CHAPTER-1 INTRODUCTION OF THE INDUSTRY 1.

1 Rationale behind the selection of Industry justification

The Indian Chocolate Industry has come a long way since long years. Ever since 1947 the Cadbury is in India, Cadbury chocolates have ruled the hearts of Indians with their fabulous taste. Indian Chocolate Industrys Cadbury Company today employs nearly 2000 people across India. The company is one of the oldest and strongest players in the Indian confectionary industry with an estimated 68% value share and 62% volume share of the total chocolate market. It has exhibited continuously strong revenue growth of 34% and net profit growth of 24% throughout the 1990. The brand of Cadbury is known for its exceptional capabilities in product innovation, distribution and marketing. With brands like Dairy Milk, Gems, 5 Star, Bourn vita, Perk, Celebrations, Bytes, Chocki, Delite and Temptations, there is a Cadbury offering to suit all occasions and moods. Today, the company reaches millions of loyal customers through a distribution network of 5.5 lakhs outlets across the country and this number is increasing every day. In 1946 the Cadburys manufacturing operations started in Mumbai, which was subsequently transferred to Thane. In 1964, Induri Farm at Talegaon, near Pune was set up with a view to promote modern methods as well as improve milk yield. In 1981-82, a new chocolate manufacturing unit was set up in the same location in Talegaon. The company, way back in 1964, pioneered cocoa farming in India to reduce dependence on imported cocoa beans. The parent company provided cocoa seeds and clonal materials free of cost for the first 8 years of operations. Cocoa farming is done in Karnataka, Kerala and Tamil Nadu. In 1977, the company also took steps to promote higher production of milk by setting up a subsidiary Induri Farms Ltd., near Pune.
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In 1989, the company set up a new plant at Malanpur, MP, to derive benefits available to the backward area. In 1995, Cadbury expanded Malanpur plant in a major way. The Malanpur plant has modernized facilities for Gems, clairs, and Perk etc. Cadbury operates as the third party operations at Phalton, Warana and Nasik in Maharashtra. These factories churn out close to 8,000 tons of chocolate annually. In response to rising demand in the chocolate industry and reduce dependency on imports, Indian cocoa producers have planned to increase domestic cocoa production by 60% in the next four years. The Indian market is thought to be worth some 15bn rupee (?0.25bn) and has been hailed as offering great potential for Western chocolate manufacturers as the market is still in its early stages. Chocolate consumption is gaining popularity in India due to increasing prosperity coupled with a shift in food habits, pushing up the country's cocoa imports. Firms across the country have announced plans to step-up domestic production from 10,000 tons to 16,000 tones, according to Reuters. To secure good quality raw material in the long term, private players like Cadbury India are encouraging cocoa cultivation, the news agency said. Cocoa requirement is growing around 15% annually and will reach about 30,000 tons in the next 5 years.

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Brief Introduction Indian Chocolate Industry as today is dominated by two companies, both multinationals. The market leader is Cadbury with a lion's share of 70%. The company's brands like Five Star, Gems, clairs, Perk, and Dairy Milk are leaders in their segments. Until early 90's, Cadbury had a market share of over 80 %, but its party was spoiled when Nestle appeared on the scene. The other one has introduced its international brands in the country (Kit Kat, Lions), and now commands approximately 15% market share. The two companies operating in the segment are Gujarat Co-operative Milk Marketing Federation (GCMMF) and Central Areca nut and Cocoa Manufactures and Processors Co-operation (CAMPCO). Competition in the segment will only get keener as overseas chocolate giants Hershey's and Mars consolidate to grab a bite of the Indian chocolate pie. The UK based confectionery giant, Cadbury is a dominant player in the Indian chocolate market and the company expects the energy glucose variant of its popular Perk brand to be singularly responsible for adding five per cent annually to the size of the companys market share.

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1.2 CHOCOLATE INDUSTRY IN INDIA The chocolates sales globally have witnessed a decline in the last few years due to the 2009 economic crisis. However, the global chocolate market has shown an upward trend since late 2010 with the improvement in the economy. Western Europe accounts for the largest market for chocolate followed by North America and Asia Pacific. With the increased consumption of chocolate and substituting it with traditional sweets, the market is expected to accelerate in the coming five years. According to the recently published report by Techs Research India Chocolate Market Forecast & Opportunities, 2018, the chocolate market revenues in India is expected to witness the compounded annual growth rate (CAGR) of around 21% from 2013-2018. The chocolate industry is also considered as the most popular product in the food processing sector. With the demand of premium high end chocolate going up in the market; international companies are entering into the market through collaborations and acquisitions in order to increase their share in the market. It is forecasted that India chocolate market will reach USD 3.2 Billion revenues by 2018 due to increasing gifting culture in the country and increase in the income bracket which will fuel the demand for chocolate products in India. India chocolate market is divided into four segments where Bars chocolate segment accounts for maximum share of 36%. However, the demand for assorted chocolates is expected to increase with the highest growth rate within next five years consideringg the increasing gifting culture in the country followed by growing demand. Techs Researchs report further elaborates that the domestic market for chocolate has increased due to shift in consumer preference and development in rural markets. The Indian chocolate market is dominated by Crafts Food being the market leader followed by Nestle and Amul. There are certain local manufacturers who also play a significant role in the chocolate market due to proximity in non-metropolitan areas and increasing awareness among the consumers. India imports chocolate products from a lot of countries such as China, Singapore, UAE, Malaysia, UK, Switzerland and Netherlands. However, one of the major challenges for the local manufacturers is the increasing cocoa prices in the country which is currently being imported and act as a main raw material used for preparing chocolates by many leading players.

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The chocolate industry has a considerable growth potential in the country but the area of concern lies in high input cost of raw materials such as sugar, cocoa, milk powder and increasing packaging cost. Increasing tariffs and rising custom duty also makes the imported chocolate costly thereby affecting the sales of premium chocolates in the country.

The report has evaluated the future growth potential of chocolate market in India and provides statistics and information on market structure, market trends, market size, etc. The report will suffice in providing the intending clients with cutting-edge market intelligence and help them in taking sound investment decisions. Besides, the report also identifies and analyzes the emerging trends along with essential drivers and key challenges faced by the industry. The chocolate market in precedent years has been witnessing tremendous growth in terms of value as well as volume. The governance of market is maintained by large international giants through franchisee and expansion into new markets which is leading to the growth of the chocolates market in India. Indian chocolate industry has registered a growth of 15% per annum from 2008 to 2012 and is projected to grow even at a higher rate in future. The industry has a positive outlook due to phenomenal growth in the confectionery industry, rising per capita income and gifting culture in the country.

According to India Chocolate Market Forecast & Opportunities, 2018, theper capita consumption of chocolates is increasing in the country which will continue to flourish the market revenues. It is expected that India chocolate industry will be growing at the CAGR 23% by volume between the years 2013-2018 and reach at 3,41,609 Tons. The dark chocolates are expected to account for the larger market share when compared to milk and white chocolates in the coming years. The introduction of medicinal and organic ingredients in the manufacturing of chocolates had lead to a new trend and development in the country, which will be adapted by major manufacturers to remain active in the market.

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1.3 INDIAN CHOCOLET INDUSTRY AT GLANCE 2012- 2013 The Indian chocolate industry may surpass the Rs 7,500-crore mark by 2015 with the help of growing consumption in the urban and semi-urban areas, according to the industry chamber Associated Chambers of Commerce and Industry of India (ASSOCHAM). Currently, the Indian chocolate market is worth around Rs 4,500 crore. The Indian chocolate industry is registering a compound annual growth rate of 25 per cent at present. The demand for chocolates in India has clocked about 35% rise as against last year primarily in urban areas due to the rising shift to chocolates from traditional mithai around the festival season. High income levels in the urban sector are a good reason for the rapid growth of the chocolate industry in India. More than 65% of the consumption occurs in the urban market. Today, the Indian confectionery industry is one of the fastest growing in the world with an estimated market size of over Rs 2,000 crore per annum accounting for an annual growth of 18-20 per cent. The global chocolate market is estimated to be around $85 billion. The Indian confectionery industry is further categorized into sub-sectors such as sugar- based confectionery, chocolatebased confectionery and gums. After Liberalization, Privatization and Globalization, India has witnessed tremendous growth in F&B sector, particularly, in the confectionery segment. Many foreign players like Nestle and Cadbury forayed into the Indian market to tap 100+ million customers and are ruling the roost till date.

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1.4 Objectives of study

To identify the chocolate industrys dominant economic features. To identify the kinds of competitive forces are industry members facing. To identify the factors are driving industry change and impacts will they have. To identify the market positions do rivals occupywho is strongly positioned and who is not. To identify the key factors for future competitive success. To check whether the outlook for the industry present is an attractive opportunity or not.

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Chapter2: Major Players

2.1Cadbury India Ltd

Company Profile
Early Days - A One Man Business

Birmingham 1824 John Cadbury was one of ten children of Richard Tapper Cadbury, a prominent Quaker who had moved to Birmingham, England from the West Country in 1794. In 1824, 22-year-old John Cadbury opened his first shop at 93 Bull Street, next to his father's drapery and silk business in the then fashionable part of Birmingham. Apart from selling tea and coffee, John Cadbury sold hops, mustard and a new sideline - cocoa and drinking chocolate, which he prepared using a mortar and pestle.

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Cocoa and drinking chocolate had been introduced into England in the 1650s but remained a luxury enjoyed by the elite of English society. Customers at John Cadbury's shop were amongst the most prosperous Birmingham families, the only ones who could afford the delicacy. Cocoa beans were imported from South and Central America and the West Indies. Experimenting with his mortar and pestle, John Cadbury produced a range of cocoa and chocolate drinks, the latter with added sugar. The products were sold in blocks: customers scraped a little off into a cup or saucepan and added hot milk or water. John Cadbury had a considerable flair for advertising and promotion. "John Cadbury is desirous of introducing to particular notice 'Cocoa Nibs', prepared by him, an article affording a most nutritious beverage for breakfast," announced his first advertisement in the Birmingham Gazette in March 1824. He soon established himself as one of the leading cocoa and drinking chocolate traders in Birmingham. The popularity and growing sales of John Cadbury's cocoa and drinking chocolate of 'superior quality' determined the future direction of the business. In 1831, John Cadbury rented a small factory in Crooked Lane not far from his shop. He became a manufacturer of drinking chocolate and cocoa, laying the foundation for the Cadbury chocolate business. These early cocoa and drinking chocolates were balanced with potato starch and sago flour to counter the high cocoa butter content, while other ingredients were added to give healthy properties. By 1842, John Cadbury was selling sixteen lines of drinking chocolate and cocoa in cake and powder forms.

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PRODUCT LINE

1) Dairy Milk 2) Fruit & Nut 3) 5 Star 4) Break 5) Perk 6) Gems 7) Eclairs 8) Nutties 9) Temptation 10) Milk Treat.

FUTURE STRATEGY

Maintain dominance in chocolate confectionery and market leadership in brown drinks. New channels such as Gifting, child connectivity and Value for Money offerings to be the ley growth drivers

Grow volume sales at 10% pa over the next three years. Achieve the goal of best manufacturing location in Cadbury Schweppes world for Dairy Milk and clairs

One new major product launch every year.

Says simply, Cadbury means quality; this is our promise. Our reputation is built upon quality; our commitment to continuous improvement will ensure that our promise.

