Cadbury-SMBA 21

CONTENTS
HISTORYCompany Profile Process
FINANCEGeographic Location Competitors
Sunday, February 5, 2017 3

Company Profile
• Cadbury began its operation in 1948 by importing
chocolates and then re-packing them before distributing it
in the Indian market.
• After 62 years, it is having five companies at Thane, Induri
(Pune), Malanpur (Gwalior), Bangalore, Baddi (Himachal
Pradesh) and 4 sales offices in (New Delhi, Mumbai,
Kolkata and Chennai).
• The corporate office is in Mumbai.
• The company’s main purpose is “Working together to
create brands people love" capture the spirit of what we
are trying to achieve as a business
• We collaborate and work as team to convert products into
brand.
• Simply, “we spread happiness”!

1824: John Cadbury opened Bull Street shop
1831: John Cadbury opens factory in Crooked Lane
1875: First Milk Chocolate Bar
1878: The Cadbury Brothers are inspired by their vision
1879: Bournville 'The Factory in a Garden' is born
1905: Cadbury Dairy Milk is Launched
1905: First Cadbury logo commissioned
1908: Bournville Chocolate is Launched
1920: Cadbury Dairy Milk goes purple
1921: Cadbury script logo first appears

1928: The 'Glass and a Half' symbol is introduced
1928: Investment Begin in Cadbury Dairy Milk Ads
1947: Milk Tray Bar is Launched
1985: Boost Coconut is Launched
1989: Inspirations Are Launched
1990: Cadbury World Opens
2003: Cadbury Schweppes Buys Adams and Becomes
the World's Leading Confectionery Company
2008: Cadbury and Schweppes Demerge
2008: Cadbury Cocoa Partnership Launched
2010: Cadbury becomes part of Kraft Foods
2012: Chocolate centre of excellence opens in Bournville

Process

Ingredients of chocolate
• Pure chocolate comes from
Cocoa beans. A typical
chocolate bar will also have:
• Sugar,
• Milk (if it's milk chocolate,
not if it's dark),
• Cocoa Butter,
• Lecithin,
• Flavorings (like vanilla),
• Sometimes, Vegetable Oil
• Exotic ingredients of chocolate
CADBURY DAIRY MILK
• Sugar
• Cocoa Butter
• Cocoa Solids
• Peanuts
• Milk Solids
• Chocolate coated Raisins
• Almonds
• Vanilin
• Honey
• Boston Baked Bean

Roasting - After being cleaned, the cacao beans pass to
the first critical step in flavor development at the factory:
roasting. There are two main approaches to roasting: roast
the beans for a short time at high heat, which produces a
strong chocolate flavor but eliminates any subtle, floral notes
and risks the development of charred flavors from over-
roasting, or roast the beans for a long time at low heat, which
allows the more delicate flavors to come through but
sacrifices the big, chocolate flavor.

• Winnowing - Getting Rid of the
Shells.After roasting, the beans are put
through a winnowing machine which
removes the outer husks or shells,
leaving behind the roasted beans,
now called nibs.
• Milling - Making Cocoa Liquor
The nibs are then ground into a
thick liquid called chocolate liquor,
which essentially is cocoa solids
suspended in cocoa butter. Despite
its name, chocolate liquor contains
no alcohol.

• Pressing - Cocoa Powder and Cocoa Butter is
required. The processing now goes in a couple of
different directions. Some batches of chocolate
liquor are pressed to extract the cocoa butter,
which leaves a solid mass behind that is
pulverized into cocoa powder. The remaining
cocoa butter is reserved to help in chocolate-
making. Other batches of chocolate liquor are
used directly to make chocolate.

• The Beginnings of Chocolate -To make dark
chocolate, chocolate liquor, sugar and other minor
ingredients such as vanilla are mixed together and
kneaded until well blended. To make milk chocolate,
milk and sugar are mixed together and then blended
with chocolate liquor. This sweet combination of
ingredients is stirred until the flavors are thoroughly
combined.

