Chocolate Industry 2013 MRP 3 PDF

CHAPTER-1 INTRODUCTION OF THE INDUSTRY
1.1 Rationale behind the selection of Industry – justification
The Indian Chocolate Industry has come a long way since

long years. Ever since 1947 the Cadbury is in India,
Cadbury chocolates have ruled the hearts of Indians with
their fabulous taste. Indian Chocolate Industry‘s Cadbury
Company today employs nearly 2000 people across India.
The company is one of the oldest and strongest players in
the Indian confectionary industry with an estimated 68%
value share and 62% volume share of the total chocolate
market. It has exhibited continuously strong revenue
growth of 34% and net profit growth of 24% throughout
the 1990. The brand of Cadbury is known for its
exceptional capabilities in product innovation, distribution
and marketing. With brands like Dairy Milk, Gems, 5 Star,
Bourn vita, Perk, Celebrations, Bytes, Chocki, Delite and
Temptations, there is a Cadbury offering to suit all
occasions and moods.
Today, the company reaches millions of loyal customers through a distribution network of 5.5
lakhs outlets across the country and this number is increasing every day. In 1946 the Cadbury‘s
manufacturing operations started in Mumbai, which was subsequently transferred to Thane. In
1964, Induri Farm at Talegaon, near Pune was set up with a view to promote modern methods as
well as improve milk yield. In 1981-82, a new chocolate manufacturing unit was set up in the
same location in Talegaon. The company, way back in 1964, pioneered cocoa farming in India to
reduce dependence on imported cocoa beans. The parent company provided cocoa seeds and
clonal materials free of cost for the first 8 years of operations. Cocoa farming is done in
Karnataka, Kerala and Tamil Nadu. In 1977, the company also took steps to promote higher
production of milk by setting up a subsidiary Induri Farms Ltd., near Pune.
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In 1989, the company set up a new plant at Malanpur, MP, to derive benefits available to the
backward area. In 1995, Cadbury expanded Malanpur plant in a major way. The Malanpur plant
has modernized facilities for Gems, Éclairs, and Perk etc. Cadbury operates as the third party
operations at Phalton, Warana and Nasik in Maharashtra. These factories churn out close to
8,000 tons of chocolate annually.
In response to rising demand in the chocolate industry and reduce dependency on imports, Indian
cocoa producers have planned to increase domestic cocoa production by 60% in the next four
years. The Indian market is thought to be worth some 15bn rupee (?0.25bn) and has been hailed
as offering great potential for Western chocolate manufacturers as the market is still in its early
stages.
Chocolate consumption is gaining popularity in India due to increasing prosperity coupled with a
shift in food habits, pushing up the country's cocoa imports. Firms across the country have
announced plans to step-up domestic production from 10,000 tons to 16,000 tones, according to
Reuters. To secure good quality raw material in the long term, private players like Cadbury India
are encouraging cocoa cultivation, the news agency said. Cocoa requirement is growing around
15% annually and will reach about 30,000 tons in the next 5 years.
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Brief Introduction
Indian Chocolate Industry as today is dominated by two

companies, both multinationals. The market leader is Cadbury
with a lion's share of 70%. The company's brands like Five Star,
Gems, Éclairs, Perk, and Dairy Milk are leaders in their
segments. Until early 90's, Cadbury had a market share of over
80 %, but its party was spoiled when Nestle appeared on the
scene. The other one has introduced its international brands in
the country (Kit Kat, Lions), and now commands approximately
15% market share. The two companies operating in the segment
are Gujarat Co-operative Milk Marketing Federation (GCMMF)
and Central Areca nut and Cocoa Manufactures and Processors
Co-operation (CAMPCO). Competition in the segment will only
get keener as overseas chocolate giants Hershey's and Mars
consolidate to grab a bite of the Indian chocolate pie.
The UK based confectionery giant, Cadbury is a dominant player in the Indian chocolate market
and the company expects the energy glucose variant of its popular Perk brand to be singularly
responsible for adding five per cent annually to the size of the company‘s market share.
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1.2 CHOCOLATE INDUSTRY IN INDIA
The chocolates sales globally have witnessed a decline in the last few years due to the 2009
economic crisis. However, the global chocolate market has shown an upward trend since late
2010 with the improvement in the economy. Western Europe accounts for the largest market for
chocolate followed by North America and Asia Pacific. With the increased consumption of
chocolate and substituting it with traditional sweets, the market is expected to accelerate in the
coming five years.
According to the recently published report by Techs Research ―India Chocolate Market Forecast
& Opportunities, 2018‖, the chocolate market revenues in India is expected to witness the
compounded annual growth rate (CAGR) of around 21% from 2013-2018. The chocolate
industry is also considered as the most popular product in the food processing sector. With the
demand of premium high end chocolate going up in the market; international companies are
entering into the market through collaborations and acquisitions in order to increase their share in
the market. It is forecasted that India chocolate market will reach USD 3.2 Billion revenues by
2018 due to increasing gifting culture in the country and increase in the income bracket which
will fuel the demand for chocolate products in India. India chocolate market is divided into four
segments where Bars chocolate segment accounts for maximum share of 36%. However, the
demand for assorted chocolates is expected to increase with the highest growth rate within next
five years consideringg the increasing gifting culture in the country followed by growing
demand.
Techs Research‘s report further elaborates that the domestic market for chocolate has increased
due to shift in consumer preference and development in rural markets. The Indian chocolate
market is dominated by Crafts Food being the market leader followed by Nestle and Amul. There
are certain local manufacturers who also play a significant role in the chocolate market due to
proximity in non-metropolitan areas and increasing awareness among the consumers. India
imports chocolate products from a lot of countries such as China, Singapore, UAE, Malaysia,
UK, Switzerland and Netherlands. However, one of the major challenges for the local
manufacturers is the increasing cocoa prices in the country which is currently being imported and
act as a main raw material used for preparing chocolates by many leading players.
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The chocolate industry has a considerable growth potential in the country but the area of concern
lies in high input cost of raw materials such as sugar, cocoa, milk powder and increasing
packaging cost. Increasing tariffs and rising custom duty also makes the imported chocolate
costly thereby affecting the sales of premium chocolates in the country.
The report has evaluated the future growth potential of chocolate market in India and provides
statistics and information on market structure, market trends, market size, etc. The report will
suffice in providing the intending clients with cutting-edge market intelligence and help them in
taking sound investment decisions. Besides, the report also identifies and analyzes the emerging
trends along with essential drivers and key challenges faced by the industry.
The chocolate market in precedent years has been witnessing tremendous growth in terms of
value as well as volume. The governance of market is maintained by large international giants
through franchisee and expansion into new markets which is leading to the growth of the
chocolates market in India. Indian chocolate industry has registered a growth of 15% per annum
from 2008 to 2012 and is projected to grow even at a higher rate in future. The industry has a
positive outlook due to phenomenal growth in the confectionery industry, rising per capita
income and gifting culture in the country.
According to ―India Chocolate Market Forecast & Opportunities, 2018‖, theper capita
consumption of chocolates is increasing in the country which will continue to flourish the market
revenues. It is expected that India chocolate industry will be growing at the CAGR 23% by
volume between the years 2013-2018 and reach at 3,41,609 Tons. The dark chocolates are
expected to account for the larger market share when compared to milk and white chocolates in
the coming years. The introduction of medicinal and organic ingredients in the manufacturing of
chocolates had lead to a new trend and development in the country, which will be adapted by
major manufacturers to remain active in the market.
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1.3 INDIAN CHOCOLET INDUSTRY AT GLANCE 2012- 2013
The Indian chocolate industry may surpass the Rs 7,500-crore mark by 2015 with the help of
growing consumption in the urban and semi-urban areas, according to the industry chamber
Associated Chambers of Commerce and Industry of India (ASSOCHAM). Currently, the Indian
chocolate market is worth around Rs 4,500 crore. The Indian chocolate industry is registering a
compound annual growth rate of 25 per cent at present. The demand for chocolates in India has
clocked about 35% rise as against last year primarily in urban areas due to the rising shift to
chocolates from traditional mithai around the festival season.
High income levels in the urban sector are a good reason for the rapid growth of the chocolate
industry in India. More than 65% of the consumption occurs in the urban market. Today, the
Indian confectionery industry is one of the fastest growing in the world with an estimated market
size of over Rs 2,000 crore per annum accounting for an annual growth of 18-20 per cent.
The global chocolate market is estimated to be around $85

billion. The Indian confectionery industry is further categorized
into sub-sectors such as sugar- based confectionery, chocolate-
based confectionery and gums. After Liberalization, Privatization
and Globalization, India has witnessed tremendous growth in
F&B sector, particularly, in the confectionery segment. Many
foreign players like Nestle and Cadbury forayed into the Indian
market to tap 100+ million customers and are ruling the roost till
date.
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1.4 Objectives of study
 To identify the chocolate industry‘s dominant economic features.

 To identify the kinds of competitive forces are industry members facing.
 To identify the factors are driving industry change and impacts will they have.
 To identify the market positions do rivals occupy—who is strongly positioned and
who is not.
 To identify the key factors for future competitive success.
 To check whether the outlook for the industry present is an attractive opportunity
or not.
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Chapter2: Major Players
2.1Cadbury India Ltd
Company Profile
Early Days - A One Man Business
Birmingham 1824
John Cadbury was one of ten children of Richard Tapper Cadbury, a prominent Quaker who had
moved to Birmingham, England from the West Country in 1794.
In 1824, 22-year-old John Cadbury opened his first shop at 93 Bull Street, next to his father's
drapery and silk business in the then fashionable part of Birmingham.
Apart from selling tea and coffee, John Cadbury sold hops, mustard and a new sideline - cocoa
and drinking chocolate, which he prepared using a mortar and pestle.
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Cocoa and drinking chocolate had been introduced into England in the 1650s but remained a
luxury enjoyed by the elite of English society. Customers at John Cadbury's shop were amongst
the most prosperous Birmingham families, the only ones who could afford the delicacy. Cocoa
beans were imported from South and Central America and the West Indies.
Experimenting with his mortar and pestle, John Cadbury produced a range of cocoa and
chocolate drinks, the latter with added sugar. The products were sold in blocks: customers
scraped a little off into a cup or saucepan and added hot milk or water.
John Cadbury had a considerable flair for advertising and promotion. "John Cadbury is desirous
of introducing to particular notice 'Cocoa Nibs', prepared by him, an article affording a most
nutritious beverage for breakfast," announced his first advertisement in the Birmingham Gazette
in March 1824.
He soon established himself as one of the leading cocoa and drinking chocolate traders in
Birmingham. The popularity and growing sales of John Cadbury's cocoa and drinking chocolate
of 'superior quality' determined the future direction of the business.
In 1831, John Cadbury rented a small factory in Crooked Lane not far from his shop. He became
a manufacturer of drinking chocolate and cocoa, laying the foundation for the Cadbury chocolate
business.
These early cocoa and drinking chocolates were balanced with potato starch and sago flour to
counter the high cocoa butter content, while other ingredients were added to give healthy
properties.
By 1842, John Cadbury was selling sixteen lines of drinking chocolate and cocoa in cake and
powder forms.
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PRODUCT LINE
1) Dairy Milk
2) Fruit & Nut
3) 5 Star
4) Break
5) Perk
6) Gems
7) Eclairs
8) Nutties
9) Temptation
10) Milk Treat.
FUTURE STRATEGY
 Maintain dominance in chocolate confectionery and market leadership in brown drinks.

