AN INTRODUCTION TO FOOD & BEVERAGES SECTOR

The multi-billion food and beverage industry comprises several markets including bakery products such as bread, biscuits etc., milk and dairy products, beverages such as tea, coffee, juices, bottled water etc., snack food, chocolates, etc. beverage, confectionery, processed foods and others. India's Food and Beverage industry is valued at Rs. 3584 billion. India produces above 600 million tonnes of food products every year and is one of the major producers of food in the world. The food and beverage industry registered a growth rate of 8.5% in 2005-06. With increase in disposable income of consumers, growing awareness among consumers about health products, rapid urbanization, and increasing popularity of convenience foods, food and beverage sector is expected to grow at a high rate. This sector holds a huge potential to grow because of the increase in advertisement spending, awareness campaign about products in urban as well as rural areas, and large scale transformation. The food and beverage industry is primarily driven by consumer health trends. Presently, the food and beverage industry is in a dynamic phase, marked by a high degree of competition. As product development within the food and beverage market moves towards a focus on health and nutrition, the growth and development of food manufacturers in the market depends on having prudent strategies in place, which can be applied globally. In effect, this has created a highly competitive market place, which fosters growth of participants with a clear vision of "growing with their customers." The major players in the "Food and Beverage" Industry is: Heinz, Mars, Marico, Pepsi, HLL, Pillsbury, Nestl, Amul, ITC, Dabur, Britannia, Cadbury, The Surya Food and Agro Private Ltd.

THE BAKERY INDUSTRY

The project is about manufacturing bakery and confectionary products as well as selling it through an outlet. Bakery industry in India is probably the largest among the processed food industries, production of which has been increasing steadily in the country. Bakery products once considered as sick mans diet have now become essential food items of the vast majority of population. The two major bakery industries, viz., bread and biscuit account for about 82% of the total bakery products. The annual production of bakery products which includes bread, biscuits, pastries, cakes, buns, rusk, etc., most of which are in the unorganized sector, is estimated to be in excess of 3 million tonnes. The production of bread and biscuits in the country both in the organized and unorganized sectors is estimated to be around 1.5 million tonnes and 1.1 million tones respectively. Of the total production of bread and biscuits, about 35% is produced in the organized sector and the remaining is manufactured in the unorganized sector. Indian Bakery sector is indicating significant growth both in terms of volumes and customer base. The sector, which is estimated at Rs 3,500 crore, is currently registering a 40% growth according to industry sources. The production of Bakery products has increased from 5.19 lakh tonnes in 1975 to 18.95 lakh tonnes in 1990 recording four-fold increase in 15 years. Some of the well-known and most frequented bakeries in the country are Sweet Chariot, Modern Bakery, Daily Bread in Bangalore, Monginis, Birdie's, Croissants in the west, and in the north and eastern parts of the country, there are quite a few big players too.

INTRODUCTION
THE ENTERPRISE AND THE ENTREPRENEURS
(ii) (iii) (iv) (v) (vi)

Name of the items Name of the unit Telephone No. Constitution of the firm :

Cakes, Pastries, Beverages , Bread etc. : Evergreen Delight

9899876696 : Partnership :

Name and address of the promoters

a) AKANKSHA JAIN , C-331 Vivek Vihar , Delhi-110095 b) APARNA SAPRA , 63,Shankar Vihar , Delhi- 110092

(vii)

Qualification of the Entrepreneurs :

a) Akanksha Jain b) Aparna Sapra

: :

Graduate (Bachelor of Business Administration) Graduate (Bachelor of Business Administration)

(viii) (ix)

Proposed location Name of the banker

: : Punjab National Bank

MISSION : Aim to offer high quality beverages, pastry, and bakery products at a competitive price to meet the demand of the middle- to higher-income local market area residents and tourists.

OBJECTIVE OF THE PROJECT : The objective of the feasibility study is primarily: To facilitate potential entrepreneurs in project identification for investment. The project feasibility may form the basis of an important investment decision and in order to serve this objective, the study covers various aspects of project concept development, start-up, production, marketing, finance and business management.This particular feasibility is regarding Bakery & Confectionery.

