Valiar Bakery

STRATEGY FOR BUSINESS MODEL AND FUTURE PLAN

Analysis
Strengths:
◦ Traditional Bakery with committed customer base
◦ Uncompromised quality
◦ Good Local Brand Name
◦ Steady Business operations
Weakness:
◦ Caters to only 20% product range
◦ Low Margin Products only
◦ Low PBT
Opportunities:
◦ Expansion in other metro cities
◦ Diversification of Product Range with higher margins
◦ Franchise the existing outlets as well as sell right and ownership of new ones
Threats:
◦ Big Brands (like Pizza hut, retail chains etc)
Strategy for Growth
Need for reducing operational costs:
◦ Sell the existing outlets for franchise
◦ This brings in more funds for operations
◦ Invest these funds for better operational efficiency and for remaining outlets
◦ Very important to maintain our MNC type quality assurance model for these franchises

Need to increase profit margins

◦ Diversify the product range
◦ Diversification brings higher margins
◦ Capacity for these new products to be managed by reducing the conventional production by 20%
◦ Capacity enhancement can be funded from selling the existing outlets as well, though this has not been accounted yet
Strategy for Growth
Need to grow Gross Sales:
◦ Bring franchises for more outlets in other metro cities
◦ This increase gross sales without additional investment
◦ Brings in more funds for operations enhancements
◦ Invest these funds for better operational efficiency and for remaining outlets
◦ Important to maintain our MNC type quality assurance model for these franchises
Need for strategic pricing:
◦ New products to be priced at a lower margin to attract customer base going to existing big brands and
retail outlets say at 50% of their margins instead of double the margins
Implementation Strategy
Sell existing outlets for franchise
◦ At 5% per year for next three years

Diversification for new products

◦ @ +20% per year till next 5 years without reduction in conventional products

Increase in gross sales

◦ New franchises in other metro cities @ +20% per year
 Financial Outlook
Detail 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
99.79 119.75 143.70 172.44 206.93
Gross Sales 54.23 56.01 63.25 74.36 83.16
14.05 18.55 24.49 32.32 42.67
PBT 4.12 4.6 6.37 8.69 9.76
14.1 15.5 17.0 18.7 20.6
% PBT of GS 7.6 8.2 10.1 11.7 11.7
27 25 24 24 24
No of Outlets 21 21 23 26 28
276 262 249 249 249
No of Employees 245 254 266 285 290
90 86 81 81 81
No of Bakers 6 72 81 92 95
85.74 101.20 119.21 140.12 164.26
Operating Cost 49.858 51.0488 56.3496 65.0028 72.8
4.22 5.57 7.35 9.70 12.80
Tax 1.236 1.38 1.911 2.607 2.928
0.00 0.00 0.00 0.00 0.00
Dividend 0.252 0.3612 0.5304 0.6672 0.6
69.16 65.70 62.42 62.42 62.42
Operating Cost 49.858 51.0488 56.3496 65.0028 72.8
 Valiar Bakery Financial Projections
250

206.93
200

172.44

150
143.70
Gross Sales
119.75 PBT
% PBT of GS
100 99.79

83.16
74.36
63.25
54.23 56.01
50
42.67
32.32
24.49
18.55 17.0 18.7 20.6
14.1
14.05 15.5
8.2 10.1 11.7
8.69 11.7
9.76
7.6
4.12 4.6 6.37
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022