The Manufacturing Process At Almoiz Sugar Mills Marketing Essay

The Manufacturing Process At Almoiz lolly Mills merchandising EssayIntroductionAl-Moiz cole Mills Limited incorporated in 2004 as a limited beau monde and certificate of commencement of vocation was granted in 2005. The Head Office of the gild is located at Gulberg III Lahore whereas the factory unit is located on Chashma Road in the D.I.KHAN District Khyber Pakhtunkhwa. The federation is recognized in the local and international commercialize as a fine forest recrudescer of sportsmanlike rulely chicken feed, Molasses and in any case holds a substantial sh be in the market. The company is as well engaged in the export of uninfected delicate scrape to Afghanistan and molasses to Euro countries and is change to the national economy in the form of foreign exchange. The company has truehe machinationed corporate clients including Engro and Pepsi. This is the hardly Pakistani company with state of the art engineering science and is one of the very few grind around in Pakistan that is providing Wapda with electrical energy.The start lurk about basic plant machinery was acquired and inst alone in alled by The Heavy Mechanical Complex Taxila (A particularct Engineering telephoner). Other equipment such(prenominal)(prenominal) as turbines and gearboxes etc were imported from Ger legion(predicate) and United Kingdom. soon the plant is working(a) at the curtailment efficiency of 1oooo MTCD and company is lancinate to increase it to 12000 MTCD. The bread wonk has a state of the art engineering which is the latest engine room in Pakistan. The molar about produces prick by victimisation both cacography cane and slit beet as a raw(a) material.The company is committed to invest in IT with an eventual home run of implementing ERP body.AL-MOIZ abrasion Mills Limited is one of the squ atomic number 18 units of Almoiz group of industries. The company is principally engaged in the business of manufacture sales of white small sc raping molasses (as a by output), Crushing of lollipopcane, chicken feed beet raw dirty money in to white refined staff of life.Manufacturing ProcessThe manufacturing process at Almoiz prize Mills comprises of the fol gloomying stepsMain CompetitorsProducts exsanguinous refined markMajor business of the company is to produce white refined cane carbohydrate of intermission standard and from the erased cane and collar several(predicate) components be achieved that are fibber, pith and moisture.MolassesThis is a by intersection and it is sell to molasses contractors. One of the allied concerns, reliance commodities (pvt) limited is the main buyer of the molasses of al-moiz dirty money mill around limited and also the main buyer of molasses from whole the country. combine commodities (pvt) limited is the main exporter of molasses in pakistan.BaggaseThis is also a bye product of the company. Baggase is used as source of energy fuel for edulcorate attention for juice heat ing. And also used for making medium density eccentric board (mdfb). Baggase is change to the baggase contractors.MudMud is also the by-product of the company. It is sold to the mud contractors. This is used in making chocolates and distinct products.ElectricityAl-moiz moolah mills also produce electricity on large quantity. The mill does not only fulfil its own energy requirements but is fit to product surplus electricity which is supplies to wapda.Departments at the Factory SiteDepartments at the Head OfficeThe strengths and Weaknesses of the company are as followsStrengthsAttractive lucre packet boats for employees on the siteTop management. The CEO of the company is a Stanford alumnus and is a man of great visionFriendly and cooperative working surroundingsFinancial resourcesAgricultural assistance to the local farmersState of the art technologyCorporate Social ResponsibilityWeaknessesLack of versatile persons on tap(predicate) in the area where the mill is locatedS hortage of residence well-fixed for employees on the siteThe site is prone to being affected by the flood and has been affected by the floods that occurred in the pastUnavail aptitude of ripe facilities on the siteNumber of accidental reports are increasing dollar volume rate is mettlesomeWeak organizational policiesPoor GSM services on the siteLiterature Review dent Industry in PakistanJCR-VIS accredit Rating Company Limited, (2011) draw the sugar effort ranked the 15th largest globally and the second largest subsequently stuff diligence with 86 operative factories across the country with an installed expertness of 7.0 one million million rafts of sugar annually. It at once employed all everyplace 30,000 personnel.JCR-VIS Credit Rating Company Limited, (2010) described the industry as the driving engine of the rural economy after farming(prenominal) economy in many countries. They also stated the sugar industrys circular nature as harvesting of sugar cane was d ependent on weather as well as the availability of adequate water.Khushk, Memon Saeed described the Pakistan sugar industry as uncompetitive in nature ascribable to low sugarcane yield per hectare and low content of sucrose ranging among 7-9 percent however they also described the sugar industry from a growers perspective as competitive since the growers were of the opinion that the sugar crisis was artificially created by mill owners with the motive of keeping sugarcane prices below fixate up prices and reaping anomalous profits.