RATIONALE AND SCOPE OF THE PROJECT : The opportunity of setting up the Bakery & Confectionery can be linked with the eating habits of the people. People in India enjoy the traditional food very well but recently world known food chains have brought cultural change in India. Now people are ready to eat junk food, while closely observing the trends, Bakery & Confectionery chain can play an important role in this new era as it is the only source which provides not only traditional bakery items but also new lines and varieties of confectionery items.

2.

TECHNICAL FEASIBILITY

a) PRODUCT The proposed bakery will be offering a large variety of quality products at competitive prices. The product line will be including different types of fresh cream cakes, dry cakes, snacks, beverages (spl. in milkshakes and mocktales) and biscuits. As the production will depend on the sales potential, the sales are estimated depending upon the industry norms. The project will be having one sales outlet of its own. 100% of the total sales will be sold on bakerys own outlets. The bakery provides freshly prepared bakery and pastry products at all times during business operations. Six to eight moderate batches of bakery and pastry products are prepared during the day to assure fresh baked goods are always available.

b) PRODUCT SPECIFICATION 1. Cakes: Fresh cream cake Fresh fruit cake Chocolate truffle Black forest Butter cream cake And much more

2. Pastries

3. Biscuits: Chocolate biscuit Protein biscuits

 Cream biscuits

And many more

4. Bread:

Garlic flavoured bread

Ginger flavoured bread

Cheese flavoured bread Chocolate flavored bread And many more mouthwatering flavours

5. Beverages:

(i)

Milkshakes: Strawberry milkshake Chocolate milkshake Vanilla milkshake Kiwi milkshake and much more

(ii)

Mocktails: Mango Tango Tangy Blue Rasberry Red and much more

c) USES OF THE PRODUCT For self consumptions as per likings.

price.

For serving in party occasions like marriages, birthdays, get-togethers, festivals. For gift purposes. Protein rich biscuits can serve the purpose of providing additional nutrition at reasonable

d) e)

MANUFACTURING PROCESS PLANT SIZE The total estimated area required for the setting up the bakery plant is 9000 sq. ft.
f) PRODUCTION SCHEDULE(Expected volume for a given time-period)

PRODUCT Beverages (each variety) BISCUITS 250 gms. 500 gms. PASTRIES (each variety) RUSK CAKES

QUANTITY 1100 bottles

PERIOD 1 day

100 pkts 100 pkts 200 pcs. 230 pkts 230 3500 per year (as per demanded) 50 pkts

2 days 2 days 2 days 2 days 2 days

BREADS

1 day

g) SELECTION OF MACHINERY AND EQUIPMENT Machinery Item Flour Safeter Brand Local No. of Items
1

Per Unit Cost (Rs.) 100,000

Total Cost (Rs.) 100,000

Spiral Mixer Planetory Mixer Oven Dyes Sheeter Burner Deep freezers Frier Packing machine Cold storage equipment Rolling racks Fixed racks Trays Tools & equipment knives others Total Cost of Machinery

Local Local Local Local Imported Local Local Local Local Local Local Local Local Local

1 3 1 250 1 2 2 1 2 1 10 350

275,000 100,000 450,000 85 650,000 20,000 18,000 100,000 50,000 550,000 12,000 175,000 225 80,000

275,000 300,000 450,000 21,250 650,000 40,000 36,000 100,000 100,000 550,000 120,000 175,000 78,750 80,000 3,076,000

625

Furniture and Fixtures Following furniture and fixtures will be required for factory and sales outlets Details of Furniture and Fixtures: Items No. of Items Cost per Items (Rs.) Total Cost (Rs.)

For Factory Tables for production Chairs tables & other furniture Air conditioners Vertical freezer Electric installations & other utilities Weighing scales Micro wave oven Computers & accessories For 2 Outlets Air conditioners Cabinet chiller Vertical freezer Designer cost Interior designing cost Weighing scales Cash register Micro wave oven Sign board Electric installations & other utilities TOTAL COST

4 5 1 1 2 1

30,000 200,000 30,000 100,000 100,000 15,000 8,000 100,000

120,000 200,000 150,000 100,000 100,000 30,000 8,000 100,000 808,200 120,000 200,000 64,000 100,000 720,000 30,000 50,000 16,000 120,000 80,000 2,268,000

4 2 2 2 2 2 2 2 2 2

30,000 100,000 32,000 50,000 360,000 15,000 25,000 8,000 60,000 40,000

h) PLANT LOCATION Plant is located in the out skirts of the city where land is available at reasonable price, as the city is not very big. Plant is located at a distance of 3 km from the main market where the outlet is situated. Plant is located at a distance of 2.5 km from the local raw material market.

i) COST OF ERECTION OF THE PROPOSED LAND AND BUILDING The proposed factory will be consisting of 9000 sq. ft. (1000 gaj) of land whereas the shop areas will be 900 sq.(100 gaj) ft for outlet. The rate of land is taken as Rs. 800/sq ft. . Double storey building is recommended, sweets, fresh cream and dry cake rooms are proposed to be on first floor.

