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Sync quest iift_n_square_final_round
 

Sync quest iift_n_square_final_round

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PPT Made by Nitesh Luthra and Me for a loss making company.

PPT Made by Nitesh Luthra and Me for a loss making company.

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  • All entries should be mailed to litmus10.nitie@gmail.com with the file name as “SyncQuest__” and subject line as “SyncQuest__”
  • To quantify the decision making process we have used the AHP model to decide – Identified 6 parameters according to their importance – Market size and current market share is important for all the 3 divisions & organized retail , expansion of fast food , popularity of india are important in D – I - E respectively Relative importance b/w the parameters was given to the software and the results were tabulated. The result shows domestic should be entered however ins---------
  • ET - 3 brands are launched every day in india but only 5% succeed reason marketingModren trade outlets are going to increase from 5-25% in next decade share in retail segment
  • Existing customers – focus group has to be done to understand their needsTo acquire new customers products should be positioned as convenience foodsTyson foods and mccain planning to enter into indiaFood fortification is the public health policy of adding micronutrients (essential trace elements and vitamins) to foodstuffs to ensure that minimum dietary requirements are met.
  • In india cold chain infra is not developed therefore warehouse technique would provide impetus to the business(Agricultural and Processed Food Products Exports Development Authority)
  • As Micheal Porter says Information leads to Competitive AdvantageWould help us improve inventory forcasting , reduce internal costs , increase customer satisfaction, helpful for exporters However in the long all stackholders will benefit from Rapidbuy
  • Across 5 verticlesProduction -> 1st year target-> Commissioning of new plant 2nd year-> expansion of distribution networkProduct -> 1st Year-> Launch of Frozen Peas n chicken n quality improvement 2nd yr-> Packaging StandardsFinance-> Raising capital for New plant, rapidBuy &Export Certification across two yearsMarketing-> 1st yr-> FGDs/Tie with HoReCa/ 2nd Yr-> Modern Trade/ Trade Fair PromotionsHR-> Training for emplyees/ Hiring of additional executives
  • Identified 3 scenarios - 1. 2.

Sync quest iift_n_square_final_round Sync quest iift_n_square_final_round Presentation Transcript