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 Mission Statement 0f the product:

The mission statement of our new product is To provide our customers with a tempting and exquisite taste as Enticing Treats means a mouth watering treat which is simply irresistible.

"Working together to create brands people love".

2.2 Nestle India Ltd

Company Profile
Nestl's relationship with India dates back to 1912, when it began trading as The Nestl AngloSwiss Condensed Milk Company (Export) Limited, importing and selling finished products in the Indian market. After India's independence in 1947, the economic policies of the Indian Government emphasized the need for local production. Nestl responded to India's aspirations by forming a company in India and set up its first factory in 1961 at Moga, Punjab, where the Government wanted Nestl to develop the milk economy. Progress in Moga required the introduction of Nestl's Agricultural Services to educate advice and help the farmer in a variety of aspects. From increasing the milk yield of their cows through improved dairy farming methods, to irrigation, scientific crop management practices and helping with the procurement of bank loans.

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Nestl set up milk collection centers that would not only ensure prompt collection and pay fair prices, but also instill amongst the community, a confidence in the dairy business. Progress involved the creation of prosperity on an on-going and sustainable basis that has resulted in not just the transformation of Moga into a prosperous and vibrant milk district today, but a thriving hub of industrial activity, as well. Nestl has been a partner in India's growth for over nine decades now and has built a very special relationship of trust and commitment with the people of India. The Company's activities in India have facilitated direct and indirect employment and provides livelihood to about one million people including farmers, suppliers of packaging materials, services and other goods. The Company continuously focuses its efforts to better understand the changing lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness through its product offerings. The culture of innovation and renovation within the Company and access to the Nestl Group's proprietary technology/Brands expertise and the extensive centralized Research and Development facilities gives it a distinct advantage in these efforts. It helps the Company to create value that can be sustained over the long term by offering consumers a wide variety of high quality, safe food products at affordable prices. Nestl India manufactures products of truly international quality under internationally famous brand names such as NESCAF, MAGGI, MILKYBAR, KIT KAT, BAR-ONE, MILKMAID and NESTEA and in recent years the Company has also introduced products of daily consumption and use such as NESTL Milk, NESTL SLIM Milk, NESTL Dahi and NESTL JeeraRaita. Nestl India is a responsible organization and facilitates initiatives that help to improve the quality of life in the communities where it operates.

PRODUCT LINE
Nestl Crunch Cailler Galak/Milkybar
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 Kit Kat Smarties Butterfinger Aero Polo.

FUTURE STRATEGY
Nestls objectives are to be recognized as the world leader in Nutrition, Health and Wellness, trusted by all its stakeholders, and to be the reference for financial performance in its industry.

We believe that leadership is not just about size; it is also about behavior. Trust, too, is about behavior; and we recognize that trust is earned only over a long period of time by consistently delivering on our promises. These objectives and behaviors are encapsulated in the simple phrase, Good Food, Good Life, a phrase that sums up our corporate ambition.

The Nestl Roadmap is intended to create alignment for our people behind a cohesive set of strategic priorities that will accelerate the achievement of our objectives. These objectives demand from our people a blend of long-term inspiration needed to build for the future and short-term entrepreneurial actions, delivering the necessary level of performance.

Watch a short animation highlighting the companys performance over the past year and outlining Nestls ambitions for the future: Nestl 2012 in 3 minutes.

The world's leading nutrition, health and Wellness Company. Our mission of "Good Food, Good Life" is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night.

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 To be a leading, competitive, Nutrition, Health and Wellness Company delivering improved shareholder value by being a preferred corporate citizen preferred employer preferred supplier selling preferred products.

2.3 Lotte India Corporation Ltd

COMPANY PROFILE
At the heart of the corporate purpose, which guides us in our approach to doing business, is the drive to serve consumers in a unique and effective way Its a story born in the age of British Raj. When children in India found confectionery hard to come by. It had to be imported from across the seas until the year 1914; When Parrys picked up the gauntlet and pioneered the manufacture of sweets - the first to do so in the country. Parrys sweets went on to become a household name- a name that people recollect with warmth and a smile. Ever since, the Parrys factory was set up in Nellikuppam, in the Cuddalore District of Tamilnadu in South India. Parrys has become synonymous with Sweets and Confectionery. With the penchant we Indians have for sweets is not surprising that this smooth, milky and irresistibly delicious confectionery is the best gift any child could get. And an obsession with quality ensured that children had a choice of nothing but the very best in confectionery. In the nine decades since, the scenario has undergone a dramatic change. There are a number of offerings in the market today, each wooing children with a wide array of products. But Parrys still finds a prominent place in the heart of consumers. Parrys has always stayed at the top, having weathered the vicissitudes of change, with our ear close to the ground - and to the hearts of children, changing, adapting and growing with the times - But never losing sight of its values traditions and ethics. At the turn of this century, Parrys is
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poised on the threshold of greater challenges in a global village, where dynamism and innovation is the very law of survival. In the backdrop of India joining the WTO, and the global giants eyeing the Indian Market with enthusiasm, the company needed to strengthen itself and broaden its base to delight customers across the country and abroad. With this vision in the mind, Murugappa Group, promoters of Parrys Confectionery Limited entered in to an agreement with Lotte Confectionery Limited, South Korea, by which the, entire shares which Murugappa Group, the founders of Parrys Confectionery Limited, held was divested to Lotte Confectionery Limited -A South Korean Multinational giant. Lotte Confectionery is the first Company of the Lotte family of Companies founded by Mr. Shin Kyuk-ho. The three Ls in the Lotte Emblem stand for Love, Liberty and Life. The Corporate philosophy and idealism of Lotte is driven by dream of a world full of Love where people care for each other and respect each others thoughts. The Lotte Group has presence in Food & Beverages, Distribution, Tourism and Leisure business; Heavy Chemicals, Construction and Machinery; Information, Communication and Electronics, Trading and Services apart from Welfare Research and Support Services. The Lotte Confectionery Co. Ltd. is the Lotte Groups flagship Company in Foods and Beverages category. Lotte Confectionery, Korea, was established with 500 employees in 1967 and today it has more than 6000 Employees. It has over 500 products produced at 5 large-scale plants in Korea. Lotte has been actively working towards establishment of overseas branches, production facilities and has a presence in more than 70 countries. Lotte Confectionerys annual Sales are over USD 900 millions, Apart from Korea, Lotte has overseas investments in production facilities in China, Philippines and Vietnam. Lotte Confectionerys Main line products are Chewing Gum (Lotte Xylitol, Lotte Juicy & Fresh, Lotte Spearmint, Lotte Fresh Mint, Flavono, White & E, Spout Caf Coffee) Candy, Biscuits, Chocolates, Snacks, Ice cream, and health care product. If the decades past are any indication, theres little doubt that even in the coming century, children grow up with the brands Parrys has established.

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PRODUCT LINE
Latte Choco Pie Lacto King BooProo

FUTURE STRATEGY
Regardless of the worsening economic situation in and out of the country in 2012, the Lotte Group realized consistent growth in each business sector. Specifically, the overseas business grew enough to earn 10 trillion won of profit based on the secured new markets and joint promotion with affiliates. Although the emergency management system was instituted at the first half of the previous year as a way to preemptively cope with the unstable economic situation, an investment to secure the new growth engine was actively promoted. As a consequence, it was possible to reach the Hi-mart. Recovery of the world economy is under a cloud of pessimism; however, Lotte plans to exert efforts to break through the low-growth era based on a prepared management against all potential crises in 2013 while searching for new opportunities for growth. Also, strengthening the core competence as well as the investment for the discovery of the new growth engine will continue by thoroughly observing the changing economic condition in and out of the country. Moreover, Lotte plans to go a step closer toward the realization of the vision of 2018 Asia Top 10' by consistently reinforcing the overseas business and promoting the value of Lotte as a global brand.

Lottes mission is the foundation as well as the starting point of our management activity. It serves a significant role in granting a sense of pride and cohesion while motivating group members.

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To spring as a global business group as well as one of the top 10 global business group in Asia, which leads the Asian region, Lotte proclaimed Vision 2018 and has been exerting multidimensional efforts through the core business reinforcement and expanded overseas business weight, aiming at its realization until 2018.

2.4 Lotus Chocolate Company Ltd.

COMPANY PROFILE Lotus Chocolates take great pride in being one of India's select manufacturers of the finest chocolates, cocoa products and cocoa derivatives. Our products are supplied to chocolate makers and chocolate users across the world, from local bakeries to multi national companies. Incorporated in 1989 and having commenced operations in 1992, Lotus is well known as a reliable business partner for the supply of cocoa and chocolate products. Starting from the cocoa bean processing to delivering fine chocolates... Lotuss fully integrated manufacturing facility is built with the best technologies and expertise from across the globe. We are the one stop chocolate hub for you - our valued customer. Located just 55km from Hyderabad in Andhra Pradesh (South India), one of India's fastest growing cities, we have the added advantage of close proximity to the cocoa growing areas of South India. Equipped with sophisticated machinery from Germany, UK, Denmark, and Italy, and backed by stringent quality processes, we ensure that our chocolate is developed with its own unique flavor - a flavor that leaves a smile of savored happiness...

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PRODUCT LINE Chuckles Superr Carr On & On High 5 Kajoos Gobble Milky Punch Maltys Tango Eclairs

&
"To constantly reinvent, innovate and implement ideas. Create finest quality, worldclass, and value for money products through continuous research to deliver the best."

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2.5 Strategic Group Mapping

What is strategy group map? A strategy group consist of those industry members with similar competitive approaches and position in the market. Companies in the same strategy group can resemble one another in any of several ways: they may have comparable product-line breadth, sell in the same price/quality range, emphasize the same distribution channel; use essentially the same product attributes to appeal to similar types of buyers, depend on identical technology approaches, or offer buyers, similar services and technical assistance. An industry contain only one strategy group when all seller pursue very similar strategy and have comparable market position. The procedure for constructing a strategy group map is straightforward: Identify the competitive characteristic that differentiate firm in the industry; typical variable are price/quality range (high, medium, low), geography coverage (local, regional, national, global), use of distribution channel (one, some, all), and degree of service offered (no-frill, limited, full). Plot the firm on a two-variable map using pair of these differentiate characteristics. Assign firm that fall in about the same strategy space strategic group. Draw circles around each strategy group, making the circles proportional to the size of the groups share of total industry sales revenues.

Company Name
Lotus Chocolate Company Ltd. Cadbury India Ltd. Nestle India Ltd. Lotte India Corporation Ltd.

Profit (Rs.in crs)

-2.2 303.25 1078.63 6.66

No.of.products
10 10 9 3

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High

CADBURY
LOTUS

NESTLE
Product Line

LOTTE Low Low Net profit Net Profit High Net profit

Interpretation: From the above strategic group mapping, we can say that nestle is having the nine product line and also consists of highestnet profit in the overall chocolate industry. nestle is having the rivalry with Cadbury which has the highest product line which consists of small net profit but the portfolio of the products are very profitable which has led to the highest net profit in the year 2012. Cadbury is the second highest profitable company seen as per the net profit and having the product portfolio of 10 products in chocolate industry, among those nestle end to lead the highest profit of all segment. Here nestle and Cadbury are almost similar in product line. Cadbury and Nestle have a close competitor with each other in this industry. Lotus is having its minus net profit which is not in the rivalry of nestle and Cadbury. Moreover, lotte is also having low profit comparison with nestle and Cadbury.