• Refining — Smoothing It All Out -After being
mixed, both dark and milk chocolates go through the
same process. The mixture travels through a series of
heavy rollers which press the ingredients until the
mixture is refined to a dry flake. Additional cocoa
butter and a small amount of emulsifying agent are
added to the flake and then mixed to make a smooth
paste ready for “conching.”

• Conching — Kneading for Exquisite Flavor
Conching further develops flavor by putting
chocolate through a kneading process. The conches,
as the machines are known, have heavy rollers that
plow back and forth through the chocolate mass
anywhere from a few hours to up to seven days.

• Tempering — Temperature Magic For A Perfect Product -
The mixture is then tempered, or passed through a heating,
cooling and reheating process. Tempering allows you to
solidify chocolate in a way that keeps it glossy, causes it to
break with a distinctive snap and allows it to melt smoothly
in your mouth.
• Moulding — We're Getting Closer The mixture is then
poured into moulds and cooled in a cooling chamber.

• Finally — Something We Can Eat!
Once cooled, the chocolate is demoulded,
packaged for distribution and is ready for
savoring.

Indicative map of India

Competitors
Within Chocolate, it's interesting that Cadbury is a very small player outshone by
Nestle,
M&M Mars (now called Masterfoods)
and
Hershey.
Cadbury is a distant 4th. But, in Canada & Europe, Cadbury is a huge player - perhaps #2.
This is because Cadbury Schweppes is British based and hence has a much larger presence
in Europe, Canada & Australia.

CAPITAL INVESTMENT
Money invested in a business venture with an expectation of income, and
recovered through earnings generated by the business over several years.
Pariculars Amoumt (RS)
Investment 9892500
Cash 107500
Total 10000000

Determination of Cost per Bar (Wt. 10gms)
Variable Cost
Sugar 0.79
Cocoa Butter 0.80
Cocoa Solids 0.82
Peanuts 0.80
Milk Solids 0.67
Chocolate Coated Rasins 0.88
Almonds 0.89
Vanilin 0.75
Honey 0.75
Boston Baked Bean 0.60
Wages 0.45
Electricity 0.05
Transportation 0.4
Total Variable Cost 8.65
Fixed cost
Salaries 4.00
Rent 3.35
Total Fixed Cost 7.35
Total Cost 16
Profit (Rs) 4
Sales (Rs) 20

Plant & Machinery Amount
Roasting Machine (2 Machines ) 500000
Refining Machine 300000
Conching Machine 400000
Power Press (3 machines) 200000
Broyage 500000
Cooled Machine 600000
Inverted machine 500000
Total 3000000
A

P&L Exp Amount
Wages of 16 workers 100000
Electricity p.m. 450000
Rent (p.m) 550000
Supervisor Salary p.m 1000000
Office boy’s salary p.m. 370000
Wastage/Rejection 130000
Transportation charges 400000
Total 3000000Sunday, February 5, 2017 25

Raw material Cost per Bar (Wt. 10gms) Amount
Cocoa (per unit) 4.48
Sugar (per unit) 4.12
Coco Butter (per unit) 0.05
Total Cost per Unit 8.65
450000 units production in a month 3892500
TOTAL CAPITAL REQD (A+B+C) 9892500
CASH IN HAND 107500
TOTAL CAPITAL INVESTED 10000000

Sales Budget
• The most important budget, which all other budgets are
contingent upon, is the sales budget.
• All budgets such as production budget, selling and distribution
budget and others are all affected by sales budget and are
depend upon the revenue generated by sales.
• The sales estimates are based on certain assumptions
regarding the enterprise objective, level of advertisement,
sales promotion, and other selling efforts, etc.

