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Cost Sheet Analysis of Amul Ice-cream

SANTANU DAS SAHIL SUHAG GAVESHA KEERTY

VISHAL B PATIL RAHUL SHETTY AKASH AGARWAL

Microsoft

SYMBIOSIS INSTITUTE OF INTERNATIONAL BUSINESS, PUNE COSTING ASSIGNMENT

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. Productionarea 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. 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

About the company Amul

Gujarat Cooperative Milk Marketing Federation:Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's larges 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. Members: 13 district cooperative milk producers' Union No. of Producer Members: 2.7 million No. of Village Societies: 13,141 Total Milk handling capacity: 10.21 million liters per day

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Milk collection (Total - 2007-08): 2.69 billion liters Milk collection (Daily Average 2007-08): 7.4 million liters Milk Drying Capacity: 626 Mts. per day Cattle feed manufacturing Capacity:3090 Mts per day 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- high quality products sold at reasonable prices, genesis of a vast co-operative network, the triumph of indigenous technology, the marketing savvy of farmers' organization and of a proven model for dairy development.

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, cupsas 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.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 HUL, thus making it 4 times larger than its closest competitor. Amuls 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) 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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Manufacturing Units
Mother Dairy, Bhat 382 428, India. Banas Dairy, Palanpur 385 001, India. Dudhmansagar Dairy, Manesar 112 020, India. Baroda Dairy, Vadodra 390 009, India. India Dairy Products Ltd, Chanditala 712 702, India. Vidya Dairy, Anand- 388 110, India. Vasundhara Dairy, Tarapur 401 506, India.

Amul Cost Sheet Particulars

opening stock Raw materials Dry fruits Milk Flavors Other ingredients Sugar Cup Cutlery Seasonal fruits Waffle Cocoa Carriage inward Raw materials Consumed Direct expenses Direct labour

Cost per Unit (Rs.)

10.00 3.00 2.50 3.00 3.50 2.00 2.50 1.50 1.00 0.50 1.00 1.50 8.00 1.85 33.85 2.20 5.30

Amount(Rs.)
10,00,000.00 3,00,000.00 2,50,000.00 3,00,000.00 3,50,000.00 2,00,000.00 2,50,000.00 1,50,000.00 1,00,000.00 50,000.00 1,00,000.00 1,50,000.00 32,00,000.00 1,84,500.00 33,84,500.00 2,20,000.00 5,30,000.00

Prime cost
Factory overheads Fixed: Depreciation Rent Power Insurance Supervisor's salary Variable: Electricity Works cost Office over head Employee cost

40.05

40,05,000.00

2.50 1.00 1.75 1.50 0.60 0.70 1.00 9.05 50.40 10.00

2,50,000.00 1,00,000.00 1,75,000.00 1,50,000.00 60,000.00 70,000.00 1,00,000.00 9,05,000.00 50,39,500.00 10,00,000.00

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SYMBIOSIS INSTITUTE OF INTERNATIONAL BUSINESS, PUNE COSTING ASSIGNMENT Other expenditure computer Telephone Taxes Carriage outward Cost of production Opening stock Closing stock Cost of goods sold Selling and distribution expenses Advertisement Delivery Vehicles Petrol Packaging Cost of sales Profit Sales

1.20 0.10 0.40 0.20 62.30 2.00 64.30

1,20,000.00 10,000.00 40,000.00 20,000.00 62,29,500.00 2,00,000.00 64,29,500.00

4.00 3.50 1.75 0.51 74.05 18.50 92.56

4,00,000.00 3,50,000.00 1,75,000.00 50,500.00 74,05,000.00 18,51,250.00 92,56,250.00

Cost Sheet Analysis

The Company is producing 100000 units of ice cream at Rs. 74.05 Which the total cost incurred is Rs.7405000 and the total cost sales profit being made is Rs. 1851250. The Company is producing a single cup of ice cream at Rs .92.5625 which includes the cost of a cup ice cream at Rs. 74.05 Which again Implies that the Profit of Rs. 18.5125 is earned on a single unit of Amul Ice Cream. Since the company is earning some percentage of Profit above the cost, it means a slight increase in the cost will not have too much of an effect on the profit since there is a large margin of safety. Since the company is earning some amount of profit, the business is capable to expand and diversify over a period of time. PVR=C/S= 2671750/9256250=28.86% BEP (in Rs.) = FC/ PVR=2195000/28.86=Rs.7650568.26 BEP (In units)= FC/C=2195000/2.67175=821558.9=821559 MOS= Profit/ PVR= 476750/28.86=16519.404

Determination of selling price

Amul Ice cream has marked the selling price of their product roughly 20% above the cost price. This implies that they are making a profit on each unit of output that is sold. These profits can be ploughed into the business again to create more output.

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Facts The portfolio consisted of impulse product like sticks, cones, cups as well as take home packs and 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. Has combated competition like Walls, Mother Dairy and achieved the No 1 position in the country. Today the market share of Amul ice cream is 38%.

Amuls entry into ice cream is regarded as successful due to the large market share it was able to capture within a short period of time.

References:

Star Industries Phone: 9922008253 Jai Shankar Dairy Phone: 020 -+27457440 Ambika Dudhalaya & Pavan Transport Phone: 9823597410

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