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Topics
Page
No.
1.
2.
No.
EXECUTIVE SUMMARY
SEM - III
SEM IV
12
16
A. Description of Business
17
B. Products
19
24
D. Competitive Environment
28
29
29
41
45
54
58
Findings
59
Conclusion
60
6.
Bibliography
61
Annexure
62
Table
Name of Table
Page
No.
No.
18
P & L Account
55
Balance Sheet
57
58
EXECUTIVE SUMMARY
(Sem. III)
2
identify
has substantial
bilateral
trade
(export
import)
and
in
Morocco employs
about
40%
of
the
nation's
components,
Inorganic
chemicals,
transistors,
crud
Asia.
It
From the above report, we have come to the conclusion that the
agriculture is the largest employer in the Morocco. Agriculture,
Forestry, Fishing and Hunting contributing 16.6% to GDP, from which
fishing contributing 1.0%.In Morocco high quality agricultural
product exported to Europe. Less than 40% of Moroccans families
have refrigerator at home. Morocco produces enough food for
domestic consumption except for grains, sugar, coffee and tea. More
than 40% of Morocco's consumption of grains and flour is imported
from the United States and France.
India is the worlds second largest producer of food, 3rd largest in
alcoholic beverages, 2nd largest rice producer having 20% global
share, 3rd largest in the world and 2nd largest in inland fish
production contribute 1.4% of total GDP.
Gujarat having export potentiality i.e. Cotton, cumin, Onion, Garlic,
Castor, Isabgul, Mango, other fruits and vegetables, Flowers, Duram
wheat, Processed maize.
Goa has a coastline of about 104 kms and inland waterways of
about 250 km. The coast is full of creeks and estuaries formed by
rivers; over 128,107 tones of marine fish and 3,718 tones of inland
fish were harvested in 2014. During 2014-15, exports of frozen fish
from Mormugao Port were recorded to be 42,940 tones
EXECUTIVE SUMMARY
(Sem. IV)
Farm food is one of the food commodity & manufacturer in India.
They started its incorporation on 16 th July 2001 .The Company deals
in a various food products such as tomato, Onion, sweet coin,
Mango Powder. S.K Associate founded in 1988 is associated in
Banking, Textiles and Construction sector. The company have
diversified in manufacture of freeze dried items in the name of Farm
food Dehydrates Pvt. Ltd. Farm Food Dehydrates Pvt. Ltd. is located
in a green belt area of kachholi near Navsari about 55 km From
Surat.
Tomato ranks third in priority after Potato and Onion in India but
ranks second after potato in the world. India ranks second in the
area as well as in production of Tomato. The major tomato growing
countries are China, USA, Italy, Turkey, India and Egypt. The process
start from sorting of tomatoes than washing, cutting than The
product is allowed to freeze at such low temperature for 8 hours so
that water content inside the tomatoes will be transformed in to ice
completely This frozen tomatoes is then transferred in to a vacuum
chamber where it is heated in vacuum and finally The finish product
is then packed with nitrogen flushing method.
6
broad target
market into
subsets
of consumers, businesses,
Fs-Boulemane
Marrakesh-Tensift-El
Haouz
Tanger-
Tetouan Rabat-Sal-Zemmour-Zaer.
Four Ps analyses for Tomatoes like product, price, place and
promotion. Tomato ranks third in priority after Potato and Onion in
India but ranks second after potato in the world. India ranks second
in the area as well as in production of Tomato. Tomatoes production
by India in 2014 at 37.5 million tones. India is second largest
producer of Tomatoes. Company can target the top cities of Morocco
country like Marakkech, Fez, Essaouia, Tangir, Asilah and fourth that
is promotion in this There is no promotional strategy available for
dehydrate tomatoes in present situation.
The Porter's 5 Forces tool is a simple but powerful tool for
understanding where power lies in a business situation. This is
useful, because it helps in understand both the strength of
companys current competitive position, and the strength of a
position company are looking to move.
Majority of goods are allowed to be exported without obtaining a
license. Export licenses are only required for items listed in the
Schedule 2 of ITC (HS) Classifications of Export and Import items. An
application for grant of Export License for such items must be
submitted to the Director General of Foreign Trade (DGFT). The
Export Licensing Committee under the Chairmanship of Export
Commissioner considers such applications on merits for issue of
export licenses. Export of samples up to specified limits are allowed
free.
