49580539 amul-cost-analysis

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report on cost analysis of amul

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49580539 amul-cost-analysis

  1. 1. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT COST SHEET FOR AMUL ICE-CREAMS PRESENTED BY HIRAL MEHTA 61 SAURAV MEHTA 62 POONAM MISHRA 63 PARINAAZ MISTRY 64IES PGDM-B Page 1
  2. 2. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT HEMAL MUCHHALA 65 BHAKTI SHAH 89 Table of ContentsSr.No Title Page Number1 ACKNOWLEDGE 32 ABSTRACT 33 OVERVIEW OF ICE CREAM 4 INDUSTRY4 ABOUT THE COMPANY AMUL 75 COST SHEET 116 COST SHEET ANALYSIS 127 SWOT ANALYSIS 168 BIBLIOGRAPHY 18IES PGDM-B Page 2
  3. 3. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT ACKNOWLEDGEMENTWe take this opportunity to thank Prof Jayesh Jain for giving us aninsight , his valuable advice , timely suggestions and constant supportthroughout the project. We would also like to thank Mr.Raj Raut who is intothe ice-cream business for the valuable information that he shared withus ,which proved to be very helpful while preparing the project ABSTRACTThis project report is prepared to study the cost analysis of Amul ice creamand to formulate the cost sheet to find the per unit cost of a single Amul icecream cup of 100 gm(fruit and nut). Our colleagues uncle also helped us infinding the various cost involved in manufacturing ice cream and we alsogot information from www.amulicecream.in.IES PGDM-B Page 3
  4. 4. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUTOVERVIEW OF ICE-CREAM INDUSTRYHistory:-The ice cream industry is mainly governed by the prevention of food andadulteration act (PFA)-1954 in India. The ice cream market growth pickedup after de-reservation of the sector in 1997. History of Indian ice-creamindustry is very old started in un-organized sector and mainly the popularproduct was kulfi. New technologies and freezers are the main force behindthe development. Future is bright for ice-cream industry in India.Production –area:-In rural areas, kulfis / ice creams made by small / cottage industry arepopular. The market for organized sector is restricted to large metropolitancities. In small towns and villages, there are thousands of small playerswho produce ice- creams / kulfis in their home backyard and cater to thelocal market. Almost 40% of the ice creams sold in the country areconsumed in the western region with Mumbai being the main market,followed by 30% in the north and 20% in the south.IES PGDM-B Page 4
  5. 5. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUTIndustry Snapshot:- • Market Size - 1200 Crores • Ice Cream market is growing at 26% (yoy)Major players:- 1. Amul - Market Leader with share of 36% 2. HLL - Kwality Walls - 2nd biggest player 3. Mother Diary 4. Arun - Chennai Based Hatsun Agro ProductFew Brands/ Target Consumers1. Youth Centric - Chillz2. Kids - Moo3. Teenagers - Cornetto4. Health Conscious - Amul Sugarfree & Pro-LifeIES PGDM-B Page 5
  6. 6. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUTFuture of Ice Cream Market in India:-Ice Cream market will expand with increase in number of malls.Also companies like - HLL has been increasing their ice cream outlets -Swirl. Few years ago consumers use to go out for walk after dinner and useto buy ice creams from hawkers. But now consumer who often visit mallsfor entertainment prefers to buy ice creams during different times of theday as it is visible upfront and feel like spending Rs. 50 for that tastychocolate swirl with cake and nuts. As marketers are understanding the different needs ofconsumers, be it health conscious people- (Amul sugar free and pro-lifeice-cream) , kids, youngsters, etc, and are coming up with productsspecific for them., with portfolio of flavors, consumer today has plethora ofoptions at hand to choose from and therefore high probability of buying onemore scoop of ice cream. Also with increasing wallet size and innovativemodern retail formats, it has definitely given a Philip to the ice creamindustry in India.IES PGDM-B Page 6
  7. 7. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT About the company AmulGujarat Cooperative Milk Marketing Federation:-Gujarat Cooperative Milk Marketing Federation (GCMMF) is Indias largestfood products marketing organization. It is a state level apex body of milkcooperatives in Gujarat which aims to provide remunerative returns to thefarmers and also serve the interest of consumers by providing qualityproducts which are good value for money.Some statistics about the company:-The Turnover of Amul was Rs. 52.55 billion in 2007-08.IES PGDM-B Page 7
