PRESENT BY.

MASROOR

Industry Overview

The food and its allied products industry is considered Pakistan’s largest industry

Pakistan’s food industry produces cooking oils, sugar, flour, dairy products such as milk, butter, yogurt, cheese and ice-cream, biscuits, breads and confectionery, fruit juices and fruit juice drinks, carbonated beverages, snack foods based on rice, potatoes, corn and pulses, processed chicken, jams, jellies, squashes, sauces, pickles, and some canned fruits

Pakistan is the 4rth largest milk producing country in the world

An estimated 33.25 billion liters of annual milk is produced

Approximately 50 million animals managed by 08 million farming households.

The milk economy represents 27.7% of the total value of the Agriculture sector.

Market Trends

The growth of processed milk is increasing by 20% annually.

People are getting more quality and health conscious with the

passage of time.

Due to impurities of loose milk, people are attracting towards

processed milk.

Dairy Industrial SWOT AnalysisSTRENGTH• Good breed of buffalos and cows• 4rth Largest Industry Dairy Industry in Pak. • Pak Dairy Industry is Cheaper than Austria,

America and other developed countries. • Farmers are engaged in agriculture and dairy

at the same time.

WEAKNESS • Small and scattered animal holding• Prevalence of traditional raw milk marketing

system• Milk processing predominantly dependant on

obsolete UHT technology• Inadequate infrastructure and institutional

facilities and support• Poor quality of animal health care and

breeding services; lack of professional management

OPPORTUNITIES • Huge unsatisfied demand of milk and milk

products• Increase consumer awareness of healthy

eating• There is an opportunity for companies to

introduce value-added products like ice creams, flavored milk, dairy sweets, etc

• There is a phenomenal scope for innovations in product development, packaging and presentation

THREATS • Unregulated imports of dairy products at

cheap prices• Very low quality milk is provided by the

milkmen to dairy farms which is a very big threat for the entire market.

• The shortage of milk providing animals is also a threat for entire milk industry.

Diversified Portfolio of Engro Pakistan 

Engro Corporation Limited (formerly known as .Engro Chemical Pakistan Limited.) is one of the largest industrial corporations in Pakistan. It has following subsidiaries business units

Engro Fertilizer

Engro Foods

Engro Power Generation

Engro Polymer & Chemical

Engro EXIMP

Engro Vopak Terminal

Elengy Terminal Pakistan

Why did Engro enter the food business?“Big opportunity due to population growth and

indigenous sourcing. There is a huge population. One

seventy million is a very big market. There are only a few countries with such a

huge population in the world. Besides, our people spend a lot on food. Our

economy is agro-based. We get raw material at the

local level.”

Engro Foods (Pvt.) Limited (EFL)

Engro Foods Limited was formed as a wholly owned

subsidiary of Engro Corporation in 2005.

It start its operation in 2006 and engaged in the

manufacturing, processing and marketing of dairy products,

ice cream and fruit juices.

The Plant Located at Sukkur on 23 Acre Land

The Plant has been established at a Cost of Rs. 1 Billion

which provide direct employment to 1400 people.

Quick Facts & Figures 1,243 Employees 45% Market Share of Dairy Products Market in

300+ Cities in Pakistan 18+ states in USA 4 Provinces in Canada

18th Largest Customer of Tetra Pak World Wide 2nd Largest Company of Chilled Milk Collection of Pakistan 2000+ Milk Collection Centers 35,000 farmers directly linked with EFL 2 Milk Processing Plants Milk Production Capacity is 700 Thousand Liters per Day. Total Assets Rs. 24,046 Millions

Departments in Engro Foods

Administration

Finance and Accounts

Human Resource

Marketing

Procurement

Management Information System

Production

Quality Assurance

Supply and Distribution

Products Portfolio

Vision Statement

Engro Foods will continue to make investments

aimed at impacting lives and delighting consumers

each day, every day, in a multitude of ways.

