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BUSINESS PLAN REPORT

ON

T@P India CHOCOLATE Pvt. Ltd.

In Partial fulfillment of

Requirements for the award of degree of

MASTER OF BUSINESS ADMINISTRATION (MBA)

Of MGM’S IOM, Aurangabad

Submitted by

TUSHAR N. CHOLE (MR13406)

PRERNA U. CHAVAN (HR13602)

AMOL G. DESHMUKH (FR13207

MBA [ IVth Sem.]

Under the guidance of

(Prof. Tusharkant Mishra)

MGM’s

Institute of Management (IOM)

CIDCO, Aurangabad

Uummm..

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DECLARATION

I, undersigned, hereby declare that the Business-Plan Report on “T@P India CHOCOLATE Pvt. Ltd.” at submitted by Tushar, Prerna and Amol to the MGM’s Institute of Management, CIDCO, Aurangabad. It is our original work & the conclusions drawn there in are based on the data & material collected by ourself.

Place: Aurangabad

Date:22/03/2014

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T@P India CHOCOLATE Pvt. Ltd.

E-70/32,Shendra MIDC, Aurangabad-431136

• Executive Summary:

We are starting a business of manufacturing chocolates. Our primary focus is locally manufacturing premium dark and milk chocolate, multigrain chocolate bar, liquid filled chocolate bar. Our target market is whole Maharashtra and premium chocolates are exported outside the country. The customers to whom our products will be supplied are retailers, wholesaler, trader in metro cities and local market. The location of our manufacturing plant is Shendra, MIDC Aurangabad.

We would be targeting the customer of children, middle age customers and our range of premium chocolates are only for adults.

• Uummm dark chocolates

• Uummm milk chocolates

• Uummm nutritious chocolate bar

• Uummm premium liquid filled chocolate bar

The core competencies on which our company would be competing are taste, quality and uniqueness of our chocolates. Our company would be partnership firm.The marketing, Finance and Operational plans are shown in further business plan.

The marketing of the product will be based on product strategy, price strategy, and promotion strategy. We also stated that who will be our target market, which kind of strategic position and risk assessment we have to done, what will be our marketing and sales planning in future and our competitor analysis. These all areas we try to cover in our business plan.

For the Financial plan we covered our sources of capital, partner’s contribution in capital, investment decision for future, break even analysis of our business for future, and what would be our taxation policies are specified further.

Human Resource Planning includes points like, our organization structure, employment, required man power and their salary/wage structure; also the recruitment policies are involved.

Finally in technical terms in operations department we describe about our plant location , details of our land requirement, plant layout, machineries used, production capacity of plant, our supply chain and quality control department.

At last but not the list this business plan is talk about all legal requirements like licensing, environmental clearances, and necessary laws. Also CSR activities and Community involvement.

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• II. Description of Business

The company would be located at,

Our corporate office would be located inShendra MIDC,Aurangabad, Maharashtra. From the next two years of firm establishment we have our branches in Maharashtra and then in future we are planning to open our branches to metro cities like Delhi, Kolkata, Mumbai and Chennai.

Our Company would be a partnership firm. Establishment of the firm includes three owner partners having equal participation and involvement in to the firm named as,

Mr. Tushar Chole (Managing Director, Marketing and promotion)

Mr.Amol Deshmukh (Chief Finance Officer)

Mrs. Prerna Chavan (Chief Executive Officer).

T@P Chocolate Limited,E-70/32, Shendra MIDC, Aurangabad, Maharashtra.

PIN Code -431136.

Contact number- 8149992273

Email ID – tapindia03@gmail.com

Fax - 0240587564

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We introduce the various ranges of chocolates including,

• Uummm dark chocolates

• Uummm milk chocolates

• Uummm nutritious chocolate bar

• Uummm premium liquid filled chocolate bar

• In the range of dark chocolate only rich cocoa and the percentage of the cocoa is more than other one. The research proves that dark chocolate is good for the heart patients.

• Our next type of chocolate that is milk chocolate contains more percentage of milk which contain nutritious and more percentage of Lactose in it.

• Nutritious bar is for those peoples who are more conscious about health and choosy. This chocolate bar contains almond, walnut, cashew which make this bar more nutritious, tasty and healthy.

• Liquid filled chocolate bar this is the premium range of chocolate bar which we are tends to export outside the country.

• The brand name would be T@P CHOCOLATES.

Our vision is “to be the leading chocolate brand at international level.”

Our mission is “We seek to produce high quality chocolate products at competitive price by modern technology to provide high satisfaction to the customer”

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III.Industry analysis and trendChocolate Industry in 2014 at a Glance

The chocolate industry offers a wide variety of opportunities for the small business owner weathers economic recession well and is growing despite increased health-consciousness and calorie counting. Growth will be driven by population growth as well as expansion into new markets, product innovation and rising disposable income levels leading to greater purchasing of premium offerings.