  8. 8. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUTMembers: 13 district cooperative milk producers Union 2.7 millionNo. of Producer Members:No. of Village Societies: 13,141Total Milk handling capacity: 10.21 million liters per dayMilk collection (Total - 2007- 2.69 billion liters08):Milk collection (Daily 7.4 million litersAverage 2007-08):Milk Drying Capacity: 626 Mts. per dayCattle feed manufacturing 3090 Mts per dayCapacity:AMUL --the brand:-Amul -the age old brand brand belongs to (GCMMF). AMUL means"priceless" in Sanskrit. The brand name "Amul," comes from the Sanskritword "Amoolya," and was suggested by a quality control expert in Anand. Today Amul is a symbol of many things. Of high-quality products sold atreasonable prices. Of the genesis of a vast co-operative network. Of thetriumph of indigenous technology. Of the marketing savvy of a farmersorganization. And of a proven model for dairy development.IES PGDM-B Page 8
  9. 9. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUTVarious products under the brand name Amul :-Amul products have been in use in millions of homes since 1946. • Amul Butter, • Amul Milk Powder, • Amul Ghee, • Amul Cheese, • Amul Chocolates, • Amul Shrikhand, • Amul Ice creams, • Nutramul, Amul Milk and • Amulya have made Amul a leading food brand in India. Some facts about the Amul ice cream:- • Amul Ice Cream was launched on 10th March, 1996 in Gujarat. • The portfolio consisted of impulse products like sticks, cones, cups as well as take home packs and institutional/catering packs. • In 1997, Amul ice creams entered Mumbai followed by Chennai in 1998 and Kolkata and Delhi in 2002. Nationally it was rolled out across the country in 1999.IES PGDM-B Page 9
  10. 10. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT • Has combated competition like Walls, Mother Dairy and achieved the No 1 position in the country. This position was achieved in 2001 and it has continued to remain at the top. • Today the market share of Amul ice cream is 38% share against the 9% market share of HLL, thus making it 4 times larger than its closest competitor. • Amul’s entry into ice creams is regarded as successful due to the large market share it was able to capture within a short period of time – due to price differential, quality of products and of course the brand name. Ice cream range:-• Royal Treat Range - (Butterscotch, Rajbhog, Malai Kulfi• Nut-o-Mania Range (Kaju Draksh, Kesar Pista Royale, Fruit Bonanza, Roasted Almond)• Royal Treat Range - (Butterscotch, Rajbhog, Malai Kulfi)• Nut-o-Mania Range - (Kaju Draksh, Kesar Pista Royale, Fruit Bonanza, Roasted Almond)IES PGDM-B Page 10
  11. 11. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT• Natures Treat - (Alphanso Mango, Fresh Litchi, Shahi Anjir, Fresh Strawberry, Black Currant, Santra Mantra, Fresh Pineapple)• Sundae Range- (Mango, Black Currant, Sundae Magic, Double Sundae)• Assorted Treat - (Choco bar, Dollies, Frostik, Ice Candies, Tricone, Choco crunch, Megabite, Cassatta)• Utterly Delicious - (Vanilla, Strawberry, Chocolate, Chocochips, Cake Magic)IES PGDM-B Page 11
  12. 12. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT cost sheet analysisDirect Cost : 1) Direct materialsTo manufacture one ice cream cup below are the components or raw materialsrequired with their unit cost :Dry Fruits – 3 %Milk – 70%Flavours – 5 %Other ingredients – 4 %Sugar – 16 %Cup – 2 %IES PGDM-B Page 12
  13. 13. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT 2) Direct Labour :There are 17 workers employed in the production of the ice cream andeach worker is paid Rs 2000 per month . 3) Direct Costs or expenses :The direct cost includes costs incurred in bringing the raw materials intothe factory ie. Carriage inward. The raw materials are purchased everymonth and costs involved for carriage are Rs 1840.Indirect Costs: 1) Factory Overheads: The Factory Overheads includes the indirect labour, factory rent, insurance and depreciation on machinery, power, factory supervisor’s salary ,packing material, ware house expenses and other factory expenses. • Indirect labour : This includes 3 sweepers whose average salaries are Rs. 1000 each.IES PGDM-B Page 13
