparation and Development:-

Much construction is not required as the plot already have a building only the resizing and the
room separation need to be done. Allocation of power lines and cable need to be done as power
is very essential for the machines to work properly. Reclamation of drainage can be easily done.

• Outdoor Works:-

Outdoor work likes sales promotion, advertisement of brand and most important the supply and
distribution channels will be properly maintained by appointing dealers. There will be a security
guard and the site will be surrounded by a boundary wall.

• Building and structure:-

We are taking plot on rent initially at Jaipur VKI.

In above figure the building structure of the manufacturing unit is clearly stated. The total area of
the plot will be 25 by 40 meters. The interior is to be designed; in such a way that labor would be
able to work properly. We will be able to accommodate at least 30 labors and 10 staff members
in our manufacturing unit.

In front office there will be requirement of tables and chairs at least for 20 employees as well as
computer systems.

Project charts and Layouts:-

• Production Layout:

Firstly the ingredients will be moved to the Mixing room (i.e. the first room) with the help of
trolleys than there the vegetables will be cut and mixed together, than again with the help of
trolleys the mixture would be send to the maturation room. In the maturation room tanks would
be use to preserve the mixture. Than at the end it would reach to the Wrapping and packaging
room after that quantity will be checked and further dispatch will be done.

So the room allotted for this process should be very close to each other so that it won’t take
much of its time for completing the manufacturing process.

• Material Flow diagram:

• Final Consumption layout:


Since we are the soup manufacturers at the local level so we will have a distribution channel
through dealers we will supply our product to the retailers.
MANAGEMENT AND ORGANIZATION

The business will be managed by me as I have good knowledge of finances because I have done
my MBA with IT and Finance and my partner because he had a good experience of two years
working with Nestle Company for Maggi soup brand.

So we will be a member of Board of Directors for the company and there other 10 employees
which will be looking for marketing and distribution channel.

2- Marketing Managers

2- Sale persons

1-Person to look after the Distribution channel

1-Accountant (For keeping the records of data)

2-Technical expert (For operating computers and feeding day to day transaction detail of sales
and dispatched goods)

1-Quantity checker expert

1-Receptionist (For handling and dealing with calls)

30 Labors are required for handling the production process they will work in two shifts.
FINANCIAL
ANALYSIS
FINANCIAL ANALYSIS

Assumptions for working out economies:

1.Capacity utilization: First year – 90%, Second year onwards - 100%.

2.80% of the capacity is used by the manufacturing unit and rest 20% capacity is used for a

front office.

3.No transportation charges are included.

4.Pledge loan margin of 2% has been assumed on 20% of total handling, considering per ton

price of potato at Rs.5000 MT.

5.Interest on working capital considered at 25% per annum in a year.

6.Margin money considered at 25% of the financial outlay.

7.Interest on term loan considered at 12%per annum

8.Depreciation rate :

Reducing Balance Method:

BUILDING: 10%
PLANT & MACHINERY: 15%
FURNITURES & FIXTURES: 25%

9.Even though the life of the SOUP MANUFACTURING UNIT will be much more, the life

has been considered as 5 years.

10.Repayment period of Ten years with one year grace period has been considered. The

interest during first year has been capitalized and repayment of principal has been

considered from third year.

11.The advertisement expenses have be written off in 5 equal installments.

12.The income tax rate applicable is 35 %.

13.The current assets requirements are expected to be as follows:-


Raw materials 1.5 months
Book debt 0 .03 months
Stock-in-Progress 0.05 months
Trade Credit for Consumable Store 0.5 months
14.Means of Finance i.e. Promoter’s Capital & Long/Medium Term Loan (Debt equity ratio)

is in the Ratio of 1:3


Means of finance

Bank of Baroda

• Since most of the branches in the extensive network of over 2700 Bank of Baroda
branches and 25 specialized SSI branches, are computerized, the user gets a benefit of
anytime, anywhere banking, along with the advantage of several consumer driven
products.

• The loan amount can extend up to a maximum of Rs. 50 Lakhs.

• There are also facilities of Credit Guarantee Fund trust scheme for the borrowers:

o Rate of interest for this will not be more than 3% over the Bank's current rate.

o No guarantor or collateral security is required.

o These credit facilities are available as a term loan and / or fund based working
capital facilities (cash credit, overdraft, bills purchased or Discounted etc.)

o A service charge (guarantee fee) at 2.5% of the credit facility sanctioned is


payable upfront.

o Annual service fee at 1% P.a. on the outstanding loan amount is payable by the
borrower.

o Loans to the software industry up to Rs. 1 Crore are eligible to be treated as SSI
finances. Working capital requirements up to Rs. 5 Crores are governed by simple
procedures.

o Working Capital Limits are fixed based on the projected annual sales turnover.
(However, Projected Turnover should be realistic and in line with past trends).