Chocolate is wildly popular for individual consumption, gift giving and celebrating. Due to the dominance of large-scale production dynasties, franchises and small businesses tend to focus on unique or specialty items or services. Unique chocolates may be from a region famous for a particular technique, baked on-site or offer a different take on tradition, while specialty services tend to focus on gift-packaging or delivery.

There are a number of trends within the chocolate industry that are driving growth; and product innovation in 2011 brought a 16% increase in new product releases over 2010. Increasing disposable incomes as well as changing public sentiments regarding health and our global community are the driving forces behind this growth in innovation.

Premium and specialty items have shown strong growth over the long-term. During the recession, there had been a shift away from premium items, but as the economy has continued to recover, sales of premium items have taken the lead again. High-end varieties can be baked on the premises, come from a renowned region or have a hidden secret recipe. Seasonal and boxed assorted chocolates have been experiencing the fastest growth, and sales are expected to expand 13% between 2012 and 2015.  Holidays, birthdays, retirement parties and more, chocolate is a versatile gift for many occasions.

Over the last several decades there has been increased understanding of what constitutes a healthy diet, and there has been a dramatic increase in sales of sugar free, reduced fat and reduced calorie offerings. Dark chocolate is known to lower both blood pressure and cholesterol, and has nearly 8 times the number of antioxidants as found in strawberries. A recent survey found that 35% of respondents believe dark chocolate to be healthier, and it shows: sales grew 9% in 2009 versus 3.6% for the chocolate industry as a whole.

Fair-trade certified chocolate is another fast growing segment of the market, where consumers pay a premium to ensure goods are produced in an ethical manner. As our global community grows smaller with the communication revolution, it becomes glaringly obvious that goods produced in developing countries are often subject to horrible labour conditions are controlled by dominant industry participants. Fair Trade is a social movement aimed to promote sustainability in developing countries, and generally requires a higher price but conforms to higher social and environmental standards.There are a wide variety of chocolate industry opportunities available for the franchisee, based on location, clientele, and affluence. Franchises exist in storefront or online variety and for shipping or hand delivery; specialty stores provide high-end treats and bulk candy stores offer large quantities of varying quality!

 

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Gift-Giving Like flower shops, these businesses often focus on themed chocolates and delivery

Bulk Candy Offering a wide assortment of candies of all types (including non-chocolate), these stores often charge by the pound...or half pound!

Premium or Unique

High-end, specialty items, imports from areas with historical processes

On-Site Baking

That smell....advertising in the air!

Ethical Free trade or other, quality products produced process and delivered in a certifiably ethical and/or environmental manner.

The chocolate industry has proven both resilient during the recession and innovative to meet changing consumer tastes and criteria. Growth will remain strong as chocolate gains in popularity in new markets and the global economy powers ahead. Healthier varieties are gaining market share and discerning consumers are willing to pay a premium for ethical production, but through it all, chocolate demand continues to grow.

THE CHOCOLATE INDUSTRY IN INDIA

The chocolate industry in India has a size of 20000 tones and is worth about Rs 400crores. The chocolate market has been growing by nearly 35 %. However there has been some slowdown in the last two years. The chocolate market is predominantly urban with coverage of 95 %. The sales volume has decreased by 5% in the last year and the chocolate market had declined with the average consumption coming down by 25% from 16000 tonnes to the current level of125000 tonnes. Chocolate consumption in India is extremely low. Per capita consumption is around160gms in the urban areas, compared to 8-10kg in the developed countries. In rural areas, it is even lower. Chocolates in India are consumed as indulgence and not as a snack food. A strong volume growth was witnessed in the early 90s when Cadbury repositioned chocolates from children to adult consumption. The biggest opportunity is likely to stem from increasing the consumer base. Leading players like Cadbury and Nestle have been attempting to do this by value for money offerings, which are affordable to the masses. Cadbury, a subsidiary of Cadbury Schweppes is a dominating player in the Indian chocolate market with strong brands like Dairy Milk, Five Star, Perk, and Gems etc. Dairy milk is the largest chocolate brand in India.

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• Size of the chocolate industry:-

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.

The size of the market for chocolates in India was estimated at 30,000 tonnes in 2008. Currently, the Indian chocolate market is worth around 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. Bars of moulded 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. The chocolate market in India has a production volume of 30,800 tonnes. The chocolate segment is characterized by high volumes, huge expenses on advertising, low margins, and price sensitivity. The count segment is the next biggest segment, accounting for 30% of the total chocolate market. The count segment has been growing at a faster pace during the last three years driven by growth in perk and Kit-Kat volumes. Wafer chocolates such as Kit-Kat and perk also belong to this segment. Panned chocolates accounts for 10% of the total market. The chocolate market today is primarily dominated by Cadbury and Nestle, together accounting for 90% of the market.

• Growth:

The consumption is impulse led and driven largely by convenient price point. As economic growth creates more disposable income with more people the consumption is expected to increase. The Indian chocolate industry may surpass the 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).