It is recommended to purchase land & building for the factory. The total cost of acquisition of land has been included in fixed assets. Whereas the land for sales outlets will be acquired for rent. Approximately 900 square feet area is desirable for the per outlet, which is easily available at about Rs.40000 per month per outlet.

j) STUDY OF AVAILABILITY OF RAW MATERIALS All the raw materials are easily available at local wholesale grocery market. There are approximately 5-8 major standardized dairy firms available in the nearby market. Major raw materials like milk, butter, ghee, flour will be available at reasonable market. k) TECHNOLOGY AND PROCESSES The proposed project will be using local machinery. Local machinery and installations are quite competitive in price in comparison to the foreign equipment and installations. Additionally, it is linked with the viability of the project as the advanced machinery and installation would not be feasible due to the high costs involved.

l) ESTIMATE OF LABOUR REQUIREMENT AND SUPERVISIONS REQUIRED

For the bakery business, following direct labor will be required for the factory. Designation Production manager Production In charge No. of Employees 1 2 Monthly Salaries (Rs.) 20,000 12,000 Annual Salaries (Rs.) 240,000 288,000

Production supervisor Helpers Dispatchers Electrician Mechanic Drivers Office Boys Security guards Total Salaries

2 8 1 1 1 1 2 2 21

7,000 3,500 3,500 5,000 8,000 4,500 3,500 4,500

168,000 336,000 42,000 60,000 96,000 54,000 84,000 108,000 1,476,000

Administrative staff for the feasibility is listed in the table below: Designation Sales manager Accountant Asst. Accountant Total Salaries No. of Employees 1 1 1 3 Monthly Salaries (Rs.) 15,000 10,000 6,000 Annual Salaries (Rs.) 180,000 120,000 72,000 372,000

There will be two sales outlets. Details of the shop staff are given in the following table: Designation Cashier Supervisor Sales man Sweeper Security guard Total Salaries No. of Employees 2 1 4 1 1 9 Monthly Salaries (Rs.) 6,000 5,000 4,000 3,000 4,500 Annual Salaries (Rs.) 288,000 120,000 384,000 72,000 108,000 972,000

m) POWER REQUIREMENT:

Main utilities would be gas, power and water. Distribution transformer station, loading capacity averaging 10 KW, 3-phase industrial meter is estimated to fulfill the requirement of power. B-1 category is advisable for electric consumption. Water supply would be through local municipality. Estimated average consumption of electricity is approx 30000 units per year at a price of Rs 5/unit.

n) ESTIMATE :

Beverages: Rs. 13 per bottle. Cakes: Rs. 100/pound. Biscuits: Rs. 75/kg Pastries: Rs. 15/pc. Rusk: Rs. 32/pkt. Bread: Rs. 12/ pkt.

The depreciation is charged at 10% p.a. on straight line method. Repair & Maintenance Annual Repair & Maintenance of the plant and machinery is expected to be 1 % from Year 1 --- 3 and 2 % from Year 4 --- 5 of the total machinery cost. Erection & Installation Erections and installation cost is assumed to be 10% of the total cost of machinery.

3) MARKET FEASIBILITY
a) MARKET DISCRIPTION There is a well established market for Beverages and bakery prevailing in the city.