Sales budget for the first six month duration of April to September.
MONTHS April May June July August September
UNITS 210000 250000 502000 525000 450000 505,000
PRICE (P.U) 20 20 20 20 20 20
TOTAL 4200000 5000000 10040000 10500000 9000000 10100000

PRODUCTION BUDGET
After preparing sales budget, production budget is prepared. A production
budget is stated in physical units.
In order to prepare a production budget level of expected sales and the desired
level of stock of finished goods is required

Following is the production budget for the first six month
duration of April to September.
Months April May June July August September
Sales 210000 250000 502000 525000 450000 505,000
Add:- Closing
stock 240,000 440,000 388,000 313,000 313,000 258,000
Less:-Opening
stock - 240,000 440,000 388,000 313,000 313,000
Production 450000 450000 450000 450000 450000 450000Sunday, February 5, 2017 30

CASH BUDGET CONTAINS DETAILED ESTIMATES OF CASH RECEIPTS (CASH
INFLOW) AND CASH PAYMENTS (CASH OUTFLOW) FOR THE BUDGET PERIOD OR
SOME OTHER SPECIFIC PERIOD.
WE HAVE CASH OPENING BALANCE OF RS. 107500 BUT WE FACE CASH CRUNCH
IN THE 1ST & 2ND MONTH , SO WE DECIDED TO AVAIL A BANK OVERDRAFT
FACILITY. AND INTEREST OF BANK OVERDRAFT AMOUNT WHICH WILL BE
NEGLIGIBLE, WILL BE DEDUCTED FROM THE TOTAL PROFIT AMOUNT.
CASH BUDGET

The other cash receipts and payments calculations are being shown below.
PARTICULARS April May June July August September
Opening Balance (A) 107500 - - 1131500 4555000 7262500
Add: Receipts
Cash sales 20% 840,000 1,000,000 2,008,000 2,100,000 1,800,000 2,020,000
Credit sales 50% 1680000 2000000 4016000 4200000 3600000 4040000
Credit sales 50% 1680000 2000000 4016000 4200000 3600000
Total receipts (B) 2,520,000 4,680,000 8,024,000 10,316,000 9,600,000 9,660,000
TOTAL ( C=A+B) 2,627,500 4,680,000 8,024,000 11,447,500 14,155,000 16,922,500
less: Payments
Creditors (450000*8.65) 3,892,500 3,892,500 3,892,500 3,892,500 3,892,500
Wages and Salaries 1,470,000 1,470,000 1,470,000 1,470,000 1,470,000 1,470,000
Rent 550,000 550,000 550,000 550,000 550,000 550,000
Electricity 450,000 450,000 450,000 450,000 450,000 450,000
Wastage/Rejection 130000 130000 130000 130000 130000 130000
Transportation charges 400,000 400,000 400,000 400,000 400,000 400,000
Total Payments (D) 3,000,000 6,892,500 6,892,500 6,892,500 6,892,500 6,892,500
Closing Balance (E=C-D) (372,500) (2,212,500) 1,131,500 4,555,000 7,262,500 10,030,000

MARGINAL COST
Month Unit Sales @20
Variable
Cost @8.65
Contributio
n
Fixed Cost Profit/Loss
April 210,000 4,200,000 1,816,500 2,383,500 3,307,500 (924,000)
May 250,000 5,000,000 2,162,500 2,837,500 3,307,500 (470,000)
June 502,000 10,040,000 4,342,300 5,697,700 3,307,500 2,390,200
July 525,000 10,500,000 4,541,250 5,958,750 3,307,500 2,651,250
August 450,000 9,000,000 3,892,500 5,107,500 3,307,500 1,800,000
September 505,000 10,100,000 4,368,250 5,731,750 3,307,500 2,424,250
TOTAL PROFIT 7,871,700

• PVR: The Profit Volume (PV) Ratio is the ratio of Contribution over Sales. It measures the
Profitability of the firm and is one of the important ratios for computing profitabilty. The
Contribution is the extra amount of sales over variable cost. Contribution is also Fixed cost plus
profit.
• In formula it is expressed as…
• P/V Ratio= Contribution * 100
Sales
• The higher the P/V Ratio better is for company prospects.
Variable Cost
@8.65
Contribution Fixed Cost Profit/Loss
June 502,000 10,040,000 4,342,300 5,697,700 3,307,500 2,390,200
P/V Ratio = 5,697,700/10,040,000*100
= 56.75 %

