UNIBIC

CHAPTER 2

COMPANY PROFILE

UNIBIC India was incorporated in August 2004 to produce world class biscuits in a niche,
unique and premium segment.

UNIBIC Australia is a niche player in the Australian biscuit market and has been in business for
over 40 years. UNIBIC Australia markets under a licensing arrangement with RSL (Returned
Service Men League). Brands like ANZAC have iconic status as well as significant equity and
historical association in Australia and New Zealand.

UNIBIC Australia has a range of over 40 products including specialty Australian and European
cookies, center filled products and niche products like Weight Watchers (under a joint venture
agreement with Weight Watchers of USA).

UNIBIC in Australia does things which are different from the main line manufacturers and does
not compete on price. Its reason for being is to produce niche, unique and premium products. It
also works under licensing arrangements in order to leverage existing brand equity.

UNIBIC India has its factory and infrastructure in Bangalore with state-of-the-art machines from
Italy. It is the first biscuit company to have put up a “wire cutting” technology which provides
superior quality products and is the only method available to make real cookie. This has been
done to create quality products as well as to build in a structural competitive advantage. The
Company has also installed equipment and packaging machinery for exports, which are both
captive as well as strategic partners, will require world approved standards.

HACCP (Hazard Analysis and Critical Control Point) certification has been done and recently
they have obtained BRC (British Retailers Consortium) certification.

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The Company has a threefold strategy to provide World class product at affordable prices
to keep our customers delighted.

1. To manufacture and market the best quality products in the Indian consumer market with
emphasis on major towns and organized trade. The company has launched Chocolate Chip
cookies (Bradman), Oatmeal Cookies (ANZAC), Butter, Butter Cashew, Choconut and Jamz
Cookies. The company has focused on its distribution and sales effort Pan India across Modern
Retail, Traditional Trade and Institution. We are present in more than 1,00,000 outlets and have
extensive coverage across all channels all over India. Unibic proposes to launch specialty health
products (Sugar free) and milk cookies.

2. To build strategic alliances by building specialized products with competitive advantages.

Unibic India has entered into an exclusive agreement with Café Coffee Day to produce coffee
accompaniment cookies. The company is also considering such offers from other Branded Chain
stores.

3. Exports: Exports are a major plan for the Company. UNIBIC India has relationships in major
markets particularly Australia, New Zealand, UK and US. They are already marketing their
products in those countries through their super market chains. This has provided an excellent
platform for UNIBIC India to get market access for a range of products to be produced from
India. These include assortment packs as well as potion packs. UNIBIC India is also exporting to
Middle East and South East Asia. UNIBIC India has a complete range of gifting packs which
will be packed in tins for festivals such as Diwali, Christmas etc. People are looking for
affordable good quality, healthy and long shelf life products. The Company intends using
celebration packs to promote the corporate gift segment in Industries like Pharmaceuticals and
those who gift both to their employees and business associate.

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Cookies and biscuit

Most people confuse cookies with biscuits. The truth is when it comes to Cookies and biscuits,
there really isn’t much to compare. Cookies are softer and tastier than traditional biscuits.
Cookies use wire cut technology that allow them to have a soft and chewy texture. Biscuits on
the other hand, due the high compression of the dough piece in between the rubber roller and the
die roll cavity, give a denser texture. When it comes to chocolate chips and fruit ingredients,
cookies allow the inclusions to embed themselves in the midst of the rich dough, to give fantastic
flavor and taste. Biscuits on the other hand, run a risk of burning the inclusions while baking,
which is why most ingredients end up on the bottom of the biscuit. No matter how you look at it
nothing comes close to enjoying a perfect cookie.

Unibic and society

Australian and New Zealand soldiers during World War 1 displayed courage & determination
which earned them the highest respect. A spirit existed which bound them, built around the
desire to look after each other. This became known as the Anzac spirit. Meanwhile at homes,
mothers and wives of the soldiers were busy making cookies to send to the war front to raise
the morale of their men.

The Anzac Cookies- as they became known proved very popular among the soldiers as well as at
home where they were sold to raise money for the Red Cross in support of the war veterans.
These cookies became an institution and in conjunction with Unibic are sold in Australia, NZ,
UK and USA. So Unibic are proud to bring Australia’s favorite cookies to India in support of
India’s Jawans.