 The growth rate for bakery products is estimated at an average of 9.8% per annum. The demand for bakery products will continue to increase in future. There are large no of consumers even for biscuits and snacks on daily basis. The Biscuits are becoming quite popular in rural areas as well. Nearly 55% of the biscuits are consumed by rural sector. The higher consumption of biscuits in rural area could be attributed to its position as a snack, longer shelf life and better taste which is liked by different cross sections of population. This business is having very high market coverage as it caters to day to day occasions like birthdays, marriages, festivals, get-togethers etc. All well established counters are enjoying high turnovers with good margins.

b) METHODS OF TRANSPORTATION Company owned vehicles like pickup or motor van will be used for transporting finished goods from factory to Main outlet.

c) CHANNELS OF DISTRIBUTION There is only one means of channel of distribution which is being used in the process, i.e., zero level distribution, in which products are being sold directly to the customers from the main outlet.

d) ANALYSIS OF PAST AND PRESENT DEMAND In the market, it has been observed that there is enough demand of all bakery goods and sweets as per the sales of already running counters. The production of Bakery products has increased from 5.19 lakh tones in 1975 to 18.95 lakh tones in 1990 and from 18.95 lakh tones to approximately 35 lakh tones in 2006. According to market details there is continuous increase or growth in the number of customers from last few years so there is big scope for the firm to provide qualitative products to the increasing demand and establish itself as successful firm. The demand for bakery products will continue to increase in future. The estimated growth rate of 9.8% is on the lower side considering the present potentiality of bakery products, particularly in rural areas, where about 70% of the population lives. Encouraging trends in consumption of bakery products by population of lower and middle income groups indicate vast scope for consideration of nutritional enrichment of bakery products.

e) MAJOR CONSUMERS OF THE PRODUCTS Our wide range of products will generally caters to every age group.

We will serve fresh snacks for youngsters, sweets for occasions of every age group. Special cakes and pastries of different varieties and flavours will be there for cake lovers. So our aim is to cover the wide market area providing qualitative food to every one.

f) COMPETITIVE POSITION OF THE PRODUCT AND MARKETING PRACTICES OF COMPETITORS: Our aim is to provide standardized quality of products with few highlights like

Reasonable rates than the competitors Cutting down the profit margin and focusing on quality aspects. More hygienic packaging and distribution. Well trained staffs for customer handling Giving importance to customers feedback about the product Providing discounts on bulk purchases Free home delivery

g) MARKET SHARE DATA FOR BISCUIT INDUSTRY

Market share data for biscuit industry from report s available at IBMA (Indian Biscuit Manufacturers Association)

Market Share - Sector wise

ORGANISED SECTOR 60% UN ORGANISED SECTOR 40%

Market share penetration- Population wise

URBAN 85%-75% RURAL 65%-55%

Market share - Region wise

NORTH ZONE WEST ZONE EAST ZONE SOUTH ZONE 25% 23% 28% 24%

Market share- Brands wise (volume )

PARLE BRITANNIA PRIYA GOLD ITC REST

40% 38% 15% 11% 6%

Market Share product wise

Marie and Glucose 50% 50%

sweet, crackers , cream ,milk

Annual growth rate

2004 2005 2006 2007 2008 2009 (june) 15% 14% 14% 13% 15% 17%

Total Production ( In lakh metric ton)

2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 11.00 12.54 14.29 16.14 17.14

g) SWOT ANALYSIS OF BAKERY AND CONFECTIONERY INDUSTRY

STRENGTHS: Bakery industry in India is the largest of the food industries with an annual turnover of about Rs. 3000 crore and is currently registering a growth of 40%. Abundant availability of raw material Vast network of manufacturing facilities all over the country Vast domestic market

Wide product offering Reasonable prices, our bread can be easily available for lower income group.

WEAKNESSES:

Inefficient supply chain due to a large number of intermediaries High requirement of working capital. Seasonality of raw material Unpredictable consumer tastes Bakery business is a business which relies heavily on volume based sales Many players entering in the race Lack of adequate quality control

OPPORTUNITIES:

Rising income levels and changing consumption patterns Favourable demographic profile and changing lifestyles Integration of development in contemporary technologies such as electronics, material science, bio-technology etc. offer vast scope for rapid improvement and progress Opening of global markets Market for bakery products is expected to grow by 11.10% in the near future.