 New channels such as Gifting, child connectivity and Value for Money offerings to be
the ley growth drivers
 Grow volume sales at 10% pa over the next three years.
 Achieve the goal of best manufacturing location in Cadbury Schweppes world for Dairy
Milk and Éclairs
 One new major product launch every year.
 Says simply, ‗Cadbury means quality‘; this is our promise. Our reputation is built upon
quality; our commitment to continuous improvement will ensure that our promise.
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 Mission Statement 0f the product:
 The mission statement of our new product is ―To provide our customers with a tempting
and exquisite taste‖ as Enticing Treats means a mouth watering treat which is simply
irresistible.
 "Working together to create brands people love".
2.2 Nestle India Ltd
Company Profile
Nestlé's relationship with India dates back to 1912, when it began trading as The Nestlé Anglo-
Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in
the Indian market.
After India's independence in 1947, the economic policies of the Indian Government emphasized
the need for local production. Nestlé responded to India's aspirations by forming a company in
India and set up its first factory in 1961 at Moga, Punjab, where the Government wanted Nestlé
to develop the milk economy. Progress in Moga required the introduction of Nestlé's
Agricultural Services to educate advice and help the farmer in a variety of aspects. From
increasing the milk yield of their cows through improved dairy farming methods, to irrigation,
scientific crop management practices and helping with the procurement of bank loans.
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Nestlé set up milk collection centers that would not only ensure prompt collection and pay fair
prices, but also instill amongst the community, a confidence in the dairy business. Progress
involved the creation of prosperity on an on-going and sustainable basis that has resulted in not
just the transformation of Moga into a prosperous and vibrant milk district today, but a thriving
hub of industrial activity, as well.
Nestlé has been a partner in India's growth for over nine decades now and has built a very special
relationship of trust and commitment with the people of India. The Company's activities in India
have facilitated direct and indirect employment and provides livelihood to about one million
people including farmers, suppliers of packaging materials, services and other goods.
The Company continuously focuses its efforts to better understand the changing lifestyles of
India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness
through its product offerings. The culture of innovation and renovation within the Company and
access to the Nestlé Group's proprietary technology/Brands expertise and the extensive
centralized Research and Development facilities gives it a distinct advantage in these efforts. It
helps the Company to create value that can be sustained over the long term by offering
consumers a wide variety of high quality, safe food products at affordable prices.
Nestlé India manufactures products of truly international quality under internationally famous
brand names such as NESCAFÉ, MAGGI, MILKYBAR, KIT KAT, BAR-ONE, MILKMAID
and NESTEA and in recent years the Company has also introduced products of daily
consumption and use such as NESTLÉ Milk, NESTLÉ SLIM Milk, NESTLÉ Dahi and NESTLÉ
JeeraRaita.
Nestlé India is a responsible organization and facilitates initiatives that help to improve the
quality of life in the communities where it operates.
PRODUCT LINE
 Nestlé
 Crunch
 Cailler
 Galak/Milkybar
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 Kit Kat
 Smarties
 Butterfinger
 Aero
 Polo.
FUTURE STRATEGY
Nestlé‘s objectives are to be recognized as the world leader in Nutrition, Health and Wellness,
trusted by all its stakeholders, and to be the reference for financial performance in its industry.
We believe that leadership is not just about size; it is also about behavior. Trust, too, is about
behavior; and we recognize that trust is earned only over a long period of time by consistently
delivering on our promises. These objectives and behaviors are encapsulated in the simple
phrase, ―Good Food, Good Life‖, a phrase that sums up our corporate ambition.
The Nestlé Roadmap is intended to create alignment for our people behind a cohesive set of
strategic priorities that will accelerate the achievement of our objectives. These objectives
demand from our people a blend of long-term inspiration needed to build for the future and
short-term entrepreneurial actions, delivering the necessary level of performance.
Watch a short animation highlighting the company‘s performance over the past year and
outlining Nestlé‘s ambitions for the future: Nestlé 2012 in 3 minutes.
 The world's leading nutrition, health and Wellness Company. Our mission of "Good
Food, Good Life" is to provide consumers with the best tasting, most nutritious choices in
a wide range of food and beverage categories and eating occasions, from morning to
night.
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 To be a leading, competitive, Nutrition, Health and Wellness Company delivering
improved shareholder value by being a preferred corporate citizen preferred employer
preferred supplier selling preferred products.
2.3 Lotte India Corporation Ltd
COMPANY PROFILE
―At the heart of the corporate purpose, which guides us in our approach to doing business, is the
drive to serve consumers in a unique and effective way‖
It‘s a story born in the age of British Raj. When children in India found confectionery hard to
come by. It had to be imported from across the seas until the year 1914; When Parry‘s picked up
the gauntlet and pioneered the manufacture of sweets - the first to do so in the country. Parry‘s
sweets went on to become a household name- a name that people recollect with warmth and a
smile. Ever since, the Parry‘s factory was set up in Nellikuppam, in the Cuddalore District of
Tamilnadu in South India. Parry‘s has become synonymous with Sweets and Confectionery.
With the penchant we Indians have for sweets is not surprising that this smooth, milky and
irresistibly delicious confectionery is the best gift any child could get. And an obsession with
quality ensured that children had a choice of nothing but the very best in confectionery.
In the nine decades since, the scenario has undergone a dramatic change. There are a number of
offerings in the market today, each wooing children with a wide array of products. But Parry‘s
still finds a prominent place in the heart of consumers.
Parry‘s has always stayed at the top, having weathered the vicissitudes of change, with our ear
close to the ground - and to the hearts of children, changing, adapting and growing with the times
- But never losing sight of its values traditions and ethics. At the turn of this century, Parry‘s is
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poised on the threshold of greater challenges in a global village, where dynamism and innovation
is the very law of survival.
In the backdrop of India joining the WTO, and the global giants eyeing the Indian Market with
enthusiasm, the company needed to strengthen itself and broaden its base to delight customers
across the country and abroad. With this vision in the mind, Murugappa Group, promoters of
Parry‘s Confectionery Limited entered in to an agreement with Lotte Confectionery Limited,
South Korea, by which the, entire shares which Murugappa Group, the founders of Parrys
Confectionery Limited, held was divested to Lotte Confectionery Limited -A South Korean
Multinational giant.
Lotte Confectionery is the first Company of the Lotte family of Companies founded by Mr. Shin
Kyuk-ho. The three L‘s in the Lotte Emblem stand for Love, Liberty and Life. The Corporate
philosophy and idealism of Lotte is driven by dream of a world full of Love where people care
for each other and respect each other‘s thoughts. The Lotte Group has presence in Food &
Beverages, Distribution, Tourism and Leisure business; Heavy Chemicals, Construction and
Machinery; Information, Communication and Electronics, Trading and Services apart from
Welfare Research and Support Services. The Lotte Confectionery Co. Ltd. is the Lotte Group‘s
flagship Company in Foods and Beverages category. Lotte Confectionery, Korea, was
established with 500 employees in 1967 and today it has more than 6000 Employees. It has over
500 products produced at 5 large-scale plants in Korea. Lotte has been actively working towards
establishment of overseas branches, production facilities and has a presence in more than 70
countries. Lotte Confectionery‘s annual Sales are over USD 900 millions, Apart from Korea,
Lotte has overseas investments in production facilities in China, Philippines and Vietnam. Lotte
Confectionery‘s Main line products are Chewing Gum (Lotte Xylitol, Lotte Juicy & Fresh, Lotte
Spearmint, Lotte Fresh Mint, Flavono, White & E, Spout Café Coffee) Candy, Biscuits,
Chocolates, Snacks, Ice cream, and health care product.
If the decades past are any indication, there‘s little doubt that even in the coming century,
children grow up with the brands Parry‘s has established.
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PRODUCT LINE
 Latte Choco Pie

 Lacto King
 BooProo
FUTURE STRATEGY
Regardless of the worsening economic situation in and out of the country in 2012, the
Lotte Group realized consistent growth in each business sector. Specifically, the overseas
business grew enough to earn 10 trillion won of profit based on the secured new markets
and joint promotion with affiliates. Although the emergency management system was
instituted at the first half of the previous year as a way to preemptively cope with the
unstable economic situation, an investment to secure the new growth engine was actively
promoted. As a consequence, it was possible to reach the ‗Hi-mart.‘
Recovery of the world economy is under a cloud of pessimism; however, Lotte plans to
exert efforts to break through the low-growth era based on a prepared management
against all potential crises in 2013 while searching for new opportunities for growth.
Also, strengthening the core competence as well as the investment for the discovery of
the new growth engine will continue by thoroughly observing the changing economic
condition in and out of the country. Moreover, Lotte plans to go a step closer toward the
realization of the vision of ‗2018 Asia Top 10' by consistently reinforcing the overseas
business and promoting the value of Lotte as a global brand.
Lotte‘s mission is the foundation as well as the starting point of our management
activity. It serves a significant role in granting a sense of pride and cohesion
while motivating group members.
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To spring as a global business group as well as ‗one of the top 10 global business group
in Asia,‘ which leads the Asian region, Lotte proclaimed ‗Vision 2018‘ and has been
exerting multidimensional efforts through the core business reinforcement and expanded
overseas business weight, aiming at its realization until 2018.
2.4 Lotus Chocolate Company Ltd.
COMPANY PROFILE
Lotus Chocolates take great pride in being one of India's select manufacturers of the
finest chocolates, cocoa products and cocoa derivatives. Our products are supplied to
chocolate makers and chocolate users across the world, from local bakeries to multi -
national companies. Incorporated in 1989 and having commenced operations in 1992,
Lotus is well known as a reliable business partner for the supply of cocoa and chocolate
products.
Starting from the cocoa bean processing to delivering fine chocolates... Lotus’s fully
integrated manufacturing facility is built with the best technologies and expertise from
across the globe.
We are the one stop chocolate hub for you - our valued customer.
Located just 55km from Hyderabad in Andhra Pradesh (South India), one of India's
fastest growing cities, we have the added advantage of close proximity to the cocoa
growing areas of South India. Equipped with sophisticated machinery from Germany,
UK, Denmark, and Italy, and backed by stringent quality processes, we ensure that our
chocolate is developed with its own unique flavor - a flavor that leaves a smile of savored
happiness...
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PRODUCT LINE
 Chuckles
 Superr Carr
 On & On
 High 5
 Kajoos
 Gobble
 Milky Punch
 Maltys
 Tango
 Eclairs
&
 "To constantly reinvent, innovate and implement ideas. Create finest quality,
worldclass, and value for money products through continuous research to deliver
the best."
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2.5 Strategic Group Mapping
What is strategy group map?
A strategy group consist of those industry members with similar competitive approaches and
position in the market. Companies in the same strategy group can resemble one another in any of
several ways: they may have comparable product-line breadth, sell in the same price/quality
range, emphasize the same distribution channel; use essentially the same product attributes to
appeal to similar types of buyers, depend on identical technology approaches, or offer buyers,
similar services and technical assistance. An industry contain only one strategy group when all
seller pursue very similar strategy and have comparable market position.
The procedure for constructing a strategy group map is straightforward:
 Identify the competitive characteristic that differentiate firm in the industry; typical
variable are price/quality range (high, medium, low), geography coverage (local,
regional, national, global), use of distribution channel (one, some, all), and degree of
service offered (no-frill, limited, full).
 Plot the firm on a two-variable map using pair of these differentiate characteristics.
 Assign firm that fall in about the same strategy space strategic group.
 Draw circles around each strategy group, making the circles proportional to the size of
the group‘s share of total industry sales revenues.
Company Name Profit (Rs.in crs) No.of.products