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Chapter 3. Strategic Analysis

3.1 Industrys dominant economic features 1. Scope of Competitive Rivalry: The chocolate industry has become increasingly larger within the last couple of years as a result increase the consumers need and demand. The market is very competitive because they offer the same products, but has different physical attributes to the chocolate and different costs, which buyers have choices to choose from. Companies want to provide the best products and to attract buyers improving products, which makes the chocolate industry very competitive. Here are the main factors of competitive rivalry:

Bundle flavor: like some fruits, sweet silk, Kesar. Fruit and nuts. Improvement in product design and packaging Providing chocolate to the health conscious customers.

2. Stage in Life Cycle: The chocolate industry is in the Mature Life Cycle Stage, where nearly all-potential customers are already users of the industrys product. The cell chocolate industrys growth and profitability depends entirely on its ability to attract new customers. By increasing and improving product innovation, it will attract more potential buyers and need of customer. 3. Numbers of Companies in the Industry: There are many companies with only top m four companies in the chocolate industry that controls 80 percent of the market. Even though there are emerging new companies into the market, they are relatively small. The four top companies are rank as follow as the largest to the smallest chocolate company. 1. Lotus Chocolate Company Ltd 2. Cadbury India Ltd
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3. Nestle India Ltd 4. Lotte India Corporation Ltd 4. Customers: What consumers want? The psychology behind chocolate suggests consumers see it as a naughty but nice impulse treat. But a closer look reveals three distinct types of buyer, each with different behaviors and demands. The convenience buyer Chocolate may be seen as an impulse purchase, but its becoming increasingly everyday among consumers. Convenience is a major driver for chocolate lovers, who want to grab a bar from a local store or throw a multi-pack into the trolley during a weekly shop. As convenience becomes more important to time-poor shoppers, sales of tablet bars are growing (up 37% in the UK last year) as consumers grab and go. Premium chocolate-makers such as Godiva are rethinking their strategies to get a bite of this lucrative market, introducing smaller bar formats. A desire for convenience is also increasing the popularity of sharing bags, particularly in Western markets, as consumers buy to share or finish eating later. Manufacturers have reacted with packaging innovations, such as the memory wrapper from Mars that allows bars to be twisted, closed and saved. Mars says the innovation empowers the consumer. It also drives brand loyalty. 5. Capital Requirements: Chocolate companies require minimum capital to enter and remain in the market successfully. Companies require capital to create products that attracts consumers and for total assets and revenues to enlist other products. A valuable capital in the chocolate industry is the consumers because revenue and profits depends on them who buy the companies product. This makes the market very competitive and large companies that have big economies of scale provide a highly automated service to a large number of customers, and have the financial resources required in building and maintaining a large chocolate market.
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The chocolate industry enjoyed sweet success in 2009, with domestic industry revenues topping $11 billion. Chocolate businesses have performed well despite a tough economy due to innovations in chocolate manufacturing and increased consumer awareness about chocolates health benefits. Chocolate businesses include a number of enterprise options. You might decide to run a gourmet chocolate candy store, manufacture your own organic chocolate products or rent chocolate fountains. Other ideas include a chocolate fondue caf, chocolate gift shop or chocolate gift basket business.

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3.2 Porters Five Forces Model Although the Indian Consumer chocolate market is highly competitive, the high growth rates that it promises make it a good industry to enter.

Porter's 5 Forces Model

Substitutes Substitutes like Ice-cream, Potato chips, biscuits, soft drinks, chewing gum, are a source of
Suppliers Major raw material Suppliers are cocoa Competitors Producers in Latin Duopoly American countries. Both the major players have Due to negligible Financial muscle to sustain their Domestic production in Brands India, suppliers enjoy All players following a pull high bargaining power. strategy. Milk supply also fluctuates, therefore, in summer months, milk suppliers gain sufficient bargaining power. New Entrants Imminent entry of global majors like Hershey's, Mars etc. is bound to change the power equation in the Indian chocolate

threat as well as opportunity for market expansion.

Buyers Since chocolates do not satisfy any Immediate needs, it is not a Necessaryitem. Consumer power is very high and consumers need to be persuaded through various positioning planks to consumechocolates.

Threat of New Entrants market. High Capital Requirements: The large investment is requiring for the new enter the market successfully. Related to manufacturing facilities and equipment, introductory advertisement and sales promotion. Cost and resources disadvantages not related to scale of operation. New entrance cannot take advantage of experience of industry, proprietary technology, partnership with the best and cheapest raw material and components.
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Difficult to make network of distributors or retailers. A potential entrance can face the challenges of distribution channel. Retailer and wholesaler both avoid purchasing the product which is new to the market and for customer.

Strong brand prefer more. The well knows brand is preferred first, and its been hard for the newcomer to sell their product. For building more clients they have to promote their product with the help of different medium.

Restrictive regulatory polices Government agencies cant limit or even bar entry by requiring license and permits. As different company having their own rules and regulation to implement and accordingly government performed their task.

Tariffs and international trade restrictions The ability and inclination of industry incumbents to lunch vigorous initiative to block a newcomers successful entry.

Bargaining Power of Buyers The bargaining power of buyers is increased by two factors: a number of large volume buyers and the buyers' relatively low profits from the product. However, the bargaining power of buyers is low to moderate because of the industry's differentiated products, the presence of switching costs, the lack of threat of backward integration, and the reliance on the industry's product.

Cost of competitive brand is low When the number of brand is more and with different price the customer can easily switch on to another brand as the customer having more option with them.

If the buyer are in small number This point is always point of consent for the seller that buyers are in small number and competitors are more.

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If buyer are well informed about sellers products, prices, and costs. The more information buyer has, the better bargaining position they are in. with the help of technology customer can take all information and compare about the product and price.

If buyers have judgment in whether and when they purchase the product. Consumer can delay their purchase if they are not happy with product and if are not good with financial condition. Bargaining power of suppliers The biggest threat is the trend of large suppliers integrating forward by setting up their own retail outlets. However, in the Indian, there are a large number of suppliers in the chocolate market who face overcapacities, poor distribution, large duties, and declining margins and hence the bargaining power for suppliers is less and competitive pricing comes into play. With more companies setting up the manufacturing plants in India. Product differentiation is more and more difficult in the consumer chocolate industry. The bargaining power of suppliers is decreased because the industry is an important customer of the supplier group and the supplier does not pose a threat of forward integration. But the bargaining power of suppliers is moderate to high because the supplier group is concentrated; there are no substitute products and the importance of the supplier's product to the industry.

Whether the items being complete is a product that is readily available for many suppliers at the going market price. When supplies became quite tight and industry members are so eager to secure what they need that they agree to terms more favorable to supplies.

Supplier is the primary sources of particular items. Good reputation supplier and strong demand of their material for to barging with the buyer.

Inputs are in short supply Short supply has some degree of pricing power. Particular items greatly weakness supplier pricing power and bargaining power.

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Differentiated raw material that improve the product Improving the efficiency of their production processes, the more bargaining power. Intensity of Rivalry amongst existing players There are few key players in the consumer chocolate market, but as they are part of big Indian business groups, they have a lot of muscle power and hence the intensity of rivalry can be placed at a mid level. Though factors such as high transport and storage costs, lack of differentiation, large investments, and low switching costs tend to intensify the rivalry, the fact that the market is only at the nascent stage with promises of high growth rates with the diverse needs of customer groups, and an untapped rural market; the existing players seem to be enjoying a relatively low rivalry.

Rivalry intensifies as the number of competitors increases. It is always difficult for the one or two player to win commanding market shares and comfort weaker market challenges from rivals.

Rivalry is usually strong in slow growing market and weaker in fast growing market. Rapidly expanding buyer demand produces enough new business for all industry members to grow. In slow growing market buyer demand drop of unexpectedly.

Better customer services Giving better services in the market for attracting more number of customers. When rivalry giving better services then its became pressure from the other competitor to perform better. And providing different feature product with low price.

Rivalry is more powerful when industry condition tempts competitors to use price cuts or other competitive weapons to boost unit volume. When the product is perishable, seasonal, or costly to hold in inventory, competitive pressures build quickly any time one or more firms decide to cut prices and take the advantage.

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Threat of Substitutes The threat of substitute produces in the chocolate are high. The industry must compete with alternate cooking flavors such as vanilla and lemon. In addition they must compete with many types of snacks including non-chocolate snacks. Finally, they must also compete in the retail arena. Substitutes are readily available and attractively price. When the substitutes are available and with a attractive price creates competitive pressure. Finally they have to cut their price to sustain and attract the consumer, and maintaining profit. Substitutes having better quality, performance, and other related attribute. Substitute product is inviting customer to compare performance, feature, ease of use and other attributes as well as prices. Whether the cost that buyer gain in switching to the substitutes are high or low. High switching cost discourage switching to substitutes, while low switching costs make it easier for the seller of attractive substitutes to lure buyer to their offering. Typical cost include involvement, cost of addition equipment, time cost. High switching cost can materially weaken the competitive pressures.

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3.3 Driving forces of industry Product and package innovation Packaging is a key element in the industry, with options such as single-serving packages, bite-sized packs and resalable bags proving popular. As consumers become more health conscious, companies are offering healthy options such as low calorie, low fat, vitamin fortified, organic and fiber-rich chocolate. Chocolate demand rises in festive season. A survey by Assocham says that chocolate demand soars by 40% amid growing concerns of adulterated sweets & abnormally high dry-fruit prices in festive season: Survey. "Adulteration in traditional sweets eroding consumers' confidence along with dry fruit prices going through the roof and other significant multiple factors like growing acceptance of chocolates amid varied Indian palates, attractive packaging, consistency in quality, growing gifting culture, rising urban affluence amid youth with high disposable incomes and a crazy sweet tooth together with other related factors are driving the demand for chocolates. Attractive youth Marketing to the youthful population of immerging market especially in India will be vital. Use of popular culture, including bands and TV shows, in marketing campaigns may increase, as will vital marketing and social media interaction, as young people broaden their channels. While children prefer sweeter chocolate, concerned parents with look for chocolate with added health value. New distribution channels Chocolate will be available from wider variety of outlets, from coffee shop to health food stores, to cater for convenience buyers. Super markets and discount stores will continue to dominate sales, particularly among value customers. Premium chocolate could become available in main streams stores as luxury buyers proliferate. Brands might seek to move up the value chain by creating their own flagship stores.

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3.4. Rivals next moves The main rival of Nestle is Cadbury. We have described the future action of Cadbury. Cadbury introduced a long-term (201215) strategy programmed, Vision into Action, last summer. Centered on the concept of Fewer, Faster, Bigger, Better, the company says it "aims to capture the significant under-exploited potential in the business in revenue growth, margins and returns". This will be achieved by focusing resources on fewer, bigger and more value-creating initiatives, and the strategy is already said to be delivering results, including improved margins and returns for shareholders.