The
exporter
is
required
to
be
registered
with
the
for
infrastructure
or
industrial
development,
meeting
or
sanitary
certificate
for
export.
10
DESCRIPTION OF BUSINESS
Farm Food Dehydrates Private Limited
Farm food is one of the food commodity & manufacturer in India.
They started its incorporation on 16 th July 2001 .The Company deals
in a various food products such as tomato, Onion, sweet coin,
Mango Powder. The Company directly purchasing food products from
selected farmers so
Mission
13
Weakness
-High Price Products
-Seasonal avalibility of product
-Requirement of high capital
investment
-Require high
power energy
consumption
Strength
SWOT
Of Farm
Food
Opportunities
-High
14
Threat
A. PRODUCT
Scope Of
Backward
Integration
-High Potential in indian market
-Scope for global market
-There is no direct competitior in
indian market
Tomato ranks third in priority after Potato and Onion in India but
ranks second after potato in the world. India ranks second in the
area as well as in production of Tomato. The major tomato growing
countries are China, USA, Italy, Turkey, India and Egypt. Total area
under
tomato
is
4582438
thousand
ha
with
production
of
Most of the freeze dried vegetables when kept in warm water for
about 20 minutes will reabsorb about 90% of removed water and
will regain its weight by 9times as it will be rehydrated completely
and will appear as fresh as purchased from the market.
Business Opportunity
Sales of processed fruit and vegetables in Morocco continue to
be driven mainly by growing demand for basic staple
foodstuffs, including shelf stable fruit and vegetables and shelf
stable beans, which are becoming a major part of the local
diet, especially in large urban areas, where people tend to do
most of their grocery shopping in large modern grocery
retailing outlets and hence tend to consume more processed
16
According
to
general
budget
2016-17
Food
processing
17
Badal
will
lead
to
creation
of
Swadeshi
against
Government
the
overall
of
India
increase
as
of
11%
of
whole.
wholesale
markets
in
the
country.
the vision
of Government to
double
harmonized
with
Standards
18
the
International
Codex
Future Potential
19
broad target
market into
subsets
of consumers, businesses,
Marrakesh-Tensift-El Haouz
Tanger-Tetouan
Rabat-Sal-Zemmour-Zaer
Behavioral Segmentation
On this basis, company can target a segment on the basis of buyers
readiness stage and usage-rate.
Four Ps analyses for Tomatoes
Four Ps includes following terms:
1) Product
2) Price
3) Place
4) Promotion
1. Product : Tomato
Tomato ranks third in priority after Potato and Onion in India
but ranks second after potato in the world. India ranks
second in the area as well as in production of Tomato. The
major tomato growing countries are China, USA, Italy,
Turkey, India and Egypt. Total area under tomato is 4582438
thousand ha with production of 150513813 thousand tons
and with productivity of 32.8 tons/ha.
2. Price
Tomatoes production by India in 2014 at 37.5 million tones.
India is second largest producer of Tomatoes. The price of
tomatoes in farm food industries is :
1 plate =2 kg
30 plate =60 kg
120 plate = 2 tray = 240 kg
Selling price of tomato= 1700 Rs./kg
240*1700= 4,08,000 per batch
21
producers
are
Karnataka,
West
Bengal,
Bihar,
Processi
ng
Agent
Foreign
Buyer
4. Promotion
22
for
promoting
and
selling
dehydrate
D. COMPETITIVE ENVIRONMENT
23
company
are
looking
to
move
into.
With
clear
24
Shipping Bill for export of duty free goods. This shipping bill is
white color.
Shipping bill for export of duty free goods ex-bond i.e. from
bonded warehouse. This shipping bill is pink color.
Shipping bill for export under DEPB scheme. This shipping bill
is blue in color.
2) Import Procedures
Import of goods helps to boost the economy by providing capital good for
infrastructure or industrial development, meeting shortages and improving
quality of production. It also helps improving living standards by making
available good and products not produced in the country. With the rise in
disposable incomes in India, the marked for imported goods is growing.
Starting a business of importing goods can be a profitable venture, but
26
requires that the rules and regulations governing such trade and the markets
in respect of both the countries, and the trade agreements with the country
of interest, are studied and understood well.