-2.2 10
Lotus Chocolate Company Ltd.
303.25 10
Cadbury India Ltd.
1078.63 9
Nestle India Ltd.
6.66 3
Lotte India Corporation Ltd.
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High
CADBURY
LOTUS
NESTLE
Product
Line
LOTTE
Low
Low Net profit Net Profit High Net profit
Interpretation:
From the above strategic group mapping, we can say that nestle is having the nine product line
and also consists of highestnet profit in the overall chocolate industry. nestle is having the rivalry
with Cadbury which has the highest product line which consists of small net profit but the
portfolio of the products are very profitable which has led to the highest net profit in the year
2012. Cadbury is the second highest profitable company seen as per the net profit and having the
product portfolio of 10 products in chocolate industry, among those nestle end to lead the highest
profit of all segment. Here nestle and Cadbury are almost similar in product line. Cadbury and
Nestle have a close competitor with each other in this industry. Lotus is having its minus net
profit which is not in the rivalry of nestle and Cadbury. Moreover, lotte is also having low profit
comparison with nestle and Cadbury.
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Chapter 3. Strategic Analysis
3.1 Industry’s dominant economic features
1. Scope of Competitive Rivalry:
The chocolate industry has become increasingly larger within the last couple of years as a result
increase the consumers need and demand. The market is very competitive because they offer the
same products, but has different physical attributes to the chocolate and different costs, which
buyers have choices to choose from. Companies want to provide the best products and to attract
buyers improving products, which makes the chocolate industry very competitive.
Here are the main factors of competitive rivalry:
 Bundle flavor: like some fruits, sweet silk, Kesar. Fruit and nuts.
 Improvement in product design and packaging
 Providing chocolate to the health conscious customers.
2. Stage in Life Cycle:
The chocolate industry is in the Mature Life Cycle Stage, where nearly all-potential customers
are already users of the industry‘s product. The cell chocolate industry‘s growth and profitability
depends entirely on its ability to attract new customers. By increasing and improving product
innovation, it will attract more potential buyers and need of customer.
3. Numbers of Companies in the Industry:
There are many companies with only top m four companies in the chocolate industry that
controls 80 percent of the market. Even though there are emerging new companies into the
market, they are relatively small. The four top companies are rank as follow as the largest to the
smallest chocolate company.
1. Lotus Chocolate Company Ltd

2. Cadbury India Ltd
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3. Nestle India Ltd
4. Lotte India Corporation Ltd
4. Customers:
What consumers want?
The psychology behind chocolate suggests consumers see it as a ‗naughty but nice‘ impulse
treat. But a closer look reveals three distinct types of buyer, each with different behaviors and
demands.
The convenience buyer
Chocolate may be seen as an impulse purchase, but it‘s becoming increasingly everyday among
consumers. Convenience is a major driver for chocolate lovers, who want to grab a bar from a
local store or throw a multi-pack into the trolley during a weekly shop. As convenience becomes
more important to time-poor shoppers, sales of tablet bars are growing (up 37% in the UK last
year) as consumers grab and go. Premium chocolate-makers such as Godiva are rethinking their
strategies to get a bite of this lucrative market, introducing smaller bar formats. A desire for
convenience is also increasing the popularity of sharing bags, particularly in Western markets, as
consumers buy to share or finish eating later. Manufacturers have reacted with packaging
innovations, such as the ‗memory wrapper‘ from Mars that allows bars to be twisted, closed and
saved. Mars says the innovation ―empowers the consumer‖. It also drives brand loyalty.
5. Capital Requirements:
Chocolate companies require minimum capital to enter and remain in the market successfully.
Companies require capital to create products that attracts consumers and for total assets and
revenues to enlist other products. A valuable capital in the chocolate industry is the consumers
because revenue and profits depends on them who buy the companies ‘product.
This makes the market very competitive and large companies that have big economies of scale
provide a highly automated service to a large number of customers, and have the financial
resources required in building and maintaining a large chocolate market.
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The chocolate industry enjoyed sweet success in 2009, with domestic industry revenues topping
$11 billion. Chocolate businesses have performed well despite a tough economy due to
innovations in chocolate manufacturing and increased consumer awareness about chocolate‘s
health benefits. Chocolate businesses include a number of enterprise options. You might decide
to run a gourmet chocolate candy store, manufacture your own organic chocolate products or
rent chocolate fountains. Other ideas include a chocolate fondue café, chocolate gift shop or
chocolate gift basket business.
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3.2 Porter’s Five Forces Model
Although the Indian Consumer chocolate market is highly competitive, the high growth rates that
it promises make it a good industry to enter.
Porter's 5 Forces Model
Substitutes
Substitutes like Ice-cream,
Potato chips, biscuits, soft drinks,
chewing gum, are a source of

Suppliers
threat as well as opportunity
Major raw material
for market expansion.
Suppliers are cocoa Buyers
Competitors
Producers in Latin Since chocolates do not satisfy any
Duopoly
American countries. Immediate needs, it is not a
Both the major players have
Due to negligible Necessaryitem.
Financial muscle to sustain their
Domestic production in Consumer power is very high and
Brands
India, suppliers enjoy consumers need to be persuaded
All players following a pull
high bargaining power. through various positioning planks
strategy.
Milk supply also New Entrants to consumechocolates.
fluctuates, therefore, in Imminent entry of global majors like
summer months, milk Hershey's, Mars etc. is bound to change
suppliers gain sufficient the power equation in the Indian chocolate
bargaining power.
Threat of New Entrants market.
 High Capital Requirements:
The large investment is requiring for the new enter the market successfully. Related to
manufacturing facilities and equipment, introductory advertisement and sales promotion.
 Cost and resources disadvantages not related to scale of operation.
New entrance cannot take advantage of experience of industry, proprietary technology,
partnership with the best and cheapest raw material and components.
24 | P a g e
 Difficult to make network of distributors or retailers.
A potential entrance can face the challenges of distribution channel. Retailer and
wholesaler both avoid purchasing the product which is new to the market and for
customer.
 Strong brand prefer more.
The well knows brand is preferred first, and it‘s been hard for the newcomer to sell their
product. For building more clients they have to promote their product with the help of
different medium.
 Restrictive regulatory polices
Government agencies can‘t limit or even bar entry by requiring license and permits. As
different company having their own rules and regulation to implement and accordingly
government performed their task.
 Tariffs and international trade restrictions
The ability and inclination of industry incumbents to lunch vigorous initiative to block a
newcomer‘s successful entry.
Bargaining Power of Buyers

The bargaining power of buyers is increased by two factors: a number of large volume
buyers and the buyers' relatively low profits from the product. However, the bargaining
power of buyers is low to moderate because of the industry's differentiated products, the
presence of switching costs, the lack of threat of backward integration, and the reliance
on the industry's product.
 Cost of competitive brand is low

When the number of brand is more and with different price the customer can easily
switch on to another brand as the customer having more option with them.
 If the buyer are in small number
This point is always point of consent for the seller that buyers are in small number and
competitors are more.
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 If buyer are well informed about sellers products, prices, and costs.
The more information buyer has, the better bargaining position they are in. with the help
of technology customer can take all information and compare about the product and
price.
 If buyers have judgment in whether and when they purchase the product.
Consumer can delay their purchase if they are not happy with product and if are not good
with financial condition.
Bargaining power of suppliers

The biggest threat is the trend of large suppliers integrating forward by setting up their
own retail outlets. However, in the Indian, there are a large number of suppliers in the
chocolate market who face overcapacities, poor distribution, large duties, and declining
margins and hence the bargaining power for suppliers is less and competitive pricing
comes into play. With more companies setting up the manufacturing plants in India.
Product differentiation is more and more difficult in the consumer chocolate industry.
The bargaining power of suppliers is decreased because the industry is an important
customer of the supplier group and the supplier does not pose a threat of forward
integration. But the bargaining power of suppliers is moderate to high because the
supplier group is concentrated; there are no substitute products and the importance of the
supplier's product to the industry.
 Whether the items being complete is a product that is readily available for many
suppliers at the going market price.
When supplies became quite tight and industry members are so eager to secure what they
need that they agree to terms more favorable to supplies.
 Supplier is the primary sources of particular items.

Good reputation supplier and strong demand of their material for to barging with the
buyer.
 Inputs are in short supply
Short supply has some degree of pricing power. Particular items greatly weakness
supplier pricing power and bargaining power.
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 Differentiated raw material that improve the product
Improving the efficiency of their production processes, the more bargaining power.
Intensity of Rivalry amongst existing players

There are few key players in the consumer chocolate market, but as they are part of big
Indian business groups, they have a lot of muscle power and hence the intensity of rivalry
can be placed at a mid level. Though factors such as high transport and storage costs, lack
of differentiation, large investments, and low switching costs tend to intensify the rivalry,
the fact that the market is only at the nascent stage with promises of high growth rates
with the diverse needs of customer groups, and an untapped rural market; the existing
players seem to be enjoying a relatively low rivalry.
 Rivalry intensifies as the number of competitor’s increases.
It is always difficult for the one or two player to win commanding market shares and
comfort weaker market challenges from rivals.
 Rivalry is usually strong in slow growing market and weaker in fast growing
market.
Rapidly expanding buyer demand produces enough new business for all industry
members to grow. In slow growing market buyer demand drop of unexpectedly.
 Better customer services
Giving better services in the market for attracting more number of customers. When
rivalry giving better services then it‘s became pressure from the other competitor to
perform better. And providing different feature product with low price.
 Rivalry is more powerful when industry condition tempts competitors to use price
cuts or other competitive weapons to boost unit volume.
When the product is perishable, seasonal, or costly to hold in inventory, competitive
pressures build quickly any time one or more firms decide to cut prices and take the
advantage.
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Threat of Substitutes
The threat of substitute produces in the chocolate are high. The industry must compete
with alternate cooking flavors such as vanilla and lemon. In addition they must compete
with many types of snacks including non-chocolate snacks. Finally, they must also
compete in the retail arena.
 Substitutes are readily available and attractively price.

When the substitutes are available and with a attractive price creates competitive
pressure. Finally they have to cut their price to sustain and attract the consumer, and
maintaining profit.
 Substitutes having better quality, performance, and other related attribute.
Substitute product is inviting customer to compare performance, feature, ease of use and
other attributes as well as prices.
 Whether the cost that buyer gain in switching to the substitutes are high or low.
High switching cost discourage switching to substitutes, while low switching costs make
it easier for the seller of attractive substitutes to lure buyer to their offering. Typical cost
include involvement, cost of addition equipment, time cost. High switching cost can
materially weaken the competitive pressures.
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3.3 Driving forces of industry
 Product and package innovation

Packaging is a key element in the industry, with options such as single-serving packages,
bite-sized packs and resalable bags proving popular. As consumers become more health
conscious, companies are offering healthy options such as low calorie, low fat, vitamin
fortified, organic and fiber-rich chocolate.
 Chocolate demand rises in festive season.
A survey by Assocham says that chocolate demand soars by 40% amid growing concerns
of adulterated sweets & abnormally high dry-fruit prices in festive season: Survey.
"Adulteration in traditional sweets eroding consumers' confidence along with dry fruit
prices going through the roof and other significant multiple factors like growing
acceptance of chocolates amid varied Indian palates, attractive packaging, consistency in
quality, growing gifting culture, rising urban affluence amid youth with high disposable
incomes and a crazy sweet tooth together with other related factors are driving the
demand for chocolates.
 Attractive youth
Marketing to the youthful population of immerging market especially in India will be
vital. Use of popular culture, including bands and TV shows, in marketing campaigns
may increase, as will vital marketing and social media interaction, as young people
broaden their channels. While children prefer sweeter chocolate, concerned parents with
look for chocolate with added health value.
 New distribution channels
Chocolate will be available from wider variety of outlets, from coffee shop to health food
stores, to cater for convenience buyers. Super markets and discount stores will continue
to dominate sales, particularly among value customers. Premium chocolate could become
available in main streams stores as luxury buyers proliferate. Brands might seek to move
up the value chain by creating their own flagship stores.
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3.4. Rival’s next moves
The main rival of Nestle is Cadbury. We have described the future action of Cadbury.
 Cadbury introduced a long-term (2012–15) strategy programmed, Vision into Action, last
summer. Centered on the concept of ‗Fewer, Faster, Bigger, Better‘, the company says it
"aims to capture the significant under-exploited potential in the business in revenue
growth, margins and returns". This will be achieved by focusing resources on fewer,
bigger and more value-creating initiatives, and the strategy is already said to be
delivering results, including improved margins and returns for shareholders.
Creating Value in Future

