COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT

COST SHEET FOR

AMUL ICE-CREAMS

PRESENTE
D BY
HIRA
L MEHTA 61

SAU
RAV MEHTA 62

POO
NAM MISHRA 63

PARI
NAAZ MISTRY 64

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COST ANALYSIS OF AMUL ICE CREAM- FRUIT AND NUT

HEM
AL MUCHHALA 65

BHA
KTI SHAH 89

Table of Contents

Sr.No Title Page Number

1 ACKNOWLEDGE 3
2 ABSTRACT 3
3 OVERVIEW OF ICE CREAM 4
INDUSTRY
4 ABOUT THE COMPANY AMUL 7
5 COST SHEET 11
6 COST SHEET ANALYSIS 12
7 SWOT ANALYSIS 16
8 BIBLIOGRAPHY 18

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ACKNOWLEDGEMENT

We take this opportunity to thank Prof Jayesh Jain for giving us an

insight , his valuable advice , timely suggestions and constant support
throughout the project. We would also like to thank Mr.Raj Raut who is into
the ice-cream business for the valuable information that he shared with
us ,which proved to be very helpful while preparing the project

ABSTRACT

This project report is prepared to study the cost analysis of Amul ice cream
and to formulate the cost sheet to find the per unit cost of a single Amul ice
cream cup of 100 gm(fruit and nut). Our colleagues uncle also helped us in
finding the various cost involved in manufacturing ice cream and we also
got information from www.amulicecream.in.

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OVERVIEW OF ICE-CREAM INDUSTRY

History:-

The ice cream industry is mainly governed by the prevention of food and
adulteration act (PFA)-1954 in India. The ice cream market growth picked
up after de-reservation of the sector in 1997. History of Indian ice-cream
industry is very old started in un-organized sector and mainly the popular
product was kulfi. New technologies and freezers are the main force behind
the development. Future is bright for ice-cream industry in India.

Production –area:-

In rural areas, kulfis / ice creams made by small / cottage industry are
popular. The market for organized sector is restricted to large metropolitan
cities. In small towns and villages, there are thousands of small players
who produce ice- creams / kulfis in their home backyard and cater to the
local market. Almost 40% of the ice creams sold in the country are
consumed in the western region with Mumbai being the main market,
followed by 30% in the north and 20% in the south.

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Industry Snapshot:-

• Market Size - 1200 Crores

• Ice Cream market is growing at 26% (yoy)

Major players:-

1. Amul - Market Leader with share of 36%

2. HLL - Kwality Walls - 2nd biggest player
3. Mother Diary
4. Arun - Chennai Based Hatsun Agro Product

Few Brands/ Target Consumers

1. Youth Centric - Chillz

2. Kids - Moo

3. Teenagers - Cornetto

4. Health Conscious - Amul Sugarfree & Pro-Life

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Future of Ice Cream Market in India:-

Ice Cream market will expand with increase in number of malls.

Also companies like - HLL has been increasing their ice cream outlets -
Swirl. Few years ago consumers use to go out for walk after dinner and use
to buy ice creams from hawkers. But now consumer who often visit malls
for entertainment prefers to buy ice creams during different times of the
day as it is visible upfront and feel like spending Rs. 50 for that tasty
chocolate swirl with cake and nuts.

As marketers are understanding the different needs of

consumers, be it health conscious people- (Amul sugar free and pro-life
ice-cream) , kids, youngsters, etc, and are coming up with products
specific for them., with portfolio of flavors, consumer today has plethora of
options at hand to choose from and therefore high probability of buying one
more scoop of ice cream. Also with increasing wallet size and innovative
modern retail formats, it has definitely given a Philip to the ice cream
industry in India.

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About the company Amul

Gujarat Cooperative Milk Marketing Federation:-

Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest

food products marketing organization. It is a state level apex body of milk
cooperatives in Gujarat which aims to provide remunerative returns to the
farmers and also serve the interest of consumers by providing quality
products which are good value for money.