• Vulnerability:

To overcome the barrier and to explore new area for our market we are not start up with huge amount of infrastructure, 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. We also introduce new ranges of chocolates in our company with the help of research and development department probably in next two years of our establishment of firm.

Promotion of our product will be within a nation and outside a nation; because there is high competition at international market to overcome the treat of promoting our brand at international level we will use the outsourcing and overcome that barrier.

• Seasonal Factors:

We produce a seasonal line of chocolates which changes each year for season and each major holiday, thereby making the packaging collectable. Our Premium range of chocolate also have new flavours introduced primarily for major holidays and festivals like Diwali, Rakshabandhan, Valentine’s day, Christmas. We can introduce our new

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range of chocolates in stated holidays and festivals with fancy art packaging and according to demand of the customers.

• Technical Factors:

Chocolate-lovers may soon find their chocolate dearer if the problems plaguing the industry continue. Raw material costs have risen by more than 20 % in the last few years. Although retail prices have not increased, a rise in input costs will force the manufacturers to consider a price hike. The Bigger players in the country such as Cadbury, which leads the 2,500 crore chocolate markets in India with a share of 72%,₹ will find it easier to absorb the surge in input costs as it has products at various price points in the market, said industry experts. Cadbury may also opt for a price hike, albeit marginal, if the current trend continues. The Indian Chocolate Industry’s current 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.

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• Supply and Distribution:

Chocolate needs to be distributed directly, unlike other FMCG products like soaps and detergents, which can be sold through a wholesale network. 90% of chocolate products are sold directly to retailers.

Distribution, in the case of chocolates, is a major deterrent to new entrants as the product has to be kept cool in summer and also has to be adapted to suit local tropical conditions.

Channels of distribution:

Manufacturer

Retailers

• Grocery/ Kirana stores

• Medical stores

• Gift Shops

• Sweet marts/Mithai Shops

• Supermarkets

• Airport shops/Railway stations/Bus stands

• Paan shops

Stockiest /C&F Agent

-Company owned

WholesalerWholesaler

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• Financial Consideration:

After economic liberalization in 1991, major changes have occurred in food habits, partly on account of rise in gross domestic product (GDP) growth and higher purchasing power in the hands of the middle-class representing a third of the total population. Availability of chocolate products has also exploded. A study had projected that sales of the Indian chocolate industry would rise from $125/$130million in 1998 to $175/$180 million by the year 2000 and to $450 million by the year 2005which actually happened irrespective of various negative factors. By this we can see rising demand of the chocolate product in Indian market.

• Anticipated (expected) Changes:

1. To help chocolate industry consultants, chocolate manufacturers and dealers to align their market-centric strategies.

2. To obtain research based business decision and add weight to presentations and marketing materials.

3. To gain competitive knowledge of leading players.

4. To avail 10% customization in the report without any extra charges and get the research data or trends added in the report as per the buyer's specific needs.

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IV. Marketing Plan

A. Product Strategy:

India has more than 50% of its population below the age of 25 and more than 65% below the age of 35.

Age Structure: -

Group- I 0-18 years: 38 % (0.48 billion)

Group-II 19-35 years: 27 % (0.34 billion)

Group-III 36-65 years: 30 % (0.38 billion)

Group-IV 66 above: 5.3% (0.06 billion)

We have made separate plan for separate age groups.

• We will be targeting the first three groups covering 94.7 % of population.

Our strategy is purely penetration into Indian chocolate market.

• We would like to target the population with the same products. No new product.

• In our marketing plan we have suggested collaboration with many institutions& organization's. We are also outsourcing to prepare marketing plan for college students.

Marketing Plan for Age group 0 to 18

Total Population: 0.483 billion

Studying in school: 0.241 billion

We have traditions of distributing sweets to all school students after Flag hosting on 15th August (Independence Day) & 26th January (Republic day).

We can tie up with the schools as a distribution chain. In future this can be extended to Birthday’s & Children's day.

Uummm has more nutritional value for children's than any other sweet. That we can say because we added grain granules in our nutritious bar which children’s prefer not to eat as whole.

Marketing Plan for Age group 19 to 35

Total Population: 0.343 billion

Best way to catch this population on internet (on Facebook or any other social website).

Most people wishes birthday to their friends & family member on Facebook.

We propose our company tie up with Facebook, So one week before birthday Facebook will give the reminder.

“Do you want to send chocolates on your friend’s birthday?”

All the Cadbury chocolates options will appear.

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Select the Chocolate, Gift wrapping & Birthday message for your friend & place the order online. The order will be received in district distributor system; same will be packed & dispatched by Courier at the delivery address.

Birthday with Chocolates.

Marketing Plan for Age group 36 to 65

Total Population: 0.381 billion

This is majorly working population of India.

This population can be targeted on Birthday at office, for Gifting, on marriages (with Marriage invitation card & after marriage), on festivals, special occasions & many more occasions.

