You are on page 1of 26

Team Name

“The Revolutionary”

Indian Harvest Limited (Agro Processing)

Rahul Chandalia
9820079332
Chandalia_rahul87@hotmail.com
Welingkar Institute of Management

[Pick the date]


Part I: Introduction

The Agro-Processing Industry

AGRO Industries are considered an extended arm of agriculture but in India they have not received as much attention as agriculture.
While agriculture contributes about 25 per cent of India's GDP the value added by the processing industry is only 8 per cent of total
food production. Some estimates suggest that in developed countries, up to 14 per cent of the total work force is engaged in agro-
processing sector directly or indirectly.

However, in India, only about 3 per cent of the work force finds employment in this sector revealing its underdeveloped state and vast
untapped potential for employment. Properly developed, agro-processing sector can make India a major player at the global level for
marketing and supply of processed food, feed and a wide range of other plant and animal products.

However, the private sector is yet to realize the full potential of agro industries. The global market is enormous for sugar, coffee, tea
and processed agricultural foods. Only with mass production aided by modern technology and intensive marketing can the domestic
market as well as the export market be exploited to the fullest extent.

Huge domestic market

Even before exploring the opportunities abroad, one has to look within the country. The size of the Indian food market is Rs. 350,000
crores. An average Indian spends around 53 per cent of his/her income on food. The domestic market for processed foods is not only
huge but is growing fast in tandem with the economy.
In order to capture the higher end of the local market and get a fair share of the export market, what is required is large scale
investment and adoption of the latest technologies supported by intensive marketing efforts. The increasing environmental concerns
will give further stimulus to agro based industries.

Processed foods

Agro industries help in processing agricultural products such as field crops, tree crops, livestock and fisheries and converting them to
edible and other usable forms. They produce both edible and non-edible things. However, edible products otherwise known as
processed foods form a predominant segment. The levels of processing and manufacturing can be classified into three groups, namely
manual, mechanical and chemical or a combination thereof. In choosing the process, the main considerations are the nature of the raw
material, technology of processing, and packing.

The volume of production depends not only on the capital investments and machine capacity but also on the ability to market them in
the domestic market and abroad.

In view of the fact that the development of agro industries can help stabilize and make agriculture more lucrative and create
employment both at the production and marketing stages, commercial banks will have to meet their financial requirements without
hassles.
The Cold Chain Facility

It is estimated that about 30% to 40% of India’s fresh fruit and vegetables deteriorates due to lack of “appropriate” Cold Chain
infrastructure. This wastage is estimated to a value loss of approx. Rs. 50,000 crore per annum. India, though positioned as the largest
producer of fresh fruits and the second largest of vegetables in the World, the export of fruits from India is just 0.1% of the total
production and that of vegetables is only 0.5%.

Collection of fresh produce in small quantities from remote and scattered small farms remains a logistic nightmare. Transportation is
generally always in open body trucks. Though efforts are made to transport fresh produce at night to avoid direct exposure to SUN, the
ambient temperatures during summer remain too high resulting in deterioration and huge value loss.

The Key to maintaining freshness and high quality in horticulture crops is to start cooling as quickly after harvest and keep it cool
while collection, transportation, packing, storage ………….… till consumption.

It is an integrated supply chain system in which perishable goods are properly handled and stored under appropriate temperature and
humidity conditions for maintaining Quality in term of Freshness, Taste, Appearance, Hygiene and Nutritive value.
Why the products?

Green Peas

India is one of the largest producers of dry pea in the world and stand at the 4th place in the list of major dry pea producers. The Indian
production contributes to around 7% in the world’s total produce with the production figures of 800000 metric tons. Uttar Pradesh is
the major field pea producing state in India producing about 60% of the country’s produce. The other major pea producing states in
India are

• Uttar Pradesh
• Madhya Pradesh
• Bihar
• Punjab
• Himachal Pradesh

The demand is high as well as increasing than its supply. The market is untapped due to the technological and specialized knowledge
considerations.