Creating Value in Future Effectively managing growth drivers 1. Gifting Child Connectivity and low end VFM. 2. New channels Optimizing manufacturing efficiencies. Competitiveness in logistics and distribution using IT. Exploiting mass media to create / maintain large brands.10+% Advertising / Sales

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3.5. Key factors for future competitive success The rapid change of the past few years gives us some vital clues to the industrys direction. Luxury vs. commodity A growing middle class will continue to propel the luxury market, and will increasingly drive it into mainstream retailers. But this will pose a challenge: although middle class consumers in emerging markets may develop expensive tastes, their disposable income will still be relatively limited. Manufacturers may need to choose between margins and volume, positioning themselves carefully as either a luxury or commodity player. The personal touch Bespoke bars may be commonplace. One artisan chocolate maker says he envisages smaller shops offering people the chance to create their own bar. As consumer palates grow more sophisticated, unusual flavors will become the norm, with chocolate-lovers choosing their own combinations. Consumers may also be able to design their own packaging. New distribution channels Chocolate will be available from a wider variety of outlets, from coffee shops to health food stores, to cater for convenience buyers. Supermarkets and discount stores will continue to dominate sales, particularly among value customers. Premium chocolate could become available in mainstream stores as luxury buyers proliferate. Brands might seek to move up the value chain by creating their own flagship stores, something Hershey and Mars (through its M &Ms brand) have already done successfully. Middle class rule Manufacturers are likely to offer more chocolate from ethical sources to meet inspirational buyers needs. Middle class consumers will also be keen on premium chocolate for gifting purposes, and seasonal launches, which increased 6% during 2011, will continue to grow.

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A new recipe Milk chocolate will have a lower cocoa content due to rising prices, and manufacturers will be forced to use cocoa more sparingly. Demand for cocoa could spiral out of control: one Latin American manufacturer predicts that China and India increasing average per capita consumption by just 1kg could make most manufacturers current models unsustainable. In that scenario, artificial cocoa could become a viable alternative. Fresh flavors In developed markets, flavors may become increasingly unusual as palates grow more sophisticated and brands seek a marketing boost. Combinations of sweet and savoury (such as bacon and chocolate) will increase, and salt, olive oil, herbs and flowers will all be used as flavorings. Think small Rising obesity levels and government regulation will lead to manufacturers limiting portion sizes. Sharing bags of smaller bars will become more popular as people seek to limit the amount eaten in one sitting. Average per capita consumption (currently 8kg in Europe) may drop, although overall consumption is likely to rise as the global middle class mushrooms. Price vs. size In emerging markets, chocolate takes a hefty bite from the household budget. As input price volatility continues, manufacturers may have to keep value in mind or risk losing consumers. Price per gram is rising fast in developed markets, but research shows consumers feel cheated if bars get smaller but price is static. Mainstream manufacturers could be forced to choose between containing costs, at the expense of size and moving further up the value chain.

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3.6 Internal analysis 3.6.1NESTLE SWOT ANALYSIS:

Strengths 1. Unmatched product and brand portfolio 2. R&D capabilities 3. Distribution channels and geographic presence 4. Competency in mergers and acquisitions 5. Brand reputation valued at $7 billion Opportunities 1. Increasing demand for healthier food products 2. Acquiring startups specializing in producing well-being products 3. Establishing new joint ventures

Weaknesses 1. Inability to provide consistent quality in food products 2. Weak implementation of CSR

Threats 1. Food contamination 2. Trend towards healthy eating 3. Growth of private labels 4. Rising raw food prices

Strengths
1. Unmatched product and brand portfolio. The business offers one of the widest portfolios of food and brewery products in its sector. It also operates 29 brands that earn more than $1 billion in annual revenues. With more than 8,000 products it is hard for any other corporate to compete against Nestl. 2. R&D capabilities. Nestl invested more than $2 billion in R&D in 2011. Its introducing new and redesigned products every year, strengthening firms competitive advantage. 3. Distribution channels and geographic presence. Nestl runs in more than 100 countries and has extensive distribution channel all over the world, which supports its operations globally.

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4. Competency in mergers and acquisitions. Over the years Nestl has been forming successful partnerships and acquiring other companies in order to grow and maintain its leadership in the market. 5. Brand reputation valued at $7 billion. Nestl is known almost everywhere and has a reputable brand for its products that are used by millions every day.

Weaknesses
1. Inability to provide consistent quality in food products. Nestl has been recalling many products from trade due to food contamination or poor quality supplies. This does not only hurt firms sales but its image as well as the business is unable to control quality of the products. 2. Weak implementation of CSR. The company has announced and is involved in many programs that aim to make company more eco-friendly and improving the working conditions of its suppliers. Still, Nestl receives a lot criticism over the effectiveness of its programs.

Opportunities
1. Increasing demand for healthier food products. The trend of buying and consuming only healthy food products is a major shift in consumer tastes and opens up an immense market for companies. Currently, Nestl tries to introduce more healthy food products in response to the trend. 2. Acquiring startups specializing in producing well-being products. Many new startups are forming and introducing new products for well-being or revolutionizing the ways those products are made. Startups are cheap and can easily be acquired. Nestl is focusing on providing more well-being products and this is a great opportunity to expand its portfolio. 3. Establishing new joint ventures. Nestle is already involved in many successful partnerships with major world companies like The Coca-Cola Company and ColgatePalmolive.

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Threats
1. Food contamination. Although it is Nestls responsibility to run thorough quality checks of its products, the company had been reportedly providing contaminated food or other products to the market. Such actions hurt companys reputation and result in losses. 2. Trend towards healthy eating. Nestl is a major supplier of chocolate and chocolate drinks that have high level of calories and due to changing customer habits, will experience decline in demand. 3. Growth of private labels. The growing number of supermarkets and other retailers are introducing their own label products that cost less and can easily compete with Nestls product portfolio. 4. Rising raw food prices. With an overall growth of world economy and population, the demand for raw food will rise. The result of that will be higher material costs and squeezed margin for Nestl. Here we complete the chapter 3 of our report, in which we have evaluated industry environment by using secondary data. In the next chapter financial statement analysis of the industry is presented.

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CHATER 4 FINANCIAL ANALYSIS

4.1 BACKGROUND OF FINANCIAL ANALYSIS
One of the most common ways of analyzing financial data is to calculate ratios from the data to compare against those of other companies or against the company's own historical performance. Financial Analysis is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions. Financial analysts often assess the firm's: 1. Profitability - its ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations; 2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term; 3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations; 4. Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of the income statement and the balance sheet, as well as other financial and non-financial indicators. Financial analysts often carried out by the following ways:

Past Performance - Across historical time periods for the same firm (the last 5 years for example),

Future Performance - Using historical figures and certain mathematical and statistical techniques, including present and future values, this extrapolation method is the main source of errors in financial analysis as past statistics can be poor predictors of future prospects.

Comparative Performance - Comparison between similar firms.

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Objectives of Financial Analysis

Objectives of the financial Analysis of the IT Industry are as follows: To know profitability of the industry To know the Financial Performance of the Industry To study, compare, and analyze the financial performance of major companies dealing in the Paint Industry.

Tools Used for Financial analysis

We have used two tools for the financial analysis of Paint Industry Ratio Analysis Trend Analysis

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BALANCE SHEET
Table 4.1 (Rs in Crs)

Particulars

08 - 09

09 - 10

10 - 11 39.32 476.21 508.68 0.635 2.755 3.39 0 512.07 813.85 332.83 0 481.02 107.38 52.15 237.29 27.94 174.17 51.08 490.47

11 -12 39.32 655.74 685.77 1.04 248.60 249.634 234.48 1169.89 1003.72 381.58 3.45 618.69 389.98 43.4 303.37 46.81 187.99 41.72 579.89

12 -13 39.32 863.08 892.08 0.65 267.83 268.47 268.05 1428.59 1513.79 465.56 3.54 1044.69 168.72 91.27 365.16 39.54 186.22 37.29 628.20

SOURCES OF FUNDS : Share Capital 38.15 37.87 Reserves Total 216.17 259.56 244.72 290.04 Total Shareholders Funds Secured Loans 9.18 0.92 Unsecured Loans 3.13 3.095 12.31 4.01 Total Debt Other Liabilities 0 0 257.03 294.05 Total Liabilities APPLICATION OF FUNDS : Gross Block 534.01 627.55 Less : Accumulated Depreciation 267.41 298.34 Less: Impairment of Assets 0.09 2.58 Net Block 266.51 326.63 Capital Work in Progress 58.47 58.04 Investments 9.455 55.32 Current Assets, Loans & Advances Inventories 170.19 180.61 Sundry Debtors 18.075 25.56 Cash and Bank 118.49 110.54 Loans and Advances 48.785 52.73 Total Current Assets 355.54 369.43 Less : Current Liabilities and Provisions Current Liabilities 249.93 286.63 Provisions 174.76 219.68 Total Current Liabilities 424.69 506.31 Net Current Assets -69.15 -136.9 Deferred Tax Assets 14.84 15.945 Deferred Tax Liability 23.095 25.01 Net Deferred Tax -8.255 -9.065 Other Assets 0 0 257.03 294.05 Total Assets Contingent Liabilities 21.80 40.97 We are taken the all data of balance sheet by average.

363.62 250.50 614.11 -123.6 21.14 25.97 -4.83 0 512.07 42.66

457.88 58.72 516.60 63.30 29.27 37.098 -7.83 62.36 1169.89 48.50

536.14 27.17 563.32 64.89 44.32 66.87 -22.56 81.59 1428.59 78.35

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PROFIT & LOSS

Table 4.2 Particulars 08 - 09 09 - 10 INCOME : Sales Turnover 1607.27 1873.41 Excise Duty 80.32 53.77 Net Sales 1526.95 1819.64 Other Income 15.74 13.54 Stock Adjustments 20.26 -1.42 1562.95 1831.76 Total Income EXPENDITURE : Raw Materials 600.97 700.11 Power & Fuel Cost 48.72 50.38 Employee Cost 110.70 143.85 Other Manufacturing Expenses 199.39 204.57 Selling and Administration Expenses 303.69 373.49 Miscellaneous Expenses 19.84 28.46 Less: Pre-operative Expenses Capitalized Total Expenditure 1283.30 1500.86 Operating Profit 279.65 330.91 Interest 2.65 1.23 Gross Profit 277.01 329.67 Depreciation 33.83 40.17 Profit Before Tax 243.18 289.5 Tax 64.34 76.08 Fringe Benefit tax 2.99 0.65 Deferred Tax 1.23 0.81 Reported Net Profit 174.68 211.96 Extraordinary Items -0.33 -0.48 Adjusted Net Profit 174.95 212.44 Adjst. below Net Profit 0 0 P & L Balance brought forward 82.63 115.87 Appropriations 141.37 186.98 P & L Balance carried down 115.87 140.86 Dividend 104.05 118.46 Equity Dividend % 111.25 126.25 Earnings Per Share-Unit Curr 24.98 32.03 Book Value-Unit Curr 73.70 85.68 We are taken the all data of profit & loss by average. 10 - 11 2299.46 60.89 2238.57 18.56 42.28 2299.41 913.79 69.83 151.41 280.83 454.96 28.55 11 -12 2887.69 90.01 2797.68 38.47 16.78 2852.93 1121.52 92.06 202.54 331.49 549.82 51.92 (Rs in Crs) 12 -13 3316.61 127.64 3188.97 23.12 34.79 3246.88 1253.34 115.90 240.26 363.43 644.43 46.58

1899.37 400.04 1.42 398.62 49.6275 348.99 97.64 0 -4.24 255.59 -2.09 257.69 0 140.86 163.70 232.75 118.46 126.25 36.16 196.11

2349.34 503.59 2.61 500.98 59.60 441.39 125.42 0 1.32 314.65 -0.997 315.65 0.0025 232.75 169.02 378.38 118.46 126.25 48.07 230.61

2663.94 582.94 8.62 574.32 93.09 481.23 122.51 0 14.73 343.99 -2.59 346.59 0 378.38 171.97 550.40 118.46 126.25 51.80 269.38

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4.2 Ratio Analysis The relationship of one item to another expressed in a simple mathematical form is known as the Ratio. The relationship can be expressed as: 1. Percentage 2. Times 3. Proportion of numbers 4. Days Ration is used as benchmark for evaluating the financial position and the performance of the company. Ratio helps to summaries the large quantities of financial data and to make qualitative judgment about the financial performance of the company. Ratio in general, is a statistical yardstick by means of which the relationship between figures can be compared and measured. Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statement so that the strengths and weaknesses of a firm as well as its historical performance and current financial can be determined. Interpretation through ratios:Only calculating ratio is useless there must be a logical interpretation that can be useful to management for making policy and take important decision. Investors can use this for finding out the risk involved and what would be the return from the particular company. Methods used for deriving interpretation are as below. a. Comparison with ideal ratio b. Comparison with past year ratio c. Compare with ratio of other competitor company d. Help of some related ratio.