Indian Chocolate Industry is a unique mix with extreme consumption patterns, attitudes, beliefs, income level and spending

Understanding the consumer demands and maintaining the quality will be essential

So we think that bringing online sales(through Facebook) & increasing the institutional sales(in unique way) would bring prosperity and increase the sales of Uummm’s as a whole again resulting in the goodwill of the company.

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B. Price Strategy

Products & Segments Uummm’s Segments Product Pack size Rate Value

Uummm 9.2 Gram Rs. 5 Value

Uummm Shots 18.6 Gram Rs. 10 Value

Uummm 17 Gram Rs. 10 Value

Uummm 38 Gram Rs. 22 Mid-Tier

Uummm Crackle 42 Gram Rs. 35 Mid-Tier

Uummm Roast Almond 42 Gram Rs. 35 Mid-Tier

Uummm Fruit & Nut 42 Gram Rs. 35 Premium

Uummm Silk 60 Gram Rs. 55 Premium

Uummm Silk Fruit & Nut 60 Gram Rs. 55 Premium

Uummm Alcoholic Chocolate 100 Gram Rs. 955 Super Premium

Uummm Silk 145 Gram Rs. 125 Super Premium

Uummm Silk Fruit & Nut 145 Gram Rs. 125 Super Premium

Uummm Orange Peel 145 Gram Rs. 125

C. Promotion Strategy

After settlement of our business we will use following techniques for promotional strategy,

• Local news paper

• Local TV channel

• Local radio Station

• Hoardings in crowded areas

• Through pages and account on Social Networking Sites (Facebook & Twitter)

• We can also use mouth to mouth promotion strategy.

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D) Target Market

Our target market will be divided into three parts that are,

• Upper class

• Middle class

• Lower middle class

That mean all age groups are our target market and we will try to cover them all by fulfilment of their requirements and demands.

E) Strategic Position & Risk Assessment

Marketing strategy for niche market

Niche "Our niche market would be the children and young generation as chocolate is mostly liked by children and youngsters."

• 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.

E1) Company Strength

The core competencies on which our company will compete are:

• Taste

By consuming the “Uummm Chocolates” flavour begins to fill your mouth the moment the chocolate begins to melt on your tongue it feel like a rich dark or milk chocolate 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 flavour. First perception the consumer would describe for the chocolate as “chocolaty” and “Yummy”.

• 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. Yummy chocolates are high quality chocolates as they are shiny brown, break cleanly and are smooth. A yummy chocolate has the sufficient quantities of cocoa butter and vegetable fat so that it does not become greasy or sticky at ambient room temperature.

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G) Competitor Analysis

G:1) Competitor Analysis

COMPANY FOUNDED IN BRAND PORTFOLIO

(confectionery products)

Nestle 1860s Kit Kat, Smarties, Wonka

Ferrero 1940s Rocher, Raffaello, Kinder, Tic Tac, Mon Cheri, Nutella

Mars 1911 Bounty, Galaxy, Mars, Snickers, Milky Way, Wrigley’s, M&M’s etc

Amul 1945 Milk chocolate, Fruit & Nut chocolate

Hershey’s 1894 Hershey’s milk chocolate, Kisses, Pot of gold, Milk duds, Reese’s, Icebreakers etc

Perfetti Van Melle

2001, when Perfetti and Van melle merged

Alpenliebe, Chlormint, Centerfresh, Happydent, Mentos

ITC 2002(confectionery segment)

Minto and Candyman

Parle 1929 Melody, mango bite, poppins, kismi toffee, mazelo, xhale, éclair, golgappa, parlelites, orange candy

Cadbury 1948 (Indian Market)

Dairy Milk, Dairy Milk fruit N nut,

Dairy Milk Shots, Dairy Milk Roasted Almond, Dairy Milk Silk

G:5) Barriers to Entry

Barriers to entry

• Huge start-up 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

Overcoming the barriers to entryTo 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.

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Distribution channels

Our products would be distributed through channels like wholesalers, retailers and our own sales force and our distribution channel shown in previous pages.

Proposed Location

For our business, the proposed location would be in Shendra MIDC, Aurangabad, Maharashtra.

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IV. Financial Plan

Financial Management is a operational activity of business i.e., responsibility for obtaining the fund & effective utilizing the fund for effective operation that is called financial management.

Objectives of Financial Management• Acquiring sufficient fund• Proper utilization of fund• Increasing profitability• Maximize the firms value

1. Raising of Capital:2. Owned Fund :

Contribution of partners in CapitalWe Raise fund for requirement of Large Capital investment by our Own by using

investment by our three partners as below.Mr.Tushar Chole - 12,00,000.00/- Mr.AmolDeshmukh - 8,00,000.00/-Mrs.PrernaChavan - 12,00,000.00/-

• Borrowed FundsWe also raise fund by using borrowed fund from IDBI Bank and from by

using the Project Finance & Export Finance it is not sufficient fund for our establishment of organization and we took Hand Loan from friends and relatives.Name of Bank – IDBI Ltd.