o Simplified application and sanction procedure.

o Rate of interest on credit facilities to SSI borrowers will be fixed on soft terms
through liberal Credit Rating mechanism

Total cost of project is 4988985 ~ 50 lacs

Debt equity ratio is 1:3

Therefore promoters contribution  5000000/3

 1666666.67

I.e. Promoters contribution ~ 1666600

Bank borrowing ~ 3333400

Particulars Cost in Lakhs

Promoter's Capital 166.66

Long/ Medium Term Loan from Banks 333.34

Special Incentive Scheme NA

Total 500
Cost of Project:

• Land & Site development:

We will be using 1000 square feet plot for establishing the manufacturing unit

1 square yard cost Rs 15000 (1 square yard = 10 sq feet) in Vishwakarma Industrial Area

Therefore, Land = 1500000 (15 Lac)

• Building and civil works

For constructing the building we will be giving contracts to the builder.

For constructing the ground floor the builder will charge 1200000 (12 Lac) which will include
the complete construction with blue prints.

• Plant and Machinery

There will be two machines which need to be installed carefully:

Mixing Machine which will cost Rs. 64900 (i.e. 65000)

Including installation cost of Rs 15000

i.e. Total cost of Mixing machine is Rs 80000

Wrapping and Packaging machine will cost Rs. 84600 (i.e. 85000)

Including installation cost of Rs. 15000

i.e. The total cost of Wrapping and packaging machine is Rs 100000 (1 Lac)

2 Trolleys will be required cost Rs. 50000 (25000 each)


2 Tanks will also be required cost of Rs. 90000 (45000 each)

Weighing Machine will be required for Quantity check, it will cost Rs. 10000

• Technical Knowhow and Engineering fee

The technical knowhow is must to be understood by the worker so that they can effectively
operate but no extra charges will be charged as it will be a demo for the machine installation
experts.

• Preliminary and capital intensive expenses

150000 for electricity connection

150000 for furniture’s and fixtures for office

36000 for intercom connection including additional charges of Rs 6000 for two new connections
of phone lines.

**Note: For the exact table of cost of project Refer annexure IV

Cost of Production

Production cost:
2000 packets per month of 50 gm each

So the total production in gms  50 * 2000

= 100000 per month

Therefore in kg 100000/1000  100 kg per month

So for 1 year  100 * 12  1200

Since 50 gm = 30 Rs

So 1000/50 = 20kg, Hence 1kg = 30 * 20 = 600

Therefore Total production cost of 1200 kg = 600 * 1200

 720000

Wages and Salaries:

Wages for 30 labors

3000 for 1 labor for 1 month

So for 30 labors  3000 * 30  90000

Therefore, for 1 year  90000 * 12

 1080000

Salaries for 10 employees

7000 for 1 employee for 1 month

So for 10 employees  7000 * 10  70000


Therefore, for 1 year  70000 * 12

 840000

Utilities:

Water bill is 7000 per month

So for 1 year  7000 * 12  84000

Electricity bill is 15000 per month

So for 1 year  15000 * 12  180000

Phone bill is 10000 per month

So for 1 year  10000 * 12  120000

Marketing expenses:

Free samples, discount offers will calculate 15000 per month

So for 1 year 15000 * 12 180000

**Note: For the exact table of Cost of production Refer annexure V

Depreciation Schedule

**Note: For the exact table of Depreciation Schedule refer annexure VI


Income statement

**Note: For the exact table of Income Statement Refer annexure VII

Projected Cash flows for the project

**Note: For the exact table of Cash Flows Refer annexure VIII

Ratios

Loan interest 10 % and opportunity cost is 14%

Therefore,
Cost of capital  1/3 * 14 +2/3 * 12

 4.67 + 8  12.67

i.e. NPV rate = 12.67%

Net present value of the project:

NPV = INR 2,309,670.87

Internal Rate of return:

IRR = 32%

Pay back period:

PBP = 2.34 years.

Conclusion

• The net present value for the project is positive.

• The payback period is of 2.34 years which means that I will be able cover my all the cost of
project within three years.

• The debt equity ratio is 1:3 so the bank is ready to finance the project without mortgage.

• The Internal rate of return is 32% which is very good for the project.

• My project is concluded as a profitable project.

• The project accounts a good profit margin since the demand supply gap is good.

• The Income statement indicates a profit from first year itself.

• The cash flows is very attractive for my project.


IMPLEMENTATION
& REVIEWS

IMPLEMENTATION & REVIEWS

Start with People

This is one aspect of pre-implementation that is often neglected and yet it is


mission critical. Many organizations are developing a single overall approach
(competency model) as a way of responding to the organizations rapidly
changing job skills' requirements. These models identify the skills required
and the how they will be provided. It is not sufficient to just add the modern
project management skill requirements to other existing organizational and
technological initiatives.

