Techno economic feasibility report 1

J ohnson & Johnson was founded more than 120 years ago on a revolutionary idea:

Doctors and nurses should use sterile sutures, dressings and bandages to treat peoples’
wounds. Since then, we’ve brought the world new ideas and products that have
transformed human health and well-being. Every invention, every product, every
breakthrough has been powered by generations of employees who are inspired to make a
difference

Since our founding in 1886, we have grown to meet the health care needs of people
worldwide. Through mergers, acquisitions and the formation of new companies, we have
become the world’s largest and most broadly based health care company. Here are some
highlights of our historical growth

The Group's principal activity is to manufacture and market products in the health care
field. The Consumer segment manufactures and markets a broad range of products used
in the baby and child care, skin care, oral and wound care and women's health care fields.
The Pharmaceutical segment provides franchises in the antifungal, anti-infective,
cardiovascular, contraceptive, dermatology, gastrointestinal, psychotropic and urology
fields. The Medical Devices and Diagnostics segment includes products used by or under
the direction of physicians, nurses, therapists, hospitals, diagnostic laboratories and
clinics. Some of the brand names are AVEENO(R), JOHNSON'S(R), RISPERDAL(R),
CONSTA(R) and PROCRIT(R). It operates in the United States of America, Europe, and
Western Hemisphere, excluding U.S.A., Africa, Asia and Pacific countries.

Punjabi university regional centre for information technology and management

Satbir Bagga M.B.A 3rd semester Roll no.6232
Techno economic feasibility report 2

1986 – 2008: Industry Leadership Enhanced by Acquisitions and

Internal Development

From the 1980s to the present, we continue to grow through acquisitions and internally
developed businesses that give us leadership positions in a number of areas.

 We acquired Life Scan, Inc. (blood glucose monitors for diabetics), Neutrogena
Corporation, and skin care brands such as CLEAN & CLEAR, RoC and
AVEENO.
 The acquisition of DePuy, Inc. made us a world leader in orthopaedics.
 We formed Ortho Biotech Products, LP (a biotechnology pioneer) and Ethicon
Endo-Surgery, Inc. (minimally invasive surgery) out of internal businesses.
 We merged with Centocor, Inc. which brought us REMICADE® (infliximab).
 Through our operating companies, we introduced the first mass market disposable
contact lenses, the first coronary stent and the first drug eluting stent.

Our future goal:

Johnson & Johnson is dedicated to advancing the health and well-being of people around
the world. Our people come to work each day inspired by their personal knowledge that
their caring transforms people's lives. Our whole history has been based on their passion
for making a difference in this world and we aspire, in the years to come, to take human
health and well-being to new levels. We are arguably the best-positioned company to do
this because of our breadth, financial strength and collaborative nature.

Johnson & Johnson is a company of enduring strength. We’ve been privileged to play a
role in helping millions of people the world over be well and stay well through more than
a century of change. As the science of human health and well-being has grown, we’ve
been able to grow along with it. Even more important, we’ve helped shape and define
what health and well-being means in every day lives. Our products, services, ideas and
giving now touch the lives of at least one billion people everyday.

Punjabi university regional centre for information technology and management

Satbir Bagga M.B.A 3rd semester Roll no.6232
Techno economic feasibility report 3

We credit our strength and endurance to a consistent approach to managing our business,
and to the character of our people. We are guided in everything we do by Our Credo, a
management document authored more than 60 years ago by Robert Wood Johnson,
former chairman from 1932 to 1963, and by four strategic principles.

Company’s strength and weakness

STARS: Baby soap, Baby hair oil, Baby oil, Baby shampoo

Cash cows: Baby body wash, Baby toothbrush, band-aid, savlon

Question marks: clean and clear

Dogs: shower to shower

Punjabi university regional centre for information technology and management

Satbir Bagga M.B.A 3rd semester Roll no.6232
Techno economic feasibility report 4

PROJECT
Techno economic feasibility report is on the entrance of our company in to Men’s range
of cosmetics.
Report in times of India published on 23 Jul 2006 explains the surprise upsurge in
demand for male grooming products.

Why Fairness Cream for Men?