IDBI bank is the development bank who provides loan to Industries development purpose and they Create segment by using the type of industry like SME. MSME, Large Industries etc., we approach to IDBI Ltd. Aurangabad Branch and mate to the Project Finance Manager Mr.Ranmale and inform them about our business plan, location, Partners & capital requirement and asks about procedure of loan proposal. He suggests for Industrial Finance and the scheme. After discussing with him, he tells us about a priority sector unit (Export Oriented Unit and MSME) and available the scheme to finance and facilities provided by bank. How to make a project proposal for loan and the requirement documents needed. After submitting the Loan proposal negotiates the interest rates and tenure fixed. He gave an assistance to provide loan to our project proposal with required 50 % of own fund and 50% loan provided by bank because we do not have any collateral security. The lean were reserved with IDBI bank

.

Sr. Party Name Amount Interest Tenure

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No. Rate (in Month)1 IDBI Ltd. (Secured Loan)

Export Finance (Rate certain to fluctuated EXIM Policy)

3,000,000.00 11.00% 06 Months (Max. 364 Days)

Term Finance 5,000,000.00 13.00% 48 Months2 Hand Loan* (Unsecured

Loan) 1,650,000.00

- -

3 Owned Fund 3,200,000.00 - -Total Fund 12,850,000.00

*Hand Loan –Advance from customers taken from friends and relatives and suppliers. We make them channel partners (Distributors) and export partners and bank assurance.

• Working capital decisions (use of funds)A business will incurs expenditure in undertaking production before recovering this-plus, it will hope a surplus representing profit –in sales revenue. Overhead expenses also have to paid working capital is the finance available to a business to meet its day to operational costs in pursuit of profitable activity There are three working capital issue on a business would to need to make a decision

Whether to offer discounts to debtors for prompt settlement of accounts Whether to dispose of slow moving stock at reduced prices, and by how much to

reduce them. Whether to purchase by cash or credit, allowing for discount which might be on

offer.

Cash & Credit: We provide discount and cash credit to our supplier. By giving them 2% discount on

the advance bill amount from suppliers in form of RTGS. And 1 % discount on the date of delivery we offer 30 day as the credit period to local supplier.And the term for foreign customer the cash credit decision on the hand of export partners, and bank assurance.

• Investment Decisions (Fund flow / Cash flow)Investment decision related to the careful selection of asset in which fund will be invested by the firm. Investment decision can be long term or short term.

Purpose: The purpose of investment decision is to investment is to invest financial resources for setting up new business or expansion an existing business.

The following two type of decision are taken:• Capital budgeting decision i.e., how much amount to invest in long term asset.• Working capital decision i.e., how much amount invest in short term asset.

Capital Budgeting:Capital budgeting is the technique of making decision for investment in long term proposals. It is a process of deciding whether or not to invest the funds in a particular proposal, the benefit of which will be available over a period of time longer than one year.

Type of Capital Investments

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Project Analysis:If the project preliminary screening suggests that the business is suitable, a detailed analysis of the project is done.

• Break even analysis Break even analysis is an important technique to trace the relationship between cost, revenue and profit at the varying levels of output or sales.

In the break even analysis the break-even point is located at the level or output or sales at which the net income or profit is zero. At this point, a total cost is equal to total revenue. Hence the break-even point is the no-profit-no-loss zone.

Formula:

Break Even Point = Fixed Cost/Sales -Variable Cost*100 = 3757800/21539743-955260*100 = 0.18*100 = 18%

In Amount = 1591839*18/100 = 286531

Type of Capital Investment

Capital Investment in Physical Assets

Rs 11,585,120.00)

Land , Building, Machinery, Vehicle,

Computer

Capital investment in monetory Assets (Rs. 1,150,000.00)

Cash, Bank.

Capital investment in Intangible Assets (Rs. 127,200.00)

R&D, T&D,MKT Development

Market Analysis

Potential Market

Market Share

Technical Analysis

Technical Viability

Sensible Choice

Financial Analysis

Risk

Return

Economic Impact

Benefits & Cost

Other Impact

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• Profitability Ratios-

Net Profit:Net profit ratio is a popular profitability ratio that shows relationship between net

profit after tax and sales. It computed by dividing the net profit after tax by net sales.

Net Profit Ratio = Net Profit after Tax/Net Sales*100

= 1591839/21539743*100 = 7.39%

ROI = Profit after Tax/Investment*100 = 1591839/12850000*100 = 12.39%

• Getting subsidies, concessions by government

a) Foreign Trade Policy: According to Foreign Trade Policy for 2009-14 it includes extension of zero duty

b) Exemption : Exemption from custom duty on import of capital goods raw materials, consumable, spares etc.,

c) *Goods Manufacturing in SEZ are excluded excisable goods – As per SEC. 3(1) of Central Excise Act 1944. (It is no duty leviable)

d) Reimbursement of Central Sales Tax paid on domestic purchase.e) Supplies from DTA to SEZ units treated as deemed to be exportf) Facilities to realise and repatriate export proceeds with in 12 monthg) Commodity hedging by SEZ unit permittedh) No Separate documentation required for custom and EXIM policy.i) Exemption on Stamp Duty.