  14. 14. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT • Insurance: The total insurance amount is Rs 15000. • Break up of the total insurance amount for Machinery - 1200000 • Land - 500000(1000 sq. ft. * Rs. 500 per sq. ft.) • Depreciation on machinery : There are 6 machines in the factory ,one machine is used for making ice creams which is Boiler and other are Refrigerators . The cost of Boiler is Rs 300000 and Refrigerators are worth of Rs. 900000. The depreciation method followed is SLM @ 7%. • Power & Fuel: The monthly average cost of power consumption of the factory is Rs 42375. • Supervisor’s salary : The factory has 2 supervisors and salary of each supervisor is Rs 2500. • Cost of maintenance : oiling and cleaning of machinery and other miscellaneous expences for maintainance. 2) Office and administration overheads:- Office and administration overheads include office rent, salary to staff, office and general expenses, printing and stationary, telephone expenses, electricity and lightingsIES PGDM-B Page 14
  15. 15. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT • Office rent: The per sq.ft rate of the Office is Rs 18.The area of the factory is 300 sq.ft. • Salary to staff : the office staff has three employees. A peon, clerk and an Accountant and the salaries are Rs 800, Rs 2200 and Rs 4000 respectively. • Office and general expenses: This comprise refreshments(tea and snacks). • Telephone Expenses:- Calls made by the staff members. • Electricity and lightings:- It consists of office lighting and air conditioning expenses. 3) Sales and distribution overheads:- • Sales Commission : As a part of encouragement for sales people ,they are given commission of 2.5 % of the total sales done by them. • Discount allowed : To attract retailer to buy the product they are offered a discount of 5% on the selling price. • Salary of salesmen : The company has 5 sales persons and they are paid a salary of Rs 3500 each per month.IES PGDM-B Page 15
  16. 16. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT • Carriage outward: To carry the finished goods to the whole sellers , the transportations charge per unit/product is set as Re 1.24.Assumptions : • The company produces only one product • All raw materials consumed in production of ice cream • The production and sales units are same. • In Valuation of plant, the rate per square feet has been assumed at Rs. 500. • We gave a discount to retailer on 450000 units on bulk purchase.IES PGDM-B Page 16
  17. 17. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT SWOT ANALYSISSTRENGTHS:The amul ice-creams brand is one of the the top 3 brands .As it’s an Indianbrand its popular as a family brand. Its available in all metropolitan citiesand is in the reach of middleclass &above middleclass .Its available inmany flavours and most of these are Indian flavours –liked by Indians.They are available in various sizes. They are available in reasonableprices.They have launched brands such as sugar free probiotic ice-creams. There are many premium varieties. It’s got good food energy valuei.e calories per 100ml-196.7.WEAKNESS:The durability of amul ice-creams is not really good, it melts very soon. Itdoes not have many outlet centers.Not a famous brand among youngsterswho are the main customers of ice-cream.OPPORTUNITIES:They can come up with new flavours which would be able to attract theyouth .They should not restrict themselves to departmental stores infactcome with new luxury brands which can be available in hotels and theyshould come up with their own ice-cream parlours. They should focus moreon their advertising and marketing strategies. They should use a strategysimilar to what they used in case of butter (Utly butterly girl ).They shouldcome up with offers for purchase of ice-cream in whole market . OffersIES PGDM-B Page 17
  18. 18. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUTshould run all throughout the year; not only in winters. There shouldemphasis for special occasions.THREATS :The biggest threat for amul ice-cream industry would be its competitors.Its ranked 3rd in the Indian market . It faces tough competition from theunorganized sector as well. A slight change in the price of the ice-creamwould shift its customers to another brand. Foreign players like Baskin-Robbins entering Indian market with new premium brands at feasibleprices. STRENGTHS WEAKNESS OPPORTUNITIES THREATSIES PGDM-B Page 18
  19. 19. COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT Bibliographywww.amulicecream.inwww.google.co.inAnnual report of AmulCost accounting and financial management-Ravi kishore –edition 5IES PGDM-B Page 19
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