French Fries

It’s a modern product. There are no known players in the market. It has extreme growth & export potential. The demand is higher than
the supply.
Background about the existing Demand, Production & Consumption in India

Projected domestic demand vegetables in India

Year Per capita demand Total demand


(kg) (Mn tonnes)
2000 77.07 79.15
2010 87.51 103.16
2015 94.28 119.12
2020 102.00 137.25

Products Production Consumption

Green Peas 58,00,000 62,65,000

Potatoes 77,20,000 78,86,000

Part II- About the Company & Financial background


Company’s Name: Indian Harvest Ltd.

Mission Statement

 Fulfil the needs of the consumer.

 Provide a good quality, safe product.

 Generate employment at the rural level.

 To revolutionize the agro-processing industry.

Vision Statement

 Creating an outstanding value for our customers and stakeholders

 Developing new innovative products

Our Aim

 To offer good quality product at affordable prices and to establish and create a national brand.

Current Strategy
 Green Peas are a natural produce with the harvest season being the period from November – January (winter season). As peas
are seasonal in production once the peas are purchased by the company, the company starts processing and potato is purchased
all round the year and immediately subject it to processing then cold storage and distribution takes place.

 Emphasis is put on the establishment of new agro-industrial plants in the production catchments to minimize transport cost,
make use lower cost land and more abundant water supply, create employment opportunity in the rural sector and utilize
process waste and by-products for feed, irrigation and manure.

 The company sources these from the farmers with a 100% buying guarantee.

 The company aims to provide the best price to the farmers and helps them with advance technology and loan for production of
vegetable at favorable rate of interest.

 Employment opportunities are provided to the rural people and it will help in overall development of the area.

 To target institutional buyers via our local authorized dealers.

 To establish oneself as a reliable and efficient local player and expand thereon.

 Authorized Dealers

For Peas: Refton Agencies

For French Fries: Malls and Mc Cain [tie-ups]

(Canada-based McCain, the world's largest maker of frozen French fries)


Factory Details

Location: Rajpura area of Punjab

Area: 2 acres land

Cold storage facility: 500 M/Tons * 2 rooms

Total size = 65*65*15 feet

Individual quick freezing: At -20 degree Celsius

Capacity: 1 ton/hr.

Refrigeration: Ammonia Based system

Process Flow

Green Peas

Controlled Infeed

Pre Cleaning

Washing

Preparation
Blanching

Cooling

Inspection

Freezing IQF

Packaging

Cold Storage -20ºC

French Fries

Control Feed

Destoning & Washing

Peeling

Inspection

Cutting

Nubbin/Sliver Removal

Sorting Inspection
Blanching

Cooling

Blanching

Pre Drying

Frying

Pre Cooling

IQF (-20ºC)

Bulk Packaging

-20ºC Store

Organizational Structure

 Sole Proprietor

 20 employees

 5 White Collared

 15 Blue Collared (Technician, Godown keeper, Helpers and security guards)


Projected cost Feasibility

Land 5000000

2 Acres
Land
development
charges 12000000

Rs. 100 / sq. ft.


Basic Construction 12000000

15000 x Rs. 800/ sq. ft.


Cold Storage 7000000
500 MT x 2

65 x 65 x 15 Ft
Processing Equipment 3500000

Cleaning, Peeling, Frying, etc.


I.Q.F.. 4000000
Till -20°C
1000 kg/hr
Material Handling Equipment 500,000

Ammonia Refrigeration System 6,000,000

Post - Processing Storage


Power Supply 1,000,000

Generator, Back – up
Storage Equipment 1,400,000

Rack Storage

52,400,000
Part III: Market Feasibility

PEST

Political

 Government - operation of manufacturing these products in terms of regulations

 Changes in laws and regulations

 Our products fall within the food category under the FDA – standard problems, shelf life, fat contents, etc for french fries

Economical

 Changes in accounting standards

 Tax rate changes

 New tax

 Revised tax law interpretations

 Changes in interest rates


 Transportation problems like strikes, fuel cost rise

 Change in demand & supply

Social

 Citizens are practicing healthier lifestyles

 Consumers of all ages are increasingly concerned with nutrition

 Many are reaching an older age in life they are becoming more concerned with increasing their longevity

 In the Indian cuisine it has traditionally been used as a symbol of rich food [pulavs & biryanis]

Technological

 Introduction of new machineries all the time

 Setting up of the plant

 High cost of cold storage

 High cost of backward integration [if we provide farmers with assistance]