Therefore, to start with my project it took it will take 1 year to get in to view
and start up as a running business and it will take only 1 to 2 years to get
into running profits:

Market analysis will take 3 months. It is decided to do this in 3 months. The


demand and supply gap has to be found out at the same time. Therefore, as
there was gap so this project is a beneficial one.

To know how soup is manufactured, it will take 1 month to know the


technical analysis of the soup product.

Financial analysis will take another 1 month and it is decided to take loan as
the finance is not available with me.

Then it will take time for the acquisition & construction of land, for this
purpose this time schedule has been prepared:-

SCHEDULE FOR PROJECT IMPLEMENTATION

Acquisition of land May 2010


Development/ conversion of land May 2010 - June 2010
Civil works, factory buildings, auxiliary Building, administrative
building,
Miscellaneous building June 2010 -
Dec 2010

Plant and Machinary


1Placement of orders June 2010-July 2010
2Delivery of site June 2010-Dec 2010

Arrangement of power
1 Temporary May2010-
June2010
2Permanent June 2010-Dec 2010

Erection of equipment Dec2010-


Jan2011
Commission and commercial production April 2010

APPENDICES
ANNEXURE - I

Mixing Machine

Pressing and wrapping machine


ANNEXURE – II (Questionnaire for retailers)

Name………………………………………………………………………………………………

Address……………………………………………………………………………………………
…………………………………………………………………………………………………….

1) Which age group generally purchases the soup?

110-25

225-50

350-55

455 above

2) Who are the most preferred customers for soup?

1Students

2Working people

3House wife’s

4Others plz specify…………………..

3) From where do you buy the soup products?

1Manufacturer

2Wholesaler

3Dealer

4Others plz specify……………………


4) How does your soup supplier reach to you?

1Personal contact

2Dealers

3Salesmanship

4Others plz specify

5) What matters more to the customers while purchasing the soup product?

1Brand

2Price

3Quality

4Faith over retailer

6) Do they prefer the same brand every time?

a ) Yes b)No

7) Name the most preferred brand for soup by customers?

1Knorr

2Maggi

3Local

4Others plz specify……………………..

8) What are the most popular flavors in the soup?

1Tomato Soup

2Vegetable soup

3Chicken soup

4Cheese soup

5Others plz specify……………………..

9) At what price you purchase the soup from the suppliers?

1Discounted price
2Fixed price

3Wholesale price

4Ohers plz specify………………………

10) Frequency of Quantity purchased?

1Weekly

2Monthly

3Quaterly

4Yearly

11) Quantity sold in a day (Packets)?

a)10-20 b)20-30 c)30-40 d)40 and above

12) Some suggestions you would like to give to the manufacturer of soup?

……………………………………………………………………………………………………
………………………………………………………………………...............................................
.....

ANNEXURE - III

Yummy Soup Cover Packet


ANNEXURE - IV

Cost Of Project

1500000
Land (1500 Rs per 1000 sq feet)
1200000
Building (ground floor)
2700000

Machineries

1) Mixing Machine (65000+15000) 80000


2) Wrapping & packaging
Machine (85000+15000) 100000
3) Trolleys (25000 * 2) 50000
4) Tanks (45000 * 2) 90000
5) Weighing Machine & quantity 330000
checking machine 10000
3030000

150000
Furniture & Fixtures for office
3180000

Misc Expenses

1) Electricity connection 150000


2) Water Connection 50000
(30000+6000 for two new 236000
3) Intercom connection connection) 36000
3416000
1119600
Margin money for working capital (1/4 * cost of production)
4535600

(10 % of total project 453385


Contingency fund cost)
4988985

ANNEXURE – V

Cost of Production

5th year
Particulars 1st year 2nd year 3rd year 4th year

1054152
Production 720000 792000 871200 958320

Raw materials
1) Vegetables 300000
2) Cornflour 8400
3) Fats 5000
4) Salt & Sugar 20000
5) Energy 14000
537910.3
6) Protein 20000 367400 404140 444554 489009.4
1447329. 1592062
1087400 1196140 1315754 4
Wages & salaries
1581228
Wages 1080000 1188000 1306800 1437480
1229844
Salaries 840000 924000 1016400 1118040
4002849. 4403134
3007400 3308140 3638954 4
Utilities
122984.4
Water 84000 92400 101640 111804
263538
Electricity 180000 198000 217800 239580
4354233. 4789657
3271400 3598540 3958394 4
Misc Expenses
175692
Telephone bills 120000 132000 145200 159720
1581228
Printing 1080000 1188000 1306800 1437480
5951433. 6546577
4471400 4918540 5410394 4
116436
Depreciation 207000 178200 154058 133699

