Ice Cream Market Set for Unprecedented Growth BHARAT BHUSHAN Managing Director, Supreme Speciality Foods Pvt Ltd, New Delhi SUDHIR SHAH Director, Director, Scoops Ice Cream, Hyderabad March 11, 2019 After a long time now, the Indian ice cream market is growing at 12-14 per cent a year. Some essential policy changes by the Government would facilitate and further accelerate this growth. There are big challenges and even bigger opportunities. The industry focus should be on strategic decision making to implement best practices, attracting higher investment, raising profitability, decreasing costs and offering a world class product to consumers. Global ice cream industry has witnessed a steady rise since its commercialisation, and of late it has seen a steep increase in consumption too. The Indian market is still in its infancy compared to traditionally developed markets. However, owing to its huge young population, increasing urban numbers and steadily increasing income it is set to become one of the largest ice cream markets in the world in the next ten to twenty years. How big is India’s ice cream market? Nobody really knows its exact value, but it is generally agreed that the level of ice cream production and consumption in India represents only the visible tip of the iceberg. According to industry estimates, the value of ice cream production in the organised sector is estimated at Rs 8,000 crores per annum with the non-organised sector also contributing a similar amount. The non-organised sector though is shrinking considerably in urban areas. However, in rural areas, kulfis/ice creams made by small/cottage industry are popular. In small towns and villages, there are thousands of small players who produce ice creams/kulfis and cater to the local demand. After a long time now, the ice cream market is growing at 12-14 per cent a year. For the last several years, the ice cream sector saw little capital investment and no new product range was actively introduced by companies. Of late, extruded ice cream has been introduced by few companies and there is a paradigm shift from cups, tubs to cones and extruded ice creams. Active brand promotion by the large players is now boosting the market. The Indian ice cream industry has emerged as the fastest growing dairy favourite in the Asia-Pacific region. The major players in India are: Amul, Mother Dairy, Kwality Walls, Hatsun’s Arun and Ibaco, Vadilal, Havmor, Creambell, Baskin Robbins, Dinshaw and Uncle John. The rest of the cone is filled up by regional brands. Almost all the State Cooperative Dairy Federations are also manufacturing and marketing ice cream under their own brand names. The import of ice cream is permitted unrestricted but attracts duty. Refrigerated transport which was expensive once has come down with more vehicles available and also fuel prices under check keeping the logistics low. It is expected that small players will penetrate the market in virgin areas. If they fail to consolidate and expand in double quick time, they will be losing their share to large players who will come with a new product range. One notable shift in the consumption pattern is from impulse purchase by youngsters as fun food to its regular use as dessert. Thus, the sale of ice cream bricks is increasing. The market for organised sector is restricted to large metropolitan cities. Eight cities account for 60 per cent of India’s total ice cream consumption. The country’s western region has a much higher consumption than the all-India average. Almost 35 per cent of the ice creams sold in the country are consumed in the western region with Mumbai being the main market, followed by 30 per cent in the north, 20 per cent in the south and 15 per cent in eastern and central India. Delhi and Gujarat together account for 30 per cent of the country’s ice cream market. The Kolkata market is the largest for ice cream in the eastern region. In the last five years India’s per capita annual consumption of ice cream has increased to 