SWOT

Strengths

 Relative inelastic demand

 Acceptable by vegetarians as well as non-vegetarians, suits the Indian taste buds, available in almost all the cuisines

 The ever growing demand with low competition

 Natural product

 Contract sale

Weakness

 Pea diseases – fungal & bacterial [search % affected]

 The society’s mind set is that french fries are not very healthy as they have high fat content

 Disturbance in the production cycle due to the unpredictable climate conditions of India

Opportunities
 Untapped market

 Nationwide distribution

 Expansion [in the global markets]

Threats

 Rising prices of commodities

 Unpredictable nature of business of the cold chain

 Rising fuel cost

 Low yield capacity

STPD

Segmentation

Note: Socio Economic Class [SEC]

SEC A  Higher class

SEC B  Middle class


SEC C  Economic class

Targeting

For peas  People of all age groups, vegetarians as well as non-vegetarians

For French fries  All age-groups, especially people with low cholesterol problems & the young crowd

Positioning

For Peas Fast moving, everyday food priced lower than the market price

For French fries Easy to cook, low fat alternative.

Differentiation

For peas Nutritious value, suits the Indian taste buds, economic balance maintained through annual availability at a standard cost.

For French fries Low fat content around 22-25 gms and it suits the Indian taste buds, fast pick-up & filling, ready availability.
Porter’s 5 Force Model

1. Threat of New entrants – Low

This is because it is an untapped market in its sense. There are not many players in the peas category. The demand is high but there
are hardly any suppliers in the market. This can also be due to the long cold chain to be maintained & three months production. It is
untapped even due to the technological and specialized knowledge considerations.

2. Bargaining Power Of suppliers – High

Our bargaining power is high as there are no/less substitutes available in the market which the customer can switch to. The demand
for the product is ever increasing but the supply doesn’t match the same.

3. Bargaining power of customers – Low

The market is untapped and the demand for the same is very high. Therefore, with low supply & high demand the bargaining power
of customer’s declines as they don’t have much option but to go for the available products in the market.

4. Threat of Substitutes – Nil/Medium


There are no substitutes for peas but a few for french fries. As people perceive fries to be an unhealthy product so they might switch
on to healthier options.

Threats of
New

Entrants-

Industry
Bargaining Competitor Bargaining
s
Power of Power of
1.Safal
Suppliers - Customers
2.Nature
High Fresh 3.Al
-Low

Threat of
Substitutes
– Nil/Low

5. Industry competitors
There are a few industry competitors for peas as Safal, Nature Fresh, Al Kabir. Al kabir being an international brand is quite costly
thus having low sales volume. Safal & Nature Fresh are the existing brands but as we are selling to authorize dealers, these
competitors would not affect our business on a high scale. Only when we plan to expand & build our own brand they can become a
threat to our business.

Distribution Model

Producers [Farmers]

Processors [The Company]

Distributors [Authorized Dealers]

Institutions [Consumers]

Distribution Strategy used: Satellite distribution strategy


Financials

Provisional Trading, Profit & Loss A/C as on 31/3/2009

TO OPENING STOCK NIL BY SALES 97,200,000.00


TO PURCHASES BY CLOSING STOCK 54,800,000.00
Raw Material 93,000,000.00 OTHER INCOME (RENT) 0.00
Packaging Material 3,600,000.00 96,600,000.00
TO ADVERTISEMENT & SALES PROMOTION 100,000.00
TO SALARY 1,200,000.00
TO TRANSPORT 3,600,000.00
TO REPAIRS & MAINTANCES 500,000.00
TO STAFF WELFARE 250,000.00
TO TELEPHONE & POSTAGE 200,000.00
TO LEGAL & PROFFESIONAL FEE 100,000.00
TO STORES & CONSUMABLES 900,000.00
TO CONVEYANCE 300,000.00
TO PRINTING CHARGES 50,000.00
TO SHRINKAGE & DAMAGES 152,000.00
TO GENERAL EXPENSES 700,000.00
TO INTEREST ON CAPITAL 4,000,000.00
TO INSURANCE 100,000.00
To VEHICLE EXPENSES 300,000.00
TO DEPRECIATION 7,000,000.00
35,948,0
TO NET.PROFIT TRANSFERED 00.0