  • LITMUS 2010Team Name – NSquare 1
  • Agenda1. Overview2. Synthesis of Market Analysis3. XYZ – Key Success Factors4. Strategy –Existing Plant5. Which Division to Enter?6. Strategy -New Plant7. Financing & Growth Forecast8. Brand Awareness9. Product & Business Development10. Distribution11. RapidBuy12. Action Plan13. Contingency Plan14. Climax15. Exhibits 2
  • OverviewREVENUE AND MARKET SIZE DIVISION WISE Share of Revenue of XYZ Division Wise Revenue , Market Size & Indian Ethnic Bread expected CAGR 5% Frozen Veg Snacks 10% XYZ Revenue (in crores) Market Size (in crores) 45% Frozen Non Veg 800(35%↑) 15% Snacks 700(35%↑) Frozen Veg 500(40%↑) 25% Others 70(25%↑) 25(30%↑) 5(10%↑) Total Market Size (Rs 2057 crores) Domestic Retail Institution Division Exports Division Indian Ethnic Bread Division 10% 5% Frozen Veg Snacks 24% Key Drivers for Industry 24% Frozen Non Veg Snacks Urbanization Convenience Frozen Veg Increase in no. of nuclear families 37% Others Rising population & income Nutritional & Health BenefitsXYZ has high market share in Ethnic Bread Market but the overall Growth in Freezer Spacebread market is very small , 107 crores onlyHuge Opportunities lies in Frozen Non Veg Snacks (750 crores) & Improvement in Packaging TechnologyFrozen Veg (500 crores) segments 3
  • Strategic positioning of XYZ --- Synthesis of Market Analysis Attractiveness FACTORS Need of a New Plant By XYZ On a scale of 5 The Targeted Market across divisions is strong. Customers’Clients, targeted awareness on the product has been growing significantly. 5 Markets External factors(penetration of organized retail, expansion of fast food chains, popularity of Indian Cuisine) are favorable.  XYZ market share is 5% of the total market share. ( Huge 4 Market Share opportunity) The industry is growing at a rate of 36.25%(Development 5Contingencies, Phase of the Industry Life Cycle)Opportunities &  Absence of Brand in North India (60% of business) huge 5 Threats opportunity as New Entrant  Opportunity in Chicken and Frozen Peas Segment  Multinational competitors 5 4 3 Strong Distribution network from Rivals offer serious 3 competitions. Competitions 2  Large Product Portfolio  Presence in Major market & Exports in big Markets (UK) 2  Business Development and New Product Launch 4 Types of  Institutional Tie Ups with increase in Organised Retail Offerings Penetration 5  Pallets design for different buyers 4
  • XYZ- Key Success Factors KEY Success Factors to be Remarks Attractive managed ness Limited Product - Chicken& Peas/ Affects Domestic Portfolio Sales - Chicken- Affects Institutional 5 Attractive Sales Investment in - Absence of Backend Infrastructure Long RunProducts/Services Limited Business - For Existing customers 4 Development Limited Product - Slow to Respond to requirement 4 Development of Customers Quality Issues - Issues with Regular Customers 4 4 Distribution for reachDistribution / Inappropriate Plant - Increased Logistics Cost 5 Strong TIESales Location - Delay in fulfilling of orders Limited Distribution -Competitors have strong network Ups 4 Quality Lack of Certification - Not able tap into Rs 350 crores emphasis 3 Need for worth UK market New Export Products Market Strong Market Access Potential 5
  • Strategy - Existing Plant Assumptions Plant Inefficiency Factors Efficient Plant• Logistic Costs to remain constant at 15% of Revenue High Cogs Lean Manufacturing & Maintenance• Advertising Cost to reach 3% in 3 years time High Employee Cost Low inventory• Employee Cost to fall by 1% every year & reach 4% in 3rd year High Turnaround Time Low Turnaround Time• COGS has to be reduced 2% annually Efficient Plant becomes profitable in 3rd year (2012-13) In all the scenarios maximum Even though revenues has Competition from MNCs implies increasing capacity & EBIDTA of only 3% can be achieved increased to 337 crores in 2014- assuming its impossible to reduce 15 but EBITDA values has remain distribution - New Plant set up mandatory Logistics cost from 15% fixed at 3% in last few years New Plant set up will enable Market Access & Brand Awareness 6
  • Which Division to enter ?Analytic Hierarchy Process ModelGoalCriteria .331 .043 .170 .258 .130 .069According to AHP criteria Domestic Market should be chosen to enter first, however Institutional offerssynergies & good potential too src for AHP calculation: http://www.cci-icc.gc.ca/tools/ahp/index_e.asp 7
  • Strategy -New Plant AssumptionsLocation – North India Setting up time – 6 months Loan of 30 crores for 5 years @ 7% is taken for new plantRevenue for 1st year – 50% of existing plant with improved efficiency Costs are benchmarked to competitors from the 1st year itselfSale will be equally divided between domestic & institutional division Advertising Cost is kept high initially at 5% Export certification will be taken after 2 years in 2012-13 Loan of 10 crores for 3 years @7% is taken in 2012-13 for certification New Plant leads to increased revenue EBITDA is increasing in The profitability increases with wider market reach all scenarios Plant Costs and Export Certification Economic Profit i.e Brand Creation , access to New Principle payments Export Markets (UK). 8
  • Financing & Growth Forecast EMI of Rs .59 crores has to be paid for 60 months for plant EMI of Rs .31 crores has to be paid for 36 months for export certification Principle payment is deducted in calculating EBITDA Interest would be subject to tax benefits there by reducing cost of financing Cash Flow generated is positive and will suffice the repayment requirements.COMBINED PLANT Revenue Growth EBITDA Growth : 3000 Existing Plant + New Plant Existing Plant + New Plant 57 60 46 2000 40 38 942 34 40 28 696 21 24 28 LL 514 HL 1000 791 20 365 463 605 ML 8 9 10 ML 203 341 665 195 318 417 526 0 HL 0 189 LL 2010-11 2011-12 2012-13 2013-14 2014-15 2010-11 2011-12 2012-13 2013-14 2014-15 -20Profitability is positive in 2 years as seen in graph Revenue reaches 500 crores in 5 yrs in all scenariosEBITDA reaches 38 crores in 5 years in least growth case Projections signal positive outlook for XYZ 9
  • BRAND AWARENESS Domestic Institutional Export Partnerships with Modern Trade  Promotion through RapidBuy  Market promotion oroutlets (Hypermarkets/ Retail  B2B Promotion through Trade fairs/events sponsored by APEDAChain) Fairs (IITF) & Direct Marketing  Innovative packaging tech to Social Networking Sites and  Co Branding & Tie Ups with suit the International market.Ambient Marketing HoReCa (Hotels/Restaraunts/  Increased Branding through In store Branding: Gondola Catering) Online mediaBranding, FSUs, Danglers and  Inviting for Discussions and Sale promotion through Int.Signage conferences retailers & departmental storesGondola & Danglers Branding Co- Branding Trade Fairs International Chains Modern Trade Branding 10