Some statistics about the company:-

The Turnover of Amul was Rs. 52.55 billion in 2007-08.

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Members: 13 district cooperative milk

producers' Union

2.7 million

No. of Producer Members:

No. of Village Societies: 13,141

Total Milk handling capacity: 10.21 million liters per day

Milk collection (Total - 2007- 2.69 billion liters

08):

Milk collection (Daily 7.4 million liters

Average 2007-08):

Milk Drying Capacity: 626 Mts. per day

Cattle feed manufacturing 3090 Mts per day

Capacity:

AMUL --the brand:-

Amul -the age old brand brand belongs to (GCMMF). AMUL means
"priceless" in Sanskrit. The brand name "Amul," comes from the Sanskrit
word "Amoolya," and was suggested by a quality control expert in Anand.

Today Amul is a symbol of many things. Of high-quality products sold at

reasonable prices. Of the genesis of a vast co-operative network. Of the
triumph of indigenous technology. Of the marketing savvy of a farmers'
organization. And of a proven model for dairy development.

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Various products under the brand name Amul :-

Amul products have been in use in millions of homes since 1946.

• Amul Butter,
• Amul Milk Powder,
• Amul Ghee,
• Amul Cheese,
• Amul Chocolates,
• Amul Shrikhand,
• Amul Ice creams,
• Nutramul, Amul Milk and
• Amulya have made Amul a leading food brand in India.

Some facts about the Amul ice cream:-

• Amul Ice Cream was launched on 10th March, 1996 in Gujarat.

• The portfolio consisted of impulse products like sticks, cones, cups

as well as take home packs and institutional/catering packs.

• In 1997, Amul ice creams entered Mumbai followed by Chennai in

1998 and Kolkata and Delhi in 2002. Nationally it was rolled out
across the country in 1999.

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• Has combated competition like Walls, Mother Dairy and achieved

the No 1 position in the country. This position was achieved in
2001 and it has continued to remain at the top.

• Today the market share of Amul ice cream is 38% share

against the 9% market share of HLL, thus making it 4 times
larger than its closest competitor.

• Amul’s entry into ice creams is regarded as successful due to the

large market share it was able to capture within a short period of
time – due to price differential, quality of products and of course
the brand name.

Ice cream range:-

• Royal Treat Range - (Butterscotch, Rajbhog, Malai Kulfi

• Nut-o-Mania Range (Kaju Draksh, Kesar Pista Royale, Fruit Bonanza,

Roasted Almond)

• Royal Treat Range - (Butterscotch, Rajbhog, Malai Kulfi)

• Nut-o-Mania Range - (Kaju Draksh, Kesar Pista Royale, Fruit

Bonanza, Roasted Almond)

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• Nature's Treat - (Alphanso Mango, Fresh Litchi, Shahi Anjir, Fresh

Strawberry, Black Currant, Santra Mantra, Fresh Pineapple)

• Sundae Range- (Mango, Black Currant, Sundae Magic, Double

Sundae)

• Assorted Treat - (Choco bar, Dollies, Frostik, Ice Candies, Tricone,

Choco crunch, Megabite, Cassatta)

• Utterly Delicious - (Vanilla, Strawberry, Chocolate, Chocochips, Cake

Magic)

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cost sheet analysis

Direct Cost :

1) Direct materials

To manufacture one ice cream cup below are the components or raw materials
required with their unit cost :

Dry Fruits – 3 %
Milk – 70%
Flavours – 5 %
Other ingredients – 4 %
Sugar – 16 %
Cup – 2 %

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2) Direct Labour :

There are 17 workers employed in the production of the ice cream and
each worker is paid Rs 2000 per month .

3) Direct Costs or expenses :

The direct cost includes costs incurred in bringing the raw materials into
the factory ie. Carriage inward. The raw materials are purchased every
month and costs involved for carriage are Rs 1840.

Indirect Costs:

1) Factory Overheads:

The Factory Overheads includes the indirect labour, factory rent,

insurance and depreciation on machinery, power, factory supervisor’s
salary ,packing material, ware house expenses and other factory
expenses.