(Shaukat) described Pakistan as the fifth largest country in the world in monetary value of area under sugar cane cultivation, eleventh by outturn and sixtieth in yield. The author also described the sugar industry in Pakistan as the second largest agro based industry with 81 sugar mills with annual devastating capacity of oer 6.1 million tons. The author also mentioned that the Sugar industry is mostly located in the rural areas of Punjab and Sind h. A small percentage of total issue is produced in Khyber Pakhtunkhwa. Previously, Punjab was partly dependent on supply of sugar from Sindh however after the establishment of some large crustal plate units in Punjab the Province became self- adapted in the commodity.(Rizvi) described Pakistans sugar industry as mostly have by politicians. The author also mentions that majority of the sugar mills were setup with the help of Development Financial Institutions normally trapped with the working peachy crisis. Consequently, some of the mills were adjacentd and it was feared that some to a greater extent sick units would close down. The author also mentions the collapse of sugar mill being a loss of national assets, reduction in the sales task taxation and an increase in unemployment.Awareness of consumers towards taged productsAaker (2000) was of the opinion that marking sensory faculty was a remarkably durable and sustainable asset that provided a comprehend of familiarity especially in low- involvement products. It also provided with a sense of presence, dedication and substance. It was very snappy to recall at the time of purchase. Besides the received media there were other effective means to create awareness such as event promotions, publicity and sampling.Chen (2001) stated that though leaf blade awareness was a necessary asset however it was not sufficient for expression strong stag candor. In this view a brand could be well known because it had inferior timbre.Ramasamy et al. (2005) reported that, the buying conduct was vastly influenced by the awareness and attitude towards the product. Television commercials were said to be the most important source of information, followed by retail outlet displays. Consumers create an opinion about a brand on the basis of respective(a) product features. A large number of respondents laid emphasis on quality and were of the opinion that price is an important factor speckle other respondents attac hed importance to image of manufacturer.Purchase Behavior of ConsumersResults of the study conducted by Joshi (1993) in Dharwad on food for thought purchase habits and consumer awareness among rural and urban housewives indicated that majority of the urban respondents purchased sugar (69.00%) on monthly basis. Rural respondents purchased sugar (71.00%) once in week. Both rural and urban respondents purchased groceries (99.00% each) from retail divulges. Price, quality and weight of the products were the important factors considered by both rural and urban respondents era purchasing of food items.Nagaraja (2004) opined that, buying behaviour is very much influenced by experience of their own and of neighbour consumers and his family. Above all, the quality of the product and its easy availability were the primary and the vital determinants of his buying behaviour. Consumers were influenced by touch and tonicity aspect of any promotional activity.Shivkumar (2004) showed that the consumer, irrespective of income groups, was mainly influenced by the opinions of their family members to purchase. Consumers were also influenced by the dealers recommendation, followed by advertisement.Brand gustatory sensationKubendran and Vanniarajan (2005) described the change in utilisation pattern a result of change in food habits. If income and urbanization increase among consumers, the percentage of income spent on consumption change magnitude. mark products were favorite(a) my urban consumers. The major factors influencing buying decisions were accessibility, quality, regular supply, door lecture and the mode of payment.Narang (2006) claimed that, a buyer does not