“Premium 777 Bidi”

Desi Bidi Videshi Swad

Mission and Vision:

Mission:To prove ourselves as the

best Bidi Manufacturing Company in India and Abroad.

Vision:To promote a Swadeshi

product such that “Premium 777” is known for Best Quality and Lower Prices.

Why a Bidi Manufacturing Company?

• A Swadeshi Product

• Condition of Indian Economy and the Unorganized Bidi Sector

• Indian Manager’s perception

Indian Bidi Manufacturing Sector:

• Types of Bidis produced in India are Toasted and Roasted ones.

• Northern Indian smokers prefer the toasted variety while in Eastern India Roasted Bidis are preferred

• Madhya Pradesh is the largest supplier of Tendu Leaves but southern India has a large number of organized producers with better working conditions for their labors and producing better quality Bidis.

• Each state in the country has around 200 manufacturers making the business very fragmented.

Contd. …

• All India Bidi Federation Claims to be more than 50yrs old, represents, Bidi Industry it has had to fight allegations regarding the use of child labor.

• The unorganized and the unbranded sector, which is bringing the entire, Bidi sector into disrepute.

• Due to rising excise duties and legislations against public smoking the overall share of cigarette declined whereas Bidi continued to perform well almost 20% in volume

terms.

Market Players:

• Pataka Bidi Manufacturing Company• The Kajah Bidi Group• Bharath Beedi• Mangalore Ganesh Beedi • Kerala Dinesh Beedi Workers Cooperative

To Note: There is no bidi manufacturer with a share of more than 5%. The market is highly fragmented, with several brands with a 1% share each. The list of key players are indicative and by no means exhaustive.

Industry Location: Geographic

• RAJNANDGAON, Situated 30Kms from Durg, 70Kms from Raipur and Nagpur 315Kms (commercial hub of Maharashtra).

• Connected by National Highway.

• Climate favourable for the growth of Tendu Tree.

• M.P.(Largest producer of Tendu Leaves) is comparatively nearby.

Industry Situation: Demographic

• The family life cycle of the city is mainly young married & unemployed people.

• Education is average .• Mainly Hindu families dominate there and the majority of

the families are middle lower and middle class. • The life style of the families are vary simple and social ,

and they carry the ambitious personality.

Note: It means there is the need of employment and our industry needs this kind of a Location.

Product Line:

• Simple Indian Bidi (Roasted) – “Josh”

• Simple Indian Bidi (Toasted) – “Shakti”

• Flavored Bidis (Roasted) – “Mehek”

• Filter Bidis (Roasted)-(Premium Product) – “Shreshtha”

• Cigars (Futuristic product)

Pricing:

• Price penetration strategy to be used.• Josh and Shakti @ Rs.3 per Pack of 20• Mehek @ Rs.3.5 per Pack of 20• Shreshtha @ Rs.4 per Pack of 20

Note:- One box contains 10 such packets and 1 master box accommodates 60 boxes i.e.

1 Master Box = 60 Boxes = 600 Packets = 12,000 Bidi.

Prospective Markets:

Geographically:• Rajnandgaon, Durg,

Raipur, Doongargarh, Bhilai etc in Chattisgarh.

• Nagpur and neighboring places in Maharashtra.

• Growing markets of A.P., U.P, Jaharkhand and Bihar.

• Exotic markets like Russia, Iraq, Canada and Germany

Demographically:• Age: 18 and above• Sex : Male• Income Level:

Medium and Low

Promotional Techniques:

• Sponsorships to local cultural and sport events.• Sponsoring constructions of Family Parks.• Public announcements and publicity on

Rickshaws.• Free filters with Josh and Shakti. • Posters at the points of sales.• Internet for Exotic Markets.

Packaging:

Josh, Shakti and Mehek

Shreshtha

Positioning:

• Positioned to the Indian consumer as the Quality product at cheap price ( More for Less)

• Positioned to the exotic customers as a Premium product at competitive prices and best quality product.

• Positioned as a Bidi, which has the minimum burning smell from the mouth after consumption and good to taste in comparison with the other brands.

Channels of Distribution:Bidi

Tobacco farmer

Traders & agents

Tendu leafs and collector

Auctioneer

Purchase of tobacco and mixing

Manufacturing

Wholesalers

Commission Agents

RetailersAround 1 million pan shops, grocery shop

Competitive Advantages:• Unique taste than the other brands.• Provision of filter with the packs of Josh, Shakti and

Mehek brands.• Best quality provided at reasonable Price.• Available in various flavors.• Concept of filter Bidis, which is new in India and can be

traded upon.• Avoid the burning smell from the mouth of the consumer.• Provide better consumer satisfaction than the other

products in the market.

Production and Technology:

Procedure for manufacturing:• Raw Materials to be stored at the storehouse located

inside the campus.• From there it would be distributed to the villagers for

rolling purposes.• Initial screening would be done.• The bad quality ones would be rejected. • Then they would be segregated in the different

departments such as the “Flavour Sangh”, “Simple Bidi Sangh”, “Filter Bidi Sangh”.

Contd. …

• At the flavour sangh, flavour tipping would be done. At all these sanghs quality check would be performed and the bad quality ones would be screened out again.

• At all these Sanghs Roasting and sun drying for the Bidis would be done.

• Then they will move collectively to the Packaging Sangh where they would be packed according to the varieties and a final quality check would be performed.

• After packaging they would move to the warehouse for final storage and sales purposes.

Quality Check:

• The Physical quality check would be performed at the first and the last stages by verifying that the Bidis are properly made and packaged by the line staff person.