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4.3.1 Current ratio It is a measure of general liquidity and is most widely used to make the analysis for short term financial position or liquidity of a firm. It is calculated by dividing the total of the current assets by total of the current liabilities. CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES Table 4.1 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average 2008-09 1.65 0.93 0.66 0.91 4.15 1.0375 2009-10 1.91 1.11 0.63 0.77 4.42 1.105 2010-11 2 1.1 0.62 1.26 4.98 1.245 2011-12 1.85 1.24 0.57 1.66 5.32 1.33 2012-2013 1.9 1.31 0.51 1.41 5.13 1.2825

1.4 1.2 1 0.8 0.6 0.4 0.2 0 2008-09 2009-10 2010-11 2011-12 2012-2013 Current ratio

Fig.-4.1 Above graph shown the current ratio of chocolate industry of five year. The current ratio of the industry is increase in 2008-09 to 2011-12, but in 2012-13 the current ratio of the industry is decrease.

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4.3.2 Interest coverage ratio The interest coverage ratio (ICR) is a measure of a company's ability to meet its interest. It determines how easily a company can pay interest expenses on outstanding debt. Payments. Interest coverage ratio is equal to earnings before interest and taxes (EBIT) for a time period, often one year, divided by interest expenses for the same time period. The interest coverage ratio is a measure of the number of times a company could make the interest payments on its debt with its EBIT INTEREST COVERAGE RATIO = EBIT / INTEREST EXPENSES Table 4.2 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average 2008-09 4.85 39.82 472.23 0.23 517.13 129.2825 2009-10 14.22 72.44 655.99 28.83 771.48 192.87 2010-11 2.83 64.9 1,061.29 6.09 1135.11 283.7775 2011-12 -4.53 87.31 272.61 78 433.39 108.3475 2012-2013 -0.16 61.9 59.37 105.63 226.74 56.685

300 250 200 150 100 50 0 2008-09 2009-10 2010-11 2011-12 2012-2013 Interest coverage ratio

Fig.-4.2 Above graph shown the Interest coverage ratio of chocolate industry of five year. The Interest coverage ratio of the industry is increase in 2008-09 to 2010-11, but in 2011-12 to 1012-13 the Interest coverage ratio of the industry is decrease.

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4.3.3 Return on capital employed ratio Return on capital employed (ROCE) is a measure of the returns that a business is achieving from the capital employed, usually expressed in percentage terms. Capital employed equals a company's Equity plus Non-current liabilities (or Total Assets Current Liabilities), in other words all the long-term funds used by the company. ROCE indicates the efficiency and profitability of a company's capital investments. ROCE = EBIT / CAPITAL EMPLOYED = EBIT / (EQUITY + NON-CURRENT LIABILITIES) = EBIT / (TOTAL ASSETS - CURRENT LIABILITIES) Table 4.3 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average
70 60 50 40 30 20 10 0 2008-09 2009-10 2010-11 2011-12 2012-2013 Return on capital employed ratio

2008-09 3.04 44.96 173.13 0 221.13 55.2825

2009-10 4.12 45.3 174.16 12.37 235.95 58.9875

2010-11 5.42 39.09 158.6 0 203.11 50.7775

2011-12 0 41.78 69.91 1.41 113.1 28.275

2012-2013 0 30.34 45.1 1.88 77.32 19.33

Fig. -4.3 Above graph shown the ROEC of chocolate industry of five year. The ROEC of the industry is increase in 2008-09 to 2009-10, but in 2010-11 to 1012-13 the ROEC of the industry is decrease.

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4.3.4 Return on net worth ratio The return on equity ratio (also known as the return on net worth) reveals the amount of return earned by investors on their investments in a business. This return can be improved when a business buys back its own stock from investors, or by using more debt and less equity to fund its operations. RETURN ON NET WORTH RATIO = NET INCOME / EQUITY Table 4.4 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average
50 40 30 20 10 0 2008-09 2009-10 2010-11 2011-12 2012-2013 Return on net worth ratio

2008-09 4.47 38.09 119.78 0 162.34 40.585

2009-10 6.39 37.91 124.22 6.08 174.6 43.65

2010-11 5.63 33.06 113.97 0 152.66 38.165

2011-12 0 33.86 90.31 1.09 125.26 31.315

2012-2013 0 25.93 69.52 1.48 96.93 24.2325

Fig.-4.4 Above graph shown the Return on net worth ratio of chocolate industry of five year. The Return on net worth ratio of the industry is increase in 2008-09 to 2009-10, but in 2010-11 to 1012-13 the Return on net worth ratio of the industry is decrease.

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4.3.5 The fixed assets ratio Fixed asset turnover ratio compares the sales revenue a company to its fixed assets. This ratio tells us how effectively and efficiently a company is using its fixed assets to generate revenues. This ratio indicates the productivity of fixed assets in generating revenues. If a company has a high fixed asset turnover ratio, it shows that the company is efficient at managing its fixed assets. Fixed assets are important because they usually represent the largest component of total assets. FIXED ASSET TURNOVER RATIO = SALES REVENUE / TOTAL FIXED ASSETS Table 4.5 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average
2.65 2.6 2.55 2.5 2.45 2.4 2.35 2.3 2.25 2.2 2008-09 2009-10 2010-11 2011-12 2012-2013

2008-09 1.42 3.09 3.46 1.45 9.42 2.355

2009-10 1.72 3.12 3.43 1.54 9.81 2.4525

2010-11 1.86 3.22 3.65 0.76 9.49 2.3725

2011-12 2.32 3.78 3.49 0.6 10.19 2.5475

2012-2013 3.25 4.08 2.47 0.67 10.47 2.6175

The fixed assets ratio

Fig.-4.5 Above graph shown the Fix asset turnover ratio of chocolate industry of five year. The Fix asset turnover ratio of the industry is increase in 2008-09 to 2009-10 and 2010-11 to 201213, but in 2010-11 the Fix asset turnover ratio of the industry is decrease.

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4.3.6Inventory ratio Inventory to sales ratio establishes relationship between the sales with average stock. This ratio measures the velocity of conversion stock in to sales. Usually, a high inventory sales indicates efficient management of inventory because more frequently the stock are sold, the lesser amount of money is required to finance the inventory. A low inventory to sales ratio indicates an inefficient management of inventory, over investment in inventories, sluggish business, and poor quality of good and lower profit as compared to total investment. A high inventory turnover may be the result of a very low level of inventory which results in shortage of goods in relation to demand and position of stock or the turnover may be high due to conservation methods of valuing inventories at lower value or the policy of the being to buy frequently in small lot. INVENTORY RATIO = SALES / INVENTORY Table 4.6 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average 2008-09 9.09 9.37 10.69 9.31 38.44 9.61 2009-10 9.75 9.68 11.19 9.63 40.25 10.0625 2010-11 8.01 9.7 11.87 9.32 38.9 9.725 2011-12 4.54 9.19 11.75 8.55 34.03 8.5075 2012-2013 6.49 7.74 11.64 8.88 34.95 8.7375

10.5 10 9.5 9 8.5 8 7.5 2008-09 2009-10 2010-11 2011-12 2012-2013 Inventory ratio

Fig.-4.6 Above graph shown the Inventory ratio of chocolate industry of five year. The Inventory ratio of the industry is increase in 2008-09 to 2009-10 and 2011-12 to 2012-13, but in 201011 to 2011-12 the Inventory ratio of the industry is decrease.

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4.3.7Debtors ratio Debtors Turnover ratio is a test of the liquidity of the firm. This ratio establishes the relationship between net credit sales and accounts receivables. The objective of this ratio is to determine the efficiency with which the debtors are being managed. It suggests the number of time the amount of credit sale is collected during the year. DEBTORS RATIO = NET SALES / DEBTOR Table 4.7 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average 2008-09 7.17 106.72 90.25 53.32 257.46 64.365 2009-10 8.73 80.56 95.14 53.91 238.34 59.585 2010-11 9.97 73.07 100.04 55.13 238.21 59.5525 2011-12 9.65 71.08 86.14 46.82 213.69 53.4225 2012-2013 9.06 76.74 84.87 36.35 207.02 51.755

70 60 50 40 30 20 10 0 2008-09 2009-10 2010-11 2011-12 2012-2013 Debtors ratio

Fig.-4.7 Above graph shown the Debtors ratio of chocolate industry of five year. The Debtors ratio of the industry is decrease in 2008-09 to 2012-13.

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4.4 Trend Analysis

Trend analysis is one of the tools for the analysis of the companys monetary statements for the investment purposes. Investors use this analysis tool a lot in order to determine the financial position of the business. In a trend analysis, the financial statements of the company are compared with each other for the several years after converting them in the percentage. In the trend analysis, the sales of each year from the 2008-2009 to 2012-2013 will be converted into percentage form in order to compare them with each other. Trend Analysis is an aspect of technical analysis that tries to predict the future movement of a stock based on past data. Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will happen in the future. Method for calculating Trend Trend Percentage Method We have utilized trend percentage method for the calculation of trend. For the trend analysis index number is advocated. The procedure followed is to assign the number 100 to the item of the base year and to calculate percentage change in each item of other years in the relation to the base year. This procedure is called trend-percentage method.

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4.4.Total Assets Table 4.8 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average 2008-09 8.22 506.1 473.35 40.44 1028.11 257.03 100 2009-10 9.31 542.97 581.27 42.64 1176.19 294.05 114.40 2010-11 11.55 740.88 855.42 440.43 2048.28 512.07 199.23 2011-12 22.67 1,081.42 3,129.96 445.49 4679.54 1169.885 455.16 2012-2013 17.47 1,370.71 3,873.65 452.54 5714.37 1428.59 555.81

Total Assets
600 500 400 300 200 100 0 2008-09 2009-10 2010-11 2011-12 2012-2013 100 114.4 199.23 455.16 Total Assets 555.81

Fig.-4.8 Above graph shown the Total Assets of chocolate industry of five year. The Total Assets of the industry is increase 555.81 in 2008-09 to 2012-13.