stick to one brand when it comes to purchasing a food item. They should be able recall different brand names when they go for purchase. Repetitive advertising can be used to aid brand recall. The product should appeal to the consumer.Kim-Hyunah et al. (2005) concluded that brand preference and brand image h ad considerable positive effects on brand loyalty. Thus, the companies should strive to streng therefore brand loyalty through building brand preference and brand image. Brand loyalty led to increased customer visits.Low and Lamb Jr. (2000) maintained that known brands prevail to exhibit multi-dimensional brand associations, consistent with the idea that consumers have more real memory structures for more familiar brands. Consumers might be willing to cast more energy in processing information regarding familiar brands compared to unfamiliar brands.Padmanabhan (1999) conducted study on brand loyalty, which revealed that the price of the preferred brand, efficiency of the preferred brand and influence of advertisement of importly influenced the brand loyalty.Factors Influencing Brand PreferenceIn a study conducted by Sarwade (2002) it was observed that the factor which influenced the purchasing decision as a summationst the quality of the product was its price. Another interestin g decision was that the company image and brand image were not totally considered by the households.Kubendran and Vanniarajan (2005) described the change in consumption pattern is due to changes in food habits. If income and urbanization increase among consumers, the percentage of income spent on consumption increases. The urban consumers prefer mostly branded products compared to rural consumers. The most significant factors influencing buying decisions were acceptability, quality, regular supply, door delivery and the mode of payment.Vincent (2006) elicited that quality was an important factor that draws consumer towards branded products. Branded products were accepted as technical quality products. People do not mind paid extra for branded products, as they get value for money. Media is a key factor in promoting and influencing brand.External environmental analysisSugar Industry in PakistanSugar is the important sector of Pakistans economy. Sugar industry plays a vital role fo r development of any countries. In Pakistan this industry play a significant role for economic development.Its share in the large scale industry is 19.25% and in GDP is 1.98%. Sugar industry contribution to the giving medication exchequer in federal excise duty 17.34%HistoryAt the time of partition in 1947 only seven sugar mills, existed in the territories of Pakistan, 5 in East Pakistan now known as Bangladesh and only 2 in West Pakistan now known as Pakistan. These dickens sugar mills namely Rahwali Sugar Mills and Frontier Sugar Mills established in 1936 and 1938 had a capacity of 5000 tonnes each of producing white sugar. During 1954-56 three more sugar mills were established with a capacity of 10000-15000 tonnes. By 1955-56, the sugar take capacity in Pakistan was around 45,000 tonnes. With an overhasty change in the economic activities and urbanization, the demand for white sugar was on the increase. This was attributed to the manufacture of soft drinks, confectioneries an d bakery products etc. The number of sugar mills was also on the increase to fulfill the demand.Major Players in the Sugar IndustryThe major players in the sugar industry are new ScenarioThe sugar industry is the second largest in the country after the textile industry. Currently there are 83 sugar mills operating(a) in Pakistan. In Pakistan normally harden starts in November and ends in April. verboten of the 83 sugar mills present in the country 76 Sugar Mills are operating having crushing capacity of 361,300 tons of cane per day (TCD). Seven Sugar mills extended capacity but they are unable to utilize. Based on 160 long time season these sugar mills have a total crushing capacity of 58 million tons of sugarcane capable to produce 5 million tons of refined sugar and 3 million tons of molasses. Also the weekly sugar production is conveyed to the government via Pakistan Sugar Mills Association.The environmental analysis can be classified into two major types of environments tha t a firm has to face. They are micro and the macro (mega) environment. These are discussed in detail below.Macro EnvironmentTechnological EnvironmentAlmoiz sugar mills position as far as the technological environment is concerned is pretty strong as of now. It uses the state of the art technology and can produce sugar using sugar beet as a raw material other than sugar cane. Other than sugar production the firm is also engaged in electricity production and is a supplier of electricity to wapda.Socio-cultural