Previously, men believed that they are not supposed to use fairness creams and this was
the domain of ladies only. However, times have changed now and male also became
conscious for their look. The growing demand of different cosmetics and skin care
products for men proves that men are now taking care of their skin.

They are using different skin care products to protect their skin from sun and every day’s
pollution. Especially the Indian Men, they didn't think anything beyond an aftershave
lotion and a perfume or body deodorant. But now they started going to beauty parlors.
They are happily ready to pay Rs. 100-200/- on hair cutting and face massage simply we
can say that today male are trying to build the USP of good looking.

There may be a genuine need for this product that the male skin in India is three times
more exposed to the sun UV rays, five times more exposed to pollution, twice more
exposed to stress, and considerably more abused by abrasive shaving blade action than
women's skin.

This is in year 2004, when Gillette conducted a survey to know the attitude of Indian
customers towards use of cosmetics products. The result showed that the Indian male
spent more time on grooming than ever before.

Indian male take an average of 20 minutes in front of mirror to groom them compared
with Indian female who take an average of 18 minutes in front of mirror at every
morning. Along with this so many other companies conducted study on same line and get

Punjabi university regional centre for information technology and management

Satbir Bagga M.B.A 3rd semester Roll no.6232
Techno economic feasibility report 5

almost similar result. This is also noticed that 25-30% of fairness products are purchased
and used by male customers.

Indian fairness creams market is estimated at Rs.800 crores. (Star Weekend Magazine,
May 12, 2006) and Indian male fairness cream market is estimated at Rs.200 crores.

(Source: Media Research User Council, 2006).

Fair and Handsome clocked sales of Rs 16 crore in the first 11 months of its launch and
is expected to generate as much as Rs 65-70 crore in the current fiscal year.The cosmetic
giant Hindustan Unilever also going to introduce complete range after the entrance of
Fair and Lovely Menz Active.

The Indian cosmetics industry appears to have considerable growth potential. Of the Rs
3,000-crore cosmetics and toiletries industry, the market size of the skin-care segment
alone is estimated at Rs 1,200 crore. Fairness creams account for around 60 per cent of
the skin-care business at around Rs 700 crore.

This segment has some of the big names such as Hindustan Lever (Fair & Lovely) with
a massive 53 per cent market share, followed by CavinKare (Fairever) with over12 per
cent share .Other players such as Emami (Gold Turmeric and Naturally Fair)

Punjabi university regional centre for information technology and management

Satbir Bagga M.B.A 3rd semester Roll no.6232
Techno economic feasibility report 6

Financial management

Gathering information from finance department, it all needs 35 crores of rupees which
can be easily available from the company’s funds.

This option would definitely provide profitability as project can yield 20%-25% profit on
net investment (as per competitor’s market survey) and our funds are utilized.

Balance sheet:
Assets Quarter Quarter Quarter Quarter Quarter
Ending Ending Ending Ending Ending
Jun 08 Mar 08 Dec 07 Sep 07 Jun 07
Current Assets
Cash 13,058.0 11,144.0 9,315.0 8,320.0 5,971.0
Net Receivables 13,151.0 12,986.0 12,053.0 11,978.0 11,664.0
Inventories 5,700.0 5,575.0 5,110.0 5,414.0 5,155.0
Other Current Assets 3,908.0 4,113.0 3,467.0 3,229.0 3,014.0
Total Current Assets 35,817.0 33,818.0 29,945.0 28,941.0 25,804.0
Net Fixed Assets 14,627.0 14,486.0 14,185.0 13,613.0 13,385.0
Other Non current Assets 37,669.0 37,691.0 36,824.0 36,111.0 35,494.0
Total Assets 88,113.0 85,995.0 80,954.0 78,665.0 74,683.0
Liabilities and
Shareholder's Equity

Current Liabilities
Accounts Payable 16,624.0 17,821.0 17,374.0 16,064.0 14,513.0
Short-Term Debt 5,156.0 4,250.0 2,463.0 3,264.0 4,470.0
Other Current Liabilities -- -- -- -- --
Total Current Liabilities 21,780.0 22,071.0 19,837.0 19,328.0 18,983.0
Long-Term Debt 8,770.0 7,166.0 7,074.0 4,633.0 2,013.0
Other Non current 11,128.0 11,133.0 10,724.0 11,131.0 10,565.0
Liabilities
Total Liabilities 41,678.0 40,370.0 37,635.0 35,092.0 31,561.0