Each time you buy a packet of Unibic ANZAC cookies, money is being raised to provide
support to India’s war widows, as well as the Indian JAWANS who risk their lives for us
every day. UNIBIC donates 3% of sales for the support of Indian veterans.

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Industry Profile

Unibic Biscuits India, in which Unibic Australia has a majority stake, is not quite averse to
another takeover deal after an earlier bid by Marico was aborted because of valuation issues.

FOCUS ON NICHE SEGMENT

The takeover would have accelerated Unibic's growth trajectory, but for now the company does
not want to be ‘distracted by the takeover experience'. Instead, it wants to focus on building the
brand in a niche segment that is high on both the price and wellness factors.

“There is a vacant space here as there are no Indian players in this slot,” Mr Nikhil Sen, Unibic's
Managing Director told Business Line. The company was launched in 2004 and has brands such
as Chocolate Chip cookies (Bradman), Oatmeal Cookies (Anzac), Butter, Butter Cashew,
Choconut and Jamz Cookies.

Unibic Australia holds about 65 per cent stake in the Indian company and the rest is held by Mr
Sen and private equity investors. Marico's takeover attempt was to acquire an estimated 51 per
cent stake in Unibic.

The company is also considering a foray into other segments such as breakfast offerings on the
‘health' platform. Having strengthened the brand in the southern and western regions, the
company will now focus on the northern and eastern markets.

Mr Sen, “We'll never be a rural brand, and plan to be a national brand in 12-18 months and be
present in 21 markets across the country.” In June 2012

Early this year, Unibic launched its sugar-free range of cookies and is now ready to bring out a
range of sugar-free cream biscuits for diabetics.

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COOKIE-DRIVEN

Retail sales of the Unibic brand of cookies make up about 80 per cent of the company's revenues.
About 10 per cent of the revenues come from manufacturing cookies for the HORECA (hotels,
restaurants and catering) segment and for Food Bazaar (under the brand Tasty Treat) and the rest
is from exports.

DETAILS OF COMPANY

1 Location 51/1A, Heggadadevanapua Village, Huskur Road, Bangalore – 562

123.

2 Telephone no. +91 -80-23712008

3 Employees 180

4 Certificates HACCP (Hazard Analysis and Critical Control Point) & BRC
(British Retailers Consortium) certification.

5 Franchise Entire industry is set up in Bangalore only.

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INFRASTRUCTURAL FACILITIES

Unibic India Pvt Ltd has its corporate office at # 1134, “Shreram Nivas”, 5th Floor, 100 Feet
Road, H.A.L. 2nd Stage, Indiranagar, Bangalore – 560 038.

Its manufacturing unit is located at 51/1A, Heggadadevanapua Village, Huskur Road, Bangalore.

The manufacturing plant is made of different divisions viz.,

 Mixing division

 Oven

 Quality

 Cold storage

 warehousing

 Packaging Section

 Canteen.

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McKinney’s 7S frame work

1. STRATEGY:

The following are the strategies adopted by Unibic in accordance with the company principles:

 Launch all products under Unibic master brand

 Operate only in value added Foods market.

 Set up industry standards for Hygiene and food safety.

 Operate only in categories in a niche market.

2. STYLE:

Style is one of the seven levers which top managers can use to bring about Company change.
The style of the company becomes evident through the patterns of actions taken by member of
top management team over a period of time. The Company is following the participative and
social type of leadership in which all the level of managers interacts with each other for
achievement towards the goals and report to each other for achievement towards the goals and
report to the higher officials. Managers work together as team to solve today’s and tomorrow’s
problems in a significant manner. The Organizations style of management can be described as to
be participative in nature.

The reasons to support this are as follows:

 Whenever important decision is to be made, the whole staff is allowed to participate in

the decision making where by suggestions are sought and if found appropriate are
accepted and implemented.

 Top management communications with each and every one in the most modest way
being casuals at certain times.

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 The response from the entire staff is also the same, when everyone gets to know and
every happening then and there and this proves to be good relation with the top
management.

 The top management always encourages changes in the Organization provided they
happen to be always ready to cope with different situation.