 Effectively managing growth drivers
1. Gifting Child Connectivity and low end VFM.
2. New channels
 Optimizing manufacturing efficiencies.
 Competitiveness in logistics and distribution using IT.
 Exploiting mass media to create / maintain large brands.10+% Advertising / Sales
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3.5. Key factors for future competitive success
The rapid change of the past few years gives us some vital clues to the industry‘s direction.
Luxury vs. commodity
A growing middle class will continue to propel the luxury market, and will increasingly drive it
into mainstream retailers. But this will pose a challenge: although middle class consumers in
emerging markets may develop expensive tastes, their disposable income will still be relatively
limited. Manufacturers may need to choose between margins and volume, positioning
themselves carefully as either a luxury or commodity player.
The personal touch
Bespoke bars may be commonplace. One artisan chocolate maker says he envisages smaller
shops offering people the chance to create their own bar. As consumer palates grow more
sophisticated, unusual flavors will become the norm, with chocolate-lovers choosing their own
combinations. Consumers may also be able to design their own packaging.
New distribution channels
Chocolate will be available from a wider variety of outlets, from coffee shops to health food
stores, to cater for convenience buyers. Supermarkets and discount stores will continue to
dominate sales, particularly among value customers. Premium chocolate could become available
in mainstream stores as luxury buyers proliferate. Brands might seek to move up the value chain
by creating their own flagship stores, something Hershey and Mars (through its M&M‘s brand)
have already done successfully.
Middle class rule
Manufacturers are likely to offer more chocolate from ethical sources to meet inspirational
buyers‘ needs. Middle class consumers will also be keen on premium chocolate for gifting
purposes, and seasonal launches, which increased 6% during 2011, will continue to grow.
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A new recipe
Milk chocolate will have a lower cocoa content due to rising prices, and manufacturers will be
forced to use cocoa more sparingly. Demand for cocoa could spiral out of control: one Latin
American manufacturer predicts that China and India increasing average per capita consumption
by just 1kg could make most manufacturers‘ current models unsustainable. In that scenario,
artificial cocoa could become a viable alternative.
Fresh flavors
In developed markets, flavors may become increasingly unusual as palates grow more
sophisticated and brands seek a marketing boost. Combinations of sweet and savoury (such as
bacon and chocolate) will increase, and salt, olive oil, herbs and flowers will all be used as
flavorings.
Think small
Rising obesity levels and government regulation will lead to manufacturers limiting portion
sizes. Sharing bags of smaller bars will become more popular as people seek to limit the amount
eaten in one sitting. Average per capita consumption (currently 8kg in Europe) may drop,
although overall consumption is likely to rise as the global middle class mushrooms.
Price vs. size
In emerging markets, chocolate takes a hefty bite from the household budget. As input price
volatility continues, manufacturers may have to keep value in mind or risk losing consumers.
Price per gram is rising fast in developed markets, but research shows consumers feel cheated if
bars get smaller but price is static. Mainstream manufacturers could be forced to choose between
containing costs, at the expense of size and moving further up the value chain.
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3.6 Internal analysis
3.6.1NESTLE SWOT ANALYSIS:
Strengths Weaknesses
1. Unmatched product and brand portfolio 1. Inability to provide consistent
2. R&D capabilities quality in food products
3. Distribution channels and geographic 2. Weak implementation of CSR
presence
4. Competency in mergers and acquisitions
5. Brand reputation valued at $7 billion
Opportunities Threats
1. Increasing demand for healthier food 1. Food contamination
products 2. Trend towards healthy eating
2. Acquiring startups specializing in 3. Growth of private labels
producing well-being products 4. Rising raw food prices
3. Establishing new joint ventures
Strengths
1. Unmatched product and brand portfolio. The business offers one of the widest
portfolios of food and brewery products in its sector. It also operates 29 brands that earn
more than $1 billion in annual revenues. With more than 8,000 products it is hard for any
other corporate to compete against Nestlé.
2. R&D capabilities. Nestlé invested more than $2 billion in R&D in 2011. It‘s introducing
new and redesigned products every year, strengthening firm‘s competitive advantage.
3. Distribution channels and geographic presence. Nestlé runs in more than 100 countries
and has extensive distribution channel all over the world, which supports its operations
globally.
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4. Competency in mergers and acquisitions. Over the years Nestlé has been forming
successful partnerships and acquiring other companies in order to grow and maintain its
leadership in the market.
5. Brand reputation valued at $7 billion. Nestlé is known almost everywhere and has a
reputable brand for its products that are used by millions every day.
Weaknesses
1. Inability to provide consistent quality in food products. Nestlé has been recalling
many products from trade due to food contamination or poor quality supplies. This does
not only hurt firm‘s sales but its image as well as the business is unable to control quality
of the products.
2. Weak implementation of CSR. The company has announced and is involved in many
programs that aim to make company more eco-friendly and improving the working
conditions of its suppliers. Still, Nestlé receives a lot criticism over the effectiveness of
its programs.
Opportunities
1. Increasing demand for healthier food products. The trend of buying and consuming
only healthy food products is a major shift in consumer tastes and opens up an immense
market for companies. Currently, Nestlé tries to introduce more healthy food products in
response to the trend.
2. Acquiring startups specializing in producing well-being products. Many new startups
are forming and introducing new products for well-being or revolutionizing the ways
those products are made. Startups are cheap and can easily be acquired. Nestlé is focusing
on providing more well-being products and this is a great opportunity to expand its
portfolio.
3. Establishing new joint ventures. Nestle is already involved in many successful
partnerships with major world companies like The Coca-Cola Company and Colgate-
Palmolive.
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Threats
1. Food contamination. Although it is Nestlé‘s responsibility to run thorough quality

checks of its products, the company had been reportedly providing contaminated food or
other products to the market. Such actions hurt company‘s reputation and result in losses.
2. Trend towards healthy eating. Nestlé is a major supplier of chocolate and chocolate
drinks that have high level of calories and due to changing customer habits, will
experience decline in demand.
3. Growth of private labels. The growing number of supermarkets and other retailers are
introducing their own label products that cost less and can easily compete with Nestlé‘s
product portfolio.
4. Rising raw food prices. With an overall growth of world economy and population, the
demand for raw food will rise. The result of that will be higher material costs and
squeezed margin for Nestlé.
Here we complete the chapter 3 of our report, in which we have evaluated industry environment
by using secondary data. In the next chapter financial statement analysis of the industry is
presented.
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CHATER 4
FINANCIAL ANALYSIS
 4.1 BACKGROUND OF FINANCIAL ANALYSIS
One of the most common ways of analyzing financial data is to calculate ratios from the data to
compare against those of other companies or against the company's own historical performance.
Financial Analysis is performed by professionals who prepare reports using ratios that make use
of information taken from financial statements and other reports. These reports are usually
presented to top management as one of their bases in making business decisions.
Financial analysts often assess the firm's:
1. Profitability - its ability to earn income and sustain growth in both short-term and long-term.
A company's degree of profitability is usually based on the income statement, which reports on
the company's results of operations;
2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term;
3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations;
4. Stability- the firm's ability to remain in business in the long run, without having to sustain
significant losses in the conduct of its business. Assessing a company's stability requires the use
of the income statement and the balance sheet, as well as other financial and non-financial
indicators.
Financial analysts often carried out by the following ways:
 Past Performance - Across historical time periods for the same firm (the last 5 years for
example),
 Future Performance - Using historical figures and certain mathematical and statistical
techniques, including present and future values, this extrapolation method is the main
source of errors in financial analysis as past statistics can be poor predictors of future
prospects.
 Comparative Performance - Comparison between similar firms.
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 Objectives of Financial Analysis
Objectives of the financial Analysis of the IT Industry are as follows:
 To know profitability of the industry

 To know the Financial Performance of the Industry
 To study, compare, and analyze the financial performance of major companies dealing in
the Paint Industry.
 Tools Used for Financial analysis
We have used two tools for the financial analysis of Paint Industry
 Ratio Analysis
 Trend Analysis
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BALANCE SHEET
Table –4.1 (Rs in Crs)
Particulars
08 - 09 09 - 10 10 - 11 11 -12 12 -13
SOURCES OF FUNDS :
Share Capital 38.15 37.87 39.32 39.32 39.32
Reserves Total 216.17 259.56 476.21 655.74 863.08
Total Shareholders’ Funds 244.72 290.04 508.68 685.77 892.08
Secured Loans 9.18 0.92 0.635 1.04 0.65
Unsecured Loans 3.13 3.095 2.755 248.60 267.83
Total Debt 12.31 4.01 3.39 249.634 268.47
Other Liabilities 0 0 0 234.48 268.05
Total Liabilities 257.03 294.05 512.07 1169.89 1428.59
APPLICATION OF FUNDS :
Gross Block 534.01 627.55 813.85 1003.72 1513.79
Less : Accumulated Depreciation 267.41 298.34 332.83 381.58 465.56
Less: Impairment of Assets 0.09 2.58 0 3.45 3.54
Net Block 266.51 326.63 481.02 618.69 1044.69
Capital Work in Progress 58.47 58.04 107.38 389.98 168.72
Investments 9.455 55.32 52.15 43.4 91.27
Current Assets, Loans & Advances
Inventories 170.19 180.61 237.29 303.37 365.16
Sundry Debtors 18.075 25.56 27.94 46.81 39.54
Cash and Bank 118.49 110.54 174.17 187.99 186.22
Loans and Advances 48.785 52.73 51.08 41.72 37.29
Total Current Assets 355.54 369.43 490.47 579.89 628.20
Less : Current Liabilities and
Provisions
Current Liabilities 249.93 286.63 363.62 457.88 536.14
Provisions 174.76 219.68 250.50 58.72 27.17
Total Current Liabilities 424.69 506.31 614.11 516.60 563.32
Net Current Assets -69.15 -136.9 -123.6 63.30 64.89
Deferred Tax Assets 14.84 15.945 21.14 29.27 44.32
Deferred Tax Liability 23.095 25.01 25.97 37.098 66.87
Net Deferred Tax -8.255 -9.065 -4.83 -7.83 -22.56
Other Assets 0 0 0 62.36 81.59
Total Assets 257.03 294.05 512.07 1169.89 1428.59
Contingent Liabilities 21.80 40.97 42.66 48.50 78.35
 We are taken the all data of balance sheet by average.
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PROFIT & LOSS
Table 4.2 (Rs in Crs)
Particulars 08 - 09 09 - 10 10 - 11 11 -12 12 -13

