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MONTE BIANCO
Deal Proposed by
WENJUAN YANG
VAIBHAV BAHL
KEY DIFFERENTIATORS
PRIVATE LABEL
PREMIUM COFFEE
Can be stored as an
inventory for a long
time
No spend on
Marketing and
reduced R&D,
Admin expenses
To maintain freshness,
the through put is
quicker than private
label coffee
Requires huge
marketing and R&D
expenditure
INCOME STATEMENT
THE 2 PLANS
Income Statement for the year
ending Dec 31, 2001
(thousands of Italian liras)
Revenues
Private Brand
Premium brand
2000
56,112,408
9,934,848
46,177,560
Plan A
52,800,000
52,800,000
0
Plan B
88,194,400
42,486,400
45,708,000
33,233,867
22,878,541
44,764,800
8,035,200
61,021,552
27,172,848
Marketing expense
R&D expense
Selling expense
Administrative expense
Interest expense
Total expense
4,155,980
3,328,130
3,574,710
4,752,000
3,825,000
19,635,820
0
832,033
1,251,149
2,376,000
3,825,000
8,284,182
6,441,380
3,330,000
3,600,000
4,760,000
3,825,000
21,956,380
Profits
Taxes(40%)
Net profit
3,242,721
1,297,089
1,945,632
-248,982
0
-248,982
5,216,468
2,086,587
3,129,881
0.21
-0.03
0.34
CASH FLOW
CASH FLOW
JAN
YEAR
2000
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
NET
INCOME
4006030 3682250 2936279 5021402 5015193 7010349 7494630 8083966 6316089 3177981 3350963 3458697 3872733
PLAN A
3692192
PLAN B
2154137
624559
317586
CONCLUSIONS
PLAN A To go all private will make the company bankrupt as the
long credit terms will leave the company with no cash in hand
also since the margin in private label is very low, the company
bears loses
PLAN B If they maximize the production capacity with a 80%
private and 20% premium split, the cash flow is negative for half
the year but the company makes a profit with a positive ROE
RECOMMENDATIONS
We suggest the company should go towards a private label heavy
production mix.
This will feed the capacities in the lean period
The company can maintain a uniform annual supply as there are no
storage issues
The premium coffee from the production mix will add to the bottom
line
THANK YOU