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4.4.2 Inventories Table 4.9 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average 2008-09 2.92 222.81 434.91 20.1 680.74 170.19 100 2009-10 3.05 199.82 498.74 20.84 722.45 180.61 106.12 2010-11 5.07 339.23 575.95 28.9 949.15 237.29 139.43 2011-12 13.72 427.04 734.04 38.69 1213.49 303.37 178.25 2012-2013 5.11 676.63 745.58 33.3 1460.62 365.16 214.56

Inventory
250 200 178.25 150 100 50 0 2008-09 2009-10 2010-11 2011-12 2012-2013 100 106.12 139.43 214.56

Fig.-4.9 Above graph shown the Inventories of chocolate industry of five year. The Inventories of the industry is increase 214.56 in 2008-09 to 2012-13.

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4.4.3 Total Liability Table 4.10 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average 2008-09 8.22 506.1 473.35 40.44 1028.11 257.03 100 2009-10 9.31 542.97 581.27 42.64 1176.19 294.05 114.40 2010-11 11.55 740.88 855.42 440.43 2048.28 512.07 199.23 2011-12 22.67 1,081.42 3,129.96 445.49 4679.54 1169.885 455.16 2012-2013 17.47 1,370.71 3,873.65 452.54 5714.37 1428.59 555.81

Total Liability
600 500 400 300 200 100 0 2008-09 2009-10 2010-11 2011-12 2012-2013 100 114.4 199.23 455.16 Total Liability 555.81

Fig.-4.10 Above graph shown the Total liability of chocolate industry of five year. The Total liability of the industry is increase 555.81 in 2008-09 to 2012-13.

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4.4.4 Total Share Capital Table 4.11 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average 2008-09 20.23 32.18 96.42 3.77 152.6 38.15 100 2009-10 20.23 31.07 96.42 3.77 151.49 37.87 99.27 2010-11 20.23 31.07 96.42 9.56 157.28 39.32 103.07 2011-12 20.23 31.07 96.42 9.56 157.28 39.32 103.07 2012-2013 20.23 31.07 96.42 9.56 157.28 39.32 103.07

Total Share Capital

104 103 102 101 100 99 98 97 2008-09 2009-10 2010-11 2011-12 2012-2013 100 99.27 Total Share Capital 103.07 103.07 103.07

Fig.-4.11

Above graph shown the Total share capital of chocolate industry of five year. The Total share capital of the industry is decrease 99.27 in 2008-09 to 2009-10 and 2009-2010 to 2010-11 in total share capital is increase 103.07, but in 2010-11 to 2012-13 the total share capital constant.

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4.4.5 Gross Profit Table 4.12 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average 2008-09 1.9 238.37 865.18 2.58 1108.03 277 100 2009-10 2.63 278.14 1,028.25 9.65 1318.67 329.67 119.01 2010-11 1.57 309.96 1,272.86 10.09 1594.48 398.62 143.91 2011-12 -4.36 443.74 1,541.25 23.3 2003.93 500.98 180.86 2012-2013 -1.58 445.25 1,829.77 23.84 2297.28 574.32 207.34

Gross Profit
250 200 150 100 50 0 2008-09 2009-10 2010-11 2011-12 2012-2013 100 119.01 143.91 Gross Profit 207.34 180.86

Fig.-4.12 Above graph shown the gross profit of chocolate industry of five year. The gross profit of the industry is increase 207.34 in 2008-09 to 2012-13.

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4.4.6 Operating Profit Table 4.13 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average 2008-09 2.1 243.57 866.82 6.12 1118.61 279.65 100 2009-10 2.72 281.42 1,029.65 9.83 1323.62 330.91 118.33 2010-11 2.17 313.86 1,273.94 10.2 1600.17 400.04 143.05 2011-12 -3.48 448.1 1,546.36 23.38 2014.36 503.59 180.08 2012-2013 0.22 451.26 1,856.37 23.92 2331.77 582.94 195.85

Operating Profit
250 200 150 100 50 0 2008-09 2009-10 2010-11 2011-12 2012-2013 100 118.33 143.05 Operating Profit 180.08 195.85

Fig.-4.13 Above graph shown the operating profit of chocolate industry of five year. The operating profit of the industry is increase 195.85 in 2008-09 to 2012-13.

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4.4.7 Total Income Table 4.14 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average 2008-09 24.23 1,664.98 4,392.68 169.9 6251.79 1562.95 100 2009-10 28.48 1,932.33 5,175.83 190.41 7327.05 1831.76 117.2 2010-11 31.12 2,616.92 6,380.33 169.26 9197.63 2299.41 147.12 2011-12 40.37 3,498.63 7,589.99 282.73 11411.72 2852.93 182.53 2012-2013 55.03 4,175.95 8,457.58 298.95 12987.51 3246.88 207.74

Total Income
250 200 150 100 50 0 2008-09 2009-10 2010-11 2011-12 2012-2013 100 117.2 147.12 Total Income 182.53 207.74

Fig.-4.14 Above graph shown the total income of chocolate industry of five year. The total income of the industry is increase 207.74 in 2008-09 to 2012-13.

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4.4.8 Total Expenses Table 4.15 Particular Lotus Chocolate Company Ltd Cadbury India Ltd Nestle India Ltd Lotte India Corporation Ltd Total Average 2008-09 22.13 1,421.41 3,525.86 163.78 5133.18 1283.3 100 2009-10 25.76 1,650.91 4,146.18 180.58 6003.43 1500.86 116.60 2010-11 28.95 2,303.06 5,106.39 159.06 7597.46 1899.37 148 2011-12 43.85 3,050.53 6,043.63 259.35 9397.36 2349.34 183.07 2012-2013 54.81 3,724.69 6,601.21 275.03 10655.74 2663.94 207.59

Total Expenses
250 200 150 100 50 0 2008-09 2009-10 2010-11 2011-12 2012-2013 100 116.6 148 Total Expenses 207.59 183.07

Fig.-4.15 Above graph shown the total expenses of chocolate industry of five year. The total expenses of the industry is increase 207.59 in 2008-09 to 2012-13.

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CHATER 5 Business Plan

5.1 Business Plan for Chocolate Industry

Blueberry Chocolate
Bhavsar Meghal K. Bhojak Keyur B. Gadhvi Hiren B. Goswami Hardip P. Joshi Naiya G. Patel Jignesh D. 12044311004 12044311005 12044311022 12044311028 12044311035 12044311095 (IBM) (Marketing) (HR) (Marketing) (HR) (Finance)

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5.2 Executive Summary

We are starting a business of manufacturing chocolates. Name of the company is Blueberry Chocolate. Our target market is whole Gujarat. The customers to whom our products will be supplied are retailers, wholesalers and traders in Gandhidham, Adipur, Rajkot, Ahmedabad, Surat and Vadodara. The location of our manufacturing plant would be GIDC, Adipur. We would be targeting the consumers of all age groups. The products that we would offer are: Blueberry Plain Chocolate Blueberry Milk Chocolate Blueberry Fruit N Nut Chocolate The core competencies on which our company would be competing are taste and quality of our chocolates. Our company would be a partnership firm. There would be 2 finance managers, 2 marketing managers, 1 accountant and 1 general manager as part of the organization.

5.3 General Company Description

Our company will be in the confectionary business. Our company will be involved in manufacturing of chocolates. Vision Our vision is to be the leading manufacturer of chocolates all over India. Mission We seek to produce high quality products at competitive price using modern technology to provide high satisfaction to the consumers.

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Objectives To manufacture and provide the customers with the quality products to the best interest of the customers. To create Price competitive Products as part of the effect to increase the world access to high quality chocolates. To ensure a hygiene & clean working environment as to continue to produce Safe & Tasty Products To strive to Meet & Exceed Customer's Expectations so as to ensure a sustainable business relationship. Target Market Upper class Middle class Lower middle class All age groups About Chocolate Industry The chocolate market is estimated around 33,000 tonnes valued at approximately Rs. 8 billion. Bars of molded chocolates like Amul, milk chocolate, dairy milk, truffle, nestle premium, and nestle milky bar comprise the largest segment, accounting for 37% of the total market in terms of volume. To push sales chocolate companies have been targeting mainly adult audiences. Chocolates are being presented as snack food for the new target audiences. The chocolate segment is characterized by high volumes, huge expenses on advertising, low margins, and price sensitivity Cadbury is the leading player in the chocolate market industry with the penetration of 70% market share. The company's brands like Five Star, Gems, clairs, Perk, and Dairy Milk are leaders in their segments. Nestle & Amul are the other major players in chocolate industry. Chocolate industry is growing at steady growth rate of 25%. Over 70% of the consumption of chocolates takes place in the urban market. It is price sensitive market.

Until early 90's, Cadbury had a market share of over 80 %, but its party was spoiled when Nestle
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appeared on the scene. The other one has introduced its international brands in the country (Kit Kat, Lions), and now commands approximately 15% market share. The two companies operating in the segment are Gujarat Co-operative Milk Marketing Federation (GCMMF) and Central Areca nut and Cocoa Manufactures and Processors Co-operation (CAMPCO). Competition in the segment will soon get keener as overseas chocolate giants Hershey's and Mars consolidate to grab a bite of the Indian chocolate pie. Indian Chocolate Industrys Margin range between 10 and 20%, depending on the price point at which the product is placed. The input costs in India are under check owing to the 24% decline in the prices of sugar.

Core Competencies The core competencies on which our company will compete are: Taste By consuming the Blueberry Chocolates flavor begins to fill your mouth the moment the chocolate begins to melt on your tongue like butter and it tastes like pure chocolate rather than cocoa powder. At first there is so much pleasure in tasting the chocolate, it may be difficult to focus on the specifics of flavor. First perception the consumer would describe for the chocolate as chocolaty and Yummy & crunchy. Quality The raw ingredients are of finest quality and also care is taken of the production process; roasting and crushing the cocoa beans and mixing the cocoa paste with sugar and other ingredients such as milk. Blueberry chocolates are high quality chocolates as they are shiny brown, breaks cleanly and is smooth. Blueberry chocolates has the sufficient quantities of cocoa butter and vegetable fat so that it does not become greasy or sticky at ambient room temperature. Ownership Our company will be a partnership firm.