INCOME :
Sales Turnover 1607.27 1873.41 2299.46 2887.69 3316.61
Excise Duty 80.32 53.77 60.89 90.01 127.64
Net Sales 1526.95 1819.64 2238.57 2797.68 3188.97
Other Income 15.74 13.54 18.56 38.47 23.12
Stock Adjustments 20.26 -1.42 42.28 16.78 34.79
Total Income 1562.95 1831.76 2299.41 2852.93 3246.88
EXPENDITURE :
Raw Materials 600.97 700.11 913.79 1121.52 1253.34
Power & Fuel Cost 48.72 50.38 69.83 92.06 115.90
Employee Cost 110.70 143.85 151.41 202.54 240.26
Other Manufacturing Expenses 199.39 204.57 280.83 331.49 363.43
Selling and Administration
Expenses 303.69 373.49 454.96 549.82 644.43
Miscellaneous Expenses 19.84 28.46 28.55 51.92 46.58
Less: Pre-operative Expenses
Capitalized
Total Expenditure 1283.30 1500.86 1899.37 2349.34 2663.94
Operating Profit 279.65 330.91 400.04 503.59 582.94
Interest 2.65 1.23 1.42 2.61 8.62
Gross Profit 277.01 329.67 398.62 500.98 574.32
Depreciation 33.83 40.17 49.6275 59.60 93.09
Profit Before Tax 243.18 289.5 348.99 441.39 481.23
Tax 64.34 76.08 97.64 125.42 122.51
Fringe Benefit tax 2.99 0.65 0 0 0
Deferred Tax 1.23 0.81 -4.24 1.32 14.73
Reported Net Profit 174.68 211.96 255.59 314.65 343.99
Extraordinary Items -0.33 -0.48 -2.09 -0.997 -2.59
Adjusted Net Profit 174.95 212.44 257.69 315.65 346.59
Adjst. below Net Profit 0 0 0 0.0025 0
P & L Balance brought forward 82.63 115.87 140.86 232.75 378.38
Appropriations 141.37 186.98 163.70 169.02 171.97
P & L Balance carried down 115.87 140.86 232.75 378.38 550.40
Dividend 104.05 118.46 118.46 118.46 118.46
Equity Dividend % 111.25 126.25 126.25 126.25 126.25
Earnings Per Share-Unit Curr 24.98 32.03 36.16 48.07 51.80
Book Value-Unit Curr 73.70 85.68 196.11 230.61 269.38
 We are taken the all data of profit & loss by average.
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4.2 Ratio Analysis
The relationship of one item to another expressed in a simple mathematical form is

known as the Ratio.
The relationship can be expressed as:
1. Percentage
2. Times
3. Proportion of numbers
4. Days
Ration is used as benchmark for evaluating the financial position and the performance of
the company. Ratio helps to summaries the large quantities of financial data and to make
qualitative judgment about the financial performance of the company. Ratio in general, is a
statistical yardstick by means of which the relationship between figures can be compared and
measured.
Ratio analysis is a widely – used tool of financial analysis. It is defined as the systematic
use of ratio to interpret the financial statement so that the strengths and weaknesses of a firm as
well as its historical performance and current financial can be determined.
Interpretation through ratios:-
Only calculating ratio is useless there must be a logical interpretation that can be useful to
management for making policy and take important decision. Investors can use this for finding
out the risk involved and what would be the return from the particular company. Methods used
for deriving interpretation are as below.
a. Comparison with ideal ratio

b. Comparison with past year ratio
c. Compare with ratio of other competitor company
d. Help of some related ratio.
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4.3.1 Current ratio
It is a measure of general liquidity and is most widely used to make the analysis for short term
financial position or liquidity of a firm. It is calculated by dividing the total of the current assets
by total of the current liabilities.
CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES
Table 4.1
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Lotus Chocolate Company Ltd 1.65 1.91 2 1.85 1.9
Cadbury India Ltd 0.93 1.11 1.1 1.24 1.31
Nestle India Ltd 0.66 0.63 0.62 0.57 0.51
Lotte India Corporation Ltd 0.91 0.77 1.26 1.66 1.41
Total 4.15 4.42 4.98 5.32 5.13
Average 1.0375 1.105 1.245 1.33 1.2825
1.4
1.2
0.8
0.6 Current ratio
0.4
0.2
0
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.1
Above graph shown the current ratio of chocolate industry of five year. The current ratio of
the industry is increase in 2008-09 to 2011-12, but in 2012-13 the current ratio of the
industry is decrease.
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4.3.2 Interest coverage ratio
The interest coverage ratio (ICR) is a measure of a company's ability to meet its interest. It
determines how easily a company can pay interest expenses on outstanding debt. Payments.
Interest coverage ratio is equal to earnings before interest and taxes (EBIT) for a time period,
often one year, divided by interest expenses for the same time period. The interest coverage ratio
is a measure of the number of times a company could make the interest payments on its debt with
its EBIT
INTEREST COVERAGE RATIO = EBIT / INTEREST EXPENSES
Table 4.2
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Lotus Chocolate Company Ltd 4.85 14.22 2.83 -4.53 -0.16
Nestle India Ltd 472.23 655.99 1,061.29 272.61 59.37
Lotte India Corporation Ltd 0.23 28.83 6.09 78 105.63
Total 517.13 771.48 1135.11 433.39 226.74
Average 129.2825 192.87 283.7775 108.3475 56.685
300
250
200
150
Interest coverage ratio
100
50
0
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.2
Above graph shown the Interest coverage ratio of chocolate industry of five year. The
Interest coverage ratio of the industry is increase in 2008-09 to 2010-11, but in 2011-12 to
1012-13 the Interest coverage ratio of the industry is decrease.
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4.3.3 Return on capital employed ratio
Return on capital employed (ROCE) is a measure of the returns that a business is achieving from
the capital employed, usually expressed in percentage terms. Capital employed equals a
company's Equity plus Non-current liabilities (or Total Assets − Current Liabilities), in other
words all the long-term funds used by the company. ROCE indicates the efficiency and
profitability of a company's capital investments.
ROCE = EBIT / CAPITAL EMPLOYED
= EBIT / (EQUITY + NON-CURRENT LIABILITIES)
= EBIT / (TOTAL ASSETS - CURRENT LIABILITIES)
Table 4.3
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Lotus Chocolate Company Ltd 3.04 4.12 5.42 0 0
Nestle India Ltd 173.13 174.16 158.6 69.91 45.1
Lotte India Corporation Ltd 0 12.37 0 1.41 1.88
Total 221.13 235.95 203.11 113.1 77.32
Average 55.2825 58.9875 50.7775 28.275 19.33
70
60
50
40
Return on capital employed
30 ratio
20
10
0
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig. -4.3
Above graph shown the ROEC of chocolate industry of five year. The ROEC of the industry
is increase in 2008-09 to 2009-10, but in 2010-11 to 1012-13 the ROEC of the industry is
decrease.
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4.3.4 Return on net worth ratio
The return on equity ratio (also known as the return on net worth) reveals the amount of return
earned by investors on their investments in a business. This return can be improved when a
business buys back its own stock from investors, or by using more debt and less equity to fund
its operations.
RETURN ON NET WORTH RATIO = NET INCOME / EQUITY
Table 4.4
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Lotus Chocolate Company Ltd 4.47 6.39 5.63 0 0
Nestle India Ltd 119.78 124.22 113.97 90.31 69.52
Lotte India Corporation Ltd 0 6.08 0 1.09 1.48
Total 162.34 174.6 152.66 125.26 96.93
Average 40.585 43.65 38.165 31.315 24.2325
50
40
30
Return on net worth ratio
20
10
0
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.4
Above graph shown the Return on net worth ratio of chocolate industry of five year. The
Return on net worth ratio of the industry is increase in 2008-09 to 2009-10, but in 2010-11 to
1012-13 the Return on net worth ratio of the industry is decrease.
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4.3.5 The fixed assets ratio
Fixed asset turnover ratio compares the sales revenue a company to its fixed assets. This ratio
tells us how effectively and efficiently a company is using its fixed assets to generate revenues.
This ratio indicates the productivity of fixed assets in generating revenues. If a company has a
high fixed asset turnover ratio, it shows that the company is efficient at managing its fixed
assets. Fixed assets are important because they usually represent the largest component of total
assets.
FIXED ASSET TURNOVER RATIO = SALES REVENUE / TOTAL FIXED ASSETS
Table 4.5
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Lotus Chocolate Company Ltd 1.42 1.72 1.86 2.32 3.25
Nestle India Ltd 3.46 3.43 3.65 3.49 2.47
Total 9.42 9.81 9.49 10.19 10.47
Average 2.355 2.4525 2.3725 2.5475 2.6175
2.65
2.6
2.55
2.5
2.45
2.4 The fixed assets ratio
2.35
2.3
2.25
2.2
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.5
Above graph shown the Fix asset turnover ratio of chocolate industry of five year. The Fix
asset turnover ratio of the industry is increase in 2008-09 to 2009-10 and 2010-11 to 2012-
13, but in 2010-11 the Fix asset turnover ratio of the industry is decrease.
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4.3.6Inventory ratio
Inventory to sales ratio establishes relationship between the sales with average stock. This ratio
measures the velocity of conversion stock in to sales. Usually, a high inventory sales indicates
efficient management of inventory because more frequently the stock are sold, the lesser amount
of money is required to finance the inventory. A low inventory to sales ratio indicates an
inefficient management of inventory, over investment in inventories, sluggish business, and poor
quality of good and lower profit as compared to total investment. A high inventory turnover may
be the result of a very low level of inventory which results in shortage of goods in relation to
demand and position of stock or the turnover may be high due to conservation methods of
valuing inventories at lower value or the policy of the being to buy frequently in small lot.
INVENTORY RATIO = SALES / INVENTORY
Table 4.6
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Nestle India Ltd 10.69 11.19 11.87 11.75 11.64
Total 38.44 40.25 38.9 34.03 34.95
Average 9.61 10.0625 9.725 8.5075 8.7375
10.5
10
9.5
9
Inventory ratio
8.5
7.5
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.6
Above graph shown the Inventory ratio of chocolate industry of five year. The Inventory
ratio of the industry is increase in 2008-09 to 2009-10 and 2011-12 to 2012-13, but in 2010-
11 to 2011-12 the Inventory ratio of the industry is decrease.
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4.3.7Debtors ratio
Debtors Turnover ratio is a test of the liquidity of the firm. This ratio establishes the relationship
between net credit sales and accounts receivables. The objective of this ratio is to determine the
efficiency with which the debtors are being managed. It suggests the number of time the amount
of credit sale is collected during the year.
DEBTORS RATIO = NET SALES / DEBTOR
Table 4.7
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Nestle India Ltd 90.25 95.14 100.04 86.14 84.87
Total 257.46 238.34 238.21 213.69 207.02
Average 64.365 59.585 59.5525 53.4225 51.755
70
60
50
40
30 Debtors ratio
20
10
0
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.7
Above graph shown the Debtors ratio of chocolate industry of five year. The Debtors ratio of the
industry is decrease in 2008-09 to 2012-13.
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4.4 Trend Analysis
Trend analysis is one of the tools for the analysis of the company‘s monetary statements for the
investment purposes. Investors use this analysis tool a lot in order to determine the financial
position of the business. In a trend analysis, the financial statements of the company are
compared with each other for the several years after converting them in the percentage. In the
trend analysis, the sales of each year from the 2008-2009 to 2012-2013 will be converted into
percentage form in order to compare them with each other.
Trend Analysis is an aspect of technical analysis that tries to predict the future movement of a
stock based on past data. Trend analysis is based on the idea that what has happened in the past
gives traders an idea of what will happen in the future.
Method for calculating Trend
Trend Percentage Method
We have utilized trend percentage method for the calculation of trend. For the trend analysis
index number is advocated. The procedure followed is to assign the number 100 to the item of
the base year and to calculate percentage change in each item of other years in the relation to the
base year. This procedure is called trend-percentage method.
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4.4.Total Assets
Table 4.8
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Cadbury India Ltd 506.1 542.97 740.88 1,081.42 1,370.71
Nestle India Ltd 473.35 581.27 855.42 3,129.96 3,873.65
Total 1028.11 1176.19 2048.28 4679.54 5714.37
Average 257.03 294.05 512.07 1169.885 1428.59
100 114.40 199.23 455.16 555.81
Total Assets
600
555.81
500
455.16
400
300
Total Assets
200 199.23
100 100 114.4
0
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.8
Above graph shown the Total Assets of chocolate industry of five year. The Total Assets of the
industry is increase 555.81 in 2008-09 to 2012-13.
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4.4.2 Inventories
Table 4.9
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Nestle India Ltd 434.91 498.74 575.95 734.04 745.58
Total 680.74 722.45 949.15 1213.49 1460.62
Average 170.19 180.61 237.29 303.37 365.16
100 106.12 139.43 178.25 214.56
Inventory
250
214.56
200
178.25
150
139.43
100 100 106.12
50
0
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.9
Above graph shown the Inventories of chocolate industry of five year. The Inventories of the
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4.4.3 Total Liability
Table 4.10
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Cadbury India Ltd 506.1 542.97 740.88 1,081.42 1,370.71
Nestle India Ltd 473.35 581.27 855.42 3,129.96 3,873.65
Total 1028.11 1176.19 2048.28 4679.54 5714.37
Average 257.03 294.05 512.07 1169.885 1428.59
100 114.40 199.23 455.16 555.81
Total Liability
600
555.81
500
455.16
400
300
Total Liability
200 199.23
100 100 114.4
0
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.10
Above graph shown the Total liability of chocolate industry of five year. The Total liability of
the industry is increase 555.81 in 2008-09 to 2012-13.
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4.4.4 Total Share Capital
Table 4.11
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Nestle India Ltd 96.42 96.42 96.42 96.42 96.42
Total 152.6 151.49 157.28 157.28 157.28
Average 38.15 37.87 39.32 39.32 39.32
100 99.27 103.07 103.07 103.07
Total Share Capital