300 ml from 200 ml which is a significant growth. The consumption is still low when compared to an estimated 22 litres in the US, 18 litres in Australia, 14 litres in Sweden, 3 litres in China and 800 ml in Pakistan. So, in India there is enough scope for more growth than the 8 to 10 per cent observed over the past few years. Of the ice cream sales in India, nearly 60 per cent is accounted for by three flavours of vanilla, strawberry and chocolate. The ice cream prices in India are reported to be three times higher than the prices prevailing in America. One reason is the legal requirement in India stipulating at least 10 per cent milk fat in ice cream. This standard needs to be reviewed to bring down the ice cream prices and for increasing its consumption. Another inflationary factor is the high cost of transportation, particularly the refrigerated type. Taxes also contribute to high prices of ice cream. Absence of a nationwide efficient and reliable cold chain distribution restricts the ice cream sales to the bigger cities. A strong distribution network, including retail chain with supporting infrastructure of refrigerated transport, cold storage and freezer cabinets is a must for the healthy growth of the ice cream industry. Table 1. Ice cream sales, regionwise, 2015. North West South East & Central Total Per Cent 30 35 20 15 100 Volume (lakh litres) 2,700 3,200 1,800 1,300 9,000 Value (Rs crores) 2,400 2,800 1,600 1,200 8,000 Extended season Though April to June is the peak season for the organised ice cream market, 50 per cent of the sales are taking place during the rest of the year. In fact, October-November festival season is being considered as a mini season. This festive season contributes 15-20 per cent to annual sales volumes. Manufacturers opt for various brand building activities through on-ground promotions around specific festival events. Winter is not really strong in the western and southern parts of the country. Thus it makes sense to launch aggressive marketing campaigns throughout the year. Key trends in the ice cream sector are: Increasing presence of international brands driving consumption in metros and mini-metros. Availability of multiple options to consumers like traditional kulfis, gelatos and flavoured yoghurts. Growing trend of going out to eat ice-cream. With increasing health consciousness especially among young urban population, higher focus on fat free, low sugar and probiotic variants. Reducing impact of seasonality on consumption. Many players ready to increase presence with aggressive expansion plans. Growing focus on smaller and profitable formats. Challenges Rising raw material costs. Supply–demand volatility. Delay in securing government permissions for increasing production capacity. Decreasing credit-lending channels. Higher cost of borrowing. Lack of efficient 24/7 power supply. Shortage of skilled manpower in the sales, marketing, logistics, operations and material handling departments within the ice cream industry. Increased competition between national and international players and between national and regional players. High competition between organised and non-organised sector. Increased cost of real estate in urban areas. Constantly changing consumer tastes. Affordable pricing to reach larger consumer base. Higher marketing and transportation costs. High capital requirement for cold-chain and transportation structure. Increasing dependence on vendors and suppliers for raw material. Opportunities Immense potential in a vastly untapped market. Increased spending towards infrastructure development by the government. Using technology to increase visibility, order creation, market survey, customer feedback, billing, tracking and reaching out to consumers. Massive potential for mass employment creation and attracting better talent across regions. Attracting government incentives and support. Persistent efforts can lead to better funding from financial institutions. Increase in consumer spending and disposable