•BEP: - Breakeven point can be defined as the point or sales level at which
profit are zero and there is no loss. That is, breakeven point is that
point at which total cost are same as total sales revenue.
So BEP profit is zero, contribution (sales-variable cost) is equal to the fixed cost.
IF Actual sales > BEP then there is a profit
If Actual sales < BEP then there is a loss.

BEP (in units) = fixed cost
Contribution per unit
BEP(in units) = 2902500/11.35
= 255727 units
BEP (in Rs.) = 255727 x 20 = INR
5114540/-
Variable Cost
@8.65
Contribution Fixed Cost Profit/Loss
June 502,000 10,040,000 4,342,300 5,697,700 3,307,500 2,390,200
July 525,000 10,500,000 4,541,250 5,958,750 3,307,500 2,651,250

MOS: This is the difference between sales and breakeven point.
If the distance is short, it indicates that a small drop in production or
sales will reduce profit considerably.
If the distance is long, it means business can still make profit even
after a serious drop in production.
MOS (in Rs.) = Profit
PVR
June July August September
=2390200/56.75 % =2651250/56.75 % =1800000/56.75 % =2424250/56.75 %
=4211806.167 =4671806.167 =3171806.167 =4271806.167

Comparison

Determination of Cost per Bar (Wt. 25gms) Per unit
Variable Cost
Sugar 22.40
Cocoa Butter & Solid 10.45
Milk Solids 10.45
Wages 0.60
Electricity 0.10
Transportation 0.50
Total Variable Cost 44.45
Fixed cost
Salaries 0.20
Rent 0.35
Total Fixed Cost 0.55
Total Cost 45.00
Profit (Rs) 15.00
Sales (Rs) 60.00

Additional Capital invested
Amount
P&L Exp (Rs)
Wages of 32 workers 200000
Electricity p.m. 550000
Rent (p.m) 650000
Supervisor Salary p.m 2000000
Office boy’s salary p.m. 470000
Wastage/Rejection 230000
Transportation charges 500000
Total 4600000
Cocoa (per unit) 23.55
Sugar (per unit) 10.45
Coco Butter (per unit) 10.45
Total Cost per Unit 44.45
270000 units production in a month 12001500

MARGINAL COST for 1 Bar
(10gms) MARGINAL COST for 1 Bar (25gms)
June June
Units 502000 Units 270000
Sales @20 10040000 Sales @60.00 16200000
less: Variable Cost @
8.65 4342300
less: Variable Cost
@44.45 12001500
Contribution 5697700 Contribution 4198500
less: Fixed Cost 3307500 less: Fixed Cost 148500
Profit/loss 2390200 Profit/loss 4050000

•OLD PROFIT VOLUME RATIO
P/V Ratio= contribution * 100
Sales
P/V RATIO = 5,697,700/10,040,000*100
= 56.75 %
•NEW PROFIT VOLUME RATIO:
P/V Ratio= Contribution * 100
Sales
P/V Ratio = 4,198,500 / 16,200,000*100
= 25.91%
•NEW BEP :
BEP (in units) = Fixed cost
Contribution per unit
BEP(in units) = 3,307,500/15.45
= 214078 units
BEP (in Rs.) = 214078 * 60.00 = INR 12844680/-Sunday, February 5, 2017 42

Bibliography
• www.allchocolate.com
• www.wikipedia.com
• www.google.com
• www.cadbury.com
• www.nestle.in
• www.reviewstream.com
• www.mouthshut.com

Credits
• We thank for giving us this
wonderful opportunity to explore the world of
costing. We have highly benefitted ourselves
and we hope to get many more such
opportunities.
THANK YOU…..!!!

Cadbury-SMBA 21

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