Mission Statement

“Build Branded food business

to improve quality of life by

offering tasty, affordable and

highly nutritional products to

our consumers while

maximizing stake holders'

value”

Objective

Engro foods main objectives

are to supply everyone their

favorite Dairy Products and

to satisfy the consumer

needs and wants. Engro foods

second main objectives are to

provide profit to the

shareholders and increase

the market share

EFL-SWOT ANALYSIS

Strengths Weaknesses Opportunities Threats

SWOT ANALYSIS

STRENGTHS

Relation with Farmers• Strong bond

Customer Response• Positive

response, crossing over 1.4 billion sales

Quality• World class

quality

Technology• Third

generation plant,

• Bactofuge tehnology

SWOT ANALYSIS

WEAKNESSES

Milk Supply •Outside farmers

Packaging •Dependent upon Tetra Pak

Distribution •Hindrance of place

SWOT ANALYSIS

OPPORTUNITIES

Govt. Funding

•Funding to farmers

Consumption

•Increased consumption of Processed Liquid Milk

Awareness

•Dissatisfaction with loose milk

Increased Population

•Increase in consumption of process milk

SWOT ANALYSIS

THREATS

Severe

Competition

High Prices

Threa

t

Dairy Market Share

MARKET SHARE

Nestle35%

Engro27%

Uniliver21%

Haleeb17%

Sales

CORE COMPETENCIES

Good brand name

Doing business without interest

Latest technology and has a high production capacity.

80,000 liters

Distribution networks (600 distributors across Pakistan )

KEY SUCCESS FACTORS Research & Development

Financial Position

Market Share

Product Quality

Price Competitiveness

Management

Global Expansion

Customer service

Network Sales And Distribution

Production Capacity

PESTEL Analysis

o EFL make strategies according to the laws and legislations.

o EFL abides to laws set by the government for trade policies,

government policies and completes its responsibilities in a

better manner.

P - POLITICAL FACTOR

PESTEL Analysis

EFL is strongly affected by both the Economic and the

Demographic.

E - ECONOMICAL FACTOR

PESTEL Analysis

EFL has helped to bring about a change in life style of the

Pakistani People by introducing Bactofuge technology

People awareness program for Olpers and Tarang

Bactofuge treated milk, which helps to improve the sale.

Usage of open Gawala milk & standardized packed milk.

S - SOCIAL FACTORS

PESTEL Analysis

Use of new technology gives firm there competitive

advantage.

EFL adopted Bactofuge Technology (Whereas Haleeb use

UHT Technology)

T – TECHNOLOGICAL FACTORS

PESTEL Analysis

• Environmental changes can cause failure of strategic plans

• EFL is using environment friendly Technology

• EFL has a friendly environmental culture within the

organization to make their employees comfortable and to

deal with the external problems

E - ENVIRONMENTAL FACTOR

PESTEL Analysis

o Check government policy about milk industry

o EFL strictly follows laws like, Minimum wage, working time,

minimum working age, & Environmental regulations

L – LEGAL FACTOR

PESTLE Analysis

EFL renowned company since 2006, and the reason for its

important ethical value.

They don’t sale on credit or on interest because they

consider it unethical and not according to the law of our

religion

E - ETHICAL FACTOR

Marketing Mix

Marketing Mix

Eye catching distinctive packaging of Olper’s Milk (Red

Color)

Olwell will be positioned in a way that it will target people who

are goal-oriented and focus on their careers

POSITIONING

Marketing Mix

A massive advertisement campaign with Olper's logo on

every bill board, ads and newspapers

Free Tea using Olper’s Milk will provided to the potential

buyers at major departmental stores for testing purposes

PRODUCT STRATEGY

Marketing Mix

Adopting competitive pricing strategy

Prices of the competitors are studied

Milk pack is around 70 Rs, we will introduce our milk with a

price slightly lower than this.

PRICING STRATEGY

Marketing Mix

Olper's milk launched in many major cities Distribution into five major regions Lahore, Karachi, Multan,

Islamabad and Peshawar Efficient transport facilities as well as warehouses and

storages in different cities Trained & Experienced personals will be hired & 5% fixed

commission rate Sales target set twice a month after discussion the market

situation with distributor Incentives, bonuses, increments, and training will be provided

to the distributors and staff for further improvement in the distribution field

DISTRIBUTION STRATEGY

COMPETITIVE ANALYSIS As a new entrant EFL focused more on advertising to

compete with old one’s like Haleeb, Nestle

Nestle maintained its value of gross profit margin around or

above 30% to ensure that it has a strong control over its

costs, and the efficiency of production. But on the other

hand, Haleeb faced a bit of down fall when Olper’s

introduced their campaign

Product Life Cycle OmoreOMORE is at the introductory phase at the life cycle phase as it was launched in 2009.