Utilization of funds
Cost of new ingredients 2 crore
Salaries and wages of workers 8 crore
Advertisement cost 20 crore
Packaging cost 5 crore

Punjabi university regional centre for information technology and management

Satbir Bagga M.B.A 3rd semester Roll no.6232
Techno economic feasibility report 7

Operations management
The whole process can be outsourced to any of the following companies:

 Aero pharmaceuticals (silvsa)

 Lotus herbal private limited (Haridwar)
 Dhiren enterprise (Mumbai)

The product can be made at companies own plant situated at Baddi ,Nalagarh.
There is no special requirement of any new machinery but the packaging and some
ingredients are required to make the product.

The cost of production is reduced by outsourcing higher amount of production and all
dealers are capable to maintain the standards of company.
Above dealers in India are already producing various products for re known brands in
India.

Marketing management
In the earlier times, the market for fairness products was not at all developed as people
love to use homemade products only viz. besan, multani mitti, curd, egg yolk etc. because
we Indians have been under a strong influence of herbal products and have habit of using
"Desi Nuskhe".

After modernization and globalization different companies felt the changing life style and
started selling their fairness products under the categories of Talcum Powder, sunscreen
lotions, vanishing creams, cold creams etc.

The fairness cream market was growing at 25% p.a., as compared to the overall cosmetic
products market's growth of 15% p.a. In 2000, there were 7 main brands in the fairness

Punjabi university regional centre for information technology and management

Satbir Bagga M.B.A 3rd semester Roll no.6232
Techno economic feasibility report 8

product market across the country. Today there are so many multinational and local
brands in the fairness product market available across the country.

Indian fairness creams market is estimated at Rs. 800 crores

(Source: Euromonitor, a Market Research Tirm).

The saying that 'supply creates its own demand' is proved to be true in this context.
Fairness product is different from other consumer durables and FMCG products.

The use of the product is guided by psychological drives, because meaning of beauty is
completely personal in nature and it varies from person to person. 'Beauty lies in eyes of
beholder'. At present we have so many domestic and multinational brands in this category

Player Brand Product Category

HLL Fair & Lovely Cream, Soap
Fair & Lovely Menz Active
Cavin Kare Fairever Cream
Godrej Fair Glow Soap, Cream
Ponds Pond's Fairness Cream Cream, Lotion
Ponds Cold Cream
Emami Naturally Fair Cream
Fair & Handsome
Paras Freshia Cream
Lakme Lakme Sun-Screen Lotion Cream, Lotion
Lakme Sun-Screen Cream
Others Himalaya's Fairness Cream
Shahnaz's Fair One
Ozone's No-Marks

Punjabi university regional centre for information technology and management

Satbir Bagga M.B.A 3rd semester Roll no.6232
Techno economic feasibility report 9

Segmenting: The product is made for upper middle class people who are
basically from the age group of 15 to 35 and the monthly income of individual is from
15000p.m. to 45000p.m. and the recognized competitors are

 Fair and lovely menz active

 Fair and handsome
 Fair one men

Targeting: The target of the product is youth who wants to be fair and the
name is like that it could explain the features too.

Positioning: The advertisement campaign of the product will make to set the
mind set up of targeted segment in such a way that it should compile with the
requirement of companies present status.

Punjabi university regional centre for information technology and management

Satbir Bagga M.B.A 3rd semester Roll no.6232
Techno economic feasibility report 10

Present Market status

fair and handsome

fair and lovely

menz active
fair one men

nivea

others

Human resource requirement

The numbers of person required are as follows:

Division manager 1
Assistant manager 2
Supervisor 5
Workers (skilled) 12
Labour 25

Government rules and regulations:

Government rules provide a scope of tax free production for further 2 years and no
particular clearance is required yet.

Punjabi university regional centre for information technology and management

Satbir Bagga M.B.A 3rd semester Roll no.6232
Techno economic feasibility report 11

The project would hold good enough as market conditions are in favour and cosmetic
market is growing at faster pace.

Punjabi university regional centre for information technology and management

Satbir Bagga M.B.A 3rd semester Roll no.6232