income. Sophisticated and urban population with focus on quality and variety as available in international markets. Increasing production capacity through better machinery and systems. Implementing corporate working to increase streamlining amongst departments, decreasing inefficiencies, reducing spending and better resource utilisation. Increasing brand awareness and attracting a loyal consumer base. Fair and competent pricing, discounting, distributor margin, retail and corporate structures. Increasing urban offering provides opportunity to cater to diverse consumers. Increasing presence in upcountry areas to expand market share and tap demand from rural areas. Popularisation of thick milk shakes, softy mixes, sherbets, syrups and special toppings for ice creams by the ice cream parlours and fast food joints opens a new business prospect. Presently their volume may be limited but by value their contribution is significant to the bottom lines of entrepreneurs. Industry experts predict a big spurt in their popular appeal in the near future. As is evident from the low per capita consumption level, India’s ice cream market is on the threshold of registering an unprecedented growth. Some essential policy changes by the Government, as desired by the industry, would facilitate and accelerate this growth. On their part, the entrepreneurs must bring in the latest technology and launch innovative products to capitalise on the business prospects offered by the ice cream market. Indian entrepreneurs have the capacity, skill, acumen and perseverance to forge ahead. The focus should be on strategic decision making to implement best practices, attracting higher investment, raising profitability, decreasing costs and offering a world class product to consumers. TECHNO-ECONOMIC FEASIBILITY The techno-economic feasibility of an ice cream unit with a freezing capacity of 500 litres per hour and 200 litres per hour is discussed below. Start-up: A number of formalities have to be completed. These include getting proper credentials of the company set up for the project indicating its name, status (proprietorship, partnership or private limited), with appropriate documentation in its support like affidavit/partnership deed duly registered. Apply for power connection of appropriate load with the state electricity board. Appoint the nominee of the company with the FSSAI authorities. Finance: Simultaneously, decide on sources of financing the project (part self, part bank/state financial corporation) in consultation with a chartered accountant; prepare a project report with his help. Apply to state financial corporation for loan and to state industrial development corporation for land and other facilities. A range of subsidies/incentives/facilities is extended by state governments to attract entrepreneurs to set up units in their states. These include location subsidy for backward district area/region, equipment subsidy for generator set and laboratory equipment, incentive for timely commissioning of the project and sales tax deferment or exemption and sales promotion schemes. Within each state, the quantum of subsidy etc., varies, guidance on which can be had from the State Director of Industries, DIC, etc. Regulations relating to pollution control/effluent treatment should be studied. Many states have instituted single window system for clearing the industrial projects and awarding the subsidies. For desired coordination needed among various agencies at the local/district/state level, appoint a local liaison officer. Feasibility: While assessing the economic and technical feasibility of an ice cream unit, suitability or availability of the following should be looked into: Location of the unit; building to house the unit; assured power and water supply; raw materials and inputs; experienced staff and labour; efficient marketing infrastructure; and, facilities for quality control tests. Income from an ice cream unit depends upon a number of factors. More important of