104
103 103.07 103.07 103.07
102
101
100 100 Total Share Capital
99 99.27
98
97
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.11
Above graph shown the Total share capital of chocolate industry of five year. The Total share
capital of the industry is decrease 99.27 in 2008-09 to 2009-10 and 2009-2010 to 2010-11 in
total share capital is increase 103.07, but in 2010-11 to 2012-13 the total share capital constant.
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4.4.5 Gross Profit
Table 4.12
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Lotus Chocolate Company Ltd 1.9 2.63 1.57 -4.36 -1.58
Nestle India Ltd 865.18 1,028.25 1,272.86 1,541.25 1,829.77
Total 1108.03 1318.67 1594.48 2003.93 2297.28
Average 277 329.67 398.62 500.98 574.32
100 119.01 143.91 180.86 207.34
Gross Profit
250
200 207.34
180.86
150 143.91
119.01 Gross Profit
100 100
50
0
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.12
Above graph shown the gross profit of chocolate industry of five year. The gross profit of the
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4.4.6 Operating Profit
Table 4.13
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Lotus Chocolate Company Ltd 2.1 2.72 2.17 -3.48 0.22
Nestle India Ltd 866.82 1,029.65 1,273.94 1,546.36 1,856.37
Total 1118.61 1323.62 1600.17 2014.36 2331.77
Average 279.65 330.91 400.04 503.59 582.94
100 118.33 143.05 180.08 195.85
Operating Profit
250
200 195.85
180.08
150 143.05
118.33 Operating Profit
100 100
50
0
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.13
Above graph shown the operating profit of chocolate industry of five year. The operating profit
of the industry is increase 195.85 in 2008-09 to 2012-13.
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4.4.7 Total Income
Table 4.14
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Cadbury India Ltd 1,664.98 1,932.33 2,616.92 3,498.63 4,175.95
Nestle India Ltd 4,392.68 5,175.83 6,380.33 7,589.99 8,457.58
Total 6251.79 7327.05 9197.63 11411.72 12987.51
Average 1562.95 1831.76 2299.41 2852.93 3246.88
100 117.2 147.12 182.53 207.74
Total Income
250
200 207.74
182.53
150 147.12
117.2 Total Income
100 100
50
0
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.14
Above graph shown the total income of chocolate industry of five year. The total income of the
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4.4.8 Total Expenses
Table 4.15
Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

Cadbury India Ltd 1,421.41 1,650.91 2,303.06 3,050.53 3,724.69
Nestle India Ltd 3,525.86 4,146.18 5,106.39 6,043.63 6,601.21
Total 5133.18 6003.43 7597.46 9397.36 10655.74
Average 1283.3 1500.86 1899.37 2349.34 2663.94
100 116.60 148 183.07 207.59
Total Expenses
250
200 207.59
183.07
150 148
116.6 Total Expenses
100 100
50
0
2008-09 2009-10 2010-11 2011-12 2012-2013
Fig.-4.15
Above graph shown the total expenses of chocolate industry of five year. The total expenses of
the industry is increase 207.59 in 2008-09 to 2012-13.
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CHATER 5
Business Plan
5.1 Business Plan for Chocolate Industry
 Blueberry Chocolate
Bhavsar Meghal K. 12044311004 (IBM)

Bhojak Keyur B. 12044311005 (Marketing)
Gadhvi Hiren B. 12044311022 (HR)
Goswami Hardip P. 12044311028 (Marketing)
Joshi Naiya G. 12044311035 (HR)
Patel Jignesh D. 12044311095 (Finance)
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5.2 Executive Summary
We are starting a business of manufacturing chocolates. Name of the company is ―Blueberry

Chocolate‖. Our target market is whole Gujarat. The customers to whom our products will be
supplied are retailers, wholesalers and traders in Gandhidham, Adipur, Rajkot, Ahmedabad,
Surat and Vadodara. The location of our manufacturing plant would be GIDC, Adipur.
We would be targeting the consumers of all age groups. The products that we would offer are:
 Blueberry Plain Chocolate

 Blueberry Milk Chocolate
 Blueberry Fruit N Nut Chocolate
The core competencies on which our company would be competing are taste and quality of our
chocolates. Our company would be a partnership firm. There would be 2 finance managers, 2
marketing managers, 1 accountant and 1 general manager as part of the organization.
5.3 General Company Description
Our company will be in the confectionary business. Our company will be involved in
manufacturing of chocolates.
Vision
Our vision is to be the leading manufacturer of chocolates all over India.
Mission
We seek to produce high quality products at competitive price using modern technology to
provide high satisfaction to the consumers.
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Objectives
 To manufacture and provide the customers with the quality products to the best interest of
the customers.
 To create Price competitive Products as part of the effect to increase the world access to
high quality chocolates.
 To ensure a hygiene & clean working environment as to continue to produce Safe &
Tasty Products
 To strive to Meet & Exceed Customer's Expectations so as to ensure a sustainable
business relationship.
Target Market
 Upper class
 Middle class
 Lower middle class
 All age groups
About Chocolate Industry
The chocolate market is estimated around 33,000 tonnes valued at approximately Rs. 8 billion.
Bars of molded chocolates like Amul, milk chocolate, dairy milk, truffle, nestle premium, and
nestle milky bar comprise the largest segment, accounting for 37% of the total market in terms of
volume. To push sales chocolate companies have been targeting mainly adult audiences.
Chocolates are being presented as snack food for the new target audiences. The chocolate
segment is characterized by high volumes, huge expenses on advertising, low margins, and price
sensitivity
Cadbury is the leading player in the chocolate market industry with the penetration of 70%
market share. The company's brands like Five Star, Gems, Éclairs, Perk, and Dairy Milk are
leaders in their segments. Nestle & Amul are the other major players in chocolate industry.
Chocolate industry is growing at steady growth rate of 25%. Over 70% of the consumption of
chocolates takes place in the urban market. It is price sensitive market.
Until early 90's, Cadbury had a market share of over 80 %, but its party was spoiled when Nestle
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appeared on the scene. The other one has introduced its international brands in the country (Kit
Kat, Lions), and now commands approximately 15% market share. The two companies operating
in the segment are Gujarat Co-operative Milk Marketing Federation (GCMMF) and Central
Areca nut and Cocoa Manufactures and Processors Co-operation (CAMPCO). Competition in
the segment will soon get keener as overseas chocolate giants Hershey's and Mars consolidate to
grab a bite of the Indian chocolate pie.
Indian Chocolate Industry‘s Margin range between 10 and 20%, depending on the price point at
which the product is placed. The input costs in India are under check owing to the 24% decline
in the prices of sugar.
Core Competencies
The core competencies on which our company will compete are:
 Taste
By consuming the ―Blueberry Chocolates‖ flavor begins to fill your mouth the moment
the chocolate begins to melt on your tongue like butter and it tastes like pure chocolate
rather than cocoa powder. At first there is so much pleasure in tasting the chocolate, it
may be difficult to focus on the specifics of flavor. First perception the consumer would
describe for the chocolate as ―chocolaty‖ and ―Yummy & crunchy‖.
 Quality
The raw ingredients are of finest quality and also care is taken of the production process;
roasting and crushing the cocoa beans and mixing the cocoa paste with sugar and other
ingredients such as milk. Blueberry chocolates are high quality chocolates as they are
shiny brown, breaks cleanly and is smooth. Blueberry chocolates has the sufficient
quantities of cocoa butter and vegetable fat so that it does not become greasy or sticky at
ambient room temperature.
Ownership
Our company will be a partnership firm.
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5.4 Competitor Analysis
COMPANY FOUNDED IN BRAND PORTFOLIO

(confectionery products)
Nestle 1860s Kit Kat, Smarties, Wonka
Ferrero 1940s Rocher, Raffaello, Kinder, Tic Tac,
Mon Cheri, Nutella
Mars 1911 Bounty, Galaxy, Mars, Snickers, Milky
Way, Wrigley‘s, M&M‘s etc
Amul 1945 Milk chocolate, Fruit & Nut chocolate
Hershey‘s 1894 Hershey‘s milk chocolate, Kisses, Pot
of gold, Milk duds, Reese‘s,
Icebreakers etc
Perfetti Van 2001, when Perfetti Alpenliebe, Chlormint, Centerfresh,
Melle and Van melle Happydent, Mentos
merged
ITC 2002(confectionery Minto and Candyman
segment)
Parle 1929 Melody, mango bite, poppins, kismi
toffee, mazelo, xhale, éclair, golgappa,
parle lites, orange candy
Cadbury 1948 (Indian Dairy Milk, Dairy Milk fruit N nut,
Market) Dairy Milk Shots, Dairy Milk Roasted
Almond, Dairy Milk Silk
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Our Products
Our company will be dealing in the manufacturing of 3 products. They are:
1. Milk Chocolate
2. Fruit & Nut Chocolate
3. Plain Chocolate
Ingredients of Milk Chocolate
Sugar, Full Cream Milk Powder, Vegetable Fat, Emulsifiers, Flavors, Whole Cow‘s Milk, Cocoa
Butter.
Recipe for milk chocolate
 Take one cup of powdered sugar, one cup of milk powder.

 One heaped table spoon of cocoa powder, about half table spoon of butter, and to this add
the minimum quantity of water required to make a thick batter.
 Place this batter on a stove and bring to a boil on a low flame.
 When the batter becomes thick (shown in the clip) stop the boiling, cool.
 Pour into suitable moulds, cut, cool in a fridge and it gets ready.
Ingredients of Fruit & Nut
Sugar, Full Cream Milk Powder, Raisins, Cocoa Butter, Cocoa Mass, Almonds, Vegetable Fat,
Emulsifiers, Flavors.
Recipe for fruit & nut chocolate
 First take whatever moulds you like and grease it with butter. Set this aside for a moment.
 Melt the chocolate either in double boiler method or in a microwave. Remove it and set
aside.
 Chop up all your nuts and dried fruits. Add it to the chocolate and mix well.
 Take a spoonful of this and fill your prepared mould and put it in the deep freeze for 1
hour.
 Unmold it and keep it in the fridge until serving.
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Ingredients of Plain Chocolate
Sugar, Full Cream Milk Powder, Cocoa Butter, Cocoa Mass, Vegetable Fat, Emulsifiers,
Flavors.
Recipe for plain chocolate
 Combine cocoa and sugar and blend until all lumps of cocoa are gone. Add water and salt
and mix well.
 Cook over medium heat, bringing it to a boil.
 Keep boiling until thick, stirring to keep from overflowing.
 Remove from heat and let cool.
 When cool, add vanilla.
 Then put this in your milk, just like the store bought stuff.
5.5 Marketing Plan
Economics
Total size of chocolate market is 33000 tones
Trends in Consumer Preferences
 The range and variety of chocolates available in malls seems to be growing day by day,
which leads to lot of impulse sales for chocolates companies.
 Chocolates which use to be unaffordable is now considered mid-priced.
 Branded chocolates have become more popular.
 Mithai is becoming the substitute of chocolates
 Instead of buying sweets on Rakhshabhandan, Diwali, people prefer to buy chocolates.
Barriers to entry
 Huge startup costs