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5.4 Competitor Analysis COMPANY FOUNDED IN BRAND PORTFOLIO (confectionery products) Nestle Ferrero 1860s 1940s Kit Kat, Smarties, Wonka Rocher, Raffaello, Kinder, Tic Tac, Mon Cheri, Nutella Mars 1911 Bounty, Galaxy, Mars, Snickers, Milky Way, Wrigleys, M&Ms etc Amul Hersheys 1945 1894 Milk chocolate, Fruit & Nut chocolate Hersheys milk chocolate, Kisses, Pot of gold, Milk duds, Reeses,

Icebreakers etc Perfetti Melle Van 2001, when Perfetti Alpenliebe, and Van Chlormint, Centerfresh,

melle Happydent, Mentos

merged ITC 2002(confectionery Minto and Candyman segment) Parle 1929 Melody, mango bite, poppins, kismi toffee, mazelo, xhale, clair, golgappa, parle lites, orange candy Cadbury 1948 Market) (Indian Dairy Milk, Dairy Milk fruit N nut, Dairy Milk Shots, Dairy Milk Roasted Almond, Dairy Milk Silk

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Our Products Our company will be dealing in the manufacturing of 3 products. They are: 1. Milk Chocolate 2. Fruit & Nut Chocolate 3. Plain Chocolate Ingredients of Milk Chocolate Sugar, Full Cream Milk Powder, Vegetable Fat, Emulsifiers, Flavors, Whole Cows Milk, Cocoa Butter. Recipe for milk chocolate Take one cup of powdered sugar, one cup of milk powder. One heaped table spoon of cocoa powder, about half table spoon of butter, and to this add the minimum quantity of water required to make a thick batter. Place this batter on a stove and bring to a boil on a low flame. When the batter becomes thick (shown in the clip) stop the boiling, cool. Pour into suitable moulds, cut, cool in a fridge and it gets ready. Ingredients of Fruit & Nut Sugar, Full Cream Milk Powder, Raisins, Cocoa Butter, Cocoa Mass, Almonds, Vegetable Fat, Emulsifiers, Flavors. Recipe for fruit & nut chocolate First take whatever moulds you like and grease it with butter. Set this aside for a moment. Melt the chocolate either in double boiler method or in a microwave. Remove it and set aside. Chop up all your nuts and dried fruits. Add it to the chocolate and mix well. Take a spoonful of this and fill your prepared mould and put it in the deep freeze for 1 hour. Unmold it and keep it in the fridge until serving.
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Ingredients of Plain Chocolate Sugar, Full Cream Milk Powder, Cocoa Butter, Cocoa Mass, Vegetable Fat, Emulsifiers, Flavors. Recipe for plain chocolate Combine cocoa and sugar and blend until all lumps of cocoa are gone. Add water and salt and mix well. Cook over medium heat, bringing it to a boil. Keep boiling until thick, stirring to keep from overflowing. Remove from heat and let cool. When cool, add vanilla. Then put this in your milk, just like the store bought stuff.

5.5 Marketing Plan

Economics Total size of chocolate market is 33000 tones Trends in Consumer Preferences The range and variety of chocolates available in malls seems to be growing day by day, which leads to lot of impulse sales for chocolates companies. Chocolates which use to be unaffordable is now considered mid-priced. Branded chocolates have become more popular. Mithai is becoming the substitute of chocolates Instead of buying sweets on Rakhshabhandan, Diwali, people prefer to buy chocolates. Barriers to entry Huge startup costs Ensuring good quality products to the customers High Level of competition from the well established brands To keep price of the product low, as it is a price sensitive market
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Overcoming the barriers to entry To overcome the barrier of huge start up costs our machinery would be taken for lease for first few years of business. Marketing of our products would be on the basis good quality and healthy products to provide a competitive advantage. From customers point of view, chocolate is the product which shows their impulse buying behavior. Customers are looking for low priced chocolates and also it should have good taste.

5.6 Features and benefits

Milk chocolate Milk chocolate is a stimulator, to the brain, to the emotions, thus, increases your stamina. Milk chocolate is high in vitamins B1, B2, D and E. It also contains potassium and magnesium. Milk chocolate contains antioxidants that boost the immune system. Fruit N Nut chocolate Almonds help in the creation of new blood cells, hemoglobin and help in proper functioning of vital organs of the body. Almonds also help in weight loss, lowering blood pressure, reduction in risk of recurrent coronary heart disease, solving constipation, etc. Raisin helps in digestion problems, acidity or constipation problems. Raisins contain considerable amount of iron Cashew nuts provide protein and fiber to body. Cashews have no cholesterol. Cashews contain healthy monounsaturated fat that promotes good cardiovascular health.

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Plain chocolate Chocolate contains essential trace elements and nutrients such as iron, calcium and potassium, and vitamins A. B1, C, D, and E. Cocoa is also the highest natural source for Magnesium. The high Magnesium content of Chocolate is beneficial for the Cardiovascular System and hypertension. Cancer Fighter High in Antioxidants Cocoa contains flavones, a type of flavonoid that is only found in cocoa and chocolate.

Customers (Wholesalers and Retailers) Anil Provision Store 166 Dbz-North Sector, AryaSamaj Road, ZandaChowk, Gandhidham, Gandhidham 370201 Rajani Provision Stores Vidhyanagar Main Road, Virani Chowk, Opp. Dr. Sanjay Gadre, Virani Chowk, Rajkot - 360002 Gayatri General Provision Stores Amrut Shopping Centre, Kevdawadi Main Road, Kevdawadi, Rajkot 360002 Jatin Provision Stores 6, Nityanand Apartment, Ellisbridge, Near Pritamnagar Akhada, Ellisbridge, Ahmedabad, Gujarat 380006 Narayan Department Store Khodiyar Chowk, Ram Nagar, Sabarmati, Ahmedabad, Gujarat 380005 Madhur Super Market ZodiacSquare,Bodakdev,Ahmedabad Dhirajsons Toyshop Mega Store, Near Chowpati, Athwa Gate, Athwa Gate, Surat

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 Sahaj Super Store Jain Wadi, Surat, Gujarat 395009 Ashok Provision Store Shop No:n -16, Main Bazar, Gandhidham, Gandhidham 370201 Pankaj Provision Store Shop No1, Lilasha Nagar, 12c Plo No: 637, Gandhidham, Gandhidham 370201 Chamunda Provision Store Gondal Road, Hasanvadi-4, Hasanwadi, Rajkot - 360002 Gujarat Provision Store C-72, Main Bazaar, Gandhidham- 370201 Yogeshwar Provision Store Dbz - N -No :1, Khanna Market, Gandhidham, Gandhidham 370201 Dairy King Plot No 117, Plaza Corner, Oslo Circle, Gandhidham, Gandhidham 370201 Signature Zanda Chowk, Gandhidham - 370201 Kavita Provision Store Maitri Road, Adipur 370205

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Competitors Amul Nestle Cadbury Kent

Niche Our niche market would be the children and young generation as chocolate is mostly liked by children and youngsters. Marketing strategy for niche market Attractive packing: Our Company will focus on packaging to attract children. Good quality and healthy chocolates are the factors on which marketing will be done. Promotion Local news paper Local TV channel Local radio Station Hoardings in Adipur and Gandhidham Through pages and account on Social Networking Sites (Facebook & Twitter) Distribution channels Our products would be distributed through channels like wholesalers, retailers and our own sales force. Proposed Location For our business, the proposed location would be in GIDC, Gandhidham.

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5.7 Operational Plan

Production The product will be manufactured by Full Automatic Chocolate Production Line (QH200), with this system, baking the moulds, depositing, forming etc. series procedure can be achieved automatically. It's available to depositing all shape of chocolate. Such as double color filled-inside, nuts etc chocolate. Since our product are plain as well as nut are added this machine is appropriate. This machine can produce 100-300 kg chocolates per hour. It can produce chocolates in different shapes .It can help to reduce cost of chocolates mould. By Producing Chocolates in different shapes we can attract all segments of market. The production capacity is fully automated as mentioned above, so the need of personnel is comparative less than other semi-automatic machine.

5.8 Manufacturing process

Chocolate production is highly sophisticated computer controlled process with much of the new specialist machinery. Machines like as chocolate cooling tunnels, enrobing machines, coating machines, molding machines.

Cleaning

Roasting

Grinding

Cocoa processing

Cooling

Tempering & molding

Conching

Mixing & Refining

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Chocolate processing: Production flow of chocolate Cleaning When seeds arrive to factory they are carefully selected and cleaned by passing through a bean cleaning machine that removes extraneous materials. Different bean varieties are blended to produce the typical flavor of chocolate of particular producer. Then the bean shells are cracked and removed. Crushed cocoa beans are called nibs. Roasting The beans are then roasted to develop the characteristic chocolate flavor of the bean in large rotary cylinders. The roasting lasts from 30 minutes to 2 hours at very high temperatures. The bean colour changes to a rich brown and the aroma of chocolate comes through. Grinding The roasted nibs are milled through a process that liquefies the cocoa butter in the nibs and forms cocoa mass (or paste). This liquid mass has dark brown colour, typical strong smell and flavor and contains about 54% of cocoa butter. Cocoa Pressing Part of cocoa mass is fed into the cocoa press which hydraulically squeezes a portion of the cocoa butter from the cocoa mass, leaving "cocoa cakes". The cocoa butter is used in the manufacture of chocolates; the remaining cakes of cocoa solids are pulverized into cocoa powders. Mixing and Refining Ingredients, like cocoa mass, sugar, cocoa butter, flavorings and powdered or condensed milk for milk chocolate are blended in mixers to a paste with the consistency of dough for refining. Chocolate refiners, a set of rollers, crush the paste into flakes that are significantly reduced in size. This step is critical in determining how smooth chocolate is when eaten. Conching Conching is a flavour development process during which the chocolate is put under constant agitation. The conching machines, called "conches", have large paddles that sweep back and
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forth through the refined chocolate mass anywhere from a few hours to several days. Conching reduces moisture, drives off any lingering acidic flavors and coats each particle of chocolate with a layer of cocoa butter. The resulting chocolate has a smoother, mellower flavor. Tempering and Molding The chocolate then undergoes a tempering melting and cooling process that creates small, stable cocoa butter crystals in the fluid chocolate mass and is deposited into moulds of different forms. Properly tempered chocolate will result in a finished product that has a glossy, smooth appearance. Cooling The moulded chocolate enters controlled cooling tunnels to solidify the pieces. Depending on the size of the chocolate pieces, the cooling cycle takes between 20 minutes to two hours. From the cooling tunnels, the chocolate is packaged for delivery to retailers and ultimately into the hands of consumers. Location Our manufacturing unit will be located in Adipur. Kandla Port and Mundra Port are also near to Adipur so it also helps in future, if we want Chocolates to be exported. Labour is easily available since there are many such labour contractor available in Gandhidham. We will get skilled and unskilled labour as per our need. Technical people are also available easily to monitor the quality and consistency of our product.

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Legal formalities: We could get DIN (Director Identification Number) which is printed, signed, and sent to Ministry of Corporate Affairs. Get a TAN (Tax Account Number) for income taxes from Income Tax Departments Assessing Office. We must be registered Enroll with Establishment Act (State/Municipal), Shops, and Office of Inspector. We should also get food process order certificate from ministry of food processing industries and also doing as business certificate required for our chocolate industry. Personnel The machine is fully automatic so need of personnel is less. We need skilled worker for packaging and storage of our product. There would be a need of professional for checking and maintaining the quality of product. Inventory The basic raw material required for making chocolate is Sugar, Full Cream Milk Powder, Cocoa Butter, Cocoa Mass, Vegetable Fat, Emulsifiers, and Flavors.