them include capital investment which varies with the size of unit. Location: The unit should be preferably located where raw materials are easily available. The sale points should also be nearby. In addition, there should be assured and uninterrupted supply of power and water in the area, as well as easy access to plentiful ice during emergency power supply breakdown. Choice of equipment: The choice of equipment is crucial in terms of economic ice cream production. For example, the batch freezers selected should be of good quality and in which approximately 60 per cent of water should be frozen. Area of shed: It is considered that the land is available for above project and investment is not shown for the same. The factory building should be on a 600 square yard plot for a 500 litre/hour capacity unit and 400 square yard plot for a 200 litre/hour unit, with two storey construction in an approved industrial estate. Construction should be in accordance with the building norms of the concerned authorities. Water requirement: It would depend on the size of the unit. For practical purposes, it has been observed that on an average the quantity of water required is 10 times the quantity of milk/mix used. Marketing: For an ice cream unit to be commercially viable, it must have a well organised marketing infrastructure. Promotional and advertising campaigns, aimed at both the consumer and the caterer, can further increase sales. A financial statement for setting up an ice cream unit with a freezing capacity of 500 litres per hour as well as a 200 litres/hour unit is given below. FINANCIAL STATEMENT 500 Litres/Hour Capacity Ice cream Manufacturing Unit The statement given below is only a guideline to help in evaluating the economic feasibility of an ice cream unit with a freezing capacity of 500 litres per hour. This statement is based on the following factors/assumptions: Machine run time: It is around 16 hours a day in which one hour each is required for preparation and machine setting, 10 hours are for actual run time and 4 hours are required for CIP (Cleaning-in-place) and manual cleaning. At the end of the day, the total output can be 5,000 litres of ice cream with two shift operation. Plant utilisation: As the ice cream sale varies season to season, it is assumed that the overall viability/utilisation of plant capacity is 35% which is equivalent to around 640,000 litres per year. Segment-wise break-up: As the product is preferred in various shapes, forms & flavours, it is packed in different stock keeping units and with different flavours. The break-up of this range is: Take home items (45%): Plain varieties—20% (1,28,000 litres), Nuts & dry fruit varieties—12.5% (80,000 litres), Fruits & Sauce varieties—12.5% (80,000 litres) Impulse items (30%): Plain varieties—15% (96,000 litres), Nuts & dry fruit varieties—15% (96,000 litres) Stick items (20%): Chocolate & milk-based varieties—10% (64,000 litres), Juicy water-based varieties—10% (64,000 litres) Novelty items like cassata, sandwiches, roll cuts etc—5% (32,000 litres) The overrun consideration in plain ice cream is 95–100% and ingredients like inclusions, toppings, ripples & coatings are considered as 10% (approx) of total product. CAPITAL INVESTMENT Plant & Machinery: During preparing the list of necessary equipment and infrastructure, an attempt has been made to take into account the necessary requirements of food safety, GMP and all legal compliances applicable for food industry. The processing equipment must be of hygienic design, easily and effectively cleanable and efficient for all required processing parameters. The building construction must comply with all requirements of GMP and desired layout for ice cream industry. Description Quantity (Nos.) Total Capacity Total Value (Rs) Mixing Tanks 2 800 litres 3,20,000 Evaporation Vat (Kulfi/Sauce Making Vat) 1 400 litres 2,00,000 Blender 1 500 kgs/hr 1,00,000 Pasteurisation Unit 1 800 kgs/hr 4,00,000 Homogeniser 1 800 kgs/hr 15,00,000 Ageing Tanks 