6085132. 6663013
Cost of production 4678400 5096740 5564452 4

263538
Marketing expenses 180000 198000 217800 239580

6324712. 6926551
Cost of Sales 4858400 5294740 5782252 4

ANNEXURE – VI

Depreciation Schedule

5th year
Particulars 1st year 2nd year 3rd year 4th year

78732
Building 120000 108000 97200 87480
(1200000 * 10 /100)

Machineries 49500 42075 35764 30399 25839


(330000 * 15/100)

11865
Furniture and Fixtures 37500 28125 21094 15820
(150000 * 25/100)

116436
207000 178200 154058 133699

ANNEXURE – VII

Income Statement

5th year
Particulars 1st year 2nd year 3rd year 4th year
9795520.512
Sales (in Rs) 7200000 7776000 8398080 9069926.4

Less: Cost of 6926550


sales 4858400 5294740 5782252 6324712

2868970.512
PBIT 2341600 2481260 2615828 2745214.4

Less: Interest (12 344276.4614


%) 280992 297751.2 313899.36 329425.728

3213246.973
PBT 2622592 2779011.2 2929727.36 3074640.128

1124636.441
Less: Tax (35 %) 917907.2 972653.92 1025404.576 1076124.045

2088610.533
1704684.8 1806357.28 1904322.784 1998516.083

ANNEXURE – VIII
Cash flows

4th 5th year


Particulars 0 year 1st year 2nd year 3 rd year year

Cost of project -4988985

1704684. 1806357. 1904322. 2088610.5


PAT 8 3 8 1998516

116436
Depreciation 207000 178200 154058 133699

100000
Amortization 100000 100000 100000 100000
(5 Lac for
advertisement)

2011684. 2084557. 2158380. 2305046.5


Total Cash flows -4988985 8 3 8 2232215
ANNEXURE – IX

Questions for the manufacturer

Market Research

1Specification Of soup product should be known.

2Requirements of the product.

3What are the target customers?

4How the purchase is made (Purchase Behaviour).

5From where u acquire raw material.

6Composition of raw material.

7Details of suppliers of raw material.

8How much ingredients u order in a month.

9How you store raw material.

10What are the preservatives?

11Do you export? And when did u get into exporting?

12Availability of raw material is easier or u finds some difficulty in procuring


them.

13Address and contact details of dealers.

14Do you have customized machine and what if its asset pricing is less do you
import them?

15What type of competition you face from Maggi, knorr etc?

Infrastructure Layout

1How it is so that you can reduce the wastage.


2How is machine fitted or accommodated.

3What is the total area which is covered for setting up this manufacturing unit?

4This Land is purchased or is on Lease.

5How electricity or water supply is provided.

6What type of backup facility is provided for electricity?

7What’s ur office Layout.(Fans, Cabins chairs tube lights, office requirements)

8What is ur transport facility and how do you reach to you suppliers for
supplying ur product.

Packaging

9What kind of packaging facility is provided (Bulk Packaging, Small or Plastic


packaging)

10How you dispatch ur product by using printed boxes, handmade or


specialized paper used.

11How much cost is required for packaging?

12What is the maximum size for packaging?

13Do you have standard set size for packing if yes then why?

 What is the margin for the distributor?

 What is the actual cost of production for company?

Distributors

 How many distributors you have?

• How do you reach to retailers?

• What is your distribution channel?

Manufacturing Details
• What is the process for manufacturing?

• What is the each stage manufacturing cost?

• What are the ingredients and in what proportion you use these ingredients.

• What kind of machineries u use.

• From where did u get these machineries, which year and at what price.

Employee and Worker Details

• How many employees and workers you have?

• What kind of facilities is provided to them?

BIBLIOGRAPHY
Bibliography

Knorr soup of Unilever (Visit to the manufacturing Unit of soup in Delhi)

Chandra, Prasanna. Projects- Planning, Analysis, Selection, Financing,


Implementation, and Review. 6 ed, Cfm-Tmh Professional Series in Finance: Tata
McGraw Hill, 2007.

Harris, J.M., et al. The U.S. Food Marketing System, 2002: Competition,
Coordination, and Technological Innovations into the 21st Century. USDA
Agricultural Economic Report 811 (August 2002).

For visiting the Food Innovation Centre website at fic.oregonstate.edu/

Maggi Soup of Nestle for taking the reference of their strength and weakness
visit to this site http://managementfunda.com/swot-analysis-of-maggi/

For knowing the holistic of processed food industry in India visit this site
(http://www.reportlinker.com/p0172078/Pasta-and-Noodles-in-India-to-
2013.html)

For getting the soup market research report visit to site


(http://www.marketresearch.com/browse.asp?categoryid=499&g=1)

For getting the financing details of Bank of Baroda visit this site
http://www.bankofbaroda.com/bbs/ssi_more.asp