Case Analysis of Kanpur Confectinory

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Written Analysis and Communication

Individual Assignment No 4

Case Analysis Report on

‘Kanpur Confectionaries Private Limited (A)’

Submitted by

Name: Shuchi Bhatnagar

Roll No: 121154

Section: A

Institute of Management, Nirma University

September 29, 2012

EXECUTIVE SUMMARY:

SITUATION ANALYSIS:

Mohan Kumar Gupta started KCPL in Jaipur in 1945 to sell sugar candies under the brand “MKG”. He set up a production unit in 1946 but due to competition, his profit margins came down. In 1954, he thus shifted the production unit to Kanpur. By 1970 ,He covered the entire UP and regions of Bihar as well as MP and emerged as a leader in candy business in his region He then ventured into the biscuit industry. Its turnover increased during the early 80’s. But with tough competition from organized and unorganized sectors, its sales declined and by mid 80’s, it started making losses (Exhibit 1). It also closed the candy line as it was no longer profitable. It became a contract manufacturer for Pearson Health Drinks Limited (Pearson) in 1985. It became a contract manufacturer for Pearson Health Drinks Limited (Pearson) in 1985. But Pearson faced stiff competition from A-One Confectioneries Private Limited (APL). Now in September 1987, KCPL has the proposal of becoming a contract manufacturer for APL. If KCPL accepts the proposal

PROBLEM DEFINITION:

OBJECTIVES:

ALTERNATIVES:

EVALUATION:

DECISION:

ACTION PLAN:

CONTINGENCY PLAN:

Exhibit 1

Table 1 : Cost of Raw Materials/tonne of Biscuits

|Raw Mat |Cons/tonne(Kg) |Cost/Kg |Cost/tonne |
|Maida |750 |10 |7500 |
|Vanaspati |150 |34.67 |5200 |
|Sugar |200 |12 |2400 |

Table 2 : Operating Costs per month

|Dimension |MKG |
|Sales/month (tonnes) |120 |
|Price /tonne |18,100 |
|Total Cost/tonne |15,100 |
|Preserv & Packing Cost/tonne |1000 |
|Casual Labour Cost/tonne |300 |
|Contribution /tonne |1700 |
|Total Contribution |204000 |
|Interest/month |10,000 |
|Other Fixed Commitments |60,000 |
|Permanent Salary Bill/month |2,75,000 |
|Loss/month |1,41,000 |

Exhibit 2

Table 1 : I Contribution on acceptance of Pearson’s Offer

|Conversion price | 3000*50 = 1,50,000 |
|Casual labour cost |300*50 = 15,000 |
|Additional pres & pack cost |1000*50 = 50,000 |
|Increased contribution |85,000 |

Exhibit 2

Table 1 : I Contribution on acceptance of Pearson’s Offer

|Conversion price | 1500*70 = 1,05,000 |
|Casual labour cost |300*70 = 21,000 |
|Increased contribution |84,000 |

UNDERTAKING

To Whom It May Concern:

I, Shuchi Bhatnagar hereby declare that this assignment is my original work and is not copied from anyone/anywhere if found similar with sources, I take complete responsibility of action taken thereof by WAC Team.

Signature

Name: Shuchi Bhatnagar

Roll no: 121154

Section: A