• Taxationa) Partnership Deed As per Indian Partnership Act 1932.b) Minimum alternate Tax: not applicable for domestic exportc) Registration of Central Excised) Registration of Sales Taxe) Registration of The Income Tax Act 1961 (PAN No.)

V. Human Resource:

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• Organization structure – (as per PVT LTD Structure)

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• Total number of employees required at different levels:

• Total numbers of skilled plus semi-skilled employees required in our establishment would be 20 people. Who has knowledge, skill and ability to handle and supervise technical work as well as helps in marketing. The person should handle the critical situations and solve the problem on that level or to report to the immediate senior officer.

• There is not more than 9-10 unskilled workers required on the field, because the machineries are fully automated and there is less work to do manually on the production line. Also the unskilled workers are to be trained to handle all machineries to avoid defects and improve quality of the product.

• Sources of recruitment-

The type of the recruitment here to be followed is external. Because would be newly established firm and internal recruitment is not possible. So that there are some ways to recruit people as per requirement of the organization,

• Advertising—Advertising in newspapers and periodicals. The company needing manpower advertises details about the job, requirements, salary perquisites, duties and responsibilities etc. It will give appropriate candidate for the senior post.

• Employment Agencies— we can give the numbers of required man power to the agencies or the consultancies to find the right candidate for the position.

• Gate Hiring-For the sake of providing employment to the unskilled workers this method can be used. This involved blue collar workers or daily wages workers.

• Educational Institution— direct recruitment from colleges and universities is prevalent for the recruitment to higher staff. This can be beneficial to hunt new and fresh talent.

• Leasing— In seasonal production contract workers could be hire to adjust short term fluctuations in personnel needs, the possibilities of leasing personnel for some specified period may be considered.

• Labour Contractors— we can also recruited workers through contractors who are themselves the employees of this organisation.

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• Salary of workers & employees: (Cost on HR estimation and its assessment w.r.t. return is to be done)

• The pay given to the skilled persons are on the basis of their level and for the position. So we pay our semi-skilled as well as skilled employees 8,000 to 10,000 per month salary respectively.

• According to The Minimum Wages Act, 1948 the recent basic wage must be 6,500 Rs. And we offered 7,000 Rs. Per person to our workers. We will place contract based labours and we will make changes in our pay structure as per changes made by central or state government.

• How to attract, motivate and retain employees towards organization:

We would attract new talent for our organization by various methods like, by offering safe working conditions, employee benefit programme, emphasizes the benefits such as flexible working hours etc. these plans are for the middle and functional level .For top level there are different requirements such as, We introducing creative motivational plans, give them opportunity to explore new area in research and development and give them chance to expand existing business by putting new ideas to the firm development. Also employees seeking the job which having new challenges these all methods we would apply to attract employees as well as to the labours in our organization.

The motivation plans for the employees it isnecessary to keep their moral high and our intention is to create awareness among them so they would be held accountable to their work. Motivational plans would boost to the firm and led to enhance organization capability to work. The motivational plan includes, create an environment where great people thrive, held ownership, encourage new ideas, ask for suggestions and give power to decision making at that level, design flat organization structure,Create open communication between employees and management.

We are not looking forward to only hire people in our organization but to motivate them to work with us for the longer period of time. Retaining the motivated employees is hard. To retain employees and to avoid separation of employees we further include the retention plan such as,Offer a competitive benefits package, including health and life insurance and a retirement plan, offering non-monetary rewards.We will make sure employees know what's expected of them and how they can grow within your company.

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VI. Operational Plan

Plant Location

Our manufacturing unit will be located at “E-70/32, Shendra MIDC, Aurangabad-431136.”

To export our product we use the Central Government transport facility named as Inland Container Depot which is located at Daulatabad, Aurangabad, Maharashtra.

Labour is easily available since there are many such labour contractor available in Aurangabad. 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.

Details of Land Requirement

The land required for our Chocolate manufacturing company is 5,500 sq.ft. it is on rental basis and the rent would be 35,000 Rs./month.

Plant Layout

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VI.4.Details of machinery and sources of machineries

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 liquid filled-inside, nuts, grains etc. chocolate. Since our products are plain as well as nutritional grains are added this machine is appropriate.

The machines are supplied by,

The machineries which we have selected 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 as follows, so the need of personnel is comparative less than other semi-automatic machine. The detail description of the machineries is as follows,

Chocolate City, Fort, Mumbai.