Suppliers For Milk Powder:

Aditya Enterprises Mr. Abhay Near Jain Mandir, Kolhapur, Maharashtra, India - 416118 Phone: +91-230-2481402 Fax: +91-230-2481402 Mobile: +91-9011710691
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Email ID: adiraj3831@yahoo.com Web Site: http://www.adityaenterprisesindia.in

Sugar S-30: Payment Terms L/C Akhilendra Pratap Singh ASA PORTFOLIO PRIVATE LIMITED Place of Origin: Maharashtra Packaging: 50 KG Delivery Detail: Within 20 days from the receipt of Confirmed payment instruments

Butter & Vegetable Fat, Vegetable oil: Company Name: BABA CASEIN INTERNATIONAL Address: 108, Kabir Market, Hathi Khana Main Road Vadodara, Gujarat, India. Zip: 390006 Tel: +91- 265- 2432628 Mobile Phone: 9824048990 Fax: +91- 265- 2432628 Website: http://www.baba-group.com Contact Person: Mr. Ashwin Golani

Milk Powder, Whole Milk Powder, Skimmed Milk Powder, Dairy Whitener, Butter Company Name: VARSHNEY BHANDU FOODS PVT LTD Address: 388 / 3, 1st Floor, Upper Side on Pratap Ghee, Main Road, Khari Baoli New Delhi Delhi India
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Zip: 110006 Tel: 91- 11- 23973674 Mobile Phone: 9810120977 Fax: 91- 11- 23973674 Website: http://www.meerapremium.com Contact Person: Mr. Anoop Kumar Varshney

Cocoa Powder & Soya Leicithin: AkhilHealthcare Private Limited-Mr.ManojShah (Managing Director) No. 205/206, B. B. C. Tower, Opposite World Trade Center, Sayajigunj, Vadodara - 390 020, Gujarat, India.

Management and organization

Company Name: Owner Partners: General Manager:

Blue Berry Chocolates. Shilesh Vyash Mr.Nitesh Kadam

Job Description: Increasing management's effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers Communicating values, strategies, and objectives; assigning accountabilities Accomplishes subsidiary objectives by establishing plans, budgets, and results measurements; allocating resources; reviewing progress; making mid-course corrections. Maintains quality service by establishing and enforcing organization standards. Contributes to team effort by accomplishing related results as needed.

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Finance Managers: Divya Dhawani Rinku Salat Job Description: providing and interpreting financial information; monitoring and interpreting cash flows and predicting future trends; developing financial management mechanisms that minimize financial risk; conducting reviews and evaluations for cost-reduction opportunities; managing a company's financial accounting, monitoring and reporting systems; liaising with auditors to ensure annual monitoring is carried out; managing budgets; arranging new sources of finance for a company's debt facilities; Marketing Managers: Jay Pujara Nikunj Gajara Job Description:

manage and coordinate all marketing, advertising and promotional staff and activities conduct market research to determine market requirements for existing and future products

analysis of customer research, current market conditions and competitor information develop and implement marketing plans and projects for new and existing products manage the productivity of the marketing plans and projects monitor, review and report on all marketing activity and results determine and manage the marketing budget deliver marketing activity within agreed budget develop pricing strategy deal with media and advertising

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Accountant: Rinku Salat Job Description: compile and analyze financial information to prepare financial statements including monthly and annual accounts ensure financial records are maintained in compliance with accepted policies and procedures ensure all financial reporting deadlines are met prepare financial management reports resolve accounting discrepancies and irregularities monitor and support taxation issues develop and maintain financial data bases financial audit preparation and coordinate the audit process ensure accurate and appropriate recording and analysis of revenues and expenses analyze and advise on business operations including revenue and expenditure trends, financial commitments and future revenues analyze financial information to recommend or develop efficient use of resources and procedures, provide strategic recommendations and maintain solutions to business and financial problems

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5.9 Financial analysis

Price Working days / years Raw material cost Cost of power Wage and salary Factory overhead Administration expenses Selling expenses Loan amortization Income-tax rate Preliminary expense. Written off Rent 1. Building 2. Machinery Rate of interest on loan amortization 15 Rs. 315 Days 48 % of Sales 5 % of Sales 10 % of Sales 50000 for first year then increase by 2 %. 4 % of Sales 4.5 % of Sales 5 equal Installment / year 30 % 5 equal Installment / year 55000 / month 130000 / month 13.75 %

5.9.1 Loan amortization

YEAR 1 2 3 4 5 A Outstanding beginning 40,00,000 33,91,855 27,00,091 19,13,209 10,18,130 B Interest (13.75 %) 5,50,000 4,66,380 3,71,262 2,63,066 1,39,993 C Payment (EAI) 11,58,145 11,58,145 11,58,145 11,58,145 11,58,145 D= (C-B) Capital Recovery 6,08,145 6,91,765 7,86,882 8,95,078 10,18,152 E= (A-D) Outstanding Ending 33,91,855 27,00,091 19,13,209 10,18,130 -22

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5.9.2 Profit & Loss Account

Particular Selling per day (Unit) Install capacity (Unit/Year) Production (Unit/Year) Capacity Utilization Sales Realization Cost of production Raw material Power Wage & salary Factory overhead Administration & selling expenses Administration expenses Selling expenses Rent Gross profit before interest Total financial expenses Interest on term loan Operating profit Preliminary expense Written off Profit & loss before tax Provision for tax Net profit EBIT

1st Year 2000 19,00,000 6,33,333 60 % 94,50,000 45,36,000 4,72,500 9,45,000 50,000 3,78,000 4,25,250 22,20,000 4,23,250 5,50,000 -1,26,750 40,000 -1,66,750 0 -1,66,750 3,83,250

2nd Year 2480 19,00,000 760000 70 %

3rd Year 2960 19,00,000 8,86,667 80 %

4th Year 3440 19,00,000 1013334 85 % 1,62,54,000 78,01,920 8,12,700 16,25,400 53,060.4 6,50,160 7,31,430 22,20,000 23,59,329.6 2,63,066 20,96,263.6 40,000 20,56,263.6 6,16,879.08

5th Year 3440 19,00,000 1013334 85 % 1,62,54,000 78,01,920 8,12,700 16,25,400 54,121.61 6,50,160 7,31,430 22,20,000 23,58,268.39 1,39,993 22,18,275.39 40,000 21,78,275.39 6,53,482.617

1,17,18,000 1,39,86,000 56,24,640 5,85,900 11,71,800 51,000 4,68,720 5,27,310 22,20,000 10,68,630 4,66,380 6,02,250 40,000 5,62,250 1,68,675 3,93,575 10,28,630 67,13,280 6,99,300 13,98,600 52,020 5,59,440 6,29,370 22,20,000 17,13,990 3,71,262 13,42,728 40,000 13,02,728 3,90,818.4 9,11,909.6 16,73,990

14,39,384.52 15,24,792.773 23,19,329.6 23,18,268.39

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5.9.3 Balance sheet

Particulars

At the End of Period. 30,00,000

1st Year

2nd Year

3rd Year

4th Year

5th Year

Liability
Owners fund Net Profit Secured loan Term loan Total 30,00,000 30,00,000 -1,66,750 3,93,575 33,91,855 27,00,091 30,00,000 9,11,909.6 19,13,290 30,00,000 30,00,000 14,39,384.52 15,24,792.77 10,18,130 -22

40,00,000 70,00,000

62,25,105 60,93,666 58,25,199.6 54,57,514.52 45,24,770.77

Asset
Loan & advances Assets Current Assets Raw materials Stock in process Finish goods Cash & bank balance Misc. Expenditure losses Preliminary expenses Total & 2,00,000 70,00,000 1,60,000 1,20,000 80,000 40,000 0

60,50,000

48,40,000 36,30,000

24,20,000

12,10,000

7,50,000

2,24,600 1,56,000 1,89,607 6,54,898

3,45,000 4,15,000 4,85,000 4,85,000 2,98,000 3,05,409 3,15,409 3,15,409 2,60,000 3,10,617 3,34,000 3,34,000 14,40,666 22,94,173.6 30,73,105.52 33,90,361.77

62,25,105 60,93,666 58,25,199.6 54,57,514.52 45,24,770.77

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5.9.4Cash Flow Statement

Particular Period 1st Year 2nd Year Source of Fund Owners fund 30,00,000 EBIT 3,83,250 10,28,630 Preliminary 40,000 40,000 expense Increase in long 40,00,000 term loan Decrease in loan & 12,10,000 12,10,000 Advances Total (A) 70,00,000 16,33,250 22,78,630

3rd Year

4th Year

5th Year

16,73,990 40,000

23,19,329.6 40,000

23,18,268.39 40,000

12,10,000

12,10,000

12,10,000

29,23,990

35,69,329.6

35,68,268.39

Capital expenditure 60,50,000 for the project Increase in working capital Preliminary 2,00,000 expense Repayment of long term loan Interest on term loan Tax (30 %) Total (B) Opening balance of cash in hand & at bank Net surplus deficit (A-B) Closing balance of cash In hand 6250000 0

5,70,207

3,32,793

1,28,026

1,03,383

6,08,145 5,50,000 0

8,18,716 4,66,380 1,68,675

13,77,999 3,71,262 3,90,818.4

19,58,396 2,63,066 6,16,879.08

21,56,625 1,39,993 6,53,482.617

17,28,352 17,86,564 22,68,105.4 29,41,724.08 29,50,100.617 750000 6,54,898 11,46,964 18,02,848.4 24,30,453.92

750000 750000

-95,102 6,54,898

4,92,066

6,55,884.4

6,27,605.52

6,18,167.77 30,48,621.69

11,46,964 18,02,848.4 24,30,453.92

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CHAPTER 6 CONCLUSION

India is recognized as a biggest and fastest growing market in the world for chocolate growing at 18 to 20% every year. So all the countries are looking at Indian chocolate industry markets for exports. India may also get some advantage in this situation as there are subsidies given by government of India. At present India, have negligible exports to international markets. These are at present are dominated by European Union, New Zealand, Australia and America. Both public and private sector have contributed to the chocolate industry growth in India. From the financial analysis of the industry we can see that the profitability of industry is increasing year of years, and investments in current and fixed assets are also increasing. In line with the same we may conclude that the industry is growing and hence provide attractive outlook to enter.

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CHAPTER 7 BIBLIOGRAPHY
Books:

Crafting and Executing Strategy: The Quest for Competitive Advantage by Thompson
II, Strickland, Gamble and Jain; McGraw Hill Publication, Latest Edition. (TSG) Kotler, Philip. "Marketing Management" Analysis, Planning, Implementation, and Control Prentice-Hall, Inc. Eighth Edition

Websites: Search Engine: www.google.co.in Other Sites:

www.lotuschocowww.cadburyindia.com/ www.nestle.in/late.com/companyoverview.html www.lotteindia.com/ http://www.amul.com/ www.indianmirror.com/indian-industries/chocolate.html http://www.nestle.in/aboutus/Pages/AllAboutNestl%C3%A9.aspx

http://www.indiainfoline.com/Markets/Company/Fundamentals/Balance-Sheet/Cadbury-IndiaLtd/500793 http://www.indiainfoline.com/Markets/Company/Fundamentals/Profit-Loss/Cadbury-IndiaLtd/500793 http://www.indiainfoline.com/Markets/Company/Fundamentals/Balance-Sheet/Nestle-IndiaLtd/500790 http://www.indiainfoline.com/Markets/Company/Fundamentals/Profit-Loss/Nestle-IndiaLtd/500790 81 | P a g e

http://www.indiainfoline.com/Markets/Company/Fundamentals/Balance-Sheet/Lotus-ChocolateCompany-Ltd/523475 http://www.indiainfoline.com/Markets/Company/Fundamentals/Profit-Loss/Lotus-ChocolateCompany-Ltd/523475 http://www.indiainfoline.com/Markets/Company/Fundamentals/Key-Ratios/Cadbury-IndiaLtd/500793 http://www.indiainfoline.com/Markets/Company/Fundamentals/Key-Ratios/Nestle-IndiaLtd/500790 http://www.indiainfoline.com/Markets/Company/Fundamentals/Key-Ratios/Lotus-ChocolateCompany-Ltd/523475

www.capitaline.com

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