 Each and every person is involved in the success of the Company and not just key person,
as Unibic Biscuits acclaims the efforts of the entire staff.

3. STRUCTURE:

Sub structure detailing with each functional discipline

Detailed study of various departments & their functions:

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PRODUCTION DEPARTMENT

Production and Operations

The manufacturing process involves various subsidiary operations like the processing of raw
materials, mixing, cooling and packaging. This process is carried out under the strict supervision
of Production head.

Procurement of Raw Material

The quality control starts from the purchase of quality raw materials. These raw materials are
directly purchased from the growers and original manufacturers. The packing materials and other
requirements are dealt directly with manufacturers to maintain the standard of quality and to
curtail the overhead costs.

Functions of Production Department

 To produce required quantity of products as per the order placed.

 To ensure that there is orderly flow of materials during the process of manufacturing.

 Scheduling and machine loading to ensure coordinated manufacturing and completion as

per production plan.

 Before the purchase of required material, the production department should inform the
store manager.

 The production manager should ensure that break down in any particular Machine should
not affect the whole process of production.

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MARKETING DEPARTMENT

Concept of Marketing

Marketing is more than a company department; it is an orderly and insightful process for
thinking about and planning for markets.

Marketing department functions with the coordination of other departments namely production,
finance and research and development. A marketer can rarely satisfy everyone in the market
therefore before marketing his products he has to start with market segmentation.

Salient Features of Marketing

 It is a creative function

 It promotes trade and employment wants

 There is an emphasis on what consumer wants

 The aim of marketing is to make selling superfluous

 There is an emphasis on what consumer wants

A Simple Marketing System

 Communication

 Goods / Services

 Money

 Information

Modern economics abound in markets. Sellers and buyers are connected by four flows. The
sellers send goods and services and communication to market in return they receive money and
information. The inner loop shows an exchange of money for goods and services the outer loop
shows an exchange of information
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UNIBIC

ADVERTISEMENT DEPARTMENT: This unit is mainly focused on the activity of

advertisements through media TV channels, pamphlets etc.

PERSONNEL DEPARTMENT

Responsibilities:

 To add in recruitment and selection of men for the appropriate job.

 To discuss and decide upon the grades of employee and to fix their wages.

 To have discussions with the unions of the company in and out of the court.

 To receive quarterly /monthly report from the departmental heads regarding performance
working under them.

 To finalise holidays after discussions with the unions.

DISPATCH DEPARTMENT

Dispatch department comes under marketing department and consists of one supervisor whose
function is as under:

As per order, job card is prepared and then the production process is carried out is carried out
and the product is ready. They are checked by the quality control and packed in the cartoon,
which contains all details and then printed on the box of each.

All these are then packed in a master cartoon and sealed with appropriate addresses.

All consignments are transported to their main office and from there are distributed to main
cities in India and abroad.
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Transport of products is through road and courier.

FINANCE DEPARTMENT

There exits an inseparable relationship between finance on the one hand and production,
marketing and other. Almost all kinds of business activities, directly or indirectly involve the use
of funds.

FUNCTIONS:

 They look after the overall financial requirement of the company.

 They see that a proper inflow and outflow of income and expenditure is maintained.

 Funds are allocated on priority bases and keeping in mind future long-term plans.

 It decides on the dividend or profit allocation decision.

 It has to decide the dividend or equity and debt.

 Liquidity is yet another important financial function.

4. SYSTEMS:

ERP software is being used in UNIBIC Pvt. ltd.

5. SKILLS:

RESPONSIBILITY AND AUTHORITY-The responsibilities of key personnel who manage,

perform and verify quality and food safety related activities are indicated clearly keeping in view
the main activity of each department. Their authorities are commensurate with the
responsibilities defined. Training schedules happen time to time for updating the employees
which are generally conducted by Knowledge and Talent management department.
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6. STAFF:

Present personnel strength at Unibic is above 150 people. Unibic’s aggressive growth strategy
suitably entails its people to succeed.

7. SHARED VALUES:

Excellence, Passion, Innovation, Inclusiveness and Openness.

Company SWOT Analysis

Strengths

 Good margin to Distributors and retailers.