Import Duties
The government levies import duties on most of the items imported
for trade purposes. These are of different types including Basic
Duty, Additional Customs Duty, True Countervailing Duty, AntiDumping or Safeguard Duty and Education Cess. Details about
these can be viewed here.
Payment of Duty
to
the
nominated
banks
for
acceptance
Bill of Entry
27
of
value
are
entering
into
the
country
from
abroad.
entry
for
customs
clearance
Licensing Policy
In Chemical Sector, 100% FDI is permissible. Manufacture of most
chemical products inter-alia covering organic / inorganic, dyestuffs &
29
Exporter
Code
Number
(IEC)
issued
against
their
must
be
identified
and
declared.
The
Indian
Trade
2.
such
as
grains
and
vegetable
oils,
and
some
pharmaceutical products.
3.
Bill of Entry
Every importer is required to begin by submitting a Bill of Entry
under Section 46. This document certifies the description and value
of goods entering the country. The Bill of Entry should be submitted
as follows:
1) The original and duplicate for customs
2) A copy for the importer
3) A copy for the bank
4) A copy for making remittances
Under the Electronic Data Interchange (EDI), no formal Bill of Entry
is required (as it is recorded electronically) but the importer is
required to file a cargo declaration after prescribing particulars
required for processing of the entry for customs clearance. Bills of
Entry can be one of three types:
1.
2.
duty until goods are actually required. This Bill of Entry is printed
on yellow paper and is thus often called the yellow bill of entry.
It is also called the into bond bill of entry as the bond is
executed for the transfer of goods in a warehouse without paying
duty.
3.
Bill of Entry for Ex-Bond Clearance The third type is for exbond clearance. This is used for clearance from the warehouse
on payment of duty and is printed on green paper.
Signed invoice
Packing list
Importer/CHA declaration
Insurance document
32
Catalogue,
technical
write
up,
literature
in
case
of
Separately
split
up
value
of
spares,
components,
and
machinery
Import Duties
The Indian government levies several types of import duties on
goods. These include:
Basic Customs Duty
Basic Customs Duty (BCD) is the standard tax rate applied to goods,
or the standard preferential rate in the case of goods imported from
specified countries. The rates of customs duties are outlined in the
First and Second Schedules of the Customs Tariff Act, 1975. The First
Schedule specifies rates of import duty and the Second specifies
rates of export duty. BCD is divided into standard and preferential
rates, with goods imported from countries holding trade agreements
with the Indian central government eligible for lower preferential
rates.
Additional Customs Duty (Countervailing Duty)
Countervailing duty (CVD) is equal to central excise duty and is
levied on imported articles produced in India. With CVD, the process
of production amounts to manufacture as it is defined in
the Central Excise Act, 1944. CVD is based on the aggregate value
of goods including landing charges and BCD. An additional CVD
may be levied equivalent to sales tax or VAT, not exceeding four
percent. This duty can be refunded if the importer pays all customs
duties, the sales invoice indicates the credit is not allowed, and the
importer pays VAT/sales tax on the sale of the good.
Other CVDs may be imposed on specific imported goods to
neutralize the effect of a subsidy in the country of origin. A
notification issued by the central government on these specified
goods is valid for five years and potentially subject to further
33
from
imports.
If
the
Tariff
Commission
issues
34
will remain in force, reduce or extend the period, and adjust the
effective rate
Restricted
2.
Canalized
3.
Prohibited
Canalized Goods
Canalized goods are items which may only be imported using
specific procedures or methods of transport. The list of canalized
goods can be found in the ITC (HS). Goods in this category can be
imported only through canalizing agencies. The main canalized
items are currently petroleum products, bulk agricultural products,
such as grains and vegetable oils, and some pharmaceutical
products.
Prohibited Goods
these are the goods listed in ITC (HS) which are strictly prohibited on
all import channels in India. These include wild animals, tallow fat
and oils of animal origin, animal rennet, and unprocessed ivory.
Export Policy
Just like imports, goods can be exported freely if they are not
mentioned in the classification of ITC (HS). Below follows the
classification of goods for export:
Restricted
Prohibited
Restricted Goods
Before exporting any restricted goods, the exporter must first obtain
a license explicitly permitting the exporter to do so. The restricted
goods must be exported through a set of procedures/conditions,
which are detailed in the license.