Phone: 022 - 23459349Mobile: 9323877672Contact Person: Abdulm Aziz AnsaiArea: Fort

Email: chocolate-city4u2@yahoo.comAddress: No. 4, Shop No. 254, Line Inside, Crawford Market, Fort, Mumbai - 400001Landmark: Near Marine LinesWorking Hours: Monday - Sunday: 10 AM - 7 PM

chocolate-city4u2 yahoo.com

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1. Chocolate Production Line:

This machineModel NO.:QJZ-II especial for chocolate pouring and depositing including mechanism, electrical controlling. The production flow including mould heating, pouring, vibration, cooling, discharge, convey and so on with automatic operation. Suit for producing pure chocolate, centre filled chocolate, double colour chocolate. Granule mixing pouring chocolate, smoothly surface, weighing correctly is a good machine for producing high quality chocolate. The capacity of the machine is producing 200kg per day.

2. High-Speed Automatic Pillow Packing Machine:

Full-automatic packager is applicable for packing oblong, Quadrate, round, oval and shaped candies. It functions rapid computer programming and photoelectric tracing, frequency control for stable and free running, reversible outsize candy sorting disc enables empty package rate to get optimal effect, excellent performance, simple operation and high-speed package of the whole machine.

The packaging speed (granile/m) ≤ 800

The dimensions (length-width-height) – 3000×1350×1450mm

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VI.5.Production capacity of the plantOur production capacity of the plant would be necessary to get the cost of equipment (bean cleaner, roaster, cracker, grinder, refiner/conch - not including (tempering/depositing/moulding/wrapping) down to 400 kg/day in order to really jumpstart the growth of the small batch craft chocolate "industry" here in the India. Furthermore, we think that at that price point it will be necessary to produce at least 1 ton per month of finished chocolate in order to be able to break even.

Capacity utilization

The maximum production capacity of our plant would be 400 kg/day and we will try to utilize optimize resources and our capacity of utilization is 300 kg/day.

VI.6. Sources of raw materials (venders)

1. Sugar supplier: SAIKRUPA SAKHAR KARKHANA LTD.

Devdaithan,Tal. Shrigonda,Dist. Ahmadnagar.Contact no. - 02487 / 258287 / 258289

GANGAMAI SUGAR INDUSTRIES LTD.Tapadia Terraces,II floor, Adalat Road.Dist. Aurangabad.Pin code – 431001 (M.S.)Contact no. – 0240 / 332572 / 2333933

2. Full cream milk powder:

GOVIND MILK & MILK PRODUCTS PVT.

Shanti Nagar Society, Shop No. 4, Building No. 2,

Ramtekdi, Hadapsar ,

Pune - 411013,

Maharashtra, India.

Dist. Pune

http://www.govindmilkproducts.com/

3. Vegetable oil or fat:

Harihar Oil Traders, Mumbai

No. A/ 10, Nanddham Industrial Estate, MarolMaroshi Road, Marol, Andheri East, Mumbai - 400059,Maharashtra, India

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http://www.indiamart.com/harihar-oil/

4. Cocoa, powder, mass and butter:

BM Foods, Mumbai

No. 305, SaiSharan Apartments, N.C. Kelkar Road,Shivaji Park, Dadar,Mumbai - 400028,Maharashtra, Indiahttp://www.indiamart.com/bm-foods/

5. Emulsifiers and flavours: Garden Flavours Cop. Pvt. Ltd.

GARDEN HOUSE, W-275, M.I.D.C., RABALE, NAVI MUMBAI - 400701, Maharashtra, India

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Production

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, moulding machines.

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 forth through the refined chocolate mass anywhere from a few hours to several days. Conching reduces moisture, drives off any lingering acidic flavours and coats each particle of chocolate with a layer of cocoa butter. The resulting chocolate has a smoother, mellower flavour.

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Tempering and Moulding

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.

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VII. Legal Aspects:

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 Department’s Assessing Office.

• We must be registered enrol 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.

Factories Act, 1948This is applicable to enterprises where the number of employees is:

Ten or more and where power is used; or Twenty or more and power is not used.

The enterprises covered under the Act are required to keep certain records: Muster Roll Workers Register Overtime Register Advance Register Register for Fine Register for Deductions Register of Wages Register of Accidents and Dangerous Occurrences Bond Inspection Book Register of Cleaning and White Washing Record of Examination of Parts of Machinery

There is another Act known as Shops & Establishment Act which is applicableto shops and business undertakings employing 5 or more persons.

Employees Provident Fund & Miscellaneous Provisions Act, 1952

The Act applies to every factory or establishment employing 20 or more employees. It, however, exempts a factory or establishment for an initial period of 3 years from commencement of business if the number of employees is more than 50 and for an initial period of 5 years if the number of employees is less than 50. The minimum contribution payable by the employer is 12% of the basic salary contribution and Dearness Allowance. The employee also makes an equal contribution. The Act, however, does not specify a maximum contribution.

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Employees’ State Insurance Act, 1948It provides benefits to employees in case of sickness, maternity and employment injury and for certain other matters in relation thereto. The Act also provides for payment of contributions by employers and employees at the rates specified in the First Schedule of the Act. The existing rates of employee’s contribution vary according to wages and the employer’s contribution is exactly double the employee’s contribution. It shall apply to factories employing 20 or more people.