3 2,400 litres 3,75,000 CIP Tanks 3 1,500 litres 3,00,000 Flavouring Tanks 3 1,200 litres 3,00,000 Freezers 3 900 litres 24,00,000 Fruit Feeder 1 400 litres/hr 2,50,000 Filling & Packing Machine 1 300 litres/hr 10,00,000 Printers 3 6,000 pcs/hr 5,40,000 Candy (Brine) Tank 1 2,000 litres 3,00,000 Candy Moulds 1 20 pcs 1,60,000 Stainless Steel Pipelines & Fittings 1 5,00,000 Boiler with softener 1 400 kgs/hr 8,00,000 Refrigeration System 1 35 tonnes 20,00,000 Hardening Room 1 2,000 litres 5,00,000 Cold Room 1 20,000 litres 8,00,000 Generator 1 150 KVA 7,00,000 Air Compressor 1 35 CFM 1,40,000 Effluent Treatment Plant 1 20,000 litres 4,00,000 Laboratory equipment 1 2,50,000 Miscellaneous Items 1 2,00,000 Electrical Panels, Cables & Accessories 1 6,00,000 Installation, Erection & Commissioning 8,00,000 Office Furniture & Computers 3,00,000 Construction Cost of Building on available land 15,00,0000 Total 3,11,35,000 Marketing Cost Cost of 100 Push Carts @ Rs. 35,000 each 35,00,000 Cost of 100 Deep Freezes @ Rs. 35,000 each 35,00,000 Cost of 100 Shippers @ Rs. 5,000 each 5,00,000 Miscellaneous expenses 10,00,000 Total Capital Investment 3,96,35,000 WORKING EXPENDITURE PER YEAR A. Cost of raw material and packing material Take Home Items (Family/Party/Bulk Packs) Plain varieties: For 1,28,000 litres/year, 70,400 kgs Flavoured Mix @ Rs. 65 per kg 45,76,000 Packing Material @ Rs. 3.50 per litre 4,48,000 Nuts & dry fruit varieties: For 80,000 litres/year 43,200 kgs Flavoured Mix @ Rs. 65 per kg 28,08,000 4,800 kgs Nuts & dry fruit @ Rs. 450 per kg 21,60,000 Packing Material @ Rs. 3.50 per litre 280,000 Fruit & Sauce varieties: For 80,000 litres/year 43,200 kgs Flavoured Mix @ Rs. 65 per kg 28,08,000 4,800 kgs Nuts & dry fruit @ Rs.150 per kg 7,20,000 Packing Material @ Rs. 3.50 per litre 2,80,000 Total Cost: 1,40,80,000 Impulse Items (Cups/Cones) Plain varieties: For 96,000 litres/year 52,800 kgs Flavoured Mix @ Rs. 65 per kg 34,32,000 Packing Material @ Rs. 18 per litre 17,28,000 Nuts & dry fruit varieties: For 96,000 litres/year 51,840 kgs Flavoured Mix @ Rs. 65 per kg 33,69,600 5,760 kgs Nuts & dry fruit @ Rs. 450 per kg 2,592,000 Packing Material @ Rs. 18 per litre 17,28,000 Total Cost: 1,28,49,600 Stick varieties (Chocolate & Kulfi Bars, Juicy Candies) Milk & Chocolate-based varieties: For 64,000 litres 34,200 kgs Flavoured Mix @ Rs. 65 per kg 22,23,000 12,800 kgs Chocolate @ Rs. 150 per kg 19,20,000 Packing Material @ Rs. 16 per litre 10,24,000 Juicy water-based varieties: For 64,000 litres 64,000 kgs Flavoured Mix @ Rs. 18 per kg 11,52,000 Packing Material @ Rs. 16 per litre 10,24,000 Total Cost: 73,43,000 Novelty Items Cassata, Sandwiches, Roll cuts: For 32,000 litres 16,000 kgs Flavoured Mix @ Rs. 65 per kg 10,40,000 5,500 kgs Cake/Nuts @ Rs. 300 per kg 16,50,000 Packing Material @ Rs. 25 per litre 8,00,000 Total Cost: 34,90,000 Total Cost (A): 3,77,62,600 B. Fixed Annual Cost Fixed electricity charges 3,00,000 Fixed staff exchequer 40,08,000 (2 Managers @ Rs. 50,000 pm, 4 supervisors @ Rs 72,000 pm, 10 Operators & Skilled workers @ Rs. 1,00,000 pm, 3 Officers for store/despatch/accounts @ Rs. 42,000 pm, 10 unskilled workers @ Rs 70,000 pm) Government fees 1,00,000 Administrative & staff welfare expenses @ Rs. 10,000 pm 1,20,000 Total Cost (B): 45,28,000 C. Variable Cost Plant machinery maintenance @ Rs. 0.60/litre 3,84,000 Electricity & fuel charges @ Rs. 4/litre 25,60,000 Water charges @ Rs. 0.10/litre 64,000 Inventory cost @ Rs. 0.15/ litre 96,000 Variable labour cost @ Rs .2/litre 12,80,000 Sampling & analysis cost @ Rs. 0.20/litre 1,28,000 Consumable cost @ Rs. 0.25/litre 1,60,000 Transportation cost @ Rs. 1.25/litre 8,00,000 Advertising cost @ Rs. 1/litre 6,40,000 Total Variable Annual Cost (C): 61,12,000 Total Working Expenditure (A+B+C) 4,84,02,600 ANNUAL TURNOVER (SALES) Take Home Items (Family/Party/Bulk Packs) By sale of 1,28,000 litres of Plain varieties @ Rs. 70/ litre 89,60,000 By sale of 80,000 litres of Nuts & dry fruit varieties @ Rs. 100/litre 80,00,00 By sale of 80,000 litres of Fruit & Sauce varieties @ Rs. 80/litre 64,00,000 Impulse Items (Cups/Cones) By sale of 96,000 litres of Plain varieties @ Rs. 80/litre 76,80,000 By sale of 96,000 litres of Nuts & dry fruit varieties @ Rs. 120/litre 1,15,20,000 Stick varieties (Chocolate & Kulfi Bars, Juicy Candies) By sale of 64,000 litres of Milk & Chocolate-based varieties @ Rs. 160/litre 1,02,40,000 By sale of 64,000 litres of Juicy water-based varieties @ Rs. 75/litre 48,00,000 Novelty Items (Cassata, Sandwiches, Roll cuts) By sale of 32,000 litres of novelty varieties @ Rs. 160/litre 51,20,000 Total Income from all segments 6,27,20,000 PROFIT STATEMENT (per annum) Income 6,27,20,000 Expenditure 4,84,02,600 Gross Profit 1,43,17,400 Loan Payback amount for total annual EMIs @ 14% 73,84,712 Net Profit (Before Tax) 69,32,688 FINANCIAL STATEMENT 200 Litres/Hour Capacity Ice cream Manufacturing Unit The statement given below is only a guideline to help in evaluating the economic feasibility of an ice cream unit with a freezing capacity of 200 litres per hour. This statement is based on various factors as follows: Machine run time: It is around 16 hours a day out of which one hour each is required for preparation and machine setting, 10 hours are for actual run time and 4 hours are required for CIP (Cleaning-in-place) and manual cleaning. At the end of the day, the total output can be 2,000 litres of ice cream with two shift operation. Plant utilisation: As the ice cream sale varies season to season in India, it is assumed that the overall annual viability/utilisation of plant capacity are only 35% which is equivalent to around 2,60,000 litres per year. Segment-wise break-up: As the product is preferred in various shapes, forms & flavours, it is packed in different stock keeping units and with different flavours. The break-up of this range is given as below Take home items (45%): Plain varieties—20% (52,000 litres), Nuts & dry fruit varieties—12.5% (32,500 litres), Fruits & Sauce varieties—12.5% (32,500 litres) Impulse Items (30%): Plain varieties–15% (39,000 litres), Nuts & dry fruit varieties—15% (39,000 litres) Stick Items (20%): Chocolate & milk-based varieties—10% (26,000 litres), Juicy water-based varieties—10% (26,000 litres) Novelty Items like cassata, sandwiches, roll cuts etc—5% (13,000 litres) The overrun consideration in plain ice cream is 95–100% and ingredients like inclusions, toppings, ripples & coatings are considered as 10% (approx) of total product. CAPITAL INVESTMENT Plant & Machinery: During preparing the list of necessary equipment and infrastructure, an attempt has been made to take into account the necessary requirements of food safety, GMP and all legal compliances applicable for food industry. The processing equipment must be of hygienic design, easily and effectively cleanable and efficient for all required processing parameters. The building construction must comply with all requirements of GMP and desired layout for ice cream industry. Description Quantity (Nos.) Total Capacity Total Value (Rs) Mixing Tanks 2 600 litres 2,40,000 Evaporation Vat (Kulfi/Sauce Making Vat) 1 200 litres 1,20,000 Pasteurisation Unit 1 500 kgs/hr 3,00,000 Homogeniser 1 500 kgs /hr 10,00,000 Ageing Tanks 2 1,600 litres 2,75,000 CIP Tanks 3 1,200 litres 2,40,000 Flavouring Tanks 3 750 litres 90,000 Freezers 3 500 litres 14,00,000 Fruit Feeder 1 200 litres/hr 2,00,000 Filling & Packing Machine 1 200 litres/hr 8,00,000 Printers 2 6,000 pcs/hr 3,00,000 Candy (Brine) Tank 1 1,000 litres 2,00,000 Candy Moulds 1 10 pcs 1,00,000 Stainless Steel Pipelines & Fittings 1 2,00,000 Boiler with softener 1 300 kgs/hr 5,00,000 Refrigeration System 1 20 tonnes 12,00,000 Hardening Room 1 1,000 litres 3,00,000 Cold Room 1 10,000 litres 4,00,000 Generator 1 60 KVA 4,00,000 Air Compressor 1 20 CFM 80,000 Effluent Treatment Plant 1 10,000 litres 2,50,000 Laboratory equipments 1 1,20,000 Miscellaneous Items 1 1,00,000 Electrical Panels, Cables & Accessories 