• The Random taste check would be performed and the subsequent action would be taken on the lot depending on the Lower control Limit (LCL) and Upper Control Limit (UCL).

Expected Production:

• 3,000 Bidis by a roller everyday or 9,000 Master Boxes annually by 100 rollers.

9,000 Master Boxes

 

 

60% Domestic 40% Exports

5,400 Master Boxes 3,600 Master Boxes

@ Rs3/ packet or Rs 1800/MB @0.08$/Packet- $48

@ Rs.3.5/ Packet- Rs.2,100/MB

@ Rs4 /Packet- Rs. 2,400/MB

Human Resource Planning:

• Packaging(8)

• Manager(3)

• Line staff (8)

• Quality Control Inspector(4)

• Rollers(100)

Human Resource Development:

Emphasis on the relationship with the employees

• Creation of a social club. • Introducing 5 scholarships every year to the meritorious

students of the staffs including rollers.

• Bonus will be given as per companies profit.

• Medical checkup will be free in every four months to each employee.

• No employment to individuals below 18 years.

Legal Bindings:

1. Apply to the Directorate of the Industries depending upon the location of the unit i.e. Rajnandgaon for a provisional Bidi Unit registration in the form prescribed by the development commissioner New-Delhi.

2. We have to get clearance from the specified industry through the directorate Of Industries and then approach for the provisional SSI registration unit.

3. After the clearance the Industry Center will forward the complete set of applications received from us to the Rajnandgaon Municipality.

4. After Getting the permission we would be able to establish our Bidi Manufacturing Unit.

Clauses required:

• No Objection Certificate (NOC) on pollution angle from the department of technology and Environment.

• Approval of factory building and machinery layout from the inspector of factories.

• Site clearance from the town and the country planning department

• Permission for land use, conversion and ground water clearance from agricultural department.

• Power feasibility certificate from the electricity department.

• Clearance from health and revenue Department.

• License from Food Administration for the canteen in the premises.

• License from the civil supplies department

Expected Cost Sheet:

Particulars Amount

Rolling Staff (100*32*360*3) 34,56,000

Packaging Personnel (8*4500*12) 4,32,000

Quality Manager (4*7500*12) 3,60,000

Manager (2*18000*12) 4,32,000

Office Boy (2*2500*12) 60,000

Staff Salary (6*10000*12) 7,20,000

Depreciation of Office Equipment (10% of 1,50,000) 15,000

Contd. …

Depreciation of Packaging Equipment (15,600*3) 46,800

Power and Lighting 2,40,000

Depreciation of Land and Building (15,00,000 @ 5%) 75,000

Water (5,000*12) 60,000

Commission, Duties and Taxes and Transport (Exports) 20,00,000

Commission, and Taxes (Domestic) 10,00,000

Contd. …

Tobacco Cost and other Raw materials (including Tendu leaves) 50,00,000

Transport Domestic (10% on S.P.) 19,26,390

Repairs and Maintaianence 2,40,000

Post and Telegraph 2,40,000

Advertisement 12,00,000

Interest on Loan (12.5% on 25,00,000) 3,12,500

Total 1,78,15,690

Valuation of Assets and Working Capital:

Particulars Amount

Land and Building 15,00,000

Machinery (78,000*3) 2,34,000

Office equipment and Furniture 1,50,000

Vehicles (2,00,000*2) 4,00,000

Note: Working Capital to be maintained for Rs.30,00,000 to meet out the daily current liabilities and maintain smooth daily operations.

Expected Sales Figures:

• Domestic Sales: Total sales 5,600 Master Boxes = Rs.1,19,19,900 ….(1) (@ Rs.1,800/ MB for 1600 MBs = Rs.28,80,000)

(@ Rs. 2,100/Mb for 1867 MBs = Rs.39,20,700) ( @ Rs. 2,400/MB for 2133 MBs = Rs.51,19,200

• Exports: Total sales 3,400 Master Boxes (@ $48/MB) = $ 1,63,200 or Rs. 73,44,000 ….(2)

 

• Total Sales Figures (1+2) = 1,92,63,900

Profit: 1,92,63,900 – 1,78,15,690 = Rs.14, 48,210/ Annum

Sources of Initial Investment:

• Loan from Small Industries development Bank of India (SIDBI) 25,00,000

• Contribution of Partners 30,00,000

Future Expansion and Growth Depends on:

RIVALRY AMONG COMPETING SELLERS IN THE INDUSTRY1. EXISTING CIGARETTE MARKET.2. LOCAL POPULAR EXISTING BRAND IN BIDI LIKE MEGHNA, 501 PATAKHA

POWER OF BUYERS1. TASTE OF THE BIDI IS DISLIKED2. NEW CONCEPT HIT THE BIDI MARKET 3. CHEAP PRICED HIT THE BUYERS

POWER OF SUPPLIERS1. IF THE SUPPLIERS STOP TO SUPPLY US RAW, MATERIAL 2. LATE SUPPLY 3. BAD QUALITY

4. HIGHER PRICE POTENTIAL NEW

ENTRANTSNEW BIDI COMPANY

CAN EMERGE GOVERNMENT CAN

ENCOURAGE THE BIDI MAKERS.

THREATS OF SUBSTITUTE PRODUCT

CIGARETTE CIGARHUKKAS

Risks Involved:

• Environmental Factors

• Strikes

• Fire

• Government rules and regulation

• Social factor

“To Err is Human and to forgive is Devine”

Sayonara

Gautam & Abhishek