• Indirect labour : This includes 3 sweepers whose average salaries

are Rs. 1000 each.

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• Insurance: The total insurance amount is Rs 15000.

• Break up of the total insurance amount for Machinery - 1200000

• Land - 500000(1000 sq. ft. * Rs. 500 per sq. ft.)

• Depreciation on machinery : There are 6 machines in the factory ,one

machine is used for making ice creams which is Boiler and other are
Refrigerators . The cost of Boiler is Rs 300000 and Refrigerators are
worth of Rs. 900000. The depreciation method followed is SLM @
7%.

• Power & Fuel: The monthly average cost of power consumption of

the factory is Rs 42375.

• Supervisor’s salary : The factory has 2 supervisors and salary of each

supervisor is Rs 2500.

• Cost of maintenance : oiling and cleaning of machinery and other

miscellaneous expences for maintainance.

2) Office and administration overheads:-

Office and administration overheads include office rent, salary to staff,
office and general expenses, printing and stationary, telephone
expenses, electricity and lightings

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• Office rent: The per sq.ft rate of the Office is Rs 18.The area of the
factory is 300 sq.ft.

• Salary to staff : the office staff has three employees. A peon, clerk
and an Accountant and the salaries are Rs 800, Rs 2200 and Rs
4000 respectively.

• Office and general expenses: This comprise refreshments(tea and

snacks).

• Telephone Expenses:- Calls made by the staff members.

• Electricity and lightings:- It consists of office lighting and air

conditioning expenses.

3) Sales and distribution overheads:-

• Sales Commission : As a part of encouragement for sales people

,they are given commission of 2.5 % of the total sales done by them.

• Discount allowed : To attract retailer to buy the product they are

offered a discount of 5% on the selling price.

• Salary of salesmen : The company has 5 sales persons and they are
paid a salary of Rs 3500 each per month.

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• Carriage outward: To carry the finished goods to the whole sellers ,

the transportations charge per unit/product is set as Re 1.24.

Assumptions :

• The company produces only one product

• All raw materials consumed in production of ice cream

• The production and sales units are same.

• In Valuation of plant, the rate per square feet has been assumed at
Rs. 500.

• We gave a discount to retailer on 450000 units on bulk purchase.

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SWOT ANALYSIS

STRENGTHS:

The amul ice-creams brand is one of the the top 3 brands .As it’s an Indian
brand its popular as a family brand. Its available in all metropolitan cities
and is in the reach of middleclass &above middleclass .Its available in
many flavours and most of these are Indian flavours –liked by Indians.
They are available in various sizes. They are available in reasonable
prices.They have launched brands such as sugar free probiotic ice-
creams. There are many premium varieties. It’s got good food energy value
i.e calories per 100ml-196.7.

WEAKNESS:

The durability of amul ice-creams is not really good, it melts very soon. It
does not have many outlet centers.Not a famous brand among youngsters
who are the main customers of ice-cream.

OPPORTUNITIES:

They can come up with new flavours which would be able to attract the
youth .They should not restrict themselves to departmental stores infact
come with new luxury brands which can be available in hotels and they
should come up with their own ice-cream parlours. They should focus more
on their advertising and marketing strategies. They should use a strategy
similar to what they used in case of butter (Utly butterly girl ).They should
come up with offers for purchase of ice-cream in whole market . Offers
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should run all throughout the year; not only in winters. There should
emphasis for special occasions.

THREATS :

The biggest threat for amul ice-cream industry would be its competitors.
Its ranked 3rd in the Indian market . It faces tough competition from the
unorganized sector as well. A slight change in the price of the ice-cream
would shift its customers to another brand. Foreign players like Baskin-
Robbins entering Indian market with new premium brands at feasible
prices.

STRENGTHS WEAKNESS

OPPORTUNITIES
THREATS

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Bibliography

www.amulicecream.in

www.google.co.in

Annual report of Amul

Cost accounting and financial management-Ravi kishore –edition 5

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