 Best quality product in its range.
 Product Differentiation (Through better Ingredients contain).
 Wide Flavors in Unibic Cookies.
 Doing Corporate Social Responsibility (product like Bradman, oatmeal good example of
CSR).

Opportunities

 India as potential Market for cookies.

 Wide scope of product penetration
 Brand Promotion (e.g.,-promotion of CSR activities)

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Threats

 Parle, Britannia and Sunfeast.

 Lack of awareness.

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Flow Diagram for Manufacture of Cookies

Raw materials (Depends on product)

1st stage-Addition of sugar, Butter, SMP, Water 50%

2nd stage- Addition of wheat flour, chemical and water

3rd stage – Addition of chocolate chip/ oats / nuts (as per requirement)

Dough making

Collecting to trolley

Putting to passing conveyor

Wire cut hopper

Weight setting

Baking

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Cooling on conveyor

Metal detection

Putting in tray

Packing with metalized wrapper

Bulk packing in cartoon or Box

Storage & Distribution

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Materials & Ingredients

 Wheat Flour

 Rolled Oats

 Sugar and Syrups (Sucrose , Brown Sugar, Honey , Liquid Glucose)

 Fats & Oils (Butter , Margarine)

 Emulsifiers (Lecithin , Egg Powder)

 Dairy Product (SMP, Butter)

 Dried Fruit & Nuts (Black Current, Cashew, Almond)

 Flavor and Flavor enhancer (Vanillin, Caramel, Cocoa Powder)

 Non-nutrient Additives

a. Water

b. Common Salt

c. Sodium Bicarbonate

d. Ammonium Bicarbonate

e. Colorant (Annatto)

 Chocolate & Cocoa (Chocolate chips and Cocoa Powder)

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Production Process and Equipment

Bulk Handling

Bulk Handling contributes to improved efficiency, labor saving and maintaining the hygiene in
the cookies factories.

Flour is conveyed pneumatically. When drown from the silo the flour is sieved to separate lumps
and to remove any foreign particle. It is normal to have a return circuit arrangement to return the
excess of flour back to silo.

Sugar may be stored as a granular or fine powder. It is also pneumatically conveyed. Excess of
sugar is not returned to silo thus to avoid cracking and lumping.

Metering of Ingredients to Mixers

Various metering system with programmable logic controller (PLC) and electronic weighing
allows a much more scientific approach to mixing control and investigation of process
difficulties. It is metered automatically for bulk handling and manually for small ingredients.

Mixing

Mixing is a process of blending together of ingredients to form a uniform mass.

Mixing Method

The method generally used is the ‘Three stage method’

 Shortening (Butter, margarine), Milk powder (SMP), Sugars (Sucrose crystals),

Syrups (Liquid glucose), coconut powder, Biscuit powder, Brown Sugar,
Emulsifier (Lecithin).

 Sodium Bicarbonate, Ammonium Bicarbonate, salt with water.

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 Flour, Other cereals (oat) or chocolate chip or cashew.

What happens During Mixing?

Agitation or mechanical mixing facilitates the overcoming of surface tension developed at film
interface of flour and water. Thus resulting in greater surface area for absorption of water by the
flour. It also facilitates gluten complex formation result in unique property of dough formation.
This protein complex is a continuous three dimensional network of very fine threads and
distributed throughout the dough mass thus imparting elasticity, resilience and mouldability to
the dough.

The amount of water used determines the amount of gluten formed. The sorting added during
mixing controls the gluten formation and structure.

Mixing time and development of temperature must have an influence on the leavening agents.
Remove the dough from the mixer after completion of the mix.

Mixer

Horizontal type of mixer is used, which contains agitator for proper mixing.

Extruding and Depositing

Depositing is a form of extrusion so these two means of dough pieces forming are not distinct
from one another.

Wire cutting method is used to form pieces from more sticky dough and dough containing coarse
particle such as nuts or oat flakes, that cannot be successfully rotary moulded.

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Extruding and Depositing Machines

These machines basically consist of a hopper over a system of two rolls, which force the dough
into a pressure/balancing chamber, the rolls run continuously. Dough is extruded through a row
of dies and then a frame bearing a wire strikes across the base of the die holes cutting off the
extruded dough at intervals. These pieces then fall onto the conveyor.