THREATS:

High inventory carrying cost New competitors entering the market. New product, people may do not accept flavored bread Imitation by existing bakeries

4)FINANCIAL FEASIBILITY
PROJECTED INCOME STATEMENTS Trading profit and loss account for the year (2010-2011) PARTICULARS To Purchases AMOUNT(Rs.) PARTICULARS 8,000,000 By Sales AMOUNT(Rs.) 16,000,00

To Carriage inward To Factory Expenses To Gross profit c/d

150,000 1,000,000 7,050,000

By Closing Stock

0 200,00 0

Total

16,200,000

16,200,00 0 7,050,00 0

To Salaries To Advertising Expenses To Telephone Charges To Carriage on sales To Printing and Stationary To Electricity To Repair & Maintainance To Depreciation To Rent To Misc. Expenses To Transportation To Income tax paid To Net Profit

2,820,000 75,000 180,000 50,000 16,600 400,000 45,000 914,400 960,000 150,000 150,000 500,000 789,000

By Gross Profit b/d

Total

7,050,000

7,050,00 0

PROJECTED INCOME STATEMENTS Trading profit and loss account for the year (2011-2012) PARTICULARS To Opening Stock AMOUNT(Rs.) PARTICULARS 200,000 By Sales AMOUNT(Rs.) 19,200,00

To Purchases To Carriage inward To Factory Expenses To Gross profit c/d

9,600,000 200,000 1,100,000 8,540,000

By Closing Stock

0 240,00 0

Total

19,440,000

19,440,00 0 8,540,00 0

To Salaries To Advertising Expenses To Telephone Charges To Carriage on sales To Printing and Stationary To Electricity To Repair & Maintainance To Depreciation To Rent To Misc. Expenses To Transportation To Income tax paid To Net Profit

2,820,000 82,500 198,000 55,000 18,260 440,000 49,500 914,400 960,000 165,000 165,000 700,000 1,972,340

By Gross Profit b/d

Total

8,540,000

8,540,00 0

PROJECTED INCOME STATEMENTS Trading profit and loss account for the year (2012-2013) PARTICULARS To Opening Stock AMOUNT(Rs.) PARTICULARS 240,000 By Sales AMOUNT(Rs.) 23,040,00

To Purchases To Carriage inward To Factory Expenses To Gross profit c/d

11,520,000 250,000 1,210,000 10,350,000

By Closing Stock

0 290,00 0

Total

23,330,000

23,330,00 0 10,350,00 0

To Salaries To Advertising Expenses To Telephone Charges To Carriage on sales To Printing and Stationary To Electricity To Repair & Maintainance To Depreciation To Rent To Misc. Expenses To Transportation To Income tax paid To Net Profit

3,102,000 90,750 217,800 60,500 20,086 484,000 54,450 914,400 960,000 181,500 181,500 1,100,000 2,983,014

By Gross Profit b/d

Total

10,350,000

10,350,00 0

PROJECTED INCOME STATEMENTS Trading profit and loss account for the year (2013-2014) PARTICULARS To Opening Stock AMOUNT(Rs.) PARTICULARS 290,000 By Sales AMOUNT(Rs.) 27,648,00

To Purchases To Carriage inward To Factory Expenses To Gross profit c/d

13,824,000 250,000 1,331,000 12,493,000

By Closing Stock

0 250,00 0

Total

27,898,000

27,898,00 0 12,493,00 0

To Salaries To Advertising Expenses To Telephone Charges To Carriage on sales To Printing and Stationary To Electricity To Repair & Maintainance To Depreciation To Rent To Misc. Expenses To Transportation To Income tax paid To Net Profit Total

3,412,200 99,825 239,580 66,550 22,095 532,400 100,000 914,400 1,056,000 199,650 199,650 1,800,000 3,850,650 12,493,000

By Gross Profit b/d

12,493,000

PROJECTED INCOME STATEMENTS Trading profit and loss account for the year (2014-2015) PARTICULARS AMOUNT(Rs.) PARTICULARS AMOUNT(Rs.)

To Opening Stock To Purchases To Carriage inward To Factory Expenses To Gross profit c/d

250,000 16,588,800 350,000 1,464,100 15,124,700

By Sales By Closing Stock

33,177,60 0 350,00 0

Total

33,527,600

33,527,60 0 15,124,70 0

To Salaries To Advertising Expenses To Telephone Charges To Carriage on sales To Printing and Stationary To Electricity To Repair & Maintainance To Depreciation To Rent To Misc. Expenses To Transportation To Income tax paid To Net Profit

3,412,200 109,808 263,538 73,205 24,304 585,640 150,000 914,400 1,056,000 219,615 219,615 2,200,000 5,896,375

By Gross Profit b/d

Total

15,124,700

15,124,70 0