Prohibited Goods
These are the items which cannot be exported at all. The vast
majority of these include wild animals, and animal articles that may
carry a risk of infection.
State Trading Enterprise (STE)
36
2.
The sale invoice shall bear the indication that the credit of
such duty shall not be allowed; and
3.
Anti-Dumping Duty
The CG may impose an anti-dumping duty if an article is imported to
India at less than its normal price, and will notify the importer if they
decide to do so. The amount of duty cannot exceed the margin of
dumping. The margin of dumping means the difference between the
export price and the normal price.
The notification issued by CG in this regard shall be valid for five
years. The period can be further extended. However, the total
period cannot exceed 10 years from the date of first imposition.
Countervailing
Duty
on
Subsidized
Articles
Research
activities
conducted
by
person
engaged
in
manufacturing or export
2.
3.
Assistance
in
adaptation
of
existing
facilities
to
new
environment requirements.
The notification issued by CG in this regard shall be valid for five
years and possibly subject to further extension. However, the total
period cannot exceed 10 years from the initial date of imposition.
Safeguard Duty
38
duty
cannot
exceed
the
amount
proposed
in
the
2. Required documents
Export procedure describes the documents required for exporting
from India. Special documents may be required depending on the
type of product or destination. Certain export products may require
a quality control inspection certificate from the Export Inspection
Agency. Some food and pharmaceutical product may require a
health or sanitary certificate for export.
Shipping Bill/ Bill of Export is the main document required by the
Customs Authority for allowing shipment. Usually the Shipping Bill is
of four types and the major distinction lies with regard to the goods
being subject to certain conditions which are mentioned below:
39
The following are the export documents required for the processing
of the Shipping Bill:
The formats presented for the Shipping Bill are as given below
40
Note: - For the goods which are cleared by Land Customs, Bill of
Export (also of 4 types - white, green, yellow & pink) is required
instead
of
Shipping
Bill.
over
1.05
m.
Measurement
of
any
other
side
of
41
Tanzania,
Mauritius,
New
Zealand,
Burma,
Iraq,
42
43
The
non-equity
modes
category
includes export
and
44
Exporting
Exporting is the process of selling of goods and services produced in
one country to other countries. There are two types of exporting:
direct and indirect.
DIRECT EXPORTS
Direct exports represent the most basic mode of exporting made by
a
(holding)
company,
capitalizing
on economies
of
scale
in
presentations,
customs
clearance
formalities,
legal
45
Disadvantages
INDIRECT EXPORTS
Indirect exports is the process of exporting through domestically
based export intermediaries. The exporter has no control over its
products in the foreign market.
TYPE
Export trading companies (ETCs)
These provide support services of the entire export process for one
or more suppliers. Attractive to suppliers that are not familiar with
exporting as ETCs usually perform all the necessary work: locate
overseas trading partners, present the product, quote on specific
enquiries, etc.
46
These are similar to ETCs in the way that they usually export for
producers. Unlike ETCs, they rarely take on export credit risks and
carry one type of product, not representing competing ones.
Usually, EMCs trade on behalf of their suppliers as their export
departments.
Export merchants
Export merchants are wholesale companies that buy unpackaged
products from suppliers/manufacturers for resale overseas under
their own brand names. The advantage of export merchants is
promotion. One of the disadvantages for using export merchants
result in presence of identical products under different brand names
and pricing on the market, meaning that export merchants
activities may hinder manufacturers exporting efforts.
Confirming houses
These are intermediate sellers that work for foreign buyers. They
receive the product requirements from their clients, negotiate
purchases, make delivery, and pay the suppliers/manufacturers. An
opportunity here arises in the fact that if the client likes the product
it may become a trade representative. A potential disadvantage
includes suppliers unawareness and lack of control over what a
confirming house does with their product.
Nonconforming purchasing agents
These are similar to confirming houses with the exception that they
do not pay the suppliers directly payments take place between a
supplier/manufacturer and a foreign buyer.
Advantages
47
Disadvantages
market
feedback
affecting
the
international
48
Quickly
expand
without
much
risk
and
large
capital
investment
49
that
presents
some
disadvantages
and
reasons
why
Franchising
The franchising system can be defined as: A system in which semiindependent business owners (franchisees) pay fees and royalties to
a parent company (franchiser) in return for the right to become
identified with its trademark, to sell its products or services, and
often to use its business format and system.