 Ensuring good quality products to the customers
 High Level of competition from the well established brands
 To keep price of the product low, as it is a price sensitive market
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Overcoming the barriers to entry
 To overcome the barrier of huge start up costs our machinery would be taken for lease for
first few years of business.
 Marketing of our products would be on the basis good quality and healthy products to
provide a competitive advantage.
From customer‘s point of view, chocolate is the product which shows their impulse buying
behavior. Customers are looking for low priced chocolates and also it should have good taste.
5.6 Features and benefits
Milk chocolate
 Milk chocolate is a stimulator, to the brain, to the emotions, thus, increases your stamina.
 Milk chocolate is high in vitamins B1, B2, D and E. It also contains potassium and
magnesium.
 Milk chocolate contains antioxidants that boost the immune system.
Fruit N Nut chocolate
 Almonds help in the creation of new blood cells, hemoglobin and help in proper
functioning of vital organs of the body.
 Almonds also help in weight loss, lowering blood pressure, reduction in risk of recurrent
coronary heart disease, solving constipation, etc.
 Raisin helps in digestion problems, acidity or constipation problems.
 Raisins contain considerable amount of iron
 Cashew nuts provide protein and fiber to body.
 Cashews have no cholesterol. Cashews contain healthy monounsaturated fat that
promotes good cardiovascular health.
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Plain chocolate
 Chocolate contains essential trace elements and nutrients such as iron, calcium and
potassium, and vitamins A. B1, C, D, and E.
 Cocoa is also the highest natural source for Magnesium.
 The high Magnesium content of Chocolate is beneficial for the Cardiovascular System
and hypertension.
 Cancer Fighter
 High in Antioxidants
 Cocoa contains flavones, a type of flavonoid that is only found in cocoa and chocolate.
Customers (Wholesalers and Retailers)
 Anil Provision Store
166 Dbz-North Sector, AryaSamaj Road, ZandaChowk, Gandhidham, Gandhidham– 370201
 Rajani Provision Stores
Vidhyanagar Main Road, Virani Chowk, Opp. Dr. Sanjay Gadre, Virani Chowk, Rajkot - 360002
 Gayatri General Provision Stores
Amrut Shopping Centre, Kevdawadi Main Road, Kevdawadi, Rajkot – 360002
 Jatin Provision Stores
6, Nityanand Apartment, Ellisbridge, Near Pritamnagar Akhada, Ellisbridge, Ahmedabad,

Gujarat 380006
 Narayan Department Store
Khodiyar Chowk, Ram Nagar, Sabarmati, Ahmedabad, Gujarat 380005
 Madhur Super Market
ZodiacSquare,Bodakdev,Ahmedabad
 Dhirajsons Toyshop
Mega Store, Near Chowpati, Athwa Gate, Athwa Gate, Surat
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 Sahaj Super Store
Jain Wadi, Surat, Gujarat 395009
 Ashok Provision Store
Shop No:n -16, Main Bazar, Gandhidham, Gandhidham– 370201
 Pankaj Provision Store
Shop No1, Lilasha Nagar, 12c Plo No: 637, Gandhidham, Gandhidham– 370201
 Chamunda Provision Store
Gondal Road, Hasanvadi-4, Hasanwadi, Rajkot - 360002
 Gujarat Provision Store
C-72, Main Bazaar, Gandhidham- 370201
 Yogeshwar Provision Store
Dbz - N -No :1, Khanna Market, Gandhidham, Gandhidham– 370201
 Dairy King
Plot No 117, Plaza Corner, Oslo Circle, Gandhidham, Gandhidham– 370201
 Signature
Zanda Chowk, Gandhidham - 370201
 Kavita Provision Store
Maitri Road,
Adipur – 370205
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Competitors
 Amul
 Nestle
 Cadbury
 Kent
Niche
Our niche market would be the children and young generation as chocolate is mostly liked by
children and youngsters.
Marketing strategy for niche market
 Attractive packing: Our Company will focus on packaging to attract children.

 Good quality and healthy chocolates are the factors on which marketing will be done.
Promotion
 Local news paper

 Local TV channel
 Local radio Station
 Hoardings in Adipur and Gandhidham
 Through pages and account on Social Networking Sites (Facebook & Twitter)
Distribution channels
 Our products would be distributed through channels like wholesalers, retailers and our own
sales force.
Proposed Location
 For our business, the proposed location would be in GIDC, Gandhidham.
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5.7 Operational Plan
Production
 The product will be manufactured by Full Automatic Chocolate Production Line (QH200),
with this system, baking the moulds, depositing, forming etc. series procedure can be
achieved automatically. It's available to depositing all shape of chocolate. Such as double
color filled-inside, nuts etc chocolate. Since our product are plain as well as nut are added
this machine is appropriate.
 This machine can produce 100-300 kg chocolates per hour. It can produce chocolates in
different shapes .It can help to reduce cost of chocolates mould. By Producing Chocolates in
different shapes we can attract all segments of market.
 The production capacity is fully automated as mentioned above, so the need of personnel is
comparative less than other semi-automatic machine.
5.8 Manufacturing process
 Chocolate production is highly sophisticated computer controlled process with much of the
new specialist machinery. Machines like as chocolate cooling tunnels, enrobing machines,
coating machines, molding machines.
Cleaning Roasting Grinding Cocoa

processing
Cooling Tempering Conching Mixing &

& molding Refining
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Chocolate processing: Production flow of chocolate Cleaning
When seeds arrive to factory they are carefully selected and cleaned by passing through a bean
cleaning machine that removes extraneous materials. Different bean varieties are blended to
produce the typical flavor of chocolate of particular producer. Then the bean shells are cracked
and removed. Crushed cocoa beans are called nibs.
Roasting
 The beans are then roasted to develop the characteristic chocolate flavor of the bean in large
rotary cylinders. The roasting lasts from 30 minutes to 2 hours at very high temperatures. The
bean colour changes to a rich brown and the aroma of chocolate comes through.
Grinding
 The roasted nibs are milled through a process that liquefies the cocoa butter in the nibs and
forms cocoa mass (or paste). This liquid mass has dark brown colour, typical strong smell
and flavor and contains about 54% of cocoa butter.
Cocoa Pressing
 Part of cocoa mass is fed into the cocoa press which hydraulically squeezes a portion of the
cocoa butter from the cocoa mass, leaving "cocoa cakes". The cocoa butter is used in the
manufacture of chocolates; the remaining cakes of cocoa solids are pulverized into cocoa
powders.
Mixing and Refining
 Ingredients, like cocoa mass, sugar, cocoa butter, flavorings and powdered or condensed milk
for milk chocolate are blended in mixers to a paste with the consistency of dough for
refining. Chocolate refiners, a set of rollers, crush the paste into flakes that are significantly
reduced in size. This step is critical in determining how smooth chocolate is when eaten.
Conching
 Conching is a flavour development process during which the chocolate is put under constant
agitation. The conching machines, called "conches", have large paddles that sweep back and
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forth through the refined chocolate mass anywhere from a few hours to several days.
Conching reduces moisture, drives off any lingering acidic flavors and coats each particle of
chocolate with a layer of cocoa butter. The resulting chocolate has a smoother, mellower
flavor.
Tempering and Molding
 The chocolate then undergoes a tempering melting and cooling process that creates small,
stable cocoa butter crystals in the fluid chocolate mass and is deposited into moulds of
different forms. Properly tempered chocolate will result in a finished product that has a
glossy, smooth appearance.
Cooling
 The moulded chocolate enters controlled cooling tunnels to solidify the pieces. Depending on
the size of the chocolate pieces, the cooling cycle takes between 20 minutes to two hours.
From the cooling tunnels, the chocolate is packaged for delivery to retailers and ultimately
into the hands of consumers.
Location
 Our manufacturing unit will be located in Adipur. Kandla Port and Mundra Port are also near
to Adipur so it also helps in future, if we want Chocolates to be exported.
 Labour is easily available since there are many such labour contractor available in
Gandhidham. We will get skilled and unskilled labour as per our need. Technical people are
also available easily to monitor the quality and consistency of our product.
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Legal formalities:
 We could get DIN (Director Identification Number) which is printed, signed, and sent to
Ministry of Corporate Affairs.
 Get a TAN (Tax Account Number) for income taxes from Income Tax Department‘s
Assessing Office.
 We must be registered Enroll with Establishment Act (State/Municipal), Shops, and
Office of Inspector.
 We should also get food process order certificate from ministry of food processing
industries and also doing as business certificate required for our chocolate industry.
Personnel
The machine is fully automatic so need of personnel is less. We need skilled worker for
packaging and storage of our product. There would be a need of professional for checking and
maintaining the quality of product.
Inventory
The basic raw material required for making chocolate is Sugar, Full Cream Milk Powder, Cocoa
Butter, Cocoa Mass, Vegetable Fat, Emulsifiers, and Flavors.
Suppliers For Milk Powder:
 Aditya Enterprises
Mr. Abhay
Near Jain Mandir, Kolhapur, Maharashtra, India - 416118
Phone: +91-230-2481402
Fax: +91-230-2481402
Mobile: +91-9011710691
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Email ID: adiraj3831@yahoo.com
Web Site: http://www.adityaenterprisesindia.in
 Sugar S-30:
Payment Terms L/C
Akhilendra Pratap Singh
ASA PORTFOLIO PRIVATE LIMITED
Place of Origin: Maharashtra
Packaging: 50 KG
Delivery Detail: Within 20 days from the receipt of Confirmed payment instruments
 Butter & Vegetable Fat, Vegetable oil:
Company Name: BABA CASEIN INTERNATIONAL
Address: 108, Kabir Market, Hathi Khana Main Road
Vadodara, Gujarat, India.
Zip: 390006
Tel: +91- 265- 2432628
Mobile Phone: 9824048990
Fax: +91- 265- 2432628
Website: http://www.baba-group.com
Contact Person: Mr. Ashwin Golani
 Milk Powder, Whole Milk Powder, Skimmed Milk Powder, Dairy Whitener, Butter
Company Name: VARSHNEY BHANDU FOODS PVT LTD
Address: 388 / 3, 1st Floor, Upper Side on Pratap Ghee, Main Road, Khari Baoli
New Delhi Delhi India
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Zip: 110006
Tel: 91- 11- 23973674
Mobile Phone: 9810120977
Fax: 91- 11- 23973674
Website: http://www.meerapremium.com
Contact Person: Mr. Anoop Kumar Varshney
Cocoa Powder & Soya Leicithin:
AkhilHealthcare Private Limited-Mr.ManojShah (Managing Director) No. 205/206, B. B. C.