EnvironmentThe impact of societal changes, sustenance styles and culture on Almoiz sugar mill is significant. in that berth has been a sack in the life style, for example the type of stores customer prefer to shop from, the type of packaging they prefer sugar in. Consumers are becoming more health conscious they prefer to go for low calorie versions and are very concerned about hygienic conditions of the sugar and the shop that sugar is purchased from.Economic EnvironmentThe economic environment of Pakistan is not very inactive and it continues to fluctuate every now and then. With the rise in interest place and double digit inflation in the country, it has practically become insufferable for the consumers to buy the same number of products as they used to buy a few social classs ago, and then the purchasing power of the consumers has sharply gone down.Political EnvironmentThe semipolitical scenario of Pakistan is the biggest threat to a business. Changing tax rates, rebates, labor strikes and the instability in general makes it difficult for Almoiz sugar mill to cope up with these changes and thus it can hamper future ope proportionalityns and thus profitability of the entire business.Legal EnvironmentThe lawful system of Pakistan is generally not very strong and in case of a problem, a company can involve itself into years long legal implications and trials.Micro EnvironmentSuppliersAlmoiz has divided its suppliers into two zonesFactory Zone 73 % of sugar cane during the cane season is obtained from the factory zone i.e. 640,000 M . tonsOuter Zone 27% of sugar cane during the cane season is obtained from the outer zone i.e. 240,000 M. Tons. The outer zone comprises of areas including Indus road, Bypass, Bhakkar and Mianwali.Market DemandThere is a great deal of demand for sugar in households. Sugar is used in very house it may be straight consumed or may be indirectly consumed in other products such as beverages and Confectionery items such as sweets, lollipops, sweeten bars, chocolate, cotton candy and other sweet snack items.CompetitionAlmoiz sugar mill has many competitors with Chashma sugar mill and Layyah sugar mill being the its two fast(a) competitors. The competitors also offer the same float of products with white refined sugar being the core product and several other by product including molasses however there isnt any sugar mill that generates its own electricity as Almoiz sugar mill.Skill Level of Workf orceWorkforce and the pack in the company is the biggest asset of an organization. In the case of Almoiz sugar mill the hands plays a very important role in the organizations productivity. The location of the factory is in Dera Ismail Khan and due to the instability in the role finding skilled workforce in that area is very hard. thusly attractive salary packages are given to attract skilled workforce from other regions of the country to come and work for Almoiz sugar mill. selling IntermediariesMarketing intermediaries are involved especially when it comes to sugar distribution to retailers and wholesalers. A high level of intermediary involvement makes communication difficult and increases the dependence.Porters Five Forces modellinghttp//www.12manage.com/images/porterfiveforces.gifPorters five forces model basically gauges the intensity of competition within its industry. The corporate strength of all these forces combined sterilises the ultimate profit potential of the ind ustry where profit potential is measured in basis of the long-run legislate on investment of capital. scourge of New EntrantsIf someone from a political or influential background wants to set up a sugar mill they have the pecuniary resources to obtain the machinery and contacts needed to obtain a license to start up a sugar mill. So door into the sugar industry is not hard. There are 83 sugar mills in Pakistan out of which 76 Sugar Mills are operating.Bargaining Power of SuppliersAlmoiz has a diverse range of suppliers as mentioned earlier. It has crack categories of suppliers based on distance from the factory site. Thus giving the suppliers a low bargaining power.Bargaining Power of CustomersCustomers have the option of transmutation to other sugar producers since barely one or two sugar mills have done something to distinguish themselves from other competitors in terms if having a brand name or packaging. People dont even ask into conside balancen the brand or sugar mill n ame while purchasing sugar they just purchase whatever is easily available.Threat of Substitute ProductsAlmoiz has many direct competitors. Currently there are 83 sugar mills in the country out of which 76 sugar mills are operating. The competitors also offer the exact same range of products with white refined sugar being the core product thus