Compared to licensing, franchising agreements tends to be longer
and the franchisor offers a broader package of rights and resources
which usually includes: equipment, managerial systems, operation
manual, initial trainings, site approval and all the support necessary
for the franchisee to run its business in the same way it is done by
the franchisor. In addition to that, while a licensing agreement
involves things such as intellectual property, trade secrets and
others while in franchising it is limited to trademarks and operating
know-how of the business.
Advantages of the international franchising mode:
Low cost
50
sharing,
technology
sharing
and
joint
product
Cultural clashes
52
effective
vision
and
strong
local
to
leaders
Negotiate an agreement
Monitoring performance
53
enables
company
to
make
informed
business
decisions. These sales forecasting for farm food dehydrated PVT ltd
is based on certain assumption and calculation.
Projected Sales Forecast (Rs.)
Particulars
2016
2017
2018
Unit
Price
Unit
Price
Unit
Price
Morocco
16,000
1740
20,000
1740
25,000
1740
Total Sales
2,78,40,000
Tomatoes
3,48,00,000
4,35,00,000
Assumption:
Latest Exchange Rates: 1 Morocco Dirham = 6.96 Indian
rupees
Dehydrate Tomato Price in India is 1700 Rs./Kg
The sales per unit in the year 2016 is 16,000
Every year the sales price is remains constant.
Every year, number of units increases by 80.00%.
54
2015-16
2016-17
2017-18
(16000 Units)
(20000
(25000
Sales
2,78,40,000
Units)
3,48,00,000
Units)
4,35,00,000
Excise Duty
TOTAL SALES
2,78,40,000
3,48,00,000
4718750
627360
260000
218000
164880
25000
26666
172631
1938750
15000
5898437
660389
280000
218000
173158
26000
35500
181720
1978340
15000
7373045
695145
300000
218000
181850
27000
47410
191280
2018715
15000
19767
22985
26730
81,86,804
94,89,529
1,96,53,196
1,76,000
1,94,77,196
36,64,200
1,58,12,996
3162599
2,53,10,471
1,76,000
2,51,34,471
29,31,360
2,22,03,111
4440622
1,26,50,397
1,77,62,489
TOTAL
OPERATING
EXPENSES
PBDIT
Interest Expanse
PBDT
Depreciation (20%)
PBT
Taxes
Net Profit
4,35,00,00
0
1,10,94,17
5
3,24,05,825
1,76,000
3,22,29,825
23,45,088
2,98,84,737
5976947
2,39,07,78
9
Assumptions
Interest paid on share capital is 8%
20% Depreciation charged on fixed assets by WDV method
Tax rate is 20%
55
Table No 3
Balance Sheet
Particulars
Sources of Funds
Total share Capital
Reserve
2015-16
2016-17
2017-18
2200000
316260
2200000
444062
2200000
597695
56
Unsecured Loans
1,37,87,009
1,46,28,483
1,53,72,523
Current Liability
147601
178911
Total Liabilities
1,64,50,870
1,74,51,456
221332
1,83,91,55
18321000
36,64,200
18321000
29,31,360
18321000
23,45,088
14656800
480000
15389640
640000
15975912
853333
Air Conditioner
289333
385778
514370
Electric Equipment
360000
360000
360000
GEB Deposit
2,00,000
2,00,000
2,00,000
FD
2,50,000
2,50,000
2,50,000
LPG System
2,14,737
2,26,038
237935
Total Asset
1,64,50,870
1,74,51,456
Application of Funds
Gross Block
Less: Accum. Dep
Net Block
1,83,91,55
0
Table No 4
Break Even Analysis
Particular
2015-16
2016-17
2017-18
Sales
2,78,40,000
3,48,00,000
4,35,00,000
70,02,799
75,47,982
84,98,036
Contribution
2,08,37,201
81,86,804
2,72,52,018
94,89,529
3,50,01,964
1,10,94,175
1,26,50,397
57
1,77,62,48
9
2,39,07,789
Unit
16,000
20,000
25,000
1302.33
1362.60
1400.08
6286.27
6964.28
7923.96
13035.72
17076.04
Forecasted
Sales 9713.73
above BEP
17076.04
18000
16000
13035.72
14000
12000
9713.73
10000
8000
6286.27
7923.96
6964.28
Forecasted Sales
above BEP
6000
4000
2000
1400.08
1362.6
1302.33
1
0
1
Assumptions
Variable cost includes electricity, cartage, lab testing etc
Contribution per unit is calculated as total contribution (in
Rs)/total numbers of unit
BEP (in units) = Fixed Cost / Contribution per Unit
and SOUSS
market
As product is expensive company can target urban rich cities
in Morocco i.e. Grand Casablanca and also top cities of
as well as
potential customers
From the study it is felt that looking at the current market
scenario of company, it will require minimum 3 to 5 years to
create awareness and interest among the potential customers
as the market is very price sensitive. Therefore it suggested
that the company should concentrate at present on their
domestic
market
and
simultaneously
explore
indirect
exporting
Conclusion
59
Bibliography
n.d.