Payment of Wages Act, 1936This Act is applicable to factories and establishments, which come under The Factories Act. The act is restricted in its application to the class of workers whose wages range upto Rs.1,600/- per month.

Minimum Wages Act, 1948The employer has to pay minimum wages to employees in certain scheduled industries. At present the minimum wages act is applicable in 44 scheduled industries. The recent minimum wages for 2013 are 6,500 Rs./month for an individual person.

The Indian Partnership Act, 1932The Indian Partnership Act, which was amended in 1932, provides for rules relating to foundation of legal partnership. It states the rights and duties of the partners amongst themselves and outside and lays down rules regarding the dissolution of partnership.

Central Excise (CE)The Central Government is empowered to levy excise on all articles manufactured in India except alcohol, alcoholic preparations and narcotics. The liability to duty starts the moment a new commodity is manufactured. There are, however, certain exemptions granted to SSI units. However, there is no CE on fruit and vegetable products.

Sales TaxSales tax is tax levied by state and centre. Tax charged by state is called LST or Local Sales Tax and tax charged by Centre is known as CST or Central Sales Tax. The latter is charged when goods move out of a state.

The Income Tax Act, 1911The Act governs the levy of income tax in India. It defines various terms and expressions and states the liability of a person to pay income tax. The rates and pattern of taxation, however, are changed from time to time.

Pollution Control Act, 1955The State Air and Water Pollution Control Board is the body responsible for implementing this Act. The act is applicable to all kinds of industry.

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SPECIFIC LEGALITIES: (FOOD PROCESSING)

In addition to the general legal requirements, there are a few legal requirements that are specific to Food Processing Industries. A food processing enterprise has to comply with several compulsory legal requirements.Implementation of these norms with regard to Small and Medium Enterprises is relatively stringent while cottage and household level units sometimes tend to compromise on such stipulations. These laws include:

a. Prevention of Food Adulteration Act (1954): This is the basic statute to protect consumers against supply of adulterated food. The Central Committee for Food Standards ‘under the Directorate General & Health Services Ministry of Health and Family Welfare has specified the standards.

b. Milk and Milk Products Order (MMPO): regulates milk and milk products production in the country. The order requires no permission for units handling less than 10,000 liters of liquid milk per day or milk solids up to 500 tpa.

c. Standard of Weights and Measures (Packaged Commodities) Rules, 1977: lay down certain obligations for all commodities in packed form with respect to their quality declaration. The Directorate of Weights and Measures under the Ministry of Food and Civil Supplies operates these rules.

d. Export (Quality Control and Inspection) Act, 1963: is operated by the Export Inspection Council and under this act many exportable commodities have been notified for compulsory pre-shipment inspection unless specifically requested by the importer not to do so.

e. Voluntary Standards: are regulated by organizations involved with voluntary standardization and certificates systems concerning quality parameters in food. They are the Bureau of Indian Standards (BIS) and Directorate of Marketing and Inspection (DMI). The food processing industries sector as a whole involves other legislations.

f. Oils, De-oiled Meal and Edible Flour Control Order 1967 and Vegetables Products Control Order, 1976: control the production and distribution of solvent extracted oils, de-oiled meals, edible oil seed flours and hydrogenated vegetable oils (vanaspati).

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VIII. Community Involvement and Social Responsibility

Our company focuses on, including all stakeholders in order to identify their company values and guide their CSR metrics and decision making.

Since we are publishing our first CSR report, we conducted surveys and asked for comments from external and internal stakeholders, such as consumers, employees, investors, business partners, communities and local governments, policy makers, and NGO’s around the Local areas and assess the need required for performing CSR activities.

Through this stakeholder engagement, we decides on top priorities for mid-long term strategic CSR initiatives. These priorities included ethical sourcing, global competitiveness, talent management, child labour, food safety, and consumer health. In addition, the company has adopted a CSR framework to build upon each year and guide strategic planning. The foundation and pillars of the framework include the marketplace, environment, workplace, and community.

We are planning to tie up with NGO’S in future, we would like to provide stationary to the Primary School students who belongs to the poor family. Our selected location will be ‘Swami Vivekananda School’ which is located at Ganesh Nagar, Aurangabad.

We are supposed to targeting both working conditions (in particular, trying to eliminate child labour) and educating farmers. The aim is to educate younger farmers so that the cocoa consuming firms have partners to work with for the next few decades.

The aim is to educate younger farmers so that the cocoa consuming firms have partners to work with for the next few decades.

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IX. Exit Plan

Our corporate office situated in Aurangabad. We are planning to capture every urban and rural market of India within one year.

As per our growth strategy we aimed to build our company head office in four main metro cities – Delhi, Mumbai, Kolkata, and Chennai in next two years. On third year we will switch our corporate office to GOA and we are thinking to build another head office in UK.