making the threat of substitute products high. Also other substitute products such as canderal are available for consumers who want to go for a lure with slight sugar contentPorters Generic StrategiesAccording to this strategy, in order to cope up with competition, firms adopt three generic strategic approaches to gain competitive advantage.Overall embody leadership entails the firm to make all or possible attempts to achieve the lowest costs in production and marketing.Differentiation approach lays emphasis on achieving class leadership by providing unique characteristics to the product/service.Focus strategy attempts to serve a designate strategic target effectively and efficiently.Thus, on the basis of these three strategies, Almoiz sugar mill follows the Overall Cost Leadership Strategy. By being the low cost leader, it increases its efficiency at all levels thus gaining a significant market share. An illust symmetryn is shown belowExternal Factor Analysis drumheadOpportunities introduction International MarketsExpanding corporate clientsTechnology judicature and industrial projects. minimization of cost by properly utilizing the by-products.Organic sugarThreatsseasonal worker fun in sugar canePolitical unbalanceNatural CalamitiesThe region in which the mill is located is very attempty in terms of stabilityCompetitors in the same region can attract the skilled resource of the company by offering them a better packageExternal FactorWeightRatingWeighted ScoreOpportunitiesEntering International Markets0.0530.15Expanding corporate clients0.1540.6Technology0.0340.12Government and industrial projects0.1340.52utilizi ng by-products0.0730.21Organic Sugar0.1430.42ThreatsSeasonal Variation in sugar cane0.1440.56Political Instability0.0930.27Natural Calamities0.0730.21location of factory0.1320.26 entire13.32Competitor AnalysisThe following are the main competitors of Almoiz Sugar millsLayyah Sugar Mills LayyahChashma sugar Mills D. I. KhanChashma Sugar Mill (D.I.Khan)The mill was set up by the sponsors of the Premier sort in 1991. Technical and other assistance is provided to the sugarcane growers, in improver to the development of 150,000 acres of land for the cane supply. The mill production stands at 18,000 tons per day, the largest in Pakistan.In the financial year 2010, the Company was state a subsidiary of The Premier Sugar Mills Distillery Company Limited, under the directions of the Securities and Exchange Commission of Pakistan.. The factory is located in Dera Ismail Khan, Khyber Pakhtunkhwa. The company has the following strategic goalsProviding Customer Satisfaction by serving with a ce quality production of white sugar at lowest costEnsuring Security and Accountability by creating an environment of security and accountability for employees, production facilities and productsExpanding Customer Base by exploring new national and international markets and job product research and development in sugar industryEnsuring effective Resource Management by managing human, financial, technical and infrastructural resources so as to support all our strategic goals and to ensure highest possible value supplyition to stakeholders.ProductsWhite Crystaline SugarWhite Crystalline SugarMolassesMolassesBagasseBagasseLayyah Sugar Mills (Layyah)Layyah Sugar Mills is a project of The Thal Industries Corporation Limited having its registered office at 23 Pir Khurshid Colony, Multan. The company was incorporated on September 07, 1953 under the companies make up 1913 (Now Companies Ordinance 1984) as Public Limited company limited by shares. Its shares are quoted on Karachi and Laho re stock exchanges in Pakistan. The company is engaged in production and sale of white refined sugar.Layyah Sugar Mills was set up by the Thal Development Authority (Defunct) with a capacity of 1200 TCD in 1954, which was enhanced, to 2000 TCD in 1979-80 and further to 2700 TCD in 1990-91. It was the first sugar mills installed and commission in Punjab after existence of Pakistan. After privatization the new management, by fetching some drastic measures, enhanced the crushing capacity of sugar mills from 2700 TCD to 3500 TCD in year 2001.In 2002 Company undertook BMR Expansion to add new mills tandem of 4000 Tons Crushing/Day .In 2002-2003 Undertook second phase ofBMR Expansion to increase in crushing capacity and synchronize the process house with the mills house to 6700 Tons Crushed/Day (TCD),successfullycompleted during the crushing season 2002-2003. collect to whichcapacity of sugar mills has been increased from 6,700 TCD to 9,300 TCD.Financial Analysis liquid balancesYear 201120102009AlmoizChashmaLayyahAlmoizChashmaLayyahAlmoizChashmaCurrent Ratio0.960.961.120.760.871.081.000.72Quick Ratio0.350.220.790.360.520.580.550.22Inventory to kale