TOTAL 152,000,000.00 TOTAL 152,000,000.00


Provisional Trading, Profit & Loss A/C as on 31/3/2010

TO OPENING STOCK 54,800,000.00 BY SALES 165,000,000.00


TO PURCHASES BY CLOSING STOCK 49,000,000.00
Raw Material OTHER INCOME (RENT) 8,000,000.00
Packaging Material 108,800,000.00
TO ADVERTISEMENT & SALES PROMOTION 100,000.00
TO SALARY 1,300,000.00
TO TRANSPORT 4,000,000.00
TO REPAIRS & MAINTANENCE 600,000.00
TO STAFF WELFARE 260,000.00
TO TELEPHONE & POSTAGE 200,000.00
TO LEGAL & PROFFESIONAL FEE 400,000.00
TO STORES & CONSUMABLES 850,000.00
TO BONUS 100,000.00
TO CONVEYANCE 250,000.00
TO PRINTING CHARGES 55,000.00
TO SHRINKAGE & DAMAGES 160,000.00
TO GENERAL EXPENSES 650,000.00
TO INTEREST ON CAPITAL 6,000,000.00
TO INSURANCE 100,000.00
To VEHICLE EXPENSES 350,000.00
TO DEPRECIATION 5,800,000.00
37,225,000.0
TO NET.PROFIT 0
TOTAL 222,000,000.00 TOTAL 222,000,000.00
Provisional Balance Sheet as on 31/03/2009

LIABILITIES AMOUNT. ASSETS AMOUNT.


SHARE CAPITAL A/c. FIXED ASSETS 42,000,000.00
Less :- Depreciation -7,000,000.00
NET ASSET VALUE 35,000,000.00
Rahul Chandalia
20,000,000.00
Profit as per P&L 35,948,000.00
SUNDRY DEBTORS 6,000,000.00

SUNDRY CREDITORS 10,102,000.00


UNSECURED LOAN & DEPOSITS 30,000,000.00
LOANS & ADVANCES 1,000,000.00

OUTSTANDING LIABILITIES &


PROVISIONS
Legal Expenses 200,000.00
Audit Fees 100,000.00 CLOSING STOCK 54,800,000.00
Professional Fees 100,000.00
Electricity 250,000.00
Wages 150,000.00 800,000.00 CASH IN HAND 50,000.00
TOTAL 96,850,000.00 TOTAL 96,850,000.00
Provisional Balance Sheet as on 31/03/2010
LIABILITIES AMOUNT. ASSETS AMOUNT.
SHARE CAPITAL A/c. FIXED ASSETS 35,000,000.00
Less :- Depreciation -5,800,000.00
NET ASSET VALUE 29,200,000.00
Rahul Chandalia7887
30,000,000.00
Profit as per P&L 37,225,000.00
Less : Withdrawals (6,000,000.00) SUNDRY DEBTORS 32,075,000.00

SUNDRY CREDITORS
UNSECURED LOAN & DEPOSITS 50,000,000.00
LOANS & ADVANCES 1,500,000.00

OUTSTANDING LIABILITIES &


PROVISIONS
Audit Fees 100,000.00 CLOSING STOCK 49,000,000.00
Professional Fees 100,000.00
Electricity 300,000.00
Wages 200,000.00 700,000.00 CASH IN HAND 150,000.00
TOTAL 111,925,000.00 TOTAL 111,925,000.00

The company achieves break even in the 1st year.

Future

 Expansion of plant
 Forward & Backward integration

 Establishment of a brand

 Exports

 Diversifying into 2 basic core products:

 Frozen line with products like frozen samosa, frozen parathas, frozen spring rolls, frozen hara bhara kababs

 Readymade food products which will be available in super markets in weekly section like sandwiches, salads, vegetable
rolls, etc.

References

1. http://www.mofpi.nic.in/projectprofiles/EDII_AHMD/others/09%20Cold%20Storage (cost of cold storage)

2. http://www.calorie-count.com/calories/item/21138.html

3. http://www.indiainbusiness.nic.in/industry-infrastructure/industrial-sectors/food-process.htm

4. http://finance.indiamart.com/markets/commodity/peas.html

5. http://economictimes.indiatimes.com/articleshow/msid-3563607,flstry-1.cms

You might also like