  • Product & Business Development Domestic Retail Institutional Pre cut chicken in Pre cut Chicken in small quantity large quantities curries Butter Chicken Frozen Chicken Chicken Kheema Green Peas Fresh Grilled Chicken Sheek Kabab Boneless Chicken Bundling: Ethnic bread (specialty) can be sold with chicken curries for Industry is in growth stage, XYZ is a small player domestic customers . Small packs as sample in growing industry. Need for launching Special Packaging: Portraying core benefits for North India & South India Innovative products to capture market. Focus on Nutritionally Enhanced & Fortified food products  International TIE ups for KNOW HOW transfer  Proactive Checkups for continuous improvement Quality  Customer Feedback implementation Convenience IssuesFood- Frozen foodsare used since theyare simple and easy  Hold conferences and seminars, inviting Focus Group current satisfied customers ProductDiscussions and  Hold product launch parties forMarket Research to Development important customersunderstand  Develop a speakers’ bureau andCustomers Needs International Business actively orchestrate speaking engagements at key industry eventsPackaging Standardsto meet competition Development  Create and actively interact with strategic partner boards 11
  • Warehouse Distribution Distributors Greater Retailer Margin – Push Implement Combination  Required for capturing North &Strategy in the market Western India market of Both Institutional Buyers prefer to buy  Increase distributor network indirectly to rule out middlemen hinterland of new plant Implementation of RapidBuy will × Lowers margins – low retailerneed warehousing for integrated SCM incentives Warehouse Distributor× Domestic market penetration Brand building requires push fromdifficult through warehousing distributers to retailers Warehouse facilitates exports XYZ  Company will be able to focus on its core competency rather than inventory× Increases Fixed cost management 61% of frozen foods worldwide are Producer 8-10% sold through supermarkets & Distributor Retailer hypermarkets for which warehouse distribution strategy is apt. src: APEDA Report Consumer XYZ XYZ Strategy Modern Trade Institutional Setup distribution network in North & West Exports India Use existing warehouses for Institutional Warehouse buyers and exports 12
  • RapidBuy IS IT NECESSARY? Yes.  Differentiation in offering |  Tap the growing e-commerce market of India Advantages ConsTransaction Cost Savings Lowering the  Institutional Buyers in India are notCost of Sales used to automatic PO systemImproved Inventory Forecasting Most of the players go by the sales representative route – he/she doesReduced Inventory Enhanced Working stock checking regularlyCapitalReduced Internal Costs  Only Reliance Fresh has automatic PO systemIncreased Customer Satisfaction Spencers has automatic PO but theyExpanded Market Opportunity don’t order themselves a salesCompetitive Advantage representative is sentImprovement in Backend Infrastructure Go forHelpful for Exports as foreign distributors RapidBuybuyers can directly order Study by Microsoft Business Solutions & Microsoft Retail Management Solutions implementation of automated PO system can result in 5% ↑ in Sales 2% ↓ in expenses 5% ↑ in Profits Src : http://www.tricityretail.com/brochures/wp_posimplementation.pdf 13
  • Action Plan Operations FY1 -Q1 & Q2 FY 1- Q3 & Q4 FY 2 -Q1 & Q2 FY 2 –Q3 & Q4 • Preparation of DPR for new • Commissioning of new • Expansion of • Expansion of plant plant distribution distribution network Production & • Improve backend •Logistics for north India network Operations infrastructure •Kaizen implementation • Improvement in existing • Launch of frozen Peas & • Nutritionally • International Product & plant inefficiencies Chicken product enhanced and packaging standards and Process •Product development and • Rapid Buy implementation fortified product regulations quality issues for existing launch products •Raising capital for new plant • Payment for RapidBuy •Raising capital for Finance construction export certification • Focus Group Discussions •Tie ups with HoReCa • Modern Trade •Market promotion or with existing customers •Launch of co branded marketing fairs/events sponsored •Low cost marketing products •Pallets Designing by APEDA for Exports Marketing / •B2B promotion through for differentialCommunication trade fairs (IITF, Delhi in Nov) offering • Communication of RapidBuy and its uses • Training for development of • Recruitment of employees •Hiring of • Training for skills for employees for new plant additional sales understanding HR • Training of Employees for executives packaging and other RapidBuy requirements for Exports 14
  • Contingency PlanSCENARIO PROBABLE REASON CONTINGENCY PLANAdverse  Sluggish economic growth oMaintain low inventory levelsMarket Decrease in purchasing power oRobust MIS for budgeting & forecastingConditions Emphasis on fresh & organic food o Long term contracts with Institutional PlayersQuality issues  Supply side issues – e.g. Avian o Ensure proper quality checks at eachwith respect to Flu , low quality produce level from procurement to productionnew products  Stringent Packaging & Regulatory o Highly integrated supply chain toChicken & Peas standards manage crisisExports not Change in UK export regulations o Diversify exports – look for new targetsgrowing as Increase in exports of competing o Regular checks on new exportsprojected countries in our exporting nations requirements – packaging , quality standards etc. 15
  • Climax• Improve existing plant efficiency • Follow a mix of warehouse &• New Plant Set up distributor based distribution strategy• Focus on domestic and institutional markets initially • Use RapidBuy to improve customer satisfaction and manage inventory• Export certification from 3rd year onwards • Use Distributors to reach new markets and Warehouse to supply• Launch innovative products to Institutional Buyers DIVISION DISTRIBUTION ENTRY MODEL REVAMP CONTINGENCY BRAND PLANNING AWARENESS • Separate Branding for Domestic, Institution & Export divisions• Effective Budgeting & • Modern Trade Branding for Forecasting Domestic Market• Highly Integrated supply chain • Co Branding & Tie Ups with HoReCa• Proper quality checks at every for Institutions level of procurement • Participation in international fairs• Diversify Exports and events for Export Market access 16
  • Thank You 17
  • ExhibitsFinancials •Income Statement- Existing Plant •Income Statement- New Plant •Market Forecast •EBITDA Growth From Both Plants AHP Calculations 18
  • Exhibits 19