Baking

It is a process of heating the moulded dough to a particular time and temperature combination
resulting in evolution of gases (CO, NH) and evaporation of water to give the product its
required body and texture.

Internal changes during Baking

 Heating of starch and protein resulting in selling, gelatinization and denaturation.

 Liberation of gases from leavening chemicals.

 Expansion of gas bubbles due to increase in temperature.

 Rapture and coalescence of some of this bubbles.

 Loss of water vapor from product surface followed by migration of moisture of the
surface.

 Increase of temperature with increase of sugar solution concentration.

 Reduction in consistency of sugar solution and fat with temperature.

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Baking in oven

The product is supported on a band which is usually a sheet of steel. The oven mainly consists of
three heating zones that produce following changes in dough.

1) First zone: Fat melts water gains temperature through conduction.

2) Second zone: Baking reaction, starch gelatinization, protein coagulation

and gaseous evolution.

3) Third zone: Maillard reaction.

Heating of cookies occur by all the three methods of conduction, convection and radiation. The
best heat transfer is through convection in the gases moved in the oven. As moisture evaporates
from the product and as cool air enters in the oven there is a rise in pressure in oven. To relieve
this pressure flues are there.

At the entrance if dough pieces and oven band are below the dew point of oven atmosphere then
condensation occurs. Due to condensation liberation of latent heat of evaporation occurs and
results in wet surface of the product. Heating by this is a beneficial to avoid crust hardening.

After dough has risen and structure has set heat is transferred rapidly to promote moisture
removal. Strong turbulence around the dough pieces is required to avoid premature coloration.

Oven atmosphere conditions are kept even across the width of the oven otherwise there may be
production of cookies with different thickness, shape and color.

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Cooling:

After coming out from oven the cookies are conveyed to the packaging table. The conveying
time is the time allowed for cooling. The cookies are allowed to cool naturally so that they not
only take up the particular size but also to protect it from moisture uptake from atmosphere.

There is appreciable loss of moisture during cooling and this is beneficial for cookies quality and
shelf life.

Packaging and Storage

Packaging is not only the contaminant of products but also maintaining its proper quality and
shelf life.

Functions of Package

 To protect the content against mechanical damage.

 To protect contents against gain or loss of moisture and foreign odor contamination.

 To prevent against rancidity.

 To protect against attack by insects, bacteria and other air borne contamination.

 To protect against U-V light causing color fading and flavor deterioration.

 The printing on packages specify legal requirements of the country in which it is sold.

 The package attracts potential buyers.

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Primary and Secondary Packages

The primary pack is the moisture proof unit which is to be offered for sale to the consumer.
Secondary packaging into groups of 10, 20 or more in boxes or cases is for ease of storage and
transportation.

Printed or unprinted wrapping material for primary packing is usually fed from reels and the
action of the wrapping machine may be intermittent or continuous. For packing HORIZONTAL
FLOW WRAP MACHINE is used.

Pack Weight

The average weight system states that over a given period the average net weight of the pack
must be as stated on the wrappers. Records must be kept to show how the weights varied
throughout the run but only samples need be checked not every packet.

Seal Qualities

Less protective wrapper is produced due to imperfect seals and perforations of the film by sharp
edges such as sugar crystals. Quick checks can be made of the seal performance by observations,
blowing through the folds to see if the pack inflates.

Pack Appearance

The customer is much influenced by the pack appearance. Any fault printing should not be
allowed to pass for sale as it suggests a casual approach to quality of the contents also.

Storage

Conditions of temperature and humidity are very important in cookies. Temperature fluctuation
causes fat migration, fat bloom, and rancidity problem. High humidity reduces strength of
cardboard cases and increases rate of moisture transmission. Thus, all parts of biscuit stores
should be dry and cool.

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Recycling, Handling and Disposal of waste materials

During cookies manufacture it is inevitable that there will be losses and wastages at all stage. It
is important that these factors are recognized, quantified and reduced as much as possible in the
interest of factory efficiency and costing.

Sources of Waste Materials

 Faulty mixing of dough which cannot be used.

 Cutter scrap from the end of run or that which is in excess of the quantity incorporated
with the fresh dough.

 Baked biscuit which are unsuitable quality due to over or under baking or misshapen.