working capital-13.50-19.632.81-1.62-2.696.08213.06-1.80The current ratiois afinancial ratiothat measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firmscurrent assetsto its current liabilities. The current ratio is an indication of a firmsmarket liquidityand ability to meet creditors demands. unexceptionable current ratios vary from industry to industry and are generally amidst 1.5 and 3 for healthy businesses. If a companys current ratio is in this range, then it generally indicates good short-term financial strength. Almoiz has a current ratio of less than 1 for the year 2011 as well as the year 2010 where as in 2009 the current assets of Almoiz are slightly more than its current liabilities therefore the ratio is above 1 in 2009. Out of the three sugar mills the value of current ratio for Layyah sugar mill indicates good financial strength as compared to Chashma and Almoiz sugar mills.Quick Ratio is an indicator of a companys short-term liquidity.The quick ratiomeasuresa companysability to meetits short-term obligations withits most liquid assets. A higher quick ratioindicates abetter position of thecompany. In the years 2010 and 2011 Layyah sugar mills has a higher quick ratio where as in 2009 Almoiz has a higher quick ratio.Inventory to Net Working Capital measuresa firmscapabilityto finance itsinventoriesfrom its available cash. Layyah sugar mill has a better capability to finance its inventories from available cash as compared to Almoiz and Chashma sugar mills.Leverage Ratios201120102009LeverageAlmoizChashmaLayyahAlmoizChashmaLayyahAlmoizChashmaDebt to assets0.700.710.810.650.680.800.650.82Debt to equity2.282.434.221.892.123.941.864.48Long Term Debt to equity1.340.831.471.381.351.961.452.30 withdraw1.081.371.650.122.161.820.02 0.68Debt to Assets is A metric used to measure a companys financial risk by determining how much of the companys assets have been financed by debt. Layyah and Chashma sugar mill have a higher debt to assets ratio as compared to Almoiz sugar mill.Debt to lawfulness is a measure of a companys financial leverage deliberate by dividingits total liabilitiesbystockholders equity. It indicates what proportion of equity and debt the company is using to finance its assets. Almoiz sugar mill has a lesser debt to equity ratio as compared to Layyah and Chashma sugar mill.Long term debt to equity is a way to determine a companysleverage. The ratio is calculated by taking the companyslong-term debt and dividing it by stockholders equity. The greater a companys leverage, the higher the ratio. Generally, companies with higher ratios are thought to be more riskybecause they have more liabilities and lessequity. Overall for all the three years Layyah sugar mill has a higher debt to equity ratio as compared to Almoiz and Chasma sugar mill.Times Interest Earned (TIE) is a metric used to measure a companys ability to meet its debt obligations. It is calculated by taking a companys earnings before interest and taxes (EBIT) and dividing it by the total interest payable on bonds and other contractual debt. It is unremarkably quoted as a ratio and indicates how many times a company can cover its interest charges on a pretax basis. Failing to meet these obligations could force a company into bankruptcy.In 2009 Almoiz has a very less TIE ratio Chashma and Layyah have higher TIE ratio than Almoiz sugar mill.Profitability RatiosProfitability201120102009AlmoizChashmaLayyahAlmoizChashmaLayyahAlmoizChashmaGPM0.120.120.130.030.120.110.050.09NPM0.0080.020.025-0.0220.050.018-0.217-0.05OPM0.1060.100.110.0130.100.080.0050.08ROA0.0060.0250.046-0.0150.1040.040-0.072-0.062EPS0.164.912.23-0.3510.787.9-7.59Gross Profit gross profit margin is a financial metric used to assessa firms financial healt h by revealing theproportion of money left over from revenues after accountancy for the cost of goods sold.Gross profit margin serves as thesource for paying additional expenses and future savings. The GPM for Almoiz sugar mill has increased from 2009 to 2011 and in 2011 it is well-nigh the same as Layyah and Chashma sugar mill however in in the midst of it dropped down to 0.03 in 2010.Net Profit Margin is very reclaimable when comparingcompanies in similar industries. A higher profit margin indicates a more profitable company thathas better control overits costs compared toits competitors. Almoiz sugar mill has a negative NPM in 2010 and 2009 since it set about a net loss and in 2011 though it didnt face a loss but the NPM is still less than that of its competitors.Operating Profit Margin is a measurement of what proportion of a companys revenue is left over after paying for variable costs of production such as wages, raw materials, etc. A healthy operating margin is necessit ate for a company to be able to pay for its