Tower, Opposite World Trade Center, Sayajigunj, Vadodara - 390 020, Gujarat, India.
Management and organization
Company Name: Blue Berry Chocolates.
Owner Partners: Shilesh Vyash
General Manager: Mr.Nitesh Kadam
Job Description:
 Increasing management's effectiveness by recruiting, selecting, orienting, training,

coaching, counseling, and disciplining managers
 Communicating values, strategies, and objectives; assigning accountabilities
 Accomplishes subsidiary objectives by establishing plans, budgets, and results

measurements; allocating resources; reviewing progress; making mid-course corrections.
 Maintains quality service by establishing and enforcing organization standards.
 Contributes to team effort by accomplishing related results as needed.
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Finance Managers: Divya Dhawani
Rinku Salat
Job Description:
 providing and interpreting financial information;

 monitoring and interpreting cash flows and predicting future trends;
 developing financial management mechanisms that minimize financial risk;
 conducting reviews and evaluations for cost-reduction opportunities;
 managing a company's financial accounting, monitoring and reporting systems;
 liaising with auditors to ensure annual monitoring is carried out;
 managing budgets;
 arranging new sources of finance for a company's debt facilities;
Marketing Managers: Jay Pujara
Nikunj Gajara
Job Description:
 manage and coordinate all marketing, advertising and promotional staff and activities
 conduct market research to determine market requirements for existing and future
products
 analysis of customer research, current market conditions and competitor information
 develop and implement marketing plans and projects for new and existing products
 manage the productivity of the marketing plans and projects
 monitor, review and report on all marketing activity and results
 determine and manage the marketing budget
 deliver marketing activity within agreed budget
 develop pricing strategy
 deal with media and advertising
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Accountant: Rinku Salat
Job Description:
 compile and analyze financial information to prepare financial statements including

monthly and annual accounts
 ensure financial records are maintained in compliance with accepted policies and
procedures
 ensure all financial reporting deadlines are met
 prepare financial management reports
 resolve accounting discrepancies and irregularities
 monitor and support taxation issues

 develop and maintain financial data bases
 financial audit preparation and coordinate the audit process
 ensure accurate and appropriate recording and analysis of revenues and expenses
 analyze and advise on business operations including revenue and expenditure trends,
financial commitments and future revenues
 analyze financial information to recommend or develop efficient use of resources and

procedures, provide strategic recommendations and maintain solutions to business and
financial problems
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5.9 Financial analysis
Price 15 Rs.
Working days / years 315 Days
Raw material cost 48 % of Sales
Cost of power 5 % of Sales
Wage and salary 10 % of Sales
Factory overhead 50000 for first year then increase by 2 %.
Administration expenses 4 % of Sales
Selling expenses 4.5 % of Sales
Loan amortization 5 equal Installment / year
Income-tax rate 30 %
Preliminary expense. Written off 5 equal Installment / year
Rent 1. Building 55000 / month
2. Machinery 130000 / month
Rate of interest on loan amortization 13.75 %
5.9.1 Loan amortization

A B C D= (C-B) E= (A-D)
YEAR Outstanding Interest Payment Capital Outstanding
beginning (13.75 %) (EAI) Recovery Ending
1 40,00,000 5,50,000 11,58,145 6,08,145 33,91,855
2 33,91,855 4,66,380 11,58,145 6,91,765 27,00,091
3 27,00,091 3,71,262 11,58,145 7,86,882 19,13,209
4 19,13,209 2,63,066 11,58,145 8,95,078 10,18,130
5 10,18,130 1,39,993 11,58,145 10,18,152 -22
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5.9.2 Profit & Loss Account
Particular 1st Year 2nd Year 3rd Year 4th Year 5th Year
Selling per day (Unit) 2000 2480 2960 3440 3440
Install capacity (Unit/Year) 19,00,000 19,00,000 19,00,000 19,00,000 19,00,000

Production (Unit/Year) 6,33,333 760000 8,86,667 1013334 1013334
Capacity Utilization 60 % 70 % 80 % 85 % 85 %
Sales Realization 94,50,000 1,17,18,000 1,39,86,000 1,62,54,000 1,62,54,000

Cost of production
Raw material 45,36,000 56,24,640 67,13,280 78,01,920 78,01,920
Power 4,72,500 5,85,900 6,99,300 8,12,700 8,12,700
Wage & salary 9,45,000 11,71,800 13,98,600 16,25,400 16,25,400
Factory overhead 50,000 51,000 52,020 53,060.4 54,121.61
Administration & selling expenses
Administration expenses 3,78,000 4,68,720 5,59,440 6,50,160 6,50,160
Selling expenses 4,25,250 5,27,310 6,29,370 7,31,430 7,31,430
Rent 22,20,000 22,20,000 22,20,000 22,20,000 22,20,000
Gross profit before interest 4,23,250 10,68,630 17,13,990 23,59,329.6 23,58,268.39
Total financial expenses
Interest on term loan 5,50,000 4,66,380 3,71,262 2,63,066 1,39,993
Operating profit -1,26,750 6,02,250 13,42,728 20,96,263.6 22,18,275.39
Preliminary expense
Written off 40,000 40,000 40,000 40,000 40,000
Profit & loss before tax -1,66,750 5,62,250 13,02,728 20,56,263.6 21,78,275.39
Provision for tax 0 1,68,675 3,90,818.4 6,16,879.08 6,53,482.617
Net profit -1,66,750 3,93,575 9,11,909.6 14,39,384.52 15,24,792.773
EBIT 3,83,250 10,28,630 16,73,990 23,19,329.6 23,18,268.39
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5.9.3 Balance sheet
Particulars At the End 1st Year 2nd Year 3rd Year 4th Year 5th Year
of Period.
Liability
Owner‘s fund 30,00,000 30,00,000 30,00,000 30,00,000 30,00,000 30,00,000
Net Profit -1,66,750 3,93,575 9,11,909.6 14,39,384.52 15,24,792.77
Secured loan
Term loan 40,00,000 33,91,855 27,00,091 19,13,290 10,18,130 -22
Total 70,00,000 62,25,105 60,93,666 58,25,199.6 54,57,514.52 45,24,770.77
Asset
Loan & advances

Assets 60,50,000 48,40,000 36,30,000 24,20,000 12,10,000 0
Current Assets
Raw materials 2,24,600 3,45,000 4,15,000 4,85,000 4,85,000
Stock in process 1,56,000 2,98,000 3,05,409 3,15,409 3,15,409
Finish goods 1,89,607 2,60,000 3,10,617 3,34,000 3,34,000
Cash & bank balance 7,50,000 6,54,898 14,40,666 22,94,173.6 30,73,105.52 33,90,361.77
Misc. Expenditure &

losses
Preliminary expenses 2,00,000 1,60,000 1,20,000 80,000 40,000 0
Total 70,00,000 62,25,105 60,93,666 58,25,199.6 54,57,514.52 45,24,770.77
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5.9.4Cash Flow Statement
Particular Period 1st Year 2nd Year 3rd Year 4th Year 5th Year
Source of Fund
Owner‘s fund 30,00,000
EBIT 3,83,250 10,28,630 16,73,990 23,19,329.6 23,18,268.39
Preliminary 40,000 40,000 40,000 40,000 40,000
expense
Increase in long 40,00,000
term loan
Decrease in loan & 12,10,000 12,10,000 12,10,000 12,10,000 12,10,000
Advances
Total (A) 70,00,000 16,33,250 22,78,630 29,23,990 35,69,329.6 35,68,268.39
Capital expenditure 60,50,000

for the project
Increase in 5,70,207 3,32,793 1,28,026 1,03,383 0
working capital
Preliminary 2,00,000
expense
Repayment of long 6,08,145 8,18,716 13,77,999 19,58,396 21,56,625
term loan
Interest on term 5,50,000 4,66,380 3,71,262 2,63,066 1,39,993
loan
Tax (30 %) 0 1,68,675 3,90,818.4 6,16,879.08 6,53,482.617
Total (B) 6250000 17,28,352 17,86,564 22,68,105.4 29,41,724.08 29,50,100.617
Opening balance 0 750000 6,54,898 11,46,964 18,02,848.4 24,30,453.92

of cash in hand &
at bank
Net surplus deficit 750000 -95,102 4,92,066 6,55,884.4 6,27,605.52 6,18,167.77
(A-B)
Closing balance of 750000 6,54,898 11,46,964 18,02,848.4 24,30,453.92 30,48,621.69
cash In hand
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CHAPTER 6
CONCLUSION
 India is recognized as a biggest and fastest growing market in the world for chocolate
growing at 18 to 20% every year.
 So all the countries are looking at Indian chocolate industry markets for exports.
 India may also get some advantage in this situation as there are subsidies given by
government of India.
 At present India, have negligible exports to international markets. These are at present are
dominated by European Union, New Zealand, Australia and America.
 Both public and private sector have contributed to the chocolate industry growth in India.
 From the financial analysis of the industry we can see that the profitability of industry is
increasing year of years, and investments in current and fixed assets are also increasing.
In line with the same we may conclude that the industry is growing and hence provide
attractive outlook to enter.
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CHAPTER 7
BIBLIOGRAPHY
Books:
 ―Crafting and Executing Strategy: The Quest for Competitive Advantage‖ by Thompson
II, Strickland, Gamble and Jain; McGraw Hill Publication, Latest Edition. (TSG)
 Kotler, Philip. "Marketing Management" Analysis, Planning, Implementation, and

Control Prentice-Hall, Inc. Eighth Edition
Websites:
Search Engine: www.google.co.in
Other Sites:
www.lotuschocowww.cadburyindia.com/
www.nestle.in/late.com/companyoverview.html
www.lotteindia.com/
http://www.amul.com/
www.indianmirror.com/indian-industries/chocolate.html
http://www.nestle.in/aboutus/Pages/AllAboutNestl%C3%A9.aspx
http://www.indiainfoline.com/Markets/Company/Fundamentals/Balance-Sheet/Cadbury-India-
Ltd/500793
http://www.indiainfoline.com/Markets/Company/Fundamentals/Profit-Loss/Cadbury-India-
Ltd/500793
http://www.indiainfoline.com/Markets/Company/Fundamentals/Balance-Sheet/Nestle-India-
Ltd/500790
http://www.indiainfoline.com/Markets/Company/Fundamentals/Profit-Loss/Nestle-India-
Ltd/500790
81 | P a g e
http://www.indiainfoline.com/Markets/Company/Fundamentals/Balance-Sheet/Lotus-Chocolate-
Company-Ltd/523475
http://www.indiainfoline.com/Markets/Company/Fundamentals/Profit-Loss/Lotus-Chocolate-
Company-Ltd/523475
http://www.indiainfoline.com/Markets/Company/Fundamentals/Key-Ratios/Cadbury-India-
Ltd/500793
http://www.indiainfoline.com/Markets/Company/Fundamentals/Key-Ratios/Nestle-India-
Ltd/500790
http://www.indiainfoline.com/Markets/Company/Fundamentals/Key-Ratios/Lotus-Chocolate-
Company-Ltd/523475
www.capitaline.com
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CHAPTER-1 INTRODUCTION OF THE INDUSTRY

1.1 Rationale behind the selection of Industry – justification

The Indian Chocolate Industry has come a long way since

Indian Chocolate Industry as today is dominated by two

The global chocolate market is estimated to be around $85

 To identify the chocolate industry‘s dominant economic features.

2.1Cadbury India Ltd

Early Days - A One Man Business

 Maintain dominance in chocolate confectionery and market leadership in brown drinks.

 "Working together to create brands people love".

2.2 Nestle India Ltd

2.3 Lotte India Corporation Ltd

 Latte Choco Pie

2.4 Lotus Chocolate Company Ltd.

What is strategy group map?

The procedure for constructing a strategy group map is straightforward:

Company Name Profit (Rs.in crs) No.of.products

Low Net profit Net Profit High Net profit

3.1 Industry’s dominant economic features

1. Scope of Competitive Rivalry:

Here are the main factors of competitive rivalry:

2. Stage in Life Cycle:

3. Numbers of Companies in the Industry:

1. Lotus Chocolate Company Ltd

What consumers want?

The convenience buyer

Porter's 5 Forces Model

Substitutes like Ice-cream,

Potato chips, biscuits, soft drinks,

chewing gum, are a source of

fluctuates, therefore, in Imminent entry of global majors like

summer months, milk Hershey's, Mars etc. is bound to change

suppliers gain sufficient the power equation in the Indian chocolate

 Tariffs and international trade restrictions

Bargaining Power of Buyers

 Cost of competitive brand is low

Bargaining power of suppliers

 Supplier is the primary sources of particular items.

Intensity of Rivalry amongst existing players

 Substitutes are readily available and attractively price.

 Product and package innovation

Creating Value in Future

Luxury vs. commodity

The personal touch

New distribution channels

Middle class rule

Price vs. size

3.6.1NESTLE SWOT ANALYSIS:

1. Food contamination. Although it is Nestlé‘s responsibility to run thorough quality

 4.1 BACKGROUND OF FINANCIAL ANALYSIS

Financial analysts often assess the firm's:

Financial analysts often carried out by the following ways:

Objectives of the financial Analysis of the IT Industry are as follows:

 To know profitability of the industry

 Tools Used for Financial analysis

Particulars 08 - 09 09 - 10 10 - 11 11 -12 12 -13

The relationship of one item to another expressed in a simple mathematical form is

The relationship can be expressed as:

Interpretation through ratios:-

a. Comparison with ideal ratio

CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES

Particular 2008-09 2009-10 2010-11 2011-12 2012-2013

0.6 Current ratio