 Broken biscuits.

 Good biscuits which have been imperfectly wrapped or from packs too light for sale.

 Wrapping material from damaged packs and bad printing.

 Various spillages on the floor or in accessible parts of the machine.

 Cleaning from the plant at the end of production run.

 Substances or contaminated ingredient stocks, dough and deteriorated biscuit.

Recycling

Incorporation of scrap dough is the biggest problem in the recycling programme. By every
means possible the amount of scrap dough to be recycled should be kept as low as possible and
where it is used it should be used as evenly as possible through mixes.

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CHAPTER 3

RESEARCH DESIGN

TITLE OF THE STUDY

“A STUDY ON PRODUCT DIVERSIFICATION AT UNIBIC BISCUITS INDIA PRIVATE

LIMITED.”

NEED FOR THE STUDY

Diversification mitigates risks in the event of an industry downturn and allows for more variety
and options of products and services. If done correctly, diversification provides a tremendous boost
to brand image and company profitability.

Diversification can be used as a defense. By diversifying products or services, a company can

protect itself from competing companies.

The diversification over the product line is another reason for the study which is to be made to find
out the level and area of diversification of the products.

STATEMENT OF THE PROBLEM

Entering an unknown market puts a significant risk on a company. Therefore, companies should
only pursue a diversification strategy when its current market demonstrates slow or stagnant future
opportunities for growth. In the case of a cash cow in a slow-growing market, diversification
allows the company to make use of surplus cash flows.
The overall product classified area and the diversified amount of product over the product line of
production with relation to increase in diversification is analyzed.

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OBJECTIVES OF THE STUDY

 To know the classification of the products at UNIBIC.

 To understand the present strategies in the company.
 To study and analyze the diversification implementation.
 The know the future perspective and growth through diversification.

LIMITATIONS OF THE STUDY

 The study is concise to only product diversification.

 The study is conducted with reference to only one unit.
 Period of the study is restricted to 45 days.
 No monetary terms are considered.
 Study does not provide actual diversification structure.

SAMPLING

SAMPLING TECHNIQUE: The technique used for the collection of data is simple Random
Sampling

SAMPLING FRAME: 100 Customers of the company

SAMPLING UNIT: Respondents Database

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SOURCES OF DATA

 PRIMARY DATA

It is also called as first handed information; the data is collected through the observation in the
organization and interview with officials. By asking question with the accounts and other persons
in the financial department.

 SECONDARY DATA

The secondary data have been collected through the various books, magazines & websites.

TOOLS FOR DATA COLLECTION

 Questionnaries
 Case Studies
 Interviews
 Observation

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REVIEW OF LITERATURE

In order to understand diversification concept, Ansoff (1957) defined diversification as the

entry into new markets with new products. However, several dimensions have been added to
the definition of diversification.

Dundas and Richardson (1980) defined diversification as markets differentiation and pursuing
of more than one target market. Amit and Livnat (1988) identified motives for diversification.
The study suggested that firms pursue diversification mainly because of financial motives.
Further, the diversification of business was viewed as a means of expanding the size of the
business, achieves an economy of scale in manufacturing, and thereby generates synergic
effects for overall operation of firms. Several studies on strategic management have examined
the relationship between diversification strategy and performance

(Schoar, 2002; Shen et al., 2011; Berger and Eli, 1995; Burgers et al., 2009). The resource-
based viewas reviewed by Chen and Yu (2011) posit that firms diversify their products to
exploit economies of scope in various resources including tangible and intangible resources.
Their findings further showed that exploitation of established capabilities via diversification
aided firms to pursue increased economic returns.

According to Amihud and Lev (1981), a diversification strategy is often employed by owner-
managers to reduce the risks related to employment and reputation, since they can decrease the
financial risk of firms by diversifying into unrelated activities. Chen and Yu (2011) observed
that increased performance of firms due to diversification occurs when the marginal benefits
are greater than the marginal costs of diversification.

Firms outperformed conglomerates across all categories of ownership identity. In a related

study conducted by Gonenc and Aybar (2006) weak evidence was found for a positive
relationship between group diversification and performance in Turkish industrial firms. This
implies that the performance of diversification strategies is hinged upon the performance of
the target industry.

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