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

1. LITMUS 2010
Team Name – NSquare
1

2. Agenda
1. Overview
2. Synthesis of Market Analysis
3. XYZ – Key Success Factors
4. Strategy –Existing Plant
5. Which Division to Enter?
6. Strategy -New Plant
7. Financing & Growth Forecast
8. Brand Awareness
9. Product & Business Development
10. Distribution
11. RapidBuy
12. Action Plan
13. Contingency Plan
14. Climax
15. Exhibits
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3. Overview
REVENUE 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 Benefits
XYZ has high market share in Ethnic Bread Market but the overall Growth in Freezer Space
bread market is very small , 107 crores only
Huge Opportunities lies in Frozen Non Veg Snacks (750 crores) & Improvement in Packaging Technology
Frozen Veg (500 crores) segments
3

4. 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 5
Contingencies,
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

5. 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 Run
Products/
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 reach
Distribution / Inappropriate Plant - Increased Logistics Cost
5 Strong TIE
Sales 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

6. 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

7. Which Division to enter ?
Analytic Hierarchy Process Model
Goal
Criteria
.331 .043 .170 .258 .130 .069
According to AHP criteria Domestic Market should be chosen to enter first, however Institutional offers
synergies & good potential too src for AHP calculation: http://www.cci-icc.gc.ca/tools/ahp/index_e.asp
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8. 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).
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9. 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
-20
Profitability is positive in 2 years as seen in graph Revenue reaches 500 crores in 5 yrs in all scenarios
EBITDA reaches 38 crores in 5 years in least growth case Projections signal positive outlook for XYZ
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10. BRAND AWARENESS
Domestic Institutional Export
 Partnerships with Modern Trade  Promotion through RapidBuy  Market promotion or
outlets (Hypermarkets/ Retail  B2B Promotion through Trade fairs/events sponsored by APEDA
Chain) 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 media
Branding, FSUs, Danglers and  Inviting for Discussions and Sale promotion through Int.
Signage conferences retailers & departmental stores
Gondola & Danglers Branding Co- Branding Trade Fairs
International Chains
Modern Trade Branding 10

11. 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 Issues
Food- Frozen foods
are used since they
are simple and easy  Hold conferences and seminars, inviting
 Focus Group current satisfied customers
Product
Discussions and  Hold product launch parties for
Market Research to Development
important customers
understand  Develop a speakers’ bureau and
Customers Needs
 International
Business actively orchestrate speaking
engagements at key industry events
Packaging Standards
to meet competition
Development  Create and actively interact with
strategic partner boards
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12. 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 in
directly to rule out middlemen hinterland of new plant
 Implementation of RapidBuy will × Lowers margins – low retailer
need warehousing for integrated SCM incentives
Warehouse Distributor
× Domestic market penetration Brand building requires push from
difficult 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
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13. 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 not
Cost 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 regularly
Capital
Reduced Internal Costs
 Only Reliance Fresh has automatic PO
system
Increased Customer Satisfaction
Spencer's has automatic PO but they
Expanded Market Opportunity don’t order themselves a sales
Competitive Advantage representative is sent
Improvement in Backend Infrastructure
Go for
Helpful for Exports as foreign distributors RapidBuy
buyers 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
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14. 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 differential
Communication
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

15. Contingency Plan
SCENARIO PROBABLE REASON CONTINGENCY PLAN
Adverse  Sluggish economic growth oMaintain low inventory levels
Market Decrease in purchasing power oRobust MIS for budgeting & forecasting
Conditions
Emphasis on fresh & organic food o Long term contracts with Institutional
Players
Quality issues  Supply side issues – e.g. Avian o Ensure proper quality checks at each
with respect to Flu , low quality produce level from procurement to production
new products  Stringent Packaging & Regulatory o Highly integrated supply chain to
Chicken & Peas standards manage crisis
Exports not Change in UK export regulations o Diversify exports – look for new targets
growing as Increase in exports of competing o Regular checks on new exports
projected countries in our exporting nations requirements – packaging , quality
standards etc.
15

16. 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
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17. Thank You
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18. Exhibits
Financials
•Income Statement- Existing Plant
•Income Statement- New Plant
•Market Forecast
•EBITDA Growth From Both Plants
AHP Calculations
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19. Exhibits
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