At the introduction stage, you should focus on the following marketing factors: pricing distribution promotion

omung lassi’s 2013 campaign

omung lassi’s 2013 campaign

An extension from its 2012 campaign, Omung

Lassi's 2013 campaign was geared towards

emphasizing love as a way to target young

audiences. In 2013, Omung Lassi launched its

Pyar Ko Vote Do campaign targeted to its young

market — the energetic, and lively which are

dispersed in the country's colleges and

universities.

tarang IIFA 2013

Tarang IIFA 2013Tarang’s promise for bringing something

dhamakedaar every time for consumers led to its first

cross-border consumer promotion initiative in the

STC category ever - Tarang IIFA 2013. This campaign

was not only a new way to garner consumer interest,

but also excited Tarang lovers. With their daily

purchase of Tarang, consumers were offered the

opportunity to attend IIFA Awards 2013. The selection

took place over a lucky draw

Omore's monkey peel

the launch of mabrook

the launch of mabrook

For the first time, Engro Foods has taken the front-end

retailer model to market Mabrook. Mabrook is available

at dedicated Mabrook Milk Shops - retail outlets - that

are spread across Karachi, offering milk from dispenser

and pre-packed pouches.

Financial Evaluation

of EFL

Business Revenue (Rs. in billions)

Ratio Analysis

Ratio Analysis

Comments on Some Financial Indicators

o Gross Profit RatioDecline in 2013 compared to last year was due to high inflation in input and utilities cost.

o Net Profit to Sales / EBITDA Margin to SalesExternalities like aggravating power crises, law and order situation together with distribution issues & one-time charges led to the deterioration of these ratios in 2013

o Return on EquityFrom 2010 to 2012 these returns witnessed improvement on account of business performance and growth. Decline in 2013 is mainly due to one-time charges coupled with other issues discussed above

o Return on Capital EmployedThis is in line with the profitability; the year 2013 was a test of Company’s resilience to face turbulent times after a smooth ride for few years back to back.

o Current Ratio / Acid Test RatioAs a best practice, the Company intends to keep its current ratio higher than one. In 2013 this ratio was impacted due to the utilization of short term investments to finance capital commitments.

Comments on Some Financial Indicators

o Cash to Current LiabilitiesThe Company has maintained a consistent ratio throughout

o Cash Flow from Operations to SalesDue to burn up of cash in earlier years, the ratio was negative. However, with the increased cash generation, the ratio has improved in recent years.

Future Strategy

In January 2014, the company has also taken price increase in one of its brands to arrest the declining margins. The Company is also working on various efficiency projects including the Heavy Fuel Oil based power plant which will result in lower energy costs. Moreover, the new powder plant at Sahiwal which will be operational shortly is expected to contribute towards stabilizing the Company’s margins.

The management will continue to focus on key growth parameters of innovation, brand differentiation and continuous business expansion including expansion in new products, e.g., pilot project for “Mabrook” (the fresh dairy segment).

WHY WE BELIEVE

ENGRO FOODS IS A SUCCESS

STORY

Success Points

Growth in a short span of time:

The company laid its foundation few

years ago in 2004 and within such short

span of time Engro foods has shown

stupendous and extraordinary growth

compared to other dairy product

manufacturing companies.

Success Points

Dominating the market giants:

One of the key features that highlight

Engro foods as a success story is the

way company wiped out some of the

leading marketing giants such as

Haleeb off the charts and even giving

hard time to Nestle, Unliver etc. .

Success Points

Quality Product and Customer Trust:

A company is nothing without its customers

and from the very beginning Engro foods has

given notable significance to its customers by

providing them with quality products of

international standards at economical prices.

Recommendations/ Suggestions Engro Foods should have much diversified bi-product line of

dairy products like Nestle & Haleeb

They should introduce new promotions to get customers’

attention

EFL should expand its dairy farms so that they can get

competitive advantage

EFL should focus on Market Penetration, Market

Development and Product Development strategies with

more efforts to be the market leader

Recommendations/ Suggestions They should go expand its capacity to enter into in

international market like Nestle.

Engro Foods can be into Co-branding with other brands like

Olper’s with Lipton tea bags, Olper’s with different biscuits

etc. to increase their sales

They can also move towards other foods products like

Nestle launch Kit Kat Chocolate, Meggi Noodles, Sweets

Candies etc.