<http://www.newsghana.com.gh/new-price-regime-introducemorocco/>.
n.d.
<http://www.dutycalculator.com/hs-lookup/3962/hs-tariff-code-fortomato-paste/>.
n.d.
<https://www.zauba.com/export-tomato/hs-code-20029000-hscode.html>.
60
n.d.
<http://www.infodriveindia.com/india-export-data/tomato-export/fcmorocco/lp-na-report.aspx>.
n.d.
<http://www.freshplaza.com/article/148322/Moroccan-tomatoes-see2-procent-decline>.
n.d.
<http://www.oxfordbusinessgroup.com/analysis/morocco-tomatoexports-eu-rise>.
n.d.
<http://www.freshplaza.com/article/136057/Moroccan-tomato-pricesin-the-EU-up-47-procent>.
n.d. <http://www.mca.gov.in/Ministry/actsbills/rules/CToPtRR1975.pdf>.
n.d. <http://www.farmfood.co/>.
Annexure
(Balance sheet)
Particulars
Current Asset
FY 2015-16
FY 2016-17
FY 2017-18
Cash/Bank in Hand
400000
444444
493827
Inventory
710526
747922
787286
Fixed Assets
61
Building Extension
Steel Fabrication
Air Conditioner
Electric Equipment
Machinery
Investment
GEB Deposit
FD
LPG System
Electric Equipment
Total Assets
Liabilities:Current liabilities
TDS Payable
Gas Bill Payable
VAT and Service Tax Payable
Unsecured loan
Owners equity
Paid In capital
Retain Earning
Net Profit
Total Liabilities
3121000
0
255294
160000
1515500
3121000
0
300346
160000
1515000
3121000
0
353348
160000
1514444
1,00,000
50,000
2,14,737
1,60,000
66,87,057
1,00,000
50,000
2,26,038
1,60,000
68,24,750
1,00,000
50,000
237935
1,60,000
69,77,840
47058
87500
13043
21397500
55363
109375
14173
26746875
69204
136718
15410
33433593
2200000
15441610
583566
66,87,057
2200000
20990284
889248
68,24,750
2200000
27890663
1213578
69,77,840
Income Statement
Particulars
Sales
Additional
sales
2012-13
50,78,700
(Retail 18,15,552
2013-14
56,43,000
18,91,200
2014-15
62,70,000
19,70,000
service)
TOTAL SALES
68,94,252
75,34,200
82,40,000
Cost of sales
(4,70,401)
(5,63,490)
(6,75,000)
64,23,851
69,70,710
75,65,000
34,23,455
3,81,440
2,17,376
1,97,823
1,42,379
22,658
11,250
1800
1,04,960
35,94,933
4,76,800
2,28,408
2,07,667
1,49,511
23,800
15,000
2700
1,31,200
37,75,000
5,96,000
2,40,000
2,18,000
1,57,000
25,000
20,000
4,050
1,64,000
62
Vegetable purchase
Bank charges
Stationary & printing
TOTAL
17,14,750
8438
12,340
OPERATING 62,38,669
EXPENSES (B)
Net income before Taxes (A-B)
Provision for Tax On Income
Net Income After Taxes
1,85,182
(39,260)
1,45,922
63
18,05,000
11,250
14,484
19,00,000
15,000
17,000
66,60,753
71,31,050
3,09,957
(65,713)
2,44,244
4,33,950
(92,000)
3,41,950