1 3,00,000 Installation, Erection & Commissioning 4,00,000 Office Furniture & Computers 2,00,000 Construction Cost of Building on available land 80,00,000 Total 1,77,15,000 Market Cost Cost of 40 Push Carts @ Rs. 35,000 14,00,000 Cost of 40 Deep Freezes @ Rs. 35,000 14,00,000 Cost of 40 Shippers @ Rs. 5,000 2,00,000 Miscellaneous Cost 5,00,000 Total Capital Investment 2,12,15,000 WORKING EXPENDITURE PER YEAR A. Cost of raw material and packing material Take Home Items (Family/Party/Bulk Packs) Plain varieties: For 52,000 litres/year 28,600 kgs Flavoured Mix @ Rs. 65 per kg 18,59,000 Packing Material @ Rs. 3.50 per litre 1,82,000 Nuts & dry fruit varieties: For 32,500 litres/year 17,500 kgs Flavoured Mix @ Rs. 65 per kg 11,37,500 2,000 kgs Nuts & dry fruit @ Rs. 450 per kg 9,00,000 Packing Material @ Rs. 3.50 per litre 1,13,750 Fruit & Sauce varieties: For 32,500 litres/year 17,500 kgs Flavoured Mix @ Rs. 65 per kg 11,37,500 2,000 kgs Nuts & dry fruit @ Rs. 150 per kg 3,00,000 Packing Material @ Rs. 3.50 per litre 1,13,750 Impulse Items (Cups/Cones) Plain varieties: For 39,000 litres/year 21,500 kgs Flavoured Mix @ Rs. 65 per kg 13,97,500 Packing Material @ Rs. 18 per litre 7,02,000 Nuts & dry fruit varieties: For 39,000 litres/year 21,000 kgs Flavoured Mix @ Rs. 65 per kg 13,65,000 2,350 kgs Nuts & dry fruit @ Rs. 450 per kg 10,57,500 Packing Material @ Rs. 18 per litre 7,02,000 Total Cost: 31,24,500 Stick varieties (Chocolate & Kulfi Bars, Juicy Candies) Milk & Chocolate based varieties: For 26,000 litres 13,900 kgs Flavoured Mix @ Rs. 65 per kg 9,03,500 5,200 kgs Chocolate @ Rs. 150 per kg 7,80,000 Packing Material @ Rs. 16 per litre 4,16,000 Juicy water-based varieties: For 26,000 litres 26,000 kgs Flavoured Mix @ Rs. 18 per kg 4,68,000 Packing Material @ Rs. 16 per litre 4,16,000 Total Cost: 8,84,000 Novelty Items Cassata, Sandwiches, Roll cuts: For 13,000 litres 6,500 kgs Flavoured Mix @ Rs. 65 per kg 4,22,500 2,200 kgs Cake/Nuts @ Rs. 300 per kg 6,60,000 Packing Material @ Rs. 25 per litre 3,25,000 Total Cost: 14,07,500 Total Cost (A): 1,53,58,500 Fixed Annual Cost Fixed Electricity Charges 1,50,000 Fixed Staff Exchequer 19,44,000 (1 Manager @ Rs. 20,000 pm, 1 supervisor @ Rs. 15,000 pm, 6 operators & skilled workers @ Rs. 51,000 pm, 2 officers for store/despatch/accounts @ Rs. 24, 000 pm, 8 unskilled workers @ Rs. 52,000) Government Fees 50,000 Administrative & Staff welfare expenses @Rs. 5,000 pm 60,000 Total Fixed Cost (B): 22,04,000 Variable Cost Plant machinery maintenance @ Rs. 0.60/litre 1,56,000 Electricity & Fuel charges @ Rs. 4/litre 10,40,000 Water charges @ Rs. 0.10/litre 26,000 Inventory cost @ Rs. 0.15/litre 39,000 Variable labour cost @ Rs. 2/litre 5,20,000 Sampling & Analysis cost @ Rs. 0.20/litre 52,000 Consumable cost @ Rs. 0.25/litre 65,000 Transportation cost @ Rs. 1.25/litre 3,25,000 Advertising cost @ Rs. 1/litre 2,60,000 Total Variable Cost (C): 24,83,000 Total Working Expenditure (A+B+C): 2,00,45,500 ANNUAL TURNOVER Take Home Items (Family/Party/Bulk Packs) By sale of 52,000 litres of Plain varieties @ Rs. 70/litre 36,40,000 By sale of 32,500 litres of Nuts & dry fruit varieties @ Rs. 100/litre 32,50,000 By sale of 32,500 litres of Fruit & Sauce varieties @ Rs. 80/litre 26,00,000 Impulse Items (Cups/Cones) By sale of 39.000 litres of Plain varieties @ Rs. 80/litre 31,20,000 By sale of 39,000 litres of Nuts & dry fruit varieties @ Rs. 120/litre 46,80,000 Stick varieties (Chocolate & Kulfi Bars, Juicy Candies) By sale of 26,000 litres of milk & chocolate-based varieties @ Rs. 160/litre 41,60,000 By sale of 26,000 litres of juicy water-based varieties @ Rs. 75/litre 19,50,000 Novelty Items (Cassata, Sandwiches, Roll cuts) By sale of 13,000 litres of novelty varieties @ `160/litre 20,80,000 Total Income from all segments: 2,54,80,000 PROFIT STATEMENT (Per Annum) Income 2,54,80,000 Expenditure 2,00,45,500 Gross Profit 54,34,500 Loan Payback amount for total annual EMIs @ 14% 39,52,773 Net Profit (Before Tax) 14,81,727